Good morning, ladies and gentlemen, and welcome to the Teleflex Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded, and will be available on the company's website for replay shortly. And now I will turn the call over to Mr. Lawrence Keusch, Vice President of Investor Relations and Strategy Development. Lawrence?

Good morning, everyone, and welcome to the Teleflex Inc. Third Quarter 2024 Earnings Conference Call. The press release and slides to accompany this call are available on our website at teleflex.com. As a reminder, a replay will be available on our website. Those wishing to access the replay can refer to our press release from this morning for details. Participating on today's call are Liam Kelly, Chairman, President and Chief Executive Officer; and Thomas Powell, Executive Vice President and Chief Financial Officer. Liam and Tom will provide prepared remarks, and then we will open the call to Q&A. Before we begin, I would like to remind you that some of the matters discussed in the conference call will contain forward-looking statements regarding future events as outlined in the slides posted to the Investor Relations section of the Teleflex website. We wish to caution you that such statements are, in fact, forward-looking in nature and are subject to risks and uncertainties and actual events or results may differ materially. The factors that could cause actual results or events to differ materially include, but are not limited to, factors referenced in our press release today as well as our filings with the SEC, including our Form 10-K, which can be accessed on our website. Now I will turn the call over to Liam for his remarks.

Thank you, Larry, and good morning, everyone. On this morning's call, we will discuss the third quarter results, review some commercial highlights and provide an update on our financial guidance for 2024. For the third quarter, Teleflex revenues were $764.4 million, up 2.4% year-over-year on a GAAP basis and an increase of 2.2% on adjusted constant currency basis. Third quarter revenues were slightly below our $765 million to $770 million guidance which reflects unanticipated softness in our OEM business. Third quarter adjusted earnings per share was $3.49, a 4.1% decrease year-over-year, but notably higher than expectations, driven by strong margin performance, which Tom will discuss later on the call. Now let's turn to a deeper dive into our third quarter revenue results. I will begin with a review of our geographic segment revenues for the third quarter. All growth rates that I referred to are on an adjusted constant currency basis unless otherwise noted. Americas revenues were $433.3 million, a 1.5% increase year-over-year. Investors familiar with Teleflex will be aware that prior year MSA revenues were booked in the Americas, which impacted growth by approximately 510 basis points in the third quarter. EMEA revenues of $150.2 million increased 3.9% year-over-year. The growth continues to be driven by our targeted strategy to increase the geographic availability of Teleflex products and improving utilization in Europe. Now turning to Asia. Revenues were $98.3 million, a 5% increase year-over-year. The quarter was primarily impacted by the continued soft performance in South Korea due to the ongoing impact of the doctor strike. We estimate that the doctor strike impacted our APAC growth by approximately 2%. Looking forward, the doctor strike remains ongoing, implying headwinds are likely to linger through the remainder of 2024. Now let's move to a discussion of our third quarter revenues by…

Thanks, Liam, and good morning. Given the previous discussion of the company's revenue performance, I'll begin with margins. For the quarter, adjusted gross margin was 60.8%, a 140 basis point increase versus the prior year period. The year-over-year increase was primarily due to the favorable impact of gross margin from the termination of the MSA and the acquisition of Palette and favorable price, partially offset by manufacturing inefficiencies and continued cost inflation, including labor and raw materials. Adjusted operating margin was 27.3% in the third quarter. The 10 basis point year-over-year increase was primarily driven by the flow-through of the year-over-year increase in gross margin, partially offset by the inclusion of Palette Life Sciences operating expenses and investments to grow the business. Net interest expense totaled $18.8 million in the third quarter, an increase from $15.7 million in the prior year period. The year-over-year increase in net interest expense reflects the impact of the funding for Palette acquisition and share repurchases in the third quarter. Our adjusted tax rate for the third quarter of 2024 was 13.6% compared to 8% in the prior year period. The year-over-year increase in our adjusted tax rate is primarily due to additional costs arising from the enactment of European Pillar 2 tax reform, nonrecurring prior year discrete benefits, not repeating this period and nonrecurring discrete detriments that occurred in the third quarter. At the bottom line, third quarter adjusted earnings per share was $3.49, a decrease of 4.1% versus prior year. The year-over-year decrease in earnings per share includes dilution from the acquisition of Palette Life Sciences and the related incremental borrowings, the termination of the MSA and a higher tax rate. Turning now to select balance sheet and cash flow highlights. Cash flow on the year-to-date continue to be solid. Cash flow from…

Thanks, Tom. In closing, I will highlight our 3 key takeaways from the third quarter of 2024. First, although we encountered some revenue headwinds in the third quarter, our diversified portfolio and global footprint proved beneficial. In the quarter, we drove year-over-year gross margin expansion and increased our operating income. We continue to focus on execution, our margins remain healthy, and we raised the low end of our adjusted 2024 EPS guidance range. Of note, our 2024 adjusted earnings per share outlook reflects approximately $0.85 in year-over-year headwind, including dilution from the termination of the MSA and the acquisition of Palette Life Sciences, increased taxes primarily due to the Pillar 2 minimum tax and foreign exchange. After adjusting for these headwinds, year-over-year underlying adjusted constant currency earnings per share growth is approximately 9% at the low end of guidance and 11% and on the high end of guidance. Second, cash flow performance remained strong in 2024 with cash flow from operations of $436 million at the 9 months and up $63 million over the prior year period. We remain on track to drive over $500 million in cash flow from operations for full year 2024. And net of capital expenditures to invest in growth, it leaves approximately $400 million in free cash flow. The healthy cash flow generation provides a strong foundation for executing on our disciplined capital allocation strategy, including investment back into the business, inorganic growth opportunities, return of capital to shareholders and debt repayment. Third, we will continue to focus on our strategy to drive durable growth. Palette is performing above our expectations. We are executing on the intra-aortic balloon pump and catheter opportunity and Titan is generating solid growth. We are continuing on our journey to transform our portfolio to drive growth and will execute on expanding our internal innovation engine and pursuing inorganic opportunities including M&A. That concludes my prepared remarks. Now, I would like to turn the call back to the operator for questions and answers.

[Operator Instructions] And our first question comes from the line of Patrick Wood with Morgan Stanley.

So I've got one and then one follow-up. The first one, of the sales cut on the top line -- and congrats on things around the gross margin side of things. But on the top line, that sales cut OEM, I mean, at least by my math, looks to be kind of roughly half of it. I think you guys mentioned in the prepared remarks -- am I right in assuming the other residual half is predominantly the effect of the weather and the IV solutions side? Is that fair? Or is there something else going on?

No. You've got the 2 buckets. You've just misallocated them, Patrick. So look at -- if we look back on the quarter, I would say that we're disappointed with the performance of OEM. But with the exception of OEM in the quarter, the rest of the business performed very well. We were -- even with the impact of OEM, we were modestly below our guidance range that we provided of $765 million to $770 million, and we're particularly happy as you pointed out, with the margin expansion, the earnings per share performance and obviously, the strong free cash flow, which will put us in a good place to execute on our capital allocation strategy. Now specifically to your question, with regarding to the buckets in the full year, there's 2 buckets, as you pointed out, OEM and Interventional Urology. The total change at the low end of the guidance, Patrick, is approximately $22 million. The larger impact is OEM, and it's driven by 2 factors. One is the vertical integration customer order and the order pushout due to inventory management. The total impact of that is approximately $14 million in the full year with the majority of it being as a result of a surprise vertical integration that we were not expecting. The other component of it is down to Interventional Urology. While Palette continues to perform very well, and we're really happy with the performance of it, our previous guidance had assumed better UroLift trends in the fourth quarter, and we have not seen that. Our updated guidance assumes normal seasonality, but does not assume better trends and also takes into account the Q4 impact of the hurricanes and the IV saline shortage impacting procedures. The total impact of that book, Patrick, is approximately $8 million in the full year, reflecting the improved performance from Palette and UroLift being impacted by approximately $11 million. So those are the buckets for the full year. And in the quarter, the impact of OEM was approximately $7 million. And excluding OEM, we would have been handsomely within the ranges that we had provided.

That's a lot of detail. The follow-on. On the balance sheet side of things, you'd obviously charted our conference and a few other times about the potential -- potentially for a little bit of bolt-on M&A. How are you thinking about the interplay between doing residual $300 million buyback and then bolt-on M&A, how do you think about the 2 opportunities there?

So the good thing is that our balance sheet is in excellent shape, Patrick. Our net leverage right now is 1.7x. And as you saw, as we went through our prepared remarks, our free cash flow from operations is $435 million, up $63 million, an outstanding performance on free cash flow, which gives us a lot of confidence that we can do both. We have still $300 million left in our share repurchase plan and we intend to use that opportunistically. The M&A environment is pretty ripe right now and we are chasing a number of private assets out there in the marketplace. We continue to be active. We don't know when we're going to get an asset on board, but I would like the investment community to know that we are working hard. And the free cash flow I gave you was free cash flow from ops, just to be clear. We're looking at assets that are within the -- cath lab. We're very focused on that call point, intensive care call point, emergency medicine and tuck-ins in other parts of the business. We will remain disciplined, and our focus remains on nonearnings per share dilutive assets that we want to bring into the Teleflex family. So active in that area and also would intend to continue with our capital allocation on the share repurchase part of the returning capital to shareholders.

Our next question comes from the line of Matthew O'Brien with Piper Sandler.

Maybe just a little bit more clarification from the last question. But just Liam, the OEM pressure, are you going to still feel that same $14 million-ish in the first half of next year? And then for UroLift, is it really still contained to just the physician's office? Or are you starting to see it spread into other areas of weakness, either hospital or ASC because at the physician's office business is pretty small at this point. And then I do have a follow-up.

Yes, Matt. So with regard to the OEM, as I said, of the $14 million, the majority of it is from vertical integration that candidly was a surprise. We've been making this particular business for a number of years, and we were not expecting it to be brought in-house by this customer who is a large customer of ours. That will continue through Q3 of next year. So that, unfortunately, will continue. The destocking, we'll monitor that closely with the inventory management of our customers, and we'll make a determination on that as we go through the year. With regards to your question, it's still the office side of service, Matt. The office side of service is incredibly challenged. Obviously, we're going into the final year of reimbursement in this year, and we'll be happy to see the end of those reimbursement changes. That will have another approximately 6% impact on the reimbursement rate for UroLift in 2025, and that will be the end of the downward trends in reimbursement in the office side of service. So hopefully, at the end of that, it will begin to show some signs of stabilization.

Got it. And then I don't want '25 guidance here. I guess I was hoping for some error bars about how to think about next year just because you've got this, it sounds like a $10 million OEM headwind, but then Barrigel's doing better and PICCs are doing great and other things are doing well. So I'm just curious if we can think about how all of those factors plus the MSA going away might influence what to think about for the underlying business next year with the top line growth going to be mid-single digits. And can you get operating margins back to where you saw those in 2021?

So Matt, obviously, this is the third quarter call. So we'll address the 2025 guidance when we get to our Q4 call, which is our next earnings call, obviously. So if you don't mind, I'll address that when we get to that earnings call.

Our next question comes from the line of Jayson Bedford with Raymond James.

Maybe just a couple here. There's been a few numbers thrown around on the OEM dynamic. Just, I guess what's the annual revenue level of the lost OEM customer? And I apologize if it's been mentioned.

No, that's okay, Jayson. So in the -- it's basically $14 million of an impact on our full year guidance with the majority of it coming from the vertical integration. So those -- that's the specific number. We had $7 million of it that we saw in Q3 with another $7 million to come in Q4, so a total of $14 million on the full year from OEM.

Okay. And just on the balloon pump dynamic, did you see any contribution in 3Q? And have your underlying assumptions that you kind of laid out on the second quarter call changed at all?

So our underlying assumptions have not changed. As investors will be aware, we have a competitor who has got a notice from the FDA, advising customers to move away from their pump and seek an alternative. Our quote volume continues to be strong in the U.S., and it is focused on the U.S. The only change since then has been that the CE mark suspension, further competitor has been extended to July of 2025. We do not anticipate a significant change in EMEA. We still believe that the majority of the upside will come in the Americas. So you should see an uptick in the Interventional Access growth rate in Q4 specifically associated with the volume of pumps that we anticipate in Q4, and nothing has changed to our expectations. We did not see an impact in Q3, also in line with our previous expectations on the balloon pumps, it is anticipated that it will hit in Q4.

Our next question comes from the line of Shagun Singh with RBC.

I guess a couple of follow-ups. On IABP, can you provide your updated thoughts on that opportunity in Q4? And then also maybe any puts and takes for 2025 and why you don't think Europe will provide any upside to that outlook even into next year?

So nothing has changed in our outlook from the Q2 call into Q4, Shagun. We anticipated on the Q2 call, we called up our revenue by approximately $15 million. And we said that a large proportion of that was down to the intra-aortic balloon pumps, so call it in excess of $10 million that will hit in the fourth quarter. As we go into 2025, we anticipate that the opportunity will continue to be with us through the first half of 2025 and nothing has changed in our assumption in that regard either. And obviously, as I said to Matt earlier, we'll get to guidance when we get to our Q4 earnings call and we'll outline what we anticipate the impact of the balloon pumps will be. We continue -- we don't expect much of an impact, as I said, already within Europe, and we continue to take share in -- we continue to take share in Asia Pacific.

Our next question comes from the line of Matt Taylor with Jefferies.

I did want to follow up on the balloon pump forecast. And just trying to understand how you're thinking about the different guideposts in terms of the order flow that you've seen already and just predicting how much upside you could get if things get extended, and your competitor, they continue to see challenges. So just a little more color on the orders that you've seen come through to date? And how you're thinking about predicting the upside next year depending on what happens there?

So as I said earlier, the orders that we see in the fourth quarter are in excess of $10 million. And also, as I said a little earlier, we still anticipate that the competitor will be out of the market through the first half of next year. Now the variable, Matt, is if they stay out of the market longer than that because that would represent a longer-term opportunity. So that's really the yard stick, and we'll assess that as we go through. So we anticipate that they will be out of the market until at least the first half of 2025 and we'll be executing against the opportunity. The order rates have continued -- pardon me, the quotation rates have continued strong right through Q3. Obviously, they peaked at the back end of Q2, but they have continued strong through Q3 and into Q4. So we would anticipate that at least through the first half of next year that this would be an opportunity for Teleflex.

Okay. And can I just ask on the impact from weather and the IV solutions. Can you talk about how much you've seen so far? Do you expect any spillover from IV Solutions beyond Q4? Or do you think that's just a short temporary impact?

So from what we're reading, we believe it's going to be a short-term temporary impact. And obviously, the hurricane is now -- has passed through and people are rebuilding down in Florida. So that was the impact in the Southeast. From the saline, we've seen an impact in particular in the Central and West regions. We do believe that it's going to normalize because we know that the supplier of saline is moving product in from Europe and from some of their plants in Asia Pacific. So the intel that we have is that we're beginning to see it get incrementally better already and that it should be much better as we go through the fourth quarter. Obviously, for urology procedures, in particular, UroLift procedures, you do use a lot of saline because you've got to fill the bladder, and that's a significant use of saline in -- when that procedure is getting done. And obviously, you flush it through in order to make sure that the procedure goes well. So that is our one procedure that is a heavy user of saline in the marketplace.

Our next question comes from the line of Larry Biegelsen with WF.

Tom, one financial question for you. How much do we -- how should we think about debt pay down and how much you could reduce interest expense next year? It seems like a good opportunity relative to the $78 million you're guiding to this year. And I have one follow-up.

Well, the way we're going to think about our free cash flow is to balance kind of investments in organic/inorganic along with the potential use of the remaining share repurchase authorization with debt payment. To the extent we've got surplus cash beyond opportunities to grow the business or potentially retire shares, we would then consider that as a use of cash to pay down our prepayable debt. So we're looking to really balance those 3 equations next year.

Got it. And then, Liam, I know the intraosseous product for you guys has been a pretty strong growth driver for you. Competitor announced approval of a new device yesterday. I know it's early, but I'm just curious to hear how you're thinking about the competitive dynamics in that space given that, that's a big important product for you guys.

Yes, Larry. Obviously, we're aware of the competitor dynamics within the marketplace. This competitor was in the market previously over 1.5 years ago and we were able to combat their efforts to move customers. The product has incredible loyalty in the marketplace. It is the first intraosseous device in the marketplace and has continued to perform very well for us. We haven't been idle, knowing that the competitors coming to the market, and we continue to innovate on our product. And just recently, we launched a disposable intraosseous product in a tray format for ease of use in order to continue to convert the hospital market in the United States, and that launch has gone very, very well. So we still think that we have significant differentiation out there, and we're monitoring the situation very closely.

Our next question comes from Anthony Petrone with Mizuho.

A couple on urology and then one on Asia Pacific. And maybe just an update on Palette and UroLift. I know those sales teams are now integrated, I think it actually -- the full integration goes through the end of 2024, and it feels like they're in a position now to be selling a bag. So maybe an update on the integration of Barrigel with UroLift. And are you seeing synergies on either one or both sides of that portfolio? And the announcement today on post-radical prostatectomy and maybe as we look ahead, what that opportunity means for Barrigel? And I have one on Asia Pacific.

Yes. Thanks, Anthony, for the question. So the integration of Palette is pretty much done. We've owned it now for almost a year, and we couldn't be happier with the performance of the product. As we announced today, we were in a position once again to call up our guidance for Palette. If you recall, we began the year expecting $66 million to $68 million, and now we're at a guidance range of $73 million to $75 million for Palette Life Sciences. And as investors know, the gross margins on Palette are actually better than the gross margins on UroLift. So the integration is pretty much done. We're a little bit of cross-training to finish out in the fourth quarter, but we anticipate getting that done. We didn't build in a halo effect for UroLift into our model actually when we acquired Palette Life Sciences. And the halo that we've seen has actually been to the Barrigel product on the Palette side because we now have more sales reps out there selling the product. So that has driven increased performance on the Palette side. And as I said earlier, when I was answering Matt's question, obviously, UroLift continues to be challenged in the office side of service. So post radical prostatectomy, which was the other part of your question, Anthony. So this is a significant opportunity for Teleflex and for the Palette portfolio. Anything from 10% to 50% of men that go through a radical prostatectomy, the cancer returns. So if you take the midpoint, around 30% of an additional market or about $100 million of a market opportunity. What is very intriguing to us about this opportunity is that Barrigel will be the only spacing technology that will be applicable in this area because of the compound of NASHA and how it works, other spacing technologies will not work in this particular application. So we feel that, that's encouraging. We've enrolled the first patient. It will take us about 1.5 years between enrolling all of the patients to writing up the study, to submitting it to the FDA, to get the expanded indication. And we're really looking forward to getting that indication and addressing that $100 million spacing market that patients today don't have access to spacing if you're going through radiation therapy post radical prostatectomy.

Our comes from the line of Richard Newitter with Truist Securities.

It's Ravi, in for Rich. So I have two questions, one on IABP, one on M&A. So I guess the first one, with the IABP, you have this $10 million line of sight in fourth quarter. Could you just help us think about what portion of that is capital versus consumable? And of that cohort, what kind of long tail do you see out of that on the consumable stream?

Yes, Ravi. So I will tell you that the vast majority of that is capital in the United States. The consumable will follow over a period of time. If you look at the overall markets, the global market for intra-aortic balloon pumps and catheters, it's approximately half and half. Half of the market is pumps and half of it is catheters, to answer the other part of your question as to what would follow. I think that as we look forward, the advantage of using the manufacturer's catheter with the manufacturer's pump is compelling. Most customers today in the United States, the majority of them will use fiber optic. If you use a Teleflex catheter with a Teleflex pump, you have that fiber optic capacity available to you. If you use a competing -- the competitor's catheter with our pump, you lose that fiber optic advantage. So we think it's compelling that customers will use our catheter with our pump.

Great. And presumably, given the way the FDA is kind of managing this, it seems like the tail on the consumables would be a little bit more pushed out? And then secondly, on the M&A. You talked about, I guess, non-EPS dilutive assets. Does that mean your tolerance for EPS dilution and M&A is a little bit lower now? It sounds like the market might be opening off and valuations might be picking up a little bit. It sounds a little bit different than what you said in the past. Do we look at the repo here as a boost earnings to absorb that kind of dilution or make it M&A a little bit more neutral?

So Ravi, I think the environment, I would push back a little bit with valuations going up. I think that what we're seeing in the marketplace is that valuations are finally modulating and have been doing for the last 6-plus months. It takes a while for the -- what's happening in the public markets to sink into the private markets. And secondly, I think with that change in valuation, obviously, with the improvement in interest rates, it's a lot more compelling to bring in an asset that is not EPS dilutive. Obviously, our criteria doesn't change. We're looking for assets that are accretive to our top line growth. And also, we're looking for assets that are at least equal to, if not accretive, to our gross margin and will continue to be accretive over time and we'll get to our op margin accretion in a reasonable amount of time. I think we're -- what I'm trying to say is that there are assets out there that are -- meet all those criteria and are also not EPS dilutive.

Our next question comes from the line of Dave Turkaly with Citizens JMP.

I just want to confirm, is the OEM business primarily in the Americas geographically?

Dave, yes, the vast majority of the revenues is within the Americas. That is correct.

And I wanted to ask one on MANTA. I was wondering if you could give us sort of an update on how that's doing, either like the growth rate and maybe what you're seeing in sort of the underlying procedures that's used for?

Yes. So on the procedures, so first of all, MANTA continues to penetrate the market. It's the only large foreclosure device out there in the marketplace that's a single-shot product. The procedures that it's used on is TAVR and EVAR. Over the past year, as we continue to penetrate TAVR, we actually have now focused on doing that same penetration within EVAR. And what we've noticed is that the EVAR side of the house isn't as price sensitive as the TAVR side of the equation. And therefore, our pricing in the EVAR market has been a lot more favorable. So we continue to penetrate, Dave, and the product is continuing to perform.

Our next question comes from the line of Craig Bijou with BofA.

I had one on IABP and then a follow-up on OEM. So Liam, the orders that you're seeing or what you are assuming for Q4, I'm just curious if you have visibility into whether those orders are a normal -- for a normal replacement cycle for the pumps? So have they reached their useful life or if you're actually seeing hospitals switch away from the competitor pumps?

Well, you have the normal recycled for our own pumps within the number, but we are also seeing a -- the uplift is really being driven. That's our normal run of the business, Craig, the conversion. But we are seeing accounts converting completely away from the competing product. I think that's your question, and we are seeing that.

Yes. I guess -- sorry, it wasn't clear. The question is more on your competitors' replacement cycle. So are you winning? Are the orders that are coming in that you -- the incremental revenue that you're expecting, is that coming from hospitals moving away from your competitor or just [indiscernible] natural replacement cycle?

That's fair, Craig. Sorry about that. So what we're seeing is both. We're seeing the replacement as pumps come up to be replaced. We're getting replacements. And then we're also seeing systems completely swap out pumps that, in some instances, are less than 2 years old.

Got it. That's helpful. And then just as a follow-up on OEM. I mean if you back out the $7 million that you talked about, I think growth this quarter would have been 9%. So when -- how should we think about the growth of that business? Is it high single digits? Is it slow or to mid-single digits? Just any way to think about the normal growth of that underlying OEM business.

Yes. So obviously, the integration is going to have an impact in 2025. The outlook for the OEM business is still very positive once you get beyond the Q3 next year and the vertical integration. The normal underlying growth of that business is in the mid- to high single digits. We've seen years where the team have executed well, and they've gotten into the double-digit growth in particular. When there was supply chain disruption, we have converted a number of accounts. We're really doing well in the microcatheter space, and we have capacity. So the good thing -- even with this vertical integration as we have capacity, we put extensions onto both of 2 plants. So the team is out there now chasing new orders, executing against those orders, doing R&D projects for some of our key customers in order to build up the order book as we head into 2025. So once you get through 2025, Craig, you'll see a normalized growth for the OEM business in '26 and beyond. And that normalized growth would be to the mid- to high single digits and in a good year to sneak into the low doubles.

Our next question comes from the line of Michael Polark with Wolfe Research.

Sorry, I will follow up on OEM. Can I better -- I'm hoping to better understand this in-sourcing decision by the customer. Do you work with this customer and other products? How big is this customer after this exit? And then this product that's being in-sourced, do you make this for other customers? And is there a reason why the customer is now moving to do this themselves? Is that a risk for this product category for other customers who you make this for? Sorry for the complicated question, but I want to understand a little bit better the why and what behind this surprise.

Yes, it's a fair question, Mike. This is a product, it's a significant component of a product that this customer sells as a branded product, and we've been making this for many, many years and it is the decision to in-source. And we only make it for this specific customer, to answer that part of your question. Second part of your question is why did they move it internally. Our assumption from the team is that they have an absorption issue in one of their plants and they're addressing it by moving this inside, and they have the capability within their plant for this particular product. Most of our products that we make are pretty complex microcatheters, pretty complex extrusions. This product was a little bit unique. It's not that complex, and therefore, the company felt that they could do themselves in-house.

Our next question comes from the line of Mike Matson with Needham.

Just one on Titan and bariatric surgery. So good to hear the product doing better, but what are you seeing with regard to bariatric surgery procedure volumes? Any signs of stabilization there? And I know it's been declining for a while. So do you think it -- just the procedures generally, sorry. Do you think that as we start to kind of lap those declines that maybe the market will start to level off?

So I think as you look forward, I think that the market will level off. What we see out there in the marketplace today is the rate of decline has slowed modestly, but they're still in decline. But candidly, Mike, it doesn't really matter for us. We're penetrating a $250 million market with a product that the clinical study today that we announced on the call demonstrates that is better. So we get people out of the hospital quicker. There's about a 25% delta for our patient group exiting the hospital after a day compared to the other technologies, and also the efficiency because it's a single line of staplers, it's much faster. So it reduces operating room time, and that's a key driver for hospitals to make decision as to which technology to use as you can appreciate. So we're -- I think it will stabilize, but it doesn't really matter to us whether it does or not, Titan grew strong double digits within the quarter and grew sequentially quarter-on-quarter. So that is encouraging. And it will be a growth driver for us through the next number of years.

Our next question comes from the line of Kristen Stewart with CL King.

I just wanted to focus in a little bit on the gross margin performance. I think your guidance for the full year implies gross margins up 100 to 150 basis points for the full year. I think the exit of MSAs was about 100 basis points. Just wanted to check the math on that. And then as we think ahead, are there any kind of puts and takes that we should think about in terms of gross margin performance for next year?

Well, sure. Well, to your point, we have raised our gross margin guidance to a range of 60.5% to 61%. The MSA going away did have an impact, and that impact will come to a close in the fourth quarter of this year as it will be in our run rate. So as we think about next year, what we're really looking to do is to continue to drive margin expansion through a combination of positive price through cost improvement programs. We still have savings from restructuring initiatives and using all of that to offset inflation. And we've been seeing inflation moderate from what it had been. It's still higher than what it was pre-COVID, but we're seeing that start to moderate. So we're going to get past some of the headwinds that we saw from this year on gross margin with the loss of Palette.

And then just thinking about the opportunity with the intra-aortic balloons. How should we think about that?

I'm sorry, just the loss of the MSA, I misspoke.

Sure. And then just thinking about the opportunity with intra-aortic balloon pumps and what we're likely to see in 2025. How should we think about you guys looking at that as kind of just flowing through to the bottom line? Or will you look to reinvest some of the upside opportunity there back into the business?

So as we look at it, as I said earlier, we're going to have -- the opportunity is going to be with us for at least the first half of 2025. There is a potential depending on what the outcome is from the FDA that it goes longer than that, but we'll assess that as we go through. With regard, we would like to see a good portion of it flow through to earnings. But we would also like to take some of it and invest it for growth into the future. And I think that's a balanced approach that we would try to take with that opportunity.

That concludes our Q&A session. I will now turn the call back over to Lawrence for closing remarks. Lawrence?

Thank you, Mark. Thank you to everyone that joined us on the call today. This concludes the Teleflex Inc. Third Quarter 2024 Earnings Conference Call.

That concludes today's call. Thank you all for joining. You may now disconnect.