At this time, I would like to turn the call over to Mr. Dorian LeBlanc, Chief Financial Officer of LeMaitre Vascular. Please go ahead, sir. Thank you, operator. Good afternoon, and thank you for joining us on our Q2 2025 conference call. With me on today's call is our CEO, George LeMaitre; and our President, Dave Roberts. Before we begin, I'll read our safe harbor statement. Today, we'll be making some forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, the accuracy of which is subject to risks and uncertainties. Wherever possible, we will try to identify those forward-looking statements by using words such as believe, expect, anticipate, pursue, forecast and similar expressions. Our forward-looking statements are based on our estimates and assumptions as of today, August 5, 2025, and should not be relied upon as representing our estimates or views on any subsequent date. Please refer to the cautionary statement regarding forward-looking information and the risk factors in our most recent 10-K and subsequent SEC filings, including disclosures of the factors that could cause results to differ materially from those expressed or implied. During this call, we will discuss non-GAAP financial measures such as organic sales growth. A reconciliation of GAAP to non-GAAP measures discussed in the call is contained in the associated press release and is available in the Investor Relations section of our website, www.lemaitre.com. I'll now turn the call over to George LeMaitre.

Thanks, Dorian. Q2 was strong across the board, with sales up 15%, a 70% gross margin and EPS up 16%. As a result, we're increasing full year guidance for sales, gross margin, operating income and EPS. Q2 sales were led by catheters, up 27% and grafts up 19%, while Valvulotomes and Chunt were both up 13%. By geography, EMEA grew 23%, Americas, 12%; and APAC 12%. Our international Artegraft launch exceeded expectations in Q2 with sales of $420,000, up from $185,000 in Q1. International Artegraft sales should surpass $2 million in full year 2025. Artegraft is currently approved in the U.S., EU, U.K., Australia, New Zealand, South Africa, Israel, Thailand and Malaysia. And 2026 approvals are likely in Canada, Korea and Singapore. Artegraft is the company's largest U.S. product in 2024 with $37 million in U.S. sales. As for RestoreFlow, we continue to anticipate at least one European approval in 2025, either Ireland or Germany. Unfortunately, there is no EU-wide approval for Allografts, but one approval in Europe should expedite others. To support the impending European launches, we are opening a RestoreFlow distribution facility in Dublin this year. RestoreFlow is currently approved in just 3 countries: the U.S., the U.K. and Canada. In China, our XenoSure vascular patch remains on track for final submission in Q4. Approval might come in 2026. This follows the Q4 2024 Chinese XenoSure cardiac patch approval. We ended Q2 with 164 sales reps and 33 sales managers, and our international go-direct efforts continue. We recently posted our first Portuguese and Czech direct-to-hospital sales. 2025 is shaping up to be another year of healthy sales and profit growth.

Thanks, George. LeMaitre's strong organic revenue growth continued in the second quarter. Our 15% organic growth consisting of 8% price growth and 7% unit growth was highlighted by the strong unit growth of Artegraft, XenoSure, RestoreFlow and catheters. Our biologics continued their strong growth. And as George discussed, our current regulatory progress provides future international growth opportunities across the biologics portfolio. Cardiac RestoreFlow was the largest product contributor to unit sales growth as our sales team continued to expand on our success at open cardiac. In Q2, we initiated a packaging-related recall on a portion of our catheters. After a temporary supply disruption, customers placed stocking orders late in the quarter, which boosted overall catheter sales. We don't expect this to be repeated in Q3. Year-over-year reported revenue growth of 15% benefited from the weaker U.S. dollar as foreign exchange added $1 million to reported sales. This was offset by the Aziyo discontinuation, which decreased reported revenues by $1.1 million. In Q2 2025, we posted a 70% gross margin. The 110 basis point increase year-over-year was driven primarily by higher average selling prices, the continued benefit of manufacturing efficiencies and positive product mix. Operating expenses in Q2 2025 were $28.8 million, an increase of 20% versus Q2 2024. The increase was driven largely by higher compensation expenses, including the addition of 23 sales professionals and the expansion of our European direct sales model, including the Portuguese and Czech go direct efforts. Q2 2025 operating income was $16.1 million, up 12%, resulting in an operating margin of 25%. Net income increased 17% year-over-year to $13.8 million. We benefited from $1.7 million of net interest income in Q2 as yield on our invested cash exceeded interest expense on our convertible debt. Fully diluted EPS was $0.60, up 16%. We ended Q2 2025 with $319.5 million in cash and securities, an increase of $17 million in the quarter. Cash from operations generated a record $20.3 million in Q2, and we paid $4.5 million in dividends to shareholders. As the landscape around international trade continues to evolve, LeMaitre remains confident in our global business model. So far, the only tariff-driven price adjustment we've made is a 25% average increase in China. During the quarter, we also increased inventory at our international warehouses, anticipating potential tariff increases. Our U.S.-only manufacturing, niche product portfolio and direct sales model give us confidence tariffs will not materially impact our financials in the second half of the year. We have raised our full year revenue guidance to $251 million and 15% organic growth due to the impact of our growing sales organization and our success across global markets. We anticipate a full year gross margin of 69.7% and operating income of $60.9 million, up 17%. We expect operating expenses to be lower in the second half of 2025 versus the first half of 2025, resulting in a 24% operating margin for the year. We also have increased our guidance on fully diluted earnings per share to $2.30, up 19%. With that, I'll turn it back over to the operator for questions.

Our first question comes from Michael Sarcone of Jefferies.

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

Right. It's difficult to say for sure, but we estimate it's around $800,000 for the quarter, and that's related to the catheter recall that Dorian explained.

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

Right. So perhaps this year we won't need to focus on it too much. We are beginning to establish a pattern in the first and second quarters, which may set the tone for the year. As for next year, I'm not certain. I recall that last fall, we started receiving inquiries early on about when we would implement a price increase and how much it would be. I understand you're not asking for details about 2025, but we will definitely be raising prices globally on January 1. I would say the rhythm we've established is likely what will continue, but we just don't have certainty yet, and we can't make any commitments at this moment.

Our next question comes from Michael Petusky of Barrington Research.

I wanted to ask for more details regarding the unit volume growth. It seems that the catheter stocking played a role in this, but you also mentioned Artegraft, which I understand due to the CE Mark and the MDR. Additionally, there’s XenoSure and possibly one or two other product categories. Could you provide more insight into what was happening there? Seven percent is a significant increase compared to recent history and clearly a strong number.

And Mike, this is George. It's great to speak with you again. We agree that the number is indeed larger. If we exclude the catheter factor we just discussed, it's really around 5%. To be frank, that's consistent over the last three years; 2023 was 5%, and 2024 was 4%. I don't have the first half numbers, but stripping out the catheter factor, the growth is 5%. Let's delve deeper because you brought up a couple of relevant points. It's not solely about catheters. Artegraft is currently undergoing a successful launch in Europe, and the units increased by 10%. XenoSure also had an excellent quarter, rising by 9% in Europe, and RFA cardiac saw a remarkable growth of 61%. We're making progress, even from a smaller base, especially with RFA cardiac, which seems to be performing very well in the United States.

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

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

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

Yes. So our next question comes from Brett Fishbin of KeyBanc.

Just wanted to follow up again on Artegraft, seemed to see a nice sequential increase there in the revenue. And I just wanted to make sure that we heard the comments for the full year correctly. I wanted to verify $2 million was the full year number. And then if that's right, it seems to imply maybe around $700,000 on average per quarter in the back half, which is about double what you previously expected. So maybe just talk more about what's driving the upside versus your preliminary expectations from last quarter.

Brett, it's George again. Thank you for your question, it's a great question. Yes, you heard correctly, the total is $2 million for the year, and we've recorded $480,000 so far. That includes $200,000 in the first quarter and $400,000 in the second quarter, so your calculations are approximately accurate. While we won't specify exactly when the revenue will come in each quarter, it can only occur in two quarters. Remember, we only received approval right before our last earnings call, so we didn't have much experience in Europe with the device before that point. You’re now seeing positive results from two months of sales in Europe, particularly in South Africa. Overall, things are progressing well, so we're increasing our guidance on that product as we know that information is important to you.

All right. Really helpful. And then just one follow-up for me. Just some of my math seems to suggest a pretty significant operating margin ramp in Q4 as compared to Q3. Just wanted to kind of gut check that cadence. And maybe if you could just call out any moving pieces between Q3 and Q4 that would support a much higher exit rate coming out of 2025.

Yes, Brett, thanks. It's Dorian. I think there is some seasonality here. The third quarter tends to be one of our lower quarters due to the European summer affecting revenue. If you do the math for the fourth quarter, you'll notice an increase in revenue from the third to the fourth quarter. Additionally, we highlighted that overall operating expenses will be lower in the second half of the year compared to the first half. This seasonality also includes variable compensation. However, we made some investments in the first half, such as expanding the sales force and our direct sales in Europe, along with some office builds. Some of those expenses, like recruiting fees and product launch costs for Artegraft, will decrease in the second half of the year, providing us with some advantages. We also have a benefit from reduced regulatory expenses related to MDRs, which are largely behind us, so we will see some relief in the third and fourth quarters.

Our next question comes from Rick Wise of Stifel.

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

Thank you for the question, Annie. This is George. We reached 164, and while we initially aimed for 165 to 170, I believe we're currently closer to the 165 mark. I don't see that as a significant difference. We've achieved a solid position, and you can see that reflected in our Q2 results. I expect us to finish the year around 165, although changes can happen quickly, like losing three people and hiring five. Regarding our product lines, our operation remains consistent. With 164 reps, we have 77 in the U.S. and Canada, 57 in Europe, and 30 in Asia Pacific, all of whom handle our full range of products without specialized sales teams.

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

We generally avoid separating our guidance between North America and Europe, but it's clear that our performance in Europe is strong. A significant opportunity for us there is the Artegraft launch. Additionally, as I mentioned earlier, we have RFA coming to Europe, which should contribute later, possibly generating substantial revenues by late 2026 or early 2026. Currently, Europe is experiencing this major launch, while the U.S. does not have something of that scale happening right now. However, we have seen a positive turnaround in the U.S. over the past couple of quarters, with reported growth in the Americas at 12% and 15% organic growth specifically in the Americas. The U.S. is beginning to drive growth in North America alongside Canada. We've had some solid quarters in the U.S., and while we shouldn't overlook it, the reported 23% growth in Europe indicates that we're performing exceptionally well there for various reasons.

Got it. Thanks so much.

Our next call comes from Suraj Kalia with Oppenheimer & Company.

George, can you hear me all right?

Perfectly, Suraj.

So George, I have a couple of questions to start with. There is typically some uncertainty in the trade and tariff environment. I appreciate your insights about China being one area where you’ll manage these issues. Looking at the current environment, how do you prioritize different products for price increases versus volume impacts? I’m trying to understand the sensitivity of different product categories. How are you navigating decisions like needing to increase the price for Artegraft while considering a price reduction for RestoreFlow? I recognize that nominal growth is important, but I’d love to get your long-term strategic perspective on this if you could share.

Yes, thank you for the question, Suraj. This is a significant topic as we transition into the new year. A lot of this can be understood through basic logic. If you hold 80% market share in a smaller market, you have the ability to adjust prices. Conversely, with only 12% market share in a larger market, price adjustments become challenging. The core principle of our company is to focus on niches where we can make a substantial impact. This aligns with the strategy often associated with Jack Welch: if you are ranked first or second in your market, you are likely to do well; if you're fourth, you'll face difficulties and may have to lower prices to compete. Additionally, on an international level, we have a unique angle. For example, when we entered markets like Thailand and recently Portugal, we noticed that bigger competitors in the Vascular space often hesitate to explore these less conventional markets. They might question the decision to venture into new territories, which leaves us at an advantage to implement our pricing strategies where others won’t follow. So, there are two perspectives to consider. I hope this provides some clarity to your question, Suraj.

Fair enough. And George, how would you characterize the churn in your sales force in the current environment?

Thanks, Suraj. You asked about the turnover rate, which is currently at 12%. I consider it to be normal. I've been here for 33 years, and we've had a sales team for about 25 of those years. The turnover tends to vary; in a very tight hiring market, it could drop to 10%, whereas in a complex environment, it might rise to 15 or 20%. So, overall, it feels normal to me at this point.

Our next question comes from Nathan Treybeck of Wells Fargo.

Can you, by any chance, break out how much of the $2 million of Artegraft sales that you expect this year will be in Europe specifically? And what is the implied share that you're capturing? I think you out sized the market at $8 million before. And where could your market share realistically go in Europe?

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

Yes, you said $2 million oUS.

Most of this is currently European. We are quoting internationally, but most is from Europe at this time, aside from the South Africa plug. We’ve been indicating an $8 million market there and an $8 million for the rest of the world, which does not include the U.S. or Europe. So we currently perceive it as a $16 million market. This will continue to evolve over time. Based on our estimates, we think 2 divided by $16 million reflects what we expect to happen right now. Dave also has something to add.

It's a good question. In a way, we're building a market outside the United States because when you consider dialysis access, where Artegraft is primarily used abroad, LeMaitre is the only biologic company with Omniflow in Europe, and it accounts for maybe 15% or 20% of dialysis access usage. So, in terms of market share, we are really creating the market abroad, which is exciting. If we continue to see success, we could potentially view the market as larger than 8 plus 8. However, we are very pleased with the initial success. It's still early days, but the initial results with Artegraft outside the United States are promising.

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

Yes, it's Dave again. The Allograft market for Cardiac and Vascular is well established in the U.S., estimated to be between $100 million and $150 million. We believe the European market is slightly smaller due to factors like pricing, but not significantly so. It's reasonable to consider an $80 million to $100 million market in Europe at maturity, although reaching that point will take time. As George mentioned, getting approval in Ireland or Germany does not automatically extend to the rest of Europe; we must seek country-specific approvals, which will be a gradual process. Additionally, allografts are supply-constrained compared to the rest of our business. If we could obtain more Allografts, we could increase sales. I commend our team in Chicago for starting an inventory build for Europe, but I believe this will pose a challenge in meeting demand over time. Nonetheless, we are very optimistic about prospects in Ireland and Germany, and we have experienced success in Canada and the U.K. with no reason to expect otherwise in the initial markets where we gain approval. We're taking it step by step, but for us, a $100 million market in Europe is substantial, while many companies may view it as niche.

Our next question comes from Daniel Stotter of Citizens JMP.

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

Thank you for the question. We achieved $20.3 million in cash from operations, which is a record for us. It's helpful to combine the quarters and consider the first half of the year, where we reached $29.4 million. We did benefit from working capital, which can vary. However, if you examine our cash from operations in relation to our operating income, they align well. Our earnings generate cash, which is reflected in the results. While there may be fluctuations from period to period, in the long run, you can expect these figures to remain consistent. Regarding capital expenditures, we have incurred $1.3 million over the last two quarters, and we don't anticipate significant changes. We are currently involved in some build-out and maintenance CapEx, but there won't be any major alterations for the second half of the year.

Great. And then just one follow-up on R&D. I know it's a small number, but that stepped down a bit. So I just wanted to ask how we should think about that in the back half of the year as we consider the different contributors to overall OpEx for the rest of '25.

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

Our next question comes from Ross Osborn of Cantor Fitzgerald.

Congrats on the strong quarter. Starting off with RestoreFlow, what has feedback been with the cardiac call point? And what can you do to help facilitate adoption within this group?

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

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

This is George. On a positive note, our sales teams are really eager to introduce this product in Germany and Ireland due to the enthusiasm expressed by their colleagues in Britain and America. However, there is a requirement in Germany for paperwork from every recovery center involved in obtaining cadaveric pieces, which adds an extra layer of regulatory oversight. While the British, Irish, and Canadians have opted not to require this documentation, the Germans do. Given that Germany represents a larger market than Ireland, this is an important consideration. Nonetheless, we are equipped to handle these challenges, and our team is experienced in navigating these processes. We will address this potential minor hurdle, and I am confident we will overcome it.

Our next question comes from Frank Takkinen of Lake Street Capital Markets.

Hi, thanks for taking my questions. I wanted to ask about RestoreFlow cardiac. I'm curious if the growth in units is related to a situation where one of your competitors had supply constraints in recent quarters. If so, do you anticipate that this will affect unit growth in the future if their supply improves?

Frank, it's George again. Thank you for the great question. To be honest, we were not aware of that situation while it was occurring. You're referring to Artivion, one of the three players in this market. We learned about it afterwards. If the situation had only been that we had significant sales in Q1, I might agree that it could be related. However, our numbers over the past several quarters show that RFA, especially in cardiac, continues to perform very well. While it may seem logical to assume that a competitor exiting the market would have an impact, we were not aware of it at the time, and our results have remained strong for several quarters. So I don't believe that's the case, but you raise a valid point. It's important to note that they have minimal involvement in Canada and no presence in the U.K., which are key markets for our growth. You also heard Dave mention that a recent surprise for us has been in the U.S. market. This could be somewhat connected, but we attribute the significant progress in Q2 to our sales manager, who previously excelled in the Canadian market and is now applying his strategy to the U.S. business. We believe this is the reason for our success in the U.S.

Helpful. And then maybe just on the sales force. Obviously, you had a big bolus of hiring in Q1. My assumption is a lot of those folks are probably ramping up throughout Q2 and maybe the fruit to bear with them is still coming? Or did they have a material impact on kind of the strong Q2 results as well?

I always find it challenging to answer this question because our charts indicate that the impact is immediate, which is quite counterintuitive. It seems more logical that it would take someone three, six, or nine months to become proficient in their role. However, our data shows that hiring occurs when results start to manifest. So, I will provide both perspectives and admit that despite my extensive experience, I still cannot fully grasp it.

Our next call comes from Jason Wittes of ROTH.

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

Sure, Jason, how are you? To address your question, you're referring to our anticipation regarding Ireland and Germany. That's accurate. Additionally, we are also awaiting the Chinese XenoSure peripheral, which is significant. We plan to make the final filing in the fourth quarter and hope to receive approval for that in 2026. Those are a couple of key points. We're also monitoring the situation with Artegraft in Singapore, Korea, and Canada, with Canada being particularly important and Korea being quite significant as well, while Singapore is less critical for us. Overall, we have a promising regulatory pipeline ahead, and we can all recognize the positive results from Artegraft in Europe and South Africa. Regarding your earlier question about R&D, I realize my response may not have been clear. As the year progresses, I'm reluctant to provide specific guidance on the allocation of expenses. It appears that operational expense guidance is slightly decreasing in the second half of the year compared to the first half, as Dorian has mentioned. However, I don't think it’s appropriate to provide detailed guidance on the distribution of that, whether it's in general and administrative expenses, sales and marketing, or R&D.

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