Transcript: Artivion Q2 2026 Earnings Conference Call

Artivion (NYSE: AORT ) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary Artivion reported a 9% increase in total constant-currency revenue and 7% growth in adjusted EBITDA for Q2 2026, driven by strong performance in On-X and stent grafts. The company received FDA approval for the PMA of the AMDS hybrid prosthesis and completed the acquisition of Endospan, enhancing its aortic arch portfolio. Stent graft revenues grew 12%, while On-X revenues increased by 18% year-over-year, attributed to global market share gains and improved outcomes in younger patients. S.

S. commercial launch in January 2027. The company anticipates completing the ARTISAN clinical trial enrollment for the SIVO LSA product by mid-2027, with an expected FDA approval in 2029. Q2 gross margins were 64%, slightly down from the previous year, due to higher costs and geographic mix.

Free cash flow was negative, impacted by acquisition-related expenses. Artivion maintains its full-year 2026 guidance of 7% to 11% revenue growth, with expected adjusted EBITDA between $92 million to $99 million. Management highlighted long-term growth opportunities from its aortic growth platforms and a strong pipeline, despite current operational challenges. Full Transcript OPERATOR Good afternoon, and welcome to the Artivion 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. Should anyone require operator assistance during the conference, please press star-0 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. Brian Johnston, Gilmartin Group 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 that 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 Artivion'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 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 on 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 over to Artivion CEO Pat Mackin. Pat Mackin, President & CEO 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 On-X 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. S. FDA approval for the PMA for our AMDS hybrid prosthesis.

S. under the full PMA. That is meaningful because PMA approval obviates a lengthy IRB review process that new accounts previously had to work through, and we expect to accelerate new account conversion and set sales going forward. We are also pleased to complete the acquisition of Endospan and its NEXUS Aortic Arch stent graft 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.

S. sales team. 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. Stent graft revenues grew 12% on a constant 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 comparisons, 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. S.

AMDS set sales to further accelerate following the recent AMDS PMA approval and as the barriers associated with the initial upfront $100,000 investment associated with the stocking continue to wane. Ultimately, we see our comprehensive stent graft portfolio as a foundational component of our growth strategy. We're encouraged by our enduring fundamental strength and increasingly strong competitive advantages within this segment. Turning to On-X, our second-quarter On-X revenues grew 18% year over year on a constant currency basis.

S. opportunity unlocked by data showing improved outcomes with mechanical versus bioprosthetic valves in younger patients. This also came against a much tougher year-over-year comparison than in prior quarters. The data supports our conviction that the On-X 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 of 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 shifting into the second quarter. Overall, we remain on track with our expectations. I also want to briefly highlight the Ross procedure data that was recently published in JACC, the Journal of the American College of Cardiology.

The study reported a 12-year outcome of 455 adult Ross procedures that were performed at a single high-volume center. This study provides compelling long-term evidence regarding the performance of our proprietary SynerGraft pulmonary valve. The results were outstanding, with survival comparable to the age-matched general population. The autograft reintervention rate was 1%, and the pulmonary homograft intervention rate was less than 2%, and that's at 12 years.

5%. Importantly, 95% of the pulmonary homografts implanted in this study were Artivion SynerGraft valves. These results further reinforce SynerGraft's differentiated clinical profile and market leadership. We believe this level of long-term clinical evidence is unmatched in the pulmonary homograft market and strengthens physician confidence in the Ross procedure 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-digit growth for BioGlue over the full year. Lastly, on our pipeline, we continue to make progress on the ARTISAN clinical trial for our SIVO LSA product.

S. 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.

S. S. market opportunity. In conclusion, the second quarter was a quarter of meaningful progress against our long-term strategy.

We delivered the AMDS PMA approval we had targeted for midyear, we completed the NEXUS acquisition ahead of schedule, stent graft revenue accelerated against a tougher comp, On-X 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 addressable market over time. With that, I'll now turn the call over to Lance. Lance Berry (COO and CFO) 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. 8 million for the second quarter of 2026, up 9% compared to Q2 of 2025. 4 million in the second quarter of 2026.

Adjusted EBITDA margin was 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 Endospan. From a product line perspective, stent graft revenues increased 12%, On-X grew 18%, tissue processing revenues grew 1%, and BioGlue revenues decreased 2% in the second quarter of 2026. On a regional basis, revenues in North America increased 8%, EMEA increased 10%, Asia Pacific increased 9%, and Latin America increased 11%, all compared to the second quarter of 2025.

Overall, we were pleased to see a return to growth across international markets. 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. 7 million in the second quarter of 2025. 2% of sales in the second quarter of 2025.

S. AMDS launch cost, while absorbing costs associated with the acquired Endospan 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. 3% of sales in the second quarter of 2025. 2 million in the prior year.

Other income and expense this quarter included foreign currency translation losses of approximately $700,000. 7 million in the second quarter of 2025. 2 million payment by Endospan as a result of the acquisition for contractually required transaction bonuses. This cash payment was funded as part of the planned $135 million purchase price but was required to be reflected for accounting purposes as a post-acquisition expense and a free cash outflow.

S. NEXUS launch. 6 million of unamortized loan origination cost. 1, reflecting the impact of the recent $150 million of borrowings drawn to primarily fund the Endospan acquisition.

1 leverage ratio for Q2. And now for our outlook for 2026. Overall, we are pleased with our Q2 performance as we saw an acceleration in stent graft revenue and strong On-X 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% for the full year, representing a reported revenue range of $480 to $496 million. This guidance contemplates FX to have an approximate 1 percentage point tailwind on as-reported revenue for the full year. S. 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. S.

S. On-X sales accelerate. With these revenue expectations, and including the impact of the Endospan acquisition, we are reiterating our full year 2026 adjusted EBITDA to be in the range of $92 million to $99 million. As a reminder, this guidance included our expectation to incur 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.

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% of sales. With that, I will turn the call back to Pat for his closing comments. Thanks, Lance.

Pat Mackin, President & CEO 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.