Enovis (ENOV) 2026年第三季度业绩电话会：上调利润指引与5%内生增长

Enovis（NYSE: ENOV）公布2026年第三季度销售额为5.59亿美元，内生增长率为5%。调整后每股收益（EPS）增长17%至0.88美元，利润率的改善和现金创造能力的提升支撑公司上调了全年利润指引，并批准了一项新的2亿美元股票回购计划。

核心要点

• 按报告口径计算，第三季度销售额同比增长2%，内生增长率为5%。剥离Dr. Comfort业务使报告口径增速降低了250个基点，而外汇变动带来了30个基点的负面影响。
• 骨科重建（Recon）业务实现6%的内生增长，其中四肢部位增长8%，髋关节与膝关节增长5%。预防与康复（P&R）业务内生增长3%。
• 调整后EBITDA利润率提升120个基点至18.5%，调整后每股收益增长17%至0.88美元。
• 当季自由现金流达到3500万美元，年初至今达3700万美元，较上年同期改善5000万美元。Enovis维持其2026年自由现金流转化率超过25%的目标。
• 管理层将全年营收指引收窄至23.2亿至23.5亿美元，并将调整后EBITDA指引上调至4.28亿至4.38亿美元，调整后每股收益指引上调至3.58至3.79美元。
• Enovis预计收购eCential Robotics的交易将于年底前完成。管理层继续致力于在两年内推出膝关节手术机器人，并预计随后不久推出肩关节应用。

核心财务数据

毛利率受益于业务结构优化、运营效率提升以及800万美元的关税退税。这些收益被原材料通胀压力以及与中东冲突相关的货运和配送成本（约300万美元）部分抵消。

业务与运营表现

骨科重建业务

美国骨科重建业务内生增长5%。其中，美国四肢部位业务增长5%，美国髋关节与膝关节业务增长3%。

Nebula仍是髋关节业务增长的关键驱动力，当季超过80%的新手术器械包投放在竞争对手的用户处。管理层表示，Nebula现已成为Enovis最畅销的股骨柄产品，并仍处于多年产品周期的早期阶段。公司继续在医院及日间手术中心领域展开竞争。

在美国膝关节置换方面，略高于25%的初次手术在日间手术中心进行；髋关节的比例约为20%或略高；肩关节的比例则处于十位数高段水平。

肩关节业务的增长得益于ARG以及Arvis的持续拓展。Enovis于10月份在欧洲完成了首批Arvis肩关节手术。管理层称肩关节是一个健康的细分市场，并表示尽管竞争日益激烈，公司仍在持续获取市场份额。

在肩关节业务两位数增长的带动下，国际骨科重建业务内生增长8%。西欧市场环境依然充满挑战，而中东冲突导致国际业务增速降低了100个基点，对Enovis整体增速产生约40个基点的拖累。

预防与康复业务

预防与康复业务内生增长3%，其中美国市场增长5%。在产品结构优化以及脊柱、核心膝关节和下肢支具新产品的支撑下，全球支具业务增长3%。

得益于Enovis加速推进Manafuse上市并完成竞争对手客户转化，康复科学业务受益于Regen两位数的增长。管理层还将与《NOPAIN法案》相关的冷疗需求以及骨关节炎产品组合的拓展，列为美国市场的增长驱动因素。

国际预防与康复业务依然承压，尤其是法国和德国市场。尽管如此，管理层表示，预防与康复产品组合中有一半以上正以中单位数或更快的速度增长。

eCential Robotics与资本配置

Enovis已就拟收购eCential Robotics完成工作委员会咨询程序，预计该交易将于年底前完成。整合规划正在推进中，包括在膝关节和肩关节项目上的协同合作，以及对研发人才和技术的投资。

管理层预计该交易将使净杠杆率提高约0.5倍。公司计划将杠杆率维持在2.5倍至3.5倍的区间内，同时继续将削减债务作为优先事项。

董事会批准了一项新的2亿美元股票回购计划。管理层表示，股票回购将根据市场机会审慎进行，而不会背离其杠杆承诺。

管理层业绩指引

在肩关节Arvis系统、持续的Nebula客户转化以及预防与康复新产品的支撑下，管理层预计两大业务板块在第四季度均将温和加速增长。此外，额外增加的一个销售日预计将为第四季度营收增长贡献约150个基点或略多。

该展望假设第三季度的手术量环境将延续至年底，并伴随典型的第四季度季节性特征。同时，展望还计入了第四季度在赋能技术研发人才方面追加的400万美元投资，以及100万美元的负面汇率影响。

对于2027年，管理层重申了此前公布的预期，即自由现金流转化率至少达到50%，现金创造额至少达到1亿美元。公司计划在2月份公布第四季度和全年业绩时提供更详尽的2027年展望。

风险与关注点

• 管理层用波动和“反复震荡”来形容美国及国际手术市场，并提及排班变动、手术取消以及患者支付能力等考量因素。
• 西欧市场的疲软以及中东冲突继续对国际业务增长和物流成本构成压力。
• 当季足踝业务表现逊于预期，但管理层表示第四季度初已出现反弹。
• 剔除关税退税后，毛利率面临来自业务结构和通胀成本的压力。
• 截至电话会议举行时，eCential交易尚未完成，其机器人平台的具体商业化方案也尚未敲定。
• 管理层预计收购eCential后净杠杆率将上升，从而限制了公司在既定杠杆率区间内的资本配置灵活性。

分析师问答要点

美国髋关节与膝关节业务增长：管理层承认市场存在波动，但表示Enovis的表现继续优于整体市场。公司预计Nebula、产品组合拓展以及赋能技术将支撑市场份额的进一步提升，不过公司拒绝提供按解剖部位细分的指引。

肩关节领域竞争：Enovis表示，公司仍是全球第三大、国际第二大肩关节产品供应商。管理层预计，在计划推出肩关节手术机器人之前，整合后的Lima与Enovis原有产品组合、ARG以及Arvis将支撑市场份额的持续扩大。

自由现金流：管理层维持原有观点，认为2027年自由现金流转化率可升至至少50%，现金创造额至少达1亿美元。预计未来几年资本支出占销售额的比例将有所下降，不过随着骨科重建业务的投入，绝对支出金额仍将继续增加。

Lima整合进展：Enovis表示，2026年应是Lima整合投资的最后一个主要年份。协同效应正在促进毛利率改善，而欧盟《医疗器械法规》相关支出的减少也带来了额外的同比收益。

eCential客户反馈：管理层表示，外科医生和销售代表给出了积极的早期反馈，尤其是对跨医院和日间手术中心集手术规划、导航及机器人辅助于一体的生态系统给予了肯定。

业绩电话会议完整实录

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完整财报电话会议逐字稿

管理层陈述

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.

分析师问答

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.