Well, good morning. Welcome to the second day of the Wells Fargo Healthcare Conference. I'm Nathan Treybeck, one of the medical device analysts at Wells Fargo. I'm pleased to introduce management from Solventum for this session. Joining us from the company are Bryan Hanson, the CEO, and Wayde McMillan, the CFO. Thank you for joining us, gentlemen.
Of course. Yeah. Glad to be here.
I thought we'd first touch on the HIS separation announcement. I think that's most pressing for investors. If we could just start off, talk about why it makes sense for you to separate out HIS right now. You previously framed autonomous coding as a revolution that's just beginning. Isn't that an argument for retaining an asset about to inflect?
Yeah. So maybe we had a feeling, Wayde and I, that we might get a few questions around HIS. Go figure, right? Maybe the way I'll start with that question in the way that you framed it is just on the second part. I want to reiterate that statement, that I really do look at autonomous coding as a revolution that's going to happen in revenue cycle management. And there's a couple of components that you need to make that a reality. Number one, it's technology, and where AI is today gives us a leg up to be able to move us in that direction and move the market in that direction.
But in concert with that, you have to have a data set that is unique, and you have to have a knowhow, I am going to call it tribal knowledge algorithms, that are unique to us to be able to train AI, to be able to leverage that effectively. So those pieces are in place and we are uniquely positioned to win. So I stand by that. I think that is going to happen. I also recognize that it is going to take a significant amount of investment and focus to get it accomplished, and we truly do believe that it will move faster and be more valuable if that entity is on its own and/or connected to someone who is in that space. We have got other businesses that we have to pay attention to.
We want to be a medtech player, and strategically speaking, this business does not quite fit the same as the others. So that is really the reason why we are moving in that direction, and we think it is the right time to do it. It has nothing to do with how attractive the business is. We think it is fantastic. It is just not as suited for us as it is for somebody else.
Okay. That makes sense. It seems that on the last earnings call you were signaling that the LRP, or organic growth target of 4%-5% in 2028 is likely still intact. As we think about the prior market growth rates you presented, HIS was 5%-6%, MedSurg was 4%-5%, and Dental was 3%-5%. So explain how the separation would not be dilutive to your top-line growth. Are you assuming growing above market, and would that be in both MedSurg and Dental?
Okay. So the only thing I would change there is the likely 4%-5% is still intact. It is definitely still intact, the 4%-5% without HIS. And I would just speaking to the market growth rate, remember, HIS is less than 20% of the business, so Dental, the RemainCo Dental, MedSurg would be over 80% of the business. And when you look at the market growth of MedSurg, which is the largest majority of that, it is 4%-5%, and then Dental is 3%-5%. So there is really not much change to the overall market growth of RemainCo. And I guess the other thing I would look at is we are already kind of moving in that direction, so we have a lot of confidence in it. So the only thing I would change in the question is, it is not likely, it will happen.
Once we get there, our goal is to move beyond that.
Okay. So ex-HIS, I estimate that Solventum grew about 3% in 2025 and is on track to grow about 3.7% in 2026 when you normalize for the SKU rationalization. Assuming you are on track and what you said you are for the 4%-5% in 2028, even excluding HIS, what is it that gets better in your business, or are there any new product launches that drive this growth acceleration? Are there any specific areas you would point to that would give investors comfort in this acceleration path?
Yeah. So I would say the 3.7% that you're referencing is just the middle of the 3.5%-4% ex-SKU that we gave for the whole company. I think it's good that you're using it for RemainCo, or in other words, MedSurg, dental, because the only way you can get there is if those two businesses, being that they're over 80% of the business, get to that growth rate. So I think the biggest proof point on us getting to 4%-5% is that we're already pretty close to it, right? We're predicting to get pretty close to it in 2026. Now outside of that, there are areas of concentration that we have. For those that are new to the story, we have these things that we call growth drivers.
We spent a lot of time when we came into the business to select the markets we were going to concentrate on and then the growth drivers inside of those. We coalesce all of our resources, or most of our resources, around those growth drivers, and four of those will be in the remaining business. One of them goes with HIS. Inside of those growth drivers, we really have, I'm going to call it three organic areas that should give people confidence. The first is that we've changed the commercial organization to specialize in those areas. So I'll call that commercial optimization, which is a really important leg of the stool.
The second, people may not recognize this, and I was very happy to find it, is we have legacy technologies that are very valued brands in the marketplace, that are clinically differentiated, that have been around for a long time, that are significantly under-penetrated. We've got an opportunity through that specialization just to get adoption of those technologies. The third leg of the stool from an organic standpoint is just new product innovation. We've really seen great product launches since we spun, and we've got almost 20 new products that we're going to launch through the first quarter of 2028. We'll talk a lot more about those at the Investor Day in March. Those are the reasons why you should have confidence.
In addition to that, from an inorganic perspective, Acera's been a great acquisition, and as we roll into 2027, as you know, that becomes organic growth for us as well.
That's great.
Sure.
Our math on the HIS separation suggests about 300-350 basis points of operating margin dilution after an assumption for stranded cost of about $30 million-$40 million. Wayde, any color you can give on that? Is that in the ballpark as investors model out the separation?
Yeah. So obviously, a bit early to be talking about modeling the separation of HIS at this point. We've got multiple separation paths, and we've got, obviously, timing and other considerations. I think just working with the number that you gave, Nathan, 400 basis points. I think if you're estimating on a full-year basis and you're netting that with some TSA offsets, and obviously, we've got a lot of work going on in the business, getting ready for stranded costs and other cost reductions. I think that 400 basis points is probably a reasonable full-year view of what the dilution could be. Obviously, it's a very profitable business for us, and we'll have some dilution. Maybe just thinking about it from a straight math basis, the dilution in total would be higher than that.
But if you're netting out TSAs and other cost reductions that we have, I think that's a reasonable full-year estimate at this point. Obviously, once we get further down the path with the separation, we've got more clarity to the separation path that we're choosing as well as the timing of that, we'll provide a forecast or an estimate for you all for 2027 and beyond when we get there.
Okay. That's helpful. So everything that you said there, Wayde, is it fair to assume that the LRP operating margin target of 23% - 25% in 2028 is basically not achievable at this point, excluding HIS?
Yeah. Happy to take that one, too. Clearly, the LRP for us is still in place, and we're still working towards that until we actually do separate from HIS. So we're not providing an update to that LRP at this point. It'd be too early to do that. But it's no question that HIS will be dilutive for us. It's a very profitable business. So when we reset our LRP, hopefully, we'll be in a position to update that at our Investor Day and provide a new LRP excluding the HIS business. We'll do that at that time. So no update to the LRP at this point. What I would just share on this one is we've made great progress on the profitability of the business.
In fact, this year, as we know with the recent tariff refund that we booked in Q2, which really neutralizes tariffs for us for the year, we do not have a tariff impact. It shows the progress that we have made on profitability to this point. In fact, if you look at our operating margin guide for the year for 2026 at the high end, we are almost at that 23% low end of our LRP. We will see where we finish this year, but if we finish at the high end or maybe even a little better, we will actually be touching the low end of that LRP guide two years early. We will see where we finish up 2026 here, and then, of course, in our Investor Day in Q1, we will provide a new LRP based on the separation plan for HIS.
That is helpful. We appreciate that you are pursuing the most value-maximizing path for a separation, but are there any specific factors that you are focused on that will determine what the ultimate deal will look like?
Absolutely. Yeah. Maybe just taking a step back there. We have talked about it a lot, but there are really three things that we look at just to make the decision whether we are going to separate or not. For us, it is number one, the most important thing is strategic fit. Do we have the strategic fit for that business or not? That is going to be the first element. Then it moves to shareholder value. If we do not feel like the strategic fit is there, can we drive shareholder value either immediately or over time as a result of separating? Then the third is just you have got to look at RemainCo financials to make sure you have got a company that you still feel good about. That is the way we make the decision, and we have made the decision to separate.
Then you have got to click down from there to decide what separation path you are going to use. The first piece you look at for separation path is obviously, again, shareholder value or package value on the various separation methods. But then you have got to look at things like the proceeds that you are going to get, cash proceeds, the time, the certainty, the complexity associated with any transaction.
We kind of put those variables together in an algorithm, if you will. We make the decision on what makes the most sense, what drives the most value, not just for shareholders, but also for our customers, our patients, and our team members. That is the way we will make that decision, and part of that cannot be decided until you get the variables, the information. You have got to have the information inside of those variables to make the ultimate decision.
Perfect. With some capital structure assumptions, our rough math suggests if you apply all the proceeds to buying back shares, you'd be looking about $1 of EPS dilution. Wayde, any additional color you could give there? Is that in the right ballpark?
Yeah. We're probably way too early for that one, I think, at this point, Nathan. I'm guessing inside of those assumptions, you're going with the sales scenario. As Bryan just outlined, we've got a lot to work through yet until we make those final decisions, and so we're not going to be commenting on the dilution at this point. A little easier to talk about operating margin. Once you get down into EPS, you bring in a lot of these other assumptions. The path of separation, the timing of that, as well as TSAs and our ability to get after stranded costs.
I think as everybody knows, as long as you have the business before you divest it you're supporting it, and then when you do divest it, there's a period of time where you have TSAs and you have to support the business, so you can't actually get after those stranded costs because you need that infrastructure to support the business until you're off the TSAs, and then you can go to work on the stranded costs that are supporting the TSAs from there. There's a lot to be worked out. I'm guessing you also have an insight. I'm thinking that's a sales scenario. Inside of that sale, you have a certain purchase price assumed in there and a certain use of proceeds. So there's just a lot, I think, that has to be worked out before we can communicate what we think the ultimate dilution will be.
In most cases, divestitures are dilutive. I think most companies have that to deal with. We're obviously conscious of that, and so we're going to shift our use of proceeds to return to shareholders in some form or fashion. We want to keep a strong balance sheet. We want to keep our solid investment grade rating inside of that strong balance sheet, and then from there, we're going to be looking to return a lot of that capital to shareholders and to be working on the methodology to do that. Again, in that sales scenario, there's obviously the spin scenario for us or anything in between, potentially some type of an RMT partner. So we've got a lot to work through before we can start communicating what an EPS dilution would look like for what period of time.
When we get to the appropriate time, when we've made the decision on the separation path and we've got the timing in hand, then we can provide what that dilution we think will look like for 2027 or 2028.
Sounds good.
Bryan, as you think about the vision for Solventum, do you envision MedSurg and Dental as the end state of the company? Maybe just remind us of the benefits of a combined MedSurg and Dental business.
Yeah, maybe I'll start with the benefit. I'll start with do I think it's the end state. It's perpetual, right? This concept of portfolio optimization, if you're doing your job, as a leadership team, you're always looking at the portfolio to make decisions on what fits and what doesn't, and what should fit that isn't here today. So that will be perpetual. I do like, though, the fact that post P&F and eventually post HIS, we are more of a medtech business. That's part of the transformation that we've been focused on. We want to be a medtech company, and those two assets that we just talked about, P&F and HIS, are atypical in a medtech company. So I feel good about that. But again, this is a perpetual thing. We'll constantly look at it.
The reasons why they go together, I'd say first, they seem more natural in a medtech business. You've got a lot of medtech companies that have both. Analysts that cover us understand both markets, and they typically cover both businesses in both markets, so that's helpful as well from a clarity perspective. For us specifically, there's a lot of, I'm going to call it secret sauce, raw materials, IP that is used across the business. One of the best things 3M has done is they created unique to the world chemicals and raw materials that make their products very special and hard to unseat, and we use those across these two businesses. Outside of just the raw materials, we have competencies in research and development that are very fungible across those businesses. So there's reasons for them to be together.
It just doesn't mean that they'll always be together, right? I just don't want to make that commitment. But I do like the fact that we're more of a medtech company post HIS.
Perfect. You talked about how while the separation dilutes operating margin, it will also help to mask the operating efficiencies that you've been generating in the business. So potentially, we could see faster margin expansion in EPS growth post HIS. Is that kind of a good way to look at the business?
Do you want to answer that, or you want me to answer that?
Yeah, sure. Yeah. Again, we're obviously focused on driving top line sales growth and operating margin expansion. You've heard us say many times, since our IPO, that we think we've got opportunities both on the top line, which Bryan covered earlier, and we're doing a great job of improving that since our spin. And on the bottom line, we've made good improvements there as well. We expect to be improving sales growth and operating margin expansion each year.
When you think about the post HIS, which I think is the essence of your question, it does put us in a position to potentially accelerate faster because, HIS, obviously a very profitable business, but as Bryan outlined earlier, the strategy there is a heavy investment strategy to compete in that fast innovation cycle, HCIT market that it's in, and we've been significantly increasing investment in that business since our IPO and investing in growth drivers for that business. But it can obviously benefit from, as Bryan laid out earlier, a new strategy, either on its own or as part of a broader group of HCIT companies. For us, with the remaining business within MedSurg and Dental, we do think we've got more margin expansion opportunity.
If you think about the RemainCo business with medtech and Dental, you could see us accelerating operating margins even faster given that RemainCo portfolio. We've been talking a lot about the two major programs that we have running, programmatic savings and our Transform for the Future. Programmatic savings, we outlined at our last Investor Day, is heavily focused on our cost of goods sold, cost of delivering our product in the supply chain, and so we've got significant efforts there. You can imagine most of that or all of that is focused on the MedSurg and Dental businesses. It's not focused as much given the different business model for our HIS software business.
Then in our Transform for the Future area, which is some cost of goods sold, but primarily focused on our operating expenditures, and the OpEx across the business, and a lot of that is focused on MedSurg and Dental as well. If you think about those two programs and what we've been working on over the last year or so to ramp those programs up, and they're multi-year programs. They will run for a few more years yet, where we're driving significant efficiency and effectiveness. It's an efficiency for sure, but it's also driving more effectiveness throughout the organization. If you put all that together, we certainly have a lot of focus through those two programs, driving efficiencies, and more so focused on the MedSurg and Dental business.
To your question, post-HIS, we will certainly have margin expansion as we've been planning, and you could see it even faster on the smaller base of business without HIS.
I'll just draft off of that because I think it's a great question. It's an important question. It's connected to the growth driver strategy, because to make it to a growth driver, that specific market or technologies need to be mission-centric. They have to be very attractive markets. We've got to understand the barriers and the solutions, and that's where we're going to focus our efforts to grow. But they also have to be profitable. That goes back to the concept of as an attractive market, a profitable market. As we grow faster, because that'll be 80% of our growth going forward, as we've talked about, you get a natural mix benefit in margins. It's not only are you getting the growth benefit, but you're getting a mix benefit as well from a margin perspective.
On top of that programmatic savings, on top of TFF, we also have this mix benefit as we grow faster in those more attractive spaces. Those are the things that we're going to be focused on. Now remember, as I said before, in those growth drivers, four of those were actually in the dental and MedSurg business.
Great. Well, I think we beat that one down.
Yes.
The HIS separation. So maybe let's move on to Q2 and full-year guidance. So you raised full-year organic growth guidance from 2%-3% to 2.5%-3%. I guess talk about what you're seeing that drove that guidance raise, and do you see areas for upside to the new guidance, and where would those areas for upside come from?
Yeah. What I'd say is, you kind of looking for proof in the pudding on why do we feel confident. And I'd say the first piece, I would say, is just the performance of the business so far. If you're looking at where we are today, we're already approximating that guidance. And all we really need to do is to keep that momentum that we've already created in the first half of the year to be able to deliver against it. Of course, our goal is to always make sure that we deliver the guidance range, if not do more than that. That's the intent. Outside of that, it's the very things that we talked about before.
It is those growth driver areas, and it's the three subcategories of growth drivers, the commercial infrastructure that we put into place, that under-penetration that we can use now for market development capabilities that we didn't have before, and product innovation that we've already launched and will launch.
Okay. Touching on MedSurg performance in Q2, organic growth after adjusting for the 700 basis points of ERP cutover was about 1.9%, which is up from 1.2% in Q1. Can you talk about what's assumed for the second half for MedSurg growth?
Yeah.
Happy to take that one if you like. Yeah. There's a lot of numbers in that one.
By default, it goes to you.
Sounds good. Yeah. Nathan, interesting that you brought that one up. I think if I talk first to the first half numbers that you put out for MedSurg, just keep in mind that we also have to normalize for the prior year tough comp in there. Then we've announced the SKU rationalization program. So I think if you normalize for those two, you get a stronger underlying growth in the first half. If you pull up to the full year, we do think that strong momentum, that underlying growth in the first half continues into the second half. So I think probably the best way to frame it would be, we've guided, as you said, to 3.5%-4% on an ex-SKU basis for the total company for the full year.
I think that's a good representation of the MedSurg business for the year as well. Just pure math, it's the largest part of the business by far, so it's tough not to grow at those rates if MedSurg isn't approximately at those rates. So I think it's a good proxy for what we see in the MedSurg business. Again, the reported growth looks lower because we had some tougher comps in the first half of the year that will ease in the second half of the year, and that was due to the ERP cutovers last year. So when you think about the MedSurg business, in our minds, it's got a strong underlying growth rate in the first half. We're expecting that momentum to continue in the second half.
With those easing comps, you will see stronger growth rates in the second half of the year and then set us up to achieve that 3.5%-4% guide for the total company.
Okay. I guess the same question on dental. If we exclude the 10 points of ERP cutover benefit in Q2, growth was about 4.8%, which is again up from 3.4% in Q1. Is there an assumption, to your point just on the mix, but is the assumption that it continues to grow at those rates? Is there a deceleration in dental in the second half?
Yeah. We have also had a great performance in our dental business in the first half of the year. If we just pull up for a second and think about that market over the last few years has been a flat market and a challenging market, and our business has started to grow. The team has done a great job of launching some great innovation over the last couple of years, and we are getting our growth primarily from that new innovation. As we continue to get into these low single digit, mid single digit growth rates for the business, we think that we are participating in a potentially stabilization or little improvement in that business. But most of our growth is, again, driven by the innovation. As we move into the second half of the year, it is actually the opposite of what I just mentioned for MedSurg.
We had some very strong growth rates, 6% growth rates in the second half of last year for dental, and that was related to a lot of the backorder recovery in that business. So one time backorder recovery, the commercial teams, supply chain teams, did a great job working together, looking at why there was some perpetual backorders in that business and underserved, under capacity areas. Since spin, really, looking at where we can invest to improve service of our customers, we can improve reduction in backorders. We saw a lot of that come through in the second half of last year, and that is really a one-time benefit once backorders have been cleared from the system. So dental is going to have to face some pretty tough comps in the second half of the year.
But again, on an underlying basis, we see continued improvement in that business and expect another strong year from dental here in 2026.
Great. So we're sitting here in September. I think a lot of investors are already thinking out to 2027. Consensus for you right now is about $8.6 billion of sales, which I think implies about 3.9% organic, which is up from 3.7% that I'm modeling for 2026 when normalizing for the SKU rationalization. Any thoughts on where consensus stands? Do you feel like consensus is in a good place at the current moment?
Hmm. I better take that one, too.
Yeah. You love talking about consensus.
You bet. This is a tough question for us to answer, Nathan, as you probably know, given we don't have a 2027 guide out there. Any comment on consensus for 2027 would be kind of front-running what we would be providing for guidance, which we always provide at our Q4 call in February. But maybe I can just add a little bit of color based on the numbers that you put out there. For 2026, as you said, a 3.7%, I think you mentioned, which is the midpoint of our guide for 2026. So that makes sense as a foundation. Then you provided a number for 2027 that is expanding upon that and increasing the growth rate for 2027. Again, we're not going to comment on specific numbers, but I would say that is the right approach.
As Bryan just outlined, we've got significant growth drivers that are building momentum and accelerating, and so we would assume we would see an acceleration of that organic sales growth rate from 2026 to 2027, which is reflected in consensus, as you mentioned. Without commenting specifically on the numbers, because we're not guiding to 2027 at this point, we think that's the right approach. When we ultimately guide, we would expect to be providing an accelerated sales growth rate based on our 2026 results.
Great. Bryan, you alluded to you're going to be launching a lot more products.
Right.
Any specific key products you would call out for next year?
For competitive reasons, until we get a little closer to launches, I probably don't want to talk specifics, but what I'll give you is in March, we'll give you a lot more color on those products. What I have said, though, is again, it's somewhere in the neighborhood of just under 20 over through Q1 of 2028. Some of the color inside of that is you're going to see some in advanced wound care, particularly around negative pressure wound therapy, but also in Acera. You're going to see some indications in there. You're going to see some product launches as well. You're going to see some in the dental category as well, which will be more focused on the very attractive aesthetic space. We've got some unique launches that they're expecting to do towards the back half of this year and then into next year.
I don't want to get into specifics, but those are the categories you're going to see. There are other product launches as well that we'll have outside of those categories, but those are the biggest that you'll see in March.
Great. Before the HIS separation and given the tariff refund this year, you're looking at difficult comps for margins and EPS growth next year. Street is modeling $7.28 EPS, which implies about 2% year-over-year growth. Adjusting for the tariff refund, that's about 9% underlying. Are you okay with the way the Street is modeling this currently?
Go ahead.
Yeah. So again, similar starting point when we think about bottom line for 2027. We cannot comment on consensus yet because, again, we do not have guidance out there for 2027. But maybe just picking up on a couple things that you included there, Nathan, one would be around the tariffs. So we are very happy with the refunds this year, which neutralized the tariffs, which again, gives us a clearer read-through of our operational improvements and our margin and our EPS growth. So it certainly is a big increase to our EPS this year. But if you look at 2026, without the tariff refund, at the high end of our guidance, we are close to double-digit EPS growth. So even without the tariffs in 2026, we have a strong EPS growth guide for 2026.
Clearly, the tariff refund adds to EPS in 2026, and as you mentioned, that will be a headwind for our EPS in 2027. But obviously, we are working on this as part of our strategy, and we have committed to driving operating margin expansion each year. So even if I just shift to operating margins for a second, operating margins, we are still looking to expand in 2027, even with the headwind from the tariffs coming back into our numbers. So cannot give specific EPS guidance for 2027 yet, but hopefully, that gives you some color in how we are thinking about 2027 margins and potentially offsetting the headwind that we will see in our EPS and continuing to drive strong EPS growth. At the end of the day, our long-range plan over that three-year period was to be driving a 10% or better EPS CAGR over those three years.
So we are obviously off to a great start with the tariff refund this year, but if you take that out and normalize for that, we are guiding to a really strong EPS growth for 2026. That will set us up for, on a normalized basis without tariffs, another strong guide for 2027 when we get there.
Okay. Is the margin benefit from the 2026 SKU rationalization, does that show up in 2026 operating margins, or is there a large portion that is showing up in 2027 margins?
Hmm. Yeah. Given that it was a two-phase program, remember Bryan and I, our strategy around SKU rationalization out of the gate was to have one phase. But when we got into it, we didn't have the data that we're accustomed to for making these kinds of decisions. So we broke it into two phases. One, call it straightforward, and then the second one, we had to get a lot more data rigor put into the business in order to get the data that we needed to make decisions in two phases.
Therefore, we've shared in the past, it's a small benefit to margins, think like 10 to 20 basis points, but phase one, there was some impact to 2026, but think small. And then for the SKU rationalization that's happening this year will have a little carryover again to next year. But think kind of in that 10 to 20 basis points range.
Great. I thought we could just touch in the last few minutes on your MedSurg business. Bryan, you said that you expect the negative pressure wound therapy business to improve in growth, talked about new product launches. I think the market is growing mid-single digits. You're growing a bit below that. Talk about the dynamics that you're seeing in that market. How confident are you in accelerating towards market growth or maybe even exceeding it?
Yeah. Are you talking specifically in negative pressure wound therapy?
Yes.
Very confident. Yeah, very confident. I don't want to say I'm not confident about MedSurg overall, because I am. But in negative pressure wound therapy, this is an exciting space. It's not just I wouldn't pay too much attention to the market growth. It's important, but if we develop our plan and execute the plan the way that we're talking about, I would expect that market growth to increase, because there's significant under-penetration for negative pressure wound therapy. Right now, if you just look at the patient side of things, there's only 10% of the patients that could benefit from negative pressure wound therapy that are using negative pressure wound therapy or getting access to it. That means 90% of patients are not getting the best therapy on the marketplace.
That's incumbent upon us to change through market development work, specialization of the sales organization, bringing in functions that are focused on market development, like clinical affairs, medical affairs, government affairs, and making sure that they're focused in this area. So, I look at this as a foregone conclusion that we will accelerate in negative pressure wound therapy. As a result of that, given our size and scale in that space, the market growth will also improve. To me, it's not a question of getting to market, it's inflecting the market through that adoption.
Great. Just broader on advanced wound products. It seems like there's an unmet need outside of the inpatient setting. Just given recent reimbursement changes, are you able to address just the outpatient market, the physician office market? Is this an opportunity for you, and any time frames you could put around that?
Yeah, I'd kind of maybe bifurcate that discussion, negative pressure wound therapy and then Acera, because when you're talking about reimbursement stuff, I'm assuming you're talking about tissue matrices.
Yeah.
On negative pressure wound therapy, we are already in both acute and non-acute areas, both hospitals, ASCs, and then alternate care. There are things that we can do to better the transition. PREVENA RESTOR ARTHRO•FORM was a dressing that does this, the transition from that acute care setting to the alternate care setting. That was one of the reasons for the PREVENA RESTOR ARTHRO•FORM dressing. It just allows a smoother transition because that dressing can be used for 7 days in the alternate care, which is perfect for that environment.
But if I think about Acera, we are going to be intentionally focused on the acute care space, because that is where you are leveraging the DRG infrastructure or the structured payment in an ASC. And we just become a part of that reimbursement that already exists, and we stay out of the melee that you are seeing in the alternate care.
At some point, that could certainly be an opportunity for us, but there is all kinds of opportunity in the acute care setting today. Remember, that is a $1 billion+ size market today just in acute care, growing double digits. So a very attractive market for us. And we have a differentiated position.
Perfect. Just to touch on Acera and their product, Restrata.
Yeah.
What needs to happen for broader adoption of that product? Do you need more clinical data? Is there more work on guidelines and coverage? And I guess what will be the most meaningful to drive a step change in adoption?
Yeah. Probably the biggest thing, you almost want to just say just add water because you have everything you kind of need. Adding the water for us is the infrastructure that we have on a global basis. We already play in the same customer call point. We already have these relationships. 60% of the time Restrata is used, they use it in concert with negative pressure wound therapy. So we have the infrastructure. We have the know-how. We have the water that needs to be added to Restrata.
Great. Well, we're at 30 seconds. Bryan, I'll leave it to you if you have any closing remarks or anything you want to share.
No. I'd just say great line of questions. I'm very pleased. I always say that I'm happy but not satisfied with the improvements that we've made. I want everyone to know that we have runway. We're in great markets. We're focused in those markets and our growth drivers, and those subcategories to growth drivers are in place and moving in the right direction. I'm really looking forward to the Investor Day in March. We've got a lot more that we're going to share.
Perfect. Bryan, Wayde, thank you so much.
Of course.
Thanks.