Artivion, Inc.

Greetings and welcome to the Artivion fourth quarter and year end 2023 financial conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the call over to Lane Morgan, from the Gilmartin Group. Thank you. You may begin.

Good afternoon, and thank you for joining the call today. Joining me today from Attivion's management team are Pat Matkin, CEO, and Lance Barry, CFO. Before we begin, I'd like to make the following statements to comply with the safe harbor requirements of the Private Securities Litigation Reform Act of 1995. Comments made on this call that look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include statements made as to the company's or management intentions, hopes, beliefs, expectations, or predictions of the future. These forward-looking statements are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from these forward-looking statements. Additional information concerning certain risks and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today. You can also find a brief presentation with details highlighted on today's call on the investor relations section of the Octavian website. Now I'll turn it over to our Octavian CEO, Pat Mackin.

Thanks, Elaine, and good afternoon, everybody. I want to start off our call today by welcoming Lance Barry, our new Executive Vice President and Chief Financial Officer. Lance most recently served as Executive Vice President, Chief Financial Officer, and Operations Officer at Wright Medical until the acquisition by Stryker in November of 2020. We are thrilled to have Lance join our team during this exciting time. I am confident his broad expertise and proven leadership in med tech will add significant value to Artivion as we enter the next phase of profitable growth. I'd also like to thank Ashley Lee for his many years of dedicated service to Artivion His contributions, no doubt, helped make Artivion the outstanding company we are today. Now on to our fourth quarter and full year 2023 results. 2023 was an outstanding year for Artivion, and I'm pleased to report that we achieved total company constant currency revenue growth just over 12% for the full year of 2023 compared to the full year of 2022. In addition to exceeding our top line growth revenue target, we achieved adjusted EBITDA growth of nearly 30% year-over-year, enabling us to deliver positive free cash flow while making strides in advancing our clinical programs and further expanding our global footprint. Our achievements throughout 2023 culminated in a particularly strong Q4 as we delivered constant currency revenue growth of 15% year-over-year, resulting in $93.7 million in revenue. Our performance was driven by improved revenue growth in our onyx business, which increased 19%, followed by tissue processing at 18%, bio glue at 11%, and stent grafts at 8% growth, each when compared to the fourth quarter of 2022, all on a constant currency basis. We've also benefited from the expansion of our commercial footprint through regulatory approvals across new geographies, especially in Latin America and Asia Pacific. Our strong top line performance led to $15.3 million in non-GAAP adjusted EBITDA in the fourth quarter, which is a 40% increase compared to the fourth quarter of last year. We expect our strong momentum in the fourth quarter to continue into 2024. From a product perspective, as I mentioned earlier, ONIX revenues increased 19% compared to the fourth quarter of last year on a constant currency basis, as we continue to take market share globally, and have the only mechanical aortic heart valve that can be maintained in an INR 1.5 to 2.0. We believe our valve is the best aortic valve on the market. Our market share gains each year and the recently presented results of the ONIX post-approval data, which showed an 85% reduction in major bleeding, clearly support our view. Tissue processing revenues increased 18% compared to the fourth quarter of last year on a constant currency basis. due primarily to pricing initiatives and the increase in volume of the ROS procedure. We expect continued double-digit growth in our tissue business in 2024, driven primarily by our significantly improved supply of our proprietary Synagraph pulmonary valve. And lastly, StantGraph revenues grew 8% on a constant currency basis in the fourth quarter compared to the fourth quarter of last year, driven by improved supply and strong performance in AMDS outside the U.S. We anticipate demand to remain strong through 2024 and beyond for our StentGraph products, which should sustain and continue our strong revenue performance. Our results were also driven by the continued progress we are making expanding into new markets. Through new regulatory approvals and commercial footprint expansion in Asia Pacific and Latin America, both delivered constant currency revenue growth of 19% compared to the fourth quarter of last year. We expect these regions to be important growth drivers over the coming years as we continue to leverage our industry-leading product portfolio further into these regions. In addition to our strong financial performance, we continue to advance our clinical programs and show leadership in the aortic field with two late-breaking science presentations at the STS Annual Meeting in San Antonio. First, the full dataset from the AMDS Persevere Clinical Trial And second, the interim data from the Nexus Triumph Clinical Trial. First, in November of last year, we completed the trial enrollment of Persevere, our IDE clinical trial for PMA approval, which consists of 93 patients who've experienced an acute type A dissection. I'm pleased to report that the trial methods combined primary efficacy and safety endpoints, demonstrating a statistically significant reduction in all-cause mortality in the primary endpoint of major adverse events, as well as no occurrence of DANE, which are associated with increased risk for re-intervention and mortality. As a reminder, the adverse events called MAEs, which is the MAE endpoint for the ID trial, is based on historical control of patients with malperfusion. In this reference cohort, 58.2% of patients had greater than or equal to one major adverse event. The target goal in the trial from the FDA was a reduction in this endpoint to 40% of patients with greater than or equal to one MAE. The recently presented 30-day data at STS showed only 28% of the patients had greater than or equal to one major adverse event, representing a 52% reduction compared to the standard of care hemiarch procedure. As it relates to Dane tears, for context, Dane occurs up to 70% of patients following hemiarth repair without AMDS. Results from the full IDE dataset have shown there have been no Danes at all detected in any patients treated with AMDS, nor were there any Dane tears reported in DART study after three years of follow-up. Critically, the data up to 30 days also demonstrated a statistically significant 72% reduction of all-cause mortality, a truly revolutionary result. Second, the interim data from the NEXUS Triumph USID trial included 22 patient study participants, demonstrated a 9% mortality, no detected strokes, paraplegia, or renal failure in any patients treated with NEXUS aortic arch stent graft system. As of today, there have been 42 of 60 patients enrolled in the primary endpoint of the NEXUS trial, and it remains on track for approval in 2026. In summary, we're very excited about these two new data prints, which, assuming we exercise our option to acquire Endospan, should accelerate stent graft growth in markets where the products are currently approved. If these PMA processes proceed as we anticipate, we would expect PMA approval for AMBS in 2025 and Nexus in 2026. At that time, again, assuming we exercise the option for Endospan, these two products would significantly increase our addressable market opportunity. Lastly, on our R&D pipeline, our third-generation frozen elephant trunk used to replace the entire aortic arch called our SIBO LSA is in the final testing stages, and we currently expect to start the USID trial later this year. I look forward to providing additional updates on our progress in future calls. With that, I'll now turn the call over to Lance.