Earnings Call Transcript - AORT Q1 FY2026

Operator

Good afternoon and welcome to Artivian's fourth quarter and year-end 2025 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I would now like to turn the conference over to your host, Mr. Brian Johnson from the Gilmartin Group. Thank you.

Brian Johnston, Analyst — Gilmartin Group

you may begin. Thank you. Good afternoon and thank you for joining the call today. Joining me from our Tibians Management Team are Pat Macken, 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 and 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 the Artibian website. Lastly, 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. Unless otherwise stated, all 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 the adjusted constant currency rates, and expenses as percentage of sales will be based on adjusted revenues. With that, I'll turn the call to our TV and CEO, Pat Mackin.

Pat Mackin, CEO

Thanks, Brian, and good afternoon, everybody. Through the first quarter of 2026, we continue to execute our strategy designed to drive long-term profitable growth through an expanding and clinically differentiated product portfolio. In the quarter, we delivered constant currency revenue growth of 12% and adjusted EBITDA growth of 26% year-over-year. Revenue growth was driven primarily by ONIX and StentGraphs, including AMDS. We also benefited from growth within preservation services as tissue processing volumes normalized following the 2024 cybersecurity event. Before expanding further on product line performance, I'd like to take a moment to address today's exciting news regarding the exercise of our option to acquire endospan. This is following the PMA approval of its Nexus aortic arch stent graft system for chronic aortic dissections, which they achieved in early April. The Nexus system is a branched endovascular stent graft system that is purpose-built for minimally invasive treatment of aortic arch disease. where patients often have no choice other than open-heart surgery. The clinical data is compelling. Data from the chronic aortic arch dissection cohort of the TRIUMPH trial demonstrated 93% of patients survived from lesion-related death, 90% freedom from disabling stroke, and at one year post-treatment. Also, 95% were free from intervention due to endoleaks, excluding type 2 endoleaks at one year, which is a very high-risk population. As a reminder, the total annual U.S. addressable market opportunity associated with both cohorts is estimated to be around $150 million, while dissections representing about $100 million of that. We plan to pursue supplementing the label to include aortic aneurysms through formal regulatory processes expeditiously post-acquisition. Importantly, our anticipated acquisition of Endospan and its Nexus system will complete our market-leading three-pronged aortic arch portfolio. This technology, if acquired alongside AMDS and our SIBO LSA, will position us at the forefront of this segment as the only company globally with a complete portfolio of aortic arch solutions, and importantly, Nexus is the platform technology, not just a single product. It's supported by additional three PMA programs in development that we expect to further extend and solidify our leadership in the aortic arch market over time. We are pleased to have had the financing already in place for this acquisition. And subject to satisfactory and customary closing conditions, we expect to close in the second quarter of 2026. As Lance will discuss in greater detail, we expect a full U.S. commercial launch of Nexus in January of 2027, following efforts to scale inventory production, complete value analysis committee processes, and augment our U.S. sales team. With that, let me turn back to our Q126 results. From a product category perspective, StantGraph revenues grew 10% on a constant currency basis in the first quarter compared to the same period last year. Year-over-year, constant currency growth fell below our expectations due to lower-than-expected AMDS set sales in the U.S., as well as softer-than-expected performance internationally, particularly in the Middle East. Year-over-year growth also reflects a tougher crop in Europe following a strong Q1 2025 performance as we recovered from the 2024 cybersecurity event. While U.S. AMBS sales associated with initial stocking fell short of our expectations in Q1, we've been very encouraged by implanting reorder patterns within the accounts already using AMBS. We view this as a much more critical item than the immediate impact of sales from starter sets. as strong reordering patterns reflect positive user experience and ultimately our long-term adoption of these and our growth uses. Looking ahead, we expect U.S. AMDS set sales to accelerate as more accounts are already through the VAC process. They finalize their procurement as we benefit from steps being taken now to ease the initial upfront $100,000 cost burden associated with stocking. We also anticipate PMA of approval of AMDS in the coming months, which will obviate the need for entirely new accounts, which won't have to go through the IRB process, some of which have deferred the PMA approval because of this increasingly imminent date. Ultimately, we see our comprehensive StentGraph portfolio as a foundational component to our growth strategy. We are encouraged by our enduring fundamental strength and increasingly strong competitive advantage within the segment. Looking ahead, we intend to replicate our proven strategy by bringing additional StentGraph products that are already generating revenue in Europe to the U.S. and Japan, which we believe will unlock further meaningful expansion of our StentGraph total addressable market. Meanwhile, our Q1 Onyx revenue was 17% year-over-year growth on a cost and currency basis. This growth was driven by further global market share gains a continued early traction in our new $100 million U.S. market opportunity unlocked by recently published data, which demonstrate improved outcomes of mechanical valves versus bioprosthetic valves for younger patients. We maintain our conviction that ONIX is the best aortic valve in the market for patients under the age of 65, and we will continue to take market share worldwide in that product line. Tissue processing revenues increased 23% year-over-year on a constant currency basis in the first quarter as demand for our products remained strong and tissue volumes normalized year-over-year following the cybersecurity incident in late 2024. QN results were slightly ahead of our expectations of roughly $24 million per quarter for that business. Lastly, BioGlue was relatively flat on a constant currency basis compared to the same period last year. While this performance was slightly lower than our mid-single-digit growth expectation contemplated in our previously communicated four-year revenue guidance. It falls within the range of normal quarter-to-quarter growth variability due to significant amount of stocking distributor business in that product line. Lastly, on our pipeline, we continue to make great progress on the Artisan clinical trial for our SIBO LSA product. We now have 26 patients enrolled in the trial, which is a non-randomized clinical trial consisting of 132 patients in the U.S. and Europe at up to 30 centers for treatment for aortic dissection and aneurysm in the arch. We anticipate completing full enrollment in mid-27. We are optimistic that the trial will be successful, supported by our clinical results from our current generation frozen elephant trunk, Avita OpenNeo, which is available outside the U.S., following our one-year follow-up period. And assuming the trial meets its endpoints, we anticipate FDA approval for our CEWA LSA in 2029, unlocking an incremental $80 million annual U.S. market opportunity. In conclusion, while Q1 results fell short of our constant currency expectation and reflected some moving pieces that Lance will walk you through in detail, it was a quarter of meaningful progress against our long-term strategy. The fundamentals that underpin our growth strategy remain intact. A comprehensive, clinically differentiated portfolio, a focused commercial organization, and a pipeline that stands to exceed the total addressable market, expand our total addressable market continuously over time. The reordering behavior we are seeing within AMDS accounts reinforces our conviction in the long-term adoption story. We have a clear line of sight and the near-term drivers that will accelerate new account conversion. ANF continues to take share from both mechanical and biopropathetic valves as the leading aortic valve on the market for patients under the age of 65. And with the addition of Nexus, we now have what we believe is the most comprehensive aortic arch portfolio in the world, a position we have built deliberately and intend to extend. With that, I'll now turn the call over to Lance.

Lance Berry, 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. Total revenues were $116.3 million for the first quarter of 2026, up 12% compared to Q1 of 2025. Meanwhile, adjusted EBITDA increased approximately 26% from $17.5 million to $22.1 million in the first quarter of 2026. Adjusted EBITDA margin was 19% in the first quarter of 2026, an approximate 130 basis point improvement over the prior year driven by leverage in SG&A and gross margin improvement. From a product line perspective, stent graft revenues increased 10%, Onyx grew 17%, tissue processing revenues grew 23%, and BioGlue revenues were relatively flat in the first quarter of 2026. On a regional basis, revenues in Asia Pacific increased 6%, North America 23%, EMEA increased 5%, and Latin America decreased 23%. all compared to the first quarter of 2025. International growth was below what we typically see from that part of the business. EMEA underperformance was driven by the stint graph-related factors that Pat discussed earlier, while underperformance across APAC and LATAM was driven primarily due to quarterly fluctuations in distributor ordering patterns, which we expect to normalize over the course of the year. Q1 gross margins were 64.9% in Q1, an increase from 64.2% in the first quarter of 2025, primarily due to favorable product and geographic mix. General administrative and marketing expenses in the first quarter were $60.8 million, compared to $54.7 million in the first quarter of 2025. Non-GAAP general administrative and marketing expenses were $59.3 million, or 51% of sales in the first quarter, compared to $53 million, or 53.6% of sales in the first quarter of 2025, reflecting a 260 basis point improvement. Approximately 170 basis points were driven through leveraging existing infrastructure and annualizing our year one AMDS launch costs, and approximately 90 basis points were from stock-based compensation. Our as-reported expenses included a gain of approximately $1.5 million in Q1 associated with insurance reimbursement for cybersecurity costs we incurred in previous periods, and approximately $1 million of diligence and integration planning costs associated with the planned acquisition of Endospan, both of which are excluded from adjusted EBITDA. R&D expenses for the first quarter were $8.8 million, or 7.6% of sales, compared to $6.7 million, or 6.8% of sales, in the first quarter of 2025. Interest expense net of interest income was $5.2 million, as compared to $7.5 million in the prior year. Other income expense this quarter included foreign currency translation losses of approximately $800,000. Free cash flow was negative $6.8 million in the first quarter of 2026 as compared to negative $20.6 million in the first quarter of 2025. As a reminder, the first quarter is typically our seasonally lowest free cash flow quarter, and although negative, this quarter's free cash flow results were actually slightly better than anticipated. As of March 31, 2026, we had approximately $55.8 million in cash and $215.4 million in debt, net of $4.6 million of unamortized loan origination costs. At the end of the first quarter, our net leverage ratio was 1.8, down from 4.0 in the prior year. And now for our outlook for 2026. As Pat stated, our Q1 stint graph results did not meet our expectations due to factors that could continue to impact our revenue in the near term, primarily softness in our international markets, particularly in the Middle East, and timing of AMDS set sales in the U.S. Because early in the year, we were working to mitigate or offset these issues. However, given the uncertainty around the timing and impact of those actions, we believe it is prudent to adjust our guidance. We now expect adjusted constant currency growth between 7% to 11% for the full year 2026, 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. From a product line perspective, the reduction relates primarily to stint graphs due to the factors we've discussed. This guidance assumes inconsequential revenue from the U.S. nexus sales in 2026 as we seek value analysis committee approvals and build supply for an anticipated January 1, 2027 U.S. launch. As a reminder, growth in the first quarter of 2026 was anticipated to be higher than the remaining quarters, driven by the easier comps for the preservation services business from the prior year cybersecurity event. These flipped to difficult comps for the preservation services business in Q2 and Q3 before normalizing in Q4. We currently anticipate our Q2 year-over-year growth rate will be the lowest in 2026, followed by more consistent sequential improvement as our U.S. AMDS and U.S. Onyx sales accelerate during the year and we return to normal costs for the preservation services business in Q4. With these updated revenue expectations and excluding the impact of the plan's end-of-span acquisition, we now expect full year 2026 adjusted EBITDA to be in the range of $100 to $107 million, representing a range of 12% to 20% growth over 2025 and approximately 100 basis points of adjusted EBITDA margin expansion at the midpoint of our ranges. Please note that this full-year adjusted EBITDA guidance excludes any potential impact from the anticipated completion of the end-of-span acquisition. Assuming the acquisition closes later in the quarter as anticipated, we would expect to incur approximately $8 million of incremental expense through 2026. This would include investments in launch costs and commercial infrastructure, while also accounting for the absorption of endospan operating costs, including ongoing R&D and clinical expenses. Given our expectation for immaterial revenue contribution from U.S. Nexus sales in 2026, this incremental $8 million would be expected to reduce our full-year 2026 adjusted EBITDA to $92 to $99 million. Looking forward, we would expect the first meaningful revenue contribution to begin in January 2027, and we anticipate our combined results to be EBITDA neutral for the full year 2027 as U.S. nexus revenue ramps over the course of the year and as we get combined R&D and clinical spending into our targeted range of 7% to 8% of sales. Relative to the pending acquisition, we also announced today that we drew $150 million under our existing term loan facility. The proceeds will be used to fund the $135 million upfront purchase price for the anticipated end-of-span acquisition. Assuming the acquisition closes as anticipated, quarterly interest expense would increase to approximately $8 million starting in Q3-2026, with Q2-2026 interest expense expected to be slightly lower than that. As a reminder, we also continue to anticipate paying a $25 million earnout in the second half of 2026 following the anticipated mid-2026 AMDS PMA approval. With that, I'll turn the call back to Pat for his

Pat Mackin, CEO

closing comments. Thanks, Lance. Overall, we have near two more to do, and we exit a Q1 with greater conviction than even in our foundational growth strategy. We're excited to move forward with our pending acquisition of Endospan as the Nexus platform stands to complete our market-leading AO Regards portfolio. We see PMA approval of AMDS as it's on track for mid-year, in-plan adoption for AMDS continues to build, and our broader market expansion pipeline is accelerating the plan, particularly with artisan enrolling as expected, and our long-range growth thesis remains intact. More specifically, we expect future growth to be driven by the following four key growth drivers. Number one, the AMDS PMA. We're commercializing the AMDS in the U.S. under the HDE increasing penetration of the annual U.S. market opportunity. With new clinical data, reimbursement dynamics, and the PMA approval are likely to further be tailwinds for this growth. Number two, the ONIX heart valve data. We're continuing to educate providers on the clinical data showing mortality and reoperation benefits in patients under 65 years of age compared to bioprosthetic valves and continue to expect this to translate into greater market share globally. Number three, we're pleased to announce that Nexus is moving forward with our strategy and to acquire our partner, Endospan, following the FDA approval of Nexus. This acquisition, if closed, will provide an additional near-term growth driver, position us at the forefront of this segment, and significantly expand our pipeline with three additional PMA programs in development, extending our runway well beyond the initial approval. And finally, number four, the ARTISAN IDE trial. We continue to make progress in our third-generation frozen elephant trunk called our CIVA LSA. This clinical trial represents an incremental $80 million U.S. annual opportunity. Finally, I want to thank our employees around the globe for the continued dedication to our mission of being a leading partner to surgeons focused on aortic disease. With that, operator, please open the line for questions.

Operator

At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For our participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from John McCauley with Stiefel. Your line is now live.

John McAuley, Analyst — Stifel

Hi, Pat and Lance. Thanks for taking the question. Just want to understand, I think, better on this guidance reset, what's exactly contemplated now? Because I think there's a few key assumptions in here. And a key one is exactly when AMDS receives PMA and then sort of more broadly, what kind of opportunity the PMA unlocks. And it gets to the question of, is this truly conservative, adequate, or how would you frame it in terms of, one, the expectations for when you get this AMDS approval, and then, two, how should we think about the opportunity that that approval unlocks in the context of the revenue ramp throughout the year?

Pat Mackin, CEO

Yeah, thanks, John. Yeah, so I would say a couple things. One, you know, there were two things that didn't go as planned in the first quarter, right? Number one was international stents were off, and that was, you know, mostly due to unplanned things. One was the Middle East, and two was some supply chain challenges. Those are temporary, and we're working to fix those. And the second, as we pointed out, was the AMDF set sales. Those are the starter sets where the hospital has to buy four. We do think that the PMA will help. You know, we've been saying all along that we didn't think the PMA was going to be that much of a difference, But the closer we get to getting the PMA approval, you know, there's some bureaucracy and work that the hospitals have to do to get these IRBs in place. And with the PMA so close, I think that they're just going to wait. So we do think that will be helpful. So, again, we're also working to knock down some of the barriers that we're seeing on getting these starter sets. The encouraging thing is that we saw, you know, we were ahead of plan on the actual implants. So I think that's what we're working on right now, is to make sure we can get access to these starter sets and working through that process. Lance, would you add anything there?

Lance Berry, CFO

Yeah, and then I would say, you know, we've been saying we expect PMA approval, you know, mid-year. We still expect that. And then as far as, you know, what the guidance contemplates, you know, I mean, it basically contemplates the trends we're seeing right now. I mean, we're working to improve those, but that is probably going to take a little bit of time, and I think this is a prudent guidance given the trends we have right now.

John McAuley, Analyst — Stifel

Got it. That's helpful. And then I also wanted to hit on Nexus here. So you talked about working towards closing the acquisition. I just want to understand from this point forward what you're doing as you work up to Jan 1, 2027, Devin, in terms of building out the commercial infrastructure from here, whether it be hiring and whatever else is required. So if you could just talk through sort of key next steps as you build to Nexus, that'd be great.

Pat Mackin, CEO

Yeah, so we're very excited about this Nexus platform. As I mentioned in my comments, it's the third piece of the puzzle, right? It's, you know, AMDS, Arcebo, and Nexus, and that really gives us a kind of a comprehensive portfolio for the arch. We're basically going to have to do a few things to get ready. Number one, we've got to go through value analysis committees. So as you've experienced with us with AMDS, you know, it can take four to six months. So we're going to use that time while we're doing that to do two things. One is build inventory, and two is to hire dedicated clinical specialists for that. The good news about this is it's a very different market than AMDS in that there's only probably 100 accounts that are on our list to begin with. These are very high-end, high-volume accounts. We know who they are, and we can cover that call point with not a lot of reps. So we're going to start hiring reps. We've already got a couple, and we're going to start hiring more as we go through the Value Analysis Committee. So that's really going to be the two main focuses once we close this transaction, getting ready for a January 1 launch.

John McAuley, Analyst — Stifel

Thanks. That's helpful, and thanks for taking the questions.

Operator

Our next question comes from Frank DeKinnon with Lake Street Capital. Your line is now live.

Frank DeKinnon, Analyst — Lake Street Capital Markets

All right. Thank you for taking the questions. We're just hoping to get maybe a little bit more color on some of the reordering versus maybe a plateauing of new accounts. Just trying to kind of really understand the concept there. Is it a factor of really new accounts are starting to slow down or the reordering isn't yet occurring? Because it feels like we've had a really steep trajectory with some of the initial ordering patterns, and then we're just waiting for the reordering? Or is the new ordering starting to plateau?

Pat Mackin, CEO

Yeah, let me clarify. So we started using this term, starter sets, right, which is basically an account that doesn't have AMDS. To get AMDS, they need to purchase four devices for $100,000, right? That is not kind of a normal practice. A lot of businesses will consign units or sell them out of trunk stock. We are having hospitals, they have to acquire four units. The other piece of the equation is the actual implants of the existing accounts. So those actually went quite well and were ahead of our plan. So we're very encouraged and pleased by the adoption of the technology of the accounts that purchased. What we're working on now is we've got a lot of accounts out there that have AMDs kind of in the queue, and we're working through trying to get the units on the shelf. There could be a number of different barriers, whether it's the IRB or just the $100,000 up front purchase, getting some. So we're working on programs to kind of minimize and ease that. Lance, would you add anything?

Lance Berry, CFO

No, I think that's, yeah. So, I mean, in summary, there's the up front $100,000 investment, and then every time that device gets used, they need to reorder a device. So we call that, you know, the initial 100 is a set sale and everything after that is implant sales. So implant sales went great. They were actually ahead of our expectation and all the feedback we're getting on those is fantastic. What we're running into is some barriers into getting this upfront $100,000 investment for a number of different reasons. We talked about the PMA and the IRB. There's also, you know, financial considerations. So we're putting things in place now to try and help overcome those barriers. And we think we'll see, you know, a reacceleration of that set sales.

Pat Mackin, CEO

I think the other point on the, you know, the $100,000 up front lands on, you know, a financial person's desk and can get stuck there for a while. I think the thing that's, you know, very interesting about this is with the DRG 209 for complex arch work, you know, there's very strong reimbursement for AMDS. But as you know, it takes a while to get that information disseminated out to the account. So we're also working on making sure they have, you know, good visibility to the publicly available information on DRG-209 and what that means to their procedural billing.

Frank DeKinnon, Analyst — Lake Street Capital Markets

Got it. That's very helpful. Thank you very much. And then maybe as a second one also on Nexus, how should we think about kind of growth trajectory of this product? I know we've spoke about in the past that there's potentially a little bit more training up front, but obviously very novel. Expect a strong growth trajectory coming out of that. So maybe how should we kind of think about that as we're looking at 2027? And then is there a point in time that you can see that $8 million incremental cost be kind of offset by revenue that you're thinking about as you're thinking about the ramp?

Pat Mackin, CEO

Yeah, so I think one of the things that's clear about this technology is that, you know, surgeons, the vascular surgeons, they've got a lot of patients that aren't being treated right now because there's no option, right? These are patients that are too sick for cardiac surgery, and we now have a solution in the arch to treat those patients. They also adopt technology very rapidly because they really have had no, you know, they've got a significant need. So I think really it's just the building blocks, right? It's like we've got to get through value analysis committees, which you're experienced with. We've got to train the surgeons. We've got to hire the team. We've got to get the inventory in place. So our goal is to really be ready to go by January 1. And I think this technology has, you know, some real opportunity to drive growth for the company and also help a lot of patients along the way. So obviously I want to get, you know, get some cases under our belt. We know that the technology is very well appreciated, but we think it's going to do quite well. We'll obviously give you more information as we go into 2027.

Lance Berry, CFO

Yeah, maybe a little information on the $8 million. I guess one other thing on Nexus, it's different than AMDS. There won't be any set sales. So our revenue will come from implants only. And then on to $8 million, just a little more color on that. kind of broken up into I would say three pieces one is you know some additional costs related to you know getting ready to launch the product that won't carry forward into next year there is R&D and clinical related expenses that are just going to be incremental this year but as we roll into 27 we will make that fit into our normal 7 to 8 percent of sales that's not really incremental if you think about it from a 27 standpoint and then there are some expenses just run rate expenses of you know the sales force and some gna that will carry forward and we think that will be covered by the actual uh nexus revenue that we have in the u.s in 2027 and make it ebitda neutral

Pat Mackin, CEO

overall so hopefully that makes yeah and i think one of the points lance brought on the on the supply chain for this product it's very different than amds we're not making people buy it up front These are, you know, AMDS cases are acute type A's, which is an emergency, so you have to have the stock on the shelf. Chronic dissections are elective, so we have plenty of time beforehand to know exactly what size devices, and we'll ship them into the cases. It will get paid at the case. So there's really going to be no stocking of the shelves and having to have that be a limiter. We're going to basically be able to support cases, you know, one by one as they need them.

Frank DeKinnon, Analyst — Lake Street Capital Markets

Got it. Very helpful.

Pat Mackin, CEO

Thanks, Ryan.

Operator

Our next question is from Bill Plavanek with Canaccord Genuity. Your line is now live.

Bill Plovanek, Analyst — Canaccord Genuity

Hey, great. Thanks for taking my questions. I just wanted to unpack the AMDS a little more and some of the commentary. So one of the challenges that's been brought up multiple times is starter set, and you mentioned strategies to get around this. Are you going to shift the product to consignment, or is the strategy, you know, you believe the PMA is really going to open up that. And is there a backlog? And I guess what I'm kind of really trying to think back to, are we through the early adopter phase and now we're getting into a broader customer base and it's just going to be a slower ramp for new accounts? And then lastly on that list is, what was the growth of the core stent business, if you back out the, you know, the AMDS, like it used to be about mid-teens, kind of, you know, obviously the growth came off a lot this quarter, kind of, what was that kind of core growth? Thanks. It's a lot there.

Pat Mackin, CEO

Yeah, so, yeah, so I would say, we have plenty of hospitals, if you step back when we set the plan, internal, you know, our expectations for the year, we had plenty of accounts on our target list to hit the numbers that we set out. And I, you know, like I said, we were pleased with the implants, the ongoing implants were ahead of what we expected. So again, I think the challenges of getting into these hospitals, this kind of upfront 100,000 purchase, you know, we're not going to consignment. You know, we could always have that be our last stop on the train, but that's not where we're going. We've come up with some programs to kind of address, you know, ways to address the barriers of this $100,000 up front. We've got some programs for that. We also mentioned the PMA that once the PMA is out, there's no longer an IRB, and we think that's going to be very helpful. So I think it's just really, you know, getting these accounts to kind of through these processes is what we're working on and that that's harder to control that timing than it is the actual implant timing you want to yeah and then on the

Lance Berry, CFO

you know we don't break out the details on US AMDS revenue as compared to all the international stent graphs but I think you can you can tell just by looking at the geographic growth rates you know the international growth was much lower than we typically expect this quarter for the reasons we've discussed. And you can also look at the North America growth rate, which you have to normalize a little bit for the comps in easy comps in Q4 and Q1. But if you do that, the North America growth rate is pretty similar in Q4 to Q1. So I think that would all point you to the slowdown was driven significantly by international, but AMDS U.S. starter set sales were definitely below our expectations for them.

Bill Plovanek, Analyst — Canaccord Genuity

Yeah, and then kind of on that same topic is, you know, I think when we started out in the launch in the first quarter last year, you know, talked about 140 targeted accounts, and I think it was like 600 full potential, and that was opening up over time. You know, can you give us anything on kind of what you feel the targeted number of accounts will be in total or where you are targeting today, kind of how far you've penetrated that, just so we get an understanding of, you know, if there's 600 hospitals, are you in 150? Are you in 600? And then it's all resale from, reuse from here versus starter kits.

Lance Berry, CFO

Yeah, that's a good question, Bill. I mean, we haven't broken that out. I mean, I think I would just say at this point, we still have plenty of opportunity to sell starter sets. I think as we move along, we'll consider giving a little more detail on that because at some point the starter set is a one-time revenue thing that won't repeat and it's the implants that matter the most long term. So, you know, we'll consider giving you a little more information on that later down the line, but not breaking that out at the moment.

Bill Plovanek, Analyst — Canaccord Genuity

Okay, and just on Nexus, you're pushing it to a 27 launch. Is manufacturing scaled and ready to go, or is that something you need to really invest a lot in? As companies transition from, you know, PMA approvals to commercials, sometimes that can be a challenge, but I believe this is being sold in Europe, so I assume the commercial is scaled, the manufacturing, but I want to ask the question.

Lance Berry, CFO

yeah so i mean yeah they're manufacturing today so it's not like they're going from no manufacturing to having to start um because they've been manufacturing we've been selling the product in in europe for over five years um but we we do need to expand um that and uh and then we actually need to build the inventory i mean you can imagine this company they had a an agreement with us um essentially for us to acquire them upon pma approval they really had no intention of ever commercializing the product, you know, they did not spend any money to build product for a U.S. launch, you know, like we would have if, you know, we had owned the business. So now there's a little bit of scale up, but mainly it's just we just got to build the product. Thanks for taking my questions. Thanks, Bill.

Operator

Our next question is from Shiraz Khalia with Oppenheimer. Your line is now live.

Seamus, Analyst — Oppenheimer

Hi, Pat. Hi, Lance. This is Seamus on for Siraj. Thank you for taking our questions. Just to start, I know we've kind of been hammering on AMDS, and apologies, going to keep in on that a little bit. But I guess can you quantify kind of how many accounts are kind of deferring AMDS for this PMA approval? I mean, this is the first time you've kind of called it out. You know, has this been kind of an ongoing trend you've seen, and now it's kind of just coming more to a head? or, you know, anything on that. And just, you know, with that, should we start kind of a bolus once you kind of get this PMA approval on this? You know, is it kind of in once they kind of get that $100,000 bill of the starter set that they say, hold on, we want to wait until maybe PMA? Or, you know, just any color they can give. Thank you.

Pat Mackin, CEO

No, so let me take that. You know, like I said, we've been saying for, I think, pretty much every quarter that we didn't really see the PMA as a big, you know, catalyst for, you know, big growth. I think what's happened is what we've seen is, you know, I'll give you a great example. We have to go to an IRB at a hospital and the surgeon has to take four hours of training. The surgeon's like, when are you going to get the PMA? And it's like, you know, sometime in the second quarter. So the guy's like, well, I'll just wait. I'm not going to do four hours of training for this IRB, right? It's just a practical thing. We do have a number of accounts. We're not going to get specifics on how many accounts are this, how many accounts are that. But we do see the PMA, you know, two quarters ago it really didn't matter, but now as it gets closer, I think people are not wanting to do the work for the IRB, and we see that as an opportunity when it comes out, and that's contemplated in our guidance.

Seamus, Analyst — Oppenheimer

Got it. I appreciate that. And then kind of just on the cross-selling opportunity you guys have had with Onyx, you know, via AMDS, guests. You know, it's been about a year, obviously, you've kind of seen that. Any difference you've been seeing kind of in physician utilization for those, you know, are they kind of ramping up on a similar curve that you've seen for those that take it on, or is it kind of just been something that kind of added to their portfolio, but it's been, you know, I say

Pat Mackin, CEO

minimal at best. Thank you. Yeah, that's a great question. I think it really speaks to our our strategy you know we are a valve company that treats patients under 65 with a Ross and with Onyx and we're an aortic arts company and if you think about our interactions I just came from ATS I met with 20 top aortic surgeons they were involved in the persevere trial they're they're involved in artisan they were involved in the triumph trial so if you think about it we're going to be, if you fast forward, kind of go through even the next three quarters, we're training AMDS centers and we have these kind of AMDS trainings. We're going to have Nexus trainings and we bring the heart surgeon and the vascular surgeon. All of those events, we have artisan investigator meetings. All of those events are ways for us to continue to build our relationship with the aortic surgeons, both on the cardiac and vascular side, and deliver our messages across all of our products, whether it's Onyx for bioprosthetic, whether it's AMDS in acute type A, or whether it's Nexus in the arch, it's very kind of complementary, right? It's all about the aorta, and I think the more we do, just the more powerful that we become. So we're already seeing the cross-selling, but it's just going to get better because we're going to do, you know, our first Nexus training will have 25 centers with 25 vascular surgeons and 25 cardiac surgeons. And I always go to present, and we'll talk about AMDS, we'll talk about Onyx. So, again, I think it's just we're surrounding the cardiac and vascular surgeon for the ARCH. Thank you. Our next question

Operator

comes from Jeffrey Cohen with Ladenburg-Tholomon. Your line is now

Jeffrey Cohen, Analyst — Ladenburg Thalmann & Company

live. Hi, Pat and Lance. Thanks for taking the questions. Two from us. I guess you did touch upon it with Nexus, but I wanted to know any updates as far as the commercial organization, both U.S., EU, and perhaps Japan, W-2s and 1099s, as far as trends, puts, and takes for, say, the balance of this year that we should anticipate.

Pat Mackin, CEO

And this is for Nexus, Jeff?

Jeffrey Cohen, Analyst — Ladenburg Thalmann & Company

Well, you addressed Nexus. I was thinking of everything else.

Lance Berry, CFO

Yeah, I mean, I think, Jeff, you know, same thing you said, you know, Pat talked about, we're going to have to hire some specialists for Nexus. But other than that, I mean, Salesforce ads would be, I mean, fairly limited, you know, across the globe and still highly leverageable with our focus Salesforce.

Pat Mackin, CEO

Yeah, and just a couple points on Nexus, right? I think I mentioned earlier, you know, our initial target is like 100 accounts. We can cover that with a pretty small team, a dedicated team, because there are elective cases, and we can cover those out of kind of central locations. You know, we do have, as part of this acquisition, um we do have a relationship with a distributor in japan um who's got a dedicated team on the ground and is very good um so we've already got the commercial infrastructure in japan um we just have to work through that approval process and again like i said we we haven't owned the company so we really are just starting those conversations now but that that's pretty well developed got it

Jeffrey Cohen, Analyst — Ladenburg Thalmann & Company

okay and as follow up can we touch upon the uh the tissue business um there's a strong quarter I know it was against the weak comp last year, but could you talk about that a little bit as far as any puts and takes and trends on the balance of the year and maybe any commentary on cardiac versus vascular, loss procedures, et cetera? Thanks, Pat.

Lance Berry, CFO

Yeah, maybe I'll take that one on the preservation search. I think, you know, we've told people to kind of think about that as a $24 million a quarter business. We obviously did a little bit better than that this quarter. I think that's great. I would put that within the realm of normal quarterly fluctuations, you know. So, you know, if it's a little bit less in the future quarter, I wouldn't read anything into that as long as it's kind of in the zip code of that 24 million and averaging that to the year, that would be in line with what we expect. So this quarter was good. You know, it would be great if we can keep that going, but don't be surprised if it dips down a little bit in future quarters.

Jeffrey Cohen, Analyst — Ladenburg Thalmann & Company

Okay, got it. That's helpful. Thanks for taking the questions.

Operator

Our next question comes from Mike Mattson with Needham & Company. Your line is live.

Mike Matson, Analyst — Needham & Company

Yeah, thanks for taking my question. I guess just starting with AMDS, I mean, I understand the commentary around consignment and these $100,000 sets, but I guess why not put it on consignment? I didn't really hear you address that. Is it just tying up too much of your company's capital and inventory that would be sitting on hospital shelves, or is there some other reason that you're requiring the hospitals to, you know, have this big expense to get started?

Lance Berry, CFO

Yeah, I mean, I think, look, you can always flip the consignment. You can never flip back, right? Yeah. It's an emergency case. They need it on the shelf. It needs to be there. It's a differentiated product. It has incredible reimbursement. And we think it's something that they should stock. And that's how we launched the product. We have a lot of accounts that have made the purchase. I think, you know, we just kind of hit a point where we're starting to see, as we get further down the list, some resistance to that that we had not seen in the past. And now it's just our job to overcome that barrier, right? I mean, it would have been great if we had seen it earlier, but now we see it. We have multiple levers that we're pulling to try and, you know, get over those barriers. And I'm sure we'll run into additional ones as we move along, and we'll come up with solutions for those as well. But, you know, we're not going to throw the towel in, you know, at the first sign of resistance. You know, we need to work to overcome the barrier.

Mike Matson, Analyst — Needham & Company

Okay. And then, yeah, go ahead.

Pat Mackin, CEO

No, I was just going to say, I mean, to Lance's point of view, it's extremely compelling data. You know, we have a device that can turn a non-mal perfusion patient or a mal perfusion patient into a non-mal perfusion patient, both in terms of mortality and restore of blood flow. We have a device that eliminates Dane, which carries a 20% difference in reoperation or a 30% difference in reoperation at 10 years and a 20% difference in mortality at 5 years. I mean, it's like super compelling data. It's an emergency. There hasn't been an innovation in the space in 50 years, and it's got the best DRG in the market. Like, you should buy those. Yeah. And we're working on it. So, again, it's a fair point, but I think Lance is, you know, the most important one. Like, once you do it, like, whoever started doing that in whatever field, like, they never stop.

Mike Matson, Analyst — Needham & Company

Yeah, I understand. And then on the international issues in Stentgrass, you know, you called out the Middle East as well as distributor de-stocking in some of the other regions. So can you – I know you're probably not going to quantify them in terms of dollars, but which of the two is bigger? Is the Middle East the bigger problem? Are they similar, you know, in terms of the impact?

Pat Mackin, CEO

Yeah, it was about half and half. I mean, you know, clearly we didn't – we have a pretty significant business in the Middle East, and we obviously didn't contemplate what's going on there to have an impact, and it did. We also had some supply chain, you know, things in the quarter that, you know, we weren't anticipating. So I think the combination of those two things, you know, was, you know, not something we had planned on.

Mike Matson, Analyst — Needham & Company

Yeah, okay. And then the revenue guidance, the 7% to 11% organic, or sorry, cost of currency, does that, what are your assumptions there about the AMDS sets and then the international Stentcraft sales? Are you assuming any improvement? Or is it maybe like no improvement at the low end and some improvement at the high end of the range or something like that?

Lance Berry, CFO

There's definitely some improvement expected for AMDS set sales. It's just that a rate that was lower than it was originally anticipated. And so I think if you're in rough numbers, if you want to think about the guidance reduction, you know, think about half of that is kind of AMDS set sales and half of that is international stint graphs. And, you know, the international stint graphs is kind of split roughly evenly between the Middle East situation and, you know, the supply chain situation that we're working through.

Mike Matson, Analyst — Needham & Company

Okay.

Lance Berry, CFO

Got it.

Operator

Our next question comes from Danny Stodder with Citizens. Your line is now live.

Danny Stodder, Analyst — Citizens

Yeah, great. Thanks for taking the questions. Just from my first one on AMDS, just on the reordering behavior, good to see that that was strong. But could you expand on any trends here? Why has usage been more than you expected? Are multiple surgeons utilizing it at some of your larger accounts? Or just anything more here about what's going on or some dynamics would be great?

Pat Mackin, CEO

Yeah, it's actually a good question. Because, I mean, one of the things that's really interesting, We knew it, but it's something that we're working on as well, which is typically what happens is you have a surgeon come from an account who goes to the training program, and he goes back and starts to implant. But then he starts to train his partners, or his partner goes to a training program. So in a lot of these bigger centers, there's two or three or four guys that do these acute type A dissection in the middle of the night. and we train one in one hospital, but there's four people that take calls. So we're also having to train more and more surgeons. So, again, it takes time, but that's what I think we're seeing is that, you know, it's spreading in the accounts. You know, so when we open an account, if you have one guy using it and all of a sudden two use it, you get more usage. So, again, we were pleased with the reorder pattern in the quarter. It was ahead of our expectations.

Danny Stodder, Analyst — Citizens

And just following up on that, Matt, could you remind us if there's any different margin contribution from reordering sales compared to initial orders? Because gross margins were still pretty strong during the quarter despite some of the AMD starter softness. So just trying to get a hold of the dynamics here and any more color would be awesome.

Lance Berry, CFO

Yeah, there's no meaningful difference. The gross margin of both are awesome.

Danny Stodder, Analyst — Citizens

Simple enough.

Lance Berry, CFO

Thanks, Daniel.

Operator

Our next question comes from Keith Hinton with Freedom Capital Markets. Your line is now live.

Mike Matson, Analyst — Needham & Company

Great. Thank you. I just have one on Onyx and then one on Nexus. So, for Onyx, can you talk a little bit about the current usage,

Danny Stodder, Analyst — Citizens

how that splits between younger patients and older kind of before this data came out

Seamus, Analyst — Oppenheimer

and then where it is today? Yeah. And then I'll follow up on Nexus.

Pat Mackin, CEO

Yeah. So, you know, we – unfortunately, we don't get, like, real-time data on, like, you know, where the surgeon puts a valve in and sends us a postcard and tells us how old the patient was. We've got historical data of roughly kind of where our patient populations are, so real time that's not something we have access to. I can tell you just based on, like I said, I just came from ATS. There's lots of conversation about these papers that have been published showing a mortality benefit to mechanical valves in patients under 60, and almost a 20% re-operation benefit at 10 years in mechanical valves versus tissue valves under 65. So we're in the process of getting that data out, and we are definitely growing our share in the bioprosthetic space, which previously we had not. So I think that, you know, the fact that, you know, a lot of our growth is coming from kind of a, when you say older, it's like 50 to 65-year-olds. because our focus is under 65, and, you know, that's really the segment we're going after.

Seamus, Analyst — Oppenheimer

Great. Thanks. And then just on the go-forward plan for Nexus, can you talk a little bit about whether there are plans to bring the Duo and Trey into the U.S.? And if so, what are kind of the regulatory steps required there? And then logistically, you know, do you see it as an issue to have a custom-made product coming from Israel into the U.S. just in terms of lead comes?

Pat Mackin, CEO

Yeah, so a couple of things. It's obviously still early. We don't own the company yet. We triggered our option today, so we just have to do the kind of customary paperwork to close the transaction. But we've already been working with their team. We've got great collaboration across the two companies. So we are planning on bringing the DuoTrade to the U.S. It will require – we have not met with the FDA on it yet, So this is just kind of my kind of spitballing. But it will require a clinical trial. It's a – we will have an off-the-shelf version. I think what's new is that we will have an off-the-shelf version, not a custom-made version. So that's, I think, some of the innovation there. So we're in the process of working on, you know, the timing of that, what that looks like, and we'll give an update on our pipeline once we've, you know, acquired them and digested it and are able to kind of come back to you guys with an updated pipeline.

Bill Plovanek, Analyst — Canaccord Genuity

Okay, great. Thank you.

Operator

We have an additional question from Bill Plevanek with Canaccord Genuity. The line is now live.

Bill Plovanek, Analyst — Canaccord Genuity

Thanks for taking my follow-up. Just, you know, there's been some discussion on supply chain challenges, and it sounds like that is going to continue to impact, you know, going forward per the comments. So I was just wondering if you could unpack that and help us understand more of what exactly it is, what's the, you know, have you ring fence the issue, what's the solution, and what's the timing? Thanks.

Lance Berry, CFO

Yeah, so we're not going to get into a ton of detail, but I'd say we have green-fenced the issue. It has, you know, somewhat to do with our supplier network, but we've got our arms around that. We feel confident about solving it, but it will take a little bit of time, and the time to solve it is what is contemplated in our guidance. But it's not a – I'd say it's – we've moved on into execution of the solution stage, if that makes sense.

Bill Plovanek, Analyst — Canaccord Genuity

And how much of your portfolio does it impact?

Lance Berry, CFO

It's not broadly across the StintGraph portfolio. It's specific to a small number of products. Okay, great.

Operator

Mr. Macken, we have reached the end of the question and answer session. I'd now like to turn the call back over to management.

Pat Mackin, CEO

for closing comments yeah well thank you for joining the call and um you know we're super excited about the end of span transaction and we'll be working to close that and i think you know this is an exciting uh day for the company because it's kind of the final piece to the puzzle of our aortic art solutions uh you know we have we have ambs approved uh with an hd in the u.s right now um we're hoping to get pma in uh you know mid-year we've got nexus just got up the approval, and you heard about our plans to launch that, and we've got Artisan that's enrolling ahead of schedule, which is our next. We've got three PMAs in the arch, one approved, one about to be approved, and then one on its way, so very excited in what that means for the company, and appreciate your support as we continue to build this AORTA company. Thank you.

Operator

This concludes today's call. You may disconnect your lines at this time, and we thank you for your participation, and have a wonderful evening.