Q1 2024 Artivion Inc Earnings Call

Participants

Laine Morgan; Moderator; Gilmartin Group LLC

James Mackin; Chairman of the Board, President, Chief Executive Officer, Director; Artivion Inc

Lance Berry; EVP & CFO; Artivion Inc

Mike Matson; Analyst; Needham & Company LLC

Suraj Kalia; Analyst; Oppenheimer & Co Inc

Rick Wise; Analyst; Stifel Nicolaus & Company Inc

Frank Takkinen; Analyst; Lake Street Capital Markets LLC

Jeffrey Cohen; Analyst; Ladenburg Thalmann & Co Inc

Presentation

Operator

Greetings.
Welcome to our TVN First Quarter 2024 financial conference call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the call over to Lynn Martin at the Gilmartin Group. Thank you. You may begin.

Laine Morgan

Thanks, operator. Good afternoon, and thank you for joining the call today. Joining me today from our Caribbean's management team are Pat Mackin, CYO., 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 and are 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 before looking statements are subject to a number of risks, uncertainties, estimates and assumptions that may cause actual results to differ materially from those 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 the details highlighted on today's call on the Investor Relations section of the Tribune website. Now I'll turn it over to the CEO. Pat Mackin.

James Mackin

Dave Flame and good afternoon, everyone.
Q1 was a strong quarter for our taking on as we maintained top line growth momentum and executed on key operational priorities. I'm pleased to report that in the first quarter of 2024, we achieved constant currency revenue growth of 16% year over year, representing $97.4 million in revenue and adjusted EBITDA growth of 60% year over year compared to the first quarter of 2023. More recently in April, new clinical data for our On-X low INR post-market study and AMDS. persevere trial were presented at the ATS Annual Meeting in Toronto, the five year results from our On-X aortic heart valve line. Our post-approval study show that the On-X aortic valve has an even more durable safety and efficacy profile for patients receiving low dose warfarin than predicted by the results of the original PMA trial. Meanwhile, the late-breaking 30-day data from persevere demonstrates positive aortic month remodeling and over 80% of patients after treatment with AMBS. These two milestones demonstrate the continued success in our clinical and regulatory programs as well as the continued expansion of our market leading aortic portfolio. Our investment in these two products and related clinical trials reinforce that we are committed to remaining the leader in aortic health.
From a financial perspective. As anticipated, our strong Q1 performance was led by tissue processing, which grew 26%, followed by stent grafts at 19%. Onyx at 11% and BioGlue at 1% growth each when compared to the first quarter of 2023 and all on a constant currency basis in the first quarter, we also continued to benefit from our footprint expansion through regulatory approvals in key international markets as a whole, our first quarter results and recent regulatory and clinical achievements further validate our growth strategy from a product category perspective, as I just mentioned, tissue processing grew 26% year over year on a constant currency basis. In Q1, we expect our tissue business will continue to grow double digits throughout the balance of 2024 as we further leverage our increased supply of our proprietary SynerGraft pulmonary valve and continued to benefit from higher Ross Procedure volumes benefits from last year's tissue pricing initiatives positively impacted Q1, but will begin to annualize in the second quarter of this year. As I also indicated earlier, our stent graft revenues grew 19% on a constant currency basis in the first quarter compared to the first quarter of last year. Our stent graft supply is now healthy and stable, which is producing strong growth across the stent graft portfolio.
Lastly, as previously mentioned, On-X revenues increased 11% year over year on a constant currency basis. As you continue to take market share globally with the only mechanical aortic valve that can be maintained in our 1.5 to 2.0. Based on feedback from the field, these market share gains and proven proven clinical outcomes that were reinforced by the results of the post-market study recently presented at ATS, we will maintain our strong conviction that the Onyx is the best aortic mechanical valve in the market, we'll continue to take market share worldwide.
Revenues in the first quarter were also driven by continued progress in growth initiatives in A-Pac and Latin America, primarily through new regulatory approvals and commercial footprint expansion.
Latin America delivered constant currency revenue growth of 22%, while A-Pac saw a 3% decline compared to the first quarter of last year. The decline in A-Pac this quarter was primarily driven by timing of distributor orders, which adversely impacted by revenue growth. Fluctuations in growth rates in A-Pac and Latin America are to be expected as those regions have the highest percentage of stocking distributor sales. We still anticipate strong revenue growth for both regions for the full year and over the coming years. As we expect to leverage our industry-leading product portfolio in those regions.
Let me turn now to the clinical data presented at ATS. in April that I mentioned previously, we were very pleased to see positive results in the On-X aortic heart valve lie in our real world post market study presented at ATS in Toronto, the abstract reported long-term clinical outcomes of 229 study participants with a target IRR of 1.8 out to five years result, the results show a significantly lower composite primary endpoint for thrombosis, thromboembolism valve thrombosis in major bleeding combined at 1.83% compared to the predefined historic control of 5.39%. This was driven by an 87% reduction in major bleeding and no increase in thromboembolism. Notably, the data compares favorably to the results of the On-X aortic heart valve low in our trial one year post market study results presented last year as well as the On-X aortic law in our IDE study that was first published in 2014. The fact that device performance performed as well or better in the real world setting than it did in the original clinical trial, provide strong additional validation that the On-X aortic valve is the best aortic mechanical heart valve market in the market for patients, thus increasing our confidence in our ability to obtain even greater On-X aortic valve market share globally. We believe the longevity, the On-X aortic valve, combined with a significantly lower risk of bleeding over the other mechanical heart valves make the On-X aortic valve. A compelling option for patients under the age of 65 also had a TS. late-breaking 30 data from our AMDS persevere trial demonstrated positive aortic remodeling over 80% of patients as well as no occurrence of Dane tears. These part of these positive results follow the 30 day IDAIDE. data from the same trial that was presented at STS. in January of 2024, which demonstrated a statistically significant 72% reduction in all cause mortality and a 52% reduction in primary major adverse events when compared to the current standard of care Hemi Arch procedure. We're excited to see the continued positive results of the persevere study, further reinforcing an unrivaled clinical benefit in the life-saving nature of AMDS. We continue to anticipate PMA approval for MDS in 2025, which would open the U.S. addressable market opportunity of about $150 million with no competitive alternatives. In addition, our partner Endospan is continued to make progress on its US IDE trial called triage for Nexus aortic arch stent system. As of today, there have been 44 of the 60 primary endpoint patients enrolled, assuming the trial endpoints are met. Nexus remains on track for approval in the back half of 2026.
In summary, we're excited about our great progress early in 2024 and look forward to sustaining our momentum throughout 2024 and beyond by driving continued growth of our Onyx debt, our Onyx portfolio stent graft, SynerGraft pulmonary valve and further expanding our full footprint in A-Pac and Latin America.
With that, I'll now turn the call over to Lance.

Lance Berry

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 $97.4 million for the first quarter of 2024 up 16% compared to Q1 2023. Non-gaap adjusted EBITDA increased approximately 60% from $10.8 million to $17.3 million in the first quarter of 2024 combination of strong top line constant currency growth and significant marketing and G&A expense leverage resulted in adjusted EBITDA margin of 17.8%, a 480 basis point improvement over the prior year.
From a product line perspective, tissue processing revenues increased 26%. Stent Graft revenues grew 19%. On-x revenues grew 11% and BioGlue revenue. Bioglue revenues grew 1% in the first quarter of 2024. As anticipated, growth in our tissue business was very strong this quarter as we benefited from both the substantial price increase we implemented in Q2 of last year and improved supply from our yield improvement initiative. We expect the growth rate to come down in future quarters as we annualize the price increase, but we still anticipate double digit growth for the full year.
On a regional basis, revenues in Latin America increased 22%. North America increased 18% EMEA increased 17% in Asia decreased 3%, all compared to the first quarter of 2023. The decrease in Asia Pacific region was expected and driven primarily by timing of distributor orders, which also impacted BioGlue sales. As Pat discussed, you should expect to see some fluctuation in quarterly growth rates in the more distributor-based regions, and we still anticipate strong growth in Asia-Pacific for the full year. As anticipated, gross margins were 64.6% in Q1, flat to the first quarter of 2023. General and administrative and marketing expenses in the first quarter were $30.7 million compared to $50.4 million in the first quarter of 2023. Non-gaap general, administrative and marketing expenses were $48.1 million in the first quarter compared to $45.2 million in the first quarter of 2023, representing 500 basis points of leverage. R&d expenses for the first quarter were $6.9 million compared to $7.2 million in the first quarter of 2023. We underspent in R&D in Q1, and we expect to catch up over the remainder of the year. 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 $7.5 million compared to $6 million in the prior year. Other income and expenses totaled $7.5 million in net interest expense $3.7 million for loss on extinguishment of debt in foreign currency translation gains of approximately $1.4 million.
On the bottom line, we reported GAAP net income of approximately $7.5 million or $0.18 per diluted share in the first quarter of 2024. Non-gaap net income was $2.6 million, or $0.06 per share for the first quarter. As expected, free cash flow was negative $9.1 million in the first quarter of 2024. As a reminder, Q1 is our most cash-intensive quarter due to the payment of annual bonus bonuses and due to normal activity such as sales meetings and industry conferences, which are heavier in the first quarter. Importantly, we continue to expect free cash flow to be positive for the full year 2024. As of March 31, we had approximately $51.1 million in cash and $313.3 million in debt net of $7.1 million of unamortized loan origination costs. Importantly, this is inclusive of the impact of our recently closed comprehensive credit agreement in January. As a reminder, the initial $190 million term loan and $30 million from the revolving credit facility were drawn at close, along with the use of some cash on our balance sheet to retire the existing senior credit facilities and pay related transaction expenses in the first quarter. Overall, this credit agreement, coupled with strong financial performance gave us flexibility gives us flexibility with no near term debt maturity overhang as we continue to evaluate the best options to address our convertible debt. 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 Q1 was 4.5, down from 6.8 in prior year. At the midpoint of our EBITDA guidance, we expect net leverage to be closer to 3.5 by the end of the year and to continue to decrease in 2025.
To now for our outlook for the remainder of 2024. Given our momentum in the first quarter of 2024 positive data from the recent ATS. presentation, supporting the long-term clinical benefits of Onyx, improved stent graft supply and were both robust demand for our SynerGraft pulmonary valve. We are raising the midpoint of our fiscal year '24 revenue guidance and now expect constant currency revenue growth between 9% and 12% compared to the previous range of 8% to 12%. We expect reported revenues to be in the range of $386 million to $396 million compared to our previous range of $382 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 Q1, we continue to expect adjusted EBITDA to be in the range of $68 million to $72 million for the full year 2024, representing a 26% or 34% growth over 2023 and 280 basis points of adjusted EBITDA margin expansion at the midpoint of our ranges. The strong start to the year puts us on a good trajectory for achievement of this guidance. 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 expenses expected to remain relatively flat as a percent of sales in summary, we feel great about the strong start to the year, and we are excited about the prospects of the business in 2024 and beyond.
With that, I will turn the call back to Pat for his closing comments.

James Mackin

A.
Thanks, Lance. As you as you've heard, we're very pleased with our first quarter performance kicking off 2024 with a very strong start. We continue to deliver strong top and bottom line growth, expand our markets and advance our clinical pipeline. We expect future growth to be driven by first, the continued strong growth in our stent graft business, driven by improved supply and our innovative portfolio. Second, continued market share gains at Onyx, driven by the recent five year data from our real-world post-market trial, reinforcing the safety and efficacy of our On-X aortic low-dose warfarin. Third, growth of our proprietary SynerGraft pulmonary valve, driven by growth of the Ross procedure and our operational improvements for continued growth in Asia Pacific and Latin America from our channel investments in new regulatory approvals.
In conclusion, we remain confident in the near and long term prospects of our business and we believe our first quarter results validate our expectation for a strong year ahead as we focus on continued revenue growth and free cash flow generation.
I want to thank all of our employees around the globe for delivering a strong first quarter and their continued dedication to our mission of building a world-class aortic company.
With that, operator, please open the line for questions.

Question and Answer Session

Operator

Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue you may press star two, if you would like to remove your question from the queue. And For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Our first question is from Mike Matson with Needham & Company. Please proceed.

Mike Matson

Yes.
I think some so I wanted to start with the tissue business.
So I know, you talked a little bit about the what drove the growth there, but it's Tom, maybe you could just elaborate on the supply and how you're able to increase that and then the outlook, I know you're not giving guidance or 25 yet, but I mean, is this business in a position now where you could sustain double digits longer than this year? Or is this more just kind of a unique year for tissue?

James Mackin

Yes. So I would say there's a couple of things. Number one, we have talked previously about the growth of the Ross procedure. And there's been a tremendous amount of new data that's been released on the Ross that shows at 25 years that you can actually have an aortic valve replacement with your own native pulmonary valve and backfilled, you're missing pulmonary valve with our valve. And you're seeing here survival and morbidity matches that of the general population. So it's a great operation and it's growing extremely fast. So that's that's the first there was some data published. It presented at ATS in Toronto last week about this procedure is growing extremely fast. Number two, you heard Lance talk about we had a big price increase last year. That's kind of annualized at the end of the first quarter. But then we also didn't talk previously about some of our operational improvements that we've undertaken here at the Company and seen a very nice increase in our in our yields. So I think the combination of those kind of three things obviously had a huge first quarter with the pricing kind of annualizing itself this year. It will be basically supply benefiting the rest of the year and then I think going forward, this procedure is not slowing down anytime soon. So I think there's a lot of opportunity for that. But as you know, there are ultimately there's a constraint on how many tissue valves you can get. So we're not going to give 25 guidance at this point, but we feel very strong about double digit growth this year.

Mike Matson

Okay.
I understand.
And then if I take the EBITDA that you did this quarter and just multiply by four, gets you into the guidance range on it seems like the last few years, we've seen EBITDA kind of ramp throughout the years your revenue, right.
So I'm just wondering why you're maintaining the guidance here or maybe some R&D spending timing or something like that?

Lance Berry

Yes, a couple of things. First of all, it's just early in the year.
That's one of two. We did have a good a good start to the year, but part of that was definitely due to timing on the R&D spend, and we absolutely intend to spend that money this year. So those are the two big things, Tom, just a little bit early to be to raise that number, which was, you know, pretty strong growth and we'll see how it goes throughout the rest of the year.

Mike Matson

Okay, great.
Thank you.

Operator

Our next question is from Suraj Kalia with Oppenheimer & Co. Please proceed.

Suraj Kalia

Good afternoon, Pat, Lance, can you hear me?
Alright.

James Mackin

Hey, good afternoon, Suraj.

Suraj Kalia

So Pat, congrats again. You guys are on the road on perhaps the obvious question. I know you've been talking about this for some time, but it seems like in the last two quarters you guys seem to be just shifting gears in terms of Calgary and now that leveragability this quarter also surprised everyone. So just talk to us, you know, I understand the supply issues and some of the other constraints that you were talking about, but is there something more fundamental we should be cognizant about our more tenured sales force rep commission changes, different marketing metrics. There seems to be as a distinct shift in everything? Maybe if you could give us some additional color there.

James Mackin

Yes, sure. No, I think I think it's one of the nice things about the Company is we've got a portfolio of products, right? So we also have a portfolio of regions. And as you heard, we had strong double digit growth across all of our portfolio. Our entire portfolio, except for BioGlue, which we expect to grow kind of low single digits and across all of our regions, except for A-Pac because we had a timing thing. So it's kind of a combination of we got highly differentiated products with really strong channels around the world, and you're seeing kind of all them firing on all cylinders. And again, I just remind you, if you look at SynerGraft, Bob, nobody no other company has SynerGraft. The Ross procedure is growing very rapidly, and we are the market share leader and we're taking advantage of that. The On-X valve is the market leading mechanical valve in the world. And we've just shown data that shows almost an 80% reduction. I mean an 87% reduction in major bleeding. So we feel very strong that that is the only mechanical valve that should be used and we're not going to stop until we take it all and number three, our stent graft portfolio. We have full supply. We have had no supplier problems probably for like a year and a half, some very highly differentiated products. Our new device is growing rapidly. Our thoracoabdominal devices are growing rapid. Nobody has an AMDS. Nobody has some of the technologies we have. So I think it's just a combination of all these portfolios under this aortic umbrella with powered by channels around the world. When you combine it all together, it's driving nice results. I think it's nothing more complicated than that.

Suraj Kalia

So that would it be fair.
To sum, I summarize this as more of product attributes yielding a pull through demand rather than any fundamental shift in your sales and marketing structure and messaging. Is it fair to put it that way?

James Mackin

Yes. I mean, I guess I guess if you think about it, we've got great channels, but this is a dynamic market, right. So just since our last call, we've released the post the five year post-approval data for Onyx, and we've released more data on on AMDS., right? So that AMD has persevered data was in the quarter. It was at the end of January. So we've got great sales forces, great products, but they're being backed up by very strong clinical data. So everything that's been coming out on the products is just nothing but reinforce and same with the Ross, there is Ross data presented at ATS. It was one of the major focuses and again, that that's growing very rapidly. So it's it's really the combination, Suraj of Proton, proprietary product, strong channels and really strong clinical data that just keeps coming out and all the products that we represent.

Suraj Kalia

Accountants are Pat, one for you, one for Lance, and I'll hop back in queue in terms of on additional opportunities, especially as I think about Nexus apps. Love to get your updated thoughts.
Lance, if I could quickly throw in there, I missed part of your commentary about the deleverage to SG&A in the quarter. Can you talk to us the sustainability? And also Is my math right that 23.5 seems to be the conversion price. How are you all thinking about the you know a 23 and beyond what happens to the conversion.
Gentlemen, congrats again. Thank you. Thank you for taking my questions.

James Mackin

Thanks, Raj.
Yes, as far as far as Mexico goes I mean, there's been there's been data. Recent data was published at ATSICSTS. on the trauma trial. It was the first 20 out of the 60 and the pivotal arm showed very strong results. Dave now enrolled 44 out of the 60. That trial should enroll in the second half of this year, and it's the data looks very good. And again, in early guys have been around a long time. We particularly use Raj and you know how clinical trials go. But I think if you look at the data and the technology that's a meaningful space to be able to treat a chronic dissection or an annual resume of the arch with a catheter is a unique opportunity and that's why we invested in the company, and that's why we have an option to acquire. We're obviously going to be watching this as the trial enrolls and they get their data, but it looks promising.
Lance, you want to go further to?

Lance Berry

Yes.
So on on SG&A leverage, as we think that's a big opportunity for us going forward, we had really good leverage last year or a good start in Q1.
Now 500 basis points is not something that we're committing to on a on a quarter-by-quarter basis.
But you can really see when we have strong revenue growth, the leverage in the model, I think that is a big opportunity for us going forward.
On the on the convert that 2350 is when the convert is in the money and we can't force conversion unless the stock gets to $30, I think and some change.
So just to be clear on on that on where that is in as far as how we're thinking about it. I mean, we talked to this on the Q4 call.
That mean the spread between the interest, the cash interest for paying on these converts versus the delayed draw term loan is pretty significant. And at the moment, we're happy to pay the lower interest.
And I think we probably all hope that interest rates would have maybe started to come down by now, but that's not the case. So we're just watching at home and, you know, we'll keep keeping our options open and what to do on that.

Operator

Our next question is from Rick Wise with Stifel.
Please proceed.

Rick Wise

Hey, Lance, this is John on for Rick. This quarter really strong growth on the top line. I just wanted to maybe start off on the Onyx data that recently read out at ATS., as you highlighted, really strong. I just wanted to hear it maybe from more of a market perspective, how much share do you see as left to go for Onex to take in the mechanical space and beyond that, what do you see as the opportunity for the valve to potentially breach that prior from bioprosthetic?
Market?

James Mackin

Yes. So on and on a pure mechanical market, the global data we have, we've got about a 30% share globally. It's higher in the US. It's more like 50 plus in the U.S. than it is outside the US. We have a lot of room to go outside the US. I mean, I've heard I've heard comments from surgeons when we've talked to them about this data about even even competitive accounts. Like why would anybody use another valve. So our team is very fired up about going aggressively after this mechanical valve market.
As far as the bioprosthetic segment, you know, typically in patients under 65, there's certainly some signals there that this data can go after bioprosthetic, but I'm not going to get out over my skis here. This data just got released and we're going to be exploring that. But for right now, we're going aggressively after the the mechanical segment when we still have a lot of room to go.

Rick Wise

Thanks.
That's helpful.
And if I could sneak in sort of a two-parter here, maybe the first for Pat, the second for Lance, just on the aortic side of the business, growth was really strong this quarter. I think it came in it kind of mid 20s. I just want to get a sense from you what the what the key growth contributors are and how you're looking at growth for the aortic business for the rest of the year?
And then second for Lance, just on the gross margin profile, tissue was particularly strong, near 60%. Just how are you thinking about tissue gross margin for the rest of the year and gross margin for the business as a whole?

James Mackin

Yes. So just on the on the stent business, so the GAAP growth was 23, we typically talk about constant currency was like 19, obviously, very strong. And as I mentioned a little bit earlier, I mean, I think what's driving this and we've got strong channels kind of around the globe, but we've also got a very differentiated unique portfolio for, for example, AMBS., we had the US IDE trial for severe presented at the beginning of the quarter, kind of the end of January with phenomenal data, I mentioned at a 72% reduction in mortality, a 52% reduction in major adverse events, no Danes. So clearly, the AMDS is proprietary. Nobody has it. We just released great data and we've also got two very significant technologies in the branched stent graft area the frozen elephant trunk, any Arch and the branched thoracoabdominal in the kind of the midsection of the aorta. And those are growing very rapidly. So again, we have a we have the whole strategy, right? Is we're in a Nordic company. We can treat from your aortic valve to your iliac with a bunch of different technologies. And the majority of them are very proprietary with a strong sales force. So I think that's that's what's driving the stent graft side.
I think you had a question on margin for Covance.

Lance Berry

Yes.
So overall, we're in a qualitatively saying you expect gross margin to be relatively flat year over year?
There's a lot of mix in our in our gross margin.
When you have we have four different product lines, different margins in four different regions with different margins.
And so there's a lot that goes into it.
I will say on specifically on the SynerGraft pulmonary valve portion of our preservation services and refrigerants versus historically been our our lowest gross margin.
But our our pulmonary valves are actually north of Company average. And so, you know, specifically with that, as that grows faster from. That's a that's a tailwind is not a not a headwind. And if not, would you take those comments and say, oh, that means mix should should go up because there's a lot of pieces, but that part growing faster isn't a negative for gross margin.

Rick Wise

Thanks, that's helpful.

Operator

Our next question is from Frank Takkinen. with Lake Street Capital Markets. Please proceed.

Frank Takkinen

Great.
Thanks for taking the questions. Pat and Lance, congrats on quarter. I was hoping to start with one on Onyx as well. In light of all the data packs that have came out consistently higher market share. How do you think about pricing opportunity? Have you taken any recent price increases? Do you think you have the ability to continue to take price?

James Mackin

Yes, it's a good question, Frank. I mean, it really is kind of evolving where it used to be mechanical valves, tissue valves from two discrete buckets. But what's what's really kind of evolving from this data is that there's kind of a new category in between a mechanical valve and a tissue valve, which is Onyx. And so I mean, we've really got the primary objective here is that we feel like this is the best mechanical valve out there. And I do think it should be the only mechanical valve being used. So that does, I think, bring with it some pricing power and that we will exploit. I'm not going to get into specifics on the call, but I do think there's an opportunity for that.

Frank Takkinen

Okay.
That's helpful.
And then maybe just one more for me for Lance. On the free cash flow commentary. I heard your comment about the negative $9 million for the quarter. How should we think about free cash flow cadence for the remaining quarters of the year.

Lance Berry

Cash can it can kind of jump around quarter to quarter. So we're not really committing to positive for every single quarter, but definitely expected to be positive for the full year, probably stronger in the back half. There's just some heavy cash outlay, things that occur in the first half of the year. Some in the second half is just a little bit lighter on that, but definitely expect to be positive for the full year.

Frank Takkinen

Okay, that makes sense. Thanks to your questions.

James Mackin

Thanks, Frank.

Operator

And our final question is from Jeffrey Cohen with Ladenburg Thalmann. Please proceed.

Jeffrey Cohen

And Lance, just a couple from Aaron, could you talk about India a little bit as far as any macro reviews and any pricing that's been taken or planned to be taken and some of that uptake and a strong quarter from new users, new surgeons that are coming on board are seeing more and in respect of a higher utilization per per surgeon or per facility?

James Mackin

Yes. So Neal, we're not going to break out specific products underneath the kind of aortic stent umbrella, if you will. But I will say that NEO is growing very rapidly. It's a combination of expansion, geographical expansion. We're selling NEO in Asia. We're selling Neo in Latin America, many markets in Europe. It's obviously not approved in U.S. or Japan, but it's doing extremely well. And as I mentioned earlier, it's a proprietary technology. We have a very unique stent system on that device on which we feel has better outcomes than the other device that's out there. And we're being very aggressive on kind of going after that business. So it's a product where that's done well and continues to do well.

Jeffrey Cohen

Got it. Okay.
And then secondly, first, Vance, can you talk a little bit about the on SG&A and maybe the cadence for 24? It seemed like it was light in the first quarter and how we should think about the leverage on the overall spend from Q2 to Q4?

Lance Berry

Yes.
I mean, honestly, like on an as adjusted basis, it looked like on an as-reported basis, but that's because some of the contingent consideration fluctuations, but on an as-adjusted basis was $48 million, which was fairly consistent with Q4. And um, you know, I think something in that kind of range is really what we think about as we move throughout the year on an as-adjusted basis, so which should drive some really good leverage year over year.

Jeffrey Cohen

Great.
And then finally, fresh R&D commentary on a tissue business for three large. Do I know that homeowners can strong brilliantly and the commentary on cardiac and vascular?
Generally speaking on pricing or unions, our IT units out there for the quarter?

James Mackin

Yes. Again, we're not we're not going to break out components underneath that kind of a tissue. Obviously, we've talked several quarters in a row about the price increases on cardiac and the volume increases. So cardiac is definitely driving it down, but the whole segment is growing. So but we're not going to break out pieces.

Jeffrey Cohen

Perfect. Okay. I got it.
So it doesn't for us actually taking the questions.

James Mackin

Thank you.

Operator

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

James Mackin

No, thanks for joining for our Q1 call. Again, we're very pleased with the first quarter and 16% top-line growth, 60% bottom line growth. We're executing on the pipeline. We've got great products, great data, great sales forces and plan on doing more of the same as a year keeps going. So appreciate your support and look forward to our next call with you.

Operator

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