LeMaitre Vascular (LMAT) Q3 2026 Earnings Call Transcript

DATE

Wednesday, Nov. 4, 2026

CALL PARTICIPANTS

• Chief Financial Officer - Dorian LeBlanc
• Chief Executive Officer - George LeMaitre

TAKEAWAYS

• Net Sales -- $68.0 million, representing 11% reported growth over the prior year.
• Organic Sales Growth -- 12% in the quarter, driven by a 7% increase in price and 5% growth in unit volume.
• Grafts Revenue -- 20% growth year over year, reflecting strong demand in the vascular graft portfolio.
• Shunts Revenue -- 14% growth year over year, supported by increased procedure volumes.
• Artegraft Sales -- 18% growth year over year, driven by the ongoing international launch of the bovine carotid artery graft.
• RestoreFlow Allografts Sales -- 34% growth year over year, reflecting expanded distribution in six countries.
• EMEA Revenue -- 18% reported growth and 20% organic growth, despite a $440,000 negative impact from foreign exchange fluctuations.
• Americas Revenue -- 9% growth year over year, supported by territory splits and sales force expansion.
• APAC Revenue -- 5% growth year over year, reflecting continued market development in the region.
• B. Braun Acquisition -- $19.2 million total consideration, including an initial $16.6 million payment for polyester and silver-coated vascular assets.
• B. Braun Portfolio Sales -- $9.4 million in 2025, with approximately 65% of sales originating in Europe.
• Gross Margin -- 71.7%, representing a 90-basis point increase over the adjusted prior-year period due to higher average selling prices.
• Adjusted Operating Expenses -- $31.0 million, an 18% increase year over year driven by hiring and research and development spending.
• Sales Representative Count -- 171 at quarter end, an increase of 19 representatives compared to the prior year.
• Operating Income -- $17.7 million, resulting in a 26% operating margin for the quarter.
• Net Income -- $15.0 million, excluding the impact of non-recurring tax credits from the previous year.
• Non-GAAP Diluted EPS -- $0.65, representing 5% growth compared to the adjusted prior-year figure of $0.62.
• Cash and Marketable Securities -- $390 million as of Sept. 30, 2026, a sequential increase of $13.5 million.
• Free Cash Flow -- $19.7 million, which represents a $6 million increase over the second quarter of 2026.
• FY 2026 Revenue Guidance -- $274.8 million to $276.8 million, reflecting an 11% reported growth forecast for the full year.
• FY 2026 EPS Guidance -- $2.77 to $2.82, representing 18% growth over the adjusted 2025 results.
• Burlington Facility Expansion -- 30,000 sq ft added to the corporate footprint to provide capacity for manufacturing consolidation and acquisition integration.
• Inventory Reserve Charge -- $500,000 recorded in the quarter due to the discontinuation of the FAS-TIP product line.
• Cardiac Allograft Revenue -- 65% year-over-year growth, reflecting increased unit volume in the RestoreFlow portfolio.
• FY 2026 Organic Sales Guidance -- 11% for the full year, as management reiterated its organic growth targets.

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RISKS

• LeBlanc stated, "this commercial transition has some complexity and is expected to take 18 to 24 months," regarding the integration of the B. Braun vascular assets.
• LeBlanc stated, "We may face back orders during this period," referring to the four-year supply agreement with B. Braun while manufacturing is transferred to Burlington.
• LeMaitre stated, "an FDA reinspection is likely in 2027," regarding the New Jersey facility following recent reviews of agency observations.
• LeMaitre noted that although cardiac allograft revenue grew 65%, the company could have sold more if they "had been able to process them and get them approved through quality inside of our buildings."

SUMMARY

LeMaitre Vascular, Inc. (NASDAQ:LMAT) reported third quarter 2026 financial results, highlighting double-digit organic revenue growth driven by price increases and biologics expansion. Management stated that the company completed a $19.2 million acquisition of vascular grafts and surgical tools from B. Braun to strengthen its market share outside of North America. The company maintained its 11% organic sales growth guidance for the full year while adjusting its reported revenue outlook to account for a strengthening U.S. dollar. Strategic focus remains on expanding the international sales force and consolidating manufacturing operations in Burlington to support future growth and improve operational efficiencies.

• CEO LeMaitre stated, "While the sales transition will take about two years, this acquisition is right out of our playbook," referring to the strategy of acquiring niche products to leverage through global sales channels.
• Management indicated that although cardiac allograft revenue grew 65%, processing constraints prevented the company from meeting the total market demand during the quarter.
• The company plans to open a new office and warehouse in Poland in the first quarter of 2027, followed by a new Malaysian facility later that year.
• Management confirmed that President Dave Roberts will retire at the end of 2026 after a 30-year career with the company, though he will retain his seat on the board of directors.
• LeMaitre intends to apply for PMDA approval for Artegraft in Japan this quarter, with a projected approval timeline of 2029 to 2030.
• The company expects to close its Chicago-based RestoreFlow facility by the end of 2026 and fully transition tissue production to its Burlington headquarters.

INDUSTRY GLOSSARY

• Artegraft: A bovine carotid artery graft used primarily for creating vascular access in hemodialysis patients.
• RestoreFlow: A product line of human vascular and cardiac allografts used in surgical procedures.
• Allograft: Human tissue transplanted from one individual to another.
• Valvulotome: A specialized surgical instrument used to cut or disable valves within a vein during bypass surgery.
• PMDA: The Pharmaceuticals and Medical Devices Agency, Japan's regulatory body for medical device approvals.
• ASP: Average Selling Price, the typical price at which a product is sold across various markets.
• DRG: Diagnosis Related Group, a system used to classify hospital cases for the purpose of medical reimbursement.
• Dacron: A synthetic polyester material commonly used to manufacture artificial vascular grafts.

Full Conference Call Transcript

Operator: Welcome to the LeMaitre Vascular Q3 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.

Dorian LeBlanc: Good afternoon, and thank you for joining us on our Q3 2026 conference call. With me on today's call is our CEO, George LeMaitre. Before we begin, I will read our safe harbor statement. Today, we will 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 risk 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, November 4th, 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 in the investor relations section of our website, www.lemaitre.com.

I will now turn the call over to George LeMaitre.

George LeMaitre: Thanks, Dorian. Sales grew 12% organically in Q3, 7% price, and 5% units. Grafts grew 20% and shunts 14%. Biologics continued to outpace the rest of our portfolio, as Artegraft was up 18% and RestoreFlow allografts 34%. Geographically, EMEA sales increased 18%, the Americas 9%, and APAC 5%. On October 14, we acquired several devices from B. Braun, polyester and silver-coated vascular grafts, valve cutters, and vein strippers. This is our third polyester graft acquisition since 2007, and we look set to become number three in worldwide share ex-Japan. We have always wanted to offer silver-coated vascular grafts, as they are designed to resist infection. The acquired portfolio posted 2025 sales of $9.4 million, all outside North America.

65% of sales were in Europe, including 21% in Germany, our second-largest market. While the sales transition will take about two years, this acquisition is right out of our playbook. We acquire niche vascular and cardiac products and grow them through our global sales channel. As for Artegraft, we are investing in the product in several ways. Number one, more international approvals. Number two, increased lengths for leg bypasses. Number three, building out our commercial infrastructure and sales force. Q3 international Artegraft sales were $3 million, and we continue to expect full-year sales of more than $11 million. In Q3, we received approvals in Brazil and Saudi Arabia, bringing us to 60 countries.

We expect 2027 approvals in Korea and India. We plan to apply to the PMDA in Japan this quarter, hoping for 2029 or 2030 approval. We are also developing long Artegrafts for leg bypasses. Unfortunately, our Artegraft packaging is too short for these long grafts. We plan to submit for U.S. and CE mark long tube approval in Q4 2026, for sales could start in H2 2027. on October 7th, we attended an encouraging FDA virtual meeting regarding our New Jersey Artegraft facility. The agency is reviewing our responses to their observations. The observations from the two FDA inspections have not disrupted our ability to produce, ship, or invoice. an FDA reinspection is likely in 2027.

RestoreFlow allograft revenues grew 34% in Q3. We are approved to distribute these cadaver tissues in six countries: the U.S., Canada, New Zealand, the United Kingdom, Austria, and Germany. We are actively working to gain approvals in four countries in 2027: Holland, Ireland, Spain, and Switzerland. We still plan to close our Chicago RestoreFlow facility this year and fully transfer production to Burlington. We continue to expand our commercial infrastructure. Rep count increased by 19 year-over-year to 171 at quarter's end. Our American and German territories continue to grow, requiring us to split territories. We now plan to open a Polish office and warehouse in Q1 2027. We also plan to open a Malaysian office and warehouse in 2027.

Indeed, seven new or larger LeMaitre International warehouses are opening in 2026/2027. These offices place LeMaitre products closer to our hospital customers and provide local customer service. We also recently expanded our Burlington footprint by adding a 30,000 sq ft building. We gain access to the building in July 2027 and expect to use the space to consolidate our Burlington manufacturing operations and provide capacity to integrate manufacturing from acquisitions. Per our recent eight-K, 2026 will be Dave Roberts' last year as our President, though he will remain on our board as elected by our shareholders. In his 30 years at LeMaitre, Dave navigated our 2006 IPO as CFO and spearheaded 26 acquisitions.

Of course, these are big shoes to fill professionally. We have begun recruiting additional senior-level biz dev executives. In the short run, I will be heading up our biz dev group, and we will remain an acquisitive company. In other personnel news, I would like to welcome Tarek Pachuca to LeMaitre as our new Global Head of Marketing and Worldwide Export. Tarek joined in August after 16 years at Terumo Aortic, where he was the Chief Commercial Officer. Terumo Aortic sells approximately $375 million a year of polyester grafts and stent grafts and has a common call point with LeMaitre Vascular and cardiac surgeons.

To conclude, 12% organic growth was driven by price and unit growth, the international autograft launch, RestoreFlow growth, and our expanding sales force. Our 26% Q3 op margin, as well as our 27% ROIC, underscores our underlying profitability. Full-year guidance implies 11% organic sales growth, 11% reported sales growth, and 18% EPS growth. I'll now turn the call over to Dorian.

Dorian LeBlanc: Thanks, George. LeMaitre's Q3 organic revenue growth of 12% consisted of 7% price and 5% units. Our Q3 reported growth of 11% was negatively impacted $440,000 by foreign exchange due to the year-over-year strengthening of the U.S. dollar. Our reported Q3 2025 financial results included a $4.8 million Employee Retention Tax Credit, and the following year-over-year comparisons all exclude this benefit. In Q3 2026, gross margin was 71.7%. The 90-basis point increase year-over-year was driven primarily by higher ASPs and reduced shipping costs, offset by a $0.5 million inventory reserve for a product discontinuation. As part of our ongoing portfolio management process, in Q3, we announced the discontinuation of FAS-TIP.

Excluding this inventory charge, gross margin for the quarter was 72.4%, up 160-basis points versus Q3 2025. Operating expenses in Q3 2026 were $31 million, an increase of 18% versus Q3 2025, as sales rep count increased by 13% year-over-year to 171 at quarter's end. In addition, R&D spending increased $1.1 million year-over-year, driven by process improvement programs and the RestoreFlow transfer expenses. Q3 2026 operating income was $17.7 million, resulting in a 26% operating margin. Net income was $15 million, and fully diluted EPS was $0.65. Free cash flow, cash from operations less capital expenditures, was $19.7 million, a sequential increase of $6 million from Q2 2026. The company ended September with $390 million of cash and investments.

We acquired a portfolio of vascular assets from B. Braun in October for total consideration of $19.2 million. The consideration includes an initial payment of $16.6 million and a deferred payment of $2.6 million to be paid on the one-year anniversary of the closing date. The 2025 sales of these products by B. Braun were $9.4 million. As these products have historically been sold under contracts, including contracts that bundle other non-acquired B. Braun products, this commercial transition has some complexity and is expected to take 18-24 months. During the commercial transition period, B. Braun will continue to directly supply customers until their customer agreements conclude or the contracts can be transferred to LeMaitre.

LeMaitre will be entitled to profit sharing on the continued direct B. Braun sales. However, under U.S. GAAP, LeMaitre will not record revenue related to those sales until the customer orders are fulfilled directly by LeMaitre. During Q4, we expect sales will be transacted predominantly by B. Braun, and we anticipate recording revenue for direct sales of approximately $150,000, with no net impact on operating income. In addition, B. Braun will continue to manufacture the products during a four-year supply agreement while LeMaitre works to transfer manufacturing to Burlington. We may face back orders during this period, but after we transfer production to Burlington, we look forward to instilling LeMaitre's no back order commitment to these products.

We believe the acquired products fit well in the bag of our expanding global sales force and aligns well with our European commercial capabilities, and the acquired manufacturing processes align with the competencies of our U.S.-based polyester graft manufacturing teams. We've been manufacturing polyester grafts in Burlington since 2011. For 2026, we have reiterated our 11% organic revenue growth guidance for the year. Our reported revenue guidance of $275.8 million reflects the recent strengthening of the U.S. dollar, with a euro-to-USD rate of 1.12 compared to 1.15 at our August earnings call.

We anticipate a full-year gross margin of 72.1%, a 170-basis point improvement from adjusted 2025, and full-year operating income of $75.4 million for a 27% operating margin in 2026. We also updated our guidance on fully diluted earnings per share to $2.80, up 18% from adjusted 2025. Our guidance includes the modest 2026 impact of the B. Braun acquisition. With that, we'll pass it to the operator for questions.

Operator: Thank you. At this time, we will conduct the question-and-answer session. To ask a question, you will need to press star one, one on your telephone and wait for your name to be announced. To withdraw your question, please press star one, one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Michael Petusky of Barrington Research. Your line is now open.

Michael Petusky: Good evening. So I guess two questions. Just on the B. Braun transaction, was this one of the sort of assets that you guys had sort of had in your, I guess, your potential portfolio the last few years, or was this something that sort of popped up and was an opportunity that maybe you hadn't anticipated? Thanks.

George LeMaitre: No, this one's been a while in gestation. Hi, this is George LeMaitre. Mike, good to hear from you. This one's been in gestation, it feels like, for nine or 12 months. It's a large company, so it was a long process, but this is very thoughtful and they figured, "Hey, we've got vascular assets to sell. LeMaitre Vascular is the buyer of choice here." So they came to us based on our reputation, I feel like 12 or 15 months ago or so. We've been working and processing this through.

Michael Petusky: Okay. Just the second question, and I'll let everybody else get a shot here. In terms of RFA, you guys identified some issues in terms of sourcing and even just the internal transition to Burlington. Can you just give updates on all of it, if you're making progress on things that are controllable and, I guess, things that are outside of your control, what the status of that is? Thanks.

George LeMaitre: Yeah. Great question. Thanks a lot, Mike. On the RFA side, there's really good news and then there's, "Oh, God, I wish we weren't doing so well." And the really good news is that the cardiac tissue, which is the one you're really caring about, the vascular tissue, we are not facing supply constraints. We're able to source enough and have enough processed ready to go for the surgeons that need it. On the cardiac side, which is the smaller but much more quickly growing side, we grew 65% in Q3 over Q3, and those are organic numbers year-over-year, obviously. Roughly speaking, those are units, not dollars.

Sorry, the number I'm quoting you is dollars, but I'm not trying to talk about a price increase here. It was a real incredible effort by the team. However, and again, two sides of a sword here, however, we could have sold a lot more if we had been able to approve, or quality-wise, approve of all the products. We're able to source a lot of them, we're just not as able to get them through our facility fast enough. So you want to be happy, we were able to process or approve, I should say, 65% more grafts in Q3 than the year before.

If you want to be frustrated, we could have sold an awful lot more if we had been able to process them and get them approved through quality inside of our buildings.

Michael Petusky: George, just a quick part B to this question, I guess. In terms of the processing, and maybe logjam is overstating it, obviously, given the growth, but just in terms of the dollars, essentially the dollars you are leaving on the table in the short term, I mean, is there a period where you say, "Hey, this should be remediated. We should be able to process what we need to process to meet the demand that we have," or are you guys going to be behind the curve for multiple quarters on this? Thanks.

George LeMaitre: I sense that the good news is we will be behind the curve for a while because we are getting so much demand for cardiac allografts, and I feel like the issues which are somewhat in our control, as I mentioned, we are able to get the supply, we are just not able to get them through our factory fast enough, if you will. I feel like those issues are basic building block medical device issues, which is, if we throw enough resources at, we should be able to handle it. As an inside baseball story here, we have this thing inside the company called Carte Blanche, and what is that?

We have decided that the folks in quality and regulatory have the right to hire anyone they want that is a chart clearer inside of this whole thing. The pressure is on, we know we need to fix this, but you want to be happy with the crowd because we got a 65% increase year-over-year. Good news here, and then maybe some opportunities in the future.

Michael Petusky: Sounds good. Thanks.

Dorian LeBlanc: Mike, this is Dorian. Maybe just to add quickly to that, we're about $2 million up on RestoreFlow inventory from year-end. So we had about $12 million of inventory at the 31st of December. We've got about $14 million of inventory now. So despite the fact that we're growing the business 65%, we are building inventory, and so it really is around this process of getting it through the quality control release.

Michael Petusky: Okay, got it. Thank you.

George LeMaitre: Thanks for the question, Mike. Okay, so operator, it looks like next up on the list, if you want to introduce them, is I think Wells Fargo. Is that true?

Operator: Yes. But before, I wanted to ask a reminder about just when you ask a question to press star 11 on your phone. But the next person on the line will be Nathan Treybeck of Wells Fargo. Your line is now open.

Nathan Treybeck: Great. Good evening. George, I guess just on the B. Braun transaction, just any color you could give us on how fast these products are growing, expectations for sales in 2026, and then just because of the bundling, how are you thinking about managing through potential disruption or potential lost customers?

George LeMaitre: Okay, great. Terrific question. All big topics during this whole due diligence phase and right into the acquisition. I can give you a closer number. We were worrying about, oh, should we try to confuse people? Here you go, I'm going to confuse you. Last 12 months through 9/30, I believe, the number was $9.5 million, and I told you that the 2025 calendar number was $9.4 million. So in that snapshot, I think you can tell these are relatively flat products. I would go one step backwards and say, these products have been inside of a $9 billion company. They were worth 0.1% of their sales, and they're in a segment that B.

Braun is sort of going away from. Our play, we believe, is with our commitment to no back orders and with our excitement around vascular and cardiac surgeons, it should be natural that we would be able to grow these for a while. They've been there for a long time, and it is a very large, I think it's a private German company. It's a very large company where this was missing. I think we'll be able to grow these things. Your second part of your question, do you mind, Nathan, repeating the second part of your question?

Nathan Treybeck: Yeah. I think it was said in the prepared remarks why the transaction's taking so long is because there's a lot of bundling involved, maybe not with B. Braun, but just generally, when we think about that, there's a potential for disruption or loss of accounts if you're not able to bundle, right?

George LeMaitre: Yes. Agreed. Okay, great. We do believe there will be some, what we are calling internally breakage, probably you guys use the same word, based on all that. But I feel like we have watched enough back orders by either our company or by other companies to learn that you do go through times of breakage, but usually you get your customers back eventually. Again, I feel like if we impose our crazy no back order mantra that we apply to everything inside this company, we will be able to easily win back these customers. But yes, there will be breakage.

It is even maybe a little bit more logical that there might be breakage of, pick a number, we do not know, 10%, 15% in year one, and then you recover it later. But B. Braun is a very large German company. They are direct in many, many places. We are, quote, "only direct in 31 countries with our sales reps." So if you say, "Oh, maybe they are direct in 45 countries and we are only in 31 countries," you have the issue you are talking about. It plays out pretty quickly. It will cause us, in a good way, one of the nice things about this acquisition is that because we get chunks of B.

Braun revenue in a lot of different countries around the world, zero in the U.S. and Canada, it will all of a sudden, five to nine more countries will look more tasty for us to go direct in. So LeMaitre has a chunk of revenue. Slovakia is a great example. This is not big numbers, but LeMaitre has a chunk of revenue in Slovakia. We have always looked at it as, "Hey, it is right next to Czech, it is right near Poland. We should do something about it." But we have not had the courage to do something about it until B. Braun acquisition comes along and we see the revenues from that.

So you will see that, and you will see five or six more of those. It is a little bit in response to breakage, but it is a little bit part of the opportunity that we are always looking for with these international acquisitions. How can we get closer to our customer with direct sales force?

Nathan Treybeck: Great. That is helpful, George. Just on Q4, it looks like you are lowering guidance by a little bit. Can you just talk about what dynamics are playing out here and how investors should think about 2027 in light of the guide down in Q4?

George LeMaitre: Right. Maybe I take the end of that question, which is, I think we're going to always come to you guys and say, "We're not giving you next year's guidance," and we're sort of trapped in a 2026 discussion. I apologize, but I don't want to get into 2027, though I'd rely on our historical track record. We have a CAGR of, I don't know, 11% or 12% for the last five years. I'd rely on that, and I'd assume you guys will be making guesses based on that. But I think we shouldn't speak about that yet.

As it relates to 2026, and even I think maybe you're asking about Q4, but I want to broaden the question to H2, and I would say, when we spoke to you all in August, I think August 4th was our call, we were giving you an 11% organic for Q3 and a 12% organic for Q4. We wound up outperforming Q3, and we got a 12%, and we're coming back to you now and saying, "Okay, we're going to do 11% next quarter in Q4." So if you put the organic numbers together, it's a wash for what we're giving our investors. The guide down that you're seeing in H2 in the aggregate is about FX largely.

I think from the August guide till now, we've lost about $450,000 because of the strengthening of the dollar against the euro and other international currencies. So it's two-thirds about that and a little bit about the pull forward of sales into Q3 and us outperforming in Q3 and maybe a little bit guiding down in Q4. I hope that's clear. I know I was running around with a lot of numbers there.

Nathan Treybeck: Yeah, that's very helpful. Thanks a lot.

George LeMaitre: Thank you. Okay. Again, I just don't want to leave too much blank airspace. I think KeyBanc is up next. Is that true?

Operator: Yes. Brett Fishbin of KeyBanc, your line is now open.

Brett Fishbin: Hey, guys. Thanks so much for taking the questions. Just maybe one or two on the B. Braun acquisition. Understand the 18-24 month transfer phase, and it makes sense. But just thinking about inorganic modeling for next year, maybe like any flavor for how far along you expect to be next year in aggregate as a proportion of the total sales.

George LeMaitre: I think what we'd like to do, again, staying out of 2027, I think we'd like to go through Q4. We've never been through one of these slower transitions. Usually when we buy stuff, it happens pretty immediately. So we'd like to go through Q4, watch how it goes. We gave you a very small guide of $150,000 of revenue in Q4 that would be booked under our name. So I think we need to go through that before we really speak out of turn about 2027. If you wanted to look way out, I feel like we're telling you we'll probably have the business in-house at year three or late year two.

And we told you we think it's a $9.4 million business, although there may be a little breakage in the early years. So, I hope you can work with that. I'd really rather not get a number out for 2027 when we're a little bit uneducated on this right now.

Brett Fishbin: Yeah, no worries on that. We can make some assumptions and follow up next quarter. Maybe just one more on B. Braun. Do you have any sense of how you think about margin profile over the medium to long term, especially as you start to consolidate some of the manufacturing presumably to Burlington? It sounds like neutral in 4Q, but just thinking more long term.

Dorian LeBlanc: Yeah, Brett, this is Dorian. There's a little bit of some timing here on how we pick up with them on the supply agreement that we signed. But you can sort of think that their polyester has a similar margin profile to ours, 40%-50% gross margin. And over time, as we transition it here and combine it with ours, hopefully we're able to continue to improve on that over time.

Brett Fishbin: All right, great. Last question from me. Good to see the organic revenue of 11% reiterated today for the year. Just to nitpick a little bit on operating margin, it sounds like a lot of hiring activity took place this quarter. Is that really the biggest driver of the slight reduction to op margin guidance, or are there some other factors that were incremental from last quarter? Thank you so much.

Dorian LeBlanc: Yeah, Brett, Dorian again. You are right, the Op margin guide is about $1.4 million down. Of course, about a $500,000 of that is related to the FAS-TIP inventory reserve that we mentioned in the prepared remarks. So that is about a third of the impact. I would say about a third of the impact as well is the sales force probably going a little faster, and us building a little faster overall with the sales force and the commercial infrastructure. We have eight new warehouses and offices OUS. Then we have got a little bit of impact on the RestoreFlow transfer expenses and just the timing of how that moves up into the gross margin.

There is a component of FX here as well, as the revenue comes down with that FX, we lose some of the flow-through. That is really the big impacts, and a little bit death by a couple small cuts, but mostly that inventory reserve and the commercial investment.

Brett Fishbin: Great. Thank you so much again.

Operator: Next on the line is Keith Hinton of Freedom Capital Markets. Your line is now open.

Nakul: Great, thanks. This is Nakul on for Keith. Thanks for taking our questions. We have two quick ones. First one regarding 2027 OpEx. Any initial comments on plans to further expand the sales force in 2027, which geographies you are targeting for additional headcount, and any other OpEx pushes and pulls we should keep in mind for next year? Then I have a quick follow-up.

George LeMaitre: Okay, great. On 2027, would rather not project there. We were ready to tell you, though, that we have 17 open rep hiring requisitions right now. We don't know how far and how deep that goes, but that's one thing that does extend. I think there is ambition by the company to continue to grow the sales force, but I don't know what that means for 2027 just yet.

Speaker 6: Got it. That helps as well. Also, last one, as you must have seen today, the med tech sector traded up significantly, possibly on hopes that a Democratic Congress can push through rollbacks to Medicaid cuts and maybe enhanced ACA subsidies. Can you speak to how much negative impact those cuts or proposed cuts have had on your end markets and what the potential upside could be if they are reversed?

Dorian LeBlanc: Yeah, this is Dorian. Thanks for the question. I think we've been answering this question pretty consistently throughout the year in that the procedures that we're involved in are really about saving limbs and lives and providing access to a life-sustaining therapy and dialysis. We haven't seen historically a big impact other than maybe the COVID time period where it was really disruptive. But these types of changes haven't seemed to translate into big changes in procedure volumes for our core procedures. Since, from a U.S. perspective, we are under the DRG codes, and these procedures are deemed, these open procedures deemed to be fairly economically attractive overall, we haven't, again, had a lot of fluctuation here.

So, not a big impact for us on the negative side from procedure volume and economics over the last year or so, and therefore probably not a perceived big benefit with the election results from last evening.

Speaker 6: Got it. Thanks so much.

Dorian LeBlanc: Thank you.

Operator: Next on the line, we have Daniel Stauder of Citizens JMP. Your line is now open.

Daniel Stauder: Yeah, great. Thanks. My first one, just really hitting on gross margin. It sounds like this quarter would have been above your guide without the inventory charge. Just looking at the new fourth quarter guide, it is down about 50 basis points. I was wondering, is this from any one-time items, or what led to the change there? I am assuming it is not from the $150,000 in revenue that is coming to the top line, but just any thoughts there on how we should think about gross margins into 2027? Thanks.

Dorian LeBlanc: Yeah. Danny, this is Dorian. Thanks for the question. If you look at the full year guidance, we brought the full year gross margin guidance down by 30 basis points from the last call, 72.4% down to 72.1%. It is about $800,000 or so of an impact on the $275 million of revenue. As you mentioned, about $500,000 of that is related to the FAS-TIP inventory reserve. The remainder is a little bit of the pressure of the FX as we reduce reported revenue. You are over a very similar fixed cost base for things like warehousing and quality, so we get a little bit of less leverage on those fixed costs.

There is some timing here of when the RestoreFlow transfer costs start moving out of R&D into COGS. We are probably a little ahead of our plan. We have always said that we would close Fox River Grove, the Illinois facility, within the year. We will probably have all of this transferred earlier than we expect. There is just always a little bit of timing there on when those costs move out of our R&D process development line into COGS themselves. That sort of explains the 30-basis point drop from full year guidance here in November from our full year guidance in August. Again, we are up 170 basis points year-on-year. We were up 180-basis points year-on-year last year.

We were up 290 basis points the year before. Gross margin has been a great story here over the last three, four years. Obviously, part of that is the continued ability to see pricing increases flow through, but that has been coupled with being able to keep costs down, cost pressure down, even in this inflationary environment on cost of sales and some of those manufacturing efficiencies.

Daniel Stauder: Okay, great. Thanks for the call. That is helpful. Then just one follow-up. I wanted to ask about EMEA. It was up 18% year-over-year, which was solid, but a little bit of a decel, I guess, from what we were seeing earlier in the year. I just wanted to ask if you have seen any disruption continue in the Middle East, similar to what you called out last quarter. I think it was some maybe some trapped inventory. Then, have you seen any softness from some of the other impacts in Europe related to budgets or strikes that other companies have called out? Just any more detail there would be great. Thank you.

George LeMaitre: Right. Thanks for the question, Danny. During this, we went with the reported growth of 18%, but actually, organically, I believe it was 20%. So, you are starting to feel the strong dollar hurt our European results. If we had said 20% organically, maybe that question does not come out, maybe it does. I do not know. I would say, in answer to the Middle East discussion and all that, I would say not really for us. You think about what is going to happen with those French riots and where does that go, but I would say certainly in Q3, we cannot go back and point at external events.

I think we are not going to point at external events.

Dorian LeBlanc: This is Dorian. Maybe one more thing to add to remember as we come into Q4 as well is that Q3 is the first quarter where we really have a comp for Artegraft because we launched the product late in Q2 last year. So, we are starting to run into actual Artegraft comps year-on-year.

Daniel Stauder: Great. Thank you very much.

George LeMaitre: Thanks, Danny.

Operator: Our next question comes from Jim Sidoti of Sidoti & Company. Your line is now open.

Jim Sidoti: Great. Thanks for taking the questions. I am not sure if you had said it or not, but what were the Artegraft sales internationally in the quarter?

George LeMaitre: 3 million in Q3.

Jim Sidoti: Okay. With the B. Braun, I'm sorry, what was that?

George LeMaitre: Sorry, Jim. Continue.

Jim Sidoti: Okay. The B. Braun products, are they approved in the U.S.? Is somebody else selling them? Is there a market for them? What's the situation there?

George LeMaitre: They are not approved in the U.S. or Canada. I'm not so sure we'd bring them here. We've had access to our own Dacron over the years, and you may or may not know this, but we exited the Dacron, polyester, I should say. We've had access with our own polyester vascular grafts in the U.S. for years. We made a run of it didn't work for us too well, and we sort of folded up our tent and went home with our AlboGraft Dacron prosthesis. I'm not so sure this is something we want to do. You got a pretty serious duopoly of those two.

Getting a Terumo in the U.S. looks like a real tough slog, and we played the game before. I would say no, not really. The valve cutter or the valvulotome, we have plenty of options, as you well know, available for our surgeons in the U.S. I do not think we need this sort of; I will call it a gen one valvulotome. But it has some great customers in Germany and France and the U.K., and we would like to get in there and sell those to those customers.

Jim Sidoti: All right. Then I will sneak one more in. You said you are up to 171 salespeople, so you had a pretty good quarter with regards to hiring. You think you will hire any more this year?

George LeMaitre: I do, and I think somewhere along the line, I think I am giving guidance here of we have narrowed the It used to be 170-180 for the end of the year, and I think we are saying 172-178 for the end of the year. We have got offers out there, we have got a bunch of recruiting processes going. Who knows how many reps quit on December 15th and how many we hire on December 26th. So, I would say 175 still feels like the place where it is going to happen, but who knows? You do not know these things.

Jim Sidoti: Got it. All right, thank you.

George LeMaitre: Thanks a lot, Jim.

Operator: Next on the call will be Michael Sarcone of Jefferies. Your line is now open.

Michael Sarcone: Good afternoon, and thanks for taking the questions. I guess just to start, just a two-parter on the longer Artegraft lengths you're working on. Could you kind of give us a rough market sizing in the U.S. and Europe for how you're thinking about that? When you launch these longer graft sizes, is it all kind of greenfield and new use cases, or will this cannibalize maybe some of the shorter grafts that might be being used right now sub-optimally?

George LeMaitre: The second part of your question is a little more straightforward for us. I think these are generally new use cases, except that we do have long Omniflow. I hate to complicate this, but we have two biologic grafts in Europe. One of them you can think of as this big thing that's going on, Artegraft, that's sort of shorter. There's no grafts longer than 50 centimeters. With Omniflow, which is a sheep graft, it gets up to 65 centimeters. So, some of the new launch of the long Artegrafts will go after some of what we're already selling with Omniflow, the sheep graft.

But I think this product, Artegraft, is superior to Omniflow, so we think even if it's going to chew up some of the Omniflow usage, it's going to create more usage itself as well. I think you want to be cannibalizing yourself always with better products. So, that is the second part of your question. The first part of your question was how big is the market? In the U.S., I am not so sure. These guys ran this company for 30 years before us, and they did not really feel with only a U.S. approval, and they really did not see the need for a long graft.

I do not think when we come out and say we are making a long graft, sure, it is going to help out in the U.S., but I think this is really for Europe where the usage is for long leg bypasses. In the U.S., there is not as much usage for long leg bypasses, even though for us it is an enormous revenue piece for AV access. You do not need long ones for AV access. You need long ones for leg grafts, and they do not use biologic grafts for many AV access cases in Europe. They use these things, Artegraft and Omniflow II, for long leg bypasses. I hope that was clear.

I know it is a little confusing. Michael, do you think I got that to you?

Michael Sarcone: You did. That is super helpful. Thanks, George. Second one for me, on the 2Q call, you had talked about having conversations with the FDA around an Artegraft Quick Stick claim, and they came back and you would need a trial. You said you were kind of having that under evaluation. I guess any update on what is the latest and greatest there?

George LeMaitre: Yeah. So, we continue to evaluate should we get involved in a five-year trial. I would say our bias is, yeah, probably we will, although we have not gotten to that yet. We have not studied it enough and made a good deliberate decision on that. But it seems to make a lot of sense in that we were just talking about AV access versus leg bypasses. In the U.S., this is all about AV access, the sales of Artegraft.

There is a giant business selling Artegraft for AV access, and a big pain point for these surgeons and nephrologists is they would love to be able to do a Quick Stick, and we cannot give them that indication right now. Even though we think the graft does work under Quick Stick scenario, the FDA still wants definitive proof. So, it sounds like it is a thing we should do, but we have not committed to a decision yet.

Michael Sarcone: Okay, great. Thanks, George LeMaitre.

George LeMaitre: Thank you.

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

George LeMaitre: Thanks a lot, operator.

Operator: Thank you.

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