Artivion(US:AORT)2025-05-06 19:10Part I Financial Statements Artivion reported Q1 2025 revenues of $99.0 million (+2%), but a net loss of $0.5 million due to increased expenses Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income Q1 2025 revenues rose 2% to $99.0 million, but operating income sharply declined to $2.1 million, resulting in a net loss of $0.5 million Q1 2025 vs Q1 2024 Statement of Operations Highlights (In Thousands, Except Per Share Data) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $98,978 | $97,431 | +1.6% | | - Products | $78,798 | $71,114 | +10.8% | | - Preservation services | $20,180 | $26,317 | -23.3% | | Gross Margin | $63,577 | $62,946 | +1.0% | | General, administrative, and marketing | $54,704 | $30,689 | +78.2% | | Operating Income | $2,145 | $25,311 | -91.5% | | Net (Loss) Income | ($505) | $7,533 | -106.7% | | Diluted (Loss) Income Per Share | ($0.01) | $0.18 | -105.6% | Condensed Consolidated Balance Sheets As of March 31, 2025, total assets were $791.2 million, cash decreased to $37.7 million, and total liabilities declined to $496.9 million Balance Sheet Highlights (In Thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $37,693 | $53,463 | | Total current assets | $287,297 | $290,080 | | Total assets | $791,163 | $789,101 | | Total current liabilities | $51,940 | $66,823 | | Long-term debt, net | $314,611 | $314,152 | | Total liabilities | $496,911 | $512,901 | | Total stockholders' equity | $294,252 | $276,200 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly increased to $17.0 million in Q1 2025, leading to a $15.8 million decrease in cash and cash equivalents Q1 2025 vs Q1 2024 Cash Flow Summary (In Thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash flows used in operating activities | ($16,953) | ($5,493) | | Net cash flows used in investing activities | ($3,638) | ($3,611) | | Net cash flows provided by financing activities | $3,937 | $737 | | Decrease in cash and cash equivalents | ($15,770) | ($7,822) | Notes to Condensed Consolidated Financial Statements Notes detail the 2024 debt refinancing, segment and geographic revenue trends, and a $2.8 million gain from contingent consideration fair value adjustment - In January 2024, the company entered into a new $350.0 million credit facility with Ares Management, using the proceeds to repay its old credit facilities. This resulted in a $3.7 million loss on extinguishment of debt in Q1 20244961 Revenue by Segment (Q1 2025 vs Q1 2024, In Thousands) | Segment | Q1 2025 Revenue | Q1 2024 Revenue | Change | | :--- | :--- | :--- | :--- | | Medical devices | $78,798 | $71,114 | +10.8% | | Preservation services | $20,180 | $26,317 | -23.3% | | Total revenues | $98,978 | $97,431 | +1.6% | Revenue by Geography (Q1 2025 vs Q1 2024, In Thousands) | Region | Q1 2025 Revenue | Q1 2024 Revenue | Change | | :--- | :--- | :--- | :--- | | North America | $47,793 | $50,928 | -6.2% | | EMEA | $37,045 | $33,588 | +10.3% | | APAC | $8,214 | $7,609 | +8.0% | | LATAM | $5,926 | $5,306 | +11.7% | | Total revenues | $98,978 | $97,431 | +1.6% | - The company recorded a net fair value gain of $2.8 million for the three months ended March 31, 2025, from a change in the fair value of contingent consideration related to the Ascyrus acquisition. This compares to a $17.5 million gain in the same period of 202437 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A highlights Q1 2025 revenue growth driven by Medical Devices, offset by Preservation Services decline due to a cyber incident, and discusses liquidity Results of Operations Q1 2025 revenues grew 2% (4% CC), driven by product sales, while Preservation Services declined 23% due to a cyber incident backlog, and G,A&M expenses surged Q1 2025 Revenue Growth by Product (As Reported vs. Constant Currency) | Product Line | As Reported Change | Constant Currency Change | | :--- | :--- | :--- | | Aortic stent grafts | +14% | +19% | | On-X | +10% | +11% | | Surgical sealants | +7% | +9% | | Total products | +11% | +14% | | Preservation services | -23% | -23% | | Total Revenues | +2% | +4% | - The decrease in Preservation Services revenue was primarily due to a backlog of tissues to be released for shipment as a result of the 2024 cybersecurity incident, which is expected to improve throughout 2025103 - General, administrative, and marketing expenses increased by $9.4 million after excluding the impact of contingent consideration adjustments. This was driven by $4.5 million of expenses associated with the 2024 cybersecurity incident and higher non-cash stock compensation110 Liquidity and Capital Resources As of March 31, 2025, the company had $37.7 million in cash and $320.1 million in debt, with available credit facilities to support future liquidity needs - The company's liquidity position includes $37.7 million in cash, $30.0 million in unused revolving credit, and a $100.0 million delayed draw term loan facility124 - The $100.0 million delayed draw term loan facility was established solely to make funds available for the repurchase or repayment of the Convertible Senior Notes due July 1, 2025126 - Net cash used in operating activities increased by $11.5 million year-over-year, primarily due to professional fees from the 2024 cybersecurity incident and the timing of interest payments on new credit facilities132 Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from interest rates and foreign currency, with no material changes since fiscal year 2024 - As of March 31, 2025, there has been no material change in the company's market risk disclosures from its 2024 Annual Report on Form 10-K140 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025143 - No changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls144 Part II Legal Proceedings The company is involved in routine legal actions, with no pending matters expected to have a material adverse effect - Based on current knowledge, the company does not believe there are any pending legal matters that could have a material, adverse effect on its business or financial condition146 Risk Factors The company faces significant risks from geopolitical instability, supply chain dependencies, cybersecurity incidents, and regulatory hurdles like EU MDR and potential FDA reclassification - The NEXUS family of products are solely manufactured by Endospan in Herzliya, Israel, exposing the company to supply chain disruptions from instability in the Middle East151 - The company experienced a cyber-attack in Q4 2024 that disrupted business operations and continues to incur related expenses. It remains subject to risks from this incident, including potential for scrap, inventory issues, and shipping delays185 - The transition to the European Union's Medical Device Regulation (MDR) presents significant risks, including potential delays or prevention of commercializing products in Europe and other markets that rely on CE Marking190191 - The FDA is considering reclassifying allograft heart valves, including the company's CryoValve SGPV, to Class III medical devices, which could make continued processing commercially infeasible due to the onerous PMA application process192193 - The company is dependent on single-source suppliers for key components of its major products, including BioGlue, On-X, and aortic stent grafts, creating significant supply chain vulnerability169171173 Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any equity securities in Q1 2025, with current credit facilities generally prohibiting such transactions - The Company did not repurchase any of its equity security during the three months ended March 31, 2025221 Other Information In March 2025, two officers adopted Rule 10b5-1 trading plans for future sales of company common stock - Chief Accounting Officer Amy D. Horton and Chief Medical Officer Marshall S. Stanton adopted Rule 10b5-1 trading plans in March 2025 for future sales of company stock224 Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files