CryoLife, Inc. Reports Record Quarterly Revenues in First Quarter of 2012
ATLANTA, April 26, 2012 /PRNewswire/ -- CryoLife, Inc. (NYSE: CRY), a leading tissue processing and medical device company focused on cardiac and vascular surgery, announced today its results for the first quarter of 2012. Revenues for the first quarter of 2012 increased 7 percent to a record $32.3 million compared to $30.2 million for the first quarter of 2011.
Steven G. Anderson, president and chief executive officer, said, "We achieved solid financial results in the first quarter of 2012, driven by 14 percent year-over-year and 6 percent sequential sales growth in our product segment. As a result, gross margin improved to 66 percent, demonstrating the high margin potential of our growth oriented products including BioGlue, PerClot®, and revascularization technologies. We also made progress on our strategic initiatives to further expand the market opportunity for these products, including the significant U.S. opportunity for PerClot. We have resubmitted our PerClot IDE application to the FDA and expect to begin enrolling our pivotal clinical trial during the third quarter, positioning the Company for potential FDA approval and launch in 2014."
Net income for the first quarter of 2012 was $1.0 million, or $0.04 per basic and fully diluted common share, compared to net income of $1.7 million, or $0.06 per basic and fully diluted common share, for the first quarter of 2011. Net income for the first quarter of 2012 included approximately $1.7 million in litigation expenses and an increase in reserves for lawsuits. Net income for the first quarter of 2011 included $371,000 in costs related to litigation expenses.
Product segment revenues were $16.5 million for the first quarter of 2012, up 14 percent from $14.4 million in the first quarter of 2011.
Surgical sealant and hemostat revenues, which consist primarily of sales of BioGlueand PerClot in 2012, were $14.3 million for the first quarter of 2012 compared to $14.4 million for the first quarter of 2011, a decrease of 1 percent. The decrease in surgical sealant and hemostat revenues was primarily due to the lack of HemoStase revenues in the first quarter of 2012, mostly offset by a 14 percent increase in BioGlue revenues. The increase in BioGlue revenues was primarily attributable to shipments into Japan. The Company discontinued U.S. and international sales of HemoStase at the end of the first quarter of 2011 and began distributing PerClot in international markets in the fourth quarter of 2010.
Revascularization technologies revenues were $2.1 million for the first quarter of 2012 as a result of the Company's acquisition of Cardiogenesis in May 2011.
Preservation services revenues were $15.7 million for both of the first quarters of 2012 and 2011. Cardiac preservation services revenues increased for the first quarter of 2012 due to an increase in shipments of cardiac tissues and an increase in average preservation service fees. Vascular preservation service revenues decreased due to a decrease in shipments of vascular tissues, and a decrease in average preservation service fees.
Total gross margins increased to 66 percent in the first quarter of 2012, up from 61 percent in the first quarter of 2011, driven by higher gross margins from the Company's existing products, the acquisition of the Cardiogenesis product line, and the loss of lower margin HemoStase revenues. Preservation services gross margins were 46 percent and 41 percent for the first quarters of 2012 and 2011, respectively. Product gross margins were 85 percent and 83 percent for the first quarters of 2012 and 2011, respectively.
General, administrative, and marketing expenses for the first quarter of 2012 were $18.0 million compared to $14.3 million for the first quarter of 2011. General, administrative, and marketing expenses for the first quarter of 2012 increased compared to 2011 due to an increase in marketing expenses, including costs of the Company's expanded sales staff and increases in spending on advertising, and an increase in litigation expenses offset by a decrease in business development expenses. General, administrative, and marketing expenses for the first quarter of 2012 included approximately $1.7 million in costs related to ongoing litigation and an increase in reserves for lawsuits.
Research and development expenses were $1.7 million and $1.8 million for the first quarters of 2012 and 2011, respectively. Research and development spending in the first quarter of 2012 was primarily focused on PerClot, BioFoam Surgical Matrix, and SynerGraft® tissues and products.
During the first quarter of 2012, the Company purchased 282,000 shares of the Company's common stock at an average price of $5.24, resulting in aggregate purchases of $1.5 million.
As of March 31, 2012, the Company had $26.5 million in cash, cash equivalents, and restricted securities, compared to $27.0 million at December 31, 2011. Of this $26.5 million in cash, cash equivalents, and restricted securities, $1.1 million was received from the U.S. Department of Defense as advance funding for the development of BioFoam protein hydrogel technology, and $5.0 million was designated as restricted securities primarily due to a financial covenant requirement under the Company's credit agreement. The Company's net cash flows provided by operations were $1.8 million for the first quarter of 2012 and $3.9 million for the first quarter of 2011.
2012 Financial Guidance
The Company is reiterating its guidance for the full year of 2012. The Company expects total revenues for the full year of 2012 to be between $126.0 million and $129.0 million, which include revenues of approximately $500,000 related to the use of funds received from the U.S. Department of Defense in connection with the development of BioFoam. This represents annual total revenue growth of 5 percent to 8 percent. The Company expects tissue processing revenues to be flat for the full year of 2012 compared to 2011. Revenues from the Company's higher margin product segment are expected to grow between 10 percent and 15 percent for the full year of 2012. This includes expectations for BioGlue and BioFoam revenues to increase in the low to mid-single digits on a percentage basis in 2012 compared to 2011, and PerClot revenues to be between $3.5 million and $4.5 million. The Company expects revenues from revascularization technologies to be between $10.5 million and $11.5 million in 2012. Research and development expenses are expected to be between $10.0 million and $12.0 million in 2012 as a result of the Company's investments in its U.S. clinical trials for Perclot and BioFoam, along with its European pilot study for TMR with biologics. The Company expects earnings per share of between $0.14 and $0.18 in 2012, which includes the increased research and development expenses described above, along with increased legal expenses related to the Company's ongoing litigation with Medafor. The Company's earnings per share guidance excludes expenses related to business development and potential share repurchases, which cannot currently be estimated. The Company has estimated litigation expense conservatively on the high end of the anticipated range of between $5.0 million and $6.0 million, because litigation expenses are extremely variable and are not easily predicted.
The Company expects the effective income tax rate for 2012 to be in the mid thirty percent range.
The Company's financial guidance for the full year of fiscal 2012 is subject to the risks described below in the last paragraph of this press release, prior to the financial tables.
Webcast and Conference Call Information
The Company will hold a teleconference call and live webcast today at 10:00 a.m. Eastern Time to discuss the results followed by a question and answer session hosted by Mr. Anderson.
To listen to the live teleconference, please dial 201-689-8261 a few minutes prior to 10:00 a.m. A replay of the teleconference will be available from April 26 through May 3 and can be accessed by calling 877-660-6853 (toll free) or 201-612-7415. The account number for the replay is 244 and the conference number is 392509.
The live webcast and replay can be accessed by going to the Investor Relations section of the CryoLife Web site at www.cryolife.com and selecting the heading Webcasts & Presentations.
About CryoLife
Founded in 1984, CryoLife, Inc. is a leader in the processing and distribution of implantable living human tissues for use in cardiac and vascular surgeries throughout the U.S., certain countries in Europa, and Canada. CryoLife's CryoValve® SG pulmonary heart valve, processed using CryoLife's proprietary SynerGraft® technology, has FDA 510(k) clearance for the replacement of diseased, damaged, malformed, or malfunctioning native or prosthetic pulmonary valves. CryoLife's CryoPatch® SG pulmonary cardiac patch has FDA 510(k) clearance for the repair or reconstruction of the right ventricular outflow tract (RVOT), which is a surgery commonly performed in children with congenital heart defects, such as Tetralogy of Fallot, Truncus Arteriosus, and Pulmonary Atresia. CryoPatch SG is distributed in three anatomic configurations: pulmonary hemi-artery, pulmonary trunk, and pulmonary branch. CryoLife's BioGlue® Surgical Adhesive is FDA approved as an adjunct to sutures and staples for use in adult patients in open surgical repair of large vessels. BioGlue is also CE marked in the European Community for use in soft tissue repair and was recently approved in Japan for use in the repair of aortic dissections. Additional marketing approvals for BioGlue have been granted in several other countries throughout the world. CryoLife, through its subsidiary Cardiogenesis Corporation, specializes in the treatment of cardiovascular disease and the sale of devices that treat severe angina. Its market leading FDA-approved Holmium: YAG laser system and single use fiber-optic delivery systems are used to perform a surgical procedure known as Transmyocardial Revascularization (TMR). CryoLife distributes PerClot®, an absorbable powder hemostat, in the European Community. CryoLife's BioFoam Surgical Matrix is CE marked in the European Community for use as an adjunct in the sealing of abdominal parenchymal tissues (liver and spleen) when cessation of bleeding by ligature or other conventional methods is ineffective or impractical.
For additional information about CryoLife, visit CryoLife's website, www.cryolife.com.