Daniel Stauder

Daniel Stauder inquired about the continued cross-selling benefits between AMDS and On-X, specifically trends in On-X utilization among newer surgeons added earlier in the year, and asked for more details on the eventual commercial process for NEXUS, comparing its training and learning curve intensity to AMDS.

Answer

CEO Pat Mackin confirmed that cross-selling benefits between AMDS and On-X are expected to be ongoing, as opening new AMDS accounts builds relationships with aortic surgeons, leading to increased On-X adoption. For NEXUS, Pat Mackin described it as a highly intensive training process for highly skilled vascular surgeons in a few hundred large centers, contrasting it with the extremely easy training and one-case learning curve for AMDS. He emphasized that while intensive, the smaller number of high-volume centers makes it manageable.

Daniel Stauder of Citizens JMP asked for more color on the On-X growth, specifically the contribution from new accounts via the AMDS cross-selling 'halo effect,' and inquired about the free cash flow outlook for the second half of 2025.

Answer

CFO Lance Berry confirmed a meaningful uptick in On-X growth from new accounts but noted it is difficult to parse the exact contribution between the AMDS cross-selling effect and the impact of new clinical data. Regarding cash flow, he stated that while timing can cause quarterly fluctuations, the company is on track to achieve its goal of being free cash flow positive for the full year.

Daniel Stauder sought clarification on the foreign exchange impact assumed in the full-year revenue guidance and asked if the previously outlined drivers for EBITDA margin expansion (gross margin, SG&A leverage, R&D) have changed.

Answer

CFO Lance Berry explained that while the previous guidance included a 2% FX headwind, current rates would make the impact closer to neutral, representing potential upside. He confirmed the full-year EBITDA drivers remain the same: approximately 100 bps of gross margin expansion from AMDS mix, SG&A leverage, and R&D spend toward the higher end of the 7-8% of sales target. He noted these dynamics should continue into 2026.

Daniel Stauder of Citizens JMP sought confirmation on the implied mid-to-high teens growth in the second half of 2025 and asked for a breakdown of the drivers for the guided EBITDA improvement.

Answer

CEO James Mackin confirmed the H2 2025 growth trajectory, citing the AMDS ramp, recovery of delayed sales, and an easy Q4 comp. CFO Lance Berry detailed the EBITDA margin drivers, attributing approximately 1 percentage point of improvement to gross margin from AMDS, 2 points from SG&A leverage, partially offset by a 1 point increase in R&D spending.

Daniel Stauder inquired about the specific drivers behind the strong performance of the aortic stent graft business and asked for more detail on the market share gains for the On-X valve.

Answer

CEO James Mackin explained that the stent graft business is seeing double-digit growth across nearly its entire differentiated portfolio globally. Regarding On-X, Mackin noted the company continues to take market share both in the U.S., where it holds about 55% share, and internationally. He attributed this to strong clinical data from a post-approval trial showing an 87% reduction in major bleeding, reinforcing his belief that On-X will remain a double-digit growth product.

Daniel Stauder, on behalf of Dave Turkaly at Citizen JMP, requested more color on the drivers behind the strong growth in OviTex PRS and asked about the source of the associated ASP lift.

Answer

CEO Antony Koblish attributed the strong performance to two main factors. First, the recent launch of new, large, long-term resorbable PRS products, which command a higher ASP. Second, the growing body of positive clinical data, with 350-400 PRS patients now featured in publications or presentations, which provides a strong clinical value proposition that was previously lacking. He also noted more PRS products are in the pipeline for 2026 and 2027.

Daniel Stauder of Citizens JMP inquired about the outlook for free cash flow, CapEx, and working capital for the remainder of 2025, and asked how to think about the R&D expense line in the second half of the year.

Answer

CFO Dorian LeBlanc stated that cash from operations should track with operating income over the long term and that CapEx should remain stable. Chairman & CEO George LeMaitre noted that the current 6% R&D spend is low due to the completion of MDR projects, calling it a 'peace dividend,' but acknowledged it would likely rise from this level over time.

Daniel Stauder of Citizens JMP asked for a breakdown of the Q1 increase in sales and marketing spend and the outlook for 2025. He also inquired about the forecast for CapEx and working capital, particularly inventory, given the company's expansion plans.

Answer

CEO George LeMaitre attributed the higher S&M spend to the annual Q1 sales meeting (approx. $1M) and a significant year-over-year increase in sales reps from 137 to 164. Executive Dorian LeBlanc suggested Q1 CapEx was standard. LeMaitre added that the company is now focused on reducing its large inventory balance, which could free up cash flow. However, inventory for Artegraft and RestoreFlow was built up in Q1 in anticipation of European launches.

Daniel Stauder of Citizens JMP sought clarity on the factors driving the high and low ends of the 2025 guidance range, such as ASP bands or product launches. He also asked about the expected progression of operating margin throughout the year, given the full-year target of 25% versus the Q1 guide of 23%.

Answer

CEO George LeMaitre and EVP, CFO & Treasurer Joseph Pellegrino pointed to the company's history of outperforming its initial organic growth guidance. They cited variable ASPs, the cadence of sales rep hiring, and the performance of key product lines as factors influencing the range. For operating margin, Pellegrino explained that Q1 is typically lower due to the significant expense of annual sales meetings, suggesting a more favorable margin profile in the subsequent three quarters.

Daniel Stauder of Citizens JMP asked for additional drivers behind the strong 16% top-line growth and inquired about plans to add more sales representatives specifically in Europe.

Answer

CEO George LeMaitre highlighted the allograft business (up 47%) and market exits by European competitors as key tailwinds. CFO Joseph Pellegrino added that new direct markets in Korea and Thailand were strong contributors. President Dave Roberts noted that an increased number of sales managers is improving rep oversight. The company confirmed plans to add more reps in Europe.

Daniel Stauder of Citizens JMP inquired about the drivers behind the reaffirmed 2025 guidance despite a recent divestiture, the sustainability of strong growth in the RF ablation business, and the long-term margin impact of the divested product line.

Answer

SVP & CFO Scott Galovan and VP Jason Pickett explained that strong performance in the core Specialty Nutrition and Pain Management segments, coupled with easing currency headwinds, offset the revenue loss from the divested hyaluronic acid business, allowing for the guidance reaffirmation. CEO Dave Pacitti attributed the nearly 14% growth in RF ablation to a dedicated company focus, a three-tiered product offering, and strong sales execution, which he sees as sustainable. Regarding the divestiture's margin impact, executives noted the business faced significant price pressure, making its removal from the portfolio not materially impactful to the bottom line.

Daniel Stauder requested more color on the expected full-year performance of the two new reporting segments and asked for confirmation that the $65 million free cash flow guidance for 2025 excludes tariff impacts.

Answer

CEO David Pacitti projected mid-single-digit growth for the Specialty Nutrition Systems segment and flat to low-single-digit growth for the Pain Management & Recovery segment for the full year. Interim CFO Jason Pickett and executive Scott Galovan confirmed the $65 million full-year free cash flow guidance explicitly excludes tariff impacts. Pickett clarified that Q1's strong $19 million in free cash flow included approximately $9 million in one-time benefits and should not be used as a quarterly run rate.

Daniel Stauder of Citizens JMP asked for a high-level overview of the primary sales tailwinds for 2025, including key products and launches, and requested more detail on the drivers behind the strong performance of the Game Ready portfolio.

Answer

Interim CEO Michael Greiner detailed the 2025 outlook by segment, highlighting new launches like CORGRIP SR in Digestive Health and volume share gains in HA. He noted strong international growth for COOLIEF and continued momentum in the IVP business, supported by the Diros acquisition. For Game Ready, Greiner attributed its success to both favorable comps and absolute dollar growth, outlining new strategies like a direct-to-consumer approach and an improved rental model to drive future performance.

Daniel Stauder from Citizens JMP asked for commentary on the expected steady-state revenue per site for Green Brook clinics, noting the significant ramp from Q1 to Q2. He also inquired about the specific marketing and outreach strategies being used to drive awareness and adoption among the growing adolescent patient population.

Answer

EVP and CFO Steven Pfanstiel addressed the per-site revenue, stating that while there isn't a specific target, the company expects clinic revenue to remain about 60% of the total business and sees upward potential from volume growth and site expansion. President and CEO Keith Sullivan explained that for the adolescent market, the company uses its 'Provider Connection Program' to directly target and educate healthcare providers who are already known to treat adolescent patients, leading to more effective referrals.

Daniel Stauder asked about the SPRAVATO buy-and-bill transition, focusing on the required capital outlay, its impact on the cash flow statement, and any potential constraints on the conversion process, given the upfront cash expense.

Answer

Executive Stephen Furlong stated that the company deliberately accelerated the buy-and-bill conversion in Q1, using proceeds from its recent financing. To mitigate the cash impact, he is in the process of increasing the company's credit line with a Letter of Credit (LOC). He also highlighted favorable 120-day payment terms with distributors against an anticipated 60-day collection cycle, which should prevent the program from becoming a cash flow issue once it reaches a regular cadence.

Daniel Stauder questioned the capital requirements for the SPRAVATO buy-and-bill transition, current site productivity levels, and the enrollment capacity for the Better Me Provider (BMP) program.

Answer

CFO Steve Furlong clarified that SPRAVATO capital expenditure is minimal at ~$10,000 per clinic, though inventory could reach $5 million, which will be managed through 120-day distributor credit terms. He stated Greenbrook averages 4 treatments/day versus 6-8 for BMP partners, with a goal to increase Greenbrook's rate. CEO Keith Sullivan added that they aim to enroll all qualifying sites into the BMP program, viewing 30-50 new additions by April as a success.

Daniel Stauder from JMP Securities asked for the source of the incremental $5 million in cost synergies, whether the new $20 million target is a ceiling, and for insights into the company's cash usage and comfort with its cash position leading up to the 2025 breakeven target.

Answer

CFO Stephen Furlong explained the additional $5 million in synergies came from the recent strategic reorganization within Neuronetics. He stated that he does not believe the $20 million synergy target is a ceiling and expects it could increase post-close. Furlong expressed comfort with the current cash position and forecasted burn, noting they are in discussions with their lender, Perceptive Advisors, about a potential future debt draw but that current models show a sufficient cash balance.

Daniel Stauder of Citizens JMP asked for details on the growth drivers for appendage management beyond the Flex Mini device and inquired about the outlook for the pain management franchise for the second half of the year.

Answer

CFO Angela Wirick identified Flex Mini as the main U.S. growth driver but noted a halo effect benefiting the legacy FlexV product. For pain management, she projected the franchise would "well outperform" overall company growth for the rest of the year, though the 40% growth rate might moderate due to more difficult year-over-year comparisons.

Daniel Stauder asked for details on pain management account growth targets and the expected launch trajectory for the new cryoXT probe.

Answer

CFO Angela Wirick clarified that Cryo Nerve Block is now used in about 600 accounts, with a total U.S. target market of 1,200-1,300 accounts. CEO Michael H. Carrel explained that the cryoXT launch will be methodical and slower than recent launches, with a focus on perfect case execution and learning in the first year. Significant revenue contribution is not expected until mid-to-late 2026.

Daniel Stauder of Citizens JMP asked about the degree of caution baked into the 2025 guidance for the minimally invasive (MIS) business and inquired about the potential timing and pathway for new pain management indications like post-amputation pain.

Answer

CFO Angela Wirick confirmed the guidance assumes a year-over-year revenue decline for the U.S. MIS businesses, with the most pressure in H1 2025. CEO Michael H. Carrel explained that for pain management, the company already has the necessary labeling and is developing a new device for the amputation market, which he described as a multi-hundred million dollar opportunity.