LeMaitre Vascular, Inc. Q2 FY2025 earnings call

Key Points:

• Q2 sales up 15%, gross margin 70%, EPS up 16%.
• Increased full-year guidance for sales, gross margin, op income, and EPS.
• Sales led by catheters (+27%), grafts (+19%), Valvulotomes and [Chunnt] (+13%).
• Geography: EMEA +23%, Americas +12%, APAC +12%.
• International Artegraft launch exceeded expectations, with sales to surpass $2M in 2025.
• RestoreFlow anticipates European approval in 2025, with a distribution facility opening in Dublin.
• XenoSure vascular patch on track for Q4 2025 final submission in China, potential 2026 approval.
• Organic sales growth 15% (8% price, 7% unit) driven by Artegraft, XenoSure, RestoreFlow, and catheters.
• Gross margin 70%, up 110 basis points year-over-year.
• Operating expenses up 20% to $28.8M, driven by compensation and European sales expansion.
• Operating income $16.1M, up 12%; net income $13.8M, up 17%; EPS $0.60, up 16%.
• Cash and securities $319.5M, cash from operations $20.3M, dividends $4.5M paid.

Q2 was strong across the board with sales up 15%. Sales were led by catheters (up 27%), grafts (up 19%), Valvulotomes and [Chunnt] (both up 13%). By geography, EMEA grew 23%, Americas 12%, and APAC 12%. International Artegraft launch exceeded expectations in Q2 with sales of $420,000, up from $185,000 in Q1, and is expected to surpass $2 million in full year 2025. Artegraft was the largest U.S. product in 2024 with $37 million in U.S. sales. RestoreFlow anticipates at least one European approval in 2025, and XenoSure vascular patch is on track for final submission in Q4 2025 with potential approval in 2026.

• Raised full-year revenue guidance to $251M with 15% organic growth.
• Anticipate full-year gross margin 69.7%, operating income $60.9M (up 17%), and EPS $2.30 (up 19%).
• Operating expenses expected to be lower in H2 2025 vs H1.

• Tariff-driven price adjustments, especially in China.
• Supply chain issues like the Q2 catheter recall.
• Regulatory uncertainties, e.g., Germany requiring more paperwork for RestoreFlow approval.
• Dependence on international approvals and launches for growth.

Q: Michael Sarcone asked about the impact of stocking orders on unit volume growth and sustainability of price taking.

A: George LeMaitre responded that stocking orders impacted ~$800,000 in the quarter due to the catheter recall and mentioned price hikes may continue but not committed to future hikes.

Q: Michael Petusky drilled down on unit volume growth, asking about sustainability and specific products.

A: George LeMaitre explained unit growth stripped of catheter impact is ~5%, with Artegraft up 10%, XenoSure up 9%, and RFA cardiac up 61%.

Q: Brett Fishbin followed up on Artegraft and operating margin ramp.

A: Dorian LeBlanc discussed seasonality, lower H2 expenses, and benefits from sales force investments and regulatory expense reduction.

Q: Annie asked about sales force expansion and international growth.

A: George LeMaitre mentioned aiming for 165 sales reps by year-end, with sales reps in U.S./Canada, Europe, and APAC carrying all product lines, and strong growth in Europe and improving U.S. performance.

Q: Suraj Kalia asked about product pricing strategy and sales force churn.

A: George LeMaitre discussed pricing based on market share, and sales force churn at 12% as normal.

Q: Nathan Treybeck inquired about Artegraft sales and market share.

A: George LeMaitre and David B. Roberts discussed Artegraft market size and initial market share capture potential.

Q: Daniel Stotter asked about free cash flow and R&D.

A: Dorian LeBlanc mentioned cash from operations tracking with operating income, and George LeMaitre noted R&D spend is light but likely to increase later.

Q: Ross Osborn asked about RestoreFlow feedback and adoption.

A: David B. Roberts discussed positive feedback on RestoreFlow, especially in cardiac allografts, and efforts to facilitate adoption.

Q: Frank Takkinen asked about RestoreFlow supply and competition.

A: George LeMaitre discussed feedback on RestoreFlow and noted durable results despite potential competitor supply issues.

Q: Jason Wittes asked about R&D and regulatory approvals.

A: George LeMaitre mentioned ongoing regulatory approvals in Ireland, Germany, China, and others, and R&D spend likely to increase later.