Wall Street is buzzing about LeMaitre Vascular's phenomenal Q1 2024 results. A 14% sales jump, a staggering 68.6% gross margin, and 62% EPS growth? That's enough to make any investor drool. But amidst the excitement, there's a subtle, yet potent factor driving this success that seems to have slipped past most analysts: LeMaitre's remarkable employee retention.

Remember the "Great Resignation"? That mass exodus of employees seeking greener pastures? LeMaitre, it seems, not only bucked the trend but entered what some are calling the "Big Stay." Turnover plummeted from around 14% to 7.5% in 2023 – significantly lower than their Massachusetts manufacturing peers. This is particularly true for the sales force, a critical engine of LeMaitre's growth.

Why is this so crucial? LeMaitre operates in a niche market, selling specialized medical devices for vascular surgery. Their success hinges on their sales force's deep understanding of these complex products and their ability to forge strong relationships with surgeons. High turnover in this crucial department would spell disaster, disrupting customer relationships and hampering sales efforts.

But that's not what's happening. LeMaitre's sales force is sticking around, and for good reason. The company experienced a 17% organic growth in 2023, driven by a surge in hospital procedures. This translated into significantly larger commission checks for the sales team, creating a powerful incentive to stay put.

"The "Big Stay," however, goes beyond fatter paychecks. It's indicative of a broader cultural shift within LeMaitre, one where employees feel valued and invested in. This is further evidenced by their proactive approach to sales force management. They're not just hiring more reps; they're strategically splitting territories to ensure surgeons receive personalized attention."

Now, let's talk numbers. Let's hypothesize that a 1% decrease in sales force turnover, on average, translates into a 0.5% increase in organic sales growth. Considering LeMaitre's 6.5% drop in turnover from 2022 to 2023, that could potentially account for as much as 3.25% of their impressive 17% organic growth last year.

While this is a simplified calculation and doesn't account for other factors influencing sales growth, it highlights the potential impact of employee retention.

Sales Force Growth and Average Territory Size

The following chart illustrates LeMaitre's sales force growth strategy and the impact on average territory size. This data is extracted from the Q1 2024 earnings call transcript.

Looking ahead, LeMaitre aims to increase their sales force to 150 reps by the end of 2024, focusing primarily on North America. They're also expanding their international footprint, opening new offices in strategic locations like Paris, Seoul, and Bangkok.

This aggressive growth strategy makes employee retention even more critical. LeMaitre needs a stable, experienced team to navigate these expansion efforts and capitalize on the enormous market potential.

The "Big Stay," therefore, is not just a nice-to-have; it's a hidden advantage, giving LeMaitre a significant edge over competitors grappling with talent shortages and high turnover. It's a testament to their commitment to their employees, a commitment that ultimately translates into strong financial performance and long-term success.

Analysts are laser-focused on LeMaitre's impressive margins, their product pipeline, and their strategic acquisitions. But they would be wise to pay attention to the quiet power of the "Big Stay." It could very well be the secret sauce behind their ongoing growth explosion.

"Fun Fact: LeMaitre Vascular is named after its founder, Dr. George D. LeMaitre, a pioneer in vascular surgery. The company's commitment to its namesake's legacy is reflected in its focus on innovation and quality in the field of vascular surgery."