Welcome to the LeMaitre Vascular Q3 2023 Financial Results conference call. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising you that your hand is raised. To withdraw your question, please press star one one again. As a reminder, today's call is being recorded. At this time, I would like to turn the conference over to Mr. J.J. Pellegrino, Chief Financial Officer of LeMaitre Vascular. Please go ahead, sir. Thank you, operator. Good afternoon, and thank you for joining us on our Q3 2023 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, November 1, 2023, 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. Thanks, J.J. Q3 was an excellent quarter. Q3 was similar to Q2 on the top line, with 16% organic sales growth, but it was better on the bottom line. Through the year, we've gained control of op expenses. Spending growth was 26% in Q1, 19% in Q2, and now 14% in Q3. As a result, op income grew 49% in Q3, and EPS was up 36%. Reported sales growth was 21% in Q3, spread across all geographies. APAC was up 30%, EMEA 24%, and the Americas 20%. By product, bovine patches were up 22%, valvulotomes 27%, bovine grafts 15%, and carotid shunts 24%. Our bovine patch and carotid shunt businesses continued to excel in Q3 as key competitors have left the market. Valvulotome growth might be due to the recent publication of the BEST-CLI trial, which showed superior results of vein bypass versus stents, angioplasty, and atherectomy. Hospital procedures remained elevated in Q3 as the 2023 return to hospital continued, and our January 1 price increase has largely been accepted. In a time of high inflation, supply chain disruptions, and the CE Mark transition, hospitals are now more attracted to our long-standing no back orders promise, and price might have become a secondary topic. Our 16% organic sales growth in Q3 was 11% price and 5% units. Feet on the street and our growing international presence also helped. We ended Q3 with a record 136 sales reps, 15% more than a year ago. We generally have posted higher sales growth rates internationally as we keep entering new markets. LeMaitre's new Bangkok office opened in August, and we began selling directly to Thai hospitals. We also opened a new, expanded Madrid office in September, and now we're planning a French sales office for H1 2024. France is our sixth largest market. For a company with a French name, it's a bit odd that we've never had a dedicated French sales office. Paris will be our 14th sales office and will now be able to serve the five largest European countries with dedicated customer service reps in their country and their languages. Previously, our European customer service reps were centralized in Frankfurt. This relocalization of customer service tightens our hospital relationships and likely increases sales. Important regulatory projects underway include our Artegraft and RFA filings in Europe, as well as our two Chinese XenoSure filings for cardiac and peripheral. It's likely that all four of these filings will be at their respective regulatory agencies by H1 2024, and we'd expect approvals two years after that. In H2 2024, we'll also file for Artegraft approval in Canada and Australia. These filings are in addition to the MDR CE transition in Europe. As you may know, Brussels has extended the MDR deadline to 2027. We have approximately 17 product categories needing this new CE stamp or letters to file, so this is a considerable undertaking. To conclude, 21% sales growth in Q3 and 49% op income growth resulted from price increases, restrained op expenses, and the continued return to hospital by patients and staff. Our profitability and $97 million of cash on hand provide safety and strategic optionality. With that, I'll turn it over to J.J. Thanks, George. As George noted, operating expenses in Q4 2023 were up 14%, and operating expense growth has slowed from 20%-25% in H1 to under 15% in H2. If the sales force ramp and post-COVID rehiring was our mantra in 2022, it's safe to say that hiring restraint and cost containment has been our 2023 theme. We had 450 employees at the end of 2021, 591 at the end of 2022, and now 613 at the end of Q3 2023. One of our notable internal goals throughout 2023 was to finish the year with fewer than 625 employees. This target seems achievable. Increased sales and cost constraints has improved the bottom line considerably. In Q1, operating income growth, excluding special charges, was 3%. It was 8% in Q2, 49% in Q3, and now we're guiding 44% in Q4. In Q3, we posted a gross margin of 65%, up 80 basis points year-over-year. The increase was driven by average selling price increases and direct labor productivity improvements. The benefits of a larger and more efficient manufacturing team are starting to come to the P&L. In retrospect, our 2022 manufacturing hiring surge was well timed with the global return to hospital of patients and staff. Units are up and back orders are down. Cash at the end of Q3 2023 was $97 million, an increase of $6.8 million in the quarter. This increase was driven by cash from operations of $11.8 million, which was partially offset by dividends of $3.1 million and capital expenditures of $1.1 million. For guidance, please see our business outlook issued in today's press release. A few Q4 highlights include: reported sales growth of 20%, organic sales growth of 16%, operating income growth of 44%, and EPS growth of 43%. This $600,000 upward revision to our Q4 operating income guidance is largely due to an improved gross margin and tighter expense control. Separately, we have lowered Q4 sales guidance by $1.5 million due to three topics which have evolved since our last guidance: the strengthening dollar, RestoreFlow output constraints, and the continued U.S. export ban on sales to Russia. Finally, I would like to welcome two new analyst teams to the LeMaitre story. In September, Suraj Kalia and Seamus Contorno from Oppenheimer initiated coverage. While in October, David Turkaly and Danny Stauder from JMP initiated coverage. Thank you to both teams, and we look forward to working with you. With that, I'll turn it back over to the operator for questions. Thank you. As a reminder, to ask a question, please press star one, one on your telephone and wait for your name to be announced. To withdraw your question, please press star one, one again. One moment while we compile our Q&A roster. Our first question is going to come from the line of Brooks O'Neil with Lake Street Capital Markets. Your line is open. Please go ahead. Thank you. Good afternoon, everyone. Congratulations on a terrific quarter. I'm curious, I guess I'd like to ask David, if you don't mind, if he could comment at all on the M&A environment. It seems to me like, the cash balance is robust, and perhaps some of the challenges that are affecting the world may be freeing up some tasty morsels from some of the big, medical companies out there with whom you talk. Any update would be helpful. Thank you very much. Hi, Brooks, and thanks for the question. Yeah, obviously, having a building cash balance is very helpful. In the quarter, we increased the cash $6.8 million, and we're up to $97 million. When you combine that with our over $40 million of EBITDA, gives us a pretty big war chest to go after acquisitions. In terms of, you know, the environment, I would say, of course, valuations are down. They're off about 20% since our last call on August first, and small and mid-cap companies, as you know, are trading at less than 3x EV to next 12 months sales. So in terms of public multiples, the valuations have come down. I think it always takes private sellers a little while to digest and get the email. But yeah, you know, so that's the environment. In terms of targets, I would say we're continuing to stay disciplined, focusing primarily on targets in the middle of the fairway, which are these open vascular targets with more than $5 million or $10 million of revenue. We like these, these niche-y, open vascular markets. But we have been hunting adjacently. I'd say probably more a little bit in the cardiac surgery market. And, you know, we have ongoing discussions at various stages with different potential sellers, and so, you know, we're out hunting. We know it's been a little while since we've done an acquisition, a little over three years. But, you know, we're waiting for a deal that we feel really good about, that deserves our capital. So, we're out hunting, and at some point, you'll see something pop out of the toaster. Great. Thank you very much. Congratulations again on a terrific quarter. Thanks, Brooks. Thank you, and one moment for our next question. Again, ladies and gentlemen, if you would like to ask a question, please press star one one on your telephone. Our next question comes from the line of Michael Petusky with Barrington Research. Your line is open. Please go ahead. Hey, good evening. J.J., sorry, if you mentioned this, I did not catch it. Did you mention cash flow from ops in the quarter? In the quarter, it was 11.8, if I recall. Let me check that, Mike. Yes, it was 11.821. Okay. All right, great. Let me just follow up on Brooks's question around M&A real quick. Dave, you know, obviously, you know, we're hearing more, more targets, more attractive targets, but also cost of capital is, is, you know, materially up as well. I'm just wondering how you guys, how you MBAs think about the cost of capital and, you know, especially what that means for larger deals. Obviously, you know, your balance sheet and cash flow support, you know, smaller or maybe even mid-sized deals. You guys have repeatedly suggested, "Hey, you know, we had, we had great, you know, a, you know, a great success with Artegraft. We're, you know, more than open to larger deals." How does cost of capital and larger deals sort of compute to you guys at this point? Yeah, I would say, obviously, the cheapest form of capital is the cash on the balance sheet. You know, if we're up near $100 million in cash on the balance sheet at the moment, we probably have $80 million of dry powder. And, you know, when you put that in the bank and earn a 5% money market return, it's not that expensive. So I would say, of course, we'll use our cash first. Secondly, absolutely, debt is more expensive than it used to be, but it's cheaper than using our own equity, and so we go to that next. And as I mentioned, the EBITDA is north of $40 million. Probably, you're going to easily borrow 3x that, and that's excluding pro forma EBITDA. So we normally do accretive acquisitions, and so the borrowing capacity could be higher. Of course, in this environment, you know, we're not going to over lever the balance sheet. And then I would say third, and I'll let J.J. add any color when I'm done on this. You know, third would be issuing equity. You know, that would have to be a much larger deal. Of course, our resolve would have to be much, much higher. There are deals out there where I could picture doing that. There aren't that many, but there are some. So that, for me, I guess, would summarize the pecking order of how we would access capital to do larger deals. Okay, great. And I guess, George, you mentioned that some key competitors have left, you know, some markets in which you guys compete. Could you sort of tease out whatever details you're willing to share there? Thanks. Sure. Yeah, of course. And one of the... They're both sort of old stories here. Maybe one's a year and a half old, maybe one's half a year old. But Becton Dickinson has completely left the shunt market over in Europe, dragged down by Europe. They've done it for the whole world, so they're out of the shunt market. And I would say they were either the key competitor or the second competitor over there. So our market shares over in Europe, and shunts are now approaching 70s, 80s, and 90s in the various countries over there. And then in the bovine patch world, we've had one Canadian guy, BioIntegral, has been taken off the market. They could not re-up their CE marks, and then Abbott has left the large patch, more the cardiac patch market, and that is providing crazy growth rates for us in our cardiac patch market. That product line for us is called CardioCel. You've heard us talking for years about the product XenoSure. That's more the peripheral patch, and CardioCel is more of our cardiac patch. Of course, the new Xeno patch is also a cardiac-type patch. Since you mentioned it, and before I jump off, the Aziyo partnership, I mean, how, you know, you guys have now, I guess, been involved in that at least a couple, two, three quarters, it feels like, how is that working out? Any commentary just around that relationship? Thanks. Yeah, Mike, it's Dave. I'll take that. I'd say it's going fine. The sales are probably running a little bit less than what we provided as guidance on the last call. I would say that, you know, as we look here over the next couple, few months, at the moment, our North American, our U.S. sales organization is compensated really outside of their quota system on this patch, and starting in January, the patch will be included in their quota. So we're sort of interested to see, you know, will that affect the revenue? Let's see how that affects or doesn't affect that revenue. But the good news is, you know, we've got six months at least to think about whether we want to acquire this. The soonest we could exercise that option would be in April of next year. And as I learned way back in business school, you should never kill a live option. So we're thinking about this, right? And then, you know, if we do exercise it, it would certainly be accretive, right? And so, it's something we're paying very close attention to. But at the moment, I know you're not asking this, we don't have further thoughts about would we exercise it or not. But yeah, I would say it seems to be going well. One spin-off benefit is, as George mentioned, it's used mostly around cardiac surgery. We picked up a lot of customers, a couple hundred customers- ... which has helped us actually sell some of our other cardiac surgery products. So there are some nice spin-off benefits occurring as well. Okay, terrific. Thank you. Thanks, Mike. Thank you. One moment as we move to our next question. Our next question is going to come from the line of Jim Sidoti with Sidoti & Company. Your line is open. Please go ahead. Good afternoon, and thanks for taking the questions. You know, the first one, a lot of talk in the last few weeks about Ozempic and the other GLP-1 drugs, and its impact on some other names. Are you seeing any impact on your business? Hey, Jim, thanks for the question. It's George. No, clearly not at this time. Okay. Do you expect any impact over the next two to three years? I mean, that's a long thing, and there's still a lot more to learn about that. My sense is our answers won't really add to this, but I'm happy to run through some stuff. We knew there'd be questions on GLPs, so if you want, I can give you a little blurb on sort of where we came at. Would you like that? Sure. Okay. So, I guess the recent 20% major adverse cardiovascular event reductions from GLPs, these headlines really got some attention on Wall Street, sort of the elephant in the room in most of these medical device, George and Dave are going to add to your folks' understanding of this, but we'll take a swing at it. So. And to start with, before we get into this, of course, everyone here is rooting for ways to reduce cardiovascular disease. I'll call it CAD and PAD for just for brevity here. But our take is that any GLP impact on CAD or PAD revenues seems very uncertain and very far away. This 20% headline, which is, I think, what most people are taking away from this whole thing, it quickly turns into a 6% a year headline because those events, the 20% events, right, the cardiovascular major adverse cardiovascular events, we'll call them MACE, if you will, they took place over 3.3 years. So if it's a 20% reduction, that's a pretty quickly it turns into a... If you're looking at the revenues of a company, you probably want to mark that down to 6%, and then you get that down to 4%, because a third of those events are death by heart attack. Of course, I hate to get technically or a little bit grim, but if we can manage to prevent death, it's a great outcome for both the patients and then also, a little oddly here, for the companies that sell devices to those patients who live longer. So roughly speaking, you can pretty quickly get the headline down to 4% per year. That's assuming that the 42%... And that would be on the whole company if all 42% of adult obese Americans were on the drugs, were on the GLPs, and that's 108 million people. So we keep coming back to, it's really unlikely that many people are going to be on these drugs, but you know, you never say never. You don't know—none of us on this call know in 10 years if this is going to be another statin or what it, what it's going to be. I think Abbott has come out on a couple of calls saying they think it's about 12 million Americans will be on these GLPs, and this sort of aligns with that. We've all heard this $80 billion in revenue for the analyst estimate, this peak revenue for the GLPs out there in, I don't know, X years. No, no one's putting a number on it, but... And so that would be 12 million being on it. Just for sort of comparison, so we can discuss this, Lipitor launched in 1997 as... So maybe the GLPs are another statin, right? Who knows? 40 million Americans are on statins, and I would say maybe the most important topic that you could think about is that even though the statins have been out there, and lots of us, lots of us 59-year-old men are on statins, the need for CAD and PAD devices has only increased over this quarter of a century. So I think maybe this could be like that, but again, I don't know. I don't think any of us knows. The Jefferies analysts who are covering us have written some really nice pieces on this. They might be on this call. I don't know if they are. They've published three... And I'll close up here. I know this is a bit of a long ramble, Jim, and you probably didn't ask for all this, but I'll close up quickly here. They published three lengthy GLP reports in the month of October, and they go all around, and they, they make good proofs everywhere, and they come back to this mantra that they repeat over and over: GLPs are indeed... So I'm definitely stealing this from their report. "GLPs are indeed a big drop in the bucket, but the bucket's much bigger and the bucket wins." And I think what they're trying to say is cardiovascular disease is the number one cause of death in the world. It's a very big bucket. It's unlikely that it goes away because of this. In all of this, we didn't talk about the fact that 40% of LeMaitre is OUS, and I think we all know that maybe this comes to the U.S. and Germany, but I don't think it's off in Japan and Thailand for a very, very long time. I hope that's a good swing at it, Jim. I'm happy to go in any direction you want with it on that, but that's sort of what we got to. Okay. No, that, that was exactly what I was asking for. But thank you. You said you ended the quarter with 136 sales reps. You think you're at the right number now, or do you think you'll continue to add in the fourth quarter? Right. So we feel like we're going to end the year between 135 and 140. So we maybe pick our way down the field and grab one or two more, but we're good for now. I do think that the growth of the sales force is a continuing objective, and I'm not going to give what are we going to do next year, but I definitely feel like it's a growth vehicle for us. We're really, I don't know, feeling our oats is the wrong word, but we're feeling really good about the growth of these offices and the growth of these reps around the world, everywhere. I mean, it's. We're growing everywhere with reps. ... All right, and then the last one for me. You know, you indicated the theme for 2022 was to build up the staff, get capacity going for 2023, was to get operating margins improved. What would you do you want to tell us what you think the theme for 2024 will be? Right. You want an advanced copy of our plans. We are Yeah Deep in discussion and lots of bureaucratic, long meetings trying to figure out. We publish this thing called the planks, Jim. We have nine objectives every year, and it's on our walls. All- if you visited our facility, I know it's been COVID and everything, but if you came up here, you'd see they're all over our walls. We'll have that posted. I think the last meeting is actually... Is it this Friday or next Friday? I think it's next Friday is the last meeting, so we'll have that all sorted out by next Friday, but it's a little early to share. All right. All right. I give it a shot. Thank you. Thanks, Jim. Thank you. One moment as we move on to our next question. Our next question is going to come from the line of Suraj Kalia with Oppenheimer. Your line is open. Please go ahead. Good afternoon, everyone. Can you hear me all right? Yes. Yeah, perfect. So, one of the key things, and forgive me, I joined a little late. What was the contribution of price in the quarter? 11% and 5% units, Suraj. Got it. Fair enough. And George, if and following up in a commentary on GLP-1s, on a relative basis, you know, just given the categories and how you'll compete, you know, in the different product segments, am I wrong in thinking that, you know, you'll should be, or LeMaitre should be relatively more insulated than other cardiovascular companies? I understand your pushback on the 4% and so on and so forth, but just on a relative basis, either way, shouldn't we also look at it that LeMaitre is relatively insulated and hence the impact, if at all, should be de minimis? I mean, the thing about LeMaitre that you have to keep knowing is that we're really diversified by product categories, by disease state, and by geography. And again, 40% of our revenue is OUS. Is that right? Yeah, 61% USA. So it's a very even though we seem like a small company, because I think our guidance here is $193.6 million in revenues, we seem like a small company because it's only a hundred and ninety-six-$193 million in revenues, but I think we act and feel like a very diversified, larger mid cap because we're everywhere with a lot of different devices. So I think you're right, but again, I, I'm not sure anyone knows, right? This is all we're going to. We're all going to work down the field here and figure this out. The thing about these studies is not much information has come out yet, right? We really don't know much. No, fair, fair point. And the key study will be released, I believe it's next Friday, so I'm sure there'll be a lot of discussion. George, in terms of just following up, a final question in terms of the 40% OUS, again, maybe I'm just stretching it here, forgive me if I am. How do you all, you know, think through the various buffers for risk mitigation OUS, just given everything going on, geopolitical, FX, you know, things seem to be amping up, and given your exposure, you know, just kind of talk to us as to the buffers, you know, from a risk management perspective. Thank you for taking my call as well. Right. Okay. Okay. Yeah, it's a great question. And maybe it goes back to how do we choose to get into the markets that we choose to get into internationally, I think is your question. And I would say we've been very cautious, maybe with the exception of Thailand, which is not exactly what I would call a Western democracy, but we've been very cautious in trying to sort of follow what I would call, to be pithy about it, the British rule of law. So you go to places like Canada, you go to places like Japan, you go to places like the U.K., Singapore, places where you wouldn't be... You know, you'd be nervous, but if you got, you know, put up on some crime in some of these countries, you'd get a jury and you'd get a trial by jury. So I think most of the places we've gone have been those type of places. And so I think the 40% that we do derive overseas is in fairly safe places like Spain, France, Germany, Italy, the U.K., Japan, and Canada. And I just reeled off in the U.S., those are the seven biggest countries of our revenue. We don't go to places like Russia. We stayed away from Saudi Arabia. We stayed away from South Africa. So we've been, you know, it's very, it is very thoughtful. I would say the one slightly odd duck here would be the Thailand thing, which is new, but we had a very big distributor there, and we felt like it'd be worth taking a risk. And what again, I would not categorize that as a voting democracy right now, and I but that's the only one. Got it. Thank you. You're welcome, Suraj. Thank you. Welcome. Thank you, and one moment as we move on to our next question. Our next question is going to come from the line of Michael Sarcone with Jefferies. Your line is open. Please go ahead. Great. Good afternoon, and thank you for the shout out before. You're more than welcome. Thanks for the nice research. It's very thoughtful. Great to hear. Just a, you know, first question, you had the 11% ASP contribution this quarter. I was wondering if you could comment on, you know, what, what's baked into the 16% organic growth guide for 4Q? ... from a price standpoint, and then, you know, looking forward, how do you think about the sustainability of that, ASP contribution, you know, going forward into 2024? Okay. So first answer is not going to be very helpful to you, which is we try not to break. We're guiding, what, 16% organic for the quarter? Yep. We try not to break that out by units or price. You're looking backwards, though, you could make some logical inferences, which is, I feel like I don't know the exact numbers right now, but the relationship between price and units has been a bit stable this year for these three. 13% ASP in Q1, 9% in Q2, and now 11% in Q3. Going forward, which is part of your question, you're trying to break into 2024, which we always try not to go into, but we'll, we'll play along a little bit here. Going forward, I think that, you know, the LeMaitre story has been about try to get into niche markets where you have big market share, and I'd reel off the valvulotomes, the shunts, XenoSure, we're a number one player there. Be in markets where you have pricing power, and be in markets where you think worldwide pricing is set in Burlington, Massachusetts. And so I don't... That's not gone away. You know, you haven't seen us change up our segments here with acquisitions here. So there's a lot of, there's a lot of segments, including Artegraft here, where I do feel like you're setting prices in Burlington and Frankfurt, and it, we don't have to go to Arizona with Gore and duke it out with them about what the PTFE price is. That's their issue. But I, but I do think this is a, you know, a bit of LeMaitre is a price play, and we keep having pricing power. And the, the good thing here is if you want more pricing power, the Brussels is about to give it to you in spades here. They keep making these regulatory barriers higher and higher with the MDRs, and the people, the, the competitors are falling off like fleas. In the smaller markets, they're just going away, and so therefore, it gives us more pricing power. To wit, you know, the shunt pricing that we've had in the last three years, the power they've gotten has been largely because Becton Dickinson left the market, and they left the market because Brussels has put up regulatory barriers that are too high for people to climb over. So I think the story continues unchanged. I won't project what 2024 will look like, but I don't think the story is changing that much. Mike, this is J.J. Another way to think about Q4, and one of the many ways we think about it, is sequentially what's going on. And so those price hikes that I talked about for Q1, Q2, and Q3 are kind of the same, in and around 10%. So you're kind of thinking probably you're going to do about the same in Q4, and then what else is different? And so the things that's kind of stuck out from Q3- Q4 this time around were, one is FX. The FX has moved a lot, and so sequentially from Q3- Q4, it's like a $600,000 headwind. And so that's one topic you have to take into consideration. The number of days in a quarter, those matter, we take those into consideration. Seasonality matters a lot for us as well. Q3 is generally the slower quarter, and Q4 is sort of behind Q2, if you will, in terms of seasonality, and so there's an uptick there. What does that mean? What's it been historically, and so what will it be this year? Then we look into specific stories, like we've had a RestoreFlow, sort of back order topic in Q3 that we're working our way out of, hopefully in Q4. As we get into Q1, what does that mean? Well, maybe that adds an extra whatever, few hundred thousand dollars. There's a Thailand story that we went direct there in Q3. The Thailand distributor stuffed the channel, essentially, so we didn't get the sales we thought we were getting in Q3, but we'll get them in Q4, and maybe that's a couple hundred thousand dollars or so. So sequentially, I think the ASPs you can think of constant as consistent, but other topics coming and going to get to the sort of $49 million we guided. Got it. That's really helpful. Thank you. And just a follow-up on that: J.J., I think you and I have spoken about in the past, historically, you know, the price algorithm has really kind of been that mid-single digit level. But I guess given the regulatory considerations that you're mentioning, you know, is it fair to think that maybe kind of the new paradigm is above what we've seen historically? You know, I think we'll take it year by year. But I think the cycle you're in right now, at least for this year, and then maybe we can talk a little bit about next year, but not too much. This year, it's all about mostly valvulotomes and shunts. And so, one of our valvulotomes was priced below one of our other valvulotomes. We brought that price up to essentially match it. And being the premier provider of these devices, the customer said, "Fine." And so we got really nice price hikes in valvulotomes. And in shunts, the topics George was talking about, with other competitors going off the market, certainly helps our share and our leverage in those spaces, and so we've gotten nice price hikes there, particularly in Europe. And then the third thing we did this year was we put in, and we've done it before, but I think we really did it a little more forcefully this year, was put in pricing floors in some of these product lines. And so you may not discount beneath whatever that pricing floor is if you're a sales rep, whereas in the past, you could have. And so to the, to the extent that we use pricing floors in the future, you might get outsized ASP growth versus your 5% historical. To the extent there's other product lines in the bag that are mismatched in terms of pricing that can be fixed, you might get outsized pricing in the future. So we'll see where that goes. But right now, we're certainly in a, in a nice spot in terms of pricing. Very helpful. Thank you. Thank you. One moment as we move on to our next question... Our next question is going to come from the line of Danny Stauder with JMP Securities. Your line is open. Please go ahead. Hi, Daniel, you're up. If you want to ask us a question, it's George. Operator, they might have bad phones out in San Francisco. Why don't we move along? All right, just one moment, please. Our next question is gonna come from the line of Scott Henry with Roth Capital Partners. Your line is open. Please go ahead. Thank you. Good afternoon. Just a couple very quick questions. First, if you don't mind, could you give me the mix between biologics and non-biologics? Biologics was 51% of sales in the quarter. Okay, thank you. And then, looking at the numbers, sales and marketing was kind of down sequentially with employees up. Any thoughts of why? And even on similar revenues to Q1, it was down significantly from Q1. How should I think about sales and marketing in Q3 and how that should be indicative going forward? Thank you. Yeah. So one of the reasons selling and marketing has been elevated in the first part of the year is because sales results were so strong versus quotas. And I think as we get through the year a little bit, quotas start to ramp up a little bit. And so even with the 16% consistent organic growth in each of the quarters, the answer versus quota changed a little bit, and so commissions and contests were down a little bit. Q3 is also seasonally a time where selling and marketing goes down a little bit. There's a little bit of this travel and conferences and all that kind of stuff, and so down there as well. And so I think there's a couple of good reasons for that. In Q1, the weird, the weird answer there is we had a sales meeting, and so that's sort of a, I don't know, a $600,000 or $700,000 event. Globally, there's one for each of the main geographies. You can see in absolute dollars sort of coming down from $1,090,000 - $1,020,000, from Q1- Q2. Maybe that's how that cadence works throughout the year. Okay, great. Thanks for the color. And, final question. You, you mentioned how you were losing some competitors in some international areas, and it benefited some of the products. Are, are there any new product launches, internationally into, you know, any specific countries that we should be factoring into our model, going forward? Any, any levers that would kind of change the trajectory, of any of the lines in the near term? Right. Thank you. Scott, it's George. I'll take that. That's a great question. I'll take that. You know, we read out in the script these regulatory approvals, but they're kind of longer. You know, they take a while to get through there. But, you know, RFA in Europe at some point will add something. We don't know when we'll get the approval outside of the U.K., so we don't want to get on the hook for changing anyone's models here, as you're suggesting. Artegraft is a biggie in Europe, maybe two years from now, three years from now, but I wouldn't until we—you know, we haven't even filed for the regulatory approval. When we get that in, maybe we'll have more details on timing and things like that. And then, of course, Artegraft in Canada and Australia. In short answer, I'd say no, there's nothing that I'd change my model for here. Things are going along. We're getting tons of little regulatory approvals over in Asia Pac that we don't talk about on these calls because they're kind of smallish, but the machine keeps going. Okay, great. Thank you for taking the questions. Thanks a lot, Scott. Thank you. One moment as we move on to our next question. Our next question is a follow-up question from the line of Michael Petusky with Barrington Research. Your line is open. Please go ahead. Thanks. Yeah, a few quick ones. George, I didn't catch this if you said this earlier, forgive me, but the CE Mark filing for Artegraft, is that targeted by year-end still? Or I think at one point it was. Yeah, it has been for a long time. It's on one of our quote planks for this year, is to put it in by December 31st. So, definitely that will go in by December 31st, and it, and it's been on our radar screen for two years or so. Yes. Okay, great. And then I wanna just make sure I understand what you're doing in Paris. That's the first time you've had direct sales folks in France. Is that correct? You know what? I'm glad you're asking it, so we can sort of re-distinguish it for everyone. No, we've had sales reps in France since, I think, 2007. Okay. But this is the first time we're gonna have an actual customer service office with French customer service- Gotcha. reps and you know, and all that, to give the hospitals a little more hand treatment. We have eight reps in France, and I would say that's on the high end of what we usually have. Maybe we've had six or seven, but we always have them. Okay, yeah, because when you said that, I... It was sort of confusing to me that, that was the ca- Okay, got it. Got it. Just last one for J.J. Numbers are down. Yep. Depreciation and amortization, $2.395. SBC, $1.313. CapEx, $1.053. Okay, and then- Usual stream. Yeah. Thank you. Thank you. And then, just, J.J., on, on gross margin and one quarter I know does not make necessarily a trend, but I think, you and, probably investors are really hoping that it is. I mean, do you feel like... It looks like gross margin may end up being flat for this year. I mean, do you feel like you guys have sort of hit bottom on this and are on the right or sort of on the right side of momentum here, I guess, as we look forward? Yeah. No, it's, it's a great question. I mean, of course, I want that to be the, the answer, but I'll give you some more color behind that. I would say the, manufacturing efficiencies from the folks getting more efficient in the, in the seats, making devices, that's been super helpful, and it's started to come through the P&L. Obviously, price increases help a lot. That's sort of a, you know, a 3% benefit year-over-year with these, with these nice price hikes coming through. And I would say those two things are sort of fighting against, I would say, one, quality costs historically. Those, those increased a lot over the last four years, but I would say we've really started focusing on those, so maybe we can, make some headway on that topic as we move forward. And then the other piece would be the transition of manufacturing for Omniflow and for CardioCel, and those start out pretty inefficient, as we've discussed before. And hopefully, and we think we can make some good progress on those as we move forward through the quarters, so we might get some good answers there as well. So we'll see where that all winds up for next year when we give you guidance. All right. Sounds great. Thanks, and really congratulations. This is another excellent quarter. Thanks. Thanks a lot, Mike. Thanks, Mike. Thank you. Ladies and gentlemen, this does conclude today's conference. We would like to thank you for participating, and you may now disconnect. Everyone, have a great day.