Artivion Inc

NYSE:AORT

Earnings Call Analysis

Artivion Sees Strong Q2 Growth and Raises 2024 Guidance

Artivion experienced a robust second quarter in 2024 with revenues reaching $98 million, representing a 10% increase year-over-year, and a 35% rise in adjusted EBITDA. Leading the growth were On-X valves with a 15% increase, and Stent Grafts at 13%. The company amended its agreements with Endospan, improving acquisition terms and adding funding. Looking ahead, Artivion anticipates annual revenue growth between 10% and 12%, raising its guidance to $388-$396 million. Adjusted EBITDA is expected to grow by 28%-34%, hitting $69-$72 million. Key markets in Latin America and Asia Pacific saw significant expansions, with revenue increases of 25% and 15%, respectively.

Strong Performance in Q2 2024

Artivion reported a revenue growth of 10% year-over-year in the second quarter of 2024, achieving $98 million in total revenue. Adjusted EBITDA grew significantly, rising 35% compared to the same quarter last year, reaching $18.6 million, marking a 350 basis point improvement in adjusted EBITDA margin to 19%. This performance reflects effective management of costs, particularly a reduction in general and administrative expenses.

Diverse Product Growth Driving Revenue

The growth was largely driven by strong performances across various product lines. Notably, On-X sales surged by 15% year-over-year, Stent Grafts increased by 13%, and BioGlue saw a 12% rise. Tissue Processing also contributed, growing by 7%. The company's strategic focus on its unique product offerings is reflected in these positive metrics, illustrating robust demand in both domestic and international markets.

Navigating Challenges and Regulatory Landscape

Meanwhile, 'Other Revenues' saw a decline of 42%, primarily due to inventory management by Baxter impacting PerClot orders. This decline, however, was deemed nominal by the management as the underlying product sales continue to show positive trends. Artivion remains focused on regulatory approvals and expanding its commercial footprint, especially in key international markets like Latin America and Asia Pacific, where revenues increased by 25% and 15%, respectively.

Financial Position and Debt Management

As of June 30, 2024, Artivion had approximately $55 million in cash and $313.6 million in debt, reflecting a net debt leverage ratio of 4.1, down from 4.7 the previous year. The company does not anticipate a need to raise additional capital to meet its financial obligations or pursue growth, expecting net leverage to decline further to around 3.5x by the end of the year.

Positive Guidance and Growth Expectations

Looking ahead, Artivion has raised its fiscal year 2024 revenue guidance, now expecting constant currency revenue growth between 10% and 12%, adjusting the revenue forecast to a range of $388 million to $396 million. Furthermore, the adjusted EBITDA guidance has been increased to a range of $69 million to $72 million for the full year, representing a growth of 28% to 34% compared to 2023. This reflects the company's confidence in continued operational and sales success.

Focus on Innovative Product Pipeline

Artivion emphasizes its commitment to innovation, specifically mentioning NEXUS, a highly differentiated aortic arch stent graft system, as a potential game-changer in providing minimally invasive options for patients previously reliant on more invasive surgical procedures. The management indicated that the NEXUS trial, nearing completion, is expected to lead to significant opportunities in the aortic repair market, with a potential total addressable market estimated around $600 million annually.

Opportunities for Expansion and Market Leadership

The company's strategy includes leveraging its existing salesforce and product portfolio to gain market share, particularly in the stent graft and On-X valve segments. With a focus on clinical outcomes and competitive pricing based on differentiated products, Artivion is well-positioned for sustained growth. The management expressed strong belief in maintaining double-digit growth rates, with an expectation for adjusted EBITDA growth to outpace revenues significantly, achieving at least twice the top-line growth.

Conclusion and Future Outlook

In conclusion, Artivion's second quarter results underscore its strong performance and long-term growth strategy. The company’s commitment to innovation, coupled with effective cost management and a focus on expanding its international footprint, sets the stage for continued success in the medical technology sector. With a solid financial stance, positive growth guidance, and a robust product pipeline, Artivion is poised to engage effectively with the evolving demands of the healthcare market.

Earnings Call Transcript 2024-Q2

[Operator]

Greetings, and welcome to Artivion's Second Quarter 2024 Financial Conference Call. [Operator Instructions]

I would now like to turn the conference over to your host, Lane Morgan.

[Lane Morgan, executive]

Good afternoon, and thank you for joining the call today. Joining me today from Artivion's management team are Pat Mackin, CEO; and Lance Berry, CFO. Before we begin, I'd like to make the following statements to comply with the safe harbor requirements of the Private Securities Litigation Reform Act of 1995. Comments made on this call that look forward in time involve risks and uncertainties in our forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

The forward-looking statements include statements made as to the company's or management's intentions, hopes, beliefs, expectations or predictions of the future. These forward-looking statements are subject to a number of risks, uncertainties, estimates and assumptions that may cause actual results to differ materially from these forward-looking statements. Additional information concerning certain risks and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings and in the press release that was issued earlier today. You can also find a brief presentation with details highlighted on today's call on the Investor Relations section of the Artivion website.

Now I'll turn it over to our Artivion CEO, Pat Mackin.

[James Mackin, executive]

Thanks, Lane, and good afternoon, everybody. We're very pleased with our Q2 performance, which capped a strong first half of 2024 for Artivion, in which we made significant progress on our commercial, operational and financial goals. In the second quarter of 2024, we delivered constant currency revenue growth of 10% year-over-year, representing $98 million in revenue and adjusted EBITDA growth of 35% year-over-year compared to the second quarter of 2023. More recently, we amended our credit facility and option purchase agreements with Endospan. The amended credit facility provides Endospan with additional funding subject to progress towards completion of the nexus PMA, while the amended option purchase agreement significantly improves our acquisition terms for Endospan, should we like to exercise our option.

From a financial perspective, our Q2 performance was led by On-X, which grew 15%, followed by Stent Grafts, which grew 13% and BioGlue that grew 12%, followed by Tissue Processing at 7%, each when compared to the second quarter of 2023, all on a constant currency basis. In the second quarter, we also continued to benefit from our regulatory approvals and commercial footprint expansion in key international markets, especially in Latin America and Asia Pacific. As a whole, our results and regulatory achievements further validate our growth strategy and we remain laser-focused on expanding access to our differentiated product portfolio in existing and new markets.

From a product category perspective, as I just mentioned, On-X revenues increased 15% year-over-year on a constant currency basis as we continued to take market share globally with the only mechanical aortic valve that can be maintained in an INR of 1.5 to 2.0. Based on feedback from the field, our recent market share gains and the proven clinical benefits of the On-X aortic valve, we maintain our strong conviction that On-X is the best aortic valve on the market and we'll continue to take market share worldwide. Meanwhile, as I indicated earlier, our Stent Graft revenues grew 13% on a constant currency basis in the second quarter compared to the same period last year. Our Stent Graft portfolio remains a key component of our growth strategy, and we are encouraged by our strong results, which are driven by our differentiated product portfolio focused on the more complex segments of the stent graft market.

Today, the products in our Stent Grafts portfolio are primarily sold in Europe, where we leverage our existing direct sales infrastructure and create significant cross-selling opportunities across our unique aortic products offering. Our pipeline consists largely of bringing these proven products to the U.S. and Japan markets, which represents a significant growth opportunity. We also saw strength in BioGlue during the second quarter, which grew 12% on a constant currency basis. As we have discussed previously, we expect to see some variability in the growth rates of BioGlue from quarter-to-quarter, driven by the significant amount of stocking distributor business in this product line. On an annual basis, we expect BioGlue to grow in the mid-single-digit range. Lastly, on Tissue Processing, our revenues grew 7% year-over-year on a constant currency basis in Q2 as we annualize the benefits from last year's pricing initiatives, we continue to expect the tissue business to grow double digits for the full year of 2024 as we further leverage increased supply of our proprietary SynerGraft pulmonary valve and continue to benefit from our higher Ross procedure volumes.

For those unfamiliar with the Ross procedure, it's a double valve procedure in which the patient's native pulmonary valve is replaced by the patient's defective aortic valve and then the patient's pulmonary valve has been replaced by a donated pulmonary valve. The Ross procedure is considered the best option for young to middle-aged patients with a diseased aortic valve as it provides the best option for these patients to have a normal life expectancy. The use of the Ross procedures increased rapidly over the last couple of months and years due to significant long-term data demonstrating these significant clinical benefits. Our SynerGraft pulmonary valve has no competitive alternative and is the market leader in allografts used in these procedures.

Further, revenues in the second quarter were also driven by our continued progress in growth in Latin America and Asia Pacific, primarily through new regulatory approvals and commercial footprint expansion. Latin America and Asia Pacific delivered constant currency revenue growth of 25% and 15%, respectively, compared to the second quarter of last year. We continue to anticipate strong revenue growth for both regions for the full year and over the coming years as we continue to leverage our industry-leading product portfolio in these regions. We are also excited about the progress of our partner, Endospan is continuing to make on the U.S. IDE TRIOMPHE trial for the NEXUS aortic arch stent graft system. As of today, there have been 50 of the 60 primary endpoint patients enrolled in the chronic dissection arm. Given this current enrolment, patients are scheduled for procedures. We expect to complete this trial by the end of 2024. Assuming the trial endpoints are met, NEXUS remains on track for approval in the second half of 2026. As a reminder, aortic arch disease patients with aneurysms and dissections who received treatment have previously had little choice before NEXUS but to undergo open chest surgery, which is an invasive and risky operation associated with lengthy hospitalizations and prolonged recuperation. NEXUS is a highly differentiated technology that transforms a complex surgical aortic arch repair into a minimally invasive endovascular procedure. In 2019, we secured exclusive distribution rights for NEXUS in Europe and began leveraging our existing European direct sales organization to expand access to the technology and drive revenue growth. Based on our experience in Europe, we continue to see a significant global opportunity for NEXUS, which has been estimated on an annual global basis to be around $600 million.

Also in 2019, we provided a credit facility to Endospan to support the Nexus U.S. IDE trial and commercial operations. We also had entered into an option agreement to acquire Endospan until 90 days following the receipt of an FDA approval for NEXUS. Recently in July, we amended these 2 agreements, which has resulted in 3 major changes that Lance will cover shortly. We view our revised agreements with Endospan as an investment in the next frontier of aortic arch surgery. We also view it as a potential opportunity to meaningfully expand our total addressable market on significantly more favorable terms than we had before. We also continue to anticipate PMA approval for AMDS in 2025, which as we have discussed, would open up an addressable market here in the U.S. for about $150 million with no competitive alternatives.

In summary, we are very excited about our Q2 performance and look forward to sustaining our momentum throughout 2024 and beyond by driving continued growth in On-X, Stent Grafts and our SynerGraft pulmonary valve business by further expanding our global footprint in Asia Pacific and Latin America.

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

[Lance Berry, executive]

Thanks, Pat, and good afternoon, everyone. Before I begin, I'd like to remind you to please refer to our press release published earlier today for information regarding our non-GAAP results, including a reconciliation of these results to our GAAP results. Additionally, all percentage changes discussed will be on a year-over-year basis, and revenue growth rates will be in constant currency unless otherwise noted. Total revenues were $98 million for the second quarter of 2024, up 10% compared to Q2 of 2023. Adjusted EBITDA increased approximately 35% from $13.8 million to $18.6 million in the second quarter of 2024. Adjusted EBITDA margin was 19% in the second quarter, a 350 basis point improvement over the prior year, driven by a 320 basis point reduction in general and administrative and marketing expense as a percentage of sales. We continue to believe our sales and G&A infrastructure is very scalable and the significant leverage we have produced in the first half of the year supports our belief. From a product line perspective, On-X revenues increased 15%, Stent Graft revenues grew 13%, BioGlue revenues grew 12% and tissue processing revenues grew 7% in the second quarter of 2024.

I would like to proactively note that other revenue declined approximately $1.3 million and 42% in the second quarter of 2024. We do not break the segment out of our product as it is relatively nominal to the business overall. However, I do want to provide some additional color on these results. The decline in Q2 was driven by the timing of PerClot orders from Baxter as they work to manage down inventory levels. The order decline also had a modest negative impact to adjusted EBITDA in Q2. Though the underlying end-user sales of PerClot are continuing to ramp up, we expect these inventory dynamics to continue through the balance of 2024. Excluding this impact, our underlying business grew 11% in the second quarter of 2024 compared to Q2 of 2023.

On a regional basis, revenues in Latin America increased 25%, Asia Pacific increased 15%, EMEA increased 13% and North America increased 5%, all compared to the second quarter of 2023. As anticipated, gross margins were 64.6% in Q2, a slight decrease from 65.1% compared to the second quarter of 2023. The decrease was due to normal fluctuations in geographic and product mix. Q2 margins were in line with the gross margins we saw in Q1 and in line with our full year expectation.

General and administrative and marketing expenses in the second quarter were $49.3 million compared to $57.2 million in the second quarter of 2023. Non-GAAP general and administrative and marketing expenses were $47.3 million in the second quarter compared to $45.9 million in the second quarter of 2023, representing 320 basis points of leverage. R&D expenses for the second quarter were $7.5 million compared to $7.4 million in the second quarter of 2023. We still anticipate full year R&D spend as a percentage of sales to be relatively flat to prior year. Interest expense net of interest income was $8 million as compared to $6.1 million in the prior year. Other income expense included foreign currency translation gains of approximately $900,000 this quarter. Free cash flow was $3.6 million in the second quarter of 2024. Importantly, we continue to expect free cash flow to be positive for the full year 2024.

As of June 30, we had approximately $55 million in cash and $313.6 million in debt, net of $6.8 million of unamortized loan origination costs. It is important to note that this does not contemplate the impact of our recently closed amendment agreement with Endospan, which I will speak to shortly. Further, we do not anticipate the need to raise additional capital to fund our debt obligations, our investments in our channels or our pipeline in the foreseeable future. Our net leverage at the end of Q2 was 4.1, down from 4.7 in the prior year. At the midpoint of our EBITDA guidance range, we expect net debt leverage to be closer to 3.5x by the end of the year and to continue to decrease in 2025. In regard to the recently amended credit facility and options purchase agreements with Endospan, we are pleased with the combined results of these 3 major changes.

First, Artivion will now provide additional loans to Endospan of up to $25 million in 3 tranches, which we expect to fund with free cash flow. Second, the upfront payment associated with the purchase option is reduced by $75 million and is now $135 million after offsetting the loans; and third, the $100 million minimum payout for the earnout is eliminated. To reiterate Pat's comments, we view the amended agreement as an investment in the future of aortic repair, while simultaneously providing our Artivion with greater financial flexibility should we exercise our option to acquire Endospan.

And now for our outlook for the remainder of 2024. Given our momentum in the first half of the year, we are raising fiscal year '24 revenue guidance and now expect constant currency revenue growth of between 10% and 12% compared to the previous range of 9% to 12%. We expect reported revenues to be in the range of $388 million to $396 million compared to our previous range of $386 million to $396 million. At current rates, we expect FX to have a negligible impact on full year revenue growth rates. With our continued top-line revenue growth and general expense management through Q2, we are raising our fiscal year '24 adjusted EBITDA guidance and now expect to be in the range of $69 million to $72 million for the full year 2024, representing a 28% to 34% growth over 2023 and 280 basis points of adjusted EBITDA margin expansion at the midpoint of our ranges. This compares to the previous guidance range of $68 million to $72 million, representing 26% to 34% growth over 2023. As a reminder, we expect gross margins to remain at levels similar to 2023 and continue to expect to drive significant leverage from our global sales force and G&A infrastructure. Additionally, R&D expense is expected to remain relatively flat as a percentage of sales.

With that, I will turn the call back to Pat for his closing comments.

[James Mackin, executive]

So as you've heard, we're very pleased with our second quarter results, which reflect the continued strength of our highly differentiated and highly defendable product portfolio. We are more excited than ever for our near-term and medium-term growth potential as we further expand our presence across markets with little existing competition and no anticipated new entrants, by leveraging our existing global infrastructure and our ability to cross-sell into well-established account base. We are committed to delivering strong revenue growth and EBITDA growth through the balance of 2024 that expect to be driven by the following: first, strong growth in our Stent Graft business driven by our innovative portfolio; second, market share increases for On-X; third, continued expansion in Asia Pacific and Latin America from our channel investment as well as new regulatory approvals; fourth, expense leverage driven by our global sales force and G&A infrastructure; and fifth, continued adjusted EBITDA margin expansion and positive free cash flow.

Finally, I want to thank all the employees around the world for their continued dedication to our mission of being a leading partner to surgeons focused on aortic diseases. With that, operator, please open the line for questions.

[Operator]

At this time, we'll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Frank Takkinen with Lake Street Capital.

[Frank Takkinen, analyst]

I wanted to start with one on EBITDA. Obviously, the leverage profile continues to be impressive. I saw the updated guidance for the back half of the year. Help us understand in weighing investments into the business and EBITDA growth through the end of the year. I know in previous years, typically, you've had a little more EBITDA in the back half as a percentage of the full year versus the front half, and it's about equal is what the guidance is implying for the back half. So is there may be some additional investment going on there? Or is that just in the interest of maybe a little bit of conservatism?

[Lance Berry, executive]

Yes. There's a little bit of spin timing between second and third quarter. Obviously, we had a really strong second quarter for EBITDA, and we do expect a very strong second half. I do think we'll see Q3 growth probably be a little bit lighter than we saw in Q2 just due to timing. So it's really not anything more than that. And as a reminder, we don't have a ton of seasonality, but Q3 is typically our lowest revenue quarter, which does have a little bit of impact Q2 and Q3.

[Frank Takkinen, analyst]

And then maybe just for my second one, I'll ask a follow-up on On-X. Maybe can you break out unit growth versus ASP and then talk about pricing in that line item? Obviously, you continue to take share. Is there still additional opportunity to raise price in the On-X portfolio?

[James Mackin, executive]

Yes. We don't really break out the price volume. It's not something we typically do. What I can tell you -- 15% growth of our mechanical valve segment is -- we continue -- in the last 6 or 7 years, we've grown this business on an average of around 15% over the last -- I think since we acquired the company. We still have a lot of opportunity internationally, and we're still taking share in the U.S. even from our high share position. We're also increasing price. I mean, our recent post-approval data that came out shows an 85% reduction in major bleeding, which moves it a lot closer to a bioprosthetic valve . We're also seeing recent data that's come out on mechanical versus bioprosthetic data that's very compelling for people moving to the On-X valve in patients under 70. So we're very bullish on what we have, and we feel like we've got the best valve and we're going to keep taking share.

[Operator]

Next question comes from Suraj Kalia with Oppenheimer.

[Suraj Kalia, analyst]

So Pat, just teeing off on the last comment you made to the previous question, can you -- I believe last quarter, On-X was about 30% OUS share, 50% plus U.S. Can you give us some color as to where we are exiting Q2?

[James Mackin, executive]

Yes. So what I will tell you without getting into the granularity is we're growing both markets double digits. As I just said, we've got -- your share comments are pretty accurate. We've got about a 30% global, and when you break that down, it's like over 50% in the U.S. and 20%, 25% internationally. So we clearly have more opportunity internationally. But I think the big story on On-X is really all the dynamics that are going on. And frankly, it's our aortic valve portfolio in patients under 65. Our Ross, our pulmonary valve for the Ross, we have the only SynerGraft valve for that. It's growing double digits consistently. On-X is growing consistently double digits with our new post-approval data. As you well know, you're very well read on the data. It's a dynamic market, but there's more and more negative data coming out on TAVR and patients under 65, on bioprosthetic in patients under 65. The difference in reoperation and mortality out to 15 years, benefits mechanical valves, and they've seen lots of reoperations in patients getting TAVR under 65.

And I think that's a real problem, right? I mean there's a difference in reop and mortality at 15 years, These are 65-year-olds. That's a big deal. So again, I think we've got a great story with the On-X valve. We're just going to keep telling our story.

[Suraj Kalia, analyst]

On NEXUS, remind me, when you talk about chronic aortic dissection, and the need and the $600 million TAM, I get that. The enrolment of the trial, again, if memory serves me correctly, it's like 5, 6 patients per quarter. Is that by design? Is that due to patient selection? Just help us understand, take a leap from here, from the trial enrolment to if you'll acquire Endospan, how NEXUS layout and whatnot, in commercial adoption, how should we think about the speed of adoption?

[James Mackin, executive]

Yes. So I would say there's a lot in that. I think in both of our messages, Lance and I commented on, we're making an investment in the future of aortic technology. Patients today who have to have a chronic dissection repaired, and we have technology for that, you're looking at a 7- to 10-day ICU stay. We have patients in Europe that are getting the NEXUS device that are standing out in front of the hospital the next day. So it's a big deal. But like any new technology, there's going to be an evolution, right? So what we're talking about right now is a single branch into the [ dominant ]. That's the U.S. IDE trial called TRIOMPHE. We've enrolled 50 out of 60. We should enroll that by the end of the year. I think that will have modest uptake when we launch it. But we'll be looking to start a 2-branch trial probably right after that. And we think that, that technology can capture half the chronic dissections in the world. So it's a big deal, and we're very interested in the space and which is why we recut the deal. The data has been excellent, and the trial is almost done. So yes, we're very excited and look forward to having to report out.

[Suraj Kalia, analyst]

In terms of your sales reps, walk us through how does the bell curve look for sales rep productivity? At this stage in Artivion's evolution, are we at that point in terms of higher elasticity to a sales rep commission structure? Just kind of put this thing together how you're seeing the direct force, the sales force U.S. versus OUS.?

[James Mackin, executive]

So to me, I think this is one of the real benefits you're seeing and how we can grow top-line 10% and bottom line 35%. We've got an excellent sales force. You talked about here in the U.S. as well as in Europe and some of the international markets. Most of our reps in the U.S. have 10 years with the company. They know their customers. They call on them for Ross procedures with SynerGraft. They call them with On-X for aortic procedures, they call on them with BioGlue. When we get AMDS approved, they will call on them for that and when we get our [indiscernible] approved, they'll call on them for that. So the cardiac surgery segment is a much different segment than many of the other kind of med tech spaces. You don't have to scale your sales force one-to-one with your revenue, and you see that in our leverage. So we're very excited about bringing our AMDS when it gets approved in late 2025, but we can just drop it in our existing reps' bags and see a lot of that incremental profitability go right to the bottom line, which has been part of our story all along.

[Operator]

Our next question comes from Rick Wise with Stifel.

[Unknown Analyst]

This is John on for Rick today. Another strong quarter in this 2Q. Just wanted to sort of look ahead, think about the bigger picture. You've provided guidance or a rough structure at your 2022 Analyst Day at [ 20-25 ] plus, but just thinking about the new approvals potentially coming through, the new potential products you're adding to the portfolio and the areas where you're innovating, just wanted to get your sense on the longer-term, bigger picture looking ahead, should we expect more of the same sort of double-digit growth, 20-25 plus?

[Lance Berry, executive]

Yes. So we've stayed away from kind of re-upping long-term guidance, we're just now finishing. We gave some formal targets back in '22 through 2024. So I hadn't quite finished those out yet, so we're not sending out some new ones, but I mean, I think we feel good about saying like, look, if you think about us looking further out with the portfolio we have now and then the things in our pipeline, we should be able to be a consistent double-digit grower for an extended period of time. And then really, we ought to be able to drive a lot of leverage off that. So we ought to be able to grow the bottom line really at least 2x ,the top-line, I mean, if you look this year, our guidance is 3x the top-line at the midpoint, and we're not committing to that forever going forward, but there's a lot of leverage opportunity in the business. And our core business is very dependable. You've got PMA-based products in markets with not a lot of competition that are really unlikely to see new entrants, and then we have this amazing pipeline. So at a high level, we feel comfortable about double-digit growth and growing the bottom line at least 2x that.

[Unknown Analyst]

And just as I look through the rest of the year, I realized last year, maybe in the second quarter, you guys put through a price increase. Just wanted to think about that in 245. Is there another opportunity for Artivion to potentially take price? Or are you all done for a bit?

Yes. I've talked about this on previous calls. I mean we look at the portfolio, we look at how differentiated our product line is, and in some cases, we have significant clinical outcomes where we spent millions of dollars generating the data that nobody else has. And SynerGraft pulmonary valves is the perfect poster for that. We spent $1 million developing the technology, patenting it and getting the clinical data that now has 25-year results, which is the best valve operation for, I would say, a patient under 55 years old. For something like that, we're going to charge a premium price for it because it warrants. I talked about On-X. We just invested millions of dollars in the post-approval trial, and we came out with data that nobody else can match. And I think that, that clinical data warrants a higher price. So we're not going to go through kind of every line item on the portfolio, but you can get a sense of the things that are highly differentiated, backed by patents, backed by compelling clinical data, we will charge what we think is a fair price for those.

[Operator]

[Operator Instructions] One moment, please, while we poll for questions.

Our next question comes from Jeffrey Cohen with Ladenburg Thalmann.

[Jeffrey Cohen, analyst]

I heard Lance call out on Baxter and the other revenue line. Are there any puts and takes there in PerClot, or do you have any clarity or see through on how things are going on their side?

[Lance Berry, executive]

Yes. I mean, first of all, at a high level -- I mean it's not really very meaningful to us. So I mean it's tiny to Baxter just to put it in context. The only reason we brought it up is it just sticks out because the decline was so significant. And I mean, our visibility is not great to underlying sales, but our understanding is they're continuing to ramp up. And this is just some basic managing the balance sheet on their side and being good about inventory management is creating some fluctuation in what's a very small line item, so it just jumps off the page. So in general, we're not going to talk about Baxter's business. That's their business. But again, I would just say it's not meaningful to us, so it's really not meaningful to them.

[Jeffrey Cohen, analyst]

And then secondly, could you talk about BioGlue a little bit? It looked extremely strong for the second quarter coming into [ 1855 ]. So any commentary there on any outlook as far as the back half of the year or a general commentary on its strength or specific geographies

[James Mackin, executive]

Yes. I think that Lance mentioned it in his comments, right? I mean, BioGlue grew like 1% in the first quarter and it grew 12% in the second quarter. Don't plug 12% on your model because it's a very kind of lumpy business. We have a lot of indirect. We sell in 110 countries around the world. So you can -- the phasing of every 90 days, you get some bigger in some quarters, less than other quarters. But on average, we think that, that product line is going to grow kind of in the mid-single digits. So obviously, we had a very good quarter this quarter, and it's obviously extremely profitable.

[Jeffrey Cohen, analyst]

And then lastly for us, could you talk a little bit about the Stent Graft portfolio for the quarter, areas of weakness or strength or any specific SKUs or items which you're doing well or not as well?

[James Mackin, executive]

Yes. We don't -- I mean, we made a move, I guess, a couple of years ago to kind of put these large buckets in place. I can tell you the area that we focus on, which is the highly differentiated faster-growing, higher-margin stent graft segment, we're growing double digits in every category. I'm not going to break out line items and give competitors' road maps. So we're doing extremely well frankly, even in the nondifferentiated, the more competitive stuff, we're growing double digits. So the whole portfolio is doing really well.

[Operator]

Mr. Mackin, there are no further questions at this time. I'd like to turn the floor back over to management for closing comments.

[James Mackin, executive]

Yes. Well, thanks for joining. Again, we had excited about the quarter, and thanks for joining the call. We've obviously got a lot of great opportunity in front of us. As you heard both Lance and I talk, we're executing well. We're growing 10% top line and 35% on the bottom line. Again, this year, we did it last year. We just talked about our kind of -- we're not giving guidance, but we think we can grow double digits top line and twice that on the bottom line. We've got an exciting pipeline, a great channel, a great portfolio, highly differentiated, and we're very excited about building this aortic company and treatment and taking care of more patients, so our surgeons have what they need from a technology standpoint. So thanks for joining.

[Operator]

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.