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| So if we execute on each of those pieces which are many of them are very much in our control, I feel very good about the $100 million opportunity and free cash flow over 2025 |
| That being said, we remain confident in our ability to achieve the other components of a 2025 financial profile as a result of the progress we are making against our overall transformation priorities |
| This is a significant improvement over last years back order loans of over $10 million serving as tangible proof that our supply chain organization is executing effectively on its transformation initiatives |
| And I think, we've established the necessary foundation to deliver on the midterm financial commitments and confident that our transformation priorities coupled with our market-leading portfolio are attractive markets does position us for sales growth margin expansion and meaningful free cash flow generation |
| The following year, zero's has really been exceeding our expectations in terms of a launch |
| As you know this is part of our ongoing journey to further enhance our financial profile with continued improvements in 2024 ultimately leading to our 2025 goal of between 38% to 39% |
| This performance gives us confidence in our ability to be within the range of the 2025 financial targets we established last year during our Investor Day |
| Our core portfolio continues to overperform globally growing double digits compared to the previous year, driven by the sustained expansion of our US contract standard of care offering |
| Separately, our new unit product line delivered another robust quarter growing mid-single digits sequentially, but faced a tough comparison as the previous year benefited from the node backwater relief and was flat year over year |
| Despite lower than anticipated sales in our fourth quarter, we are extremely pleased with the full year performance of our digestive health portfolio, growing double digits globally, excluding the slight negative impact of currency |
| We're particularly excited by our commercial optimization and portfolio transformation accomplishments, which I'll review now |
| Overall for the year adjusted EBITDA margin improved to 14.7% compared to 13.3% in 2022 and 140 basis point increase year-over-year |
| Similarly, our IVP portfolio showed sequential gains posting 10% growth versus the third quarter, excluding the positive impact of Diros revenue as supply constraints alleviated in the latter part of the fourth quarter |
| On top of that our operational cash flow will be improving and just by nature of the revenue going up mid-single digits and the margin improvement the cost management takeout |
| I mean obviously we've kept a really strong balance sheet and our leverage extremely low in this environment |
| We are encouraged by the double-digit growth seen in IVP generator sales in the U.S |
| Our Game Ready portfolio performed very strongly in North America achieving double-digit growth compared to the prior year boosted by capital sales |
| As I mentioned earlier, we are excited about our transformation journey and I'm confident we will improve on each of these metrics as the year progresses |
| Overall margin expansion of between 400 and 500 basis points supported by gross margins surpassing 60% and SG&A as a percentage of revenue being between 38% and 39% and free cash flow generation of approximately $100 million in 2025 supported by these operational financial metrics consistent CapEx spend and meaningful improvement in working capital |
| In particular, the organic sequential improvement in our fourth quarter that I just highlighted reinforces our expectation of mid single-digit growth for 2024 |
| Our US Trident RF launch exceeded our expectations and we were able to maintain double-digit growth in our US -- our OUS markets |
| Those financial metrics support, an adjusted diluted earnings per share between $1.30 and $1.45 for the year as well as adjusted EBITDA margin improvement of at least 200 basis points |
| The sequential sales improvements I just referenced to give us confidence in our strategies as we move forward into 2024 and include the following |
| We continue to anticipate mid to high single digit growth organically for our digestive health portfolio and our ability to deliver above market growth will be supported by innovations we plan to launch during the back half of the year, expansion into additional global markets with attractive growth prospects and low growth product rationalization |
| We're seeing tailwinds from COOLIEF reimbursement OUS, including the UK and Japan |
| That being said we believe we have the right strategies in place to capitalize on our HA growth opportunities over the long term |
| This is a strategic area for us, because of the focus on orthopedic pain and recovery and it fits nicely into our channel -- has great gross margin |
| In 2023, notably, we made significant leadership and go-to-market changes to improve our commercial effectiveness, executed the acquisition of Diros Technologies, as well as the divestiture of our Respiratory Health business, exited low-margin, low-growth product categories, and delivered double-digit growth across our DH portfolio |
| Our balance sheet remains strong and continues to provide us with strategic flexibility with $88 million of cash on hand and $168 million of debt outstanding as of December 31 |
| While 2023 was a year of transition and transformation we believe we established a foundation that will yield dividends in 2024 for our pain management and recovery business to gradually return to sustainable mid single-digit growth over the mid to long-term |
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| Supply chain challenges impacting product availability slowed the ability of our commercial teams to execute on the new go-to-market strategies |
| Net sales for the fourth quarter were $173.3 million impacted by the company's hyaluronic acid pain relief injection products as a result of continued pricing pressure due to the Medicare reimbursement changes and lower than anticipated sales across the company's North America digestive health products due to a major distributors ordering pattern change |
| And so the -- it's really the price affected by the Medicare changes that's really hurting the business and in particular I think everybody's fighting, a little bit with that |
| As previously communicated, our HA portfolio was the main contributor to the decline, primarily as a result of continued pricing pressure due to Medicare reimbursement changes |
| Organic sales were down 4.5% compared to a year ago |
| For the full year sales of our pain management and recovery portfolio were down approximately 11%, excluding the benefit of Diros revenue, the impact of foreign exchange and our previously announced decision to discontinue certain low growth, low-margin products |
| However, with the nearly $4 million underperformance in our HA business combined with the lower sales in our North America pain management and recovery business, our mix unfavorably impacted our fourth quarter gross margin |
| As you know, we've struggled a little bit with our inventory management over the last couple of years for a range of reasons some macro and some self-inflicted |
| Organic sales were down 0.3% compared to a year ago |
| Net sales negatively impacted our margin profile |
| Sales for this quarter were down approximately 12% excluding the benefit of DRS |
| As we have consistently communicated since I first presented our transformation plan at the January 2023 JPMorgan Conference, 2023 would be a bit uneven given the transformation priorities, the realignment of our commercial organization, M&A execution and our other portfolio optimization activities |
| As we mentioned during our third-quarter earnings call, we anticipated that our digestive health business would have a tough comparison in the fourth quarter given the release of backorder products in the fourth quarter of last year |
| But yes, that will be our lowest operating profit quarter, and then it will build a couple of few hundred basis points per quarter from there |
| The majority -- heavy majority of the revenue decline has been due to pricing |
| As previously shared, this decrease was primarily driven by our HA portfolio down almost 35% year-over-year |
| As a result, our digestive health portfolio grew 3% in the fourth quarter on a constant currency basis below our full year trending |
| And the quality issues in the supply chain issues are behind us |
| This two-quarter delay is due to the pain commercial reset necessary to address the breadth of strategy structure and talent changes in the pain business |
| And yes, first half is always going to be lower than the second half |
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