Lemaitre Vascular Inc Q4 FY2025 Earnings Call

Welcome to the LeMaitre Vascular Q4 2025 Financial Results Conference Call. As a reminder, today's call is being recorded. At this time, I would like to turn the call over to Mr. Dorian LeBlanc, Chief Financial Officer of LeMaitre Vascular. Please go ahead, sir.

Thank you. Good afternoon, and thank you for joining us on our Q4 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, February 25, 2026, 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 disclosure of the factors that could cause results to differ materially from those expressed or implied. During this call, we may discuss non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures discussed in this call is contained in the associated press release and will be available in the Investor Relations section of our website, www.lemaitre.com. I'll now turn the call over to George LeMaitre.

Thanks, Dorian. Q4 featured 16% sales growth, a 71.7% gross margin, and 47% operating income growth. Q4 sales were led by grafts, up 27%, valvulotomes up 20%, and shunts up 18%. EMEA grew 29%; APAC, 20%; and the Americas, 10%. Artegraft grew 29% worldwide in Q4 as our OUS launch continues. We now have approvals to sell Artegraft in 52 countries. International sales were $1.9 million in Q4 and $4 million in the full year 2025. We expect to sell approximately $10 million of Artegraft internationally in 2026, contributing $6 million of sales growth for the year. In Q4, RFA vascular grew 19% and RFA cardiac grew 90%. As a reminder, we currently distribute RFA tissues in just 3 countries: the U.S., Canada, and the U.K. German distribution should begin in Q2, and we now expect to receive Irish approval in Q3. We also plan to file for approval in Austria, Holland, Belgium, Spain, and Switzerland this year. On a related note, we will be consolidating our Chicago RFA facility into Burlington in 2026 as we seek to simplify operations and reduce costs. We ended 2025 with 160 sales reps, up 5% year-over-year, and we plan to end 2026 with 170 to 180. We also expect to go direct in Poland in Q4. We've begun hiring a Polish general manager. This project will include an office, warehouse, customer service team, and several sales reps. We currently sell approximately $650,000 a year to our Polish distributor, and this will be the 32nd country where LeMaitre sells direct to hospitals. As mentioned on our November call, the 2026 U.S. price list reflects a blended 8% increase across the portfolio. On January 1, the price increase was implemented, and early results indicate hospital acceptance. Our U.S. customer service team tells us that this year's transition has been smoother than in years past. Our European customer service team also reports positive customer acceptance to a similar January 1 price increase. 2025 was another year of operating leverage at LeMaitre. Sales were up 14% and operating income was up 30%. Our 2026 guidance indicates another positive year on the horizon, with 12% sales growth and 21% adjusted operating income growth. We recently hung our 5-year goals on the conference room wall. We call them the 2030 planks. Our playbook remains simple: produce quality devices, build our vascular sales force, go direct in new countries, acquire niche products, and focus on profitability, cash flow, and dividends. I'll now turn the call over to Dorian.

Thanks, George. Q4 organic revenue growth was 15% with 9% price growth and 6% unit growth. Organic growth was broad-based both by geography and by product category. In Q4, our gross margin increased 240 basis points year-over-year to 71.7%. This increase was a result of higher ASPs and manufacturing efficiencies. Operating expenses in Q4 were $27.4 million, a 6% year-over-year increase. Our margin expansion and moderated expense growth in Q4 led to operating income increasing 47% year-over-year to $18.8 million, and operating margin of 29%. Q4 fully diluted earnings per share were $0.68, a 39% increase year-over-year. Our Q4 EPS includes a one-time loss on a mark-to-market adjustment in our investment portfolio of $0.5 million for an investment that has subsequently been sold. Overall, 2025 was a year of 14% organic revenue growth with 9% price growth and 5% unit growth. Adjusted gross margin of 70.4%, a 180 basis point improvement over 2024, adjusted operating margin of 26%, and adjusted EPS growth of 23%. Our adjusted numbers exclude the one-time benefit from the employee retention tax credit received in Q3 2025. We ended 2025 with $359 million in cash and securities. Our free cash flow, cash from operations less capital expenditures in 2025 was $74.5 million. In January 2026, we experienced a cyber incident that affected certain of our systems and data. We securely restored our critical systems and experienced minimal to no disruption in sales to our customers or in the manufacturing or release of the product. We do not believe the incident has had a material impact on our financial position or results, and we believe we have adequate insurance coverage. The estimated impact is reflected in our 2026 guidance. However, our review of the incident remains ongoing, and we are subject to various risks described in our SEC filings, including in our upcoming Form 10-K. On February 19, our Board of Directors approved a new $100 million share repurchase program and a Q1 2026 dividend of $0.25 per share, an increase of 25% year-over-year. This is our 15th consecutive year increasing our dividend. Our increasing dividend underscores our continued focus on profitable growth, and that commitment is reflected in our 2026 guidance. We anticipate full year 2026 revenue of $280 million, organic sales growth of 12%, a gross margin of 72.1% and operating income of $77.8 million, up 21% adjusted from a very strong 2025. We are guiding EPS of $2.91 per share, up 22% adjusted. The manufacturing transfer of our Chicago RestoreFlow processing to Burlington and the opening of our new 34,000 square foot warehouse will drive an increase of Capital Expenditures to approximately $11 million for the year. Our guidance implies a constant euro-U.S. dollar exchange rate of $1.18 for the year and an anticipated yield on our invested cash of 4%. The LeMaitre franchise delivered in 2025 with a focus on niche markets, our direct-to-hospital sales model, our growing commercial organization, and our disciplined expense and capital management. Thanks to our focused and dedicated global teams, we believe we are poised for another successful year in 2026. Finally, we would like to welcome Kyle Bauser to the call. Kyle has picked up the coverage of LeMaitre at ROTH. Thank you, Kyle, and we look forward to the continued coverage. With that, I'll turn the call over for questions.

Our first question comes from Kyle Bauser with ROTH Capital Partners.

Thank you for the welcome. It's a pleasure to be following the company. Maybe I'll just start off on guidance. Really nice finish to the year, continued operating leverage. 2026 looks to have some nice continued operating leverage in the business. Can you maybe rank the factors that will be key to achieving the operating growth kind of that's north of what the sales growth rate is, just kind of explain the leverage in the business?

Sure. This is George, Kyle. How are you doing, and welcome to the call and welcome to covering the company. Yes, maybe looking backwards, it's a little bit of a look at the leverage, but we've been pretty good at keeping headcount at a fairly stable level. We've been good at growing our sales pricing, our ASPs to the customers. You've seen that again here at the beginning of 2026 in our gross margin. We're getting a little more efficient also manufacturing our products. So old-fashioned operating leverage was what we showed last year. To get to that was at 14% sales growth and 30% profit growth, and we expect more of the same next year.

Got you. I appreciate that. And George, in your prepared remarks, you talked about the 8% blended increase for this year in prices, and it sounds like this year's transition was smoother than in the past. I guess any additional color around maybe why it was more difficult in the past, and moreover, kind of the outlook for future price increases? Is 8% still kind of what you're looking for going forward?

It's always a key topic for us. Let’s discuss the pricing a bit. This year, we decided to distribute the price list on November 1 instead of December 1. I believe this provided everyone—sales reps, customer service, and hospital purchasers--with more time to prepare for the transition in January, which went very smoothly. However, it's important to clarify that while it may seem like business as usual, it actually feels a bit more streamlined for bureaucratic reasons. Regarding the U.S. rack rate price list increases, historically, we've announced these in early February, so let me recap that. In 2022, we had a 6.1% price increase for U.S. hospitals, followed by 5.6%, 5.8%, 8.1%, and now this year, 8.3%. Although these increases are slightly rising, I would still consider this business as usual in the U.S., and our European counterparts are reporting similar experiences.

Thank you. Lastly, regarding the reps, you mentioned 160 and expect to finish the year at 170 to 180. What does the timeline look like? Is it steady and evenly spread throughout the year, or is it more concentrated towards the end? I'm just interested to know.

Right. Kyle, you mentioned this. I've been providing updates quarterly, but this will be the first time we're moving to annual updates. It's challenging to track individual sales reps, their hiring and quitting patterns, and similar factors. Therefore, we won't be offering exact quarterly updates; we might share some insights, but we won't specify our targets. Generally, we're focused on growing our sales force, with some positions expected to be in Poland, as discussed earlier. I hope that clarifies things; we're looking at around 170 to 180 by the end of the year.

Our next question comes from Rick Wise with Stifel.

Great to see the excellent quarter. A couple of things. You highlighted in your starting remarks sort of who we are and what we do, the M&A, we acquired niche products, et cetera, et cetera. Hate to always hit the M&A question, but gosh, what a great job you're doing with cash generation, $359 million. Surely, all things equal, that number is going to be higher in 12 months, depending on how you manage the share buybacks. But how do we think about the setup for M&A in '26? How important is it to you now? What are you thinking about?

Maybe I'll give you a quick intro, and then Dave will handle most of it. Obviously, Dave is here. I would say, in a good way, one of the things we've been trying to prove over the last 5 years is that this company was a great operating company by itself and didn't have to rely on M&A. And I think the proof is in the pudding; we've had all these years of the organic growth rate of 17%, 13%, 14%, and now who knows what happens this year. So we have had a bit of a chip on our shoulder about trying to prove to you guys that we could do it organically. But of course, we went out and raised all this money. We're really in the game for M&A. Maybe Dave can expand a little bit more on how he sees the field right now.

Yes. Thanks for the question, Rick. Our primary focus remains on the open vascular area, which generates 80% of our revenue. There are approximately 22 targets we are currently discussing, some more actively than others. It's a relatively small group. Additionally, we've begun exploring acquisition opportunities in the cardiac surgery sector, which accounts for 12% of our revenue. Our ideal acquisition targets typically have revenues between $15 million and $150 million. While there are a few larger opportunities in open vascular, many of the bigger ones are in cardiac surgery. As for the pressure to pursue an acquisition, I feel consistently pressured to make the right choice. While having cash is beneficial, providing flexibility to consider larger options, what truly matters is making a sensible acquisition, even if it isn’t the largest one. We are committed to finding the right fit rather than just utilizing all available cash.

And one more for me. Just maybe you could unpack the stellar Artegraft performance in the quarter, and you highlighted a couple of points, but just help us understand, so 2 things, one, maybe is the TAM, is the opportunity perhaps bigger than the $8 million in Europe, for example, you talked about in the past? And I mean, you're already at $2 million quarterly run rate in the fourth quarter, I think, if I remember saying it right. But how sustainable is this? Any updated thoughts on the TAM?

Okay. So Rick, we knew we would have to address this, and I take responsibility for that one. We presented that total addressable market, or TAM, and I guess we didn't fully grasp the potential we had; it's much larger than we initially believed. Just for fun, and not too scientifically, let's say the TAM is now $30 million instead of $8 million, and that's new information for this call. Thanks for pointing that out; you were right. Additionally, we can also look at the current market we're selling into. Remember, we have the Omniflow ovine graft, which is part of it, and we also have the new Artegraft in Europe, which is now at $4 million, and the other one is at $6 million. That's $10 million right there. So maybe we can estimate the TAM at $30 million right now. It's going really well and seems to be exceeding expectations. The doctors are more enthusiastic about it. In some ways, the Omniflow, which is the ovine sheep product, paves the way for the doctors to be ready for the ovine version, which is stronger, healthier, and less likely to have post-implantation complications. Everything is looking positive. The market is ready for it, and we have a fantastic sales team of about 55 reps there. Yes, we're ready to move forward, continuing to go direct in these new regions. It feels great – a perfect launch for the company. And as you can see, organic growth in Europe is 17%. Is that for the quarter or the year?

Year.

That's year. Okay. Yes. So 17% organic growth driven a lot by that product line. Hope I gave you what you wanted, Rick. Dave, do you want to add something about the different products maybe?

I might add, Rick, that Artegraft in the U.S. is used primarily for dialysis access procedures. And in Europe, the algorithm for dialysis treatment is fistula first and then frankly, they go right to a catheter, which is difficult for patients due to the infection risk. They skip over the middle step that we have in the U.S., which is to implant an access graft, and that's where Artegraft has really shined. So in Europe, Omniflow, the graft that George is referring to, is used predominantly as a leg bypass graft. And we're seeing, in early days, Artegraft, the hospitals and doctors are ordering the longer ones for use in the leg. I think we'll be developing the market for AV access graft, dialysis access graft in the arm, but we believe it's there strictly because we see the success in the U.S., and the patients' benefit. So I think we're delighted by the uptake of Artegraft in Europe and outside the United States now. And I think we have a long-term growth potential there by expanding the use of it more into dialysis access.

Our next question comes from Michael Petusky with Barrington Research.

So George, I'm curious about the strength in Europe. Obviously, Artegraft deserves some credit for that. Do you think the way you approached MDR and actively pursued opportunities, while some competitors backed off on certain products, is also contributing to this growth? If so, do you have any stories about gaining market share?

Sure. Okay. So it's a little bit of that. We've been pretty aggressive with MDR. In fact, just to sit on that point for a second, we got our final necessary MDR approval for our PTFE LifeSpan product. We couldn't be more excited about that. I think we have 22 approvals and our regulatory team has just done a knockdown job getting those things early for us. As to whether it's taking share because other people have fallen down on the job, other companies have not gotten their approvals. I think early on, we were getting worried that, that was the case. I don't have additional stories. You heard a lot about our shunt where we were sort of left as the only man standing for a while. I think 1 or 2 of them are coming back on the market now. But I would say, we're thrilled where we are MDR-wise. I don't have new stories about material players dropping out of the market vis-à-vis MDRs. I will tell you, every time a company gets acquired in and around our space, I think the Edwards' embolectomy catheters were acquired by BD 1.5 years ago; somehow the larger companies that they get traded into, they don't treat these as well and they leave opportunities for us. So maybe we have some opportunities around catheters because a very large competitor now owns the Edwards catheters. But of course, Edwards is large to start with. So no new great war stories there. Just maybe we go direct, where we went direct in Portugal last year, we went direct in Czechia; you're hearing us talk about Poland. We're really covering the map over there. And at some point, we're going to be one of the largest vascular distribution channels in Europe. So maybe that always plays into our health over in Europe. I don't know.

Okay. Great. Let me ask one more question, my almost obligatory question on China. I know it's a tiny market for you, but I also know you're trying there. And I'm just wondering, any updates in China?

Sure. And I think for the last 3 or 4 calls, Mike, and I appreciate you staying on the topic, it's been good news over there. And I got another good one for you, which is I think we were up 24% in revenue in Q4. It's happening there for us as just a regular company. We're a $2 million company over there. It's small versus our guidance this year for revenues is $280 million. So you and I are now talking about a $2 million entity inside of a $280 million. So it's small, but it's growing like you'd expect it to grow in China. We're over the tariff thing. The way we got over that was we just raised prices. That's helped us a lot over there. We're profitable over there now for the first time ever. I think Q4 was a profitable quarter. And that's saying a lot. That's having come a long way from losing $1 million a year over there on regulatory filings. The one sort of, I don't know what you say, negative over there is that we went over there to get XenoSure cardiac approved, and we got it approved after a long arduous clinical trial. And then quite honestly, it's been a big nothing burger over there. So it's not happening because of that. It's happening because of everything else. We also separately have now finalized our application for XenoSure Vascular in China. We shall see what that leads to. I don't want to make a big deal out of it here. But as an organic operating business, forget about XenoSure and all the clinical trials on that. It's going great over there. We're thrilled. We've got a new manager, he started about 1.5 years ago or so. He's doing a fantastic job.

Okay. Great. I've got to ask this because I sort of almost can't believe the number. The 20% valvulotomes, I mean, I think that product came out when I was roughly in college. I may be exaggerating, but it's pretty close, I think. How do you put up a 20 plus 20 on a product that's been around 3 decades or more?

It's a significant focus for us, and we've developed an ideal channel for valvulotomes. I've been here for 33 years, and over that time, we've built a strong channel aimed at selling valvulotomes and other products that customers might need. It's well-structured for that purpose. However, we need to be cautious not to overstate our position. While we had a noteworthy quarter, the unit sales are fairly stable. We're not operating in a rapidly expanding market, so I want to be realistic about our performance. That said, our approach continues to be effective. I'm not certain about the unit sales figures for Q4, but we did report a 20% sales growth in that quarter.

17% organic.

That's for the year of 2025; and in the quarter, 9% and 6%.

Our next question comes from Jakub Mlejnek with Oppenheimer.

What impact do you anticipate the CREST-2 trial in carotid revascularization will have on your carotid artery stenting business? Also, how has that been accounted for in your guidance?

Thanks for the question, Jakub. It's interesting that we just achieved a record quarter in our carotid shunt business. To provide some perspective, 15% of our total sales are related to carotid procedures, including shunts and patches. Although over 50% of our revenue is generated outside the U.S., 80% of our shunt units are sold internationally. I am uncertain how long the CREST-2 results from the NIH trial will take to affect our U.S. business, especially since our U.S. operations have already been influenced by the TCAR stenting procedure. I believe we are well positioned due to our geographical diversification. I want to point out that while CREST-2 is considered a Level 1 NIH study, the stenting cohort excluded patients with long lesions, calcified lesions, and tortuous arteries, which is not the case for the carotid endarterectomy cohort. This makes the comparison somewhat misleading. In fact, if just three out of 600 patients in the stenting group experienced incidents after their procedure, it would negate any statistical advantage of stenting. Therefore, I view the results as quite close. Given these exclusions, we need to consider the long-term implications. However, in the meantime, I believe our carotid shunt business is transitioning to be more robust internationally and remains resilient for the foreseeable future.

Got it. Yes. I appreciate all the color on that. And then I guess back to the price versus unit growth, would you be able to break out for this last quarter, the price versus volume contributions within the various categories?

Jakub, we've tried to stay away from that just for simplicity. So no, we'd prefer not to, if you don't mind.

Our next question comes from Michael Sarcone with Jefferies.

I guess I just wanted to start on the gross margin side, do you think you can walk through the puts and takes as we make our way through 2026? It would be helpful to get some color there.

Yes. Mike, thanks. It's Dorian. And I think you saw a really nice step-up throughout 2025. We had an 80 to 90 basis point step-up each quarter. And when you adjust out the benefit of that tax credit, which on a reported basis gave us an extra 110 basis points. So we're up 180 basis points from 2024 to 2025, adjusted, and we're guiding to be up 170 basis points from 2025 to 2026. So we're seeing a nice continuation of that gross margin story. And obviously, we get the benefit from the pricing increases coming through. We've done a nice job of getting underperforming products out of the bag. We got rid of the ZEO midway through the year. So that helped with that cadence of improvement in the gross margin in the second half of the year. But we've got some good manufacturing efficiencies that have come through. And all that offsets the normal inflationary pressures in cost of sales, but also some of that mix of the OUS business growing faster than the U.S. business. And we all know that the U.S. business has higher ASPs in general. Back half of the year, we'll have a little bit of pressure from the manufacturing transfer for the RestoreFlow business and a little bit of pressure from opening the new 34,000 square foot warehouse we have here near the Burlington headquarters. But overall, it's just been a great gross margin story for us, up 180 and guiding for another up 170.

That's great. I guess a second one for me, and I apologize if it's been asked, but hopping between calls. Just any update on the M&A environment and what the pipeline looks like there?

Yes. Mike, I answered the question a little bit earlier for Rick, but the summary is, the pipeline is in good shape. We're pretty busy these days, still hunting in open vascular surgery, where there are 22 targets, and cardiac surgery as well. But yes, the revenue sweet spot, as I mentioned, is $15 million to $150 million. Yes, we're out hunting. And as soon as we have anything to report, we'll report back.

Our next question comes from Brett Fishbin with KeyBanc Capital Markets.

Just wanted to start with a follow-up on the OUS Artegraft launch again. Just we saw a really significant upside to your original expectations in 2025, the year coming in at $4 million rather than $2 million. I wanted to just double-click on where you saw the outperformance. Just curious like on what countries are performing the best. And then just thinking about the $10 million guidance for 2026. Just curious on your approach to that, just thinking about the sequential progression in the past 2 quarters, like where it seems to be heading, if you view that as maybe a conservative approach to the year-over-year ramp?

Okay, great. So the first part of your question is about which countries are performing well. It seems like most of the strength is coming from Central Europe, particularly in the DACH region, which includes Germany, Austria, and Switzerland. The Netherlands has also been performing well. We're starting to see significant growth in Italy and Spain as well. Initially, we were hesitant about allowing consignment in those markets, but we changed our minds and decided to proceed, which is helping us ramp up our efforts there. In the U.K., however, the performance hasn't been as strong as in these other regions. Central Europe is off to a fantastic start, and we expect to see growth in Southern Europe, which includes France, Italy, and Spain, and in Northern Europe, which encompasses the U.K. and the Nordics. There is still a lot of potential for growth, and we won't specify where we are in terms of timeline because that often leads to complications. Regarding our quarterly performance, we considered it carefully and chose to focus on providing an annual figure instead of breaking it down by quarter for one product line, which is relatively small compared to our overall guidance for Europe. We're estimating $10 million for that line and prefer not to delve further into quarterly specifics. However, we expect to see $6 million in growth from that product line in Europe alone. It's primarily a European and South African focus right now, with less activity in other regions, although we've made progress in Canada and Australia after receiving the necessary approvals.

All right. That was super helpful. And then I'll ask one other question. I think it was more of a topic on the last earnings call, but just wanted to ask about the overall health of the APAC market. You commented on China already, but it looks like a bit of a bounce back quarter here. And just curious if you're still seeing any signs of softness in certain countries or back to business as usual in '26?

It was a fantastic quarter with a 20% organic and reported growth, which is a solid result. In Q4, most areas seemed to rebound, except for Japan, which didn't recover as much as we had hoped. I still sense some softness in Japan, but I'm optimistic as we enter the new year, especially with China showing improvement in the APAC region. Korea had a specific issue related to direct embolectomy catheters, but that has been resolved, and we are now fully operational there. I expect positive developments from both Korea and China this year. Overall, I'm feeling much more positive about Q4 and look forward to what the next 12 months will bring in Asia.

Our next question comes from Danny Stauder with Citizens JMP. There is a sense of optimism because China is making significant progress within the APAC region. Korea experienced a specific issue regarding direct embolectomy catheters, which has since been resolved, and we are now operating directly in Korea. We expect positive developments from both Korea and China this year, and I felt more optimistic in Q4. We will see what the next 12 months bring in Asia.

First one, I wanted to ask on the RestoreFlow cardiac call point. It sounded like it accelerated, I believe I heard 90%, and that's after a strong 2Q and 3Q. So I was curious what you saw in 4Q that is driving this performance? And then just more broadly, are there any recent trends in the area that are playing out thus far in 2026 that we should keep in mind here?

Okay. Maybe this thing called the Ross procedure is sort of starting to dominate conversation inside of our company. And the sales manager in the U.S. is a fellow who lives in Toronto, and he's been the guy who's generally been building the Canadian business around allografts. He's now in charge of North America. He's been in charge for 1.5 years. And I would say, he's been pushing the cardiac side of allografts a lot harder in the U.S. proper, not just Canada anymore, but in all of what we call North America. We really don't have much of a presence in Mexico. So I would say it's a bit of that. We did a big training course down at Mount Sinai in New York in October around the cardiac device, and that sort of brought a lot of interest to that device. So we're in a spot where we don't have a lot of cardiac sales. So when we sell some stuff, it looks like a lot. But still, it's was nothing 5 years ago, right? We had 0 in sales 5 years ago, and now it is something. So it's been a satisfying run, and I would say it's about the focus on cardiac. The vascular business itself is pretty good, too. It's a lot bigger, but it grew, what, 19% in Q4. So the vascular business is also doing well, but maybe the excitement is around cardiac.

Great. That's great color. Just one follow-up for me. Staying with RestoreFlow, just with the manufacturing transfer of RestoreFlow from Chicago to Burlington, I may have missed this, but should we see this benefit to gross margin in 2026? Is it already in that guidance? Or is this more of a 2027 event? How should we be thinking about that?

Yes. It's probably a slight headwind to margin in 2026 as we ramp up in one location and wind down in another. We do think that we're bringing it here, as we have with other manufacturing transfers, to have it centralized, to have better control over it, whether or not it improves gross margins long term. I mean, I think that's our hope, but we'll get it transferred first and think about 2027 when it comes. But all the costs are fully baked into our 2026 guidance.

Our next question comes from Jim Sidoti with Sidoti & Co.

A couple of modeling questions. The 2026 guidance, can you tell me what you're assuming for tax rate and share count?

Yes. Tax rate, I can give you, we had a Q4 '25 tax rate of 23.2%, and that was the same for the full year, 23.2% for 2025. So that's probably a pretty good number to plug in for your 2026 models. Share count, it doesn't change a whole lot, just the option activity. We'll hit publish on the 10-K in the morning, and I think you can pick up the numbers from there, or we can get them to you offline if you need them earlier.

Okay. It looks like it was down in the fourth quarter. I mean, is that a good number for 2026?

If you're considering the decrease compared to 2023, keep in mind that in Q3, we had a situation where the excess income from the tax credit caused us to change from excluding the convertible to including it, which introduced a dilutive effect. Therefore, the Q4 figure is the one that should be focused on.

Okay. All right. And then you talked about RestoreFlow in Ireland. Is that approved already?

No, it's not, Jim. You're correct to point that out. We initially expected approval by the end of Q2 during the last call, but we are now projecting approval in Q3. The filing was slightly delayed and will be submitted in March, as we had anticipated it would be submitted earlier.

Okay. All right. And then you've also talked about the headwind to consolidate Chicago into Burlington. Is that significant? Or is that $1 million, less than $1 million, more than $1 million? Can you give us some sense on that?

I think we'll say, it's fully baked into the guidance, and you can see we've got a pretty consistent gross margin guide here, 72.1% for the quarter, 72.1% for the year. So obviously not having a material impact.

Okay. All right. And then the last one, can you give me the operating cash flow in the quarter?

Cash from operations was $23.1 million. CapEx was $1.8 million. Free cash flow of $21.3 million.

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