Artivion(AORT) - 2024 Q3 - Earnings Call Transcript

Financial Performance - The company reported Q3 2024 revenue of $95.8 million, reflecting a 10% year-over-year growth in constant currency, and adjusted EBITDA increased by 28% year-over-year [9][33] - Adjusted EBITDA margin improved to 18.5%, a 270 basis point increase from the previous year, driven by a reduction in general, administrative, and marketing expenses as a percentage of sales [33] Product Line Performance - On-X revenues grew by 15% year-over-year in constant currency, attributed to market share gains and clinical benefits [10][34] - BioGlue experienced a 14% increase in revenue on a constant currency basis, marking the second consecutive quarter of double-digit growth [11][34] - Stent graft revenues rose by 13% year-over-year in constant currency, supported by a differentiated product portfolio [12][34] - Tissue processing revenues grew by 2% year-over-year, impacted by lower donor allograft volumes [14][34] Geographic Performance - Revenue growth in Latin America was 32% and 23% in Asia Pacific, driven by regulatory approvals and commercial expansion [18][36] - EMEA revenues increased by 15%, while North America saw a modest growth of 2% [36] Company Strategy and Industry Competition - The company is focused on expanding its product portfolio and regulatory approvals, with significant growth opportunities in the U.S. and Japan markets for stent grafts [13][19] - The company anticipates FDA approval for AMDS in Q4 2025, which could open a$ 150 million market with no competitive alternatives [19][49] - The recent regulatory approval for BioGlue in China is expected to create a significant market opportunity, with commercialization anticipated in the second half of 2025 [20][21] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in sustaining double-digit revenue growth and driving EBITDA growth at twice the rate of revenue [31][48] - The company expects to maintain gross margins similar to 2023 levels and anticipates continued leverage from its global sales force [44][88] - For 2025, the company expects similar growth dynamics as in 2024, with no significant revenue from AMDS anticipated until 2026 [46][73] Other Important Information - Free cash flow for Q3 2024 was $7.8 million, with expectations for positive free cash flow for the full year [39] - The company’s net leverage decreased to 3.9x, down from 5.3x in the prior year, with expectations for further reduction [41] Q&A Session Summary Question: Insights on aortic stent graft business performance - Management noted strong double-digit growth across multiple products in the aortic stent graft segment, with significant market presence in Europe, Asia, and Latin America [53][54] Question: Market share gains for On-X - The company holds approximately 30% global market share and 55% in the U.S., with expectations for continued growth driven by clinical data showing reduced bleeding [55][57] Question: Long-term growth for SynerGraft - Management highlighted the challenge of donor constraints impacting growth, but ongoing improvements in donor yields are expected to support mid-single-digit growth in the long term [60][61] Question: Launch strategy for AMDS - A soft launch is anticipated in Q4 2025 following FDA approval, with a gradual ramp-up as surgeons are trained and hospitals are onboarded [70][73] Question: BioGlue market opportunity in China - The estimated market opportunity remains around$ 20 million, with a gradual rollout expected over several years post-approval [80][82] Question: Impact of PerClot manufacturing agreement - The agreement is expected to create a slight headwind of less than 1 percentage point in revenue, with minimal impact on EBITDA [84]