Q1 2024 Artivion Inc Earnings Call

May 6, 2024

Operator: Greetings, and welcome to Artivion's first quarter 2024 financial conference call. At this time, all participants are in a listen only mode.

Greetings and welcome to our first quarter 'twenty 'twenty four financial conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.

Operator: A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone. As a reminder, this conference is being recorded. I will now turn the call over to Laine Martin of Gilmore. Thank you. Thanks, operator. Good afternoon, and thank you for joining the call today. Joining me today from Artivion's management team are Pat Mackin, CEO, and Lance Berry, CFO.

Lean More: As a reminder, this conference is being recorded I will now turn the call over to lean more and I think he'll Martin group. Thank you you may begin.

Operator: Before we begin, I'd like to make the following statements to comply with the safe harbor requirements of the Private Securities Litigation Reform Act of 1994. Comments made on this call that look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements made as to the company's or management's intentions, hopes, beliefs, expectations, or predictions of the future.

Lean More: Thanks, operator, good afternoon, and thank you for joining the call today, joining me today from our Caribbean management team are Pat Mackin, CEO and Lansberry CFO before we begin I'd like to make the following statements to comply with the safe Harbor requirements of the private Securities Litigation Reform Act of 1995.

Laine Morgan: These forward-looking statements are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from these forward-looking statements. Additional information concerning certain risks and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today. You can also find a brief presentation with the details highlighted on today's call in the investor relations section of the Artivion website. Now I'll turn it over to Artivion CEO, Pat Mackin. Hey, thanks, Lane. And good afternoon, everyone.

Lean More: Comments made on this call that look forward in time involve risks and uncertainties and are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995. The forward looking statements include statements made as to the Companys or managements intentions hopes beliefs expectations or predictions of the future before looking statements are subject to a number.

Lean More: Risks uncertainties estimates and assumptions that may cause actual results to differ materially from those from these forward looking statements additional information concerning certain risks and uncertainties that may impact. These forward looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today.

Lean More: You can also find a brief presentation with the details highlighted on today's call on the Investor Relations section of their Chilean website, now I'll turn it overcharges I've been CEO Pat Mackin.

Pat Mackin: Hey, Thanks, Wayne and good afternoon, everyone.

Pat Mackin: Q1 was a strong quarter for Artivion as we maintained top-line growth momentum and executed on key operational priorities. I'm pleased to report that in the first quarter of 2024, we achieved constant currency revenue growth of 16% year over year, representing 97.4 million in revenue and adjusted EBITDA growth of 60% year over year compared to the first quarter of 2023. More recently, in April, new clinical data from our ONIX Low INR Post-Market Study and AMDS Persevere trial were presented at the ATS Annual Meeting in Toronto.

Pat Mackin: Q1 was a strong quarter for our two young as we maintained topline growth momentum and executed on key operational priorities.

Pat Mackin: I'm pleased to report during the first quarter of 2024, we achieved constant currency revenue growth of 16% year over year, representing $97 4 million in revenue and adjusted EBITDA growth of 60% year over year compared to the first quarter of 2023.

Pat Mackin: More recently in April new clinical data from our Onyx low INR post market study.

Pat Mackin: And AMD has persevered trial were presented at the Ats annual meeting in Toronto.

Pat Mackin: The five-year results from our Onyx Aortic Heart Valve Low INR Post-Approval Study show that the Onyx Aortic Valve has an even more durable safety and efficacy profile for patients receiving low-dose warfare than predicted by the results of the original PMA trial.

The five year results from our Onyx aortic heart valve low INR a post approval study.

Pat Mackin: So that the onyx aortic valve hasnt, even more durable safety and efficacy profile for patients receiving low dose warfarin.

Pat Mackin: And then predicted by the results of the original PMA trial.

Pat Mackin: On the other hand, the late-breaking 30-day data from Persevere demonstrates positive aortic remodeling in over 80% of patients after treatment with AMDF. These two milestones demonstrate the continued success in our clinical and regulatory programs, as well as the continued expansion of our market-leading aortic portfolio. Our investment in these two products and related clinical trials reinforces that we are committed to remaining the leader in aortic health. From a financial perspective, as anticipated, our strong Q1 performance was led by tissue processing, which grew 26%, followed by StentGrafts at 19%, Onyx at 11%, and BioWoo at 1% growth. Each when compared to the first quarter of 2023 and all on a constant currency basis.

Pat Mackin: Meanwhile, the late breaking 30 day data from persevere demonstrates positive aortic remodeling and over 80% of patients after treatment with Andas.

Pat Mackin: These two milestones demonstrate the continued success in our clinical and regulatory programs as well as the continued expansion of our market leading aortic portfolio.

Pat Mackin: Our investment in these two products and related clinical trials reinforced that we are committed to remaining the leader in aortic health.

From a financial perspective as anticipated our strong Q1 performance was led by tissue processing, which grew 26%.

Pat Mackin: Followed by stent grafts at 19% Onyx at 11% and by we were at 1% growth each when compared to the first quarter of 2023, and all on a constant currency basis.

Pat Mackin: In the first quarter, we also continued to benefit from our footprint expansion through regulatory approvals in key international markets. As a whole, our first quarter results and recent regulatory and clinical achievements further validate our growth strategy. From a product category perspective, as I just mentioned, tissue processing grew 26% year-over-year on a constant currency basis in Q1.

In the first quarter. We also continued to benefit from our footprint expansion through regulatory approvals in key international markets.

Pat Mackin: As a whole our first quarter results and recent regulatory and clinical achievements further validate our growth strategy.

Pat Mackin: From a product category perspective, as I, just mentioned tissue processing grew 26% year over year on a constant currency basis in Q1.

Pat Mackin: We expect our tissue business will continue to grow double digits throughout the balance of 2024 as we further leverage our increased supply of our proprietary Synagraft pulmonary valve and continue to benefit from higher ROS procedure volume. Benefits from last year's Tissue Pricing Initiative positively impacted Q1, but will begin to annualize in the second quarter of this year. As I also indicated earlier, our Stencraft revenues grew 19% on a constant currency basis in the first quarter compared to the first quarter of last year.

Pat Mackin: We expect our tissue business will continue to grow double digits throughout the balance of 2024 as we further leverage our increased supply of our proprietary scintigram pulmonary valve and continued to benefit from higher Ross procedure volumes.

Pat Mackin: Benefits from last year's tissue pricing initiatives positively impacted Q1, but will begin to annualize in the second quarter of this year.

Pat Mackin: As I also indicated earlier, our stent graft revenues grew 19% on a constant currency basis in the first quarter compared to the first quarter of last year.

Pat Mackin: Our StentGraft supply is now healthy and stable, which is producing strong growth across the StentGraft portfolio. Lastly, I also previously mentioned Onyx revenues increased 11% year-over-year on a constant currency basis as you continue to take market share globally with the only mechanical aortic valve that can be maintained at an INR of 1.5 to 2.0. Based on feedback from the field, these markets share gains and proven clinical outcomes that were reinforced by the results of the post-market study recently presented at AAPS.

Pat Mackin: Our stent grafts supply is no healthy and stable, which is producing strong growth across the stent graft portfolio.

Pat Mackin: Lastly, I also previously mentioned on X revenues increased 11% year over year on a constant currency basis. As you continue to take market share globally with the only mechanical aortic valve that can be maintained at a INR one five to two point out.

Pat Mackin: Based on feedback from the field these market share gains and proven proven clinical outcomes that were reinforced by the results of the post market study recently presented at Ats, We will maintain our strong conviction that the onyx is the best aortic mechanical valve in the market will continue to take market share worldwide.

Pat Mackin: We will maintain our strong conviction that the Onyx is the best aortic mechanical valve in the market and will continue to gain market share worldwide. Revenues in the first quarter were also driven by continued progress and growth initiatives in APAC and Latin America, primarily through new regulatory approvals and commercial footprint expansion. Latin America delivered constant currency revenue growth of 22%, while APAC saw a 3% decline compared to the first quarter of last year. The decline in APAC this quarter was primarily driven by the timing of distributor orders, which adversely impacted blue revenue growth.

Pat Mackin: Revenues in the first quarter were also driven by continued progress in growth initiatives in APAC, and Latin America, primarily through new regulatory approvals and commercial footprint expansion.

Pat Mackin: Latin America delivered constant currency revenue growth of 22%, while APAC saw a 3% decline compared to the first quarter of last year.

Pat Mackin: The decline in APAC. This quarter was primarily driven by timing of distributor orders, which adversely impacted <unk> revenue growth.

Pat Mackin: Fluctantuations in growth rates in APAC and Latin America are to be expected as those regions have the highest percentage of stocking distributor sales. However, we still anticipate strong revenue growth for both regions for the full year and over the coming years as we expect to leverage our industry-leading product portfolio in those regions. Let me turn now to the clinical data presented at ATS in April that I mentioned previously. We are very pleased to see positive results from the Onyx Aortic Heart Valve Low INR Real-World Postmarket Study presented at AATS in Toronto.

Pat Mackin: Fluctuations in growth rates in APAC, and Latin America are to be expected as those regions had the highest percentage of stocking distributor sales.

Pat Mackin: We still anticipate strong revenue growth for both regions for the full year and over the coming years as we expect to leverage our industry, leading product portfolio in those regions.

Pat Mackin: Let me turn now to the clinical data presented at Ats in April that I mentioned previously.

Pat Mackin: We were very pleased to see positive results from the on X aortic heart valve low INR real World Post market study presented at Ats in Toronto.

Pat Mackin: The abstract reported long-term clinical outcomes of 229 study participants with a target INR of 1.8 for five years. The results showed a significantly lower composite primary endpoint for thromboembolism, bowel thrombosis, and major bleeding, combined at 1.83%, compared to the predefined historic control of 5.39%. This was driven by an 87% reduction in major bleeding and no increase in thromboembolism.

Pat Mackin: The abstract reported long term clinical outcomes of 229 study participants with a target INR 1.8 out to five years.

Pat Mackin: The results show a significantly lower composite primary endpoint for thrombosis thromboembolism valve thrombosis and major bleeding combined at 183%.

Pat Mackin: Compared to the predefined historic control of 539%.

Pat Mackin: This was driven by an 85 and 87% reduction in major bleeding and no increase in thromboembolism.

Pat Mackin: Notably, the data compares favorably to the results of the Onyx aortic heart valve low-NR trial, the one-year post-market study results presented last year, as well as the Onyx Aortic Low INR ID Study that was first published in 2014. The fact the device performed as well or better in the real world setting than it did in the original clinical trial provides strong additional validation that the Onyx aortic valve is the best aortic mechanical heart valve on the market for patients.

Notably the data compares favorably to the results of the on X aortic heart valve Leeuwen ice trials. The one year post market study results presented last year as.

Pat Mackin: As well as the on X aortic low INR IDE study that was first published in 2014.

Pat Mackin: The fact that device.

Pat Mackin: Performed as well or better in the real world setting than it did in the original clinical trial.

Pat Mackin: <unk> strong additional validation that the on X aortic valve is the best aortic mechanical heart valve market in the market for patients.

Pat Mackin: Thus, increasing our confidence in our ability to obtain even greater onyx aortic valve market share globally. We believe the longevity of the Onyx aortic valve, combined with a significantly lower risk of bleeding over the other mechanical heart valves, make the Onyx aortic valve a compelling option for patients under the age of 65.

Pat Mackin: Thus, increasing our confidence in our ability to obtain even greater on X aortic valve market share globally.

Pat Mackin: We believe the longevity of the on X aortic valve combined with a significantly lower risk of bleeding over the other mechanical heart valves make the on X aortic valve a compelling option for patients under the age of 65.

Pat Mackin: Also at ATS, late-breaking 30-day data from our AMDS-PERSEVERE trial demonstrated positive aortic remodeling in over 80% of patients, as well as no occurrence of Dane tears. These positive results follow the 30-day IDE data from the same trial that was presented at STS in January of 2024, which demonstrated a statistically significant 72% reduction in all-cause mortality and a 52% reduction in primary major adverse events when compared to the current standard-of-care hemiarch procedure.

Pat Mackin: Also at Ats late breaking 30 day data from our AMD has persevered trial demonstrated positive aortic remodeling over 80% of patients as well as no occurrence of Dane tariffs.

Pat Mackin: These PA. These positives results followed a 30 day data from the same trial that was presented at <unk> in January of 2024, which demonstrated a statistically significant 72% reduction of all cause mortality and a 52% reduction in primary major adverse events when compared to the current standard of care Hemi arch.

Pat Mackin: Procedure.

Pat Mackin: We're excited to see the continued positive results of the PERSEVERE study, further reinforcing the unrivaled clinical benefit of AMDS. We continue to anticipate PMA approval for AMDS in 2025, which would open the U.S. market opportunity of about $150 million with no competitive alternative. In addition, our partner Endospan is continuing to make progress on its US IDE trial called Triumph for its NEXUS aortic arch stent system. As of today, 44 of the 60 primary endpoint patients have been enrolled.

Pat Mackin: We are excited to see the continued positive results of the persevere study further reinforcing and unrivaled clinical benefit and the life saving nature of Andas.

We continue to anticipate PMA approval for <unk> in 2025, which would open the U S addressable market opportunity of about $150 million with no competitive alternatives.

Pat Mackin: In addition, our partner Endo span is continuing to make progress on its U S. IDE trial called triumph for its Nexus aortic arch stent system.

Pat Mackin: As of today, there have been 44 of the 60 primary endpoint patients enrolled.

Pat Mackin: Assuming the trial endpoints are met Nexus remains on track for approval in the back half of 2026.

Pat Mackin: Assuming the trial endpoints are met, Nexus remains on track for approval in the back half of 2026. In summary, we're excited about our great progress early in 2024 and look forward to sustaining our momentum throughout 2024 and beyond by driving continued growth of our Onyx portfolio, StentGraft, and CineGraft pulmonary valve, and further expanding our footprint at APAC in Latin America. With that, I'll now turn the call over to Lance.

In summary, we're excited about our great progress early in 2024 and look forward to sustaining our minimum throughout 2024 and beyond by driving continued growth of our onyx that our annex portfolio stent graft cerograph pulmonary valve and further expanding our footprint in APAC and Latin America.

With that I'll now turn the call over to Lance.

Lance E. Berry: Thanks, Pat, and good afternoon, everyone. Before I begin, I'd like to remind you to please refer to our press release published earlier today for information regarding our non-GAAP results, including a reconciliation of these results to our GAAP. Additionally, all percentage changes discussed will be on a year-over-year basis, and revenue growth rates will be in constant currency unless otherwise noted. Total revenues were $97.4 million for the first quarter of 2024, up 16% compared to Q1 of 2023.

Lance: Thanks, Pat and good afternoon, everyone before I begin I'd like to remind you to please refer to our press release published earlier today for information regarding our non-GAAP results, including a reconciliation of these results to our GAAP results.

Lance E. Berry: Non-gap adjusted EBITDA increased approximately 60% from 10.8 million to 17.3 million in the first quarter of 2020. The combination of strong top-line constant currency growth and significant marketing and G&A expense leverage resulted in an adjusted EBITDA margin of 17.8 percent, a 480 basis point improvement over the prior year. From a product line perspective, tissue processing revenues increased 26 percent, stent graft revenues grew 19 percent, onyx revenues grew 11 percent, and bioglue revenues grew one percent in the first quarter of 2025.

Additionally, all percentage changes discussed will be on a year over year basis and revenue growth rates will be in constant currency unless otherwise noted.

Lance: Total revenues were $97 4 million for the first quarter of 2024 up 16% compared to Q1 of 2023.

Lance: non-GAAP adjusted EBITDA increased approximately 60% from $10 8 million to $17 3 million in the first quarter of 2024, the combination of strong top line constant currency growth and significant marketing and G&A expense leverage resulted in an adjusted EBITDA margin of 17, 8% up 480 <unk>.

Lance: <unk> point improvement over the prior year.

Lance: From a product line perspective tissue processing revenues increased 26% stent graft revenues grew 19% on X revenues grew 11% and <unk> revenue.

Lance: <unk> revenues grew 1% in the first quarter of 2024.

Lance E. Berry: As anticipated, growth in our tissue business was very strong this quarter as we benefited from both the substantial price increase we implemented in Q2 of last year and improved supply from our Yield Improvement Initiative. We expect the growth rate to come down in future quarters as we annualize the price increase, but we still anticipate double-digit growth for the full year. On a regional basis, revenues in Latin America increased 22%, North America increased 18%, EMEA increased 17%, and Asia decreased 3%, all compared to the first quarter of 2023. The decrease in the Asia Pacific region was expected and driven primarily by the timing of distributor orders, which also impacted bioglue sales.

Speaker Change: As anticipated growth in our tissue business is very strong this quarter as we benefited from both the substantial price increase we implemented in Q2 of last year and improved supply from our yield improvement initiatives.

Speaker Change: We expect the growth rate to come down in future quarters, as we annualize the price increase, but we still anticipate double digit growth for the full year.

Speaker Change: On a regional basis revenues in Latin America increased 22% North America increased 18% EMEA increased 17% in Asia decreased 3% all compared to the first quarter of 2023.

Speaker Change: The decrease in Asia Pacific region was expected and driven primarily by the timing of distributor orders, which also impacted by a blue sales.

Lance E. Berry: As Pat discussed, you should expect to see some fluctuation in quarterly growth rates in the more distributor-based regions, and we still anticipate strong growth in Asia Pacific for the full year. As anticipated, gross margins were 64.6% in Q1, flat to the first quarter of 2023. General administrative and marketing expenses in the first quarter were $30.7 million compared to $50.4 million in the first quarter of 2023.

Speaker Change: As Pat discussed you should expect to see some fluctuation in quarterly growth rates in the more distributor based regions and we still anticipate strong growth in Asia Pacific for the full year.

Speaker Change: As anticipated gross margins were 64, 6% in Q1 flat to the first quarter of 2023.

Speaker Change: General administrative and marketing expenses in the first quarter were $30 7 million compared to $54 million in the first quarter of 2023.

Lance E. Berry: Non-GAAP General Administrative and Marketing Expenses were $48.1 million in the first quarter compared to $45.2 million in the first quarter of 2023, representing 500 basis points of leverage. R&D expenses for the first quarter were $6.9 million compared to $7.2 million in the first quarter of 2023. We underspent in R&D in Q1, and we expect to catch up over the remainder of the year. However, we still anticipate full year R&D spend as a percentage of sales to be relatively flat to the prior year. Interest expense net of interest income was $7.5 million as compared to $6 million in the prior year.

Speaker Change: non-GAAP general administrative and marketing expenses were $48 1 million in the first quarter compared to $45 $2 million in the first quarter of 2023, representing 500 basis points of leverage.

Speaker Change: R&D expenses for the first quarter were $6 9 million compared to $7 2 million in the first quarter of 2023, we under spent in R&D in Q1, and we expect to catch up over the remainder of the year.

Speaker Change: We still anticipate full year R&D spend as a percentage of sales to be relatively flat to prior year.

Speaker Change: Interest expense net of interest income was $7 5 million as compared to $6 million in the prior year.

Lance E. Berry: Other income expenses totaled $7.5 million in net interest expense, $3.7 million for loss on extinguishment of debt, and foreign currency translation gains of approximately $1.4 million. On the bottom line, we reported a gap net income of approximately $7.5 million, or $0.18 per diluted share, in the first quarter of 2024. Non-GAAP Net Income was $2.6 million or $0.06 per share for the. As expected, free cash flow was negative $9.1 million in the first quarter of 2024.

Speaker Change: Other income and expenses totaled $7 $5 million and net interest expense $3 7 million for loss on extinguishment of debt and foreign currency translation gains of approximately $1 4 million.

Speaker Change: On the bottom line, we reported GAAP net income of approximately $7 5 million or.

Speaker Change: Or <unk> 18 per diluted share in the first quarter of 2024 <unk>.

non-GAAP net income was $2 6 million or <unk> <unk> per share for the first quarter.

Speaker Change: As expected free cash flow was negative $9 1 million in the first quarter of 2024.

Lance E. Berry: As a reminder, Q1 is our most cash-intensive quarter due to the payment of annual bonuses and due to normal activities such as sales meetings and industry conferences, which are heavier in the first quarter. Importantly, we continue to expect free cash flow to be positive for the full year 2024, as of March 31st. We had approximately $51.1 million in cash and $313.3 million in debt, net of $7.1 million of unamortized loan origination costs.

Speaker Change: As a reminder, Q1 is our most cash intensive quarter due to the payment of annual bone bonuses and due to normal activities, such as sales meetings and industry conferences, which are heavier in the first quarter.

Importantly, we continue to expect free cash flow to be positive for the full year 2024.

Speaker Change: As of March 31.

Speaker Change: We had approximately $51 $1 million in cash and $313 3 million in debt net of $7 1 million of unamortized loan origination costs.

Lance E. Berry: Importantly, this is inclusive of the impact of our recently closed comprehensive credit agreement in January. As a reminder, the initial $190 million term loan and $30 million from the revolving credit facility were drawn at close, along with the use of some cash on our balance sheet to retire the existing senior credit facilities and pay related transaction expenses in the first quarter. Overall, this credit agreement, coupled with strong financial performance, gives us flexibility with no near-term debt maturity overhang as we continue to evaluate the best options to address our convertible debt.

Speaker Change: Importantly, this is inclusive of the impact of our recently closed comprehensive credit agreement in January.

Lance E. Berry: Further, we do not anticipate the need to raise additional capital to fund our debt obligations, our investments in our channels, or our pipeline in the foreseeable future. Our net leverage at the end of Q1 was 4.5, down from 6.8 in prior years.

Speaker Change: As a reminder, the initial $190 million term loan and $30 million from our revolving credit facility were drawn at close along with the use of some cash on our balance sheet to retire the existing senior credit facilities and pay related transaction expenses in the first quarter.

Speaker Change: Overall this credit agreement coupled with strong financial performance gave us flex gives us flexibility with no near term debt maturity overhang as we continue to evaluate the best options to address our convertible debt.

Speaker Change: Further we do not anticipate the need to raise additional capital to fund our debt obligations are investments in our channels or our pipeline in the foreseeable future.

Speaker Change: Our net leverage at the end of Q1 was four five down from six eight in prior year.

Lance E. Berry: At the midpoint of our EBIDA guidance, we expect net leverage to be closer to 3.5 by the end of the year and to continue to decrease in 2025. Now for our outlook for the remainder of 2024. Given our momentum in the first quarter of 2024, positive data from the recent AATS presentation supporting the long-term clinical benefits of Onyx, improved stent graft supply, and robust demand for our stent graft pulmonary valves.

Speaker Change: At the midpoint of our EBITDA guidance, we expect net leverage to be closer to three five by the end of the year and to continue to decrease in 2025.

Speaker Change: And now for our outlook for the remainder of 2024 <unk>.

Speaker Change: Given our momentum in the first quarter of 2020 for positive data from the recent AAD.

Speaker Change: U S presentation supporting the long term clinical benefits of Onyx improves stent grafts supply and robust demand for our scintigram pulmonary valves, we are raising the midpoint of our.

Lance E. Berry: We are raising the midpoint of our fiscal year 24 revenue guidance and now expect constant currency revenue growth between 9% and 12% compared to the previous range of 8% to 12%. We expect reported revenues to be in the range of $386 million to $396 million compared to our previous range of $382 million to $396 million. At current rates, we expect FX to have a negligible impact on full-year revenue growth rates.

Speaker Change: Fiscal year 2004 revenue guidance and now expect constant currency revenue growth between 9% and 12% compared to the previous range of 8% to 12%.

Speaker Change: We expect reported revenues to be in the range of $386 million to $396 million compared to our previous range of $382 million to $396 million.

Speaker Change: At current rates, we expect FX to have a negligible impact on full year revenue growth rates.

Lance E. Berry: With our continued top-line revenue growth and general expense management through Q1, we continue to expect adjusted EBITDA to be in the range of $68-$72 million for the full year 2024, representing a 26-34% growth over 2023 and 280 basis points of adjusted EBITDA margin expansion at the midpoint of our range. The strong start to the year puts us on a good trajectory for achievement of this guidance. As a reminder, we expect gross margins to remain at levels similar to 2023 and continue to expect to drive significant leverage from our global sales force and GNA infrastructure. Additionally, R&D expense is expected to remain relatively flat as a percentage of sales.

Speaker Change: With our continued top line revenue growth and general expense management through Q1, we continue to expect adjusted Ebitdas to be in the range of $68 million to $72 million for the full year 2024, representing a 26% to 34% growth over 2023, and 280 basis points of adjusted EBITDA margin expansion at the midpoint of our.

Speaker Change: Our ranges.

Speaker Change: A strong start to the year puts us on a good trajectory for achievement of this guidance.

Speaker Change: As a reminder, we expect gross margins to remain at level similar to 2023.

Speaker Change: And continue to expect to drive significant leverage from our global sales force and G&A infrastructure. Additionally, R&D expense is expected to remain relatively flat as a percentage of sales.

Pat Mackin: In summary, we feel great about the strong start to the year, and we are excited about the prospects of the business in 2024 and beyond. With that, I will turn the call back to Pat for his closing comment. Hey, thanks, Lance.

Speaker Change: In summary, we feel great about the strong start to the year and we are excited about the prospects of the business in 2024 and beyond with that I'll turn the call back to Pat for his closing comments.

Pat Mackin: So, as you've heard, we're very pleased with our first quarter performance, kicking off 2024 with a very strong start. We continue to deliver strong top and bottom line growth, expand our markets, and advance our clinical pipeline. We expect future growth to be driven by, first, the continued strong growth in our Stencraft business, driven by improved supply in our innovative portfolio. Second, continued market share gains for Onyx, driven by the recent five-year data from our real-world post-market trial, reinforcing the safety and efficacy of our Onyx aortic low-dose warfarin.

Pat Mackin: Hey, Thanks, Lance so as you've heard we're very pleased with our first quarter performance kicking off 2024 with a very strong start.

Pat Mackin: We continue to deliver strong top and bottomline growth expand our markets and advance our clinical pipeline.

Pat Mackin: We expect future growth to be driven by first the continued strong growth in our stent graft business driven by improved supply and our innovative portfolio.

Pat Mackin: Continued market share gains of Onyx driven by the recent five year data from a rural World post market trial, reinforcing the safety and efficacy of our on X aortic low dose warfarin.

Pat Mackin: Third, growth of our proprietary synagraph pulmonary valve driven by growth of the ROS procedure and our operational improvements for continued growth in Asia Pacific and Latin America from our channel investments in new regulatory approvals. In conclusion, we remain confident in the near and long-term prospects of our business. We believe our first quarter results validate our expectations for a strong year ahead as we focus on continued revenue growth and free cash flow generation.

Pat Mackin: Third growth of our proprietary scintigram pulmonary valves driven by growth of the Ross procedure and our operational improvements.

Pat Mackin: For continued growth in Asia Pacific and Latin America from our channel investments and new regulatory approvals.

Pat Mackin: In conclusion, we remain confident in the near and long term prospects of our business. We believe our first quarter results validate our expectation for a strong year ahead as we focus on continued revenue growth and free cash flow generation I want to thank all of our employees around the globe for delivering a strong first quarter and their continued dedication to our mission of building a world class aortic company.

Pat Mackin: I want to thank all of our employees around the globe for delivering a strong first quarter and their continued dedication to our mission of building a world-class aortic company. With that, Operator, please open the line for questions. Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.

Speaker Change: That operator, please open the line for questions.

Operator: And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star. Our first question is from Mike Matson with Needham and Company. Please proceed. Yeah, thanks. So I wanted to start with the tissue business. So I know you talked a little bit about what drove the growth there, but maybe just elaborate on the supply and how you're able to increase that. And then the outlook, I know you're not giving guidance for 25 yet, but I mean, is this business in a position now where you could sustain double digits longer than this year, or is this more just kind of a unique year? Yeah, so I would say there are a couple things.

Speaker Change: Thank you as he would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue and for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

Our first question is from Mike Matson with Needham <unk> Company. Please proceed.

Michael Stephen Matson: Yeah. Thanks, So I wanted to start with the the tissue business. So I know you talked a little bit about what drove the growth there but.

Michael Stephen Matson: If you could just elaborate on the supply and how you're able to increase that and then the outlook I know youre not giving guidance for 'twenty five yet, but I mean is this.

Michael Stephen Matson: <unk> in a position now where you could sustain double digit for longer than this year or is this more just kind of a unique year for for this year.

Speaker Change: Yeah, So I would say.

Speaker Change: There's a couple of things.

Michael Stephen Matson: Number one, you know, I've talked previously about the growth of the ROS procedure. There's been a tremendous amount of new data that's been released on the ROS that shows that, after 25 years, you can actually have an aortic valve replacement with your own native pulmonary valve and backfill your missing pulmonary valve with our valve. And your survival and morbidity match that of the general population.

Speaker Change: Number one.

Speaker Change: I've talked previously about the growth of the Ross procedure.

Speaker Change: There's been a tremendous amount of new data that's been released on the Ros that shows that 25 years that you can actually have an aortic valve replacement.

Speaker Change: With your own native pulmonary valve and backfill youre missing pulmonary valve with our valve.

Speaker Change: And your peer survival and morbidity matches that of the general population. So it's a great operation and it's growing extremely fast. So that's the first there was some data published at presented at Ats in Toronto last week about this procedure is growing extremely fast.

Pat Mackin: So it's a great operation, and it's growing extremely fast. So that's the first. There was some data published, presented at AATS in Toronto last week about this procedure growing extremely fast. Number two, you heard Lance talk about, you know, we had a big price increase last year that's kind of annualized, you know, at the end of the first quarter. But then we also did a talk previously about some of our operational improvements that we've undertaken here at the company.

Speaker Change: Number two you heard Lance talk about we had a big price increase last year, that's kind of annualized at the end of the first quarter.

But then we also do had talked previously about some of our operational improvements that we've undertaken here at the company and <unk>.

Pat Mackin: And it's, you know, a very nice increase in our yields. So, I think the combination of those kind of three things, obviously, had a huge first quarter, with the pricing kind of annualizing itself this year, it'll be basically supply benefiting the rest of the year. And then I think going forward, this procedure is not slowing down anytime soon. So, you know, I think there's a lot of opportunity for that. But as you know, ultimately, there's a constraint on, you know, how many tissue valves you can get. So, we're not going to give 25 guidance at this point, but we feel very strong about double-digit growth this year. Okay, I understand.

Speaker Change: Very nice increase in our in our yields so I think that the combination of of those kind of three things, obviously had a huge first quarter with a pricing kind of annualizing itself. This year it'll be basically supply.

Speaker Change: Benefiting the rest of the year.

Speaker Change: And then I think going forward. This procedure is not slowing down anytime soon.

Speaker Change: I think theres a lot of opportunity for that but as you know they're ultimately there is a constraint on how many tissue valves you can get so we're not going to give 25 guidance at this point, but.

Speaker Change: Feel very strong about double digit growth this year.

Speaker Change: Okay I understand.

Michael Stephen Matson: And then if I take the EBITDA that you did this quarter and I just multiply by four, it gets you into the guidance range. It seems like the last few years we've seen this kind of ramp-up throughout the years, your revenue ramp. So, you know, just wondering why you're maintaining the guidance here. Is there, maybe it's R&D spending, timing, or something, Lance? Yeah, it's a couple things. First of all, it's just early in the year.

And then if I take the EBITDA that you did this quarter and I just multiply by four gets you into the guidance range.

Speaker Change: It seems like the last few years, we've seen EBITDA kind of ramp throughout the year as your revenue ramp.

Speaker Change: So.

Speaker Change: Just wondering why you are maintaining the guidance here or there.

Speaker Change: Maybe it's the R&D spending timing or something like that.

Lance E. Berry: That's one. Two, you know, we did have a good, a good start to the year, but part of that was definitely due to timing on the R&D spend, and we absolutely intend to spend that money this year. So those are the two big things, you know, just a little bit early to be, to raise that number, which was, you know, pretty strong growth, and we'll see how it goes throughout the rest of the year. Okay, great.

Speaker Change: Yes. It is a couple of things first of all it's just early in the year.

Speaker Change: One.

Two.

We did have a good a good start.

Speaker Change: To the year, but part of that was definitely due to timing on the R&D spend and we absolutely intend to spend that money. This year. So those are the two big things.

Speaker Change: Just a little bit early to be.

Speaker Change: To raise that number which as you know.

Speaker Change: Pretty strong growth.

Speaker Change: And we will see how it goes throughout the rest of the year.

Speaker Change: Okay, great. Thanks.

Michael Stephen Matson: Thanks. Our next question is from Suraj Kalia with Oppenheimer and Company. Please proceed. Good afternoon, Pat, Lance, can you hear me all right? Hey, good afternoon, Suraj.

Speaker Change: Our next question is from Suraj Kalia with Oppenheimer and company. Please proceed.

Suraj Kalia: Good afternoon, Pat Lance can you hear me all right.

Suraj Kalia: Hey, good afternoon Raj.

Suraj Kalia: So Pat, congrats again. You guys are enrolled. Now the obvious question, I know you've been talking about this for some time. But it seems like in the last two quarters, you guys seem to be just shifting gears in terms of CAGR. Now the leverageability this quarter also surprised everyone. So Pat, just talk to us.

Suraj Kalia: So Pat Congrats again, you guys are on a roll packed.

Suraj Kalia: The obvious question I know you've been talking about this for some time.

Suraj Kalia: But it seems like in the last two quarters you guys seem to be just shifting gears in terms of CAC or.

Suraj Kalia: Now that leverage ability this quarter also surprised everyone. So just talk to us.

Pat Mackin: You know, I understand the supply issues and some of the other constraints that you were talking about, but is there something more fundamental we should be cognizant about? A more tenured sales force, rep commission changes, different marketing methods? There seems to be a distinct shift in everything. Maybe if you could give us some additional color there,

Suraj Kalia: I understand the supply issues in some of the other constraints that you were talking about.

Suraj Kalia: Is there something more fundamental we should be cognizant about.

Suraj Kalia: More tenured sales force Rep Commission changes different marketing or is it just.

This seems to be yes.

Suraj Kalia: Shift.

Suraj Kalia: And everything maybe if you could give us some additional color there.

Pat Mackin: Yeah, sure. No, I think, I think it's a, you know, it's one of the nice things about the company is that we've got a portfolio of products, right? So we also have a portfolio of regions. And as you heard, we had strong double-digit growth across all of our portfolio, our entire portfolio, except for BioGlue, which we expect to grow kind of low single-digits and across all of our regions, except for APAC, because we had a timing thing. So it's, it's kind of a, you know, combination of highly differentiated products with really strong channels around the world, and you're seeing them kind of firing on all cylinders.

Speaker Change: Yeah sure no I think I think it's.

Speaker Change: It's one of the nice things about the company is we've got a portfolio of products right. So we also have a portfolio of regions.

Speaker Change: <unk> heard we had strong double digit growth across all of our portfolio, our entire portfolio, except for <unk>, which we expect to grow kind of low single digits and across all of our regions, except for APAC, because we had a timing thing so it's kind of a.

Speaker Change: A combination of weak.

Speaker Change: But highly differentiated products with really strong channels around the world and Youre seeing kind of them firing on all cylinders and again I just would remind you.

Pat Mackin: And again, I just would remind you, you know, if you look at Synagraph, nobody, no other company has Synagraph. The Ross procedure is growing very rapidly, and we are the market share leader, and we're taking advantage of that. You know, the Onyx valve is the market-leading mechanical valve in the world, and we've just shown data that shows a, you know, an almost 80% reduction, I mean, an 87% reduction in major bleeding.

Speaker Change: If you look at sooner graph.

Speaker Change: Nobody no other company has set a graph the Ross procedures growing very rapidly and we are the market share leader and we're taking advantage of that.

Speaker Change: The on X valve is the market, leading mechanical valve in the world and we've just shown data that shows.

Speaker Change: Almost an 80% reduction I mean, 87% reduction in major bleeding.

Pat Mackin: So, we feel very strongly that that is the only mechanical valve that should be used, and we're not going to stop until we take it all. Number 3, our StantCraft portfolio: we have a full supply, we have had no supplier problems probably for like a year and a half.

Speaker Change: So we feel very strong that that is the only mechanical valve that should be used and we're not going to stop until we take it all.

Speaker Change: Number three our stent graft portfolio, we have full supply we have had no supply of problems probably for like a year and a half.

Pat Mackin: Very highly differentiated products. Our Neo device is growing rapidly. Our thoracal abdominal devices are growing rapidly. Nobody has an AMDS.

Speaker Change: Very highly differentiated products.

Speaker Change: Our new device is growing rapidly our political abdominal devices are growing rapidly nobody has any mds nobody has some of the technologies we have so.

Pat Mackin: Nobody has some of the technologies we have. I think it's just the combination of all these portfolios under this aortic umbrella, powered by channels around the world, when you combine it all together, it's driving nice results. I think it's nothing more complicated than that. So Pat, would it be fair to summarize this as more product attributes yielding pull-through demand rather than any fundamental shift in your sales and marketing structure and messaging? Is it fair to put it that way?

Speaker Change: I think it's just a combination of all these portfolios under this aortic umbrella.

Speaker Change: Powered by channels around the world when you combine it all together.

Speaker Change: Driving nice results I think it's nothing more complicated than that.

Speaker Change: So would it be fair to summarize this is more of product attributes, yielding a pull through demand rather than any fundamental shift in your sales and marketing structure and messaging is that fair to put it that way.

Suraj Kalia: Yeah, I mean, I guess if you think about it, we've got great channels, but, you know, this is a dynamic market, right? So just since our last call, we've released the five-year post-approval data for Onyx, and we've released more data on AMDS, right? So that AMDS Persevere data was in the quarter. It was at the end of January.

Yes, I mean, I guess I guess, if you think about it and we've got great channels, but.

Speaker Change: This is a dynamic market right. So just since our last call.

Speaker Change: We've released the post a five year post approval data for on X and we release more data on on <unk>.

Speaker Change: Alright, so that AMD has persevered data was in the quarter. It was at the end of January so.

Pat Mackin: So, you know, we've got great sales forces, great products, but they're being backed up by very strong clinical data. Everything that's been coming out about the products has done nothing but reinforce their effectiveness. And same with the ROS.

Speaker Change: We've got great sales force has great products, but they are being backed up by very strong clinical data. So.

Speaker Change: Everything thats been coming out on the product has done nothing but reinforce and same with the Ross there was raw data presented at Ats. It was one of the major focuses in.

Pat Mackin: There is ROS data presented at AATS. It was one of the major focuses. And, you know, again, that that's growing very rapidly. So it's really the combination, Suraj, of protecting you know proprietary product. Strong channels and really strong clinical data that just keeps coming out on all the products that we represent. Got it. Pat, one for you, one for Lance, and I'll hop back into you. In terms of, the Unknown Speaker.

Suraj Kalia: ......

Speaker Change: Again, thats growing very rapidly so it's really the combination suraj.

Speaker Change: Proprietary product strong channels and really strong clinical data that just keeps coming out and all the products that we represent.

Speaker Change: Got it.

Speaker Change: One for you one for Lance and I will hop back in queue.

Speaker Change: <unk>.

Speaker Change:

Suraj Kalia: Additional opportunities, especially as I think about Nexus. Love to get your updated thoughts. Lance, if I could quickly throw in there, I missed part of your commentary about the leverage in SG&A in the quarter. Can you talk to you about the sustainability? And also, is my math right that 23 and a half seems to be the conversion price.

Additional opportunities, especially as I think about Nexus.

Speaker Change: Love to get your updated thoughts Lance if I could quick quickly throw in there I missed part of your commentary about the.

Lance: Leverage to SG&A in the quarter can you talk to you about the sustainability and all is my math right that 23, and a half it seems to be the conversion price.

Pat Mackin: How are you all thinking about the 23 and beyond? What happens to the conversion? Gentlemen, congrats again. Thank you. Thank you for taking the time to answer my questions. Hey, thanks Raj. Yeah, as far as Nexus goes, I mean, there's been data, you know, recent data was published at ATS, sorry, at STS on the Triumph trial, it was the first 20 out of the 60 in the pivotal arm and showed very strong results. They've now enrolled 44 out of 60.

Lance: Thinking about the.

Speaker Change: 'twenty three and beyond what happens to the conversion gentlemen, congrats again. Thank you. Thank you for taking my questions Hey, Thanks Raj.

Speaker Change: As far as far as Nexus goes I mean, there has been there's been data.

Speaker Change: Recent data was published at Ats excuse me at STS.

Speaker Change: On the <unk> trial. It was the first 20 out of the 60 and the pivotal arm.

Speaker Change: <unk> very strong results, Dave now enrolled 44 out of 60.

Pat Mackin: You know, that trial should start in the second half of this year. And it's, you know, the data looks very good. And again, you guys have been around a long time, particularly you, Suraj, and you know how clinical trials go.

Speaker Change: That trial should enroll in the second half of this year.

Speaker Change: And it's the data looks very good and again.

Speaker Change: You guys have been around a long time is particularly use Raj and you know how clinical trials go but I think if you look at the data and the technology.

Speaker Change: That's a meaningful space to be able to treat a chronic dissection or an aneurysm under the arch with a catheter.

Speaker Change: <unk> is a unique opportunity and that's why we invested in the company and Thats why we have an option to acquire well obviously going to be watching this as the trial enrolls and they get their data.

Pat Mackin: We're obviously going to be watching this as the trial enrolls and they get their data, but it looks promising. Lance, do you want to take the other two?

Speaker Change: But it looks promising Lance you want to take the other two yes, so on an SG&A leverage.

Lance E. Berry: Yeah, so on SG&A leverage. We think that's a big opportunity for us going forward. We had really good leverage last year.

Lance: We think thats, a big opportunity for us going forward, we had really good leverage last year good start in Q1.

Lance E. Berry: We had a good start in Q1. Now, 500 basis points is not something that we're committing to on a quarter-by-quarter basis. But you can really see the leverage in the model when we have strong revenue growth. And I think that is a big opportunity for us going forward. On the convert, 2350 is when the convert is in the money. But we can't force a conversion unless the stock gets to $30, I think, and some change. So just to be clear on that, where that is, and then as far as how we're thinking about it.

Lance: 500 basis points is not something that we're committing to.

Lance: On a quarter by quarter basis, but you can really see when we have strong revenue growth.

Lance: The the leverage in the model and I think that is a big opportunity for us going forward.

Lance: On the on the convert the $23 50 is when the convert is in the money.

Lance: But we can't force conversion.

Lance: Yes, the stock gets to $30 I think in some changed so.

Speaker Change: Just to be clear on that.

Speaker Change: Where that is and then as far as how we're thinking about it I mean.

Lance E. Berry: You know, we talked about this on the Q4 call that, I mean, the spread between the interest, the cash interest we're paying on these converts versus, The delayed draw term loan is pretty significant, and at the moment, we're just happy to pay the lower interest, and I think we'd probably all hope that interest rates would have maybe started to come down by now, but that's not the case. So we're just watching it, and we'll keep keeping our options open on what to do on that. Our next question is from Rick Wise with Stiefel. Please proceed. Hey, Pat.

Speaker Change: We talked about on the Q4 call that I mean, the spread between the interest the cash interest we're paying on these converts versus the delayed draw term loan is pretty significant and at the moment. We're just happy to pay the lower interest and I think we play all hope that interest rates would it maybe started to come down by now, but that's not the case.

Speaker Change: We're just watching it.

Speaker Change: And we will keep keeping our options open.

Speaker Change: On what to do on that.

Speaker Change: Yes.

Speaker Change: Our next question is from Rick Wise with Stifel. Please proceed.

Frederick Allen Wise: Hey, Pat.

Frederick Allen Wise: Hey, Lance this is John on correct. This quarter really strong growth on the top line I just wanted to maybe start off.

John: On the on X data that recently read out at Ats.

Pat Mackin: I just want to hear it maybe from more of a market perspective. How much share do you see as left for Onyxx to take in the mechanical space? And beyond that, what do you see as the opportunity for the valve to potentially reach the bioprosthetic market? Yeah, so on the pure mechanical market, you know, the global data we have, we've got about a 30% share globally. It's higher in the U.S. It's more like 50 plus in the U.S. than it is outside the U.S. We have a lot of room to go outside the U.S.

John: As you highlighted really strong I just want to hear maybe from more of a market perspective, how much share do you see is left to go for on X take in the mechanical space and beyond that what do you see as the opportunity for the valve to potentially reach the prior bio prosthetic market.

Speaker Change: Yes, so on.

Speaker Change: On the pure mechanical market.

Speaker Change: The global data we have.

Speaker Change: We've got about a 30% share globally.

It's higher in the U S. It's more like 50, plus in the U S than it is outside the U S. We have a lot of room to go.

Pat Mackin: I mean, I've heard comments from surgeons when we've talked to them about this data, about even competitive accounts, like why would anybody use another valve? So, you know, our team's very fired up about going aggressively after this mechanical valve market. As far as the bioprosthetic segment, you know, typically in patients under 65, there's certainly some signals there that this data can go after bioprosthetics, but I'm not going to get out over my skis here.

Outside the U S. I mean, I've heard I've heard comments from surgeons, when we've talked to them about this data.

Speaker Change: About even even competitive accounts like why would anybody use another valve so.

Speaker Change: Our team is very fired up about going aggressively after this mechanical valve market as far as the bioprocess segment in <unk>.

Speaker Change: Typically.

Speaker Change: In patients under 65.

Speaker Change: Certainly some signals there that this data can go after <unk>, but I'm not going to get out over my skis here. This data just got released.

Pat Mackin: This data just got released, and, you know, we're going to be exploring that. But, you know, for right now, we're going aggressively after the mechanical segment when we still have a lot of room to go. Thanks, that's helpful. And if I could sneak in sort of a two-part here, maybe the first for Pat, and the second for Lance. Just on the aortic side of the business, growth was really strong this quarter. I think it came in at kind of the mid 20s.

Speaker Change: And we're going to be exploring that but.

For right now we're going aggressively after the the mechanical segment when we still have a lot of room to go.

Frederick Allen Wise: I just want to get a sense from you on what the key growth contributors are and how you're looking at growth for the aortic business for the rest of the year. And then, second, for Lance, just on the gross margin profile, tissue was particularly strong near 60%. Just how are you thinking about tissue gross margin for the rest of the year and gross margin for the business as a whole? Yeah, so just on the stent business. So the gap growth was 23. What we typically talk about constant currency was like 19. You know, obviously very strong.

Speaker Change: Thanks, that's helpful and if I could sneak it in sort of a two parter here, maybe the first for Pat.

Speaker Change: Second for Lance just on the aortic side of the business growth was really strong this quarter I think it came in at kind of mid twenties.

Want to get a sense from you what the what the key growth contributors are and how youre looking at growth through the aortic business for the rest of the year and then second for Lance just on the gross margin profile tissue was particularly strong near 60%. Just how are you thinking about tissue gross margin for the rest of the year and gross margin for the business as a whole. Thanks.

Speaker Change: Yes, so just on the on the stent business.

Speaker Change: So the GAAP growth was 23, we typically talk about constant currency was like 19.

Pat Mackin: And I mentioned a little bit earlier, I think what's driving this, we've got strong channels kind of around the globe, but we've also got a very differentiated, unique portfolio. For example, AMDS, we had the USID trial Persevere presented at the beginning of the quarter, kind of the end of January, with phenomenal data. I mentioned it, a 72% reduction in mortality, a 52% reduction in major adverse events, no doubt. So clearly, the AMDS is proprietary. Nobody has it.

Speaker Change: Obviously very strong.

Speaker Change: And as I mentioned, it a little bit earlier, I mean, I think what's driving this.

We've got strong channels.

Speaker Change: Around the globe.

Speaker Change: But we've also got a very differentiated unique portfolio for example, <unk> we.

Speaker Change: We had the U S. IDE trial for severe presented at the beginning of the quarter kind of the end of January with phenomenal data I mentioned at a 72% reduction in mortality a 52% reduction in major adverse events no Danes. So clearly the andas is proprietary nobody hasnt, we just released great data.

Pat Mackin: We just released great data. We've also got two very significant technologies in the branch StentGraft area, the frozen elephant trunk in the arch, and then the branch thoracodominal in the kind of the midsection of the aorta. And those are growing very rapidly. So again, we have a, it's the whole strategy, right?

Speaker Change: We've also got two very significant technologies in the branch stent graft area.

The frozen elephant trunk in the arch and the branched thoracoabdominal.

Speaker Change: The mid section of the aorta.

Speaker Change: And those are growing very rapidly. So again, we have a we have the whole strategy.

Pat Mackin: Is we're an aorta company. We can treat from your aortic valve to your iliac with a bunch of different technologies, and the majority of them are very proprietary with a strong sales force.

Speaker Change: <unk> right is where an aortic company, we can treat from your aortic valve to your iliac with a bunch of different technologies in the majority of them are very proprietary with a strong sales force. So I think that's that's what's driving the stent graft side I think you had a question on margin for fluent.

Pat Mackin: So I think that's what's driving the StentGraft side. I think you had a question on margin for Lance. Yeah, so overall, we're, you know, qualitatively saying that you expect gross margin to be relatively flat year over year. There's a lot of mix in our gross margin. We have four different product lines at different margins and in four different regions with different margins. And so there's a lot that goes into it.

So overall.

We're in a.

Speaker Change: Qualitatively, saying you expect gross margin to be relatively flat year over year. There is a lot of mix.

Speaker Change: In our in our gross margin when you have we have four different product lines.

Speaker Change: Different margins in four different regions with different margins and so there is a lot that goes into it I will say.

Lance E. Berry: I will say specifically about the Centigraph pulmonary valve portion of our preservation services. Now preservation services have historically been our lowest gross margin, but our pulmonary valves are actually north of the company average. And so specifically with that, as that grows faster, that's a tailwind, it's not a headwind. And I don't want you to take those comments and say, oh, that means mix should go up because there's a lot of pieces, but that part growing faster isn't a negative for gross margin. Thanks, that's very helpful.

Specifically on the <unk> pulmonary valve portion of our preservation services in refrigerated services has historically been our lowest gross margin, but our our pulmonary valves are actually north of company average and so specifically with that as that grows faster.

Hum.

Speaker Change: That's a that's a tailwind it's not a not a headwind.

Speaker Change: You take those comments and say Oh that means mix should.

Speaker Change: Should go up because there's a lot of pieces, but that part growing faster isn't a negative for for gross margin.

Thanks Thats helpful.

Frederick Allen Wise: Our next question is from Frank Takkinen with Lake Street Capital Markets. Please proceed. Great. Thanks for taking the questions. Pat and Lance, congrats on the quarter. Was hoping to start with one on X as well.

Speaker Change: Our next question is from Frank <unk> with Lake Street Capital markets. Please proceed.

Frank James Takkinen: In light of all the data packs that have come out consistently with higher market share, how do you think about the pricing opportunity? Have you taken any recent price increases?

Frank: Great. Thanks for taking the questions patent last congrats on the quarter was hoping to start with one on on X as well in light of all the data packs that have came out consistently higher market share. How do you think about pricing opportunity have you taken any recent price increases and do you think you have the ability to continue to take price.

Pat Mackin: And do you think you have the ability to continue to take price? Yeah, it's a good question, Frank. I mean, it really is kind of, you know, evolving where, you know, it used to be mechanical valves and tissue valves, like, you know, two discrete buckets. But what's really kind of evolving from this data is that there's kind of a new category in between a mechanical valve and a tissue valve, which is called onyx.

Speaker Change: Yes, it's a good question Frank.

Speaker Change: It really is kind of.

Speaker Change: Evolving where it used to be mechanical valves and tissue valves.

Two discrete buckets, but what's really kind of evolving from this data is that theres kind of a new category in between a mechanical valve in a tissue valve which is onyx.

Frank: So I mean, we've really got the primary objective here is that we feel like this is the best mechanical valve out there and.

Pat Mackin: So, I mean, we've really got, you know, the primary objective here is that we feel like this is the best mechanical valve out there. And I do think, you know, it should be the only mechanical valve being used.

Frank: And I do think it should be the only mechanical valve being used so that does bring with it some pricing power.

Frank James Takkinen: So that does, I think, bring with it some pricing power that we will exploit. I'm not going to get into specifics on the call, but I do think there is an opportunity for that. Okay, that's helpful.

Frank: That we will exploit I'm not going to get into specifics on the call, but I do think there is an opportunity for that.

Frank James Takkinen: And then maybe just one more from me for Lance on the free cash flow commentary. I heard your comment about the negative 9 million for the quarter. How should we think about free cash flow cadence for the remaining quarters of the year? Cash can kind of jump around quarter to quarter, so we're not really committing to positive for every single quarter, but definitely expect it to be positive for the full year, probably stronger in the back half.

Speaker Change: Okay. That's helpful. And then maybe just one more from me.

Speaker Change: For Lance on the free cash flow commentary heard your comments about the negative 9 million for the quarter, how should we think about free cash flow cadence for the remaining quarters of the year.

Speaker Change: Cash it can kind of jump around.

Lance: Order to quarter. So we're not really committing to positive for every single quarter.

Lance: Definitely expected it to be positive for the full year, probably stronger in the back half. There is just some heavy cash outlay things that occur in the first half of the year.

Frank James Takkinen: There's just some heavy cash outlay things that occur in the first half of the year, and the second half is just a little bit lighter on that, but definitely expect to be positive for the full year. Okay, that makes sense. Thanks for taking the question. Thanks, Frank.

Lance: In the second half is just a little bit lighter on that but.

Lance: Definitely expect to be positive for the full year.

Speaker Change: Okay that makes sense, thanks for taking questions.

Speaker Change: Thanks, Brian.

Lance E. Berry: Our final question is from Jeffrey Cohen with Bladdenburg-Thouman. Please proceed. [inaudible] from our end.

Speaker Change: Our final question is from Jeffrey Cohen with Ladenburg Thalmann. Please proceed.

Jeffrey Scott Cohen: Alright that Lance just a couple for Mary could you talk about EMEA, a little bit as far as any macro views and any pricing that's been taken or plan to be taken with some of the uptake and strong quarter from new users new surgeons that are coming on board or is it more in respect of <unk>.

Jeffrey Scott Cohen: Could you talk about a little bit as far as any macro views and any pricing that's been taken or planned to be taken and some of that uptake and strong quarter from new users, new surgeons that are coming on board, or is it more in respect of higher utilization per surgeon or per facility? Yeah, so NEO, you know, we're not going to break out specific products underneath the kind of aortic stent umbrella, if you will.

Jeffrey Scott Cohen: Higher utilization.

Jeffrey Scott Cohen: For surge in oil facility.

Lance: Yes, so neal.

Neal: We're not going to breakout specific products underneath that are kind of aortic stent umbrella, if you will but I will say that.

Jeffrey Scott Cohen: But I will say that, you know, NEO is growing very rapidly. It's a combination of, you know, expansion, geographical expansion. We're selling NEO in Asia, we're selling NEO in Latin America, many markets in Europe. It's obviously not approved in the U.S. or Japan.

Neal: <unk> is growing very rapidly.

Neal: A combination of.

Neal: Expansion geographical expansion, we're selling neo in Asia, we're selling neo in Latin America.

Neal: Any markets in Europe, It's obviously not approved in the U S or Japan.

Pat Mackin: But it's doing extremely well. And as I mentioned earlier, it's a proprietary technology. We have a very unique stent system on that device, which we feel has better outcomes than the other devices out there. And we're being very aggressive, kind of going after that business. So, you know, it's a product that has done well and continues to do well. Okay.

Neal: But it's doing extremely well.

Neal: And as I mentioned earlier.

Neal: <unk> proprietary technology, we have.

Neal: A very unique stent system on that device, which we feel has better outcomes in the other devices out there and we're being very aggressive.

Neal: <unk>.

Neal: Kind of going after that business so.

Neal: It's a product that's done well and continues to do well.

Speaker Change: Got it Okay, and then secondly first.

Jeffrey Scott Cohen: Lance, can you talk a little bit about the SG&A and maybe Cadence for 24? It seemed like it was... White in the first quarter and how we should think about the leverage on the overall spend from Q2 to Q4. [inaudible] Yeah, I mean, honestly, like, on an as-adjusted basis, now, it looks light on an as-reported basis, but that's because of some of the contingent considerations, fluctuations, but on an as-adjusted basis, it was $48 million, which was fairly consistent with Q4.

Speaker Change: Can you talk a little bit about the.

Speaker Change: SG&A and maybe cadence for 'twenty four it seems like your wish.

Speaker Change: Light in the first quarter and how we should think about the language on the overall spend from Q2 to Q4.

Speaker Change:

Speaker Change: Yes.

Speaker Change: Honestly like on an as adjusted basis, it looks like on an as reported basis, but thats because some of the.

Speaker Change: Considerations fluctuations, but on an as adjusted basis.

Speaker Change: It was $48 million, which was fairly consistent with Q4 and.

Jeffrey Scott Cohen: And I think something in that kind of range is really what we think about as we move throughout the year on an as-adjusted basis, which should drive some really good leverage year over year. And then finally, for us, any commentary on the tissue business with regard to, I know that pulmonary has been strong, but any commentary on cardiac versus vascular, generally speaking, on pricing or units out there for the quarter? Yeah, again, we're not going to break out components underneath the kind of tissue.

Speaker Change: I think something in that kind of range is really what we think about as we move throughout the year on an as adjusted basis. So.

Speaker Change: Which should drive some really good leverage year over year.

Great and then finally for Sandy commentary on.

Speaker Change: Tissue business with regard to renew that formulary has been strong, but any commentary on cardiac versus fashion jewelry generally speaking on.

Speaker Change: Are you seeing are you again, our units out there for the quarter.

Lance E. Berry: Obviously, we've talked, you know, several quarters in a row about the price increases on cardiac and the volume increases. So cardiac is definitely driving it. But the whole segment is growing, but we're not going to break it down into pieces. Perfect. Okay, I got it.

Sandy: Yeah again, we're not we're not going to break out components underneath that kind of the tissue obviously, we've talked.

Sandy: Several quarters in a row about the price increases on cardiac and the volume increases so cardiac is definitely driving it.

Sandy: But the whole segment is growing so, but we're not going to breakout pieces.

Speaker Change: Perfect. Okay, I got it that dosing for us thanks for taking the questions. Thanks, Jeff.

Speaker Change: Mr. Mcewan there are no further questions at this time I would like to turn the floor back over to management for closing comments.

Pat Mackin: No, thanks for joining us for our Q1 call. Again, we were very pleased with the first quarter and, you know, 16% top line growth, 60% bottom line growth. We're executing the pipeline.

Speaker Change: No. Thanks for joining for our Q1 call again.

Speaker Change: Pleased with the first quarter.

Speaker Change: 16% topline growth, 60% bottom line growth, we are executing on our pipeline. We've got great products, great data, great sales forces and plan on doing more of the same as a year. It keeps going so appreciate your support and look forward to our next call with you.

Operator: We've got great products, great data, great sales forces, and plan on doing more of the same as the year keeps going. So appreciate your support and look forward to our next call with you. Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation. ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Greetings, welcome to Artivion first quarter 2024 financial conference call. At this time, all participants are in a listen only mode.

Laine Morgan: Thank you. Thanks, operator. Good afternoon, and thank you for joining the call today. Joining me today from Artivion's management team are Pat Mackin, CEO, and Lance Berry, CFO. Before we begin, I'd like to make the following statements to comply with the safe harbor requirements of the Private Securities Litigation Reform Act of 1995. The comments made on this call that look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements made as to the company's or management's intentions, hopes, beliefs, expectations, or predictions of the future.

Speaker Change: Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

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Pat Mackin: These forward-looking statements are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from these forward-looking statements. Additional information concerning certain risks and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today. You can also find a brief presentation with the details highlighted on today's call in the investor relations section of the Artivion website. Now I'll turn it over to Artivion CEO, Pat Mackin. Hey, thanks, Lane. And good afternoon, everyone.

Speaker Change: Greetings welcome to <unk> first quarter 2024 financial conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.

Speaker Change: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Speaker Change: As a reminder, this conference is being recorded I will now turn the call over to Lynn Martin The Gilmartin group.

You may begin.

Pat Mackin: Q1 was a strong quarter for Artivion as we maintained top line growth momentum and executed on key operational priorities. I'm pleased to report that in the first quarter of 2024, we achieved constant currency revenue growth of 16% year over year, representing 97.4 million in revenue and adjusted EBITDA growth of 60% year over year compared to the first quarter of 2023. More recently, in April, new clinical data from our ONIX Low INR Post-Market Study and AMDS Persevere trial were presented at the ATS annual meeting in Toronto.

Lynn Martin: Thanks, operator, good afternoon, and thank you for joining the call today, joining me today from <unk> management team are Pat Mackin, CEO and Lance Berry CFO before we begin I would like to make the following statements to comply with the safe Harbor requirements of the private Securities Litigation Reform Act of 1095 comments.

Pat Mackin: The five-year results from our onyx aortic heart valve low INR post-approval study show that the onyx aortic valve has an even more durable safety and efficacy profile for patients receiving low-dose warfarin than predicted by the results of the original PMA trial.

Pat Mackin: On the other hand, the late-breaking 30-day data from Persevere demonstrates positive aortic remodeling in over 80% of patients after treatment with AMDF. These two milestones demonstrate the continued success in our clinical and regulatory programs, as well as the continued expansion of our market-leading aortic portfolio. Our investment in these two products and related clinical trials reinforces that we are committed to remaining the leader in aortic health. From a financial perspective, as anticipated, our strong Q1 performance was led by tissue processing, which grew 26%, followed by StentGrafts at 19%, Onyx at 11%, and Bayou at 1% growth. Each when compared to the first quarter of 2023 and all on a constant currency basis.

Lynn Martin: Comments made on this call that look forward in time involve risks and uncertainties and are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095. The forward looking statements include statements made as to the companys or managements intentions hopes beliefs expectations or predictions of the future.

Lynn Martin: These forward looking statements are subject to a number risks uncertainties estimates and assumptions that may cause actual results to differ materially from those from these forward looking statements additional information concerning certain risks and uncertainties that may impact. These forward looking statements is contained from time to time in the company's SEC filings and in the pressure.

Lynn Martin: That was issued earlier today.

Lynn Martin: You can also find a brief presentation with detailed highlighted on today's call on the Investor Relations section of their Canadian website, now I'll turn it over to Charles maybe in CEO Pat Mackin.

Charles: Hey, Thanks, Wayne and good afternoon, everyone.

Charles: Q1 was a strong quarter for our <unk> as we maintain top line growth momentum and executed on key operational priorities I.

Pat Mackin: Our stent graft supply is now healthy and stable, which is producing strong growth across the stent graft portfolio. Lastly, I also previously mentioned Onyx revenues increased 11% year-over-year on a constant currency basis as you continue to take market share globally with the only mechanical aortic valve that can be maintained at an INR of 1.5 to 2.0. Based on feedback from the field, these markets share gains and proven clinical outcomes that were reinforced by the results of the post-market study recently presented at AAPS.

Charles: I am pleased to report during the first quarter of 2024, we achieved constant currency revenue growth of 16% year over year, representing $97 4 million in revenue and adjusted EBITDA growth of 60% year over year compared to the first quarter of 2023.

Charles: More recently in April new clinical data from our Onyx low INR post market study and AMD has persevered trial were presented at the Ats annual meeting in Toronto.

The five year results from our on X aortic heart valve low INR post approval study showed that the on X aortic valve hasnt, even more durable safety and efficacy profile for patients receiving low dose warfarin.

Charles: And then predicted by the results of the original PMA trial.

Meanwhile, the late breaking 30 day data from persevere demonstrates positive aortic remodeling and over 80% of patients after treatment with <unk>.

These two milestones demonstrate the continued success in our clinical and regulatory programs as well as the continued expansion of our market leading aortic portfolio.

Charles: Our investment in these two products and related clinical trials reinforced that we are committed to remaining the leader in aortic health.

Charles: From a financial perspective as anticipated our strong Q1 performance was led by tissue processing, which grew 26%.

Charles: Followed by stent grafts at 19% Onyx at 11% and <unk> at 1% growth each when compared to the first quarter of 2023, and all on a constant currency basis.

Charles: In the first quarter. We also continued to benefit from our footprint expansion through regulatory approvals in key international markets.

Charles: As a whole our first quarter results and recent regulatory and clinical achievements further validate our growth strategy.

Charles: From a product category perspective, as I, just mentioned tissue processing grew 26% year over year on a constant currency basis in Q1.

Charles: We expect our tissue business will continue to grow double digits throughout the balance of 2024 as we further leverage our increased supply of our proprietary <unk> pulmonary valve and continue to benefit from higher Ross procedure volumes.

Charles: Benefits from last year's tissue pricing initiatives positively impacted Q1, but will begin to annualize in the second quarter of this year.

Charles: As I also indicated earlier, our stent graft revenues grew 19% on a constant currency basis in the first quarter compared to the first quarter of last year.

Charles: Our stent grafts supply is now healthy and stable, which is producing strong growth across the stent graft portfolio.

Charles: Lastly, I also previously mentioned on X revenues increased 11% year over year on a constant currency basis. As you continue to take market share globally with the only mechanical aortic valve that can be maintained at a INR one five to two point out.

Charles: Based on feedback from the field these market share gains and proven proven clinical outcomes that were reinforced by the results of the post market study recently presented at Ats, We will maintain our strong conviction that the onyx is the best aortic mechanical valve in the market will continue to take market share worldwide.

Pat Mackin: Fluctantuations in growth rates in APAC and Latin America are to be expected as those regions have the highest percentage of stocking distributor sales. We still anticipate strong revenue growth for both regions for the full year and over the coming years as we expect to leverage our industry-leading product portfolio in those regions. Let me turn now to the clinical data presented at ATS in April that I mentioned previously. We are very pleased to see positive results from the Onyx aortic heart valve low INR real-world post-market study presented at AATS in Toronto.

Charles: Revenues in the first quarter were also driven by continued progress in growth initiatives in APAC, and Latin America, primarily through new regulatory approvals and commercial footprint expansion.

Charles: Latin America delivered constant currency revenue growth of 22%, while APAC saw a 3% decline compared to the first quarter of last year.

Charles: The decline in APAC. This quarter was primarily driven by timing of distributor orders, which adversely impacted <unk> revenue growth.

Charles: Fluctuations in growth rates in APAC, and Latin America are to be expected as those regions had the highest percentage of stocking distributor sales.

Charles: We still anticipate strong revenue growth for both regions for the full year and over the coming years as we expect to leverage our industry, leading product portfolio in those regions.

Charles: Let me turn now to the clinical data presented at Ats in April that I mentioned previously.

Charles: We're very pleased to see positive results from the on X aortic heart valve low INR real World Post market study presented at Ats in Toronto.

Charles: The abstract reported long term clinical outcomes of 229 study participants with a target INR 1.8 out to five years.

Charles: The results show a significantly lower composite primary endpoint for thrombosis thromboembolism valve thrombosis and major bleeding combined at 183%.

Charles: Compared to the predefined historic control of 539%.

Charles: This was driven by an 85 and 87% reduction in major bleeding and no increase in thromboembolism.

Charles: Notably the data compares favorably to the results of the on X aortic heart valve low NR trial. The one year post market study results presented last year as.

Charles: As well as the on X aortic low INR IDE study that was first published in 2014.

Charles: The fact that device.

Charles: Performed as well or better in the real world setting than it did in the original clinical trial.

Charles: Strong additional validation that the on X aortic valve is the best aortic mechanical heart valve market in the market for patients.

Thus, increasing our confidence in our ability to obtain even greater on X aortic valve market share globally.

Charles: We believe the longevity of the on X aortic valve combined with a significantly lower risk of bleeding over the other mechanical heart valves make the on X aortic valve a compelling option for patients under the age of 65.

Charles: Also at Ats late breaking 30 day data from our AMD has persevered trial demonstrated positive aortic remodeling over 80% of patients as well as no occurrence of Dane tariffs.

Charles: These these positive results followed a 30 day.

Charles: Data from the same trial that was presented at <unk> in January of 2024, which demonstrated a statistically significant 72% reduction of all cause mortality and a 52% reduction in primary major adverse events when compared to the current standard of care <unk> procedure.

Pat Mackin: We're excited to see the continued positive results of the PERSEVERE study, further reinforcing the unrivaled clinical benefit of AMDS. We continue to anticipate PMA approval for AMDS in 2025, which would open the U.S. market opportunity of about $150 million with no competitive alternative. In addition, our partner Endospan is continuing to make progress on its US IDE trial called TRIUMPH for its NEXUS aortic arch stent system. As of today, 44 of the 60 primary endpoint patients have been enrolled.

Charles: We're excited to see the continued positive results of the persevere study further reinforcing and unrivaled clinical benefit and the life saving nature of Andas.

Charles: We continue to anticipate PMA approval for <unk> in 2025, which would open the U S addressable market opportunity of about $150 million with no competitive alternatives.

Charles: In addition, our partner Endo span is continuing to make progress on its U S. IDE trial called <unk> for its next aortic arch stent system.

Charles: As of today, there have been 44 of the 60 primary endpoint patients enrolled.

Charles: Assuming the trial endpoints are met <unk> remains on track for approval in the back half of 2026.

Charles: In summary, we are excited about our great progress early in 2024 and look forward to sustaining our minimum throughout 2024 and beyond by driving continued growth of our onyx that our on X portfolio stent graft sonograph pulmonary valve and further expanding our footprint in APAC and Latin America.

Charles: With that I'll now turn the call over to Lance.

Laine Morgan: Thanks, Pat, and good afternoon, everyone. Before I begin, I'd like to remind you to please refer to our press release published earlier today for information regarding our non-GAAP results, including a reconciliation of these results to our GAAP results. Additionally, all percentage changes discussed will be on a year-over-year basis, and revenue growth rates will be in constant currency unless otherwise noted. Total revenues were $97.4 million for the first quarter of 2024, up 16% compared to Q1 of 2023.

Lance E. Berry: Thanks, Pat and good afternoon, everyone before I begin I'd like to remind you to please refer to our press release published earlier today for information regarding our non-GAAP results, including a reconciliation of these results to our GAAP results.

Lance E. Berry: Additionally, all percentage changes discussed will be on a year over year basis and revenue growth rates will be in constant currency unless otherwise noted.

Lance E. Berry: Total revenues were $97 4 million for the first quarter of 2024 up 16% compared to Q1 of 2023.

Laine Morgan: Non-gap adjusted EBITDA increased approximately 60% from 10.8 million to 17.3 million in the first quarter of 2020. The combination of strong top-line constant currency growth and significant marketing and G&A expense leverage resulted in an adjusted EBITDA margin of 17.8 percent, a 480 basis point improvement over the prior year. From a product line perspective, tissue processing revenues increased 26 percent, stent graft revenues grew 19 percent, onyx revenues grew 11 percent, and bioglue revenues grew one percent in the first quarter of 2025.

Lance E. Berry: non-GAAP adjusted EBITDA increased approximately 60% from $10 8 million to $17 3 million in the first quarter of 2024.

Lance E. Berry: The combination of strong top line constant currency growth and significant marketing and G&A expense leverage resulted in an adjusted EBITDA margin of 17, 8% up 480 basis point improvement over the prior year.

Lance E. Berry: From a product line perspective tissue processing revenues increased 26% stent graft revenues grew 19% on X revenues grew 11% and <unk> revenue bio glue revenues grew 1% in the first quarter of 2024.

Laine Morgan: As anticipated, growth in our tissue business was very strong this quarter as we benefited from both the substantial price increase we implemented in Q2 of last year and improved supply from our Yield Improvement Initiative. We expect the growth rate to come down in future quarters as we annualize the price increase, but we still anticipate double-digit growth for the full year. On a regional basis, revenues in Latin America increased 22%, North America increased 18%, EMEA increased 17%, and Asia decreased 3%, all compared to the first quarter of 2023. The decrease in the Asia-Pacific region was expected and driven primarily by the timing of distributor orders, which also impacted bioglue sales.

Lance E. Berry: As anticipated growth in our tissue business is very strong this quarter as we benefited from both the substantial price increase we implemented in Q2 of last year and improved supply from our yield improvement initiatives.

Lance E. Berry: We expect the growth rate to come down in future quarters, as we annualize the price increase, but we still anticipate double digit growth for the full year.

Lance E. Berry: On a regional basis revenues in Latin America increased 22% North America increased 18% EMEA increased 17% in Asia decreased 3% all compared to the first quarter of 2023.

Lance E. Berry: The decrease in Asia Pacific region was expected and driven primarily by the timing of distributor orders, which also impacted bio glue sales.

Lance E. Berry: As Pat discussed, you should expect to see some fluctuation in quarterly growth rates in the more distributor-based regions, and we still anticipate strong growth in Asia Pacific for the full year. As anticipated, gross margins were 64.6% in Q1, flat to the first quarter of 2023. General Administrative and Marketing expenses in the first quarter were $30.7 million compared to $50.4 million in the first quarter of 2023.

Lance E. Berry: As Pat discussed you should expect to see some fluctuation in quarterly growth rates in the more distributor based regions and we still anticipate strong growth in Asia Pacific for the full year.

Lance E. Berry: As anticipated gross margins were 64, 6% in Q1 flat to the first quarter of 2023.

Lance E. Berry: General administrative and marketing expenses in the first quarter were $30 7 million compared.

Lance E. Berry: Compared to $54 million in the first quarter of 2023 <unk>.

Lance E. Berry: non-GAAP general administrative and marketing expenses were $48 $1 million in the first quarter compared to $45 2 million in the first quarter of 2023, representing 500 basis points of leverage.

Lance E. Berry: R&D expenses for the first quarter were $6 9 million compared to $7 2 million in the first quarter of 2023, we underspent in R&D in Q1, and we expect to catch up over the remainder of the year.

We still anticipate full year R&D spend as a percentage of sales to be relatively flat to prior year.

Lance E. Berry: Interest expense net of interest income was $7 5 million as compared to $6 million in the prior year.

Lance E. Berry: Other income and expenses totaled $7 $5 million and net interest expense $3 7 million for loss on extinguishment of debt and foreign currency translation gains of approximately $1 4 million.

Lance E. Berry: On the bottom line, we reported GAAP net income of approximately $7 $5 million or <unk> 18 per diluted share in the first quarter of 2024.

Lance E. Berry: non-GAAP net income was $2 6 million or <unk> <unk> per share for the first quarter.

Lance E. Berry: As expected free cash flow was negative $9 1 million in the first quarter of 2024 as.

Lance E. Berry: As a reminder, Q1 is our most cash intensive quarter due to the payment of annual bone bonuses and due to normal activities, such as sales meetings and industry conferences, which are heavier in the first quarter.

Lance E. Berry: Importantly, we continue to expect free cash flow to be positive for the full year 2024.

Lance E. Berry: As of March 31.

Lance E. Berry: We had approximately $51 $1 million in cash and $313 3 million in debt net of $7 1 million of unamortized loan origination costs.

Lance E. Berry: Importantly, this is inclusive of the impact of our recently closed comprehensive credit agreement in January.

Lance E. Berry: As a reminder, the initial $190 million term loan and $30 million from our revolving credit facility were drawn at close along with the use of some cash on our balance sheet to retire the existing senior credit facilities and pay related transaction expenses in the first quarter.

Overall this credit agreement coupled with strong financial performance gave us flex gives us flexibility with no near term debt maturity overhang as we continue to evaluate the best options to address our convertible debt.

Lance E. Berry: Further we do not anticipate the need to raise additional capital to fund our debt obligations are investments in our channels or our pipeline in the foreseeable future.

Lance E. Berry: Our net leverage at the end of Q1 was four 5% down from six eight in prior year.

Lance E. Berry: At the midpoint of our EBITDA guidance, we expect net leverage to be closer to three five by the end of the year and to continue to decrease in 2025.

Speaker Change: And now for our outlook for the remainder of 2024.

Speaker Change: Given our momentum in the first quarter of 2020 for positive data from the recent AAD.

Speaker Change: S presentation supporting the long term clinical benefits of Onyx improves stent grafts supply and robust demand for our syngraft pulmonary valves, we are raising the midpoint of our.

Lance E. Berry: We are raising the midpoint of our Fiscal Year 24 Revenue Guidance and now expect constant currency revenue growth between 9% and 12% compared to the previous range of 8% to 12%. We expect reported revenues to be in the range of $386 million to $396 million compared to our previous range of $382 million to $396 million. At current rates, we expect FX to have a negligible impact on full-year revenue growth rates.

Speaker Change: Fiscal year 2004 revenue guidance and now expect constant currency revenue growth between 9% and 12% compared to the previous range of 8% to 12%.

Speaker Change: We expect reported revenues to be in the range of $386 million to $396 million compared to our previous range of $382 million to $396 million.

Speaker Change: At current rates, we expect FX to have a negligible impact on full year revenue growth rates.

Lance E. Berry: With our continued top-line revenue growth and general expense management through Q1, we continue to expect adjusted EBITDA to be in the range of $68 to $72 million for the full year 2024, representing a 26 to 34 percent growth over 2023 and 280 basis points of adjusted EBITDA margin expansion at the midpoint of our range. The strong start to the year puts us on a good trajectory for achievement of this guidance. As a reminder, we expect gross margins to remain at levels similar to 2023 and continue to expect to drive significant leverage from our global sales force and GNA infrastructure. Additionally, R&D expense is expected to remain relatively flat as a percentage of sales.

Speaker Change: Yes.

Speaker Change: With our continued top line revenue growth and general expense management through Q1, we continue to expect adjusted EBITDA has been in the range of $68 million to $72 million for the full year 2024, representing a 26% to 34% growth over 2023, and 280 basis points of adjusted EBITDA margin expansion at the midpoint of our ranges.

Speaker Change: The strong start to the year puts us on a good trajectory for achievement of this guidance.

As a reminder, we expect gross margins to remain at level similar to 2023.

Speaker Change: We continue to expect to drive significant leverage from our global sales force and G&A infrastructure. Additionally, R&D expense is expected to remain relatively flat as a percentage of sales.

Lance E. Berry: In summary, we feel great about the strong start to the year, and we are excited about the prospects of the business in 2024 and beyond. With that, I will turn the call back to Pat for his closing comment. Hey, thanks, Lance.

Pat: Thanks, Lance so as you've heard we're very pleased with our first quarter performance kicking off 2024 with a very strong start.

Pat: We continue to deliver strong top and bottomline growth expand our markets and advance our clinical pipeline.

Pat: We expect future growth to be driven by first the continued strong growth in our stent graft business driven by improved supply and our innovative portfolio.

Pat: Second continued market share gains of Onyx driven by the recent five year data from a rural World post market trial, reinforcing the safety and efficacy of our on X aortic low dose warfarin.

Pat Mackin: Third, growth of our proprietary synagraph pulmonary valve driven by growth of the ROS procedure and our operational improvement for continued growth in Asia Pacific and Latin America from our channel investments in new regulatory approval. In conclusion, we remain confident in the near and long-term prospects of our business. We believe our first quarter results validate our expectation for a strong year ahead as we focus on continued revenue growth and free cash flow generation.

Pat: Third growth of our proprietary <unk> pulmonary valves driven by growth of the Ross procedure and our operational improvements for.

Pat: <unk> continued growth in Asia Pacific and Latin America from our channel investments and new regulatory approvals.

Pat: In conclusion, we remain confident in the near and long term prospects of our business. We believe our first quarter results validate our expectation for a strong year ahead as we focus on continued revenue growth and free cash flow generation.

Speaker Change: Want to thank all of our employees around the globe for delivering a strong first quarter and their continued dedication to our mission of building a world class aortic company with that operator. Please open the line for questions.

Operator: And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question is from Mike Matson with Needham and Company. Please proceed. Yeah, thanks.

Speaker Change: Thank you if you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue and for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Yes.

Speaker Change: Our first question is from Mike Matson with Needham <unk> Company. Please proceed.

Michael Stephen Matson: So I know you talked a little bit about what drove the growth there, but maybe just elaborate on the supply and how you're able to increase that. And then the outlook, I know you're not giving guidance for 25 yet, but I mean, is this business in a position now where you could sustain double digits longer than this year, or is this more just kind of a unique year? Yeah, so I would say there are a couple things.

Michael Stephen Matson: Yeah. Thanks, So I wanted to start with the the tissue business. So I know you talked a little bit about what drove the growth there, but maybe you could just elaborate on the supply and how you're able to increase that and then the outlook I know youre not giving guidance for 'twenty five yet, but I mean is this.

Speaker Change: Business in a position now where you could sustain double digit longer than this year. That's more just kind of a unique year for for this year.

Speaker Change: Yes, so I would say theres a couple of things.

Speaker Change: Number one.

Michael Stephen Matson: Number one, you know, I've talked previously about the growth of the ROS procedure. There's been a tremendous amount of new data that's been released on the ROS that shows at 25 years, you can actually have an aortic valve replacement with your own native pulmonary valve and backfill your missing pulmonary valve with our valve.

Speaker Change: <unk> previously about the growth of the Ross procedure.

Speaker Change: There's been a tremendous amount of new data that's been released on the Ros that shows that 25 years that you can actually have an aortic valve replacement.

Speaker Change: With your own native pulmonary valve and backfill youre missing pulmonary valve with our valve.

Pat Mackin: And your survival and morbidity matches that of the general population. So it's a great operation, and it's growing extremely fast. So that's the first. There was some data published, presented at AATS in Toronto last week about this procedure growing extremely fast. Number two, you heard Lance talk about, you know, we had a big price increase last year that's kind of annualized at the end of the first quarter. But then we also did talk previously about some of our operational improvements that we've undertaken here at the company.

Speaker Change: Number two you heard Lance talk about we had a big price increase last year, that's kind of annualized at the end of the first quarter.

But then we also do had talked previously about some of our operational improvements that we've undertaken here at the company and <unk>.

Pat Mackin: And it's, you know, a very nice increase in our yields. So I think the combination of those kind of three things, obviously, had a huge first quarter, with the pricing kind of annualizing itself this year, it'll be basically supply benefiting the rest of the year. And then I think going forward, this procedure is not slowing down anytime soon. So, you know, I think there's a lot of opportunity for that. But as you know, ultimately, there's a constraint on, you know, how many tissue valves you can get. So we're not going to give 25 guidance at this point, but we feel very strong about double-digit growth this year. Okay, I understand.

Speaker Change: Benefiting the rest of the year.

Speaker Change: And then I think going forward. This procedure is not slowing down anytime soon.

Speaker Change: So I think theres a lot of opportunity for that but as you know there is ultimately there is a constraint on how many tissue valves you can get so we're not going to give 25 guidance at this point, but.

Speaker Change: Feel very strong about double digit growth this year.

Speaker Change: Okay I understand.

Michael Stephen Matson: And then if I take the EBITDA that you did this quarter and I just multiply by four, it gets you into the guidance range. It seems like the last two years, we've seen EBITDA kind of ramp up throughout the year as your revenue ramps up. So, um, you know, just wondering why you're maintaining the guidance here. Is there, uh, maybe it's the R&D spending timing or something, uh, Lance? Yeah, I think there are a couple things. First of all, it's just early in the year.

And then if I take the EBITDA that you did this quarter and I just multiply by four gets you into the guidance range.

It seems like the last few years, we've seen EBITDA kind of ramp throughout the year as your revenue ramp.

Speaker Change: So.

Speaker Change: Just wondering why you're maintaining the guidance here.

Speaker Change: Maybe it's the R&D spending timing or something.

Lance E. Berry: That's one. Two, you know, we did have a good start to the year, but part of that was definitely due to timing on the R&D spend, and we absolutely intend to spend that money this year. So those are the two big things, you know, just a little bit early to raise that number, which was, you know, pretty strong growth, and we'll see how it goes throughout the rest of the year. Okay, great.

Speaker Change: Yes. It is a couple of things first of all it's just early in the year.

Speaker Change: One.

Speaker Change: Two.

Speaker Change: We did have a good a good start.

Speaker Change: To the year, but part of that was definitely due to timing on the R&D spend and we absolutely intend to spend that money. This year. So those are the two big things.

Speaker Change: Just a little bit early to be.

Speaker Change: To raise that number which was.

Speaker Change: Pretty strong growth.

Speaker Change: And we will see how it goes throughout the rest of the year.

Speaker Change: Okay, great. Thanks.

Speaker Change: Our next question is from Suraj Kalia with Oppenheimer <unk> Company. Please proceed.

Suraj Kalia: Good afternoon, Pat Lance can you hear me all right.

Suraj Kalia: Hey, good afternoon Raj.

Suraj Kalia: So Pat Congrats again, you guys are on a roll.

Suraj Kalia: Perhaps the obvious question I know you've been talking about this for some time.

Suraj Kalia: It seems like in the last two quarters, you guys seem to be shifting gears in terms of <unk>.

Raj: Now that leverage ability this quarter also surprised everyone. So just talk to us.

Pat Mackin: You know, I understand the supply issues and some of the other constraints that you were talking about, but is this something more fundamental we should be cognizant about? A more tenured sales force, rep commission changes, different marketing methods, just there seems to be a distinct shift in everything. Maybe if you could give us some additional color there.

Yes.

Raj: I understand the supply issues in some of the other constraints that you were talking about.

Is there something more fundamental we should be cognizant about.

Raj: More tenured sales force Rep Commission changes different marketing or is it just.

Raj: It seems to be.

Raj: A distinct shift.

Speaker Change: And everything maybe if you could give us some additional color there.

Pat Mackin: Yeah, sure. No, I think I think it's a, you know, it's one of the nice things about the company is that we've got a portfolio of products, right? So we also have a portfolio of regions. And as you heard, we had strong double-digit growth across all of our portfolio, our entire portfolio, except for Bioglue, which we expect to grow kind of low single-digits and across all of our regions, except for APAC, because we had a timing thing. So it's, it's kind of a, you know, combination of highly differentiated products with really strong channels around the world, and you're seeing them kind of firing on all cylinders.

Speaker Change: Yeah sure no I think I think it is.

Speaker Change: It's one of the nice things about the company is we've got a portfolio of products right. So we also have a portfolio of regions and as you heard we had strong double digit growth across all of our portfolio our entire portfolio, except for <unk>, which we expect to grow kind of low single digits and across all of our regions, except for APAC, because we had a timing.

Speaker Change: So it's kind of a <unk>.

Speaker Change: Combination of we've got highly differentiated products with really strong channels around the world and Youre seeing kind of them firing on all cylinders and again I just would remind you.

Speaker Change: If you look at sooner graph.

Speaker Change: Nobody no other company has set a graph the Ross procedures growing very rapidly and we are the market share leader and we're taking advantage of that.

Speaker Change: The on X valve is the market, leading mechanical valve in the world and we've just shown data that shows.

Speaker Change: Almost an 80% reduction I mean, 87% reduction in major bleeding.

Speaker Change: So we feel very strong that that is the only mechanical valve that should be used and we're not going to stop until we take it all.

Number three our stent graft portfolio, we have full supply we have had no supply of problems probably for like a year and a half.

Pat Mackin: Very highly differentiated products. Our Neo device is growing rapidly. Our thoracal abdominal devices are growing rapidly. Nobody has an AMDS.

Speaker Change: Very highly differentiated products.

Speaker Change: Our new device is growing rapidly our political abdominal devices are growing rapidly nobody has any MBS nobody has some of the technologies we have so.

I think it's just a combination of all of these portfolios under this aortic umbrella.

Powered by channels around the world when you combine it all together, it's driving nice results I think it's nothing more complicated than that.

Speaker Change: So Pat would it be fair to summarize this is more of product attributes yielding a pull through demand.

Pat: Rather than any fundamental shift in your sales and marketing structure and messaging is that fair to put it that way.

Pat: Yes, I mean, I guess I guess, if you think about it we've got great channels, but.

Pat: This is a dynamic market right. So just since our last call.

Pat: We've released the post a five year post approval data for <unk> and we've released more data on on AMD.

Pat: Alright, so that AMD has persevered data was in the quarter. It was at the end of January so.

Pat: We've got great Salesforce has great products, but they are being backed up by very strong clinical data. So.

Pat: Everything thats been coming out on the product has done nothing but reinforce and same with the Ross there was raw data presented at Ats. It was one of the major focuses in.

Pat Mackin: It was one of the major focuses. And, you know, again, that that's growing very rapidly. So it's truly the combination, Suraj, of the prototype, you know, proprietary product, strong channels, and really strong clinical data that just keeps coming out on all the products that we represent. Got it. Pat, one for you, one for Lance, and I'll hop back into you. In terms of, Unknown Speaker.

Suraj Kalia: ......

Pat: Again, thats growing very rapidly so it's really the combination suraj.

Pat: Proprietary product strong channels and really strong clinical data that just keeps coming out and all the products that we represent.

Speaker Change: Got it.

Speaker Change: One for you one for Lance and I will hop back in queue.

Speaker Change: <unk>.

Speaker Change:

Pat Mackin: Additional opportunities, especially as I think about Nexus. Love to get your updated thoughts. Lance, if I could quickly throw in there, I missed part of your commentary about the leverage in SG&A in the quarter. Can you talk about the sustainability? And also, is my math right that 23 and a half seems to be the conversion price.

Speaker Change: Additional opportunities, especially as I think about Nexus love.

Speaker Change: Love to get your updated thoughts.

Speaker Change: If I could quick quickly throw in there I missed part of your commentary about the.

Speaker Change: Leverage to SG&A in the quarter can you talk to you about the sustainability and all is my math right that 'twenty, three and half which seems to be the conversion price.

Suraj Kalia: How are you all thinking about the 23 and beyond? What happens to the conversion? Gentlemen, congrats again. Thank you. Thank you for taking the time to answer my questions. Hey, thanks Raj. Yeah, as far as Nexus goes, I mean, there's been data, you know, recent data was published at ATS, sorry, at STS on the Triumph trial, it was the first 20 out of the 60 in the pivotal arm and showed very strong results. They've now enrolled 44 out of 60.

Speaker Change: Thinking about again.

Speaker Change: Yes.

Speaker Change: Yes, 'twenty three and beyond what happens to the conversion gentlemen, congrats again. Thank you. Thank you for taking my questions Hey, Thanks Raj Yes.

Speaker Change: As far as far as <unk> goes I mean, there has been there's been data recent data was published at Ats excuse me at STS.

Speaker Change: On the <unk> trial. It was the first 20 out of the 60 and the pivotal arm.

Showed very strong results, Dave now enrolled 44 out of 60.

That trial should enroll in the second half of this year.

Speaker Change: And it's the data looks very good and again.

Speaker Change: You guys have been around a long time is particularly use Raj and you know how clinical trials go but.

Pat Mackin: But I think if you look at the data and the technology, that's a meaningful space to be able to treat a chronic dissection or an aneurysm of the arch with a catheter is a unique opportunity. And, you know, that's why we invested in the company. And that's why we have an option to acquire. We're obviously going to be watching this as the trial enrolls and they get their data. But it looks promising. Lance, do you want to take the other two?

Speaker Change: I think if you look at the data and the technology.

That's a meaningful space to be able to treat a chronic dissection or an aneurysm under the arch with a catheter.

Speaker Change: As a unique opportunity and that's why we invested in the company and Thats why we have an option to acquire <unk>.

We are going to be watching this as the trial enrolls and they get their data.

Speaker Change: But it looks promising.

Speaker Change: <unk>.

Lance E. Berry: Yeah, so on SG&A leverage. You know, we think that's a big opportunity for us going forward. We had really good leverage last year.

Speaker Change: Of the two yes, so on SG&A leverage.

Speaker Change: We think thats, a big opportunity for us going forward, we had really good leverage last year.

Speaker Change: Good start in Q1, now 500 basis points is not something that we're committing to.

Speaker Change: On a quarter by quarter basis, but you can really see when we have strong revenue growth.

Speaker Change: The the leverage in the model and I think that is a big opportunity for us going forward on the on the convert the $23 50 is when the convert is in the money.

Lance E. Berry: But we can't force conversion unless the stock gets to $30, I think, by some change. So just to be clear on that, where that is. And then as far as how we're thinking about it, I mean.

Speaker Change: But we can't force conversion unless the stock gets to $30 I think in some changed so.

Speaker Change: Just to be clear on that.

Speaker Change: Where that is and then as far as how we're thinking about it I mean.

Speaker Change: We talked about on the Q4 call that I mean, the spread between the interest the cash interest we're paying on these converts versus the delayed draw term loan is pretty significant and at the moment. We're just happy to pay the lower interest and I think we play all hope that interest rates when it maybe started to come down by now, but thats not the case.

Speaker Change: So we're just watching it.

Speaker Change: And.

Speaker Change: Keith keeping our options open.

Speaker Change: On what to do on that.

Okay.

Our next question is from Rick Wise with Stifel. Please proceed.

Frederick Allen Wise: Hey Lance, this is John for Rick this quarter. Really strong growth on the top line. I just wanted to maybe start off on the ONIX data that recently came out at AATS. As you highlighted, really strong. I just want to hear it maybe from more of a market perspective. How much share do you see as left to go for onyx to take in the mechanical space? And beyond that, what do you see as the opportunity for the valve to potentially reach the bioprosthetic?

Frederick Allen Wise: Hey, Pat.

Frederick Allen Wise: Hey, Ross this is Jon on correct. This quarter really strong growth on the top line I just wanted to maybe start off.

Frederick Allen Wise: On the on X data that recently read out at Ats.

Jon: As you highlighted really strong I just want to hear maybe from more of a market perspective, how much share do you see is left to go for on X take in the mechanical space and beyond that what do you see as the opportunity for the valve to potentially reach the prior bio prosthetic market.

Frederick Allen Wise: Yeah, so on the pure mechanical market, you know, the global data we have, we've got about a 30% share globally. It's higher in the U.S. It's more like 50 plus in the U.S. than it is outside the U.S. We have a lot of room to go outside the U.S.

Speaker Change: Yes, so on the pure mechanical market.

Speaker Change: The global data we have.

Speaker Change: We've got about a 30% share globally.

Speaker Change: It's higher in the U S. It's more like 50, plus in the U S than it is outside the U S. We have a lot of room to go outside.

Speaker Change: Outside the U S. I mean, I've heard I've heard comments from surgeons, when we've talked to them about this data.

Pat Mackin: I mean, I've heard comments from surgeons when we've talked to them about this data, about even competitive accounts, like, why would anybody use another valve? So, you know, our team's very fired up about going aggressively after this mechanical valve market. As far as the bioprosthetic segment, you know, typically in patients under 65, there's certainly some signals there that this data can go after bioprosthetics, but I'm not going to get out over my skis here.

Speaker Change: About even even competitive accounts like why would anybody use another valve so.

Speaker Change: Our team is very fired up about going aggressively after this mechanical valve market as far as the bioprocess segment.

Speaker Change: And typically.

Speaker Change: Patients under 65, there is certainly some signals there that this data can go after <unk>, but I'm not going to get out over my skis here. This data just got released.

Speaker Change: And we're going to be exploring that but.

Speaker Change: Right now we're going aggressively after the the mechanical segment when we still have a lot of room to go.

Frederick Allen Wise: I just want to get a sense from you on what the key growth contributors are and how you're looking at growth for the aortic business for the rest of the year. And then, second, for Lance, just on the gross margin profile, tissue was particularly strong near 60%. Just how are you thinking about tissue gross margin for the rest of the year and gross margin for the business as a whole? Thanks. Yeah, so just on the stent business. So the gap growth was 23. We typically talk about constant currency was like 19.

Speaker Change: Thanks, that's helpful and if I could sneak it in sort of a two parter here, maybe the first for Pat.

Second for labs.

Speaker Change: Just on the aortic side of the business growth was really strong this quarter I think it came in at kind of mid twenties.

Pat: To get a sense from you what the what the key growth contributors are and how youre looking at growth through the aortic business for the rest of the year and then second for Lance just on the gross margin profile tissue was particularly strong near 60%.

Speaker Change: How are you thinking about tissue gross margin for the rest of the year and gross margin for the business as a whole. Thanks.

Speaker Change: Yes, so just on the on the stent business.

Speaker Change: So the GAAP growth was 23, we typically talk about constant currency was like 19.

Pat Mackin: You know, obviously very strong. And I mentioned a little bit earlier, I think what's driving this is that we've got strong channels kind of around the globe. But we've also got a very differentiating, unique portfolio. For example, AMDS, we had the USID trial Persevere presented at the beginning of the quarter, kind of the end of January, with phenomenal data. I mentioned it, a 72% reduction in mortality, a 52% reduction in major adverse events, no doubts. So clearly, the AMDS is proprietary. Nobody has it.

Speaker Change: Obviously very strong.

Speaker Change: And I mentioned, it a little bit earlier, I mean, I think what's driving this.

Speaker Change: We've got strong channels.

Speaker Change: Around the globe.

Speaker Change: But we've also got a very differentiated unique portfolio for example, <unk> we.

Pat Mackin: We've just released great data. We've also got two very significant technologies in the branch stent graft area, the frozen elephant trunk in the arch, and then the branch thoracobdominal in the kind of midsection of the aorta. And those are growing very rapidly. So again, we have a, it's the whole strategy, right, that we're an aorta company. We can treat everything from your aortic valve to your iliac with a bunch of different technologies, and the majority of them are very proprietary with a strong sales force.

Speaker Change: We've also got two very significant technologies in the branch stent graft area.

The frozen elephant trunk in the arch and the branched thoracoabdominal.

Speaker Change: The mid section of the aorta.

And those are growing very rapidly. So again, we have a we have a.

Speaker Change: It's the whole strategy right is where an aortic company, we can treat from your aortic valve to your iliac with a bunch of different technologies in the majority of them are very proprietary with a strong sales force. So I think that's that's what's driving the stent graft side I think you had a question on margin for <unk>, yes. So overall.

Pat Mackin: So I think that's what's driving the stent graft side. I think you had a question on margin for Lance. Yeah, so overall, we're, you know, qualitatively saying you should expect gross margin to be relatively flat year over year. There's a lot of mix in our gross margin. And you have, we have, you know, four different product lines at different margins and in four different regions with different margins, and so there's a lot that goes into it.

Speaker Change: We're in a.

Speaker Change: Qualitatively, saying you expect gross margin to be relatively flat year over year. There is a lot of mix.

Speaker Change: In our in our gross margin when you have we have four different product lines at <unk>.

Speaker Change: Margins in four different regions with different margins and so there is a lot that goes into it I will say.

Lance E. Berry: I will say specifically on the Centigraph pulmonary valve portion of our preservation services, now preservation services have historically been our lowest gross margin, but our pulmonary valves are actually north of company average, and so specifically with that, that grows faster. You know that's a tailwind. It's not a headwind, and now I don't want you to take those comments and say oh, that means mix should should go up because there's Thanks.

Speaker Change: Specifically on the <unk> pulmonary valve portion of our preservation services and refrigerated services historically been.

Our lowest gross margin, but our our pulmonary valves are actually north of company average and so specifically with that as that grows faster.

Speaker Change: That's a that's a tailwind it's not a not a headwind now I don't want you to take those comments and say Oh that means mix should should go up because there's a lot of pieces, but that part growing faster isn't a negative for for gross margin.

Speaker Change: Yes.

Speaker Change: Thanks Thats helpful.

Lance E. Berry: Our next question is from Frank Takkinen with Lake Street Capital Markets. Please proceed. Great. Thanks for taking the questions. Pat and Lance, congrats on the quarter. I was hoping to start with one on Onyx as well.

Speaker Change: Our next question is from Frank <unk> with Lake Street Capital markets. Please proceed.

Frank James Takkinen: In light of all the data packs that have come out, consistently higher market share, how do you think about the pricing opportunity? Have you taken any recent price increases?

Pat Mackin: And do you think you have the ability to continue to take prices? Yeah, it's a good question, Frank. I mean, it really is kind of, you know, evolving where, you know, it used to be mechanical valves and tissue valves, like, you know, two discrete buckets. But what's really kind of evolving from this data is that there's kind of a new category in between a mechanical valve and a tissue valve, which is onyx.

Speaker Change: Yes, it's a good question Frank.

Speaker Change: It really is kind of.

Speaker Change: Evolving where it used to be mechanical valves and tissue valves.

Speaker Change: Two discrete buckets, but what's really kind of evolving from this data is that theres kind of a new category in between a mechanical valve in a tissue valve which is onyx.

Frank: So I mean, we've really got the primary objective here is that we feel like this is the best mechanical valve out there and.

Frank: And I do think it should be the only mechanical valve being used so that does bring with it some pricing power.

Frank James Takkinen: So, that does, I think, bring with it some pricing power that we will exploit. I'm not going to get into specifics on the call, but I do think there is an opportunity for that. Okay, that's helpful.

Frank: That we will exploit I'm not going to get into specifics on the call, but I do think there is an opportunity for that.

Speaker Change: Okay. That's helpful. And then maybe just one more from me.

Speaker Change: For Lance on the free cash flow commentary heard your comments about the negative $9 million for the quarter, how should we think about free cash flow cadence for the remaining quarters of the year.

Speaker Change: Cash.

Speaker Change: Jump around.

Speaker Change: Order to quarter. So we're not really committing to positive for every single quarter.

Speaker Change: But definitely expected it to be positive for the full year, probably stronger in the back half. There is just some heavy cash outlay things that occur in the first half of the year.

Frank James Takkinen: There's just some heavy cash outlay things that occur in the first half of the year, and the second half is just a little bit lighter on that, but I definitely expect it to be positive for the full year.

Speaker Change: In the second half is just a little bit lighter on that but.

Speaker Change: Definitely expect to be positive for the full year.

Frank James Takkinen: Okay, that makes sense. Thanks for taking the question. Thanks, Frank.

Speaker Change: Okay that makes sense, thanks for taking questions.

Speaker Change: Thanks, Brian.

Jeffrey Scott Cohen: Our final question is from Jeffrey Cohen with Lattenberg-Thalman. Please proceed. [inaudible] from our end. Could you talk about a little bit as far as macro views and any pricing that's been taken or planned to be taken and some of that uptake and strong quarter from new users, new surgeons that are coming on board, or is it more in respect of higher utilization per surgeon or per facility? Yeah, so NEO, you know, we're not going to break out specific products underneath the kind of aortic stent umbrella, if you will.

Speaker Change: Our final question is from Jeffrey Cohen with Ladenburg Thalmann. Please proceed.

Jeffrey Scott Cohen: Alright, Lance just a couple from Amarin could you talk about EMEA, a little bit as far as any macro views and any pricing that's been taken or plan to be taken with some of the uptake and a strong quarter from new users new surgeons that are coming on board or is it more in respect of <unk>.

Jeffrey Scott Cohen: Here are the utilization curve.

Jeffrey Scott Cohen: For surge in oil per facility.

Lance E. Berry: Yes, so neal.

Neal: We're not going to breakout specific products underneath that are kind of aortic stent umbrella, if you will but I will say that.

Neal: <unk> is growing very rapidly.

Neal: It's a combination of.

Neal: Expansion geographical expansion, we're selling neo in Asia, we're selling neo in Latin America.

Neal: Many markets in Europe, It's obviously not approved in the U S or Japan.

Pat Mackin: But it's doing extremely well. And as I mentioned earlier, it's a proprietary technology. We have a very unique stent system on that device, which we feel has better outcomes than the other devices out there. And we're being very aggressive, kind of going after that business. So, it's a product that's done well and continues to do well. Okay.

Neal: But it's doing extremely well.

Neal: And as I mentioned earlier.

Neal: Proprietary technology, we have.

Neal: A very unique stent system on that device, which we feel has better outcomes in the other devices out there and we're being very aggressive.

Neal: Kind of going after that business so.

Neal: It's a product that's done well and continues to do well.

Speaker Change: Got it Okay, and then secondly first.

Jeffrey Scott Cohen: Lance, can you talk a little bit about the SG&A and maybe Cadence for 24? It seemed like it was... White in the first quarter and how we should think about the leverage on road mile spend from Q2 to Q4. [inaudible] Yeah, I mean, honestly, like, on an as-adjusted basis, now, it looks light on an as-reported basis, but that's because of some of the contingent consideration fluctuations, but on an as-adjusted basis, it was $48 million, which was fairly consistent with Q4.

Speaker Change: Can you talk a little bit about.

Speaker Change: SG&A and maybe cadence for 'twenty four it seems like Youre Rus.

Speaker Change: Right in the first quarter and how we should think about the leverage on the overall spend from Q2 to Q4.

Speaker Change: Yeah, I mean honestly like on an as adjusted basis, it looks like on an as reported basis, but thats because some of the.

Speaker Change: Contingent consideration fluctuations, but on an as adjusted basis.

Speaker Change: $48 million, which was fairly consistent with Q4 and.

Lance E. Berry: And I think something in that kind of range is really what we think about as we move throughout the year on an as-adjusted basis, which should drive some really good leverage year over year. And then finally, for us, any commentary on the tissue business with regard to, I know that pulmonary has been strong, but any commentary on cardiac versus vascular, generally speaking, on pricing or units out there for the quarter? Yeah, yeah, we're not going to break out components underneath the kind of tissue. Obviously, we've talked for several quarters in a row about the price increases on cardiac and the volume increases. So cardiac is definitely driving it.

Speaker Change: I think something in that kind of range is really what we think about as we move throughout the year on an as adjusted basis. So.

Jeffrey Scott Cohen: But the whole segment is growing, but we're not going to break it down into pieces. Perfect. Okay, I got it.

Speaker Change: Which should drive some really good leverage year over year.

Speaker Change: Great and then finally for Sandy commentary on.

Speaker Change: Tissue business with regard to I know that formulary has been strong.

Speaker Change: Your commentary on cardiac versus vascular generally speaking on.

Speaker Change: Are you seeing or Europeans or units out there for the quarter.

Sandy: Yeah again, we're not we're not going to break out components underneath that kind of the tissue obviously, we've talked.

Sandy: For several quarters in a row about the price increases on cardiac and the volume increases so cardiac definitely driving it.

Sandy: But the whole segment is growing so, but we're not going to breakout pieces.

Jeffrey Scott Cohen: That does it for us. Thanks for taking the questions. Thanks, Jeff. Mr. Mackin, there are no further questions at this time. I would like to turn the floor back over to management for closing comments. No, thanks for joining us for our Q1 call. Again, we were very pleased with the first quarter and, you know, 16% top line growth, and 60% bottom line growth. We're executing on the pipeline. We've got great products, great data, great sales forces, and plan on doing more of the same as the year keeps going. So, I appreciate your support and look forward to our next call with you. Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Speaker Change: Perfect. Okay, I got it that dosing for us thanks for taking the questions. Thanks, Jeff.

Speaker Change: Mr. Matthew and there are no further questions at this time I would like to turn the floor back over to management for closing comments.

Speaker Change: No. Thanks for joining for our Q1 call again.

Speaker Change: Very pleased with the first quarter.

Speaker Change: Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

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