Financial Data and Key Metrics Changes - Q3 2025 organic sales growth was 12%, with reported revenue growth of 11% impacted by a $1.3 million reduction due to the Z-Medica distribution exit [7][10] - Reported gross margin was 75.3%, while adjusted gross margin was 70.8%, reflecting a 300 basis point year-over-year increase [8][9] - Reported operating income was $20.3 million, with an operating margin of 33% [8] - Adjusted net income increased 27% year-over-year to $14.2 million, with adjusted fully diluted EPS at $0.62, also up 27% [9] Business Line Data and Key Metrics Changes - Sales from grafts increased by 23%, and shunts grew by 18% in Q3 [4] - Excluding catheters, Q3 organic growth was 14% [7] - Autograft sales grew 33% worldwide in Q3, with Q2 sales at $420,000 and Q3 sales at $1.4 million, expecting Q4 sales of $2 million [4][5] Market Data and Key Metrics Changes - AMEA region grew by 18%, the Americas by 10%, and APAC by 4% [4] - 55% of North American revenue is now subject to price floors, indicating a strategic pricing approach [6][41] Company Strategy and Development Direction - The company is focusing on profitable growth, with guidance for Q4 indicating a 40% operating income growth and a 29% operating margin [6][10] - Plans to open a new 34,000 sq ft distribution center in Q1 2026 to support growth [6] - The company is investing in sales force expansion and regulatory approvals, with expectations for Autograft approvals in Canada and Korea in 2026 [4][5] Management's Comments on Operating Environment and Future Outlook - Management noted challenges in the APAC region, attributing some struggles to management changes and a recent catheter recall affecting sales [12][13] - The company anticipates continued strong performance in 2025, with full-year revenue guidance of $248 million, reflecting 13% growth [10] - Management expressed confidence in the strength of their product channels and the positive impact of recent approvals on future growth [33][45] Other Important Information - The company ended Q3 with $343.1 million in cash and securities, an increase of $23.6 million [9] - The company received $4.8 million from the employee retention tax credit, impacting several P&L line items [7] Q&A Session Summary Question: Revenue guidance changes and lower organic growth expectations - Management explained that the catheter recall led to front-loading sales into Q2, affecting Q3 and Q4 growth, with some impact from foreign exchange [12][14][15] Question: Future gross margin expectations - Management indicated that while they are not ready to guide on 2026, they have seen a positive trend in gross margins and expect continued improvements [16] Question: Price increase strategy for 2026 - Management discussed the rationale behind the 8% price floor, indicating a blended approach across different product categories [19][20] Question: Key product lines and geographies for growth - Management highlighted Autograft and Allografts as key growth drivers, along with XenoSure in the peripheral vascular segment [31][33] Question: Capital deployment strategy and M&A plans - Management noted that while they have a strong cash balance, they are not rushing into acquisitions and are maintaining high standards for potential deals [35][37] Question: Price floors and R&D spending - Management clarified that 55% of North American revenue is subject to price floors and discussed plans to increase R&D spending over time [40][42] Question: Performance of cardiac patches and market trends - Management reported strong growth in cardiac allografts and noted that the cardiac segment is growing faster than peripheral vascular [92][93] Question: Growth in carotid shunts - Management attributed the 18% growth in carotid shunts to market share gains following a competitor's exit from the market [96][97]

Financial Data and Key Metrics Changes - Q1 2025 sales showed a 13% organic growth and a 12% reported growth, exceeding previous guidance [6][13] - Gross margin for Q1 2025 was 69.2%, a 60 basis point increase year-over-year, driven by higher average selling prices (ASPs) and lower inventory scrap [14][15] - Operating income increased 6% year-over-year to $12.6 million, with an operating margin of 21% [16] - Fully diluted EPS rose to $0.48, up 10% from the previous year [16] - Cash and securities at the end of Q1 2025 totaled $302.5 million, reflecting a $2.8 million increase during the quarter [16] Business Line Data and Key Metrics Changes - Sales records were achieved in all five categories: grafts, carotid shunts, catheters, valvulotomes, and patches [6] - Grafts sales increased by 17%, while carotid shunts grew by 14% [6] - The company anticipates a significant contribution from the autograft product, which had $37 million in U.S. sales in 2024 [9][10] Market Data and Key Metrics Changes - By geography, EMEA sales increased by 18%, the Americas by 11%, and APAC by 3% [6] - The autograft market size in Europe is estimated at $8 million, with similar expectations for the rest of the world [10] Company Strategy and Development Direction - The company is focusing on expanding its sales force, targeting 170 sales representatives by year-end, up from 164 [7][13] - New international sales offices are being established, including a direct office in Portugal and a new office in Zurich to enhance sales performance [8] - The company is transitioning away from the porcine patch distribution agreement to focus on its own biologics, which is expected to improve organic growth and gross margin [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in increasing guidance due to strong Q1 performance, effective price increases, and the positive impact of new sales representatives [28][30] - The company remains optimistic about its position regarding tariffs, as it manufactures 100% of its products in the U.S. and has limited exposure to import tariffs [18][20] - Management anticipates continued growth in the RestoreFlow allograft segment, with a 23% CAGR since acquisition [11] Other Important Information - The company is preparing for the European launch of the autograft product following the receipt of the MDR CE mark [9] - The company plans to open a pan-European RestoreFlow distribution facility in Dublin in the second half of 2025 [12] Q&A Session Summary Question: What gives the company confidence to raise guidance early in the year? - Management cited strong Q1 performance, better-than-expected price increases, and the positive impact of exiting the Aleutia business as key factors [28][30] Question: Any updates on M&A activity? - The pipeline remains strong, focusing on open vascular surgery and adjacent cardiac surgery markets, with a preference for larger deals [34][36] Question: Concerns regarding XenoSure in China? - Management acknowledged challenges but remains committed to the long-term potential in China, expecting to continue pursuing provincial approvals [40][41] Question: Clarification on gross margin performance? - The allograft product's strong performance contributed to the gross margin miss, with management adjusting expectations slightly for the full year [63][65] Question: How will the sales force ramp-up impact operating leverage? - Management indicated that new sales representatives are expected to contribute to operating income growth, with a projected 14% increase in H2 [72][73] Question: Status of the share buyback program? - Management confirmed that no shares have been repurchased as of the date of the call [86]