バイオベンタス（BVS）2026年第3四半期決算説明会：売上高ガイダンス引き下げも利益率は拡大

バイオベンタス（NASDAQ: BVS）が発表した2026年第3四半期決算は、疼痛治療領域および海外売上高の好調が骨移植代替材の不振で一部相殺されたものの、売上高は3%増加しました。成長施策への投資を増やしたにもかかわらず、収益性は向上しました。

主要ポイント

• 売上高は前年同期比3%増の1億4,200万ドルとなり、調整後EBITDAはほぼ200万ドル増の2,800万ドルに増加しました。
• 調整後EBITDAマージンは70ベーシスポイント拡大して20%となりました。調整後希薄化後EPSは13%増の0.17ドルとなりました。
• 疼痛治療領域の売上高は、ヒアルロン酸（HA）ポートフォリオと、多血小板血漿（PRP）および末梢神経刺激（PNS）の初期の好調に支えられ、6%増の7,100万ドルとなりました。
• 海外売上高は1,800万ドルと16%増加（固定為替レートベースでは18%増）しました。経営陣は第4四半期に20%を超える成長を見込んでいます。
• バイオベンタスは、主に骨移植代替材の業績不振を理由に、通期の売上高見通しを5億9,000万〜5億9,500万ドルに引き下げました。
• 営業キャッシュフローは2,100万ドルに達しました。同社はさらに1,900万ドルの負債を返済し、年初来のタームローン返済額は6,500万ドルに達し、純負債は2億ドルを下回りました。

主要財務実績

事業および業績の動向

疼痛治療領域の売上高は前年同期比6%増、年初来で9%増の7,100万ドルとなりました。当四半期はPRPの使い捨てキットによる売上高が機器配置による売上高を上回り、経営陣はこれをリピート需要を示す重要な指標と位置付けています。また、バイオベンタスはAPEX Biologixからスポーツ医学分野向けに同社のPRPソリューションを提供する独占権を取得しました。

PNSの展開は引き続き好調に推移しました。トライアルから永久植込みへの移行率は計画を上回り、トライアルから永久植込みまでの期間も短縮、トレーニングを受けた医師の数は前四半期比で50%以上増加しました。経営陣は、具体的な2027年の見通しは示さなかったものの、同事業は今後数年間で1億ドルを超える規模に拡大すると予想していると述べました。

外科ソリューションの売上高は1%増の5,100万ドルとなりました。超音波機器事業は、機器の配置、新規外科医による採用、使い捨て製品の販売数量増加に牽引され、2桁台の力強い伸びを示しました。経営陣はこの勢いが第4四半期まで続き、2027年のさらなる成長加速を支えると見込んでいます。

骨移植代替材（BGS）が引き続き主な下押し要因となりました。経営陣は、人工骨製品における競合状況、脊椎手術件数の鈍化、ならびに販売代理店の新規追加における一時的な遅れを不振の理由として挙げました。同社は第3四半期末に対策を講じ、10月の実績は予想を上回るペースで推移していると説明しました。

修復治療領域の売上高は、EXOGENの営業人員の欠員による販売数量減により、3%減の2,100万ドルとなりました。これらの欠員はその後補充されました。経営陣は、EXOGENの伸びが第4四半期に改善し、長期的には1桁台前半から中盤の成長ペースを維持すると見込んでいます。

海外売上高は、超音波機器およびHAの2桁台の力強い伸びに牽引され、16%増（固定為替レートベースでは18%増）の1,800万ドルとなりました。経営陣は、海外売上高が第4四半期に20%以上増加し、通期でも力強い2桁成長を達成すると見込んでいます。

経営陣の見通し

バイオベンタスは、4つの成長ドライバー（PNS、PRP、超音波機器、海外事業）に対する2026年の投資計画額を、1,300万ドルからほぼ1,500万ドルに引き上げました。投資の半数以上がPNSに割り当てられています。経営陣は2027年も投資を継続するものの、増加ペースは同水準にはならないとしています。

PRPおよびPNSの現在の寄与度は、目標としていた200ベーシスポイントの追加成長をわずかに下回っています。経営陣は、最終的な通期での寄与度は第4四半期の業績によって決定されると述べました。

リスクと注視すべきポイント

• BGSの業績は引き続き、人工骨市場における競合、脊椎手術件数の伸び悩み、販売代理店の本格稼働のタイミングによる影響を受けています。
• 通期の売上高見通しは中央値で約1,200万ドル下方修正されましたが、その減少分の半数以上は第3四半期の業績、主にBGSに起因するものです。
• EXOGENの第4四半期における回復は、最近補充された営業担当者の着任と生産性に一部依存しています。
• 疼痛治療領域は、前年同期にHAが14%〜15%成長したため、第4四半期の前年比較ハードルが高くなっています。
• 自発的な買収提案および複数の関心表明を受けて開始された戦略的検討は現在も進行中です。経営陣はスケジュールや追加の詳細について言及していません。

アナリスト質疑応答の要点

経営陣は、BGSの不振は主に人工骨製品に集中していたものの、手術件数の減少や代理店のタイミングがポートフォリオ全体に影響を与えたと説明しました。9月末に実施した施策は10月に良好な結果を示し始めています。同社は統合医療提供ネットワーク（IDN）戦略への確信を維持しており、大口顧客は臨床的価値および経済的価値に基づいて個別製品を評価する傾向を強めていると述べました。

超音波機器について、経営陣は新規外科医による採用、機器の追加配置、ならびに使い捨て製品の使用量の順調な拡大が組み合わさった成長であると説明しました。新規ユーザーの採用ペースは予定を上回っています。

コスト管理に関して、経営陣はBGSが他のいくつかの事業と比較して変動利益率が低いことを指摘しました。その結果、売上高の未達が利益に与える影響は比較的小さく、手数料やその他の変動費の減少がEBITDAマージンの拡大を損なうことなく投資拡大の原資となったと説明しました。

決算説明会文字起こし全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good afternoon, and welcome to the Bioventus Third Quarter 2026 Earnings Conference Call.

[Operator Instructions]

Please note, this event is being recorded.

I would now like to turn the conference over to Dave Crawford, Vice President, Investor Relations and Treasurer. Please go ahead.

David Crawford

Thanks, Drew, and good afternoon, everyone, and thanks for joining us. It is my pleasure to welcome you to the Bioventus 2026 third quarter earnings conference call. With me this afternoon are Rob Claypoole, President and CEO; and Mark Singleton, Senior Vice President and CFO. Rob will provide an update on our 2026 priorities and the third quarter highlights, and then Mark will review the third quarter results and discuss the update to our 2026 financial guidance. We will finish the call with Q&A. A presentation for today's call is available on the Investors section of our website, bioventus.com.

Before we begin, I would like to remind everyone that our remarks today contain forward-looking statements that are based on the current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including Item 1A, Risk Factors, of the company's Form 10-K for the year ended December 31, 2025. Such factors may be updated from time to time in the company's other filings made with the Securities and Exchange Commission. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made.

Although the company may voluntarily do so from time to time, it undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable securities laws. This call will also include references to certain financial measures that are not calculated in accordance with U.S. Generally Accepted Accounting Principles, or GAAP. We generally refer to these as non-GAAP or adjusted financial measures. Important disclosures about and definitions and reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the Investors section of our website, bioventus.com.

Now, I will turn the call over to Rob.

Robert Claypoole

Thank you, Dave. Good afternoon, everyone, and thanks for joining our call today. Bioventus continued to build on its positive momentum in the third quarter, delivering a solid financial performance and encouraging leading indicators across our growth drivers. These results reinforce our conviction and our ability to create sustainable long-term value for shareholders. Before going through the details on the third quarter, I will take a moment to provide a brief update on the strategic review we disclosed on our Q2 earnings call. With the assistance of our advisers, we continue to evaluate a range of strategic options for the company. As you may recall, this review was prompted by an unsolicited acquisition proposal and multiple expressions of interest. The process is ongoing, and we will continue to take the time necessary to fully assess all options and determine the best path forward for our shareholders.

We are not able to provide further details at this time and will not be answering any questions regarding the strategic review. Turning to the third quarter, I will update you on the three priorities we outlined at the start of the year. One, accelerating long-term revenue growth with increased investment in the four growth drivers: peripheral nerve stimulation, platelet-rich plasma, Ultrasonics, and our international business. Two, increasing earnings even with a higher level of investment in these four growth drivers. And three, continuing to strengthen cash flow and enhance capital allocation optionality. Let me expand on each priority, starting with accelerating long-term revenue growth. Overall, third quarter revenue grew 3%, led by strong growth of 6% in Pain Treatments. This performance was partially offset by softness in bone graft substitutes within Surgical Solutions, which continued to face near-term headwinds.

Excluding BGS, revenue growth for the rest of the business was 6% for the quarter, reflecting strong underlying momentum within each of the growth drivers. Let me highlight a few examples of the progress we are achieving with the growth drivers, starting with platelet-rich plasma, where momentum continues to build with sequential growth in the number of capital placements. Even more encouraging is the meaningful ramp-up in disposable reorders. During the third quarter, revenue from PRP disposable kits exceeded revenue from capital placements, which is an important indicator of future growth. We are pleased to see the growing adoption of our customizable solution and its potential to displace competitive offerings. In addition, we recently secured exclusive rights from our PRP partner, APEX Biologix, to offer our solution in sports medicine accounts.

This agreement broadens the addressable market and creates an additional avenue for growth as we continue to build commercial momentum. Next, our PNS business continues to gain traction, strengthening our confidence in both the market opportunity and the vast potential for our product offering. Physician feedback is very encouraging as clinicians gain more experience with TalisMann, providing further validation of our differentiated technology and launch strategy. Key performance indicators reinforce this progress. Trial to permanent conversion rates are exceeding plan, the time from trial to permanent implant placement has shortened, and the number of physicians trained grew by more than 50% quarter-over-quarter. Collectively, these trends point to growing physician engagement and improving conversion efficiency, key drivers for continued revenue growth acceleration.

We've also strengthened PNS leadership and commercial capabilities by hiring a best-in-class marketing leader, expanding our commercial infrastructure, equipping the team with more effective competitive selling and targeting tools, and increasing our presence at key medical congresses and industry meetings. Learnings in the initial launch phase, combined with these investments, position us to accelerate market adoption and capitalize on this significant growth opportunity. Turning to Ultrasonics, we saw very strong double-digit revenue growth this quarter. Investments in marketing and surgeon training are driving increased surgeon adoption, accelerated disposables growth, and new account wins. We expect this momentum to continue into the fourth quarter, paving the way for further growth acceleration in 2027. Finally, international revenue accelerated 16% in Q3, as we begin to see the impact from talent additions and the team's successful focus on select markets.

We are encouraged by the speed of execution, the depth of the opportunity pipeline, and our customer win rates. We expect to deliver strong double-digit growth in the fourth quarter and for the full year. Turning to our second priority, increasing earnings even as we invest in future growth drivers. The third quarter again demonstrated the underlying earnings power and resilience of Bioventus' business. Despite increased investment in growth initiatives, we delivered an adjusted EBITDA margin of 20%, an improvement of 70 basis points compared to the prior year period. Looking ahead, we now expect full-year adjusted EBITDA margin to be above the prior year level, reflecting our ability to balance strategic investment with operating discipline. With strong operating performance and significant interest expense savings, we delivered adjusted EPS of $0.17 in the quarter, which advanced 13% versus the prior year.

On a year-to-date basis, adjusted EPS has increased by 18%, underscoring our continued ability to grow earnings while investing in the opportunities that will drive long-term value for shareholders. As we close out the year, we expect to see sequential acceleration in revenue growth and earnings while continuing to increase our investments to drive growth and deliver on the full-year adjusted EPS guidance we provided at the beginning of the year. This reflects the strength of our business model, supported by the earnings power generated from solid revenue growth, our stable peer-leading gross margin, and the disciplined focus on operating expense management. Turning to our third priority, accelerated cash flow, we delivered another strong quarter with cash from operations of $21 million. This strong cash generation funded the repayment of an additional $19 million of our term loan, bringing year-to-date term loan repayments to $65 million.

This enabled us to achieve an important financial milestone of lowering net debt at the end of the quarter to below $200 million. Overall, we continue to execute on our strategic priorities, driving increased conviction in our strategy and growing confidence in the strength of the portfolio and investment approach as we build Bioventus into a leading $1 billion medtech company that delivers exceptional value for customers, employees, shareholders, and all other stakeholders.

Now I'll turn the call over to Mark to walk through the quarter results in more detail.

Mark Singleton

Thank you, Rob, and good afternoon, everyone. Let me start by saying I am excited about our ability to continue to increase profitability and deliver strong cash flow as we continue to invest in our future growth drivers. Turning to headline results for the third quarter, revenue of $142 million increased 3% compared to the prior year period. Growth was driven by strength in Pain Treatments, along with strong performance in other areas of the portfolio, which was partially offset by a slowdown in BGS within Surgical Solutions. Adjusted EBITDA of $28 million increased nearly $2 million compared to the prior year period and grew faster than revenue growth. Additionally, adjusted EBITDA margin of 20% expanded 70 basis points compared to the third quarter last year.

Adjusted earnings were $0.17 per diluted share for the quarter, up 13% compared to $0.15 in the prior year period. Now let me provide some additional commentary on the quarterly revenue. In global Pain Treatments, we delivered strong growth with revenue of $71 million, representing a 6% increase compared to the prior year. Pain Treatments is up 9% year-to-date, reflecting the strength of our broad HA portfolio, the differentiation of DUROLANE, and the strong early traction we are seeing with PRP and PNS. Moving to Surgical Solutions, revenue in Q3 totaled $51 million, which was an increase of 1% compared to the prior year. In Ultrasonics, we delivered strong double-digit growth with continued progress in capital placements and continued acceleration in disposable volume as we drive new surgeon adoption.

As Rob mentioned, the momentum with our strong underlying fundamentals support very strong growth for the fourth quarter and into 2027. As it relates to BGS, revenue came in lower than expected, as strong volume from new large IDN accounts was offset by modest softness in spine procedures, temporary delays in adding new distributors, and some competitive dynamics in the synthetic market. We implemented changes late in the third quarter and are seeing positive trends to start the fourth quarter. We continue to believe that these factors are transitory, and we continue to have strong conviction in our IDN strategy, the clinical and economic value proposition, and the long-term opportunity for this business. In Restorative Therapies, revenue of $21 million declined 3%. The quarter's results were driven by an impact to volume due to higher vacancies in the EXOGEN sales force that have since been filled.

Finally, international revenue of $18 million grew 16% compared to the prior year period, or 18% on a constant currency basis, primarily due to the strong double-digit growth in the Ultrasonics and HA businesses. Our growth outlook for international continues to be very strong, and we expect to generate more than 20% growth in the fourth quarter and continued excellent growth in 2027. Moving down the income statement, adjusted gross margin of 75% was slightly lower than the prior year period, primarily due to product mix. With respect to operating expenses, we remained disciplined with our spending while appropriately investing in our growth drivers and achieved adjusted EBITDA margin of 20% in the quarter. Turning to the balance sheet and cash flow statement, we continue to generate strong cash flow.

Cash flow from operations totaled $21 million during the quarter, and we ended the period with $31 million of cash on hand and $230 million of outstanding debt. During the quarter, we reduced debt by an additional $19 million, bringing the total debt repayment for the year to $65 million. We continue to expect our net leverage ratio to be below 1.5x by the end of this year. This stronger financial position is expected to drive further interest expense savings while enhancing our ability to strategically deploy capital towards the highest value opportunities. As a result of strong earnings and outlook for the business, we are reaffirming our full-year adjusted earnings per share guidance of $0.75 to $0.79 per diluted share.

We are adjusting our previously provided cash from operations guidance of $84 million to $89 million and presenting adjusted cash from operations in the same range, which excludes the cash flow impact of the company's review of potential strategic alternatives. With lower revenue expectations, primarily in BGS, we now expect 2026 revenue of $590 million to $595 million. This guidance reflects the expectations of mid-single-digit revenue growth in Q4 and sequential acceleration. In closing, we delivered a strong performance across key strategic segments of the business. The successful investments in our growth drivers, disciplined execution, enhanced profitability, and strong cash flow position us very well to increase our momentum and build a leading medtech company that creates meaningful long-term value for our shareholders.

Operator, please open the line for questions.

Operator

[Operator Instructions] The first question comes from Caitlin Roberts with Canaccord Genuity. Please go ahead.

質疑応答

Caitlin Cronin

Maybe just to start on BGS, would love a little bit more color on the headwinds that you noted. And just with the spine market softness you called out, any concerns that, that could potentially impact Ultrasonics going forward?

Robert Claypoole

Yes, thanks, Caitlin. This is Rob. There were two primary drivers behind the Q3 BGS performance, both of which we view as transitory. First was we addressed some of the competitive dynamics in the synthetic market late in Q3 and already seeing positive results there with October tracking ahead. Second is that what you mentioned and what Mark Singleton mentioned, that slowdown in spine procedural volume and the number of new distributors we added, which are now ramping back up. I think really important to note there that we are already seeing positive results with October after the actions we took and ahead of our expectations. Just long term, very excited about our IDN strategy in this space, which is gaining significant momentum. As it relates to the procedures, it does not really impact from an Ultrasonics standpoint.

Keep in mind, we have relatively small business there, large market. We are changing the standard of care in that space, and so our strong volume was able to overcome anything that may have been happening from a procedural standpoint in that space.

Caitlin Cronin

Understood. Just turning to EXOGEN, expectations for the recovery here with the positions filled that you noted, and how much of that potential recovery is built into the revised revenue expectations?

Robert Claypoole

Yes. Well, for EXOGEN overall, we are making really good progress in refining commercial data analytics and targeting. We talked a little bit about that last time, and our messaging to help the team continue to get more efficient and effective in growing the business. Overall, this year, we expect the growth to be low single digits, which, for your comment, is towards the lower end of the range that we targeted for the year. That is factored into Q4 as well. But going forward, we expect this business to grow in the low single digit to mid-single digit range, consistent with what we have mentioned in the past.

Operator

The next question comes from Larry Solow with CJS Securities. Please go ahead.

Lawrence Solow

Could you maybe just give us a little more color, just on the granularity on the guidance, revised revenue guidance, like $12.5 million at the midpoint? Is that all BGS, or are we hitting that kind of 2% bar you set for PRP and PNS? I know you didn't give numbers there, but has anything else changed across the P&L in terms of the top line?

Robert Claypoole

Yes, Larry, this is Rob. I will start. We are lowering the full-year guidance by, as you mentioned, by approximately $12 million at the midpoint of the guidance range. Again, more than half of that is from Q3, and that was primarily driven by BGS, as mentioned. For Q4, the remainder of the reduction is due to BGS and the timing and contribution of new reps that we are onboarding. All that said, we expect a sequential acceleration in Q4 to mid-single-digit growth, and pleased to say that we are already seeing positive traction there with the first month of the quarter.

Lawrence Solow

Okay. On the BGS, the competitive dynamics, is that pricing, I am taking it? Was that kind of the, if you had to kind of bucket those three things, is there, they kind of split evenly, or is one heavier than the other? I mean, I know you have been walking away from some business, is that discretionarily? Is that continuing still, or on at least, at some point, I mean, in some respects?

Robert Claypoole

Yes. In the third quarter, really due to the two factors that we mentioned, the competitive dynamics in the synthetic space, again, already seeing positive results after taking the actions late in the quarter. Second, that slowdown in procedural volume with the number of new distributors that we added, which are now ramping back up. Those are the two primary causes for Q3, spread across the two of them. Again, just cannot emphasize enough that we are already seeing positive results in October. We do not usually talk about the current quarter in a call, but think it is important here to mention that seeing positive results with October ahead of our expectations. Longer term, again, just excited. We're gaining a lot of momentum with the IDN strategy that we've talked about before, already seeing some nice gains there, and expect that to contribute going forward.

Operator

The next question comes from Chase Knickerbocker with Craig-Hallum. Please go ahead.

Chase Knickerbocker

Sorry for another one on BGS here, but could you maybe just, with a little bit more detail, was the weakness isolated to SIGNAFUSE specifically? Maybe just talk about how OSTEOAMP performed in the quarter, kind of relative to SIGNAFUSE. Thanks.

Robert Claypoole

Yes, Chase. Primarily, we saw the impact in the quarter to the synthetic space. Again, that is because of some of the competitive dynamics, et cetera. When we mention the second reason of the slowdown in procedural volume and the number of new distributors added, obviously, that is across the portfolio, just not in the synthetic space. The good news, again, I will repeat a little bit here, but we took the actions at the end of September, and we are already seeing really positive traction there with October tracking ahead. I think that just underscores for us that we identified the right areas to focus on, took the actions early in the fourth quarter, but we are seeing an impact from the actions that we took.

Chase Knickerbocker

If we just think about kind of what the right expectations by segment are in Q4, you kind of talked about the changes to guidance, but maybe just a little bit more specifically on how quickly you think that could bounce back from those two, specifically to surgical, from those two specific headwinds. The second piece, we have heard from some competitors that seemingly some larger customers are more willing to separate out biologics RFPs. Can you just speak to what you are seeing from a customer perspective? Are you getting more kind of inbounds on participating in those RFP processes specifically for biologics?

Mark Singleton

Chase, this is Mark. I will start with just kind of going through the revenue when you look at it from the third quarter to fourth quarter sequentially. Overall, Restorative Therapies or EXOGEN, we would expect that growth rate to improve a little bit into 4Q. Again, we have the vacancies in 3Q. We have those filled, obviously have to get them on board, but from a growth perspective, we actually expect it to improve, even though that is part of the guidance reduction. From a pain perspective, great growth in 3Q as we talked about.

We look into Q4, we will see a slightly lower growth rate, not much, but really you have to remember, when we look into last year, our growth rate was 14% and 15% overall for HA, so it was a strong quarter in Pain Treatments last year that we are comparing to, but still feel really good about the growth drivers and about our HA business within Pain Treatments. From a surgical perspective, Ultrasonics again had a really strong quarter with double-digit growth. Obviously, we talked about the struggles that we have had with BGS, and we look into fourth quarter, as we talked about, BGS will be lower than our original expectations from a guidance perspective, but we do expect the growth to accelerate into fourth quarter.

That is kind of walking through that, and as Rob also pointed out, we are seeing some early signs of traction and improvement in fourth quarter in BGS. From a biologic RFPs, I am going to let Rob take that one.

Robert Claypoole

Yes. So Chase, on that, with the RFPs, the RFQs with the large accounts, particularly with the IDNs, they are putting out new requests for proposals with set formularies, and we are seeing that across the portfolio. What I think is most important there is that they are basing the decision-making on the clinical and economic value of each of the individual products. So, we like that they are getting their hands around it, and we like that they are basing it on that combination of clinical and economic value, and I think that is why we are seeing a lot of traction there, is because of our strong combination of clinical and economic value. So, really support what is happening there, and we are gaining traction and already seeing a nice contribution to our growth within that space from the activity with those large accounts.

Chase Knickerbocker

Got it. Maybe just last from me, it is a little bit tough for us sometimes to get a sense for kind of some of the specifics around PNS, just with it being in Pain Treatments. Can you maybe just give us a sense for your expectations for kind of growth contribution from PNS next year? Thank you.

Robert Claypoole

Yes, Chase. As it relates to specifics for 2027, I'm not going to obviously give any formal guidance or get too specific there, but I will give you some context on PNS. I mean, again, really excited about what we saw in Q3, which included the expansion of the team, new customers, new trials, which led to new implants, and just very positive feedback about both our trial device and the power of our permanent implant, TalisMann. As we alluded to, the leading indicators that we have are getting more and more defined, and they're tracking ahead of our launch plan, and we're just learning a lot about how to maximize our success with this business over the coming years. I'll tell you, that's what this year is all about.

We're investing in and activating our growth drivers while also very diligently analyzing our performance to shape the future decisions and investments to maximize our success. Hey, I fully expect the learnings, investments, revenue growth to keep ramping strongly, not just in Q4, but for your question, throughout 2027 and the future years. While I won't get specific on '27, we fully expect to scale this business to over $100 million in the coming years.

Operator

The next question comes from Mike Petusky with Barrington Research. Please go ahead.

Michael Petusky

I was wondering, the $13 million in incremental investment you guys sort of charted the course for at the beginning of the year, how far into that are you, and are you going to end up sort of investing that incremental $13 million, or is it going to come in less, or can you just speak to where you are on that? Thanks.

Robert Claypoole

Sure, Yes. Great question, Mike. We've accelerated our investments actually beyond the $13 million to almost $15 million, so a couple million more this year, and similar to what we've conveyed in the past, more than half of that's going to PNS, given the tremendous opportunity there and our build-out of the business. But really across all of them, we're investing in an exciting range of commercial activities and gathering a lot of data-backed insights on just how to best unlock the full potential of the growth drivers. I'd say in general, the fact that we're accelerating the investments beyond the $13 million to $15 million in the back half here just demonstrates how much we're learning and the insights we're gaining, and how confident we are in increasing our investment given in certain areas because of the positive traction that we're seeing.

And again, as it relates back to our earnings, it's nice to be able to drive up our investment like this and still deliver strong earnings for the quarter, and we expect to continue those investments going here through the fourth quarter, and not at the same rate in 2027, but of course, we'll be investing in those growth drivers in 2027 as well.

Michael Petusky

Sure. Appreciate all the data points you gave around PRP and PNS. Just curious, though, Rob, are you guys affirming sort of the 2% lift that you were expecting at the beginning of the year on those two, or are you essentially saying that there may be some timing that maybe 2% incremental associated with those two initiatives may not come in?

Robert Claypoole

Yes. As you alluded to there, really exciting traction with both. Currently tracking a little shy of the 200 basis points, but we will see what we can do in Q4. I would say either way, I couldn't be more excited about progress that we are making with both of them and the potential to enhance our overall growth profile, not just with those two, but all of our key growth drivers. We will let you know where we land after the year.

Michael Petusky

Okay. One more quick one, and then I will get off. In terms of the Ultrasonics momentum, is it primarily getting deeper in with docs in terms of just driving better utilization with sort of the guys you have relationships with, or are you really expanding the footprint of docs that are utilizing your Ultrasonics? Thanks.

Robert Claypoole

Yes, Mike. Really all of the above. The investments are working. They are having a clear impact. The team is doing an excellent job. Just to address a couple of points, we are ahead of schedule on new users or surgeon adoption, which is a really important leading indicator for us. We are also expanding our capital placements. Then, perhaps most importantly, we are seeing very positive continuous sequential growth trends in disposables. That is what really fueled the double-digit growth in Q3, is that combination. We look at this business, and we are in the early innings with activating the real potential of Ultrasonics, and just really looking forward to the path forward with this business.

Operator

We have a follow-up from Larry Solow with CJS Securities. Please go ahead.

Lawrence Solow

Great. I appreciate the extra time. Just on the I am curious, as Mike alluded to, you said the investments expense is actually spending up a couple million or up a couple million run rate. Where have you been able to cut the costs on that SG&A line, or at least keep SG&A relatively flat, I guess, year-over-year on an adjusted basis if we take out the you had a $3.5 million strategic alternatives expense that you took out there. On an adjusted basis, if it is keeping it flat on similar revenue year-over-year, it is continuing to invest, if you could just give us a little more color on where you have been able to take some costs out of the P&L.

Mark Singleton

Yes, Larry, this is Mark. Thanks for the question. First, we talked about our largest shortfall in revenue in 3Q and for guidance from a BGS perspective. That business is our lowest variable margin business compared to other businesses that have very lucrative variable margins. So, when we miss on that, the profit that we lose isn't as material as it would be in some of the other businesses. I also think this is a testament to the powerful P&L that we do have when we're driving above-market growth, and the gross margins that we have really gives us the control over P&L. We have the commissions come out for BGS, but then there's other levers that we have from a variable spending perspective that come out as well.

I think we've done a good job as a team over the last few years of really demonstrating the discipline and management of all of our costs. Most importantly, as Rob talked about in one of the earlier questions, amongst that, prioritizing our spending and still being able to make significant investments into the business that allows us to continue the momentum and the fuel that we're putting into these growth drivers of starting out the year of investing $13 million, it's up to $15 million. So really, overall, just the power of the P&L, the fact that we missed in our least lowest variable margin business is really the dynamics that's going on in the P&L, but it really just speaks to the strength of the powerful P&L that we do have.

Lawrence Solow

I appreciate that. That makes a lot of sense. If I could squeeze one more in. I know you don't want to answer any questions on this strategic process, but thoughts just from a rough timeline, approximate basis, would you like to optimally like to have something done by year end? Is that maybe a soft goal, soft target, if you will? Is there any, just any color on potential timing would be great if you can offer anything. Thanks.

Robert Claypoole

Yes, Larry. As noted in the prepared remarks, the strategic review remains ongoing, and really not able to comment further at this time about any of the details. So, thanks for that.

Lawrence Solow

I appreciate that. I figured I would try.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Rob Claypoole for any closing remarks.

Robert Claypoole

Yes. Thanks, everyone. We delivered another strong quarter and are excited about the underlying momentum across our growth drivers. We're confident in our ability to deliver above-market revenue growth, increase earnings, and accelerate cash flow to create significant shareholder value.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.