AORT - Earnings call transcript Q1 2022

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Operator

Greetings and welcome to the Artivion First Quarter 2022 Financial Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I will now turn the call over to Brian Johnston from the Gilmartin Group. Thank you.

You may begin.

Brian Johnston

operator. Thanks, thank the and today. for you afternoon call joining Good

are Artivion’s CEO Joining from team Pat me today CFO. management Mackin, Lee, and Ashley

of Litigation we the that Harbor that forward-looking within management’s to as to hopes, comply Before of and forward-looking XXXX. these of Securities like uncertainties following The Act on number Act Private to in I’d uncertainties, and to the this statements beliefs, the predictions of statements. time made Reform include statements made statements risks a estimates forward-looking call assumptions Litigation make Reform XXXX. statements with forward of statements or subject meaning are materially requirements These company’s the intentions, the Safe results Securities that differ forward-looking Comments of from to risks, the actual are may look Private or the future. begin, expectations involve cause

statements impact certain Additional in risks concerning forward-looking issued filings release SEC the the information from earlier that press and that and may time-to-time company’s was in these is today. uncertainties contained

Now, I CEO, to over Mackin. will it Pat turn Artivion’s

Pat Mackin

followed constant strong fourth currency pleased the growth thanks, performance with the XX.X% Hey, This after year, quarter up first double-digit our growth. quarter. very revenue we of in is an QX of am of report a quarter compared in first this of last to the XXXX consecutive revenue Constant half was exceptional currency headwinds despite Brian. substantial to COVID second I year. quarter

valves On-X processing and grafts of on ‘XX More driven grew by comparing to stent our QX growth both stent a XX%, QX was On-X basis specifically, aortic Our processing. XX%. tissue and in mechanical of grafts, grew and tissue ‘XX, constant currency QX

and on you Day many XX held York New we Investor March in City. an Analyst As of know,

our attend, webcast detailed strategy replay. of our encourage listen We I and you able you goals overview X next If would years. to a provided not to to are the to the

our announced stent follows: the of currency had event initiatives provide continue and our with We why the review first, their on growth about of will We way a and three growth leadership team experience excited excellent had company. members drive constant was growth. so will grafts. three products years that we key They future great are a in over we also using to understand as are you to an our revenue to share and next we KOLs the pipeline. double-digit aortic It products and On-X drive of focus

upside Second, new our America. Mitral Asia-Pacific PROACT our we generate And indication. Latin growth further approvals U.S. in in On-X PerClot through the in in our and PMA will further the drive for from we INR investments channels regulatory XXXX, our third, will low and and approvals

made This of solid each quarter, progress on these we initiatives.

to let me first Starting We grafts. the them. revenue performance stent on a trunk E-vita year-over-year stent elephant NEO particular constant on basis in OPEN the building well had frozen So in QX, as posted take we AMDS. a our growth first our XX% few quarter quarter with year, where last review as XX% offerings; strength in minutes to our of currency increased compared in graft product

the currency we environment full hampered XX% pandemic. of first portfolio improves quarter staffing to constant we as On-X, growth build not quarter the continue the in effects our potential to by where last posted demand XXXX, shortage quarter the For of of beginning first significantly believe fourth the these of only abate. adoption products an will and are we We the XX% that for XXXX. in hospital fourth ‘XX at see the to of We compared posted year-over-year to in compared revenue growth anticipate of quarter the year,

that Moving first our XX% I demonstrated of am initiative, executing well and approvals to in currency revenue Latin through commercial report regulatory Asia-Pacific quarter Latin and are constant and in on growth pleased XX% as footprint the Asia-Pacific in America. new expansion; by strategy international to we next expansion America very on

We continue our contributors continue years regions coming to strategy. execute as over growth to the these important we expect be this to on to

Regarding approvals our mitral achieving make third regulatory progress PerClot. On-X initiative, we on continue to for and

the for On-X First for we mitral in lower is application for label significant significant the believe benefit will for clinical valve, patients. – a our which INR a U.S. be

We in our On-X mitral FDA to with On-X INR the and label continue sometime share so lower approval label just On-X U.S. to the are in continue for the INR approved we’ve as believe with will the valve. like we to valve XXXX. low active market On-X valve, we do for the dialogue expect receive the PMA in the If and significant aortic just aortic done mitral take for

during PerClot, Baxter, with of the second generate we for to $XX receive expect and half to we’ll approximately begin milestone approval agreement we will work and we approved, XXXX. under For million supply revenue payment and due to Baxter with continue years have to If us receive to thereafter. two a divestiture the closely the FDA PerClot

make this and each strides to later midterm products U.S. to are our in three others with PROACT These currently Xa, these and key year. trials about continue clinical start addition In progress three our AMDS. initiatives, on we products NEXUS on of also pipeline to

make in trial our determine can anticipate clinical the be from enrollment We remain patients XXX this patients under become warfarin. if Eliquis which believe valve endpoints, aortic warfarin using we the in Eliquis is the rather continue of warfarin. FDA, and valve by assuming the for in effectively prospective safely market XX, using the quarter end We in for of of very patients valves On-X aortic age achieve On-X maintained We patients to Eliquis benefits trial the should early Xa, the we approved And feedback aortic around by valve significant trial new completing than currently and rather believe positive. – significant study the this have to given the in trial the the surgeons PROACT to the approval on participating its XXXX. can the progress If FDA third enrolled randomized meets with we the patients indication market-leading enrollment versus far so than XXXX. of

follows: U.S. FDA to patients. As PERSEVERE efficacy up begin our nonrandomized for recently type lumen a of dissection. clinical sites PERSEVERE. stroke, myocardial AMDS, mortality, new we in enrollment is year. by all-cause Q we trial the are in onset enrolling pivotal approval dialysis A The which The aiding to the and the We around anticipate received renal a expansion the new this as full and trial requiring trial disability Aortic will the of These well reduction of expect endpoints first enroll to and as patient aorta. clinical true and of patients experience as in the end completing called the primary infarction safety failure XXX XX the combined trial month

one-year we XXXX. a FDA would follow-up anticipate period, for early Following receive we approval AMDS in

In is also our of U.S. the well will PMA likely PROACT XX QX of NEXUS for approximately September are increase three If in to we and as our this would on in approval trial XX Xa, as over NEXUS completion trials There $X.X treatment. the have addition to AMDS turn have now approval leading been of of treated its pleased FDA to we’ve trial up progress and Xa Endospan who estimate making an each known currently as TRIOMPHE. of are AMDS, XXXX addressable that, and patients been XXXX, been I in currently to for we With PROACT Endospan Ashley. as approved get and anticipate these that estimating opportunity for call ID to by the XXXX. is on partner, report that market proceed billion. a we made the progress

Ashley Lee

$XX.X increased the strength XXXX and X.X% new increased the to and good of processing and first a revenues regional aortic XXXX, stent EMEA and XX%. increased decreased increased quarter volumes currency increased revenues processing launches. quarter graft a tissue XX%. first On-X revenues stent first quarter increased the procedure volumes from improving reflecting the Pat, afternoon, revenues in up XX%, lower revenues to Revenues U.S. million basis, of volume were everyone. revenues product constant hospital reflecting both and stent from the reflecting On primarily XX%, revenues quarter XX% On-X basis, XX%, shortages. procedure GAAP compared XX%, cardiac of in currency a procedure relative grafts, for X%. XXXX. On in both tissue of basis, decreased revenues BioGlue on and and benefited quarter, grafts aortic tissues. due up our staffing the the to quarter in On-X aortic QX compared basis On revenues year-over-year increased BioGlue basis XXXX constant a revenues Total XX.X% to in first of to half a on Thanks, XXXX. first first

increased to a XX%. basis, On increased constant of in America currency first compared Asia-Pacific North and XX% Latin X%, quarter XXXX. America increased XX%. increased to the revenues all Europe

in and increased driven to XXXX. first $XX primarily expenses were XXXX. by QX the Latin Gross quarter first of the first a million was XX.X% Asia-Pacific XX%, to increased our margins quarter in being of of were all North America The G&A line $XX.X XX.X% increased smaller revenues. BioGlue quarter the portion compared compared stent first graft and million within aortic America our product for mix the XX% XX%, to of compared XXXX. decrease in quarter

$X.X to of adjustments G&A to of consideration for business non-recurring first the compared and million Excluding charges and of a development consists in million $X.X and rebranding which business primarily Ascyrus XXXX, of benefit then acquisition non-recurring related expenses value the first million million $XXX,XXX quarter million in fair development in of were for contingent non-cash ‘XX. quarter $XX.X $X.X acquisition-related and of benefit $XX.X charges ‘XX XXXX, excluding

$X.X or fully first in On GAAP quarter. first per net per reported $X.XX share net or $X.X million line, the diluted was we the in income $X.XX Non-GAAP loss the of quarter. share million bottom

and our year guidance approximately of that XX, last the Since March strengthen, ‘XX. million. continued of million facility. In this, Please quarter XXXX versus GAAP call, our ‘XX. range second of we was press of of additional the be for in the full revolving constant available million in in to $XX that X% compared ‘XX to ‘XX credit our And revenues million we the see a in additional approximately headwind of be about full information now to for currency FX a we quarterly compared on our we first we XX% we results. expect headwinds under to forward, now best be results XXXX, including ‘XX. little year. to continue full year first the As that will information bit for million felt currency between will $XX EBITDA refer for we we we not our would for stated has $XXX million million in to full those it $X a faced to quarter million to Adjusted more for our provide million time, issuing $XXX expect ‘XX $X had going be cash, dollar revenue Considering anticipate outlook; $XXX we reconciliation debt Though $XX.X for and what want clear to resulting quarter. the a of – results, of non-GAAP growth release $XX a

revenue prior assumption headwind. rate year Given euro-USD for our $XX.X quarter, a million, $X.X is for of which million anticipated the adjusted currency FX of our QX accounts XXXX $X.XX an second

to recertify have mark until QX we CE and that our our exited the for restrictions, notified received will until of year. December unable XXXX, travel market recertification body our by previously process to extension Due this time new able the not to be COVID-related an since XX, As notified we was body BioGlue now XXXX. for communicated, in complete BioGlue

have we control. process, been seeking but previously certain recertification, factors we our countries As derogations too, by EU indicated, that beyond have has pending in delayed been

$X XQ could be the result, million, range we similar and affected of be recertification, full headwind in revenue XX%. QX derogations, $X constant will growth in for temporary X% of and range million. delays revenues the X% the in the currency BioGlue growth in Despite XX%. QX, million the in year headwind potential could be to a receive currency range by are up QX growth affected second to quarter currency not BioGlue we QX second expect quarter constant revenues by less. this the in be X% – of additional If still would If X%. As constant significantly revenue If to impact to a the delay adversely and $X between in in

and no more operating remainder during environment, channels a invest his other capital. can R&D continue With from our to impact to having closing deferred without to in-person a America, back debt shortages meaning assumes surgeries turn our the selling. significant return raise this of in in comfortably limited Asia-Pacific Latin COVID we and that comments. believe and more guidance our year to Our commercial normal staff pipeline any for I’ll service that, and Pat it additional and We over

Pat Mackin

Thanks, Ashley.

we So our solid us become deliver growth with We’ve deliver in revenue in aortic the made growth innovation. for we and through necessary – to goal key past and firmly initiatives years in years acquisitions pipeline on is come. provided pieces and to growth to a few these what have place laid summarize, Investor world to have believe products on leader the a our out on repair to Day. We that

Our direct digits invested and channel the our capacity. become manufacturing broad business. a we next and million years, and significantly is in $XXX sales We’ve grow increased double to In expanding. expect manufacturing X have

generate increase basis leverage expect We our Xx. margin, we adjusted in EBITDA, to to $XX point while reducing million gross million in net than $XX also anticipate our XXX less to and

quarter to successful much delivering us first first quarter moves our had Our that on closer metrics. these we –

portfolio aortic tissue a our constant saw we in growth First, XX% stent XX% portfolios. and in growth currency our graft processing On-X and

America invest currency these and in Second, regions. we growth posted in growth Asia-Pacific, to Latin XX% continuing constant we’re in XX% and

addressable business Third, we AMDS Mitral clinical and expand the trend our that U.S. have early for that foreseeable approvals trials, the of momentum to late to robust continued interest please and start PerClot PROACT expect should your by future. We and team the for for as Operator, PMA in in strong. the about receive in either XXXX, or enrolling. as In PERSEVERE low On-X place billion is Xa, pipeline enrolling ‘XX, total our ‘XX. a INR. have for NEXUS $X.X closing, And we in questions. These to believe the we well our midterm open products strategy, you TRIOMPHE PROACT Thank line three continue market trials, time Artivion.

Operator

your [Operator first Our proceed line Wise question of from Instructions] comes Please question. the with Rick with Stifel.

Rick Wise

just quarter. off start On-X see progress good the in the start from solid Pat to off and afternoon, somewhere, to start Hi, performance, great another with solid the quarter to Maybe with – On-X.

I we know, important this the it you docs one on the competitively INR. impressed are use a lower to doc And feel some like an They really As They differentiated. did going due diligence came focused is are And more. is are for work. that engineering away product.

doing you’re the just the message on steps complement part On-X? So that you all how – that, next And just reflecting what the as side? that already does or how discussion, are what into maybe getting out opportunity in PROACT play are on Mitral of aortic

Pat Mackin

Rick. Thanks, Yes.

that company tissue approval product and ever And think valves, which the mechanical not has we so taken we’ve interesting at acquired PROACT some that years ago. the that that market And like by in almost XX had – time segment, INR Valve X had aortic and things launched the share is tissue been we pulmonary And low of about points Mechanical experience aortic, are On-X that selling when valves, this our the been force sales had in they the big is the first I against segment. competitors. FDA with

as all they aortic in got have relationships not whether and valves, the as INR, Europe also selling heart they but with the only mitral, years surgeons U.S. who of cardiac a the low experience, well in it’s implant or group. Asia, building an so X aortic And same the are

as shelves get the on are change, aortic. On-X a I label got lower valves highly Once lots PROACT using mitral a hospitals. valve a what trained is are INR used the proxy of aortic do to customers for of because we’re a like that with good the force, So a we’ve going think the to the sales surrogate this of a mitral PROACT we one for

that is the So the mitral requires transition, INR. a think, in our I think situation, easier. talked we a which position also as Day, will low pressure higher be about I valve Investor

patient meaningful that are standard from trial. So that care their And a that XX involved think obviously, from not centers we the lifestyle. I in we’re is PROACT any we’ve marketing in reduction the even got and Xa. for enrolled almost XXX obviously, And commercial more at then But standpoint. third is the patients –

On-X plan continued of the Mitral aortic I so. we approval. or enrollment adoption, pending trial the next PROACT PROACT here in So think the the Xa in On-X combination completing quarter the on And

three and that at all around that see those the really can of in the going real things you we’re think run the we also and of the lower brand. a technology. this of massive technology trial technology, clinical kind of can use highlight we On-X that the that brand do brand and of testing can we I with differently if INRs prove game-changing forward with it to Because

same, think I roll and just approval the is another look mitral we for quarter later continuing this So of had forward great On-X year. and look to more the to

Rick Wise

next BioGlue can of understand delayed Great. steps? – are to next be are this And do great are I company other to forward? can there anything to if – us maybe a – to on to there appreciate the and world mean, being push very the can understand clear and that you’re what is side darker I as you take I’d it’s this what I’d hear, help steps But you you it. curious any, hear it? research. curious resolve to accelerate talk on And side help be the what

Pat Mackin

Rick. Thanks, Yes.

was a BioGlue came the burden this is, and this This that body decided that it – nothing do There to issue previous regulatory of a triggered this obviously, administrative they performance. great notified big the So products, was is MDR with is thought to they frankly, very I for by frustrating. regulations is for out, has mean, didn’t it. still safety once these our And demand got new want product. do too

May left a supposed we notified effect, was process the which they because to that. in just of in visit. of out, supposed which find in recertification, restrictions. doing done delayed are end literally to they Atlanta year. go notified last facility when the find XXXX, would meant new the it into got which body, we’ve approval our happen, and to is well advance a a to full goes MDR in to had plenty body site by in the to fall, do And So have COVID put which new us have time us of having get which here They of of of come They to travel the

are now nobody has it’s longer. We’ve done We’ve some So taken they been ever And which through June. lot this because needed not before has a places. nobody derogation it. do to gone coming ever until process, successful in

We countries other have big the are in some wings. that

talked of that the be things kind of transparent situation, I that numbers Ashley for about the one case wanted about BioGlue. worst the the think to are we

government of big right through, couple agencies. a could are have the but going now through in they that countries We works come

So I control. little very have really

situation derogation, which, there no with again, frequently happened been are other in that a because before. through European-wide ever not companies are going this dealing But also this. has We’re one’s

has It’s world. is almost This with I approved got around in It’s nothing implanted to units the U.S. a really Japan. issue. the this approved million mean in got the X product It’s do business. So transient

safety issues with product. no have the We

to jet we administrative with everywhere shipping they to people private nothing didn’t our do travel else. an selling fly frankly couldn’t a offered We’re got And regulatory manufacturing. them that thing of to to want inspect because site It’s It’s do and COVID. that. on and

we’re we how notified And a is. for everything the long at and we in it we’ve can, doing and soon at done is working this get the our what we’re June, of mean it as been kind body. while, I as it takes of inspection mercy but So

So we business. and QX expect be back we will probably in sometime back in be

that’s So kind situation. the that of full on picture

Rick Wise

it. appreciate much. so I Thanks

Pat Mackin

Thanks, Rick.

Operator

comes Instructions] [Operator line Please of question proceed Our question. your Thank Kalia next from the Oppenheimer. you. with with Suraj

Suraj Kalia

you Can alright? Ashley. Hi hear Pat. Hey, me

Pat Mackin

Yes, Suraj.

Suraj Kalia

Perfect. Pat, great quarter. congrats on

if at almost month doubled And sales. international a correct quarter me where memory than are sales Analyst I’m so in Latin Pat, headwinds, that is I’m about the your were at the domestic So ago euro, obviously, Day first serves wrong. for this me $X.XX greater You right? if right, FX or quarter. Please curious, America the there referenced

us Just importantly, what walk see are through do you more drivers? these? sustainable the And how

Pat Mackin

Yes, thanks, Suraj.

very a than of couple a size it’s about the U.S. before, in that’s one different that as – of our have lot of interesting think of mean, size things couple of companies we’ve business, mostly I companies So products, many the a talked this our U.S., in I we’re mostly

We have many we’re different countries. in XXX products,

diversified well products, you’re we’re quarter we’re issue. of staffing a very you was and real hospitals QX, happened and for our channels. I What as U.S. first half know very for the getting hearing to staffing. So the ICUs is, infected able this diversified staffs know, this hospital seeing really So all It and real from hospital calls, clogging COVID. issues we being up work. the not with patients right? was It wasn’t our with were your

now. this from But get America we’ve while and process, it’s been between a that COVID a U.S., growing kind and us, first pretty happened quarter kind what in simple really U.S., recoveries right? vascular So we blocks. for a of and saw go about and America to the salespeople, quarter investment as shortfall saw and and even in was out new America we’re Analyst Asia-Pacific all in of the XX% the European tissue BioGlue XX%. expecting to And in we graft difference we’ve was in Simultaneously, said and stent the of of work. the in Latin approvals We business, got Asia-Pacific. X Latin at Latin for we hire our next have you they then the obviously our products growth know, the big technology. for a out And Asia-Pacific we new portfolio both right all of And has Day, we XX% our had years. And the in talking then

AMDS. they doing with E-nside NEO, So our well thoracoabdominal, with are brand extremely with

on So they geographies. to was we like guess to but U.S. didn’t first from off was faster as know it’s kind U.S. going multiple clearly, virulent I But a the expected standpoint a outside see we a the were, expect depending just the didn’t also staffing pieces growth of being have see going such different – to the We Omicron half the be of big quarter. impact in to

Suraj Kalia

enough. fair multi-layered okay, Right, Hey a Pat, question.

in PMA So On-X, versus PROACT o-U.S. the for you you’ll for mitral U.S. remind DSMB going to us status? On-X quarter? throw me, is Pat, maybe should this also, When there on – in expect many we May, in think as Gentlemen, are on, you if calls thank right, to mitral Xa, taking referenced forgive could going when my congrats that already the I was the meet meet month? how And just about is and to when DSMB contribution approval this questions.

Pat Mackin

at Okay. at Yes, a I’ll go time. one these

had similar than with way but we because we didn’t about staffing the U.S. staffing normal. we o-U.S. lighter U.S., okay On-X issues U.S. On-X, think on first the to the better issue. one growth to – the outside it, caused I be Again, Still did have

the I they of of U.S. end I then DSMB, here not what the mitral, expecting We believe put X months. of press May. the the approval this in And surprise half it’s going but it’s in end kind we’re given second every meet of probably it’s Xa, stuff, to this this PROACT a out end in was of month. the half I happened on don’t not releases May, mean think that quarter the the normal, PROACT it’s first but be – of year. So

on in PMAs both of those PerClot. We’re as well with working PROACT the FDA as mitral real-time

is of and we’re about aortic, to have So team the our sister raring the kind to go. PROACT opportunity excited to valve the

waiting just the for probably think mitral. be half PROACT approval. we’re And again, So for the I going than it’s more to second the

Suraj Kalia

you. Thank

Pat Mackin

Thanks, Suraj.

Operator

no like to Thank there time. are this the management questions at closing back for you. remarks. floor over Mr. I’d Mackin, turn further to any

Pat Mackin

for thanks appreciate your and joining, time. Well, we

grew to grow in midterm X% year. pipeline that On-X As told you approved They the XX% Day, the to – both of and was PerClot Asia-Pacific of kind this And to grow second focus you of XX%. and said, products, grow grew our We XX% crafts mid-teens. told grew On-X we respectively, kind with XX%. AMDS PERSEVERE. America PMAs you – teens PROACT the going XX%. Xa, towards stent we’re next going our NEXUS and years, XX%. and we’d year. in told grow We we’re stents overall We X going of business, we and the out we’re We progress. XX%. it to at this the Latin half XX%, high the two XX% clear measure tracking and grew laid and Investor our We XX% a to and to plan and the should Asia-Pacific We I for you get Latin And America. PROACT mitral you to told can said we’re We TRIOMPHE we’re

enroll expect We to PROACT Xa.

expect We NEXUS and we to expect a have in the enroll PERSEVERE, improvement big to enrollment.

like of much challenges checked even here all pretty the face in in we the the Omicron boxes U.S. So

appreciate to forward your we quarter. support next look Thank you. getting back and you with So

Operator

concludes This you. teleconference. today’s Thank

Thank this wonderful have participation your you You time. a and at may your day. disconnect for lines

Artivion (AORT) 8 May 222022 Q1 Earnings call transcript