Artivion Inc.

08/07/2026 | Press release | Distributed by Public on 08/07/2026 11:58

Quarterly Report for Quarter Ending June 30, 2026 (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, Arcevo LSA, AMDSTM, the NEXUS ONETM, NEXUS DUOTM, and NEXUS TRETM aortic arch stent graft systems (the "NEXUS family of products"), and E-vita Thoracic 3G products. Abdominal stent grafts include our E-xtra Design Engineering, E-nsideTM, ArtivexTM, E-tegraTM, E-ventusTM BX, TuvaTM BX, and E-liacTM products. 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 $125.8 million for the three months ended June 30, 2026, an 11% increase from the three months ended June 30, 2025. The increase in revenues for the three months ended June 30, 2026 was due to an increase in revenues from all products and preservation services other than surgical sealants, which remained relatively flat. Constant currency revenues, as defined below, increased 9% for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025.
See the "Results of Operations" section below for additional analysis of the three and six months ended June 30, 2026.
Presentation
In addition to the corresponding measures under generally accepted accounting principles ("US GAAP"), management uses non-GAAP measures in reviewing and disclosing our financial results. The foreign exchange neutral revenues ("constant currency revenues") discussed below are non-GAAP financial measures and are not in accordance with, or an alternative to, measures prepared in accordance with US GAAP. Accordingly, the constant currency revenues appearing in the following discussion of our results of operations should be read in conjunction with the information provided in "Non-GAAP Measures of Financial Performance" below, which includes a reconciliation of constant currency financial measures to the most directly comparable US GAAP measure.
Results of Operations
($ 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,
2026 2025 Percent Change 2026 2025
Products:
Aortic stent grafts $ 46,414 $ 39,841 16% 37% 35%
On-X 30,506 25,572 19% 24% 23%
Surgical sealants 19,287 19,288 -% 15% 17%
Other 3,698 2,743 35% 3% 2%
Total products 99,905 87,444 14% 79% 77%
Preservation services 25,852 25,528 1% 21% 23%
Total $ 125,757 $ 112,972 11% 100% 100%
Revenues for the
Six Months Ended
June 30, 		Revenues as a Percentage of
Total Revenues for the
Six Months Ended
June 30,
2026 2025 Percent Change 2026 2025
Products:
Aortic stent grafts $ 90,811 $ 76,443 19% 38% 36%
On-X 56,457 47,146 20% 23% 22%
Surgical sealants 38,092 37,394 2% 16% 18%
Other 5,987 5,259 14% 2% 2%
Total products 191,347 166,242 15% 79% 78%
Preservation services 50,747 45,708 11% 21% 22%
Total $ 242,094 $ 211,950 14% 100% 100%
Revenues increased 11% and 14% for the three and six months ended June 30, 2026, respectively, as compared to the three and six months ended June 30, 2025. The increase in revenues for the three months ended June 30, 2026 was primarily due to an increase in revenues from aortic stent grafts and On-X products, and to a lesser extent, preservation services and other products. The increase in revenues for the six months ended June 30, 2026 was primarily due to an increase in revenues from aortic stent grafts, On-X products, and preservation services, and to a lesser extent, surgical sealants and other products.
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
2026 2025
US GAAP US GAAP Exchange Rate Effect Constant Currency Constant Currency
Products:
Aortic stent grafts $ 46,414 $ 39,841 $ 1,632 $ 41,473 12%
On-X 30,506 25,572 311 25,883 18%
Surgical sealants 19,287 19,288 361 19,649 -2%
Other 3,698 2,743 7 2,750 34%
Total products 99,905 87,444 2,311 89,755 11%
Preservation services 25,852 25,528 20 25,548 1%
Total $ 125,757 $ 112,972 $ 2,331 $ 115,303 9%
North America 62,333 57,569 50 57,619 8%
Europe, the Middle East, and Africa 44,548 38,713 1,781 40,494 10%
Asia Pacific 12,169 11,131 - 11,131 9%
Latin America 6,707 5,559 500 6,059 11%
Total $ 125,757 $ 112,972 $ 2,331 $ 115,303 9%
Revenues for the
Six Months Ended
June 30, 		Percent
Change
From Prior
Year
2026 2025
US GAAP US GAAP Exchange Rate Effect Constant Currency Constant Currency
Products:
Aortic stent grafts $ 90,811 $ 76,443 $ 5,509 $ 81,952 11%
On-X 56,457 47,146 945 48,091 17%
Surgical sealants 38,092 37,394 1,110 38,504 -1%
Other 5,987 5,259 32 5,291 13%
Total products 191,347 166,242 7,596 173,838 10%
Preservation services 50,747 45,708 41 45,749 11%
Total $ 242,094 $ 211,950 $ 7,637 $ 219,587 10%
North America 121,028 105,362 136 105,498 15%
Europe, the Middle East, and Africa 88,534 75,758 6,462 82,220 8%
Asia Pacific 20,859 19,345 - 19,345 8%
Latin America 11,673 11,485 1,039 12,524 -7%
Total $ 242,094 $ 211,950 $ 7,637 $ 219,587 10%
A detailed discussion of the changes in product revenues and preservation services revenues for the three and six months ended June 30, 2026 is presented below.
Products
Revenues from products increased 14% and 15% for the three and six months ended June 30, 2026, respectively, as compared to the three and six months ended June 30, 2025. The increase for the three months ended June 30, 2026 was primarily due to an increase in revenues from aortic stent grafts and On-X products, and to a lesser extent, other products. The increase for the six months ended June 30, 2026 was primarily due to an increase in revenues from aortic stent grafts and On-X products, and to a lesser extent, surgical sealants and other products.
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 Francs with a concentration denominated in Euros. Each currency is subject to exchange rate fluctuations. For the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025, the US Dollar weakened in comparison to major currencies, resulting in revenue increases 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 16% and 19% for the three and six months ended June 30, 2026, respectively, as compared to the three and six months ended June 30, 2025. These increases were primarily due to an increase in the volume of units sold, and to a lesser extent, the favorable effect of foreign exchange rates.
Constant currency revenues from the sales of aortic stent grafts increased 12% and 11% for the three and six months ended June 30, 2026, respectively, as compared to the three and six months ended June 30, 2025. These increases for the three and six months ended June 30, 2026 were primarily due to revenue increases in Europe, the Middle East, and Africa (collectively, "EMEA") and North America. The revenue increases in EMEA for the three and six months ended June 30, 2026 were primarily due to an increase in volume of products sold within the aortic stent graft product line in direct (to hospitals) markets. The revenue increases in North America for the three and six months ended June 30, 2026 were primarily due to an increase in sales of AMDS, reflecting increased adoption following the grant of a humanitarian device exemption ("HDE") 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 allowed 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 received in June 2026, allowing for full commercial distribution of AMDS in the US. The revenue increases for the six months ended June 30, 2026 were partially offset by revenue decreases in Asia Pacific ("APAC") and Latin America ("LATAM"), primarily due to customer buying patterns in certain markets.
For the three and six months ended June 30, 2026 and 2025, the substantial majority of aortic stent graft revenues were generated from geographies outside 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® CO2 diffusion 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 19% for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. This increase was primarily due to higher average sales prices and an increase in the volume of units sold.
Revenues from the sales of On-X products increased 20% for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. This increase was primarily due to an increase in the volume of units sold and an increase in average sales prices.
Constant currency revenues from the sales of On-X products increased 18% and 17% for the three and six months ended June 30, 2026, respectively, as compared to the three and six months ended June 30, 2025. The increase in revenues for the three and six months ended June 30, 2026 was primarily due to growth in North America, EMEA, and APAC, reflecting gains in market share.
Domestic revenues from the sales of On-X products accounted for 58% and 60% of total On-X revenues for the three and six months ended June 30, 2026, respectively, as compared to 61% and 63% for the three and six months ended June 30, 2025, respectively.
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 were flat for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to a decrease in the volume of milliliters sold, offset by favorable foreign exchange rates and, to a lesser extent, an increase in average sales prices.
Revenues from the sales of surgical sealants increased 2% for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. This increase was primarily due to favorable foreign exchange rates and, to a lesser extent, an increase in average sales prices, partially offset by a decrease in the volume of milliliters sold.
Constant currency revenues from the sales of surgical sealants decreased 2% for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The decrease for the three months ended June 30, 2026 was primarily due to revenue decreases in EMEA and North America, partially offset by revenue increases in APAC and LATAM. Revenue variability across international markets primarily reflected the timing of hospital and distributor purchases and buying patterns. North America revenues decreased due to lower unit sales primarily reflecting the timing of customer orders, partially offset by higher average selling prices.
Constant currency revenues from the sales of surgical sealants decreased 1% for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The decrease for the six months ended June 30, 2026 was primarily due to revenue decreases in LATAM and EMEA, partially offset by revenue increases in APAC and North America. Revenue variability across international markets primarily reflected the timing of hospital and distributor purchases and buying patterns, while APAC growth also benefited from increased adoption in certain markets. The revenue increase in North America for the six months ended June 30, 2026 was primarily due to an increase in average sales prices.
Domestic revenues from the sales of surgical sealants accounted for 45% and 48% of total surgical sealant revenues for the three and six months ended June 30, 2026, respectively, as compared to 48% for both the three and six months ended June 30, 2025.
Other
Other revenues are comprised of revenues from PhotoFix and PerClot.
Other revenues increased 35% and 14% for the three and six months ended June 30, 2026, respectively, as compared to the three and six months ended June 30, 2025. The increase was primarily due to an increase in PerClot product revenues resulting from an increase in volume of units sold.
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 1% for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase was primarily due to an increase in average sales prices, partially offset by a decrease in the volume of tissues shipped. Shipment volumes during the three months ended June 30, 2025 benefited from the release of a backlog of tissues resulting from the 2024 cybersecurity incident, which started to release during the second quarter of 2025.
Revenues from tissue processing increased 11% for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase was primarily due to an increase in the volume of tissues shipped as well as an increase in average sales prices. Revenues for the three months ended March 31, 2025 were adversely affected by a backlog of tissues resulting from the 2024 cybersecurity incident. The backlog started to release during the second quarter of 2025, as discussed above.
Cost of Products and Preservation Services
Cost of Products
Three Months Ended
June 30, 		Six Months Ended
June 30,
2026 2025 2026 2025
Cost of products $ 33,991 $ 28,315 $ 63,688 $ 53,578
Cost of products increased 20% and 19% for the three and six months ended June 30, 2026, respectively, as compared to the three and six months ended June 30, 2025. Cost of products for the three and six months ended June 30, 2026 and 2025 included costs related to aortic stent grafts, On-X products, surgical sealants, and other products.
The increase in total cost of products for the three months ended June 30, 2026 was primarily due to an increase in the volume of aortic stent grafts and On-X products shipped, as compared to the three months ended June 30, 2025.
The increase in total cost of products for the six months ended June 30, 2026 was primarily due to an increase in the volume of On-X products and aortic stent grafts shipped, and an increase in the unit cost of certain aortic stent grafts and On-X products shipped, as compared to the six months ended June 30, 2025.
Cost of Preservation Services
Three Months Ended
June 30, 		Six Months Ended
June 30,
2026 2025 2026 2025
Cost of preservation services $ 11,249 $ 11,545 $ 22,441 $ 21,683
Cost of preservation services decreased 3% for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. Cost of preservation services increased 3% for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. Cost of preservation services included costs for cardiac and vascular tissue preservation services.
The decrease in total cost of preservation services for the three months ended June 30, 2026 was primarily due to a decrease in the unit cost and volume of certain tissues shipped, as compared to the three months ended June 30, 2025.
The increase in total cost of preservation services for the six months ended June 30, 2026 was primarily due to an increase in the volume of certain tissues shipped, partially offset by a decrease in the unit cost of certain tissues shipped, as compared to the six months ended June 30, 2025.
Gross Margin
Three Months Ended
June 30, 		Six Months Ended
June 30,
2026 2025 2026 2025
Gross margin $ 80,517 $ 73,112 $ 155,965 $ 136,689
Gross margin as a percentage of total revenues 64% 65% 64% 64%
Gross margin increased 10% and 14% for the three and six months ended June 30, 2026, respectively, as compared to the three and six months ended June 30, 2025.
The increase in gross margin for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, was primarily due to higher average selling prices for certain products and tissues shipped, an increase in volume of certain products shipped, and favorable foreign currency effects for the three months ended June 30, 2026. The increase was partially offset by unfavorable cost of certain products shipped, as compared to the three months ended June 30, 2025. Gross margin as a percentage of total revenues decreased for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. Gross margin as a percentage of total revenues was negatively impacted by an unfavorable geographic mix and unfavorable costs of certain products and tissues shipped, partially offset by favorable pricing of certain products shipped, during the three months ended June 30, 2026.
The increase in gross margin for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, was primarily due to a favorable mix of certain products and tissues shipped, an increase in the average sales price of certain products and tissues shipped, a favorable effect of foreign exchange rates, and an increase in volume of certain products and tissues shipped for the six months ended June 30, 2026. The increase was partially offset by unfavorable cost of certain products and tissues shipped, as compared to the six months ended June 30, 2025. Gross margin as a percentage of total revenues was flat for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. Gross margin as a percentage of total revenues was impacted by unfavorable costs of certain products and certain tissues shipped, offset by favorable pricing of certain products and tissues shipped during the six months ended June 30, 2026.
Operating Expenses
General, Administrative, and Marketing Expenses
Three Months Ended
June 30, 		Six Months Ended
June 30,
2026 2025 2026 2025
General, administrative, and marketing expenses $ 79,826 $ 57,665 $ 140,646 $ 112,369
General, administrative, and marketing expenses as a percentage of total revenues 63% 51% 58% 53%
General, administrative, and marketing expenses increased 38% for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, which includes the impact of the Ascyrus contingent consideration fair value adjustment loss of $8.0 million and $2.6 million for the three months ended June 30, 2026 and 2025, respectively. The remaining general, administrative, and marketing expenses for the three months ended June 30, 2026 increased $16.8 million, primarily due to $11.7 million of Endospan acquisition transaction costs, of which $10.2 million related to transaction bonuses for Endospan employees associated with the Endospan acquisition, as well as investments in sales and marketing, and increased non-cash stock compensation expenses.
General, administrative, and marketing expenses increased 25% for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, which includes the impact of the Ascyrus contingent consideration fair value adjustment loss of $9.7 million and gain of $0.2 million for the six months ended June 30, 2026 and 2025, respectively. The remaining general, administrative, and marketing expenses for the six months ended June 30, 2026 increased $18.4 million, primarily due to $12.5 million of Endospan acquisition transaction costs, of which $10.2 million related to transaction bonuses for Endospan employees associated with the Endospan acquisition, as well as investments in sales and marketing and information technology, and increased non-cash stock compensation expenses. These increases were partially offset by $1.5 million in net cyber insurance recoveries received.
Research and Development Expenses
Three Months Ended
June 30, 		Six Months Ended
June 30,
2026 2025 2026 2025
Research and development expenses $ 9,055 $ 7,063 $ 17,896 $ 13,791
Research and development expenses as a percentage of total revenues 7% 6% 7% 7%
Research and development expenses increased 28% and 30% for the three and six months ended June 30, 2026, respectively, as compared to the three and six months ended June 30, 2025. Research and development spending for the three and six months ended June 30, 2026 was primarily focused on clinical work to gain regulatory approvals for certain aortic stent grafts.
Interest Expense
Interest expense was $7.3 million and $12.6 million for the three and six months ended June 30, 2026, respectively, as compared to $7.3 million and $14.9 million for the three and six months ended June 30, 2025, respectively. Interest expense for the six months ended June 30, 2026 decreased primarily due to lower variable interest rates on our credit facilities and reduced interest expense as a result of the settlement of the Convertible Senior Notes, partially offset by interest incurred on the New Delayed Draw Term Loan borrowed in May 2026. See Part I, Item 1, Note 9 of the "Notes to Condensed Consolidated Financial Statements" for further discussion of the settlement of the Convertible Senior Notes and the borrowing under the New Delayed Draw Term Loan.
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 9 of the "Notes to Condensed Consolidated Financial Statements" for further discussion of our Convertible Senior Notes.
Other Income
Other income was $3.6 million and $3.3 million for the three and six months ended June 30, 2026, respectively, as compared to $5.0 million and $8.0 million of income for the three and six months ended June 30, 2025, respectively. For the three months ended June 30, 2026, other income primarily included a $4.3 million gain from fair value adjustments to loans issued in connection with our acquisition of Endospan, partially offset by a net $0.7 million loss from realized and unrealized effects of foreign currency gains and losses. Other income for the six months ended June 30, 2026 primarily included a $4.8 million gain associated with fair value adjustments to loans issued in connection with our acquisition of Endospan, partially offset by a net $1.6 million loss from realized and unrealized effects of foreign currency gains and losses.
Income Tax Expense
Our effective income tax rate was (15)% and (6)% for the three and six months ended June 30, 2026, respectively, as compared to 61% and 29% for the three and six months ended June 30, 2025, respectively. Our income tax rate varied from the US statutory rate of 21% predominately due to state income taxes, non-deductible executive compensation, changes in our valuation allowance for current period losses and changes in estimates of our expected recovery of net deferred tax assets, excess tax deductions on stock-based compensation, and foreign withholding taxes. The year-over-year changes to the effective income tax rate were largely attributable to the shift from pre-tax book income in each respective period in 2025 to pre-tax book losses in each respective period in 2026.
On July 4, 2025 the One Big Beautiful Bill Act ("OBBBA") was enacted in the US. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We have reflected the impact of the enactment in our results for the three and six months ended June 30, 2026.
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 primarily due 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.
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.
We do not believe demand for our On-X products, other products, and cardiac preservation services is materially seasonal.
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, 2026 we had approximately $370.0 million of total principal indebtedness outstanding.
Our liquidity as of June 30, 2026 consisted of cash and cash equivalents of $77.3 million and unused commitments of $30.0 million under a revolving credit facility (see "Credit Facilities" below). As of June 30, 2026 approximately 28% 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 Credit 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 other business development activities including obligations pursuant to the acquisition of Ascyrus and Endospan. In July 2026, following receipt of FDA approval of the premarket approval application for the AMDS, we made a contingent payment of $25.0 million under the Ascyrus Agreement. 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 Delayed Draw Term Loan Facility remained undrawn and was terminated on July 2, 2025 as we entered into separate, privately negotiated exchange agreements with the Holders of the Convertible Senior Notes as discussed below.
On September 12, 2025 we entered into a Second Amendment to the credit and guaranty agreement (the "Amendment"), with Ares Management Credit funds, which amends the credit and guaranty agreement dated as of January 18, 2024. The Amendment provides for (i) an extension of the maturity date of the existing term loans (the "Existing Term Loan Facility") and the existing revolving credit facility (the "Existing Revolving Credit Facility") under the Credit Agreement by one year to January 18, 2031, (ii) a reduction in the interest rate margin applicable to the Existing Term Loan Facility and the Existing Revolving Credit Facility and (iii) a new $150.0 million secured delayed draw term loan facility (the "New Delayed Draw Term Loan Facility" and, together with the Existing Term Loan Facility, the "Term Loan Facilities").
In May 2026 in connection with our acquisition of Endospan, we borrowed $150.0 million under the New Delayed Draw Term Loan Facility, as further described below. The proceeds of borrowings were used in part to fund the upfront purchase price for the acquisition of Endospan. See Part I, Item 1, Note 4 - "Acquisition of Endospan" for further discussion of the Endospan Acquisition.
In connection with the borrowing, the lender withheld a $1.1 million draw fee, resulting in net cash proceeds of $148.9 million. In addition, we reclassified $1.1 million of previously capitalized debt issuance costs from other long-term assets as a deduction from the carrying amount of the facility. Accordingly, the related debt discount and debt issuance costs totaled $2.3 million and are being amortized to interest expense over the term of the facility.
The final scheduled maturity date of the Credit Facilities is January 18, 2031. 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 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 Secured Overnight Financing Rate ("SOFR") plus applicable margins. As of June 30, 2026 the stated interest rates on the Term Loan Facility, Revolving Credit Facility, and New Delayed Draw Term Loan Facility were 8.44%, 7.19%, and 8.40%, respectively. See Part I, Item 1, Note 9 of the "Notes to Condensed 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"). 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. The remaining $0.5 million in aggregate principal amount of the Convertible Senior Notes was settled on July 1, 2025 resulting in the issuance of 19,605 shares 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,
2026 2025
Cash flows (used in) provided by:
Operating activities $ (112) $ (1,942)
Investing activities (139,912) (6,925)
Financing activities 152,851 6,535
Effect of exchange rate changes on cash and cash equivalents (419) 2,345
Increase in cash and cash equivalents $ 12,408 $ 13
Net Cash Flows from Operating Activities
Net cash used in operating activities decreased by $1.8 million during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, as an increase in cash collected from customers and the insurance recoveries associated with the 2024 cybersecurity incident were partially offset by transaction and integration expenditures associated with our acquisition of Endospan, the $10.2 million payment for transaction bonuses for Endospan employees associated with the Endospan acquisition, and an increase in inventories to support revenue growth.
Net Cash Flows from Investing Activities
Net cash used in investing activities was $139.9 million and $6.9 million for the six months ended June 30, 2026 and 2025, respectively. During the six months ended June 30, 2026 cash flows used in investing activities included $116.7 million of payments related to the acquisition of Endospan, net of cash acquired, $18.8 million of cash used for capital expenditures, $3.0 million of payments under the Endospan agreements, and $1.5 million payment related to sale of PerClot.
Net Cash Flows from Financing Activities
Net cash provided by financing activities was $152.9 million and $6.5 million for the six months ended June 30, 2026 and 2025, respectively. The current year cash provided by financing activities was primarily due to $148.9 million of proceeds received on the New Delayed Draw Term Loan Facility, $3.2 million of proceeds from financing insurance premiums, $2.6 million of proceeds from the exercise of stock options and issuances of common stock, partially offset by $1.4 million for principal payments on short-term notes payable.
Scheduled Contractual Obligations and Future Payments
In May 2026, we borrowed $150.0 million under the New Delayed Draw Term Loan Facility in connection with our acquisition of Endospan. As of June 30, 2026, our total principal indebtedness was $370.0 million, and our anticipated interest payments related to the Term Loan Facility, Revolving Credit Facility, and New Delayed Draw Term Loan Facility were $143.7 million.
We also have contingent payment obligations of up to $200.0 million payable to the former security holders of Endospan upon the achievement of certain performance milestones related to NEXUS.
In July 2026 we made a $25.0 million contingent payment upon FDA approval of the PMA application for the AMDS. Following this payment, we may be required to pay up to an additional $75.0 million under the Ascyrus Agreement upon the achievement of specified sales milestones. See Part I, Item 1, Note 3 - "Acquisition of Ascyrus" for additional information.
Other than the borrowing, related anticipated interest payments, contingent payment obligations, and payment described above, 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, 2025.
Capital Expenditures
Capital expenditures were $18.8 million and $6.9 million for the six months ended June 30, 2026 and 2025, respectively. Capital expenditures for the six months ended June 30, 2026 were primarily related to computer software development, purchases of manufacturing and tissue processing equipment, leasehold improvements, and computer equipment to support our business.
Off-Balance Sheet Commitments and Arrangements
As of June 30, 2026 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, 2025. For information concerning contingencies, see Note 10 - "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.
Artivion Inc. published this content on August 07, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 07, 2026 at 18:01 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]