Good afternoon, and welcome to the Artivion Fourth Quarter and Year-End 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Laine Morgan from the Gilmartin Group. Thank you. You may begin.

Thanks, operator. Good afternoon, and thank you for joining the call today. Joining me today from Artivion's management team are Pat Mackin, CEO; and Lance Berry, COO and CFO. Before we begin, I'd like to make the following statements to comply with the safe harbor requirements of the Private Securities Litigation Reform Act of 1995. Comments made on this call that look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include statements made as to the company's or management'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 the Artivion 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 a 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 the adjusted constant currency rates and expenses as a percent of sales will be based on adjusted revenues. Now I'll turn it over to Artivion's CEO, Pat Mackin.

Thanks, Laine, and good afternoon, everybody. 2025 was a highly successful year for Artivion, during which our team made meaningful progress against our strategy designed to drive long-term growth, profitable growth through our expanding and clinically differentiated product portfolio. I'm pleased to report that for the full year of 2025, total adjusted constant currency revenue growth was 13% and adjusted EBITDA growth was 26% year-over-year. This enabled us to deliver positive free cash flow for the year while also investing significantly in future growth and operational excellence. Our progress through the year culminated in a strong fourth quarter with performance driven by continued growth across our entire product portfolio led by stent grafts and On-X. As a reminder, during the fourth quarter of 2024, stent graft and Preservation Services businesses were negatively impacted by the cybersecurity incident. With that in mind, from a product category perspective, stent grafts grew 36% on a constant currency basis in the fourth quarter compared to the same period last year. Year-over-year growth was again driven in large part by AMDS in the U.S., continued strong growth in stent grafts internationally as well as an easier year-over-year comp due to last year's cyber incident. We see our stent graft portfolio as a foundational component of our growth, and we are encouraged by the continued strong results across the portfolio. Looking ahead, we intend to replicate our proven strategy by bringing additional stent graft products that are already generating revenue in Europe to the U.S. and Japan, which we believe will unlock further meaningful expansion of our stent graft total addressable market. Also in Q4, our On-X revenues grew 24% year-over-year on a constant currency basis. Growth was driven by our continued global market share gains and early traction in our new $100 million U.S. market…

Thanks, Pat, and good afternoon, everyone. Before I begin, I'd 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 adjusted constant currency unless otherwise noted. Total adjusted revenues were $118.3 million for the fourth quarter of 2025, excluding the Italian payback adjustment, up 18.5% compared to Q4 of 2024. Meanwhile, adjusted EBITDA increased approximately 29% from $17.6 million to $22.7 million in the fourth quarter of 2025. Adjusted EBITDA margin was 19.2% in the fourth quarter of 2025, an approximately 110 basis point improvement over the prior year, driven by leverage in SG&A. For the full year, total adjusted revenues were $443.6 million, up 13% compared to full year 2024. Adjusted EBITDA grew 26% for the full year, twice the rate of adjusted revenue growth. This resulted in an adjusted EBITDA margin of 20.2%, a 190 basis point improvement from 2024. Before the detailed review of our results, I would like to comment on the impact of the Italian government's payback legislation to our 2025 financials. You may be familiar with this as it impacts a number of medical device companies. In 2015, the Italian government passed legislation requiring medical device companies that supply goods and services to public Italian hospitals to pay back a portion of their revenue when regional health care spend exceeds specified budgets. The applicability of this law was subject to extended legal proceedings and after years of litigation, the Italian government proposed a settlement for fiscal years 2015 through 2018, which became effective in Q3 of 2025. The impact on us for those fiscal years was…

Thanks, Laine. So we're very pleased with our '25 performance and our position entering '26, which reinforces our confidence of our growth strategy is working and delivering the results we envision. More specifically, we expect future growth to be driven by the following key growth drivers. First, AMDS HDE. We're commercializing AMDS in the U.S. and continue to penetrate the $150 million annual U.S. market opportunity with new clinical data and reimbursement dynamics likely adding as a further tailwind. Number two, On-X heart valve data. We are educating health care providers on the new clinical data showing a mortality and reoperation benefit in patients under 65 years of age compared to bioprosthetic valves. This is a new $100 million annual U.S. market opportunity that we'll be pursuing with the only mechanical aortic valve that can be maintained at a low INR of 1.5 to 2.0. Number three, the NEXUS PMA. We are pleased with the positive new 1-year clinical data from the NEXUS TRIOMPHE trial, which we believe, assuming we exercise our option to acquire Endospan, this will bring us one step closer to being able to access the annual U.S. market opportunity for this device of $150 million. And fourth, the ARTIZEN IDE trial. We continue to make progress on our third-generation frozen elephant trunk called our Arcevo LSA and the clinical trial, which represents an incremental $80 million annual U.S. market opportunity. Finally, I want to thank our employees around the globe for their continued dedication to our mission of being a leading partner to surgeons focused on aortic disease. With that, operator, please open the lines for questions.

[Operator Instructions] Our first question comes from Bill Plovanic with Canaccord Genuity.

I think what I'm trying to get my head around is just the Italian clawback obviously kind of skews the numbers a little. So my questions are going to roll around that is, first is, I assume that's in OUS, not U.S., because your U.S. growth was in the high teens. I assume that was hit by the Preservation Services growth. But I'm trying to figure out, did it flow through any specific products? Kind of how did it? It sounds like it also impacted the P&L. And then I think what I'm really trying to get at, given the growth rate year-over-year, I think the U.S. was a little lower than what we would have expected given how strong the stent graft business was. And I'm trying to -- it goes into the AMDS question on sell-in versus sell-through there. I know there's a lot in that, but it's kind of -- the Italian stuff kind of might be throwing some of the numbers off.

Yes, Bill, let me maybe try and clear up some of the details around the Italian payback. So first of all, yes, it was in OUS, specifically in the EMEA line. Second, it was reported in other line item of revenue. So it did not impact any of the big 4 line items. So it's not skewing that growth rate that we discussed in any way, shape or form. So hopefully, that's helpful. And then if you look at the U.S., really, honestly, if you just step back and look at the growth rates for the business from Q3 to Q4, almost whatever you're looking at, the main difference is just the tissue business. And that business, if you take out the impact of the easy comp of the cybersecurity event, the growth rate was quite a bit lower in Q4 versus Q3.

Okay. And then just really kind of the final thing is just any commentary you can provide on the sell-in versus sell-through on the AMDS. And I mean, you lifted -- you expect continued guidance, I think, well above our expectations on the AMDS and On-X. So that's a good trend, but I'm just -- a lot of people are focused on this.

Yes. So we don't -- I guess we typically don't break out the details on AMDS specifically even in total for revenue. And so we also don't break out the details on the new account start-ups as opposed to the actual implantations. Other than I think we'll say the implantations are continuing to grow, and they're continuing to go really well. I think, again, I've said this a lot of times that it's just important that, that first experience for a surgeon is a good one. And so far, that's been going really, really well.

Our next question comes from John McAulay with Stifel.

I wanted to start off back where Bill was on AMDS. Very helpful color on just how the year plays out. Just hoping for a little more color in the sense of how much is left to go here. Earlier last year, I think you mentioned target accounts and accounts that you were in at that point. How much progress have you made on that front? And what should we be expecting as 2026 plays out and you gain the full FDA approval?

Yes, Lance, I'll take that. So I think it's important. It's a good question, right? If you want to make this the analogy to like baseball, like we're in the first inning. I mean, we launched the product like right out a year ago, had to go through all these value analysis committees that take 6 to 9 months. So really, 2025 was the year of opening accounts, and we had implants. But we're already starting to see those accounts implanting, but we were probably only in 10% of the accounts. So in '26, we've got the opportunity to continue to open new accounts, but also get implants in the accounts you already opened, right? So it's -- I think it's very early for AMDS, and that's why we're bullish on 2026 and driving the growth there.

Yes. That's very helpful, Pat. And just broadly on NEXUS, there was some impressive data coming out of STS. Just wanted to get your general reaction there and maybe help frame this market opportunity for us again. I believe there's an approved somewhat similar competitive device in this market. Can you talk about how big the market is today and what NEXUS can do to, one, help you gain share in that space; and two, help expand the market beyond its current size?

Yes. So you're correct. There's one product approved in the market. They got approval last like May or June. So this is kind of a nascent market. From my conversations with clinicians, I mean, this is a -- particularly the trial kind of showed that, that these are patients that were at very high risk of open surgery. There's a category called ASA, which kind of characterizes the risk of a patient with all the different comorbidities and 2/3 of these patients or actually like 70% of these patients were ASA 3 and 4, which would tell you that most surgeons are not going to operate on these patients. So I mean, a good analogy is like the early -- kind of the early TAVR was started in patients who couldn't withstand surgery and then all of a sudden, it started going other places. So we see this as a platform technology. We say that the U.S. market is $150 million. It will take us some time to penetrate that. But it's a very unique technology, and we think we're extremely well positioned. I had a chance [Technical Difficulty] who saw the presentation. I think that this device will be very competitive in the U.S. market compared to the other player. We think they're on track for a PMA approval in the second half. And this just further goes to our focus in the aortic arch, whether it's AMDS or NEXUS or our ARTIZEN trial with Arcevo LSA. So it's -- I think it just shows the company's commitment to bringing aortic technologies to these surgeons so they can treat their patients. So I do think this is a first step in a very exciting new space.

Our next question comes from Suraj Kalia with Oppenheimer. Our next question will be from Jacob [ Melanjek ] with Oppenheimer.

This is Jacob on for Suraj here actually. I guess, first off, could you talk to us about how you're thinking about pricing for AMDS and by extension, NEXUS? Have you seen relative price insensitivity of demand that your assumptions of $25,000 for AMDS and $50,000 for NEXUS are still seen as the right levels?

Yes. I think it's an important point. These are cutting-edge life-saving therapies, first of their kind, that happen to come with a very favorable reimbursement background. So that is not something we see at all in this space.

Got it. And then just on your guide, what are the assumptions of the 10% to 14% CAGR? How can we stress test the conditions for either end of that spectrum?

Well, I think it's -- if you look at kind of our history, I'll let Lance chime in here in a second. But we've got -- he gave you a pretty clear direction. We think tissue is going to be -- we're going to forecast tissue flat this year because we saw it last year, it took a while to recover on the cyber, so we're going to be prudent. We think Glue is going to grow 5, in the mid-single digit, and we think On-X is going to grow mid-teens, and we think stents are going to grow in low 20s. So it doesn't -- those are the things that, particularly the On-X, I think half the portfolio, I think we feel very comfortable with. We understand the tissue and the BioGlue. I think on the upside, how successful are we driving the On-X message into the marketplace? And can we grow faster than that and same with AMDS, opening more accounts and getting more implants. Those are the two that can move you up very quickly above those ranges, which are going to drive the growth rate to the higher end of the range. Lance, do you want to comment?

Yes. No, I was going to say the same thing. Those are the two things that are newest and are big opportunities and have a wider range of possible outcomes. And we're obviously going to be doing what we can to maximize both of them.

Our next question comes from Frank Takkinen with Lake Street Capital Markets.

Nelson on for Frank. Congrats on all the progress. Maybe just to start, I wanted to ask about the DRG code that went live October 1. Any measurable acceleration in VAC approvals or shortening of the time frame from IRB to first case? Just any color there would be helpful.

Yes. We weren't seeing -- prior to the October 1 implementation of DRG 209, we weren't seeing the economics as a barrier. We weren't -- again, whether it helped accelerate things, I certainly think it makes it a much easier conversation, although I think hospitals were doing fine before the new DRG. So I think I would just say it's a tailwind for us. I don't know, Lance, do you have any thoughts?

Yes. I've yet to run into anything that significantly accelerates hospital bureaucracy. So I can't wait for the day when it happens, but they have a lot of DRGs that they sift through and a lot of products and their value analysis committee kind of -- it moves at the pace that it moves. But obviously, the new reimbursement is a great fact when we do get in front of the value analysis committee, and I think it will be helpful when we get on the agenda.

Got it. That's helpful. And then apologies if I missed it, but you mentioned last quarter, you haven't launched formal marketing to formal marketing program to cardiologists for On-X. Any sense of timing on that, if you haven't started that already? Or how should we think about that as a potential lever on top of everything else you have going for you with On-X?

Yes. I think that gets back to the question that was asked by the previous person, right, which is your range of 10% to 14%. The two things that stand to outperform are On-X and stents because it's really the biggest opportunity. We see both of these as kind of 5-year opportunities and how fast we drive the adoption, we'll see. We're obviously going to do as aggressive as we can. But there's a lot of cardiologists out there we have to educate, and we've got several programs in place to deliver the message to the cardiologist, the referring cardiologist. So it will take time. And we'll have a lot better sense this year when we start doing these programs and understand how many cardiology groups we get to and how the message resonates and how the growth rate moves forward. So I'm very optimistic because the market research, particularly on the On-X, when we talk to the referring cardiology, these are the cardiologists that refer to the implanting surgeon. When we review the two papers that show a mortality and reop benefit in patients under 65 for mechanical versus bioprosthetic and we show them the On-X low INR data that nobody else has got, they were wildly positive to the point where they were going to refer On-X valves by name, branded, which you don't see very often. So again, we're very excited. We just got to execute. And I think it's a multiyear program, but we'll have a better grip as we kind of move through '26.

Our next question comes from Mike Matson with Needham & Co.

Yes. So I guess, starting with AMDS, when you do get the PMA, do you expect that to have any impact on the growth at all? Like would it maybe help a little or not make a difference?

I mean I think the real meaningful change is just the -- the main requirement of an HDE is you've got to get a local IRB at the hospital, which out of the blocks was a little confusing, but we figured it out. So it's the administrative stuff. So that will go away. But we don't feel like it's going to change -- meaningfully change. I mean the opportunities here with the HDE, it just gets rid of some of the red tape and bureaucracy of the IRB.

Okay. Got it. And then where do things stand with getting AMDS into Japan? I mean looking at your slides, I think you were saying by the end of this year...

Yes. So Japan typically pegs off the PMA. So that clock is going to start once we get the PMA in the U.S. So we should have an update probably midyear on AMDS Japan once we get the PMA in the U.S.

Okay. All right. And then just for the CapEx, I think, Lance, you said $50 million, $50 million. Is that right for this year? And that's a pretty big step up from what was already a pretty big step-up last year. So is that all just really to support the capacity expansion for On-X?

Yes. I mean I'd say primarily the higher levels both years are primarily related to that. I would say also just we have upticked our own internal investment in IT systems to help drive better efficiency going forward than what we had done in the past. And I've told investors before that at the moment, if there's an opportunity where we can invest capital to either improve revenue or SG&A leverage, then I'm really interested in doing that. And so a lot of it is often, but not all of it. And so I do think if you look into '27, '28, I would expect the CapEx to come down from where it is. I would not expect it to go back to where the historical levels were '24 and previous, but I would expect it to come down meaningfully.

[Operator Instructions] Our next question comes from Daniel Stauder with JMP Securities.

So first one, just on On-X, another really strong quarter. I wanted to ask if -- are you still seeing the same level of cross-selling benefits with AMDS that you've mentioned in the past? And are there any trends you're seeing in terms of these newer surgeons in their On-X utilization? Just really trying to get at what you were seeing with some of these physicians that you added earlier in the year.

Yes. No, I think we're expecting that to be an ongoing kind of benefit, right? So if you think about it, there's 1,000 centers in the U.S. that do acute Type A dissection. They also do aortic valves. So we're not selling On-X valves to all 1,000 centers. And for whatever reason, up to now, we hadn't had relationships with some of these surgeons, and they become interested in AMDS, they come to training, the rep gets to know them and then we show them the data. And I've had dinners with a number of these surgeons. And after the dinner conversation with the new data and the low INR and they go back and switch. So I think they kind of go hand in glove, right? As we continue to open new AMDS accounts and continue to build relationships with these aortic surgeons, we're going to get the message out on On-X, both to the surgeon as well as to the cardiologist. So I think that cross-selling is going to be an ongoing thing for the next couple of years as we continue to open up AMDS accounts.

Okay. That makes sense. That's helpful. Just one more for me. Focusing on NEXUS, could you tell us a little bit more about the eventual commercial process here? Is it really just the same playbook as AMDS? Or do you expect the training and learning curve could be more or less intensive? Any more color on specific nuances to the eventual NEXUS commercial rollout would be great.

Yes. They're very kind of opposite devices. If you look at on a continuum, AMDS is extremely easy. The training requirement is really we can do it at a bench top with a pig valve or pig heart. Every aortic surgeon can do it. The learning curve is like 1 case, it adds 5 minutes to the procedure. So that really is kind of like a nirvana from a product launch because it's just -- it's so easy. I would go to the other end of the spectrum, NEXUS is easy in that category, but these are highly trained vascular surgeons that are only in the biggest centers. So AMDS can be used in 1,000 centers. NEXUS is probably a couple of hundred centers. There's going to be extensive training because it's all endovascular in the arch. It's the first device that's been trialed in chronic dissections. So I think there will definitely be a more intensive training. We'll have to cover every case with a rep. And so they're very different, I would say. And again, I think we're well prepared for it. In some ways, it makes it a lot easier because it's not as many centers, and those centers are going to do a lot of volume. So -- and they're all, like I said, highly trained, highly skilled vascular surgeons are already kind of skilled in the art of doing this. So we just have to train them on how to use this technology.

Mr. Mackin, we have reached the end of our question-and-answer session. I would now like to turn the call back over to management for closing comments.

Yes. Well, thanks for joining our Q4 call. And I hope you can hear in our voices, we're super excited about '26. We think we've got a great opportunity to drive both our commercial business with the On-X on the new clinical data and AMDS with the new data. We think we're going to get the PMA from AMDS halfway through the year, and we think we're going to get -- NEXUS is going to get their PMA in the second half. And we've got our trial enrolling on our Arcevo, and we expect that to be our next PMA in '29. So that's kind of our business model, which is a new PMA every 2 years to keep the double-digit growth and EBITDA twice as fast over the long term. So we appreciate your attention and support of the company. Look forward to the next call.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.