Q2 2024 Artivion Inc Earnings Call

Operator: Greetings and welcome to Artivion's second quarter 2024 financial conference call. At this time, all participants are on a listen-only mode. A 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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Laine Morgan. Thank you.

Operator: Greetings and welcome to Artivion's second quarter 2024 financial conference call. At this time, all participants are on the list in only mode. A question and answer session will follow the formal presentation.

Speaker Change: Greetings and welcome to Artivion's second quarter 2024 financial conference call. At this time, all participants are on a listen-only mode.

Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Speaker Change: A 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.

Laine Morgan: I would now like to turn the conference over to your host, Laine Morgan. Thank you, you may begin.

Speaker Change: As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Laine Morgan. Thank you.

Laine Morgan: Good afternoon, and thank you for joining the call today. Joining me today from on Tribune's management team are Pat Mackin, CEO, and Lance Berry, CSO.

Laine Morgan: 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.

Laine Morgan: 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.

Laine Morgan: 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. Comments made on this call that was forward in time involved risks and uncertainties in our 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 companies or management intentions, hopes, beliefs, expectations, or predictions of the future. Before-looking statements are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from the forward-looking statements.

Laine Morgan: 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. 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.

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 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.

Laine Morgan: Comments made on this call that look forward in time involve risks and uncertainties in our forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Laine Morgan: The forward-looking statements include statements made as to the company's or management's intentions, hopes, beliefs, expectations, or predictions of the future. 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.

Laine Morgan: 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.

Laine Morgan: 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 filing and in the press release that was issued earlier today.

Laine Morgan: You can also find a brief presentation with details highlighted on today's call on the investor-relation section of the RTVN website.

Laine Morgan: You can also find a brief presentation with details highlighted on today's call on the Investment Relations section of the Artivion website. Now I'll turn it over to Artivion CEO , Pat Mackin.

Pat Mackin: Now, I'll turn it over to our Tribune CEO, Pat Mackin. Thanks, Laine, and good afternoon, everybody. We're very pleased with our Q2 performance, which capped a strong first half of 2024 for RTVN. We made significant progress on our commercial, operational, and financial goals. In the second quarter of 2024, we delivered constant currency revenue growth of 10% year-over-year, representing $98 million in revenue, and adjusted EVA.growth of 35% year-over-year compared to the second quarter of 2023. More recently, we amended our credit facility in option-person agreements with EndoSpan. The amended credit facility provides EndoSpan with additional funding, subject to progress towards completion of the Nexus PMA, while the amended option purchase agreement significantly improves our acquisition terms for EndoSpan should we like to exercise our option.

Pat Mackin: Thanks, Laine, and good afternoon, everybody. We're very pleased with our Q2 performance, which capped a strong first half of 2024 for Artivion in which we made significant progress on our commercial, operational, and financial goals. In the second quarter of 2024, we delivered constant currency revenue growth of 10% year-over-year, representing $98 million in revenue and adjusted EBITDA growth of 35% year-over-year compared to the second quarter of 2020. Additionally, more recently, we amended our credit facility in our option purses agreements with Endospan.

Pat Mackin: Thanks, Laine, and good afternoon to everybody. We're very pleased with our Q2 performance, which capped a strong first half of 2024 for Artivion, with which we made significant progress on our commercial, operational, and financial goals.

Pat Mackin: In the second quarter of 2024, we delivered constant currency revenue growth of 10% year over year, representing $98 million in revenue, and adjusted EBITDA growth of 35% year over year, compared to the second quarter of 2023.

Pat Mackin: The amended credit facility provides ENDOSPAN with additional funding subject to progress towards completion of the Nexus PMA. Additionally, the amended option purchase agreement significantly improves our acquisition terms for Enderspan should we like to exercise our option.

Pat Mackin: More recently we amended our credit facility in option purses agreements with Endospan.

ENDOSPAN: The amended credit facility provides ENDOSPAN with additional funding subject to progress towards completion of the Nexus PMA.

ENDOSPAN: Well, the amended option purchase agreement significantly improves our acquisition terms for Enderspan should we elect to exercise our option.

Pat Mackin: From a financial perspective, our Q2 performance was led by Onyx, which grew 15%, followed by Stankgrass, which grew 13%, and by glue that grew 12%. Followed by TSU processing at 7%, each went compared to the second quarter of 2023, all on a constant currency basis. In the second quarter, we also continue to benefit from our regulatory approvals in commercial footprint expansion in key international markets, especially in Latin America and Asia-Pacific. As a whole, our results and regulatory achievements further validate our growth strategy, and we remain laser-focused on expanding access to our differentiated product portfolio in existing and new markets.

Pat Mackin: From a financial perspective, our Q2 performance was led by Onyx, which grew 15%, followed by Stentgrass, which grew 13%, and BioGlue, which grew 12%, followed by tissue processing at 7%, each when compared to the second quarter of 2023, all on a constant currency basis. In the second quarter, we also continued to benefit from our regulatory approvals for commercial footprint expansion in key international markets, especially in Latin As a whole, our results and regulatory achievements further validate our growth strategy, and we remain laser focused on expanding access to our differentiated product portfolio in existing and new markets. From a product category perspective, as I just mentioned, Onyx revenues increased 15% year-over-year on a constant currency basis.

ENDOSPAN: From a financial perspective, our Q2 performance was led by Onyx, which grew 15%.

ENDOSPAN: followed by Stentgrass, which grew 13%, and BioBlue that grew 12%, followed by tissue processing at 7%. Each we compared to the second quarter of 2023, all on a constant currency basis.

ENDOSPAN: In the second quarter, we also continue to benefit from our regulatory approvals in commercial footprint expansion in key international markets, especially in Latin America and Asia-Pacific.

ENDOSPAN: As a whole, our results and regulatory achievements further validate our growth strategy, and we remain laser-focused on expanding access to our differentiated product portfolio in existing and new markets.

Pat Mackin: From a product category perspective, as I just mentioned, Onyx revenues increased 15% year-over-year on a constant currency basis, as we continue to take market share globally with the only mechanical eortic valve that can be maintained in an INR of 1.5 to 2.0.

ENDOSPAN: From a product category perspective, as I just mentioned, ONIX revenues increase 15% year-over-year on a constant currency basis as we continue to take market share globally with the only mechanical aortic valve that can be maintained in an INR of 1.5 to 2.0.

Pat Mackin: As we continue to take market share globally, we're the only mechanical aortic valve that can be maintained at an INR of 1.5 to 2.0. Based on feedback from the field, our recent market share gains, and the proven clinical benefits of the Onyx aortic valve, we maintain our strong conviction that Onyx is the best aortic valve on the market and will continue to take market share worldwide.

Pat Mackin: Hello. Based on feedback from the field, our recent market share gains in the proven clinical benefits of the Onyx aortic valve, we maintain our strong conviction that Onyx is the best aortic valve on the market and will continue to take market share worldwide. Meanwhile, as I indicated earlier, our strength graph revenues grew 13% on a constant currency basis in the second quarter compared to the same period last year. Our strength graph portfolio remains a key component of our growth strategy. And we are encouraged by our strong results, which are driven by our differentiated product portfolio focused on the more complex segments of the strength graph market.

ENDOSPAN: Based on feedback from the field, our recent market share gains and the proven clinical benefits of the Onyx aortic valve

ENDOSPAN: We maintain our strong conviction that Onyxx is the best aortic valve on the market and will continue to take market share worldwide.

Pat Mackin: Meanwhile, as I indicated earlier, our Stencraft revenues grew 13% on a constant currency basis in the second quarter compared to the same period last year. Our STENCRAFT portfolio remains a key component of our growth strategy, and we are encouraged by our strong results, which are driven by our differentiated product portfolio focused on the more complex segments of the STENCRAFT market. Today, the products in our Stencraft portfolio are primarily sold in Europe, where we leverage our existing direct infrastructure and sales infrastructure and create significant cross-selling opportunities across our unique aortic products offering.

ENDOSPAN: Meanwhile, as I indicated earlier, our stent graph revenues grew 13% on a constant currency basis in the second quarter compared to the same period last year.

ENDOSPAN: Our Stencraft portfolio remains a key component of our growth strategy and we are encouraged by our strong results which are driven by our differentiated product portfolio focused on the more complex segments of the Stencraft market.

Pat Mackin: To get today the products in our strength graph portfolio are primarily sold in Europe, where we leverage our existing direct infrastructure sales infrastructure and create a significant cross-selling opportunities across our unique aortic products offering. Our pipeline consists largely of bringing these proven products to the US and Japan markets, which represents a significant growth opportunity. We also saw strength in bio-food during the second quarter, which grew 12% on a constant currency basis. As we have discussed previously, we expect to see some variability in the growth rates of bio-food from quarter to quarter, driven by the significant amount of stocking distributor business in this product line.

ENDOSPAN: Today, the products in our Stencraft portfolio are primarily sold in Europe , where we leverage our existing direct infrastructure, sales infrastructure, and create a significant cross-selling opportunities across our unique aortic products offering.

Pat Mackin: Our pipeline consists largely of bringing these proven products to the U.S. and Japan markets, which represents a significant growth opportunity. We also saw strength in Baobu during the second quarter, which grew 12% on a constant currency basis. As we have discussed previously, we expect to see some variability in the growth rates of Bioglue from quarter to quarter driven by the significant amount of stocking distributor business in this product line. On an annual basis, we expect BioBlue to grow in the mid-single-digit range.

ENDOSPAN: Our pipeline consists largely of bringing these proven products to the U.S. and Japan markets, which represents a significant growth opportunity.

ENDOSPAN: We also saw strength in Baobu during the second quarter, which grew 12% on a constant currency basis.

ENDOSPAN: As we have discussed previously, we expect to see some variability in the growth rates of BioGlue from quarter to quarter, driven by the significant amount of stocking distributor business in this product line.

Pat Mackin: On an annual basis, we expect bio-food to grow in the mid-single-digit range. Lastly, on tissue processing, our revenues grew 7% every year on a constant currency basis in Q2, as we annualize the benefits from last year's pricing initiatives. We continue to expect the tissue business to grow double digits for the full year of 2024, as we further leverage increased supply of our proprietary Centigraph pulmonary valve and continue to benefit from our higher-ros procedure volumes.

ENDOSPAN: On an annual basis, we expect BioGlue to grow in the mid-single-digit range.

Pat Mackin: Lastly, on tissue processing, our revenues grew 7% year-over-year on a constant currency basis in Q2, as we annualized the benefits from last year's pricing initiative. We continue to expect the tissue business to grow double digits for the full year of 2024 as we further leverage increased supply of our proprietary Synagraft pulmonary valve and continue to benefit from our higher ROS procedure volume. For those unfamiliar with the ROS procedure, it's a double valve procedure in which the patient's native pulmonary valve is replaced by the patient's defective aortic valve, and then the patient's pulmonary valve is then replaced by a donated pulmonary valve. The Ross procedure is considered the best option for young to middle-aged patients with a diseased aortic valve, as it provides the best chance for these patients to have a normal life expectancy.

ENDOSPAN: Lastly, on tissue processing, our revenues grew 7% year-over-year on a constant currency basis in Q2.

ENDOSPAN: As we annualize the benefits from the last year's pricing initiatives.

ENDOSPAN: We continue to expect the tissue business to grow double digits for the full year of 2024 as we further leverage increased supply of our proprietary Synagraft pulmonary valve and continue to benefit from our higher Ross procedure volumes.

Pat Mackin: For those unfamiliar with the Ross procedure, it's a double-valved procedure in which the patient's native pulmonary valve is replaced by the patient's defective aortic valve. And then the patient's pulmonary valve is then replaced by a donated pulmonary valve. The Ross procedure is considered the best option for young to middle-aged patients with a diseased aortic valve, as it provides the best option for these patients to have a normal life expectancy. The use of the Ross procedure is increased rapidly over the last couple of months in years to significant long-term data demonstrating these significant clinical benefits. Our centigraph pulmonary valve has no competitive alternative and is the market leader in Allagrasse using these procedures.

Speaker Change: For those unfamiliar with the ROS procedure, it's a double valve procedure in which the patient's native pulmonary valve is replaced by the patient's defective aortic valve, and then the patient's pulmonary valve is then replaced by a donated pulmonary valve.

Speaker Change: The Ross procedure is considered the best option for young to middle-aged patients with a diseased aortic valve as it provides the best option for these patients to have a normal life expectancy.

Pat Mackin: The use of the ROS procedures has increased rapidly over the last couple of months and years due to significant long-term data demonstrating these significant clinical benefits. Our Cinegraft pulmonary valve has no competitive alternative and is the market leader in allografts used in these procedures. Further, revenues in the second quarter were also driven by our continued progress and growth in Latin America and Asia Pacific, primarily through new regulatory approvals and commercial footprint expansion. Latin America and Asia Pacific delivered constant currency revenue growth of 25% and 15%, respectively, compared to the second quarter of last year.

Speaker Change: The use of the ROS procedures increased rapidly over the last couple of months and years due to significant long-term data demonstrating these significant clinical benefits.

Speaker Change: Our Cinegraft pulmonary valve has no competitive alternative and is the market leader in allografts used in these procedures.

Pat Mackin: Further, revenues in the second quarter were also driven by our continued progress in growth in Latin America and Asia-Pacific, primarily through new regulatory approvals and commercial footprint expansion. Latin America and Asia-Pacific delivered constant currency revenue growth of 25 and 15 percent, respectively, compared to the second quarter of last year. We continue to anticipate strong revenue growth for both regions for the full year, and over the coming years as we continue to leverage our industry-leading product portfolio in these regions.

Speaker Change: Further, revenues in the second quarter were also driven by our continued progress and growth in Latin America and Asia Pacific.

Speaker Change: primarily through new regulatory approvals and commercial footprint expansion.

Speaker Change: Latin America and Asia Pacific delivered constant currency revenue growth of 25 and 15 percent respectively compared to the second quarter of last year.

Pat Mackin: We continue to anticipate strong revenue growth for both regions for the full year and over the coming years as we continue to leverage our industry-leading product portfolio in these regions. We are also excited about the progress our partner, Endospan, is continuing to make in the U.S. IDE Triumph trial for the Nexus Aortic Arc Stent Graph System. As of today, there have been 50 of the 60 primary endpoint patients enrolled in the chronic dissection arm. Given this current enrollment, patients are scheduled for procedures.

Speaker Change: We continue to anticipate strong revenue growth for both regions for the full year. And over the coming years, as we continue to leverage our industry-leading product portfolio in these regions.

Pat Mackin: We are also excited about the progress of our partner End of Spans continuing to make on the US IDE Triumph trial for the Nexus Aortic Arc Strength Growth System.

Speaker Change: We are also excited about the progress of our partner, Endospan, is continuing to make on the US IDE Triumph Trial for the Nexus Aortic Arc Stent Graph System.

Pat Mackin: Som. As of today, there have been 50 of the 60 primary endpoint patients enrolled in the chronic dissection arm. Given this current enrollment, patients are scheduled for procedures.

Speaker Change: As of today, there have been 50 of the 60 primary endpoint patients enrolled in the chronic dissection arm.

Pat Mackin: We expect to complete this trial by the end of 2024. Assuming the trial endpoints are met, Nexus remains on track for approval in the second half of 2026. As a reminder, Aortic arch disease patients with aneurysms and dissections who receive treatment previously had little choice before NEXUS but to undergo open chest surgery, which is an invasive and risky operation associated with lengthy hospitalizations and prolonged recuperation. Nexus is a highly differentiated technology that transforms a complex surgical aortic arch repair into a minimally invasive endovascular procedure.

Pat Mackin: We expect to complete this trial by the end of 2024. Assuming the trial endpoints are met, Nexus remains on track for approval in the second half of 2026.

Speaker Change: Given this current enrollment, patients are scheduled for procedures. We expect to complete this trial by the end of 2024.

Speaker Change: Assuming the trial endpoints are met, Nexus remains on track for approval in the second half of 2026.

Pat Mackin: As a reminder, aortic arch disease patients with aneurysms and dissections who receive treatment have previously had little choice before Nexus, but to undergo open chest surgery, which is an invasive and risky operation associated with lengthy hospitalizations and prolonged recuperation. Nexus is a highly differentiated technology that transforms a complex surgical aortic arch repair into a minimally invasive endovascular procedure. In 2019, we secured exclusive right distribution rights for Nexus in Europe and began leveraging our existing European direct sales organization to expand access to the technology and drive revenue growth. Based on our experience in Europe, we continue to see a significant global opportunity for Nexus, which has been estimated on an annual global basis to be around $600 million.

Speaker Change: As a reminder,

Speaker Change: Aortic arch disease patients with aneurysms and dissections who receive treatment have previously had little choice before NEXUS, but to undergo open chest surgery, which is an invasive and risky operation associated with lengthy hospitalizations and prolonged recuperation.

Speaker Change: Nexus is a highly differentiated technology that transforms a complex surgical aortic arch repair into a minimally invasive endovascular procedure.

Pat Mackin: In 2019, we secured exclusive distribution rights for Nexus in Europe and began leveraging our existing European direct sales organization to expand access to the technology and drive revenue growth. Based on our experience in Europe, we continue to see a significant global opportunity for Nexus, which has been estimated on an annual global basis to be around $600 million.

Speaker Change: In 2019, we secured exclusive distribution rights for Nexus in Europe and began leveraging our existing European direct sales organization to expand access to the technology and drive revenue growth.

Speaker Change: Based on our experience in Europe , we continue to see a significant global opportunity for Nexus, which has been estimated on an annual global basis to be around $600 million.

Pat Mackin: Also in 2019, we provided a credit facility to End a span to support the Nexus USID trial and commercial operations. We also would enter into an option agreement to acquire end of span until 90 days following the receipt of an FDA approval for Nexus.

Pat Mackin: Also in 2019, we provided a credit facility to Endospan to support the Nexus USID trial and commercial operation. We also entered into an option agreement to acquire Endospan until 90 days following the receipt of an FDA approval for next. Recently, in July, we amended these two agreements, which has resulted in three major changes that Lance will cover shortly. We view our revised agreements with Endospan as an investment in the next frontier of aortic arch surgery.

Speaker Change: Also, in 2019, we provided a credit facility to Endospan to support the Nexus USID trial and commercial operations.

Speaker Change: We also had entered into an option agreement to acquire Endospan until 90 days following the receipt of an FDA approval for Nexus.

Pat Mackin: Recently, in July, we amended these two agreements, which has resulted in three major changes that Lance will cover shortly. We view our revised agreements with end of span as an investment in the next frontier of aortic arch surgery. We also view it as a potential opportunity to meaningfully expand our total addressable market on significantly more favorable terms than we had before.

Speaker Change: Recently in July, we amended these two agreements, which has resulted in three major changes that Lance will cover shortly.

Lance Berry: We view our revised agreements with Endospan as an investment in the next frontier of aortic arc surgery.

Pat Mackin: We also view it as a potential opportunity to meaningfully expand our total addressable market on significantly more favorable terms than we had before. We also continue to anticipate PMA approval for AMDS in 2025, which, as we have discussed, would open up an addressable market here in the U.S. for about $150 million with no competitive alternative. In summary, we are very excited about our Q2 performance and look forward to sustaining our momentum throughout 2024 and beyond by driving continued growth in onyx, stencrafts, and our cinnagraph pulmonary valve business by further expanding our global footprint in Asia-Pacific and Latin America. With that, I'll now turn the call over to...

Lance Berry: We also view it as a potential opportunity to meaningfully expand our total addressable market on significantly more favorable terms than we had before.

Pat Mackin: We also continue to anticipate PMA approval for AMDS in 2025, which, as we have discussed, would open up an addressable market here in the US for about $150 million with no competitive alternatives.

Lance Berry: We also continue to anticipate PMA approval for AMDS in 2025.

Lance Berry: Which, as we have discussed, would open up an addressable market here in the U.S. for about $150 million with no competitive alternatives.

Pat Mackin: In summary, we are very excited about our Q2 performance and look forward to sustaining our momentum throughout 2024 and beyond by driving continued growth in Onyx, Stancrafts, and our Cinegraph pulmonary valve business by further expanding our global footprint in Asia-Pacific and Latin America.

Speaker Change: In summary, we are very excited about our Q2 performance and look forward to sustaining our momentum throughout 2024 and beyond by driving continued growth in onyx, stencrafts, and our cinnagraph pulmonary valve business, and by further expanding our global footprint in Asia Pacific and Latin America. With that, I'll now turn the call over to Lance.

Lance Berry: With that, I'll now turn the call over to Lance. Thanks, Pat. In 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 $98 million to the second quarter of 2024, up 10 percent compared to Q2 of 2023. Adjusted EBITDA increased approximately 35 percent from 13.8 million to 18.6 million in the second quarter of 2024.

Lance 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 $98 million for the second quarter of 2024, up 10% compared to Q2 of 2023.

Lance 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 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.

Speaker Change: Total revenues were $98 million for the second quarter of 2024, up 10% compared to Q2 of 2023.

Lance Berry: Suggested EBITDA increased approximately 35% from $13.8 million to $18.6 million in the second quarter of 2024. Adjusted EBITDA margin was 19% in the second quarter, a 350 basis point improvement over the prior year, driven by a 320 basis point reduction in general administrative and marketing expense as a percentage of sales. We continue to believe our sales and G&A infrastructure is very scalable, and the significant leverage we have produced in the first half of the year supports our belief.

Lance Berry: Adjusted EBITDA increased approximately 35% from $13.8 million to $18.6 million in the second quarter of 2024.

Lance Berry: Adjusted EBITDA margin was 19 percent in the second quarter, a 350 basis point improvement over the prior year driven by a 320 basis point reduction in general administrative and marketing expense as a percentage of sales. We continue to believe our sale in DNA infrastructure is very scalable, and the significant leverage we have produced in the first half of the year supports our belief.

Speaker Change: A judge to leave a down margin was 19% in the second quarter, a 350 basis point improvement over the prior year, driven by 320 basis point reduction in general administrative and marketing expense as a percentage of sales.

Lance Berry: We continue to believe our sales and G&A infrastructure is very scalable and the significant leverage we have produced in the first half of the year supports our belief.

Lance Berry: From a product line perspective, there is 42% in the second quarter of 2024. We did not break this segment out by product as it is relatively nominal to the business overall. However, I do want to provide some additional color on these results. The declining Q2 was driven by the timing of per-cloud orders from Baxter as they work to manage down inventory levels. The order decline also had a modest negative impact to adjusted EBIDOT in Q2. Though the underlying end user sales of per-cloud are continuing to ramp up, we expect these inventory dynamics to continue through the balance of 2024, including this impact. Our underlying business grew 11% in the second quarter of 2024 compared to Q2 of 2023.

Lance Berry: From a product line perspective, Onyxx revenues increased 15%, Scenticraft revenues grew 13%, BioBlue revenues grew 12%, and Tissue Processing revenues grew 7% in the second quarter of 2025. However, I would like to proactively note that other revenue declined approximately $1.3 million and 42% in the second quarter of 2024. We did not break this segment out by product, as it is relatively insignificant to the business overall. However, I do want to provide some additional color on these results.

Lance Berry: From a product line perspective, Onyx revenues increased 15%, Synthcraft revenues grew 13%, BioBlue revenues grew 12%, and Tissue Processing revenues grew 7% in the second quarter of 2024.

Lance Berry: I would like to proactively note that other revenue declined approximately $1.3 million and 42% in the second quarter of 2024.

Lance Berry: We did not break this segment out about product as it is relatively nominal to the business overall. However, I do want to provide some additional color on these results.

Lance Berry: The decline in Q2 was driven by the timing of per cloud orders from Baxter as they worked to manage down inventory levels. The order decline also had a modest negative impact on adjusted EBITDA in Q2. Though the underlying end-user sales of Perklot are continuing to ramp up, we expect these inventory dynamics to continue through the balance of 2024.

Lance Berry: The decline in Q2 was driven by the timing of per plot orders from Baxter as they worked to manage down inventory levels.

Lance Berry: The order decline also had a modest negative impact to adjusted EBITDA in Q2.

Lance Berry: Though the underlying end-user sales of Perklot are continuing to ramp up, we expect these inventory dynamics to continue through the balance of 2024. Excluding this impact, our underlying business grew 11% in the second quarter of 2024 compared to Q2 of 2023.

Lance Berry: Excluding this impact, our underlying business grew 11% in the second quarter of 2024 compared to Q2 of 2023. On a regional basis, revenues in Latin America increased 25 percent, Asia Pacific increased 15 percent, EMEA increased 13 percent, and North America increased 5 percent, all compared to the second quarter of 2020. As anticipated, gross margins were 64.6 in Q2, a slight decrease from 65.1% compared to the second quarter of 2023. The decrease was due to normal fluctuations in geographic and product mix.

Lance Berry: On a regional basis, revenues in Latin America increased 25%, A's of Pacific increased 15%, EMEA increased 13%, and North America increased 5%, all compared to the second quarter of 2023. As anticipated, gross margins were 64.6% in Q2, a slight decrease from 65.1% compared to the second quarter of 2023. The decrease was due to normal fluctuations in geographic and product mix. Q2 margins were in line with the gross margins we saw in Q1 and in line with our full-year expectation. General administrative and marking expenses in the second quarter were $49.3 million compared to $57.2 million in the second quarter of 2023.

Lance Berry: On a regional basis, revenues in Latin America increased 25 percent, Asia Pacific increased 15 percent, EMEA increased 13 percent, and North America increased 5 percent, all compared to the second quarter of 2023.

Lance Berry: As anticipated, gross margins were 64.6 in Q2, a slight decrease from 65.1% compared to the second quarter of 2023. The decrease was due to normal fluctuations in geographic and product mix.

Lance Berry: Q2 margins were in line with the growth margins we saw in Q1 and in line with our full year expectations. General Administrative and Marketing expenses in the second quarter were $49.3 million compared to $57.2 million in the second quarter of 2023. Non-GAAP General Administrative and Marketing expenses were $47.3 million in the second quarter compared to $45.9 million in the second quarter of 2023, representing 320 basis points of leverage. R&D expenses for the second quarter were $7.5 million compared to $7.4 million in the second quarter of 2023.

Lance Berry: Q2 margins were in line with the growth margins we saw in Q1 and in line with our full year expectation.

Lance Berry: General administrative and marketing expenses in the second quarter were $49.3 million compared to $57.2 million in the second quarter of 2023.

Lance Berry: Non-GAAP general administrative and marking expenses were $47.3 million in the second quarter compared to $45.9 million in the second quarter of 2023, representing 320 basis points of leverage. R&D expenses for the second quarter were $7.5 million compared to $7.4 million in the second quarter of 2023. We still anticipate full-year R&D spend as a percentage sale to be relatively flat to prior year. Interest expense, net of interest income, was $8 million as compared to $6.1 million in the prior year. Other income expense included foreign currency translation gains of approximately $900,000 this quarter. Free cash flow was $3.6 million in the second quarter of 2024.

Lance Berry: Non-gap general administrative and marketing expenses were $47.3 million in the second quarter compared to $45.9 million in the second quarter of 2023 representing 320 basis points of leverage.

Lance Berry: R&D expenses for the second quarter were $7.5 million, compared to $7.4 million in the second quarter of 2023. We still anticipate fully your R&D span as a percentage sale to be relatively flat to try our year.

Lance Berry: We still anticipate full year R&D spending as a percentage of sales to be relatively flat to the prior year. Interest expense net of interest income was $8 million as compared to $6.1 million in the prior year. Other income expense included foreign currency translation gains of approximately $900,000.00.

Lance Berry: Interest expense net of interest income was $8 million as compared to $6.1 million in the prior year.

Lance Berry: Other income expense included foreign currency translation gains of approximately $900,000 this quarter.

Lance Berry: Free cash flow was $3.6 million in the second quarter of 2024. Importantly, we continue to expect free cash flow to be positive for the full year 2020. As of June 30, we had approximately $55 million in cash and $313.6 million in debt, net of $6.8 million of unamortized loan origination costs.

Lance Berry: Importantly, we continue to expect free cash flow to be positive for the full-year 2024. As of June 30, we had approximately $55 million in cash and $313.6 million in debt, net of $6.8 million of unamortized loan origination costs. It is important to note that this does not contemplate the impact of our recently closed amendment agreements to the end of span, which I will speak to shortly. Further, we do not anticipate the need to raise additional capital to fund our debt obligations, our investments, and our channels, or our pipeline in the foreseeable future. Our net leverage at the end of Q2 was 4.1, down from 4.7 in the prior year.

Lance Berry: Free cash flow was $3.6 million in the second quarter of 2024. Importantly, we continue to expect free cash flow to be positive for the full year 2024.

Lance Berry: As of June 30, we had approximately $55 million in cash and $313.6 million in debt, net of $6.8 million of unamortized loan origination costs.

Lance Berry: It is important to note that this does not contemplate the impact of our recently closed amendment agreement with ENDOSPAN, which I will speak to shortly. 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 Q2 was 4.1, down from 4.7 in prior years.

Lance Berry: is important to note that this does not contemplate the impact of our recently closed amendment agreement with IndoSpan, which I will speak to you shortly.

Speaker Change: Further would you not anticipate the need to raise additional capital to fund our dead obligations, our investments, and our channels or our pipeline in the foreseeable future.

Speaker Change: Our net leverage at the end of Q2 was 4.1, down from 4.7 in prior year.

Lance Berry: At the midpoint of our EBITDA guidance range, we expect net debt leverage to be closer to 3.5 by the end of the year and to continue to decrease in 2025.

Lance Berry: At the midpoint of our EBIDTA guidance range, we expect net debt leverage to be closer to 3.5 by the end of the year and to continue to decrease in 2025.

Lance Berry: In regard to the recently amended credit facility and option persons agreements with Endless Man, we are pleased with the combined results of these three major changes. First, Artivion will now provide additional loans to Endless Man of up to $25 million in three tranches, which we expect to fund with free cash flow. Second, the upfront payment associated with the purchase option is reduced by $75 million and is now 135 million after offsetting the loans. And third, the $100 million minimum payout for the earnout is eliminated. To reiterate Pat's comments, we view the amended agreement as an investment in the future of A.O.

Lance Berry: At the midpoint of our EBIDTA guidance range, we expect net debt leverage to be closer to 3.5 by the end of the year and to continue to decrease in 2025. In regard to the recently amended Credit Facility and Option Purchase Agreements with INDISPAN, we are pleased with the combined results of these three major changes. First, Artivion will now provide additional loans to end the span of up to $25 million in three tranches, which we expect to fund with free cash flow. Second, the upfront payment associated with the purchase option is reduced by $75 million and is now $135 million after offsetting the loan. And third, the $100 million minimum payout for the earn-out is eliminated.

Speaker Change: In regard to the recently amended credit facility and option persons to agreements with Indusman, we are pleased with the combined results of these three major changes.

Speaker Change: First, Artivion will now provide additional loans to end the span of up to $25 million in three tranches, which we expect to fund with free cash flow.

Speaker Change: Second, the upfront payment associated with the purchase option is reduced by $75 million and is now $135 million after offsetting the loans. And third, the $100 million minimum payout for the earn out is eliminated.

Lance Berry: To reiterate Pat's comments, we view the amended agreement as an investment in the future of aortic repair while simultaneously providing Artivion with greater financial flexibility should we exercise our option to acquire Indus. And now for our outlook for the remainder of 2024. Given our momentum in the first half of the year, we are raising fiscal year 24 revenue guidance and now expect constant currency revenue growth of between 10 and 12% compared to the previous range of 9 to 12%.

Lance Berry: Repair, while simultaneously providing Artivion with greater financial flexibility, should we exercise our option to acquire Endless Man.

Lance Berry: To reiterate Pat's comments, we view the amended agreement as an investment in the future of aortic repair, while simultaneously providing Artivion with greater financial flexibility should we exercise our option to acquire Indospan.

Unknown Executive: Greetings and welcome to Artivion's second quarter, 2024 Financial Conference call. At this time, all participants are on the list in only mode. A question and answer session will follow the formal presentation.

Lance Berry: And now for our outlook for the remainder of 2024. Given our momentum in the first half of the year, we are raising fiscal year 24 revenue guidance and now expect constant currency revenue growth of between 10 and 12 percent compared to the previous range of 9 to 12 percent. We expect reported revenues to be in the range of $388 to $396 million, compared to our previous range of $386 to $396 million. At current rates, we expect FX to have a negligible impact on full-year revenue growth rates. With our continued top-line revenue growth and general expense management through Q2, we are raising our fiscal year 24 adjusted EBITDA guidance and now expect to be in the range of $69 to $72 million for the full year 2024, representing a 28 to 34 percent growth over 2023 and 280 basis points of adjusted EBITDA margin expansion at the midpoint of our ranges.

Speaker Change: And now for our outlook for the remainder of 2024. Given our momentum in the first half of the year, we are raising fiscal year 24 revenue guidance and now expect constant currency revenue growth of between 10 and 12% compared to the previous range of 9 to 12%.

Unknown Executive: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Lance Berry: We expect reported revenues to be in the range of $388 to $396 million compared to our previous range of $386 to $396 million. At current rates, we expect FX to have a negligible impact on full-year revenue growth. With our continued top line revenue growth and general expense management through Q2, we are raising our fiscal year 24 adjusted EBITDA guidance and now expect to be in the range of $69 to $72 million for the full year 2024, representing a 28 to 34 percent growth over 2023 and 280 basis points of adjusted EBITDA margin expansion at the midpoint of our ranges.

Laine Morgan: I would now like to turn the conference over to your host, Laine Morgan. Thank you, you may begin. Good afternoon, and thank you for joining the call today. Joining me today from on Tribune's Management Team are Pat Mackin, CEO, and Lance Berry, CSO.

Speaker Change: We expect reported revenues to be in the range of $388 to $396 million compared to our previous range of $386 to $396 million.

Laine Morgan: Before we begin, I'd like to make the following statements to comply with the safe harbor requirements of the private security's litigation reform act of 1995. Comments made on this call that was forward in time involved risks and uncertainties in our forward-looking statements within the meaning of the private security's litigation reform act of 1995. The forward-looking statements include statements made as to the companies or management intentions, hopes, beliefs, expectations, or predictions of the future.

Lance Berry: A current rate to respect ethics to have a negligible impact on full-year revenue growth rate.

Lance Berry: With our continued top-line revenue growth and general expense management through Q2, we are raising our FY24 adjusted EBITDA guidance and now expect to be in the range of $69-72 million for the full year 2024, representing a 28-34%

Laine Morgan: Before-looking statements are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from the 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 filing and in the press release that was issued earlier today.

Lance Berry: Growth over 2023 and 280 basis points of adjusted EBITDA margin expansion at the midpoint of our ranges.

Lance Berry: This compares to the previous guidance range of $68 to $72 million, representing 26 to 34 percent growth over 2023. As a reminder, we expect growth 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 experiments is expected to remain relatively flat as a percentage of sales.

Lance Berry: This compares to the previous guidance range of 68 to 72 million, representing 26 to 34% growth over 2023. 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 G&A infrastructure. Additionally, R&D expense is expected to remain relatively flat as a percentage of sales. With that, I will turn the call back to Pat for his closing comment. All right.

Lance Berry: This compares to the previous guidance range of 68 to 72 million, representing 26 to 34% growth over 2023.

Lance Berry: 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 G&A infrastructure. Additionally, R&D expense is expected to remain relatively flat as a percentage of sales.

Laine Morgan: You can also find a brief presentation with details highlighted on today's call on the investor-relation section of the RTVN website.

Pat Mackin: Now, I'll turn it over to our Tribune CEO, Pat Mackin. Thanks, Laine, and good afternoon, everybody. We're very pleased with our Q2 performance, which capped a strong first half of 2024 for RTVN, which we made significant progress on our commercial, operational, and financial goals. In the second quarter of 2024, we delivered constant currency revenue growth of 10% year-over-year, representing $98 million in revenue, and adjusted eva.growth of 35% year-over-year compared to the second quarter of 2023.

Pat Mackin: With that, I will turn the call back to Pat for his closing comment.

Pat Mackin: All right, thanks, Lance. As you've heard, we're very pleased with our second quarter results, which reflect the continued strength of our highly differentiated and highly descendable product portfolio. We are more excited than ever for our near-term and medium-term growth potential, as we further expand our presence across markets with little existing competition and no anticipated new entrants by leveraging our existing global infrastructure and our ability to cross-sell into a well-established account base.

Pat Mackin: Thanks, Lance. As you've heard, we're very pleased with our second quarter results, which reflect the continued strength of our highly differentiated and highly defendable product portfolio. We are more excited than ever for our near-term and medium-term growth potential as we further expand our presence across markets with little existing competition and no anticipated new entrants by leveraging our existing global infrastructure and our ability to cross-sell into well-established account bases. We're committed to delivering strong revenue growth and EBITDA growth through the balance of 2024, which is expected to be driven by the following.

Lance Berry: With that, I will turn the call back to Pat for his closing comment. Thanks, Lance. So as you've heard, we're very pleased with our second quarter results, which reflect the continued strength of our highly differentiated and highly defendable product portfolio.

Pat Mackin: We are more excited than ever for our near-term and medium-term growth potential as we further expand our presence across markets with little existing competition and no anticipated new entrants.

Lance Berry: By leveraging our existing global infrastructure and our ability to cross sell into well-established account base.

Pat Mackin: We are committed to delivering strong revenue growth and EBITDA growth through the amount to 2024 that expect to be driven by the following. First, strong growth in our stincraft business driven by our innovative portfolio. Second, market share increases for ONIC. III continued expansion in Asia-Pacific and Latin America from our channel investment, as well as new regulatory approvals; fourth, expense leverage driven by our global sales force and GNA infrastructure; and fifth, continued adjusted EBITDA margin expansion and positive free cash flow.

Pat Mackin: More recently, we amended our credit facility in option-person agreements with EndoSpan. The amended credit facility provides EndoSpan with additional funding subject to progress towards completion of the Nexus PMA, while the amended option purchase agreement significantly improves our acquisition terms for EndoSpan should we like to exercise our option. From a financial perspective, our Q2 performance was led by Onyx, which grew 15%, followed by Stankgrass, which grew 13%, and by glue that grew 12%.

Lance Berry: We are committed to delivering strong revenue growth and EBITDA growth through the balance of 2024 that expect to be driven by the following. First, strong growth in our Stencraft business driven by our innovative portfolio. Second, market share increases for Onyx.

Pat Mackin: First, strong growth in our Stencraft business driven by our innovative portfolio. Second, market share increases for Onyx. Third, continued expansion in Asia Pacific and Latin America from our channel investment, as well as new regulatory approvals. Fourth, expense leverage driven by our global sales force and GNA infrastructure, and fifth, continue to adjust it to achieve a margin expansion and positive free cash flow. Finally, I want to thank all the employees around the world for their continued dedication to our mission of being a leading partner to surgeons focused on aortic diseases. With that, operator, please open the line for questions. Thank you.

Lance Berry: Third, continued expansion in Asia-Pacific and Latin America from our channel investment as well as new regulatory approvals. Fourth, expense leverage driven by our global sales force and GNA infrastructure. And fifth, continued adjusted EBITDA margin expansion and positive free cash flow.

Pat Mackin: Finally, I want to thank all the employees around the world for their continued dedication to our mission of being a leading partner to surgeons focused on AORI diseases.

Pat Mackin: Followed by TSU processing at 7%, each went compared to the second quarter of 2023, all on a constant currency basis. In the second quarter, we also continue to benefit from our regulatory approvals in commercial footprint expansion in key international markets, especially in Latin America and Asia-Pacific. As a whole, our results and regulatory achievements further validate our growth strategy, and we remain laser-focused on expanding access to our differentiated product portfolio in existing and new markets.

Lance Berry: Finally, I want to thank all the employees around the world for their continued dedication to our mission of being a leading partner to surgeons focused on aortic diseases. With that, operator, please open the line for questions.

Operator: Would that operator please open the line for questions? Thank you. At this time, we'll be conducting a question-and-answer session. If you'd 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'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we pull for questions.

Operator: Thank you. We'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 2.

Speaker Change: Thank you. At this time we'll be conducting a question and answer session. If you'd like to ask the question, please press star one on your telephone keypad.

Speaker Change: A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please while we poll for questions.

Pat Mackin: From a product category perspective, as I just mentioned, Onyx revenues increased 15% year-over-year on a constant currency basis, as we continue to take market share globally with the only mechanical eortic valve that can be maintained in an INR of 1.5 to 2.0.

Operator: One moment, please, while we poll for questions. Our first question comes from Frank Takkinen with Lake Street Capital. Please proceed with your question.

Frank Takkinen: Our first question comes from Frank Takenin with Lake Street Capital. Please proceed with your question. Great. Thanks for having the questions. Congrats on all the progress. I wanted to start with one on EBITDA; obviously, the leverage profile continues to be impressive. I saw the updated guidance for the back half of the year. Help us understand and weigh investments into the business and EBITDA growth through the end of the year. I know in previous years, typically you've had a little more EBITDA on the back half as a percentage of the full year versus the front half.

Speaker Change: Our first question comes from Frank Takkinen with Lake Street Capital. Please proceed with your question.

Frank Takkinen: Great, thanks for taking the questions. Congratulations on all the progress. Wanted to start with one on EBITDA. Obviously, the leverage profile continues to be impressive. I saw the updated guidance for the back half of the year. Please help us understand.

Pat Mackin: Hello. Based on feedback from the field, our recent market share gains in the proven clinical benefits of the Onyx aortic valve, we maintain our strong conviction that Onyx is the best aortic valve on the market, and will continue to take market share worldwide. Meanwhile, as I indicated earlier, our strength graph revenues grew 13% on a constant currency basis in the second quarter compared to the same period last year. Our strength graph portfolio remains a key component of our growth strategy.

Frank Takkinen: Great, thanks for taking the questions. Congrats on all the progress. Wanted to start with one on EBITDA. Obviously, the leverage profile continues to be impressive. Saw the updated guidance for the back half of the year. Help us understand.

Lance Berry: Weighing investments into the business and EBITDA growth through the end of the year, I know in previous years you've had a little more EBITDA in the back half as a percentage of the full year versus the front half. And it's about equal to what the guidance is implying for the back half. So is there maybe some additional investment going on there? Or is that just in the interest of maybe a little bit of conservatism?

Speaker Change: Weighing investments into the business and EBITDA growth through the end of the year. I know in previous years typically you've had a little more EBITDA on the back half as a percentage of the full year versus the front half and it's about equal is what the guidance is implying for the back half. So is there maybe some additional investment going on there or is that just in the interest of maybe a little bit of conservatism?

Lance Berry: It's about equal as what the guidance is implying for the back half, so there may be some additional investment going on there, or is that just in the interest of a little bit of conservatism. Yeah, there's a little bit of spin timing between second and third quarter. Obviously, we had a really strong second quarter for EBITDA, and we do expect a very strong second half. I do think we'll see queue three growth probably be a little bit lighter than we saw in queue two, just due to timing, so it's really not anything more than that.

Pat Mackin: And we are encouraged by our strong results, which are driven by our differentiated product portfolio focused on the more complex segments of the strength graph market. To get today the products in our strength graph portfolio are primarily sold in Europe, where we leverage our existing direct infrastructure sales infrastructure and create a significant cross-selling opportunities across our unique aortic products offering. Our pipeline consists largely of bringing these proven products to the US and Japan markets, which represents a significant growth opportunity.

Lance Berry: Yeah, there's a little bit of spin timing between the second and third quarters. You know, obviously, we had a really strong second quarter. For EBITDA and, you know, we do expect a very strong second half. However, I do think we'll see Q3 growth probably be a little bit lighter than we saw in Q2 just due to timing. So it's really not anything more than that. And as a reminder, we don't have a ton of seasonality, but Q3 is typically our lowest revenue quarter, which, you know, does have a little bit of an impact.

Speaker Change: Yeah, there's a little bit of spin timing between second and third quarter. You know, obviously we had a really strong second quarter.

unknown: Got it. That's helpful.

Speaker Change: for EBITDA and you know we do expect a very strong second half. I do think we'll see Q3 growth probably be a little bit lighter than we saw in Q2 just due to timing. It's really not anything more than that.

Lance Berry: As a reminder, we don't have a ton of seasonality, but queue three is typically our lowest revenue quarter, which does have a little bit of impact queue to queue three. Got it. That's helpful.

Pat Mackin: We also saw strength in bio-food during the second quarter, which grew 12% on a constant currency basis. As we have discussed previously, we expect to see some variability in the growth rates of bio-food from quarter to quarter driven by the significant amount of stocking distributor business in this product line. On an annual basis, we expect bio-food to grow in the mid-single-digit range. Lastly, on tissue processing, our revenues grew 7% every year on a constant currency basis in Q2, as we annualize the benefits from the last year's pricing initiatives.

Speaker Change: And as a reminder, we don't have a ton of seasonality, but Q3 is typically our lowest revenue quarter, which

Pat Mackin: And then maybe just for my second one, I'll ask a follow up on OnEx. Maybe can you break out unit growth versus ASP and then talk about pricing and that line item? Obviously, you continue to take shares, but is there still additional opportunity to raise prices in the OnEx portfolio?

Speaker Change: you know, does have a little bit of impact Q2 to Q3.

Lance Berry: And then maybe just for my second one, I'll ask a follow-up on ONX. Maybe can you break out unit growth versus ASP and then talk about pricing in that line item? I'm sure you continue to take shares. There's still additional opportunity to raise price in the ONX portfolio. Yeah, we don't really break out the price volume. That's not something we typically do. What I can tell you is 15% growth. Of our mechanical valve segment is, you know, we continue ending in the last six or seven years. We've grown this business on an average of around 15% over the last, I think, since we acquired the company.

Speaker Change: John, that's helpful. And then maybe just for my second one I'll ask a follow up on on X. Maybe can you break out unit growth versus ASP and then talk about pricing and that line item. I'm sure you continue to take shares there. Still additional opportunity to raise price in the on X portfolio.

Pat Mackin: Yeah, we don't we don't really break out the price volume. You know, it's not something we typically do.

Speaker Change: Yeah, we don't we don't really break out the price volume, you know, it's not something we typically do. What I can tell you is, you know, 15% growth of our mechanical valve segment is

Pat Mackin: What I can tell you is, you know, 15% growth in our mechanical valve segment is, you know, we continue, and in the last six or seven years, we've grown this business on an average of around 15% over the last, I think, since we acquired the company. We still have a lot of opportunity internationally, and we're still taking share in the US, even from our high share position.

Pat Mackin: We continue to expect the tissue business to grow double digits for the full year of 2024, as we further leverage increased supply of our proprietary centigraph pulmonary valve and continue to benefit from our higher-ros procedure volumes. For those unfamiliar with the Ross procedure, it's a double-valved procedure in which the patient's native pulmonary valve is replaced by the patient's defective aortic valve. And then the patient's pulmonary valve is then replaced by a donated pulmonary valve.

Speaker Change: You know, we continue ending in the last six or seven years we've grown this business on an average of around 15% over the last, I think since we acquired the company

Lance Berry: We still have a lot of opportunity internationally, and we're still taking share in the US, even from our high share position. We're also increasing price. I mean, our recent post-approval data that came out shows an 85% reduction in major bleeding, which moves it a lot closer to a bioprosthetic valve. We're also seeing, you know, recent data that's come out on mechanical versus bioprosthetic data that's very compelling for people moving to the ONX valve in patients under 70. So, we're very bullish on what we have, and we feel like we've got the best valve, and we're going to keep taking share.

Speaker Change: We still have a lot of opportunity internationally and we're still taking chair in the U.S. even from our high-share position. We're also increasing price. I mean, our recent post-approval data that came out.

Pat Mackin: We're also increasing the price. I mean, our recent post approval data that came out shows an 85% reduction in major bleeding, which moves it a lot closer to a bioprosthetic valve. We're also seeing, you know, more recent data that's come out on mechanical versus bioprosthetic data that's very compelling for people moving to the Onyx valve in patients under 70. So we're very bullish on what we have. And we feel like we've got the best valve, and we're going to keep, you know, taking share.

Pat Mackin: The Ross procedure is considered the best option for young to middle-aged patients with a disease aortic valve, as it provides the best option for these patients to have a normal life expectancy. The use of the Ross procedure is increased rapidly over the last couple of months in years to significant long-term data demonstrating these significant clinical benefits. Our centigraph pulmonary valve has no competitive alternative and is the market leader in allagrasse using these procedures.

Speaker Change: Shows an 85% reduction in major bleeding, which moves it a lot closer to a bioprosthetic valve. We're also seeing, you know,

Speaker Change: You know, most recent data that's come out on mechanical versus bioprosthetic data that's very compelling for people moving to the onyx valve in patients under 70. So we're very bullish on what we have and we feel like we've got the best valve and we're going to keep, you know, taking share.

Frank Takkinen: Got it. Thanks for your questions.

Frank Takkinen: Got it. Thanks Dave for the questions. Congratulations again.

Frank Takkinen: Congrats again.

Pat Mackin: Further, revenues in the second quarter were also driven by our continued progress in growth in Latin America and Asia-Pacific, primarily through new regulatory approvals and commercial footprint expansion. Latin America and Asia-Pacific delivered constant currency revenue growth of 25 and 15 percent respectively compared to the second quarter of last year. We continue to anticipate strong revenue growth for both regions for the full year, and over the coming years as we continue to leverage our industry-leading product portfolio in these regions. We are also excited about the progress of our partner end of spans continuing to make on the US IDE Triumph trial for the Nexus aortic arc strength growth system.

Frank Takkinen: Thanks, Frank.

Speaker Change: Got it. Thanks for taking the questions. Congrats again.

Suraj Kalia: My next question comes from Suraj Kalia with Oppenheimer. Please proceed with your question. Hey Pat, Lance, can you hear me all right? Yeah, we need you to find Suraj. Congrats on all the progress. So Pat, just keying off from the last comment you made to the previous question. Can you, I believe last quarter on X was about 30% or US share 50% plus US. Yeah. Can you give us some color as to why VR exiting Q2? Yeah, so what I will tell you without getting into the granularities. We're growing both markets, double digits. As I just said, we've got your share; your share comments are pretty accurate, right?

Operator: Our next question comes from Suraj Kalia on behalf of Oppenheimer. Please proceed with your question.

Frank Takkinen: Thanks, Frank.

Speaker Change: Our next question comes from Suraj Kalia with Oppenheimer. Please proceed with your question.

Suraj Kalia: Hey Pat, Laine, can you hear me all right? Yeah, we knew you'd find it, Suraj. Congratulations on all the progress. So Pat, just keying off on the last comment you made, to the previous question. Can you, I believe last quarter, Onyx was about 30% all U.S. share, 50% plus U.S. Can you give us some color as to where we are exiting Q2?

Speaker Change: Hey Pat, Lance, can you hear me all right? Yeah, we can hear you fine, Suraj.

Suraj: Congrats on all the progress. So Pat, just keying off on the last comment you made.

Speaker Change: To the previous question, can you, I believe, last quarter, on X was about 30% or US share, 50% plus US.

Pat Mackin: Som. As of today, there have been 50 of the 60 primary endpoint patients enrolled in the chronic dissection arm. Given this current enrollment, patients are scheduled for procedures. We expect to complete this trial by the end of 2024. Assuming the trial endpoints are met, Nexus remains on track for approval in the second half of 2026. As a reminder, aortic arch disease patients with aneurysms and dissections who receive treatment have previously had little choice before Nexus, but to undergo open chest surgery, which is an invasive and risky operation associated with lengthy hospitalizations and prolonged recuperation.

Speaker Change: Can you give us some color as to where we are exiting Q2?

Pat Mackin: Yeah, so what I will tell you without getting into, you know, the granularity is that we're growing both markets double digits. As I just said, we've got, you know, your shared comments are pretty accurate, right?

Pat Mackin: Yeah, so what I will tell you without getting into, you know, the granularity is we're growing both markets double digits. As I just said, we've got, you know, your share comments are pretty accurate, right? We've got about a 30 percent global.

Pat Mackin: We've got about a 30% global. And when you break that down, it's like over 50% in the US and in the, you know, 20, 25% internationally. So we clearly have more opportunity internationally. But, you know, I think the big story on Onyx is really all the dynamics that are going on. And frankly, it's our aorta valve portfolio in patients under 65. You know, our, our Ross, our pulmonary valve for the Ross, you know, we have the only center graph valve for that. It's growing double digits consistently. Onyx is growing consistently, double digits with our new post-approval data.

Pat Mackin: We've got about a 30% global market share, and when you break that down, it's like over 50 in the U.S. and, you know, 20, 25 percent internationally. So we clearly have more opportunity internationally. But, you know.

Speaker Change: and when you break that down it's like over 50 in the U.S. in the, you know, 20-25% internationally. So we clearly have more opportunity internationally.

Pat Mackin: I think the big story on Onyx is really all the dynamics that are going on. And frankly, it's our aortic valve portfolio in patients under 65. You know, our ROS, our pulmonary valve for the ROS, we have the only synagraph valve for that.

Speaker Change: but you

Speaker Change: I think the the big story on on onyx is really all the dynamics that are going on and frankly it's our aortic valve portfolio in patients under 65.

Speaker Change: You know, our Ross, our pulmonary valve for the Ross, you know, we have the only synagraft valve for that.

Pat Mackin: It's growing double digits consistently. Onyx is growing double digits consistently with our new post-approval data. As you well know, you're very well read on the data. It's a dynamic market, but there's kind of more and more negative data coming out on TAVR in patients under 65, on bioprosthetics in patients under 65. The difference in re-operation and mortality out to 15 years benefits mechanical valves, and they've seen lots of re-operations in patients getting TAVR under 65. And I think that's a real problem, right? I mean, there's a difference in re-op and mortality at 15 years. But these are 65-year-olds.

Pat Mackin: Nexus is a highly differentiated technology that transforms a complex surgical aortic arch repair into a minimally invasive endovascular procedure. In 2019, we secured exclusive right distribution rights for Nexus in Europe and began leveraging our existing European direct sales organization to expand access to the technology and drive revenue growth. Based on our experience in Europe, we continue to see a significant global opportunity for Nexus, which has been estimated on an annual global basis to be around $600 million.

Speaker Change: It's growing double digits. Consistently, Alex is growing consistently double digits.

Pat Mackin: As you well know, you're very well read on the data. It's a dynamic market, but there's kind of more and more negative data coming out on TAVR and patients under 65 on bioproesthetic and patients under 65. The difference in re-operation and mortality out to 15 years benefits mechanical valves. And they've seen lots of re-operations in patients getting TAVR under 65. And I think that's a real problem, right? I mean, there's the difference in re-op and mortality is 15 years. These are 65 year olds. That's a big deal. So again, I think we've got a great story with the Onyx valve.

Speaker Change: with our new post-approval data.

Speaker Change: As you well know, you're very well read on the data. It's a dynamic market, but there's kind of more and more negative data coming out on TAVR and patients under 65.

Speaker Change: on bioprosthetic in patients under 65.

Speaker Change: The difference in re-operation and mortality out to 15 years benefits mechanical valves and they've seen lots of re-operations in patients getting TAVR under 65.

Speaker Change: and I think that's a real problem, there's a difference in re-opin mortality at 15 years, these are 65 year olds. That's a big deal. So again, I think we've got a great story with the on-exvalve we're just going to keep telling our story.

Pat Mackin: Also in 2019, we provided a credit facility to end a span to support the Nexus USID trial and commercial operations. We also would enter into an option agreement to acquire end of span until 90 days following the receipt of an FDA approval for Nexus. Recently in July, we amended these two agreements, which has resulted in three major changes that Lance will cover shortly. We view our revised agreements with end of span as an investment in the next frontier of aortic arch surgery.

Pat Mackin: That's a big deal. So again, I think we've got a great story with the Onyx Valve. We're just going to keep telling it.

Suraj Kalia: We're just going to keep telling our story. Got it.

Suraj Kalia: Got it. I'm drawing a blank here, so please forgive me on Nexus.

Suraj Kalia: I'm drawing the blank here. So please forgive me on Nexus. It reminds me, you know, when you talk about chronic aortic dissection, right? And the need and the 600 million AM, I get that. Enrolled into the trial, again, if memory serves me correctly, like five, six patients per quarter. Is that by design? Is that due to patient selection? Just kind of help us understand, you know, take a leap from here from the trial and enrollment to, if you'll acquire and expand, you know, how Nexus layout and whatnot in commercial adoption. How should we think about, you know, the speed of adoption?

Speaker Change: Got it. Pat, I'm drawing the blank here, so please forgive me. Our next is...

Suraj Kalia: Remind me, you know, when you talk about chronic aortic dissection, right, and the need and the 600 million hams, I get that. The enrollment in the trial, again, if memory serves me correctly, it's like five, six patients per quarter. Is that by design? Is that due to patient selection? Just kind of help us understand, you know, take a leap from here, from the trial enrollment, if you'll acquire, understand, you know, how Nexus is laid out and whatnot in commercial adoption, how should we think about? you know, the speed of production.

Pat Mackin: Remind me, you know, when you talk about chronic aortic dissection, right, and the need and the 600 million M, I get that.

Pat Mackin: We also view it as potential opportunity to meaningfully expand our total addressable market on significantly more favorable terms than we had before. We also continue to anticipate PMA approval for AMDS in 2025, which as we have discussed would open up an addressable market here in the US for about $150 million with no competitive alternatives. In summary, we are very excited about our Q2 performance and look forward to sustaining our momentum throughout 2024 and beyond by driving continued growth in Onyx, Stancrafts, and our Cinegraph pulmonary valve business by further expanding our global footprint in Asia-Pacific and Latin America.

Speaker Change: The enrollment of the trial, again, if memory serves me correctly, is like five, six patients per quarter. Is that by design? Is that due to patient selection? Just kind of help us understand, you know, take a leap from here, from the trial enrollment model.

Speaker Change: to, if you'll acquire, understand, you know, how Nexus layout and whatnot in commercial adoption, how should we think about, you know, the speed of adoption?

Pat Mackin: Yeah, so I would say there's a lot in that. I think in both of our messages, Lance and I commented on how we're making an investment in the future of aortic technology. Patients today who have to have a chronic dissection repaired, and we have technology for that, you're looking at a, you know, seven to ten day ICU stay. We have patients in Europe that are getting the Nexus device and are standing out in front of the hospital the next day. Right, so it's a big deal. But like any new technology, there's going to be an evolution, right? What we're talking about right now is a single branch into the inominate.

Pat Mackin: Yeah, so there's a lot in that. You know, I think both in both of our messages, Lance and I commented on, we're making an investment in the future of aortic technology. Patients today who have to have a chronic dissection repaired, and we have technology for that. You're looking at a, you know, seven to ten day ICU stay. We have patients in Europe that are getting the next device that are standing out in front of the hospital the next day. Right, so it's a big deal. But, like any new technology, there's going to be an evolution, right?

Speaker Change: Yeah, so there's a lot in that. I think both of our messages will answer and I comment it on.

Speaker Change: We're making an investment in the future of aortic technology.

Lance Berry: With that, I'll now turn the call over to Lance. Thanks, Pat. In good afternoon, everyone.

Speaker Change: Patients today who have to have a chronic dissection repaired and we have technology for that. You're looking at a, you know, seven to ten day ICU stay.

Lance Berry: 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 and less otherwise noted. Total revenues were $98 million to the second quarter of 2024, up 10 percent compared to Q2 of 2023.

Speaker Change: We have patients in Europe that are getting the Nexus device that are standing out in front of the hospital the next day.

Pat Mackin: Right, so it's a big deal.

Pat Mackin: So what we're talking about right now is a single branch into the denominator. That's the US ID trial called Triumphant. We've enrolled 50 out of 60. We should enroll that by the end of the year. I think that'll have modest uptake when we launch it. But we'll be looking to start a two-branch trial while probably right after that. And we think that that technology can capture half the chronic dissections in the world. So it's a big deal. And, you know, we're very interested in the space, and which is why we recut the deal. The data has been excellent, and the trial is almost done.

Speaker Change: But like any new technology, there's going to be an evolution, right?

Pat Mackin: That's the USID trial called TRIOMPH. We've enrolled 50 out of 60. We should enroll that by the end of the year. I think that it'll have modest uptake when we launch it, but we'll be looking to start a two-branch trial probably right after that. And we think that that technology can capture half the chronic dissections in the world. So it's a big deal, and we're very interested in the space, which is why we recut the deal. The data's been excellent, and the trial's almost done. So yeah, we're very excited and look forward to having the results out.

Speaker Change: What we're talking about right now is a single branch into the dominant. That's the U.S. ID trial called Trionc. We've been rolled 50 out of 60. We shouldn't roll that by the end of the year.

Suraj Kalia: Got it. That's the final question.

Lance Berry: Adjusted EBITDA increased approximately 35 percent from 13.8 million to 18.6 million in the second quarter of 2024. Adjusted EBITDA margin was 19 percent in the second quarter, a 350 basis point improvement over the prior year driven by a 320 basis point reduction in general administrative and marketing expense as a percentage of sales. We continue to believe our sale in DNA infrastructure is very scalable and the significant leverage we have produced in the first half of the year supports our belief.

Speaker Change: I think that'll have modest uptake when we launch it.

Speaker Change: But we'll be looking to start a two-branch trial probably right after that. And we think that that technology can capture half the chronic dissections in the world.

Speaker Change: So it's a big deal and we're very interested in the space and which is why we recut the deal. The data's been excellent and the trials almost done. So yeah, we're very excited and look forward to having it report out.

Pat Mackin: So, yeah, we're very excited and look forward to having it report out.

Suraj Kalia: Got it.

Suraj Kalia: I'll hop back in queue in terms of your sales rep. Walk us through how does the bell curve look for sales rep productivity? At this stage in Artivion's evolution, are we at that point in terms of higher elasticity in the sales rep commission structure? Just kind of put this thing together, how you're seeing the direct force, the self-force, U.S. versus O.U.S. Gentlemen, thank you for taking my questions. Yeah, thanks, Raj. So, you know, to me, I think this is one of the real benefits you're seeing in how we can grow.

Suraj Kalia: That's final question. I'll hop back and cue in terms of your sales reps. What is through how does the bell curve look for sales rep productivity at this stage in Artivion's evolution? I'll be at that point in terms of higher elasticity to sales rep commission structure. Just kind of put this thing together how you're seeing the direct force that sells for us. Thank you for taking my questions.

Speaker Change: Got it. That's final question. I'll hop back and kill in terms of your sales reps.

Lance Berry: From a product line perspective, there is 42% in the second quarter of 2024. We did not break this segment out by product as it is relatively nominal to the business overall. However, I do want to provide some additional color on these results. The declining Q2 was driven by the timing of per-cloud orders from Baxter as they work to manage down inventory levels. The order decline also had a modest negative impact to adjusted EBIDOT in Q2.

Speaker Change: Um, welcome to how does the bell curve look for Perth Sales Rep productivity?

Speaker Change: At this stage in Artevian's evolution,

Speaker Change: Um, I'll be at the point in terms of higher

Speaker Change: Elaster City to sell,

Ray: sales rep commission structure. Just kind of put this thing together how you're seeing the direct force that sells force US versus OUS. Gentlemen, thank you for taking my questions. Yeah, thanks Ray. So, you know, to me I think this is one of the real benefits you're seeing and how we can grow top line 10% and bottom line 35%.

Pat Mackin: Yeah, thanks, right. So, you know, to me, I think this is one of the real benefits you're seeing and how we can grow our top line 10% and our bottom line 35%. We've got an excellent sales force, you know, if you talk about here in the U.S. as well as in Europe and some of the international markets. Most of our reps in the U.S. have 10 years with the company. They know their customers. They call on them for Ross procedures with Synagraft. They use them with Onyx for aortic procedures. They also use them with BioBloom.

Suraj Kalia: Yeah, thanks, right.

Pat Mackin: So, you know, to me, I think this is one of the real benefits you're seeing and how we can grow top line 10% in bottom line 35%. We've got an excellent sales force. You know, you talked about here in the US, as well as in Europe and some of the international markets. Most of our reps in the US have 10 years with a company. They know their customers. They call them for Ross procedures with sinographs. They call them them with onyx for aortic procedure. They call them with Bio Blue. You know, when we get AMDS approved, they'll call on them for that, and we get our frozen elephant trunk approved.

Speaker Change: We've got an excellent sales force, you know, if you talk about here in the U.S. as well as in Europe and some of the international markets.

Ray: Most of our reps in the U.S. have 10 years with the company.

Lance Berry: Though the underlying end user sales of per-cloud are continuing to ramp up, we expect these inventory dynamics to continue through the balance of 2024, including this impact our underlying business grew 11% in the second quarter of 2024 compared to Q2 of 2023. On a regional basis, revenues in Latin America increased 25%, A's of Pacific increased 15%, EMEA increased 13%, and North America increased 5%, all compared to the second quarter of 2023.

Speaker Change: They know their customers. They call on them for ROS procedures with Synagraft. They call on them with Onyx for aortic procedures. They call them with Bioglue. You know, when we get AMDS approved, they will call on them for that. And when we get our Frozen Alpha and Trunk approved, they'll call on them for that. So...

Pat Mackin: You know, when we get AMDS approved, they will call on them for that. And when we get our frozen elephant trunks approved, they'll call on them for that. So, you know, the cardiac surgery segment is a much different segment than many of the other kinds of med tech spaces. You don't have to scale your sales force kind of one-to-one, you know, with your revenue. And you see that in our leverage. So you know, we're very excited about bringing our AMDS when it gets approved in late 2025. But we can just drop it in our existing reps' bags and see a lot of that incremental, you know, profitability go right to the bottom line, which has been part of our story all along.

Pat Mackin: They'll call on them for that. So, you know, the cardiac surgery segment is a much different segment than many of the other kinds of med tech spaces. You don't have to scale your sales force kind of one to one, you know, with your revenue. And you see that in our leverage. So, you know, we're very excited about bringing our AMDS when it gets approved in late 2025. But we can just drop it in our existing reps' bags and see a lot of that incremental, you know, profitability go right to the bottom line, which has been part of our story all along.

Ray: You know, the cardiac surgery segment is a much different segment than many of the other

Ray: Kind of med tech spaces. You don't have to scale your...

Speaker Change: Salesforce kind of one-to-one, you know, with your revenue, and you see that in our leverage. So, you know, we're very excited about bringing our AMDS when it gets approved in late 2025, but we can just drop it in our existing reps' bags.

Lance Berry: As anticipated, Gross margins were 64.6 in Q2, a slight decrease from 65.1% compared to the second quarter of 2023. The decrease was due to normal fluctuations in geographic and product mix. Q2 margins were in line with the gross margins we saw in Q1 and in line with our full-year expectation. General administrative and marking expenses in the second quarter were $49.3 million compared to $57.2 million in the second quarter of 2023. Non-gap general administrative and marking expenses were $47.3 million in the second quarter compared to $45.9 million in the second quarter of 2023, representing 320 basis points of leverage.

Speaker Change: and see a lot of that incremental profitability go right to the bottom line, which has been part of our story all along.

Rick Wise: Our next question comes from Rick Wise with Steve. Please proceed with your question. Hi, Pat. Hi, Lance.

Operator: Our next question comes from Rick Wise with Stiefel. Please proceed with your question.

Speaker Change: Oh, what's up?

Speaker Change: Our next question comes from Rick Wise with Stiefel. Please proceed with your question.

John McAulay: Hi Pat, hi Lance, this is John on for Rick today. Another strong quarter in this 2Q, just wanted to sort of look ahead and think about the bigger picture. You've provided guidance or a rough structure at your 2022 analyst day on 2025 plus, but just thinking about the new approvals potentially coming through, the new potential products you're adding to the portfolio, and the areas where you're innovating. Just wanted to get your sense on the longer term, bigger picture looking ahead. Should we expect more of the same sort of double digit growth in 2025 plus?

John: This is John on for today. Another strong quarter in this to queue. Just wanted to sort of look ahead and think with bigger picture. You've provided guidance or rough structure at your 2022 Analyst Day on 2025 plus. But just thinking about the new approvals potentially coming through, the new potential products you're adding to the portfolio and the areas where you're innovating. Just wanted to get your sense on the longer term bigger picture looking ahead. Should we expect more the same sort of double-digit growth 2025 plus? Yeah, so we, you know, we've stayed away from kind of re-upping long-term guidance.

Speaker Change: Hi, Pat. Hi, Lance. This is John Onverick. Today, another strong quarter in this two cue. Just wanted to sort of look ahead and think with a bigger picture.

John Onverick: You've provided guidance or a rough structure at your 2022 analyst, I am 2025 plus, but just thinking about...

Lance Berry: R&D expenses for the second quarter were $7.5 million compared to $7.4 million in the second quarter of 2023. We still anticipate full-year R&D spend as a percentage sale to be relatively flat to prior year. Interest expense net of interest income was $8 million as compared to $6.1 million in the prior year. Other income expense included foreign currency translation gains of approximately $900,000 this quarter. Free cash flow was $3.6 million in the second quarter of 2024.

Speaker Change: The new approvals potentially coming through the new potential products you're adding to the portfolio and the areas where you're innovating. Just wanted to get your sense on the longer term, bigger picture looking ahead. Should we expect more of the same sort of double digit growth 2025 plus?

Pat Mackin: Yeah, so we, you know, we've stayed away from... kind of re-upping long-term guidance. We're just now finishing, we gave some formal targets back in 22 through 2024. I hadn't quite finished those out yet, so we're not sending out some new ones, but I think we feel good about saying like, "Look, if you think about us." Looking further out, with the portfolio we have now and then the things in our pipeline, you know, we should be able to be a consistent double-digit grower for the long term. Interview with Aaron Jackson on March 20th, 2017, you know, at a high level, we feel comfortable about double-digit growth and growing the bottom line at least two X.

Speaker Change: Yeah, so we, you know, we've stayed away from...

Pat Mackin: We're just now finishing. You know, we gave some formal targets back in 22 through 2024. So hadn't quite finished those out yet. So we're not we're not sending out some new ones. But I think we feel good about saying, like, look, if you think about us looking further out with the portfolio we have now and then the things in our pipeline. You know, we should be able to be a consistent double-digit grower for an extended period of time. And then really we ought to be able to drive a lot of leverage off that. So, you know, we ought to be able to grow the bottom line, you know, really at least 2x the top line.

John Onverick: kind of re-upping long-term guidance, we're just now finishing, we gave some formal targets back in 22 through 24, so, hadn't quite finished those out yet, so we're not sending out some new ones, but I think we feel good about saying, look, if you think about us.

Lance Berry: Importantly, we continue to expect free cash flow to be positive for the full-year 2024. As of June 30, we had approximately $55 million in cash and $313.6 million in debt net of $6.8 million of unamortized loan origination costs. It is important to note that this does not contemplate the impact of our recently closed amendment agreements to the end of span, which I will speak to shortly. Further, we do not anticipate the need to raise additional capital to fund our debt obligations, our investments and our channels, or our pipeline in the foreseeable future.

John Onverick: Looking further out with the portfolio we have now and then the things in our pipeline, you know, we should be able to be a consistent double-digit grower.

John Onverick: for an extended period of time. And then really, we ought to be able to drive a lot of leverage off that. So, you know, we ought to be able to grow the bottom line, you know, really at least two X, the top line. I mean, if you look this year our guidance is 3X.

Pat Mackin: I mean, if you look this year, our guidance is 3x the top line at the midpoint, and we're not committing to that forever going forward. But there's a lot of leverage opportunity in the business, and our core business is very defendable. You know, you've got me PMA-based products in markets with not a lot of competition that's really unlikely to see new entrance, and then we have this amazing pipeline.

John Onverick: The top line at the midpoint and we're not committing to that for forever going forward, but there's a lot of leverage opportunity in the business and

Lance Berry: Our net leverage at the end of Q2 was 4.1, down from 4.7 in prior year. At the midpoint of our EBITDA guidance range, we expect net debt leverage to be closer to 3.5 by the end of the year and to continue to decrease in 2025.

Speaker Change: Our core business is very defendable. You've got PMA-based products in markets with not a lot of competition that are really unlikely to see new entrants, and then we have this amazing pipeline.

Pat Mackin: So. You know, at a high level, you know, we feel comfortable about double-digit growth and growing the bottom line at least 2X that. Got it. Now appreciate the color. And just as I, as I looked at the rest of the year, I realized last year, maybe in the second quarter, you guys put through a price increase. Just wanted to think about that in 24, 25. Is there another opportunity for Artivion to potentially dig price, are you all done for a bit? Yeah, I've talked about this on previous calls. I mean, you know, we look at the portfolio; we look at how differentiated our product line is.

Lance Berry: In regard to the recently amended credit facility and option persons agreements with Endless Man, we are pleased with the combined results of these three major changes. First, Artivion will now provide additional loans to Endless Man of up to $25 million in three tranches which we expect to fund with free cash flow. Second, the upfront payment associated with the purchase option is reduced by $75 million and is now 135 million after offsetting the loans.

John Onverick: You know, at a high level, you know, we feel comfortable about double-digit growth and growing the bottom line at least 2x that.

John McAulay: Got it. Now, appreciate the color. And just as I looked at the rest of the year, I realized last year, maybe in the second quarter, you guys put through a price increase. Just wanted to think about that in 24, 25. Is there another opportunity for Artivion to potentially take prices? Or are you all done for a bit?

Speaker Change: Thanks for watching, and don't forget to like, share, and subscribe to our channel.

Speaker Change: got it now appreciate the color

Speaker Change: And.

Speaker Change: Just as I looked at the rest of the year, I realized last year, maybe in the second quarter you guys put through.

Speaker Change: I just wanted to think about that in 24, 25, is there another opportunity for Artivion to potentially take price or are you all done for a bit?

Lance Berry: And third, the $100 million minimum payout for the earnout is eliminated. To reiterate Pat's comments, we view the amended agreement as an investment in the future of A.O. Repair, while simultaneously providing Artivion with greater financial flexibility, should we exercise our option to acquire Endless Man.

Pat Mackin: Yeah, I've talked about this on previous calls. I mean, you know, we look at the portfolio; we look at how differentiated our product line is. And in some cases, we have, you know, significant clinical outcomes where we spent millions of dollars generating data that nobody else has. And Synagraph Pulmonary Valve is the perfect poster for that. We spent a million dollars developing the technology, patenting it, and getting the clinical data that now has 25-year results, which is the best valve operation for, I would say, a patient under 55 years old.

Speaker Change: Yeah, and I've talked about this on previous calls. I mean, you know, we look at the portfolio, we look at how differentiated our product line is.

Pat Mackin: In some cases, we have, you know, significant clinical outcomes where we spent millions of dollars generating the data that nobody else has, and SynerGraft pulmonary valve is the perfect poster for that. We spent a million dollars developing the technology, patenting it, and getting the clinical data. That now has 25 year results, which is the best valve operation for, I would say, a patient under 55 years old. For something like that, we're going to charge a premium price for it because it's, you know, it warrants. I talked about on it, we just invested millions of dollars in the post approval trial and we came out with data that nobody else can match, and I think that that clinical data warrants a higher price.

Speaker Change: And in some cases, we have, you know, significant clinical outcomes where we spent millions of dollars generating the data that nobody else has. And Synagraft Pulmonary Valve is the perfect poster for that.

Lance Berry: And now for our outlook for the remainder of 2024. Given our momentum in the first half of the year, we are raising fiscal year 24 revenue guidance and now expect constant currency revenue growth of between 10 and 12 percent compared to the previous range of 9 to 12 percent. We expect reported revenues to be in the range of $388 to $396 million compared to our previous range of $386 to $396 million.

John Onverick: We spent a million dollars developing the technology, patenting it, and getting the clinical data that now has 25-year results, which is

Pat Mackin: For something like that, we're going to charge a premium price for it because it's, you know, it warrants it. I talked about Onix. We just invested millions of dollars in the post-approval trial, and we came out with data that nobody else can match, and I think that that clinical data warrants a higher price. So we're not going to go through kind of every line item on the portfolio, but you can get a sense of the things that are highly differentiated, backed by patents, and backed by compelling clinical data. We will charge what we think is a fair price for them.

John Onverick: The best valve operation for I would say a patient under 55 years old

John Onverick: For something like that we're going to charge a premium price for it because it's you know, it warrants I talked about on it

John Onverick: We just invested millions of dollars in the post-approval trial.

Lance Berry: At current rates, we expect FX to have a negligible impact on full-year revenue growth rates. With our continued top-line revenue growth and general expense management through Q2, we are raising our fiscal year 24 adjusted EBITDA guidance and now expect to be in the range of $69 to $72 million for the full year 2024, representing a 28 to 34 percent growth over 2023 and 280 basis points of adjusted EBITDA margin expansion at the midpoint of our ranges.

John Onverick: We came out with data that nobody else can match, and I think that that clinical data awards

John: So, we're not going to go through kind of every line item on the portfolio, but you can get a sense of the things that are highly differentiated, backed by patents, backed by compelling clinical data. We will charge what we think is a fair price for those. Yeah, appreciate the color. Thanks for taking the questions.

John Onverick: A higher price.

John McAulay: Yeah, I appreciate the color. Thanks for taking the questions.

Speaker Change: I appreciate the color. Thanks for taking the questions.

Operator: As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment please, while we poll for questions.

Operator: As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment, please, while we poll for questions. Our next question comes from Jeffrey Cohen with Ladenburg Thalman. Please proceed with your question.

Speaker Change: To remind, if you'd like to ask a question, please press star one on your telephone keypad. One moment, please, while we poll for questions.

Lance Berry: This compares to the previous guidance range of $68 to $72 million representing 26 to 34 percent growth over 2023. As a reminder, we expect growth margins to remain at level similar to 2023 and continue to expect to drive significant leverage from our global sales force and GNA infrastructure. Additionally, R&D experiments is expected to remain relatively flat as a percentage of sales.

Jeffrey Cohen: Our next question comes from Jeffrey Cohen with Latin Bergthalman. Please proceed with your question. I think I'm going to tell you. Hey, Jeff, thanks for taking our questions, and thanks just a few from there. We're going to focus on the call out on the backstreet and the other revenue line.

Speaker Change: Our next question comes from Jeffrey Cohen with Ladenburg Thalman. Please proceed with your question.

Jeffrey Cohen: Go ahead, Colin Lawrence. How are you? Hey, Jeff. Thanks for taking our questions in advance.

Jeffrey Cohen: So hey guys, Lance, how are you?

Lance Berry: Just a few from there, and I heard Lance. Let's call out on Baxter and the other revenue line. Are there any puts and takes here on Perklot, or do you have any clarity or insight into how things are going on their side?

Lance Berry: Hey Jeff

Speaker Change: Thanks for taking our questions in advance. Just a few from our end.

Lance Berry: Are there any puts in texture and perclod, or do you have any clarity or see through in the health these are going on their side? Yeah, I mean, I guess, first of all, at a high level, I mean, it's not really very meaningful to us. I mean, it's tiny to Backstreet just to put it in context. The only reason we brought it up is it just sticks out because the decline was so significant. And, you know, I mean, our visibility is not great to underlying sales, but understanding is they're continuing to ramp up. And this is just some basic, you know, managing the balance sheet on their side and just doing being good about inventory management is creating some fluctuations in what's a very small line item, so it just jumps off the page.

Speaker Change: Call out on the backster and the other revenue line, are there any puts in texture and per clot or do you have any clarity or see through and how these are going on their side?

Pat Mackin: With that, I will turn the call back to Pat for his closing comment. All right, thanks, Lance. As you've heard, we're very pleased with our second quarter results, which reflect the continued strength of our highly differentiated and highly descendable product portfolio. We are more excited and ever for our near-term and medium-term growth potential, as we further expand our presence across markets with little existing competition and no anticipated new entrants by leveraging our existing global infrastructure and our ability to cross-sell into well-established account base.

Lance Berry: First of all, at a high level, I mean, it's not really very meaningful to us. So, I mean, it's tiny to Baxter.

Speaker Change: Yeah, I mean, I guess.

Lance Berry: Just to, you know, put it in context, the only reason we brought it up is because the decline was so significant. And, you know, I mean, our visibility is not great to underlying sales, but our understanding is they're continuing to ramp up. And this is just some basic, you know, managing the balance sheet on their side and just being good about inventory management is creating some fluctuations, and what's a very small line item, so it just jumps off the page. So in general, we're not going to talk about Baxter's business; that's their business, but you know again, I would just say it's not meaningful to us, so it's really not meaningful.

Speaker Change: First of all, it's hollow, I mean, it's not

Speaker Change: really very meaningful to us. I mean, it's tiny to Baxter. Just to put it in context, the only reason we brought it up is it just sticks out because the decline was so significant.

Speaker Change: and, you know, I mean, our visibility is not great to underline sales but I'm understanding is there continued to ramp up and this is just some basic, you know, managing the balance you don't their side and just doing being good about inventory management is creating some fluctuation.

Pat Mackin: We are committed to delivering strong revenue growth and EBITDA growth through the amount to 2024 that expect to be driven by the following. First, strong growth in our stincraft business driven by our innovative portfolio. Second, market share increases for ONIC. III continued expansion in Asia-Pacific and Latin America from our channel investment as well as new regulatory approvals, fourth expense leverage driven by our global sales force and GNA infrastructure, and fifth continued adjusted EBITDA margin expansion and positive free cash flow.

Lance Berry: So, in general, we're not going to talk about backstreet business. That's their business, but, you know, again, I would just say it's not meaningful to us, so it's really not meaningful to them.

Speaker Change: and what's a very small line item so it just jumps off the page. So in general we're not going to talk about Baxter's business that's that's their business but you know again I would just say it's not meaningful to us so it's really not meaningful to them.

Pat Mackin: Secondly, could you talk about Barglow a little bit? Look extremely strong for the second quarter coming into 1855. So, any commentary there, and I'll look as far as the back half of the general commentary on the strength or specific geographies? Yeah, I think that the, you know, we mentioned Lance mentioned it in his comments, right? I mean, Bible grew like 1% in the first quarter, and it grew 12% in the second quarter. You know, don't plug 12% in your model because it's a very kind of lumpy business. We have a lot of indirect. We sell in 110 countries around the world.

Jeffrey Cohen: Got it. OK. Secondly, could you talk about Barglow a little bit? It looked extremely strong for the second quarter, coming in at 1855. So any commentary there on any outlook as far as the back half of the year or general commentary on its strength or specific geographies? Yeah, I think so.

Speaker Change: A.C.C.C.C.C.C.C.C.C.C.C

Speaker Change: Got it. Okay, I mean...

Speaker Change: Secondly, could you talk about a barglue little bit, looks extremely strong for the second quarter, coming in to 1855, so any commentary there, or maybe I'll look as far as the back half the general commentary on its strength or specific draw on the face.

Unknown Executive: Finally, I want to thank all the employees around the world for their continued dedication to our mission of being a leading partner to surgeons focused on AORI diseases. Would that operator please open the line for questions? Thank you. At this time we'll be conducting a question and answer session. If you'd 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.

Pat Mackin: Yeah, I think that, you know, Lance mentioned it in his comments, right? I mean, Viabu grew like 1% in the first quarter, and it grew 12% in the second quarter. You know, don't plug 12% into your model because it's a very kind of lumpy business. We have a lot of indirect sales; we sell in 110 countries around the world. So you can, the phasing of every 90 days, you know, you get some bigger in some quarters, less in other quarters. But on average, we think that that product line is going to grow kind of in the mid-single digits. So, you know, obviously had a very good quarter this quarter, and it's obviously extremely profitable.

Unknown Executive: You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please while we pull for questions.

Speaker Change: Yeah, I think that the, you know,

Speaker Change: We mentioned it in his comments, right? I mean, by like 1% in the first quarter, and it grew 12% in the second quarter.

Speaker Change: Don't plug 12% on your model, because it's a very kind of lumpy business. We have a lot of indirect, we sell in 110 countries around the world. So you can, the phasing of every 90 days, you know, you get some...

Pat Mackin: So you can, the phasing of every 90 days, you know, you get some bigger, some quarters less than other quarters, but on average, we think that that product line is going to grow kind of in the mid single digits. So, you know, I've just had a very good quarter this quarter, and it's obviously extremely profitable.

Speaker Change: Bigger is some quarters, less than other quarters, but on average we think that that product line is going to grow kind of in the middle of the single digit. So obviously it had a very good quarter of this quarter and it's obviously extremely profitable.

Frank Takkinen: Our first question comes from Frank Takenin with Lake Street Capital. Please proceed with your question. Great. Thanks for having the questions, congrats on all the progress. I wanted to start with one on EBITDA, obviously the leverage profile continues to be impressive. I saw the updated guidance for the back half of the year. Help us understand and weighing investments into the business and EBITDA growth through the end of the year. I know in previous years, typically you've had a little more EBITDA on the back half as a percentage of the full year versus the front half.

Pat Mackin: Donna, and there's last list for us. Could you talk a little bit about the, it would extend graph portfolio for the quarter areas of week as a strength or any specific status or items which you do well or not as well? Yeah, we don't, we don't break. I mean, we made it. We made a move, I can a couple of years ago to kind of put these large buckets in place. I can tell you the area that we focus on, which is the highly differentiated, faster growing, higher margin, stancrap segment. We're growing double digits in every category.

Jeffrey Cohen: Got it. And then lastly, for us, could you talk a little bit about the IwateXtentGraph portfolio for the quarter? Areas of weakness or strength or any specific SKUs or items which you're doing well or not as well?

Speaker Change: Got it. And then lastly for us, could you talk a little bit about the Inwood ExtendGraph portfolio for the quarter? Areas of weakness or strength or any specific SKUs or items which you're doing well or not as well?

Pat Mackin: Yeah, we don't break. I mean, we made a move a couple of years ago to kind of put these large buckets in place. I can tell you the area that we focus on, which is the highly differentiated, faster growing, higher margin StentGraft segment. We're growing double digits in every category. I'm not going to break out line items and give competitors roadmaps.

Speaker Change: Yeah, we don't, we don't break, I mean we made it, we made a move a couple years ago that kind of put these large buckets in place

Frank Takkinen: It's about equal as what the guidance is implying for the back half so there may be some additional investment going on there or is that just in the interest of a little bit of conservatism. Yeah, there's a little bit of spin timing between second and third quarter. Obviously we had a really strong second quarter for EBITDA and we do expect a very strong second half. I do think we'll see queue three growth probably be a little bit lighter than we saw in queue two just due to timing, so it's really not anything more than that. As a reminder, we don't have a ton of seasonality, but queue three is typically our lowest revenue quarter, which does have a little bit of impact queue to queue three. Got it. That's helpful.

Speaker Change: I can tell you the area that we focus on.

Speaker Change: which is the highly differentiated, faster-growing, higher-margin Stink Wrap segment. We're growing double digits in every category. I'm not going to break out line items.

Pat Mackin: I'm not going to break out line items and get competitors' road maps. So, we're doing extremely well, frankly, even in the non-differentiated, the more competitive stuff, we're growing double digits. So, you know, the whole portfolio is doing really well. Perfect. That goes across.

Pat Mackin: So we're doing extremely well. Frankly, even in the non-differentiated, the more competitive stuff, we're growing double digits. So the whole portfolio is doing really well.

Speaker Change: and give competitors roadmaps, so.

Speaker Change: We're doing extremely well, frankly, even in the non-differentiated, the more competitive stuff, we're growing double digits. So the whole portfolio is doing really well.

Jeffrey Cohen: Perfect. That does it for us. Thanks for taking our questions. Nice quarter.

Pat Mackin: Thanks for taking our questions. Nice quarter. Thanks.

Speaker Change: Perfect. That does it for us. Thanks for taking our questions. Nice quarter.

Operator: Mr. Mack, and there are no further questions at this time.

Operator: Mr. Mackin, there are no further questions at this time. I'd like to turn the floor back over to management for closing comments.

Pat Mackin: I'd like to turn the floor back over to management for closing comments. Yeah, well, thanks for joining. Again, we were, we had excited about the quarter. Thanks for joining the call. We've obviously got a lot of great opportunity in front of us, as you heard both Lance and I talked. We're executing well. We're growing, you know, 10% top line and 35% on the bottom line. Again, this year, we did it last year. We just talked about our kind of, we're not giving guidance, but we think we can grow double digits top line and twice that on the bottom line.

Speaker Change: Mr. Mackin, there are no further questions at this time. I'd like to turn the floor back over to Management for closing comments

Pat Mackin: Thanks for joining us. Again, we're excited about the quarter and thanks for joining the call. We've obviously got a lot of great opportunity in front of us, as you heard both Lance and I talk. We're executing well. We're growing 10 percent on the top line and 35 percent on the bottom line. Again, this year, we did it last year.

Speaker Change: Thanks for joining. Again, we were excited about the quarter. Thanks for joining the call. We've obviously got a lot of great opportunity in front of us is you heard both Lance and I talked.

Frank Takkinen: And then maybe just for my second one, I'll ask a follow up on ONX.

Lance Berry: We're executing well, we're growing, you know, 10% top line and...

Pat Mackin: We just talked about our kind of We're not getting guidance, but we think we can grow double digits on the top line and twice that on the bottom line. We've got an exciting pipeline, a great channel, a great portfolio, highly differentiated. And, you know, we're very excited about building this aortic company and treating and taking care of more patients. So our surgeons have what they need from a technology standpoint. So

Pat Mackin: Maybe can you break out unit growth versus ASP and then talk about pricing in that line item? I'm sure you continue to take shares. There's still additional opportunity to raise price in the ONX portfolio. Yeah, we don't really break out the price volume. That's not something we typically do. What I can tell you is 15% growth. Of our mechanical valve segment is, you know, we continue ending in the last six or seven years.

Speaker Change: 35% on the bottom line. Again, this year, we did it last year.

Speaker Change: We just talked about our kind of, we're not giving guidance, but we think we can grow double digits top line and twice that on the bottom line. We've got an exciting pipeline, a great channel, a great portfolio.

Pat Mackin: We've got an exciting pipeline, a great channel, a great portfolio, highly differentiated. And, you know, we're very excited about building this aorta company and treating and taking care of more patients. So, our surgeons have what they need from a technology standpoint.

Speaker Change: Highly differentiated and you know, we're very excited about building this aortic company and treating and taking care of more patients So our surgeons have what they need from a technology standpoint. So thanks for joining

Pat Mackin: So, thanks for joining.

Operator: This concludes today's conference. You may disconnect your launch at this time, and we thank you for your...

Operator: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

Pat Mackin: We've grown this business on an average of around 15% over the last, I think, since we acquired the company. We still have a lot of opportunity internationally, and we're still taking share in the US, even from our high share position. We're also increasing price. I mean, our recent post approval data that came out shows an 85% reduction in major bleeding, which moves it a lot closer to a bioprostetic valve. We're also seeing, you know, recent data that's come out on mechanical versus bioprostetic data that's very compelling for people moving to the ONX valve in patients under 70. So, we're very bullish on what we have, and we feel like we've got the best valve, and we're going to keep taking share. Got it. Thanks for your questions. Congrats again. Thanks, Frank.

Speaker Change: This concludes today's conference you may disconnect your launch at this time and we thank you for your participation.

Laine Morgan: Laine Morgan.

Laine Morgan: www.artivion.org

Suraj Kalia: My next question comes from Suraj Kalia with Oppenheimer. Please proceed with your question. Hey Pat, Lance, can you hear me all right?

Laine Morgan: [inaudible]

Pat Mackin: Yeah, we need you to find Suraj. Congrats on all the progress. So Pat, just keying off from the last comment you made to the previous question. Can you, I believe last quarter on X was about 30% or US share 50% plus US. Yeah. Can you give us some color as to way VR exiting Q2? Yeah, so what I will tell you without getting into the granularities. We're growing both markets, double digits.

Pat Mackin: As I just said, we've got your share, your share comments are pretty accurate, right? We've got about a 30% global. And when you break that down, it's like over 50 in the US and in the, you know, 20, 25% internationally. So we clearly have more opportunity internationally.

Pat Mackin: But, you know, I think the big story on Onyx is really all the dynamics that are going on. And frankly, it's our aorta valve portfolio in patients under 65. You know, our, our Ross, our pulmonary valve for the Ross, you know, we have the only center graph valve for that. It's growing double digits consistently. Onyx is growing consistently, double digits with our new post-approval data. As you well know, you're very well read on the data.

Pat Mackin: It's a dynamic market, but there's kind of more and more negative data coming out on TAVR and patients under 65 on bioproesthetic and patients under 65. The difference in re-operation and mortality out to 15 years benefits mechanical valves. And they've seen lots of re-operations in patients getting TAVR under 65. And I think that's a real problem, right? I mean, there's the difference in re-op and mortality is 15 years. These are 65 year olds. That's a big deal. So again, I think we've got a great story with the Onyx valve. We're just going to keep telling our story. Got it. I'm drawing the blank here.

Pat Mackin: So please forgive me on Nexus. It reminds me, you know, when you talk about chronic aortic dissection, right? And the need and the 600 million am, I get that. Enrolled into the trial, again, if memory serves me correctly, like five, six patients per quarter. Is that by design? Is that due to patient selection?

Pat Mackin: Just kind of help us understand, you know, take a leap from here from the trial and enrollment to, if you'll acquire and expand, you know, how Nexus layout and whatnot in commercial adoption. How should we think about, you know, the speed of adoption? Yeah, so there's a lot in that. You know, I think both in both of our messages, Lance and I commented on, we're making an investment in the future of aortic technology.

Pat Mackin: Patients today who have to have a chronic dissection repaired and we have technology for that. You're looking at a, you know, seven to ten day ICU stay. We have patients in Europe that are getting the next device that are standing out in front of the hospital the next day. Right, so it's a big deal. But like any new technology, there's going to be an evolution, right? So what we're talking about right now is a single branch into the denominator.

Pat Mackin: That's the US ID trial called triumphant. We've enrolled 50 out of 60. We should enroll that by the end of the year. I think that'll have modest uptake when we launch it. But we'll be looking to start a two branch trial while probably right after that. And we think that that technology can capture half the chronic dissections in the world. So it's a big deal. And, you know, we're very interested in the space, and which is why we recut the deal. The data has been excellent and the trial is almost done. So, yeah, we're very excited and look forward to having it report out. Got it. That's final question.

Unknown Executive: I'll hop back and cue in terms of your sales reps.

Pat Mackin: What is through how does the bell curve look for sales rep productivity at this stage in Artivion's evolution? I'll be at that point in terms of higher elasticity to sales rep commission structure. Just kind of put this thing together how you're seeing the direct force that sells for us. Thank you for taking my questions. Yeah, thanks, right. So, you know, to me, I think this is one of the real benefits you're seeing and how we can grow top line 10% in bottom line 35%.

Rick Wise: We've got an excellent sales force. You know, you talked about here in the US as well as in Europe and some of the international markets. Most of our reps in the US have 10 years with a company. They know their customers. They call them for Ross procedures with with sinographs. They call them them with onyx for aortic procedure. They call them with bio blue. You know, when we get AMDS approved, they'll call on them for that and we get our frozen elephant trunk approved.

Rick Wise: They'll call on them for that. So, you know, the cardiac surgery segment is a much different segment than many of the other kind of med tech spaces. You don't have to scale your sales force kind of one to one, you know, with your revenue. And you see that in our leverage. So, you know, we're very excited about bringing our AMDS when it gets approved in late 2025. But we can just drop it in our existing reps bags and see a lot of that incremental, you know, profitability go right to the bottom line, which has been part of our story all along.

John: Our next question comes from Rick Wise with Steve. Please proceed with your question. Hi, Pat. Hi, Lance. This is John on for today. Another strong quarter in this to queue. Just wanted to sort of look ahead and think with bigger picture. You've provided guidance or rough structure at your 2022 analyst day on 2025 plus. But just thinking about the new approvals potentially coming through the new potential products you're adding to the portfolio and the areas where you're innovating.

John: Just wanted to get your sense on the longer term bigger picture looking ahead should we expect more the same sort of double digit growth 2025 plus. Yeah, so we, you know, we've stayed away from kind of re-upping long term guidance. We're just now finishing. You know, we gave some formal targets back in 22 through 2024. So hadn't quite finished those out yet. So we're not we're not sending out some new ones.

John: But I think we feel good about saying like look if you think think about us looking further out with the portfolio we have now and then the things in our pipeline. You know, we should be able to be a consistent double digit grower for an extended period of time. And then really we ought to be able to drive a lot of leverage off that. So, you know, we ought to be able to grow the bottom line, you know, really at least 2x the top line.

John: I mean, if you look this year, our guidance is is 3x the top line at the midpoint and we're not committing to that forever going forward. But there's a lot of leverage opportunity in the business and our core business is very defendable. You know, you've got me PMA based products in markets with not a lot of competition that's really unlikely to see new entrance and then we have this amazing pipeline.

Pat Mackin: So. You know, at a high level, you know, we feel comfortable about double digit growth and growing the bottom line at least 2X that.

Pat Mackin: Got it, now appreciate the color. And just as I, as I looked at the rest of the year, I realized last year, maybe in the second quarter, you guys put through a price increase. Just wanted to think about that in 24, 25, is there another opportunity for Artivion to potentially dig price, are you all done for a bit? Yeah, I've talked about this on previous calls. I mean, you know, we look at the portfolio, we look at how differentiated our product line is.

Pat Mackin: In some cases, we have, you know, significant clinical outcomes where we spent millions of dollars generating the data that nobody else has and synergrap pulmonary valve is the perfect poster for that. We spent a million dollars developing the technology, patenting it and getting the clinical data. That now has 25 year results, which is the best valve operation for, I would say, a patient under 55 years old. For something like that, we're going to charge a premium price for it because it's, you know, it warrants.

Pat Mackin: I talked about on it, we just invested millions of dollars in the post approval trial and we came out with data that nobody else can match and I think that that clinical data warrants a higher price. So, we're not going to go through kind of every line item on the portfolio, but you can get a sense of the things that are highly differentiated back by patents, back by compelling clinical data, we will charge what we think is a fair price for those. Yeah, appreciate the color. Thanks for taking the questions. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment please, while we poll for questions.

Jeffrey Cohen: Our next question comes from Jeffrey Cohen with Latin Bergthalman. Please proceed with your question. I think I'm going to tell you. Hey, Jeff, thanks for taking our questions and thanks just a few from there. We're going to focus on the call out on the backstreet and the other revenue line. Are there any puts in texture and perclod or do you have any clarity or see through in the health these are going on their side?

Jeffrey Cohen: Yeah, I mean, I guess, first of all, at a high level, I mean, it's not really very meaningful to us. I mean, it's tiny to backstreet just to put it in context. The only reason we brought it up is it just sticks out because the decline was so significant. And, you know, I mean, our visibility is not great to underlying sales, but understanding is they're continuing to ramp up. And this is just some basic, you know, managing the balance sheet on their side and just doing being good about inventory management is creating some fluctuations in what's a very small line item, so it just jumps off the page. So in general, we're not going to talk about backstreet business. That's that's their business, but, you know, again, I would just say it's not meaningful to us, so it's really not meaningful to them.

Pat Mackin: Secondly, could you talk about Barglow a little bit? Look extremely strong for the second quarter coming into 1855. So any commentary there and I'll look as far as the back half of the general commentary on the strength or specific geographies? Yeah, I think that the, you know, we mentioned Lance mentioned it in his comments, right? I mean, Bible grew like 1% in the first quarter and it grew 12% in the second quarter.

Pat Mackin: You know, don't plug 12% in your model because it's a very kind of lumpy business. We have a lot of indirect. We sell in 110 countries around the world. So you can, the phasing of every 90 days, you know, you get some bigger, some quarters less than other quarters, but on average, we think that that product line is going to grow kind of in the mid single digits. So, you know, I've just had a very good quarter this quarter and it's obviously extremely profitable.

Pat Mackin: Donna, and there's last list for us. Could you talk a little bit about the, it would extend graph portfolio for the quarter areas of week as a strength or any specific status or items which you do well or not as well? Yeah, we don't, we don't break. I mean, we made it, we made a move, I can a couple of years ago to kind of put these large buckets in place. I can tell you the, the area that we focus on, which is the highly differentiated, faster growing, higher margin, stancrap segment, we're growing double digits in every category.

Pat Mackin: I'm not going to break out line items and get competitors road maps. So, we're doing extremely well, frankly, even in the, in the non differentiated, the more competitive stuff, we're growing double digits. So, you know, the whole portfolio is doing really well.

Unknown Executive: Perfect. That goes across. Thanks for taking our questions. Nice quarter. Thanks. Mr. Mack, and there are no further questions at this time.

Pat Mackin: I'd like to turn the floor back over to management for closing comments. Yeah, well, thanks for joining. Again, we were, we had excited about the quarter. Thanks for joining the call. We've obviously got a lot of great opportunity in front of us as you heard both Lance and I talked. We're executing well. We're growing, you know, 10% top line and 35% on the bottom line. Again, this year, we did it last year.

Pat Mackin: We just talked about our kind of, we're not giving guidance, but we think we can grow double digits top line and twice that on the bottom line. We've got an exciting pipeline, a great channel, a great portfolio, highly differentiated. And, you know, we're very excited about building this aorta company and treating and taking care of more patients. So, our surgeons have what they need from a technology standpoint. So, thanks for joining.

Unknown Executive: This concludes today's conference.

Unknown Executive: You may disconnect your launch at this time and we thank you for your...