Lemaitre Vascular Inc Q1 FY2026 Earnings Call

Welcome to the LeMate Vascular Q1 2026 Financial Results Conference Call. As a reminder to everyone, 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 LeMate Vascular. Please go ahead, sir.

Thank you. Good afternoon and thank you for joining us on our Q1 2026 Conference Call. With me on today's call is our CEO, George LeMate, 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, May 5, 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 10K and subsequent SEC filings, including disclosures of 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. Reconciliations of GAAP to non-GAAP measures discussed in this call are contained in the associated press release and, if applicable, in supplemental materials, both of which are available in the Investor Relations section of our website, www.lemate.com. I'll now turn the

call over to George Lemate. Thanks, Dorian. Q1 featured 11% sales growth, a 72.7% gross margin, and 42% EPS growth. Graphs were up 20%, Valvatome's 15%, and Carotid Chunk's 11%, as each category posted record sales. Our three geographies also posted record sales. EMEA was up 20%, APAC 18%, and the Americas 7%. Art of Graphs has become our largest product, and we're investing in its growth in three ways. Number one, filing more international approvals. Number two, making longer sizes available for leg bypasses. And number three, proving quick stick claims for AV access. Worldwide autograph sales grew 36% in Q1. International autograph sales in Q1 were $2.1 million, and we expect 2026 sales to be $10 million versus $4 million in 2025. Health Canada has approved autographs, and the launch is now planned for H2-2026 as we finalize Canadian-specific packaging validations. Additional autographed approvals are expected in 2027 for Korea, Brazil, Vietnam, and India. We're also working to make longer autographs available. Because European surgeons use autographs for leg bypasses, our longest autograph, which is 50 centimeters, is now in high demand, and we know we could sell longer sizes. Unfortunately, our current packaging tube is just 53 centimeters long. So the first step is to gain approval for a longer tube, and we plan to make these filings in the U.S. and Europe in H2-2026. First sales of these longer autographs could start in H2-2027. Separately, we've made a pre-submission filing to the FDA as we seek quick-stick AV access claims on autographs' U.S. labeling. This pre-submission will help us collaborate with the FDA to develop the pathway for a PMA filing or to design a clinical trial. While ArteGraph's current U.S. labeling restricts cannulation to 10 days after implantation, peer-reviewed literature indicates that ArteGraphs can be cannulated one to three days after implantation. RFA grew 25% in Q1, led by strong U.S. results. We currently distribute tissues in three countries, the U.S., Canada, and the U.K. German implants should begin in Q2, and we now expect to receive Irish approval in H2. Our Irish warehouse opened in April, and we'll begin shipping our core medical devices starting in June as we await an audit from the Irish Tissue Authority. This audit should enable tissue distribution from our Dublin warehouse to Irish hospitals in H2. Long term, this warehouse will be used for pan-European distribution. We filed for Australian approval in April, and we plan to file in Austria, Holland, Belgium, Spain, and Switzerland in 2026. As for our RFA facility transfer, tissue processing is ramping up in Burlington, and we should complete the project by year-end. We ended Q1 with 158 sales reps, up 3% year-over-year, and we plan to end 2026 with 170 to 180. We currently have 16 open requisitions for new reps, mostly in the U.S. We ended Q1 with 35 RSMs and country managers, up 13% year-over-year. We expect to go direct in Poland in Q4, and this project will include an office, warehouse, a GM, customer service team, and several reps. Poland will be our 32nd direct country. Higher ASPs, geographic expansion, and disciplined spending produced 11% sales growth and 42% EPS growth in Q1. Full year 2026 also shows op leverage. Increased guidance implies 12% sales growth and 26% EPS growth. Our new 2030 goals are posted on the walls of all LMAIT conference rooms. We call them the 2030 planks, and our playbook remains simple. Produce quality devices, build our sales force, go direct in new countries, acquire niche products, and focus on profitability, cash flow, and dividends. I will now turn the call over to Dorian.

Thanks, George. Organic sales growth of 10% over Q1 2025 was driven by average selling price increases of 8% and unit growth of 2%. Unit growth was impacted by a lower than average quarter in our distribution business, which can be lumpy. Excluding distribution, direct sales grew 12.8% organically, comprised of 8.4% price and 4.4% units. Total organic revenue growth excludes a $2 million foreign exchange benefit in Q1-2026 and $1.5 million of Azeo distribution sales in Q1-2025. These two items largely offset one another. We discontinued Azeo distribution in May 2025. In Q1-2026, we posted a gross margin of 72.7%. The 350 basis point year-over-year improvement was driven primarily by higher ASPs and manufacturing efficiencies. Our Q2 gross margin guidance of 72.1% reflects the impact of our new Berica warehouse and the manufacturing transfer of our RFA processing to Burlington. Operating expenses in Q1 2026 were $30.6 million, an increase of 6% versus Q1 2025. Despite the continued expansion of the sales force, overall company headcount decreased 3% from $662 at March 1, 2025 to $641 at March 31, 2026. Q1 2026 operating income increased 41% year-over-year to $17.8 million, with an operating margin of 27% compared to 21% in Q1 2025. Fully diluted earnings per share were $0.68, up 42%, benefiting from strong operating income and an improved effective tax rate. We believe our effective tax rate will remain lower than our historical rates. Given the strong growth in high-margin international autograph sales and our overall geographic sales mix, A larger share of our income qualifies for the foreign-derived intangible income, or FITI, deduction, which structurally lowers our tax rate. Excluding the discrete items in this quarter, we expected 80 basis point improvement from historical effective tax rate due to the higher FITI deductions, another benefit of our U.S. manufacturing footprint. Cash from operations generated $15 million in Q1-2026, as compared to $9 million in Q1-2025. We paid $5.7 million in dividends to our shareholders during the quarter. We ended Q1 2026 with $367 million in cash and securities, an increase of $8 million in the quarter. The LeMate playbook continues to drive broad-based revenue growth, supported by our differentiated products, direct-to-hospital model, and strong commercial organization. We are affirming our full-year revenue guidance of $280 million, representing 12% organic growth. We are increasing our annual guidance for gross margin to 72.3% and operating to $79.8 million, representing 24% growth over adjusted 2025 operating income. We are also increasing annual guidance for diluted earnings per share to $3, or 26% growth from adjusted 2025. Historically, Q2 has been one of our strongest quarters, and we're expecting revenue of $71.5 million and an operating margin of 30%. Our current guidance assumes a constant euro-US dollar exchange rate of 1.17 and no dilutive impact from our convertible debt. For additional details, please see today's press release. Finally, we'd like to welcome Keith Hinton from Freedom Capital Markets to the call. Keith initiated coverage on LMAIT on March 31st. With that, I'll turn the call over to the operator for questions.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by as we compile the Q&A roster. Our first question comes from the line of Keith Hinton from Freedom Capital Markets. Your line is now open.

Great. Thank you. Thanks for taking the question. I have kind of a high-level question here on the pricing side of things. So, you know, EMEA has been growing faster than the U.S. for a few years. You know, it's my assumption that the prices there start lower and there's less ability to take price over time. So considering that kind of balanced against the ongoing mix shift towards graphs, where it seems like you do have good pricing leverage in the U.S., just how should we think about the high sustainability of high single-digit funded pricing increases in the out years.

Hi, Keith. This is George Lemaitre. Again, welcome to your firm for covering the company. And also, welcome to the call in terms of asking about price increases and the sustainability. It's a question you can imagine we get frequently. We feel very comfortable with what's going on here. We have another year where I think we're validating all the way into Q1 that we're able to get these price increases. We got 8% in Q1. Did you want me to distinguish between European pricing flexibility and U.S. pricing flexibility? Was that part of your question?

Yes, that would be terrific.

I would say it's not exactly answering it, but on that topic, I would say the floors, the pricing floors that we put in are largely in and installed the United States in about 55% of our products, we have pricing floors, and then we change them from year to year, of course, and in Europe, I still think we have a little room to go. I think only about 40% of our products have pricing floors, so you can do more, you can add pricing floors to more of the different products over there, and also in Europe, I think it takes longer for prices to really get installed since, particularly in Southern Europe, a lot of the stuff is sold on three-year tenders, and so you can only change your price once every three years. So you change it, and then it takes three years for it to fully get implemented. I hope that makes sense to you. So maybe a little more room over in Europe, given the fact that we're not as price floored over there, and that it takes longer once you do do a price, to get to a price like it takes longer to get to. Understood. Great. And then

just one specific, and again, apologies if I missed this, but can you talk a little bit about the performance for patches in the quarter. I know there was a bit of a tough comp there. You were lapping some supply issues for a competitor and I think that was the last quarter of Aluxia. So just talk a little bit about that and how we should think about patches growth going forward.

Right. And I can pull out, it was not such a great quarter for patches. Pat, Xenosure was up 5%. That's the core patch and I can get you in a second if you stand by, I can get you the full patch category. If anyone in the room has that, we can do that. Xenosure is the main piece of all this. And I'm getting closer here, Keith. I should know this up top of my head. Let's see. Let's see. That is, no, that's not going to help me. One second. I can do it. Organic growth for the whole category was 2.3% for the quarter. Again, 5% for Zeno and 2.3% for the whole category

patches. Excellent. Thank you so much. Yep, no problem. Thank you. Our next... So we're having

some audio problems. Okay, I can hear you very well at the moment. Great. I think we lost you

for a little while, yep.

Oh, I'm so sorry. Our next question is coming from the line of Michael Petosky from Barrington Research. Your line is now open, Michael.

Okay, thank you. Good evening. So, George, I guess I'm curious, with the stuff of the last, I guess, two months in the Middle East, are you guys seeing any impact from that, either just in terms of customers that you may have in that part of the world or just in general in terms of the cost of transporting things and so on and so forth? Just wondering any impact from sort of the international problems.

So we have a very concrete topic about that, but it's not large. We weren't able to ship $175,000 worth of export towards the Middle East at the end of the quarter. So we ended the quarter Q1 without having shipped that. But in general, Mike, I would say, no, we're not really being bothered by this. This is a big topic for everyone in the world. But for our little world, LeMate Baskler, so far, we've been okay. Probably as time goes by, the supply chain will put extra costs on us for transportation and things like that. But I would say for now, you know, we're crossing fingers and toes, And I think things are okay for us vis-a-vis what's going on in Iran.

Okay, great. And I don't know if David's there, but if he is, I'd love an update on M&A, any commentary he has there.

Hi, Mike. Yeah, it's Dave. Nice to hear your voice. Yeah, so, you know, we're out hunting. We're active. We've put out two or three term sheets so far this year. the hunting ground remains the same of open vascular where there are a couple dozen targets and cardiac surgery which of course is about 12 percent of the revenue and the revenue sweet spot stays in that sort of 15 to 150 million give or take we do look smaller we do look bigger and certainly we have cash and dry powder to execute. So we're just trying to find a good target that's the right fit at the

right price. Obviously, you guys were pretty active for a long time. In the last five years or so, it has been less so. Other than maybe looking bigger, I mean, have you guys changed the approach at all in terms of hurdle, you know, internal hurdle rates or anything like that, or is it just, hey, we're waiting for our pitch and we just aren't seeing our pitch?

I would say we haven't really changed it. I mean, obviously, the last sizable acquisition we did was Artographed, which was almost six years ago. We did a very small one acquisition, which, you know, some people might have missed in December. It was just a few hundred thousand of revenue over in Europe. But high level, no, I mean, I would say since our graph, we did that and it was COVID and then we're integrating, but we've been hunting. I think, you know, one factor is that there just aren't that, that many targets left in open vascular. So that's piece A. And then piece B is, you know, I think it's taken us a little while to sharpen our focus in cardiac surgery, and I feel like we're there now, which is why I think you hear me saying we're fairly active with respect to making these non-binding offers. So we're out there, and yeah, I mean, on the one hand, you know, I'm fully cognizant of the amount of cash we have, but I've done enough bad acquisitions to know that you're really better off waiting for your

pitch. And so we're waiting for our pitch. Mike, maybe a small add to that from George would be, I think in the last six years since we did the last big acquisition in June of 2000, I do think, and I think I mentioned this on one of these calls, I think we've gotten more self-confident about our ability to grow this company organically. So the last three or five years, the stock price has moved a lot based on organic growth. And I think when you prove that to yourself, that you can run a business organically that well, you start feeling less pressure to do acquisitions. So I think maybe that sort of implicitly made the bar go up a little

bit as well. All right. Makes sense. Thanks, guys. Thanks a lot, Mike. Thank you. Our next question comes from the line of Michael Cercone of Jefferies. Your line is now open. Good afternoon,

and thanks for taking the question. Just wanted to start, you know, George, you opened up the call talking about some opportunities and growth drivers for Artograph. And wanted to hone in on the QuickStick claim. Maybe, you know, I was hoping you could help us frame the volume opportunity. I believe Gore AccuSeal is kind of the primary competitor there. You know, help us frame the opportunity for what you could gain and share or volume growth.

you did get the quick stick claim Mike it's Dave Roberts I'm going to jump in on this and George can add color yeah you are right in identifying the Gore AccuSeal whenever you buy a Gore-Tex raincoat you support AccuSeal so there's that and then you know they're flexing there are other quick stick graphs on the market of course quick stick really is focused on dialysis access and then not peripheral bypass autographed it's funny over in Europe as George mentioned it's being used primarily for peripheral bypass so a quick stick indication unless the Europeans take up using graphs as part of their algorithm for Dallas's access the quick stick feature will really just help us in the US and last year our autograph sales in the US were around 40 million dollars you know we don't we don't really speak in TAMs too too much around here you know do we think that quick stick will expand our our sales of autographed we do and you know because we see these competitors we know there's market and so you know but but we feel also like this regulatory path is long for us it could be two years but it could be five or six years and so we know the market is big enough that it completely justifies us investing the dollars to pursue that indication but in terms of exactly how much bigger we expect the market to be I don't think we're prepared to say that we do think it will be materially bigger than our U.S. autograph sales today, but beyond that, I'm not so sure we're ready to say exactly how much bigger.

Got it. That's helpful. Thanks, Dave. And I guess just another one on autograph, just about the 53 centimeters, the longer length. How much, I guess I'm trying to figure out what does that do for pricing for you? You know, obviously, as George mentioned, one of the central focuses here is sustainability of pricing. So, you know, what kind of ASP bump do you get as you elongate the length of some of these graphs?

I think there's a good market out there, and we've proven it with our OmniFlow 2 product, which we've had out there for five or eight years now. That's the Ovine-based device out there, Mike. And so when we get to the longer Artigraft, and we'll get there at some point, we've already proven the 50 centimeter has significantly premium pricing versus the rest of the entire autographs, portfolio, catalog numbers, if you will, the other lengths. So I would say when you get up to 53, 55, 58, you are going to be able to get into premium pricing there. So as good as possible. And some other good news is that when we went into Europe, our manager over there put pricing above the American pricing, which is kind of rare, and it seems to be working. So, So, you know, it should be nice gross margin devices when we get there. Great. Thank you. Thank you.

Thank you. Our next question comes from the line of Brett Fishpin from Key Blank Capital Markets. Your line is now open.

Hey, everyone. This is Will on for Brett. Quick question on gross margin. You expanded around 350 basis points, and you called out higher pricing as well as some manufacturing efficiency. Could you just speak a bit to the split between those two items? And then can you just double-click on some of the manufacturing efficiencies? And how much more room do you see to take out costs?

Yeah, this is Dorian. Thanks for the question. The 350 BIPs year-over-year, it's largely the pricing. It's also driven by some positive mix. We talked about the distribution business being down a little bit. That's a lower-margin business overall. We also talked about the success of Artigraft, and that's a very high-margin business. So that price and that positive mix helped to that $350,000. And the manufacturing efficiencies, we've talked about this on several calls now, and it's hard to identify really one single individual thing that we've done in the operations. but you know other than really maybe the theme of consolidating here in in Massachusetts which we do think long term gives us a better operational efficiencies but we have seen we are really good you know Trent Camp you runs our operations Ryan Conley at our engineering team you know Andrew Hodgkinson who runs quality regulatory I think I've done a nice job of just building a culture of continuous improvement here so we've seen that come through in a lot of just discrete, you know, what you'd call lean or Kaizen projects. Maybe the best way to, you know, articulate it is at the end of 2023, we had 211 direct labor employees in the company, and at the end of 2025, we had 175. So we continue to increase the number of devices that we're manufacturing, and we can continue to do it with fewer and fewer direct labor heads, and that's really a result of these automation projects, these lean Kaizen-type projects. And then we've also, elsewhere in the cost structure, tried to drive cost out over the last year. We did do some initiatives around freight and logistics in the back half of last year that really helped margins. we have been building out that footprint of warehouses across Europe in particular where we used to ship all the products from our German facility in Salzbach to cover the European customers we now have operations with warehouses in Switzerland in Italy in Spain and France in the UK and just being closer to the customer as a lot of commercial benefits but it also has a lot of cost benefits around freight so I think we're just trying to continuously improve and drive cost out and I think that continues to be opportunity you know you know for us there but it really has been a great story you know gross margin with the pricing and the abilities to just keep trying to continuously improve

the operations I really appreciate that caller and then maybe just sticking with the theme of margins the guidance implies material ramp up in operating margin to hit 29% for the year. How should we think about the next few quarters and eventually

getting to a 4Q exit rate? You know, I think material here is that we have a 30% margin coming at us in Q2, which is historically one of our better sales quarters. So that one's a little bit more obvious. But, you know, 29%, I don't know, what do we have keyed in here for the back half, we have 29 for the H2. So that implies H2 at 29%, but we're not splitting the quarters exactly right now. I hope that's cleaning up. But I mean, 30 is very close to 29. So it's a nice exit rate in any event. And what do we have this quarter? We're at 27 right now. So a little

bit better. And this is Dorian, just maybe just to jump in a little there. Again, I think we did just talk through some of the investments that we plan to make in the back half of the year, some of the investments around Artigraft. Talked about the Bill Ricca warehouse and the Burlington manufacturing transition for RFA. But also, we do expect to ramp the sales force in the back half of the year and make other commercial investments. So 2025 was a year where the front half of the year had a little more expense and we had a little less expense in the back half. 2026 will probably be a more normal year where you see the second half of the year have a little bit more OPEX in the first half.

Thank you very much.

Thanks, William.

Thank you. Our next question comes from the line of Rick Wise from Stifle. Rick, your line is now open.

Hi, this is Annie on for Rick. Thanks for taking our questions. So my first one is on the first quarter OUS autographed performance. I think I heard you call out $2.1 million in sales this quarter, which would sort of imply this annual run rate that's a bit below your $10 million target for the full year. So I guess I'm just curious how you're thinking about the sales cadence through the rest of the year, if you're expecting sales dollars to continue stepping up each quarter, or if there are any sort of seasonal dynamics that we should be conscious of and how you're expecting to sort of get to that $10 million target. Thanks.

Sure, sure. And if you go on a day-adjusted look at this, Annie, 2.1 in the first quarter winds up being an 8.6, not an 8.4, so we did do the math on that. But you have plenty coming at you. Q1 is always your lightest quarter at this company, always. Canada has approval. We should be shipping devices in Q4 or I think we're saying H2 here at some point in the back half. And you also have the Southern European region kind of ramping up right now. So, you know, we felt good about that. We put that number out there at the last quarter, so we're validating again this quarter. Makes sense to us. The rent makes a lot of sense to us to get to $10 million.

Okay, great. And then maybe just one on RestoreFlow Allograv. I heard you highlight that you're beginning distribution in Germany in the second quarter, I believe, and you're expecting RFA to be approved in Ireland in the second half. So maybe you could just share your latest thoughts about the European RFA market opportunity and sort of the potential speed of adoption and revenue ramp there.

Right. That's a good question. You know, I would say it's been a little – the autograph thing happened so suddenly it sort of took front and center stage at the company last year and then this year. I think RFA is kind of not as much focus from a regulatory perspective, but I think now the focus is on that and these things will start coming soon. So I would say it's been a little bit slow to start with and that we should see it speed up as we get more regulatory focus on that product line. Also in Germany, we got the approval, if you remember, in October and we have not done one implant yet and we're still sort of building our supply of quote-unquote German-approved items and they're slightly different technical reasons. They're slightly different than the American-approved items, and so it's taken a little bit longer for us to build up stock there. And then maybe the Irish approval and, you know, audit by the tissue authority there is a little bit slower in coming than we expected. It took us a little bit longer to set up our Irish office, and you're not allowed to ask them to inspect your facility until the facility is truly open. So a couple of those items there. But, you know, to go back to this, we just filed in Australia, and then there's five European filings, which will take place in H2 of 2026, Austria, Holland, Belgium, Spain, and Switzerland. So it's starting to happen here. But we would admit it's been a little bit light over there until now.

Got it. Thanks so much for the color there.

Thanks, Annie.

Thank you. Our next question comes from the line of Danny Sautter from Citizens JMP. Danny, your line is now open.

Yeah, great. Thanks for the questions. Just my first one on autographs, specifically on the point on making the longer sizes for leg bypass. Could you talk about this decision? I mean, it sounds like it's higher dollar in terms of a sell point than maybe it's more common in Europe, but are there any more recent trends from vascular surgeons that you're seeing that's leading to higher demand for these longer sizes? I guess, in summation, the question is, why now, and why are you pursuing this at this point? Thank you.

Right. You know, I think it's always been very clear to our European colleagues that a 50 centimeter wasn't going to make them happy, and that it just barely qualified for what we'll call FEMPOP bypasses, which is just below the knee, they've always told us, yeah, well, we can sell the 50, but George, we want 60s and 58s and 53s, just like you provide us with that OmniFlow graph. Again, I'm talking again about what I said. We sell bovine, ovine OmniFlow over there, and they're longer, and that's the market. They don't really do AV access in general in Europe. And so in the U.S., where we sell mostly AV access autograph, 50 centimeters has always been sufficient for the whole entire history of this device so we figured oh let's get going in Europe but then we always knew so this has been a project that's been on our drawing board for a while but it's starting to get real now

that we've got that CE mark and I would add this Dave Roberts the backdrop you know if a patient has peripheral vascular disease especially distally you know down the calf towards the foot the smaller diameter the artery the more likely it is that an endovascular intervention, whether it's an angioplasty or stent or atherectomy or whatever you have, isn't going to be durable over the long haul. So that's why we always see with our valvulatoma long bypass is what surgeons want to do. With our allografts here in the U.S. and in Canada and the U.K., we've always seen the most demand for the longest allograft. So clinically, there's a very good reason for it. But as George said, for us, our U.S. artograph business has been mostly dialysis access. It's only since we got into Europe where they're really adopting it for peripheral that it's highlighted the need for a longer artograph. That's really

helpful. And just following up on that line of questioning, just in terms of the market opportunity, how much would approvals here expand your total addressable market for this business? Are there certain procedures that this unlocks? It sounds like it might be more so in Europe, but any more detail on patient population sizing or growth here would be great in terms of what this could offer you.

Slightly complex answer, but the answer is we've given you a TAM, and I think we upped it the last time we met at $30 million for biologic graphs in Europe or international, rather, OUS, let's call it. And that always included the ovine graft, and we sold something like $6 million last year of ovine, and we plan to sell $10 million worth of this bovine graft artograph, so that's 16 of the 30 TAM. But in knowing that we were already selling, it's a little complex, in knowing that we were already selling ovine for the distal bypasses, for these longer bypasses, we already felt that was part of the TAM. So in the very short run, does this affect our TAM of $30 million? No, though we should think about it for a while and come back to you guys on it. But in the short run, no, let's stay with $30 million as the TAM.

Appreciate it. Sorry for making it more complex than it used to be. Thanks a lot. Thank you.

Thank you very much.

Thank you. Our next question comes from the line of Nathan Threbeck from Wells Fargo. Your line is now open.

Good afternoon. Thanks for taking the question. You know, just thinking about capital allocation, I guess as we think about your opportunity set, either organically or through M&A, are there any product categories you would call out in open vascular, open cardiac, where, you know, you're seeing outsized momentum or maybe strategic underinvestment?

I mean, for us, Nathan, this is Dave. It's a great question. I think the first level consideration is, you know, open vascular versus open cardiac. And for us, open vascular is still the center of the fairway. But like I've said, there are limited targets set in open vascular. When you get to cardiac, we're generally steering away from capital equipment, never say never. But the more important attribute for us is the niche market. And George emphasized that when he rattled off, I think, five of the key tenets of the LeMate playbook. We're looking for these niche markets where we can acquire into a leadership position. We really like physician preference items that are differentiated, that the surgeons are going to gravitate towards over time. So, you know, the cardiac surgery market devices is, I'd say, at least four times the size of the open vascular surgery market. So there are a lot of targets there. I'm not going to get specific for, obviously, competitive strategic reasons about the targets we're interested in, but there are plenty of these interesting niches that we could acquire into, and then hopefully they would exhibit the same financial characteristics over time that our organic products are these days. Thanks for that. How are you thinking about the RestoreFlow launch in Germany?

How are you thinking about the ramp and the contribution to growth this year? I mean, this is George again. It's all baked into guidance, but I think we're being quite cautious with what we're baking into guidance because we don't know. We've had one European launch over there, and it went fantastic. It was the U.K., but, you know, we haven't seen it yet. We have less supply. We didn't have supply issues the last time. The American and the British, what the Americans and the British accepted for acceptable tissue was the same, so we didn't have a distinction. Now we have a distinction. Every single tissue that we send to Germany has to be sort of German-qualified, if you will, so we've had a slower time. So we don't know. We've got very cautious numbers baked into guidance. we shall see. Maybe there's a little upside for everyone in this launch.

Okay. And if I could squeeze one more in, you know, as we think about your guidance philosophy, I mean, we see 10% organic growth and there was this distribution dynamic in Q1. Your guidance implies an acceleration through the rest of the year, I guess. How do you risk this guidance at

this point? I mean, if you look at tough comps, easy comps, I think the summer quarter is an easy quarter to beat up on. So you have that going for you. And in general, maybe even Q4 is something that we can do better than what we had here. But, you know, you look at our guidance history, I think, Dave, what do we hit like 77% of the quarters for sales guidance? We have it written on the investor prezzo out there. I think it's something like that, Nathan. So, you know, this is like our 78th call. So we're getting better and better at doing guidance, I think. But yeah, there's always risk. I don't think you would accuse us of sandbagging if we're only, quote unquote, only making it 75% of the time. So we try to give you the right number and then we, you know, and we chase it too. We'll chase those numbers. They mean a lot to us. Thanks for that. Yep.

Thank you. Our next question comes from the line of Jim Sidoti from Sidoti & Company. Your line is now open.

Hi, good afternoon. Thanks for taking the questions. Can you tell me what the operating cash and the capital expenditures were in the quarter?

Sure. This is Dorian. Jim, cash from operations was $15.1 million, and the CapEx was $2.8 million.

okay and um you talked about the consolidation of the chicago plant uh is that something you expect to be done by the end of this year yes okay and then i feel like i'd be uh i'd be missing something i didn't ask an autograph question on the call it seems like that's the topic of the day um you brought up uh korea brazil vietnam india when do you expect those approvals 2027 those are all 2027 so early late you know will they be

contributors I mean I wrote in the we wrote in the script H2 but I bet you get one of them in H1 and three of them in H2 something like that okay so they'll be moderate cut contributors to 2027 you know we haven't even thought that through we're thrilled to get them and that would make us have 56 approvals instead of 52, but they're okay countries for us. Okay. All right. Thank you. Thanks, Jim.

Thank you. Our next question comes from the line of Frank Takinen from Lake Street Capital Markets. Your line is now open.

Great. Thank you for taking the questions. I was hoping to follow up on the distributor. Is there a chance this swings back in Q2 and the back half of the year? And then is this potentially a geography where you may elect to go direct?

So you're talking about when we talked about export in Q1 being a little bit light. Yes, there's a very good chance it will swing back. Maybe if we look at maybe one fact that didn't come out yet, which is if you look at April, you guys, we usually don't do this, but just to give people some comfort there. In April, sales growth was 13%. It was 7% price and 6% units, and that's a big hint that, yeah, it was a temporary passing phenomenon. And one little step further here, Frank, the export business, interestingly enough, because, you know, we run around touting ourselves as a direct-to-hospital company, and lo and behold, if you really look at the facts, the export business at this company has a CAGR of 20% for the last, since 2019, So skipping over the pandemic, starting in 2019, the seven-year CAGR, if you will, is 20%. And so that business continues to just do fantastic. And all it says to me is that the world's a very big place. We ignore it, and the business keeps coming in, and then we use that to pick off places to go direct. You can see Poland, Mexico, and Greece. If you were in our building, you would look at the walls at all these 20, 30 plank sets. It says Poland, Mexico, and Greece. so you're probably going to see that happen over the next two or three years, certainly Poland this year and then Mexico and Greece coming after that. But not worried, you know, very excited about the export business always. And we have four export managers right now, or three, and one being filled right now. And on our plank set, we plan to get to eight export managers by 2030, so a place where we heavily invest because of the growth of the business as well as it produces great opportunities for us to go direct.

perfect helpful thanks for the april bonus and then uh on the autographed r&d projects you mentioned my my assumption to this answer is no but is this at all kind of marking a transition to maybe looking more internally at the portfolio for other r&d opportunities in in light of maybe the mna uh lack of appropriate mna currently or is this just kind of one-off because the

has had so much momentum that's a good question good way to look at it um I mean one of the nice things about being a company that doesn't do too much R&D is that the R&D projects scream at you and you can't ignore them for too long so maybe we could maybe we could put that in that category this is very very obvious stuff and also you're allowed if you don't do too much R&D you're allowed to do some really low risk low beta projects you know making a longer tube is a very low risk projects where we have high confidence that we'll get that approved by Europe and the U.S. So I hope that gives you some color on the choice of R&D projects. Probably, I think we've said this before, and again, it's on these plank sets. We do plan to do a little bit more R&D around here. I think in the old days we were targeting 10%. Now we're maybe targeting 8% just because we're at 6% and saying 10% seems false. But we should do more R&D around here. There's a lot of projects. The larger you get, the more helpful a little bit of R&D is to each one of your 160 sales reps, and I think we're becoming conscious of that.

Perfect. Very helpful. Thank you for taking the questions.

Thanks a lot, Frank.

Thank you. Our next question comes from the line of Keith Hinton from the Freedom Capital Markets. Your line is now open, Keith.

Great. Thanks for taking the follow-up. I just have a high-level question on business development. If you do decide to execute on a sizable deal in the cardiac space, just beyond the purchase price, kind of how should we think about the potential need for incremental investment to just bolster your commercial presence in cardiac? Is there kind of a level of near-term margin dilution that you're willing to live with in order to bring in another growth driver for the out years Keith it's Dave it's a good

question and the answer is it depends and what it primarily depends on is if the cardiac surgery product is a product that's also used in vascular surgery because there are five or seven crossover products like surgical sealants and pliegating clips and atraumatic occlusion devices like that and they're relatively easy short learning curve the answer might be no we may not need a dilutive cardiac sales force but if the product is a product that's used exclusively in cardiac surgery then I would say it's much more likely and the way we look at that is okay so maybe there is the need to establish some size of a cardiac sales force depends of course on the size of the acquisition and its geographic reach but you know if that's the first step into cardiac surgery then future cardiac acquisitions would leverage that channel to derive sales so we're always taking a very long-term view around here we've done vascular acquisitions for almost 30 years and I think we would do we would have a long runway of cardiac acquisition so we pay attention to it but it doesn't really deter us because we have a long-term viewpoint.

Great. That's helpful. Thank you.

Thanks a lot, Keith.

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