LeMaitre (LMAT)

Medical device company LeMaitre Vascular (NASDAQ:LMAT) fell short of the markets revenue expectations in Q3 CY2025, but sales rose 11.4% year on year to $61.05 million. Next quarter’s revenue guidance of $62.8 million underwhelmed, coming in 2.9% below analysts’ estimates. Its GAAP profit of $0.75 per share was 31.5% above analysts’ consensus estimates.

Company Overview

Founded in 1983 and named after a pioneering vascular surgeon, LeMaitre Vascular (NASDAQGM:LMAT) develops and manufactures specialized medical devices used by vascular surgeons to treat peripheral vascular disease and other circulatory conditions.

The surgical equipment and consumables industry provides tools, devices, and disposable products essential for surgeries and medical procedures. These companies therefore benefit from relatively consistent demand, driven by the ongoing need for medical interventions, recurring revenue from consumables, and long-term contracts with hospitals and healthcare providers. However, the high costs of R&D and regulatory compliance, coupled with intense competition and pricing pressures from cost-conscious customers, can constrain profitability. Over the next few years, tailwinds include aging populations, which tend to need surgical interventions at higher rates. The increasing integration of AI and robotics into surgical procedures could also create opportunities for differentiation and innovation. However, the industry faces headwinds including potential supply chain vulnerabilities, evolving regulatory requirements, and more widespread efforts to make healthcare less costly.

LeMaitre Vascular competes with several larger medical device companies including Abbott, Baxter International, Becton Dickinson, Edwards Lifesciences, Getinge, Terumo Medical Corporation, and W.L. Gore & Associates, as well as specialized competitors like Artivion, LifeNet Health, and Silk Road Medical.

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With just $240.9 million in revenue over the past 12 months, LeMaitre is a small company in an industry where scale matters. This makes it difficult to build trust with customers because healthcare is heavily regulated, complex, and resource-intensive.

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, LeMaitre grew its sales at a solid 14.6% compounded annual growth rate. Its growth beat the average healthcare company and shows its offerings resonate with customers.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. LeMaitre’s annualized revenue growth of 13.9% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong.

We can better understand the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, LeMaitre’s organic revenue averaged 13.4% year-on-year growth. Because this number aligns with its two-year revenue growth, we can see the company’s core operations (not acquisitions and divestitures) drove most of its results.

This quarter, LeMaitre’s revenue grew by 11.4% year on year to $61.05 million but fell short of Wall Street’s estimates. Company management is currently guiding for a 12.7% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 11.3% over the next 12 months, a slight deceleration versus the last two years. Despite the slowdown, this projection is healthy and suggests the market is forecasting success for its products and services.

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

LeMaitre has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average operating margin of 22.1%.

Looking at the trend in its profitability, LeMaitre’s operating margin rose by 1 percentage points over the last five years, as its sales growth gave it operating leverage. This performance was mostly driven by its recent improvements as the company’s margin has increased by 7.7 percentage points on a two-year basis.

This quarter, LeMaitre generated an operating margin profit margin of 33.3%, up 9.3 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

LeMaitre’s EPS grew at an astounding 20.1% compounded annual growth rate over the last five years, higher than its 14.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into LeMaitre’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, LeMaitre’s operating margin expanded by 1 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, LeMaitre reported EPS of $0.75, up from $0.49 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects LeMaitre’s full-year EPS of $2.32 to grow 7.6%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

LeMaitre has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 17.8% over the last five years, quite impressive for a healthcare business.

Taking a step back, we can see that LeMaitre’s margin dropped by 1.1 percentage points during that time. If its declines continue, it could signal increasing investment needs and capital intensity.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Although LeMaitre hasn’t been the highest-quality company lately, it historically found a few growth initiatives that worked out well. Its five-year average ROIC was 15.8%, impressive for a healthcare business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, LeMaitre’s has increased over the last few years. This is a good sign, and if its returns keep rising, there’s a chance it could evolve into an investable business.

One of the best ways to mitigate bankruptcy risk is to hold more cash than debt.

LeMaitre is a profitable, well-capitalized company with $343.1 million of cash and $185.6 million of debt on its balance sheet. This $157.4 million net cash position is 8% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

It was good to see LeMaitre beat analysts’ EPS expectations this quarter. We were also excited its full-year EPS guidance outperformed Wall Street’s estimates by a wide margin. On the other hand, its revenue guidance for next quarter missed and its revenue fell short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter. The stock remained flat at $85.60 immediately after reporting.

Updated: December 3, 2025 at 10:45 PM EST

Before investing in or passing on LeMaitre, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

LeMaitre isn’t a terrible business, but it doesn’t pass our quality test. Although its revenue growth was solid over the last five years, it’s expected to deteriorate over the next 12 months and its subscale operations give it fewer distribution channels than its larger rivals.

LeMaitre’s P/E ratio based on the next 12 months is 32.4x. At this valuation, there’s a lot of good news priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $104.33 on the company (compared to the current share price of $84.82).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.