LeMaitre Vascular Q3 2026 Earnings Call Transcript
LeMaitre Vascular (NASDAQ:LMAT) reported third-quarter financial results on Wednesday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
LeMaitre Vascular reported 12% organic sales growth in Q3 2026, driven by 7% price increases and 5% unit growth. Key product lines, such as grafts and shunts, saw significant growth.
The company completed an acquisition of vascular devices from B. Braun, expecting a 2-year transition period. This acquisition aligns with LeMaitre’s strategy of acquiring niche vascular and cardiac products.
LeMaitre is expanding its global footprint, with plans to open new offices and warehouses in Poland and Malaysia in 2027. The company also increased its sales force by 19 reps year-over-year.
For full-year 2026, the company reiterated guidance of 11% organic revenue growth and 18% EPS growth. Q3 operating margin was 26%, and the gross margin improved to 71.7%, driven by higher ASPs and reduced shipping costs.
The company is investing in Artegraft with international approvals and product enhancements. Q3 international Artegraft sales were $3 million, with expectations of over $11 million for the full year.
LeMaitre’s future outlook includes further expansion of commercial infrastructure and continued focus on acquisitions. The company plans to consolidate manufacturing operations to enhance efficiency.
Key management personnel changes include the upcoming retirement of President Dave Roberts and the hiring of Tarek Pachuca as the new Global Head of Marketing.
Full Transcript
OPERATOR
Welcome to the LeMaitre Vascular Q3 2026 Financial Results Conference Call. As a reminder, today’s call is being recorded. At this time, I would like to turn the call over to Mr. Dorian LeBlanc, Chief Financial Officer of LeMaitre Vascular. Please go ahead.
Dorian LeBlanc (Chief Financial Officer)
Good afternoon and thank you for joining us on our Q3 2026 conference call. With me on today’s call is our CEO George LeMaitre. Before we begin, I’ll read our Safe Harbor statement. Today we’ll be making some forward-looking statements within the meaning of the US 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, might and similar expressions. Our forward-looking statements are based on our estimates and assumptions as of today, November 4, 2026, 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 such as organic sales growth. A reconciliation of GAAP to non-GAAP measures discussed in this call is contained in the associated press release and in the Investor Relations section of our website, www.lemaitre.com. I’ll now turn the call over to George LeMaitre.
George Lemaitre (Chief Executive Officer)
Thanks, Dorian. Sales grew 12% organically in Q3, 7% price and 5% units. Grafts grew 20% and shunts 14%, and biologics continued to outpace the rest of our portfolio as Artegraft was up 18% and RestoreFlow allografts 34%. Geographically, EMEA sales increased 18%, the Americas 9% and APAC 5%. On October 14th we acquired several devices from B. Braun: polyester and silver-coated vascular grafts, valve cutters and vein strippers. This is our third polyester graft acquisition since 2007, and we look set to become number three in worldwide share ex-Japan, and we’ve always wanted to offer silver-coated vascular grafts as they are designed to resist infection. The acquired portfolio posted 2025 sales of 9.4 million, all outside North America.
Sixty-five percent of sales were in Europe, including 21% in Germany, our second largest market. While the sales transition will take about two years, this acquisition is right out of our playbook. We acquire niche vascular and cardiac products and grow them through our global sales channel. As for Artegraft, we’re investing in the product in several ways: number one, more international approvals; number two, increased length for leg bypasses; and number three, building out our commercial infrastructure and sales force. Q3 international Artegraft sales were $3 million and we continue to expect full-year sales of more than $11 million. In Q3 we received approvals in Brazil and Saudi Arabia, bringing us to 60 countries. We expect 2027 approvals in Korea and India.
We plan to apply to the PMDA in Japan this quarter, hoping for 2029 or 2030 approval. We’re also developing long Artegrafts for leg bypasses. Unfortunately, our Artegraft packaging is too short for these long grafts. We plan to submit for US and CE Mark long tube approval in Q4 2026; first sales could start in H2 2027. On October 7th, we attended an encouraging FDA virtual meeting regarding our New Jersey Artegraft facility. The agency is reviewing our responses to their observations. The observations from the two FDA inspections have not disrupted our ability to produce, ship or invoice. An FDA reinspection is likely in 2027.
RestoreFlow allograft revenues grew 34% in Q3. We’re approved to distribute these cadaver tissues in six countries: the U.S., Canada, New Zealand, the United Kingdom, Austria and Germany; and we’re actively working to gain approvals in four countries in 2027: Holland, Ireland, Spain and Switzerland. We still plan to close our Chicago RestoreFlow facility this year and fully transfer production to Burlington. We continue to expand our commercial infrastructure. Rep count increased by 19 year over year to 171 at quarter’s end. Our American and German territories continue to grow, requiring us to split territories. We now plan to open a Polish office and warehouse in Q1 2027. We also plan to open a Malaysian office and warehouse in 2027. Indeed, seven new or larger LeMaitre international warehouses are opening in 2026. These offices place LeMaitre products closer to our hospital customers and provide local customer service.
We also recently expanded our Burlington footprint by adding a 30,000 square foot building. We gain access to the building in July 2027 and expect to use the space to consolidate our Burlington manufacturing operations and provide capacity to integrate manufacturing from acquisitions. Per our recent 8-K, 2026 will be Dave Roberts’ last year as our President, though he’ll remain on our board as elected by our shareholders. In his 30 years at LeMaitre, Dave navigated our 2006 IPO as CFO and spearheaded 26 acquisitions. Of course, these are big shoes to fill. Professionally, we’ve begun recruiting additional senior-level biz dev executives. In the short run, I’ll be heading up our biz dev group, and we will remain an acquisitive company.
In other personnel news, I’d like to welcome Tarek Pachuca to LeMaitre as our new Global Head of Marketing and Worldwide Export. Tarek joined in August after 16 years at Terumo Aortic, where he was the Chief Commercial Officer. Terumo Aortic sells approximately $375 million a year of polyester grafts and stent grafts and has a common call point with LeMaitre—vascular and cardiac surgeons. To conclude, 12% organic growth was driven by price and unit growth, the international Artegraft launch, RestoreFlow growth and our expanding sales force. Our 26% Q3 op margin, as well as our 27% ROIC, underscores our underlying profitability. Full-year guidance implies 11% organic sales growth, 11% reported sales growth and 18% EPS growth. I’ll now turn the call over to Dorian.
Dorian LeBlanc (Chief Financial Officer)
Thanks, George. LeMaitre’s Q3 organic revenue growth of 12% consisted of 7% price and 5% units. Our Q3 reported growth of 11% was negatively impacted $440,000 by foreign exchange due to the year-over-year strengthening of the U.S. dollar. Our reported Q3 2025 financial results included a $4.8 million employer retention tax credit, and the following year-over-year comparisons all exclude this benefit. In Q3 2026, gross margin was 71.7%. The 90 basis point increase year over year was driven primarily by higher ASPs and reduced shipping costs, offset by a $0.5 million inventory reserve for our product discontinuation as part of our ongoing portfolio management process. In Q3 we announced the discontinuation of FASTIP. Excluding this inventory charge, gross margin for the quarter was 72.4%, up 160 basis points versus Q3 2025.
Operating expenses in Q3 2026 were $31 million, an increase of 18% versus Q3 2025 as sales rep count increased by 13% year over year to 171 at quarter’s end. In addition, R&D spending increased $1.1 million year over year driven by process improvement programs and the RestoreFlow transfer expenses. Q3 2026 operating income was $17.7 million, resulting in a 26% operating margin. Net income was $15 million and fully diluted EPS was $0.65. Free cash flow—cash from operations less capital expenditures—was $19.7 million, a sequential increase of $6 million from Q2 2026.
The company ended September with $390 million of cash and investments. We acquired a portfolio of vascular assets from B. Braun in October for total consideration of $19.2 million. The consideration includes an initial payment of $16.6 million and a deferred payment of $2.6 million to be paid on the one-year anniversary of the closing date. The 2025 sales of these products by B. Braun were $9.4 million. As these products have historically been sold under contracts, including contracts that bundle other non-acquired B. Braun products, this commercial transition has some complexity and is expected to take 18 to 24 months. During the commercial transition period, B. Braun will continue to directly supply customers until their customer agreements conclude or the contracts can be transferred to LeMaitre. LeMaitre will be entitled to profit sharing on the continued direct B. Braun sales. However, under U.S. GAAP, LeMaitre will not record revenue related to those sales until the customer orders are fulfilled directly by LeMaitre.
During Q4 we expect sales will be transacted predominantly by B. Braun, and we anticipate recording revenue for direct sales of approximately $150,000 with no net impact on operating income. In addition, B. Braun will continue to manufacture the products during a four-year supply agreement while LeMaitre works to transfer manufacturing to Burlington. We may face back orders during this period, but after we transfer production to Burlington we look forward to instilling LeMaitre’s no-backorder commitment to these products.
We believe the acquired products fit well in the bag of our expanding global sales force and align well with our European commercial capabilities, and the acquired manufacturing processes align with the competencies of our U.S.-based polyester graft manufacturing teams. We’ve been manufacturing polyester grafts in Burlington since 2011. For 2026, we have reiterated our 11% organic revenue growth guidance for the year. Our reported revenue guidance of $275.8 million reflects the recent strengthening of the U.S. dollar, with a euro to USD rate of 1.12 compared to 1.15 at our August earnings call. We anticipate a full-year gross margin of 72.1%, a 170 basis point improvement from adjusted 2025, and full-year operating income of $75.4 million for a 27% operating margin in 2026. We also updated our guidance on fully diluted earnings per share to $2.80, up 18% from adjusted 2025.
Our guidance includes the modest 2026 impact of the B. Braun acquisition. With that, we’ll pass it to the operator for questions.
OPERATOR
Thank you. At this time, we will conduct the question and answer session. To ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Michael Patuski of Barrington Research. Your line is now open.
Michael Patuski (Analyst)
Good evening. So I guess just—I guess two questions just on the B. Braun transaction. Was this one of the sort of assets that you guys had sort of had in your, I guess, your potential portfolio, you know, the last few years? Or was this something that sort of popped up and was an opportunity that maybe you hadn’t anticipated? Thanks.
George Lemaitre (Chief Executive Officer)
No, this one’s sort of been a while in gestation. Hi, this is George. Mike, good to hear from you. This one’s been in gestation, it feels like, for nine or 12 months. It’s a large company, so it was a long process. But this is very thoughtful. And they figured, hey, we’ve got vascular assets to sell. LeMaitre is the buyer of choice here. So they came to us based on our reputation, I feel like 12 or 15 months ago or so. So we’ve been working and processing this through.
Michael Patuski (Analyst)
Okay. And then just the second question—I’ll let everybody else get a shot here. In terms of RFA, you guys sort of identified some issues in terms of sourcing and even just the internal transition to Burlington. Can you just give updates on all of it? If you’re making progress on things that are controllable and, I guess, things that are outside of your control, what the status of that is. Thanks.
George Lemaitre (Chief Executive Officer)
Yeah, great question. Thanks a lot, Mike. So on the RFA side, there’s really good news, and then there’s, oh, God, I wish we weren’t doing so well. And the really good news is that the cardiac tissue, which is the one you’re really caring about, the vascular tissue, we are not facing supply constraints. We’re able to source enough and have enough process ready to go for the surgeons that need it. On the cardiac side, which is the smaller but much more quickly growing side, we grew 65% in Q3 over Q3. And those are organic numbers year over year. Obviously, roughly speaking, those are units, not dollars. Sorry, the number I’m quoting you is dollars, but there’s no specific. I’m not trying to talk about a price increase. Here it was a real incredible effort by the team. However, and again, two sides of a sword here. However, we could have sold a lot more if we hadn’t been able to approve or, quality-wise, approve all the products.
We’re able to source a lot of them. We’re just not as able to get them through our facility fast enough. So you want to be happy we were able to process, or approve, I should say, 65% more grafts in Q3 than the year before. If you want to be frustrated, we could have sold an awful lot more if we had been able to process them and get them approved through quality inside of our buildings.
Michael Patuski (Analyst)
George, just a quick part B to this question. I guess in terms of the processing—and maybe logjam is overstating it, obviously, given the growth—but just in terms of the dollars, you know, essentially the dollars you’re leaving on the table in the short term, I mean, is there a period where you say, hey, this should be remediated, we should be sort of, you know, able to sort of process what we need to process to meet the demand that we have, or are you guys going to sort of be behind the curve for multiple quarters on this?
George Lemaitre (Chief Executive Officer)
I sense that the good news is we’ll be behind the curve for a while because we’re getting so much demand for cardiac allografts. And I feel like the issues, which are somewhat in our control—as I mentioned, we’re able to get the supply, we’re just not able to get them through our factory fast enough, if you will—I feel like those issues are sort of basic building-block medical device issues, which is if we throw enough resources at, we should be able to handle it.
As a sort of inside baseball story, here we have this thing inside the company called Carte Blanche. And what is that? Well, that’s—we’ve decided that the folks in quality and regulatory have the right to hire anyone they want. That’s a carte blanche inside of this whole thing. So the pressure’s on. We know we need to fix this, but you know, you want to be happy with the crowd because we got a 65% increase year over year. So good news here and then maybe some opportunities in the future.
Dorian LeBlanc (Chief Financial Officer)
Mike, this is Dorian. Maybe just to add quickly to that, we’re about 2 million up on RestoreFlow inventory from year-end. So we had about 12 million of inventory at 31st December. We’ve got about 14 million of inventory now. So despite the fact that we’re growing the business 65%, we are building inventory. And so it really is around this process of getting it through the quality control release.
Michael Patuski (Analyst)
Okay, got it. Thank you.
George Lemaitre (Chief Executive Officer)
Thanks for the question, Mike. Okay, so, operator, it looks like next up on the list, if you want to introduce them, is, I think, Wells Fargo. Is that true?
OPERATOR
Yes, but before, I wanted to ask a reminder about—when you ask a question, press star 11 on your phone. The next person on the line will be Nathan Trabek of Wells Fargo. Your line is now open.
Nathan Trabek (Analyst)
Great. Good evening, George. I guess just on the B. Braun transaction, any color you could give us on how fast these products are growing, expectations for sales in ’26, and then—because of the bundling—how are you thinking about managing through potential disruption or potential loss to customers?
George Lemaitre (Chief Executive Officer)
Okay, great. Terrific question. All big topics during this whole due diligence phase and right into the acquisition. I can give you a closer number. We were worrying about, oh, should we try to confuse people? But here you go, I’m going to confuse you. Last 12 months through 9/30, I believe the number was 9.5 million. And I told you that the 2025 calendar number was 9.4. So in that snapshot, I think you can tell these are relatively flat products.
And I would go one step backwards and say these products have been inside of a $9 billion company; they were worth 0.1% of their sales, and they’re in a segment that B. Braun is sort of going away from. So our play, we believe, is with our commitment to no back orders and with our excitement around vascular and cardiac surgeons, it should be natural that we would be able to grow these for a while. They’ve been there for a long time, and it is a very large—I think it’s a private German company, it’s a very large company—where this was missing.
So I think we’ll be able to grow these things. As to the—and your second part of your question. Do you mind, Mason, repeating the second part of your question?
Nathan Trabek (Analyst)
Yeah, I mean, I think it was said in the prepared remarks why the transaction is taking so long—it’s because there’s a lot of bundling involved. Maybe not with B. Braun, but generally, when we think about that, there’s a potential for disruption or loss of accounts if you’re not able to bundle, right?
George Lemaitre (Chief Executive Officer)
Yes, agreed. Okay, great. So, yeah, we do believe there will be some—what we’re calling internally—breakage. Probably you guys use the same word based on all that, but I feel like we’ve watched enough back orders by either our company or by other companies to learn that you do go through times of breakage, but usually you get your customers back eventually. And again, I feel like if we impose our crazy no-backorder mantra that we apply to everything inside this company, we’ll be able to easily win back these customers.
But yes, there’ll be breakage. It’s even maybe a little bit more logical that there might be breakage of—pick a number, we don’t know—10–15% in year one, and then you recover it later. But B. Braun is a very large German company. They’re direct in many, many places. We’re, quote, only direct in 31 countries with our sales reps. So if you say, oh, maybe they’re direct in 45 countries and we’re only in 31 countries, you have the issue you’re talking about.
It plays out pretty quickly. It will cause us in a good way. One of the nice things about this acquisition is that because we get chunks of B. Braun revenue in a lot of different countries around the world—zero in the United States and Canada—it will, all of a sudden, five to nine more countries will look more tasty for us to go direct in. So LeMaitre Vascular has a chunk of revenue—Slovakia is a great example. This is not big numbers, but LeMaitre Vascular has a chunk of revenue in Slovakia. We’ve always looked at it as, hey, it’s right next to Czech. It’s right near Poland. We should do something about it. But we haven’t had the courage to do something about it until the B. Braun acquisition comes along and we see the revenues from that. So you’ll see that, and you’ll see five or six more of those.
And it’s a little bit in response to breakage, but it’s a little bit part of the opportunity that we’re always looking for with these international acquisitions—how can we get closer to our customer with direct sales force?
Nathan Trabek (Analyst)
Great. That’s helpful, George. And just on Q4, it looks like you’re lowering guidance by a little bit. Can you just talk about what dynamics are playing out here and how investors should think about 2027 in light of this guide-down in Q4?
George Lemaitre (Chief Executive Officer)
Right. Maybe I’ll take the end of that question, which is, I think we’re going to always come to you guys and say we’re not giving you next year’s guidance, and we’re sort of trapped in a 2026 discussion. So I apologize, but I don’t want to get into 2027, though I’d rely on our historical track record. We have a CAGR of, I don’t know, 11 or 12% for the last five years. I’d rely on that and I’d assume you guys will be making guesses based on that.
But I think we shouldn’t speak about that yet. As it relates to 2026—and even I think maybe you’re asking about Q4—but I want to broaden the question to H2, and I would say when we spoke to you all in August, I think August 4th was our call, we were giving you an 11% organic for Q3 and a 12% organic for Q4. We wound up outperforming Q3 and we got a 12. And we’re coming back to you now and saying, okay, we’re going to do 11 next quarter in Q4. So if you put the organic numbers together, it’s a wash for what we’re giving our investors.
The guide-down that you’re seeing in H2 in the aggregate is about FX. Largely, I think from the August guide until now, we’ve lost about $450,000 of U.S. dollars because of the strengthening of the dollar against the euro and other international currencies. So it’s two-thirds about that and a little bit about the pull-forward of sales into Q3 and us outperforming in Q3 and maybe a little bit guiding down in Q4. I hope that’s clear. I know I was running around with a lot of numbers there.
Nathan Trabek (Analyst)
Yeah, that’s very helpful. Thanks a lot.
George Lemaitre (Chief Executive Officer)
Thank you. Okay. Again, I just don’t want to leave too much blank airspace. I think KeyBank is up next. Is that true?
OPERATOR
Yes. Brett Fishman of KeyBanc, your line is now open.
Brett Fishman (Analyst)
Hey guys, thanks so much for taking the questions. Just maybe one or two on the B. Braun acquisition. Understand the 18 to 24 month transfer phase and it makes sense. But just thinking about inorganic modeling for next year, maybe any flavor for how far along you expect to be next year in aggregate as a proportion of the total sales?
George Lemaitre (Chief Executive Officer)
I think what we’d like to do—again, staying out of ’27—I think we’d like to go through Q4. We’ve never been through one of these slower transitions. Usually when we buy stuff, it happens pretty immediately. So we’d like to go through Q4, watch how it goes. We gave you a very small guide of 150 of revenue in Q4 that would be booked under our name. So I think we need to go through that before we really speak out of turn about 2027. If you wanted to look way out, I feel like we’re telling you we’ll probably have the business in-house at year three or late year two. And we told you we think it’s a $9.4 million business, although there may be a little breakage in the early years. So I hope you can work with that. I’d rather, really rather not get a number out for 2027 when we’re a little bit uneducated on this right now.
Brett Fishman (Analyst)
Yeah, no worries on that. We can make some assumptions and follow up next quarter. Maybe just one more on B. Braun. Do you have any sense of how you think about margin profile over the medium to long term, especially as you start to consolidate some of the manufacturing—presumably to Burlington? It sounds like neutral in 4Q, but just thinking more long term.
Dorian LeBlanc (Chief Financial Officer)
Yeah. Brett, this is Dorian. There’s a little bit of some timing here on how we pick up with them on the supply agreement that we’ve signed. But you can sort of think that their polyester has a similar margin profile to ours—40 to 50% gross margin. And over time, as we transition it here and combine it with ours, hopefully we’re able to continue to improve on that over time.
Brett Fishman (Analyst)
All right, great. And last question from me. Good to see the organic revenue of 11% reiterated today for the year. And then just to nitpick a little bit on operating margin, it sounds like a lot of hiring activity took place this quarter. Is that really the biggest driver of the slight reduction to OP margin guidance, or are there some other factors that were incremental from last quarter? Thank you so much.
Dorian LeBlanc (Chief Financial Officer)
Yeah. Brett, again, you’re right. The operating margin guide is about 1.4 million down. Of course, about a half a million of that is related to the FASTIP inventory reserve that we mentioned in the prepared remarks. So that’s about a third of the impact. I’d say about a third of the impact as well is the sales force probably going a little faster, us building a little faster overall with the sales force and the commercial infrastructure. We have eight new warehouses and offices.
And then we’ve got a little bit of impact on the RestoreFlow transfer expenses and just the timing of how that moves up into the gross margin. And there’s a component of FX here as well. As the revenue comes down with that FX, we lose some of the flow-through. So that’s really the big impacts, a little bit death by a couple small cuts, but mostly that inventory reserve and the commercial investment.
Brett Fishman (Analyst)
Great. Thank you so much again.
OPERATOR
Next on the line is Keith Henson of Freedom Capital Markets. Your line is now open.
Nakul (Analyst)
Great, thanks. Hi, this is Nakul on for Keith. Thanks for taking our questions. We have two quick ones. First one regarding 2027 OpEx. So any initial comments on plans to further expand the sales force in 2027, which geographies you are targeting for additional headcount and any other OpEx pushes and pulls we should keep in mind for next year? And then I have a quick follow-up.
George Lemaitre (Chief Executive Officer)
Okay, great. So again on 2027, would rather not project there. We were ready to tell you though that we have 17 open rep hiring requisitions right now. We don’t know how far and how deep that goes, but that’s one thing that does extend. I think there is ambition by the company to continue to grow the sales force, but I don’t know what that means for 2027 just yet.
Nakul (Analyst)
Good, that helps as well. And also last one, as you must have seen today, the medtech sector traded up significantly, possibly on hopes that Democratic Congress can push through rollbacks to Medicaid cuts and maybe enhanced ACA subsidies. Can you speak to how much negative impact those cuts or proposed cuts have had on your end markets and what the potential upside could be if they are reversed?
Dorian LeBlanc (Chief Financial Officer)
Yeah, this is Dorian. Thanks for the question. I think we’ve been answering this question pretty consistently throughout the year in that the procedures that we’re involved in are really about saving limbs and lives and providing access to a life-sustaining therapy in dialysis. We haven’t seen historically a big impact other than maybe the COVID time period where it was really disruptive. But these types of changes haven’t seemed to translate into big changes in procedure volumes for our core procedures.
And since from a U.S. perspective we are under the DRG codes and these open procedures are deemed to be fairly economically attractive overall, we haven’t again had a lot of fluctuation here. So not a big impact for us on the negative side from procedure volume and economics over the last year or so and therefore probably not a perceived big benefit with the election results from last evening.
Nakul (Analyst)
Thanks so much.
OPERATOR
Thank you. Next on the line we have Daniel Stodder of Citizens JMP. Your line is now open.
Daniel Stodder (Analyst)
Yeah, great, thanks. Just my first one straight hitting on gross margin. You know, it sounds like this quarter would have been above your guide without the inventory charge. Just looking at the new fourth quarter guide, you know it’s down about 50 bps. So I was wondering, is this from any one-time items or, you know, what led to the change there? I’m assuming it’s not from the $150,000 in revenue that is coming to the top line, but just, you know, any thoughts there and how we should think about gross margins into 2027?
Dorian LeBlanc (Chief Financial Officer)
Yes, Danny, this is Dorian. Thanks for the question. Yes, if you look at the full year guidance, we brought the full year gross margin guidance down by 30 bps from the last call, 72.4 down to 72.1. It’s about 800,000 or so of an impact on the 275 million of revenue. So as you mentioned, about 500,000 of that is related to the FASTIP inventory reserve and the remainder is a little bit of the pressure of the FX as we reduce reported revenue. You’re over a very similar fixed cost base for things like warehousing and quality, so we get a little bit less leverage on those fixed costs.
And then there is some timing here of when the RestoreFlow transfer costs start moving out of R&D into COGS. We’re probably a little ahead of our plan. We have always said that we would close Fox River Grove, the Illinois facility, within the year. We’ll probably have all this transferred earlier than we expect. And so there’s just always a little bit of timing there on when those costs move out of our R&D process development line into COGS themselves.
So that sort of explains the 30 bp drop from full year guidance here in November from our full year guidance in August. Again, we’re up 170 bps year on year. We were up 180 bps year on year. Last year we were up 290 bps the year before. So gross margin has been a great story here over the last three, four years. Obviously part of that’s the continued ability to see pricing increases flow through, but that’s been coupled with being able to keep cost pressure down, even in this inflationary environment on cost of sales and some of those manufacturing efficiencies.
Daniel Stodder (Analyst)
Okay, great. Thanks for the color. That’s helpful. And then just one follow-up, wanted to ask about EMEA. You know, it was up 18% year over year, which was solid, but a little bit of a decel, I guess, from what we were seeing earlier in the year. I just wanted to ask if you’ve seen any disruption continue in the Middle East similar to what you called out last quarter. I think it was some, maybe some trapped inventory. And then have you seen any softness from some of the other impacts in Europe related to budgets or strikes that other companies have called out.
Just any more detail there would be great. Thank you.
George Lemaitre (Chief Executive Officer)
Right, thanks for the question, Danny. And, you know, during this, we went with the reported growth of 18, but actually organically I believe it was 20%. So you’re starting to feel the strong dollar hurt our European results. So if we had said 20 organically, maybe that question doesn’t come out. Maybe it does. I don’t know. And I would say in answer to the Middle East discussion and all that, I would say not really for us. You know, you think about what’s going to happen with those French riots and where does that go?
But I would say certainly in Q3, we can’t go back and point at external events. I think we’re not going to point at external events.
Dorian LeBlanc (Chief Financial Officer)
And this is Dorian. Maybe one more thing to add to remember as we come into Q4 as well is that Q3 is the first quarter where we really have a comp for Artegraft because we launched the product late in Q2 last year. So we’re starting to run into actual Autograft comps year on year.
Daniel Stodder (Analyst)
Great. Thank you very much.
Dorian LeBlanc (Chief Financial Officer)
Thanks, Danny.
OPERATOR
Our next question comes from Jim Sidoti of Sidoti and Company. Your line is now open.
Jim Sidoti (Analyst)
Great. Thanks for taking the questions. I’m not sure if you said it or not, but what were the Autograft sales internationally in the quarter?
Dorian LeBlanc (Chief Financial Officer)
3 million in Q3.
Jim Sidoti (Analyst)
And with the B. Braun… I’m sorry, what was that?
George Lemaitre (Chief Executive Officer)
Sorry, Jim, continue.
Jim Sidoti (Analyst)
Okay, the B. Braun products, are they approved in the U.S.? Is somebody else selling them? Is there a market for them? What’s the situation there?
George Lemaitre (Chief Executive Officer)
They are not approved in the U.S. or Canada, and I’m not so sure we’d bring them here. We’ve had access to our own Dacron over the years, and you may or may not know this, but we exited the polyester — I should say we’ve had access with our own polyester vascular grafts in the U.S. for years. We made a run of it, it didn’t work for us too well, and we sort of folded up our tent and went home with our AlboGraft Dacron prosthesis. So I’m not so sure this is something we want to do.
You got a pretty serious duopoly of those two. Getting it in Terumo in the U.S. looks like a real tough slog. And we played the game before, so I would say no, not really. And the valve cutter or the valvulotome, we have plenty of options, as you well know, available for our surgeons in the U.S. I don’t think we need this sort of, I’ll call it a Gen 1 valvulotome, but it has some great customers in Germany and France and the UK and we like to get in there and sell those to those customers.
Jim Sidoti (Analyst)
All right, and then I’ll sneak one more in. You said you’re up to 171 salespeople, so you had a pretty good quarter with regards to hiring. Do you think you’ll hire any more this year?
George Lemaitre (Chief Executive Officer)
I do and I think somewhere along the line, I think I’m giving guidance here of we’ve narrowed the from — it used to be 170 to 180 for the end of the year and I think we’re saying 172 to 178 for the end of the year. We’ve got offers out there, we’ve got a bunch of recruiting processes going. Who knows how many reps quit on December 15th and how many we hire on December 26th. So I would say 175 still feels like the place where it’s going to happen.
But who knows? You don’t know these things.
Jim Sidoti (Analyst)
Got it. All right, thank you.
George Lemaitre (Chief Executive Officer)
Thanks a lot, Jim.
OPERATOR
Next on the call will be Michael Sarcon of Jefferies. Your line is now open.
Michael Sarcon (Analyst)
Good afternoon and thanks for taking the questions. I guess just to start, just a two-parter on the longer Autograft lengths you’re working on. Could you kind of give us a rough market sizing in the U.S. and Europe for how you’re thinking about that? And then when you launch these longer graft sizes, is it all kind of greenfield and new use cases or will this cannibalize maybe some of the shorter grafts that might be being used right now suboptimally?
George Lemaitre (Chief Executive Officer)
The second part of your question is a little more straightforward for us. I think these are generally new use cases, except that we do have long Omniflow. I hate to complicate this, but we have two biologic grafts in Europe. One of them you can think of as this big thing that’s going on Autograft that’s sort of shorter. There are no grafts longer than 50 centimeters. With Omniflow, which is a sheep graft, it gets up to 65 centimeters. So some of the new launch of the long Autograft will go after some of what we’re already selling with Omniflow, the sheep graft.
But I think this product, Autograft, is superior to Omniflow. So we think even if it’s going to chew up some of the Omniflow usage, it’s going to create more usage itself as well. I think you want to be cannibalizing yourself always with better products. So that’s the second part of your question. The first part of your question was how big is the market in the U.S. I’m not so sure. You know, these guys ran this company for 30 years before us with only a U.S. approval and they really didn’t see the need for a long graft. So I don’t think when we come out and say we’re making a long graft — sure it’s going to help out in the U.S. — but I think this is really for Europe, one where the usage is for long leg bypasses.
And in the U.S. there’s not as much usage for long leg bypasses, even though for U.S. it’s an enormous revenue piece for AV access. You don’t need long ones for AV access, you need long ones for leg grafts. And they don’t use biologic grafts for many AV access cases in Europe. They use these things, Autograft and Omniflow, for long leg bypasses. I hope that was clear. I know it’s a little confusing. Michael, do you think I got that to you?
Michael Sarcon (Analyst)
You did. That’s super helpful. Thanks, George. And second one for me, on the 2Q call, you had talked about having conversations with the FDA around an Autograft Quick Stick claim and they came back and you’d need a trial. You said you were kind of, you know, having that under evaluation. I guess any update on what’s the latest and greatest there?
George Lemaitre (Chief Executive Officer)
Yeah. So we continue to evaluate should we get involved in a five-year trial. And I would say our bias is, yeah, probably we will. Although we haven’t gotten to that yet. We haven’t studied it enough and made a good, deliberate decision on that. But it seems to make a lot of sense in that we were just talking about AV access versus leg bypasses in the U.S. This is all about AV access, the sales of Artegraft; there’s a giant business selling Artegraft for AV access.
And a big pain point for these surgeons and nephrologists is they would love to be able to do a quick stick, and we can’t give them that indication right now. Even though we think the graft does work under a quick stick scenario, the FDA still wants definitive proof. So it sounds like it’s a thing we should do, but we have not committed to a decision yet. Thank you.
OPERATOR
Ladies and gentlemen, this concludes today’s conference. I would like to thank you for your participation. And you may now disconnect. Have a great day.
George Lemaitre (Chief Executive Officer)
Thanks a lot, operator.
OPERATOR
Thank you.
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