LeMaitre Vascular, Inc. (LMAT) Q2 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call reflects a positive outlook with increased sales guidance, strong international growth, and optimistic product feedback. Despite minor setbacks, such as not reaching the sales rep target and uncertainty in price hikes, the overall sentiment is bolstered by strategic international expansions and improved margins. The market cap suggests a moderate reaction, aligning with a 'Positive' sentiment.

Key Financial Performance

Sales Sales increased by 15% year-over-year, driven by strong performance in catheters (up 27%) and grafts (up 19%). Valvulotomes and Chunnt also grew by 13%. Geographically, EMEA grew 23%, Americas 12%, and APAC 12%. The increase was attributed to strong unit growth, pricing growth, and international expansion.

Gross Margin Gross margin was 70%, up 110 basis points year-over-year. The improvement was driven by higher average selling prices, manufacturing efficiencies, and a positive product mix.

Operating Income Operating income was $16.1 million, up 12% year-over-year, resulting in an operating margin of 25%. The increase was driven by higher revenues and operational efficiencies.

Net Income Net income increased 17% year-over-year to $13.8 million. This was supported by $1.7 million of net interest income due to higher yields on invested cash compared to interest expenses on convertible debt.

Earnings Per Share (EPS) Fully diluted EPS was $0.60, up 16% year-over-year, reflecting the company's strong financial performance.

Cash and Securities Cash and securities increased by $17 million in the quarter, ending at $319.5 million. This was driven by record cash from operations of $20.3 million and offset by $4.5 million in dividends paid to shareholders.

Operating Expenses Operating expenses were $28.8 million, up 20% year-over-year. The increase was primarily due to higher compensation expenses, the addition of 23 sales professionals, and the expansion of the European direct sales model.

You have reached the limit Upgrade to access full content

Get started

Operating Highlights

ArteGraft: International Artegraft launch exceeded expectations in Q2 with sales of $420,000, up from $185,000 in Q1. Expected to surpass $2 million in full year 2025. Approved in multiple countries including U.S., EU, U.K., and more. 2026 approvals likely in Canada, Korea, and Singapore.

RestoreFlow: Anticipating at least one European approval in 2025 (Ireland or Germany). Opening a RestoreFlow distribution facility in Dublin to support European launches. Currently approved in U.S., U.K., and Canada.

XenoSure Vascular Patch: On track for final submission in China in Q4 2025. Approval expected in 2026.

Geographic Sales Growth: EMEA grew 23%, Americas 12%, and APAC 12%. First Portuguese and Czech direct-to-hospital sales posted.

Tariff Adjustments: 25% average price increase in China due to tariffs. Increased inventory at international warehouses to anticipate potential tariff increases.

Sales Team Expansion: Added 23 sales professionals and expanded European direct sales model, including Portuguese and Czech markets.

Gross Margin: Achieved 70% gross margin in Q2, driven by higher selling prices, manufacturing efficiencies, and positive product mix.

Operating Income: Q2 operating income was $16.1 million, up 12%, with a 25% operating margin.

Revenue Guidance: Raised full year revenue guidance to $251 million, reflecting 15% organic growth.

Earnings Per Share: Increased guidance on fully diluted EPS to $2.30, up 19%.

You have reached the limit Upgrade to access full content

Get started

Risk or Challenges

Packaging-related recall: In Q2 2025, a packaging-related recall on a portion of catheters caused a temporary supply disruption. Although customers placed stocking orders late in the quarter to compensate, this issue could impact customer trust and future sales.

Regulatory hurdles for RestoreFlow: RestoreFlow lacks EU-wide approval for Allografts, which complicates and delays its European market entry. The company anticipates only one European approval in 2025, which may slow broader adoption.

Dependence on international regulatory approvals: Future growth in international markets is contingent on regulatory approvals, such as the XenoSure vascular patch in China and Artegraft in Canada, Korea, and Singapore. Delays or denials could hinder expansion plans.

Foreign exchange volatility: While foreign exchange added $1 million to reported sales in Q2 2025, currency fluctuations remain a risk to financial performance, especially in international markets.

Tariff-driven price adjustments: The company has implemented a 25% average price increase in China due to tariffs. This could impact competitiveness and demand in the Chinese market.

Increased operating expenses: Operating expenses rose 20% year-over-year in Q2 2025, driven by higher compensation costs and the expansion of the European direct sales model. This could pressure margins if revenue growth slows.

Aziyo discontinuation impact: The discontinuation of Aziyo decreased reported revenues by $1.1 million in Q2 2025, highlighting risks associated with product portfolio changes.

You have reached the limit Upgrade to access full content

Get started

Guidance & Outlook

Full Year Revenue Guidance: Raised to $251 million, reflecting 15% organic growth driven by an expanding sales organization and global market success.

Gross Margin: Anticipated full year gross margin of 69.7%.

Operating Income: Projected to reach $60.9 million for the full year, representing a 17% increase.

Operating Margin: Expected to be 24% for the full year, with operating expenses lower in the second half of 2025 compared to the first half.

Earnings Per Share (EPS): Guidance increased to $2.30, reflecting a 19% growth.

Artegraft Sales: International Artegraft sales projected to surpass $2 million in 2025. Approvals in Canada, Korea, and Singapore anticipated in 2026.

RestoreFlow Approvals: At least one European approval expected in 2025, with a new distribution facility opening in Dublin to support launches.

XenoSure Vascular Patch: Final submission in China expected in Q4 2025, with potential approval in 2026.

You have reached the limit Upgrade to access full content

Get started

Shareholder Return Plan

Dividends Paid: $4.5 million in dividends were paid to shareholders in Q2 2025.

You have reached the limit Upgrade to access full content

Get started

Key Q&A

Q:Could you provide an update and quantify the impact of stocking orders at the end of Q2?

A:The impact of stocking orders in Q2 was estimated to be around $800,000, primarily related to a catheter recall.

Q:How sustainable is the 8% price increase going forward?

A:Management believes the price increase pattern established in Q1 and Q2 may hold for the year, but they are uncertain about next year and cannot commit to any specific price hike beyond January 1.

Q:Can you provide more details on the unit volume growth, particularly the contributions from Artegraft, XenoSure, and other products?

A:Excluding the catheter impact, unit growth was 5%. Artegraft saw a 10% increase in units due to a European launch, XenoSure grew 9% in Europe, and RFA cardiac grew 61%, particularly in the U.S.

Q:Are there any updates on assets or areas of interest for acquisitions?

A:Management continues to focus on open vascular and cardiac surgery, with a revenue sweet spot of $15 million to $150 million. They have issued term sheets but have no new updates to report.

Q:What is the full-year revenue expectation for Artegraft, and what is driving the upside?

A:The full-year revenue expectation for Artegraft is $2 million, with $480,000 logged so far. The upside is driven by strong results in Europe and South Africa following recent approval.

Q:What explains the expected operating margin ramp in Q4 compared to Q3?

A:The ramp is due to seasonality, lower operating expenses in the second half, reduced regulatory expenses, and benefits from earlier investments in sales force and product launches.

Q:Are you still targeting 170 sales reps by year-end, and where will the new reps focus?

A:Management now expects to end the year with 165 reps, slightly below the earlier target. The reps will focus on the U.S., Europe, and Asia Pacific, carrying the entire product bag.

Q:How should we think about international sales growth in the back half of the year?

A:International sales growth is expected to remain strong, driven by Artegraft's European launch and other product successes. The U.S. market has also shown a turnaround with 15% organic growth.

Q:How does management prioritize price increases versus volume impacts in the current trade and tariff environment?

A:Management prioritizes price increases in markets where they have significant market share and focuses on niche markets where competitors are less likely to follow.

Q:What is the current sales force turnover rate?

A:The turnover rate is 12%, which management considers normal and within historical ranges.

Q:Can you break out the expected Artegraft sales in Europe and the implied market share?

A:Most of the $2 million Artegraft sales are expected in Europe, representing approximately 12.5% of the estimated $16 million market.

Q:What is the market opportunity for RestoreFlow in Germany or Ireland, and what is the expected ramp?

A:The European allograft market is estimated at $80 million to $100 million. The ramp will depend on gaining country-specific approvals and overcoming supply constraints.

Q:How should we think about free cash flow and CapEx for the rest of 2025?

A:Free cash flow is expected to track operating income, with CapEx remaining steady at around $1.3 million per quarter.

Q:Why did R&D expenses step down, and what is the outlook for the rest of the year?

A:R&D expenses decreased due to the completion of MDR-related work. Management expects R&D spending to remain low in the near term but may increase in the future.

Q:What has been the feedback on RestoreFlow in the cardiac call point, and how can adoption be facilitated?

A:Feedback has been positive, with 61% unit growth in cardiac allografts. Adoption is facilitated by leveraging vascular reps' familiarity with allografts and focusing on the Ross procedure.

Q:Are there any unique hurdles for launching RestoreFlow in Germany or Ireland?

A:Germany requires additional paperwork from recovery centers, which could delay the launch. However, sales forces in both countries are eager to adopt the product.

Q:Did the competitive supply constraints impact RestoreFlow's unit growth?

A:Management was unaware of the competitor's supply constraints during the period. They attribute growth to their own efforts, particularly in Canada, the U.K., and the U.S.

Q:What is the impact of the recent sales force expansion on Q2 results?

A:Management believes the impact was immediate, although it is counterintuitive. Historical data suggests new hires contribute to results right away.

Q:What regulatory approvals are pending, and what is the timeline?

A:Pending approvals include XenoSure peripheral in China (final filing in Q4, approval expected in 2026) and Artegraft in Singapore, Korea, and Canada. Canada is the most significant among these.

Q:Review of Unclear Management Responses

A:Management avoided providing specific guidance on the sustainability of the 8% price increase beyond 2024, citing uncertainty. They also did not commit to a specific timeline for achieving the 170 sales reps target, instead revising it to 165. Additionally, they did not provide detailed guidance on R&D spending for the rest of the year, stating only that it may increase in the future.

You have reached the limit Upgrade to access full content

Get started

Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

LMAT Transcript

LeMaitre Vascular, Inc. (LMAT) Q3 2025 Earnings Call Transcript

Positive11-7

The company has raised its full-year revenue guidance and EPS, indicating strong financial performance. Despite some management ambiguity on future metrics, the overall sentiment is positive with strategic growth plans, including Artegraft and XenoSure expansion, and a robust sales force strategy. The market cap suggests moderate reaction, predicting a 2-8% stock price increase.

LeMaitre Vascular, Inc. (LMAT) Q2 2025 Earnings Call Transcript

Positive8-6

LeMaitre Vascular, Inc. (LMAT) Q1 2025 Earnings Call Transcript

Positive5-1

The earnings call indicates strong financial performance with a 12% increase in Q1 sales, improved gross margins, and an increase in organic sales growth guidance from 10% to 13%. Despite some concerns in the Q&A about Xenosure in China and vague responses regarding share buybacks, the overall sentiment is positive due to the increased guidance and strategic moves like exiting the declining Elutia distribution. The market cap suggests moderate volatility, leading to a positive stock price prediction (2% to 8%) over the next two weeks.

LeMaitre Vascular, Inc. (LMAT) Q4 2024 Earnings Call Transcript

Positive2-27

The earnings call indicates strong financial performance with significant sales and EPS growth, a 25% dividend increase, and improved margins. While there are potential challenges in new markets and supply chain complexities, the guidance remains optimistic, expecting 10% organic growth. The Q&A section reveals management's cautious optimism and strategic hiring plans, although some answers were vague. Given the company's market cap, the positive financial metrics and shareholder returns suggest a likely positive stock price movement over the next two weeks.

LMAT Report

LEMAITRE VASCULAR INC 10-Q

10-Q

2024-11-08

LEMAITRE VASCULAR INC 10-Q

10-Q

2024-08-08

LEMAITRE VASCULAR INC 10-Q

10-Q

2024-05-10

LEMAITRE VASCULAR INC 10-K

10-K

2024-02-29

Frequently Asked Questions

Where does this earnings call transcript come from?

All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.

How soon is the transcript available after the earnings call ends?

Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.

Is the transcript edited or altered in any way?

No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.

Why do some answers appear as “Unclear” or “Inaudible”?

When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.

Who creates the AI Summary and Key Q&A highlights shown above the transcript?

They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.