Teleflex's Q1 2024 earnings call was dominated by discussions of the Palette acquisition and its impact on the urology business. Analysts understandably focused on the integration progress, revenue expectations for Barrigel, and the challenges faced by UroLift in the shifting reimbursement landscape. But a closer examination of the transcript reveals a subtle, yet potentially significant trend: the quiet resurgence of PICCs (Peripherally Inserted Central Catheters) within the Vascular Access business.

While the overall Vascular Access segment grew by a modest 2%, the story is more nuanced than it initially appears. Liam Kelly, Teleflex's CEO, noted double-digit growth in the underlying PICC business when excluding the impact of the Endurance catheter recall, which will be fully anniversaried in Q2. This underlying strength in PICCs is masked by the Endurance recall and somewhat muted by weaker-than-anticipated growth in other Vascular Access products, likely due to seasonality.

This resurgence of PICCs is noteworthy for several reasons. First, it signifies a potential return to pre-pandemic levels of utilization for these critical care devices. The pandemic disrupted elective procedures and PICC placements, impacting Teleflex's growth in the segment. A robust rebound in PICC placements could add significant momentum to the Vascular Access business, which represents over 25% of Teleflex's total revenue.

Second, it highlights Teleflex's commitment to innovation within this core franchise. The company recently launched next-generation navigation devices and new PICC stylets, demonstrating their focus on improving the safety and efficiency of PICC placement. These new product initiatives, coupled with an expected increase in utilization, position Teleflex to potentially gain market share in the competitive peripheral access market.

Delving into the Numbers

Let's delve into the numbers. Teleflex reported Q1 2024 Vascular Access revenue of $181.4 million. Assuming the Endurance recall impacted the quarter by 10% (a reasonable estimate based on previous transcripts), the implied underlying revenue would be $199.5 million, representing a 12% year-over-year growth. While this 12% growth is partially inflated due to easy comparisons against the prior year recall impact, it nonetheless paints a picture of a resurgent PICC franchise.

Furthermore, the CEO anticipates a pickup in PICC volumes throughout 2024, suggesting that this underlying growth could be sustained. A conservative assumption of a 6% organic growth in PICCs (half the implied Q1 growth) would translate to an additional $12 million in annual revenue for Teleflex. This represents a significant boost to the Vascular Access segment and a potential upside to current analyst estimates, which are likely focused on the urology dynamics.

Visualizing the PICC Resurgence

The following chart illustrates the potential impact of the PICC resurgence on Teleflex's Vascular Access revenue.

This is not to say that the urology business is unimportant. The successful integration of Palette and the stabilization of UroLift are crucial for Teleflex's long-term growth. However, the quiet rise of PICCs amidst the urology storm should not be overlooked. It represents a potential catalyst for accelerating growth within the Vascular Access segment and a testament to Teleflex's focus on innovation within its core franchises.

"Key Takeaways The underlying growth in PICCs, masked by the Endurance recall, is a significant positive indicator for Teleflex's Vascular Access business. The combination of increased utilization and new product initiatives could lead to market share gains for Teleflex in the peripheral access market."

"Fun Fact Did you know Teleflex's Arrow brand catheters were used in the first successful human heart catheterization in 1949? This pioneering spirit of innovation continues to drive Teleflex's success in developing critical care medical devices."