Medical device company Artivion (NYSE:AORT) reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 1.6% year on year to $98.98 million. The company’s full-year revenue guidance of $429 million at the midpoint came in 1.2% above analysts’ estimates. Its non-GAAP profit of $0.06 per share was $0.02 above analysts’ consensus estimates.
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Artivion (AORT) Q1 CY2025 Highlights:
- Revenue: $98.98 million vs analyst estimates of $94.98 million (1.6% year-on-year growth, 4.2% beat)
- Adjusted EPS: $0.06 vs analyst estimates of $0.05 ($0.02 beat)
- Adjusted EBITDA: $17.55 million vs analyst estimates of $16.47 million (17.7% margin, 6.6% beat)
- The company slightly lifted its revenue guidance for the full year to $429 million at the midpoint from $427.5 million
- Operating Margin: 2.2%, down from 26% in the same quarter last year
- Free Cash Flow was -$20.59 million compared to -$9.1 million in the same quarter last year
- Sales Volumes rose 10.8% year on year (14.2% in the same quarter last year)
- Market Capitalization: $1.26 billion
StockStory’s Take
Artivion’s first quarter was shaped by the rapid recovery from a previously disclosed cybersecurity incident and the early momentum of key product launches. CEO Pat Mackin highlighted that supply chain stabilization, particularly for On-X mechanical valves, and clearance of about a third of the tissue processing backlog enabled the company to surpass internal expectations. Management also pointed to double-digit revenue gains in its stent graft and On-X product lines, partially offset by ongoing softness in preservation services due to lingering supply constraints.
Looking ahead, management’s guidance reflects confidence in accelerating revenue and margin growth, supported by the ongoing U.S. launch of the AMDS device and anticipated recovery in tissue processing volumes. Mackin emphasized the potential for sustained double-digit growth and noted that product mix improvements—especially with AMDS and favorable On-X data—are expected to drive higher gross margins. CFO Lance Berry added that management expects free cash flow to turn positive as the year progresses, with incremental contributions from backlog resolution and new product adoption.
Key Insights from Management’s Remarks
Artivion’s leadership attributed the quarter’s results to faster-than-expected operational normalization, new clinical launches, and growth in select product segments. Key factors driving financial performance and expectations for the rest of the year included:
- Cybersecurity Incident Recovery: The company made significant progress on restoring operations after the supply chain disruption, clearing a third of the tissue processing backlog ahead of schedule and returning On-X manufacturing to normal levels earlier than anticipated.
- Stent Graft Expansion: Stent graft revenue grew 19% in constant currency, driven by cross-selling in Europe and initial U.S. uptake of the AMDS device, which received FDA Humanitarian Device Exemption (HDE) approval. Management noted that most current stent graft sales are outside the U.S., but the pipeline aims to expand into new geographies, including the U.S. and Japan.
- AMDS U.S. Launch: Early feedback from surgeons and adoption by around 150 facilities underscored strong demand, though onboarding varies due to regulatory steps at each hospital. Management expects sequential sales growth for AMDS throughout the year.
- On-X Valve Performance: On-X revenue rose 11% year-over-year, aided by normalization of supply and favorable clinical data showing improved mortality for patients under 60 compared to bioprosthetic valves. Management cited this as opening a $100 million U.S. market opportunity.
- Geographic Growth Drivers: Latin America and Asia Pacific posted revenue increases of 26% and 8%, respectively, as regulatory approvals and expanded commercial presence supported growth. Management expects these regions to remain important contributors going forward.
Drivers of Future Performance
Management expects accelerating growth in coming quarters as new product rollouts and backlog resolution offset lingering headwinds. The company’s outlook is anchored in continued product adoption and operational recovery.
- AMDS and NEXUS Pipeline: Broader adoption of AMDS in the U.S. and anticipated approval of the NEXUS stent graft system are viewed as major future growth drivers, with management highlighting their combined $250 million annual U.S. market potential.
- Tissue Processing Recovery: Full normalization of tissue processing volumes is expected by the end of Q3, which management believes will restore mid-single digit growth in this segment for the full year.
- Margin Expansion Initiatives: Management pointed to product mix improvements, especially from AMDS and On-X, and SG&A leverage as key levers for adjusted EBITDA margin expansion. Risks cited include the pace of hospital onboarding and the timing of regulatory approvals.
Top Analyst Questions
- John McAulay (Stifel): Asked about the pace of AMDS adoption and whether all 150 facilities could be live by year-end; management stated onboarding is progressing well but timing depends on each hospital’s processes.
- Frank Takkinen (Lake Street Capital): Inquired about surgeon training and the true U.S. market size for AMDS; management reported training has exceeded expectations and the market could expand beyond current estimates if clinical outcomes remain favorable.
- Mike Matson (Needham & Company): Questioned the timing and financing of the potential Endospan (NEXUS) acquisition; management said the option triggers upon FDA approval, with financing seen as manageable through improved EBITDA and cash flow.
- Daniel Stauder (Citizens JMP): Sought clarity on foreign exchange headwinds in guidance; management said currency impacts are now expected to be neutral for the year, with constant currency growth emphasized in projections.
- Jeffrey Cohen (Ladenburg Thalmann): Asked about APAC and Latin America contributions; management cited ongoing product approvals and commercial expansion as sustaining strong growth in both regions.
Catalysts in Upcoming Quarters
In future quarters, the StockStory team will be watching (1) the pace at which AMDS gains hospital approvals and drives sequential revenue, (2) the resolution of the tissue processing backlog and resulting return to mid-single digit growth in that segment, and (3) continued progress toward U.S. approval for the NEXUS stent graft system. Execution against these milestones will be key for sustained double-digit growth and margin improvement.
Artivion currently trades at a forward P/E ratio of 43.9×. At this valuation, is it a buy or sell post earnings? See for yourself in our free research report.
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