Q4 2023 Artivion Inc Earnings Call

Participants

Pat Mackin; Chairman, President and CEO; Artivion Inc

Lance Berry; EVP and CFO; Artivion Inc

Laine Morgan; Moderator; Gilmartin Group LLC

Rick Wise; Analyst; Stifel Nicolaus & Company Inc

Mike Matson; Analyst; Needham & Company LLC

Suraj Kalia; Analyst; Oppenheimer & Co Inc

Jeffrey Cohen; Analyst; Ladenburg Thalmann & Co Inc

Nelson Cox; Analyst; Lake Street Capital Markets LLC

Presentation

Operator

Greetings and welcome to the Octavian Fourth Quarter and Year End 2023 financial conference.
Yes, at this time, all participants are in a listen only 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. As a reminder, this conference is being recorded, so we'll now turn the call over to Lynn Morgen from the Gilmartin Group. Thank you. You may begin.

Laine Morgan

Good afternoon and thank you for joining the call today. Joining me today from a TV and 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. 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 and additional information concerning certain risks and uncertainties that may impact these forward-looking statements is contained from time to time in the Company's SEC filings and in the press release that was issued earlier today. You can also find a brief presentation with details highlighted on today's call on the Investor Relations section of the activity on our website. Now I'll turn it over to BNCEO. Pat Mackin.

Pat Mackin

Fairfax, Wayne, and good afternoon, everybody. I want to start off our call today by welcoming Lance Berry, our new Executive Vice President and Chief Financial Officer. Lance most recently served as Executive Vice President and Chief Financial Officer and Operations Officer at Wright Medical until the acquisition by Striker in November of 2020. We are thrilled to have Lance join our team during this exciting time, I am confident his broad expertise and proven leadership in medtech will add significant value to our TV on as we enter the next phase of profitable growth I'd also like to thank Ashley Lee for his many years of dedicated service start to be on his contributions. No doubt helped make our TV and the outstanding company. We are today now on to our fourth and Fourth Quarter and Full Year 2023 results. 2023 was an outstanding year for our TV on and I'm pleased to report that we achieved total company constant currency revenue growth just over 12% for the full year of 2023 compared to the full year of 2022. In addition, to exceeding our top-line growth revenue target. We achieved adjusted EBITDA growth of nearly 30% year over year, enabling us to deliver positive free cash flow while making strides in advancing our clinical programs and further expanding our global footprint.
Our achievements throughout 2023 culminated a particularly strong Q4, as we delivered constant currency revenue growth of 15% year over year, resulting in $93.7 million in revenue. Our performance was driven by improved revenue growth in our Onyx business, which increased 19%, followed by tissue processing at 18%, BioGlue at 11% and stent grafts at 8% growth each when compared to the fourth quarter of 2022, all on a constant currency basis. We've also benefited from the expansion of our commercial footprint through regulatory approvals across new geographies, especially in Latin America and Asia Pacific. Our strong top line performance led to $15.3 million in non-GAAP adjusted EBITDA in the fourth quarter, which is a 40% increase compared to the fourth quarter of last year. We expect our strong momentum in the fourth quarter to continue into 2024.
From a product perspective, as I mentioned earlier, On-X revenues increased 19% compared to the fourth quarter of last year on a constant currency basis. As we continue to take market share globally and have the only mechanical aortic heart valve that can be maintained at an INR of 1.5 to 2.0. We believe our valve is the best aortic valve on the market. Our market share gains each year and the recently presented results of the Onyx post-approval data, which showed an 85% reduction in major bleeding, clearly support our view.
Tissue processing revenues increased 18% compared to the fourth quarter of last year on a constant currency basis due primarily to pricing issues and the increase in volume of the Ross procedure. We expect continued double-digit growth in our tissue business in 2024, driven primarily by our significantly improved supply of our proprietary SynerGraft pulmonary valve.
And lastly, stent graft revenues grew 8% on a constant currency basis in the fourth quarter compared to the fourth quarter of last year, driven by improved supply and strong performance in AMDS outside the US, we anticipate demand to remain strong through 2024 and beyond.
For our stent graft products which should sustain and continue our strong revenue performance. Our results will also be driven by the continued progress we are making expanding into new markets through new regulatory approvals and commercial footprint expansion in Asia Pacific and Latin America both delivered constant currency revenue growth of 19% compared to the fourth quarter of last year. We expect these regions to be important growth drivers over the coming years as we continue to leverage our industry-leading product portfolio further into these regions.
In addition to our strong financial performance, we continued to advance our clinical programs and show leadership in aortic field with two late-breaking science presentations at the STS. Annual Meeting in San Antonio. First, the full dataset from the ANDS. persevered clinical trial, and second, the interim data from the Nexus three clinical trial. First, in November of last year, we completed the trial enrollment of persevere, our IDE clinical trial for PMA approval, which consists of 93 patients who have experienced an acute Type A. dissection. I'm pleased to report that the trial met its combined primary efficacy, efficacy and safety endpoints demonstrating a statistically significant reduction in all cause mortality in the primary endpoint of major adverse events as well as no occurrence of data, which are associated with increased risk for reintervention and mortality. As a reminder, the adverse events called MAE.s, which is the EMA endpoint for the IDE trial, is based on historical control of patients with mild perfusion in this reference core 58.2% of patients had greater than or equal to one major adverse events. The target goal of the trial from the FDA was a reduction in this endpoint to 40% of patients with greater than or equal to one MAE. The releases the recently presented 30 day data at STS. should only 28% of the patients had greater than or equal to one major adverse event, representing a 52% reduction compared to the standard of care MERs procedure as it relates to Dain tears for contact data occurs up to 70% of patients following Hemi arch repair without a MDS results from the full IDE. dataset has shown there have been no, no gains at all detected in any patients treated with AMBS., nor were there any gain tiers reported in DART study after three years of follow-up critically, the data up to 30 days also demonstrated a statistically significant 72% reduction of all-cause mortality. It truly REVENUES revolutionary results.
Second, the interim data from the Nexus three of US IDE trial included a 22 patient study. Participants demonstrated a 9% mortality, no detected strokes, peripheral iGA or renal failure in any patients treated with NEXUS aortic arch Stent Graft System. As of today, there have been 42 of 60 patients enrolled and the primary endpoint of the Nexus trial, and it remains on track for approval in 2026.
In summary, we're very excited about these two native print. These two new data prints, which assuming we exit our exercise, our option to acquire Endospan should accelerate stent graft growth in markets where the products are currently approved. If these PMA processes proceed as we anticipate, we would expect PMA approval for AMBS. in 2025 and Nexus in 2026. At that time, again, assuming we exercise the option for Endospan, these two products will significantly increase our addressable market opportunity.
Lastly, on our R&D pipeline, our third-generation frozen elephant trunk used to replace the entire aortic arch called RCBOLSA. is in the final testing stages, and we currently expect to start the US IDE trial later this year. I look forward to providing additional updates on our proprietary on our progress in future calls. 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. And 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 revenues were $93.7 million for the fourth quarter of 2023, up 15% compared to Q4 of 2022. Non-gaap adjusted EBITDA increased approximately 40% from $11 million to $15.3 million in the fourth quarter of 2023. And after generating $5.8 million of free cash flow in the third quarter of 2023, we generated $7.4 million of free cash flow in the fourth quarter. Importantly, we were free cash flow positive for the full year 2023, representing a critical milestone achievement for our TBR. As importantly, we expect that free cash flow will continue to be positive in 2024 from a product line perspective, On-X revenues grew 19%. Tissue processing revenues increased 18%, BioGlue revenues increased 11%, and stent graft revenues grew 8% in the fourth quarter of 2023 on a regional basis, revenues in both Asia Pacific and Latin America increased 19%, while North America increased 17% and EMEA increased 10%, all compared to the fourth quarter of 2022. Gross margin improved to 65% in Q4 compared to 64% in the fourth quarter of 2022. This increase was driven by price increases and product mix, partially offset by inflationary impact on materials and labor.
General.
Administrative and marketing expenses in the fourth quarter were $50.3 million compared to $38.5 million in the fourth quarter of 2022. Non-gaap general, administrative and marketing expenses were $47.7 million compared to $41.9 million in the fourth quarter of 2022.
R and D expenses for the fourth quarter were $7.6 million compared to $8.3 million in the fourth quarter of 2022. Other income and expenses include $5.8 million in net interest expense and foreign currency translation gains of approximately $2.2 million. On the bottom line, we reported GAAP net loss of approximately $4 million or $0.1 per fully diluted share in the fourth quarter of 2023, non-GAAP net income was $4.6 million or $0.11 per share in the fourth quarter. As of December 31st, 2023, we had approximately $58.9 million in cash and $312 million in debt is important to note that this does not contemplate the impact of our recently closed comprehensive credit agreement, which I will speak to shortly. And now for our initial outlook for 2024, we expect to continue building on our momentum, enabling us to achieve as reported revenues in the range of $382 million to $396 million at current FX rates, the year-over-year impact on revenue is expected to be negligible. Therefore, this range represents revenue growth of 8% to 12%, both as reported and on a constant currency basis. With our continued top-line revenue growth and general expense management, we expect adjusted EBITDA to be in the range of $68 million to $72 million for the full year 2024, representing 26% to 34% growth over 2023 and 280 basis points of adjusted EBITDA margin expansion at the midpoint of our ranges, we expect gross margins to remain at levels similar to 2023. We expect to continue 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. I would like to proactively note that our guidance range is below the $75 million that we originally targeted for 2024. At our March 2022 Investor Day, there has been no change to our commitment to drive significant adjusted EBITDA growth in 2024, as evidenced by our expectation for 30% year-over-year growth at the midpoint of our range, which is three times our midpoint top line growth rate. We are driving this level of improvement while maintaining our investment levels in R&D as a percentage of sales driving strong adjusted EBITDA growth is a top priority, but not at the expense of the investments we need to make for the future. We feel that the strength of our underlying business, our longer-term growth outlook and our balance sheet today validate this approach in regard to our capital structure. We are very pleased to have recently closed the comprehensive nondilutive financing for $350 million of senior secured interest only credit facilities with six year maturities. The facilities include an initial $190 million term loan, a $60 million revolving credit facility and an additional $100 million in unfunded delayed draw term loan that may be drawn to refinance our convertible bonds at any time prior to their maturity in July 2025. As a reminder, our convertible notes do not contain any financial covenants. 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 secured credit facilities and pay related transaction expenses. Overall, this credit agreement, coupled with our 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. We also intend to file a shelf registration statement on Form S-3 with the SEC following the filing of our 10-K. We view this strictly as a matter of good corporate housekeeping and prudent considering the reestablishment of our weekly status as it relates to free cash flow we are not giving formal guidance. However, we are confident in our ability to be free cash flow positive in 2024 the $16 million of incremental adjusted EBITDA at the midpoint more than covers the $5.7 million of additional interest from the new credit facility, which provides us room for working capital expansion to support the growth of the business while still being free cash flow positive.
Finally, I want to make a few comments on quarterly cadence to assist you with your modeling as it relates to revenue seasonality, the third quarter is typically our lowest growth quarter, particularly due to the impact of the European vacation season. 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, despite our expectations for free cash flow to be negative in Q1 because of these items, we still expect cash flow to be free to be free cash flow positive for the full year of 2024.
In summary, we are thrilled with our 2023 performance and 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.

Pat Mackin

A Thanks, Lance. As you heard from Lance, we're extremely pleased with our 2023 performance and continue to deliver on our mission to build a world-class aortic company. We finished strong with 15% revenue growth and 40% adjusted EBITDA growth in the fourth quarter, we continued to expand our markets and meaningfully advance our clinical pipeline, positioning us well for long-term growth. We also executed a nondilutive capital structure, giving us a six year runway with no financing overhang. Our strategy to deliver sustained profitable growth is working, and we look forward to continuing the momentum we built in 2023 through 2024 and beyond. More specifically, our growth this year will be driven by the following number one, our continued growth in our stent graft business, driven by the recent 30 day persevered data presented at STS. showing a 72% reduction in mortality and a 52% reduction in major adverse events compared to the standard of care literature trial. Number two, continued market share gains for Onyx, driven by data recently presented in Europe of 510 patients in our aortic valve showing an 85% reduction in major bleeding. Number three, continued growth of our proprietary SynerGraft pulmonary valve, driven by price increases, growth of the Ross procedure as well as our ability to capture that growth from our efforts to improve supply.
And fourth, our continued growth in Asia-Pacific and Latin America from our channel investments and new regulatory approvals. So in conclusion, we are more than confident we are more confident than ever in our near and long-term prospects of our business.
Finally, I want to thank all of our employees around the globe for delivering an exceptional year.
So with that, operator, please open the line for questions.

Question and Answer Session

Operator

Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue and you may press star two. If you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing One moment please while we poll for questions.
Our first question comes from the line of Rick Wise with Stifel. Please proceed with your question.

Rick Wise

Hey, Lance, this is John on for Rick. Today.
Just wanted to start off with MDS.
You had some really positive strong data readout at STS. recently. And I just wanted you to maybe remind us about just how clinically meaningful this is in the eyes of doctors, how that technology is performing in Europe today and how we should be thinking about the U.S. opportunity as we look ahead to '25?

Pat Mackin

Yes, I'll take that one. So clearly, this is a very exciting technology. I've been in the field, a cardiac devices for 30 years and associated with a lot of breakthrough technologies. I've never seen one that actually has the patient benefit that we've seen in this in this device. And I'll give you just a kind of a background right so an acute Type A. dissection is a very extreme disease state where patients are metabolic and typically the middle of the night and we did this trial was done in patients with mild profusion, which means they have kind of blood not flowing to the to the brain to the kidneys to the lakes. This this device in an FDA trial of 93 patients, which is the largest series ever done in acute Type A. dissection patients showed a statistically significant reduction of 72% in mortality. That's death, right? So 72% more patients were alive on. It also showed reduction in the major adverse events of strokes. People have require kidney dialysis and myocardial infarctions. So we saw 52% reduction in those four major adverse events. So I think this is a really a light until it's truly a life-saving technology and we're very excited. Our investigators are very excited about this it's about $150 million market opportunity in the US. We'll have obviously we'll have to go through all the steps you have to go through in the adoption of a new technology, but we're all alone in the market. There's no other competitor. The competitor is a Hemi Arch, which is a surgical graft that's been done for 50 years there have been no innovation. This is a highly patented protected product. So we feel like this is a market of that RT. alone for a very long time. And we're super excited about getting it out to the patients.

Rick Wise

Thanks. That's helpful.
And then just to follow up on the guidance, I understand the logic on adjusted EBITDA reinvesting in the business just curious, one exactly what particular areas of focus are you reinvesting in innovating in?
And then on the revenue side, I noticed that in the fourth quarter sense graphs on an organic basis were more like high single digits, then preservation tissue business was high 10s.
So just as we think about that into '24, should we expect similar growth rates from those two or maybe find somewhere in the middle?

Pat Mackin

Yes.
Let me just let me take the first one. I'll answer the second one. So as far as the investments from as we've said all along, we're building an aortic company, right? So you've seen a significant investment in AMBS. in the US FDA trial for severe, which you just heard about we're literally starting as that one is getting ready to get to market where we're literally starting our next-generation device to replace the entire aortic arch called our CFO. And we've been developing it for several years. It's a breakthrough technology as identified by the FDA. We will start that clinical trial this year from here in the US and Europe. And then we've got some some technology behind it. But as Lance said in his comments, we can do this in our P & L and not really holding to increase our percentage of R&D as a percentage of revenue because we're growing the top line as well. So we're being very pragmatic about being financially disciplined, grown the top line midpoint of our range, 10%, bottom line, 30% and still being able to invest in innovation. So I think this is something that shareholders should like because we can deliver top line bottom line cash flow and a pipeline. So Lance, maybe you can take that second question.

Lance Berry

Sure. So the question was about on stent graft growth and tissue processing growth and how those flow into 2024.
So first on stent grafts on, I think the Q4, I would call that just kind of normal a level of quarterly fluctuation on growth rates for the full year stent grafts grew in the mid 10s, and that's really how we think about that business going into for full year 2024. Again, you may see some variation quarter to quarter on the tissue processing, we are benefiting from the price increase we took in second quarter of 2023 on our own SynerGraft technology. So we're benefiting from that and we began to see a little bit of improved supply as well in the fourth quarter that helped help that. So we may see the tissue processing revenues be a little higher in the beginning of 2024 for the full year, we think about that more kind of a double digit growers as we've kind of talked about in the recent past.

Rick Wise

Thanks for taking the questions.

Operator

Our next question comes from the line of Mike Matson with Needham. Please proceed there.

Mike Matson

Yes.
Thanks on. So I guess I'll just start with the financing on the new credit facility. So can you just call it kind of where you'll be with regard to your leverage ratio following that data transaction and where you kind of ended up the year last year in terms of EBITDA.

Pat Mackin

You've read last.

Lance Berry

Yes. So on the route of my head, but we did $52.8 million of EBITDA are shown at the end of this in 2023. And you know, post transaction, you're really thinking about net debt of about $260 million. So I mean, I guess do the math on that real quick. (multiple speakers) five point pumping roughly a [$4.8 million], and you know, is where it is right now and we think we'll get it, you know, the midpoint of the range and some cash flow will kind of get that approaching [$3.5 million to $3 million] by the end of 2024 So some really good progress there. I would point out that there are covenants in the new debt, but they're well above that, that level and we actually have a favorable definition of EBITDA in the credit agreement. So per the actual credit agreement, that net leverage ratio is even less than than what it is on a on an as-adjusted basis.

Mike Matson

Okay, thanks.
That's helpful. And then just on the MDS, I mean, obviously, the data looked really good on. Do you expect to would the FDA require a panel for that? Or do you think they'll just do approval without a panel.

Pat Mackin

We haven't gotten like we haven't gotten to that level of detail yet. I mean, I am not going to opine on what the FDA is going to do, but obviously, but I think the data speaks for itself, right? I mean, it's this is a super sick population with phenomenal results. So we're obviously going to work with them to get the technology out as soon as we possibly can. So at what point or not, I don't I can't really comment.

Mike Matson

Okay. And then on as far as our CFO goes on just the timing, I mean, would that be it's not really more 2027 at this point? Or could it be early to add?

Pat Mackin

Yes, I think that's I think that's about right, probably late '27. So we we expect to get the IDE approved this year and hopefully, we'll get some patients enrolled but again, there's a lot of bureaucracy at the startup of a trial. So I think that's right. We feel like just the centers we have in this and the kind of the a lot of these top centers were involved in the development of this technology, and they're super excited about it. So I expect our enrollment to go pretty well, but there is a one-year follow-up, and then you've got to go through an FDA PMA cycle. So there's some time, but kind of late '27 is probably a good timing for that.

Mike Matson

Okay. Got it.
Thank you.

Operator

Thank you.
Our next question comes from the line of Suraj Kalia with Oppenheimer. Please proceed with your question.

Suraj Kalia

Our lines, can you hear me all right.

Pat Mackin

Yes, we hear you fine.

Suraj Kalia

Pat, let me start out, David, congratulations. I mean, you guys have consistently even through COVID, probably one of the few that consistently beat numbers every quarter. So congrats once again. And I know Pat, on MDS, a number of questions there. Just for the audience again, can you size the US market? What how do you define the low-hanging fruit.

Pat Mackin

Yes.
So basically, if you if you look at there's a number of different ways to kind of slice of the market. So we come up with a number of $150 million. The ASP. on that device is going to be about $25,000. So there's about 6,000 acute Type A. dissection has done in the US. So that's really kind of the back of a napkin is the math on 6,000 cases, 25,000 device multiplied together and you get $150 million. We've done market research with a number of physicians and I can talk, you know, some of the physicians that are in the trial. This is a very substantial technology on again, as I said from an earlier question, I've not seen you see these heart failure trials that what you're trying to get somebody to walk 12 more feet. You're talking about a 72% reduction in mortality. The mortality in this standard of care control group was 35%. At 30 days. We were at 9.7. So that is a significant technology. And you know, these are these are extremely sick patients that are met of act in an emergency and is life-saving technology. So we're very excited and we've got a sales force on BioGlue is used in aortic dissections. Our sales team sells the On-X valves, aortic repair, Tom, our CFO devices, used in replacing the arcs of we are an aortic company. And this is kind of the first significant innovation in the acute Type A. dissections in 50 years. So I mean, I'm super excited about it and think this is really going to change a lot of lots.

Suraj Kalia

Fair enough patents. I'll just throw a bunch of questions your way and hop back in queue. Lance, for you, net ASP impact in the quarter and for Q1, how should we think about the sequential for you in terms of On-X mitral label, any or just in terms of On-X mitral, I know the FDA process is behind us, but just kind of give us next steps and the status also of more generally, TJ, at this point in time, do you think the portfolio is optimal, not what else needs to be.
Gentlemen, thank you for taking my questions and congrats again.

Pat Mackin

Sure. I'll take the first. I'll take the last two. I'll let Lance work on the number piece, one pocket of. So as far as the ProAct mitral, as we talked about last year, I guess we've been making into Q3, we ended up withdrawing the PMA because we missed our statistical end point, which is really I don't want to get into the details around the statistics of the trial. The fact that it is the largest body of evidence ever with a mechanical mitral valve. We just had a recent presentation at SCS. in January. There's nothing close from a significant level of data and the fact of the matter is the micro business grew 20% in 2023, right? So people are recognizing the value that we're not off. We were promoting it, but people I recognize that you can actually lower than INR if that's the physician's choice arm. So maybe over to Lance, you can grab a couple of the other ones.

Lance Berry

Yes.
So on ASP., I think without giving you an exact number on the total company, which can be kind of tough with different products, different mix and different countries, I think the things to highlight is obviously our our tissue business benefited meaningfully from price, which we've talked about. We took a significant price increase in Q2 of this year. And so in Q1 we will still benefit from that and we'll annualize that in Q2. And then we have had some favorable pricing on at Onyx in particular, I would call out on that we will have for a portion of the year as well. Other than that, we're taking price increases, but not anything outside of the kind of normal running the business type price increases.

Pat Mackin

And then the other question you had, Suraj was on the portfolio.
I mean we would have because we said is we did three acquisitions in one kind of a distribution agreement with an option to acquire with Endospan with the Nexus device, you're fairly fairly quickly over four or five year period. We feel like our portfolio is in excellent shape and as I mentioned from an earlier question, you can see us going from the AMDS. US FDA trial to the RCM FDA trial, and then we got more stacked up behind them. So we really we do not need to acquire anything. We're very well set up from a portfolio standpoint.
The only other point I would make on the pricing and I've said this to a number of times. I mean, we did get some significant price increases on SynerGraft pulmonary valves in 2023. And is that kind of asymptote on itself at the end of the first quarter, '23 was a year the price for SynerGraft at 20 for the year, the volume because we've had some significant yield improvements in our processing where we're going to potentially double our availability of those valves, and we sell every single one of them because of the significant growth of the Ross procedure. So again, we feel very confident in that tissue business is continuing to grow pretty significantly.

Suraj Kalia

Thank you.

Operator

Our next question comes from the line of Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.

Jeffrey Cohen

The hotel manager are you.

Pat Mackin

Good. How are you.

Jeffrey Cohen

Good. Thanks. May segue right into my first question, which is on 59% in tissue forms that's all-time high for the Company. Is that sustainable? Or how should we think about that folding them in the tissue business for '24?

Lance Berry

As I just mentioned, Jeff, and I think it's also Lance commented on the pricing. We obviously had some significant increases on SynerGraft in '23, which we'll still get some benefit in the first quarter during that year. By working with some of our top top surgeons. We've also seen significant yield improvements in our processing area. So we think that that growth will continue because we, like I said, we've almost doubled the availability of our pulmonary valves. And because of this rapid growth of the Ross procedure, we're literally selling every one that kind of comes out the off the line. So the answer your question is yes, it's going to continue.

Jeffrey Cohen

Wonderful. And I guess secondly, first, could you comment a little bit on some of the geographies out there? I know you called out Asia and LatAm at the 19% rate by any specific geographies, and how does that tie in specific product lines by geography or in geographies.

Lance Berry

Yet February every region grew double digits. Obviously, Asia Pacific and Latin America are smaller in size. They're growing 20% or so. Again, we're seeing double digits across all four of our regions.

Jeffrey Cohen

Okay, got it. And then lastly for us, could you talk about gain a little bit as far as be the prevention of a tear in the structure and are on clinicians and hospitals looking at that as a cost associated or it's just debt period?

Pat Mackin

Patrick, I'm not sure if I caught that, Jeff.

Jeffrey Cohen

As foreseen and its measurement and how it's being viewed by Celanese chains? (technical difficulty)
Yes.

Pat Mackin

Yes. Yes. Actually, it's a again, it's probably not a topic, many people understand. I mean, I certainly didn't know what Dan was until we got into this specific area. So think about it this way in the current standard, Hemi Arch, where they actually I tried to make a plumbing analogy, right? You have a tear in the pipe you got to fix that little piece of pipe. So you take the bad desal, you put a new piece in it connected to the old kind of connect the oil piece of the pipes and you've got a fully functioning pipe. That's what they do with any large up to 70% of times the connection you make end up having a leak which requires a reoperation and can lead to higher mortality. It's a real problem and it can happen like ITO, again, depends on where you're doing it, but 35% to 70% of time. They get a leak in the connection, which is again now we don't see it at all with Andreas three years in the 50 patient starts trial and 93 patients in the person of your trial to zero. So we're running the house economics on that, but relapse and mortality for these patients. I mean, this is obviously a significant thing and the FDA has been extremely interested in India and actually how does I add it as a primary efficacy endpoint.

Jeffrey Cohen

Okay. That's super helpful. Again, thanks for the questions and fantastic readout on the year.

Pat Mackin

Thanks, Jeff.

Operator

Thank you. Our next question comes from the line of Frank Chapman with Lake Street Capital. Please proceed with your.

Nelson Cox

Hey, this is Nelson Cox on for Frank. I'll just start maybe internationally as well. Can you refresh us on the current size of the sales force there and maybe thinking about the team size there throughout the year. Obviously, you've seen some nice nice gross growth there, but maybe just walk through your thinking there.

Pat Mackin

We've been able to we've talked about Asia and Latin America as when I started the company. We had one person in Asia, nobody in Latin America. We're now probably about 30 people in Asia and probably 15 in Latin America. We feel like Latin America is kind of where it needs to be. We may have a kind of onesie twosies here and there from Asia, obviously is a significant opportunity and we'll continue to add to those regions, but we treated somewhat like a like a venture capitalist, right? I mean, as we get product approved products approved, for example, we've had some big approvals in Australia done a lot of feet on the street. We've got approvals in Hong Kong. We're direct there. We've had approvals in Thailand or direct there that approvals in Taiwan. We're adding people there. So as as we get the product approved, which is really just the incremental cost of the regulatory approval, if we see the size of that market makes sense. And we do run an NBV and then we'll add people. So it's really a gated sort of fulfilling a self-funding process that we go through. But Asia is the area that we can pull that back. We can titrate that depending on our EBITDA requirements and commitments and what we see coming from an approval standpoint. Hopefully that helps you.

Nelson Cox

Yes, no, that does.
And then obviously I'll switch over to Onyx, obviously a strong quarter there.
Can you maybe just talk a bit more about the competitive landscape?
Maybe just what you're seeing from the other competitive competitors there, you can clearly continue to take share, but just curious what you're hearing out there from maybe their investments or lack thereof.

Pat Mackin

Yes. So I mean, I'll talk about what customers are saying. We just as I mentioned in November or I guess October last year, we presented a 510 patient study, the kind of the FDA post-approval trial on the low INR, which is a typical requirement. They want to see that your valve performs in the community as it performed in the kind of rigorous FDA trial. So 60 centers, 510 valves, we saw an 85% reduction in major bleeding. So we went and did some market research talked to 100 cardiac surgeons by the way. It's very unique research that a lot of this over my career, we did research in competitive accounts what we call competitive accounts, which have Onex share like less than 25%. And it shows that we continue to take share over the next three years and basically double our share. So this is a very meaningful new dataset. We're excited about and our customers are excited about it, and we're going to be going after.

Nelson Cox

It, Al, thanks, guys.

Operator

Thank you. There are no further questions at this time, and I'd like to turn the floor back over to management for closing comments.

Pat Mackin

Yes. We're obviously, we appreciate everybody's time here. I mean, I'm I'll be quick in my wrap up. We're super excited about about '24. We have this great persevered rate, a readout on on MDS with 72% reduction in mortality, 52% reduction in major adverse events. So we're going to be working with the FDA to get this technology here in the US, but we're also approved around it in multiple countries in Europe, Canada and Asia, where we're going to use that data to continue to take care of patients and drive growth.
I just got done talking about the Onyx post-approval trial of 510 patients showing an 85% reduction in major bleeding, and we're going after share there. I talked about a couple of times about our price increases on SynerGraft as well as our our efforts to improve supply, and we'll continue to see growth there. And we talked about Asia Pacific, Latin America. We're also advancing our pipeline. We're going to be starting the third-generation Frozen Elephant total arch repair system called RCBOLSA. later this year. So we continue to build an aortic company and are excited about delivering for you again in 2024.
Thank you.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.