Artivion Reports Third Quarter 2024 Financial Results
Third Quarter Highlights:
-- Achieved revenue of $95.8 million in the third quarter of 2024 versus $87.9 million in the third quarter of 2023, an increase of 9% on a GAAP basis and 10% on a non-GAAP constant currency basis -- Net loss was ($2.3) million or ($0.05) per fully diluted share and non-GAAP net income was $5.0 million or $0.12 per fully diluted share in the third quarter of 2024 -- Adjusted EBITDA increased 28% to $17.7 million in the third quarter of 2024 compared to $13.9 million in the third quarter of 2023 -- Submitted first module of the pre-market approval application (PMA) for AMDS Hybrid Prosthesis with the U.S. Food and Drug Administration -- Enrollment completed in NEXUS TRIOMPHE clinical trial -- Received regulatory approval from the National Medical Products Administration (NMPA) to commercialize BioGlue Surgical Adhesive in China. Commercialization expected in the second half of 2025.
ATLANTA, Nov. 7, 2024 /PRNewswire/ -- Artivion, Inc. (NYSE: AORT), a leading cardiac and vascular surgery company focused on aortic disease, today announced financial results for the third quarter ended September 30, 2024.
"We continued our strong financial performance through the third quarter as our team delivered revenue growth consistent with our expectations while executing on several initiatives designed to drive long-term profitable growth with our expanding, clinically differentiated product portfolio. Revenue growth in the third quarter was driven by year-over-year growth in On-X of 15%, BioGlue of 14% and stent grafts of 12%, all compared to the third quarter of 2023. On a constant currency basis, year-over-year On-X, BioGlue, and stent grafts grew 15%, 14% and 13%, respectively. We also saw continued revenue strength across Asia Pacific and Latin America which grew 23% and 21%, respectively, and on a constant currency basis, 23% and 32%, compared to last year," said Pat Mackin, Chairman, President, and Chief Executive Officer.
Mr. Mackin concluded, "We also achieved important milestones in our R&D pipeline this quarter. First, BioGlue was approved in China. Second, we submitted our first module of the PMA application for AMDS with the FDA keeping us on track for an anticipated approval in Q4 2025. Third, our partner Endospan completed enrollment in its U.S. IDE trial TRIOMPHE, putting it on track for PMA approval in the second half of 2026. Fourth, excellent clinical data on 161 patients from our Evita Open Neo trial was presented as a late breaker at EACTS. That trial was larger than our upcoming Arcevo IDE trial, which gives us confidence the upcoming trial will be successful."
Third Quarter 2024 Financial Results
Total revenues for the third quarter of 2024 were $95.8 million, an increase of 9% on a GAAP basis and 10% on a non-GAAP constant currency basis, both compared to the third quarter of 2023.
Net loss for the third quarter of 2024 was ($2.3) million, or ($0.05) per fully diluted common share, compared to net loss of ($9.8) million, or ($0.24) per fully diluted common share for the third quarter of 2023. Non-GAAP net income for the third quarter of 2024 was $5.0 million, or $0.12 per fully diluted common share, compared to non-GAAP net income of $749,000, or $0.02 per fully diluted common share for the third quarter of 2023. Non-GAAP net income for the third quarter of 2024 includes pretax gains related to foreign currency revaluation of $2.4 million.
2024 Financial Outlook
Artivion is narrowing its revenue guidance and continues to expect constant currency revenue growth of between 10% to 12% for the full year 2024 compared to 2023 and now expects a range of $389 to $396 million for 2024 compared to the previously articulated range of $388 to $396 million. At current rates, the Company expects negligible year-over-year currency impact on the full year 2024 revenues.
Additionally, Artivion continues to expect adjusted EBITDA growth of between 28% and 34% for the full year 2024 compared to 2023 resulting in an expected range of $69 to $72 million for 2024.
The Company's financial performance for 2024 and future periods is subject to the risks identified below.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, including non-GAAP revenue, non-GAAP net income, non-GAAP adjusted EBITDA, non-GAAP general, administrative, and marketing expenses, and free cash flows. Investors should consider this non-GAAP information in addition to, and not as a substitute for, financial measures prepared in accordance with US GAAP. In addition, this non-GAAP financial information may not be the same as similar measures presented by other companies. The Company's non-GAAP revenues are adjusted for the impact of changes in currency exchange. The Company's non-GAAP net income, non-GAAP adjusted EBITDA, non-GAAP general, administrative, and marketing, and free cash flows results exclude (as applicable) depreciation and amortization expense, interest income and expense, stock-based compensation expense, loss or gain on foreign currency revaluation, income tax expense or benefit, corporate rebranding expense, business development, integration, and severance income or expense, loss on extinguishment of debt, and non-cash interest expense. The Company generally uses non-GAAP financial measures to facilitate management's review of the operational performance of the company and as a basis for strategic planning. Company management believes that these non-GAAP presentations provide useful information to investors regarding unusual non-operating transactions, the operating expense structure of the Company's existing and recently acquired operations, without regard to its on-going efforts to acquire additional complementary products and businesses, and the transaction and integration expenses incurred in connection with recently acquired and divested product lines, and the operating expense structure excluding fluctuations resulting from foreign currency revaluation and stock-based compensation expense. The Company believes it is useful to exclude certain expenses because such amounts in any specific period may not directly correlate to the underlying performance of its business operations or can vary significantly between periods as a result of factors such as impact of recent acquisitions, non-cash expense related to amortization of previously acquired tangible and intangible assets, and any related adjustments to their carrying values. The Company has adjusted for the impact of changes in currency exchange from certain revenues to evaluate comparable product growth rates on a constant currency basis. The Company does, however, expect to incur similar types of expenses and currency exchange impacts in the future, and this non-GAAP financial information should not be viewed as a statement or indication that these types of expenses will not recur. Company management encourages investors to review the Company's consolidated financial statements and publicly filed reports in their entirety, including the reconciliation of GAAP to non-GAAP financial measures.
Webcast and Conference Call Information
The company will hold a teleconference call and live webcast on November 7, 2024, at 4:30 p.m. ET to discuss the results, followed by a question and answer session. To participate in the conference call dial 201-689-8261 a few minutes prior to 4:30 p.m. ET. The teleconference replay will be available approximately one hour following the completion of the event and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415. The conference number for the replay is 13748263.
The live webcast and replay can be accessed by going to the Investors section of the Artivion website at www.Artivion.com and selecting the heading Webcasts & Presentations.
About Artivion, Inc.
Headquartered in suburban Atlanta, Georgia, Artivion, Inc., is a medical device company focused on developing simple, elegant solutions that address cardiac and vascular surgeons' most difficult challenges in treating patients with aortic diseases. Artivion's four major groups of products include: aortic stent grafts, surgical sealants, On-X mechanical heart valves, and implantable cardiac and vascular human tissues. Artivion markets and sells products in more than 100 countries worldwide. For additional information about Artivion, visit our website, www.Artivion.com.
Forward Looking-Statements
Statements made in this press release that look forward in time or that express management's beliefs, expectations, or hopes are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the views of management at the time such statements are made. These statements include, but are not limited to, those regarding our full year revenue expectations and our confidence in our ability to meet or exceed our adjusted EBITDA target for 2024; the timeline for regulatory approval for AMDS and other products; that our revenues for the full year 2024 will be in the range of $389 and $396 million, representing revenue growth of between 10% to 12% compared to 2023 on a constant currency basis; expect, at current exchange rates, negligible currency impact on the 2024 full year revenues; and expect non-GAAP adjusted EBITDA to increase between 28% and 34% for the full year 2024 compared to 2023, resulting in non-GAAP adjusted EBITDA in the range of $69 to $72 million in 2024. These forward-looking statements are subject to a number of risks, uncertainties, estimates and assumptions that may cause actual results to differ materially from current expectations, including, but not limited to, the unpredictability of the timing and outcome of regulatory decisions, the benefits anticipated from the Ascyrus Medical LLC transaction and Endospan agreements and our operational improvements in our tissue and stent graft business may not be achieved at all or at the levels we anticipate or had originally anticipated; the benefits anticipated from our clinical trials and regulatory approvals may not be achieved or achieved on our anticipated timelines; and the benefits anticipated from our expansion into APAC and LATAM may not be achieved or achieved on our anticipated timelines. These risks and uncertainties include the risk factors detailed in our Securities and Exchange Commission filings, including our Form 10-K for the year ended December 31, 2023, and our Form 10-Q for the quarter ended September 30, 2024. Artivion does not undertake to update its forward-looking statements, whether as a result of new information, future events, or otherwise.
Artivion, Inc. and Subsidiaries Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) In Thousands, Except Per Share Data (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Revenues: Products $71,244 $63,747 $215,568 $192,041 Preservation services 24,535 24,107 75,661 68,293 Total revenues 95,779 87,854 291,229 260,334 Cost of products and preservation services: Products 24,412 21,574 72,707 62,084 Preservation services 10,358 10,010 31,243 30,169 Total cost of products and preservation services 34,770 31,584 103,950 92,253 Gross margin 61,009 56,270 187,279 168,081 Operating expenses: General, administrative, and marketing 50,017 51,093 130,026 158,699 Research and development 6,605 6,421 21,048 21,062 Total operating expenses 56,622 57,514 151,074 179,761 Gain from sale of non-financial assets - (14,250) Operating income (loss) 4,387 (1,244) 36,205 2,570 Interest expense 8,405 6,603 24,535 19,055 Interest income (366) (339) (1,093) (679) Loss on extinguishment of debt - 3,669 Other (income) expense, net (2,386) 1,911 6 5,189 (Loss) income before income taxes (1,266) (9,419) 9,088 (20,995) Income tax expense 1,022 382 5,964 5,720 Net (loss) income $(2,288) $(9,801) $3,124 $(26,715) (Loss) income per share: Basic $(0.05) $(0.24) $0.07 $(0.65) Diluted $(0.05) $(0.24) $0.07 $(0.65) Weighted-average common shares outstanding: Basic 41,844 40,881 41,607 40,691 Diluted 41,844 40,881 42,621 40,691 Net (loss) income $(2,288) $(9,801) $3,124 $(26,715) Other comprehensive income (loss): Foreign currency translation adjustments 8,393 (7,070) 2,529 $(1,423) Unrealized (loss) gain from foreign currency intra-entity loans, net of tax (2,060) 2,060 (47) 1,855 Comprehensive income (loss) $4,045 $(14,811) $5,606 $(26,283)
Artivion, Inc. and Subsidiaries Condensed Consolidated Balance Sheets In Thousands September 30, December 31, 2024 2023 (Unaudited) ASSETS Current assets: Cash and cash equivalents $56,173 $58,940 Trade receivables, net 75,686 71,796 Other receivables 2,288 2,342 Inventories, net 84,123 81,976 Deferred preservation costs, net 50,421 49,804 Prepaid expenses and other 19,267 15,810 Total current assets 287,958 280,668 Goodwill 248,745 247,337 Acquired technology, net 135,052 142,593 Operating lease right-of-use assets, net 41,206 43,822 Property and equipment, net 38,262 38,358 Other intangibles, net 29,527 29,638 Deferred income taxes 1,458 1,087 Other long-term assets 20,936 8,894 Total assets $803,144 $792,397 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $11,146 $13,318 Current portion of long-term debt 99,698 1,451 Accrued expenses 15,888 12,732 Accrued compensation 15,236 18,715 Current maturities of operating leases 4,513 3,395 Taxes payable 3,521 3,840 Accrued procurement fees 1,456 1,439 Other current liabilities 1,380 2,972 Total current liabilities 152,838 57,862 Long-term debt 214,270 305,531 Contingent consideration 51,720 63,890 Non-current maturities of operating leases 41,440 43,977 Deferred income taxes 18,538 21,851 Deferred compensation liability 7,930 6,760 Non-current finance lease obligation 3,194 3,405 Other long-term liabilities 8,475 7,341 Total liabilities $498,405 $510,617 Commitments and contingencies Stockholders' equity: Preferred stock - Common stock (75,000 shares authorized, 43,392 and 42,569 shares issued in 2024 and 2023, respectively) 434 426 Additional paid-in capital 373,264 355,919 Retained deficit (44,783) (47,907) Accumulated other comprehensive loss (9,528) (12,010) Treasury stock, at cost, 1,487 shares as of September 30, 2024 and December 31, 2023 (14,648) (14,648) Total stockholders' equity 304,739 281,780 Total liabilities and stockholders' equity $803,144 $792,397
Artivion, Inc. and Subsidiaries Condensed Consolidated Statement of Cash Flows In Thousands (Unaudited) Nine Months Ended September 30, 2024 2023 Net cash flows from operating activities: Net income (loss) $3,124 $(26,715) Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation and amortization 17,910 17,260 Change in fair value of contingent consideration (12,170) 21,900 Non-cash compensation 11,499 10,466 Non-cash lease expense 5,860 5,467 Deferred income taxes (4,187) (7,250) Non-cash debt extinguishment expense 3,669 Write-down of inventories and deferred preservation costs 2,911 3,726 Fair value adjustment of Endospan agreements (195) 5,000 Gain from sale of non-financial assets - (14,250) Other 1,818 2,325 Changes in operating assets and liabilities: Accounts payable, accrued expenses, and other liabilities (5,237) 412 Inventories and deferred preservation costs (4,791) (10,592) Prepaid expenses and other assets (4,758) (527) Receivables (3,356) 765 Net cash flows provided by operating activities 12,097 7,987 Net cash flows from investing activities: Capital expenditures (9,763) (7,083) Payments for Endospan agreements (7,000) (5,000) Proceeds from sale of non-financial assets, net - 14,250 Net cash flows (used in) provided by investing activities (16,763) 2,167 Net cash flows from financing activities: Proceeds from issuance of debt 190,000 Proceeds from revolving credit facility 30,000 Proceeds from exercise of stock options and issuance of common stock 5,285 3,467 Proceeds from financing insurance premiums - 3,558 Repayment of debt (211,765) (2,063) Payment of debt issuance costs (10,044) Principal payments on short-term notes payable (1,027) (1,522) Other (420) (945) Net cash flows provided by financing activities 2,029 2,495 Effect of exchange rate changes on cash and cash equivalents (130) 1,481 (Decrease) increase in cash and cash equivalents (2,767) 14,130 Cash and cash equivalents beginning of period 58,940 39,351 Cash and cash equivalents end of period $56,173 $53,481
Artivion, Inc. and Subsidiaries Financial Highlights In Thousands (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Products: Aortic stent grafts $28,643 $25,523 $92,936 $80,032 On-X 21,478 18,744 61,804 54,346 Surgical sealants 18,437 16,234 53,963 49,503 Other 2,686 3,246 6,865 8,160 Total products 71,244 63,747 215,568 192,041 Preservation services 24,535 24,107 75,661 68,293 Total revenues $95,779 $87,854 $291,229 $260,334 North America 49,089 48,028 148,679 137,541 Europe, the Middle East, and Africa 30,423 26,536 98,156 84,608 Asia Pacific 10,366 8,402 27,628 24,655 Latin America 5,901 4,888 16,766 13,530 Total revenues $95,779 $87,854 $291,229 $260,334
Artivion, Inc. and Subsidiaries Reconciliation of GAAP to Non-GAAP Revenues In Thousands (Unaudited) Revenues for the Percent Three Months Ended Change September 30, From Prior Year 2024 2023 US GAAP US GAAP Exchange Constant Constant Rate Effect Currency Currency Products: Aortic stent grafts $28,643 $25,523 $(208) $25,315 13 % On-X 21,478 18,744 (103) 18,641 15 % Surgical sealants 18,437 16,234 (128) 16,106 14 % Other 2,686 3,246 1 3,247 -17 % Total products 71,244 63,747 (438) 63,309 13 % Preservation services 24,535 24,107 (22) 24,085 2 % Total $95,779 $87,854 $(460) $87,394 10 % North America 49,089 48,028 (50) 47,978 2 % Europe, the Middle East, and Africa 30,423 26,536 12 26,548 15 % Asia Pacific 10,366 8,402 1 8,403 23 % Latin America 5,901 4,888 (423) 4,465 32 % Total $95,779 $87,854 $(460) $87,394 10 %
Revenues for the Percent Nine Months Ended Change September 30, From Prior Year 2024 2023 US GAAP US GAAP Exchange Constant Constant Rate Effect Currency Currency Products: Aortic stent grafts $92,936 $80,032 688 $80,720 15 % On-X 61,804 54,346 (2) 54,344 14 % Surgical sealants 53,963 49,503 (10) 49,493 9 % Other 6,865 8,160 4 8,164 -16 % Total products 215,568 192,041 680 192,721 12 % Preservation services 75,661 68,293 (26) 68,267 11 % Total $291,229 $260,334 $654 $260,988 12 % North America 148,679 137,541 (57) 137,484 8 % Europe, the Middle East, and Africa 98,156 84,608 994 85,602 15 % Asia Pacific 27,628 24,655 24,655 12 % Latin America 16,766 13,530 (283) 13,247 27 % Total $291,229 $260,334 $654 $260,988 12 %
Artivion, Inc. and Subsidiaries Reconciliation of GAAP to Non-GAAP General, Administrative, and Marketing Expense, Adjusted EBITDA, and Free Cash Flows In Thousands (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Reconciliation of G&A expense, GAAP to adjusted G&A, non-GAAP: General, administrative, and marketing expense, GAAP $50,017 $51,093 $130,026 $158,699 Business development, integration, and severance expense (income) 3,431 6,363 (11,923) 22,461 Corporate rebranding expense - 65 283 Adjusted G&A, non-GAAP $46,586 $44,665 $141,949 $135,955 Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Reconciliation of net loss, GAAP to adjusted EBITDA, non-GAAP: Net (loss) income, GAAP $(2,288) $(9,801) $3,124 $(26,715) Adjustments: Interest expense 8,405 6,603 24,535 19,055 Depreciation and amortization expense 6,110 5,759 17,910 17,260 Business development, integration, and severance expense (income) 3,431 6,122 (11,923) 26,844 Stock-based compensation expense 3,769 3,187 11,499 10,466 Income tax expense 1,022 382 5,964 5,720 Loss on extinguishment of debt - 3,669 Interest income (366) (339) (1,093) (679) (Gain) loss on foreign currency revaluation (2,382) 1,882 (29) 112 Abandonment of CardioGenesis Cardiac laser therapy business - 390 Corporate rebranding expense - 65 283 Gain from sale of non-financial assets - (14,250) Adjusted EBITDA, non-GAAP $17,701 $13,860 $53,656 $38,486 Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Reconciliation of cash flows from operating activities, GAAP to free cash flows, non-GAAP: Net cash flows provided by operating activities $11,455 $7,232 $12,097 $7,987 Capital expenditures (3,639) (2,068) (9,763) (7,083) Free cash flows, non-GAAP $7,816 $5,164 $2,334 $904
Artivion Inc. and Subsidiaries Reconciliation of GAAP to Non-GAAP Net Income and Diluted Income Per Common Share In Thousands, Except Per Share Data (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 GAAP: (Loss) income before income taxes $(1,266) $(9,419) $9,088 $(20,995) Income tax expense 1,022 382 5,964 5,720 Net (loss) income $(2,288) $(9,801) $3,124 $(26,715) Diluted (loss) income per common share $(0.05) $(0.24) $0.07 $(0.65) Diluted weighted-average common shares outstanding 41,844 40,881 42,621 40,691 Reconciliation of (loss) income before income taxes, GAAP to adjusted income, non-GAAP: (Loss) income before income taxes, GAAP: $(1,266) $(9,419) $9,088 $(20,995) Adjustments: Business development, integration, and severance expense (income) 3,431 6,122 (11,923) 26,844 Amortization expense 3,990 3,766 11,650 11,453 Loss on extinguishment of debt - 3,669 Non-cash interest expense 546 465 1,610 1,391 Abandonment of CardioGenesis Cardiac laser therapy business - 390 Corporate rebranding expense - 65 283 Gain from sale of non-financial assets - (14,250) Adjusted income before income taxes, non-GAAP 6,701 999 14,094 5,116 Income tax expense calculated at a tax rate of 25% 1,675 250 3,523 1,279 Adjusted net income, non-GAAP $5,026 $749 $10,571 $3,837 Reconciliation of diluted income (loss) per common share, GAAP to adjusted diluted income per common share, non-GAAP: Diluted (loss) income per common share, GAAP: $(0.05) $(0.24) $0.07 $(0.65) Adjustments: Business development, integration, and severance expense (income) 0.08 0.15 (0.28) 0.65 Amortization expense 0.09 0.09 0.27 0.28 Loss on extinguishment of debt - 0.09 Non-cash interest expense 0.02 0.01 0.04 0.03 Abandonment of CardioGenesis Cardiac laser therapy business - 0.01 Corporate rebranding expense - 0.01 Gain from sale of non-financial assets - (0.34) Tax effect of non-GAAP adjustments (0.05) (0.06) (0.03) (0.17) Effect of 25% tax rate 0.03 0.07 0.09 0.27 Adjusted diluted income per common share, non-GAAP $0.12 $0.02 $0.25 $0.09 Reconciliation of diluted weighted-average common shares outstanding GAAP to diluted weighted-average common shares outstanding, non-GAAP: Diluted weighted-average common shares outstanding, GAAP: 41,844 40,881 42,621 40,691 Adjustments: Effect of dilutive stock options and awards 1,160 662 512 Diluted weighted-average common shares outstanding, non-GAAP 43,004 41,543 42,621 41,203
Contacts: Artivion Gilmartin Group LLC Lance A. Berry Brian Johnston /Laine Morgan Executive Vice President & Phone: 332-895-3222 Chief Financial Officer investors@artivion.com Phone: 770-419-3355
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SOURCE Artivion, Inc.