LeMaitre Vascular Q3 Earnings Call Highlights

Key Points

• Q3 organic sales grew 12%, driven by 7% pricing growth and 5% higher unit volumes; biologics performed especially well, with Artegraft sales up 18% and RestoreFlow revenue up 34%.
• LeMaitre reported 71.7% gross margin and $0.65 diluted EPS, but lowered its 2026 gross margin outlook to 72.1% from 72.4%, citing an inventory reserve, foreign-exchange pressure and RestoreFlow transfer costs. It maintained its 11% organic revenue growth forecast and expects $2.80 in full-year diluted EPS.
• The B. Braun device acquisition faces an 18–24-month commercial transition, with management warning hypothetically of 10%–15% customer or sales losses in the first year. RestoreFlow also remains constrained by quality-control processing capacity, limiting its ability to meet demand.

LeMaitre Vascular NASDAQ: LMAT reported 12% organic sales growth in the third quarter of 2026, driven by higher prices and unit volumes, while reiterating its full-year organic growth outlook and lowering its gross margin forecast.

CEO George LeMaitre said on the Nov. 4 earnings call that organic growth comprised a 7% increase from pricing and a 5% increase in units. Reported sales growth was 11%, with foreign exchange reducing revenue by $440,000 as the U.S. dollar strengthened year over year.

Biologic products continued to grow faster than the broader portfolio: Artegraft sales rose 18%, and RestoreFlow allograft revenue increased 34%. Graft sales grew 20% and shunt sales rose 14%. By region, reported sales increased 18% in Europe, the Middle East and Africa; 9% in the Americas; and 5% in Asia-Pacific.

Margins Rise Despite Inventory Charge

Third-quarter gross margin was 71.7%, up 90 basis points from a year earlier, excluding a $4.8 million employee retention tax credit recorded in the 2025 period. CFO Dorian LeBlanc attributed the improvement primarily to higher average selling prices and lower shipping costs, partly offset by a $500,000 inventory reserve tied to the discontinuation of FAS-TIP.

Without that charge, gross margin would have been 72.4%, up 160 basis points year over year. Operating expenses rose 18% to $31 million, reflecting sales force expansion and a $1.1 million increase in research and development spending. LeBlanc said the higher R&D spending was driven by process improvements and expenses related to transferring RestoreFlow operations.

Operating income was $17.7 million, for an operating margin of 26%. Net income was $15 million, or $0.65 per diluted share. Free cash flow was $19.7 million, and the company ended September with $390 million in cash and investments.

B. Braun Acquisition Brings Transition Challenges

On Oct. 14, LeMaitre acquired a portfolio of vascular devices from B. Braun for $19.2 million, including $2.6 million due one year after closing. The products include polyester and silver-coated vascular grafts, valve cutters and vein strippers.

The acquired products generated $9.4 million in sales in 2025, all outside North America. LeBlanc said the commercial transition is expected to take 18 to 24 months because some products were sold under contracts bundled with other B. Braun offerings.

B. Braun will continue to supply customers during the transition, with LeMaitre entitled to profit sharing on those sales. LeMaitre will record revenue only when it fulfills orders directly. The company expects approximately $150,000 in directly recorded revenue from the acquisition in the fourth quarter, with no net impact on operating income.

George LeMaitre acknowledged the potential for lost business during the transition. He offered a hypothetical range of 10% to 15% customer or sales loss in the first year, while stressing that the company does not know the actual amount and expects to recover business over time. B. Braun will continue manufacturing the products under a four-year supply agreement as LeMaitre works to transfer production to Burlington.

Artegraft Expansion and RestoreFlow Capacity

International Artegraft sales reached $3 million in the quarter, and LeMaitre continues to expect more than $11 million for the full year. The product received approvals in Brazil and Saudi Arabia, bringing its approval count to 60 countries.

The company plans to submit for U.S. and European approval of longer packaging tubes in the fourth quarter of 2026, potentially allowing sales of longer Artegrafts for leg bypasses to begin in the second half of 2027. George LeMaitre said the longer products would primarily address European demand and could displace some sales of the company’s Omniflow grafts.

He also said the Food and Drug Administration is reviewing the company’s responses to observations at its New Jersey Artegraft facility. The observations have not disrupted production, shipments or invoicing, and a reinspection is likely in 2027, he said.

For RestoreFlow, George LeMaitre said cardiac tissue revenue grew 65% year over year, but quality-control processing constraints prevented the company from meeting all demand. He said the company could remain behind demand for some time and is adding resources to address the bottleneck. LeMaitre still plans to close its Chicago-area RestoreFlow facility this year and transfer production to Burlington.

Full-Year Outlook

LeMaitre reiterated its forecast for 11% organic revenue growth in 2026 and projected reported revenue of $275.8 million. It lowered its full-year gross margin forecast to 72.1% from 72.4%, citing the FAS-TIP reserve, foreign exchange pressure and the timing of RestoreFlow transfer costs.

The company forecast full-year operating income of $75.4 million and updated its diluted earnings-per-share guidance to $2.80, up 18% from adjusted 2025 results. Management declined to provide 2027 financial guidance. The sales force ended September at 171 representatives, up 19 from a year earlier; George LeMaitre said the company expects to finish 2026 with 172 to 178 representatives.

About LeMaitre Vascular (NASDAQ:LMAT)

LeMaitre Vascular, Inc is a medical device company focused on the treatment of peripheral vascular disease. The company develops, manufactures and markets products used primarily by vascular surgeons and other specialists in open vascular surgery procedures.

Its product portfolio includes biological and synthetic vascular grafts, carotid shunts, embolectomy and thrombectomy catheters, valvulotomes, vessel closure devices, vascular patches and surgical instruments. These products are designed to support procedures involving the arteries and veins, including the repair, reconstruction and treatment of diseased or obstructed blood vessels.

Founded in 1983 and headquartered in Burlington, Massachusetts, LeMaitre Vascular sells its products through a combination of direct sales personnel and distributors.

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