AORT - Earnings call transcript Q2 2024

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Operator

Greetings, and welcome to Artivion's Second Quarter 2024 Financial Conference Call. [Operator Instructions] I would now like to turn the conference over to your host, Lane Morgan.

Lane Morgan

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

Joining me today from Artivion's management team are Pat Mackin, CEO; and Lance Berry, CFO.

Before we begin, I'd like to make the following statements to comply with the safe harbor requirements of the Private Securities Litigation Reform Act of 1995. Reform call in forward the our the Securities this risks time meaning on Private uncertainties XXXX. and forward-looking Litigation made that in look involve of Comments of Act statements within forward-looking intentions, beliefs, management's include company's the predictions hopes, made to expectations as The the statements or of or future. statements that these are results to actual subject statements of forward-looking forward-looking cause a number risks, materially may from uncertainties, These to estimates statements. and assumptions differ

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

can You Relations a Investor section details with of the highlighted presentation on also Artivion call the find today's on website. brief

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

James Mackin

Endospan. and facility our $XX progress Grafts, currency performance purchase year-over-year, America funding towards that in we adjusted XX% XX% while key at of footprint by amended grew growth More everybody. for X%, our the pleased from BioGlue performance, In a very exercise grew financial revenue and credit and operational Thanks, which revenue the Artivion, when continued with first From to of PMA, growth was of nexus option compared our afternoon, agreement basis. to Endospan, in approvals on provides QX by to on our and markets, followed the Endospan Lane, constant of facility a second capped XX% especially XX%, with XX%, and Latin EBITDA terms year-over-year second with followed quarter goals. international by recently, Pacific. which On-X, the credit we which and perspective, to the quarter XXXX good amended agreements expansion to progress commercial, like currency acquisition quarter, quarter QX in significant half led benefit of constant our for second Stent million strong XXXX, in a of second The delivered subject representing and regulatory grew amended In XXXX. financial purchase we option additional made our which completion improves we We're also commercial XXXX, significantly all we the Tissue compared Asia should our of Processing each option.

year-over-year quarter portfolio further globally As and category growth achievements as XX% markets. we product a constant access take in our laser-focused and we only a proven market of I be new expanding our basis regulatory field, maintained our X.X. INR the the validate maintain valve we'll revenues and on product mechanical and to from constant that that whole, feedback market Meanwhile, on benefits Based compared basis in share conviction earlier, to best strong XX% share grew the of continue aortic take as second valve indicated to market same on a recent on year. clinical the increased revenues a on strategy On-X can I Graft the our and currency in market last an results aortic currency From On-X remain to mentioned, the is gains we our our period existing valve, the as to worldwide. continued share just with Stent perspective, X.X the differentiated On-X aortic

growth aortic opportunities across Grafts our primarily Stent by encouraged driven significant strategy, strong the portfolio our in offering. products by are portfolio and leverage create results, of more the complex infrastructure in Graft and where are the Today, Europe, our products sold existing we direct market. focused we unique our key graft stent our which sales are cross-selling component remains on differentiated segments portfolio product Stent Our a our of

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

strength We also which during in currency constant on second basis. the BioGlue XX% saw grew a quarter,

of growth product grow discussed the line. previously, annual quarter-to-quarter, expect basis, variability we On BioGlue BioGlue an some the of the this have we expect see in to we As driven in mid-single-digit from to distributor in amount range. by stocking rates business significant

Lastly, the continue X% business increased digits on further proprietary the supply to grow XXXX for in we Processing, initiatives, to Tissue year basis last the QX constant a on we currency and our as from we grew leverage continue revenues SynerGraft higher annualize pulmonary Ross our of procedure pricing to of from double benefits expect our as year-over-year year's benefit full volumes. valve tissue

procedure The clinical as Ross middle-aged procedure, of valve with pulmonary provides unfamiliar these is valve normal expectancy. procedure The patient's the patient's and valve the the the aortic to young valve has with donated diseased patients then by option over significant the and use long-term for benefits. due For patients patient's rapidly increased by Ross replaced the demonstrating it's option double last to valve which a valve. defective pulmonary of Ross a the in a data been it those a best procedures life considered is replaced years native pulmonary the to have couple these months best for aortic significant

Pacific, growth in driven allografts valve approvals no Latin these quarter second progress Further, America by to XX% Pacific compared the in is also our revenues were year. through of of pulmonary in quarter SynerGraft and XX%, and growth commercial last regulatory continued market Asia competitive and Our and footprint in expansion. Latin currency used second the alternative constant has respectively, new primarily in the revenue and procedures. Asia delivered leader America

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

progress graft the excited NEXUS IDE also make the to about is for U.S. continuing the We arch our partner, are of TRIOMPHE stent system. aortic trial Endospan on

been the there endpoint primary chronic XX As dissection enrolled the XX of today, of patients arm. have in

procedures. Given patients are enrolment, this current for scheduled

by of the end trial XXXX. complete to We this expect

half remains trial on Assuming are approval the met, second XXXX. in the endpoints NEXUS of for track

patients IDE chest an is arch aortic dissections and have invasive disease to operation and before and received reminder, with risky had which aneurysms to previously choice experience and treatment little surgery, significant who NEXUS, see in undergo existing organization associated operations. annual has opportunity Based facility a our provided which to European lengthy Endospan Nexus and NEXUS a been an with we technology to our a credit Europe, NEXUS but leveraging As distribution support global the XXXX, open trial global into began a recuperation. growth. invasive commercial exclusive basis continue direct for estimated be repair that on in surgical Europe Also access to procedure. transforms we differentiated minimally arch secured NEXUS expand million. a sales aortic for U.S. prolonged drive around rights on In is XXXX, $XXX highly technology we endovascular to revenue and to in a hospitalizations complex the

following frontier into option in an Recently the XX Endospan which acquire will in these arch has investment surgery. X that receipt we days the entered an next aortic view of approval had to FDA We X cover for major NEXUS. changes an as resulted agreements with agreements, until Endospan revised Lance agreement also We of in July, amended our shortly.

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

would America. continue look U.S. million competitive here an summary, QX for in have valve approval excited by XXXX, open no to forward addressable over very Grafts up we to anticipate alternatives. with the sustaining Lance. that, PMA performance also for turn With our business in about $XXX AMDS are and driving SynerGraft about which Asia our beyond We Latin momentum to call and market in discussed, our further In as we On-X, by pulmonary global and in our Stent XXXX throughout footprint now continued the and I'll growth Pacific expanding

Lance Berry

good afternoon, and Pat, everyone. Thanks,

begin, reconciliation to please release you to I'd published information results. results, like of these our earlier including to GAAP our I Before for results our to refer a press regarding non-GAAP today remind

margin all Adjusted will $XX noted. compared XXXX. will approximately over and million of improvement to XXX Total XXX currency up were $XX.X second changes be Additionally, general basis driven from a increased in by a on the quarter was Adjusted of in a as in XXXX, million year, growth of in the marketing reduction constant of EBITDA expense QX and second administrative unless XXXX. prior point point be XX% to year-over-year quarter, the revenues sales. for and million basis a EBITDA otherwise basis, $XX.X rates XX% percentage revenue the quarter second XX% percentage discussed

produced of other is our that in as is leverage Graft product quarter in grew approximately the We break increased On-X to From We line XX% business scalable continue XX%, half revenue supports X% our proactively sales revenues of the to do overall. grew tissue grew have XXXX. I million quarter we revenues to XXXX. and belief. in G&A product and processing the revenues like nominal believe note would XX%, segment second Stent BioGlue first relatively the our the the and $X.X infrastructure very revenues the second out a of of and year not perspective, significant it XX% declined

inventory additional as want results. timing balance Though XXXX. down modest are these decline QX. order was in ramp on of to levels. through dynamics from continue I up, sales adjusted continuing impact they of orders end-user of also inventory do negative manage to However, some to the work to color QX decline driven Baxter provide the The underlying PerClot PerClot these a by The expect in had EBITDA the we to

increased Excluding EMEA quarter increased the quarter Latin basis, XXXX America XX% On XX% QX second XXXX. compared a Pacific the increased increased revenues of compared XX%, of and to business XX%, to this second underlying North all impact, Asia regional America our XXXX. X%, in grew in of

quarter quarter the quarter gross from year and full $XX.X interest XXXX. million of XXX quarter in second income R&D XXXX. net basis million to We million to million in margins flow margins million were and gains full product be the of expenses QX second to decrease points margins in expenses expenses QX prior normal of XX.X% XXXX, in and in year. in anticipated, leverage. and Non-GAAP of the million geographic $XXX,XXX general quarter. and relatively second gross a income compared General foreign currency administrative we the QX, Interest as translation XXXX. The and of to administrative compared spend saw marketing the were were compared to in decrease approximately compared this line were for second $XX.X fluctuations to in still second with marketing XXXX. in million the $X.X $X.X to XX.X% with year mix. second Other the percentage were sales $XX.X due slight was quarter second was million representing as $X.X anticipate quarter line of flat the our R&D of expectation. quarter the million of of was $XX.X in second $X.X quarter compared to in the year. included a prior $X expense Free cash expense in As

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

Further, closed shortly. do additional XX, to to our million amendment investments our of As debt agreement in note had cash foreseeable with does to we and capital of $XXX.X unamortized raise June this need important It loan pipeline anticipate channels $XX in future. debt, $X.X Endospan, the of our our fund that is which recently in or million to million not of the our impact I obligations, speak will not costs. approximately net contemplate the in we origination

XXXX. in QX agreements was of these EBITDA the to end purchase in facility to decrease of changes. major net X.X, the we and down debt continue regard Our the the are prior to expect credit the and with In to leverage X.X net year. range, midpoint the pleased results from year of amended with options our recently X.Xx Endospan, At to closer combined be of we X by end guidance leverage the at

First, additional expect now of cash which up to loans tranches, flow. to in provide Artivion to will $XX we X fund million Endospan free with

$XXX financial the for $XX comments, purchase is million amended associated our by for flexibility future of the To the Pat's as now remainder And of minimum and in the while option $XXX we now offsetting view XXXX. Second, the aortic and simultaneously million with acquire the is an reiterate providing exercise Endospan. option repair, for agreement reduced million payment loans; eliminated. our after earnout is our we payout the third, with greater upfront outlook investment should to the Artivion

of the 'XX in XX% first year, between X% we momentum revenue year range the are currency XX%. to revenue Given to and our half fiscal guidance expect now compared growth previous of constant XX% raising the of and

expect growth be now range the adjusted range impact the million. full XXXX. previous of over rates. points XXXX to basis full in revenue the in million we year top-line revenues through our to $XXX $XXX At $XXX QX, a negligible compared to reported to at of and to raising XXX expansion to to rates, to XX% XX% current XX% million XX% expect $XX growth million We XXXX, over are to million, our have million of EBITDA representing we continued of a With year revenue fiscal management year to 'XX expense compares the EBITDA million general the for be guidance previous growth $XX ranges. This range representing expect FX adjusted $XX midpoint of margin $XX to our million $XXX our guidance on growth of range and and

we XXXX global expect and gross drive leverage from expect sales to reminder, continue to remain to similar margins G&A at force and levels our to As significant infrastructure. a

to R&D a is expected call I turn percentage as for back Pat of With Additionally, flat remain expense comments. that, closing the relatively his will to sales.

James Mackin

So very our of strength highly with our differentiated portfolio. we're the results, which as defendable reflect highly heard, second product continued pleased quarter and you've

our for We cross-sell near-term well-established and by expand growth no our and our our with excited presence than as base. to existing leveraging we are entrants, infrastructure ability potential and medium-term new anticipated ever account across little more global existing competition markets into further

and first, second, that strong balance Asia investment growth fourth, to our in On-X; by infrastructure; committed increases growth from by Stent portfolio; driven continued global fifth, innovative expansion approvals; continued expansion our EBITDA as following: adjusted America revenue expense driven driven by share third, flow. cash Pacific are our for EBITDA force Latin regulatory and of in free to and We channel the market XXXX business our margin through strong growth delivering be and as the Graft well leverage and sales new positive expect G&A

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

Operator

Takkinen At be Frank [Operator question comes conducting Our from this a with session. first Street Instructions] we'll time, Lake question-and-answer Capital.

Frank Takkinen

the of understand and and years, typically, you've business the a with through front start into be profile in year. the updated had one year year. half back half. back previous about versus of weighing Obviously, what Help more as EBITDA. investments to I the I wanted half, guidance end EBITDA to on implying guidance know the the back little I impressive. us in equal leverage the full saw continues the a in for it's the is for percentage growth the the of the half is EBITDA

bit just on is there? of some So investment be there going that interest may is a Or in maybe little additional conservatism? the of

Lance Berry

we strong little see in do second half. between be second and EBITDA, growth second do than spin we strong we'll bit Yes. for There's a a QX third a just expect bit probably think Obviously, I timing of to and a really lighter saw timing. QX quarter. had due quarter we little very

really more and And it's a as which a of we typically QX QX not our a that. impact reminder, lowest but of anything don't So have QX. ton have revenue is bit little seasonality, does quarter, than

Frank Takkinen

to Maybe On-X. out about can second Obviously, talk opportunity in item? growth And that take Is portfolio? still follow-up ASP one, the in to unit price On-X and versus then a there you you then ask my raise on continue share. maybe for line I'll just break additional pricing

James Mackin

do. mechanical company. years, we this segment on XX% valve major tell share that we've growth last think What the -- continue an we price or closer still bioprosthetic business a moves don't it a we of X that's last We average XX% versus X which is also on grown and It's the the opportunity lot still . XX. even of since lot an bleeding, around you our can -- I people in I reduction seeing our out shows not We We're position. moving bioprosthetic our recent Yes. We're share patients of something -- typically -- very internationally, to also that's have to came data under I recent volume. mechanical in increasing the we're taking mean, out data price. high out over really break for On-X valve the come U.S. XX% in data a compelling in the acquired post-approval from valve

very keep have, to and we're on the bullish what So share. and got like valve going feel taking we we we're best we've

Operator

Oppenheimer. from comes with Kalia question Next Suraj

Suraj Kalia

comment teeing you last U.S. are -- just previous the On-X OUS to give XX% you can So to question, off QX? plus quarter, believe last we was exiting where share, you color made about us as I Pat, Can on some the XX%

James Mackin

Yes.

tell will growing digits. the you we're into without I getting double what So granularity is both markets

said, just break XX%, we've accurate. XX% -- like and over I We've XX% you in that pretty it's when XX% share about the got down, and are a global, As your got comments internationally. U.S.

So we story portfolio aortic big On-X going our patients is really clearly it's think under dynamics the opportunity internationally. that in And all XX. on. more the But valve frankly, have I on are

new valve the double growing the growing is valve digits that. pulmonary consistently. Our digits we SynerGraft for On-X Ross, Ross, post-approval double consistently It's data. only with have our our for

there's TAVR real a bioprosthetic are XX. As years, big lots years, you there's XX in And reop well at XX deal. TAVR out and of getting mean negative coming they've on seen I to in valves, in and mortality It's difference in patients but under and problem, XX. on patients you're mechanical These The a right? reoperations more dynamic That's a market, on that's very data. patients and under data a XX-year-olds. well more and XX, read mortality reoperation benefits know, I difference think under the out

we've going So telling keep a valve. again, story. I just great our On-X to think with the We're got story

Suraj Kalia

us On again, dissection, selection? think the a million if that should Endospan, here, adoption, layout we memory remind due chronic to and leap I commercial the enrolment The NEXUS, that talk trial, if me, Is X acquire serves adoption? about the enrolment speed you'll the that. it's in trial quarter. by get patient understand, aortic how when $XXX TAM, me NEXUS whatnot, help X, Is Just patients the from per need from and you about and correctly, to like design? how take of of

James Mackin

Yes.

So there's say I lot that. would in a

in I at on, think Patients I investment to an a stay. we're in today of XX-day who to have that, aortic you're messages, technology commented repaired, and and looking both of have our a chronic dissection Lance have for technology. ICU we X- the making future

patients getting the Europe hospital are that are in device have out front next the in We NEXUS the that day. of standing

deal. like talking out technology, called We U.S. big dominant we're a any right? ]. XX should That's enroll of new of IDE single end right XX. going We've what into an TRIOMPHE. a the So branch to [ year. the evolution, it's So trial enrolled But about there's by is the be now the that

probably uptake can But we think modest that. have And to we'll a capture chronic X-branch the trial be that when looking world. that, the it. will half technology in right think I dissections start that launch after we

done. trial interested is almost The is deal. has excellent, we the recut and and why in the which very a it's big the data So and space deal, we're been

we're look out. forward So very excited to having to yes, and report

Suraj Kalia

sales thing structure? the that terms the in look reps, for through force, walk elasticity seeing versus of together productivity? curve At to sales stage Just kind put U.S. in direct Artivion's sales bell terms are the us rep of this In higher you're OUS.? force at evolution, sales point how we how commission a does this of rep your

James Mackin

one to force. the We've bottom I me, XX% sales real and seeing can So XX%. excellent got top-line of think line grow how you're benefits this is an we and

for know that. Most as Europe in the about have XX of with U.S. with company. AMDS Ross our call for call as aortic They approved, we their approved, You customers. on and When them reps SynerGraft. markets. of with our here in On-X procedures, for on call they'll procedures U.S. with them that They call well They them when them the the the them international and talked on on years we get in get call for some BioGlue. they they will [indiscernible]

much segment kind than cardiac other So surgery of different the many is spaces. of segment the med a tech

you see You don't one-to-one your leverage. with that to and have in our sales force scale your revenue,

So of line, existing our about we're profitability approved but bringing in to just it can very part right reps' which in bags incremental lot we story drop AMDS and it of all the been when a gets late see has our excited XXXX, bottom that along. go our

Operator

Stifel. question Our next Rick comes from Wise with

Unknown Analyst

for John Rick on is This today.

quarter in XQ. strong Another this

look Just think the wanted picture. to bigger sort of ahead, about

but portfolio bigger You've the products or of XXXX the coming Day structure same a XX-XX the [ and at to provided sense at potentially your more get plus? the you're about you're new longer-term, just rough adding on guidance thinking should we just growth, of ahead, sort plus, double-digit to through, expect Analyst the the ] new areas potential XX-XX looking where your picture wanted innovating, approvals

Lance Berry

Yes.

We in 'XX just away some long-term back we're So XXXX. formal gave of kind we've targets re-upping through stayed now from guidance, finishing.

in drive be period then to grower ought to that. we things able and have And out think of the feel mean, some now good about pipeline, ones, should think for new time. to consistent extended a quite hadn't saying look, of so I out looking yet, those with I the sending if finished So but portfolio we're out us really, be then able we about a like, leverage our not you lot further double-digit off be we I an we

the grow midpoint, core of business forever our able forward, to you there's top-line mean, I really business. that in look top-line, is the very going lot guidance ought committing dependable. least bottom line Xx Xx we be And a our at is year, leverage to this opportunity if the at So but we're ,the and to the not

are unlikely amazing You've PMA-based that have with lot pipeline. markets really we entrants, new competition and in not of this see products to then a got

growing comfortable a at So the high Xx line least and level, at bottom double-digit about that. growth we feel

Unknown Analyst

And guys just the maybe put a year, in quarter, the year, through I look rest the I price second realized through as of last you increase.

that where Artivion opportunity patenting about that the Just take else We XXX. years the to mean spent price? dollars clinical we for spent And is developing Is on the Yes. I generating for for that XX-year in clinical and look $X has. millions technology, which under results, valves done another that. in valve at of for, data look data potentially have patient a would I've the million nobody pulmonary poster there we outcomes getting Or say, best you previous now SynerGraft differentiated wanted some at we it significant operation about is, portfolio, I perfect the this has is XX old. the how and think are bit? all we to talked calls. a our product line cases,

we're charge it dollars in like I can warrants a data that match. going that post-approval talked out On-X. just warrants. something data trial, a about we of higher millions because think it invested For the nobody and premium We else that, with that, to And I came price clinical price. for

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

Operator

questions. [Operator Instructions] please, One we for moment, while poll

Our Cohen from next Ladenburg Thalmann. question Jeffrey with comes

Jeffrey Cohen

revenue Lance are side? clarity or I do through their heard out any or on in puts call and PerClot, see you the on there things line. Are and Baxter how other on takes any going have there

Lance Berry

first mean, not really mean at I I it's level -- meaningful of to us. a Yes. all, high very

sales, the So reason And tiny because only context. to put to mean, underlying just management item, is I to up. great brought just on we up sticks continuing our managing is just decline was what's Baxter in they're off is I understanding just And it significant. small it it the visibility to mean about it our fluctuation this good basic so jumps not it's but The page. and is some line balance is ramp the their some very in creating inventory being a side sheet out so

we're not business. to not general, But talk Baxter's That's in meaningful going to again, I really just it's them. it's to meaningful about would us, not So business. their say so

Jeffrey Cohen

talk could about a then secondly, looked ]. And second for [ little bit? the quarter coming strong It extremely into BioGlue you XXXX

So commentary general strength back as geographies half as year or any its any on far there or outlook on the of specific commentary a the

James Mackin

Yes.

kind X% comments, your grew that first because very plug Lance think mentioned it's right? in in XX% his I it and second BioGlue quarter. I mean, the the Don't like in on quarter lumpy a grew of it model XX% business.

lot in a have We world. of indirect. We sell XXX countries the around

some that, But that in the we than days, get bigger quarters. on quarters, think in the less line going is you to XX phasing product of other some -- kind of you digits. can mid-single every So grow average,

profitable. good quarter, quarter we this and obviously, extremely a had very So obviously it's

Jeffrey Cohen

items portfolio as areas of talk or And well? SKUs weakness the well little strength quarter, then lastly us, Stent you're not for the or or specific about or bit any which Graft a for could you doing

James Mackin

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

double stuff, So the more we're we're growing doing extremely well digits. in frankly, the competitive nondifferentiated, even

portfolio well. whole the is doing So really

Operator

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

James Mackin

great front for the Yes. We've obviously in joining opportunity the had quarter, thanks of Again, thanks joining. call. excited and a of got us. Well, lot for we about

that but I Lance twice of line taking we're the building our a and executing an think got we We differentiated, channel, standpoint. need last treatment talk, a of As on talked and they this we digits We've very XX% guidance, did great Again, top care more not our and we're aortic line and it a from company heard portfolio, well. pipeline, just growing this both and We're -- year. you have double XX% bottom what great line. top excited giving and grow can year, technology about about highly bottom kind exciting we line. on patients, so surgeons we're the

joining. thanks So for

Operator

This conference. concludes today's

You participation. this you thank at may your for and your lines time, we disconnect

Artivion (AORT) 8 Aug 242024 Q2 Earnings call transcript