Enovis Corporation

Enovis reported first-quarter sales of $589 million, up 5% versus prior year on a reported basis. Organic revenue growth was 3% companywide, with Recon up 6% and Prevention & Recovery up 1%; on a days-adjusted basis, organic growth was 6% overall, 8% in Recon, and 3% in P&R. Adjusted gross margin was 62%, an underlying increase of 40 basis points, while adjusted EBITDA margin was 17.6%, down 10 basis points underlying. Adjusted EPS was $0.89, up 10% underlying, with a 21% effective tax rate and $9 million of interest expense. Free cash flow improved by $16 million year over year in Q1. For guidance, management reaffirmed 2026 outlook, said revenue should be split evenly between the first and second half, expects Q2 to reflect war-related impacts, and said the company can absorb Middle East-related revenue and supply chain inflation without changing guidance. They continue to expect free cash flow conversion of greater than 25% in 2026.

Damien McDonald said the quarter reflected solid execution and continued progress on the company’s innovation-led strategy. He emphasized that commercial execution, innovation, operational excellence, and financial discipline are the key priorities, and highlighted organizational changes he has made over the past year to improve daily management and incentives. He was upbeat about share gains in both segments, especially the rollout of Arvis, Nebula, and other new products, but repeatedly noted that the macro environment remains dynamic and that the company wants to stay focused on executing the full-year plan rather than raising guidance early.

Ben Berry highlighted reported sales of $589 million, adjusted gross margin of 62%, adjusted EBITDA margin of 17.6%, adjusted EPS of $0.89, and free cash flow improvement of $16 million year over year. He said gross margin improved 40 basis points underlying from favorable mix, productivity, and synergies, partially offset by roughly $4 million of tariffs paid in the quarter. He also explained that the company revised adjusted EBITDA to stop excluding inventory step-up charges after SEC comment-letter discussions, and noted that the change is accounting-related with no free cash flow impact. On capital allocation, he said capex is still being invested heavily to support Recon, will be about in line with last year or slightly below as a percentage of sales, and that free cash flow typically builds through the year after a soft Q1.

Analysts focused on the durability of U.S. Recon growth, Arvis adoption, free cash flow cadence, margin progression, and whether macro issues like weather, tariffs, Middle East disruption, and possible healthcare demand softness were affecting the outlook. Management said U.S. Recon strength is being driven by customer segmentation, pricing discipline, Arg, Nebula, and a pipeline of conversions, but it did not raise guidance because the macro backdrop is still noisy. On free cash flow, management said Q1 is typically the weakest quarter due to bonuses and timing of expenses, then cash builds through the rest of the year; on tariffs, they said no refunds are assumed in guidance. They also said the adjusted EBITDA presentation change came from SEC dialogue over inventory step-up treatment, not a new operating issue.