CryoLife Aktie

Good afternoon, and welcome to the Artivian Second Quarter 2026 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to Brian Johnston from the Gilmartin Group. Thank you. You may begin.

Good afternoon and thank you for joining the call today. Joining me from our Tivian's management team are Pat Mackin, CEO, and Lance Berry, COO 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. Comments made on this call that look forward in time involve risks and uncertainties that are forward-looking statements within the meaning of the Federal Securities, Private Securities Litigation Reform Act of 1995. Includes statements made as the company's or management's intentions, hopes, beliefs, expectations, or predictions of the future. These forward-looking statements are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from these forward-looking statements. Additional information concerning certain risks and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today. You can also find a brief presentation with details highlighted on today's call on the investor relations section of Artivian's website.

Lastly, I'd like to remind you to please refer to our press release published earlier today for information regarding our non-GAAP results, including reconciliation of these results to our GAAP results. Unless otherwise stated, all of our comments today will be using our non-GAAP results. Additionally, all percentage changes discussed will be on a year-over-year basis. Revenue growth rates will be on the adjusted currency, constant currency rates, and expenses as percentage of sales will be based on adjusted revenues. With that, I'll turn the call over to Artivian CEO, Pat Mackin. Hey, thanks, Brian, and good afternoon, everybody.

Through the second quarter of 2026, we continue to execute on our strategy designed to drive long-term profitable growth through an expanding and clinically differentiated product portfolio. We delivered total constant currency revenue growth of 9% and adjusted EBITDA growth of 7% over prior year. Revenue growth was again driven primarily by ONIX and stent grafts, including AMDS. Before expanding further on product line performance, I want to take a moment to address two milestones that we were most focused on coming into this year and recently achieved In late June, we received US FDA approval for the PMA for our AMDS hybrid prosthesis in line with our previously communicated expectations. The third quarter will be the first full quarter in which AMDS is sold in the U.S. under the full PMA. is meaningful because PMA approval obviates the lengthy IRB review process. and new accounts that previously had to work through. And we expect to accelerate new account conversion and set sales going forward. We were also pleased to complete the acquisition of Endospan in its Nexus Aortic Arch Tentcraft system during the second quarter, again ahead of the timing we had anticipated.

This acquisition completes our market-leading, three-pronged aortic arch portfolio. We believe this technology, alongside AMDS and our CIVO, positions us at the forefront of this segment as the only company globally with a complete portfolio of aortic arch solutions. Importantly, Nexus is a platform technology, not just a single product. It supports three additional PMA programs in development that we expect will further extend and solidify our leadership in the aortic arch market over time. As it relates to Nexus, our message here is consistent with last quarter. Through 2026, our focus will be on building inventory, working through value analysis committees, and augmenting our U.S. sales team. We continue to expect a full U.S. commercial launch of the Nexus system in January of 2027.

As a reminder, the device is approved to treat chronic aortic dissections, which represents about a $100 million market opportunity. With that, now let me turn to the second quarter results. From a product category perspective, StemCraft revenues grew 12% on a cost and currency basis in the second quarter compared to the same period last year. This is an acceleration from the 10% growth we reported in the first quarter and came against tougher year-over-year comparison, so we're encouraged to see this progress. Importantly, one of our key areas of focus coming out of the first quarter was on AMDS set sales. We were pleased to see improvement in set sales relative to the first quarter with implant trends also remaining strong. As we said last quarter, we view implant reordering as the most critical indicator, as strong reordering patterns reflect positive user experience and ultimately longer-term adoption and higher growth.

Looking ahead, we expect USAMDS set sales to further accelerate following the recent AMDS PMA approval. As the barriers associated with the initial upfront $100,000 investment associated with the stocking continue to wane. Ultimately, we see our comprehensive StantGraph portfolio as a foundational component of our growth strategy. We are encouraged by our enduring fundamental strength and increasingly strong competitive advantages within this segment. Turning to ONIX, our second quarter ONIX revenues grew 18% year-over-year on a constant currency basis. This growth was again driven by global market share gains in the newer U.S. opportunity unlocked by data showing improved outcomes with mechanical versus bioprosthetic valves in younger patients. also came against a much tougher year-over-year comparison than in prior quarters. The data supports our conviction that the Onyx valve is the best aortic valve on the market for patients under the age of 65.

Meanwhile, tissue processing came in slightly ahead of our expectations, generating approximately $26 million in revenue, representing an increase of 1% year-over-year on a constant currency basis against a challenging comp due to recovery from the 2024 cyber incident in Q2 2025? We had a strong finish to the quarter in terms of tissue releases resulting in some volume we might otherwise have expected in the third quarter shifted into the second quarter. Overall, we remain on track with our expectations. I also want to briefly highlight the ROS procedure data that was recently published in JAK, the Journal of American College of Cardiology. The study reported a 12-year outcome of 455 adult ROS procedures that were performed at a single high-volume center. This study provides compelling long-term evidence regarding the performance of our proprietary Sinegraph pulmonary valve. The results were outstanding. With survival compared to the age match general population, The autograft re-intervention rate was 1%, and the pulmonary homograft intervention rate was at less than 2%, and that's at 12 years. As a result, the overall re-intervention at 12 years was about 3.5%.

Importantly, 95% of the pulmonary homographs implanted in this study were artesian cinegraph valves. These results further reinforce Synograph's differentiated clinical profile and market leadership. We believe this level of long-term clinical evidence is unmatched in the pulmonary homograph market and strengthens physician confidence in the ROS procedure and as well as our product. Collectively, these data reinforce our conviction that supply, not demand, continues to be the primary constraint in growth for this segment of our tissue business. Finally, BioGlue revenue declined modestly in the quarter on a constant currency basis. As we discussed last quarter, this product line carries a meaningful amount of stocking distribution business, which creates normal quarter-to-quarter variability, and we continue to expect mid-single growth for BioGlue over the full year. Lastly, on our pipeline, we continue to make progress on the Artisan Clinical Trial for our CIVO LSA product.

We've now enrolled 30 patients in the trial, which is a non-randomized clinical trial up to 132 patients in the US and Europe at 30 centers. This is for the treatment of aortic dissection and aneurysm in the arch. We anticipate completing enrollment in mid-27. We are optimistic the trial will be successful. based on, in part, the positive clinical results from our current generation frozen elephant trunk, Aveda Open Neo, outside the U.S. Following a one-year follow-up period and assuming the trial meets its endpoints, we anticipate FDA approval for our CVO in 2029, unlocking an incremental $80 million of annual U.S. market opportunity. In conclusion, the second quarter was a quarter of meaningful progress against our long-term strategy. We delivered the AMBS PMA approval we had targeted for me a year.

We completed the nexus acquisition ahead of schedule. Stengrath revenue accelerated against a tougher comp. Honest continued to take share, and our preservation services business is growing, constrained generally by supply, not demand. The fundamentals that underpin our growth strategy remain exceptionally strong, a comprehensive, clinically differentiated portfolio, a focused commercial organization, and a pipeline that stands to expand our total adjustable market over time.

With that, I'll now turn the call over to Lance. Thanks, Pat, and good afternoon, everyone. Before I begin, I would like to remind you to please refer to our press release published earlier today for information regarding our non-GAAP results, including a reconciliation of these results to our GAAP results. Additionally, all percentage changes discussed will be on a year-over-year basis, and revenue growth rates will be in constant currency unless otherwise noted. Federal revenues were $125.8 million for the second quarter of 2026, up 9% compared to Q2 of 2025. Meanwhile, adjusted EBITDA increased approximately 7% from $24.8 million to $26.4 million in the second quarter of 2026. Adjusted EBITDA margin was $12.5 million. 21% in the second quarter of 2026, an approximately 90 basis point decrease from the prior year, primarily driven by the anticipated increased investments in R&D, including investments in the Nexus pipeline following the acquisition of IndusFans.

From a product line perspective, stent graft revenues increased 12 percent, onyx grew 18 percent, tissue processing revenues grew 1 percent, and bio-glue revenues decreased 2 percent in the second quarter of 2026. On a regional basis, revenues in North America increased 8 percent, EMEA increased 10 10 percent, Asia Pacific increased 9 percent, and Latin America increased 11 percent, all compared to the second quarter of 2025. Overall we were pleased to see a return to growth across international markets. Q2 growth margins were 64%, a decrease from 64.7% in the second quarter of 2025 as favorable pricing was more than offset by unfavorable geographic mix and some higher costs in our Austin facility as we incur early costs associated with ramping production. General administrative and marketing expenses in the second quarter were $79.8 million compared to $57.7 million in the second quarter of 2025. Non-GAAP general administrative and marketing expenses were $60 million or 47.7% of sales in the second quarter compared to $53.4 million 47.2% of sales in the second quarter of 2025. Approximately 90 basis points of year-over-year improvement was driven through leveraging existing infrastructure and annualizing our year one US AMDS launch cost, while absorbing costs associated with the acquired end-of-span business, which was more than offset by approximately 90 basis points of deleverage from increased stock-based compensation and approximately 40 basis points of deleverage from increased amortization expenses following the acquisition of Endospan.

R&D expenses for the second quarter were $9 million or 7.2% of sales compared to $7.1 million or 6.3% of sales in the second quarter of 2025. Interest expense net of interest income was $6.9 million as compared to $7.2 million in the prior year. Other income and expense this quarter included foreign currency translation losses of approximately $700,000. Free cash flow was negative 12 million in the second quarter of 2026 as compared to pods of 11.7 million in the second quarter of 2025. This quarter's free cash flow was impacted by 1.5 million of IndusPan related diligence and integration expenses and a 10.2 million dollar payment by IndusPan as a result of the acquisition for contractually required transaction bonuses. This cash payment was funded as part of the plan's $135 million purchase price, but was required to be reflected for accounting purposes as a post-acquisition expense and a free cash outflow. remaining free cash flow is relatively neutral as anticipated as we invested in our onyx manufacturing facility cost to run the acquired Indus Fan business and the US Nexus launch. As of June 30, 2026, we had approximately $77.3 million in cash and $363 million in debt, net of $6.6 million of unadvertised loan origination costs.

At the end of the second quarter, our net leverage ratio was 3.1, reflecting the impact of the recent $150 million of borrowings drawn to primarily fund the end-of-span acquisition. Note that the $25 million AMDS PMA milestone payment was paid in July and is not included in the 3.1 leverage ratio for Q2. And now for our outlook for 2026. Overall, we are pleased with our 2Q performance as we saw an acceleration in stint graph revenue and strong ONIX growth, both against difficult comps and a return to growth across all international geographies. This combined with the AMDS PMA approval leaves us more confident in our ability to deliver our previously outlined guidance. We continue to expect adjusted constant currency growth between 7 to 11 percent for the full year, representing a reported revenue range of $480 to $496 million. This guidance contemplates FX to have an approximate one percentage point tailwind on as reported revenue for the full year.

As a reminder, this guidance assumes inconsequential revenue from the U.S. nexus sales in 2026 as we seek Value Analysis Committee approvals and build supply for an anticipated January 2027 U.S. launch. We also continue to expect a difficult comp for the preservation services business in Q3 before normalizing in Q4. Additionally, as Pat discussed, we had some upside in preservation services in Q2, but that was primarily timing between Q2 and Q3. Outside of that business, we continue to expect sequential improvements through the back half of the year as our U.S. AMDS and U.S. Onyx sales accelerate. With these revenue expectations and including the impact of the end of span acquisition, we are reiterating our full year 2026 adjusted EBITDA to be in the range of $92 to $99 million. As a reminder, this guidance included our expectation to occur approximately $8 million of expenses associated with the acquisition of Endospan through 2026 associated with investments in launch costs and commercial infrastructure while also accounting for the absorption of Endospan operating costs, including ongoing R&D and clinical expenses.

Looking forward, we would expect the first meaningful revenue contribution for Nexus to begin in January 2027 and would anticipate our combined results to be even non-neutral for the full year 2027 as U.S. Nexus revenue ramps over the course of the year as we get combined R&D and clinical spending into a targeted range of 7% to 8%.

sales. With that, I will turn the call back to Pat for his closing comments. Thanks, Lance. Overall, we're very pleased with our Q2 performance following a challenging start to the year. With Nexus and AMDS, we have a strong conviction in our longer-term growth outlook. We continue to build our broader market expansion pipeline, particularly with the Artisan Trial enrolling on schedule. More specifically, we believe that future growth will be driven by four primary USAortic growth platforms, which collectively represent about $430 million in annual U.S. market opportunity today. additional upside from expanding innovation pipeline. First is the AMDS PMA. We're seeing strong early commercial momentum with AMDS. And following the US PMA approval this past quarter, we expect accelerating adoption as we expand access to the US market.

This represents about a $150 million annual opportunity in the US. Second, onic heart valves. We continue to educate physicians on the compelling clinical data demonstrating improved survival and lower re-operation rates for patients under 65 years old compared with bioprosthetic valves. We believe this data will continue to drive greater global adoption and market share gains for ONIX, representing an estimated 100 million U.S. market opportunity. Third, Nexus. We're excited to acquire the Nexus platform following its FDA approval earlier this year. In addition to providing an estimated $100 million annual U.S. market opportunity, the acquisition positions Artevian as a leader in the aortic arch repair market and significantly strengthens our innovation pipeline with three additional PMA programs currently in development. And fourth, the Artisan IDE trial. We continue to make excellent progress in rolling on the FDA IDE trial called Artisan for our next generation frozen elephant trunk platform.

We believe this technology represents an additional $80 million U.S. market opportunity and further expands our long-term growth runway. Finally, I want to thank all of our employees around the globe for the continued dedication to our mission of being a leader, a leading partner for surgeons focused on aortic disease,.

So with that, operator, please open the line for questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions.

The first question is from Bill from Canaccord Genuity. Please go ahead.

Hi, it's Zachary on for Bill. Thank you for taking the question. to beat by a nice bit. Why not raise the guidance? What does it imply for the back half of the year, more specifically on product line, especially with some of the drivers you have, AMDS getting approval? Thank you.

Yes, so a couple of things. We're really pleased with the Q2 performance. Obviously, we got the PMA approval for AMDS and we closed the end of span transaction. But both of those were contemplated in our previous guidance. And at the time of the Q1 call, we had a very high degree of confidence in both those things. Beyond that, if you look at Q2, the preservation services, we had a great quarter. It was probably about $2 million above our kind of targeted expectations.

But a lot of that was due to really strong releases toward the end of the quarter. that really just kind of moved some revenue that would have been in Q3 into Q2. And then lastly, though, if you look, stint graphs accelerated revenue growth despite a much tougher comp, and ONIX actually even slightly higher growth in Q1 despite a much tougher compass too, which is great. And all that gives us more confidence in our ability to deliver that guidance. I think really just coming off of what was honestly a pretty challenging Q1, we felt at this point it was just prudent to maintain some conservatism. until we get a little further in the year, and it's really nothing more than that.

Got it, thank you. And then for my follow-up, if you don't mind, can you quantify or provide some relative scale to the number of accounts currently with AMDS on the shelf and those either in VAC approval or purchasing of inventory? I know that there were some headwinds before about about, you know, AMDS being in HCE and some accounts are waiting until we got the PMA to adopt it. Just any comment on that, thank you.

Yes, we've not really given a lot of details on those other than like the initial quarter after we launched we gave some comments. We did make good progress in Q2 and had an improved performance on set sales and new account openings in Q2 as compared to Q1. So we will say that. And then, Pat, I don't know if you want to give some qualitative comments on AMDS and Q2. Yes, no, I mean, we clearly haven't given.

an account level detail that we're not planning on anytime soon, but I do think we've said for a while that this PMA is a, we think this is a big deal. It allows us to be more aggressive with the marketing. We brought the whole commercial team back in in July for a sales training meeting. It was fantastic. So I feel like our messaging, the not having to go through the IRB, not having this HTE to deal with, I think it's going to set us up well for the back half.

The next question is from Suraj Kalia from Oppenheimer. Please go ahead.

Hi, Pat. Hi, Lance. This is Seamus on for Suraj. Thank you for taking our questions. Just to start, Pat, can you talk a little bit more about kind of AMDS? I think you said something along the lines of, you know, the $100,000 set price, you know, you're kind of seeing that kind of barrier waning as you kind of go on. Just trying to understand a little bit better kind of what happened kind of in one queue, what kind of... have changed now that obviously we know PMA approval, but obviously that $100,000 price didn't change. So kind of why was it a barrier before and why is it not so much now? Yes.

Yes, I think, you know, as we said on the Q1 call, you know, all the way through 2024, we – through 2025 with HD, we were tracking every quarter to our sets, to our implants, and Q1 of 26 was really our first kind of time that we missed our expectations. And trying to predict when these things close is challenging because you're outside of them. We had a number of accounts that had IRB approval, VAC approval, but we're waiting on a PO because this is not normal that they have to write a check for $100,000. So we spent a lot of work in Q2 kind of understanding the barriers of why it was taking people longer. We have programs kind of set up for addressing those types of things. I just think we've really gotten our arms around kind of what it takes to open accounts and drive adoption. And like I said, we're super excited about the PMA.

And it'll take us some time to get that out and it doesn't travel out immediately, but we're very bullish on the second half, what we can do with AMGS. Got it.

Thank you for that. And then just kind of thinking through things a little bit differently. You know, fast forward, we'll say six months or so from now, kind of January, Nexus is launched. How are you guys kind of balancing kind of the sales force of selling? You know, you've got these great new products, but obviously you have kind of legacy what's been in the bag. You know, how are you balancing kind of them selling everything that's newer, what's kind of what you've got, and making sure that nothing kind of slips. Thank you again for taking the questions. Yes, so I think a couple points. So we've got a couple of questions.

A commercial team in the U.S. are about 60 people, and they focus heavily on the aortic cardiac surgeon. that's ONIX for going against bioprosthetic vials, and that's AMBS. It's also the Synergraph Pullman Revitality. It's the same customers. They already know them all. We have business in each one of these accounts. They have relationships. It's really just our team driving messaging into those accounts. Nexus is also done in the big accounts. but that's primarily with the vascular surgeon. And so we're building out a small commercial team that'll work with our cardiac team because they actually work together on these, the cardiac and vascular surgeons.

And the nice thing about Nexus, the Nexus opportunity, is there's probably 150 centers that are really our target. So it's not a huge universe of accounts, but that's where all the volume is. So with kind of a small dedicated vascular team, we'll be able to do, you know, cover these nexus cases and they'll work kind of hand in hand. with the cardiac team. So our cardiac team just went through value analysis committee and a bunch of accounts. we're already going through value analysis committee even faster because we learned how to do it and we've kind of got the playbook set. So I think there's a lot of synergy between our cardiac and vascular, but the nice thing about this Nexus product is it's a very tight number of accounts and a small team of reps can actually cover the implants.

The next question is from John McCauley from Stiefel. Please go ahead.

Hi, Pat and Lance. It was clearly a positive, busy quarter on the aortic side of things with Nexus officially acquired and getting the PMA for AMDS approved. Quick question sort of on both items. I mean, can you just talk a little more qualitatively about how conversations with customers have changed since the approval has been in hand? And sort of as a follow-up to that, I mean, is this a situation where revenues could accelerate in the back half of the year? And then on... On Nexus, just curious on the progress you're making on integration, rep hiring, and getting the device sort of ready to scale from a manufacturing perspective.

Yes, so let me take the Nexus one first. I mean, the great thing about the relationship we had with Endospan is, you know, we've been partnering with them since 2019, so this is not a new, you know, I've done a lot of acquisitions in my career. When you do an acquisition and, you know, people don't know each other and everything's new, this is a team we've worked with for, what is it now, six, seven years. So I think the integration's gone extremely well. We've brought over the majority of their team and they've been doing really well We're super aligned on what we're trying to accomplish in delivering breakthrough technology to the aortic arch, and they're a key component of that. The other thing with Nexus is, as you guys know, there's a built-in six-month delay in to start in these accounts because of the Value Analysis Committee. So we're taking that time to build up the inventory, hire the reps, train the surgeons.

And as we've said all along from last quarter, our plan is to launch this product on January 1 of 2027. Now, we're going to be doing some cases between now and the end of the year, but they're more ad hoc. and we'll take them as they come through. But we're really trying to position ourselves for a January 1 kind of kickoff for Nexus. As far as AMDS, you know, I think the one thing I would say on the customer side, you know, I've been to a lot of these training meetings with surgeons, you know, People were super confused by this HTE. They had to go through your IRB. In some cases, they had to fill out paperwork for the trial, almost like it was a clinical trial. I think the other thing is we've got this very positive reimbursement, and we're getting that messaging out, both this new DRG 209 for Medicare patients and communicating kind of what the private payers are paying.

So that's been another big thing we've learned through the initial launch is tightening up the messaging around the reimbursement as well as the, now that we've got the PMA, not having to go through that process. So, you know, again, I think the biggest thing is we just really kind of tightened up our messaging on AMDS now that we have the PMA. And I think it's very well done and, you know, we've got to get out in the market and you know, put it to work. But, you know, we're encouraged by kind of our opportunity in the back half. Yes.

Got it. That's very helpful. And looking at maybe a tad too far ahead at this stage, but as I'm looking at 27, I hear you talking about a Nexus product launch January 1st. But at the same time, I also hear you talking about hiring reps and developing that. And I think, Lance, you even made some comments there about leave it to a neutral impact. Just Just curious sort of about how we should be thinking about the top line equation for next year with Nexus coming into the fold, but also what the implications are for EBITDA. I know your typical goal is to grow at least higher or at least faster than revenues growing. So just be curious about any initial thoughts there.

Yes, first of all, it's a little early. We usually try and give some directional comments on the Q3 call, not the Q2 call. But some directional things. One, we are going to have to make some investments on the commercial side for reps and for training for surgeons. We've talked about Nexus is a more intensive training. product now but we've also said it's going to be very concentrated from a facility and certain standpoint and we're not going to need a large sales force to be able to deliver what we want to in 2027. So I think there will be some investment, but it's not going to be... it's not going to be I think obviously the rest of our business, our business model is great if you take the investments and costs from Indusband that we're going to have and the revenue out. The underlying business model is still great and has an opportunity to generate a lot of leverage and really good revenue growth. Those are some high-level comments, and I think we'll think about giving you a little bit more detail in Q3 when we get a little bit closer to 27.

I appreciate the color, and thanks for taking the questions. The next question is from Keith Hinton from Freedom Capital Markets. Please go ahead.

Great, thanks. Yes, so I have a question on AMDS just in terms of what things have looked like since the approval. So, should we be thinking about this as the approval hits and then you guys have full license to go out and kind of rebuild the pipeline for potential accounts or is there some kind of like warehousing effect where you had some you know some accounts that were were ready to go and just waiting for that approval and so we could see more of a step change upwards and then I have a follow.

Yes, we've talked to people in the past, like, to, you know, don't expect, like, this giant bolus to come through just on PMA approval. And I would say, you know, we're only a month into the quarter, but that's as expected. It wasn't like this avalanche that came through immediately upon PMA approval. I think what it's like now. What it does is it just removes a point of friction as we try and move accounts through the process to get them to make that $100,000 investment. The other thing it does is we can – we're fairly restricted around our marketing messaging under the HDE. You know, now we have a full PMA label that we can go out and market. more information just from the clinical trial, honestly.

So we expect that to help not only with getting new accounts set up, but also driving better adoption and implant adoption. And Pat's also talked about some accounts actually had some administrative friction for just doing implants under the HDE, and that will go away as well. So, directionally, there's a lot of good things that will be helpful, but no, people should not expect that there's a big bolus that is just going to come through.

through immediately post-PMA approval. Okay, great. And then just on the preservation services side of things, so one of your competitors in that space reported having some supply issues on the cardiac side. So, you know, did you see any upside from that in the quarter? It sounds like that's not what the upside was. It was more just timing. But have you seen any upside from that? Are you expecting any for the full year? And then just when you think about building out the vascular sales force for Nexus, are there potentially any synergies on the tissue side, you know, the vascular tissue side, where I think you guys have a little bit less of a presence.

On the tissue supply, I'll take a shot at that. I actually obviously don't have that level of detail. I will tell you this, I mentioned in the script, you know, there was this publication in Jack that just came out, which is a huge cardiology journal, showed phenomenal results of the Synegraph pulmonary valve, which is exclusive to Artivion. And frankly, I don't know why anybody would put a non-synograph valve in. So I'll just leave it at that. As far as the Nexus Salesforce, this is a, you know, the Nexus is a very advanced technology in the arch. It's super cool technology. It's a catheter delivered, a 20-pence catheter delivered, and you actually, you know, build the stent graft inside the patient's aorta, you know, So it's super sophisticated and our reps will be in every case.

Those are not the same vascular surgeons that are doing vascular tissue. So that's not something we're going to kind of, put in their bag, it's just a very different job. It's a good question, but again, I just think that that's the wrong vascular surgeon, and they're very different customers.

Great, thanks for the clarification. The next question is from Danny Satyutter from Citizens Bank. Please go ahead.

Thanks. The first one on onX. Really strong on a much harder prior comp. Congrats. I was just curious if you started or how much you've invested in the cardiologist-directed marketing at this point. have started, you know, how much ulcer you might be seeing or change in referral patterns or just any more color there would be great.

Yes, I think we've got kind of a multi-pronged approach there. We're working on some very interesting stuff behind the scenes that I'm not prepared to talk about until we're further down the pipe, which will be, I think, kind of world-class, clinically communicated information to cardiologists about the benefits of the Onyx valve. So I'll just leave it at that. When we're ready to talk about that, we will. But our team's out there talking to heart surgeons and cardiologists on a daily basis, but getting at that big cardiology population, we've got some other initiatives we're working on that we're not really prepared to share.

To get the whole $100 million opportunity, we're going to have to go upstream and get you know, better education in the cardiologist group. But there's a large portion of the 100 million that's available to us just from educating the cardiac surgeon, which obviously that's right,.

right in our sweet spot and we're aggressively doing that. Okay, great, appreciate that. And then just one follow up on some of the points you made on tightening up your messaging and some of the marketing pieces for AMDS. I guess I just wanna be clear, to what extent were you restricted under the HD from communicating and going out and marketing what can you do now with the PMA in hand that you couldn't do before? And it seems like that would be a pretty, um, big piece in making people understand the pricing and economics. So I just would like to double hit on that, if you can give any more color there in terms of what you're now looking at as a PMA.

Yes, so just to make it simple, think about it this way. When we got the HDE approval, It was off the Persevere trial. Okay, so we were basically allowed to market off of the Persevere trial. In the time from when we got the PERSEVERE trial and the HDE approval, There had been several presentations on the podium about additional data, particularly around malprofusion, cerebral malprofusion, visceral malprofusion, renal malprofusion, which is one of the great benefits of the technology, we've had papers presented and podium presentations specifically about those topics that we were not able to market against because they were not in the HGE. Those are in the PMA, and we will be aggressively marketing that information. And it's a really important point, so hopefully it gives you some color without getting too far into the weeds.

Oh, great. Thank you very much and congrats on the quarter. As a reminder, to ask a question, please press star 1. The next question is from Mike Mattson from Needham & Company. Please go ahead.

Hi guys, thanks very much. It's Joseph on for Mike. Question on maybe international strip stent growth. You know, maybe how did that trend in the quarter? Last quarter you guys had called out some supply chain challenges and obviously what's going on in the Middle East. But, you know, curious if any of that has been alleviated to any degree. And maybe if it has, you know, how much is left and maybe, you know, how much is, you know, persistent until conflict, you know, dramatically dies down in the Middle East.

Yes, we obviously did that. So, first of all, on supply, the supply challenge, you know, what we said was we probably had our arms around it, but it would really probably take us through the end of the year to get healthy. And so, you know, that was what was contemplated in our guidance. So, I think, you know, where we stand today, we made some great progress. progress during Q2. I feel even more confident that we will be ready to go and back to full strength. at the beginning of the year for 2027, uh, not ready to say that there's upside to, to 26 yet. And therefore, you know, there's no change to the kind of underlying assumption on the guidance for supply, but qualitatively, uh, feel even better than we did, you know, 90 days ago. Uh, On the Middle East, we actually did get a little bit of revenue, not very much. of revenue in Q2, but definitely can't necessarily count on that going forward, given the current situation. So, again, nothing in the guidance for the second half of the year on that.

If you look at international overall, if you just look at the growth rates, which is obviously not just stint graphs, but if you look at the international growth rates, there was some really nice improvement across the board. And even Latin America, which is pretty small, it was a pretty healthy decline in Q1, and then it was a 10% growth. quarter so we're really happy to see you know pretty consistent performance.

across the international business in Q2. Okay, great. And then just with, you know, EndoSpan now working on, you know, being integrated, I'm just wondering if you guys have any updated thoughts on, you know, manufacturing site there in Israel, if there's any challenges that seem like could pop up or maybe any contingency plans that are working if that is the case. And then just to clarify, did you or are you guys in the process of adding reps specifically for AMDF following approval?.

We're not talking about adding reps right now on the AMBS side. We like with our channel we've got the coverage we need. We always will evaluate that. I'm talking about for the second half of this year. We're going to keep the team we have on the ground. Whether we do more next year, we'll evaluate. I'll make a couple comments on the Endospan Manufacturing Facility. Even through all the challenges, because again, we've been partners with them for the last even through all the, you know, the hardships that countries faced, they've done a fantastic job delivering, um, We've really had, in any one of these situations, we've really had no supply chain challenges from their manufacturing facility.

So I think the other thing to keep in mind is that's a PMA facility. You know, we always try to have contingent backups, but it takes time to do something like that. So we're committed to that facility for a while.

if we do something down the road it would be a backup. Yes, I think with all PMA products, having dual source is just a challenge, particularly right at approval. We're obviously working to have contingencies for all parts of the Endospan supply chain, not necessarily just the Israel factory. And Endospan already honestly had some things in process that we're continuing. So we're doing the best we can, just like we would for any of our products, to try and have contingencies in place, recognizing that with a PMA product, that's not something you can do overnight.

Okay, great. Yes, that's very clear. Thanks for taking our questions.

The next question is from Frank Takkanen from Lake Street Capital Markets. Please go ahead.

Great. Thank you for taking the question. Apologies if this has been asked. I've been hopping between a couple calls. I wanted to talk about free cash flow a little bit more. I know, Lance, you mentioned the $25 million AMDS is in Q3. But as we think about going forward, can you just remind us if there's any other puts or takes in the cash flow calculations think about and at the risk of getting a little over our skis, maybe just any initial thoughts on 2027, just some announcements anomalies we may want to keep in mind or if it's going to be a little bit cleaner on free cash flow conversion.

Well, let's hope it's definitely cleaner because it's pretty unclean this year on free cash flow. Off the top of my head, right now I can't think of anything that would be really abnormal in 2027. I reserve the right to give a little more clarity on that maybe on the next call. get a little closer to a couple of things on cash flow for 2026. Heading into the year, we had kind of said, hey, we expect free cash flow to be basically neutral as we make investments in this Austin expansion in particular. that we're going to have a much higher rate of CapEx than we normally would have had. That's pre-COVID. consideration of the in the span acquisition or the AMDS earn out payment. Right, so obviously we expected to make the AMDS earn out payment, but that's not really a free cash flow item if you will. So if you think about in this span, we had in this quarter, something really kind of odd.

There's roughly $10 million that was essentially purchase price, but the GAAP accounting required us to put that through the P&L, which means that it hit free cash flow. So that's not really free cash flow in my opinion, but it shows up there on the cash flow statement. So, putting that aside, we do have these kind of $8 million of incremental expense and we do have some incremental interest too. So those things are going to drive us to be... know free cash flow negative for this year but as you're rolling in 2027 and we have EBITDA growth and then we have a step down in capex and you know some of these endospan expenses that don't repeat you know we would expect 2027 to be you know meaningfully free cash flow positives.

That's helpful. Thank you. Mr. Mackin, this concludes the question and answer session. I'd like to turn the call back over to management for closing remarks.

Yes, well, thanks for participating. Again, we're really pleased with our second quarter. I think I would just leave you with this. I mean, it's rare that a company gets a PMA in a year. We got two and a quarter, right? We also did an acquisition of Endospan and have closed it kind of through our integration. The combined PMAs from AMDS and Nexus with our artisan trial is three, and then we got four more behind it. That's seven PMAs in the ARCH. which really sets us up for long-term profitable growth. So we're super excited about the transaction and look forward to talking to you next quarter.

This concludes today's call. You may disconnect your lines at this time. Thank you for your participation and have a wonderful afternoon.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Good afternoon, and welcome to Artivion's Fourth Quarter and Year-End 2025 Earnings Conference Call.

[Operator Instructions] I would now like to turn the conference over to your host, Mr. Brian Johnston from the Gilmartin Group. Thank you. You may begin.

Thank you. Good afternoon, and thank you for joining the call today. Joining me from Artivion's management team are Pat Mackin, CEO; and Lance Berry, COO and 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.

Comments made on this call that look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include statements made as to the company's or management's intentions, hopes, beliefs, expectations or predictions of the future. These forward-looking statements are subject to a number of risks, uncertainties, estimates and assumptions that may cause actual results to differ materially from these forward-looking statements.

Additional information concerning certain risks and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today. You can also find a brief presentation with details highlighted on today's call on the Investor Relations section of the Artivion website.

Lastly, I would like to remind you to please refer to our press release published earlier today for information regarding our non-GAAP results, including a reconciliation of these results to our GAAP results. Unless otherwise stated, all comments today will be using our non-GAAP results. Additionally, all percentage changes discussed will be on a year-over-year basis. Revenue growth rates will be the adjusted constant currency rates and expenses as a percentage of sales will be based on adjusted revenues.

With that, I'll turn the call to Arctivan's CEO, Pat Mackin.

Thanks, Brian, and good afternoon, everybody. Through the first quarter of 2026, we continue to execute our strategy designed to drive long-term profitable growth through an expanding and clinically differentiated product portfolio. In the quarter, we delivered constant currency revenue growth of 12% and adjusted EBITDA growth of 26% year-over-year.

Revenue growth was driven primarily by On-X and stent grafts, including AMDS. We also benefited from growth within preservation services as tissue processing volumes normalized following the 2024 cybersecurity event. Before expanding further on product line performance, I'd like to take a moment to address today's exciting news regarding the exercise of our option to acquire Endospan.

This is following the PMA approval of its NEXUS Aortic Arch Stent Grafts system for chronic aortic dissections, which they achieved in early April. The NEXUS system is a branched endovascular stent graft system that is purpose-built for minimally invasive treatment of Aortic Arch disease where patients often have no choice other than open heart surgery. The clinical data is compelling.

Data from the chronic Aortic Arch dissection cohort of the TRIOMPHE trial demonstrated 93% of patients survived from lesion-related death, 90% freedom from disabling stroke and at 1 year post treatment. Also, 95% were free from intervention due to endoleaks, excluding type 2 endoleaks at 1 year, which is a very high-risk population.

As a reminder, the total annual U.S. addressable market opportunity associated with both cohorts is estimated to be around $150 million, with dissections representing about $100 million of that. We plan to pursue supplementing the label to include aortic aneurysms through formal regulatory processes expeditiously post acquisition. Importantly, our anticipated acquisition of Endospan and its NEXUS system will complete our market-leading three-pronged Aortic Arch portfolio.

This technology, if acquired alongside AMDS and our Arcevo LSA will position us at the forefront of this segment as the only company globally with a complete portfolio of Aortic Arch solutions. And importantly, NEXUS is the platform technology, not just a single product. It's supported by additional three PMA programs in development that we expect to further expand and solidify our leadership in the Aortic Arch market over time.

We are pleased to have had the financing already in place for this acquisition and subject to satisfactory and customary closing conditions, we expect to close in the second quarter of 2026. As Lance will discuss in greater detail, we expect a full U.S. commercial launch of NEXUS in January 2027, following efforts to scale inventory production, complete value announced committee processes and augment our U.S. sales team.

With that, let me turn back to our Q1 '26 results. From a product category perspective, stent graft revenues grew 10% on a constant currency basis in the first quarter compared to the same period last year. Year-over-year constant currency growth fell below our expectations due to lower-than-expected AMDS set sales in the U.S. as well as softer-than-expected performance internationally, particularly in the Middle East.

Year-over-year growth also reflects a tougher comp in Europe following a strong Q1 2025 performance as we recovered from the 2024 cybersecurity event. While U.S. AMDS sales associated with initial stocking fell short of our expectations in Q1, we've been very encouraged by implanting reorder patterns within the accounts already using AMDS. We view this as a much more critical item than the immediate impact of sales from starter sets as strong reordering patterns reflect positive user experience and ultimately, our long-term adoption of these in our growth thesis.

Looking ahead, we expect U.S. AMDS set sales to accelerate as more accounts are already through the VAC process, they finalize the procurement as we benefit from steps being taken, not to ease the initial upfront $100,000 cost burden associated with stocking.

We also anticipate PMA approval of AMDS in the coming months, which will obviate the need for entirely new accounts, which won't have to go through the IRB process, some of which have deferred the PMA approval because of this increasingly imminent date.

Ultimately, we see our comprehensive stent graft portfolio as a foundational component to our growth strategy. We are encouraged by our enduring fundamental strength and increasingly strong competitive advantage within the segment.

Looking ahead, we intend to replicate our proven strategy by bringing additional stent graft products that are already generating revenue in Europe to the U.S. and Japan, which we believe will unlock further meaningful expansion of our stent graft total addressable market.

Meanwhile, our Q1 On-X revenue was 17% year-over-year growth on a constant currency basis. This growth was driven by further global market share gains and continued early traction in our new $100 million U.S. market opportunity unlocked by recently published data, which demonstrate improved outcomes with mechanical valves versus bioprosthetic valves for younger patients.

We maintain our conviction that On-X is the best aortic valve in the market for patients under the age of 65, and we will continue to take market share worldwide in that product line. Tissue processing revenues increased 23% year-over-year on a constant currency basis in the first quarter as demand for our products remained strong and tissue volumes normalized year-over-year following the cybersecurity incident in late '24. Q1 results were slightly ahead of our expectations of roughly $24 million per quarter for that business.

Lastly, BioGlue was relatively flat on a constant currency basis compared to the same period last year. While this performance was slightly lower than our mid-single-digit growth expectation contemplated in our previously communicated full year revenue guidance, it falls within the range of normal quarter-to-quarter growth variability due to significant amount of stocking distributor business in that product line.

Lastly, on our pipeline, we continue to make great progress on the ARTIZEN clinical trial for our Arcevo LSA product. We now have 26 patients enrolled in the trial, which is a nonrandomized clinical trial consisting of 132 patients in the U.S. and Europe and up to 30 centers for treatment for aortic dissection and aneurysm in the arch.

We anticipate completing full enrollment in mid-'27. We are optimistic that the trial will be successful, supported by our clinical results from our current generation Frozen Elephant Trunk, E-vita OPEN NEO, which is available outside the U.S. following our 1-year follow-up period and assuming the trial meets its endpoints, we anticipate FDA approval for our Arcevo LSA in 2029, unlocking an incremental $80 million annual U.S. market opportunity.

In conclusion, while Q1 results fell short of our constant currency expectation and reflected some moving pieces that Lance will walk you through in detail, it was a quarter of meaningful progress against our long-term strategy. The fundamentals that underpin our growth strategy remain intact, a comprehensive clinically differentiated portfolio, a focused commercial organization and a pipeline that stands to exceed the total addressable market, expand our total addressable market continuously over time.

The reordering behavior we are seeing within AMDS accounts reinforces our conviction in the long-term adoption story, and we have a clear line of sight in the near-term drivers that will accelerate new account conversion. On-X continues to take share from both mechanical and bioprosthetic valves as the leading Aortic Valve in the market for patients under the age of 65. And with the addition of NEXUS, we now have what we believe is the most comprehensive Aortic Arch portfolio in the world, a position we have built deliberately and intend to extend.

With that, I'll now turn the call over to Lance.

Thanks, Pat, and good afternoon, everyone. Before I begin, I would like to remind you that please refer to our press release published earlier today for information regarding our non-GAAP results, including a reconciliation of these results to our GAAP results.

Additionally, all percentage changes discussed will be on a year-over-year basis, and revenue growth rates will be in constant currency unless otherwise noted.

Total revenues were $116.3 million for the first quarter of 2026, up 12% compared to Q1 of 2025. Meanwhile, adjusted EBITDA increased approximately 26% from $17.5 million to $22.1 million in the first quarter of 2026. Adjusted EBITDA margin was 19% in the first quarter of 2026, an approximate 130 basis point improvement over the prior year, driven by leverage in SG&A and gross margin improvement.

From a product line perspective, stent graft revenues increased 10%, On-X grew 17%, tissue processing revenues grew 23% and BioGlue revenues were relatively flat in the first quarter of 2026.

On a regional basis, revenues in Asia Pacific increased 6%, North America 23%, EMEA increased 5% and Latin America decreased 23%, all compared to the first quarter of 2025. International growth was below what we typically see from that part of the business. EMEA underperformance was driven by the stent graft-related factors that Pat discussed earlier, while underperformance across APAC and LatAm was driven primarily due to quarterly fluctuations in distributor ordering patterns, which we expect to normalize over the course of the year.

Q1 gross margins were 64.9% in Q1, an increase from 64.2% in the first quarter of 2025, primarily due to favorable product and geographic mix. General and administrative and marketing expenses in the first quarter were $60.8 million compared to $54.7 million in the first quarter of 2025.

Non-GAAP general and administrative and marketing expenses were $59.3 million or 51% of sales in the first quarter compared to $53 million or 53.6% of sales in the first quarter of 2025, reflecting a 260 basis point improvement. Approximately 170 basis points were driven through leveraging existing infrastructure and annualizing our year one AMDS launch costs and approximately 90 basis points were from stock-based compensation.

Our as-reported expenses included a gain of approximately $1.5 million in Q1 associated with insurance reimbursement for cybersecurity costs we incurred in previous periods and approximately $1 million of diligence and integration planning costs associated with the planned acquisition of Endospan, both of which are excluded from adjusted EBITDA.

R&D expenses for the first quarter were $8.8 million or 7.6% of sales compared to $6.7 million or 6.8% of sales in the first quarter of 2025. Interest expense net of interest income was $5.2 million as compared to $7.5 million in the prior year. Other income and expense this quarter included foreign currency translation losses of approximately $800,000.

Free cash flow was negative $6.8 million in the first quarter of 2026 as compared to negative $20.6 million in the first quarter of 2025. As a reminder, the first quarter is typically our seasonally lowest free cash flow quarter. And although negative, this quarter's free cash flow results were actually slightly better than anticipated.

As of March 31, 2026, we had approximately $55.8 million in cash and $215.4 million in debt, net of $4.6 million of unamortized loan origination costs. At the end of the first quarter, our net leverage ratio was 1.8, down from 4.0 in the prior year.

And now for our outlook for 2026. As Pat stated, our Q1 stent graft results did not meet our expectations due to factors that could continue to impact our revenue in the near term, primarily softness in our international markets, particularly in the Middle East and timing of AMDS set sales in the U.S. It is early in the year, and we are working to mitigate or offset these issues. However, given the uncertainty around the timing and impact of those actions, we believe it is prudent to adjust our guidance.

We now expect adjusted constant currency growth between 7% to 11% for the full year 2026, representing a reported revenue range of $480 million to $496 million. This guidance contemplates FX to have an approximate 1 percentage point tailwind on as-reported revenue for the full year.

From a product line perspective, the reduction relates primarily to stent grafts due to the factors we've discussed. This guidance assumes inconsequential revenue from the U.S. NEXUS sales in 2026 as we seek value analysis committee approvals and build supply for an anticipated January 1, 2027 U.S. launch.

As a reminder, growth in the first quarter of 2026 was anticipated to be higher than the remaining quarters, driven by the easier comps for the preservation services business from the prior year cybersecurity event. These flipped to difficult comps for the preservation services business in Q2 and Q3 before normalizing in Q4. We currently anticipate our Q2 year-over-year growth rate will be the lowest in 2026, followed by more consistent sequential improvement as our U.S. AMDS and U.S. On-X sales accelerate during the year and we return to normal comps for the Preservation services business in Q4.

With these updated revenue expectations and excluding the impact of the planned Endospan acquisition, we now expect full year 2026 adjusted EBITDA to be in the range of $100 million to $107 million, representing a range of 12% to 20% growth over 2025 and approximately 100 basis points of adjusted EBITDA margin expansion at the midpoint of our ranges.

Please note that this full year adjusted EBITDA guidance excludes any potential impact from the anticipated completion of the Endospan acquisition. Assuming the acquisition closes later in the quarter as anticipated, we would expect to incur approximately $8 million of incremental expense through 2026. This would include investments in launch costs and commercial infrastructure while also accounting for the absorption of Endospan operating costs, including ongoing R&D and clinical expenses.

Given our expectation for immaterial revenue contribution from U.S. NEXUS sales in 2026, this incremental $8 million would be expected to reduce our full year 2026 adjusted EBITDA to $92 million to $99 million.

Looking forward, we would expect the first meaningful revenue contribution to begin in January 2027 and we anticipate our combined results to be EBITDA neutral for the full year 2027 as U.S. NEXUS revenue ramps over the course of the year and as we get combined R&D and clinical spending into our targeted range of 7% to 8% of sales.

Relative to the pending acquisition, we also announced today that we drew $150 million under our existing term loan facility. The proceeds will be used to fund the $135 million upfront purchase price for the anticipated Endospan acquisition. Assuming the acquisition closes as anticipated, quarterly interest expense would increase to approximately $8 million starting in Q3 2026 with Q2 2026 interest expense expected to be slightly lower than that.

As a reminder, we also continue to anticipate paying a $25 million earn-out in the second half of 2026 following the anticipated mid-2026 AMDS PMA approval.

With that, I'll turn the call back to Pat for his closing comments.

Thanks, Lance. Overall, we have near-term work to do, and we exited Q1 with greater conviction than even in our foundational growth strategy. We're excited to move forward with our pending acquisition of Endospan as the NEXUS platform stands to complete our market-leading Aortic Arch portfolio. We see PMA approval of AMDS as it's on track for midyear. Implant adoption for AMDS continues to build and our broader market expansion pipeline is accelerating to plan, particularly with ARTIZEN enrolling as expected, and our long-range growth thesis remains intact.

More specifically, we expect future growth to be driven by the following four key growth drivers:

Number one, the AMDS PMA. We're commercializing the AMDS in the U.S. under the HDE, increasing penetration of the annual U.S. market opportunity, with new clinical data, reimbursement dynamics and the PMA approval are likely to further be tailwinds for this growth.

Number two, the On-X heart valve data. We're continuing to educate providers on the clinical data showing mortality and reoperation benefits in patients under 65 years of age compared to bioprosthetic valves and continue to expect this to translate into greater market share globally.

Number three, we're pleased to announce that NEXUS is moving forward with our strategy and to acquire our partner, Endospan, following the FDA approval of NEXUS. This acquisition, if closed, will provide an additional near-term growth driver, position us at the forefront of this segment and significantly expand our pipeline with three additional PMA programs in development, extending our runway well beyond the initial approval.

And finally, number four, the ARTIZEN IDE trial. We continue to make progress in our third-generation Frozen Elephant Trunk trial called our Arcevo LSA. This clinical trial represents an incremental $80 million annual opportunity.

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

[Operator Instructions] Our first question comes from John McAulay with Stifel.

Just want to understand, I think, better on this guidance reset, what's exactly contemplated in it now? Because I think there's a few key assumptions in here. And the key one is exactly when AMDS receives PMA and then sort of more broadly, what kind of opportunity the PMA unlocks? And I guess the question of, is this truly conservative, adequate? Or how would you frame it in terms of, one, the expectations for when you get this AMDS approval? And then two, how should we think about the opportunity that, that approval unlocks in the context of the revenue ramp throughout the year?

Yes. Thanks, John. Yes. So, I would say a couple of things. One, there were two things that didn't go as planned in the first quarter, right? Number one was international stents were off, and that was mostly due to unplanned things. One was the Middle East and two was some supply chain challenges. Those are temporary, and we're working to fix those. And the second, as we pointed out, was the AMDS set sales. Those are the starter sets where the hospital has to buy four.

We do think that the PMA will help. We've been saying all along that we didn't think the PMA was going to be that much of a difference. But the closer we get to getting the PMA approval, there's some bureaucracy and work that the hospitals have to do to get these IRBs in place. And with the PMA so close, I think that they're just going to wait. So we do think that will be helpful. So again, we're also working to knock down some of the barriers that we're seeing on getting these starter sets. The encouraging thing is that we saw, we were ahead of plan on the actual implants. So I think that's what we're working on right now is to make sure we can get access to these starter sets and working through that process.

Lance, would you add anything there?

Yes. And then I would say we've been saying we expect PMA approval midyear. We still expect that. And then as far as what the guidance contemplates, I mean, it basically contemplates the trends we're seeing right now. I mean we're working to improve those, but that is probably going to take a little bit of time. And I think this is a prudent guidance given the trends we have right now.

Got it. That's helpful. And then I also wanted to hit on NEXUS here. So, you talked about working towards closing the acquisition. Just wanted to understand from this point forward, what you're doing as you work up to Jan 1, 2027 in terms of building out the commercial infrastructure from here, whether it be hiring and whatever else is required. So if you could just talk through sort of key next steps as you build to NEXUS, that would be great.

Yes. So, we're very excited about this NEXUS platform. As I mentioned in my comments, it's the third piece of the puzzle, right? It's AMDS, Arcevo, and NEXUS, and that really gives us a kind of a comprehensive portfolio for the Arch, we're basically going to have to do a few things to get ready.

Number one, we've got to go with through value analysis committees. So, as you've experienced with us with AMDS, it can take 4 to 6 months. So, we're going to use that time while we're doing that to do two things. One is building inventory and two is to hire dedicated clinical specialists for that. The good news about this is it's a very different market than AMDS in that there's only probably 100 accounts that are on our list to begin with. These are very high-end, high-volume accounts.

We know who they are, and we can cover that call point with not a lot of reps. So, we're going to start hiring reps. We've already got a couple, and we're going to start hiring more as we go through the value analysis committee. So that's really going to be the two main focuses once we close this transaction, getting ready for a January one launch.

Our next question comes from Frank Takkinen with Lake Street Capital Markets.

I was just hoping to get maybe a little bit more color on some of the reordering and versus maybe a plateauing of new accounts. Just trying to kind of really understand the concept there of is it a factor of really new accounts are starting to slow down or the reordering isn't yet occurring? Because it feels like we've had a really steep trajectory with some of the initial ordering patterns and then we're just waiting for the reordering? Or is it the new ordering starting to plateau?

Yes. Let me clarify. So we've started using this term starter sets, right, which is basically account that doesn't have AMDS. To get AMDS, they need to purchase four devices for $100,000, right? That is not kind of a normal practice. A lot of business will consign units or sell them lot of trunk stock. We are having hospitals they have to acquire four units.

The other piece of the equation is the actual implants of the existing accounts. So those actually went quite well, and we're ahead of our plan. So, we're very encouraged and pleased by the adoption of the technology of the accounts have purchased. What we're working on now is we've got a lot of accounts out there that have AMD kind of in the queue, and we're working through trying to get the units on the shelf.

There could be a number of different barriers, whether it's the IRB or just the 100,000 upfront purchase getting someone. So, we're working on programs to kind of minimize and need that anything.

No, I think that's, yes. So, I mean, in summary, there's the upfront $100,000 investment. And then every time that device gets used, they need to reorder a device. So, we call that the initial 1000 is a set sale and everything after that is implant sales. So, implant sales went great. They were actually ahead of our expectations and all the feedback we're getting on those is fantastic. What we're running into is some barriers into getting this upfront $100,000 investment for a number of different reasons. We talked about the PMA and the IRB. There's also financial considerations. So, we're putting things in place now to try and help overcome those barriers, and we think we'll see a reacceleration of that set sales.

I think the other point on that, the $100,000 upfront lands on a financial person's desk and can get stuck there for a while. I think the thing that's very interesting about this is with the DRG-209 for complex arch work, there's very strong reimbursement for AMDS. But as you know, it takes a while to get that information disseminated out to the account. So, we're also working on making sure they have good visibility to the publicly available information on DRG-209 and what that means to their procedural billing.

Got it. That's very helpful. And then maybe as a second one also on NEXUS. How should we think about kind of growth trajectory of this product? I know we've spoke about in the past that there's potentially a little bit more training upfront, but obviously, very novel, expect a strong growth trajectory coming out of that. So maybe how should we kind of think about that as we're looking at 2027? And then is there a point in time that you can see that $8 million incremental cost be kind of offset by revenue that you're thinking about as you're thinking about the ramp?

Yes. So, I think one of the things that's clear about this technology is that the vascular surgeons, they've got a lot of patients that aren't being treated right now because there's no option, right? These are patients that are too sick for cardiac surgery, and we now have a solution in the arch to treat those patients. They also adopt technology very rapidly because they really have had no, they've got a significant need.

So, I think really, it's just the building blocks, right? It's like we've got to get through value analysis committees, which you're experienced with. We've got to train the surgeons. We've got to hire the team, and we've got to get the inventory in place. So, our goal is to really be ready to go by January one. And I think this technology has some real opportunity to drive growth for the company and also help a lot of patients along the way.

So obviously, I want to get some cases under our belt. We know that the technology is very well appreciated. But we think it's going to do quite well. We'll obviously give you more information as we go into 2027.

Yes. Maybe a little information on the $8 million.

Just one other thing on NEXUS is different than AMDS, there won't be any set sales. So our revenue will come from implants only. And then on the $8 million, just a little more color on that. It kind of is broken up into, I would say, 3three pieces. One is some additional costs related to getting ready to launch the product that won't carry forward into next year. There is R&D and clinical-related expenses that are just going to be incremental this year. But as we roll into '27, we will make that fit into our normal 7% to 8% of sales. So it's not really incremental if you think about it from a '27 standpoint. And then there are some expenses, just run rate expenses of the sales force and some G&A that will carry forward. And we think that will be covered by the actual NEXUS revenue that we have in the U.S. in 2027 and make it EBITDA neutral overall. So hopefully that makes sense.

Yes. I think one other point, Lance, on the supply chain for this product, it's very different than AMDS. We're not making people buy it upfront. These are, AMDS cases are acute Type A, which is an emergency. So you have to have the stock on the shelf. Chronic dissections are elective. So we have plenty of time beforehand to know exactly which size devices, and we'll ship them into the cases that will get paid at the case. So there's really going to be no stocking of the shelves and have that be a limiter. We're going to basically be able to support cases one by one as they need them.

Our next question is from Bill Plovanic with Canaccord Genuity.

I just wanted to unpack the AMDS a little more in some of the commentary. So one of the challenges that's been brought up multiple times is starter set, and you mentioned strategies to get around this. Are you going to ship the product to consignment? Or is the strategy, you believe the PMA is really going to open up that? And is there a backlog? And I guess what I'm kind of really trying to think back to, are we through the early adopter phase and now we're getting into a broader customer base, and it's just going to be a slower ramp for new accounts? And then lastly, on that list is what was the growth of the core stent business if you back out the AMDS, like it used to be about mid-teens. Kind of obviously, the growth came off a lot this quarter. Kind of what was that kind of core growth?

A lot there. Yes. Yes. So I would say we have plenty of hospitals. If you step back when we set the plan internal, our expectations for the year, we had plenty of accounts on our target list to hit the numbers that we set out. And like I said, we were pleased with the implants, the ongoing implants were ahead of what we expected.

So again, I think the challenges of getting into these hospitals this kind of upfront 100,000 purchase, we're not going to consignment. We could always have that be our last stop on the train, but that's not where we're going. We've come up with some programs to kind of address ways to address the barriers of this 100,000 upfront. We've got some programs for that.

We also mentioned the PMA that once the PMA is out, there's no longer an IRB, and we think that's going to be very helpful. So I think it's just really getting these accounts to kind of through these processes is what we're working on. And that's harder to control that timing than it is the actual implant timing. Do you want to.

Yes. And then on the, we don't break out the details on U.S. AMDS revenue as compared to all the international stent grafts. But I think you can tell just by looking at the geographic growth rates, the international growth was much lower than we typically expect this quarter for the reasons we've discussed. And you can also look at the North America growth rate, which you have to normalize a little bit for the comps in easy comps in Q4 and Q1. But if you do that, the North America growth rate is pretty similar in Q4 to Q1. So I think that would all point you to the slowdown was driven significantly by international, but AMDS U.S. starter set sales were definitely below our expectations for the quarter.

Yes. And then kind of on that same topic is I think when we started out in the launch in the first quarter last year, talked about 140 targeted accounts. And I think it was like 600 full potential, and that was opening up over time. Can you give us anything on kind of what you feel the targeted number of accounts will be in total or where you are targeting today, kind of how far you've penetrated that? Just so we get an understanding of if there's 600 hospitals, are you in 150 or are you in 600 and then it's all resale from reuse from here versus starter kits?

Yes. that's a good question, Bill. I mean we haven't broken that out. I mean, I think I would just say at this point, we still have plenty of opportunity to sell starter sets. I think as we move along, we'll consider giving a little more detail on that because at some point, that the starter set is a onetime revenue thing that won't repeat, and it's the implants that matter the most long term. So we'll consider giving you a little more information on that later down the line, but not breaking that out at the moment.

Okay. And just on NEXUS, you're pushing it to a '27 launch. Is manufacturing scaled and ready to go? Or is that something you need to really invest a lot in as companies transition from PMA approvals to commercial, sometimes that can be a challenge, but I believe this is being sold in Europe. So I assume that commercial is scaled, the manufacturing, but I want to ask the question.

Yes. So I mean, yes, they're manufacturing today. So it's not like they're going from no manufacturing to having to start because they've been manufacturing, we've been selling the product in Europe for over five years. But we do need to expand that and then we actually need to build the inventory.

I mean, as you can imagine, this company, they had an agreement with us essentially for us to acquire them upon PMA approval. They really had no intention of ever commercializing the product. They did not spend any money to build product for a U.S. launch like we would have if we had owned the business. So now there's a little bit of scale up, but mainly it's just, we just got to, these guys build the product.

Our next question is from Suraj Kalia with Oppenheimer

This is Shaymus on for Suraj. Just to start, I know we've kind of been hammering on AMDS, and apologies is going to keep in on that a little bit. But I guess, can you quantify kind of how many accounts are kind of deferring AMDS for this PMA approval? I mean, is this the first time you kind of called it out? Has this been kind of an ongoing trend you've seen and now it's kind of just coming more to ahead? Or anything on that? And just with that, should we expect kind of a bolus once you kind of get this PMA approval in this? Is it kind of been once they kind of get that $100,000 bill of the starter set that they say, 'hold on, we want to wait until maybe PMA?' Or just any color there you can give?

Yes. No. So let me take that. Like I said, we've been saying for, I think, pretty much every quarter that we didn't really see the PMA as a big catalyst for good growth. I think what's happened is what we've seen is, I'll give you a great example. We have to go to an IRB in a hospital and the surgeon has to take four hours of training. And surges like when are you going to get the PMA, it's like sometime in the second quarter. So they guys like, well, I'll just wait. I'm not going to do four hours of training for this IRB, right? It's just a practical thing. We do have a number of accounts. We're not going to get specifics on how many accounts are this, how many accounts are that. But we do see the PMA two quarters ago, it really didn't matter. But now as it gets closer, I think people are not wanting to do the work for the IRB, and we see that as an opportunity when it comes out, and that's contemplated in our guidance.

Got it. I appreciate that. And then kind of just on the cross-selling opportunities you guys have had with On-X via, it's been about a year. Obviously, you've kind of seen that. Any difference you've been seeing kind of in physician utilization for those? Are they kind of ramping up on a similar curve that you've seen for those that you've taken on? Or is it kind of just been something that kind of added to our portfolio, but it's been, I'd say, minimal at best?

Yes, it's a great question. I think it really speaks to our strategy. We are a valve company that treats patients under 65 with Ross and with On-X, and we're an Aortic Arch company. And if you think about our interactions, I just came from ATS. I met with 20 top aortic surgeons. They were involved in the PERSEVERE trial. They're involved in ARTIZEN. They were involved in the TRIOMPHE trial.

So if you think about it, we're going to be, if you fast forward kind of go through even the next three quarters, we're training AMDS centers and we have these kind of AMDS trainings. We're going to have NEXUS trainings, and we bring the heart surgeon and the vascular surgeon. All of those events, we have ARTIZEN investigator meetings. All of those events are ways for us to continue to build our relationship with the aortic surgeons, both on the cardiac and vascular side and deliver our messages across all of our products, whether it's On-X for bioprosthetic, whether it's AMDS in acute Type A or whether it's NEXUS in the arch, it's very kind of complementary, right?

It's all about the aorta. And I think the more we do, just the more powerful that we become. So, we're already seeing the cross-selling, but it's just going to get better because we're going to do, our first NEXUS training will have 25 centers with 25 vascular surgeons and 25 cardiac surgeons. I always go to present and we'll talk about AMDS, we'll talk about On-X. So again, I think it's just, we're surrounding the cardiac and vascular surgeon for the arch.

Our next question comes from Jeffrey Cohen with Ladenburg Thalmann.

Two from us. I guess you did touch upon it with NEXUS, but I wanted to know any updates as far as the commercial organization, both U.S., EU and perhaps Japan, W2s and 1099s as far as trends, puts and takes for, say, the balance of this year that we should anticipate.

And this is for NEXUS Jeff?

Well, you addressed NEXUS. I was thinking of everything else.

Yes. I mean I think, Jeff, same thing said that Pat talked about we're going to have to hire some specialists for NEXUS. But other than that, I mean, sales force adds would be, I mean, fairly limited across the globe and still highly leverageable with our focused sales force.

Yes. And just a couple of points on NEXUS, right? I think I mentioned earlier, our initial target is like 100 accounts. We can cover that with a pretty small team, a dedicated team because they are elective cases, and we can cover those out of kind of central locations. We do have, as part of this acquisition, we do have a relationship with a distributor in Japan, who's got a dedicated team on the ground and is very good. So, we've already got the commercial infrastructure in Japan. We just have to work through that approval process. And again, like I said, we haven't owned the company. So, we really are just starting those conversations now, but that's pretty well developed.

Got it. Okay. And as a follow-up, can we touch upon the tissue business. It was a strong quarter. I know it was extensively comp last year. But could you talk about that a little bit as far as any puts and takes or trends on the balance of the year? And maybe any commentary on cardiac versus vascular, loss procedures, et cetera?

Yes. Maybe I'll take that one on the preservation. I think we told people to kind of think about that as a $24 million a quarter business. We obviously did a little bit better than that this quarter. I think that's great. I would put that within the realm of normal quarterly fluctuations. So if it's a little bit less in the future quarter, I wouldn't read anything into that. As long as it's kind of in the ZIP code of that $24 million and averaging out to that to the year, that would be in line with what we expect. So this quarter was good. It would be great if we can keep that going, but don't be surprised if it dips down a little bit in future quarters.

Our next question comes from Mike Matson with Needham & Company.

I guess just starting with AMDS, I mean, I understand the commentary around consignment and these $100,000 sets. But I guess, why not put it on consignment? I didn't really hear you address that. Is it just tying up too much of your company's capital and the inventory that will be sitting on hospital shelves? Or is there some other reason that you're requiring the hospitals to have this big expense to get started?

Yes. I mean I think, look, you can always flip the consignment, you can never flip back, right? It's an emergency case. They need it on the shelf. It needs to be there. It's a differentiated product, has incredible reimbursement. And we think it's something that they should stock. And that's how we launched the product. We have a lot of accounts that have made the purchase. I think we just kind of hit a point where we're starting to see as we get further down the list, some resistance to that, that we had not seen in the past. And now it's just our job to overcome that barrier, right?

I mean it's been great if we've seen it earlier. But now we see it. We have multiple levers that we're pulling to try and get over those barriers. And I'm sure we'll run into additional ones as we move along, and we'll come up with solutions for those as well. But we're not going to throw in at the first time of resistance. We need to work to overcome the barrier.

No, I was just going to say, I mean, to Lance's point, it's extremely compelling data. We have a device that can turn a non-malperfusion patient or malperfusion patient into a non-malperfusion patient, both in terms of mortality and restore blood flow. We have a device that eliminates in which carries a 20% difference in reoperation or 30% difference in reoperation at 10 years and a 20% difference in mortality at 50 years. I mean it's like super compelling data.

It's an emergency. There hasn't been an innovation in the space in 50 years, and it's got the best DRG in the market. Like you should buy those, and we're working on it. So again, it's a fair point, but I think the most important one is like once you do it, like we ever started doing that in whatever field, like they never stop.

Yes, I understand. Okay. And then on the international issues in stent grafts, you called out the Middle East as well as distributor destocking in some of the other regions. So, can you, I know you're probably not going to quantify them in terms of dollars, but which of the two is bigger? Is it Middle East the bigger problem? Are they similar in terms of the impact?

Yes. It was about half and half. I mean, clearly, we didn't, we have a pretty significant business in the Middle East, and we obviously didn't contemplate what's going on there to have an impact and it did. We also had some supply chain things in the quarter that we weren't anticipating. So I think the combination of those two things was not something we had planned on.

Yes. Okay. And then the revenue guidance, the 7% to 11% organic, or sorry, constant currency, does that, what are your assumptions there about the AMDS sets and then the international stent graft sales? Is it, are you assuming any improvement? Or is it maybe like no improvement at the low end and some improvement at the high end of the range or something like that?

There's definitely some improvement expected for AMDS set sales. It's just at a rate that was lower than it was originally anticipated. And so I think rough numbers, if you want to think about the guidance reduction, think about half of that is kind of AMDS set sales and half of that is international stent grafts. And the international stent grafts is kind of split roughly evenly between the Middle East situation and the supply chain situation that we're working through.

Our next question comes from Danny Stauder with Citizens.

Just for my first one on AMDS, just on the reordering behavior. Good to see that, that was strong. But could you expand on any trends here? Why has usage been more than you expected? Are multiple surgeons utilizing at some of your larger accounts? Or just anything more here about what's going on or some dynamics would be great.

No, it's actually, it's a good question because I mean, one of the things that's really interesting, we knew it, but it's something that we're working on as well, which is typically, what happens is you have a surgeon come from an account who goes to the training program and he goes back and starts to implant. But then he starts to train his partners or his partner goes to a training program. So in a lot of these bigger centers, there's two or three or four guys that do these acute type A dissections in the middle of the night. And we trained in hospital, but there's four people that take calls. So we're also having to train more and more surgeons. So again, it takes time, but that's what I think we're seeing is that it's spreading in the accounts. So when we open account, if you have one guy using and all use, you get more usage. So we were pleased with the reorder pattern in the quarter was ahead of our expectations.

Great. And just following up on that, could you remind us if there's any different margin contribution from reordering sales compared to initial orders because gross margins were still pretty strong during the quarter despite some of the AMD starter softness. So just trying to get a hold of the dynamics here. And any more color would be awesome.

Yes, there's no meaningful difference in gross margin in both are also.

Our next question comes from Keith Hinton with Freedom Capital Markets.

Great. I just have one on On-X and then one on NEXUS. So for On-X, can you talk a little bit about the current usage, how that splits between younger patients and older kind of before this data came out and then where it is today? Yes. And then I'll follow up.

Yes. So we, unfortunately, we don't get like real-time data on like where the surgeon puts a valve and sends us a postcard and tells us how old the patient was, right?

We just, we've got historical data of roughly kind of where our patient populations are. So real time, that's not something we have access to. I can tell you, just based on, like I said, I just came from ATS, there's lots of conversation about these papers that have been published showing a mortality benefit to mechanical valves in patients under 60 and almost a 20% reoperation benefit at 10 years in mechanical valves versus tissue valves under 65.

So we're in the process of getting that data out, and we are definitely growing our share in the bioprosthetic space, which previously we had not. So I think that the fact that a lot of our growth is coming from kind of, when you say older, it's like 50- to 65-year olds because our focus is under 65, and that's really the segment we're going after.

Great. And then just on the go-forward plan for NEXUS, can you talk a little bit about whether there are plans to bring the Duo and Tre into the U.S.? And if so, what are kind of the regulatory steps required there? And then logistically, do you see it as an issue to have a custom-made product coming from Israel into the U.S. just in terms of lead times?

Yes. So a couple of things. It's obviously still early. We don't own the company yet. We're in the, we triggered our option. So we just have to do the kind of customary paperwork to close the transaction. But we've already been working with their team. We've got great collaboration across the two companies.

So we are planning on bringing the Duo tray to the U.S. It will require, we have not met with the FDA on it yet. So this is just kind of my kind of spitballing, but it will require a clinical trial. It's a, we will have an off-the-shelf version. I think what's new is that we will have an off-the-shelf version, not a custom-made version. So that's, I think, some of the innovation there. So we're in the process of working on the timing of that, what that looks like, and we'll give an update on our pipeline once we've acquired them and digested it and are able to kind of come back to you guys with an updated pipeline.

We have an additional question from Bill Plovanic with Canaccord.

Just there's been some discussion on supply chain challenges, and it sounds like that is going to continue to impact going forward for the comments. So I was just wondering if you could unpack that and help us understand more of what exactly it is? What's the, have you ring-fenced the issue? What's the solution? And what's the timing?

Yes. So we're not get into a ton of detail, but I'd say we have ring-fenced the issue. It has somewhat to do with our supplier network, but we've got our arms around that. We feel confident about solving it, but it will take a little bit of time. And the time to solve it is what is contemplated in our guidance. But it's not, I'd say it's, we've moved on into execution of the solution stage, if that makes sense.

And how much of your portfolio does it impact?

It's not broadly across the graft portfolio. It's specific to a small number of products.

Mr. Mackin, we have reached the end of the question-and-answer session. I'd now like to turn the call back over to management for closing comments.

Yes. Well, thank you for joining the call, and we're super excited about the Endospan transaction, and we'll be working to close that. And I think this is an exciting day for the company because it's kind of the final piece to the puzzle of our Aortic Arch solutions. We have AMDS approved with an HDE in the U.S. right now. We're hoping to get PMA in midyear. We've got NEXUS just got FDA approval, and you heard about our plans to launch that. And we've got ARTIZEN that's enrolling ahead of schedule, which is our next. We've got three PMAs in the arch, one approved, one about to be approved and then one on its way. So very excited in what that means for the company and appreciate your support as we continue to build this aorta company.

Thank you. This concludes today's call. You may disconnect your lines at this time. And we thank you for your participation, and have a wonderful evening.

Good afternoon, and welcome to the Artivion Fourth Quarter and Year-End 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Lynn Morgan from the Gilmartin Group. Thank you. You may begin.

Thanks, operator. 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, COO and 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. Comments made on this call that look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include statements made as to the company's or management's intentions, hopes, beliefs, expectations or predictions of the future. These forward-looking statements are subject to a number of risks, uncertainties, estimates and assumptions that may cause actual results to differ materially from these forward-looking statements. Additional information concerning certain risks and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today. You can also find a brief presentation with details highlighted on today's call on the Investor Relations section of the Artivion website. Lastly, I'd like to remind you to please refer to our press release published earlier today for information regarding our non-GAAP results, including a reconciliation of these results to our GAAP results. Unless otherwise stated, all of our comments today will be using our non-GAAP results. Additionally, all percentage changes discussed will be on a year-over-year basis. Revenue growth rates will be the adjusted constant currency rates and expenses as a percent of sales will be based on adjusted revenues. Now I'll turn it over to Artivion's CEO, Pat Mackin.

Thanks, Lynn, and good afternoon, everybody. 2025 was a highly successful year for Artivion, during which our team made meaningful progress against our strategy designed to drive long-term growth, profitable growth through our expanding and clinically differentiated product portfolio. I'm pleased to report that for the full year of 2025, total adjusted constant currency revenue growth was 13% and adjusted EBITDA growth was 26% year-over-year. This enabled us to deliver positive free cash flow for the year while also investing significantly in future growth and operational excellence. Our progress through the year culminated in a strong fourth quarter with performance driven by continued growth across our entire product portfolio led by stent grafts and On-X.

As a reminder, during the fourth quarter of 2024, stent graft and Preservation Services businesses were negatively impacted by the cybersecurity incident. With that in mind, from a product category perspective, stent grafts grew 36% on a constant currency basis in the fourth quarter compared to the same period last year. Year-over-year growth was again driven in large part by AMDS in the U.S., continued strong growth in stent grafts internationally as well as an easier year-over-year comp due to last year's cyber incident. We see our stent graft portfolio as a foundational component of our growth, and we are encouraged by the continued strong results across the portfolio. Looking ahead, we intend to replicate our proven strategy by bringing additional stent graft products that are already generating revenue in Europe to the U.S. and Japan, which we believe will unlock further meaningful expansion of our stent graft total addressable market.

Also in Q4, our On-X revenues grew 24% year-over-year on a constant currency basis. Growth was driven by our continued global market share gains and early traction in our new $100 million U.S. market opportunity unlocked by recently published data. As previously discussed, the clinical evidence supported by 2 leading journals demonstrated improved outcomes with mechanical versus bioprosthetic valves for younger patients. As a result, we maintain a strong conviction that On-X is the best aortic valve on the market for patients under the age of 65 and that we'll continue to take market share worldwide in that product line. In Q4, tissue processing revenue, which was the category most heavily impacted by last year's cybersecurity event, increased 6% year-over-year on a constant currency basis. Lastly, BioGlue was relatively flat on a constant currency basis compared to the same period last year. As we have discussed previously, we expect to see some variability in the growth rates of BioGlue quarter-over-quarter, driven by the significant amount of stocking distributor business in that product line.

In addition to our strong financial performance, we continue to advance our clinical programs and pipeline. Recently, in January, we saw positive new clinical data from the AMDS PERSEVERE and NEXUS TRIOMPHE trials presented at the STS Annual Meeting in New Orleans. First, the 2-year data for AMDS PERSEVERE trial demonstrates continued clinical benefits of AMDS after 1 year, including minimal additional mortality and morbidity, no additional unanticipated aortic reoperations and the continued absence of aortic tears. These data build on the positive findings from the 30-day and 1-year readouts, further supporting the life-saving nature of the AMDS technology, which represents our nearest-term PMA opportunity. While the HDE enables us to sell AMDS in the U.S. ahead of the PMA approval, we remain focused on securing the PMA for AMDS. We are pleased to report that we recently filed the fourth and final module with the FDA, keeping us on track for FDA approval in mid-'26.

Second, our partner, Endospan, presented 1-year data from the U.S. IDE trial for its NEXUS aortic arch stent graft system. This trial is the first FDA IDE trial for the endovascular treatment of chronic dissections in the aortic arch and is focused on patients at high risk for open surgery. The data highlighted 94% of patient survival from lesion-related death and 91% of patients were free from stroke at 1 year post treatment in this high-risk patient group. The data also showed 97% of patients were free from interventions due to endoleaks. In our discussions with physicians at STS, surgeons generally expressed that they believed that the 1-year results were extremely promising. Based on these positive outcomes, we believe NEXUS remains on track for approval in the second half of 2026.

Lastly, on our pipeline, we continue to make progress on the ARTIZEN trial for our Arcevo LSA product. We now have 8 patients enrolled in our trial, which is a nonrandomized clinical trial consisting of 132 patients in the U.S. and Europe and up to 30 centers for treatment of aortic dissection and aneurysm. The combined primary safety and efficacy endpoints assess the reduction in all-cause mortality, new permanent disabling stroke, new permanent paraplegia or paraparesis, unanticipated aortic reoperation in the treated segment and subclavian artery occlusion. We anticipate completing the full enrollment in mid-'27. We are optimistic that the trial will be successful, supported by the positive clinical results from our current generation frozen elephant trunk, AVITA OPANEO, where outside the U.S. following our 1-year follow-up period, we're assuming that the trial meets its endpoints, we anticipate FDA approval for our Arcevo LSA in 2029, unlocking an incremental $80 million in annual U.S. market opportunity.

In conclusion, 2025 was a standout year for Artivion, and our strong financial, clinical and regulatory execution position us well for continued growth in 2026 and beyond. We remain confident in our ability to deliver sustainable double-digit revenue growth, drive EBITDA margin expansion and grow adjusted EBITDA at twice the rate of constant currency revenue growth over the long term. With that, I'll now turn the call over to Lance.

Thanks, Pat, and good afternoon, everyone. Before I begin, I'd like to remind you to please refer to our press release published earlier today for information regarding our non-GAAP results, including a reconciliation of these results to our GAAP results. Additionally, all percentage changes discussed will be on a year-over-year basis, and revenue growth rates will be in adjusted constant currency unless otherwise noted. Total adjusted revenues were $118.3 million for the fourth quarter of 2025, excluding the Italian payback adjustment, up 18.5% compared to Q4 of 2024. Meanwhile, adjusted EBITDA increased approximately 29% from $17.6 million to $22.7 million in the fourth quarter of 2025. Adjusted EBITDA margin was 19.2% in the fourth quarter of 2025, an approximately 110 basis point improvement over the prior year, driven by leverage in SG&A.

For the full year, total adjusted revenues were $443.6 million, up 13% compared to full year 2024. Adjusted EBITDA grew 26% for the full year, twice the rate of adjusted revenue growth. This resulted in an adjusted EBITDA margin of 20.2%, a 190 basis point improvement from 2024. Before the detailed review of our results, I would like to comment on the impact of the Italian government's payback legislation to our 2025 financials. You may be familiar with this as it impacts a number of medical device companies. In 2015, the Italian government passed legislation requiring medical device companies that supply goods and services to public Italian hospitals to pay back a portion of their revenue when regional health care spend exceeds specified budgets. The applicability of this law was subject to extended legal proceedings and after years of litigation, the Italian government proposed a settlement for fiscal years 2015 through 2018, which became effective in Q3 of 2025. The impact on us for those fiscal years was minimal.

Subsequently, to address the ongoing impact of the law in years after 2018, during the fourth quarter, we recorded a $2.3 million adjustment to revenue for the estimated payback obligations for fiscal years 2019 through 2025, which has been excluded from our fourth quarter and full year adjusted revenue. I want to highlight that while we are subject to this law after 2025, the quarterly impact is expected to be immaterial compared to this cumulative adjustment for 2019 through 2025. We do not expect to adjust for this payback moving forward unless there are significant changes to prior period estimates. To further contextualize our underlying fourth quarter performance, I'll provide additional details on our results, excluding the impact of the 2024 cybersecurity incident. As previously disclosed, the incident had a negative impact of approximately $4.5 million on Q4 2024 revenue, approximately $2 million in stent grafts and approximately $2.5 million in tissue processing. As a result, we estimate that our underlying business grew 13% for the fourth quarter of 2025, adjusted for impacts associated with the cyber incident and Italian payback.

With that, I will now move on to our Q4 results. From a product line perspective, stent graft revenues increased 36%, On-X grew 24%, tissue processing revenues grew 6% and BioGlue revenues were flat in the fourth quarter of 2025. As previously discussed, the cyber incident primarily impacted our stent graft and tissue processing revenues. Excluding the previously discussed impact of the cyber incident from our prior year results, our fourth quarter stent graft revenues increased 28% and our tissue processing revenues declined 4%. I would like to note that tissue processing growth for the full year declined 3% compared to 2024. This came in below our expectations, driven primarily by the lingering impact of the cybersecurity incident in Q1.

Moving now to our regional performance. Revenues in Asia Pacific increased 32%, North America increased 18%, EMEA increased 17% and Latin America increased 9%, all compared to the fourth quarter of 2024. Q4 gross margins were 63% in both 2025 and 2024. As a reminder, the 2024 gross margin was negatively impacted by approximately 2 percentage points by an idle plant charge due to the cyber incident. The 2025 gross margin was negatively impacted by roughly 1 percentage point from the Italian payback adjustment and was also impacted by certain manufacturing inefficiencies that we do not anticipate to repeat in 2026.

General, administrative and marketing expenses in the fourth quarter were $56.8 million compared to $51.4 million in the fourth quarter of 2024. Non-GAAP general and administrative and marketing expenses were $53.5 million or 45.2% of sales in the fourth quarter compared to 47.5% or 48.8% of sales in the fourth quarter of 2024, reflecting a 360 basis point improvement. Approximately 200 basis points were driven through leveraging existing infrastructure and approximately 160 basis points were from stock-based compensation. Our as-reported expenses included a gain of approximately $2.9 million in Q4 associated with the cybersecurity incident, which are excluded from adjusted EBITDA, reflecting a $3.2 million insurance reimbursement for costs we incurred in previous periods.

R&D expenses for the fourth quarter were $9.1 million or 7.7% of sales compared to $7.4 million or 7.6% of sales in the fourth quarter of 2024. and as expected, an uptick in spending from previous quarters this year due to the start of the ARTIZEN clinical trial. Interest expense net of interest income was $5.2 million as compared to $9.4 million in the prior year. Other income and expense this quarter included a nominal amount of foreign currency translation losses. Free cash flow for the full year was above expectations, coming in at approximately $1 million despite continued investments in our business, including onetime cash payments of approximately $20 million related to the previously disclosed purchase of 2 Austin facilities in the fourth quarter. We previously anticipated one of the buildings closing in Q1 2026, but we were able to accelerate that close to close in Q4.

As of December 31, 2025, we had approximately $64.9 million in cash and $215.1 million in debt, net of $4.9 million of unamortized loan origination costs. At the end of the fourth quarter, our net leverage ratio was 1.8, down from 3.8 in the prior year. And now for our outlook for 2026. Please note that this outlook excludes any impact from the potential acquisition of Endospan. We expect constant currency growth between 10% to 14% for the full year 2026, representing a reported revenue range of $486 million to $504 million. This guidance contemplates FX to have an insignificant impact on our as-reported revenue for the full year.

On a segment basis, we expect similar business dynamics to be in place in 2026 as there were in 2025 with a few items to note. First, we will be in year 2 of the AMDS launch, resulting in more difficult comps as the year progresses. Second, our tissue business fluctuated a fair amount quarter-to-quarter due to the impacts of the cyber event. Overall, the business was relatively flat for the full year. And at this point, we feel it's prudent from a planning perspective to assume that, that business will remain flat in 2026. Given these factors, we expect full year 2026 tissue revenue to be relatively flat compared to the full year 2025, year-over-year BioGlue growth to be in the mid-single digits, On-X growth rates to be in the mid-teens and stent graft growth rates to be in the low 20s.

As it relates to quarterly cadence, we expect growth in the first quarter of 2026 to outweigh growth in the rest of the year. This is driven by an easier Q1 comparison due to lingering revenue impacts in Q1 2025 from the cybersecurity incident. -- tougher comps in the second and third quarters due to the recovery of the tissue backlog and tougher On-X and AMDS comps starting in Q2. Altogether, this results in Q1 constant currency growth rate towards the high end of our full year range with lower constant currency growth rates for the remaining quarters, and we expect the second through fourth quarters to have fairly similar constant currency revenue growth rates.

With our continued top line revenue growth and general expense management, we expect full year 2026 adjusted EBITDA to be in the range of $105 million to $110 million, representing a range of 18% to 22% growth over 2025 and approximately 150 basis points of adjusted EBITDA margin expansion at the midpoint of our ranges. Additionally, we expect gross margins to improve by approximately 50 basis points, driven by mix benefit from U.S. AMDS and U.S. On-X sales growth. We also expect approximately 200 basis points of leverage from SG&A, partially offset by an expected 100 basis point increase in R&D as a percentage of sales. Altogether, this results in EBITDA growth at the midpoint of our range that is slightly below our target of 2x our revenue growth rate.

The primary driver of this is an increase in R&D spend from 7% of sales in 2025, which is at the low end of our targeted range to approximately 8% in 2026, which is at the high end of our targeted range. This is driven primarily due to timing as we had minimal clinical trial expenses in 2025 and expect a full year of ARTIZEN trial-related expenses in 2026. Although there will be some variation in R&D as a percentage of sales from year-to-year, we do not expect it to be this significant going forward. On interest expense, we expect 2026 to be more consistent with our fourth quarter exit rate following the midyear 2025 refinancing. We also expect free cash flow to be slightly positive for the full year 2026. Lastly, we expect CapEx to be approximately $50 million in 2026, up from $39 million in 2025.

We see a long runway for On-X growth globally based on the growing body of clinical evidence supporting the use of mechanical valves in younger patients and On-X's differentiated low INR indication. Accordingly, we are investing in facilities, equipment and systems to ensure we can efficiently support that growth over the long term, resulting in elevated CapEx in 2025 and 2026. In general, our business is not capital intensive, and we expect CapEx to moderate in subsequent years. In summary, we are pleased about our 2025 performance and are excited about the prospects of the business in 2026 and beyond. With -- with that, I will turn the call back to Pat for his closing comments.

Thanks, Lance. So we're very pleased with our '25 performance and our position entering '26, which reinforces our confidence of our growth strategy is working and delivering the results we envision. More specifically, we expect future growth to be driven by the following key growth drivers. First, AMDS HDE. We're commercializing AMDS in the U.S. and continue to penetrate the $150 million annual U.S. market opportunity with new clinical data and reimbursement dynamics likely adding as a further tailwind. Number two, On-X heart valve data. We are educating health care providers on the new clinical data showing a mortality and reoperation benefit in patients under 65 years of age compared to bioprosthetic valves. This is a new $100 million annual U.S. market opportunity that we'll be pursuing with the only mechanical aortic valve that can be maintained at a low INR of 1.5 to 2.0.

Number three, the NEXUS PMA. We are pleased with the positive new 1-year clinical data from the NEXUS TRIOMPHE trial, which we believe, assuming we exercise our option to acquire Endospan, this will bring us one step closer to being able to access the annual U.S. market opportunity for this device of $150 million. And fourth, the ARTIZEN IDE trial. We continue to make progress on our third-generation frozen elephant trunk called our Arcevo LSA and the clinical trial, which represents an incremental $80 million annual U.S. market opportunity. Finally, I want to thank our employees around the globe for their continued dedication to our mission of being a leading partner to surgeons focused on aortic disease. With that, operator, please open the lines for questions.

[Operator Instructions] Our first question comes from Bill Plovanic with Canaccord Genuity.

I think what I'm trying to get my head around is just the Italian clawback obviously kind of skews the numbers a little. So my questions are going to roll around that is, first is, I assume that's in OUS, not U.S., because your U.S. growth was in the high teens. I assume that was hit by the preservation services growth. But I'm trying to figure out, did it flow through any specific products? Kind of how did it? It sounds like it also impacted the P&L. And then I think what I'm really trying to get at, given the growth rate year-over-year, I think the U.S. was a little lower than what we would have expected given how strong the stent graft business was. And I'm trying to -- it goes into the AMDS question on sell-in versus sell-through there. I know there's a lot in that, but it's kind of -- the Italian stuff kind of might be throwing some of the numbers off.

Yes, Bill, let me maybe try and clear up some of the details around the Italian payback. So first of all, yes, it was in OUS, specifically in the EMEA line. Second, it was reported in other line item of revenue. So it did not impact any of the big 4 line items. So it's not skewing that growth rate that we discussed in any way, shape or form. So hopefully, that's helpful. And then if you look at the U.S., really, honestly, if you just step back and look at the growth rates for the business from Q3 to Q4, almost whatever you're looking at, the main difference is just the tissue business. And that business, if you take out the impact of the easy comp of the cybersecurity event, the growth rate was quite a bit lower in Q4 versus Q3.

Okay. And then just really kind of the final thing is just any commentary you can provide on the sell-in versus sell-through on the AMDS. And I mean, you lifted -- you expect continued guidance, I think, well above our expectations on the AMDS and On-X. So that's a good trend, but I'm just -- a lot of people are focused on this.

Yes. So we don't -- I guess we typically don't break out the details on AMDS specifically even in total for revenue. And so we also don't break out the details on the new account start-ups as opposed to the actual implantations. Other than I think we'll say the implantations are continuing to grow, and they're continuing to go really well. I think, again, I've said this a lot of times that it's just important that, that first experience for a surgeon is a good one. And so far, that's been going really, really well.

Our next question comes from John McAulay with Stifel.

I wanted to start off back where Bill was on AMDS. Very helpful color on just how the year plays out. Just hoping for a little more color in the sense of how much is left to go here. Earlier last year, I think you mentioned target accounts and accounts that you were in at that point. How much progress have you made on that front? And what should we be expecting as 2026 plays out and you gain the full FDA approval?

Yes, Lance, I'll take that. So I think it's important. It's a good question, right? If you want to make this the analogy to like baseball, like we're in the first inning. I mean, we launched the product like right out a year ago, had to go through all these value analysis committees that take 6 to 9 months. So really, 2025 was the year of opening accounts, and we had implants. But we're already starting to see those accounts implanting, but we were probably only in 10% of the accounts. So in '26, we've got the opportunity to continue to open new accounts, but also get implants in the accounts you already opened, right? So it's -- I think it's very early for AMDS, and that's why we're bullish on 2026 and driving the growth there.

Yes. That's very helpful, Pat. And just broadly on NEXUS, there was some impressive data coming out of STS. Just wanted to get your general reaction there and maybe help frame this market opportunity for us again. I believe there's an approved somewhat similar competitive device in this market. Can you talk about how big the market is today and what NEXUS can do to, one, help you gain share in that space; and two, help expand the market beyond its current size?

Yes. So you're correct. There's one product approved in the market. They got approval last like May or June. So this is kind of a nascent market. From my conversations with clinicians, I mean, this is a -- particularly the trial kind of showed that, that these are patients that were at very high risk of open surgery. There's a category called ASA, which kind of characterizes the risk of a patient with all the different comorbidities and 2/3 of these patients or actually like 70% of these patients were ASA 3 and 4, which would tell you that most surgeons are not going to operate on these patients. So I mean, a good analogy is like the early -- kind of the early TAVR was started in patients who couldn't withstand surgery and then all of a sudden, it started going other places. So we see this as a platform technology. We say that the U.S. market is $150 million. It will take us some time to penetrate that. But it's a very unique technology, and we think we're extremely well positioned. I had a chance who saw the presentation. I think that this device will be very competitive in the U.S. market compared to the other player. We think they're on track for a PMA approval in the second half. And this just further goes to our focus in the aortic arch, whether it's AMDS or NEXUS or our ARTIZEN trial with Arcevo LSA. So it's -- I think it just shows the company's commitment to bringing aortic technologies to these surgeons so they can treat their patients. So I do think this is a first step in a very exciting new space.

Our next question comes from Suraj Kalia with

Our next question will be from Jacob Melanjek with Oppenheimer.

This is Jacob on for Suraj here actually. I guess, first off, could you talk to us about how you're thinking about pricing for AMDS and by extension, NEXUS? Have you seen relative price sensitivity of demand that your assumptions of $25,000 for AMDS and $50,000 for NEXUS are still seen as the right levels?

Yes. I think it's an important point. These are cutting-edge life-saving therapies, first of their kind, that happen to come with a very favorable reimbursement background. So that is not something we see at all in this space.

Got it. And then just on your guide, what are the assumptions of the 10% to 14% CAGR? How can we stress test the conditions for either end of that spectrum?

Well, I think it's -- if you look at kind of our history, I'll let Lance chime in here in a second. But we've got -- he gave you a pretty clear direction. We think tissue is going to be -- we're going to forecast tissue flat this year because we saw it last year, it took a while to recover on the cyber. We're going to be prudent. We think glue is going to grow in the mid-single digit, and we think On-X is going to grow mid-teens, and we think stents are going to grow in low 20s. So it doesn't -- those are the things that, particularly the On-X, I think half the portfolio, I think we feel very comfortable with. We understand the tissue and the BioGlue. I think on the upside, how successful are we driving the On-X message into the marketplace? And can we grow faster than that and same with AMDS, opening more accounts and getting more implants. Those are the 2 that can move you up very quickly above those ranges, which are going to drive the growth rate to the higher end of the range. Lance, do you want to comment?

Yes. No, I was going to say the same thing. Those are the 2 things that are newest and are big opportunities and have a wider range of possible outcomes. And we're obviously going to be doing what we can to maximize both of them.

Our next question comes from Frank Takkinen with Lake Street Capital Markets.

Nelson on for Frank. Congrats on all the progress. Maybe just to start, I wanted to ask about the DRG code that went live October 1. Any measurable acceleration in VAC approvals or shortening of the time frame from IRB to first case? Just any color there would be helpful.

Yes. We weren't seeing -- prior to the October 1 implementation of DRG 209, we weren't seeing the economics as a barrier. We weren't -- again, whether it helped accelerate things, I certainly think it makes it a much easier conversation, although I think hospitals were doing fine before the new DRG. So I think I would just say it's a tailwind for us. I don't know, Lance, do you have any thoughts?

Yes. I've yet to run into anything that significantly accelerates hospital bureaucracy. So I can't wait for the day when it happens, but they have a lot of DRGs that they sift through and a lot of products and their value analysis committee kind of -- it moves at the pace that it moves. So -- but obviously, the new reimbursement is a great fact when we do get in front of the value analysis committee, and I think it will be helpful when we get on the agenda.

Got it. That's helpful. And then apologies if I missed it, but you mentioned last quarter, you haven't launched formal marketing to formal marketing program to cardiologists for On-X. Any sense of timing on that, if you haven't started that already? Or how should we think about that as a potential lever on top of everything else you have going for you with On-X?

Yes. I think that gets back to the question that was asked by the previous person, right, which is your range of 10% to 14%. The 2 things that stand to outperform are On-X and stents because it's really the biggest opportunity. We see both of these as kind of 5-year opportunities and how fast we drive the adoption, we'll see. We're obviously going to do as aggressive as we can. But there's a lot of cardiologists out there we have to educate, and we've got several programs in place to deliver the message to the cardiologist, the referring cardiologist -- so it will take time. And we'll have a lot better sense this year when we start doing these programs and understand how many cardiology groups we get to and how the message resonates and how the growth rate moves forward. So I'm very optimistic because the market research, particularly on the On-X, when we talk to the referring cardiology, these are the cardiologists that refer to the implanting surgeon. When we review the 2 papers that show a mortality and reoperation benefit in patients under 65 for mechanical versus bioprosthetic and we show them the On-X low INR data that nobody else has got, they were wildly positive to the point where they were going to refer On-X valves by name, branded, which you don't see very often. So again, we're very excited. We just got to execute. And I think it's a multiyear program, but we'll have a better grip as we kind of move through '26.

Our next question comes from Mike Matson with Needham & Co.

Yes. So I guess, starting with AMDS, when you do get the PMA, do you expect that to have any impact on the growth at all? Like would it maybe help a little or not make a difference?

I mean I think the real meaningful change is just the main requirement of an HDE is you've got to get a local IRB at the hospital, which out of the blocks was a little confusing, but we figured it out. So it's the administrative stuff. So that will go away. But we don't feel like it's going to change -- meaningfully change. I mean the opportunities here with the HDE. It just gets rid of some of the red tape and bureaucracy of the IRB.

Okay. Got it. And then where do things stand with getting AMDS into Japan? I mean looking at your slides, I think you were saying by the end of this year.

Yes. So Japan typically pegs off the PMA. So that clock is going to start once we get the PMA in the U.S. So we should have an update probably midyear on AMDS Japan once we get the PMA in the U.S.

Okay. All right. And then just for the CapEx, I think, Lance, you said $50 million, $50 million. Is that right for this year? And that's a pretty big step up from what was already a pretty big step-up last year. So is that all just really to support the capacity expansion for On-X?

Yes. I mean I'd say primarily the higher levels both years are primarily related to that. I would say also just we have upticked our own internal investment in IT systems to help drive better efficiency going forward than what we had done in the past. And I've told investors before that at the moment, if there's an opportunity where we can invest capital to either improve revenue or SG&A leverage, then I'm really interested in doing that. And so a lot of it is often, but not all of it. And so I do think if you look into '27, '28, I would expect the CapEx to come down from where it is. I would not expect it to go back to where the historical levels were '24 and previous, but I would expect it to come down meaningfully.

Our next question comes from Daniel Stauder with JMP Securities.

So first one, just on On-X, another really strong quarter. I wanted to ask if -- are you still seeing the same level of cross-selling benefits with AMDS that you've mentioned in the past? And are there any trends you're seeing in terms of these newer surgeons in their On-X utilization? Just really trying to get at what you were seeing with some of these physicians that you added earlier in the year.

Yes. No, I think we're expecting that to be an ongoing kind of benefit, right? So if you think about it, there's 1,000 centers in the U.S. that do acute Type A dissection. They also do aortic valves. So we're not selling On-X valves to all 1,000 centers. And for whatever reason, up to now, we hadn't had relationships with some of these surgeons, and they become interested in AMDS, they come to training, the rep gets to know them and then we show them the data. And I've had dinners with a number of these surgeons and after the dinner conversation with the new data and the low INR and they go back and switch. So I think they kind of go hand in glove, right? As we continue to open new AMDS accounts and continue to build relationships with these aortic surgeons, we're going to get the message out on On-X, both to the surgeon as well as to the cardiologist. So I think that cross-selling is going to be an ongoing thing for the next couple of years as we continue to open up AMDS accounts.

Okay. That makes sense. That's helpful. Just one more for me. Focusing on NEXUS, could you tell us a little bit more about the eventual commercial process here? Is it really just the same playbook as AMDS? Or do you expect the training and learning curve could be more or less intensive? Any more color on specific nuances to the eventual NEXUS commercial rollout would be great.

Yes. They're very kind of opposite devices. If you look at on a continuum, AMDS is extremely easy. The training requirement is really we can do it at a bench top with a pig valve or pig heart. Every aortic surgeon can do it. The learning curve is like 1 case. It adds 5 minutes to the procedure. So that really is kind of like a nirvana from a product launch because it's just -- it's so easy. I would go to the other end of the spectrum, NEXUS is easy in that category, but these are highly trained vascular surgeons that are only in the biggest centers. So AMDS can be used in 1,000 centers. NEXUS is probably a couple of hundred centers. There's going to be extensive training because it's all endovascular in the arch. It's the first device that's been trialed in chronic dissections. So I think there will definitely be a more intensive training. We'll have to cover every case with a rep. And so they're very different, I would say. And again, I think we're well prepared for it. In some ways, it makes it a lot easier because it's not as many centers, and those centers are going to do a lot of volume. So -- and they're all, like I said, highly trained highly skilled vascular surgeons are already kind of skilled in the art of doing this. So we just have to train them on how to use this technology.

Mr. Mackin, we have reached the end of our question-and-answer session. I would now like to turn the call back over to management for closing comments.

Yes. Well, thanks for joining our Q4 call. And I hope you can hear in our voices, we're super excited about '26. We think we've got a great opportunity to drive both our commercial business with the On-X on the new clinical data and AMDS with the new data. We think we're going to get the PMA from AMDS halfway through the year, and we think we're going to get -- NEXUS is going to get their PMA in the second half. And we've got our trial enrolling on our Arcevo LSA, and we expect that to be our next PMA in '29. So that's kind of our business model, which is a new PMA every 2 years to keep the double-digit growth and EBITDA twice as fast over the long term. So we appreciate your attention and support of the company. Look forward to the next call.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Good afternoon, and welcome to the Artivion Third Quarter 2025 Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Lynn Morgan from the Gilmartin Group. Thank you. You may begin.

Thanks, operator. 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, COO and 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.

Comments made on this call that look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include statements made as to the company's or management's intentions, hopes, beliefs, expectations or predictions of the future.

These forward-looking statements are subject to a number of risks, uncertainties, estimates and assumptions that may cause actual results to differ materially from these forward-looking statements. Additional information concerning certain risks and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today.

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

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

Thanks, Lynn, and good afternoon, everyone.

I'm pleased to report another strong quarter of financial and operational results in which we delivered total constant currency revenue growth of 16% and adjusted EBITDA growth of 39% year-over-year.

Further, we continue to make good progress in each of our key clinical and pipeline initiatives, which we believe will drive continued growth in the near term, medium term and long term.

Our Q3 performance was enabled by continued growth across our product portfolio with stent grafts and On-X valves acting as significant growth engines.

From a product category perspective, stent graft revenues grew 31% on a constant currency basis in the third quarter compared to the same period last year. Continued sequential growth was again driven in large part by AMDS as we benefited from growing early adoption and initial stocking orders. We see our stent graft portfolio as a foundational component of our growth strategy, and we are encouraged by these strong results with AMDS.

Looking ahead, we intend to replicate our proven strategy by bringing additional stent graft products that are already generating revenue in Europe to the U.S. and Japan, unlocking a meaningful expansion of our total addressable market.

Relative to the AMDS U.S. launch, we're very pleased with the market enthusiasm since we received the HDE in late 2024. Feedback from early adopters remains exceptional, and we're seeing more and more customers moving through the 3-step process, including IRB approval, VAC analysis and company-required surgeon training prior to implanting an AMDS under the HDE. Our early success reflects both the dedication of our existing sales force and the still growing body of positive clinical data validating the unparalleled clinical benefits of AMDS.

With respect to new clinical data, we were very pleased to see 2 late-breaking science sessions highlighting the favorable data regarding our AMDS technology at the recent EX Annual Meeting in Copenhagen in October. Late-breaking data from our AMDS PERSEVERE trial highlighted the positive benefits of AMDS beyond the region treated by the stent for the subset of patients with preoperative visceral and renal malperfusion.

The results continue to demonstrate the benefit of patients with malperfusion even in subsets of malperfusion. Also at EX, late-breaking data from our AMDS PROTECT trial reported real-world outcomes from our European and Canadian multicenter registry, demonstrating excellent 3- to 6-month results consistent with those from AMDS PERSEVERE and the DART studies.

Notably, there were no occurrences of paralysis paraphoresis, aortic rupture, myocardial infarction as well as over 95% of the patients showed positive remodeling with the true lumen diameter increasing or remaining stable in Zone 1 to 3. These data build upon our prior positive findings and further support lifesaving -- the life-saving nature of AMDS.

Lastly, on AMDS, we're very pleased to see that CMS recently established a new MSDRG DRG-209, specifically for complex aortic procedures. This code was made effective on October 1, 2025, and reflects a meaningful increase to the reimbursement available to health care providers for these procedures. We believe this improved rate of more actively reflects the clinical necessity and complexity of these cases as well as the hospital resources required to deliver life-saving treatments such as AMDS.

We expect this will strengthen our economic value proposition even further, improve patient access and act as an incremental tailwind for -- for already adopting these trends.

Overall, we're encouraged by the early commercial traction of AMDS, our expanding base of clinical evidence and the reimbursement updates and an even stronger value proposition for this life-saving technology. We're excited to continue growing AMDS revenue as we further tap into what we estimate to be a $150 million annual U.S. market opportunity, the vast majority of which is already unlocked through the HDE with limited competitive alternatives.

Alongside AMDS, On-X continues to be another major growth factor in 2025. In Q3, we delivered exceptional results in our On-X business with revenue growing 23% year-over-year on a constant currency basis. Growth was driven by continued global market share gains supported by On-X unique clinical profile as the only mechanical aortic heart valve that can be maintained at a low INR of 1.5 to 2.0.

Based upon the proven clinical benefits of the On-X aortic valve as well as the growing body of evidence supporting the use of mechanical valves in younger patients, we maintain our strong conviction that On-X is the best aortic valve in the market for patients under the age of 65, and we'll continue to take market share worldwide.

In the U.S., we are benefiting from expanding awareness and adoption of our On-X valves, driven by positive new data as well as cross-selling opportunities from our AMDS launch. This dynamic, in particular, reinforces our conviction in our innovation-led multipronged growth strategy and further strengthens our confidence in both our near- and long-term outlooks for growth and profitability.

In line with that strategy, in anticipation of continued growth, we've taken meaningful steps in the third quarter to expand our On-X operational footprint. During the quarter, we entered into 2 real estate agreements to purchase 2 facilities in Austin, Texas. The first facility where we currently lease and occupy serves as the basis for our On-X manufacturing operation and includes about 75,000 square feet of combined manufacturing, administrative, laboratory and warehouse and office space.

Meanwhile, the second adjacent facility allows us to expand our footprint in Austin as our capacity needs continue to rise in the coming years. We expect these facilities to provide long-term capacity for the On-X business.

Ultimately, we remain confident in the growth trajectories of our stent graft and On-X businesses where we continue to focus our investments on maximizing and sustaining our growth momentum.

Beyond these growth engines, we also are maintaining a strong position across our highly differentiated and highly defendable base businesses, tissue processing and BioGlue.

In Q3, tissue processing revenue increased 5% year-over-year on a constant currency basis. As a reminder, a significant portion of our tissue revenue comes from our SynerGraft pulmonary valves for which demand largely outstrips supply every quarter, and therefore, we hold no inventory.

At this point, we believe tissue processing volumes have normalized following the disruption caused earlier this year by the 2024 cybersecurity event. As a result, we expect full year '25 tissue revenue to be relatively flat compared to 2024 with mid-single-digit revenue growth expected for the full year of '26 and beyond.

Meanwhile, BioGlue grew 1% in Q3 on a constant currency basis compared to the same period last year. As we've discussed previously, we expect to see some variability in the growth rate of BioGlue quarter-over-quarter, driven by the significant amount of stock and distributor business in this product line. On an annual basis, we expect BioGlue to grow in the mid-single-digit range.

In summary, we're encouraged by our third quarter commercial performance driven by our unique portfolio of highly differentiated PMA-approved products. Looking ahead, we're advancing a robust pipeline of high-margin innovations that we expect will unlock approximately $1 billion of incremental market opportunity over the next 5-plus years.

Our nearest-term PMA opportunity is for AMDS. While the HDE enables us to sell AMDS in the U.S. before obtaining the PMA, we are focused on securing the PMA for AMDS. To date, we've successfully -- we've already filed 3 of the 4 modules, keeping us on track for FDA approval in mid-2026. As for NEXUS, Endospan is expected to present its 1-year data from its U.S. IDE trial Triumph for the NEXUS device at the upcoming STS Annual Meeting in late January.

Assuming the data shows the trial endpoints have been met, NEXUS remains on track for approval in the second half of 2026. In Q3, we took strategic steps to strengthen our balance sheet in anticipation for a potential Endospan acquisition by refinancing our existing credit agreement to extend its maturity to 2031. We also secured more favorable interest rate and gained access to a new $150 million delayed draw term loan facility.

Lastly, on our pipeline, I'm pleased to announce we recently enrolled our first patient in our pivotal trial called ARTIZEN. As a reminder, in July, we received investigational device exemption approval IDE, for the FDA to begin our U.S. pivotal trial, Arcevo LSA, which is our third-generation frozen elephant trunk used to replace the entire aortic arch. The trial will evaluate the safety and effectiveness of Arcevo in the treatment of acute and chronic Arch pathologies and will enroll 132 patients in up to 30 sites. We are optimistic that the trial will be successful, supported by the positive clinical results from our current generation Frozen elephant trunk, [Indiscernible].

In conclusion, we believe our accelerated top line growth at 16% constant currency, the positive new late-breaking clinical data presented at EX for AMDS, the establishment of the approved DRG-209 for AMDS, all serve as clear validation of our strategy and the strength of our unique innovative product portfolio and pipeline.

We look forward to continuing to build on our momentum as we close out the year and remain confident in our ability to deliver sustained double-digit revenue growth while growing adjusted EBITDA at twice the rate of constant currency revenue growth.

With that, I'll turn the call over to Lance.

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

Additionally, all percentage changes discussed will be on a year-over-year basis, and revenue growth rates will be in constant currency unless otherwise noted.

Total revenues were $113.4 million for the third quarter of 2025, up approximately 16% compared to Q3 of 2024. Meanwhile, adjusted EBITDA increased approximately 39% from $17.7 million to $24.6 million in the third quarter of 2025.

Adjusted EBITDA margin was 21.7% in the third quarter of 2025, and approximately 320 basis point improvement over the prior year, driven by improvements in gross margin and leverage in SG&A.

From a product line perspective, stent graft revenues increased 31%, On-X grew 23%, tissue processing revenues grew 5% and BioGlue revenues grew 1% in the third quarter of 2025.

On a regional basis, revenues in North America increased 19%, Asia Pacific increased 18%, EMEA increased 12% and Latin America increased 10%, all compared to the third quarter of 2024.

Our as-reported expenses include approximately $700,000 in Q3 associated with the 2024 cybersecurity incident, which are excluded from adjusted EBITDA. While we have sought insurance reimbursement for some of the costs we've incurred since the incident, this process will take some time. We will exclude any insurance proceeds we receive from adjusted EBITDA as well.

Gross margins were 65.6% in Q3 compared to 63.7% in the third quarter of 2024. This reflects an approximate 200 basis point increase from 2024 due primarily to favorable mix from AMDS HDE revenues in the U.S. and the exceptional On-X growth, particularly in the U.S.

General and administrative and marketing expenses in the third quarter were $57.3 million compared to $50 million in the third quarter of 2024. Non-GAAP general and administrative and marketing expenses were $53.6 million or 47.3% of sales in the third quarter compared to $46.6 million or 48.6% of sales in the third quarter of 2024, reflecting a 130 basis point improvement while funding our AMDS HDE launch costs.

R&D expenses for the third quarter were $8.1 million or 7.1% of sales compared to $6.6 million or 6.9% of sales in the third quarter of 2024, reflecting consistent investment in our pipeline as a percentage of sales.

Interest expense net of interest income was $5.9 million as compared to $8 million in the prior year. Other income and expense this quarter included foreign currency translation losses of approximately $100,000.

Free cash flow was $17.7 million in the third quarter of 2025. Free cash flow for the full year is anticipated to be impacted by a onetime cash payment of approximately $12 million during the fourth quarter and $8 million in Q1 2026 related to the opportunistic purchase of 2 facilities in Austin. To reiterate Pat's comments, we view these purchases as a prudent long-term investment in our operational infrastructure.

Owning these assets allows us to avoid potential future rent escalations, reduce long-term occupancy costs and ensure stability and long-term capacity for our On-X manufacturing operations.

With this opportunistic $12 million purchase, we now expect to be slightly cash flow negative for the full year 2025, but we anticipate being free cash flow positive in 2026 despite the expected $8 million Q1 payment. As of September 30, 2025, we had approximately $73.4 million in cash and $214.9 million in debt, net of $5.1 million of unamortized loan origination costs. At the end of the third quarter, our net leverage ratio was 1.8, down from 3.9 in the prior year.

In regards to the recently amended credit facility, we are pleased to have extended the maturity date by 1 year to 2031 while also securing a more favorable interest rate. In addition, the amendment provides us with optional access to a new $150 million delayed draw term loan facility, which enhances our financial flexibility and positions us well to pursue the potential acquisition of Endospan, assuming receipt of FDA approval for NEXUS. As a result, we expect to realize an annualized reduction in interest expense of approximately $1.5 million.

And now for our outlook for the remainder of 2025. We are raising the midpoint of our full year 2025 revenue and adjusted EBITDA guidance. We now expect constant currency revenue growth between 13% and 14% compared to the previous range of 12% to 14%. We expect reported revenues to be in the range of $439 million to $445 million compared to our previous range of $435 million to $443 million, reflecting greater confidence in our overall growth outlook. This guidance range reflects our current estimate that currency will have a slight favorable impact to full year 2025 as compared to 2024.

With our continued top line revenue growth and general expense management, we now expect full year 2025 adjusted EBITDA to be in the range of $88 million to $91 million representing a 24% to 28% growth over 2024 compared to the previous guidance of 21% to 28% and approximately 200 basis points of adjusted EBITDA margin expansion at the midpoint of our ranges.

Lastly, I would like to discuss 2026. We will provide 2026 guidance in February during our Q4 earnings call, but I did want to provide you with some directional comments as you think about next year. In general, we expect the same dynamics to be in place for the business in 2026 as there are in 2025 with 2 exceptions.

First, we will be in year 2 of the AMDS launch, resulting in more difficult comps as we progress throughout the year.

Second, on the expense side, we will have a full year of our CVO trial costs. Ultimately, we still expect to continue to drive double-digit revenue growth with adjusted EBITDA growing at twice the rate of constant currency revenue growth.

With that, I will turn the call back to Pat for his closing comments.

Thanks, Lance. So to close things up, we're very pleased with our third quarter results, which reflect strong execution, sustained momentum across our core product lines and meaningful progress of our pipeline.

We continue to deliver significant top line growth, expanding adjusted EBITDA at twice the rate while strengthening our balance sheet and investing in long-term growth. As we enter the final quarter of the year, we remain confident in our ability to drive continued performance by leveraging our differentiated portfolio, global infrastructure and targeted commercial strategy.

More specifically, we expect future growth to be driven by the following growth drivers: number one, the AMDS HDE. We're commercializing AMDS in the U.S., starting to penetrate the $150 million annual U.S. market opportunity with new clinical data and reimbursement dynamics likely to act as a further tailwind to growth.

Number two, On-X heart valve data. We're educating health care providers on the JAK clinical data showing mortality benefit in patients under 60 compared to bioprosthetic valves. This is a new $100 million annual market opportunity that we are pursuing with the only mechanical valve -- aortic valve that can be maintained at a low INR of 1.5 to 2.0.

Number three, the NEXUS PMA. Endospan is expected to present 1-year clinical data from the late clinical trial in late January 2026, which would, assuming we exercise our option to acquire Endospan, bring us one step closer to being able to access the annual U.S. market opportunity of $150 million.

And fourth, the Arcevo LSA IDE trial. The first patient was recently treated with our third-generation frozen elephant trunk device, Arcevo as part of our U.S. IDE trial.

Finally, I want to thank all of our employees around the globe for their continued dedication to our mission of being a leading partner to surgeons focused on aortic disease.

With that, operator, please open the line for questions.

[Operator Instructions]. Our first question comes from John McAulay with Stifel.

I wanted to start off with the comments you made about 2026. Just want to make sure I'm fully understanding. So from an Arcevo perspective, just any kind of general sense of what this trial is going to cost on an annualized basis?

And two, from -- as you mentioned, AMDS, tougher comps, understandable. But on the other hand, the dollar contribution should be much stronger. It seems like sort of small contribution beginning this year ramping through the end of this year. So I just want to get a better sense of what you mean exactly by tougher comps in that sense. Does it imply slower growth? So sort of 2 parts, Arcevo and AMDS would be helpful to start.

Sure. So on our CVO, we've said repeatedly, we think we can fund our pipeline, investing in R&D at a rate of 7% to 8% of sales on an annual basis. This year, realistically, we're going to come in towards the very low end of that range, but we're only going to have a few months of a clinical trial that is ongoing this year. Next year, obviously, we'll have a full year. And it's possible that could push that toward the higher end of the range.

So that would be something to keep in mind. And then on AMDS, I just -- I mean, just from a growth rate perspective, it's smaller numbers this year, but as compared to a prior year of 0. So obviously, that helps the growth rate quite a bit. And just recognizing as we move throughout the year, we are going to have actual numbers in the prior year when we think about what the actual contribution is to the growth rate and just making sure that everyone keeps that in mind.

Okay. Understood. And a follow-up on On-X, another quarter of sort of growth at 20-plus percent rate. Just want to get a sense from what you're hearing either from your reps or for direct conversations with doctors. It seems like we're in a mechanical valve sort of renaissance. We've done a few calls on it ourselves here. Just want to get a sense of what's driving the growth? Is it -- do you think it's share gain from competition? Is it some of the data you've cited? What's going on there?

Well, I think it's both. I mean we've shown over the last 8 years, we've taken market share every year because we're the only product that has an aortic valve with a low INR indication from the FDA. So that was kind of already in the works, and we are continuing to kind of -- we've been growing that business double digits for a long time. I think the new information, I think there's 2 other pieces. There's been some new clinical data we've talked about it, we've talked about it previously. A paper came out in January that presented at STS published in JAK that showed a mortality benefit in mechanical valve patients in favor over bioprosthetic valve patients in patients under 60.

There was another paper that just came out last week in 140,000 patients showing a huge difference between -- and this is in patients under 65. The difference at 10 years from a totality or a reoperation the combined for 10 years for mechanical valves, like 87% of the patients didn't die or have a re-op and only 69% of the bioprosthetic valve patients didn't die or have a rep. It's like a 20-point real difference. So I think there's a real sea change in the feeling towards mechanical valves in these younger patients. And we haven't even -- I mentioned this on the last call, we've been focused on the AMDS launch in the U.S., and we haven't even really started our kind of marketing program to cardiologists. And we know that they're very excited about the clinical data that we have with On-X as well as the data that's coming out in these big series because it's better for patients. So I think we've got a very exciting growth opportunity here with On-X.

Our next question comes from Frank Takkinen with Lake Street Capital Markets.

Congrats on the quarter. I was hoping I could start with some more commentary around the new DRG that was in place. Maybe speak to what it was previously? Was there an economic challenge with it previously? Where is it now? And does it solve that challenge? And then as an extension to that, I appreciate you just launched the product, but is there a pathway to get some ASP expansion out of the product over time under the new DRG?

Yes. So let me start high level. I mean, so when CMS looks at these changes in reimbursement, basically, what they've done here is it reflects when they look at a procedure, the high cost and complexity of an advanced aortic arch procedure. So they recognize this is a very complex area. There's a lot of cost, a lot of work that's done in the replacement and repair of an aortic arch. As it relates to this wasn't a big challenge from the economics equation.

However, we've been going through value analysis committees. So certainly, that will be more of a tailwind going forward if they'll be less constrained by cost. I think the final point is, I think this new DRG reflects the value of our portfolio of products across the complex aortic arch. This new DRG-209 kind of covers that whole ARC segment, and I think it validates kind of our strategy in that complex area.

Got it. Okay. That makes sense. And then maybe just talking a little bit more about NEXUS. I heard the comment that you're on track with the second half '26 approval is the expectation still. Maybe talk through thought process around exercising that option versus not. Anything that you're still waiting to see? Or is it pretty much at this point if you feel like the approval goes through as intended, it to exercise the option and carry forward.

Yes. So I'm not going to tell you what we're going to do. I mean this is an option. Clearly, we've set everything up. I mean, I think all the pieces are set up. The next piece of information is going to be the 1-year data presented at STS at the end of January. They're currently under review with the FDA on their PMA. We've been telling people for the last probably 2 years that we think it's going to be second half of '26. And when they get FDA approval, we will make the analysis at that time whether we buy them or not.

We also -- as you heard in our debt facility, we now have a $150 million delayed draw term loan, so we can acquire them. We've got the money to acquire them.

I don't know, Lance, if you would add anything.

No. I mean I think we're optimistic about the process that things aren't improved to they're approved and labels aren't labeled to their labels, and we'll have to evaluate it at that point in time.

Yes. I will say from a clinical standpoint, I've had a chance personally to talk to a number of the investigators and cardiac surgeons, vascular surgeons, there is a lot of excitement about the Nexus technology. This is a platform. It's not just one product. There's multiple products behind it. So we're very excited by it, but we're not going to tell you what we're going to do as it's not appropriate.

Our next question comes from [ John Young ] with Canaccord Genuity.

Congratulations on a great quarter. I wanted to just go back to AMDS. Is there any way to think about the strong results you saw in the quarter in terms of the aortic stent graft business in terms of sell-through versus sell-in for the product?

Yes. I mean I would say just in general, you have to get the product on the shelf before you can get it used in a surgery. So right now, the majority of the revenue really continues to be heavily weighted towards that initial stocking. But as you can imagine, we're every month seeing the number of implantations increase. And obviously, that's super important part of the future is getting that adoption rate up. So right now, honestly, the revenue is still heavily weighted towards the initial stocking, but with positive exciting ramp to the implantations as well.

And I would say also more importantly, the feedback from these early adopters on the surgeries has been excellent.

I appreciate that. And then is there any way to quantify just what inning you are in terms of that 600 center initial target you guys gave for MDS in terms of stocking?

It's pretty early.

Got it. And if I could squeeze just one more in. BioGlue China, should we expect any stocking in Q4 from that launch?

We've been -- well, as you can imagine, China is challenging under any normal circumstances, and the world has gotten weird in that regard over the past year. So we've kind of just told people to think about that as an incremental opportunity that's going to help us get to our mid-single-digit annual growth rate targets and to not really think about that as an incremental uptake. And so I would advise you to continue to think about it that way.

Our next question comes from Suraj Kalia with Oppenheimer & Co.

Congrats on a nice quarter.

Lance, many calls going on. So if you don't mind, I'll just pose both of my questions upfront. Pat, for you, a 2-part question. And forgive me if you've already highlighted this, just how you size -- how should we size the Arcevo market?

And Pat, what are you hearing about the PARTNER-III 7-year, especially the SAVR arm performance? Any color there would be great.

Lance, to you, AMDS, obviously, the stent graft business is strong. I'm just curious how we should think about AMDS performance. I think you had said earlier 100-plus sites. Just size up AMDS for us in the quarter because we had roughly around $5 million to $10 million contribution for the year. So help us guide where AMDS should land up.

Yes. Thanks, Raj. I'll take the Arcevo one first. So our sense of the frozen elephant trunk market in the U.S. is about $80 million. So that's just the U.S. segment, which Arcevo would be our first product in that segment when that gets -- hopefully gets approved. So that's the first question.

The second is the 7-year data from PARTNER III that was presented at TCT. I think there's a bunch there. I'm not going to get into the nuances of the specific trial, but I think I have some big picture comments about the results and how to put them in context vis-a-vis what matters to the Arm-- so the first thing which you know well is the average age of that trial was 73 years old. The lines for SAVR and TAVR are already bumping up against each other. People were worried they were going to cross. So you're right there already at 7 years.

Our focus on patients is under the age of 65 with our product portfolio, both with On-X and our SynerGraft pulmonary valve. If you look at the life expectancy for a 65-year-old in the U.S., it's like 20 years. So if you're struggling to kind of cross the lines at 7, why on earth would you be getting this technology if you're under 65 years old. I think that's really the important takeaway message.

And even more importantly, these 2 papers that have come out recently, and I know you're very familiar with the JAK paper from January, there's another one that came out that's published in animals and 140,000 patients I just mentioned earlier. But there's now 2 huge papers that whether it's under 65 or under 60, it's showing that the mortality and reop rates from a tissue valve and mechanical valve in patients under 65 is significantly different in the benefit of mechanical valve. So it's not even -- when you start talking about TAVR at a 73-year-old, when we already know that under 65-year-olds just don't do well with tissue valves. I think that's kind of my -- how I position that trial relative to our patient population and our technology. Lance?

Yes. And then on AMDS, we've said previously, we're not going to break out U.S. AMDS performance specifically. But a couple of things. Obviously, we had a very nice acceleration in the stent graft. -- growth rates this quarter, safe to assume that AMDS was a huge factor -- AMDS in the U.S. was a huge factor in that acceleration.

Also at the beginning of the year, we were pretty clear that the swing factor in whether we come in toward the higher end or the lower end of our original guidance range was likely to be the AMDS U.S. launch and how well we did with that early on. I'd say we've consistently narrowed our range to the high end each quarter. And I think it's also safe to assume that, therefore, AMDS is trending towards the high end of our original expectations of what we could do in year 1. So I think lots of positive things to point to without actually giving you a number. And I think you should assume that it's going well.

Our next question comes from Mike Matson with Needham & Co.

This is Joseph on for Mike. Just a quick one on AMDS and then maybe gross margin question.

Can you just remind us, I don't know if you've actually given a time line, but the expectations for AMDS internationally? Well, I guess, in China and in Japan because I guess it is available in Europe and Canada, I believe. But just targets there for the Asian markets.

So we haven't really spoken about China. We have spoken about Japan in the past and just in general, bringing our products to the Japan market post the U.S. market. So usually, there is a little bit a year or so time frame post receiving your PMA approval to get into the Japanese market, and then you also need to work on reimbursement. So step 1 is for us to get our U.S. PMA, and we're obviously working thinking ahead on that Japan PMA, but that's kind of the first step there. Then we would move towards trying to get approval in Japan and then trying to get reimbursement in Japan.

Okay. Yes, that's clear. And then I guess, Lance, just given what you discussed on, I guess, AMDS comp being a headwind, more or less a headwind in 2026. I'm just wondering if you could frame for us what growth would look like in 2026. Is it mid-teens, the high teens, low teens? I guess, is it anywhere in that range depending on how the launch goes?

And then real quick, I just wanted to get a little bit more color on gross margin. Obviously, great improvement year-over-year. But even looking sequentially, third quarter versus second quarter, pretty similar quarters even with the revenue splits, but there was substantial gross margin improvement. Is that just more AMDS and less BioGlue? Yes. Any color there would be helpful.

Yes. Maybe I'll take the gross margin first and then talk about '26. My numbers here is about a 50 basis point improvement sequentially from Q2 to Q3, so -- which was -- and it's similar from Q1 to Q2. That's really largely driven by mix AMDS, but also with On-X in the U.S. growing faster as well. Those are 2 of the highest gross margin products.

Honestly, BioGlue is a fantastic gross margin product. In general, less BioGlue is not a good thing from a gross margin standpoint. But with the strength of AMDS and On-X in the U.S., that's what's really driving that continued mix benefit, which is what we've talked about. That's an expectation as we go forward and we bring these products to the U.S. market, they should have substantially higher gross margins than our current corporate average and should allow us to continue to drive mix in gross margin for a while.

As it relates to 2026, we're not going to get into specifics right now. We'll give hard guidance in February, but I just wanted to give you a little bit of color. And I think mainly, I would focus on my first comment, which is we expect dynamics that are in place now to be similar dynamics that are in place in 2026. So I just want to make sure that people aren't thinking about this as an ever accelerating growth rate. We've had really good top line growth the last 2 quarters.

But I think if you kind of think about the way we think about annual growth for this year, I'm signaling annual growth for the full year this year is what I'm telling you is how you should be thinking about 2026 as well at this point.

Thank you very much for taking our questions and congrats on a very Strong quarter.

Our next question comes from Daniel Stauder with JMP Securities.

So first one for me on On-X. Great to see the growth here. But I wanted to ask on the cross-selling benefits. I think you noted last quarter that there was a large uptick in new accounts. Could you give us any color on these new users? I know it's early days, but are you seeing any notable utilization trends from these new surgeons? Are they converting their usage to On-X after initially using it? Just trying to get an idea of some of the stickiness with On-X and some of these new adds.

Yes. I mean I would just point to the growth rate. We had pretty similar growth rate in Q3 versus Q2, which I think is a very positive sign. We're very early on in this with the new data, but early signs are really positive. And again, I think maintaining that growth rate for 2 quarters is a good sign.

Yes, definitely. Great. Yes. Just one quick follow-up. So I know you -- also on On-X, I know you had said in the past that the first half growth really came without much marketing on your end, and I'm not sure if you touched on this, but is that still the case? And have you put more capital towards marketing the 2 data sets? And if not, when might that start? And how much more of a tailwind could that be?

Yes. I mean we're still getting spooled up on that. Now obviously, like we're in front of a lot of surgeons right now because of AMDS. And when we get in front of them, we're making sure that we are -- make sure they're aware of the data in that regard. We talk about marketing the data, we also need to get that information out to cardiologists, not just cardiac surgeons. That is a little bit longer lead time initiative, and I would say that really hasn't started at all. That's going to be probably more of a 2026 type activity.

Yes, the cardiologist piece, I guess, is what I was referring to. So appreciate it.

Our next question comes from Jeffrey Cohen with Ladenburg Thalmann.

So I wondered if you could dive into the Arcevo trial a little bit and give us a sense of what kind of pace on recruitment you expect in a little compare and contrast versus the current [Indiscernible]... and perhaps a sense of number of SKUs that you would expect as well.

Yes. So this is a -- the Neo device is currently available in Europe and a bunch of international markets. We had a product through our acquisition in that space for 20 years, and this is -- the ArceEvos the third-generation device. The really unique kind of differentiating factor, which has been patented and we have a license on is a subclavian branch, which again is technical, but it just makes the procedure easier and faster, which is really helpful in these really sick patients.

So this is like a 130-patient trial in 30 centers. It's roughly the same. It's kind of an equivalent trial to what we did with PERSEVERE with AMDS, a lot of the same centers, roughly the same numbers. We're not going to get into the details and stuff like that, but we've already started enrolling. We put a press release out this morning, and we expect to have sites kind of rolling on board and be enrolling over the next, I'd say, 12 to 18 months.

Okay. Got it. And then a quick follow-up, if you could. Besides pulmonary grafts, anything to call out specifically in the tissue business from the quarter, experience weaknesses or the areas of note?

Yes. So the tissue business is back to kind of normalized growth at 5%. We did note that we now expect the full year to be closer to flat than mid-single digits. We have, at this point, pretty much caught up all of the backlog that we had on releasing our very high demand tissue from the cyber event from last year. So that's all done. Honestly, like we are not going to quite see the 100% catch-up that we thought we did. We're going to be close, but we're not going to quite get back to mid-single digits for the full year. But we -- with the normalized run rate and what we're seeing on the donation side, we expect to get back to that kind of mid-single-digit growth next year. So that's kind of where we are on the tissue business.

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

Yes. Well, thanks for joining the call, and we're super excited about the results, 16% top line and 39% bottom line while reducing our leverage and with a great cash flow. I think just kind of shows the business model in action. We've got a couple of great growth drivers with On-X. We've talked a lot about it on this call with the low INR, the new data, the cross-selling with the AMDS trainings, AMDS with the new reimbursement code, DRG-209 and our new clinical data we just presented at EA.

So we're going to be driving the growth in those segments I think the last point I would make is really our business model is about bringing aortic innovations to the market. And it's basically setting up that every 2 years, you've got a new aortic technology come into the U.S. and then we'll take other places. ADS, obviously, we launched in '25. And then hopefully, with NEXUS getting approval and our acquisition of them, we launched that fully in '27, '28, and we're kind of finishing up that launch -- we'll be launching our CVO.

So just PMA after PMA after PMA, and then we've got a bunch more behind it. So this is a business model that's really just getting going. So we appreciate everybody's support and look forward to the next call.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful afternoon.

Perfect. Great. Thanks, everyone, for being with us. Before we start, just the disclaimer. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. And with that, we are here with Pat Mackin; and Lance Berry, CEO and CFO of Artivion. Thank you very much for being here with us.

Thanks for having us.

Yes, absolutely. Maybe before we take a deep dive into your recent performance, it would be great if you can speak a little bit to those unfamiliar with the audience, what Artivion is about? And if you could provide a brief overview.

Sure. I'll do a quick intro. So we're an aorta-focused company. Specifically, we have heart valves for patients under the age of 65. We have a number of products to treat aortic aneurysms and dissections. We're a little over $400 million. I think midpoint of our guidance is $440 million for this year and about a 20% EBITDA margin company. We have a portfolio of really highly differentiated PMA-protected products, and we have a pipeline of a series of additional PMA products.

And then from kind of a financial objective standpoint, what we tell people is our goal is to grow the business double digits for the foreseeable future and to grow EBITDA at twice the rate of sales. We have really good leverage opportunity. We have -- like most companies our size, we have a good opportunity to leverage G&A. We also have a leverageable sales force because our reps don't have to stand in all the cases. And then our pipeline of products really are for the U.S., and those will carry higher gross margins than our current gross margin average. And so we should have a gross margin expansion opportunity as well. So that's real high level on Artivion.

Awesome. I guess maybe diving a bit into your guidance. We -- obviously, you have your 2025 guidance out there. There's an implied acceleration in the second half of '25. Could you talk about what's driving your confidence that you're going to be able to accelerate in the second half of '25?

Yes. So there's a few things. Number one, and we said when we gave our guidance back in February, we launched AMDS under this HDE format. And getting through value analysis committees was going to take some time and that we expected each quarter to be better sequentially. So that would imply that you're going to have a better second half than first half.

So clearly, the AMDS launch is one of them. We've also got -- the fourth quarter comp is quite [ easy ], because that was our cyberattack last year. We've also got the On-X performance that you've seen post this new data, we expect to continue as well. I don't know if there's anything else you would add there?

Yes. I mean I think those are the big drivers.

Yes. Understood. And then you mentioned this at the beginning, but on top of the exciting growth, you're also saying that your EBITDA is going to grow at twice the rate. Maybe could you talk about what gives you confidence that you'll be able to meet that?

Yes. I think well, first of all, if you go back and look over the past couple of years, we pretty consistently had EBITDA margin expansion of 200 to 300 basis points each year, and that's really been with no gross margin expansion. And so we still feel like we have plenty of leverage opportunity in our sales and marketing and our G&A.

And then with AMDS, first of these pipeline products coming to the U.S. is significantly higher gross margin than our current average. Right now, a total company, we're about 65%. It's a 90-plus percent gross margin product. So now we're going to add gross margin expansion kind of into the formula, which is just going to make it easier for us to hit that 2x EBITDA growth target.

Understood. Maybe shifting a bit into your portfolio. So your mechanical valve business has seen some pretty durable growth. And I think most recently in the last quarter, you mentioned that a lot of the growth was driven by cross-selling opportunities from the initial AMDS launch. Could you maybe help us understand what exactly that means? And how should we look -- as we look forward, if we should continue expecting this?

Yes. So On-X has been a great story for the company and for patients. So I think there's probably 3 or 4 things that are driving the On-X. You mentioned one of them. So before the beginning of the year, we had -- so I think it was about a year ago, we presented the post-approval data in 500 patients, which showed an 87% reduction in major bleeding for the valve. We've done some research on that and showed that we continue to take market share. So we kind of already had that in our favor.

And then in January, we were surprised by a big paper, 109,000 patients that was presented back in January at STS. There was a paper that was published in JACC, the Journal of American College of Cardiology that basically showed that if you get a mechanical valve versus a tissue SAVR valve under the age of 60, the benefit from a mortality standpoint was towards mechanical valves. We were not involved in the paper. It was presented and published out of UCLA. That was an extremely positive piece of information. And we saw the market -- our business kind of take off right after that.

And then the third thing you mentioned is also the cross-selling. We're training all these surgeons on AMDS in 1,000 centers over the next several years. And when we get in front of them, we can present the data. So it's kind of the combination of the post-approval data, the JACC data, the cross-selling. And when you put that all together, it's -- we've been growing that business 13% a year for the last 10 years. And it just, I think, is going to allow us to continue to do that.

So do you think that, that sort of double-digit growth going forward is what people can expect?

Yes. We haven't given long-term guidance. But I mean, in February, we'll -- it's pretty new. I'd say the other piece of information on that is we didn't do anything in the second quarter from a marketing standpoint because we're obviously focused on the AMDS launch, and On-X grew 22% worldwide.

We have a big marketing campaign we're about to kick off to focus on getting that information out to cardiologists, which takes time. So it's -- we're 1 quarter in, but we'll be able to give further updates as we go through the upcoming quarters. But yes, it's certainly very positive and a real tailwind.

Perfect. Maybe you touched on AMDS. Can you maybe talk about what acute Type A aortic dissection is and how AMDS is going to fundamentally change the treatment paradigm?

Yes. So acute Type A dissection is -- it's a very -- it's acute. So it's a very emergency procedure a tear in the ascending part of the aorta. What happens is you get basically a false aorta and you have blood going down basically the wrong pathway and it's not getting to your brain, your kidneys, your spine and it is a very serious situation, roughly 1/3 of the people die and then almost 2/3 of the people either have some major issue, a heart attack, a stroke, paralysis or death.

And so that's the procedure. It's basically the same procedure that's been done for 50 years to remove the disease or the torn part of the aorta and replace it with a simple surgical graft. The problem is you still have blood going down the wrong areas of the aorta. And so AMDS is a really straightforward device. It's open surgery and under direct line of sight, you put AMDS into the aorta and then deploy the stent, and it pushes the wall of the true aorta back to where it needs to be and gets all the blood flowing into all the right places.

So we had pretty amazing results in the clinical study. And I think we've continued to see that early on in the launch in real-life application and I'm really excited about what the product can do longer term.

Could you maybe double-click on the clinical trial results? I know you mentioned they're positive, but maybe give us a little bit more context of what you saw in some of the data.

Yes, I can jump in. I mean the big takeaway, right, so in the trial was specifically done, it was the U.S. FDA trial. It was 93 patients against kind of the body of evidence that's been out there to date. mortality in a mouth perfusion, this is what Lance described is when blood is not going where it's supposed to go, mortality is about 35%. We showed a 9.7% mortality rate in the trial. So just on that, the stroke patients requiring dialysis, paralysis, all significantly lower. So really kind of across the board on all those endpoints, it's a life-saving, life-changing device.

Yes. Fair enough. And I guess now that with the launch ongoing, anything that you can tell us about how it's going so far? Any green shoots that we can look for to measure success?

Yes. So we gave a little bit of information on our first quarter call around the significant number of accounts that we had in the process of seeking IRB approval, which is a requirement of the HDE and getting through value analysis committee, which honestly is the longer lead time item most of the time. So we have a large number of accounts that are in the process. I think you can tell looking at our numbers, our growth rate accelerated from Q1 to Q2.

So I think there's some indication in the stent graft line in particular, where probably a larger contribution from AMDS. We didn't break it out specifically. We've also given, I think, most importantly, some qualitative comments around how the first implantations have gone. So we're getting [ patent ] feedback every time one of these things is being implanted in a patient.

And so far, really, all the results have been outstanding. We're really batten 1,000 right now. That won't always be the case. All med devices have some level of less than desired outcome. But right now, it's off to a great start clinically, which I think is probably the most important thing for long-term success.

Great. And as we think about the future regulatory pathway there, is there anything else that as we think about timing for the PMA, et cetera, are you...

No, we're basically -- we've got one module left, which we've communicated publicly that we expect it in Q2 of next year. So that would basically get the PMA. So the HDE would go away, which the only real change is we no longer have to have an IRB to get into a center.

So it's -- and you said middle of next year is when you expect it.

Yes.

Great. So maybe pivoting to another product that you just got FDA approval as well or you got approval to initiate the ARTIZEN trial, right? Can you maybe tell us about that and how you're thinking about the trial and timing, et cetera?

Yes. So the trial is called ARTIZEN and the product is called Arcevo. This is our third-generation frozen elephant trunk, which is basically a device that's used to replace the entire aortic arch. So it's for -- it can be for acute type A dissections, chronic dissections or aneurysms, anything that involves kind of the arch off the heart and the head vessels.

We've been a leader in that field internationally for a decade. We sell that product kind of around the world, not in the U.S. or Japan. And that's really what this trial is going to seek to get approval for. So it's about 125-patient trial centers in the U.S., Europe. We've got an approval to start the trial. The unique technology in this device is it's the very first device of its kind that actually has a branch that goes into one of the head vessels, which is called the subclavian.

We think that will actually make the procedure faster. And because these patients are on the heart-lung machine, it will basically reduce morbidity and mortality by speeding up the operation. So we hope to have our first implant in the second half of this year, before the year-end. And our clinicians are super excited about the technology. It's really a cutting edge -- another cutting-edge breakthrough aortic technology.

Great. And does it open any more TAM for any patient population?

Well, it will open TAM, obviously, in the U.S. and Japan, assuming we can get the -- we typically are able to use the U.S. trial to get into Japan, but we always have to have those conversations. But it clearly opens up those 2. And the other thing it does is it gets you FDA clinical data. We'll be able to take that trial and get that product approved in Europe. The predecessor product is already in Europe and in many other countries around the world, but we can take that FDA trial and get our Arcevo approved in many markets and market that data.

So I think the trial, it's being done in the top centers in the country and in the top, I think, top 5 centers in Europe. So with that kind of clinician involved with the technology, it will really get the word around kind of the world about this technology when it comes out.

And any way that you could sort of quantify a bit more of what the TAM could be?

Yes, I think we have the TAMs are out there on our slides.

Yes. It's in our slide.

I think it's 75 in the U.S. and another 70 or 50 to 70 in Japan.

Great. Maybe moving to one of your other products, NEXUS. Can you maybe talk about overview of NEXUS and your relationship with Endospan and sort of some of the data releases that they've had recently.

Yes. I'll comment on the data, and I'll let Lance talk about the relationship. So NEXUS is interesting, all the technologies we're talking about from AMDS to Arcevo to NEXUS. These are all used in the arch. It's a cutting-edge area, if you will. It's really nascent. And we've really, as a company, that's been our focus is really the cutting-edge technology into the aortic arch, and we're a leader in that space.

So NEXUS is a catheter delivery. So both AMDS and Arcevo are done in open surgery under direct vision where you're putting a stent into the aorta. NEXUS is a catheter, fully catheter delivered from the [ growing ]. The current generation that we're bringing to the U.S. or the first generation is it's a branch and the first branch, which is the nominant. That trial has completed. The 30-day data was presented in May. We expect to have the 1-year data at the STS in January in New Orleans. I think it's the last week in New Orleans. And that will really be the last piece of information before the FDA approval or not.

So I think people will have all the information they need to see about how NEXUS is performing in that space. We think this is a platform technology. This is the first step. We've got many things coming behind it. I think there's 2 or 3 more PMAs right behind it with various kind of configurations of that platform. So we're very excited about it. The 30-day data was excellent. We'll wait to see the 1-year data, and we'll comment when that becomes public in January. But we're very excited. And I'll let Lance explain kind of the relationship.

Yes. We've had a partnership with Endospan for a number of years where, a, we distribute the product in Europe, and which has been great because we see the product in use every day and getting to really understand the technology. And then also, we have an option to purchase Endospan. We have 90 days post approval, we can exercise that option. Purchase price of $135 million upfront, and then there is an earn-out at 2.5x year 2 revenue. So that's kind of the basic parameters of our relationship with Endospan.

Understood. And I guess now that we've seen the data, how does that change your thinking in terms of exercising the option for Endospan?

I mean there's always -- I mean, the first point is that to acquire them, they have to get FDA approval. So kind of the onus is on them to get the approval. What we've seen in the 30-day data was excellent. There's one product approved in the U.S. right now, and our 30-day data was very strong compared to that. So if that's the proxy, I mean, it looks pretty good, and we're very excited about the technology, but they've got to get the approval and once they do that, then we'll decide what happens next.

Yes. No, fair enough. And then maybe in that same vein, obviously, a lot of exciting organic growth internally. But as you think about maybe longer term, how are you thinking about your capital allocation?

Yes. I think hopefully, we use some capital to acquire Endospan. That would be step one. I'd say that's really from an M&A standpoint, that's the one piece of M&A that's definitely on our radar screen. We don't feel like we need M&A to hit those financial objectives that I laid out at the kickoff to this fireside chat. And so -- but we do want to stay the leader in these differentiated technologies for the aorta, particularly the arch. And so right now, those differentiated things are all in our pipeline with the exception of the NEXUS device. So main purpose of capital allocation other than hopefully funding the Endospan deal is probably pay down debt. And then we get a little further out and we can reassess that. That's where we are right now.

Fair enough. Any thoughts of any share repurchases or anything along those lines?

Well, I would say we're probably not quite flush enough with cash to be thinking about share repurchase, but that's aspirational, I love it. So hopefully, we get there soon.

Fair enough. I guess maybe as you think about your investment thesis, you talked about continuing being a leader in aorta. What do you think makes you all so unique? Or what's the most underappreciated part of your thesis that you would like people to know about?

Yes. I think it's the focus on the aorta. I mean it's -- I think as a smaller size company, as I said, we're in the $440 million range this year, the midpoint of our guidance, very profitable. We're growing double digits, top and bottom line, cash flow positive. We basically have 7 PMAs. If we acquire Endospan. We've got 3 or 4 in our in our kind of current company. And if we acquire them, it will add another 3. So 7 PMAs, I don't need to buy anything. And I can spend around 7% to 8% on R&D and have a PMA come every 2 years. And then the odd year gets into Japan.

So this is like a decade-long kind of opportunity. So I think the unique thing about the company is the focus on the aorta. These are largely the same customers, the same hospitals and the same diseases with a multitude of technologies just using in different ways in different places depending on what the patient needs. And I think the combination of that makes a very unique company. And I don't think there's a lot of companies, I think if folks do their screens on growing double-digit top and bottom or profits twice as fast and all the things already rattled off. I mean it's a pretty unique company.

Yes. Fair enough. And I guess maybe in terms of as you look at it in the competitive landscape, anything that either any competitors that you look -- see out there that you're concerned about or anything in the landscape that people should be looking out for?

I mean it's one of our kind of mantras is when we get involved in a technology, we have to have competitive advantage. We don't like playing in markets where we don't have competitive advantage. Now you don't always know it when you have -- when you do a trial because you got to wait for the data to come out.

But if you look at the On-X valve, I mean, we absolutely have competitive advantage. We have a much bigger competitor, and we take share from them. If you look at our pulmonary valve, we're the only ones with the decellularized valve with outstanding data. Nobody else has it. It's kind of the same thing when you go through like very few competitors. And if we do have a competitor, we have better technology. So yes, I mean we're always paying attention to what competition is up to. But so far, I feel pretty good about what we've got in our bag.

The other thing that's great, too, these are all PMA products, right? Yes. So it's a pretty high barrier for competitive entry. And I think because of that, in general, we have few competitors in each of our segments. And we also get a very long lead time heads up, there's one coming.

Yes. Fair enough. And do you think that there's any products in the portfolio that the Street is underappreciating, as you look out at the projections out there or when you speak to analysts, is there anything that in the portfolio that's not getting enough attention?

Yes. I think it's a good question. I mean, I think one of the -- I understand it, but it's like when something is too far away, the Street doesn't really value it much, which I get. But obviously, AMDS is here and people are valuing it. I mean we could launch NEXUS a year from now. And then we have Arcevo 2 years after that, right? So I think it's the combination of the every 12 to 18 months, you've got another PMA hit, I think is underappreciated, but you typically don't get the value.

I'll throw another one on there. I think people that have spent time trying to understand our company a little bit, I think, get this. But if you haven't, you don't appreciate how sustainable the growth is in our existing portfolio. And some of it doesn't grow super fast, but it has been growing at the pace it's been growing for a very long time. There's really no reason for that dynamic to change. And it's because these are highly differentiated products. Again, they're PMA protected and in market sizes that are such that they're unlikely to ever see additional competition.

And so I think sometimes people don't appreciate on the surface like how can we have these legacy products where we're so confident in our ability to continue to grow them, but it's the kind of the nature of the market dynamic that allows us to do that. So if people spend time on it, I think they get it, but I think a lot of people haven't spent the time.

Yes. Fair enough. Can you -- maybe double-clicking on that, can you give an example of one of those products that you would say this product, even if it's not growing as fast, will have durable growth for the foreseeable future?

Yes. I mean my favorite one is BioGlue. It's a 20-year-old product. There's 3 other competitors in the market for surgical sealant. So we each kind of have our own niche within the niche, if you will. Ours is we're the only ones that have an indication for acute Type A dissection, which obviously fits perfectly with our call point and our portfolio. That product has grown consistently for 2 decades. It's super high gross margin. We don't consign it. We sell it the minute we ship it out wherever it goes, we sell over 100 countries all over the world. And there's really no reason why it can't continue to grow at kind of procedure rates plus a little bit of price for I don't want to give, say, 20 years, that's a long time, but for the foreseeable future.

So I mean that's an example. And it's because it's probably never going to have additional competition. There'll be another -- never be another -- or hopefully never be another surgical sealant with an acute Type A dissection indication.

Right. Fair enough. I guess maybe moving out a little bit. I know you mentioned Japan on coming. How should we think about internationally? I know you are already in many geographies, but do you have a strategy sort of for further diversification internationally? Or how should we think about your split?

Yes. I mean we're 50-50 international U.S. right now, which is pretty rare for a company of our size. So we actually were way more international than most companies. We sell On-X and BioGlue in 100 countries. right? So we're -- we've expanded pretty significantly. If you go back and watch our evolution over the last 5 years, we started with like 1 person in Asia, now we have 50. So we've put a lot into Asia. We've also built out in Latin America. So I think those are kind of slowing down. Those investments are slowing down. But I don't know, Lance, if you have any other.

Yes. I mean I think actually there's a nice cadence to it. I think while we were working on getting these products, these new PMA products on the U.S. market, we had this opportunity to build out our international footprint, which we did, and that helped drive growth. And the margin profile for a lot of these products is really good outside the U.S. as well, but it's not as good as it is in the U.S.

And I think now that was a great thing we could do while we were working on these PMAs. Now we have AMDS is kind of the first one of the domino's to fall in the U.S., I think you'll see a little bit more of the investment now is to how do we maximize that U.S. growth for AMDS, for On-X, hopefully, fingers crossed for NEXUS.

One, that's the bigger opportunity now as opposed to what it was, say, 3 to 5 years ago, but that's also just way more profitable. These are super high gross margin products. And so I think as Pat said, you'll see a little bit more of a shift. But I think we think we can continue to grow our international business really well, probably accretive to our overall company gross margins for, again, for a while.

Right. And -- but as we look forward, I know you mentioned it's sort of half and half right now, 3 to 5 years from now, should we should expect the U.S. to be the preponderance of revenue?

I think you'll start to see a shift. But again, I still expect the international business to grow. I would expect it to grow certainly double digits. So I think it's not going to be like a light switch. I think it will progress over time. You'll be able to see that mix shift and you'll be able to see it in the gross margin.

Yes. Fair enough. I think we have a few minutes left. I want to see if there is any sort of final remarks or anything that you think I missed in the conversation that you'd want to highlight for potential investors.

No, I think it's just some of the stuff we talked about, right, an aorta-focused company that literally has an R&D pipeline of 5 PMAs in the works now with a couple more coming if we do the Endospan acquisition. We have a 200-person channel already. We've barely brought the first product to the U.S. We're working on getting in Japan and the ability to grow this business double-digit top line, twice as fast bottom line, cash flow positive, expanding gross margins, expanding EBITDA margins. It's a pretty unique company.

Yes. No, the same thing we talked about. It's a really clean story if people will take a little bit of time to go research it. We're very financially healthy right now and have really good EBITDA margins right now. But with this pipeline opportunity we have, we can continue this growth for a long time and take EBITDA margins. Even though they're great right now, we can take them meaningfully higher than where they are at the moment.

And again, companies this size typically don't have that level of profitability to begin with. But if they do, they certainly don't have an opportunity to take it considerably higher. So I think it's a really great clean story. And if anybody hasn't been paying attention, I encourage them to check us out.

Yes. I agree. Well, thank you very much for being at our conference. And hopefully, this is helpful.

Thank you.

Thanks.