LeMaitre Vascular, Inc. (LMAT) 2026 Q2 法說會逐字稿

Welcome to LeMaitre Vascular quarter two 2026 financial results conference call. As a reminder, today's call is being recorded.

At this time, I would like to turn the call over to Mr. Dorian LeBlanc, Chief Financial Officer of LeMaitre Vascular. Please go ahead, sir.

Good afternoon, and thank you for joining us for our Q2 2026 conference call. With me on today's call is our CEO, George LeMaitre; and our President, David Roberts. Before we begin, I'll read our safe harbor statement.

Today, we will make 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. Wherever possible, we will try to identify those forward-looking statements by using words such as believe, expect, anticipate, pursue, forecast, might, and similar expressions.

Our forward-looking statements are based on our estimates and assumptions as of today, August 4, 2026, and should not be relied upon as representing our estimates or views on any subsequent date. Please refer to the cautionary statement regarding forward-looking information and the risk factors in our most recent 10-K and subsequent SEC filings, including disclosure 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 this call is contained in the associated press release and is available in the investor relations section of our website, www.lemaitre.com.

I will now turn the call over to George LeMaitre.

Thanks, Dorian. Artegraft grew 34% in Q2, accounting for 21% of sales. Grafts up 23%, shunts up 18%, and patches up 4%, each posted records, as did EMEA up 18%, APAC up 18%, and the Americas up 5%. Sales grew 10% organically in Q2, 7% from price and 3% from units. Catheters were down 11% in Q2 due to recall-driven overstocking in the year earlier quarter.

Excluding Catheters, Q2 2026 organic growth was 12%, 7% from price and 5% from units. Notably, we underperformed our Q2 2026 sales guidance by $1.1 million for three reasons. Each with roughly the same impact in the quarter. The strengthening of the dollar after we gave guidance on May 5, the impact of the Middle East war continued to delay export revenues, and cardiac Artegraft sales have been hampered by supply. Our guidance reflects these three items continuing to hamper sales in H2.

Turning to the positive, Artegraft has become our fastest and largest product, and we're investing in the product in several ways. Number one, more international approvals; number two, longer sizes for leg bypasses, particularly for Europe; and finally, number three, building out our sales force and our commercial infrastructure.

International Artegraft sales advanced sequentially from $2.1 million in Q1 to $2.8 million in Q2, and we now expect sales of $11 million in 2026 versus $4 million in 2025. Artegraft approvals were received in Vietnam, Morocco, and Turkey in Q2, and were now approved in 56 countries. We also expect three large approvals in 2027, Korea, Brazil, and India. In July, we met face to face with Japan's PMDA, and the initial response was positive. We might receive approval for the AV indication by 2029-2030 without a clinical trial.

Canada approved the Artegraft last year, and the launch is set to occur this September. We're also working to make longer Artegraft available. Because European surgeons use Artegraft for leg bypasses, our longest Artegraft, which is 50 centimeters, is now in high demand. But the Artegraft packaging tube is just 53 centimeters long.

So we plan to make approval filings for longer tubes in the US and Europe in Q4 2026. First, sales of these longer bovine grafts could start in H2 2027. Here's an update on the QuickStick project. We made a pre-submission filing to the FDA for this indication. Unfortunately, we now believe that a clinical trial is likely.

If we like to follow this path, the timeline would be measured in years, not quarters. As a follow-up to the 2025 warning letter, the FDA re-audited our New Jersey facility in June 2026. At this audit, we believe that we adequately addressed three-fourths of their 2025 observations.

On June 25, the FDA provided an additional set of quality systems observations. As per standard practice, we responded on July 16. The observations from these audits have not disrupted our ability to produce, ship, or invoice. As for RFA, Artegraft revenues grew 17% in Q2. We now distribute these cadaver tissues in four countries, the US, Canada, the UK, and Germany.

German surgeons have recently performed three implants. Our German sales force reports high levels of interest from German surgeons due to the quality and availability of our tissues. In Ireland, we have just responded to our first set of questions from the Irish Tissue Authority, and we await an inspection of our Dublin facility. Current expectations are for an Irish approval in H1 2027. Long-term, the Dublin facility is expected to be used for Irish as well as pan-European RFA distribution.

And here's the timeline for when we expect to begin distributing tissues in several other countries. H1 2027, Austria, Holland, and Spain. H2 2027, Australia and Switzerland. As always, we continue to hire sales reps and build out our commercial infrastructure. We ended Q2 with 163 sales reps, and we still plan to end the year with 170 to 180 reps. Nine reps have signed and are set to start in Q3, and 13 requisitions are currently open.

In July, we signed a Polish Go Direct term sheet and expect to sell direct to hospital from a Warsaw warehouse this December. In addition to Dublin and Warsaw, we have five other warehouse projects underway. Our primary warehouse has tripled and moved to Billerica, Massachusetts. Madrid has doubled and now ships all products. Paris is doubling in Q3 and will ship all products. Toronto is moving and tripling in Q3. And finally, Hereford, UK, is moving to the London area in Q4.

In total, that's seven new or larger warehouses opening in 2026-2027. We believe these infrastructure projects will help make a tighter connection between LeMaitre and its worldwide hospital customers.

Higher ASPs, geographic expansion, and discipline spending produce 10% sales growth and 23% EPS growth in Q2 2026. Our 29% Op margin in Q2 as well as our 17% ROE underscores the strength and profitability of our business. Full year guidance implies 11% organic sales growth and 21% EPS growth.

I'll now turn the call over to Dorian.

Thanks, George. LeMaitre's Q2 organic revenue growth of 10%, consisting of 7% price growth and 3% unit growth, was impacted by the Q2 2025 stocking orders following our package-relating catheter recall. As George noted, excluding catheters, organic growth across the remaining portfolio was 12%, consisting of 7% price and 5% unit growth. The 5%-unit growth was highlighted by the strong unit growth of Artegraft and Cardiac RestoreFlow.

In Q2-2026, gross margin was 72.1%. The 210-basis point increase year-over-year was driven primarily by higher ASPs, reduced shipping costs, and positive product mix, supported in particular by growing high-margin Artegraft sales. We remain on track to transfer tissue processing from our Fox River Grove facility in Illinois to our Burlington, Massachusetts headquarters before the end of the year. We have already yielded tissue in Burlington.

In addition, we began shipping our core devices in June from our new 34,000-square-foot high bay warehouse in Billerica to US domestic customers and our international subsidiaries and distributors. Operating expenses in Q2 2026 were $34.4 million, an increase of 5% versus Q2 2025, resulting from continued hiring restraint as full-time employees increased marginally from 658 at June 30, 2025 to 660 at June 30, 2026.

We do anticipate continued 2026 investment in expanding our global sales force, including the new sales reps joining in Q3. Q2 operating income was a record $20.4 million, up 26%, and resulting in an operating margin for the quarter of 29%.

Net income increased 24% year-over-year to $17.1 million, and fully diluted EPS was $0.74, up 23%. Our fully diluted EPS calculation for Q2 2026 triggered the if-converted accounting for our convertible debt, increasing the fully diluted share count to $24.5 million for the basis of this calculation.

We ended Q2 2026 with $376 million in cash and securities, an increase of $9 million in the quarter. Cash from operations generated $16 million in Q2. We incurred $2.3 million in capital expenditures and paid $5.7 million in dividends to shareholders. We have updated our full-year revenue guidance to $276.3 million and 11% reported revenue growth.

Expected reported revenue has declined as we updated our FX assumptions for the strengthening US dollar since our February and May guidance. In addition, we have reduced full-year organic revenue growth from 12% to 11% to reflect our Q2 results and the revenue impact related to our export business and slowing growth for RFA, largely due to anticipated supply constraints.

We anticipate full-year gross margin of 72.4%, a 200 basis point improvement from adjusted 2025, full-year operating income of $76.8 million, resulting in a 28% operating margin for 2026 and operating income an increase of 19% from adjusted 2025. We have also updated our guidance on fully diluted earnings per share to $2.89, up 21% from adjusted 2025. Our guidance implies a fourth consecutive year of strong double-digit revenue growth and 20% plus EPS growth.

We'll now take questions.

(Operator Instructions)

Michael Sarcone, Jefferies.

Hey, good afternoon, and thanks for taking the question. I guess, George, just to start, you gave us the update on the quick stick claim, and we've got this timeline measured in years now. And I guess, can you give us a little more color on how you're thinking about allocating resources to that effort and just any updated thoughts on what you're going to do there?

Sure. We definitely see that as a nice piece of the market, Mike. And by the way, thanks for your question. I appreciate it. I think the news is fresh enough here that we just need to sit back and decide what to do next here.

We're not really a clinical trial company historically, but we do have these aspirations to get a little bit more R&D focused. So I think it will take us a little time to figure that out, but we do acknowledge it's an important piece of the market, particularly in the US.

Thanks, George. And then just on the RFA supply constraints, I guess, how are you thinking about next steps here and maybe any timelines for when you could see some relief on those constraints?

Sure. As you can imagine, we're running around like crazy trying to solve this. I think when you're dealing in cadaver tissues. There are always threats of supply around you. So there's a set of four or five to-dos that we're not going to bore you with today that we're in the middle of trying to do. If you want to think of this positively, when we first took over this company in 2016 for the first five years, we had tremendous difficulty having enough supply of the peripheral vascular tissues, the veins and the femoral arteries and such.

And we've definitely solved that. We feel really good about that and now this is sort of the next frontier. And then I always say this to the sales force, which is 95% of your products are good to go here. We have ample supply, and they always talk about the one that does it. So we want to get rid of it because it's tiring to sit there and listen to it from the sales force as much as we want the sales to come out.

Hey, Mike, this is Dorian. Maybe just to add on that. Cardiac allografts were up 39% quarter-on-quarter. So we're talking about a business that's performing very well, just maybe the growth rate slowing a bit from where we anticipated. And one of the big things, of course, that we're doing on supply is to move that processing here to Burlington, Massachusetts, where we're all closer to it.

So I think those are two important things to kind of wrap up the question.

Brett Fishbin.

Hey guys, thank you.

So, sorry, that's all. Go ahead.

Alright, thanks so much guys for taking the questions. Just had a quick first on 2Q. The geographical performance versus our model at least looked pretty good in Europe and in Asia and Americas was a little bit softer than expected. I was hoping you could just touch on kind of what you're seeing in the Americas region just given some of the mixed reads on procedural growth this quarter domestically or if that was mostly driven by the catheter issue?

I would say we should start with the catheter issue, which is, first of all, if you X out the Aziyo issue, and we've all forgotten about that, but we used to distribute Aziyo way back when, it was in Q2 of '25, you get it to a 6% organic number for the Americas, and then if you strip out the Catheters topic, again, you can go strip out stuff, right? But if you strip that out, that's a real thing. You get it to 8% organic in the Americas, and it's probably feeling more normal to us that that's our business.

Your second part of your question, Brett, was about the procedure volume. And I think we tend not to lean on that in these phone calls about procedure volume. And one specific reason we might not lean on it is the stuff we're reading about in the newspapers about the Affordable Care Act and all that, it's a little bit more -- it's not really our customer.

Our customers are 70-year-old men and women, and they're not Medicaid patients and things like that. So we don't. Too hard on that. I think the internal issues, but again, if you X out those two issues, you can get yourself to 8% organic growth for the quarter.

All right, great. And then just one follow-up from me. You talked a lot more today in the press release and prepared remarks about some of these warehouse expansions and the magnitude and number of them. Maybe if you could just elaborate a little bit more at a high level on this overall initiative and if there's any long-term read into either margin expansion upside or working capital.

Right, okay, thanks for giving me the platform to talk about this. This is sort of one of my really serious initiatives inside the company called relocalization and historically we tried to address Europe just from Frankfurt because we're all excited about the EU and the Schengen Zone and the Euro as common currency and I would say I -- myself and our team, we've sort of debunked that over 20 years. In the last five years, we've gotten much more serious about the Spanish hospital wants to talk to a Spanish customer service rep located in Madrid with the product sitting right next to him or her and get it shipped directly for so many reasons.

That's the hypothesis of relocalization. And you can kind of see we've gone a bit hog wild with it, right? We're going to have, when Warsaw opens up, we're going to have seven offices in Europe, I believe. And maybe 15 years ago, it was just one in Frankfurt. So we've really gone down this path.

There's the outside reasoning or the larger rationale for it. What we're also finding, which we didn't expect to find, is shipping a package from Frankfurt costs $55 to the Madrid hospital and shipping a package from Madrid to the Madrid hospital costs $5.

And so there's this huge shipping savings, to go with Artegraft being so much bigger in Europe, just to press forward on a point here, there's an explosion of gross margin going on over in Europe and I've never seen this in my career, but it's 6 points, 5 points, 9 points for year-over-year, full points, not [bps].

And it's been really satisfying to see even though we spent the money on these places, the gross margin is exploding over there for a number of reasons. And I would say the focus of the success of the company in Q2 clearly was Europe, whether it be from the sales perspective or on a growth of profitability perspective.

And I think the profitability of that segment was up like 70% or something like that. It's really going nicely over there and it's sort of intertwined with that relocalization project.

Rick Weiss, Stifel.

Hi, this is Annie on for Rick. Thanks for taking our question. My first one is on Artegraft in Europe. When we spoke with you last, we kind of heard that Artegraft was seeing early success in these European countries with shorter sales cycles, while the more tender-based countries were likely to come in further down the road. So I guess can you update us on where those tender processes like stand today and whether the updated back half outlook is going to depend on those wins converting before the year-end?

Okay. And I think when we gave the Q1 call, we were a little bit like, well, is it going to be $10 million or what? We were all talking about it. And we're happy to say Q2 seemed like a little bit better than we all expected over in Europe for Artegraft. So we're thrilled about that.

As your specific question on the tender. I don't have a real angle on that. I will say that when it first started, let's call it Q3 and Q4 of 2025, it felt very much like a Central Europe, I'm going to say Holland, Belgium, Germany, Austria thing.

And in the last three or four quarters, it definitely has spread out. It's become a big topic in France, Italy and Spain and a big topic in the UK. The tender-driven markets of sort of the Nordics, when you talk about tenders over there and in the Southern European markets, you feel like the Nordics may be a little slower and the tender-driven markets of the South part of Europe are doing really well right now, very well. It's helping the business post records every month and every quarter.

Great, thanks. And maybe just to follow-up on the RFA supply constraints, maybe just generally about the longer-term opportunity outside the US. I'm curious if you have any plans to build out tissue processing OUS and what that might entail in terms of the timing, investment, and regulatory work there?

Annie, it's Dave. It's a great question. It is something we think about on a long-term basis, but I think we still have a long way to go in the US to rationalize and approve our supply of cardiac tissue, especially here. So I think we're focused on that in the near term. As Dorian mentioned, we're moving the processing from the Chicago area to Burlington, so all the management will be concentrated here, and we are taking a few steps to improve the supply here.

Certainly, as we see sales start growing, OUS, that topic about supplying outside the United States becomes more relevant, but I don't think it's a near-term project for the company at this point.

Danny Stauder, Citizens.

Yeah, great. Thanks for the questions. This is my first one. It's going to focus on the guidance. So if we're looking. The guide below the top-line, gross margin was in line with the quarter, you raised it a bit for the full year and then full year operating income guide was lowered by a bit more than this quarter's performance versus the quarterly guide.

So I guess really my question is this, could you help us with some of those dynamics maybe? It's simple as it's a function of lower sales base or some product mix, but just how should we think about these metrics moving in opposite directions in the back half and how we should think about them in our model? Thank you.

Yeah, Danny, it's Dorian. I think you're right on the decrease in operating income guidance is just directly dropping through from the revenue decline and really that's a function of the three factors that George walked through in the prepared remarks, which is about a third of the myths for Q2 and a third of the change in guidance is purely related to FX.

In our prepared remarks in Q2, I think we gave the euro rate that we were forecasting at 117. Of course, we exited the back half of June at 114, which hurt us in the quarter to come up a little bit to 115. So that's about a third of the miss for Q2 and about a third of the change in guidance for Q3 and Q4.

And then we do continue to just have this hangover on our export business from not being able to ship to the Middle East. We had $400,000 of orders ready to go here that just can't go out because of the conflict. We think again that that's probably something that's going to recur and our export business overall is going to be down for the year if this doesn't resolve.

And then the last third is really around the -- while we did post a 39% growth rate on cardiac allografts, that curve, that growth curve coming down a little bit from our expectation really related to the supply. So those three factors kind of explain the Q2 and they're really the drivers of the change in guidance. And the flow through to the bottom line is the impact on Op Inc.

Danny, maybe I could pick up a second-half of your question, which I think you have in there, which is the bottom line and Op expenses. And I think as you compare H2 2026 to H2 2025. We were sort of in belt-tightening mode for those Q3 and Q4 of '25. So you're going to see, even though we haven't raised op expenses implicitly too much in this model here, it's going to look like a lot when we start coming around to the Q3 and Q4, particularly these sales reps being hired.

So that's something you're going to be noticing. The lack of op leverage is going to be driven a little bit by that. It was a tight-fisted company in Q3 and Q4 of last year, a little bit less so this year. We definitely want to get involved in, and so we're not sort of slowing down a little bit. Maybe that helps you on the bottom part of the guidance.

Just one more focusing on the model. So, Dorian, I'll ask some of these of you again, but just as I think about EPS guide. Are there any other dynamics beyond gross margin, OpEx, you already highlighted? I think last quarter, you talked a little bit about tax and it being below your historical rate and some of that being due to the FDIIs.

We saw it step up a little bit here in the quarter. So how should we think about that in the back half and just anything else beyond or below the operating income line that we should think about as we model out here? Thank you.

Yes, sure. If you get below Op [Inc], Danny, the put and the take is a little bit better yield on our invested cash. Yield curves come up a little bit. So we're getting a little bit better earnings on that cash balance here in July versus where we were forecasting from May. On the effective tax rate, still getting that benefit from the city.

But the tax rates really impacted by the discrete items, particularly around stock-based comp and the timing of option exercises, so fewer of that in Q2. Overall, for the blend of the year, our ETR for our guidance hasn't really changed too much, but you're always going to see some variability.

I think we did caution in the call last quarter not to read into 20.3 as the long-term rate on the ETR, but yes, probably a little higher than we anticipate in Q2, settling out more normalized throughout the year.

Jim Sidoti, Sidoti & Co.

Hi, good afternoon. Thanks for taking the questions. So, George, you've dealt with shortages for Artegraft before. What did you do then, and are you going to do something similar now?

And I would broaden that to, we pride ourselves, thanks for the question, Jim, great question. We pride ourselves on being a no-backorder company. You've heard that from me a billion times over the years. And we got to that with peripheral vascular largely through huffing and puffing and sweating and figuring how to do stuff better.

I think the big move here is going to be bringing the factory to Burlington, where it's near Trent, who's the head of ops, and Andrew, who's the head of regulatory, who's the guy in charge of approving all this stuff going out the door. So I think that's the major move. We have AI in the background here with this new program called Donor IQ, and we have put some constraints on because we were nervous about purchasing too much and only using a piece of this, and we've removed those constraints, so there's a number of moves we can pull.

I think it'll get better, and again, I think Dorian. In his initial response here is pointing out, okay, but we still did grow the business 39% in the second quarter. So there's still the cardiac business, there's still cause for, well, it's growing fast and they're missing that last piece of business by the lack of supply, but it's still a nice business. But yeah, we got to get down to work on that and fix that. It's on us.

So it sounds like you have a sufficient number of organ procurement people that you're dealing with to get the product, you just have to get better at processing it.

I would say it's both. I do think we also consider from time to time bringing on more recovery groups. So there's a limited number of those in the whole country, and we're already dealing with about half of them, but we do consider bringing more of them on from time to time. So that might be an avenue as well.

Okay, and then just a quick one for Dave, just an update on the pipeline out there with growing acquisitions and what do you see?

Yeah, hi, Jim. Thanks for the question. It's a pretty active pipeline right now. Obviously, I don't usually disclose how many deals or the size of deals, but we are busy. We're adding a fourth member to the [BizDev] team this coming Monday.

It is pretty busy. The target zone is what we've focused on the past. The, roughly two dozen businesses in open vascular that are big enough for us to focus on or, expanding into cardiac surgery where we had about 13% of our Q2 revenue. And the sweet spot, I'd say, is anywhere from $15 million to $150 million of revenue. So pretty active pipeline building the team and stay tuned.

(Operator Instructions)

Keith Hinton, Freedom Capital Markets.

Great. Thank you. So apologies if this has already been addressed. I'm jumping around a little bit. But just in terms of Catheters in the quarter, was that just simply a tough year-over-year comp or is there any sort of durable change going on there in terms of competitive dynamics?

Sure, Keith. Thanks for the question. It's George. Yeah, it's a big topic here in that in Q2 of 2025, we had a very big recall of a simple product line problem with our packaging on catheters. So we pulled in a lot of product and oddly, which doesn't always happen, the customer then went and did a bunch of hoarding. All of the customers around the world went and did a bunch of hoarding and bought a lot of devices.

Therefore, we had a huge Catheters sales in Q2 last year. And now coming around the bend here in Q2 of this year, Catheters sales were down 11%. So if you strip the Catheters out of the company's performance, instead of us showing up here today on this call with a 10% organic growth rate, you'd a 12% organic growth rate.

So it does make a big difference. We called that out in the press release, and we've called it out in this phone call as well. It's an important topic, and we do believe that it's transient and that you won't have that brutal comp again as you go into H2.

Okay, great. Thanks for the clarification, and again, apologies if I missed this, but did you guys talk at all about the plans for autographed quick stick in terms of potential trial there, trial design, timeline, anything like that?

We did. And Keith, unfortunately, the news that we got from our FDA meeting, and we did address this in the prepared remarks, unfortunately, the FDA seems to be leaning, it's not for sure, but they seem to be leaning towards you've got to go back and do a clinical trial for that. And so that puts us back at, gosh, should we go forward with this? It's a big investment. It's an X year timeline. So we're still in the thinking it through phase of that project.

Michael Petusky, Barrington Research.

Hi, Mike. It's George in Burlington. I think you're up if you're still hanging on to the call. Operator, he's usually pretty good about being here. So let's assume something happens here. You can either go on to next questions or wrap up the call, whatever you see is the right next move.

Right. So it looks like we have no further questions. And give me one moment.

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