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Greetings, and welcome to the Artivion Third Quarter 2024 Financial Conference Call. At this time, all participants are in listen only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Laine Morgan from Gilmartin Group.

Thanks, operator. Good afternoon, and thank you for joining the call today. Joining me today from our Artivion's management team are Pat Mackin, CEO; and Lance Berry, CFO. Before we begin, I'd like to make the following statements to comply with the safe harbor requirements of the Private Securities Litigation Reform Act of 1995. Comments made on this call that look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include statements made as to the company's or management's intentions, hopes, beliefs, expectations or predictions of the future. These forward-looking statements are subject to a number of risks, uncertainties, estimates and assumptions that may cause actual results to differ materially from these forward-looking statements. Additional information concerning certain risks and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today. You can also find a brief presentation with details highlighted on today's call on the Investor Relations section of the Artivion website. Now I'll turn it over to our Artivion CEO, Pat Mackin.

Thanks, Laine, and good afternoon, everyone. I'm pleased to report continued strong financial performance through the third quarter as we delivered robust revenue growth and further improved operating leverage. We also made breakthrough progress on several key clinical and regulatory initiatives that have collectively given us greater conviction in our ability to execute our best-in-class PMA focused pipeline and delivered sustained double-digit revenue growth while growing EBITDA twice as fast as revenue. In the third quarter of 2024, we delivered constant currency revenue growth of 10% year-over-year, representing $95.8 million in revenue and adjusted EBITDA growth of 28% year-over-year compared to the third quarter of 2023. Let me first cover our Q3 financial performance before addressing the significant clinical and regulatory updates for the quarter. From a financial perspective, our strong Q3 performance was enabled by continued growth across our product portfolio as well as continued benefit from regulatory approvals and commercial footprint expansion in key international markets, especially in Latin America and Asia Pacific. From a product category perspective, On-X revenues increased 15% year-over-year on a constant currency basis as we continue to take market share globally, with the only mechanical aortic valve that can be maintained at a low INR of 1.5 to 2.0. Based on feedback from the field, our recent market share gains and the proven clinical benefits of the On-X aortic valve, we maintain our strong conviction that On-X is the best aortic valve in the market, and we'll continue to take market share worldwide. BioGlue grew 14% on a constant currency basis compared to the same period last year. This was the second straight quarter of double-digit constant currency revenue growth for BioGlue. We are pleased with the strong performance to date of BioGlue as we continue to grow this differentiated product globally. Also in Q3, our stent graft revenues grew 13% on a constant currency basis in the third quarter compared to the same period last year. Our stent graft portfolio remains a key component of our growth strategy, and we are encouraged by our strong results, which were driven by our differentiated portfolio of products focused on a more complex segments of the stent graft market. Today, the products in our stent graft portfolio are primarily sold in Europe, where we leverage our existing direct sales infrastructure to create significant cross-selling opportunities across our unique aortic product offering. Our pipeline consists largely of bringing these proven products to the U.S. and Japan markets, which represents a significant growth opportunity. Lastly, tissue processing grew 2% year-over-year on a constant currency basis compared to Q3 of last year. This slightly lower-than-expected growth was driven by lower-than-anticipated donor allograft volumes in the third quarter. While we do not report revenues on a product-by-product basis, for context, tissue processing growth is driven primarily by our SynerGraft pulmonary valves, which are used in the Ross procedure. For those unfamiliar with the Ross procedure, it's a double valve procedure in which a patient's native pulmonary valve, used to replace the patient's defective aortic valve and then the patient's pulmonary valve is then replaced by the donor pulmonary allograft. Because of the success of this procedure, demand for our SynerGraft pulmonary valves significantly exceeds our supply, and therefore, our growth is dependent on donor allograft volumes, which tend to fluctuate from quarter-to-quarter. Still, tissue processing revenues have grown 11% year-to-date on a year-over-year constant currency basis. Importantly, our team has also initiated new measures to further improve donor yields beginning in Q4 and early into 2025, leaving us increasingly confident that our tissue business can be a mid-single-digit grower over the long-term. However, you should see -- expect to see some fluctuations in growth rates quarter-to-quarter driven by underlying fluctuations in donation. From a geographic standpoint, we continue to see great results from our growth initiatives across Latin America and Asia Pacific, primarily through new regulatory approvals and commercial footprint expansion. Latin America and Asia Pacific delivered constant currency growth, revenue growth of 32% and 23%, respectively, compared to the third quarter of last year. We continue to anticipate strong revenue growth for both regions for the full year and over the coming years as we continue to leverage our industry-leading product portfolio in those regions. I will now turn to our product pipeline and regulatory developments. We are excited to announce that we recently filed the first module of the PMA application for AMDS with the FDA. We continue to anticipate FDA approval -- PMA approval for AMDS in Q4 of 2025, which as we've discussed, would open up a U.S. addressable market opportunity of approximately $150 million with no competitive alternatives. I'm also pleased to announce our recent regulatory approval from the National Medical Products Administration, also known as NMPA to commercialize BioGlue in China. We estimate that approximately 12,000 patients in China each year having an acute Type A dissection, which could benefit from BioGlue each year. There are some additional administrative steps that we have to take to gain reimbursement and then to get access at the hospital level. These steps are expected to take 9 to 12 months, and therefore, we expect to begin commercializing BioGlue in China in the second half of 2025. BioGlue has been a great product for patients for many years, and we're excited to be able to bring this technology to another large market in China. Now we discuss the 2 regulatory updates. I would like to now update you on our pipeline and recently released clinical data. First, in October, Endospan completed enrollment in the U.S. IDE pivotal trial called TRIOMPHE for its NEXUS Aortic Arch Stent Graft System. Assuming the trial endpoints are met, NEXUS remains on track for approval in the second half of 2026. As a reminder, aortic arch disease with aneurysms or dissections who received treatment have previously had no -- or had little choice before NEXUS but to undergo an open chest surgery which is an invasive operation associated with lengthy hospitalizations and prolonged recuperation. NEXUS is a highly differentiated technology that transforms a complex surgical aortic arch repair into a minimally invasive endovascular repair. Second, at EACTS in October, we are very pleased to see our AMDS and E-vita OPEN NEO technologies take center stage at the aortic focus late-breaking science session at EACTS. Late-breaking 5-year data from our AMDS DARTS trial reported long-term clinical follow-up on the remaining 25 of 46 study participants with the acute Type A dissections who are treated with approximately aortic repair and AMDS. The results demonstrate 94% of patients were free from aortic reoperation compared to existing literature on hemiarch only outcomes which report freedom from late aortic arch reoperation as low as 76%. Additionally, 95% of patients were free from total aortic diameter growth above 5 millimeters at zones 2 and 4. This compares favorably to existing literature on hemiarch only outcomes, which suggests a majority of patients have early aortic diameter growth in the proximal descending aorta. For context, significant growth of the aorta can lead to increased risk of rupture, dissection and reoperation. Long-term results from DARTS trials show a large majority of the patients experienced stable or decreased total aortic diameter following the treatment with AMDS and thus are at decreased risk for further aortic dissection or reoperation as far out as 5 years post implantation, thus showing the durable effect of the therapy. Third, regarding AMDS 30-day from the PERSEVERE trial showed a cerebral malperfusion resolution of 90% of affected subjects in the AMDS implantation Group. The results also indicated a stroke occurrence of 10.8% following AMDS implant, which compares favorably to 20.9% for hemiarch alone based on the 5 articles in literature. Cerebral malperfusion, often leading to stroke is a major complication for acute Type A aortic dissections. These positive results from PERSEVERE trials show that AMDS reduces malperfusion and the rate of stroke. We're excited to see the continued positive results from both DARTS and PERSEVERE studies, further reinforcing the significant clinical benefits and life-saving nature of AMDS. Lastly, at EACTS, 1-year data from the NEOS trial showed that the E-vita OPEN NEO is safe and effective in treating aortic arch pathologies. E-vita OPEN NEO is our current generation frozen elephant trunk that is sold internationally and is the predecessor to our pipeline product called ARCEVO LSA. Notably, the 161 patients treated with E-vita OPEN NEO experienced lower 1-year mortality and 1-year combined major adverse event rates compared to the current market-leading device. Given that we anticipate the ARCEVO U.S. IDE trial will be in the range of 120 patients, these results give us greater confidence in the future success of that trial. In summary, we're encouraged by our Q3 financial performance and thrilled with the progress this quarter on the regulatory and clinical fronts. Our strong financial, clinical and regulatory performance positions us well for the remainder of '24 and beyond and increases the confidence we have in our ability to deliver sustainable double-digit revenue growth while driving EBITDA margin expansion and growing EBITDA twice as fast as sales. With that, I'll now turn the call over to Lance.

Thanks, Pat, and good afternoon, everyone. Before I begin, I'd like to remind you to please refer to our press release published earlier today for information regarding our non-GAAP results, including a reconciliation of these results to our GAAP results. Additionally, all percentage changes discussed will be on a year-over-year basis, and revenue growth rates will be in constant currency unless otherwise noted. Total revenues were $95.8 million for the third quarter of 2024, up 10% constant currency compared to Q3 of 2023. Adjusted EBITDA increased approximately 28% and from $13.9 million to $17.7 million in the third quarter of 2024. Adjusted EBITDA margin was 18.5% in the third quarter of 2024, a 270 basis point improvement over the prior year, driven by a 220 basis point reduction in general, administrative and marketing expense as a percentage of sales. We continue to believe our sales and G&A infrastructure is very scalable and the significant leverage we have produced in the first half of the year supports our belief. From a product line perspective, On-X revenues increased 15%, BioGlue revenues grew 14%, stent graft revenues grew 13% and tissue processing revenues grew 2% in the third quarter of 2024. Other revenue declined approximately $561,000 and 17% in the third quarter of 2024. While relatively nominal to the business, the decline in Q3 was driven by the timing of PerClot orders from Baxter as they continue to manage down inventory levels. Though the underlying end-user sales of PerClot are beginning to ramp up, we expect these inventory dynamics to continue through the balance of 2024. Excluding this impact, our underlying business grew 11% in the third quarter compared to Q3 of 2023. On a regional basis, revenues in Latin America increased 32%, Asia Pacific increased 23%, EMEA increased 15% and North America increased 2%, all compared to the third quarter of 2023. As anticipated, gross margins were 64% in Q3, flat compared to the third quarter of 2023. General, administrative and marketing expenses in the third quarter were $50 million compared to $51.1 million in the third quarter of 2023. Non-GAAP general, administrative and marketing expenses were $46.6 million in the third quarter compared to $44.7 million in the third quarter of 2023. R&D expenses for the third quarter were $6.6 million compared to $6.4 million in the third quarter of 2023. We still anticipate full year R&D spend as a percentage of sales to be relatively flat to prior year. Interest expense net of interest income was $8 million as compared to $6.3 million in the prior year. Other income expense this quarter included foreign currency translation gains of approximately $2.4 million. Free cash flow was $7.8 million in the third quarter of 2024. Importantly, we continue to expect free cash flow to be positive for the full year 2024. As of September 30, 2024, we had approximately $56.2 million in cash and $314 million in debt, net of $6.3 million of unamortized loan origination costs. This is inclusive of the impact of our recently closed July amendment agreement with Endospan. I'd also like to add that our convertible debt moved to current on our balance sheet this quarter as expected. As we've discussed, our delayed draw term loan announced earlier this year, provides us with flexibility to opportunistically settle the convert with cash or shares, assuming our stock price exceeds $23.46 at maturity in July 2025. We do not anticipate the need to raise additional capital to fund our debt obligations, our investments in our channels or our pipeline in the foreseeable future. Our net leverage at the end of Q3 was 3.9x, down from 5.3x in prior years. At the midpoint of our EBITDA guidance range, we expect net leverage to be closer to 3.5x by the end of the year and to continue to decrease in 2025. Now for our outlook for the remainder of 2024. We are continuing to expect constant currency growth of between 10% and 12% for the full year 2024 compared to 2023. Narrowing our range of reporting revenue -- reported revenues to $389 million to $396 million compared to our previously articulated range of $388 million to $396 million. At current FX rates, we expect FX to have a negligible impact on full year revenue growth rates. As we look ahead, we have conviction in the ability of the overall business to grow low double digits year-over-year over the long-term driven by our portfolio of differentiated products and our best-in-class R&D pipeline. With our continued top line revenue growth and general expense management through Q3, we continue to expect adjusted EBITDA to be in the range of $69 million to $72 million for the full year 2024 representing a 28% to 34% growth over 2023 and 280 basis points of adjusted margin -- EBITDA margin expansion at the midpoint of our ranges. As a reminder, we expect gross margins to remain at a level similar to 2023 and continue to expect to drive significant leverage from our global sales force and G&A infrastructure. Additionally, R&D expenses is expected to remain relatively flat as a percentage of sales. Lastly, I would like to discuss 2025. We will provide 2025 guidance in February during our Q4 earnings call, but I did want to provide you with some directional comments as you think about 2025. In general, we expect the same dynamics to be in place for the existing product portfolio in 2025 as there are in 2024 with the exception that we will not have the 1 quarter of significant SynerGraft pulmonary valve increase benefit in our tissue business in 2025 that we had in 2024. We expect to continue to drive EBITDA margin expansion by leveraging sales and G&A expenses. With that, I will turn the call back to Pat for his closing comments.

Thanks, Lance. So as you've heard throughout of our comments, we're committed to shareholders that we will deliver double-digit revenue growth and 2x that for EBITDA. You've also just heard about our strong execution of our R&D pipeline, which gives us stronger confidence that we can deliver on these financial commitments going forward. More specifically, we have the following key regulatory approval in 3 PMAs in our R&D pipeline that will help us to deliver on the continued revenue and EBITDA growth. First, BioGlue China regulatory approval. This opens up a major new market starting in the second half of 2025. Second, the AMDS PMA. We've just completed the 1-year follow-up of the PERSEVERE trial, and we just filed the first PMA module, both of which put us on track for a Q4 2025 PMA approval. Third, the NEXUS PMA. The Endospan -- our partner Endospan completed enrollment in the NEXUS IDE trial called TRIOMPHE, which puts the PMA on track for approval in the second half of 2026. Fourth, ARCEVO LSA PMA. Presentation of the clinical data at EACTS from the NEOS clinical trial that is our current generation frozen elephant trunk called NEO, was in 161 patients, which showed clinical results that are better than the commercially available device that's on the U.S. market today. Given that our U.S. IDE trial for ARCEVO LSA, we enrolled around 120 patients, the results of the NEOS trial gives us great confidence that the ARCEVO LSA trial will also be successful. Finally, I want to thank all of our employees around the globe for their continued dedication to our mission of being the leading partner to surgeons focused on aortic disease. With that, operator, please open the line for questions.

[Operator Instructions] The first question that we have comes from Daniel Stauder of Citizens JMP.

Yes. Great. I guess I'll start off on the aortic stent graft business. So another strong quarter despite 3Q '23 being a tougher comp. I just wanted to ask if you can give any more color on what specific products are performing well? Or if you could just give us any puts and takes on what's driving this business? And is it any cross-selling benefits or anything you're seeing in the market?

Yes. I would say a couple of things, and Lance, you can chime in as well. I mean when you look at -- we don't break out the specific product segment detail. We've got a half a dozen products that cover the entire span of aorta, pretty much every one of them is growing double digits and continues to do so. So we're very kind of confident in that business continue to grow in the double-digit range. We're seeing it in Europe. We're seeing it in Asia. We're seeing it in Latin America. So I mean, I think it's kind of more of the same because we've got such a differentiated portfolio, and we're expanding globally at the same time.

Great. And just one follow-up on, On-X. So you noted some share gain nationally. I just want to get a sense of what extent are you seeing this? And how should we think about this or where this could go in 2025? And are you seeing more traction just mostly because of the new data with the reduced bleeding? Just any puts and takes or any other additional commentary as we think about that?

Yes. So if you started the kind of the globe, we've got about 30% market share globally. We are much stronger in the U.S. We're in the 55% range in the U.S. The share gains we're seeing are really across the globe. We continue to take share in the U.S. driven by the post-approval trial. And just as a refresher, we ran the original PMA trial for On-X low INR, and it showed a 60% reduction in major bleeding. We've ended a post-approval trial with 5-year follow-up required by the FDA and 500 valves. We presented that in May, showed an 87% reduction in major bleeding. Based on our market checks and research, we expect our market share in the U.S. to continue to go up, and we've got even more upside opportunity internationally. So I think On-X continues. And as we've told investors, we think that's a double-digit growth product than it has been for the last 6 or 7 years. So we're continuing to execute on what we said we would do.

The next question we have comes from Suraj Kalia of Oppenheimer & Co.

Pat, Lance, congrats on the quarter. Can you hear me all right?

Yes, we can hear you fine.

Perfect. So Pat, SynerGraft, long-term mid-single-digit growth. I guess just a tangential question. Do you think -- there are some other ways in terms of alternative assets that can be complementary to growth rates? How do you all think -- or basically, this is the way the Ross has done. This is the way SynerGraft does and the donation algorithm, and that's the way we should start thinking about it.

Yes. I think -- so there's a couple of things that are, I think, super impressive about one, the Ross and two, the Ross with SynerGraft. We have 25 years of data on the Ross procedure with SynerGraft. So and it's phenomenal. The reason the procedure is taken off is because of that data. There's been kind of a number of different papers that have been published recently that show if you get a Ross procedure that you can actually match the survival and lifestyle of a patient who didn't have one. So the data is outstanding. The challenge here is that we're just constrained by donation. Now we are doing things. We're always working on continuous improvement last year -- this past year, we've worked on our yields on the SynerGraft pulmonary valve, which have been very impressive. We've got more kind of tricks up our sleeve. We've got other things we're working on because we're always looking at stuff. So we'll continue to work in it. It's just I don't have the luxury of telling the factory to make more. So we literally sell everyone that comes out, and we're working to make sure that we can meet the demands of the market to the best of our ability.

Pat, in terms of -- and I know this might be dumb, but the NEXUS trial, obviously, the 30-day outcomes were good in terms of stroke and paraplegia and whatnot. Pat, even though the trial -- TRIOMPHE trial calls out 30 days. Remind us again, is there any late migration we should be worried about?

No. So we've had -- I think the only public data on NEXUS, the U.S. IDE trial called TRIOMPHE is -- was presented at STS year, I think, in 20 patients. It was Brad Leshnower, from Emory who presented that data and did show very good results. And the big thing they're looking at, right, is what's the stroke rate, what's the paraplegia rate, what's the reoperate, what's the mortality, renal dialysis, so all the same stuff we track in PERSEVERE. So we have not seen the full 60-day cohort that will be presented to the FDA. We may see that in January. We may see that in May. Just we don't run that trial. It's Endospan runs that. So as soon as they get that data out, we'll be able to react to it. I think the one thing that's very important about this device, and we went through this in our diligence when we looked at it, it is the only arch thoracic stent graft designed for the arch. And if you ask surgeons about it, it's specifically designed for the arch. It's a 2P system, so to my knowledge, we've seen no migration on this technology because of that reason. It's a custom -- or specifically designed technology for the aortic arch. And we've seen excellent results to date, and I'm very excited to see you with the 60 show because I think this is going to be a game changer for patients.

Got it. Lance, one question for you, and I'll hop back in the queue. Is the game plan still at the stock is, let's say, above $30 force a conversion? And then should we start factoring in on an as-converted basis when we think about the fully diluted EPS because you guys are pretty close right now to breakeven, and I just want to make sure from a modeling perspective, any color would be great.

Thanks, Suraj. Yes. So we've continued to say -- we're in the -- we have the luxury now of having options with our delayed draw term loan. And we've been saying for the past couple of quarters, look, we have the ability to take a wait-and-see approach to see what goes on with interest rates, what goes on our stock price and then based on that, decide. We're still in that mode. What I would tell investors is it could go either way and just to take whatever you think is the most conservative approach. If you want to put the shares in and assume that they get converted to shares is the most conservative approach, do that. If you want to assume that we draw down and delay draw term loan and have incremental interest expense. If you think that's a more conservative approach. I would tell you to do that. And at the moment, we're still watching and it could go either way.

The next question we have comes from Frank Takkinen of Lake Street Capital.

This is Nelson Cox on for Frank. So maybe just want to start with AMDS. Can you walk us through how we should think about the launch of that, maybe just the learning curve you guys when you go through bags. Is this a soft launch in '25 with the full launch in '26? And then maybe just some other -- any other comments would be helpful.

Yes. And just to kind of refresh people where we are, right? So I mentioned in my comments, we just hit the 1-year follow-up. We're going to have to obviously get that data pulled together, and that will be the clinical module that gets submitted based on how we've laid out the modules, we've submitted our first module would put us in -- and FDA approval has us on track for Q4 of '25, so a year from now. I think you're -- I mean, assuming we get in Q4 '25, I think a soft launch is a good way to describe Q4 of '25. We do have to go through value analysis committees. We do have to train surgeons. We've got to get them to buy the devices. So we've got a great sales force. We know these customers. We know these hospitals. We already have all the relationships but we still have to go through the process. I also think that the fact that this is a lifesaving, I just told you that we saw strokes cut in half with the acute Type A dissections that was just published at EACTS from the PERSEVERE trial. I think the fact that the mortality is so much lower, the stroke is so much lower, [indiscernible] is so much lower that we're hopeful that we can get through these value analysis committees faster, but I'll know it when we do it right, better visibility once we've launched it. So but we are geared up, and we'll have the sales team ready to go.

And maybe I'll jump in, just put my plug in for everyone as you think about 2025 from a modeling standpoint, I would advise everyone to not put any revenue in for AMDS with the Q4 approval and just the things you have to do to get going, revenue would be very minimal, if any, in 2025. I think the safe thing is just at the moment to assume 0. And then if we get beneficial timing and it's sooner, then we can talk about adding some of that.

Perfect. And then maybe just about the pricing opportunity in the preservation business, specifically SynerGraft. Do you see more room to take additional price? Or do you kind of feel like you're reaching a point where you can maybe stay consistent for a while?

Yes. I mean I think we're sensitive to the pricing environment out there and I think the price increase we did last year was pretty significant. And I don't think there's a lot of room on that. I think there's other parts. It's not the only tissue we have in the portfolio. So there are other areas where we will be getting price increases. But I think the SynerGraft one is probably not one we're going to be going after any time soon.

[Operator Instructions] The next question we have comes from Mike Matson of Needham & Co.

Yes. I guess with AMDS, I'm a little surprised that it's the first module because I feel like the data is usually like the final module. So can you maybe just talk about what's going there...

Let me clarify, Mike. I think you might have made it sounded confusing when I just said that, right? So we have 4 or 5 modules we're going to submit. We submitted the first module. The last module will be clinical. And you're correct. The last module is going to be clinical.

And so when would that final model be submitted, do you think?

Probably in the second quarter.

Second quarter of next year?

'24 -- 2025. Yes.

Okay. And you still think it can be approved in the fourth quarter?

Yes. I do.

Okay. All right. Okay. And then just on BioGlue in China, I seem to remember you talking about that being like a $20 million opportunity. Is that still the right number?

Yes. No, it's actually -- go ahead.

And then I'll let you answer that. Let me just go ahead and finish the question. How fast does that -- would that ramp? I mean, is this kind of like a 1-year step-up? Or would it be like a more gradual kind of like tailwind over like several years as you penetrate that market?

Yes. So first thing is we -- Lance and I had to go back and look at our earnings transcripts and find what we last talked about BioGlue China, it was 2 years ago. And we basically said we're working with the Chinese regulators and you'll hear from us in the summer '24. And we obviously are very happy to have a report on the approval. Your math is correct. But I think it's like most things, right? So we -- I mentioned in my comments that we've -- China has its own special requirements, right? So we've got to get the national medical registration and then we have to get province registration, and we've got to get on hospital price list. So it takes some time. So we aren't really expecting anything meaningful until the second half of '25. But this will be a -- we'll be rolling this out to hospitals. We've got to train surgeons. We've got to get them familiar with the product. So this would be kind of a gradual kind of uptick over several years, not a 1-year thing.

Yes. Okay. Got it. All right. And then the PerClot manufacturing agreement. How much revenue is that generating? And when does that -- and when will that -- to what degree will that become a headwind at some point? And what year would that be when that happens?

So that depends on how fast they can be ready to take it over. They obviously would like to take it over as fast they can, and we'd be more than happy to transfer to them. It's -- if it just go -- went away completing the full year in and then a full year out, you're talking about slightly less than a 1 percentage point headwind. So it's just not significant. This year, it's created some noise quarter-to-quarter. But it's always about 1 point. For the full year this year, it's probably about 1 point headwind to last year. And if it stays at that level, which is our assumption and when it goes away completely, it will be about 1 point headwind that year. Right now, it looks like play for sure, we'll have it for the full year of '25 and then we'll have to assess after that. It also has really little to no impact on EBITDA. We're just kind of manufacturing for them.

The next question we have comes from Jeffrey Cohen of Ladenburg Thalmann.

So I guess, firstly, Lance, you had some commentary about the preservation business for 2025. And was that Q1 that you called out from the previous bolus of Q1 in SynerGraft from Q1 last year or Q1 this year as it would pertain to Q1 next year?

So we took the big increase in price for SynerGraft in Q2 of 2023. So we had 1 quarter in 2024 of elevated growth rates from that price increase before we annualize that. So if you look back in Q1 of 2024, we had a very high growth rate for the tissue business. And that's the one thing I'm calling out that really -- that will be the one thing that's different if you think about 2025 versus 2024. We will not have that 1 quarter of elevated growth rate in the tissue business.

Yes, that we see $25.7 million increase to -- from $26.3 million. Okay. I got that. That's clear to me. Could you talk a little bit about LatAm and APAC by specific countries Japan as well as the balanced APAC specific countries and/or LatAm specific countries?

Yes. We're not going to get into specific countries, Jeff. I don't necessarily need to telegraph it to our competitors what we're doing. I will say that in Asia, when I started here, we had 1 person and now we've got 50. In Latin America, we had none and now we have 25. We're direct in Brazil. We've talked about before. We mostly won a distributor this in LatAm. So we've gone direct in several countries in Asia, but I'm not going to get into the specifics of where we are now and where we're going later.

Okay. Got it. And then lastly, Lance, any further commentary on gross margins for Q4 and/or for '25? Does you feel like mid-60s is kind of the right territory to think about?

Yes. I mean, I think at the moment, we just need to think about gross margins being relatively flat year-to-year and quarter-to-quarter, you may have some minor fluctuations just due to revenue mix in any given quarter. And then once down the line, when we get approvals of these products in our pipeline and they come to the U.S. market, then we should be able to see some gross margin expansion through mix. But at the moment, I would tell people to just kind of model gross margin is fairly flat year-to-year.

Ladies and gentlemen, we have reached the end of our question-and-answer session. And I would like to turn the call back to Pat Mackin for closing remarks. Please go ahead, sir.

Yes. Thanks for joining. We appreciate it. You see we had another strong quarter of double-digit revenue growth and more than twice that on the bottom line at 28%. You heard about some really amazing performance on our pipeline, regulatory approval in China, late-breaking trials on AMDS at EACTS in Europe, the biggest cardiac meeting in Europe. The NEO trial presented at EACTS as well. We've also got -- NEXUS is finished enrollment in their pivotal trial, which puts them on track for '26. And we just saw the NEOS trial in Europe in 161 patients which is more than we're going to do in the U.S., and we had very positive results that are better than the market, the only product in the U.S. market from a competitive standpoint. So we're very confident that we can continue to grow this business double-digit top line and twice as fast on the bottom line. And thanks for joining, and we'll look to see you at our next call.