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DATE

Thursday, Aug. 6, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chairman, President, and Chief Executive Officer - Pat Mackin
• Executive Vice President, Chief Operating Officer and Chief Financial Officer - Lance Berry

TAKEAWAYS

• Revenue -- $125.8 million, up 9% on a constant currency basis reflecting growth in heart valve and stent graft products.
• Adjusted EBITDA -- $26.4 million, a 7% increase year over year driven by higher product sales.
• EBITDA Margin -- 21%, a decrease of 90 basis points due to increased investments in research and development and the acquisition of Endospan.
• Stent Graft Revenue -- $46.4 million, representing 12% constant currency growth driven by higher sales of AMDS products.
• On-X Valve Revenue -- $30.5 million, up 18% on a constant currency basis due to global market share gains against bioprosthetic valves.
• Preservation Services Revenue -- $25.9 million, a 1% increase on a constant currency basis as growth remained limited by supply availability.
• Surgical Sealant Revenue -- $19.3 million, down 2% on a constant currency basis due to quarter-to-quarter variability in stocking distribution.
• AMDS PMA Approval -- Received from the U.S. FDA in late June, which management expects will accelerate new account conversion by removing the requirement for institutional review board oversight.
• Endospan Acquisition -- Completed during the second quarter, adding the NEXUS Aortic Arch Stent Graft System and three additional premarket approval programs to the pipeline.
• Full-Year Revenue Guidance -- Reiterated at $480 million to $496 million, representing adjusted constant currency growth of 7% to 11%.
• Full-Year Adjusted EBITDA Guidance -- Reiterated at $92 million to $99 million, including approximately $8 million in anticipated expenses related to the Endospan acquisition.
• Free Cash Flow -- Negative $12 million, reflecting a $10.2 million payment for transaction bonuses and $1.5 million in diligence expenses related to the Endospan acquisition.
• Cash and Debt -- $77.3 million in cash and $363 million in net debt as of June 30, 2026.
• Net Leverage Ratio -- 3.1, reflecting $150 million in borrowings for the Endospan transaction but excluding a $25 million milestone payment made in July.
• ARTISAN Clinical Trial -- 30 patients enrolled at 30 centers for the Arcevo LSA product, with full enrollment expected by mid-2027.
• SynerGraft Clinical Performance -- 3.5% overall re-intervention rate at 12 years, according to data published in the Journal of the American College of Cardiology.
• International Revenue Growth -- EMEA increased 10%, Asia Pacific rose 9%, and Latin America grew 11%, representing a return to growth across all international geographies.
• PMA Milestone Payment -- $25 million for the AMDS approval was paid in July, following the close of the second quarter.
• NEXUS Market Opportunity -- Estimated at $100 million for chronic aortic dissections in the U.S., with a full commercial launch scheduled for January 1, 2027.
• Research and Development Expense -- $9 million, or 7.2% of sales, reflecting continued investment in the innovation pipeline.
• Non-GAAP General, Administrative, and Marketing Expense -- $60 million, or 47.7% of sales, reflecting the absorption of Endospan operating costs and increased stock-based compensation.
• Gross Margin -- 64%, down from 64.7% as favorable pricing was offset by unfavorable geographic mix and production ramp costs in Austin.

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RISKS

• CFO Berry stated that gross margins were "impacted by unfavorable geographic mix and some higher costs in our Austin facility as we incur early costs associated with ramping production," reflecting operational headwinds related to capacity expansion.
• CFO Berry noted that non-GAAP general, administrative, and marketing expenses faced "approximately 90 basis points of deleverage from increased stock-based compensation" during the quarter.
• CFO Berry warned that while international growth improved, the company cannot "count on" revenue from the Middle East for the second half of the year due to regional instability.

SUMMARY

Management reported that performance in the second quarter was supported by the growth of heart valve, stent graft, and tissue products. The company finalized the acquisition of Endospan and received regulatory approval for the AMDS prosthesis, which executives indicated will support the strategy of establishing a comprehensive portfolio for aortic arch treatments. Artivion, Inc. (AORT -0.80%) intends to expand its domestic market footprint through newly approved technologies and ongoing clinical trials while managing production capacity in North American facilities and integrating recent acquisitions. The company maintained its full-year financial outlook, anticipating sequential improvements in revenue and profitability as new products transition to full commercial scale.

• CEO Mackin stated, "The third quarter will be the first full quarter in which AMDS is sold in the U.S. under the full PMA."
• CEO Mackin stated, "The data supports our conviction that the On-X valve is the best aortic valve on the market for patients under the age of 65."
• The company expects the first meaningful revenue contribution for the NEXUS system to begin in January 2027 following the completion of inventory building and value analysis committee approvals.
• Management reported that supply availability currently limits growth in the preservation services segment despite strong market demand for pulmonary homografts.
• Enrollment for the ARTISAN clinical trial reached 30 patients, with a full enrollment target set for mid-2027 to support a projected FDA approval for Arcevo in 2029.
• Executives reported that the NEXUS acquisition positions the organization as the only global provider with a complete portfolio of solutions for aortic arch repair.

INDUSTRY GLOSSARY

• AMDS: Ascyrus Medical Dissection Stent, a hybrid prosthesis used to treat acute Type A aortic dissections.
• Arcevo: Artivion's next-generation frozen elephant trunk platform currently in clinical trials.
• HDE: Humanitarian Device Exemption, a regulatory pathway for devices intended to treat or diagnose a disease or condition that affects fewer than 8,000 individuals in the U.S. per year.
• IRB: Institutional Review Board, an administrative body established to protect the rights and welfare of human research subjects.
• Malperfusion: A complication of aortic dissection where blood flow is restricted to vital organs or limbs.
• NEXUS: A branched stent graft system designed for minimally invasive repair of the aortic arch.
• On-X: A mechanical heart valve manufactured from pyrolytic carbon, designed to reduce the risk of blood clots.
• PMA: Pre-Market Approval, the most stringent type of device marketing application required by the FDA.
• Ross Procedure: A cardiac surgery where a patient's diseased aortic valve is replaced with their own pulmonary valve.
• Stent Graft: A fabric tube supported by a metal framework used to reinforce a weak spot in an artery.
• SynerGraft: A proprietary decellularization technology used to process human donor heart valves and vessels.
• VAC: Value Analysis Committee, a hospital group that evaluates the clinical and financial impact of new medical products before purchase.

Full Conference Call Transcript

Operator: Good afternoon, and welcome to the Artivion Second Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Brian Johnston from the Gilmartin Group. Thank you. You may begin.

Brian Johnston: Good afternoon, and thank you for joining the call today. Joining me from Artivion's management team are Pat Mackin, CEO, and Lance Berry, 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 that are forward-looking statements within the meaning of the Federal Securities -- Private Securities Litigation Reform Act of 1995. The forward-looking statements include statements made as to the company's or management's intentions, hopes, beliefs, expectations, or predictions of the future.

These forward-looking statements are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from these forward-looking statements. Additional information concerning certain risks and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today. You can also find a brief presentation with details highlighted on today's call on the Investor Relations section of Artivion's website. Lastly, I'd like to remind you to please refer to our press release published earlier today for information regarding our non-GAAP results, including reconciliation of these results to our GAAP results.

Unless otherwise stated, all of our comments today will be using our non-GAAP results. Additionally, all percentage changes discussed will be on a year-over-year basis. Revenue growth rates will be on the adjusted currency -- constant currency rates, and expenses as a percentage of sales will be based on adjusted revenues. With that, I'll turn the call over to Artivion CEO, Pat Mackin.

James Mackin: Hey, thanks, Brian, and good afternoon, everybody. Through the second quarter of 2026, we continue to execute on our strategy designed to drive long-term profitable growth through an expanding and clinically differentiated product portfolio. We delivered total constant currency revenue growth of 9% and adjusted EBITDA growth of 7% over prior year. Revenue growth was again driven primarily by On-X and stent grafts, including AMDS. Before expanding further on product line performance, I want to take a moment to address two milestones that we were most focused on coming into this year and recently achieved. In late June, we received U.S. FDA approval for the PMA for our AMDS hybrid prosthesis in line with our previously communicated expectations.

The third quarter will be the first full quarter in which AMDS is sold in the U.S. under the full PMA. That is meaningful because PMA approval obviates the lengthy IRB review process in new accounts that previously had to work through. And we expect to accelerate new account conversion and set sales going forward. We were also pleased to complete the acquisition of Endospan and its NEXUS Aortic Arch Stent Graft System during the second quarter, again ahead of the timing we had anticipated. This acquisition completes our market-leading, three-pronged aortic arch portfolio.

We believe this technology, alongside AMDS and Arcevo, positions us at the forefront of this segment as the only company globally with a complete portfolio of aortic arch solutions. And importantly, NEXUS is a platform technology, not just a single product. It supports three additional PMA programs in development that we expect will further extend and solidify our leadership in the aortic arch market over time. As it relates to NEXUS, our message here is consistent with last quarter. Through 2026, our focus will be on building inventory, working through value analysis committees, and augmenting our U.S. sales team. We continue to expect a full U.S. commercial launch of the NEXUS system in January of 2027.

As a reminder, the device is approved to treat chronic aortic dissections, which represents about a $100 million market opportunity. With that, now let me turn to the second quarter results. From a product category perspective, stent graft revenues grew 12% on a constant currency basis in the second quarter compared to the same period last year. This is an acceleration from the 10% growth we reported in the first quarter and came against a tougher year-over-year comparison, so we're encouraged to see this progress. Importantly, one of our key areas of focus coming out of the first quarter was on AMDS set sales.

We were pleased to see improvement in set sales relative to the first quarter with implant trends also remaining strong. As we said last quarter, we view implant reordering as the most critical indicator, as strong reordering patterns reflect positive user experience and ultimately longer-term adoption and higher growth. Looking ahead, we expect U.S. AMDS set sales to further accelerate following the recent AMDS PMA approval, and as the barriers associated with the initial upfront $100,000 investment associated with the stocking continue to wane. Ultimately, we see our comprehensive stent graft portfolio as a foundational component of our growth strategy. We are encouraged by our enduring fundamental strength and increasingly strong competitive advantages within this segment.

Turning to On-X, our second quarter On-X revenues grew 18% year-over-year on a constant currency basis. This growth was again driven by global market share gains in the newer U.S. opportunity unlocked by data showing improved outcomes with mechanical versus bioprosthetic valves in younger patients, also came against a much tougher year-over-year comparison than in prior quarters. The data supports our conviction that the On-X valve is the best aortic valve on the market for patients under the age of 65.

Meanwhile, tissue processing came in slightly ahead of our expectations, generating approximately $26 million in revenue, representing an increase of 1% year-over-year on a constant currency basis against a challenging comp due to recovery from the 2024 cyber incident in Q2 2025. We had a strong finish to the quarter in terms of tissue releases resulting in some volume we might otherwise have expected in the third quarter shifted into the second quarter. Overall, we remain on track with our expectations. I also want to briefly highlight the Ross procedure data that was recently published in JACC, the Journal of the American College of Cardiology.

The study reported a 12-year outcome of 455 adult Ross procedures that were performed at a single high-volume center. This study provides compelling long-term evidence regarding the performance of our proprietary SynerGraft pulmonary valve. The results were outstanding. With survival compared to the age-matched general population, the autograft re-intervention rate was 1%, and the pulmonary homograft intervention rate was at less than 2%, and that's at 12 years. As a result, the overall re-intervention at 12 years was about 3.5%. Importantly, 95% of the pulmonary homografts implanted in this study were Artivion SynerGraft valves. These results further reinforce SynerGraft's differentiated clinical profile and market leadership.

We believe this level of long-term clinical evidence is unmatched in the pulmonary homograft market and strengthens physician confidence in the Ross procedure as well as our product. Collectively, these data reinforce our conviction that supply, not demand, continues to be the primary constraint in growth for this segment of our tissue business. Finally, BioGlue revenue declined modestly in the quarter on a constant currency basis. As we discussed last quarter, this product line carries a meaningful amount of stocking distribution business, which creates normal quarter-to-quarter variability, and we continue to expect mid-single growth for BioGlue over the full year. Lastly, on our pipeline, we continue to make progress on the Artisan Clinical Trial for Arcevo LSA product.

We've now enrolled 30 patients in the trial, which is a non-randomized clinical trial up to 132 patients in the U.S. and Europe at 30 centers. This is for the treatment of aortic dissection and aneurysm in the arch. We anticipate completing enrollment in mid-'27. We are optimistic the trial will be successful, based on, in part, the positive clinical results from our current generation frozen elephant trunk, E-vita OPEN NEO outside the U.S. Following a 1-year follow-up period and assuming the trial meets its endpoints, we anticipate FDA approval for Arcevo in 2029, unlocking an incremental $80 million of annual U.S. market opportunity. In conclusion, the second quarter was a quarter of meaningful progress against our long-term strategy.

We delivered the AMDS PMA approval we had targeted for nearly a year. We completed the NEXUS acquisition ahead of schedule. Stent graft revenue accelerated against a tougher comp. On-X continued to take share, and our preservation services business is growing, constrained generally by supply, not demand. The fundamentals that underpin our growth strategy remain exceptionally strong, a comprehensive, clinically differentiated portfolio, a focused commercial organization, and a pipeline that stands to expand our total addressable market over time. With that, I'll now turn the call over to Lance.

Lance Berry: Thanks, Pat, and good afternoon, everyone. Before I begin, I would like to remind you to please refer to our press release published earlier today for information regarding our non-GAAP results, including a reconciliation of these results to our GAAP results. Additionally, all percentage changes discussed will be on a year-over-year basis, and revenue growth rates will be in constant currency unless otherwise noted. Total revenues were $125.8 million for the second quarter of 2026, up 9% compared to Q2 of 2025. Meanwhile, adjusted EBITDA increased approximately 7% from $24.8 million to $26.4 million in the second quarter of 2026.

Adjusted EBITDA margin was 21% in the second quarter of 2026, an approximately 90 basis point decrease from the prior year, primarily driven by the anticipated increased investments in R&D, including investments in the NEXUS pipeline following the acquisition of Endospan. From a product line perspective, stent graft revenues increased 12%, On-X grew 18%, tissue processing revenues grew 1%, and BioGlue revenues decreased 2% in the second quarter of 2026. On a regional basis, revenues in North America increased 8%, EMEA increased 10%, Asia Pacific increased 9%, and Latin America increased 11%, all compared to the second quarter of 2025. Overall, we were pleased to see a return to growth across international markets.

Q2 gross margins were 64%, a decrease from 64.7% in the second quarter of 2025 as favorable pricing was more than offset by unfavorable geographic mix and some higher costs in our Austin facility as we incur early costs associated with ramping production. General, administrative, and marketing expenses in the second quarter were $79.8 million compared to $57.7 million in the second quarter of 2025. Non-GAAP general, administrative, and marketing expenses were $60 million or 47.7% of sales in the second quarter compared to $53.4 million or 47.2% of sales in the second quarter of 2025. Approximately 90 basis points of year-over-year improvement was driven through leveraging existing infrastructure and annualizing our year 1 U.S.

AMDS launch cost, while absorbing costs associated with the acquired Endospan business, which was more than offset by approximately 90 basis points of deleverage from increased stock-based compensation and approximately 40 basis points of deleverage from increased amortization expenses following the acquisition of Endospan. R&D expenses for the second quarter were $9 million or 7.2% of sales compared to $7.1 million or 6.3% of sales in the second quarter of 2025. Interest expense net of interest income was $6.9 million as compared to $7.2 million in the prior year. Other income and expense this quarter included foreign currency translation losses of approximately $700,000.

Free cash flow was negative $12 million in the second quarter of 2026 as compared to positive $11.7 million in the second quarter of 2025. This quarter's free cash flow was impacted by $1.5 million of Endospan related diligence and integration expenses and a $10.2 million payment by Endospan as a result of the acquisition for contractually required transaction bonuses. This cash payment was funded as part of the planned $135 million purchase price, but was required to be reflected for accounting purposes as a post-acquisition expense and a free cash outflow. The remaining free cash flow is relatively neutral as anticipated as we invested in our On-X manufacturing facility, cost to run the acquired Endospan business, and the U.S.

NEXUS launch. As of June 30, 2026, we had approximately $77.3 million in cash and $363 million in debt, net of $6.6 million of unamortized loan origination costs. At the end of the second quarter, our net leverage ratio was 3.1, reflecting the impact of the recent $150 million of borrowings drawn to primarily fund the Endospan acquisition. Note that the $25 million AMDS PMA milestone payment was paid in July and is not included in the 3.1 leverage ratio for Q2. And now for our outlook for 2026.

Overall, we are pleased with our Q2 performance as we saw an acceleration in stent graft revenue and strong On-X growth, both against difficult comps and a return to growth across all international geographies. This combined with the AMDS PMA approval leaves us more confident in our ability to deliver our previously outlined guidance. We continue to expect adjusted constant currency growth between 7% to 11% for the full year, representing a reported revenue range of $480 million to $496 million. This guidance contemplates FX to have an approximate 1 percentage point tailwind on as reported revenue for the full year. As a reminder, this guidance assumes inconsequential revenue from the U.S.

NEXUS sales in 2026 as we seek Value Analysis Committee approvals and build supply for an anticipated January 2027 U.S. launch. We also continue to expect a difficult comp for the preservation services business in Q3 before normalizing in Q4. Additionally, as Pat discussed, we had some upside in preservation services in Q2, but that was primarily timing between Q2 and Q3. Outside of that business, we continue to expect sequential improvements through the back half of the year as our U.S. AMDS and U.S. On-X sales accelerate. With these revenue expectations and including the impact of the Endospan acquisition, we are reiterating our full year 2026 adjusted EBITDA to be in the range of $92 million to $99 million.

As a reminder, this guidance included our expectation to incur approximately $8 million of expenses associated with the acquisition of Endospan through 2026 associated with investments in launch costs and commercial infrastructure while also accounting for the absorption of Endospan operating costs, including ongoing R&D and clinical expenses. Looking forward, we would expect the first meaningful revenue contribution for NEXUS to begin in January 2027 and would anticipate our combined results to be EBITDA neutral for the full year 2027 as U.S. NEXUS revenue ramps over the course of the year as we get combined R&D and clinical spending into a targeted range of 7% to 8% of sales.

With that, I will turn the call back to Pat for his closing comments.

James Mackin: Thanks, Lance. Overall, we're very pleased with our Q2 performance following a challenging start to the year. With NEXUS and AMDS, we have a strong conviction in our longer-term growth outlook. We continue to build our broader market expansion pipeline, particularly with the ARTISAN Trial enrolling on schedule. More specifically, we believe that future growth will be driven by four primary U.S. aortic growth platforms, which collectively represent about $430 million in annual U.S. market opportunity today, with additional upside from our expanding innovation pipeline. First is the AMDS PMA. We're seeing strong early commercial momentum with AMDS. And following the U.S. PMA approval this past quarter, we expect accelerating adoption as we expand access to the U.S. market.

This represents about a $150 million annual opportunity in the U.S. Second, On-X heart valves. We continue to educate physicians on the compelling clinical data demonstrating improved survival and lower re-operation rates for patients under 65 years old compared with bioprosthetic valves. We believe this data will continue to drive greater global adoption and market share gains for On-X, representing an estimated $100 million U.S. market opportunity. Third, NEXUS. We're excited to acquire the NEXUS platform following its FDA approval earlier this year.

In addition to providing an estimated $100 million annual U.S. market opportunity, the acquisition positions Artivion as a leader in the aortic arch repair market and significantly strengthens our innovation pipeline with three additional PMA programs currently in development. And fourth, the ARTISAN IDE trial. We continue to make excellent progress enrolling in the FDA IDE trial called Artisan for our next generation frozen elephant trunk platform. We believe this technology represents an additional $80 million U.S. market opportunity and further expands our long-term growth runway. Finally, I want to thank all of our employees around the globe for their continued dedication to our mission of being a leader -- a leading partner for surgeons focused on aortic disease.

So with that, operator, please open the line for questions.

Operator: [Operator Instructions] The first question is from Bill Plovanic from Canaccord Genuity.

Zachary Day: It's Zachary on for Bill. Q2 revenue beat by a nice bit. Why not raise the guidance? What does it imply for the back half of the year, more specifically on product line, especially with some of the drivers you have, AMDS getting approval?

Lance Berry: Yes, so a couple of things. We're really pleased with the Q2 performance. Obviously, we got the PMA approval for AMDS and we closed the Endospan transaction. But both of those were contemplated in our previous guidance. And at the time of the Q1 call, we had a very high degree of confidence in both those things. Beyond that, if you look at Q2, the preservation services, we had a great quarter. It was probably about $2 million above our kind of targeted expectations. But a lot of that was due to really strong releases toward the end of the quarter that really just kind of moved some revenue that would have been in Q3 into Q2.

And then lastly, though, if you look, stent grafts accelerated revenue growth despite a much tougher comp, and On-X was actually even slightly higher growth in Q1 despite a much tougher comp, too, which is great. And all that gives us more confidence in our ability to deliver that guidance. I think really just coming off of what was honestly a pretty challenging Q1, we felt at this point it was just prudent to maintain some conservatism until we get a little further in the year, and it's really nothing more than that.

Zachary Day: Got it. And then for my follow-up, if you don't mind, can you quantify or provide some relative scale to the number of accounts currently with AMDS on the shelf and those either in VAC approval or purchasing of inventory? I know that there were some headwinds before about AMDS being in HDE and some accounts are waiting until we got the PMA to adopt it. Just any comment on that.

Lance Berry: Yes, we've not really given a lot of details on those other than like the initial quarter after we launched, we gave some comments. But -- we did make good progress in Q2 and had an improved performance on set sales and new account openings in Q2 as compared to Q1. So we will say that. And then, Pat, I don't know if you want to give some qualitative comments on AMDS in Q2.

James Mackin: Yes, no, I mean, we clearly haven't given an account level detail and we're not planning on anytime soon, but I do think we've said for a while that this PMA is a, we think this is a big deal. It allows us to be more aggressive with the marketing. We brought the whole commercial team back in, in July for a sales training meeting. It was fantastic. So I feel like our messaging, the not having to go through the IRB, not having this HDE to deal with, I think it's going to set us up well for the back half.

Operator: The next question is from Suraj Kalia from Oppenheimer.

Shaymus Contorno: This is Shaymus on for Suraj. Just to start, Pat, can you talk a little bit more about kind of AMDS? I think you said something along the lines of, the $100,000 set price, you're kind of seeing that kind of barrier waning as you kind of go on. Just trying to understand a little bit better kind of what happened kind of in 1Q? What kind of have changed now that obviously we know PMA approval, but obviously that $100,000 price didn't change. So kind of why was it a barrier before and why is it not so much now?

James Mackin: Yes, I think, as we said on the Q1 call, all the way through 2024, we -- through 2025 with HDE, we were tracking every quarter to our sets, to our implants, and Q1 of '26 was really our first kind of time that we missed our expectations. And trying to predict when these things close is challenging because you're outside of them. We had a number of accounts that had IRB approval, VAC approval, but we're waiting on a PO because this is not normal that they have to write a check for $100,000. So we spent a lot of work in Q2 kind of understanding the barriers of why it was taking people longer.

We have programs kind of set up for addressing those types of things. I just think we've really gotten our arms around kind of what it takes to open accounts and drive adoption. And like I said, we're super excited about the PMA. And it'll take us some time to get that out and it doesn't travel out immediately, but we're very bullish on the second half, what we can do with AMDS.

Shaymus Contorno: Got it. And then just kind of thinking through things a little bit differently. Fast forward, we'll say 6 months or so from now, kind of January, NEXUS is launched. How are you guys kind of balancing kind of the sales force of selling? You've got these great new products, but obviously you have kind of legacy what's been in the bag. How are you balancing kind of them selling everything that's newer, what's kind of what you've got, and making sure that nothing kind of slips.

James Mackin: Yes, so I think a couple points. So we have got a commercial team in the U.S. of about 60 people, and they focus heavily on the aortic cardiac surgeon. That's On-X for going against bioprosthetic valves, and that's AMDS. It's also the SynerGraft pulmonary valve. It's the same customers. They already know them all. We have business in each one of these accounts. They have relationships. So it's really just our team driving messaging into those accounts. NEXUS is also done in the big accounts, but that's primarily with the vascular surgeon.

And so we're building out a small commercial team that will work with our cardiac team because they actually work together on these, the cardiac and vascular surgeons. And the nice thing about the NEXUS opportunity, is there's probably 150 centers that are really our target. So it's not a huge universe of accounts, but that's where all the volume is. So with kind of a small dedicated vascular team, we'll be able to do, cover these NEXUS cases and they'll work kind of hand in hand with the cardiac team. So our cardiac team just went through value analysis committee in a bunch of accounts.

We're already going through value analysis committee even faster because we learned how to do it and we've kind of got the playbook set. So I think there's a lot of synergy between our cardiac and vascular, but the nice thing about this NEXUS product is it's a very tight number of accounts and a small team of reps can actually cover the implants.

Operator: The next question is from John McAulay from Stifel.

John McAulay: It was clearly a positive, busy quarter on the aortic side of things with NEXUS officially acquired and getting the PMA for AMDS approved. Quick question sort of on both items. I mean, can you just talk a little more qualitatively about how conversations with customers have changed since the approval has been in hand? And sort of as a follow-up to that, I mean, is this a situation where revenues could accelerate in the back half of the year? And then on NEXUS, just curious on the progress you're making on integration, rep hiring, and getting the device sort of ready to scale from a manufacturing perspective.

James Mackin: Yes, so let me take the NEXUS one first. I mean, the great thing about the relationship we had with Endospan is, we've been partnering with them since 2019, so this is not a new, I've done a lot of acquisitions in my career. When you do an acquisition and, people don't know each other and everything's new. This is a team we've worked with for, what is it now, 6, 7 years. So I think the integration's gone extremely well. We've brought over the majority of their team. We're super aligned on what we're trying to accomplish in delivering breakthrough technology to the aortic arch, and they're a key component of that.

The other thing with NEXUS is, as you guys know, there's a built-in kind of a 6-month delay in to start in these accounts because of the Value Analysis Committee. So we're taking that time to build up the inventory, hire the reps, train the surgeons. And as we've said all along from last quarter, our plan is to launch this product on January 1 of 2027. Now, we're going to be doing some cases between now and the end of the year, but they're more ad hoc, and we'll take them as they come through. But we're really trying to position ourselves for a January 1 kind of kickoff for NEXUS.

As far as AMDS, I think the one thing I would say on the customer side, I've been to a lot of these training meetings with surgeons. People were super confused by this HDE. They had to go through your IRB. In some cases, they had to fill out paperwork for the trial, almost like it was a clinical trial. I think the other thing is we've got this very positive reimbursement, and we're getting that messaging out, both this new DRG 209 for Medicare patients and communicating kind of what the private payers are paying.

So that's been another big thing we've learned through the initial launch is tightening up the messaging around the reimbursement as well as the, now that we've got the PMA, not having to go through that process. So, again, I think the biggest thing is we just really kind of tightened up our messaging on AMDS now that we have the PMA. And I think it's very well done and, we've got to get out in the market and, put it to work. But, we're encouraged by kind of our opportunity in the back half.

John McAulay: Got it. That's very helpful. And looking at maybe a tad too far ahead at this stage, but as I'm looking at '27, I hear you talking about a NEXUS product launch on January 1st. But at the same time, I also hear you talking about hiring reps and developing that. And I think, Lance, you even made some comments there about EBITDA neutral impact. Just curious sort of about how we should be thinking about the top line equation for next year with NEXUS coming into the fold, but also what the implications are for EBITDA. I know your typical goal is to grow at least higher or at least faster than revenues growing.

So just be curious about any initial thoughts there.

Lance Berry: Yes, first of all, it's a little early. We usually try and give some directional comments on the Q3 call, not the Q2 call. But some directional things. One, we are going to have to make some investments on the commercial side for reps and for training for surgeons. We've talked about NEXUS is a more intensive training product now, but we've also said it's going to be very concentrated from a facility and surgeon standpoint and we're not going to need a large sales force to be able to deliver what we want to in 2027. So I think there will be some investment, but it's not going to be super significant.

And, I think, obviously the rest of our business, our business model is great if you take the investments and costs from Endospan that we're going to have and the revenue out. The underlying business in our business model is still great and has an opportunity to generate a lot of leverage and really good revenue growth. So those are some high-level comments, and I think we'll think about giving you a little bit more detail in Q3 when we get a little bit closer to '27.

Operator: The next question is from Keith Hinton from Freedom Capital Markets.

Keith Hinton: Yes, so I have a question on AMDS just in terms of what things have looked like since the approval. So, should we be thinking about this as the approval hits and then you guys have full license to go out and kind of rebuild the pipeline for potential accounts or is there some kind of like warehousing effect where you had some accounts that were ready to go and just waiting for that approval and so we could see more of a step change upwards and then I have a follow.

Lance Berry: Yes, I think we've talked to people in the past, like, to don't expect, like, this giant bolus to come through just on PMA approval. And I would say, we're only a month into the quarter, but that's as expected. It wasn't like this avalanche that came through immediately upon PMA approval. I think what it does is it just removes a point of friction as we try and move accounts through the process to get them to make that $100,000 investment. The other thing it does is we can -- we're fairly restricted around our marketing messaging under the HDE.

And now we have a full PMA label that we can go out and market more information just from the clinical trial, honestly. So we expect that to help not only with getting new accounts set up, but also driving better adoption and implant adoption. And Pat's also talked about some accounts actually had some administrative friction for just doing implants under the HDE, and that will go away as well. So, directionally, there's a lot of good things that will be helpful, but no, people should not expect that there's a big bolus that is just going to come through immediately post-PMA approval.

Keith Hinton: Okay, great. And then just on the preservation services side of things. So one of your competitors in that space reported having some supply issues on the cardiac side. So, did you see any upside from that in the quarter? It sounds like that's not what the upside was. It was more just timing. But have you seen any upside from that? Are you expecting any for the full year? And then just when you think about building out the vascular sales force for NEXUS, are there potentially any synergies on the tissue side, the vascular tissue side, where I think you guys have a little bit less of a presence.

James Mackin: On the tissue supply, I'll take a shot at that. I actually obviously don't have that level of detail. But I will tell you this, I mentioned in the script, there was this publication in JACC that just came out, which is a huge cardiology journal, that showed phenomenal results of the SynerGraft pulmonary valve, which is exclusive to Artivion. And frankly, I don't know why anybody would put a non-SynerGraft valve in. So I'll just leave it at that. As far as the NEXUS sales force, this is -- the NEXUS is a very advanced technology in the arch. It's super cool technology.

It's a catheter delivered -- a 20-French catheter delivered, and you actually, build the stent graft inside the patient's aorta. So it's super sophisticated and our reps will be in every case. Those are not the same vascular surgeons that are doing vascular tissue. So that's not something we're going to kind of put in their bag, it's just a very different job. It's a good question, but again, I just think that's the wrong vascular surgeon, and they're very different customers.

Operator: The next question is from Danny Stauder from Citizens Bank.

Daniel Stauder: The first one just on-X. Really strong on a much harder prior comp. So congrats. I was just curious if you started or how much you've invested in the cardiologist-directed marketing at this point. And if you have started, how much also you might be seeing or change in referral patterns? Just any more color there would be great.

James Mackin: Yes, I think we've got kind of a multi-pronged approach there. We're working on some very interesting stuff behind the scenes that I'm not prepared to talk about until we're further down the pipe, which will be, I think, kind of world-class, clinically communicated information to cardiologists about the benefits of the On-X valve. So I'll just leave it at that. When we're ready to talk about that, we will. But our team's out there talking to heart surgeons and cardiologists on a daily basis, but getting at that big cardiology population, we've got some other initiatives we're working on that we're not really prepared to share.

Lance Berry: And then maybe I'll add as part of our market research to get the whole $100 million opportunity, we're going to have to go upstream and get, better education in the cardiologist group. But there's a large portion of the 100 million that's available to us just from educating the cardiac surgeon, which obviously that's right in our sweet spot and we're aggressively doing that.

Daniel Stauder: Okay. Great. Appreciate that. And then just one follow up on some of the points you made on tightening up your messaging and some of the marketing pieces for AMDS. I guess I just wanna be clear, to what extent were you restricted under the HDE from communicating and going out and marketing and what can you do now with the PMA in hand that you couldn't do before? And it seems like that would be a pretty big piece in making people understand the pricing and economics. So I just would like to double hit on that, if you can give any more color there in terms of what you're now looking at as a PMA.

James Mackin: Yes, so just think about -- to make it simple, think about it this way. When we got the HDE approval, it was off the PERSEVERE trial. Okay, so we were basically allowed to market off of the PERSEVERE trial. In the time from when we got the PERSEVERE trial and the HDE approval, there had been several presentations on the podium about additional data, particularly around malperfusion, cerebral malperfusion, visceral malperfusion, renal malperfusion, which is one of the great benefits of the technology. We've had papers presented and podium presentations specifically about those topics that we were not able to market against because they were not in the HDE.

Those are in the PMA, and we will be aggressively marketing that information. And it's a really important point, so hopefully it gives you some color without getting too far into the weeds.

Daniel Stauder: Great. Congrats on the quarter.

Operator: [Operator Instructions] The next question is from Mike Matson from Needham & Company.

Joseph Conway: It's Joseph on for Mike. Question on maybe international stent growth. Maybe how did that trend in the quarter? Last quarter you guys had called out some supply chain challenges and obviously what's going on in the Middle East. But curious if any of that has been alleviated to any degree. Maybe if it has, how much is left and maybe, how much is persistent until conflict, dramatically dies down in the Middle East?

Lance Berry: Yes, we obviously did that. So, first of all, on supply, the supply challenge, what we said was we probably had our arms around it, but it would really probably take us through the end of the year to get healthy. And so, that was what was contemplated in our guidance. So, I think, where we stand today, we made some great progress during Q2. I feel even more confident that we will be ready to go and back to full strength at the beginning of the year for 2027. Not ready to say that there's upside to '26 yet.

And therefore, there's no change to the kind of underlying assumption on the guidance for supply, but qualitatively, feel even better than we did, 90 days ago. On the Middle East, we actually did get a little bit of revenue, not very much of revenue in Q2, but definitely can't necessarily count on that going forward, given the current situation. So, again, nothing in the guidance for the second half of the year on that. If you look at international overall, if you just look at the growth rates, which is obviously not just stent grafts, but if you look at the international growth rates, you can see there was some really nice improvement across the board.

And even Latin America, which is pretty small, it was a pretty healthy decline in Q1, and then it was a 10% growth next quarter. So we're really happy to see pretty consistent performance across the international business in Q2.

Joseph Conway: Okay. Great. And then just with, Endospan now working on, being integrated, I'm just wondering if you guys have any updated thoughts on, manufacturing site there in Israel, if there's any challenges that seem like could pop up or maybe any contingency plans that are working if that is the case? And then just to clarify, did you or are you guys in the process of adding reps specifically for AMDS following approval?

James Mackin: We're not talking about adding reps right now on the AMDS side. We feel like with our channel we've got the coverage we need. We always will evaluate that. I mean I'm talking about for the second half of this year. We're going to keep the team we have on the ground. Whether we do more next year, we'll evaluate. I'll make a couple comments on the Endospan manufacturing facility. Even through all the challenges, because again, we've been partners with them for the last 5 years, even through all the hardships that countries faced, they've done a fantastic job delivering.

We've really had, in any one of these situations, we've really had no supply chain challenges from their manufacturing facility. So I think the other thing to keep in mind is that's a PMA facility. We always try to have contingent backups, but it takes time to do something like that. So we're committed to that facility for a while. If we do something down the road it would be a backup.

Lance Berry: Yes, I think with all PMA products, having dual source is just a challenge, particularly right at approval. We're obviously working to have contingencies for all parts of the Endospan supply chain, not necessarily just the Israel factory. And Endospan already honestly had some things in process that we're continuing. So we're doing the best we can, just like we would for any of our products, to try and have contingencies in place, recognizing that with a PMA product, that's not something you can do overnight.

Operator: The next question is from Frank Takkinen from Lake Street Capital Markets.

Frank Takkinen: Great. Apologies if this has been asked. I have been hopping between a couple of calls. I wanted to talk about free cash flow a little bit more. I know, Lance, you mentioned the $25 million AMDS is in Q3. But as we think about going forward, can you just remind us if there's any other puts or takes in the cash flow calculations we should think about? And at the risk of getting a little over our skis, maybe just any initial thoughts on 2027, just some anomalies we may want to keep in mind or if it's going to be a little bit cleaner on free cash flow conversion?

Lance Berry: Well, let's hope it's definitely cleaner because it's pretty unclean this year on free cash flow. Off the top of my head, right now I can't think of anything that would be really abnormal in 2027. I reserve the right to give a little more clarity on that maybe on the next call, when we get a little closer to it. A couple of things on cash flow for 2026. Heading into the year, we had kind of said, hey, we expect free cash flow to be basically neutral as we make investments in this Austin expansion in particular, that we're going to have a much higher rate of CapEx than we normally would have had.

That's pre-consideration of the Endospan acquisition or the AMDS earn out payment. Right. So obviously we expected to make the AMDS earn out payment, but that's not really a free cash flow item, if you will. So if you think about Endospan, we had in this quarter, something really kind of odd. There's roughly $10 million that was essentially purchase price, but the GAAP accounting required us to put that through the P&L, which means that it hit free cash flow. So that's not really free cash flow in my opinion, but it shows up there on the cash flow statement.

So, putting that aside, we do have these kind of $8 million of incremental expense and we do have some incremental interest too. So those things are going to drive us to be free cash flow negative for this year but as you're roll into 2027 and we have EBITDA growth and then we have a step down in CapEx and some of these Endospan expenses that don't repeat. We would expect '27 to be meaningfully free cash flow positive.

Operator: Mr. Mackin, this concludes the question and answer session. I'd like to turn the call back over to management for closing remarks.

James Mackin: Yes, well, thanks for participating. Again, we're really pleased with our second quarter. I think I would just leave you with this. I mean, it's rare that a company gets a PMA in a year. We got two and a quarter. We also did an acquisition of Endospan and have closed it kind of through our integration. The combined PMAs from AMDS and NEXUS with our ARTISAN trial is three, and then we got four more behind it. That's seven PMAs in the arch, which really sets us up for long-term profitable growth. So we're super excited about the transaction and look forward to talking to you next quarter.

Operator: This concludes today's call. You may disconnect your lines at this time. Thank you for your participation and have a wonderful afternoon.