Non-GAAP diluted earnings per share of $1.18, growing 22.9% and 42.6%, respectively, over the prior year quarter. In addition, free cash flow was a record for the third quarter, delivering $213.9 million. The recently acquired Nevro business delivered $99.3 million in revenue during the quarter. The Nevro business also delivered a positive adjusted EBITDA margin, finishing at 16.2%.
Our overall results reflect continued market penetration and earnings expansion that is sustainable and enduring. spine during every week in Q3, which has carried forward into Q4, as we now sit at 32 weeks of consecutive growth. We remain laser-focused on attracting and retaining the best long-term sales talent who will help us drive sustainable growth. spine revenue, product development projects, set and inventory deliveries, recruiting, as well as enabling tech placements.
Q3 enabling technologies revenue was $28 million, declining 27% to the prior year quarter, driven primarily by lower sales of eGPS systems. While our view of the pipeline and its strength remains positive, we have not closed sales at the same pace and cadence as we have in years past. While a significant portion of this relates to fewer full revenue cash deals, we have increased our flexibility of capital deal structures as our overarching goal remains focused on achieving increased spinal implant growth. Our install base continues to drive strong recurring revenue growth with implant pull-through, service contracts, and disposal revenue, with robotic procedures now surpassing 115,000 cases.
| Metric | Period | Current guidance |
|---|---|---|
| Full-year financial guidance | FY2025 | revised upward (raised) |
| Total adjusted gross profit | FY2025 | 67%-68% of consolidated revenue (updated) |
| Total R&D expense | FY2025 | 5%-5.5% of consolidated revenue (updated) |
| Full-year non-GAAP tax rate | FY2025 | approximately 24%-25% (updated) |
| Metric | YoY | Note |
|---|---|---|
| Total Q3 revenue | +22.9% as reported (+22.3% constant currency) | Sales growth across most businesses led by U.S. spine plus Nevro contribution |
| U.S. spine | +9.6% as reported | Broad-based implant growth, competitive rep recruiting, and robotic pull-through |
| Enabling Technologies | -26.8% as reported | Lower ExcelsiusGPS sales and fewer full-revenue cash deals amid elongated deal timelines |
| Trauma | +17.2% as reported (domestic core and NSO +27.6%) | Precice manufacturing challenges resolved, supporting accelerated growth |
| Neuromonitoring | +15.8% as reported | Anniversarying the mid-2024 reimbursement headwinds |
| International spine | +5.6% as reported (+2.9% constant currency) | One fewer selling day in Japan and U.S.-prioritized supply, with sequential improvement |
| Adjusted gross profit | 68.1% vs 66.5% | Favorable sales mix and synergy execution; 70 bps boost from Q2 |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Enabling Technologies sales model | Primarily outright cash robot sales | Increased flexibility with fair-market-value leases and pay-per-click; lease/rental mix significantly higher than prior years | Shifting |
| U.S. spine momentum | Reaccelerated to 7.4% day-adjusted in Q2 | 9.6% as reported, 32 consecutive weeks of growth, seeking to stabilize as high-single-digit above-market grower | Accelerating |
| Nevro integration | Operating/free cash burn of $26.3M/$29M in Q2, -1.4% EBITDA | 16.2% EBITDA, $8.5M free cash flow, sequential sales growth, now FY2025 EPS accretive | Improving |
| Margin path to mid-70s | Sequential improvement underway | Four straight quarters of adjusted gross profit improvement, gradual progress with bigger step toward end of 2026 from manufacturing in-sourcing | Improving |