Artivion(AORT) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q2 2024, the company reported total revenues of $98 million, reflecting a 10% increase year-over-year in constant currency [6][17] - Adjusted EBITDA grew 35% year-over-year, increasing from$ 13.8 million to $18.6 million, with an adjusted EBITDA margin of 19%, a 350-basis-point improvement [6][17] - General administrative and marketing expenses decreased from$ 57.2 million in Q2 2023 to $49.3 million in Q2 2024, indicating improved expense management [17][20] Business Line Data and Key Metrics Changes - On-X revenues increased by 15% year-over-year on a constant currency basis, driven by market share gains [7][17] - Stent graft revenues grew 13% year-over-year, supported by a differentiated product portfolio [8][17] - BioGlue revenues rose 12% year-over-year, with expectations of mid-single-digit growth for the full year [9][17] - Tissue processing revenues increased by 7% year-over-year, with expectations for double-digit growth for the full year [10][17] Market Data and Key Metrics Changes - Revenues in Latin America increased by 25% year-over-year, while Asia-Pacific revenues grew by 15% [11][19] - EMEA revenues rose by 13%, and North America saw a 5% increase compared to Q2 2023 [19] Company Strategy and Development Direction - The company is focused on expanding access to its differentiated product portfolio in existing and new markets, particularly in Latin America and Asia-Pacific [7][11] - The amended agreements with Endospan are viewed as an investment in the future of aortic repair, providing greater financial flexibility [15][21] - The company anticipates PMA approval for AMDS in 2025, which would open a$ 150 million addressable market in the U.S. [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining momentum throughout 2024, driven by growth in On-X, stent grafts, and SynerGraft pulmonary valves [15][25] - The company raised its fiscal year 2024 revenue guidance to a growth range of 10% to 12% and adjusted EBITDA guidance to $69 million to$ 72 million [22][23] - Management highlighted the potential for double-digit growth in the long term, supported by a strong product pipeline and market position [46][47] Other Important Information - The company does not anticipate the need to raise additional capital to fund its debt obligations or investments in the foreseeable future [21] - Free cash flow was reported at $3.6 million for Q2 2024, with expectations for positive free cash flow for the full year [20] Q&A Session Summary Question: Clarification on EBITDA growth and investments - Management indicated that Q3 growth may be lighter than Q2 due to timing, with Q3 typically being the lowest revenue quarter [30] Question: On-X unit growth and pricing - Management did not break out price versus volume but confirmed continued market share growth and price increases for On-X [31][32] Question: On NEXUS trial enrollment and commercial adoption - Management noted that the trial is nearing completion, with expectations for modest uptake upon launch, followed by further trials [39][40] Question: Sales rep productivity and commission structure - Management highlighted the effectiveness of the sales force, with experienced reps capable of driving growth without needing to scale one-to-one with revenue [42][43] Question: Long-term growth expectations - Management expressed confidence in maintaining double-digit growth and leveraging the existing product portfolio for future growth [46][47] Question: BioGlue performance and outlook - Management noted strong growth in Q2 but cautioned against projecting that growth consistently due to the lumpy nature of the business [55] Question: Aortic stent graft portfolio performance - Management confirmed strong double-digit growth across the differentiated stent graft segment, without breaking out specific SKUs [57]