Artivion (AORT) Reports
The market has quickly moved from one in which companies were given the benefit of the doubt when things weren’t perfect to one in which everything that’s not perfect is a disaster.
Artivion (AORT) provides a good example today. The company reported Q4 2024 results that came in below expectations (revenue growth of 3.9% to $97.3 million missed by $3.6 million and adjusted EPS of $0.00 missed by $0.04) because of a cybersecurity event that took place in November. Management estimates it cut about $4.5 million in revenue from the quarter.
In other words, the company would likely have beaten revenue expectations, as it has in all but two (now three) quarters over the last five years. But shares are down about 10% on the miss, extending a selloff that was already five days running.
To cut to the punchline, we will stick with AORT for now. Many analysts have taken a few bucks off their price targets due to the miss, but those targets are still hovering around the 30 level (AORT is trading at 25 mid-day today).
Management has guided for revenue growth of 10% to 14% ($420 - $435 million) in 2025 (straddling consensus of $430 million) and about 1% of gross margin improvement and free cash flow of +$45 million. Adjusted EBITDA (a measure of profits) growth should roughly double that of revenue growth.
Back to the cyber event, management said it disrupted On-X tissue supply (On-X aortic valve revenue was up 10% in the quarter) which will still likely be impacted in Q1 but made up during the other three quarters of the year. This is because this product is typically supply constrained and Artivion sells everything that it can make.
In terms of other products, BioGlue is set to begin distribution in China in the second half of this year. And the more significant event, final approval for AMDS in the U.S., is expected in the middle of 2026, slightly later than previously expected due to process changes at the FDA that are not company specific. Artivion currently has 55 sales reps out there working to sell the product right now.
Recall that Artivion was granted a Humanitarian Device Exemption (HDE) for AMDS, and hospitals are now in the process of securing approval to use it. This requires a process that is ongoing. This is a life-saving device with little to no competition that can help avoid patients literally dying on the operating table (AMDS has a 72% reduction in mortality).
On the Endospan front (the company that owns the NEXUS aortic stent graft system that Artivion has an option to buy upon FDA approval), the company will present 30-day data at the ATS Annual Meeting in May. This is a significant data release, and management believes NEXUS is on track for approval in the second half of 2026.
Suffice it to say, approval of NEXUS and AMDS next year would set Artivion up for significant revenue and EPS growth expansion. This is a big part of why we are here.
There are a lot more details from the conference call that get into product specifics. But at the moment, those are secondary to the big picture, which boils down to a good company with good products, for which there is often no competition, that had a tough quarter due to a one-time item (security breach that required manual processes) that hurt revenue for a couple of months.
Keeping at buy for now. BUY
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