Artivion Inc.

08/08/2025 | Press release | Distributed by Public on 08/08/2025 09:30

Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
Overview
Artivion, Inc. ("Artivion," the "Company," "we," or "us"), is a leader in the manufacturing, processing, and distribution of medical devices and implantable human tissues used in cardiac and vascular surgical procedures for patients with aortic disease. We have four major product families: aortic stent grafts, On-X®mechanical heart valves and related surgical products ("On-X" products), surgical sealants, and implantable cardiac and vascular human tissues. Aortic stent grafts include aortic arch stent grafts, abdominal stent grafts, and synthetic vascular grafts. Aortic arch stent grafts include our E-vita®Open NEO, E-vita Open Plus, AMDSTM, the NEXUS ONETM, NEXUS DUOTM, and NEXUS TRETMaortic arch stent graft systems (the "NEXUS family of products"), and E-vita Thoracic 3G. Abdominal stent grafts include our E-xtra Design Engineering, E-nsideTM, ArtivexTM, E-tegraTM, E-ventusTMBX, TuvaTM BX, and E-liacTMproducts. Surgical sealants include BioGlue Surgical Adhesive ("BioGlue") products. In addition to these four major product families, we sell or distribute PhotoFix bovine surgical patches ("PhotoFix"). We began to manufacture and supply PerClot®hemostatic powder ("PerClot") during the second quarter of 2023 (as part of our Transitional Manufacturing and Supply Agreement with Baxter International, Inc.).
We reported quarterly revenues of $113.0 million for the three months ended June 30, 2025, a 15% increase from the three months ended June 30, 2024. The increase in revenues for the three months ended June 30, 2025 was due to an increase in revenues from all products and preservation services. Constant currency revenues, as defined below, increased 14% for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024.
See the "Results of Operations" section below for additional analysis of the three and six months ended June 30, 2025.
Presentation
In addition to the corresponding measures under generally accepted accounting principles ("US GAAP"), management uses non-GAAP measures in reviewing and disclosing our financial results. The foreign exchange neutral revenues ("constant currency revenues") discussed below are non-GAAP financial measures and are not in accordance with, or an alternative to, measures prepared in accordance with US GAAP. Accordingly, the constant currency revenues appearing in the following discussion of our results of operations should be read in conjunction with the information provided in "Non-GAAP Measures of Financial Performance" below, which includes a reconciliation of constant currency financial measures to the most directly comparable US GAAP measure.
Results of Operations
($ in thousands)
Revenues
Revenues for the
Three Months Ended
June 30, 		Revenues as a Percentage of
Total Revenues for the
Three Months Ended
June 30,
2025 2024 Percent Change 2025 2024
Products:
Aortic stent grafts $ 39,841 $ 32,190 24% 35% 33%
On-X 25,572 20,645 24% 23% 21%
Surgical sealants 19,288 18,545 4% 17% 19%
Other 2,743 1,830 50% 2% 2%
Total products 87,444 73,210 19% 77% 75%
Preservation services 25,528 24,809 3% 23% 25%
Total $ 112,972 $ 98,019 15% 100% 100%
Revenues for the
Six Months Ended
June 30, 		Revenues as a Percentage of
Total Revenues for the
Six Months Ended
June 30,
2025 2024 Percent Change 2025 2024
Products:
Aortic stent grafts $ 76,443 $ 64,293 19% 36% 33%
On-X 47,146 40,326 17% 22% 21%
Surgical sealants 37,394 35,526 5% 18% 18%
Other 5,259 4,179 26% 2% 2%
Total products 166,242 144,324 15% 78% 74%
Preservation services 45,708 51,126 -11% 22% 26%
Total $ 211,950 $ 195,450 8% 100% 100%
Revenues increased 15% and 8% for the three and six months ended June 30, 2025, respectively, as compared to the three and six months ended June 30, 2024. The increase in revenues for the three months ended June 30, 2025 was due to an increase in revenues from all products and preservation services. The increase in revenues for the six months ended June 30, 2025 was due to an increase in revenues from all products, partially offset by a decrease in revenues from preservation services.
The following table reconciles revenues to constant currency revenues for the periods presented:
Revenues for the
Three Months Ended
June 30, 		Percent
Change
From Prior
Year
2025 2024
US GAAP US GAAP Exchange Rate Effect Constant Currency Constant Currency
Products:
Aortic stent grafts $ 39,841 $ 32,190 $ 584 $ 32,774 22%
On-X 25,572 20,645 41 20,686 24%
Surgical sealants 19,288 18,545 61 18,606 4%
Other 2,743 1,830 4 1,834 50%
Total products 87,444 73,210 690 73,900 18%
Preservation services 25,528 24,809 (17) 24,792 3%
Total $ 112,972 $ 98,019 $ 673 $ 98,692 14%
North America 57,569 48,662 (46) 48,616 18%
Europe, the Middle East, and Africa 38,713 34,145 1,091 35,236 10%
Asia Pacific 11,131 9,653 - 9,653 15%
Latin America 5,559 5,559 (372) 5,187 7%
Total $ 112,972 $ 98,019 $ 673 $ 98,692 14%
Revenues for the
Six Months Ended
June 30, 		Percent
Change
From Prior
Year
2025 2024
US GAAP US GAAP Exchange Rate Effect Constant Currency Constant Currency
Products:
Aortic stent grafts $ 76,443 $ 64,293 $ (724) $ 63,569 20%
On-X 47,146 40,326 (231) 40,095 18%
Surgical sealants 37,394 35,526 (256) 35,270 6%
Other 5,259 4,179 - 4,179 26%
Total products 166,242 144,324 (1,211) 143,113 16%
Preservation services 45,708 51,126 (84) 51,042 -10%
Total $ 211,950 $ 195,450 $ (1,295) $ 194,155 9%
North America 105,362 99,590 (198) 99,392 6%
Europe, the Middle East, and Africa 75,758 67,733 (119) 67,614 12%
Asia Pacific 19,345 17,262 - 17,262 12%
Latin America 11,485 10,865 (978) 9,887 16%
Total $ 211,950 $ 195,450 $ (1,295) $ 194,155 9%
A detailed discussion of the changes in product revenues and preservation services revenues for the three and six months ended June 30, 2025 is presented below.
Products
Revenues from products increased 19% and 15% for the three and six months ended June 30, 2025, respectively, as compared to the three and six months ended June 30, 2024. The increase for the three and six months ended June 30, 2025 was due to an increase in revenues from all products. A discussion of the changes in product revenues for aortic stent grafts, On-X products, surgical sealants, and other product revenues is presented below.
Sales of certain products through our direct sales force and distributors across Europe and various other countries are denominated in a variety of currencies including Euros, Brazilian Reals, Polish Zlotys, British Pounds, Canadian Dollars, and Swiss Francswith a concentration denominated in Euros. Each currency is subject to exchange rate fluctuations. For the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, the US Dollar weakened in comparison to major currencies, resulting in revenue increases when these foreign currency denominated transactions were translated into US Dollars. For the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, the US Dollar strengthened in comparison to major currencies, resulting in revenue decreases when these foreign currency denominated transactions were translated into US Dollars. Future changes in these exchange rates could have a material, adverse effect on our revenues denominated in these currencies. Additionally, our sales to many distributors around the world are denominated in US Dollars, and although these sales are not directly impacted by currency exchange rates, we believe that some of our distributors may delay or reduce purchases of products in US Dollars depending on the relative price of these goods in their local currencies.
Aortic Stent Grafts
Aortic stent grafts include aortic arch stent grafts, abdominal stent grafts, and synthetic vascular grafts, and original equipment manufacturing ("OEM") aortic stent graft products. Aortic arch stent grafts include our E-vita Open NEO, E-vita Open Plus, AMDS, the NEXUS family of products, and E-vita Thoracic 3G products. Abdominal stent grafts include our E-xtra Design Engineering, E-nside, Artivex, E-tegra, E-ventus BX, Tuva BX, and E-liac products. Aortic stent grafts are used in endovascular and open vascular surgery for the treatment of complex aortic arch, thoracic, and abdominal aortic diseases. Our aortic stent grafts are primarily distributed in international markets.
Revenues from the sales of aortic stent grafts increased 24% for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. This increase was primarily due to an increase in the volume of units sold.
Revenues from the sales of aortic stent graft increased 19% for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. This increase was primarily due to an increase in the volume of units sold.
Constant currency revenues from the sales of aortic stent grafts increased 22% and 20% for the three and six months ended June 30, 2025, respectively, as compared to the three and six months ended June 30, 2024. Revenues for the three and six months ended June 30, 2025 increased in all geographies, with the most significant increases in North America and Europe, the Middle East, and Africa (collectively, "EMEA"). The revenue increase in EMEA for the three and six months ended June 30, 2025 was primarily due to an increase in volume of higher priced products within the aortic stent graft product line in direct (to hospitals) markets. The revenue increase in North America for the three and six months ended June 30, 2025 was primarily due to sales of AMDS as a result of humanitarian device exemption ("HDE") granted by the FDA in December 2024 for use of the AMDS™ Hybrid Prosthesis in acute DeBakey Type I dissections in the presence of malperfusion. The HDE allows for, subject to certain restrictions, commercial distribution of AMDS in the United States ("US") prior to the approval of a Premarket Approval Application, which we currently anticipate receiving in 2026 allowing for full commercial distribution of AMDS in the US.
On-X Products
The On-X products include the On-X aortic and mitral heart valves and the On-X ascending aortic prosthesis ("AAP") for heart valve replacement. Revenues from the sales of On-X products include revenues from the distribution of CarbonAid®CO2diffusion catheters and from the sale of Chord-X®ePTFE sutures for mitral chordal replacement. On-X product revenue also includes revenue generated from pyrolytic carbon coating services for OEM customers.
Revenues from the sales of On-X products increased 24% for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. This increase was primarily due to an increase in the volume of units sold as well as an increase in average sales price.
Revenues from the sales of On-X products increased 17% for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. This increase was primarily due to an increase in the volume of units sold as well as an increase in average sales price, partially offset by the effect of foreign exchange rates.
Constant currency revenues from the sales of On-X products increased 24% and 18% for the three and six months ended June 30, 2025, respectively, as compared to the three and six months ended June 30, 2024. Revenues for the three months ended June 30, 2025 increased in all geographies, with the most significant increase in North America. The increase in revenues in North America for the three months ended June 30, 2025 was impacted by gains in the market share. Revenues for the six months ended June 30, 2025 increased primarily in North America and EMEA, partially offset by a decrease in Asia Pacific ("APAC").The increase in revenues in North America for the six months ended June 30, 2025 was impacted by gains in the market share. The increase in revenues from EMEA for the six months ended June 30, 2025 was primarily due to an increase in unit sales in indirect markets. The decrease in revenues in APAC for the six months ended June 30, 2025 was primarily due to a decrease in unit sales as a result of customer buying patterns.
Domestic revenues from the sales of On-X products accounted for 61% and 63% of total On-X revenues for the three and six months ended June 30, 2025, as compared to 59% and 61% for the three and six months ended June 30, 2024.
Surgical Sealants
Surgical sealants include BioGlue products used as an adjunct to standard methods of achieving hemostasis (such as sutures and staples) in adult patients in open surgical repair of large vessels (such as aorta, femoral, and carotid arteries).
Revenues from the sales of surgical sealants increased 4% for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. This increase was primarily due to an increase in the volume of milliliters sold and, to a lesser extent, an increase in average sales prices.
Revenues from the sales of surgical sealants increased 5% for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. This increase was primarily due to an increase in the volume of milliliters sold and, to a lesser extent, an increase in average sales prices, partially offset by the effect of foreign exchange rates.
Constant currency revenues from the sales of surgical sealants increased 4% and 6% for the three and six months ended June 30, 2025, respectively, as compared to the three and six months ended June 30, 2024. The increase in revenues for the three months ended June 30, 2025 was primarily due to revenue increases in North America and APAC. The increase in revenues in North America for the three months ended June 30, 2025 was primarily due to an increase in unit sales. The increase in revenues in APAC for the three months ended June 30, 2025 was primarily due to an increase in unit sales. The increase in revenues for the six months ended June 30, 2025 was due to revenue increases in all geographies, with the most significant increase in Latin America ("LATAM"). The increase in revenues in LATAM for the six months ended June 30, 2025 was primarily due to an increase in unit sales in indirect markets.
Domestic revenues from the sales of surgical sealants accounted for 48% of total surgical sealant revenues for both the three and six months ended June 30, 2025, as compared to 47% and 49% of total surgical sealant revenues for the three and six months ended June 30, 2024.
Other
Other revenues are comprised of revenues from PhotoFix and PerClot.
Other revenues increased 50% and 26% for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024. The increase in other revenues for the three and six months ended June 30, 2025 was due to an increase in PerClot and PhotoFix product revenues.
Preservation Services
Preservation services include service revenues from processing cardiac and vascular tissues. Our cardiac valves are primarily used in cardiac replacement and reconstruction surgeries, including the Ross procedure, for patients with endocarditis or congenital heart defects. Our cardiac tissues are primarily distributed in domestic markets. The majority of our vascular preservation services revenues are related to shipments of saphenous veins, which are mainly used in peripheral vascular reconstruction surgeries to avoid limb amputations. Competition with synthetic product alternatives and the availability of tissues for processing are key factors affecting revenue volume that can fluctuate from quarter to quarter. Our vascular tissues are primarily distributed in domestic markets.
We continue to evaluate modifications to our tissue processing procedures in an effort to improve tissue processing throughput and yields, reduce costs, and maintain quality across our tissue processing business. Preservation services revenues, particularly revenues for certain high-demand cardiac tissues, can vary from quarter to quarter and year to year due to a variety of factors, including quantity and type of incoming tissues, yields of tissue through the preservation process, timing of receipt of donor information, timing of the release of tissues for implant, demand for certain tissue types due to the number and type of procedures being performed, and pressures from competing products or services.
Revenues from tissue processing increased 3% for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The increase was primarily due to an increase in the volume of higher priced tissues shipped primarily due to the release of a backlog of tissues that resulted from the 2024 cybersecurity incident. The tissue backlog started to release during the second quarter of 2025 and is expected to improve throughout the remainder of 2025.
Revenues from tissue processing decreased 11% for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The decrease was primarily due to a backlog of tissues to be released for shipments as a result of the 2024 cybersecurity incident which started to release during the second quarter.
Cost of Products and Preservation Services
Cost of Products
Three Months Ended
June 30, 		Six Months Ended
June 30,
2025 2024 2025 2024
Cost of products $ 28,315 $ 24,545 $ 53,578 $ 48,295
Cost of products increased 15% and 11% for the three and six months ended June 30, 2025, respectively, as compared to the three and six months ended June 30, 2024. Cost of products for the three and six months ended June 30, 2025 and 2024 included costs related to aortic stent grafts, On-X products, surgical sealants, and other products.
The increase in cost of products for the three and six months ended June 30, 2025 was primarily due to an increase in the volume of all products shipped, as compared to the three and six months ended June 30, 2024.
Cost of Preservation Services
Three Months Ended
June 30, 		Six Months Ended
June 30,
2025 2024 2025 2024
Cost of preservation services $ 11,545 $ 10,150 $ 21,683 $ 20,885
Cost of preservation services increased 14% and 4% for the three and six months ended June 30, 2025, respectively, as compared to the three and six months ended June 30, 2024. Cost of preservation services included costs for cardiac and vascular tissue preservation services.
The increase in cost of preservation services for the three months ended June 30, 2025 was primarily due to an increase in cost of certain tissues shipped, as compared to the three months ended June 30, 2024.
The increase in cost of preservation services for the six months ended June 30, 2025 was primarily due to an increase in the cost of tissues shipped, partially offset by a decrease in the volume of tissues shipped, as compared to the six months ended June 30, 2024.
Cost of Preservation Services
Gross Margin
Three Months Ended
June 30, 		Six Months Ended
June 30,
2025 2024 2025 2024
Gross margin $ 73,112 $ 63,324 $ 136,689 $ 126,270
Gross margin as a percentage of total revenues 65% 65% 64% 65%
Gross margin increased 15% and 8% for the three and six months ended June 30, 2025, respectively, as compared to the three and six months ended June 30, 2024.
The increase in gross margin for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, was primarily due to an increase in the volume of all products and tissues shipped as well as the increase in the average sales price of products and certain tissues shipped and favorable mix of certain products shipped for the three months ended June 30, 2025. The increase was partially offset by unfavorable cost of certain products and tissues shipped, as compared to the three months ended June 30, 2024. Gross margin as a percentage of total revenues was flat for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. Gross margin as a percentage of total revenues was positively impacted by favorable product mix as well as favorable pricing of certain products shipped, including aortic stent grafts, offset by unfavorable costs of certain products and tissues shipped during the three months ended June 30, 2025.
The increase in gross margin for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, was primarily due to an increase in the volume of all products and tissues shipped as well as the increase in the average sales price of certain products and tissues shipped and favorable mix of certain products shipped for the six months ended June 30, 2025. The increase was partially offset by unfavorable cost of certain products and tissues shipped as well as an unfavorable mix of tissues shipped as compared to the six months ended June 30, 2024. Gross margin as a percentage of total revenues decreased for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. Gross margin as a percentage of total revenues was negatively impacted by an unfavorable mix and costs of tissues shipped, partially offset by a favorable mix of certain products shipped, including aortic stent grafts, as well as favorable pricing of certain products during the six months ended June 30, 2025.
Operating Expenses
General, Administrative, and Marketing Expenses
Three Months Ended
June 30, 		Six Months Ended
June 30,
2025 2024 2025 2024
General, administrative, and marketing expenses $ 57,665 $ 49,320 $ 112,369 $ 80,009
General, administrative, and marketing expenses as a percentage of total revenues 51% 50% 53% 41%
General, administrative, and marketing expenses increased 17% for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, which includes the impact of the Ascyrus contingent consideration fair value adjustment loss of $2.6 million and $1.8 million for the three months ended June 30, 2025 and 2024, respectively. The remaining general, administrative, and marketing expenses for the three months ended June 30, 2025 increased $7.5 million as a result of investments in sales and marketing, including expenses associated with the AMDS launch in the US, as well as investments in information technology, including $1.2 million of expenses associated with the 2024 cybersecurity incident, and increased non-cash stock compensation expenses.
General, administrative, and marketing expenses increased 40% for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, which includes the impact of the Ascyrus contingent consideration fair value adjustment gain of $0.2 million and $15.7 million for the six months ended June 30, 2025 and 2024, respectively. The remaining general, administrative, and marketing expenses for the six months ended June 30, 2025 increased $16.9 million as a result of investments in information technology, including $5.7 million of expenses associated with the 2024 cybersecurity incident, as well as investments in sales and marketing, including expenses associated with the AMDS launch in the US, and increased non-cash stock compensation expenses.
Research and Development Expenses
Three Months Ended
June 30, 		Six Months Ended
June 30,
2025 2024 2025 2024
Research and development expenses $ 7,063 $ 7,497 $ 13,791 $ 14,443
Research and development expenses as a percentage of total revenues 6% 8% 7% 7%
Research and development expenses decreased 6% and 5% for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, respectively. Research and development spending for the three and six months ended June 30, 2025 was primarily focused on clinical work to gain regulatory approvals for certain aortic stent grafts.
Interest Expense
Interest expense was $7.3 million and $14.9 million for the three and six months ended June 30, 2025, respectively, as compared to $8.3 million and $16.1 million for the three and six months ended June 30, 2024, respectively. Interest expense for the three and six months ended June 30, 2025 decreased due to lower variable interest rates on our credit facilities.
Losses on Inducement/Extinguishment of Debt
During the three and six months ended June 30, 2025 we recorded a loss on inducement of convertible debt of $2.7 million in connection with the settlement of our Convertible Senior Notes. See Part I, Item 1, Note 7 of the "Notes to Condensed Consolidated Financial Statements" for further discussion of our Convertible Senior Notes.
During the six months ended June 30, 2024 we recorded a loss on extinguishment of debt of $3.7 million in connection with the extinguishment of our previously existing credit facilities. See Part I, Item 1, Note 7 of the "Notes to Condensed Consolidated Financial Statements" for further discussion of our new credit facilities.
Other (Income) Expense, Net
Other (income) expense, net was $5.0 million and $8.0 million of income for the three and six months ended June 30, 2025, respectively, as compared to $1.0 million and $2.4 million of expense for the three and six months ended June 30, 2024, respectively. Other (income) expense, net for the three months ended June 30, 2025 primarily included a net $4.5 million gain from realized and unrealized effects of foreign currency gains and losses and a $0.5 million gain associated with fair value adjustments to loans issued pursuant to our Endospan agreements. Other (income) expense, net for the six months ended June 30, 2025 primarily included a net $7.4 million gain from realized and unrealized effects of foreign currency gains and losses and a $0.8 million gain associated with fair value adjustments to loans issued pursuant to our Endospan agreements. Other expense, net for the three and six months ended June 30, 2024 primarily included net losses of $0.9 million and $2.4 million, respectively, from realized and unrealized effects of foreign currency gains and losses.
Income Tax Expense
Our effective income tax rate was an expense of 61% and 29% for the three and six months ended June 30, 2025, respectively, as compared to a benefit of 13% and an expense of 48% for the three and six months ended June 30, 2024, respectively. Our income tax rate was primarily impacted by state income taxes, non-deductible executive compensation, and changes in our valuation allowance against our net deferred tax assets, partially offset by excess tax deductions on stock-based compensation and foreign provision to return adjustments.
On July 4, 2025, the OBBBA was signed into law. This legislation includes changes to U.S. federal tax law, which may be subject to further clarification and the issuance of interpretive guidance. We are assessing the legislation and its effect on our consolidated financial statements.
Non-GAAP Measures of Financial Performance
To supplement our Condensed Consolidated Financial Statements presented in accordance with US GAAP, we use constant currency revenues, which is a non-GAAP financial measure. We define constant currency revenues as revenues adjusted for the exchange rate effect. We define exchange rate effect as the year-over-year impact of foreign currency movements using current period foreign currency rates applied to prior period transactional currency amounts.
We have provided non-GAAP financial measures in this report as we believe that these figures are helpful in allowing management and investors to more accurately assess the ongoing nature of our operations and measure our performance more consistently across periods. Management uses constant currency revenues internally to assess the operational performance of the Company, as a component in compensation metrics, and as a basis for strategic planning.
We believe the provided non-GAAP measures are meaningful in addition to the information contained in the US GAAP presentation of financial performance. Investors should consider this non-GAAP information in addition to, and not as a substitute for, financial measures prepared in accordance with US GAAP. In addition, this non-GAAP financial information may not be the same as similar measures presented by other companies.
Seasonality
Historically, we believe the demand for most of our aortic stent grafts is seasonal, with a decline in demand generally occurring in the third quarter due primarily to the summer holiday season in Europe.
Historically, we believe the demand for surgical sealants is seasonal, with a decline in demand generally occurring in the third quarter followed by stronger demand in the fourth quarter. We believe that this trend may be due to the summer holiday season in Europe and the US.
We do not believe the demand for our On-X and other products is seasonal.
Demand for our cardiac preservation services has traditionally been seasonal, with peak demand generally occurring in the third quarter. We believe this trend for cardiac preservation services is primarily due to the high number of surgeries scheduled during the summer months for school-aged patients. Based on experience in recent years, we believe that this trend is lessening as we are distributing a higher percentage of our tissues for use in adult populations.
Demand for our vascular preservation services has also traditionally been seasonal, with lowest demand generally occurring in the fourth quarter. We believe this trend for vascular preservation services is primarily due to fewer vascular surgeries being scheduled during the winter holiday months.
Liquidity and Capital Resources
Our primary uses of liquidity include the payment of operating expenses, capital expenditures, servicing of debt and the funding of acquisitions or other collaborative arrangements. Our primary sources of funding are operating cash flows and borrowings under our debt facilities. As of June 30, 2025 we had approximately $220.5 million of total principal indebtedness outstanding.
Our liquidity as of June 30, 2025 consisted of cash and cash equivalents of $53.5 million, unused commitments of $30.0 million under a revolving credit facility and unused commitments of $100.0 million on delayed draw term loan facility (see "Credit Facilities" below). As of June 30, 2025 approximately 47% of our cash and cash equivalents were held in foreign jurisdictions. Our practice is to maintain sufficient liquidity through cash from operations and our revolving credit facility to mitigate the impacts of any adverse financial market conditions on our operations. We believe that cash generated from operations, together with amounts available under our Term Loan Facilities, as defined below, will be sufficient to meet working capital requirements and anticipated capital expenditures, and other strategic uses of cash, if any, and debt payments, if any, over the next twelve months.
Our future cash requirements are expected to include interest payments under our credit facilities, expenditures for clinical trials, research and development expenditures, general working capital needs, capital expenditures, other corporate purposes and may include cash to fund business development activities including obligations pursuant to arrangements with Endopsan and the acquisition of Ascyrus. These items may have a significant effect on our future cash flows during the next twelve months. Subject to the terms of our credit facilities, we may seek additional borrowing capacity or financing, pursuant to our current or any future shelf registration statement, for general corporate purposes or to fund other future cash requirements. If we undertake any further significant business development activity, we may need to finance such activities by obtaining additional debt financing or using a registration statement to sell equity securities. There can be no assurance that we will be able to obtain any additional debt or equity financing at the time needed or that such financing will be available on terms that are favorable or acceptable to us.
Significant Sources and Uses of Liquidity
Credit Facilities
On January 18, 2024 we entered into a credit and guaranty agreement with Ares Management Credit funds (the "Ares Credit Agreement") for $350.0 million of senior secured, interest-only, credit facilities, consisting of a $190.0 million secured term loan facility (the "Term Loan Facility"), a $100.0 million secured delayed draw term loan facility (the "Delayed Draw Term Loan Facility" and, together with the Term Loan Facility, the "Term Loan Facilities") and a $60.0 million "senior-priority" secured revolving credit facility with a priority claim ahead of the other secured facilities (the "Revolving Credit Facility" and, together with the Term Loan Facilities, the "Credit Facilities"). Upon closing, we borrowed $190.0 million under the Term Loan Facility and $30.0 million under the Revolving Credit Facility. The proceeds of the initial borrowings were used along with cash on hand to pay off our previously existing credit agreement and pay related fees and expenses. The $100.0 million of undrawn availability under the Delayed Draw Term Loan Facility was established solely to make funds available in the event of a repurchase or repayment of the Convertible Senior Notes on or prior to a scheduled maturity date of July 1, 2025 (see below). The Delayed Draw Term Loan Facility was terminated on July 2, 2025 as weentered into separate, privately negotiated exchange agreements with the Holders of the Convertible Senior Notes as discussed below.
The final scheduled maturity date of the Credit Facilities is January 18, 2030. There are no scheduled repayments of principal required to be made prior to the final maturity date. We have the right to prepay loans under the Ares Credit Agreement in whole or in part at any time, subject to certain premium payment requirements. Amounts repaid in respect of loans under the Term Loan Facilities may not be reborrowed. The Credit Facilities currently bear interest at the Adjusted Term Secured Overnight Financing Rate ("Adjusted Term SOFR")plus applicable margins. As of June 30, 2025 the aggregate interest rate was 10.55% and 8.30% per annum for the Term Loan Facilities and Revolving Credit Facility, respectively. See Part I, Item 1, Note 7 of the "Notes to Consolidated Financial Statements" for further discussion of our new Ares Credit Agreement.
Convertible Senior Notes
On June 18, 2020 we issued $100.0 million aggregate principal amount of 4.25% Convertible Senior Notes with a maturity date of July 1, 2025 (the "Convertible Senior Notes"). The Convertible Senior Notes may be settled in cash, stock, or a combination thereof, solely at our discretion. The initial conversion rate of the Convertible Senior Notes is 42.6203 shares per $1,000 principal amount, which is equivalent to a conversion price of approximately $23.46 per share, subject to adjustments. We use the if-converted method for assumed conversion of the Convertible Senior Notes for the diluted earnings per share calculation. On or after January 1, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their notes at any time.
In May 2025 we entered into separate, privately negotiated exchange agreements ("Exchange Agreements") with the Holders of the Convertible Senior Notes. The transactions contemplated by the Exchange Agreements closed on May 28, 2025. Under the terms of the Exchange Agreements, the Holders exchanged an aggregate principal amount of approximately $99.5 million of the Convertible Senior Notes held by the Holders in exchange for an aggregate of 4,334,347 shares of our common stock. In addition, pursuant to the Exchange Agreements, we made a cash payment of approximately $1.7 million to the Holders in respect of accrued and unpaid interest on the exchanged Convertible Senior Notes.
Approximately $0.5 million in aggregate principal amount of the Convertible Senior Notes remained outstanding as of June 30, 2025. The remaining $0.5 million in aggregate principal amount of theConvertible Senior Notes were settled on July 1, 2025 resulting in the issuance of 19,605shares of our common stock.
Cash Flows
The following table summarizes cash flows from operating activities, investing activities, and financing activities for the periods indicated (in thousands):
Six Months Ended
June 30,
2025 2024
Cash flows (used in) provided by:
Operating activities $ (1,942) $ 642
Investing activities (6,925) (6,124)
Financing activities 6,535 556
Effect of exchange rate changes on cash and cash equivalents 2,345 1,005
Increase (decrease) in cash and cash equivalents $ 13 $ (3,921)
Net Cash Flows from Operating Activities
Net cash used in operating activities increased $2.6 million during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to an increase in working capital related to receivables and inventory, an increase in professional fees related to the 2024 cybersecurity incident, and a change in the timing of interest payments on our credit facilities executed in January 2024. We expect to continue to incur professional fees in the remainder of 2025 in connection with enhanced ongoing cybersecurity services.
Net Cash Flows from Investing Activities
Net cash used in investing activities was $6.9 million and $6.1 million for the six months ended June 30, 2025 and 2024, respectively. During the six months ended June 30, 2025 cash flows used in investing activities included $6.9 million of cash used for capital expenditures.
Net Cash Flows from Financing Activities
Net cash provided by financing activities was $6.5 million and $0.6 million for the six months ended June 30, 2025 and 2024, respectively. The current year cash provided by financing activities was primarily due to $4.5 million of proceeds from the exercise of stock options and issuances of common stock and $3.1 million of proceeds from financing insurance premiums, partially offset by $0.6 million for principal payments on short-term notes payable.
Scheduled Contractual Obligations and Future Payments
As of June 30, 2025 there have been no material changes outside of the ordinary course of business with respect to our material cash requirements for our contractual and other obligations as set forth in the table included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024.
Capital Expenditures
Capital expenditures were $6.9 million and $6.1 million for the six months ended June 30, 2025 and 2024, respectively. Capital expenditures for the six months ended June 30, 2025 were primarily related to routine purchases of manufacturing and tissue processing equipment, computer software, computer equipment, and leasehold improvements to support our business.
Off-Balance Sheet Commitments and Arrangements
As of June 30, 2025 there have been no material changes to our indemnification obligations as disclosed in Part II, Item 8, Note 11 -"Commitments and Contingencies" in our Annual Report on Form 10-K for the year ended December 31, 2024. For information concerning contingencies, see Note 8 -"Commitments and Contingencies" in Part I, Item 1 of this Form 10-Q.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see Note 1 -"Basis of Presentation and Summary of Significant Accounting Policies" in Part I, Item 1 of this Form 10-Q.
Risks and Uncertainties
See the "Risk Factors" identified in Part II, Item 1A of this Form 10-Q.
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