エノビス（ENOV）2026年第3四半期決算説明会：利益ガイダンス引き上げと5%のオーガニック成長

エノビス（NYSE: ENOV）が発表した2026年第3四半期の売上高は5億5,900万ドルとなり、オーガニック成長率は5%だった。調整後EPSは17%増の0.88ドルとなった。マージンとキャッシュ創出力の改善を背景に通期の利益予想を引き上げ、新たに2億ドルの自社株買い枠を設定した。

主なポイント

• 第3四半期の売上高は報告ベースで前年同期比2%増、オーガニックベースで5%増となった。Dr. Comfort事業の売却により報告ベースの成長率が250ベーシスポイント押し下げられた一方、為替変動が30ベーシスポイントの逆風となった。
• Reconのオーガニック成長率は6%で、四肢が8%増、股関節・膝関節が5%増となった。P&Rはオーガニックで3%成長した。
• 調整後EBITDAマージンは120ベーシスポイント拡大して18.5%となり、調整後EPSは17%増の0.88ドルとなった。
• フリーキャッシュフローは当四半期に3,500万ドル、年初来で3,700万ドルに達し、前年同期比で5,000万ドル改善した。エノビスは2026年のフリーキャッシュフロー・コンバージョン率25%超という目標を維持した。
• 経営陣は通期の売上高予想を23億2,000万〜23億5,000万ドルに絞り込み、調整後EBITDA予想を4億2,800万〜4億3,800万ドルに、調整後EPS予想を3.58〜3.79ドルにそれぞれ引き上げた。
• エノビスはeCential Roboticsの買収が年末までに完了すると見込んでいる。経営陣は引き続き2年以内の膝関節ロボットの投入を目指しており、その後間もなく肩関節への展開も続く見通しだ。

主要財務データ

売上総利益率は、事業ミックス、業務生産性の向上、および800万ドルの関税還付の恩恵を受けた。これらの増益要因は、原材料のインフレ圧力や、中東紛争に伴う貨物輸送・物流コストの増加による約300万ドルの負担によって一部相殺された。

事業および業績動向

Recon

米国のReconはオーガニックベースで5%成長した。米国の四肢は5%増、米国の股関節・膝関節は3%増となった。

Nebulaは引き続き股関節製品の主要な成長要因となっており、当四半期に新規配置された器械セットの80%超が競合他社のユーザーに導入された。経営陣によると、Nebulaは現在エノビスで最も売れているステムであり、複数年にわたる製品サイクルの初期段階にある。同社は病院と外来手術センター（ASC）の双方で競争を継続した。

米国の膝関節手術では、初回手術の25%強が外来手術センターで実施された。股関節におけるその割合は約20%またはそれをわずかに上回り、肩関節では10%台後半だった。

肩関節製品の成長は、ARGおよびArvisの継続的な拡大が寄与した。エノビスは10月に欧州でArvisを用いた初の肩関節手術を実施した。経営陣は肩関節市場を健全な市場と位置付け、競争環境が激化する中でも同社は市場シェアを拡大し続けていると述べた。

海外Reconは、肩関節製品の2桁成長に牽引され、オーガニックベースで8%成長した。西欧の市場環境は依然として厳しい状況が続いたほか、中東紛争が海外部門の成長率を100ベーシスポイント、エノビス全体の成長率を約40ベーシスポイント押し下げた。

予防・回復（Prevention & Recovery）

P&Rのオーガニック成長率は3%で、米国では5%となった。グローバル装具事業は、製品ミックスや、脊椎、主要な膝関節、下肢装具の新製品に支えられ、3%成長した。

リカバリー・サイエンス事業は、エノビスがManafuseの市場投入を加速させ、競合からの切り替えを獲得したことで、Regenの2桁成長が寄与した。また経営陣は、NOPAIN法に関連する冷却療法の需要や、変形性関節症ポートフォリオの開発を米国における成長要因として挙げた。

海外のP&Rは、特にフランスとドイツで引き続き圧力を受けた。それにもかかわらず、経営陣はP&Rポートフォリオの半分以上が1桁台半ば以上のペースで成長していると述べた。

eCential Roboticsと資本配分

エノビスは計画中のeCential Robotics買収に向けた労使協議会との協議を完了し、年末までに買収が完了すると見込んでいる。膝関節および肩関節プログラムでの連携や、開発人材および技術への投資など、統合計画が進められている。

経営陣は、本買収によって純レバレッジが約0.5倍上昇すると予想している。同社は負債削減を引き続き最優先としながらも、レバレッジを2.5〜3.5倍の範囲内に維持する方針だ。

取締役会は新たに2億ドルの自社株買いプログラムを承認した。経営陣は、自社株買いはレバレッジ目標からの逸脱ではなく、好機を捉えた規律ある形で行われると述べた。

経営陣の業績予想

経営陣は、肩関節におけるArvis、Nebulaへの継続的な切り替え、およびP&Rの新製品に支えられ、第4四半期には両セグメントで緩やかな成長加速を見込んでいる。営業日数が1日多いことが、第4四半期の売上高成長率に約150ベーシスポイント、またはそれをわずかに上回る寄与をもたらすと予想される。

この見通しは、第3四半期の手術環境が典型的な第4四半期の季節性を伴いながら年末まで続くことを前提としている。また、第4四半期におけるイネーブリング技術の研究開発人材への400万ドルの追加投資や、100万ドルの為替マイナス影響も織り込まれている。

2027年について、経営陣は以前発表した50%以上のフリーキャッシュフロー・コンバージョン率と1億ドルのキャッシュ創出という見通しを改めて表明した。同社は2月に第4四半期および通期決算を発表する際に、より詳細な2027年の見通しを公表する予定である。

リスクと注視点

• 経営陣は、日程変更やキャンセル、患者の経済的負担への配慮などを理由に挙げ、米国および海外の手術市場は変動が激しく「不安定」であると説明した。
• 西欧の軟調さと中東紛争が、引き続き海外部門の成長と物流コストの重荷となった。
• 当四半期の足部・足関節製品の業績は予想を下回ったものの、経営陣は第4四半期初頭に回復したと報告した。
• 関税還付を除くと、売上総利益率は事業ミックスやインフレによるコスト増の圧力に直面した。
• 電話会見の時点ではeCentialの買収手続きは完了しておらず、同社のロボットプラットフォームに関する詳細な商業化計画も確定していなかった。
• 経営陣はeCentialの買収後に純レバレッジが上昇し、公表しているレバレッジ範囲内での資本配分の柔軟性が制約されると見込んでいる。

アナリスト質疑応答の要点

米国の股関節および膝関節の成長：経営陣は市場の変動性を認めつつも、エノビスは市場全体と比較して引き続き良好に推移していると述べた。同社は部位別のガイダンス提供は控えたものの、Nebula、製品群の拡充、イネーブリング技術がさらなるシェア獲得を支えると見込んでいる。

肩関節分野の競争環境：エノビスは、肩関節分野において世界第3位、米国以外の国際市場で第2位の地位を維持していると述べた。経営陣は、リマと既存のエノビスの統合ポートフォリオ、ARG、Arvisが、計画中の肩関節向けロボット投入までの継続的なシェア獲得を支えると見込んでいる。

フリーキャッシュフロー：経営陣は、2027年にフリーキャッシュフロー・コンバージョン率が少なくとも50%に上昇し、1億ドル以上のキャッシュを創出できるとの見通しを維持した。設備投資額はReconへの投資に伴い絶対額としては増加し続けるものの、売上高に対する比率は今後数年間で低下する見込みである。

リマの統合：エノビスは、2026年がリマの統合投資における最後の主要な年になると述べた。シナジー効果が売上総利益率の改善に寄与しているほか、欧州医療機器規則（MDR）関連費用の減少が前年比での追加的な好影響をもたらしている。

eCentialに対する顧客の反応：経営陣は、外科医や営業担当者から好意的な初期フィードバックを得ていると報告した。特に、病院と外来手術センターの双方で計画立案、ナビゲーション、ロボット支援を組み合わせたエコシステムが高く評価されている。

決算説明会トランスクリプト全文

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 morning, and welcome to the Enovis 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 Kyle Rose Rose, VP of Investor Relations. Please go ahead.

Kyle Rose

Good morning, everyone, and thank you for joining us today for our third quarter 2026 earnings conference call. I'm Kyle Rose, Vice President of Investor Relations. Joining me on the call this morning are Damien McDonald, Chief Executive Officer; and Ben Berry, our Chief Financial Officer.

Our earnings release was issued earlier this morning and is available in the Investors section of our website, enovis.com. We also posted a slide presentation to accompany today's call on our website. Both the audio and the slide presentation of this call will be archived on our website later today.

During this call, we'll be making some forward-looking statements about our beliefs and estimates regarding future events and results, including statements related to our pending acquisition of eCential Robotics. These forward-looking statements are subject to risks and uncertainties, including those set forth in the safe harbor language in today's earnings release and in our filings with the SEC. Actual results might differ materially from any forward-looking statements that we make today.

The forward-looking statements speak only as of today, and we do not assume any obligation or intend to update them, except as required by law. For further details regarding any non-GAAP financial measures referenced during this call, the accompanying reconciliation information can be found in our earnings press release and in the appendix of today's slide presentation.

With that, let me turn it over to Damien.

Damien McDonald

Thanks, Kyle. Good morning, everyone, and thank you for joining us today. I'll start with an overview of our third quarter results across Recon and P&R and give a short update on eCential Robotics. Ben will then walk through the financials and our outlook for the fourth quarter and the full year before we open the call for questions.

In the third quarter, we delivered organic growth of 5% with 6% organic growth in Recon and 3% in P&R. In U.S. Recon, we grew 5% organically with Extremities up 5% and Hips and Knees up 3%. In Extremities, we're now past the anniversary of the ARG launch, and ARG continues to be a strong growth opportunity for the future. As planned, Arvis is expanding in Shoulder, and we build upon the launch that began in Q2. Shoulder remains a healthy market, and it's where we have one of our leading share positions globally.

In Hips and Knees, Nebula continues to drive growth with over 80% of new instrumentation sets going to competitive users in the quarter. While we've now annualized the launch of the Nebula in the U.S., we remain in the early stages of a multiyear product cycle. I'm proud to note that it is now our top-selling stem, and we've got a long runway ahead of us. We're competing and winning in both hospital and ASC settings, and the ASC continues to be a good fit for our portfolio.

Internationally, Recon grew 8% organically. As we've noted the past several quarters, market dynamics in Western Europe remain challenging, and the conflict in the Middle East continues to weigh on growth. Despite these challenges, Shoulder grew double digits and led the international business. We continue to win competitive accounts outside the U.S., and I'm excited to announce we completed the first Arvis shoulder cases in Europe last month.

On eCential Robotics, we announced our binding offer to acquire the company on September 1. Since then, we have completed the Works Council consultation, and we expect the deal to close by the end of the year. Integration planning is well underway. Our Recon team is working with the eCential team in Grenoble on the knee and shoulder programs, and the time lines we laid out are unchanged. In fact, through our integration planning, we are making investments to secure the talent and technology required to accelerate our development upon deal close.

We expect to bring the knee robot to market within 2 years and shoulder to follow soon thereafter. Since the announcement, I've spent a lot of time discussing robots with surgeons. What I hear most is how much opportunity there is to develop innovative enabling technology and implant systems, which solve known problems and anticipate the evolution of surgical workflows and patient outcomes. This is an exciting inflection point for our Recon business, and we believe it will be a meaningful contributor to our sustained above-market growth.

Now moving to P&R, which grew 3% organically, including 5% organic growth in the U.S. Global Bracing grew 3%, driven by business mix and new products in spine, core knees and lower extremity bracing segments. Recovery Sciences was driven by double-digit growth in Regen as we accelerate the launch of Manafuse and capitalize on key competitive conversions.

Now I'll turn it over to Ben, who will walk through the financial details.

Phillip Berry

Thanks, Damien, and hello, everyone. We reported third quarter sales of $559 million, up 2% versus prior year on a reported basis and up 5% on an organic basis. Reported growth included a 30 basis point headwind from foreign currency and a 250 basis point headwind related to the divestiture of Dr. Comfort. As a reminder, Q3 is the last quarter in which the Dr. Comfort divestiture affects our year-over-year comparison.

Recon grew 6% organically with Extremities up 8% and up 5% in Hip and Knees. P&R grew 3% organically. The ongoing conflict in the Middle East was a 100 basis point headwind to international growth, which represents about 40 basis points to total Enovis growth in the quarter. We delivered adjusted gross margins of 60.9%, up 60 basis points, driven by mix and operational productivity. This includes $8 million of tariff refunds, offset by roughly $3 million of inflationary pressure from higher raw material and freight and distribution costs tied to the Middle East conflict. Our teams continue to work on mitigation actions to soften the overall impact of inflation in this dynamic market.

Adjusted EBITDA margin was 18.5%, up 120 basis points year-over-year. Our third quarter effective tax rate was 23%. Interest expense was $8 million for the quarter versus $9 million in the prior year. Overall, we posted adjusted earnings per share of $0.88, up 17% versus prior year. Free cash flow in the quarter was $35 million, bringing year-to-date free cash flow to $37 million, up $50 million versus the prior year. We remain confident in our 2026 target of greater than 25% free cash flow conversion.

I'm encouraged by the strong demonstrated progress we have made on cash generation, which now gives us more flexibility as we think about capital allocation in the future. We exited the quarter with net leverage of 2.9x, which is below the goal we set for the year. When the eCential transaction closes, leverage will step up about 0.5 turn.

While we remain committed to improving our balance sheet and paying down debt, we're also focused on continuing to make capital allocation decisions that we believe will drive long-term growth and shareholder value. To this end, today, we announced that our Board has authorized a new $200 million share repurchase program. We do not plan to materially waiver from our leverage commitments. However, we plan to use this opportunistically and stay within a range of 2.5 to 3.5x leverage. We see real value in our long-term growth strategy, and share repurchases are another tool we can utilize to create shareholder value.

Turning to full year guidance. We are narrowing our revenue range to $2.32 billion to $2.35 billion. We expect organic growth to be approximately 5%, and we are increasing our adjusted EBITDA range to $428 million to $438 million. We are also raising our adjusted earnings per share range to $3.58 to $3.79.

As we outlined last quarter, in Q4, we expect modest acceleration in both segments, driven by Arvis in Shoulder, continued Nebula conversions and new products in P&R. Our outlook assumes the procedural environment we saw in the third quarter holds through year-end with typical Q4 seasonality. On the profit side, our updated guidance assumes an incremental $4 million investment in enabling technology R&D talent and a $1 million negative impact from currency. We continue to expect free cash flow conversion of greater than 25% in 2026.

To summarize, the third quarter was in line with expectations we set in August in a market that remains dynamic. Cash generation continues to improve, and we are carrying new product momentum in both segments into the fourth quarter.

Now I'd like to turn it over to Kyle to start the Q&A. Kyle?

Kyle Rose

Thanks, Ben. [Operator Instructions]

With that, we would now like to open up the call to take your questions. Operator?

Operator

[Operator Instructions]

Our first question comes from Ryan Zimmerman of U.S. Bancorp BTIG.

質疑応答

Iseult McMahon

This is Izzy on for Ryan. I just wanted to start on the U.S. Recon business, specifically with Knees and Hips. It was a little bit softer than what we saw your growth for both Extremities and the international business. And we've heard some comments from your peers about softness in the large joint market. So I was curious what your take is on the outlook of the market and what will help get your knee and hip growth back in line or better with that.

Damien McDonald

Thanks for the question. Look, we've been saying since Q1 that the market is more volatile than we've normally seen both in the U.S. and internationally. I know there's a lot of soil about markets, even from those who have much larger perspectives than we do. But we're focused on controlling the controllables. It's a dynamic market environment. We think we're building a strong, resilient customer organization. So our focus is really on gaining market share and candidly, not being a victim to the market.

Iseult McMahon

Understood. That's helpful. And I understand that it's still a little bit on the early side, but I was hoping you could maybe provide some color on your thoughts around 2027.

Damien McDonald

Yes. With 2027, we're going to point everyone back to what we outlined in September when we did the eCential announcement. Our view hasn't changed since then, and we're going to comment fully in February when we do the Q4 full year results.

Operator

Our next question comes from Vijay Kumar of Evercore ISI.

Vijay Kumar

I guess my first one, when you look at this Recon assumptions getting back to high singles in Q4, is the bridge between [ CQ ] to Q4 just the comp from the headwinds? Could you also comment on what's happening within ASCs? What percentage of Recon procedures are being done in ASCs and what's the growth rate in been?

Phillip Berry

Vijay, thanks for the question. Yes, I think as you recall, we had an extra selling day in Q4. So that's going to contribute about 150 basis points, a little bit more than that to the top line growth. So that plus some of the dynamics that we talked about with just normal Q4 seasonality will drive some of the acceleration there.

In terms of ASC, we continue to see movement there. In terms of our knee business, I think what we're seeing is a little over 25% of primary knees going through the ASC. It's about 20% or a little bit more than that in hips, and we're climbing closer to that hip number and shoulder. We're still in, I'd say, the high teens in terms of percentage of our procedures going through the ASC. So we see the ASC as a continued strategic channel for us and one that we will continue to be focused on in terms of setting our business up for success.

Vijay Kumar

That's helpful. Then maybe one on free cash. Third quarter was pretty impressive, 68% free cash conversion. Is this a sustainable number for you guys when you think about fiscal '27? I know with the deal coming on, like the impact of free cash conversion or is a sustainable number?

Phillip Berry

Yes. Thanks, Vijay. Again, we'll point you back to what we talked about in September, where we see a step-up to at least 50% free cash flow conversion next year and $100 million of cash generation. So we still see line of sight to that. We'll try to do better than that. But overall, I'll point you back to that in terms of thinking about next year.

Operator

The next question comes from Jeff Johnson of Baird.

Jeffrey Johnson

Damien, maybe a follow-up on your comment about controlling the controllable. U.S. hip and knee growth was 3% this quarter. It does seem, as others have said that the U.S. market, especially for U.S. hips and knees, may have slowed a bit this quarter. Just are you seeing anything even if you can or can't control, I guess, surgical schedules, higher cancellation rates, extended willingness to pay co-pays, deductibles, things like that, so patients slowing down. Anything at all there?

And then I guess the corollary or follow-up on that is just that you talked about Nebula being one of the drivers of acceleration in 4Q. So if U.S. hip and knee was 3% this quarter, you pick up the extra day, that's 4.5% and then Nebula on top of that, should we see U.S. hip and knee growth above the mid-single digits next quarter?

Damien McDonald

So was there an option D there that was like all of the above? That's -- I'd point you to that. I think all of the things you mentioned, we're seeing all of that. It's pretty choppy. And we're, as I said, very focused on market share gain and using EGX to get after the targeting and segmenting account acquisition, account penetration, being very disciplined on price and, again, making sure we have the best sales force. So we're doing a lot on sales force training. So the way we're countering all of those things that you mentioned is by focusing on our performance.

Phillip Berry

Yes. In terms of hip and knee growth in the U.S., Jeff, we don't guide particularly on anatomy level growth given some of the dynamics in the market that Damien talked about. But we see momentum building there. We still see a large opportunity in U.S. hips and knees in terms of ability to take market share as we continue to reinforce the portfolio and build more strength there with enabling tech. So overall, I think the way you're thinking about it makes sense. But like I said, we don't guide for anatomy level.

Jeffrey Johnson

Yes, fair enough. And then just one follow-up. I think last quarter, that low single-digit U.S. shoulder number is what caught a lot of us off guard. I think you explained it well with some of your Arvis shoulder training during the period last quarter. So that all made sense, encouraging to see that shoulder number get back to high single digits in the U.S. this quarter. But just what can you talk about the competitive environment?

You do have a couple of your competitors out there with new shoulder systems, maybe even some robotic applications in shoulders, even though early stage there. Just how to think about the shoulder competitive environment and until you get the robotic option out in a couple of years on shoulder, can you sustain market, above-market growth? How are you thinking about that in the U.S.?

Phillip Berry

Yes. I mean I think it's definitely a competitive environment. We're pleased with our position in the market. We believe we're continuing to take share. We're the global #3 player in shoulder, #2 internationally, knocking on the door of being #2 globally. We really are encouraged by the portfolio that we've built in the shoulder in terms of the dynamics that we have in terms of products that can be used for different philosophies.

That continues to build with new product innovations, things like ARG that are complementing that overall portfolio. Putting the Lima and legacy Enovis portfolios together just adds strength, adds compatibility, gives more options. And what we're really seeing right now is really strong uptake and interest in the Arvis platform. And given where shoulders are in terms of the enabling tech curve, which still needs a lot of development in terms of use cases there, we feel like Arvis will continue to be a player here in terms of giving the surgeons enabling tech tools that really help aid them in a way that makes surgery more efficient in the shoulder.

So we're encouraged by the portfolio, the momentum, Arvis' contribution to that, and we would expect that to continue into the future.

Operator

Our next question comes from Robbie Marcus of JPMorgan.

Unknown Analyst

This is Lily on for Robbie. One on guidance, you beat EPS by about $0.11, but guidance by my math is moving up by [ $0.05 ] at the midpoint. So hoping you can unpack that a bit more. Why not flow through the full upside? And are there any incremental headwinds or expenses down the P&L we should be baking into the fourth quarter?

Phillip Berry

Lily, thanks for the question. As I mentioned in our prepared remarks, we're investing in enabling tech resources, particularly in R&D to really get ahead of bringing eCential into the family. We see lots of opportunities to really derisk that program and to add some strength with regards to talent within the organization. So that's about $4 million that we're going to make investments in Q4 to support that acquisition. On top of that, currency has moved in a negative way since last quarter. So that's going to hit us for about $1 million in Q4. So contemplating those 2 things is really the reason why we didn't flow everything through.

Unknown Analyst

Great. And then just a follow-up to that. You delivered pretty significant SG&A leverage this quarter with expense actually down a bit year-over-year. So what drove that? And was there anything onetime or timing that drove the greater-than-expected leverage in the third quarter?

Phillip Berry

Yes. Nothing I would point to as onetime. Overall, I think it's just phasing of expenses through the year. We generally invest a little bit heavier in the first part of the year. You have the softer Q3 with regards to international markets, and that generally reduces expenses in the quarter. So overall, nothing unexpected there, and it's just really phasing.

Operator

Our next question comes from Lawrence Biegelsen of Wells Fargo.

Ross Osborn

This is Ross Osborn for Larry. Starting off, I would be curious to hear where Lima stands. How much integration spending carries into '27? And how much of the 50 bps underlying EBITDA margin expansion comes from Lima synergies versus improvement elsewhere in the business?

Damien McDonald

The integration expense in the quarter?

Phillip Berry

So Lima integration expense? So yes, I think we continue to -- like we've laid out, this is the third year of integration on the Lima, where we're continuing to finish a lot of that journey with regards to the investments we needed to make to integrate that into the organization. So we're continuing to track to our stated plans there. This will be the last big meaningful year of investments in integration on Lima, and it's going very well in terms of the way that we laid out the plan in terms of executing against that plan. And a lot of what we're doing this year is cleaning up some things, moving some things from manufacturing to other locations. So that's all continuing to track.

In terms of the synergy value, yes, it continues to contribute to our mix and gross margins. We see that as an opportunity to continue to drive improvement there. And that is one of the key drivers as we lay out how do we drive our 50 basis points of improvement every year. So it's a contributor. It's not the contributor. But overall, I'd say it's tracking to what our expectations were.

Damien McDonald

I mean the other one that's stepping down a lot too is the EU MDR, right? So year-over-year, that's the other step down.

Ross Osborn

Okay. Great. And then on capital deployment and with your leverage within your comfort range and a new $200 million authorization program, is repurchasing shares now a near-term priority or more so optionality? And what capacity remains after eCential? And how do you rank buyback against that reduction in M&A?

Phillip Berry

Yes. Thanks, Ross. I mean we believe that the company's valuation is significantly below where our value lies. You look at where the stock has traded off quite considerably over the last 12 months. And it's dislocated given our performance and our outlook for the future. So what we wanted was flexibility to take advantage of this dislocation. And as we think about share buybacks, we're going to be very much opportunistic, disciplined and focused on how we do that. And it's really going to depend on if we feel like the shares are really dislocated from where they should be. And right now, the way the value that we're trading, we would say that we do see that. So we will use this as a capital allocation tool. But like I said, we'll be disciplined about how we deploy it.

Operator

Our next question comes from Young Li from Jefferies.

Young Li

I guess to start, just on eCential. So this deal hasn't closed yet, but what has been the early feedback on that from your customer base as well as from your reps? Are there any features that eCential offers that the customers or reps are more excited about?

Damien McDonald

I have to say we've had a great response from our customers, both on the knee side and the shoulder side. In fact, Ben and I just last night were with a group of physicians that we're very close to, and we had a long conversation about this. In both therapeutic areas, both anatomies, there's a lot of excitement about what we can bring to the table. And it's not just about the robot. It's -- we've always talked about enabling tech planning, navigation assistance. And we think the whole ability to bring an ecosystem to an offering for physicians is really key here and meeting the physician where they are.

So a lot of people work in large hospitals and then they also work in small ASC clinics and being able to give them an ecosystem that seamlessly moves between those venues, we view as exciting and so do they. The reps are just excited to be able to compete. In terms of a contractual basis, a lot of accounts require the assistance part of the equation. We've got that now coming into the bag, and I think they view that as a really great opportunity to compete. And candidly, a lot of shareholders also viewed it as that just being able to compete head-to-head and also shape the direction of where we're going in shoulder with a new form factor is exciting.

Phillip Berry

Yes. And I'll pile in there, Young. I think that we continue to be very impressed with the eCential team, their talent, their ability to collaborate, the speed in which they operate. So overall, we're really excited about this acquisition and what it's going to bring to Enovis in the future.

Young Li

Okay. Great. Really helpful. And then just one more just on the U.S. extremities side, shoulders leading the growth there. Can you talk a little bit more about what's going on in the U.S. foot and ankle side? That market is typically viewed as a little bit more deferrable kind of like knees. How is that business doing? Any changes in the macro or competitive dynamics you call out?

Phillip Berry

Yes. Thanks, Young. I think foot and ankle market is -- continues to be a little bit volatile quarter-over-quarter. I think underlying performance through the first 9 months, we're very pleased with the foot and ankle business. Portfolio continues to get stronger with some of the new innovations that we're launching. We've got some other things coming here later this year and into next year that we're really excited about. We still see this as a market that over time is going to grow into the high single-digit range, and we're really excited about the portfolio that we're putting together to continue to capitalize on that growth and take share.

So overall, I'd say in the quarter itself, it was a little bit softer than what we would have anticipated. Could that have been some deferrals? Maybe. If we look at where it was coming from certain product lines, it's nothing that we're concerned about, and we saw a nice rebound as we stepped into the first month in the fourth quarter there. So overall, I think foot and ankle continues to be a growth driver for us, and we're excited about the portfolio we're building.

Quarter-over-quarter, there could be things that pop up. But overall, if you look at it over the course of time, we expect this business to continue to grow high single-digit plus.

Operator

The next question comes from Caitlin Roberts of Canaccord.

Unknown Analyst

This is Michaela on for Caitlin. Just one from us today. We were just wondering if -- are you seeing any impact from recent competitive dynamics, including the new knee launch from one competitor and then the weakness another has called out in hips related to the lack of an impact?

Damien McDonald

Again, I think we've got a great knee portfolio, and we're continuing to take share with that, which is exciting. On the impactor side, we can definitely tell you that having an impactor and by the way, a triple-tapered collared stem with Nebula has really made a tremendous impact on our ability to take share and partner with new clinics. So definitively, an impactor is a key part of that equation.

Operator

Our next question comes from Vik Chopra of BMO.

Vikramjeet Chopra

I had 2, and apologies if these have been asked, I've been bouncing around. So you said that U.S. hips and knees grew 3% in the quarter. By our math, that's still ahead of the market. I'm just curious what you're seeing in underlying procedural volumes exiting the third quarter? And how much of that growth represents share gain versus the market? And I had a quick follow-up.

Phillip Berry

Yes. I think, Vik, the way that we see it is, yes, we continue to feel positive with regards to our U.S. hip and knee performance if you stack it up versus the overall market. We have seen some nice start to Q4 here. Again, it's still early in the quarter. So we'll have to see how that plays out. But overall, as Damien mentioned, we're excited about the portfolio we're building there, still see a large opportunity for us in growth in terms of our hips and knees, particularly in the U.S. market.

Vikramjeet Chopra

Great. You delivered about 5% organic growth in the third quarter. As we look into 2027, maybe just talk at a high level about the biggest drivers and potential offsets to sustaining that 5% or better organic growth.

Damien McDonald

Again, without commenting on '27, I think what gives us confidence about going into the new year in a choppy market, and there's been a lot of talk about that in various forums, we've continued to take share in global hip and knee, global shoulder. P&R is growing above the market. So I think our underlying performance and commercial execution is what gives us confidence about how we not only finish off the year, but where we're heading into next year.

Operator

Our next question comes from Steve Lichtman of William Blair.

Steven Lichtman

I wanted to ask on the P&R business. It's delivered a pretty steady 3% underlying growth here over the last few quarters. Can you give us your latest outlook on the market there and the state of your business overall? Just sort of how you're feeling overall about where your P&R business sits today?

Damien McDonald

Yes. We're really proud of how that business has shaped. We've talked about the portfolio now that more than 50% of it is growing mid-single digit or greater. I think the team is really executing in the U.S. really, as in my prepared remarks, Regen with Manafuse has done a great job of doing competitive conversions, and that's really leading the way. But broadly, we've got some great things going on and some tailwinds like the NOPAIN Act driving cold therapy and where we're going with the OA portfolio.

So I think in the U.S., we're seeing really solid above-market performance there. Internationally has been challenged. I mean we have a big presence in international. And we've talked about markets like France and Germany where -- by the way, we skew towards France and Germany for that portfolio being under pressure. But again, I think those teams are working hard to counter all of those changes and the dynamics in those markets. So overall, we're really, really pleased with how that group is going.

Steven Lichtman

Great. And then just a follow-up. Ben, you highlighted some of the drivers of free cash flow improvement. Sorry if I missed it, but one thing I'm not sure you mentioned was leverage on the CapEx side. It looks like that was down. Is that more of a timing thing? Or do you see that continuing to run lower year-over-year? And what might be driving that?

Phillip Berry

Yes. Thanks, Steve. I think if you look at how we deploy instruments in CapEx, it's generally first half weighted, so we can capitalize on those placements throughout the course of the year and as we build into next year. So I'd point it more towards the phasing of spend versus anything at this point. Overall, I'd say we see capital -- CapEx as a percentage of sales to tick down over the next couple of years, but it will continue to grow because of the investments that we're making on the Recon side of the business.

Operator

The next question comes from Mike Matson of Needham.

Joseph Conway

This is Joseph on for Mike. Maybe just a couple of product ones on P&R. It looks like maybe in the quarter, there was some SKU rationalization or discontinuing a product maybe in U.S. other P&R. So just wondering what that was and maybe the reasons for that? Is it a margin problem that was being addressed?

And then maybe just MotionMD, you guys called out penetration there in the slide deck. I saw on the website that you guys list some metrics there, including maybe 75 integration partners. I'm just wondering in terms of penetration, what's the ceiling there, if you can quantify it at all? And how is growth looks like in that product?

Phillip Berry

Yes. Thanks, Joseph. I think what you're referencing is the divestment of Dr. Comfort that we did last year. So this is the last quarter that that's in the comparable, but that is what's driving that down in terms of the rationalization, I believe.

Damien McDonald

And on MotionMD, we don't declare the metrics broadly. But I will say there's a number of things that are really important for us. We have a 99% customer satisfaction rating with the software and the service that's attached to that. And that provides enormous stickiness. Again, without declaring the the number of accounts that we service, it's a significant number and growing year-on-year. And we've got demonstrable ability to show how we can reduce inventory at the clinic level, how we increase the speed of processing of claims and the return of claims. So we're very, very proud of how that team works, and it's a real core competency and, I think, a differentiator in the P&R space.

Joseph Conway

Okay. Great. Yes. And then maybe just on the robotics launch. I guess my assumption for the launch in 2028 would be to target current customers that are already using ASTRA, Arvis and Portal. But maybe you can touch on that strategy, whether it's more broad-based or targeted. And just based on your initial conversations, you guys have a good idea, what's maybe your expectation of how many of those ASTRA customers would be interested in integrating robotics or maybe you feel comfortable with just the navigation and planning of Arvis and Portal?

Damien McDonald

Yes. That's a whole bunch of questions there, and we don't even own the company yet. So first, we're interested in getting to the close, which we think is on track to be done before year-end. Once we do that, we'll start talking about how we are going to frame this up, but I'm definitely not in a position to talk about strategy yet, but we certainly have some great ideas. And again, as I said earlier, the reaction to this from our key customers has been really very positive.

Phillip Berry

Yes. And I'll just weigh in there, too. I mean I think we see an ability here to create a seamless ecosystem between Arvis and the robot. And as we do that, we don't believe there's a one-size fits all. So we'll continue to try to leverage this to take as much market share as we can and to really drive penetration into the market as best we can. But I think it's still a little bit early in terms of our go-to-market approach. But overall, I think we're going to have some flexibility for customers and some really good products for them to leverage.

Operator

The next question comes from Nakul Desai of Freedom Capital Markets.

Nakul Desai

This is Nakul on for Keith. We have just one quick one. So if we exclude the tariff refund, gross margin was down approximately 80 basis points year-over-year. So can you give any color on what the drivers were there and how we should think about gross margin in 4Q and heading into 2027?

Phillip Berry

Yes. I think the way to really think about it, it's the mix of the business in the third quarter that was really driving that and some of the pressure points that we saw there. So overall, that's the key contributor. Not commenting on guidance in terms of that line for the fourth quarter. But overall, I think we still see gross margin as the company grows and as Recon becomes a bigger part of the portfolio, we see opportunities to expand gross margins year-over-year.

Operator

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Damien McDonald, CEO, for any closing remarks.

Damien McDonald

Thanks, Cindy, and thanks, everyone, for joining us today. The third quarter played out largely as we expected, and I want to thank our teams for delivering on our commitment and to take share regardless of the challenges posed by the dynamic and volatile markets we face. We appreciate all of you for your continued interest. Thanks for your support, and we look forward to updating you in the fourth quarter and our full year results in February. Thanks, everyone.

Operator

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