LeMaitre Vascular - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 delivered double‑digit growth and margin expansion: sales $64.23mm (+15%), gross margin 70.0% (+110 bps), operating income $16.10mm (+12%), diluted EPS $0.60 (+16%).
• Broad-based strength by product and region; catheters (+27%) and grafts (+19%) led growth; EMEA +23%, Americas +12%, APAC +12%. Price contributed +8% and units +7%; management flagged ~$0.8mm of end‑quarter catheter stocking tied to a packaging recall.
• Guidance raised across the board: FY25 sales midpoint to $251mm (+15% organic), gross margin 69.7%, operating income $60.9mm (+17%), EPS $2.30 (+19%); Q3 guide midpoints: sales $62.2mm, EPS $0.57.
• Estimate context: Q2 revenue and EBITDA beat consensus; EPS beat by ~$0.034 (0.600 vs 0.566*)—Q1 had an EPS miss despite a revenue beat; Q4 2024 was roughly in line to slightly below on revenue/EPS*.

What Went Well and What Went Wrong

What Went Well

• Strong top-line and margin execution: “Q2 was strong across the board, with sales up 15%, a 70% gross margin, and EPS up 16%”.
• Biologics momentum and international expansion: Artegraft OUS launch “ahead of plan,” with FY25 OUS sales now expected to surpass $2mm; autograft approvals expanding across US, EU, UK, Australia, NZ, South Africa, Israel, Thailand, Malaysia.
• Cash generation and balance sheet strength: Record cash from operations of $20.3mm; cash and securities ended at $319.5mm, up $16.9mm sequentially; dividend $0.20/share declared.

What Went Wrong

• Temporary supply disruption and recall: Packaging-related catheter recall caused disruption; late-quarter stocking boosted sales by ~$0.8mm—management does not expect a repeat in Q3.
• OpEx inflation and mix pressure: Operating expenses rose 20% Y/Y on salesforce expansion and European go-direct build-outs; allografts carry margins below corporate average, contributing to mix drag in prior periods.
• Tariff exposure in China: Implemented ~25% average price increase in China to offset tariff headwinds; inventory increased in international warehouses to buffer potential tariff changes.

Transcript

Speaker 3

Welcome to the LeMaitre Vascular Q2 2025 fiscal results conference call. As a reminder, today's call is being recorded. At this time, I would like to turn the call over to Mr. Dorian LeBlanc, Chief Financial Officer of LeMaitre Vascular. Please go ahead, sir.

Speaker 2

Thank you, Operator. Good afternoon, and thank you for joining us on our Q2 2025 conference call. With me on today's call is our CEO, George LeMaitre, and our President, Dave Roberts. Before we begin, I'll read our Safe Harbor Statement. Today, we'll be making some forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, the accuracy of which is subject to risks and uncertainties. Wherever possible, we will try to identify those forward-looking statements by using words such as believe, expect, anticipate, pursue, forecast, and similar expressions. Our forward-looking statements are based on our estimates and assumptions as of today, August 5, 2025, and should not be relied upon as representing our estimates or views on any subsequent date.

Please refer to the cautionary statement regarding forward-looking information and the risk factors in our most recent 10-K and subsequent SEC filings, including disclosures of the factors that could cause results to differ materially from those expressed or implied. During this call, we will discuss non-GAAP financial measures such as organic sales growth. A reconciliation of GAAP to non-GAAP measures discussed in the call is contained in the associated press release and is available in the Investor Relations section of our website, www.lemaitre.com. I'll now turn the call over to George LeMaitre.

Speaker 1

Thanks, Dorian. Q2 was strong across the board, with sales up 15%, a 70% gross margin, and EPS up 16%. As a result, we're increasing full-year guidance for sales, gross margin, operating income, and EPS. Q2 sales were led by catheters, up 27%, and grafts, up 19%, while valvulotomes and shunts were both up 13%. By geography, EMEA grew 23%, Americas 12%, and APAC 12%. Our international Autograft launch exceeded expectations in Q2, with sales of $420,000, up from $185,000 in Q1. International Autograft sales should surpass $2 million in full-year 2025. Autograft is currently approved in the U.S., EU, UK, Australia, New Zealand, South Africa, Israel, Thailand, and Malaysia, and 2026 approvals are likely in Canada, Korea, and Singapore. Autograft was the company's largest U.S. product in 2024, with $37 million in U.S. sales.

As for RestoreFlow, we continue to anticipate at least one European approval in 2025, either Ireland or Germany. Unfortunately, there is no EU-wide approval for allografts, but one approval in Europe should expedite others. To support the impending European launches, we are opening a RestoreFlow distribution facility in Dublin this year. RestoreFlow is currently approved in just three countries: the U.S., the UK, and Canada. In China, our XenoSure Vascular Patch remains on track for final submission in Q4. Approval might come in 2026. This follows the Q4 2024 Chinese XenoSure Cardiac Patch approval. We ended Q2 with 164 sales reps and 33 sales managers, and our international GoDirect efforts continue. We recently posted our first Portuguese and Czech direct-to-hospital sales. 2025 is shaping up to be another year of healthy sales and profit growth. I'll now turn the call over to Dorian.

Speaker 2

Thanks, George. LeMaitre's strong organic revenue growth continued in the second quarter. Our 15% organic growth, consisting of 8% price growth and 7% unit growth, was highlighted by the strong unit growth of Autograft, Zenissure, RestoreFlow, and catheters. Our biologics continued their strong growth, and as George discussed, our current regulatory progress provides future international growth opportunities across the biologics portfolio. Cardiac RestoreFlow was the largest product contributor to unit sales growth, as our sales team continued to expand on our success at OpenCardiac. In Q2, we initiated a packaging-related recall on a portion of our catheters. After a temporary supply disruption, customers placed stocking orders late in the quarter, which boosted overall catheter sales. We don't expect this to be repeated in Q3. Year-over-year reported revenue growth of 15% benefited from the weaker U.S. dollar, as foreign exchange added $1 million to reported sales.

This was offset by the Azeo discontinuation, which decreased reported revenues $1.1 million. In Q2 2025, we posted a 70% gross margin. The 110 basis point increase year-over-year was driven primarily by higher average selling prices, the continued benefit of manufacturing efficiencies, and positive product mix. Operating expenses in Q2 2025 were $28.8 million, an increase of 20% versus Q2 2024. The increase was driven largely by higher compensation expenses, including the addition of 23 sales professionals, and the expansion of our European direct sales model, including the Portuguese and Czech GoDirect efforts. Q2 2025 operating income was $16.1 million, up 12%, resulting in an operating margin of 25%. Net income increased 17% year-over-year to $13.8 million. We benefited from $1.7 million of net interest income in Q2 as yield on our invested cash exceeded interest expense on our convertible debt. Fully diluted EPS was $0.60, up 16%.

We ended Q2 2025 with $319.5 million in cash and securities, an increase of $17 million in the quarter. Cash from operations generated a record $20.3 million in Q2, and we paid $4.5 million in dividends to shareholders. As the landscape around international trade continues to evolve, LeMaitre remains confident in our global business model. So far, the only tariff-driven price adjustment we've made is a 25% average increase in China. During the quarter, we also increased inventory at our international warehouses, anticipating potential tariff increases. Our U.S.-only manufacturing, niche product portfolio, and direct sales model give us confidence tariffs will not materially impact our financials in the second half of the year. We have raised our full-year revenue guidance to $251 million and 15% organic growth due to the impact of our growing sales organization and our success across global markets.

We anticipate a full-year gross margin of 69.7% and operating income of $60.9 million, up 17%. We expect operating expenses to be lower in the second half of 2025 versus the first half of 2025, resulting in a 24% operating margin for the year. We also have increased our guidance on fully diluted earnings per share to $2.30, up 19%. With that, I'll turn it back over to the Operator for questions.

Speaker 3

Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, you will need to press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. Please stand by while we compile the Q&A roster. Our first question comes from Michael Petusky of Jefferies. Your line is now open.

Hey, good afternoon, and thanks for taking the questions. Just the first one for me. You talked about some of the stocking orders at the end of Q2. I guess, could you just give us an update and maybe help quantify what the impact was in the quarter? You did have some pretty strong unit volume growth of 7%. Just wanted to get a sense for, you know, how much that was impacted by the stocking.

Speaker 1

Right. You can't always tell, but we're—hi Mike, this is George. How you doing? Nice to talk to you.

Good.

We're thinking it's around $800,000 in the quarter, and that's around that catheter recall, which Dorian detailed for you.

Got it. Very helpful. I figure I'll ask, another strong quarter of price taking at 8%. Maybe you can talk about how you're thinking about the sustainability of that level of price taking going forward.

Right. Maybe during this year, we don't have to think about it too much. We're starting to establish a pattern in Q1 and Q2, so maybe it's set up for the year. As to next year, I don't know. I remember last fall we started getting questions very early about when will you do your price hike and how much will it be. Of course, I don't want to go, I know you're not asking me to go into 2025, but we will certainly do a price hike on January 1st around the world. I would say the cadence that we've set is probably what happens, but we just don't know and we can't commit to anything just yet.

Understood. Thanks, George.

Thanks a lot.

Speaker 3

Our next question comes from Michael Petusky of Barrington Research. Your line is now open.

Hey, good evening, guys. I wanted to ask, or try to drill down a little bit more on the human volume growth. Obviously, it sounds like the catheter stocking contributed to that, but you guys also called out Autograft, which I guess I get because of the CE mark and the MDR there, but also Zenissure and I think possibly one or two other product categories. Could you just sort of drill down on what may have been going on there? Because 7%, honestly, is a big number relative to recent history and obviously a great number. Thanks.

Speaker 1

Mike, we agree. Hi, this is George. Nice to talk to you again. Yes, we agree, it's a bigger number. If you extract out the catheter thing that we just talked about, it's really 5%. Quite honestly, that's sort of the last three years. 2023 was 5%. 2024 was 4%. So far, I don't know what the H1 number was. I'm only going after Q. This stripped out of the catheter thing is 5%. With the catheter stripped out, it's 5%. Let's go further here because you touched on a couple other good topics here. It's not just all about the catheters. Autograft, as you know, is in the middle of this really nice European launch, and the units were up 10%. Zenissure just had another great quarter. It was up 9% in Europe, and RFA Cardiac was up 61%.

We keep making strides on a small base, albeit, but with the RFA Cardiac, that seems to be really working, particularly in the United States.

Okay, terrific. I want to make sure Dave gets in on some action. Anything interesting to talk about just in terms of assets that are out there, conversations you're having, any areas of interest that may be new. Thanks.

Speaker 0

Hi, Mike. Thanks for the question. I would say nothing too new and groundbreaking. We do continue to hunt in open vascular and cardiac surgery. We now get about 13% of our revenue in cardiac surgery. We have issued a few term sheets in the last few years, so we have been active. Nothing really new to report on this call. I think our revenue sweet spot is $15 million kind of minimum, and then on up from there to, I don't know, $100 million, $150 million of revenue. I think probably preferentially we like the drop-ins, but occasionally there's a larger target we might look at.

Speaker 1

You know, Mike, this is George again. Maybe a little bit more detail. You asked about the unit growth. Maybe I can go back and give you the last four quarters because I was not able to pull that Q1 from memory, but here they are starting in Q3 of last year. This is unit growth, not price, just unit growth: 6, 6, 4, 7, being this quarter. So 6, 6, 4, 7. I think if you put all those together, you're getting a 5% type company. Unit growth, not pricing.

Okay, I appreciate that. I was not remembering unit growth quite that strong, but thank you. I appreciate it.

No problem. Operator, maybe we need to line up the next question here.

Speaker 3

Yes, our next question comes from Brett Fishbin of KeyBanc Capital Markets. Your line is now open.

Hey guys, thanks very much for taking the questions. I just wanted to follow up again on Autograft. Seemed to see a nice sequential increase there in the revenue. I just wanted to make sure that, you know, we heard the comments for the full year correctly. I wanted to verify $2 million was the full year number. If that's right, it seems to imply maybe around $700,000 on average per quarter in the back half, which is about double what you previously expected. Maybe just talk more about what's driving the upside versus your preliminary expectations from last quarter.

Speaker 1

Hi Brett, it's George again. Thanks for the question. It's a great question. Yes, you did hear right. It's $2 million for the year and we've logged $480,000. Is that right? It was at $200,000 in the first quarter and then $400,000 in the second quarter. That makes your math approximately correct. I think we're not going to guide on exactly when the stuff happens in which quarter, but obviously it can only happen in two quarters. I mean, I think we came on, remember we only got the approval, I think, right before the earnings call the last time or right at, yeah, right before the earnings call. I think we were typing it in that day or something like that. We didn't really have much experience in the EU with the device before that.

You know, you're seeing us piling up two months of nice results in the EU and also in South Africa in particular as well. It's going quite well. We're just pushing the guidance up on that particular product because we know you want to see that called out.

All right, really helpful. Just one follow-up from me. Some of my math seems to suggest a pretty significant operating margin ramp in 4Q as compared to 3Q. I just wanted to kind of gut check that cadence. Maybe if you could just call out any moving pieces between 3Q and 4Q that would support a much higher exit rate coming out of 2025. Thank you.

Speaker 0

Yeah, Brett, thanks. It's Dorian. I think there is some seasonality here. Q3 tends to be one of our lower quarters with the European summer impacting revenue. You're going to see, and if you maybe probably do the math to imply the fourth quarter, you'll see a revenue difference stepping up from Q3 to Q4. In addition, I think we mentioned in the script that overall operating expenses are lower in the second half of the year than the first half. Again, there's the seasonality element there around variable compensation as well. We also did set the table in the first half of the year with some of the investments we made around the increase of the sales force, the GoDirects in Europe, some of the office builds.

Some of that will fall off in the second half of the year, things like recruiting fees and the product launch costs for Autograft. We'll have the benefit of that. We do have a benefit coming through as well around the regulatory expense for the MDRs. That's largely behind us. In the third and fourth quarter, we'll see some of that coming off.

Thank you, Dorian. Yeah, that was great. Thank you.

Speaker 3

Thank you. Our next question comes from Rick Wise of Stifel. Your line is now open.

Hi, this is Annie on for Rick. Thanks for taking our questions. For the first one, I was just curious about your sales force expansion plans. On the last call, I believe you were targeting 170 sales reps by year end, and it looks like you ended Q2 with 164 reps. Are you still feeling good about that 170 number? Separately, can you talk to us about where you plan to focus these new reps from a product or geographic standpoint?

Speaker 1

Okay, Annie, thanks a lot for the questions, George. Yeah, so we got to 164. I would say, you know, if we said 165 to 170, I think that was what we were after last time. You may remember 170. I feel like we're sort of more in the 165 range right now, but I don't think that's a material difference. I think we've gotten up to a place and we feel really good about it. You can see the results in Q2. I think 165 is where we're going to wind up at the end of the year, although these things turn on a dime. Three people quit, you hire five people, it goes up and down. In terms of where and what product lines, same, same business as usual. We have set, at this 164, we have 77 reps in the U.S. and Canada.

We have 57 in Europe and 30 in Asia Pac, and they all carry the entire bag. There's no specialized sales forces here.

Got it. Thanks for the color there. I'm wondering how we should think about international sales growth heading into the back half of the year. It seemed particularly strong this quarter, up 21%. Curious if we should expect similar growth into the back half or if there are any specific market dynamics that we need to be sensitive to.

I mean, we try not to split up the guidance between what's going to happen in North America and Europe, but I think you can tell things are going great in Europe for us. The big opening here, the very big opening that we've got is this Autograft in Europe right now thing. We also have coming along, as I mentioned in my script, RFA in Europe, and that will come along. It will come along later. Maybe that's, you know, material revenues in 2026, late 2026, I don't know, early 2026, something like that. Right now you do have that dynamic, which is in Europe. You don't have that type of mega launch going on in the U.S. That being said, we've had a nice turnaround in the U.S. proper over the last couple of quarters.

This quarter with America's being a 12% number, I think reported, in organic was, can anyone help me? What was the organic America's number? 15% organic, sorry, 15% organic America's number. You're starting to see the U.S., not just Canada now, but the U.S. sort of pull the cart, if you will, in North America. I've had a couple of nice quarters in the U.S. Not to be forgotten about is the U.S., but of course, as you can see, 23% reported growth in Europe. Things are going fantastic over there for a number of reasons.

Got it. Thanks so much.

Speaker 3

Thank you. Our next call comes from Suraj Kalia with Oppenheimer. Your line is now open.

Hey, George. Can you hear me all right?

Speaker 1

Perfectly, Suraj. Hello.

Hi there. George, a couple of questions, and I'll pose them right up front. George, you know, there is generally a certain level of uncertainty in the trade and tariff environment. I appreciate your commentary about, you know, China being one of those pockets where you'll have managed, you know, these issues. As you look at the current environment, George, how do you all strategically prioritize, you know, different products for price increases versus volume impacts? I guess I'm trying to understand what is the sensitivity of different buckets of products. How are you all navigating? I got to increase the price for Autograft. I got to reduce the price for RestoreFlow, whatever, in the current environment. Obviously, nominal growth is important. I get that. Just as your long-term strategically, as you think about it, I'd love to get any color there if possible.

Yeah, and of course, Suraj, thanks for the question. This is a huge topic at the end of every year as we're going over the cusp into the new year. I would say a lot of it is driven by logic. If you have 80% market share in a smallish market, you can move prices, and if you have 12% market share in a large market, you can't move prices. I think the foundation of this company is we try to stay in niches where we can have some kind of impact in that niche. That means going back to the Jack Welch strategy over and over again, Chairman of GE, you know, if you're number one or number two in the market, things are going to go well for you.

If you're number four in the market, you're going to be struggling and you're going to be taking prices from someone else. I would say maybe it's not much more complex than the Jack Welch, number one or number two in the market strategy. Internationally, maybe we have a little twist on this too, Suraj, which is if you go to places, for instance, we went to Thailand, you saw that, we went to Portugal recently. If you go to some of these slightly off the beaten track markets, you find that the other big competitors in Vascular don't necessarily follow you because they feel funny going to their board of directors and saying, "Hey, we're going direct in Korea next week." They're like, "What?

What are you, why are you doing that?" As a result, I think we're finding ourselves in these off the beaten track markets where we can take advantage of pricing because the other competitors don't follow us to those markets. Two ways to look at it. I hope that starts to answer your question, Suraj.

Fair enough. George, how would you characterize the churn in your sales force in the current environment? Gentlemen, thank you for taking my questions.

Thanks, Suraj. You're asking a question inside there, what's the turnover rate probably, and it's 12% right now. I think it's normal and fine. I've been here for 33 years. We've had a sales force for like 25 of them, and it feels like it bounces around between, in a really tight hiring environment, you might get it down to 10%, and in a complex environment, it might be up to 15% or 20%. It seems normal to me right now.

Thank you.

Speaker 3

Thank you. Our next question comes from Nathan Treybeck of Wells Fargo. Your line is now open.

Thanks. Good evening. Hey, can you by any chance break out how much of the $2 million of Autograft sales that you expect this year will be in Europe specifically, and what is the implied share that you're capturing? I think you outsized the market at $8 million before, and where could your market share realistically go in Europe?

Speaker 1

Right, and you said $2 million in sales, right? I just want to confirm that, right?

Yeah, you said $2 million O.U.S.

Okay, if we have a, most of this is European right now. It is, we are quoting international, but most of it's European for the time being, except for that South Africa plug. We've been quoting $8 million there and $8 million O rest of the world, right? Not U.S. and not Europe. We're saying it's a $16 million market for now. This is to be discovered as time goes by. Obviously, 2 divided by 16 is what we think is going to happen right now. Dave's got some data as well.

Speaker 0

Thanks, Nathan. It's a good question. In a way, we're kind of building a market OUS because, you know, when you think of dialysis access, which is where Autograft is used primarily outside the U.S., the only biologic company is LeMaitre with Omniflow in Europe, and that's only maybe 15% or 20% used in dialysis access. Really, in terms of thinking about market share, we're really creating the market OUS, and I think that's what makes it so exciting. Yeah, I think, you know, if we continue to see success, could we view the market as larger than 8 plus 8? Possibly. We're really pleased by the initial success. It's very early days, but the initial success with Autograft OUS.

That's very helpful. Thanks. In terms of, you know, assuming you launch RestoreFlow in Germany or Ireland, any way you could kind of quantify the market opportunity in these countries and how we should think about the ramp once you get that approval?

Yeah, so Dave again here, Nathan. You know, the allograft market in cardiac and vascular is very well understood in the U.S. It's a $100 to $150 million market, roughly. We think for various reasons, pricing, etc. The European market's a little bit smaller, but not materially smaller. For us, you know, could we think of an $80 or $100 million market in Europe at maturity? I would say, yeah, that's possible. It'll take a while to get there, because as George pointed out already in his prepared remarks, once we get approval either in Ireland or Germany, that doesn't automatically grant us approval in the rest of Europe. We have to go sort of door to door, country by country, seeking those approvals. That'll take a little time. Secondly, and this is a pretty important point, you know, allografts, unlike the rest of our business, are a supply-constrained product.

In general, if we could get our hands on more allografts, we could sell more. I will give kudos to our team in the Chicago area who does the processing. We have been able to start an inventory build in Chicago for Europe. I personally think that will be somewhat of a rate limiter over time, and we've got to figure out a way to satisfy all the demand in Europe over time. In the near term, we're very excited about Ireland or Germany. As we turn on Canada and the UK, we met with a lot of success, and we don't really have a reason to believe that we won't in the markets where we first gain approval. Kind of one step at a time, but we're optimistic. For us, a $100 million-ish market in Europe is fairly big. To a lot of companies, that's just a niche market.

Thank you.

Speaker 3

Thank you. Our next question comes from Danny Stauder of Citizens JMP. Your line is now open.

Great, thank you for the questions. This first one on free cash flow is really strong this quarter. I think you called out a record in cash from operations. Just in terms of free cash flow for the rest of 2025, how should we think about this in the back half of the year? With that in mind, you know, how should we think about CapEx, working capital, specifically inventory as we consider some of the regulatory approvals and geographical expansions that are coming the rest of the year? Thanks.

Speaker 0

Yeah, Dorian, Dan, thanks for the question. Yeah, as you mentioned, $20.3 million in cash from operations, a record for us. I think it's probably best to add the quarters together and think about them as the first half of the year where we're at $29.4 million. We do have some benefits from working capital, and that can be a little, it can have some variability to it. If you kind of look at our cash from operations and compare it to our operating income, we're pretty much in sync. We're not a phony baloney earnings company. Earnings create cash here, and that's what you're seeing. Although there's some lumpiness from period to period, I think over the long haul, you can expect those to track with each other. On CapEx, we've had $1.3-ish million of CapEx the last two quarters. Don't expect that to change materially.

We have some build-out going on here and just some maintenance CapEx, but nothing material that's going to change to the back half of the year.

Great, thanks for that. Just one follow-up on R&D. I know it's a small number, but that's down a bit. I just wanted to ask how we should think about the back half of the year as we consider the different contributors to overall OpEx for the rest of 2025. Thanks.

Speaker 1

Right, and this is George, and Dorian mentioned this before, but there is what we're terming a peace dividend around here in terms of we just got done with the MDRs, and so it's light around here. Certainly, there's going to be other stuff that's popping up that's going to be a 6% spend on R&D is quite low for us. I think we feel more comfortable. All the charts on the wall say sort of 8s and 9s and 10s for us. It probably needs to go up at some point, but for now, that's where we're at. Obviously, we're not just going to go out and spend it to spend it. It's helping us a little bit on the op margin side right now.

Great, thank you for the questions.

Speaker 0

Thanks, Dan.

Speaker 3

Thank you. Our next question comes from Ross Osborne of Cantor Fitzgerald. Your line is now open.

Hey guys, congrats on the strong quarter, and thanks for taking our questions. Starting off with RestoreFlow, what has feedback been with the cardiac call point, and what can you do to help facilitate adoption within this group?

Speaker 0

Do you mind repeating that question one more time?

Yeah, it's just regarding the cardiac call point. You know, how has feedback trended, and what can you do to help facilitate adoption within this group?

I would say that the feedback has been fantastic. Obviously, Roth, it's Dave. Obviously, you heard that 61% unit growth figure in cardiac allografts, which, you know, that's a pretty large number for us. We're really happy to be seeing that growth. I will say what's different with cardiac allografts this quarter is we're starting to see some traction in the U.S. For us, the story of cardiac allografts has been adoption in the UK and Canada, with the U.S. lagging behind. With the increasing adoption and popularity of the ROS procedure, and frankly, just a greater focus of our U.S. reps on allografts and a little bit on cardiac, we're seeing a nice uptake with that. We do find that our vascular reps, because they're very familiar with allografts, are able to support the cardiac cases.

Okay, great. When thinking about the RestoreFlow initial launch in either Ireland or Germany, outside of the supply headwinds, are there any other large hurdles you guys are going to have to overcome that may be unique to those geographies relative to the U.S.?

Speaker 1

This is George. On the positive side, you have sales forces that are really excited to see this product in Germany and Ireland because they've heard so much from their British colleagues as well as the American. On the plus side of that, there is one detail about Germany, which the German regulators want to see paperwork from every single recovery center where we get these cadaveric pieces. There is another sort of layer of rate limiting there by the German authorities. They want to see all the paperwork that normally the British, the Irish, the Canadians have decided we don't need to see that paperwork, but the Germans do. Germany is going to be a lot bigger than Ireland. You got that. We'll work through it. That's what we do here, and we have folks that do that for us all the time.

We'll work through it, but that's another potential small stumbling block. I almost certainly will get through that.

Got it. Congrats again on the quarter.

Thanks a lot, ROTH.

Speaker 3

Thank you. Our next question comes from Frank Tarkinen of Lake Street. Your line is now open.

Thanks for taking the questions. I was going to swing back to RestoreFlow cardiac. I'm just curious if that has anything to do with, I think there was a competitive dynamic where one of your competitors had a little bit more supply-constrained operating status in recent quarters. Does that have anything to do with the unit growth you saw? If that is the case, do you see that impacting unit growth going forward if their supply improves?

Speaker 1

Frank, it's George again. Thanks for the good question. It's a great question, actually. To be quite honest, we really didn't know about that while it was going on. You're obviously referring to Artivion. There are only three players in this market, and Artivion is one of them. We didn't know about that when it was really live and happening, and we found out about it in retrospect. If the phenomenon had been limited to, hey, in Q1 we sold a lot of stuff, I might say, yeah, it probably had something to do with that. I think you can see our numbers for the last several quarters. RFA keeps going very, very well, particularly cardiac. I don't really think it's that, although it's illogical to say when a competitor leaves a market, something doesn't happen.

We didn't know about it while it was going on, but our results have been durable for the last several quarters. I don't think it's that, but you bring up a good point. Remember, they're not participating to too much extent in Canada, and they're not participating at all in the UK, which is where lots of this growth comes from, at least on those two markets. You've heard Dave here call out that the big surprise for us now is in the U.S. recently. That might tie to it a little bit, but the big surprise recently is in Q2, the American market seems to have opened up for us. We think that's for a different reason, which is our sales manager ran the Canadian business, and he did a great job running the Canadian business, and now he's taking his game plan and putting it on the U.S.

business. We think that's the reason for the great work in the U.S.

Helpful. Thank you. Maybe just on the sales force, obviously you had a big bowl of some hiring in Q1. My assumption is a lot of those folks were probably ramping up throughout Q2, and maybe the fruit to bear with them is still coming, or did they have a material impact on kind of the strong Q2 results as well?

Right. I never know how to answer this question because all of our charts say they impact immediately, and it's really counterintuitive. It makes a lot more sense that it takes someone three or six or nine months to figure out how to do their job well. Our charts all say you hire people and it starts happening. I'm going to give you both answers and say, you know, I've been doing this for a long time. I still can't figure it out.

Fair enough. Appreciate the color. Thanks.

Speaker 3

Thank you. Our next call comes from Jason Wittes of ROTH Capital Partners. Your line is now open.

Hi, thanks for the questions. Maybe just a couple of follow-ups here. One, you mentioned the R&D was light this quarter, but I think the implication is that it remains light for the rest of the year. Related to that, in terms of sort of new product introductions and regulatory approvals, I know we're waiting on the UK and Germany. Is there anything else that we should have on our radar to be aware of?

Speaker 1

Sure. Jason, how are you doing? Maybe I answer the back of the question. You're saying we're waiting on Ireland and Germany. I think that's what you meant to say.

My apologies, that's correct.

No problem. In my script, I would say we're also waiting on Chinese Zenissure peripheral. That's a biggie. We're making the final filing in Q4 here, and we hope in 2026 to get an approval for that. I'd say those are a couple of the biggies. Also, somewhere in the script there, I think it is we're waiting on Autograft in Singapore, Korea, and Canada. Canada being the very big one there, Korea is sort of big, and Singapore is not that big for us. I think you've got to, you do have a nice regulatory pipeline in front of you. We can all see the nice results of Autograft in Europe and South Africa. You can hear that too. Way back at the beginning of your question, you were asking for, hey, is the R&D, maybe my answer wasn't that clear.

I would say, gosh, as the year goes on, I'd hate to give guidance on inside of where the expenses are. I think implicitly you're seeing an OpEx guidance, and it's going down a little bit in H2, as Dorian has detailed, versus H1. Where it comes, whether it's in G&A, whether it's in SG, in sales and marketing, or R&D, I don't think we should probably guide on that or detail that, if that's okay.

Okay, that's fair. I appreciate it. I will jump back in queue. Thanks, George.

Thanks a lot, Jason. Good to hear your voice.

Speaker 3

Ladies and gentlemen, that concludes today's conference. I would like to thank you for your participation. You may now disconnect. Have a great day.