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CryoLife Reports Fourth Quarter and Full Year 2019 Financial Results

February 13, 2020 at 4:05 PM EST

ATLANTA, Feb. 13, 2020 /PRNewswire/ --

Cryolife logo. (PRNewsFoto/CryoLife, Inc.) (PRNewsFoto/CRYOLIFE_ INC_) (PRNewsFoto/CRYOLIFE, INC.)

Fourth Quarter and Recent Business Highlights:

  • Total revenues were $69.7 million in the fourth quarter of 2019, reflecting year over year growth of 3% and a 4% increase on a non-GAAP constant currency basis, both compared to the fourth quarter of 2018
    • On-X® revenues increased 18%, and 18% on a non-GAAP constant currency basis, both compared to the fourth quarter of 2018
    • JOTEC® revenues decreased 4% and increased less than 1% on a non-GAAP constant currency basis, both compared to the fourth quarter of 2018; excluding OEM, JOTEC revenues were flat and increased 4% on a constant currency basis compared to the fourth quarter of 2018
  • Net loss was ($681,000), or ($0.02) per fully diluted common share; non-GAAP net income was $3.8 million, or $0.10 per fully diluted common share
  • Received approval to commence our PROACT Xa trial
  • Granted European approval for two next generation JOTEC products
  • Entered into a distribution agreement with Misonix for NeoPatch®

CryoLife, Inc. (NYSE: CRY), a leading cardiac and vascular surgery company focused on aortic disease, announced today its financial results for the fourth quarter and full year ended December 31, 2019. 

"The fourth quarter was marked by significant progress on our key initiatives, highlighted by European approvals for two next generation JOTEC products, E-nside and E-nya, the approval to commence the PROACT Xa trial to study the use of Eliquis® with the On-X Aortic Valve, the initial launch of NEXUS™ into select European markets, as well as our collaboration with Misonix," said Pat Mackin, Chairman, President, and Chief Executive Officer.  "Additionally, we anticipate the approval for E-vita OPEN NEO in the first quarter of 2020, and we continue to increase JOTEC and vascular tissue supply.  The full launch in 2020 of three next generation JOTEC products and NEXUS, as well as the commencement of the PROACT Xa trial, positions us well to deliver high single-digit revenue growth over the next several years."

Fourth Quarter 2019 Financial Results
Total revenues for the fourth quarter of 2019 were $69.7 million, reflecting growth of 3%, and 4% on a non-GAAP constant currency basis, both compared to the fourth quarter of 2018.  The non-GAAP constant currency increase was driven by revenue growth from On-X, tissue processing, and JOTEC, excluding JOTEC OEM.

Net loss for the fourth quarter of 2019 was ($681,000), or ($0.02) per fully diluted common share, compared to a net loss of ($776,000), or ($0.02) per fully diluted common share for the fourth quarter of 2018.  Non-GAAP net income for the fourth quarter of 2019 was $3.8 million, or $0.10 per fully diluted common share, compared to non-GAAP net income of $1.9 million, or $0.05 per fully diluted common share for the fourth quarter of 2018. 

Full Year 2019 Financial Results     
Total revenues for 2019 were $276.2 million, reflecting growth of 5% on a reported basis and 7% on a non-GAAP constant currency basis compared to 2018.  The increase was driven by growth in the On-X, BioGlue and JOTEC product lines as well as the tissue processing business.  For 2019, On-X and JOTEC non-GAAP constant currency revenues increased by 12% and 9%, respectively, versus 2018. 

Net income for 2019 was $1.7 million or $0.05 per share compared to a net loss of ($2.8) million or ($0.08) per share for 2018.  Non-GAAP net income for 2019 was $11.7 million, or $0.31 a share compared to non-GAAP net income of $9.6 million, or $0.26 per share in 2018.

The independent registered public accounting firm's audit report with respect to the Company's fiscal year-end financial statements will not be issued until the Company completes its annual report on Form 10-K, including its evaluation of the effectiveness of internal controls over financial reporting.  Accordingly, the financial results reported in this earnings release are preliminary pending completion of the audit.

2020 Financial Outlook
CryoLife expects constant currency revenue growth of between 6.3% and 8.5% for the full year of 2020 compared to 2019.  Assuming a Euro/USD exchange rate of 1.10, revenues are expected to be in the range of $292 million to $298 million.  Our 2020 revenue guidance assumes no contribution during 2020 from BioGlue® in China, PerClot® in the U.S., or TMR handpieces.

Non-GAAP earnings per share for 2020 are expected to be between $0.15 and $0.17.  Non-GAAP earnings per share reflect approximately $0.12 per share in planned incremental investment in the Company's pipeline, an estimated $0.06 per share additional investment in our Asia Pacific and Latin American infrastructure, and approximately $0.05 per share in planned incremental spending related to new product launches.

All numbers are presented on a GAAP basis 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 2020 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 net income and non-GAAP EBITDA results exclude (as applicable) business development and integration expenses, rebranding expenses, amortization expense, inventory basis step-up expense, loss on foreign currency revaluation, and stock-based compensation expense.  The Company believes that these non-GAAP presentations provide useful information to investors regarding unusual non-operating items; 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; and the operating expense structure excluding fluctuations resulting from foreign currency revaluation and stock-based compensation expense.  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 acquisitions, or non-cash expense related to amortization of previously acquired tangible and intangible assets.  The Company has excluded the impact of changes in currency exchange from certain revenues to evaluate growth rates on a constant currency basis.  The Company does, however, expect to incur similar types of expenses and currency exchange impacts 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 later today, February 13, 2020 at 4:30 p.m. ET to discuss the results followed by a question and answer session.  To listen to the live teleconference, please dial 201-689-8261.  A replay of the teleconference will be available through February 20, 2020 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415.  The Conference ID for the replay is 13698400.

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 and vascular surgical procedures focused on aortic repair.  CryoLife markets and sells products in more than 100 countries worldwide.  For additional information about CryoLife, visit our website, www.cryolife.com.  

Forward Looking Statements
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 our revenue and non-GAAP earnings per share guidance, including projected exchange rates, our planned incremental investment in our pipeline and in our Asia Pacific and Latin American infrastructure, and planned incremental spending related to new product launches; and our beliefs regarding the anticipated approval of Evita Open NEO in the first quarter of 2020, that we will continue to increase JOTEC and vascular tissue supply and that the full launches in the EU of three of our next-generation JOTEC products, and NEXUS, and commencement of the PROACT Xa trial position us well to deliver high single digit growth over the next several years.  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 the risk factors detailed in our Securities and Exchange Commission filings, including our Form 10-K for year ended December 31, 2019.  CryoLife does not undertake to update its forward-looking statements, whether as a result of new information, future events, or otherwise.

 

 

CRYOLIFE, INC. AND SUBSIDIARIES
Financial Highlights - Unaudited
(In thousands, except per share data)







Three Months Ended


Twelve Months Ended


December 31,


December 31,


2019


2018


2019


2018

Revenues:












Products

$

50,193


$

49,331


$

197,246


$

187,394

Preservation services


19,504



18,468



78,976



75,447

Total revenues


69,697



67,799



276,222



262,841













Cost of products and preservation services:












Products


14,001



13,606



55,022



53,772

Preservation services


9,144



9,002



38,187



36,085

Total cost of products and preservation services


23,145



22,608



93,209



89,857













Gross margin


46,552



45,191



183,013



172,984













Operating expenses:












General, administrative, and marketing


37,609



35,628



143,011



140,574

Research and development


5,312



6,784



22,960



23,098

Total operating expenses


42,921



42,412



165,971



163,672













Operating income


3,631



2,779



17,042



9,312













Interest expense


3,626



3,925



14,886



15,788

Interest income


(130)



(85)



(738)



(226)

Other (income) expense, net


(1,412)



398



1,250



141













Income (loss) before income taxes


1,547



(1,459)



1,644



(6,391)

Income tax expense (benefit)


2,228



(683)



(76)



(3,551)













Net (loss) income

$

(681)


$

(776)


$

1,720


$

(2,840)













(Loss) income per common share:












Basic

$

(0.02)


$

(0.02)


$

0.05


$

(0.08)

Diluted

$

(0.02)


$

(0.02)


$

0.05


$

(0.08)













Weighted-average common shares outstanding:












Basic


37,274



36,652



37,118



36,412

Diluted


37,274



36,652



37,860



36,412

 

 

CRYOLIFE, INC. AND SUBSIDIARIES
Financial Highlights - Unaudited
(In thousands)







Three Months Ended


Twelve Months Ended


December 31,


December 31,


2019


2018


2019


2018

Products:












BioGlue

$

17,777


$

17,975


$

68,611


$

66,660

JOTEC


16,038



16,672



64,974



63,341

On-X


13,345



11,337



50,096



44,832

CardioGenesis cardiac laser therapy


1,050



1,703



6,016



6,217

PerClot


981



945



3,795



3,767

PhotoFix


1,002



699



3,754



2,577

          Total products


50,193



49,331



197,246



187,394













Preservation services:












Cardiac tissue


10,145



9,023



40,879



35,683

Vascular tissue


9,359



9,445



38,097



39,764

Total preservation services


19,504



18,468



78,976



75,447













Total revenues

$

69,697


$

67,799


$

276,222


$

262,841













Revenues:




U.S.

$

37,005


$

36,528


$

150,553


$

144,651

International


32,692



31,271



125,669



118,190

Total revenues

$

69,697


$

67,799


$

276,222


$

262,841



















December 31,


December 31,


2019


2018

Cash, cash equivalents, and restricted securities

$

34,294


$

42,236

Total current assets


187,390



179,168

Total assets


605,654



571,091

Total current liabilities


45,195



34,523

Total liabilities


319,958



296,024

Shareholders' equity


285,696



275,067

 

CRYOLIFE, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP
Net Income (Loss) and Diluted Income (Loss) Per Common Share - Unaudited
(In thousands, except per share data)







Three Months Ended


Twelve Months Ended


December 31,


December 31,



2019



2018



2019



2018

GAAP:












Income (loss) before income taxes

$

1,547


$

(1,459)


$

1,644


$

(6,391)

Income tax expense (benefit)


2,228



(683)



(76)



(3,551)

Net (loss) income

$

(681)


$

(776)


$

1,720


$

(2,840)













Diluted (loss) income per common share:

$

(0.02)


$

(0.02)


$

0.05


$

(0.08)













Reconciliation of income (loss) before income taxes,












GAAP to adjusted net income, non-GAAP












Income (loss) before income taxes, GAAP

$

1,547


$

(1,459)


$

1,644


$

(6,391)

Adjustments:












Business development and integration expenses


526



1,399



3,088



8,332

Amortization expense


3,054



2,597



10,850



10,792

Gain on On-X escrow settlement


--



--



--



(2,675)

Inventory basis step-up expense


--



--



--



2,805

  Adjusted income before income taxes,












  non-GAAP


5,127



2,537



15,582



12,863

Income tax expense calculated at a












pro forma tax rate of 25%


1,282



634



3,896



3,216

  Adjusted net income, non-GAAP

$

3,845


$

1,903


$

11,686


$

9,647













Reconciliation of diluted (loss) income per common share, GAAP












to adjusted diluted income per common share, non-GAAP:












Diluted (loss) income per common share, GAAP:

$

(0.02)


$

(0.02)


$

0.05


$

(0.08)

Adjustments:












Business development and integration expenses


0.02



0.04



0.08



0.22

Amortization expense


0.08



0.07



0.28



0.29

Gain on On-X escrow settlement


--



--



--



(0.07)

Inventory basis step-up expense


--



--



--



0.07

Tax effect of non-GAAP adjustments


(0.03)



(0.03)



(0.09)



(0.12)

Effect of 25% pro forma tax rate


0.05



(0.01)



(0.01)



(0.05)

 Adjusted diluted income per common share,












 non-GAAP:

$

0.10


$

0.05


$

0.31


$

0.26













Diluted weighted-average common












shares outstanding


37,914



37,658



37,860



37,437

 

 

CRYOLIFE, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP
Revenues - Unaudited
(In thousands, except per share data)







Three Months Ended


Twelve Months Ended


December 31,


December 31,


2019


2018

Growth
Rate


2019


2018

Growth
Rate

Reconciliation of total revenues, GAAP to














total revenues, non-GAAP:














Total revenues, GAAP

$

69,697


$

67,799

3%


$

276,222


$

262,841

5%

Impact of changes in currency exchange


--



(933)




--



(4,708)


 Total constant currency revenues, non-GAAP

$

69,697


$

66,866

4%


$

276,222


$

258,133

7%















Reconciliation of total revenues, GAAP to














total revenues, non-GAAP:














Total revenues, GAAP

$

69,697


$

67,799

3%


$

276,222


$

262,841

5%

Impact of changes in currency exchange


--



(933)




--



(4,708)


Less CardioGenesis cardiac laser therapy


(1,050)



(1,703)




(6,016)



(6,217)


 Total constant currency revenues excluding
 CardioGenesis, non-GAAP

$

68,647


$

65,163

5%


$

270,206


$

251,916

7%















Reconciliation of total JOTEC revenues, GAAP, to














total JOTEC revenues, non-GAAP:














Total JOTEC revenues, GAAP

$

16,038


$

16,672

-4%


$

64,974


$

63,341

3%

Impact of changes in currency exchange


--



(691)




--



(3,471)


 Total constant currency JOTEC revenues, non-GAAP

$

16,038


$

15,981

0%


$

64,974


$

59,870

9%

 

 

CRYOLIFE, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP
Adjusted EBITDA  - Unaudited
(In thousands, except per share data)








Three Months Ended



Twelve Months Ended


December 31,



December 31,


2019


2018



2019


2018

Reconciliation of net (loss) income, GAAP to













adjusted EBITDA, non-GAAP:













Net (loss) income, GAAP

$

(681)


$

(776)



$

1,720


$

(2,840)

Adjustments:













Depreciation and amortization expense


5,060



4,459




18,317



18,095

Income tax expense (benefit)


2,228



(683)




(76)



(3,551)

Interest income


(130)



(85)




(738)



(226)

Interest expense


3,626



3,925




14,886



15,788

Gain on On-X escrow settlement


--



--




--



(2,675)

Inventory basis step-up expense


--



--




--



2,805

Business development and integration expenses


526



1,399




3,088



8,332

(Gain) loss on foreign currency revaluation


(1,437)



437




1,232



2,578

Stock-based compensation expense


2,218



1,641




8,799



6,326

Adjusted EBITDA, non-GAAP

$

11,410


$

10,317



$

47,228


$

44,632

 

 

Contacts:

CryoLife

Gilmartin Group LLC

D. Ashley Lee

Greg Chodaczek / Lynn Lewis

Executive Vice President, Chief Financial Officer and Chief

Phone:  646-924-1769

Operating Officer

investors@cryolife.com  

Phone: 770-419-3355


 

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SOURCE CryoLife, Inc.