AORT - Earnings call transcript Q2 2022

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Operator

Greetings, and welcome to the Artivion Second Quarter 2022 Financial Results Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Brian Johnston of the Gilmartin Group. sir. you, Thank ahead. Please go

Brian Johnston

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

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

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

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

Now turn it Mackin. Artivion's over Pat I'll CEO, to

James Mackin

to was pleased comparing delivered -- driven quarter a X On-X currency of of More grafts, XXXX, tissue constant the tissue grafts aortic XX%, grew investor revenue constant XXXX meeting as another of year. processing XXXX XX%, on in periods us segments. we stent QX grew when QX Once our a currency well to Thanks, our report putting the following at our valves growth processing stent constant March. Brian. commitments by deliver of growth compare Constant QX XX% on X%. basis, made each half track growth as top again, currency of of grew compared we to primarily strong double-digit currency Overall, on growth. to specifically, first QX On-X to consecutive mechanical line at in revenue I'm X% we've we was remain this the quarter,

U.S. for the quarter primarily decreased CE in in comps revenue BioGlue well that we've second half the the securing made the first of significant renewal second we've facility. on continued business expected, meantime, expect BioGlue to end, of make last last substantial country-specific facility June, to year, inspection their as body in the since as CE third end German now our in-person we collectively as quarter. our XXXX. of To our quarter. near renewal market We the tough progress completed compared the Europe quarter progress as cover In third our XX% now CE through BioGlue of our America sell have inspection Mark derogations, of enabling As North These derogations quarter. the In to our notified well in in due call to to the our delays of Mark approximately in securing us product. our

in deliver currency double-digit March, key we all on will over our that we Day at our growth the years. we X our revenue success outlined initiatives reinforced in on can drive that these Our has growth X next constant Investor confidence fronts which believe

are our follows. initiatives As a X reminder, as

growth continued stent in and our grafts. On-X drive will we aortic First,

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

this quarter. XX% constant the quarter second We in the category broad currency saw to stent year. basis increased grafts, revenues on quarter second compared in the For a last strength for

adoption is these for on to feedback product revenue currency each hospital we the these been of last as superior second that quarter will second from products quarter the in market compared to quarter shortages we XX% in The of anticipate and customers -- posted the and continue differentiation constant build demand clinical On-X, year. For the positive, growth are lines increases extremely we the staffing has receiving abate.

next and Asia as Pacific respectively. approvals new very footprint growth on I'm to in of and track. XX% expanding to currency Asia remains second continuing pleased report regulatory and our by quarter the Moving Latin initiative, presence XX% in revenue through to Latin were our they America, on expansion commercial America constant Pacific well and strategy execute demonstrated

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

PMA as we've done and XXXX. On-X will with aortic do approved, to we If achieving by in approvals approval valve. our the we receive to the to just we On-X for expect progress market in mitral the valve, to to share end On-X the INR with low mitral continue the significant take our make valve On-X respect mitral regulatory and believe we year. U.S. of continuing valve, Regarding initiative, for are our PerClot continue on third our With

PerClot, XXXX. by payment half for revenue expect thereafter. begin a approved approximately we the $XX to we'll years from which due Baxter, December work is Baxter the to and divestiture our agreement. supplying And of If approval second to XXXX, on For XX, closely with during to from million PerClot X generate us receive based continue a FDA receive milestone to we'll

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

trial if On-X effectively and -- Xa the to the mitral be randomized with determine in we aortic progress On-X warfarin. valve maintained Regarding Eliquis versus enrollment safely aortic trial, PROACT make on continue patients clinical significant prospective this to

surgeons very fourth completing patients today, As patients, feedback quarter in trial and the XXX XXXX. anticipate over we've enrolled and from of of We remains enrollment in participating the positive.

warfarin leader under aortic the Eliquis market of become meets its FDA by the valve using we than significant will for believe trial patient warfarin. market for aortic approval XX, new patients rather indication share We age early the expect On-X valve this over Assuming endpoints, given 'XX. benefits the the using Eliquis in

our announce to trial infarction re-expansion the As for patients that have of nonrandomized true aortic type requiring safety AMDS, stroke, trial new-onset our dissection. called and are new as A lumen I'm device. of disabilitating experienced all-cause today, the well failure is dialysis of first the the in enrolled combined AMDS dialysis XX an acute -- participants the of primary PERSEVERE we clinical of efficacy new-onset trial. in myocardial The trial in enrolled renal U.S. renal as sites reduction pleased pivotal PERSEVERE up the recently who patients endpoints and mortality, aorta. And approximately as for a we X have to of XXX

enrollment are We completing of anticipating full now the 'XX. first quarter during

expect we anticipate, its we we trial Following should -- a or endpoints, if receive approval for X-year meets XXXX. period, the early AMDS follow-up in

trial NEXUS is we its the in graft are treated in and In system. aortic trial, AMDS approximately Endospan there patients the trial stent PROACT June report Xa pleased progress U.S. is trial and of for IDE, estimating the IDE arch Endospan, for we've In a treatment. completion made that XX to approved progress XX are partner, currently making TRIOMPHE option on our exercise addition these estimate Xa, time, reiterate, anticipated. to the that to We $X.X the assuming also total patients With endpoints our XXXX. Ashley. for we the At now that, XXXX, call turn products that market addressable AMDS again Endospan, our proceeded these approval FDA assuming To XXXX of and anticipate approval in in met. are by and increase billion. PROACT for as would trial I'll of each X over PMA an NEXUS trials PMA already

David Lee

Thanks, constant compared million X% of a the currency second X% basis, both everyone. and to for second afternoon, GAAP good a quarter revenues were and on Total basis Pat, on up $XX.X XXXX. quarter, the up

in second quarter XXXX. the to stent North XXXX. CE As XX%, in On X%, volumes processing. G&A quarter XXXX, within aortic increased from BioGlue decrease decreased $XX.X Pat increased the X% increased increased revenues $XX we impacts compared mentioned, to were America million a stent quarter Latin tissue our of tissue reflecting launches second XX% in graft On-X quarter mix quarter second reflecting product revenues Europe North XXXX. the basis, of increased On-X the XXXX, comps labor. procedure compared revenues quarter X%, the expenses stent revenues quarter processing XXXX. decreased and new BioGlue all to XXXX in Pacific quarter X%, product increased of and XX% basis, year-over-year XX% tissue XXXX graft America BioGlue increased XX%, and increased second On-X delay increased X%, of currency and product Pacific X% XX%, increased strength and to basis, On quarter aortic compared and Europe Asia quarter of Asia second revenues Mark XX%, and as grafts, revenues increased margins renewal driven revenues particularly decreased in Latin on graft the increased well North in second as of constant revenues of America a second in in relative the Gross constant the improving basis, XX%, XX%, inflationary regional compared aortic lines and revenues were and compared second revenues The second processing materials the a currency by to aortic America. benefited On X%. was in a XX%, stent increased America XX%, XXXX. million tough in all to second On the

XXXX, benefit benefits excluding Ascyrus acquisition-related of in of consists charges for in 'XX nonrecurring of million quarter of $X.X of nonrecurring 'XX. to $XX.X second value $X.X development the of related which consideration quarter a and million compared and were XXXX, and in noncash acquisition $XX.X fair million million rebranding expenses to business second charges and primarily the for adjustments Excluding $X.X $XXX,XXX, contingent development business million G&A

loss quarter. the net reported of we $X.XX $X.XX currency net fully loss share line, million the quarter was GAAP bottom GAAP in non-GAAP revaluations. or second the 'XX. and on of diluted losses net includes in loss per million or On foreign $X.XX in per share or second $X.X per Non-GAAP share $X.X $X.X million

net income non-GAAP amounts, would per million these share. been $X.XX have $X.X or Excluding

Please second million we As in for under XX, XXXX, million quarter XXXX. results our results, to outlook. reconciliation of And credit for $XX.X had now Adjusted the of of these full including $XX and for EBITDA 'XX press about June the information available was compared for million in the release results. debt our to $XX our million to $XXX XXXX additional cash, approximately facility. GAAP of $XX.X our non-GAAP a refer quarter revolving million second

year we call, currency revenues approximately stated our FX approximately for our X.XX, last year In to XXXX information each is that growth a little X% of FX $XX.X additional partially year in provide in continue million. in XXXX our Due in markets, faced see and in $XX million, the to to of quarter resulting 'XX the strengthen, versus 'XX rate to headwind million At performance approximately fourth quarter. of $XXX $XXX currency compared better-than-anticipated million. 'XX. of $X range the approximately anticipate our QX what we dollar, full $X XX% of continued we the FX has between in the of we the headwinds expect FX prior $X million balance We and is a to continued the approximately headwinds XXXX. million, reflecting of to an euro-USD volatility offset want adjusted QX, for the dollar continued million more on the we revenue time, by year. continue that full Since Considering of strengthening to constant revenue

currency We channels of our that guidance to we year comfortably We X% be to service back continue in the third comments. growth. invest raise with the can and between additional Latin Pat his both and believe turn commercial consistent capital. should pipeline without quarters expect growth our R&D that in I America, constant having closing for our full our in debt XX% fourth and will Asia to and call

James Mackin

Thanks, Ashley.

$XXX footprint global clinical anticipate our to leader approximately more expanding our increase leaves investing to commercial our and So in become and execute ability than We a goal gross ever X to through point achieve million. our double to years, repair we in In on margin. summarize, us of XXX-basis our expect We're programs. in innovation. to execution initiatives world the in strong a consecutive confident our growth revenue quarter next grow digits third aortic our

our reduce We less between $XX generate to $XX net and in and million million expect EBITDA than to leverage adjusted Xx.

second in to these quarter us well positions Our success deliver metrics. the on

in currency X% First, growth stent we in graft tissue saw our franchise and growth On-X XX% constant program, growth our processing. XX% in

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

we and for low expect PMA indication. receive XXXX, PerClot to INR On-X the approval Mitral in PROACT Third,

very are a also of X U.S. We enrolling. pipeline that have trials robust currently clinical midterm

PROACT that PERSEVERE in I and We is the $X.X Having in the dedication. late like AMDS NEXUS our focus execution. expect led their and organizations execution by essential for to 'XX, our TRIOMPHE, billion market having commercial we over our the pieces expand I'd all At effective know successful to Xa, right team have trials and all management of work hard the place, 'XX. addressable in we our highly place. early of these will total thank this all to pivoted years, key team point, employees

open please the for So questions. line that, with operator,

Operator

[Operator Instructions].

The first Wise today Rick Stifel. is coming question from of

Frederick Wise

was macro mean expect the the to this and see much it's heard programs quarter curious on are a -- year's great all off, track. the progress I'm to transportation. talk these impact, continue from make I I not quarter all companies the and you what perspective. staffing start inflation, just into sort Pat, anxious to knowing of coming little to track we've on how a about

You know the long list.

better? that is your about been have Would half even as the rest numbers affect the of And did second frame -- or you have progress thinking question how the So you the it how all guidance? are you? been

James Mackin

Yes.

same XX-year is been key other And right, has with a do obviously headwind seeing a inflations the Rick. at thanks, seen a -- currency is one So and messages I foreign report, is high. of of I've Inflationary and think we're the the here companies lot euro. -- stuff,

issues, And customers, chance so your to just our goods, kind had gross -- turnover. actually, staff more and and your COVID-related it's of on a talk I affecting So costs both labor more -- a of cost I've materials on do to of going number overall basis. staffing and And which edges. think I it's a There's up, regular the your is are been margin. just

know So mantra can't I much we you is But but I it's that would really execution. is tell out this better our think there. how here have done, I

So all power the them. we time, we through headwinds face and

exist, think kind of us of how As can I one the is which is a kind if as pressures that far thing forward, inflationary it affects price. have tool I we going we use mean, these

something take lot to to a these And competition. have have things do. line price. is soon, And if with And we're high-end abate so a don't that of product we going continue to basically portfolio it's we very a not

the So we in price. have market a pricing to with the lot of ability take power

So I all existed second good had through in you all and about we -- quarter, and quarter. a powered mean the these things talked the

we'll half. mean I same the the manage back So in

Frederick Wise

get is I we progress, was PROACT are Just also as a but it on any next heard trying Xa. your And to you. here, over pointers ask said, that us way of it good if a XXX, of you include? Xa sense encouraging and hear to follow-up many enrollment correctly. the encourage to will I it And Got might about you're how years look PROACT blinded where know

James Mackin

Yes.

So we're over XXX.

think, about of, in XX I as think X,XXX. we in earnings this at before next we're days. the enroll out yesterday fourth enroll XXX We next so quarter, call, should -- the hopefully of the trial will I

over is designed, it okay. as Board years obviously enrolling, look bad over of fact our has Monitoring this it regular we patients the trial and X data. to One XXXX, the that Data that the so trial a keeps means if patient things enrolled And the then meets review -- -- news. long ago. way of the in XXX was on basis stops, about May things first Safety is the the only as that's The And trial

now. We have XXX right patients on Eliquis

until So I the well. the bodes obviously, of that, that trial. And know think don't end we

follow-up more So higher that more years goes -- success. the and that but think probability of adding and patients more the that the time the up, the the keep get -- of I you more by the

a this in the times, this you shift old. also, market-leading in said people. But can market. think, will number by the show very years math FDA. it a significant see that the And means. valve be and I the that are what will We This we'll approval under And trial of confident if patients XX be run gets I've and

Frederick Wise

for No, Yes. sure. just last for Maybe one margin. one me, gross

How the You -- second the we in came in, right the as is and well? about XX% cetera, have in way. think the hanging range. to second in et of of et takes inflation, the been half from quarter the about Again, in sales it reasonable sort exchange, there obviously, this a Gross cetera, think margins here? way do given XX%, half puts

James Mackin

Yes.

that gross let jump think I margin. of on comments Ashley A I'll -- in. couple

impact So an because on saw out we were selling BioGlue, we Europe. we to one, -- definitely sell just we because in sizes having were were running different

And so little costs, there the increase for gross issue. is margin headwind The us bit a on of everybody has what in in noise Mark right, -- increase the biggest CE BioGlue around materials was been materials costs. labor is seeing,

And Ashley, in. And that so aggressive get front. can the I we're made going pricing to comment. on chime Maybe you more already

David Lee

Yes.

full So had impact XXX-basis year. the we on anticipate estimate a margins. going gross that We that's Rick, impact about to point has be for inflation the

of with look said, Now that's half in first price year more the we're of that pricing year. maybe been And on half Pat second said, impact. to this being mitigate this that to us half have to going taking of we allowed as the aggressive some get in about

just year. range. that XX% we're Last be XX%. XX% hanging look you little than year, balance XX% for to the we of of it's on what in the the over to second regards going we've depend range again, out As anticipate half as over closer up in the ended bit continue year, half as a to success this been We to we around the that we lot a taking to second additional this the going have of inflation see pricing. regards But to well in

Operator

[Operator Instructions].

from Our of Oppenheimer. is next Kalia Suraj coming question

Suraj Kalia

Pat, Ashley, can you hear right? me all

James Mackin

Yes.

David Lee

Yes, Suraj.

Suraj Kalia

Gentleman, congrats great a on circumstances. the quarter considering

think in some Did on mention in you and throughout COVID. have number reason Pat, years between couple consistently patient guys the of PROACT -- ask already -- the is... a bag calls. delivered I the jumping of I you

James Mackin

that tongue. of have X,XXX. goal the at I my XXX as I patients actually enrolled enrolling yesterday did don't the mean with of of tip we've not. I

Our May first patient enrolled in was XXXX. of

actually I don't years. have patient That's quickly, fairly but can have I So don't I don't get the -- actually something my that at I fingertips.

Suraj Kalia

still you are number we somewhat contemplating a using PROACT of this maybe for filing? patient years Xa can rush Pat,

James Mackin

trial you it's I are and in -- to in quarter, is Yes, X which of, about plan think aware Mitral, follow-up, our well X-year follow-up, mitral like submitting that's trial a approach low the which going Suraj. fourth FDA XXX are we XX patient you're years so of with is we PROACT mean if a years. this great -- is we point, patient on enrolling years. the about They wanted a X,XXX which INR which

will X,XXX year. patient in years We less than a hit

something going have that's So to we're pursue. on any yet, but that's definitive to guidance don't I we're something that think We going explore.

Suraj Kalia

more with issues is all Europe? in particular, proctoring bird's-eye on. your what view status of give going us And the how geopolitical Pat, view specifically, Germany Okay. you Pat, the in of

with if going any everything Just trying or the in on. could issues later crop preempt year to up

James Mackin

we BioGlue And like mean -- was of last them. on were mid-February, quarter we Europe. I the had so we've subsequently mean, we XX gotten only issue derogation I in and real a like derogations, X it of solid call when Yes. the quarter out Mark. our in CE had was XX, The

these did a team getting great we derogations. So our -- great did a job

as was I -- great -- I BioGlue it's there I under twice a there we've been confident CE be nightmare, running are third everything aside of how usual. to I've else. end half. I twice for predict feel kind the and of see get think Germany, and really going I talked the the we XX% in today, inspection mean, last to to our happen -- local think about the we at back our travel with But don't revenue what's issue team We've and things that think of think MDR from regulators, power us can't tracking grid I So pretty stand covered, as geopolitically. the we the second quarter, power and things we an I in And as quarter. for the I got think had we we're Mark the

Suraj Kalia

tell A utilization you how aortic? On-X the many final U.S., question. or the On-X through us low-hanging more contrast, rates, could love at hop look we of queue. and in on launching. us be sites the kind us some Walk you could Would And of On-X. back approval what an I'll when just you and fruit specifically, mitral, idea post to if high-risk, when share. are give get in parameters compare if using could start

a again. to could immediate sense Gentlemen, what trying Just be. get of the pull-through congrats

James Mackin

this is so head. my and about that There's of do Suraj. -- XXX aortic valves. about mitral Thanks, there's off the hospitals Yes, top

do of Some very few. them

our a are So lot of of is XXX XXX I and And some those of accounts like we're major smaller And in don't have volume. just mean, like again, accounts. probably them accounts. XXX focus on

with then the surgeon, in data came center to a we saw out, would aortic but PROACT things the would spread of One with is be surgeons. multiple we we that when one

in it's the it's are Also account. point, So new not kind opening how of, deep you the just your account, accounts. up in to actually being

about be So at million low a aortic mechanical mechanical PROACT PROACT point. us only in opportunity we've space the the leader this with the FDAapproval assuming half, market And we've has the we'll get We're second that space we we've would showed aortic. mechanical what done INR. -- be in a you for $XX talked the the We Mitral share. only just taking in valve mitral the as

same PROACT we Mitral. where data, thing have expect to with good at the do least in the U.S., share So the we

Operator

back Mackin I'd like floor to comments. to Mr. time, closing turn this for At the over you. Thank

James Mackin

X We've and approach So joining growing. growing One's Latin XXXX. a and will on drivers. XX%, PROACT One nice think, together XX%, we've And Asia we're in expanding which growing both growth stent growing America. products, on quarters. strung growing getting pleased today. is clinical We We're that key I XX% get be halfway and if our Pacific through one's XX%. is X key X will the approved, On-X PMAs year. grafts, billion for one PerClot focused focus growing got, in with We're all our the our we're revenue. with on focus We thanks very in us market XX%. and they're That, on Mitral, X in $X.X focused PMA trials, approved, enrolling XX% gross margin get simple

this really story. execution an So is

As guidance face lot the year questions, confident for we've of can the you a of it. the our delivering in of and deliver the we some we're heard rest of even challenges, reiterated from feel and that

you joining, see and thanks quarter. next for we'll So

Operator

event. for today's you This participation. concludes thank gentlemen, and your Ladies

may You day. and your enjoy lines, disconnect of rest the your

Brian Johnston	Gilmartin Group
James Mackin	Chairman, President & CEO
David Lee	EVP, COO & CFO
Frederick Wise	Stifel, Nicolaus & Company
Suraj Kalia	Oppenheimer

Artivion (AORT) 7 Aug 222022 Q2 Earnings call transcript