LeMaitre Vascular Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 5, 2025

Key Takeaways

  • Positive Sentiment: Q2 revenue rose 15%, gross margin improved to 70%, and EPS grew 16%, prompting management to raise full-year guidance for sales, gross margin, operating income, and EPS.
  • Positive Sentiment: The international autograft launch far exceeded expectations, with Q2 sales of $420,000 vs. $185,000 in Q1 and a projected >$2.0M in full-year 2025, backed by approvals across multiple regions and planned 2026 submissions.
  • Positive Sentiment: LeMaitre anticipates its first RestoreFlow approval in Europe (Ireland or Germany) in 2025 and is opening a Dublin distribution facility to support upcoming launches.
  • Negative Sentiment: A packaging-related catheter recall caused a temporary supply disruption in Q2 that boosted unit sales via stocking orders but is not expected to recur in Q3.
  • Positive Sentiment: The company generated a record $20.3M in cash from operations in Q2, ending with $319.5M in cash and securities and paying $4.5M in dividends, underscoring a strong cash position.
AI Generated. May Contain Errors.
Earnings Conference Call
LeMaitre Vascular Q2 2025
00:00 / 00:00

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Operator

Welcome to the Lemaitre Vascular q two twenty twenty five fiscal results conference call. As a reminder, today's call is being recorded. At this time, I would like to turn the call over to mister Dorian LeBlanc, chief financial officer of Lemit Vascular. Please go ahead, sir.

Dorian LeBlanc
Dorian LeBlanc
CFO at LeMaitre Vascular

Thank you, operator. Good afternoon and thank you for joining us on our Q2 twenty twenty five conference call. With me on today's call is our CEO, George LeMaitre and our President, Dave Roberts. Before we begin, I'll read our Safe Harbor statement. Today, we'll be making some forward looking statements within the meaning of The US Private Securities Litigation Reform Act of 1995, the accuracy of which is subject to risks and uncertainties.

Dorian LeBlanc
Dorian LeBlanc
CFO at LeMaitre Vascular

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, 08/05/2025, and should not be relied upon as representing our estimates or views on any subsequent date. Please refer to the cautionary statement regarding forward looking information and the risk factors in our most recent 10 ks and subsequent SEC filings, including disclosures of the factors that could cause results to differ materially from those expressed or implied. During this call, we will discuss non GAAP financial measures such as organic sales growth. A reconciliation of GAAP to non GAAP measures discussed in the call is contained in the associated press release and is available in the Investor Relations section of our website, www.lemaitre.com. I'll now turn the call over to George Lemaitre.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Thanks, Dorian. Q2 was strong across the board, with sales up 15%, a 70% gross margin, and EPS up 16%. As a result, we're increasing full year guidance for sales, gross margin, op income, and EPS. Q2 sales were led by catheters, up 27% and grafts, up 19%, while valvulotomes and shunts were both up 13%. By geography, EMEA grew 23%, Americas, 12% and APAC, 12%.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Our international autograft launch exceeded expectations in Q2, with sales of $420,000 up from $185,000 in Q1. International autograft sales should surpass $2,000,000 in full year 2025. ArteGraft is currently approved in The US, EU, UK, Australia, New Zealand, South Africa, Israel, Thailand, and Malaysia. And 2026 approvals are likely in Canada, Korea, and Singapore. Artegraft is the company's largest U.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

S. Product in 2024 with $37,000,000 in U. S. Sales. As for RestoreFlow, we continue to anticipate at least one European approval in 2025, either Ireland or Germany.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Unfortunately, is no EU wide approval for allografts, but one approval in Europe should expedite others. To support the impending European launches, we are opening a RestoreFlow distribution facility in Dublin this year. RestoreFlow is currently approved in just three countries, The U. S, The U. K, and Canada.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

In China, our XenoSure vascular patch remains on track for final submission in Q4. Approval might come in 2026. This follows the Q4 twenty twenty four Chinese XenoSure cardiac patch approval. We ended Q2 with 164 sales reps and 33 sales managers, and our international Go Direct efforts continue. We recently posted our first Portuguese and Czech direct to hospital sales.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

2025 is shaping up to be another year of healthy sales and profit growth. I'll now turn the call over to Dorian.

Dorian LeBlanc
Dorian LeBlanc
CFO at LeMaitre Vascular

Thanks, George. LeMaitre's strong organic revenue growth continued in the second quarter. Our 15% organic growth consisting of 8% price growth and 7% unit growth was highlighted by the strong unit growth of ArteGraft, XenoSure, RestoreFlow and catheters. Our biologics continued their strong growth and as George discussed, our current regulatory progress provides future international growth opportunities across the biologics portfolio. Cardiac RESTORE FLO was the largest product contributor to unit sales growth as our sales team continued to expand on our success at Open Cardiac.

Dorian LeBlanc
Dorian LeBlanc
CFO at LeMaitre Vascular

In Q2, we initiated a packaging related recall on a portion of our catheters. After a temporary supply disruption, customers placed stocking orders late in the quarter, which boosted overall catheter sales. We don't expect this to be repeated in Q3. Year over year reported revenue growth of 15% benefited from the weaker U. S.

Dorian LeBlanc
Dorian LeBlanc
CFO at LeMaitre Vascular

Dollar as foreign exchange added $1,000,000 to reported sales. This was offset by the ASEAL discontinuation, which decreased reported revenues 1,100,000.0 In Q2 twenty twenty five, we posted a 70% gross margin. The 110 basis point increase year over year was driven primarily by higher average selling prices, the continued benefit of manufacturing efficiencies and positive product mix. Operating expenses in Q2 twenty twenty five were $28,800,000 an increase of 20% versus Q2 twenty twenty four. The increase was driven largely by higher compensation expenses, including the addition of 23 sales professionals and the expansion of our European direct sales model, including the Portuguese and Czech go direct efforts.

Dorian LeBlanc
Dorian LeBlanc
CFO at LeMaitre Vascular

Q2 twenty twenty five operating income was $16,100,000 up 12% resulting in an operating margin of 25%. Net income increased 17% year over year to $13,800,000 We benefited from $1,700,000 of net interest income in Q2 as yield on our invested cash exceeded interest expense on our convertible debt. Fully diluted EPS was $0.60 up 16%. We ended Q2 twenty twenty five with $319,500,000 in cash and securities, an increase of $17,000,000 in the quarter. Cash from operations generated a record $20,300,000 in Q2 and we paid $4,500,000 in dividends to shareholders.

Dorian LeBlanc
Dorian LeBlanc
CFO at LeMaitre Vascular

As the landscape around international trade continues to evolve, LeMaitre remains confident in our global business model. So far, only tariff driven price adjustment we've made is a 25% average increase in China. During the quarter, we also increased inventory at our international warehouses, anticipating potential tariff increases. Our U. S.

Dorian LeBlanc
Dorian LeBlanc
CFO at LeMaitre Vascular

Only manufacturing, niche product portfolio and direct sales model give us confidence tariffs will not materially impact our financials in the second half of the year. We have raised our full year revenue guidance to $251,000,000 and 15% organic growth due to the impact of our growing sales organization and our success across global markets. We anticipate a full year gross margin of 69.7% and operating income of $60,900,000 up 17%. We expect operating expenses to be lower in the 2025 versus the 2025, resulting in a 24% operating margin for the year. We also have increased our guidance on fully diluted earnings per share to 2.3 up 19%.

Dorian LeBlanc
Dorian LeBlanc
CFO at LeMaitre Vascular

With that, I'll turn it back over to the operator for questions.

Operator

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we compile the Q and A roster.

Operator

Our first question comes from Michael Czarcone of Jefferies. Your line is now open.

Michael Sarcone
Michael Sarcone
Analyst at Jefferies

Hey, good afternoon, and thanks for taking the questions. Just first one for me. You talked about some of the stocking orders at the end of 2Q. I guess, you just give us an update and maybe help quantify what the impact was in the quarter? You did have some pretty strong unit volume growth of 7%.

Michael Sarcone
Michael Sarcone
Analyst at Jefferies

Just wanted to get a sense for how much that was impacted by the stocking.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Right. So we it's you can't always tell, but we're Hi, Mike, this is George. How are doing? Nice to talk to you. Good.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

We're thinking it's around $800,000 in the quarter, and that's around that catheter recall, which Dorian detailed for you.

Michael Sarcone
Michael Sarcone
Analyst at Jefferies

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

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Right. So maybe during this year, we don't have to think about it too, too much. We're starting to establish a pattern in Q1 and Q2. And so maybe it's set up for the year. As to next year, I don't know.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

We did I remember last fall, we started getting questions very early about when will you do your price hike and how much will it be, and of course, I don't want to go I know you're not asking me to go into 2025, but we will certainly do a price hike on January 1 around the world. And I would say the cadence that we've set is probably what happens, but we just don't know. And we can't commit to anything just yet.

Michael Sarcone
Michael Sarcone
Analyst at Jefferies

Understood. Thanks, George.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Thanks a lot.

Operator

Our next question comes from Michael Petusky of Barrington Research. Your line is now open.

Michael Petusky
MD & Senior Investment Analyst at Barrington Research Associates

Hey, good evening, guys. So I guess I wanted to ask or try to drill down a little bit more on the human volume growth. Obviously, it sounds like the catheter stocking contributed to that. But you guys also called out autograft, which I guess I get because of the CE Mark and the MDR there, but also XenoSure and I think possibly one or two other product categories. Could you just sort of drill down on what may have been going on there?

Michael Petusky
MD & Senior Investment Analyst at Barrington Research Associates

Because honestly, percent is a big number relative to recent history and obviously a great number. Thanks.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

And Mike, we hi, this is George. Nice to talk to you again. And yes, we agree it's a bigger number. If you extract out the catheter thing that we just talked about, it's really five percent. And quite honestly, that's sort of the last three years.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

2023 was five percent, 2024 was four percent, and so far, sorry, I don't know what the H1 number was. I'm only going after Q. This stripped out of the catheter thing is 5%. With the catheter stripped out, it's 5%. But let's go further here because you touched on a couple other good topics here.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

It's not just all about the catheters. ArteGraft, as you know, is in the middle of this really nice European launch, and the units were up 10%. XenoSure just had another great quarter. It was up 9% in Europe, and RFA Cardiac was up 61%, so we keep making strides on a small base, albeit, but with the RFA Cardiac, that seems to be really working, particularly in The United States.

Michael Petusky
MD & Senior Investment Analyst at Barrington Research Associates

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

David Roberts
David Roberts
President & Director at LeMaitre Vascular

Hi, Mike. Thanks for the question. I would say nothing like too new and groundbreaking. We do continue to hunt in open vascular and cardiac surgery. We now get about 13% of our revenue in cardiac surgery.

David Roberts
David Roberts
President & Director at LeMaitre Vascular

We have issued a few term sheets in the last few years. So we have been active, but nothing really new to report on this call. I think our revenue sweet spot is $15,000,000 kind of minimum and then on up from there to, I don't know, 100,000,000, 150,000,000 of revenue. I think probably preferentially, we like the drop ins, but occasionally, there's a larger target we might look at.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Know, Mike, this Maybe is George a little bit more detail, you asked about the unit growth, maybe I can go back and give you the last four quarters because I was not able to pull that Q1 from memory, but here they are starting in Q3 of last year. This is unit growth, not price, just unit growth, six thousand six forty seven being this quarter. So 6,647, I think if you put all those together, you're getting a 5% type company, unit growth, not pricing.

Michael Petusky
MD & Senior Investment Analyst at Barrington Research Associates

Okay, I appreciate that. I was not remembering unit growth quite that strong, but thank you. I appreciate it.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

No problem. And operator, maybe we need to line up the next question here.

Operator

Yes. So, next question comes from Brett Fishman of Key Blanc. Your line is now open.

Brett Fishbin
Brett Fishbin
VP - Senior Equity Research Analyst at KeyBanc Capital Markets

Hey, guys. Thanks very much for taking the questions. I just wanted to follow-up again on ArteGraft. Seemed to see a nice sequential increase there in the revenue. And just wanted to make sure that we heard the comments for the full year correctly.

Brett Fishbin
Brett Fishbin
VP - Senior Equity Research Analyst at KeyBanc Capital Markets

I wanted to verify $2,000,000 was the full year number. And then if that's right, it seems to imply maybe around $700,000 on average per quarter in the back half, which is about double what you previously expected. So maybe just talk more about what's driving the upside versus your preliminary expectations from last quarter.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Hi, Brett. It's George again. Thanks for the question. It's a great question. Yes, you did hear right.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

It's $2,000,000 for the year, and we've logged 480,000 Is that right? It was 200,000 in the first quarter, then 400,000 in the second quarter. So that makes your math approximately correct. I think we're not going to guide on exactly when this stuff happens and which quarter, but obviously it can only happen in two quarters. Yeah, think we came on remember, we only got the approval, I think, right before the earnings call the last time or right before the earnings call.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

I think we were typing it in that day or something like that. So we didn't really have much experience in Europe with the device before that. And so you're seeing us piling up two months of nice results in Europe and also in South Africa in particular as well. So it's going quite well. And so we're just pushing the guidance up on that particular product because we know you want to see that called out.

Brett Fishbin
Brett Fishbin
VP - Senior Equity Research Analyst at KeyBanc Capital Markets

All right, really helpful. And then just one follow-up for me. Some of my math seems to suggest a pretty significant operating margin ramp in 4Q as compared to 3Q. Just wanted to kind of gut check that cadence. And maybe if you could just call out any moving pieces between 3Q and 4Q that would support a much higher exit rate coming out of 2025? Thank you.

Dorian LeBlanc
Dorian LeBlanc
CFO at LeMaitre Vascular

Yeah, Brett, thanks. It's Dorian. I think there is some seasonality here. Q3 tends to be one of our lower quarters with the European summer impacting revenue. So you're going to see and if you may probably do the math to imply the fourth quarter, you'll see a revenue difference stepping up from Q3 to Q4.

Dorian LeBlanc
Dorian LeBlanc
CFO at LeMaitre Vascular

And in addition, I think we mentioned in the script that overall operating expenses lower in the second half of the year than the first half. Again, there's the seasonality element there around variable compensation as well. But we also did set the table in the first half of the year with some of the investments we made around the increase of the sales force, the go directs in Europe, some of the office builds. So some of that will fall off in the second half of the year, things like recruiting fees and, the product launch costs for ArteGraft. So we'll have the benefit of that.

Dorian LeBlanc
Dorian LeBlanc
CFO at LeMaitre Vascular

We do have a benefit coming through as well around the regulatory expense for the MDRs. That's largely behind us. So in the third and fourth quarter, we'll see some of that coming off. Thank Hopefully you, helps.

Brett Fishbin
Brett Fishbin
VP - Senior Equity Research Analyst at KeyBanc Capital Markets

That was great. Thank you.

Operator

Thank you. Our next question comes from Rick Wise of Stifel. Your line is now open.

Analyst

Hi, this is Annie on for Rick. Thanks for taking our questions. So for the first one, I was just curious about your sales force expansion plans. On the last call, I believe you were targeting 170 sales reps by year end, and it looks like you ended 2Q with 164 reps. So are you still feeling good about that 170 number?

Analyst

And separately, can you talk to us about where you plan to focus these new reps from a product or geographic standpoint?

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Annie, thanks a lot for the questions. It's George. Yeah, so we got to 164. I would say if we said 165 to 170, I think that was what we were after last time. You may remember 170.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

I feel like we're sort of more in the 165 range right now, but I don't think that's a material difference. I think we've gotten up to a place and we feel really good about it. You can see the results in Q2. So, I think 165% is where we're going to wind up at the end of the year, although these things turn on a dime, three people quit, you hire five people, it goes up and down. In terms of where and what product lines, same business as usual.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

At this 164, we have 77 reps in The U. S. And Canada. We have 57 in Europe and 30 in Asia Pac, and they all carry the entire bag. There's no specialized sales forces here.

Analyst

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

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

We try not to split up the guidance between what's going to happen in North America and Europe, but I think you can tell things are going great in Europe for us, and the big opening here, the very big opening that we've got is this autograft in Europe right now thing. We also have coming along, as I mentioned in my script, RFA in Europe, and that will come along, it will come along later, maybe that's material revenues in late twenty six, I don't know, early twenty six, something like that. But right now, you do have that dynamic, which is in Europe. You don't have that type of mega launch going on in The US. That being said, we've had a nice turnaround in The U.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

S. Proper over the last couple of quarters. And this quarter, Americas being a 12% number, I think reported in organic was can anyone help me with what was the organic Americas number? 15% organic Americas number. You're starting to see The U.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

S, not just Canada now, but The U. S. Sort of pull the cart, if you will, in North America. So, we've a couple of nice quarters in The U. S.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

So, not to be forgotten about is The U. S, Of course, as you can see, 23% reported growth in Europe. Things are going fantastic over there for a number of reasons.

Analyst

Got it. Thanks so much.

Operator

Thank you. Our next call comes from Suraj Kalia with Oppenheimer and Company. Your line is now open.

Suraj Kalia
Managing Director at Oppenheimer & Co. Inc.

Hey, George. Can you hear me alright?

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Perfectly, Suraj. Hello.

Suraj Kalia
Managing Director at Oppenheimer & Co. Inc.

Hi there. So, George, couple of questions and I'll pose them right up front. George, you know, there is generally a certain level of uncertainty in the trade and tariff environment. I appreciate your commentary about, you know, China being one of the pockets where you'll have managed, you know, these issues. But as you look at the current environment, George, how do you all strategically prioritize, you know, different products for price increases versus volume impacts.

Suraj Kalia
Managing Director at Oppenheimer & Co. Inc.

I guess I'm trying to understand what is the sensitivity of different buckets of products. How do you how are you navigating? I gotta increase the price for autograph. I gotta reduce the price for a store for a buy or whatever, in the current environment. Obviously, nominal growth is important.

Suraj Kalia
Managing Director at Oppenheimer & Co. Inc.

I get that. But just as your long term strategically as you think about it, I'd love to get any color there if possible.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Yeah, and of course, Suraj, thanks for the question. Of course, this is a huge topic at the end of every year as we're going over the cusp into the new year. I mean, I would say it's just a lot of it is driven by logic. If you have 80% market share in a smallish market, you can move prices, and if you have 12% market share in a large market, you can't move prices. So I think the foundation of this company is we try to stay in niches where we can have some kind of impact in that niches, and that means, and going back to the Jack Welch strategy over and over again, Chairman of GE, if you're number one or number two in the market, things are going to go well for you.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

If you're number four in the market, you're going to be struggling and you're going to be taking prices from someone else. So, would say maybe it's not much more complex than the Jack Welch number one or number two in the market strategy. Internationally, maybe we have a little twist on this too, Suraj, which is if you go to places, for instance, we went to Thailand, you saw that, we went to Portugal recently, if you go to some of these slightly off the beaten track markets, you find that the other big competitors in vascular don't necessarily follow you because they feel funny going to their board of directors and saying, hey, we're going direct in Korea next week. And they're like, why are you doing that? And as a result, I think we're finding ourselves in these off the beaten track markets where we can take advantage of pricing because the other competitors don't follow us to those markets.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

So two ways to look at it, and I hope that starts to answer your question, Suraj.

Suraj Kalia
Managing Director at Oppenheimer & Co. Inc.

Fair enough. And George, how would you characterize the churn in your sales force in the current environment? Gentlemen, thank you for taking my questions.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Thanks, Suraj. And you're asking a question inside there, what's the turnover rate probably? And it's 12% right now. I think it's normal and fine, and I've been here for thirty three years. We've had a sales force for like 25 of them, and it feels like it bounces around between, in a really tight hiring environment, you might get it down to 10, and in a complex environment, it might be up to 15 or 20, so it seems normal to me right now.

Suraj Kalia
Managing Director at Oppenheimer & Co. Inc.

Thank you.

Operator

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

Nathan Treybeck
Nathan Treybeck
VP - Equity Research at Wells Fargo

Thanks. Good evening. Hey, can you by any chance break out how much of the $2,000,000 of autograft sales that you expect this year would be in Europe specifically? And what is the implied share that you're capturing? I think you have sized the market at 8,000,000 before.

Nathan Treybeck
Nathan Treybeck
VP - Equity Research at Wells Fargo

And where could your market share realistically go in Europe?

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Right. And you said $2,000,000 in sales, right? I just want to confirm that, right?

Nathan Treybeck
Nathan Treybeck
VP - Equity Research at Wells Fargo

Yeah, you said $2,000,000 OUS.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Okay, and again, if we have a most of this is European right now. We are quoting international, but most of it's European for the time being, except for that South Africa plug. But yes, we've been quoting $8,000,000 there and $8,000,000 rest of world, right? Not U. S.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

And not Europe. So we're saying it's a $16,000,000 market for now. And again, this is to be discovered as time goes by, but obviously two divided by 16 is what we think is going to happen right now. Yeah, Dave's got something to add

David Roberts
David Roberts
President & Director at LeMaitre Vascular

as Hey, Ethan. It's a good question. In a way, we're kind of building a market OUS because when you think of dialysis access, is where autograft is used primarily outside The United States, the only biologic company is LeMaitre with Omniflow in Europe and that's only maybe 15% or 20% used in dialysis access. So really in terms of thinking about market share, we're really creating the market OUS and I think that's what makes it so exciting. So, yeah, I think if we continue to see success, could we view the market as larger than eight plus eight?

David Roberts
David Roberts
President & Director at LeMaitre Vascular

Possibly. But, we're really pleased by the initial success. It's very early days, but the initial success with autograft OUS.

Nathan Treybeck
Nathan Treybeck
VP - Equity Research at Wells Fargo

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

David Roberts
David Roberts
President & Director at LeMaitre Vascular

Yeah. Dave again here, Nathan. The allograft market in cardiac and vascular is very well understood in The U. S. It's 100,000,000 to $150,000,000 market roughly.

David Roberts
David Roberts
President & Director at LeMaitre Vascular

We think for various reasons, pricing, etcetera, the European market is a little bit smaller but not materially smaller. And so for us, could we think about 80,000,000 or $100,000,000 market in Europe at maturity? I would say, yeah, that's possible. But it'll take a while to get there, because as George pointed out already in his prepared remarks, once we get approval, either in Ireland or Germany, that doesn't automatically grant us approval in the rest of Europe. We have to go sort of door to door, country by country, seeking those approvals.

David Roberts
David Roberts
President & Director at LeMaitre Vascular

And and that'll take a little time. But then secondly, and this is, a pretty important point, allografts unlike the rest of our business are a supply constrained product. In general, if we could get our hands on more allografts, we could sell more. And so I will give kudos to our team in the Chicago area who does the processing. We have been able to start an inventory build in Chicago for Europe.

David Roberts
David Roberts
President & Director at LeMaitre Vascular

But I personally think that will be somewhat of a rate limiter over time and we've got to figure out a way to satisfy all the demand in Europe over time. But in the near term, we're very excited about Ireland or Germany. And then as we turn on Canada and The UK, we met with a lot of success and we don't really have a reason to believe that we won't in the markets where we first gain approval. So kind of one step at a time, but we're optimistic. I mean, for us, dollars 100,000,000 ish market in Europe is fairly big.

David Roberts
David Roberts
President & Director at LeMaitre Vascular

To a lot of companies, that's just a niche market.

Nathan Treybeck
Nathan Treybeck
VP - Equity Research at Wells Fargo

Thank you.

Operator

Thank you. Our next question comes from Daniel Stauder of Citizens JMP. Your line is now open.

Daniel Stauder
Director & Equity Research - Medical Technology at Citizen JMP

Yeah, great. Thank you for the questions.

Daniel Stauder
Director & Equity Research - Medical Technology at Citizen JMP

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

Dorian LeBlanc
Dorian LeBlanc
CFO at LeMaitre Vascular

Yes. Dori and Dan, thanks for the question. As you mentioned, 20,300,000.0 in cash from operations, a record for us. I think it's probably best to add the quarters together and think about them as the first half of the year where we're at $29,400,000 And we do have some benefits from working capital, and that can be a little it can have some variability to it. But if you kind of look at our cash from operations and compare it to our operating income, we're pretty much in sync.

Dorian LeBlanc
Dorian LeBlanc
CFO at LeMaitre Vascular

We're not a phony baloney earnings company. Earnings create cash here, and that's what you're seeing. Although there's some lumpiness from period to period, I think over the long haul, you can expect those to track with each other. On CapEx, we've had $1.3 ish million of CapEx for the last two quarters. Don't expect that to change materially.

Dorian LeBlanc
Dorian LeBlanc
CFO at LeMaitre Vascular

We have some build out going on here and just some maintenance CapEx, but nothing material that's going to change to the back half of the year.

Daniel Stauder
Director & Equity Research - Medical Technology at Citizen JMP

Great. Thanks for that. And then just one follow-up on R and D. I know it's a small number, but that's set down a bit. So just wanted to ask how we should think about that in the back half of the year as we consider the different contributors to overall OpEx for the rest of 2025? Thanks.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Right. Ed, this is George. And Dorian mentioned this before, but there is what we're terming a piece dividend around here in terms of we just got done with the MDRs and so it's light around here. Certainly, there's going to be other stuff that's popping up that's going to be a 6% spend on R and D is quite low for us. I think we feel more comfortable.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

All the charts on the wall say sort of eights and nines and tens for us. So it probably needs to go up at some point. But for now, that's where we're at. And obviously, we're not just going to go out and spend it to spend it. It's helping us a little bit on the op margin side right now.

Daniel Stauder
Director & Equity Research - Medical Technology at Citizen JMP

Great. Thanks for the questions.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Thanks, Dan.

Operator

Thank you. Our next question comes from Ross Osborne of Cantor Fitzgerald. Your line is now open.

Ross Osborn
Director & Lead Research Analyst - MedTech & Diagnostics at Cantor Fitzgerald

Hey, guys. Congrats on the strong quarter, and thanks for taking our questions. Starting off with RestoreFlow, what has you backed in with a cardiac call point? And what can you do to help facilitate adoption within this group?

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Do you mind repeating that question one more time?

Ross Osborn
Director & Lead Research Analyst - MedTech & Diagnostics at Cantor Fitzgerald

Yeah, regarding the cardiac call point, how has feedback trended, and what can you do to help facilitate adoption within this group?

David Roberts
David Roberts
President & Director at LeMaitre Vascular

So I would say that the feedback has been fantastic. I mean, obviously Ross, it's Dave. Obviously, you heard that sixty one percent unit growth figure in cardiac allografts, which that's a pretty large number for us. We're really happy to be seeing that growth. I will say what's different with cardiac allografts this quarter is we're starting to see some traction in The United States.

David Roberts
David Roberts
President & Director at LeMaitre Vascular

So for us, the story of cardiac allografts has been adoption in The UK and Canada with The US lagging behind. But with the increasing adoption and popularity of the Ross procedure, and frankly just a greater focus of our US reps on allografts and a little bit on cardiac, we're seeing a nice uptake with that. And we do find that our vascular reps, because they're very familiar with allografts, are able to support the cardiac cases.

Ross Osborn
Director & Lead Research Analyst - MedTech & Diagnostics at Cantor Fitzgerald

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

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

This is George. On the positive side, you have sales forces that are really excited to see this product in Germany and Ireland because they've heard so much from their British colleagues as well as the American. So, on the plus side, have that. There is one detail about Germany, which they the German regulators want to see paperwork from every single recovery center where we get these cadaveric pieces. And so there's another sort of layer of rate limiting there by the German authorities.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

We do so they want to see all the paperwork that normally the British, the Irish, the Canadians have decided we don't need to see that paperwork, but the Germans do. And of course, Germany is going be a lot bigger than Ireland. So you got that, but we'll work through it. That's what we do here, and we have folks that do that for us all the time. So we'll work through it, but that's another potential small stumbling block. But almost certainly, we'll get through that.

Ross Osborn
Director & Lead Research Analyst - MedTech & Diagnostics at Cantor Fitzgerald

Got it. Congrats again on the quarter.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Thanks a lot, Ross.

Operator

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

Frank Takkinen
Senior Research Analyst - Medical Device at Lake Street Capital Markets

All right, thanks for taking the questions. Was going swing back to RestoreFlow cardiac. I'm just curious if that has anything to do with I think there was a competitive dynamic where one of your competitors had a little bit more supply constrained operating status in recent quarters. Does that have anything to do with the unit growth you saw? And if that is the case, do you see that impacting unit growth going forward if their supply improves?

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Frank, it's George again. Thanks for the good question. It's a great question, actually. To be quite honest, we really didn't know about that while it was going on. You're obviously referring to Artibion.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

There's only three players in this market, and Artibion is one of them. We didn't know about that when it was really live and happening, and we found out about it in retrospect. If the phenomenon had been limited to, hey, in Q1 we sold a lot of stuff, I might say, yeah, it probably had something to do with that, but I think you can see our numbers for the last several quarters. RFA keeps going very, very well, particularly cardiac, so I don't really think it's that, although it's illogical to say when a competitor leaves a market, something doesn't happen. So we didn't know about it while it was going on, but our results have been durable for the last several quarters, so I don't think it's that, but you bring up a good point.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Remember, they're not participating to much extent in Canada and they're not participating at all in The UK, which is where lots of this growth comes from, so at least on those two markets. And then you've heard Dave here call out that the big surprise for us now is in The US recently. That might tie to it a little bit, but the big surprise recently is in Q2, the American market seems to have opened up for us. But we think that's for a different reason, which is our sales manager ran the Canadian business and he did a great job running the Canadian business, and now he's taking his game plan and putting it on The US business. So we think that's the reason for the great work in The US.

Frank Takkinen
Senior Research Analyst - Medical Device at Lake Street Capital Markets

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

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Right, I never know how to answer this question because all of our charts say they impact immediately, and it's really counterintuitive. It makes a lot more sense that it takes someone three or six or nine months to figure out how to do their job well, but our charts all say you hire people and it starts happening, so I'm going to give you both answers and say, I've been doing this for a long time, I still can't figure it out.

Frank Takkinen
Senior Research Analyst - Medical Device at Lake Street Capital Markets

Fair enough. Appreciate the color. Thanks.

Operator

Yep. Thank you. Our next call comes from Jason Wittes of Roth. Your line is now open.

Jason Wittes
MD & Senior Research Analyst at Roth Capital Partners, LLC

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

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Sure. Jason, how are you doing? Maybe answer the back of the question. You're saying we're waiting on Ireland and Germany. I think that's what you meant to say.

Jason Wittes
MD & Senior Research Analyst at Roth Capital Partners, LLC

Yeah, my father was in That's correct.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

No problem. And in my script, I would say we're also waiting on Chinese XenoSure peripheral. That's a biggie. We're making the final filing in Q4 here and then we hope in 2016 to get an approval for that. So I'd those are a couple of biggies.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

And then also somewhere in the script there, think, is we're waiting on autograft in Singapore, Korea, and Canada, Canada being the very big one there and Korea sort of big, and then Singapore not that big for us. So I think you do have a nice regulatory pipeline in front of you, and we can all see the nice results of autograft in Europe and South Africa. Can hear that too. But way back at the beginning of your question, you were asking for, hey, is the R and D maybe my answer wasn't that clear. I would say, gosh, as the year goes on, I'd hate to give guidance on inside of where the expenses are.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

I think implicitly, you're seeing an op expense guidance, and it's going down a little bit in H2, as Dorian has detailed, versus H1. But where it comes, whether it's in G and A, whether it's in sales and marketing or R and D, I don't think we should probably guide on that or detail that, if that's okay.

Jason Wittes
MD & Senior Research Analyst at Roth Capital Partners, LLC

Okay, that's fair. I appreciate it. I will jump back in queue. Thanks, George.

George LeMaitre
George LeMaitre
Chairman & CEO at LeMaitre Vascular

Thanks a lot, Jason. It's good to hear your voice.

Operator

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

Executives
Analysts
    • Michael Sarcone
      Analyst at Jefferies
    • Michael Petusky
      MD & Senior Investment Analyst at Barrington Research Associates
    • Brett Fishbin
      VP - Senior Equity Research Analyst at KeyBanc Capital Markets
    • Analyst
    • Suraj Kalia
      Managing Director at Oppenheimer & Co. Inc.
    • Nathan Treybeck
      VP - Equity Research at Wells Fargo
    • Daniel Stauder
      Director & Equity Research - Medical Technology at Citizen JMP
    • Ross Osborn
      Director & Lead Research Analyst - MedTech & Diagnostics at Cantor Fitzgerald
    • Frank Takkinen
      Senior Research Analyst - Medical Device at Lake Street Capital Markets
    • Jason Wittes
      MD & Senior Research Analyst at Roth Capital Partners, LLC
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