Q1 2025 Artivion Inc Earnings Call
John McAulay, John McAulay, John McAulay,
Speaker Change: Greetings, welcome to Artivion's first quarter 2025 financial conference call. At this time, all participants are in listening mode. The question and answer session will follow the formal presentation.
Speaker Change: If anyone today should require operator assistance, please press star zero from your telephone keypad.
Please note that today's conference is being recorded.
Speaker Change: At this time, I'll now turn the conference over to Lane Morgan with Invest Relations. Lane, you may begin.
Lane Morgan: Thanks, operator. Good afternoon and thank you for joining the call today. Joining me today from a trivia 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 Security's Litigation Reform Act of 1995.
Lane Morgan: Comments made on this call that look forward in time, involve risks in uncertainties and are forward looking statements within the meaning of the private security's litigation reform act of 1995.
Lane Morgan: The forward-looking statements include statements made as to the companies our management's intentions, hopes, beliefs, expectations or predictions of the future.
Lane 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.
Lane Morgan: Additional information concerning certain risks and uncertainties that may impact these four looking statements is contained from time to time in the company's SEC fileings, and in the press release that was issued earlier today.
Lane Morgan: You can also find a brief presentation with details highlighted on today's call on the Investor Relations section of the Artivion website. Now I'll turn it over to Artivion CEO Pat Mackin.
Hey, thanks, Lane, and good afternoon everyone.
Lane Morgan: I'm very pleased to report that our first quarter performance, despite the timing impact of our previously disclosed cyber security incident, was largely head of initial expectation
Lane Morgan: Despite these headwinds, we delivered total constant currency revenue growth of 4% and adjusted EBITDA growth of 1% year over year.
Lane Morgan: We also maintain momentum across several key clinical and pipeline initiatives aimed at growing our adjustable market.
Lane Morgan: As I will discuss, we are also making significant progress with our initial AMDS launch following the FDA HDE approval.
John McAulay, John McAulay, John McAulay,
before detailing Q1 performance.
Lane Morgan: I'd like to first provide an update on our previously disclosed cyber security incident and the residual impact discussed on our last call.
Lane Morgan: At a high level, we're very excited about our Q1, with a near total return to normal operations, including across our manufacturing facilities and tissue processing operations.
as we previously communicated in February . [inaudible]
We anticipated that our Q1 performance would be unfavorably impacted.
by Extended Leet Times and the Tissue Business.
as a team work through the Supply Backlog.
Lane Morgan: as well as in our Onyx business as the manufacturing operations replenished onhand inventory to support distributor sales.
Lane Morgan: We've made great progress over the past two months and overall. We are ahead of schedule to achieve a complete return to normalcy across both tissue and our onyx supply.
Lane Morgan: For Onyx, we exceed our expectations on the supply side, return to normal levels faster than we anticipated, enabling double digit growth in the first quarter.
Lane Morgan: We're continuing to ramp our onyx supply to capitalize on the tailwinds from positive clinical data presented at STS, which I will detail shortly.
Lane Morgan: We also made great progress on clearing the tissue processing backlog which drove most of the upside for the quarter.
Lane Morgan: For context, as relates to the impact on revenue, by the end of the first quarter, we had declared about one-third of the backlog.
Lane Morgan: Looking ahead, we anticipate we will fully be caught up by the end of the third quarter.
Lane Morgan: Where there's still more work to do and to be done, we're very pleased with the progress to date, which we believe speaks to the hard work and dedication of our team in the different branching of our Cinegraph products.
Now on to the Q1 Results!
Lane Morgan: From a financial perspective, our Q1 performance was driven by continued growth across our product portfolio, with the exception of revenue from our preservation services business.
Lane Morgan: From a product category perspective, our strength graph revenues grew 19% on a constant currency basis in the first quarter compared to the same period last year.
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Lane Morgan: Our strength graph portfolio remains a key component to our growth strategy and we're encouraged.
Lane Morgan: By our strong results which are driven by our differentiated portfolio of products that are focused on more complex segments of the stent graph market.
Lane Morgan: Today, the products in our Stancraft portfolio are sold primarily in Europe where we leverage our existing direct sales infrastructure to create significant cross-selling opportunities across our unique aortic product offering.
Lane Morgan: Our pipeline consists largely of bringing some of these proven products to the US and Japan representing a significant growth opportunity.
Lane Morgan: We're also pleased with the ongoing launch of AMDS in the US, following our receipt of the humanitarian device exemption in late 2024.
Lane Morgan: As a reminder, there are three steps that each center has to go through to complete prior to implanting an A-M-D-S as part of the A-M-D-S launch process.
Lane Morgan: First, each hospital we need to see receive a site-wide IRB before implanting the AMDS, except in the case of an emergency.
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Lane Morgan: Second, we'll need to have Anne Diaz approved by the Hospital Value Analysis Committee.
Lane Morgan: Third, Suraj and clinical staff will need to be trained on this device before they implant.
Lane Morgan: Additional response to the HD from the Surgeon community has been extremely positive.
Lane Morgan: As of today, there are approximately 150 facilities actively seeking IRB and Value Analysis Committee approvals.
Lane Morgan: In the first quarter, we gained valuable information in particular regarding the IRB approval process that will enable us to more efficiently work through the process that new facilities going forward.
Lane Morgan: Overall, I'm extremely pleased with the progress so far in the response from this Surgeon community and our Salesforce during the first months of this launch of this breakthrough product.
I look forward to providing updates on our future calls.
Lane Morgan: As mentioned, Q1 Onyx revenue increased double digits at 11% year over your growth on a constant currency basis.
Lane Morgan: As we outpaced initial supply expectations and continued to take market share globally with the only mechanical heart valve that can be maintained at a low iron R of 1.5 to 2.0.
Lane Morgan: Based on the proven clinical benefits of the Onyx theortic valve and the growing body of evidence supporting the use of mechanical valves in younger patients, we maintain our strong conviction that Onyx is the best theortic valve on the market for patients under the age of 65 and will continue to take market share worldwide.
John McAulay, John McAulay, John McAulay,
Lane Morgan: Bob Blue grew 9% on a constant currency basis compared to the same period last year as we continue to see growth in all of our major markets.
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Lane Morgan: Lastly, tissue processing, which was the area most heavily impacted by the cyber security incident, the client 23% year-over-year on a constant currency basis in Q1.
Lane Morgan: As discussed in February , a significant portion of our Tissue Revenue comes from our Synograph Pulmonary Vials, for which the demand outstrips supply every quarter and therefore we hold no inventory.
Lane Morgan: Due to extended lead times for tissue that were in process or received during the period impacted by the cyber incident, there's a backlit of product that has not yet been released.
Lane Morgan: However, as I mentioned earlier, progress in Q1 reinforces our expectation that we will catch up our tissue backlog this year and we've now accelerated our time line with an expectation to complete this by the end of Q3.
Lane Morgan: We remain confident that the tissue business can grow mid-single digits for the full year in 25 and over the long term.
Lane Morgan: From a geographic standpoint, we continue to see results from growth initiatives across Latin American and Asia Pacific, primarily through new regulatory approvals and commercial footprint expansion.
Lane Morgan: Latin America and Asia Pacific delivered constant currency revenue gross of 26 and 8 percent respectively in the first quarter
Lane Morgan: We continue to anticipate strong revenue growth for both regions over the coming years as we continue to leverage our industry leading products in those regions.
I will now turn my attention to our clinical programs.
Lane Morgan: and as we spoke during the Q4 call, there is new data that was presented at the Society of Thrasic Surgery meeting at the end of January that was also published in Jack, the Journal of American College of Cardiology, which is very relevant for the Onyx valve.
Therefore, I'd like to highlight this data once more.
Lane Morgan: The data showed that across 109,000 patients from the STS database
Lane Morgan: Mechanical Vals resulted in a statistically significant improvement in mortality compared to surgically implanted bioproesthetic valves in patients under the age of 60.
Lane Morgan: We believe this data opens roughly a $100 million US market expansion opportunity to convert borrow prosthetic valves to mechanical valves.
Lane Morgan: This is a significant opportunity for the onyx valves and gives us even greater confidence that we should be able to continue double-digit onyx growth for the foreseeable future.
Lane Morgan: This past weekend at AETS in Seattle, Endospan presented late-breaking 30-day data from its U.S. ID trial for Nexus Aortic Art Stankcraft system.
Lane Morgan: This trial is the first FDA ID trial for end-of-asture treatment of chronic dissections in the aortic arch and is focused on patients at high risk for open surgery.
Lane Morgan: The data met its protocol-defined primary endpoints demonstrating a 63% reduction in major adverse events relative to the comparators.
Lane Morgan: In our conversations with physicians at AATS, surgeons generally expressed that the 30-day results were extremely positive.
Lane Morgan: Suraj were particularly pleased the performance across stroke and renal endpoints, which is quite favorable comparative publish data for alternative endovascular treatments.
Lane Morgan: With these outcomes, which represent a significant development, we believe Nexus remains on track for an approval in the second half of 2026.
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Lastly on our pipeline.
Lane Morgan: With the HDE for AMDS, we are able to commercially distribute the device in the US prior to the receipt of a PMA, but we continue to focus on securing the PMA for AMDS.
Lane Morgan: We are pleased to report that we've been informed by FDA that we have completed the review of the Manufacturing Quality Management System Module.
Lane Morgan: We've also recently filed our clinical module, the FDA, representing the third of four modules required to be filed, keeping us on track for an FDA approval in mid-2026.
Lane Morgan: In conclusion, we're extremely excited about the progress early in 2025 and remain confident in our ability to deliver sustainable double-digit revenue growth drive EBITDA margin expansion and grow a adjusted EBITDA twice the rate of constant currency revenue growth. With that, I'll turn the call over to Lance.
Thank you.
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 GAP 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.
Lance Berry: Total revenues were $99 million for the first quarter of 2025, up 4% compared to Q1 of 2024.
Lance Berry: Judge Adibadaw increased to approximately 1% from 17.3 million to 17.5 million in the first quarter of 2025.
Lance Berry: Adjusted EBIT on Margin with 17.7% in the first quarter of 2025, relatively flat to the first quarter of 2024 due to the lower revenue base from the preservation services.
Lance Berry: Business and Investment in Sales and Marketing, including AMDS HTE launch costs.
Lance Berry: From a product line perspective, on a constantly currency-based assistant graph for revenue, increased 19% on extra 11% in bio-glue revenues, grew 9%.
Lance Berry: As anticipated, tissue processing revenues decline in the first quarter due to the backlog caused by the previously disclosed cybersecurity incident
Lance Berry: However, the amount of revenue we achieved this quarter was better than we expected, as we accelerated our timeline for clearing the backlog and were able to release more of our hot demand product.
Lance Berry: On a regional basis, revenues in Latin America increased 26 percent, EMEA increased 14 percent, raised a specific increased 8 percent, and North America declined 6 percent, all compared to the first quarter of 2024.
Thank you for tuning in.
Lance Berry: Our as reported expenses include approximately $4.7 million in Q1 associated with the cyber incident, which are excluded from adjusted EBITDAG.
Lance Berry: While we anticipate seeking insurance reimbursement for some of these costs, the process will take some time. We will exclude any insurance proceeds we receive from adjusted EBITDA as well.
Lance Berry: Grills margins were 64.2% in Q1, a decrease from 64.6% in the first quarter of 2024 due to the lower revenue from our higher margin.
Preservation Services Products
Lance Berry: General administrative and marketing expenses in the first quarter were $54.7 million compared to $30.7 million in the first quarter of 2024.
Lance Berry: and investments in sales and marketing, including AMDS HDE launch cost.
Lance Berry: R&D expenses for the first quarter were $6.7 million compared to $6.9 million in the first quarter of 2024.
Lance Berry: Interest expense net of interest income with $7.5 million flat as compared to the prior year.
Lance Berry: C. Other income and expense this quarter included foreign currency translation gains of approximately $2.9 million dollars.
Lance Berry: As of March 31, 2025, we had approximately $37.7 million in cash and 314.6 million in debt, net of 5.4 million of unamortized loan origination costs.
Lance Berry: We do not anticipate the need to raise additional capital to fund our debt obligations, our investments in our channels, or our pipeline in the foreseeable future. Our net leverage at the end of Q1 was 4.0 down from 4.5 in prior year.
Lance Berry: and now for our outlook for the remainder of 2025. Given our momentum in the first quarter, we are raising the midpoint of our full year 2025 revenue guidance and now expect constant currency growth of the 2011 and 14 percent compared to the previous range of 10 to 14 percent.
Lance Berry: We expect reported revenues to be in the range of 423 million to 435 million compared to our previous range of 420 million to 435 million.
Lance Berry: While current exchange rates would provide incremental upside to our guidance range, we are not revising our effects assumptions at this time, giving the ongoing volatility in the current current exchange environments.
Lance Berry: with our continued top-line revenue growth and general expense management.
Lance Berry: We continue to expect adjusted EBITDA to be in the range of $84 to $91 million for the full year 2020-2020.
25
Lance Berry: representing an 18-28% growth over 2024 and over 200 basis points of adjustity without more expansion at the midpoint of our ranges.
Lance Berry: As it relates to quarterly cadence, we anticipate that the unbearable impact of preservation services in Q1 will be fully caught up by the end of Q3 with some quarter to quarter variability.
Lance Berry: We also anticipate AMDS sales will grow sequentially each quarter of 2025.
Lance Berry: While we do not plan to provide quarterly guidance on a regular basis, given the expected non-typical quarterly cadence, we are providing one-time guidance for 2 Q2 025 revenue for clarity.
Lance Berry: We are forecasting our second quarter reported revenue to be in the range of 107.5 to 109.5 million which represents approximately 13% constant currency growth at the midpoint.
Lance Berry: The midpoint of our full-year guidance assumes an acceleration and constant currency growth in the second half of the year as compared to Q2. We are confident that we will see an acceleration in the second half due to ramping AMDS HTE in addition to an easy comparable in Q4.
Lance Berry: In summary, we made some great progress in Q1 on clearing our tissue supply backlog, catching up on our onyx supply, and building our AMDS pipeline, and have greater conviction on our ability to deliver our full-year guidance.
Lance Berry: Before turning the call back to Pat, I'd also like to provide a few points to contextualize our relatively minimal exposure to the dynamic trade policy and tariff environment.
Lance Berry: First and most importantly, currently all products sold in the US are also manufactured in the US.
Lance Berry: and less than 1% of our total sales are in China.
Lance Berry: Second, on the cost side, our U.S. facilities do not source any materials from China and source very little from outside the U.S. in general.
Lance Berry: for Contacts in 2024 are sourcing from Alpha the U.S. within the single digit.
Millions of Dollars
Lance Berry: We are of course monitoring these dynamics closely, but do not currently anticipate a material impact on our results from enacted and contemplated other tariffs.
Pat Mackin: With that, I will turn the call back to Pat for his closing comment.
Speaker Change: Hey, thanks Lance. So as you've just heard, we're extremely pleased with our first quarter performance which exceeded our initial expectations despite the timing impact of the cyber security incident.
Speaker Change: I'd like to take a moment to recognize our team's outstanding work in ramping up Onyx Supply, which has now returned to normal levels, and in clearing approximately one-third of our
Speaker Change: Also, the U.S. Salesforce is off to a great start on the AMDS launch.
Speaker Change: Our progress to date leaves us increasingly confident in our ability to deliver double-digit revenue growth and twice that rate for EBITDA.
Speaker Change: More specifically, we have the following key growth drivers that we expect to help us deliver on a continued revenue in EBITDA growth for 2025 and beyond.
First, the AADS-HD-E.
Speaker Change: We are currently commercializing AMDS in the US and are starting to penetrate the $150 million annual market opportunity.
Second, Onyx Hartvaldata.
Speaker Change: We are marketing the Jack Clinical Data I discussed earlier, showing a mortality benefit in patients under 60 compared to bioprostetic valves.
Speaker Change: This is a new $100 million annual market opportunity that we'll be pursuing with the only mechanical earthquake valve that can be maintained at an INR between 1.5 and 2.0.
Speaker Change: In 3rd and filing, the Nexus PMA, Positive 30 Day, Data from the End of Spans Tremont Trial.
Speaker Change: This reaffirms our confidence. It remains on track for PMA approval in the second half of 2026.
Speaker Change: This data brings us one step closer to being able to access the annual US market opportunity of $150 million.
Speaker Change: Finally, I want to thank our employees around the globe for the continued dedication to our mission of being a leader partnering to surgeons focused on aortic disease. With that operator, please open the line for questions.
Speaker Change: Thank you. Well, now we're conducting a question and answer session.
Speaker Change: If you'd like to ask a question, does time please press star one from your telephone keypad and the confirmation tone indicate your line is in the question queue?
Speaker Change: Let me press star two if you'd like to withdraw your question from the queue [inaudible]
Speaker Change: For Pistons Using Sweeper Equipment, it may be necessary to pick up the handset before pressing the star keys. One moment please will be pulled for questions.
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Speaker Change: Thank you, and the first question is from the line of John McAulay with Steeple. Please
Hi Pat, hi Lance, thanks for taking the question.
John McAuley: I wanted to start off with AMDS and the aortic stents and centgraph business generally. It's a really strong 19% growth this quarter, clear re-acceleration from the last few.
John McAuley: I just want to get a better sense of how much AMDS contribution or US contribution was in that versus improvement OUS.
John McAuley: And just beyond that, you mentioned 150 facilities seeking approval. Just generally speaking, would you expect to have all those up and running by the end of the year? Could we see a number higher than that? Just any sort of account goals would be helpful.
John McAuley: Yeah, thanks for the question. No, we were pleased with the growth, right? I mean, we've accelerated obviously, there's some AMDS in the US that's in that number. We are not going to be breaking that number out.
We've said that, you know, kind of last quarter [inaudible]
and then the 150 facilities.
We've been very encouraged by-
John McAuley: The reception of the clinical community. And as we said in the Q4 call after we got approval, you know, there is a...
John McAuley: Degree of bureaucracy you have to move through in the hospital. There's an added step with this HDE where you have to get an IRB from the hospital and then go through value analysis committee. Every hospital has a different-
John McAuley: Timing for their IRBs, a different timing for their value analysis committees, but of the places that we've targeted and closed we've got a hundred percent hit rate. So, you know, again, I'm not going to, you know.
John McAuley: I hypothesized what's going to happen to the 150, but so far it's been extremely successful. So it's really more of a timing issue rather than a, I think, you know, whether it's going to happen or not. So I can't tell you where they're all going to close because I don't know every hospital's timeframe. Hopefully that helps.
Speaker Change: Yeah, that's very helpful. And maybe just one for for your Lance here.
Speaker Change: It was very helpful providing the 2Q guidance, just wanted to get a better understanding of the tissue ramp that goes along with that. I mean, we were sort of at, if I'm looking at our model here, flatish to low single digit growth for the year, but you're talking about sort of full recovery of all the tissue sales. [inaudible]
Speaker Change: How should we be thinking about tissue growth for the year, maybe a return to mid-single digits, and then how that sort of contributes to the quarters. It's sort of to us sound like that. I think the one thing there, right? So we were very clear about the impact that the Cybersecurity Event hit tissue the hardest. We talked about it.
Sure, thanks for saying my questions.
Dr.
Speaker Change: Our next questions are from the line of Frank Takkinen with Lake Street Capital. Please just see with your questions.
All right. Thanks for taking the questions.
Speaker Change: So I'm going to start with one on AMDS. Sounds like you've had a couple.
Speaker Change: Accounts onboarded and selling into in the first quarter. I was curious if you could provide any learnings. How is the actual onboarding of surgeons from a training perspective gone versus expectations? [inaudible]
and then maybe as a second part, also on AMDS.
Speaker Change: I know we've talked about the $150 million US market opportunity being an estimate and there's some theories out there that the market could be larger as you've spoke with Doctors who are interested in the product any sense on where that market maybe can can trend to over time once you better understand the size of it.
Speaker Change: Thanks, Frank. We've been very pleased with the launch. With any new product that you're familiar with, we trained our Salesforce in January .
Speaker Change: We did our first training in February , we did our second training in March. We've had phenomenal training sessions. I think those have gone better than I expected.
Speaker Change: Great engagement from the customers. People are leaving super motivated, going back to their IRBs and their value analysis committees. And we're seeing, you know, literally a quick
Speaker Change: Kind of response once they come out of training. So that'll be continuing throughout the year. So in the Salesforce has done a fantastic job. So we're very bullish. I mean, you know, we talked about, you know, there's 600 accounts in the US.
that do 80% of the volume.
You know, we are actively engaged with probably half of those accounts [inaudible]
Speaker Change: with our commercial team, and we got 150 as I said in my comments.
Speaker Change: that are currently going through IRB and Value Analysis Committee. So I think things are, as we talk about last quarter, we expected this to take some time. If you look at any company that launches,
Speaker Change: James Berry. And we've been very pleased with how well it's gone in the first quarter and we have learned some stuff on the RRB because.
Speaker Change: That is unique to an HDE. That is not normal. They're very rare. The reserve for very important.
Speaker Change: Products that are lifesaving and the FDA thought it was important enough to give us in the market earlier. So we have learned some lessons on the IRB and that has accelerated some of our accounts.
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Speaker Change: Got it. And then maybe the second half of that just kind of market opportunity, any initial feedback? Yeah, I mean, I mean if you think about it, you know, we basically used, you know, kind of the STS data bit where they have actual captured literature.
Speaker Change: The mortality of an acute type A with malperfusion, which is where AMDS is primarily indicated, the mortality is 35%.
within 30 days.
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The Persevere Trial for AMBS was less than 10%.
Speaker Change: So just by nature, if everybody starts using AMDS they're going to be more patient.
Speaker Change: Right. I hear that all the time that a lot of people die on the way or sit on the table and they don't have a treatment for malperfusion and they die. So I think by just looking at the mortality outcomes between a malperfusion
Speaker Change: Not with, if you don't get an AMDS and malperfusion mortality, if you do get an AMDS, there's a huge difference and that would be there's more patience. So, you know, this is still evolving, we're one quarter into the launch. But, you know, I think it's all been very encouraging.
Speaker Change: Got a couple and then maybe just one more for Lance. I was hoping you could comment on maybe cashful expectations.
Speaker Change: Looks like you on there is a little more burn. Obviously it's a seasonally high expense corner. And I assume there was some cybersecurity in there that hasn't yet been reimbursed by insurance as you alluded to, but maybe talk to kind of casual expectations for the year. [inaudible]
Speaker Change: Yeah, we still expect to be free cash flow pods are for the year. Q1 is...
Speaker Change: seasonally, always the worst, you know, free caseload quarter of the year for a number of reasons.
Speaker Change: and your bonuses paid, you have all your sales meetings and it's usually...
Speaker Change: Very industry-meeting intensive, you know, then on top of it this year, we had some AMDS launch costs and some of these cyber costs. So there's a lot of stuff going on in Q1. I think I actually think the bigger thing, though, was a lot of that.
Speaker Change: The invoicing we did during the cyber event was, you know, really more in a manual type nature and collections on that has...
Speaker Change: Drugged out a little longer than normal, and I think you can see that he looked on the balance. She did, the counterseeable balances up quite a bit.
Speaker Change: No issue with clickability on that. It's really just been a timing thing. We expect that we get a lot of that cleared out by the Indie Q2 and we'll get back more to normal and certainly don't see any impact for the full year.
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Great. That's helpful. Thank you.
Thanks, Frank.
Speaker Change: Next questions are from the line of Suraj Kalia with Oppenheimer. Please see with your questions.
Suraj: Pat Lance, congrats on a great start to the quarter. You hear me all right? Yeah, you're fine. How you doing, Suraj? Hey, good. So, Pat, you know, you guys are back on the trajectory of beating and raising. So, Kudos, a couple of questions for you, Pat, and one full
Suraj: Lance, if I could, and I'll just kind of say the prompt Lance, if I, 25 guide, can you give us some directional color?
Speaker Change: on what the implied growth for Onyx and 10 grasses as the year progresses.
Speaker Change: That for you, Lance. Pat, a couple of questions for you. So next is show the 60% reduction in MAAs, right?
How does that stack relative to your internal expectations?
Speaker Change: and what do you define as the key threshold at the one-year mark that would make Nexus like you have to have it in the bag?
Pat Mackin: Yeah, let me take the Nexus one first, and then Lance can take the growth by segment. So we just as I mentioned in my remarks, you know, we just presented our endospan just presented the Nexus.
Pat Mackin: 30-day data which is the pivotal kind of arm of the FDA trial.
Pat Mackin: That is the clinical data that is going to be used for this submission. They will do just like AMDS Persevere. There will be a one-year follow-up or they'll look at imaging of the stance.
Pat Mackin: So really the 30-day in this patient population is really the critical endpoint, again just like it was for AMDS.
Pat Mackin: I think the results were extremely positive. I had a chance to meet face-to-face at ATS with probably 20 cardiac and vascular surgeons.
I got the reaction to the data, comments like.
Pat Mackin: Extremely impressed, very impressive results, better than you have better stroke rates than any other end of a device on the market, very good results, especially at least a renal and stroke.
Pat Mackin: I think Nexus, it's the only device that's specifically designed for the Aortic Arch.
I think this clinical data is extremely positive.
Pat Mackin: You know, they obviously have to get it at the approval so our option doesn't trigger until they get the approval but...
Pat Mackin: I would think with this data that makes it very likely that they will get an FDA approval and we're very bullish on the technology because...
Pat Mackin: The results from some of the top aortic vascular and cardiac surgeons in the world was extremely positive.
Pat Mackin: Yes, so Suraj, I'll answer the question was on stint graphs and on excret rates and, you know, what?
Pat Mackin: Time of commentary. Can we give on those throughout, you know, the remainder here? So I guess just...
Pat Mackin: Walk you through the things that we've said is first of all [inaudible]
We said, excluding the impact of the AMDS HDE.
We would expect
Pat Mackin: Stintgraphs and Onyx to continue to do what they have been doing which is think about Stintgraphs as for the full year of Minteen's growth rate business and Onyx for the full year of double digit growth rate business.
Pat Mackin: We also said on a last call that we expected AMDSHT to improve the total company growth rate about 1 to 2 percentage points for the full year and then we also said today that we expected
Pat Mackin: Stead Graph, Grills Ray, to increase sequentially throughout the year as there's more benefit from AMDS in the US.
Pat Mackin: So I think that's kind of the puzzle pieces that we've provided to help you try and think about how those product lines are going to progress throughout the year. I also say, you know...
Pat Mackin: Onyx has been growing double digits for extended period of time. I've said it's been some very favorable.
Pat Mackin: Sonipul data that has come out recently. If we are able to use that tailwind and drive further growth, that would be upside to what the comments we provided previously are.
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Speaker Change: Fair enough. And Pat if I could quickly snake in one last one. I'm 50 AMDS sites Pat.
Speaker Change: Would that be too optimistic and saying let's say by Q3 End?
All the sites are on board.
Speaker Change: I've multiplied by X number of implants in the final quarter by these sides, multiplied by it. Would I be too optimistic in trying to do that kind of math or is this something I would say a couple things won?
Speaker Change: I'm extremely encouraged by the clinical reaction, the clinician community reaction, and them pushing through IRBs and value analysis committee, so that I think is all good news. The thing we talked about at the very beginning of the year, we've given guidance for the year.
Speaker Change: that contemplates the AMDS taking up or overall growth rate by one to two percent. So we're very comfortable with that. Really with this boil down to us, how long does it take an individual hospital to get through an IRB and a value analysis committee?
Speaker Change: And it's all over the board. So to sit here and tell you, I know you guys love your models, but to sit here and tell you I can project how those 150 accounts are going to layer in, you know, each week, I can't do it.
Speaker Change: I always tell you, we're very comfortable with our guidance and just potentially upside if we can move these through faster and we're going to be working to do that but I can't really give you a number because we're still three months into the launch.
Thank you. Thank you.
General and congrats again.
Thanks, Ralph.
Speaker Change: Our next question is from the line of Mike Matson with Needham & Company. Pleasers here with your question.
Speaker Change: Yeah, thanks. So, you know, the Nexus data looks good, and it seems like it's probably going to be on track to, you know, get the PM in the second half of next year, just talk about so.
Speaker Change: At what point do you have to make a decision on whether or not you want to acquire and expand your span and then maybe just quickly remind us of the terms of that agreement I know they were
Speaker Change: and then how would you expect to finance that? I mean, your leverage ratios come down, but it's still like four times I think right now. I mean, in the year maybe it'll be essentially lower, but
Lance Berry: Yes, let me take the first, the first part about timing in a wetland, take the second part about.
Lance Berry: Kind of financing and so on the on the I think it's pretty clear on the time you know again, you know, this is all predicated upon an FDA approval so we our option does not trigger until they get FDA approval um
Lance Berry: Based on the data we've seen, based on the timelines, you've got to get your one, your follow-up and then submit your PMA. It looks very probable that the second half of 2026, that they would get approval.
Lance Berry: That trigger is as soon as they get to prove the data, they get to prove all triggers are option. And then we have 90 days to decide if we want to buy it. Maybe I'll pivot over to Lance now and let him take the, you know.
of the other parts of that question.
Thank you. Thank you. Thank you.
Lance Berry: Yeah, and so, and then, as far as costs, some net of the loans we've already provided them, the upfront cost is $135 million and then we have an earn out that's payable.
Lance Berry: Post Year Two of the deal closing at two-and-a-half times, essentially year two incremental revenue.
Lance Berry: So, you know, the real number that is the focus is the 135 up front, you know, and I think given what we expect to do with our Yvdah and improving cash flow, we really don't think we're having an issue.
Lance Berry: Having available, getting availability to fund, to execute that up front if we exercise our option, if we're really not concerned about it.
Speaker Change: Okay, thanks. And then I know it's in this fan's product, but you know, you guys kind of surprised us with the HDE. So, sorry for A and B.S. So, I mean, is there any potential that they could get an HDE for Nexus to kind of, you know, get the product onto the market sooner than you was?
Yeah, for my understanding, Mike, that they're not pursuing an HDE.
Okay.
Speaker Change: All right, and then, you know, just on the onyx, I mean, it's good to see the 11% growth is that was that still kind of
Speaker Change: Can constrain by the cyber issue. I mean, could that have grown even faster in the quarter if he had more supply or yes and yes.
Okay.
Speaker Change: Yeah, I mean, the great news is our team and they were hit pretty hard by the cyber incident.
Speaker Change: They did a phenomenal job kind of clawing back out and you know we're back up to you know as I mentioned in my comments back up to normal they were they actually had a over performance in the quarter on the supply side and we sold every single valve. [inaudible]
Speaker Change: We could have sold a lot more valves. So it was definitely a constrained growth rate. And as I mentioned, I think the more important part is, you know, this I keep pounding a table on this STS presentation on that was published in Jack about.
Speaker Change: The mortality benefit to a mechanical valve versus a tissue valve in patients under 60.
Speaker Change: Um, you know, we're seeing acceleration based off of that and we haven't even started fan in the flame yet, so let's go.
You know, we're focused on the A and B.S. launch.
Speaker Change: and we're working to ramp up our supply on Onyx, so we're extremely bullish on the Onyx platform.
Okay, got it. Thank you.
Speaker Change: The next question is from the line of Daniel Stauder with Citizen's JMP. Please receive your questions.
Speaker Change: Yeah, great. Thanks for the questions and congrats on the quarter.
So, just first on guidance.
Speaker Change: Just on the commentary around the FXPs in terms of total revenue.
Speaker Change: I appreciate that it's still a fluid situation, it's difficult to forecast this
Speaker Change: and I may be off here, but I believe you outlined on 4K that it was contemplated to be a 2% headwind from foreign exchange and is that still in the range as you sit here today or is there anything new?
That's where I'll say it again.
Speaker Change: Yes, so obviously the rates have changed pretty significantly from when we gave that guidance.
Speaker Change: Back in the fourth quarter. So, you know, if current rates were to hold today, you know, it would be closer to neutral.
Speaker Change: for the full year. But at this point, that's very difficult to predict.
Speaker Change: We're just mainly focused people on that constant currency revenue growth rate. If FX holds where it is, that's definitely, you know, a potential upside on as reported revenue in a little bit on EBIT, but we're pretty naturally hedged.
Speaker Change: Okay, great. And that kind of gets to the core of what I was trying to understand, so that's perfect. I think that's just on evitac guidance.
Speaker Change: I think last quarter, you know, we discussed that this is 100 bits from Croce Margin Expansion, 200 bits from SGNA leverage and then some offset from...
Speaker Change: Higher R&D spend. Has that changed at all for 2025 in terms of the line items or how should we think about that and then you know any more color on the cadence for 2025 or maybe just should be in in line with revenues. So anything I'll say would be great. Thanks.
Ron,
SG&A, Despite.
The Lawrence College from MTS.
Speaker Change: and then it is a little bit higher spin on R&D this year as a percent of sales, but within our range we said that we kind of have a goal of spending seven to eight percent, so probably toward the higher end, but still within our range. So we still expect all that for the full year, the...
Speaker Change: Our quarters are a little different than we would have normally expected but the full year is still the same.
and then if you think about Rollin' in 2026…
Speaker Change: I definitely not give in 2026 guidance, but a lot of those same dynamics should still be in play as we think about next year.
Right. Thank you for the questions.
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Speaker Change: The next questions from the line of Jeffrey Cohen with Latin Berk Salmon. Please excuse your questions.
. . .
Jeffrey Cohen: So hey, thanks for taking our questions. Just one for my random wonder.
Jeffrey Cohen: Andrew Lance, if you could come in any on APAC and LATAM, it looks like again very solid for the quarter and any specific call-out stairs for our products or countries or geographies or commercial folks, thanks.
That's why you take that one.
Brinley, Dr.
Yeah, so...
Jeffrey Cohen: We continue to see really good growth. You know, both of those do fluctuate a little bit quarter to quarter. I think Apex a little bit lower than we expect the full year. I think they were the ones that probably got shorted a little bit on Onyx supply.
Jeffrey Cohen: Disquarter and we'll be catching them up through the remainder of the year.
Jeffrey Cohen: Stilcy and really good growth out of both of those geographies as we continue to get more products.
Jeffrey Cohen: Approved and yeah it's really kind of just more of more of the same there as we just continue to get our whole portfolio approved in these various geographies where we have built out Salesforce and so feel really really good about that as a continued growth driver.
For more information, visit www.FEMA.gov
Okay, Donna. Thanks for taking a question.
Jeffrey Cohen: Thank you. At this time we've reached the end of the question and answer session and I'll turn the call over to Pat Mackin for closing remarks.
Pat Mackin: Yeah, well first thanks for attending the call and just a couple quick comments. I mean, we're very excited about
Lance Berry: as I mentioned on the call of Lance and I talked about tissue as recovering.
Lance Berry: We expect to kind of have this whole backlog resolved through Q2 and Q3 and get it back on track.
Lance Berry: Onix at a great job of covering with supply, delivered double digits in the quarter, and we've got more we can do there, and we've got this new $100 million opportunity to go after bioprositic cells because of the mortality benefit in patients under 60.
Lance Berry: AIMDS launches off to a great start. We're in 150 counts right now and so far we've had a 100% hit rate on the ones we've gone after.
Lance Berry: and then the Nexus data that was just presented two days ago was extremely positive and that's our next wave of growth, assuming they get a PMA approval and we acquire them in the fourth quarter of 2026.
Lance Berry: That's another $150 million opportunity. So, you know, I think it just gives us more confidence than ever that our ability to continue to grow double digit on the top line and twice as fast on the bottom line for a long time to come is well intact. So, thank you for attending the call and look forward to reporting out the next quarter.
Thank you for watching!
Speaker Change: This will conclude today's conference. Let me disconnect your lines at this time. Thank you for your participation.