The quarter beat on earnings but came in slightly light on revenue. Sales were $789.6 million versus published consensus of roughly $798.5 million, while non-GAAP diluted EPS was $1.34 versus expectations near $1.12.
| Metric | Q2 2026 | Q2 2025 | Market expectation |
|---|---|---|---|
| Net sales | $789.6M | $745.3M | ~$798.5M |
| Non-GAAP diluted EPS | $1.34 | $0.86 | ~$1.12 |
| Adjusted gross margin | 69.4% | 67.4% | — |
| Free cash flow | $176.6M | $31.3M | — |
| Full-year revenue guidance | $3.18B–$3.22B | — | Reaffirmed |
| Full-year non-GAAP EPS guidance | $4.95–$5.05 | — | Previously $4.70–$4.80 |
Underlying profitability was the stronger signal. Adjusted gross margin expanded 200 basis points to 69.4%, adjusted EBITDA margin rose to 35.4% from 28.0%, and free cash flow increased to $176.6 million from $31.3 million. That combination indicates the earnings outperformance was driven by operating leverage and cost discipline, not just accounting noise. (Adjusted EBITDA reconciliation; Adjusted Gross Profit table; Free Cash Flow table)
Growth was healthy but uneven. Total sales increased 5.9% year over year, with U.S. sales up only 3.0% and international sales up 18.0%, or 16.2% in constant currency. Musculoskeletal Solutions grew to $763.5 million, while Enabling Technologies fell to $26.1 million from $35.2 million. Management also reported 9% base-business growth excluding Nevro, but that figure is company-defined and not separately quantified in the financial tables. (Geographic Net Sales Growth; Segment Net Sales)
The guidance change makes the net read positive despite the top-line miss. Revenue guidance was unchanged, suggesting no major upgrade to demand expectations, but the midpoint of non-GAAP EPS guidance rose by about 5% to $5.00 from $4.75. The raise reflects better expected margins, operating leverage, and acquisition synergies; it is the clearest evidence that management believes the quarter's profitability improvement can persist. (Full-Year Guidance)
Net: a narrowly positive report. The revenue miss prevents this from being a clean beat, but the sizable adjusted EPS outperformance, margin expansion, stronger cash generation, and EPS guidance raise outweigh the modest top-line shortfall. GAAP EPS fell to $1.10 from $1.49 because the prior-year period included a $110.6 million Nevro bargain-purchase gain, making GAAP year-over-year comparisons less informative. (Income Statement; Non-GAAP Diluted EPS Reconciliation)
Read the original 8-K on SEC EDGAR ↗