바이오벤투스(BVS) 2026년 3분기 실적 컨퍼런스 콜: 매출 가이던스 하향 속 마진 확대

바이오벤투스(Bioventus, NASDAQ: BVS)가 2026년 3분기 매출액이 3% 증가했다고 발표했다. 통증 치료 부문과 해외 매출 호조가 골이식재 부진을 일부 상쇄한 가운데, 회사의 성장 이니셔티브에 대한 투자가 확대되었음에도 수익성은 개선되었다.

핵심 요약

• 매출액은 전년 동기 대비 3% 증가한 1억 4,200만 달러를 기록했으며, 조정 EBITDA는 약 200만 달러 증가한 2,800만 달러를 기록했다.
• 조정 EBITDA 마진은 70bp 확대된 20%를 기록했다. 조정 희석 EPS는 13% 증가한 0.17달러를 기록했다.
• 통증 치료 매출은 HA 포트폴리오와 자가혈소판 풍부 혈장(PRP) 및 말초신경자극술(PNS)의 초기 성과에 힘입어 6% 증가한 7,100만 달러를 기록했다.
• 해외 매출은 16%(고정환율 기준 18%) 증가한 1,800만 달러를 기록했다. 경영진은 4분기에 20% 이상의 성장을 전망하고 있다.
• 바이오벤투스는 주로 골이식재 부진으로 인해 연간 매출 가이던스를 5억 9,000만~5억 9,500만 달러로 하향 조정했다.
• 영업활동 현금흐름은 2,100만 달러에 달했다. 회사는 1,900만 달러의 부채를 추가 상환하여 연초 대비 기간제 대출 상환액은 6,500만 달러에 이르렀으며, 순부채는 2억 달러 미만으로 낮아졌다.

주요 재무 실적

사업 및 영업 실적

통증 치료 부문은 전년 동기 대비 6%, 연초 대비 9% 증가한 7,100만 달러의 매출을 올렸다. 분기 중 PRP 일회용 키트 매출이 장비 공급 매출을 상회했으며, 경영진은 이를 반복적 수요의 중요한 지표로 평가했다. 또한 바이오벤투스는 APEX Biologix로부터 스포츠 의학 분야에 PRP 솔루션을 공급할 수 있는 독점권을 확보했다.

PNS 출시도 지속적인 진전을 보였다. 임시 시술에서 영구 시술로의 전환율이 계획을 상회했고, 임시 시술과 영구 이식 사이의 기간이 단축되었으며, 교육을 받은 의사 수가 전분기 대비 50% 이상 증가했다. 경영진은 구체적인 2027년 가이던스를 제공하지는 않았으나, 이 사업이 향후 수년 내에 1억 달러 이상 규모로 확장될 것으로 예상된다고 밝혔다.

수술 솔루션 매출은 1% 증가한 5,100만 달러를 기록했다. 초음파 제품(Ultrasonics)은 장비 판매, 신규 외과의 도입 및 일회용품 소모량 증가에 힘입어 강력한 두 자릿수 성장을 달성했다. 경영진은 이러한 모멘텀이 4분기에도 이어져 2027년의 성장 가속화를 뒷받침할 것으로 예상하고 있다.

골이식재 부문은 여전히 주요 부담 요인으로 작용했다. 경영진은 이러한 부진의 원인으로 합성 제품 시장의 경쟁 상황, 척추 수술 건수 둔화 및 유통업체 추가의 일시적 지연을 꼽았다. 회사는 3분기 말에 대책을 시행했으며 10월 실적은 예상보다 좋게 진행되고 있다고 밝혔다.

재활 치료 매출은 엑소젠(EXOGEN) 영업 인력의 공석으로 인해 판매량이 감소하면서 3% 줄어든 2,100만 달러를 기록했다. 해당 직무는 이후 모두 충원되었다. 경영진은 4분기에 엑소젠의 성장이 개선될 것으로 기대하며, 장기적으로 1%대 초반에서 5%대 중간 범위 수준을 유지할 것으로 예상하고 있다.

해외 매출은 초음파 제품과 HA의 견조한 두 자릿수 성장에 힘입어 16% 증가한 1,800만 달러(고정환율 기준 18%)를 기록했다. 경영진은 4분기 해외 매출이 20% 이상 성장하고, 연간 전체로도 견조한 두 자릿수 성장을 달성할 것으로 전망하고 있다.

경영진 가이던스

바이오벤투스는 PNS, PRP, 초음파 제품 및 해외 사업 등 4대 성장 동력에 대한 2026년 계획 투자를 1,300만 달러에서 약 1,500만 달러로 늘렸다. 투자금의 절반 이상이 PNS에 배정된다. 경영진은 2027년에도 투자가 계속될 것이나 동일한 증가율을 보이지는 않을 것이라고 밝혔다.

PRP와 PNS는 현재 당초 목표였던 200bp의 추가 성장 기여도에 약간 못 미치는 수준이다. 경영진은 4분기 실적에 따라 최종 연간 기여도가 결정될 것이라고 전했다.

리스크 및 주요 관전 포인트

• BGS 실적은 합성 제품 시장의 경쟁, 척추 수술 건수 둔화 및 유통업체 확충 시점의 영향을 계속해서 받고 있다.
• 연간 매출 전망치는 중간값 기준 약 1,200만 달러 하향 조정되었으며, 하향분 중 절반 이상은 3분기 실적, 그중에서도 주로 BGS 부진과 관련이 있다.
• 엑소젠(EXOGEN)의 4분기 회복은 최근 충원된 영업 인력의 적응 및 생산성에 부분적으로 달려 있다.
• 통증 치료 부문은 전년 동기에 HA 매출이 14%~15% 성장했던 만큼 4분기에는 이에 따른 까다로운 역기저 효과에 직면해 있다.
• 자발적 인수 제안 및 다수의 의향 표명으로 시작된 전략적 검토 작업은 여전히 진행 중이다. 경영진은 구체적인 일정이나 추가 세부사항은 밝히지 않았다.

애널리스트 Q&A 주요 내용

경영진은 수술 감소 및 유통망 시점이 포트폴리오 전반에 영향을 미쳤으나 BGS 부진은 주로 합성 제품에 집중되었다고 밝혔다. 9월 말에 취해진 조치들은 10월 들어 긍정적인 성과를 보이고 있다. 회사는 통합 의료 제공 네트워크(IDN) 전략에 대한 자신감을 유지했으며, 대형 고객들이 임상적·경제적 가치를 기준으로 개별 제품을 평가하는 경향이 점차 강화되고 있다고 언급했다.

초음파 제품(Ultrasonics)에 대해 경영진은 성장의 배경으로 신규 외과의의 채택, 추가적인 장비 설치, 일회용품 사용의 지속적인 확대를 꼽았다. 신규 사용자 채택 속도는 계획보다 앞서 진행되고 있다.

비용 통제와 관련해 경영진은 BGS가 다른 여러 사업 부문에 비해 변동 마진이 낮다고 설명했다. 이에 따라 매출 미달이 이익에 미친 영향은 비교적 크지 않았으며, 수수료 감소 및 기타 변동비 절감은 EBITDA 마진 확대를 저해하지 않으면서 투자 증액을 뒷받침하는 데 도움이 되었다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

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.

질의응답

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.