Issue #26

From the Heart to the Liver: MedTech’s Most Underrated Growth Stories

While much of the medtech sector focuses on incremental upgrades, two companies are standing out for transforming how life-threatening conditions are treated — and delivering real commercial momentum in the process.

Artivion (NYSE: AORT) is rapidly becoming the go-to name in complex aortic surgery. Its aortic stent grafts and mechanical heart valves are driving double-digit revenue growth, while strong clinical data from its AMDS trials reinforce its leadership in life-saving vascular innovation. With debt reduced, profitability restored, and FDA approval on the horizon, AORT is transitioning from recovery to growth mode.

Delcath Systems (NASDAQ: DCTH), meanwhile, is breaking new ground in interventional oncology. Its FDA-approved HEPZATO KIT is revolutionizing liver cancer treatment, delivering high-dose chemotherapy directly to the liver while minimizing side effects — a breakthrough that’s already translating into triple-digit revenue growth and its first profitable quarter. With a promising pipeline expansion into colorectal cancer, Delcath’s growth story is just getting started.

Together, Artivion and Delcath showcase the next wave of medical innovation — commercial-stage companies with real products, rising profits, and technologies that save lives.

Artivion (NYSE: AORT)

Artivion (NYSE: AORT) is a leading global medical technology company dedicated to providing cardiac and vascular surgeons with a comprehensive suite of aortic-centric solutions. Formerly known as CryoLife, the company specializes in products used for the repair and replacement of the aorta, a critical area of cardiac and vascular surgery.

Business Model and Revenue Streams 📦

Artivion's business model is centered on developing, manufacturing, and distributing technologically advanced products and providing sophisticated tissue services for complex aortic diseases. This model is underpinned by a deep focus on clinical differentiation and high-value surgical procedures.

The company's revenue is primarily generated from two core segments:

• Medical Devices: This is the larger segment and includes sales from its proprietary products like aortic stent grafts (e.g., AMDS for aortic dissection), surgical sealants (e.g., BioGlue), and the On-X mechanical heart valves. This segment benefits from new product launches and the clinical data supporting their superior outcomes.
• Preservation Services: This segment derives revenue from the processing and preservation of implantable human cardiac and vascular tissues (allografts) used in surgical procedures. This service-based revenue stream provides a steady, albeit slower-growing, source of income related to the donation and processing of human tissues.

Macroeconomic Impact

As a global medical device company, Artivion's operations are subject to several macroeconomic policies and factors:

• Inflation and Interest Rates: High interest rates and inflation can impact the company's cost of capital (though it recently strengthened its balance sheet by retiring convertible debt) and the overall profitability of hospitals. However, the demand for its life-saving and medically necessary products for aortic disease is generally inelastic (not highly sensitive) to typical consumer-driven economic downturns.
• Foreign Exchange Fluctuations: Given its global presence (North America, EMEA, LATAM, APAC), Artivion's reported financial results are exposed to currency fluctuations, which can impact revenue growth when converted back to US dollars. The company often reports using a "constant currency" metric to illustrate underlying operational performance.
• Supply Chain and Labor Costs: Like all manufacturers, Artivion faces risks from global supply chain disruptions and rising costs for specialized labor and raw materials, which pressure gross margins.

Recent Performance and Corporate Developments 📈

Artivion has demonstrated strong recent performance, driven by the adoption of its key growth products and strategic balance sheet management.

Q2 2025 Financial Highlights: 💰

• Total Revenue: Artivion reported Q2 2025 revenue of $113.0 million, representing a 15% increase year-over-year (or 14% on a constant currency basis), significantly beating analyst expectations.
• Net Income: The company reported a Net Income of $1.3 million, or $0.03 per fully diluted share, marking a move back toward GAAP profitability.
• Segment Growth: Revenue growth was particularly strong in the Medical Devices segment:
• On-X Valve revenue grew 24% year-over-year.
• Stent Graft revenues grew 22%, largely due to the U.S. launch of its AMDS Hybrid Prosthesis.
• Balance Sheet Improvement: A major strategic move was the retirement of approximately $100 million of convertible debt, which significantly reduced the net leverage ratio from 4.1 to 2.2, enhancing financial flexibility.
• Full-Year Guidance: Following the strong quarter, the company raised the midpoint of its full-year 2025 revenue guidance, projecting constant currency growth between 12% and 14%.

Strategic Initiatives and News: 🤝

• AMDS Clinical Data: In a very recent development (October 2025), Artivion announced late-breaking data from its AMDS PERSEVERE and PROTECT trials, which showed the AMDS Hybrid Prosthesis (for acute DeBakey Type I aortic dissection) was highly effective in resolving visceral and renal malperfusion complications. This strong clinical evidence is crucial for driving adoption and supporting its forthcoming application for U.S. FDA Premarket Approval (PMA), positioning AMDS as a key future growth driver in a multi-million dollar market.
• Debt Exchange: In May 2025, the company closed transactions to exchange $99.5 million in principal amount of its convertible notes for common stock, further deleveraging the company.
• Product Pipeline: Continued focus on the launch of the AMDS and the anticipated U.S. pivotal trial for the Arcevo LSA device demonstrate a robust pipeline of aortic-centric solutions.

Path to Profitability and Fair Value 🎯

Artivion is transitioning from a period of strategic investment and occasional losses toward a state of sustainable profitability.

Path to Profitability: The company achieved net income in Q2 2025 and is on a clear path to sustained operating leverage. The key drivers are:

1. High-Margin Product Adoption: Continued, rapid growth in its high-margin products like the On-X valve and the roll-out of the AMDS stent graft should improve the overall gross and operating margins.
2. Operational Efficiencies: Leveraging the fixed costs of its global infrastructure and R&D over a larger revenue base will naturally drive higher profitability.
3. De-leveraging: The significant reduction in debt and associated interest expense improves net income, reinforcing its financial health.

Fair Value Assessment: Based on a consensus of analyst narratives, Artivion's stock price, trading around $40-$41, is often considered slightly undervalued (by approximately 4.4%) relative to its fair value, due to strong growth projections and expected margin improvement. However, high valuation multiples like its Forward P/E (around 58x) suggest the market is already pricing in its aggressive growth expectations. Investors are essentially paying a premium for its differentiated technology and expected market share gains in the high-growth aortic disease space.

Analyst Estimates and Ratings 📊

Analyst sentiment is overwhelmingly positive, reflecting the company's strong execution and promising product pipeline.

• Consensus Rating: The consensus rating from analysts is a strong "Buy" (with 85.7% of analysts recommending Buy or Strong Buy).
• Recent Ratings (Last 30 Days): Artivion has received several recent "Buy" and "Market Outperform" ratings and price target increases from firms like JMP Securities, Citizens, Canaccord Genuity, Stifel, and Needham.
• Price Target: The average 12-month price target is approximately $43.11 to $44.56, suggesting a modest upside from the current share price. Notably, some analysts have set high-end targets up to $50.00.

Investor-Focused Takeaway: Is AORT Right for Your Portfolio?

Artivion offers an investment thesis rooted in premium medical technology addressing a critical and growing area of cardiac surgery. Its recent financial results confirm that its pivot to a more focused, aortic-centric portfolio is paying off, with robust double-digit sales growth and a return to profitability.

What to Watch in the Near Term: 📈

• AMDS PMA Progress: Monitor the progress of the AMDS application for U.S. FDA Premarket Approval, as this is a major catalyst.
• Operating Margin Expansion: Watch for continued improvement in operating margins and net profitability driven by high-margin product adoption.
• Pipeline Execution: Successful initiation of the pivotal trial for the Arcevo LSA will be key to long-term pipeline value.

Recommendation:

Artivion (AORT) is viewed as a compelling growth-oriented investment in the medical device sector. Backed by strong analyst support and clear clinical data for its differentiated products, the company is effectively executing its strategy to become a dominant player in aortic disease solutions. The improving balance sheet and shift to sustained profitability provide a solid foundation for continued outperformance.

Delcath Systems (NASDAQ:DCTH)

Delcath Systems (NASDAQ: DCTH) is an interventional oncology company whose core mission is to treat primary and metastatic liver cancers with its proprietary drug-device combination product, the HEPZATO KIT (melphalan for injection/Hepatic Delivery System). This innovative approach—known as percutaneous hepatic perfusion (PHP)—is designed to deliver high-dose chemotherapy directly to the liver while controlling and filtering the drug to minimize systemic side effects.

Business Model and Revenue Streams 📦

Delcath operates a highly specialized model focused on commercializing its proprietary drug-device system, which involves both a pharmaceutical component (melphalan) and a complex medical device (the filtration system).

The company's revenue is generated primarily from the sale and utilization of its flagship product:

• HEPZATO KIT (Melphalan/HDS) Revenue: This is the dominant and fastest-growing revenue stream. In August 2023, the HEPZATO KIT received U.S. FDA approval for the treatment of adult patients with unresectable hepatic-dominant metastatic Uveal Melanoma (mUM). Revenue is generated from the sale of the entire kit (drug and device components) to hospitals and specialized cancer centers that adopt the complex PHP procedure.
• CHEMOSAT Revenue: This represents a smaller, legacy revenue stream from the commercialization of its system in Europe, where it is approved as a device-only product (CHEMOSAT) for various liver cancers.

The business model relies on the successful adoption and reimbursement of the complex PHP procedure by major interventional oncology centers. Growth is tied to activating new centers, training surgical teams, and generating robust clinical data to expand the product's label to other liver cancers.

Macroeconomic Impact

As a highly specialized commercial-stage biotech/medical device company, Delcath is sensitive to factors slightly different from large, diversified corporations:

• Reimbursement and Healthcare Policy: This is the most critical external factor. The recent New Technology Add-on Payment (NTAP) approval from the Centers for Medicare & Medicaid Services (CMS) for the HEPZATO KIT is a significant positive development, as it secures specialized reimbursement and facilitates hospital adoption—far outweighing the impact of general macroeconomic fluctuations.
• Interest Rates and Capital: Given its recent transition to profitability and strong cash position (approximately $81.0 million in cash and virtually no debt), the company is well-insulated from rising interest rates impacting its cost of capital. The key financial risk shifts from survival to optimizing cash use for commercial expansion and R&D.
• Healthcare Spending: The demand for the HEPZATO KIT, a treatment for a rare and severe form of cancer, is inelastic and driven by patient need rather than consumer confidence. The major risks relate to hospital budgeting and the time it takes for centers to build the capacity for the complex procedure.

Recent Performance and Corporate Developments 📈

Delcath's recent performance has been transformational, driven by the U.S. commercial launch of the HEPZATO KIT.

Q2 2025 Financial Highlights: 💰

• Total Revenue: Total revenue reached $24.2 million in Q2 2025, a massive increase from $7.8 million in Q2 2024, demonstrating the successful commercial ramp-up post-FDA approval. HEPZATO KIT revenue accounted for the vast majority of this total.
• Net Income and Profitability: The company reported Net Income of $2.7 million for the quarter, compared to a net loss in the prior year period. This marks a critical milestone in Delcath's transition to a profitable commercial entity.
• Gross Margin: Gross margins are extremely high (over 85%), reflective of the specialized and high-value nature of the drug-device combination product.
• Commercial Momentum: Delcath significantly expanded its commercial footprint, activating new U.S. treatment centers and increasing patient treatments. The company also announced a Phase 2 trial of HEPZATO in liver-dominant metastatic Colorectal Cancer (mCRC), a much larger patient population.
• Full-Year Guidance: For fiscal year 2025, Delcath projects total revenue between $93 - $96 million, representing over 150% growth from 2024.

Strategic Initiatives and News: 🤝

• Phase 2 Trial in mCRC: In August 2025, Delcath announced the dosing of the first patient in a Phase 2 clinical trial evaluating HEPZATO in combination with standard care for liver-dominant mCRC. Success in this trial would dramatically expand its total addressable market.
• CHOPIN Trial Data: Upcoming presentation (October 2025) of the investigator-initiated CHOPIN Phase 2 trial results at the ESMO Congress, which evaluates the use of its system in combination with systemic immunotherapy for metastatic uveal melanoma, is a key near-term clinical catalyst.
• No Recent Mergers/Acquisitions: The company's focus remains squarely on the commercial expansion of the HEPZATO KIT in the U.S. and expanding its clinical pipeline.

Path to Profitability and Fair Value 🎯

Delcath has already achieved net profitability and positive Adjusted EBITDA. Its path to sustained and increasing profitability is centered on commercial scale and pipeline success.

Path to Profitability: The company's profitability is expected to strengthen further through:

1. Operating Leverage: Due to its very high gross margin, every incremental sale of the HEPZATO KIT drives significant cash flow, allowing the company to spread its fixed sales, general, and administrative (SG&A) costs over a growing revenue base.
2. Market Penetration: Continued center activation and increased utilization rates at existing centers will rapidly drive top and bottom-line growth.

Fair Value Assessment: Delcath is considered by analysts to be significantly undervalued. The consensus fair value target is more than double the current stock price, suggesting a deep discount on its growth potential. While the trailing P/E ratio is high (around 200x) due to its nascent profitability, the forward P/E is much lower (around 19x), reflecting strong optimism for future earnings growth. Its strong balance sheet (no debt, significant cash) further supports a high-growth valuation.

Analyst Estimates and Ratings 📊

Analyst coverage is highly bullish, driven by the successful U.S. launch and the large, untapped potential of the mCRC indication.

• Consensus Rating: The consensus rating from analysts is a strong "Strong Buy," with 100% of tracked analysts recommending a "Buy" or "Strong Buy."
• Recent Ratings (Last 30 Days): The company has maintained its strong buy ratings, with analysts reiterating their targets. The consistency of these high ratings underscores the confidence in the commercial and clinical trajectory.
• Price Target: The average 12-month price target is approximately $24.33, representing a potential upside of over 115% from its current share price of around $11.32. The target range is between $21.00 and $31.00.

Investor-Focused Takeaway: Is DCTH Right for Your Portfolio?

Delcath Systems represents a high-growth, high-risk, and high-reward investment in the specialized interventional oncology space. The successful U.S. launch of the HEPZATO KIT, coupled with the achievement of profitability, has validated its core commercial thesis. The current valuation suggests a significant disconnect between the market price and analyst expectations, positioning it for potential substantial appreciation.

What to Watch in the Near Term: 📈

• Center Activation Rate: Monitor the pace at which new U.S. centers are activated and begin performing the PHP procedure.
• Commercial Sales Trajectory: Pay close attention to quarterly revenue growth, as this is the best indicator of adoption.
• mCRC Trial Progress: The progress of the Phase 2 trial in metastatic colorectal cancer is the biggest long-term catalyst for Delcath's valuation.

Recommendation:

Delcath (DCTH) is a strong buy recommendation for investors with a higher risk tolerance, seeking exposure to a company with a first-in-class product and a massive total addressable market opportunity in liver cancer. The stock is currently supported by a flawless balance sheet, commercial momentum, and overwhelmingly positive analyst outlooks, suggesting significant upside potential.

🩺 Final Take: Innovation, Execution, and Real Impact

In a healthcare market crowded with incremental upgrades, Artivion (AORT) and Delcath Systems (DCTH) are standing out for bold innovation — and the operational excellence to match. These are not speculative plays. They’re commercial-stage companies generating revenue, delivering breakthrough care, and backed by strong analyst conviction.

🫀 Artivion (AORT) – Aortic Solutions at the Forefront
✔ 15% YoY revenue growth and return to GAAP profitability
✔ AMDS stent graft poised to become the standard in complex aortic dissection
✔ Balance sheet strength after $100M debt reduction
➤ Best for: Investors seeking growth exposure to high-value medtech, with upside from FDA catalysts and clinical differentiation in cardiovascular surgery.

🩸 Delcath Systems (DCTH) – Profitable Disruptor in Interventional Oncology
✔ Triple-digit revenue growth and first profitable quarter
✔ HEPZATO KIT already FDA-approved and scaling fast
✔ Massive expansion potential into colorectal cancer treatment
➤ Best for: Risk-tolerant investors who want a commercially validated oncology play with multi-billion-dollar market potential and zero debt.

Investor Insight:

🔬 Want proven products and margin expansion in cardiovascular innovation? → AORT
​ 🧬 Want first-mover advantage and scalable profits in cancer care? → DCTH

These are not just science stories — they’re business success stories in the making.

We’ll be back with our next report soon, bringing you fresh insights on the market and new opportunities to watch. In the meantime, we’d love to hear from you—let us know how you found this report, what niche sectors you’d like us to cover next, and don’t forget to share your top stock holdings with us. Your feedback helps us deliver reports that matter most to your investing journey.

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Happy Trading
​— Team Premium Stock Alerts