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CryoLife Reports First Quarter 2017 Financial Results

April 26, 2017 at 5:00 PM EDT

ATLANTA, April 26, 2017 /PRNewswire/ --

First Quarter Highlights:

  • Revenues Increased Five Percent Year-over-Year to $45.1 Million; Non-GAAP Revenues Increased Five Percent Year-over-Year
  • Gross Margins were 65 Percent; Non-GAAP Gross Margins were 70 Percent
  • GAAP Net Income was $2.2 Million, or $0.06 Per Fully Diluted Common Share; Non-GAAP Net Income was $3.2 Million, or $0.09 Per Fully Diluted Common Share

CryoLife, Inc. (NYSE: CRY), a leading medical device and tissue processing company focused on cardiac surgery, announced today its results for the first quarter of 2017. 

J. Patrick Mackin, Chairman, President, and Chief Executive Officer, said, "We are very pleased with the many positive factors that contributed to our successful first quarter.  We made considerable progress on the items that impacted our prior quarter and we continue to benefit from our decision to focus on select markets.  We posted solid first quarter financial results driven by our On-X and tissue products.  Non-GAAP On-X revenues were up 12 percent excluding the OEM business.  Our tissue processing business was strong as revenues increased 10 percent year-over-year due to robust demand for our cardiac tissues and our increased focus on re-engaging vascular tissue customers.  Our growth in medical device and tissue processing revenues contributed to non-GAAP gross margin of 70 percent.  Given our strong performance in the first quarter, we remain confident in our ability to achieve our 2017 strategic and financial goals."    

Revenues for the first quarter of 2017 increased five percent to $45.1 million, compared to $43.0 million for the first quarter of 2016.  The increase was primarily driven by increases in On-X and tissue processing revenues, partially offset by the absence of HeRO and ProCol revenues, and a decrease in TMR revenues.  Non-GAAP revenues for the first quarter of 2017 increased five percent compared to the first quarter of 2016.  A reconciliation of GAAP to non-GAAP financial metrics is included as part of this press release.

GAAP net income for the first quarter of 2017 was $2.2 million, or $0.06 per fully diluted common share, compared to net income of $2.5 million, or $0.08 per fully diluted common share, for the first quarter of 2016.  Non-GAAP net income for the first quarter of 2017 was $3.2 million, or $0.09 per fully diluted common share, compared to non-GAAP net income of $3.2 million, or $0.10 per fully diluted common share for the first quarter of 2016. 

With the exception of our income tax rate, the Company is reiterating its full year 2017 financial guidance, as summarized below, and expects revenues in the second quarter of 2017 to be between $46.5 million and $47.0 million

2017 Financial Guidance Summary

Total revenues

$188 Million - $192 Million

Product revenues

Year-over-year mid-single digits % non-GAAP revenue increase

Tissue processing revenues

Year-over-year mid-single digits % revenue increase

Gross margins

Between 68% - 69%

R&D expenses

$17.0 Million - $19.0 Million

Income tax rate

Mid to Upper 20%

Non-GAAP income per common share

$0.40 - $0.43

 

All numbers in the table above are GAAP except where expressly referenced as non-GAAP.  The Company does not provide GAAP income per common share on a forward-looking basis because the Company is unable to predict with reasonable certainty business development and acquisition-related expenses, purchase accounting fair value adjustments, and any unusual gains and losses without unreasonable effort.  These items are uncertain, depend on various factors, and could be material to results computed in accordance with GAAP.

The Company's financial guidance for 2017 is subject to the risks identified below.  

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures.  Investors should consider this non-GAAP information in addition to, and not as a substitute for, financial measures prepared in accordance with U.S. GAAP.  In addition, this non-GAAP financial information may not be the same as similar measures presented by other companies.  The Company's non-GAAP revenues include (as applicable) On-X revenues for the period in 2016 prior to the closing of the acquisition and excludes revenues for the HeRO Graft and ProCol product lines for 2016.  The Company's other non-GAAP results exclude (as applicable) business development expenses; gain on sale of business components; amortization expenses; and inventory basis step-up expense.  The Company believes that these non-GAAP presentations provide useful information to investors regarding unusual non-operating transactions and the operating expense structure of the Company's existing and recently acquired operations, without regard to its on-going efforts to acquire additional complementary products and businesses and the transaction and integration expenses incurred in connection with recently acquired and divested product lines.  The Company believes it is useful to exclude certain expenses because such amounts in any specific period may not directly correlate to the underlying performance of its business operations or can vary significantly between periods as a result of factors such as new acquisitions, or non-cash expense related to amortization of previously acquired tangible and intangible assets.  The Company does, however, expect to incur similar types of expenses in the future, and this non-GAAP financial information should not be viewed as a statement or indication that these types of expenses will not recur.

Webcast and Conference Call Information

The Company will hold a teleconference call and live webcast tomorrow at 8:00 a.m. Eastern Time to discuss the results followed by a question and answer session hosted by Mr. Mackin.

To listen to the live teleconference, please dial 201-689-8261 a few minutes prior to 8:00 a.m.  A replay of the teleconference will be available April 27 through May 3 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415.  The conference number for the replay is 13659245.

The live webcast and replay can be accessed by going to the Investor Relations section of the CryoLife website at www.cryolife.com and selecting the heading Webcasts & Presentations.

About CryoLife, Inc.

Headquartered in suburban Atlanta, Georgia, CryoLife is a leader in the manufacturing, processing, and distribution of medical devices and implantable tissues used in cardiac surgical procedures.  CryoLife markets and sells products in more than 80 countries worldwide.  For additional information about CryoLife, visit our website, www.cryolife.com

Statements made in this press release that look forward in time or that express management's beliefs, expectations, or hopes are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements reflect the views of management at the time such statements are made.  These statements include those regarding our financial guidance for 2017, the benefits from our decision to focus on select markets on our 2017 results and beyond and our confidence in our ability to achieve our 2017 strategic and financial goals.  These forward-looking statements are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from current expectations.  These risks and uncertainties include that the expected benefits of our focus on select markets may be incorrect or may not be achieved; we may not achieve the growth in On-X sales that we expect; we may not continue to make progress at all or as quickly as we would like on certain items that negatively impacted our prior quarter; we may not achieve the financial benefits of transitioning our sales channels in Canada, Belgium and the Netherlands from a distributor to direct model; and our business development efforts may not be successful.  These risks and uncertainties include the risk factors detailed in our Securities and Exchange Commission filings, including our Form 10-K for the year ended December 31, 2016, and our subsequent filings with the SEC. CryoLife does not undertake to update its forward-looking statements.

 

 

CRYOLIFE, INC. AND SUBSIDIARIES

Financial Highlights

(In thousands, except per share data)




Three Months Ended



March 31,



2017


2016

Revenues:







Products


$

27,396


$

27,018

Preservation services



17,663



15,998

Total revenues



45,059



43,016








Cost of products and preservation services:







Products



8,017



7,003

Preservation services



7,530



8,392

Total cost of products and preservation services



15,547



15,395








Gross margin



29,512



27,621








Operating expenses:







General, administrative, and marketing



22,871



26,274

Research and development



4,093



2,609

Total operating expenses



26,964



28,883

 

Gain on sale of business components



-



(7,915)

 

Operating income



2,548



6,653








Interest expense



801



717

Interest income



(40)



(12)

Other expense (income), net



43



(109)








 

Income before income taxes



1,744



 

6,057

Income tax (benefit) expense



(479)



3,516








Net income


$

2,223


$

2,541








 Income per common share:







Basic


$

0.07


$

0.08

Diluted


$

0.06


$

0.08








Weighted-average common shares outstanding:







Basic



32,439



31,029

Diluted



33,604



31,771















 

 

CRYOLIFE, INC. AND SUBSIDIARIES

Financial Highlights

(In thousands)




Three Months Ended



March 31,



2017


2016

Products:







BioGlue and BioFoam


$

15,681


$

15,316

On-X



8,860



6,715

CardioGenesis cardiac laser therapy



1,585



1,984

PerClot



819



991

PhotoFix



451



381

HeRO Graft



-



1,413

ProCol



-



218

Total Products



27,396



27,018








Preservation services:







Cardiac tissue



7,502



6,428

Vascular tissue



10,161



9,570

Total preservation services



17,663



15,998








Total revenues


$

45,059


$

43,016








Revenues:







U.S.


$

33,534


$

32,238

International



11,525



10,778

Total revenues


$

45,059


$

43,016















 

 


March 31,


December 31,


2017


2016







Cash, cash equivalents, and restricted securities

$

59,595


$

57,341

Total current assets


149,187



147,233

Total assets


319,366



316,140

Total current liabilities


28,147



30,102

Total liabilities


105,932



107,157

Shareholders' equity


213,434



208,983

 

 

CRYOLIFE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP

Net Income and Diluted Income Per Common Share

(In thousands, except per share data)




Three Months Ended



March 31,



2017


2016








GAAP:







Income before income taxes


$

1,744


$

6,057

Income tax (benefit) expense



(479)



3,516

Net income


$

2,223


$

2,541








Diluted income per common share:


$

0.06


$

0.08








Reconciliation of income before income taxes,







GAAP to adjusted net income, non-GAAP:














Income before income taxes, GAAP


$

1,744


$

6,057

Adjustments:







Business development expenses



288



5,568

Gain from sale of business components



--



(7,915)

Amortization expense



1,142



962

   Inventory basis step-up expense



2,049



565

Adjusted income before income taxes,







 non-GAAP



5,223



5,237








Income tax expense calculated at a







     pro forma tax rate of 38%



1,985



1,990

Adjusted net income, non-GAAP


$

3,238


$

3,247








Reconciliation of diluted income per common







       share, GAAP to adjusted diluted income per







common share, non-GAAP:














Diluted income per common share – GAAP


$

0.06


$

0.08

Adjustments:







   Business development expenses



0.01



0.17

Gain from sale of business components



--



(0.24)

Amortization expense



0.03



0.03

Inventory basis step-up expense



0.06



0.02

Tax effect of non-GAAP adjustments



(0.04)



--

Effect of 38% pro forma tax rate



(0.03)



0.04

Adjusted diluted income per common share,







    non-GAAP:


$

0.09


$

0.10








Diluted weighted-average common







       shares outstanding:



33,604



31,771















 

 

CRYOLIFE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP

Revenues; Gross Margin; General, Administrative, and Marketing

(In thousands, except per share data)




Three Months Ended



March 31,



2017


2016


Growth
Rate










Reconciliation of total revenues, GAAP to









total revenues, non-GAAP:









Total revenues, GAAP


$

45,059


$

43,016


5%

Plus: On-X pre-acquisition revenues



--



1,627



Less: HeRO revenues



--



(1,413)



Less: ProCol revenues



--



(218)



Total revenues, non-GAAP


$

45,059


$

43,012


5%







































Three Months Ended





March 31,






2017



2016



Reconciliation of gross margin %, GAAP to









gross margin %, non-GAAP:









Total revenues, GAAP


$

45,059


$

43,016



Gross margin, GAAP


$

29,512


$

27,621



Gross margin %, GAAP



65%



64%












Gross margin, GAAP


$

29,512


$

27,621



Plus: Inventory basis step-up expense



2,049



565



Gross margin, non-GAAP


$

31,561


$

28,186



Gross margin %, non-GAAP



70%



66%






























 

 

Contacts:




CryoLife       

D. Ashley Lee                                                

Executive Vice President, Chief Financial Officer
and Chief Operating Officer 
Phone: 770-419-3355

The Ruth Group

Nick Laudico / Zack Kubow

646-536-7030 / 7020

nlaudico@theruthgroup.com

zkubow@theruthgroup.com

 

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SOURCE CryoLife, Inc.