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CryoLife Reports Third Quarter 2019 Financial Results

October 30, 2019 at 4:05 PM EDT

ATLANTA, Oct. 30, 2019 /PRNewswire/ --

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

Third Quarter and Recent Business Highlights:

  • Total revenues were $67.9 million in the third quarter of 2019, reflecting year over year growth of 5% and a 6% increase on a non-GAAP constant currency basis, both compared to the third quarter of 2018
    • On-X® revenues increased 12%, and 12% on a non-GAAP constant currency basis, both compared to the third quarter of 2018
    • JOTEC® revenues increased 5%, and 9% on a non-GAAP constant currency basis, both compared to the third quarter of 2018
  • Net loss was ($134,000), or $0.00 per fully diluted common share; non-GAAP net income was $2.2 million, or $0.06 per fully diluted common share

CryoLife, Inc.(NYSE: CRY), a leading cardiac and vascular surgery company focused on aortic disease, announced today its financial results for the third quarter ended September 30, 2019. 

"Our third quarter results were in line with our expectations, and through the first three quarters of 2019 we have delivered constant currency growth of 8% relative to the same period last year," said Pat Mackin, Chairman, President, and Chief Executive Officer.  "The anticipated effects from continued currency headwinds and temporary issues with TMR handpiece supply in the US are causing us to lower our full year top line guidance.  We believe the upcoming launch of three next-generation JOTEC products in the EU combined with the recent addition of NEXUS, manufacturing improvements at JOTEC, and the anticipated commencement of the PROACT Xa trial position us well for 2020 and beyond."   

Third Quarter 2019 Financial Results
Total revenues for the third quarter of 2019 were $67.9 million, reflecting growth of 5%, and 6% on a non-GAAP constant currency basis, both compared to the third quarter of 2018.  The increase was driven by revenue growth from On-X, JOTEC, and tissue processing. 

Net loss for the third quarter of 2019 was ($134,000), or $0.00 per fully diluted common share, compared to a net income of $1.6 million, or $0.04 per fully diluted common share for the third quarter of 2018.  Net loss for the third quarter of 2019 includes $1.2 million in business development expenses.  Non-GAAP net income for the third quarter of 2019 was $2.2 million, or $0.06 per fully diluted common share, compared to non-GAAP net income of $3.1 million, or $0.08 per fully diluted common share for the third quarter of 2018. 

2019 Financial Outlook
CryoLife expects total revenues for 2019 to be in the range of $276.5 million to $278.5 million.  This compares to the previous expected range of $280.0 million to $284.0 million for the year, with the change due to the effects of foreign currency and a lack of availability of TMR handpieces in the fourth quarter of 2019.  Non-GAAP earnings per share are still expected to be between $0.28 and $0.32 for the full year.

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 2019 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, 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 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, October 30, 2019 at 5:30 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 November 6, 2019 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415.  The Conference ID for the replay is 13695440.

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, and our beliefs that the effects of our TMR handpiece supply in the US are temporary and that the upcoming launch in the EU of three of our next-generation JOTEC products, combined with the recent addition in the EU of NEXUS, manufacturing improvements at JOTEC, and anticipated commencement of the PROACT Xa trial position us well for 2020 and beyond."  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, 2018.  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


Nine Months Ended


September 30,


September 30,



2019



2018



2019



2018

Revenues:












Products

$

47,484


$

45,152


$

147,053


$

138,063

Preservation services


20,397



19,446



59,472



56,979

Total revenues


67,881



64,598



206,525



195,042













Cost of products and preservation services:












Products


12,706



12,459



41,021



40,166

Preservation services


9,953



9,425



29,043



27,083

Total cost of products and preservation services


22,659



21,884



70,064



67,249













Gross margin


45,222



42,714



136,461



127,793













Operating expenses:












General, administrative, and marketing


34,259



32,871



105,402



104,946

Research and development


6,259



5,225



17,648



16,314

Total operating expenses


40,518



38,096



123,050



121,260













Operating income


4,704



4,618



13,411



6,533













Interest expense


3,555



4,104



11,260



11,863

Interest income


(259)



(52)



(608)



(141)

Other expense, net


2,400



(1,542)



2,662



(257)













(Loss) income before income taxes


(992)



2,108



97



(4,932)

Income tax (benefit) expense


(858)



543



(2,304)



(2,868)













Net (loss) income

$

(134)


$

1,565


$

2,401


$

(2,064)













(Loss) income per common share:












Basic

$

0.00


$

0.04


$

0.06


$

(0.06)

Diluted

$

0.00


$

0.04


$

0.06


$

(0.06)













Weighted-average common shares outstanding:












Basic


37,255



36,526



37,065



36,331

Diluted


37,255



37,610



37,850



36,331

 


CRYOLIFE, INC. AND SUBSIDIARIES

Financial Highlights

(In thousands)














(Unaudited)


(Unaudited)


Three Months Ended


Nine Months Ended


September 30,


September 30,


2019


2018


2019


2018

Products:












BioGlue

$

15,679


$

15,646


$

50,834


$

48,685

JOTEC


15,774



15,004



48,936



46,669

On-X


12,610



11,298



36,751



33,495

CardioGenesis cardiac laser therapy


1,354



1,590



4,966



4,514

PerClot


980



882



2,814



2,822

PhotoFix


1,087



732



2,752



1,878

          Total products


47,484



45,152



147,053



138,063













Preservation services:












Cardiac tissue


11,304



9,502



30,734



26,660

Vascular tissue


9,093



9,944



28,738



30,319

Total preservation services


20,397



19,446



59,472



56,979













Total revenues

$

67,881


$

64,598


$

206,525


$

195,042













Revenues:




U.S.

$

37,981


$

36,516


$

113,548


$

108,123

International


29,900



28,082



92,977



86,919

Total revenues

$

67,881


$

64,598


$

206,525


$

195,042

 


(Unaudited)





September 30,


December 31,


2019


2018

Cash, cash equivalents, and restricted securities

$

37,177


$

42,236

Total current assets


181,354



179,168

Total assets


592,602



571,091

Total current liabilities


42,190



34,523

Total liabilities


315,101



296,024

Shareholders' equity


277,501



275,067

 

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


Nine Months Ended


September 30,


September 30,



2019



2018



2019



2018

GAAP:












(Loss) income before income taxes

$

(992)


$

2,108


$

97


$

(4,932)

Income tax (benefit) expense


(858)



543



(2,304)



(2,868)

Net (loss) income

$

(134)


$

1,565


$

2,401


$

(2,064)













Diluted (loss) income per common share:

$

0.00


$

0.04


$

0.06


$

(0.06)













Reconciliation of (loss) income before income taxes,












GAAP to adjusted net income, non-GAAP












(Loss) income before income taxes, GAAP

$

(992)


$

2,108


$

97


$

(4,932)

Adjustments:












Business development and integration expenses


1,250



1,917



2,562



6,933

Amortization expense


2,660



2,707



7,796



8,195

Gain on On-X escrow settlement


--



(2,675)



--



(2,675)

Inventory basis step-up expense


--



62



--



2,805

Adjusted income before income taxes,












non-GAAP


2,918



4,119



10,455



10,326

Income tax expense calculated at a












pro forma tax rate of 25%


730



1,030



2,614



2,582

Adjusted net income, non-GAAP

$

2,188


$

3,089


$

7,841


$

7,744













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












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












Diluted income (loss) per common share, GAAP:

$

0.00


$

0.04


$

0.06


$

(0.06)

Adjustments:












Business development and integration expenses


0.03



0.05



0.06



0.19

Amortization expense


0.07



0.08



0.20



0.22

Gain on On-X escrow settlement


--



(0.07)



--



(0.07)

Inventory basis step-up expense


--



--



--



0.07

Tax effect of non-GAAP adjustments


(0.02)



(0.02)



(0.05)



(0.10)

Effect of 25% pro forma tax rate


(0.02)



--



(0.06)



(0.04)

Adjusted diluted income per common share,












 non-GAAP:

$

0.06


$

0.08


$

0.21


$

0.21













Diluted weighted-average common












shares outstanding


37,940



37,610



37,850



37,351

 

CRYOLIFE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP

Revenues

(In thousands, except per share data)
















(Unaudited)


(Unaudited)


Three Months Ended


Nine Months Ended


September 30,


September 30,


2019


2018

Growth Rate


2019


2018

Growth Rate

Reconciliation of total revenues, GAAP to














total revenues, non-GAAP:














Total revenues, GAAP

$

67,881


$

64,598

5%


$

206,525


$

195,042

6%

Impact of changes in currency exchange


--



(701)




--



(3,775)


Total constant currency revenues, non-GAAP

$

67,881


$

63,897

6%


$

206,525


$

191,267

8%















Reconciliation of total On-X revenues, GAAP to














total On-X revenues, non-GAAP:














Total On-X revenues, GAAP

$

12,610


$

11,298

12%


$

36,751


$

33,495

10%

Impact of changes in currency exchange


--



(46)




--



(214)


Total constant currency On-X revenues, non-GAAP

$

12,610


$

11,252

12%


$

36,751


$

33,281

10%















Reconciliation of total JOTEC revenues, GAAP, to














total JOTEC revenues, non-GAAP:














Total JOTEC revenues, GAAP

$

15,774


$

15,004

5%


$

48,936


$

46,669

5%

Impact of changes in currency exchange


--



(496)




--



(2,780)


Total constant currency JOTEC revenues, non-GAAP

$

15,774


$

14,508

9%


$

48,936


$

43,889

11%

 

CRYOLIFE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP

Adjusted EBITDA

(In thousands, except per share data)















(Unaudited)



(Unaudited)


Three Months Ended



Nine Months Ended


September 30,



September 30,


2019


2018



2019


2018

Reconciliation of net (loss) income, GAAP to













adjusted EBITDA, non-GAAP:













Net (loss) income, GAAP

$

(134)


$

1,565



$

2,401


$

(2,064)

Adjustments:













Depreciation and amortization expense


4,526



4,530




13,257



13,636

Income tax (benefit) expense


(858)



543




(2,304)



(2,868)

Interest income


(259)



(52)




(608)



(141)

Interest expense


3,555



4,104




11,260



11,863

Gain on On-X escrow settlement


--



(2,675)




--



(2,675)

Inventory basis step-up expense


--



62




--



2,805

Business development and integration expenses


1,250



1,917




2,562



6,933

Loss on foreign currency revaluation


2,419



683




2,669



2,141

Stock-based compensation expense


2,462



1,565




6,581



4,685

Adjusted EBITDA, non-GAAP

$

12,961


$

12,242



$

35,818


$

34,315

 

Contacts:

CryoLife

D. Ashley Lee

Executive Vice President, Chief Financial Officer and
Chief Operating Officer

Phone: 770-419-3355

Gilmartin Group LLC

Greg Chodaczek / Lynn Lewis

Phone:  646-924-1769

investors@cryolife.com

 

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SOURCE CryoLife, Inc.