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CryoLife Reports Second Quarter 2020 Financial Results

July 30, 2020 at 4:05 PM EDT

ATLANTA, July 30, 2020 /PRNewswire/ --

Second Quarter and Recent Business Highlights:

  • Achieved total revenues of $53.8 million in the second quarter 2020 versus $71.1 million in the second quarter of 2019
    - Total revenues decreased 24% and decreased 23% on a non-GAAP constant currency basis versus second quarter 2019
  • Completed $100.0 million convertible debt financing for general corporate purposes, including the repayment of approximately $30.0 million outstanding under the revolving credit facility
  • Initiated enrollment in PROACT Xa clinical trial
  • Initiated limited market release of E-vita Open NEO and E-nside and limited relaunch of NEXUS™

CryoLife, Inc. (NYSE: CRY), a leading cardiac and vascular surgery company focused on aortic disease, announced today its financial results for the second quarter ended June 30, 2020

"Despite the disruptions to our business from COVID-19, we posted a solid second quarter and advanced on several of our key initiatives.  We believe our business is weathering the pandemic well, as we believe the majority of products in our portfolio are used in procedures that cannot be postponed or delayed for long," commented Pat Mackin, Chairman, President, and Chief Executive Officer.  "We saw an improvement in procedure volumes sequentially month to month from April to June with a corresponding increase in revenue growth over those months.  Our manufacturing facilities continue to run at near capacity and our supply chain remains largely intact.  We have continued to fund R&D programs related to products that we believe will deliver revenue in 2021 and 2022, including our regulatory approvals for U.S. PerClot PMA, BioGlue China and PROACT Mitral.  We initiated limited market releases for Evita Open NEO and E-nside, with E-nya anticipated to follow by October, and a limited relaunch of NEXUS.  We also initiated enrollment in our PROACT Xa clinical trial.  Lastly, we completed a $100.0 million convertible debt financing to use for general corporate purposes, including the repayment of our $30.0 million revolver draw down.  We have the financial strength to be opportunistic on the business development front.  Given these achievements in the second quarter, we anticipate continued momentum in the second half of 2020 and are optimistic that we will have a strong 2021."

Second Quarter Financial Results
Total revenues for the second quarter of 2020 were $53.8 million, reflecting a decrease of (24%), and (23%) on a non-GAAP constant currency basis, both compared to the second quarter of 2019.  Decreases in all product lines reflect the impact of the COVID-19 pandemic on the number of procedures using our products.

Net loss for the second quarter of 2020 was ($3.7) million, or ($0.10) per fully diluted common share, compared to net income of $2.8 million, or $0.07 per fully diluted common share for the second quarter of 2019.  Non-GAAP net loss for the second quarter of 2020 was ($835,000), or ($0.02) per fully diluted common share, compared to non-GAAP net income of $4.1 million, or $0.11 per fully diluted common share for the second quarter of 2019. 

2020 Financial Outlook 
Due to uncertainties resulting from the COVID-19 pandemic, the Company is not issuing 2020 financial guidance at this time.

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 performance 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 expense, severance expense, amortization expense, inventory basis step-up expense, loss on foreign currency revaluation, stock-based compensation expense, and corporate rebranding expense.  The Company believes that these non-GAAP presentations provide useful information to investors regarding unusual non-operating transactions; 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, July 30, 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 August 6, 2020 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415.  The Conference ID for the replay is 13706961.

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 beliefs that our business us weathering the pandemic well; our belief that the majority of products in our portfolio are used in procedures that cannot be postponed or delayed for long; that we are continuing to fund R&D programs for products that will deliver revenue in 2021 and 2022, including our regulatory approvals for U.S. PerClot PMA, BioGlue China and PROACT Mitral; we will relaunch E-nya on a limited basis by October, 2020; we have the financial strength to be opportunistic on the business development front; and we will have continued momentum in the second half of 2020 and a strong 2021.  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, including the continued effects of COVID-19 and government mandates implemented to address the pandemic.  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

(In thousands, except per share data)














(Unaudited)


(Unaudited)


Three Months Ended


Six Months Ended


June 30,


June 30,



2020



2019



2020



2019

Revenues:












Products

$

37,268


$

51,168


$

83,688


$

99,569

Preservation services


16,503



19,971



36,512



39,075

Total revenues


53,771



71,139



120,200



138,644













Cost of products and preservation services:












Products


10,040



14,489



23,080



28,315

Preservation services


7,841



9,684



17,059



19,090

Total cost of products and preservation services


17,881



24,173



40,139



47,405













Gross margin


35,890



46,966



80,061



91,239













Operating expenses:












General, administrative, and marketing


32,288



34,623



71,290



71,143

Research and development


5,522



5,841



11,878



11,389

Total operating expenses


37,810



40,464



83,168



82,532













Operating (loss) income


(1,920)



6,502



(3,107)



8,707













Interest expense


3,652



3,811



7,040



7,705

Interest income


(66)



(233)



(168)



(349)

Other (income) expense, net


(740)



185



2,922



262













(Loss) income before income taxes


(4,766)



2,739



(12,901)



1,089

Income tax benefit


(1,077)



(93)



(2,547)



(1,446)













Net (loss) income

$

(3,689)


$

2,832


$

(10,354)


$

2,535













(Loss) income per common share:












Basic

$

(0.10)


$

0.08


$

(0.27)


$

0.07

Diluted

$

(0.10)


$

0.07


$

(0.27)


$

0.07













Weighted-average common shares outstanding:












Basic


37,520



37,156



37,455



36,968

Diluted


37,520



37,838



37,455



37,789













Net (loss) income

$

(3,689)


$

2,832


$

(10,354)


$

2,535

Other comprehensive income (loss):












Foreign currency translation adjustments


4,434



2,995



(29)



(786)

Comprehensive income (loss)

$

745


$

5,827


$

(10,383)


$

1,749

 

CryoLife, Inc. and Subsidiaries

Financial Highlights

(In thousands)














(Unaudited)


(Unaudited)


Three Months Ended


Six Months Ended


June 30,


June 30,


2020


2019


2020


2019

Products:












BioGlue

$

12,437


$

17,933


$

29,174


$

35,155

JOTEC


13,174



17,208



28,642



33,162

On-X


10,116



12,410



22,318



24,141

PhotoFix


880



935



1,922



1,665

PerClot


497



784



1,357



1,834

CardioGenesis cardiac laser therapy


164



1,898



275



3,612

          Total products


37,268



51,168



83,688



99,569













Preservation services:












Cardiac tissue

$

8,061


$

10,500



18,079



19,430

Vascular tissue


8,396



9,471



18,372



19,645

NeoPatch


46



--



61



--

Total preservation services


16,503



19,971



36,512



39,075













Total revenues

$

53,771


$

71,139


$

120,200


$

138,644













Revenues:








U.S.

$

30,392


$

38,239


$

66,839


$

75,563

International


23,379



32,900



53,361



63,081

Total revenues

$

53,771


$

71,139


$

120,200


$

138,644

 








(Unaudited)





June 30,


December 31,


2020


2019

Cash, cash equivalents, and restricted securities

$

126,118


$

34,294

Total current assets


287,121



187,390

Total assets


693,254



605,654

Total current liabilities


48,933



45,195

Total liabilities


396,698



319,958

Shareholders' equity


296,556



285,696

 

CryoLife, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP

Net (Loss) Income and Diluted (Loss) Income Per Common Share

(In thousands, except per share data)














(Unaudited)


(Unaudited)


Three Months Ended


Six Months Ended


June 30,


June 30,



2020



2019



2020



2019

GAAP:












(Loss) income before income taxes

$

(4,766)


$

2,739


$

(12,901)


$

1,089

Income tax benefit


(1,077)



(93)



(2,547)



(1,446)

Net (loss) income

$

(3,689)


$

2,832


$

(10,354)


$

2,535













Diluted (loss) income per common share

$

(0.10)


$

0.07


$

(0.27)


$

0.07













Reconciliation of (loss) income before income taxes,












GAAP to adjusted net (loss) income, non-GAAP












(Loss) income before income taxes, GAAP:

$

(4,766)


$

2,739


$

(12,901)


$

1,089

Adjustments:












Amortization expense


3,000



2,557



6,033



5,136

Business development, integration, and severance expense


653



203



1,476



1,312

Corporate rebranding expense


--



--



321



--

Adjusted (loss) income before income taxes,












non-GAAP


(1,113)



5,499



(5,071)



7,537

Income tax (benefit) expense calculated at a












pro forma tax rate of 25%


(278)



1,375



(1,268)



1,884

Adjusted net (loss) income, non-GAAP

$

(835)


$

4,124


$

(3,803)


$

5,653













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












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












Diluted (loss) income per common share, GAAP:

$

(0.10)


$

0.07


$

(0.27)


$

0.07

Adjustments:












Amortization expense


0.08



0.06



0.16



0.13

Business development, integration, and severance expense


0.02



--



0.04



0.03

Corporate rebranding expense


--



--



0.01



--

Tax effect of non-GAAP adjustments


(0.02)



--



(0.05)



(0.03)

Effect of 25% pro forma tax rate


--



(0.02)



0.01



(0.05)

Adjusted diluted (loss) income per common share,












 non-GAAP

$

(0.02)


$

0.11


$

(0.10)


$

0.15













Diluted weighted-average common












shares outstanding


37,520



37,838



37,455



37,789

 

CryoLife, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP

Revenues and Adjusted EBITDA

(In thousands, except per share data)
















(Unaudited)


(Unaudited)


Three Months Ended


Six Months Ended


June 30,


June 30,


2020


2019

Growth
Rate


2020


2019

Growth
Rate

Reconciliation of total revenues, GAAP to














total revenues, non-GAAP:














Total revenues, GAAP

$

53,771


$

71,139

-24%


$

120,200


$

138,644

-13%

Impact of changes in currency exchange


--



(1,095)




--



(1,723)


Total constant currency revenues, non-GAAP

$

53,771


$

70,044

-23%


$

120,200


$

136,921

-12%















 















(Unaudited)



(Unaudited)


Three Months Ended



Six Months Ended


June 30,



June 30,


2020


2019



2020


2019

Reconciliation of net (loss) income, GAAP to













adjusted EBITDA, non-GAAP:













Net (loss) income, GAAP

$

(3,689)


$

2,832



$

(10,354)


$

2,535

Adjustments:













Depreciation and amortization expense


4,743



4,381




9,642



8,731

Interest expense


3,652



3,811




7,040



7,705

Stock-based compensation expense


2,510



2,266




5,074



4,119

Business development, integration, and severance expense


653



203




1,476



1,312

Corporate rebranding expense


--



--




321



--

Interest income


(66)



(233)




(168)



(349)

(Income) loss on foreign currency revaluation


(744)



176




2,919



250

Income tax benefit


(1,077)



(93)




(2,547)



(1,446)

Adjusted EBITDA, non-GAAP

$

5,982


$

13,343



$

13,403


$

22,857

 

Contacts:



CryoLife 

D. Ashley Lee

Executive Vice President, Chief Financial Officer and

Chief Operating Officer

Phone: 770-419-3355

Gilmartin Group LLC

Brian Johnston / Lynn Lewis 

Phone:  631-807-1986

investors@cryolife.com 

 

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SOURCE CryoLife, Inc.