LEMAITRE VASCULAR INC Q1 FY2025 earnings call

• Sales Growth: Q1 sales stronger than guidance, led by graphs and carotid chunks. Geographical growth in EMEA, Americas, APAC. • Sales Force and Offices: Currently 164 reps, targeting 170 at year end. New sales offices in Zurich and Lisbon with improved sales performance. • Regulatory Progress: Received MDR CE mark for Artegraft, European launch beginning. RestoreFlow expects approval in Ireland or Germany in 2025, with a Pan European distribution facility in Dublin planned. • Business Developments: Wound down porcelain patch distribution agreement with Elutia, expected to improve organic growth and gross margin.

Q1 sales were stronger than February 27 guidance, with 13% organic and 12% reported growth. Growth was led by graphs (up 17%) and carotid chunks (up 14%). All five categories (graphs, carotid chunks, catheters, velvet homes, patches) posted sales records. Geographically, EMEA was up 18%, the Americas 11%, and APAC 3%. Organic sales growth 13%, reported sales growth 12%. Gross margin was 69.2%, up 60 basis points year over year. Operating expenses increased 16% to $28.8 million. Operating income increased 6% to $12.6 million, operating margin 21%. Fully diluted EPS was $0.48, up 10%. Ended Q1 with $302.5 million in cash and securities.

• Revenue: Raised 2025 reported sales guidance to $245 million from $239, organic sales guidance to 13% from 10%. • Cash Position: Ended Q1 with $302.5 million in cash, providing strategic optionality. • Tariffs: Implemented price increases in China to offset tariff impacts, believe well-positioned with US manufacturing and direct sales model.

• Tariffs: Chinese import tariffs increase costs, but price increases in China to offset half of these costs. Potential retaliatory tariffs could affect international sales, but low substitution risk and ability to raise prices. • Regulatory Delays: Approval timelines for RestoreFlow and other products could impact market entry and sales. • Sales Force Ramp-Up: Uncertainty around how quickly new sales reps will contribute to sales growth.

Q: What gives confidence to increase guidance?

A: Beating Q1 guidance, price hikes better than expected, winding down Elutia agreement, adding sales reps, Artegraft CE mark approval, and European office expansions.

Q: Update on M&A?

A: Pipeline in good shape, hunting in open vascular surgery and adjacent cardiac surgery, targets with over $5 million revenue, sweet spot revenues 15-100 million.

Q: View on Xenosure in China?

A: Frustrating but plan to continue, expecting provincial listing approvals in Q4, material sales next year.

Q: Gross margin and operating margin guidance?

A: Gross margin guidance slightly lowered, operating margin guidance affected by sales growth, easier comps in H2, and dropping Elutia distribution agreement.

Q: Sales force ramp-up and operating leverage?

A: Reps perform similarly regardless of tenure, quick ramp-up expected, warm body hypothesis at play.

Q: M&A and med tech valuations?

A: Valuations don't change strategy, still hunting niche products, but more novel devices may be more affordable with cash.

Q: Tariffs impact on guidance?

A: 825k annualized China tariff impact factored in, price increases in China to recoup half, best estimates incorporated into guidance.

Q: Artegraft operational steps for 2026?

A: Marketing launch, initial shipments to Europe, training sales reps, leveraging existing clinical data.

Q: Sales and marketing spend and free cash flow?

A: Q1 spend due to sales rep increase and one-time sales meeting, capex and inventory management to free up cash flow.