LeMaitre Vascular Inc

NASDAQ:LMAT

Earnings Call Analysis

LeMaitre Shows Strong Growth and Raises Guidance

In Q2 2024, LeMaitre reported a 12% organic sales growth with substantial gains in seven product lines and noteworthy performances in APAC, EMEA, and the Americas. Notable subsidiaries, Canada and the UK, each posted over 27% growth. Gross margins increased to 68.9%, driven by higher ASPs and productivity improvements. LeMaitre added seven sales reps, aiming for 155-160 by year-end. Regulatory progress included 11 new MDR CE marks, with eight more expected in 2025. Consequently, the company raised its full-year sales guidance by $3.8 million and EPS by $0.07, projecting an operating margin of 23% for 2024, an improvement from 19% in 2023.

Strong Performance in Q2 2024

In the second quarter of 2024, LeMaitre Vascular showcased impressive financial results, achieving **12% organic sales growth** and a remarkable **44% increase in earnings per share (EPS)**. Notably, the growth was broad-based, with **7 out of 12 product lines** setting new records. RestoreFlow Allografts significantly contributed, soaring by **30%**, followed by bovine patches at **12%**, and shunts at **22%**. The Asia-Pacific region led sales growth at **20%**, driven primarily by newly established direct markets in Thailand and Korea.

Regional Highlights and Sales Force Expansion

Sales growth was robust across regions, with the Americas reporting **10% growth** and EMEA at **13%**. Notably, strong performances were seen in Canada and the UK, posting **33% and 27% increases**, respectively. To capitalize on this momentum, LeMaitre added **7 sales representatives** in Q2, ending the quarter with **144**, with plans to reach **155 to 160** by year-end, focusing on North America where territories are deemed too vast.

Regulatory Approvals Boosting Market Position

LeMaitre received **11 more MDR CE marks** since the last earnings call, increasing their total to **14 out of 22 approvals** aimed for. The company expects to obtain the remaining approvals by **2025**, which it views as a strategic advantage. LeMaitre now commands around **90%** of the European shunt market, mainly due to competitors like Bard exiting the market, creating an opportunity for expansion.

Profit Margins and Cost Management

The company reported a gross margin of **68.9%**, marking an increase of **490 basis points** year-over-year, bolstered by productivity improvements and a **10%** average selling price (ASP) increase. Operating expenses rose modestly by **6%** compared to the previous year, showing effective cost management compared to a **20%** increase last year. Consequently, operating income grew **52%** year-over-year to **$14.4 million**, translating to an operating margin of **26%.**.

Future Guidance – Growth and EPS Projections

Looking ahead, LeMaitre expects sales growth to accelerate in the latter half of 2024, forecasting mid-teens growth. The company has raised its full-year sales guidance by **$3.8 million** and increased EPS guidance by **$0.07** per share. The anticipated operational margin for 2024 is projected to be **23%**, a noticeable improvement from **19%** in 2023.

Innovations and International Market Engagement

The company is actively pursuing international expansion, with plans to establish a new office in Zurich and further explore go-direct opportunities in several European countries. LeMaitre is also advancing its strategic initiatives in Asia, with particular interest in the XenoSure product line, setting expectations for an approval submission in China within the next year.

Strategic Focus and M&A Activity

Despite the strong organic growth and expanding sales channels, LeMaitre has faced challenges in pursuing significant mergers and acquisitions (M&A). The company remains committed to finding the right strategic targets for acquisition, while simultaneously building its cash reserves, which reached **$113 million**, indicating readiness for future investments when favorable opportunities arise.

Earnings Call Transcript 2024-Q2

[Operator]

Welcome to the LeMaitre Vascular Q2 2024 Financial Results Conference Call. As a reminder, today's call is being recorded.

At this time, I would like to turn the call over to Mr. J.J. Pellegrino, Chief Financial Officer for LeMaitre Vascular. Please go ahead, sir.

[Joseph Pellegrino, executive]

Good afternoon, and thank you for joining us on our Q2 2024 conference call. With me on today's call is our CEO, George LeMaitre, and our President, Dave Roberts.

Before we begin, I'll read our safe harbor statement. Today, we will make some forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, the accuracy of which is subject to risks and uncertainties. Wherever possible, we will try to identify those forward-looking statements by using words such as believe, expect, anticipate, pursue, forecast and similar expressions. Our forward-looking statements are based on our estimates and assumptions as of today, August 1st, 2024, and should not be relied upon as representing our estimates or views on any subsequent date.

Please refer to the cautionary statement regarding forward-looking information and the risk factors in our most recent 10-K and subsequent SEC filings, including disclosure of the factors that could cause results to differ materially from those expressed or implied.

During this call, we will discuss non-GAAP financial measures, which include organic sales growth, as well as operating income, operating expense, and EPS, excluding special charges. A reconciliation of GAAP to non-GAAP measures discussed in this call is contained in the associated press release and is available in the investor relations section of our website, www.lemaitre.com.

I'll now turn the call over to George LeMaitre.

[George LeMaitre, executive]

Thanks, J.J. Q2 is an excellent quarter, featuring 12% organic sales growth and 44% EPS growth. I'll focus my remarks on our top line, sales force, and the MDR CE marks.

Our 12% organic growth in Q2 was broad-based, with 7 of our 12 product lines posting records. RestoreFlow Allografts were up 30%, bovine patches 12% and shunts 22%. APAC was our strongest region again, up 20% thanks to Thailand and Korea, our recently converted direct markets. EMEA sales were up 13% in Q2, while the Americas were up 10%.

2 of our larger subsidiaries continued to excel in Q2. Canada was up 33%, and the U.K. was up 27%. Both benefited from exceptional RestoreFlow growth.

We added 7 reps in Q2, ending the quarter with 144, and we're now targeting 155 to 160 at year-end. This mid-year expansion is largely about North America, where the territories remain too large.

As for our international sales offices, we continue to hire staff into the new Paris office, and we've begun scouting for an office in Zurich. We also continue to evaluate go-direct opportunities in Europe, including Portugal, Czechia, Poland and Greece.

Turning to regulatory. Since our last call, we've received 11 more MDR CE marks, bringing our total to 14 of the 22 approvals we're seeking. These 8 remaining CE marks should be received in 2025. Some analysts believe that only 70% of all MDD cleared devices industry-wide will eventually receive MDR CE marks.

Europe's regulatory barriers have been raised, and it's allowing us to capture share. As an example, we now have approximately 90% of the European shunt market due to Bard's CE-driven exit.

One of the CE marks which we expect to receive in 2025 is Artegraft, our largest American product. We have also submitted Artegraft applications in Thailand, Malaysia and Singapore, and we plan to make filings by year-end in Australia, Canada and Korea. Bringing this device to international markets was a key consideration at the time of the 2020 Artegraft acquisition.

With respect to RestoreFlow, we now believe our Irish and German approvals will be received in 2025 and 2026, respectively. RestoreFlow needs to be approved by each individual country, as there is no pan-European approval. We currently have approvals in just 3 countries, the U.S., the U.K. and Canada, where the combined sales CAGR has been 23% since the 2016 RestoreFlow acquisition.

I'd like to welcome back analyst Jason Wittes of ROTH Capital, who re-initiated coverage in May of this year. In 2014, Jason initiated LeMaitre coverage while at another firm with an $11 target and 3 headlines, owning the niche, disciplined acquisitions and international expansion. To conclude my remarks, 2024 is shaping up to be another year of healthy sales and profit growth.

With that, I'll turn the call over to J.J.

[Joseph Pellegrino, executive]

Thanks, George. In Q2 2024, we continued to execute the LeMaitre's playbook, a targeted call point, niche markets, and a focus on the bottom line. We posted a gross margin of 68.9%, up 490 basis points year-over-year. The increase was driven by productivity improvements and higher ASPs.

Productivity improvements were driven by higher direct labor utilization, lower times to build and lower quality costs. ASP increased 10% in Q2, driven by our highly differentiated Artegraft, valvulotome and shunt devices, as well as our supply-constrained RestoreFlow.

Our gross margin was 68.1% in Q4, 68.6% in Q1, and now 68.9% in Q2. Operating expenses in Q2 2024 were $24.1 million, an increase of just 6% versus Q2 2023. This compares favorably to last year's 20% operating expense increase, reflecting our shift from significant post-COVID rehiring to a more restrained hiring posture. As a result, Q2 2024 operating income increased 52% year-over-year to $14.4 million, and operating margin of 26%.

Our operating income was $10.1 million in Q4, $11.9 million in Q1, and now $14.4 million in Q2. We ended Q2 2024 with $113 million in cash and securities, an increase of $4.8 million in the quarter. The increase was driven by cash from operations of $9.6 million and was partially offset by dividends of $3.6 million.

With regard to guidance, sales growth in the back half of 2024 should accelerate into the mid-teens, while operating expenses increased moderately as we continue to build out the sales channel and invest in new regulatory approvals. As a result, we have increased our full year 2024 sales guidance by $3.8 million and our full year EPS guidance by $0.07 per share.

Our guidance implies an operating margin of 23% for 2024 and 19% versus 19% in 2023. For more details, please see today's press release. But a few Q3 highlights include, sales growth of 14% organically, gross margin of 68%, operating income of $12 million, up 31% and EPS of $0.44 per share, up 32%.

With that, I'll turn it back over to the operator for questions.

[Operator]

[Operator Instructions] And our first question will be coming from Rick Wise of Stifel.

[Frederick Wise, analyst]

Great to see this excellent quarter. Let me start off. There's a lot to chew on here. I think let me start off with the sales force expansion. I mean, this is a meaningful step up, and you're raising the bar again. Just a couple of questions surrounding it, and I'll let you take it away.

Just help us understand your thinking behind raising that bar for the rest of the year. And you were particularly emphatic about North America and the territories being too large, implying, I assume, the opportunity to split them and help drive increased sales. Just talk us through some of those factors in your thinking.

[George LeMaitre, executive]

It's George. Yes, and I got at a little bit of this last time, and as you're pointing out correctly, I feel like there's an expanded feeling of that at this call, where we really have opened up a bunch of new territories. It's the same thing, which is -- the years go by and you get this 10%, 12%, 14% organic growth, and I feel like we never really, not recovered, because it's a good thing. But we never really got the sizes down following the Artegraft acquisition in 2020. So we're still playing around with these $2 million territories in the U.S., and they're just too big geographically and financially.

So about 12 months ago, we teed ourselves up for all this by having sort of a reorg in the sales force where we got 4 area sales managers. We had never had those before, watching over what was then 10 or 11 regional managers. And before that, it was just a VP of sales and then 9 regional managers.

So I think we're better equipped structurally to handle it now. And so, yes, we've launched a bunch of these things, and we'll see when they come on board. Interestingly enough, the hiring is -- you read in the newspaper it's easier to hire these days. We're not exactly finding that. It's still hard to hire for us in the sales.

[Joseph Pellegrino, executive]

And Rick, this is J.J. From a financial perspective as well, I mean, it's a nice time to fit them into the P&L, and you can see op income going to $12 million in Q1 and $14.4 million in Q2, up 50%, 52% for both quarters year-over-year. And so it's just a nice time to slot those investments also into the P&L story that we have going on.

[Frederick Wise, analyst]

And turning to operating margins, J.J., you were very clear in reminding us, and you're basically assuming you hit your targets, approaching like a 400 basis point step up year-over-year,'24 versus '23 in operating margins. A couple of things. So I guess, 2 questions related to that. One, help us think about the sustainable drivers there. Obviously, volume makes price, you talked about the gross margin productivity. But how do we start thinking about '25, '26 and beyond in terms of where -- gosh, what kind of operating margin potential is left and how do we think about it? And is it just doing what you're doing? And just help us think through that.

[Joseph Pellegrino, executive]

Yes. And that's a tough one, obviously, because you're looking way out there and we don't give guidance that far out. But I would say if you remember from way back when we used to say 10%, 20% a lot, we're going to grow the top line 10% and the bottom line 20%. And if you do that, you get leverage on the bottom line in terms of an op margin story.

Now, I'm not saying we're 10%, 20% anymore, and we've certainly been beating that recently, and who knows where we're going to go beyond this year, because we haven't talked about that. But I would say if you keep having nice top line growth numbers and keep a lid on OpEx, you're probably going to get a good answer there.

That said, I mean, if you have a 30% op margin number that you're thinking of way out there, I'd be like, no, I don't think that's who we want to be, really. Maybe if you said to us, do that tomorrow and do it for a year-and-a-half, we could certainly do that by pulling back on expenses. But if we want to keep investing in the medium term and long term of the business, which we do, obviously, then you're going to sort of stay range bound to some extent. So I would say that's -- without totally answering your question, that's sort of the bench post for you.

[Operator]

Our next question will come from Suraj Kalia of Oppenheimer & Co.

[Shaymus Contorno, analyst]

This is Shaymus on for Suraj. Just looking at the gross margin guidance for 3Q and for the full year, just kind of wondering -- put up a very nice quarter there, about 69%. It looks like a little step down in 3Q, and I think the full year was lowered a little bit. But you guys raised revenue guidance, increased EPS guidance. Just looking to understand the puts and takes there, if you could?

[Joseph Pellegrino, executive]

Yes. So if you look at our Q3 guidance of 68%, then you can sort of impute a little step up in Q4 to 68%, 2, or 3, or 4, or something like that. And so that's the cadence for you. I think the Q3 step down is a number of things. One is our manufacturing team has been doing an awesome job, and they've been really pulling through a lot of efficiencies. And I'm sort of trying to out-guess that and say maybe that doesn't continue sort of steadily throughout the rest of the year. So maybe that's thing one.

Thing 2 is we know we have some higher costs coming at us on the RestoreFlow side, so we take that into account. And maybe some E&O topics outside the U.S. coming up for the back half of the year, so I'll take that into account. And then seasonally, oddly, generally speaking, Q3 is lower in the year than sort of the other quarters in the year, so it would make sense that you would step down in Q3 maybe and then move back up in Q4. I don't know if that totally answers and gets at what you're asking.

[Shaymus Contorno, analyst]

No, that helps. And just kind of 2 more from my end, and I'll just kind of throw them together. Any latest updates on M&A? I know I think you said last quarter you were talking about 2 different companies, just kind of wondering what the -- any updates that you can give there.

And then secondly, you guys have seen -- sorry, we've seen you take a lot of price, so to speak, in terms of this past year. Kind of as we start to firm up our models for '25, where is there still up where you can take price? What do you think kind of what numbers are you looking at? Any color there would be helpful.

[David Roberts, executive]

Hey, Seamus. It's Dave. I'll take the acquisitions question, and maybe I'll turn it over to George on price. But on acquisitions, yes, I mean, obviously there's nothing too specific that I can share with you.

The acquisitions department is healthy, is busy. We just added another person to the department. And we continue to seek out the same targets with the same criteria. Of course, what's nice is that our cash balance is growing, our EBITDA is growing, so the size of deal we can look at is increasing. And I'd say everything else equal, we would prefer to do a larger deal.

So there are various active targets at various stages. And when I can disclose more, I will. Sometimes you think things are moving along and they don't. But we continue to be active, and I do expect at some point I don't know exactly when we'll be able to announce something, but I don't know if it will be this year or next year or whenever. But we're not setting our thumbs.

[George LeMaitre, executive]

And, Seamus, on pricing, I would say concretely for 2025, you won't -- we're not going to try to set our prices until November or December. So there's that a little bit. If you wanted to get some insight into how we price, I think we've updated our slide show on the Internet on our website, and it shows the last 4 years of pricing. I think they were 8, 8, 12, and 8 or something like that. And also it puts it up against the CPI to sort of see what kind of price. So you could look at that, and you could make your own inferences about where you think we're going.

A couple other things I would say is that, the 2 items really help us with doing more price hikes, which is when we expand the sales force, a lot of the responsibility that we put in the hands of a sales rep is to go get that price hike. So when you see us expanding the sales force, that's our army to get price hikes, of course.

And then also in Europe where the CE mark, the transition to MDR, is putting up a lot of barriers. And I think they're making it significantly easier to pass along price increases as long as you stay in your segment because a lot of the other companies are electing not to stay in the segment and to just not file for the MDR CE mark.

So barriers to entry help us, sales force expansion helps us. And then the record's fairly clear over the last 4 years if you could surmise what you think we might do next year.

[Operator]

Our next question comes from Jason Wittes of ROTH.

[Jason Wittes, analyst]

Congrats on a solid quarter here. And I guess also thanks for the mention at the beginning. I guess, if $11 was my target, you guys have done great on execution since I last looked at you guys. So congrats on that as well. So a couple questions. One, I apologize if this was mentioned already, but can you break out what price and volume was in the quarter for revenues?

[George LeMaitre, executive]

Sure, sure. So organic growth was 12%, and 10 was price, and 2 was units.

[Jason Wittes, analyst]

And then you mentioned shunts are benefiting from bar dropping out. I'm wondering if there are other large product lines that are also seeing competition drop out, especially in the biologic front over in Europe?

[George LeMaitre, executive]

Yes, interesting you mentioned biologics. That's the first place I would go to, which is we've seen patches, biologic patches by Abbott, and then I think BioIntegral, a Canadian company, drop out of the European markets. That's helped us a lot with XenoSure over in Europe as well as CardioCel over in Europe.

[Jason Wittes, analyst]

Is this driving the upside to the year? Or is this the sales force additions that you recently added?

[George LeMaitre, executive]

I would say over the -- yes, I think over the last 2 or 3 years, we felt the dropping out of competition, allowing us to do pricing and giving us better unit share. And then I think the European rep surge, if you will, came a little bit earlier than the American rep surge. So I feel like they picked up a bunch of reps. I can do the numbers here. We had 47 reps a year ago. Now we have 52 over in Europe. And so they've had a bit of a surge in Europe and that's helping us as well.

[Jason Wittes, analyst]

And then just -- I don't know if you also break out on gross margins between biologics and, I guess, nonbiological implants, if there's a breakout there that we could track. I mean what's the gross.

[George LeMaitre, executive]

Jason, right. So we don't do that. We just give one number. I think sometimes we answer are they above corporate or below corporate. And if you ask, what -- which particular brand are you interested in?

[Jason Wittes, analyst]

Well, I'm just -- the bovine patches and the allografts, I imagine they're a little bit different. But you've had a nice rise in gross margin. I always thought part of that was due to the fact that you've improved your yields dramatically on the biologic front. I thought that was a major driver. I don't know if that's the case right now.

[Joseph Pellegrino, executive]

Jason, this is J.J. So generally, when we say RestoreFlow's done well and Dacron's done well, that's going to hurt the margin. And generally, when we say XenoSure's doing well and Artegraft's doing well, that's generally going to help the margin. That's helpful directionally for you.

Okay. I'm in a little quiet pocket here, so I know there's a couple other questioners out there. I don't really know how to get to them. Would the operator want to introduce the next questioner?

[Operator]

The next question is coming from Danny Stauder of Citizens JMP.

[Daniel Stauder, analyst]

So I guess just first, real quick, on the sales rep ads, I know you upped your full year target. But could you just give any color on your plans or your expected cadence for adding these new reps? And with that, how long does it typically take for these new reps to ramp up to the corporate average or even above the corporate average typically?

[George LeMaitre, executive]

Sure. And, Danny, I've handled this question a number of ways over the years, and I always give an unsatisfactory answer, but I'll try it again. I'll try something different here maybe. The cadence for hiring is we put a lot of approvals out there, and our guess that we're trying to do for you guys right now is that we'll have 155 or 160 reps by the end of this year. And I think what happens after that, I don't know, but it feels like we'll get to that. So there's the timing of that.

And then the second question you're asking is when do they get up to snuff? And I would say we've done a couple studies around here lately, and oddly the good ones get up to snuff right away, and the ones that aren't going to make it don't get up to snuff. And so it's not really that much about time.

I think in the old days the answer we would give to everyone, the generic answer, was about 9 months to really get going and understand everything. But in terms of if you really look and study quota for all these reps that come on board, it happens pretty quickly for a good guy, a good woman who's doing a good job at the sales position.

[Daniel Stauder, analyst]

Asia-Pacific, really strong again. You talked about some of the drivers there. But as we look out for the rest of the year, I guess in the back half and into 2025, how much of a runway is there for this outsized growth?

[George LeMaitre, executive]

I think the runway there -- I never guide past the year that we're in, so we're in 2024. For these 6 months I think there's terrific runway and space for the APAC. We're on fire over there. We're starting all these new entities. And I said on the last call, this is just simply an old-fashioned virgin territory play where we didn't exist in Asia except for Japan until about 10 years ago. So I feel really excited about what's going on over there.

And they also have half of the approvals have not -- we have not gotten half of the approvals that we need over there, whereas in Western Europe and North America, you largely have all the approvals that you need right now. And in Asia, that's not true if you're 50 percent-ish.

[Operator]

And our next question will be coming from Michael Sarcone of Jefferies.

[Michael Sarcone, analyst]

You talked about adding reps, particularly in North America and some of these territories getting up to $2 million. So sometimes we do see potential for disruption when you do split sales territories. I guess, how confident are you that you can split some of these territories and not cause any disruption? And basically, how do you plan to mitigate the risks there?

[George LeMaitre, executive]

Right. It's true. Sometimes there is a kerfuffle when you break up a territory. The person doesn't want it to happen. The person does want it to happen. So yes, that's true. Although, I would say, we've been doing this for years and years and years in Europe and the U.S. And so, how we do it, I think, is -- I think we do it the right way, which is we announce it early. We're very open about it, and we pay double commissions for the back of the year after the person gets hired in the new territory.

So the person who's running the -- who was previously running the territory is getting full commissions the whole time, and then when the new person comes on, let's say, in October, they're getting commissions on that -- on the split, the smaller territory that's been split off, and so is the sort of legacy rep there. So we try to do it like that, and we always tell the reps that we believe the way it'll be set up, your W-2 will go up next year. So we have a new plan every year, and it takes into account what their base quota was with the new, smaller territory.

[Michael Sarcone, analyst]

And just one on 2Q. Really strong gross margin expansion there, and I know J.J. mentioned, on the manufacturing side your team has been doing great work. I was just curious if you could help parse out, how much of that year-over-year expansion was related to these solid productivity improvements versus the price-taking?

[Joseph Pellegrino, executive]

Yes, Mike, so about half of that was the ASP, so 9%, 10% ASP increase sort of equates to 2.3%, 2.4% good guy on the gross margin, which is nice. And then the rest of it basically sort of manufacturing improvements around, yes, manufacturing team being more efficient, being more utilized, reducing their times to build. But also our quality costs have been flat now for a little while, and I think it's a nice story within the company that we don't really see too much outside of it, but it's popping through now in the gross margin line and helping about 0.3% or so year-over-year, just keeping that sort of constant.

[Michael Sarcone, analyst]

And if I could just squeeze in one more, just on pricing, you know, averaging about 9% for the first half of this year. Do you feel like that's sustainable through the back half, and is that what's baked into the guidance?

[George LeMaitre, executive]

Yes. So we have, I think 14% organic in Q3 and implied 14% organic in Q4. We try not to split out what of that is going to be units and what is going to be pricing, but it seems like you've got a couple quarters that you can run with and figure it out, right?

[Joseph Pellegrino, executive]

And Mike, as I was trying to say in my script portion, these differentiated devices in these categories with lower rivalry where you have big market share really allow you to sort of take advantage of some of that to some extent, and it's sort of a nice tailwind there.

And on the RestoreFlow side, there's a supply constraint issue, and so if we can make them, we can generally tell them they're really in high demand in the marketplace, and that helps as well. So some nice dynamics as tailwinds for pricing.

[Operator]

Our next question will be coming from Michael Petusky of Barrington Research.

[Michael Petusky, analyst]

So George, I'm just curious with the positive comments around APAC, anything new in China worth talking about, or is that just not a market that is worth the time and energy when you've got everything that's going on over there?

[George LeMaitre, executive]

Sure. Okay. So we've been up and down on this one. We were all excited about it for 5 years, and then I think we tried to make it sort of a 4-letter word on these conference calls for the last 5 years. And I feel like 2 good things are happening here. One is the small organic business that we do have of about 5 different products approved -- it's hard to get approvals over there -- that business is really doing well right now.

It's small. I think it's about a $1.3 million or $1.4 million run rate business right now. But I think I mentioned this on the last call, we had a 93% growth rate in Q1, and then in this quarter, Q2, we had a 35% growth rate, and I don't see that slowing down. I mean, it's a big country, as you know, and we have 4 sales reps right now. So to say that we've only scratched the surface would be the understatement of the universe. So that's one thing.

Second thing that's probably more exciting is this crazy 8-year clinical trial that we're involved in. Again, we don't bring it up much. Maybe we're doing it now on a response to a question, but it's just been this long, long thing, and it does feel like if you can believe me now, which -- I've been a liar for the last 7 years. So if you can believe me now, we're making our final submission in November, and we believe we'll have the approval for XenoSure in next year. So let's see. But that is the…

[Joseph Pellegrino, executive]

Cardiac.

[George LeMaitre, executive]

What's that?

[Joseph Pellegrino, executive]

Cardiac.

[George LeMaitre, executive]

Excuse me. For the cardiac XenoSure. Also, we have peripheral XenoSure, but we're sort of thinking maybe we'll wait until we get the cardiac approval and then do that as a submission change or a change to the submission. So it feels really good right now on those 2 fronts, but it is quite small for our guidance is $218 million for this business this year, and it's a $1.4 million business, so I guess it's pretty small.

[Michael Petusky, analyst]

What's the turnaround on the regulatory body over there on a trial where you submitted the data in, like, November? I mean, is it 6 months? Is it 12 months? What's the turnaround for a potential approval?

[George LeMaitre, executive]

Right. And when I say the submission, this is the, "final submission", and we've had 2 or 3 other final submissions, which came back, making data requests and things like that. So the word out of my regulatory group is, okay, this is the last final questions that you want, and then in 6 or 12 months, you're going to get your approval.

So supposedly, it's Q2 to Q4 next year, we get XenoSure in China. But, we'll see. I don't -- we've lost faith in the timing on this topic a long time ago.

[Michael Petusky, analyst]

Okay. So don't bet my house.

[George LeMaitre, executive]

I wouldn't. No, I'd bet your house on organic growth and other markets, but not.

[Michael Petusky, analyst]

Absolutely. Okay. Just real quick, and you guys talk faster sometimes than I can take notes. On Artegraft, you may have mentioned it in the prepared remarks, but have there been any additional regulatory approvals OUS, on Artegraft in the last 90 days or what's the outlook there going forward?

[George LeMaitre, executive]

Okay. So that's the big good question. I'm glad you're asking that. Maybe we glossed over it quickly, which is, yes, so we're applying in 7 different places, Europe as a whole, let's call it. And then in the prepared remarks, we're talking about Thailand, Malaysia, Singapore have already been approved -- excuse me, have been applied for.

And then Australia, Canada and Korea will go in by the end of this year. One positive thing that happened in the last, I don't know, 3 or 6 months here has been that we had previously been thinking that Artegraft was a late 2025 approval, and we're now thinking it's more like a June approval of 2025 -- excuse me, in Europe, sorry about that. Thanks, Dave. In Europe, the CE mark. We feel really good about that.

And so that's -- it's been drawn forward a little bit, and usually you don't hear us do that. And that's the biggie, because this is our largest American product. I think sales are approximately $33 million this year annualized for Artegraft. And we talked on the last call that maybe there's an $8 million market over in Europe. And then maybe we were just sort of -- this is very high-level stuff, but maybe there's another $8 million market over in APAC or something like that. So this is the big one that we want to get approved, and things are going well in the approval process in Europe.

[Michael Petusky, analyst]

If I could just sneak one last one in for Dave. In terms of M&A, obviously, this is probably the longest period of time that -- at least since I've been around that I can remember you guys not doing anything like super meaningful in terms of external growth opportunities.

What are the hang-ups? I mean, is it just a lot of valuation? Are you not seeing the assets that really strategically make sense? Like, what are you, I guess, coming up against in terms of just this sort of gap in closing a meaningful deal the last few years?

[David Roberts, executive]

Yes. I mean, some of it's the target pool where if we stick very close to our call point, which is open vascular surgery, there are 25 targets with more than $5 million or $10 million of revenue. And so we, obviously, know who they all are. We have ongoing dialogues. Those targets' product lines are owned by about 18 companies, and some of those companies have never done divestiture. So we've been very close to those targets, et cetera. But we've also expanded a little bit.

We've looked in an adjacent field, cardiac surgery. I think some cardiac surgery products would work better inside LeMaitre than others because some are crossover used by vascular surgeons and others aren't. But there's a strategic question there about, do you want to get in a cardiac surgery and how much and which products?

And then also on the other side, another immediately adjacent market is endovascular. And while some of the products, there are dozens of products that are endovascular, some are more used by our physician specialty, the vascular surgeon, than others. But what you run up against there is much more competitive markets, a lot of bigger players in that space. And then also, endovascular products get used by other specialties like interventional cardiologists and radiologists.

So strategically, we're factoring all of those things in. The good news is, I think, as I mentioned on previous calls, we've been active with letters of intent over the last couple, few years. Yes, sometimes it's valuation. Sometimes there's a divestiture from a large company and they want to sell us a bundle of products and we want some but we don't want others. So we might bid just for what we want, but they don't want to sell the garage without the house, et cetera. So I think that's some of what we're up against.

But I would say we're not discouraged at all. I mean, to state it positively, we're waiting for our pitch. And I've done this long enough that I know doing an acquisition that isn't strategically on is very painful. It takes a long time to unwind that. And you're much better off just waiting for the right strategic target and at the right price.

And so, in the meanwhile, we're just building our cash. And I'd say, if I could just add one more idea, it's been a nice opportunity for the company to, if you will really get the house in order with respect to regulatory and quality and sales force optimization and all that. So you see the company performing well while we're building the bank account. At some point, you'll get news from LeMaitre, but that I hope answers your question.

[Operator]

Our next question will be coming from Frank Takkinen of Lake Street Capital Markets.

[Frank Takkinen, analyst]

Congrats on all the progress. Maybe I'll start with kind of following up with what you were alluding to right at the end of that last question, Dave. Maybe is the sales force kind of doubled down in a way, expanded hiring goals for the year a function of the right acquisition not showing up and in turn saying we have the right product portfolio right now, let's maybe double down a little bit more on the sales force and get prepared in that way instead of kind of going down the wrong avenue with the wrong acquisition?

[David Roberts, executive]

Yes. I mean, for sure. I mean, look you can grow 2 ways in this life. You can grow organically or inorganically. And what I focus on a lot for the company is the inorganic growth. And sometimes that's only so much within your control.

On the organic side, there are buttons you can push. And clearly for us, adding sales reps is a critical growth driver, expanding the channel, not just filling in reps in the United States and other markets where we're already direct, but investing in new countries like Korea and Thailand.

And as George mentioned on this call, there could be others in Europe maybe next year. And so that's really important. Getting the regulatory approvals in new markets, that's really important. Getting and supporting price increases, that's really important. So there are a bunch of things we can do to accelerate organic growth. And I would say at a high level, it feels like that's been working.

So while me and my team, while we've been off hunting for the next deal, I would say the organic growth team and the organic operations team here is doing a really excellent job pushing the business forward. And we're getting stronger in all departments, so the day when we do an acquisition, I think our ability to integrate is just that much more strengthened. So I guess that's how I would answer that question.

[Frank Takkinen, analyst]

And maybe a little bit bigger picture question on salesforce productivity. I think you alluded to it on this call, the U.S. reps over $2 million. I think on previous calls, you kind of said EMEA reps in the just over a $1 million range and then APAC reps a little below $1 million, I think around $700,000. Where can those international reps really mature from a utilization standpoint?

[George LeMaitre, executive]

Right, that's a good question. And Frank, thanks for remembering the figures from the last phone call. So we actually have answers to that already, which is in Germany and the U.K., you have reps pushing 1.1 million, 1.4 million euros or pounds in those respective markets. So there's no reason they can't get larger size and control more revenues than what they are right now. So it does happen overseas.

And I think I have one example over in, I think the [ Nagoya ] rep is something like $800,000 in revenue. So it does happen over there. It's taking longer. And, of course, pricing is lower in all those places. So it takes more units to get there.

[Frank Takkinen, analyst]

And then last one, maybe just a housekeeping item. I heard 144 reps plus 7, mostly U.S. Can you give us that breakout, U.S., EMEA and APAC?

[George LeMaitre, executive]

Sure. So right now we have 67 North American reps, 52 European reps and 25 Asia-Pac reps, and that should get you to 144.

[Operator]

[Operator Instructions] Our next question will come from Brett Fishbin of KeyBanc Capital Markets.

[Elizabeth Bui, analyst]

This is actually Liz on for Brett. If I could just start a little bit more broadly. Could you share what you've been seeing in regards to procedural trends in the U.S. and Europe? We've gotten some mixed commentary so far and would just love to get your take.

[George LeMaitre, executive]

Sure. And interestingly enough, it's your data that we go to for a lot of this with those credit card swipes. And so beyond what we see for our sales units and dollar growth, we then go back to the KeyBanc Capital Markets data and we try to figure out what's going on. I think you'd corroborate this, which is it's been a very healthy 6 months of staffing inside the hospitals, as we get from the Bureau of Labor Statistics, and then also credit card swipes, general credit card swipes in the hospitals are up and it's indicating full hospitals. So ironically, you're asking that question to me, but I'd flash it right back at you.

[Elizabeth Bui, analyst]

Well, I'm glad we can be of use to you guys. Could you also update us on where you're at with the new ERP implementation and what that timeline looks like?

[Joseph Pellegrino, executive]

Yes. So we implemented in the U.S. on February 1 and then spent the next 2 months putting out fires and keeping the business functioning. And we've sort of started to settle down on that topic and we've started looking towards Europe. And so we recently signed an agreement to start our implementation in the U.K. as our first European geography. And we'll create a template of sort of what Europe needs from an ERP perspective and then we'll roll that out to the other geographies in Europe, maybe Germany next and then Italy and France, et cetera. So it's ongoing.

[Operator]

Ladies and gentlemen, that concludes today's conference. I would like to thank you for your participation. You may now disconnect. Thank you, and have a great day.