© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Greetings. Welcome to Artivion First Quarter 2024 Financial Conference Call.
[Operator Instructions]
As a reminder, this conference is being recorded. I will now turn the call over to Lee Martin of the Gil Martin Group. Thank you. You may begin.
Thanks, operator. Good afternoon, and thank you for joining the call today. Joining me today from our 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 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. 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 and 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 Artivion website. Now I'll turn it over to our Artivion CEO, Pat Mackin.
Thanks, Lynn, and good afternoon, everyone. Q1 was a strong quarter for Artivion 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 and 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 from our [ On-X ] low INR post-market study and AMDS per severe trial were presented at the AATS Annual Meeting in Toronto.
The 5-year results from our On-X aortic heart valve low INR 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 or remodeling in over 80% of patients after treatment with AMDS. These 2 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 2 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% and On-X 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 continue 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, I also previously mentioned, On-X revenues increased 11% year-over-year on a constant currency basis as we continue 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, these market share gains and 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 On-X is the best aortic mechanical valve in the market and will continue to take market share worldwide.
Revenues in the first quarter were also driven by continued progress in growth initiatives in APAC and Latin America, primarily through new regulatory approvals and commercial footprint expansion. Latin America delivered constant currency revenue growth of 22%, while APAC saw a 3% decline compared to the first quarter of last year. The decline in APAC this quarter was primarily driven by timing of distributor orders, which adversely impacted BioGlue revenue growth. Fluctuations in growth rates in APAC 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 are very pleased to see positive results from the On-X aortic heart valve, low INR real-world post-market study presented at AATS in Toronto. The abstract reported long-term clinical outcomes of 229 study participants with a target INR of 1.8 out to 5 years. The results show a significantly lower composite primary endpoint for thromboembolism, [ valcrombosis ] and major bleeding combined at 1.83%. And 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 1 trial, the 1-year post-market study results presented last year, as well as the On-X aortic low INR ID study that was first published in 2014.
The fact that device performed as well or better in the real word 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 valve market share globally. We believe the longevity of the On-X [indiscernible] valve combined with a significantly lower risk of bleeding over the other mechanical heart valves, make the On-X [indiscernible] valve a compelling option for patients under the age of 65. Also at ATS, late-breaking 30 data from our AMDS persevere trial, demonstrated positive aortic remodeling over 80% of patients as well as no occurrence of [indiscernible] tears. These positive results follow a 30-day IDE data from the same trial that was presented at STS in January of 2024, which demonstrated a statistically significant 72% reduction of all-cause mortality and a 52% reduction in primary major adverse events when compared to the current standard of care hemiarch 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 AMDS in 2025 and which would open the U.S. addressable market opportunity of about $150 million with no competitive alternatives. In addition, our partner, Endospan is continuing to make progress on its U.S. IDE trial called [ Triump ] for its 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 momentum throughout 2024 and beyond by driving continued growth of our On-X portfolio, stent graft SynerGraft pulmonary valve and further expanding our footprint in APAC and Latin America. With that, I'll now turn the call over to Lance.
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 up 16% compared to Q1 of 2023. Non-GAAP adjusted EBITDA increased approximately 60% from $10.8 million to $17.3 million in the first quarter of 2024.
The combination of strong top line constant currency growth and significant marketing and G&A expense leverage resulted in an 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 revenues grew 1% in the first quarter of 2024. As anticipated, growth in our tissue business was very strong in 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% and 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, 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 and 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 as compared to $6 million in the prior year. Other income and expenses totaled $7.5 million and net interest expense, $3.7 million for a loss on extinguishment of debt and 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 bonuses and due to normal activities 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 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.
And now for our outlook for the remainder of 2024. Given our momentum in the first quarter of 2024, positive data from the recent AATS presentation, supporting the long-term clinical benefits of On-X, improved stent graft supply and robust demand for our SynerGraft pulmonary valves, 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 of 2024 representing a 26% to 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 expense is expected to remain relatively flat as a percentage 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.
Thanks, Lance. So 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 in our innovative portfolio. Second, continued market share gains of On-X, driven by the recent 5-year data from our real-world post-market trial, reinforcing the safety and efficacy of our On-X aortic low-dose warfarin. Third, growth from our proprietary SynerGraft pulmonary valve, driven by growth of the Ross procedure and our operational improvements.
Fourth, continued growth in Asia Pacific and Latin America from our channel investments and new regulatory approvals. In conclusion, we remain confident in the near- and long-term prospects of our business. 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.
[Operator Instructions] Our first question is from Mike Matson with Needham & Company.
So I wanted to start with the tissue business. So I know you talked a little bit about what drove the growth there, but 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 for '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?
Yes. So I would say there's a couple of things. Number one, I've talked previously about the growth of the Ross procedure. 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 backfill you're missing pulmonary valve with our valve. And your survival and morbidity matches that of the general population.
So it's a great operation, and it's growing extremely fast. So that's the first -- there was some data published -- presented at AATS 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 talked previously about some of our operational improvements that we've undertaken here at the company and see a very nice increase in our yields. So I think the combination of those kind of 3 things, Hobbies 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, the -- 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.
Okay. I understand. And then if I take the EBITDA that you did this quarter and just multiply by 4, it gets you into the guidance range. it seems like the last few years, we've seen EBITDA kind of ramp throughout the year as your revenue ramps. So just wondering why you're maintaining the guidance here. Is there maybe it's the R&D spending and timing or something laying?
Yes, I think there's a couple of things. First of all, it's just early in the year. That's one. Two, we did have 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 2 big things, just a little bit early to be -- to raise that number, which was pretty strong growth, and we'll see how it goes throughout the rest of the year.
Our next question is from Suraj Kalia with Oppenheimer & Company.
Pat, Lance, can you hear me all right? So Pat, congrats again. You guys are unrolled. Pat, the obvious question, I know you've been talking about this for some time. But it seems like in the last 2 quarters, you guys seem to be just shifting gears in terms of CAGR, now the leverageability this quarter also surprised everyone.
So Pat just talk to us, I understand the supply issues and some of the other constraints that you were talking about. But is this something more fundamental we should be cognizant about? A more tenured sales force, commission changes, different marketing method -- just there seems to be a distinct shift in everything. Maybe if you could give us some additional color there.
Yes, sure. No, 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 our entire portfolio, except for BioGlue, which we expect to grow kind of low single digits and across all of our regions, except for APAC 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 them firing on all cylinders.
And again, I just would remind you if you look at SynerGraft, 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. Number three, our stentgraph portfolio. We have full supply. We have had no supply problems probably for like 1.5 years, very highly differentiated products. our NEO device is growing rapidly.
Our thoracal abdominal 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.
So Pat, would it be fair to 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 that fair to put it that way?
Yes. I mean, 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 5-year post-approval data for Onex, and we've released more data on AMDS, right? So that AMDS persevere data was in the quarter. It was at the end of January. So we've got great sales force, great products, but they're being backed up by very strong clinical data.
So everything that's been coming out on the products has done nothing but reinforce and same with the Ross. There's Ross data presented at AATS. It was one of the major focuses. And again, that's growing very rapidly. So it's really the combination, Suraj, proprietary product strong channels and really strong clinical data that just keeps coming out and all the products that we represent.
Got it. Pat, one for you, one for Lance, and I'll hop back in queue. In terms of additional opportunities, especially as I think about Nexus as Love to get your updated thoughts. Lance, if I could quickly throw in there. I missed part of your commentary about the leverage, the SG&A in the quarter. Can you talk to about the sustainability? And also, is my math right that 23.5% seems to be the conversion price. How are you all thinking about '23 and beyond what happens to the conversion Gentlemen, congrats again Thanks.
Yes, as far as NEXUS goes, I mean there's been data -- recent data was published at ATS -- excuse me, STS on the [ Trump ] trial. I think it was the first 20 out of the 60 in the pivotal arm -- showed very strong results. They've now enrolled 44 out that trial should enroll in the second half of this year. And it's -- the data looks very good. And again, you guys have been around a long time, particularly you Suraj, 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 aneurysm 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, do you want to take the two?
Yes. So on SG&A leverage, we think that's a big opportunity for us going forward. We had really good leverage last year. We had a good start in now 500 basis points is not something that we're committing to on a quarter-by-quarter basis. But you can really see when we have strong revenue growth, the leverage in the model, and I think that is a big opportunity for us going forward.
On the convert, the 2,350 is when the convert is in the money but we can't force conversion unless the stock gets to $30, I think, in some change. So just to be clear on that, where that is. And then as far as how we're thinking about it, I mean, we talked about this on the Q4 call that I mean, the spread between the interest -- the cash interest we're paying on these converts versus the delayed draw term loan is pretty significant. And at the moment, we're just happy to pay the lower interest. And I think we'd probably all hope that interest rates wouldn't have maybe started to come down by now, but that's not the case. So we're just watching it and we'll keep keeping our options open on what to do on that.
Our next question is from Rick Wise with Stifel.
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 On-X data that recently read out at AATS as you highlighted, really strong. I just want to hear it maybe from more of a market perspective. How much share do you see as left to go for On-X to take in the mechanical space. And beyond that, you see as the opportunity for the valve to potentially reach the bioprosthetic market?
Yes. So on the pure mechanical market, the global data we have we've got about a 30% share globally. It's higher in the U.S. It's more like 50 plus in the U.S. than it is outside the U.S. So we have a lot of room to go outside the U.S. I mean I've heard comments from surgeons when we've talked to them about this data -- about 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, 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 mechanical segment when we still have a lot of room to go.
That's helpful. And if I could sneak in sort of a 2-part here made 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 at kind of mid-20s. I just want to get a sense from you what the key growth contributors are and 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?
Yes. So just on the stent business, so the GAAP growth was 23%. We typically talk about constant currency was like 19%. Obviously, very strong. I mentioned it a little bit earlier. I mean I think what's driving this, we've got strong channels kind of around the globe. But we've also got a very differentiated unique portfolio. For example, AMDS, we had the U.S. ID trial persevere 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 [ dams. ]
So clearly, the AMDS is proprietary, nobody has it, and we just released great data. We've also got 2 very significant technologies in the branch stent graft area, the frozen elephant trunk in the arch and then the branch [indiscernible] in the kind of the mid-section of the aorta. And those are growing very rapidly. So again, we have a -- it's the whole strategy, right, is we're an aorta 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 what's driving the stent graft side. I think you had a question on margin for Lance.
Yes. So overall, we're qualitative saying you expect gross margin to be relatively flat year-over-year. There's a lot of mix in our in our gross margin. I mean you have -- we have 4 different product lines at different margins in 4 different regions with different margins. And so there's a lot that goes into it. I will say specifically on the SynerGraft pulmonary portion of our preservation services. Now predated service has historically been our lowest gross margin.
But our pulmonary valves are actually north of company average. And so specifically with that, as that grows faster, that's a tailwind. It's not a headwind. Now I don't want you to take those comments and say, oh, that means mix go up because there's a lot of pieces. But that part growing faster isn't a negative for gross margin.
Our next question is from Frank Takkinen with Lake Street Capital Markets.
Pat and Lance, congrats on the quarter. I was hoping to start with one on On-X 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? And do you think you have the ability to continue to take price?
Yes, it's a good question, Frank. I mean it really is kind of evolving where it used to be mechanical valves and tissue valves -- like 2 discrete buckets. But 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 On-X. 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 that we will exploit. I'm not going to get into specifics on the call, but I do think there is an opportunity for that.
Okay. That's helpful. And then maybe just one more for me for Lance on the free cash flow commentary. I heard your comments about the negative $9 million for the quarter. How should we think about free cash flow cadence for the remaining quarters of the year?
Cash, it can kind of jump around quarter-to-quarter. So we're not really committing to positive for every single quarter. but definitely expect it 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. and the second half is just a little bit lighter on that. But definitely expect to be positive for the full year.
Our final question is from Jeffrey Cohen with Ladenburg Dolman.
I've got Lance, just a couple from Erin. Could you talk about EMEA a little bit as far as any macro views 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 or the more in respect of higher utilization for surgeon or per surgery or per facility?
Yes. So Neo, 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 the 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, which we feel has better outcomes than the other devices out there, and we're being very aggressive kind of going after that business. So -- it's a product that's done well and continues to do well.
Got it. Okay. And then secondly, first, Lance, can you talk a little bit about the SG&A and maybe 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.
Yes. I mean, honestly, like on an as-adjusted basis, it looks like on an as-reported basis, but that's because some of the contingent consideration fluctuations. But on an as adjusted basis, it was $48 million, which was fairly consistent with Q4 -- and 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.
Great. And then finally, for us, any commentary on our tissue business with regard to. I know that pulmonary has been strong, but any commentary on the cardiac versus vascular, generally speaking, on pricing or our units out there for the quarter?
Yes, we're not going to break out components underneath the kind of the 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, but the whole segment is growing. So -- but we're not going to break out pieces.
There are no further questions at this time. I would like to turn the floor back over to management for closing comments.
No. Thanks for joining for our Q1 call again. We're very pleased with the first quarter and 16% top line growth, 6% 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 the year keeps going. So appreciate your support and look forward to our next call with you.
Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.