CryoLife Reports Second Quarter 2018 Results

Published: Aug 06, 2018

 

ATLANTA, Aug. 6, 2018 /PRNewswire/ -- 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, 2018.

Second Quarter and Recent Business Highlights:

  • Total revenues increased 43% to $68.5 million in the second quarter of 2018 compared to the second quarter of 2017
  • Non-GAAP total revenues increased 12% in the second quarter of 2018 compared to the second quarter of 2017; Non-GAAP total revenues increased 10% on a constant currency basis
  • On-X® revenues increased 21% in the second quarter of 2018 compared to the second quarter of 2017
  • JOTEC® revenues were $17.2 million in the second quarter of 2018, a 31% increase on a Non-GAAP basis compared to the second quarter of 2017
  • Net income was $226,000 or $0.01 per fully diluted common share; Non-GAAP net income was $3.9 million, or $0.10 per fully diluted common share

"We had a very successful second quarter which included strong revenue growth, market share gains, new account growth and progress on our clinical and R&D programs," said Pat Mackin, Chairman, President, and Chief Executive Officer. "Our On-X and JOTEC products continue to gain momentum as our direct sales force is effectively conveying the attributes of our differentiated products. We expect our business momentum to continue, which has led us to raise our full year revenue guidance. Looking ahead, we have a number of initiatives that can drive substantial future growth. Given our highly experienced leadership team, we are confident we can deliver on our goals and objectives."

Second Quarter 2018 Financial Results
Revenues for the second quarter of 2018 increased 43% to $68.5 million, compared to $47.8 million for the second quarter of 2017. The increase was primarily driven by $17.2 million in revenues from JOTEC and strong revenue growth from On-X. Non-GAAP total revenues for the second quarter of 2018 increased 12%, compared to the second quarter of 2017, a 10% increase on a constant currency basis.

Net income for the second quarter of 2018 was $226,000, or $0.01 per fully diluted common share, compared to net income of $3.2 million, or $0.09 per fully diluted common share for the second quarter of 2017. Non-GAAP net income for the second quarter of 2018 was $3.9 million, or $0.10 per fully diluted common share, compared to non-GAAP net income of $4.8 million, or $0.14 per fully diluted common share for the second quarter of 2017.

2018 Financial Outlook
The Company is increasing its full-year 2018 total revenues financial guidance, as summarized below, and expects total revenues in the third quarter of 2018 to be between $61.0 million and $63.0 million. Except for total revenues, the Company is reiterating its full year 2018 financial guidance.

                                             Previous                                                      Revised
                                             --------                                                      -------

    Total Revenues                                                         $250.0 million - $256.0 million       $256.0 million - $260.0 million
    --------------                                                         -------------------------------       -------------------------------

    Gross Margins                                                                            65.5% - 66.5%  same

                        (includes $3.5 million non-cash charges related to
                             acquired JOTEC inventory and distributor
                                       inventory buy backs)
    ---                                -------------------

    R&D Expenses                                                             $23.0 million - $25.0 million   same
    ------------                                                             -----------------------------   ----

    Non-GAAP Tax Rate                                                                              Mid 20%  same

                          (excludes effect of nondeductible transaction
                          costs and the tax effect of stock compensation
                                            expenses)
    ---                                      --------

    Non-GAAP EPS                                                                             $0.29 - $0.32

                            (assumes approximately 37.5 million fully                                        same
                      diluted shares outstanding and 25% effective tax rate)
    ---               -----------------------------------------------------

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 2018 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 JOTEC revenues for the same six-month period in 2017 prior to the closing of the acquisition of JOTEC on December 1, 2017. The Company's other non-GAAP results exclude (as applicable) business development and integration expenses; amortization expense; 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 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, August 7, 2018 at 8:30 a.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 14, 2018 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415. The Conference ID for the replay is 13681499.

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 90 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 forecasted revenues, gross margins, R&D expenses, non-GAAP income tax rate and non-GAAP earnings per share; our On-X and JOTEC products are continuing to gain momentum as our direct sales force is effectively conveying the attributes of our differentiated products; our expectation that our business momentum will continue; we have a number of internal initiatives that can drive substantial future growth; and given our highly experienced leadership team, we are confident we can deliver on our goals and objectives. 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, 2017. These risks and uncertainties also include that our beliefs may be incorrect regarding the benefits of the On-X and JOTEC acquisitions, including that these acquisitions provide us with product portfolios that are technologically and clinically differentiated and offer strong competitive advantages, substantially enhance our growth potential and ability to drive profitable growth, strengthen our direct sales force, significantly accelerate our going direct strategy, increase our cross-selling opportunities, and significantly enhance our R&D capabilities and pipeline; they also include that our projections of markets sizes and revenue growth rates for our four main product lines, clinical trial timelines and clearance or approval times for new products or new indications may be incorrect or may change over time. As with most acquisitions, the successful integration of JOTEC's business with ours may take longer and prove more costly than expected, and we may experience currently unforeseen difficulties related to the JOTEC products and our combined sales forces' ability to successfully market them; we may not be able to secure the anticipated financial and operational benefits of the acquisition as soon as anticipated, or at all. We may also inherit unforeseen risks and uncertainties related to JOTEC's business, particularly if the information received by CryoLife during the due diligence phase of this transaction was incomplete or inaccurate. 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,
                                                                               --------                   --------

                                                                           2018                2017      2018                       2017
                                                                           ----                ----      ----                       ----

    Revenues:

    Products                                                                       $49,313           $30,094                    $92,911    $57,490

    Preservation services                                                         19,183            17,724                     37,533     35,387

    Total revenues                                                                68,496            47,818                    130,444     92,877
                                                                                  ------            ------                    -------     ------


    Cost of products and preservation services:

    Products                                                                      13,550             6,959                     27,707     14,976

    Preservation services                                                          9,095             7,954                     17,658     15,484
                                                                                   -----             -----                     ------     ------

    Total cost of products and

    preservation services                                                         22,645            14,913                     45,365     30,460
                                                                                  ------            ------                     ------     ------


    Gross margin                                                                  45,851            32,905                     85,079     62,417
                                                                                  ------            ------                     ------     ------


    Operating expenses:

    General, administrative, and marketing                                        34,727            23,389                     72,075     46,260

    Research and development                                                       5,719             4,728                     11,089      8,821
                                                                                   -----             -----                     ------      -----

    Total operating expenses                                                      40,446            28,117                     83,164     55,081
                                                                                  ------            ------                     ------     ------

    Operating income                                                               5,405             4,788                      1,915      7,336
                                                                                   -----             -----                      -----      -----


    Interest expense                                                               4,103               834                      7,759      1,635

    Interest income                                                                 (30)             (55)                      (89)      (95)

    Other expense (income), net                                                    1,466             (134)                     1,285       (91)
                                                                                   -----              ----                      -----        ---


    (Loss) income before income taxes                                              (134)            4,143                    (7,040)     5,887

    Income tax (benefit) expense                                                   (360)              980                    (3,411)       501
                                                                                    ----               ---                     ------        ---


    Net income (loss)                                                                 $226            $3,163                   $(3,629)    $5,386
                                                                                      ====            ======                    =======     ======


    Income (loss) per common share:

    Basic                                                                            $0.01             $0.09                    $(0.10)     $0.16
                                                                                     =====             =====                     ======      =====

    Diluted                                                                          $0.01             $0.09                    $(0.10)     $0.16
                                                                                     =====             =====                     ======      =====


    Weighted-average common shares outstanding:

    Basic                                                                         36,318            32,664                     36,233     32,552

    Diluted                                                                       37,249            33,814                     36,233     33,739

 

 

                                        CRYOLIFE, INC. AND SUBSIDIARIES

                                             Financial Highlights

                                                (In thousands)


                                                                    (Unaudited)                         (Unaudited)

                                                                 Three Months Ended                   Six Months Ended

                                                                    June 30,                        June 30,
                                                                    --------                        --------

                                                               2018                 2017             2018                 2017
                                                               ----                 ----             ----                 ----

    Products:

    BioGlue and BioFoam                                                $17,069              $16,683               $33,039          $32,364

    JOTEC                                                    17,205                     --            31,665                   --

    On-X                                                              11,888                9,862                22,197           18,722

    CardioGenesis cardiac laser therapy                                1,578                2,056                 2,924            3,641

        PerClot                                                          968                  936                 1,940            1,755

    PhotoFix                                                             605                  557                 1,146            1,008

              Total products                                          49,313               30,094                92,911           57,490
                                                                      ------               ------                ------           ------


    Preservation services:

    Cardiac tissue                                                     9,055                8,477                17,158           15,979

    Vascular tissue                                                   10,128                9,247                20,375           19,408
                                                                      ------                -----                ------           ------

    Total preservation services                                       19,183               17,724                37,533           35,387
                                                                      ------               ------                ------           ------


    Total revenues                                                     $68,496              $47,818              $130,444          $92,877
                                                                       =======              =======              ========          =======


    Revenues:

       U.S.                                                            $36,719              $34,712               $71,607          $68,246

    International                                                     31,777               13,106                58,837           24,631
                                                                      ------               ------                ------           ------

    Total revenues                                                     $68,496              $47,818              $130,444          $92,877
                                                                       =======              =======              ========          =======

 

 

 

                                                      (Unaudited)         December 31,

                                                        June 30,

                                                             2018                  2017
                                                             ----                  ----


    Cash, cash equivalents, and restricted securities             $25,719               $40,753

    Total current assets                                          169,698               179,280

    Total assets                                                  570,448               589,693

    Total current liabilities                                      34,121                42,940

    Total liabilities                                             298,961               312,635

    Shareholders' equity                                          271,487               277,058

 

 

                                                                  CRYOLIFE, INC. AND SUBSIDIARIES

                                                                Reconciliation of GAAP to Non-GAAP

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

                                                               (In thousands, except per share data)


                                                                                                      (Unaudited)                      (Unaudited)

                                                                                                Three Months Ended            Six Months Ended

                                                                                                     June 30,                     June 30,
                                                                                                     --------                     --------

                                                                                                 2018              2017           2018                  2017
                                                                                                 ----              ----           ----                  ----

    GAAP:

    (Loss) income before income taxes                                                                     $(134)              $4,143                         $(7,040)              $5,887

    Income tax (benefit) expense                                                                         (360)                 980                          (3,411)                 501
                                                                                                          ----                  ---                           ------                  ---

    Net income (loss)                                                                                       $226               $3,163                         $(3,629)              $5,386
                                                                                                            ====               ======                          =======               ======


    Diluted income (loss) per common share:                                                                $0.01                $0.09                          $(0.10)               $0.16
                                                                                                           =====                =====                           ======                =====


    Diluted weighted-average common

    shares outstanding                                                                                  37,249               33,814                           36,233               33,739



    Reconciliation of (loss) income before income

    taxes, GAAP to adjusted net income, non-GAAP:


    (Loss) income before income taxes, GAAP                                                               $(134)              $4,143                         $(7,040)              $5,887

    Adjustments:

    Business development and integration expenses                                                        1,294                1,094                            5,016                1,382

    Amortization expense                                                                                 2,753                1,141                            5,488                2,283

    Inventory basis step-up expense                                                                      1,273                   63                            2,743                2,112

    Adjusted income before income taxes,

    non-GAAP                                                                                             5,150                6,441                            6,207               11,664


    Income tax expense calculated at 25% pro forma

    tax rate                                                                                             1,288                1,610                            1,552                2,916
                                                                                                         -----                -----                            -----                -----

    Adjusted net income, non-GAAP                                                                         $3,862               $4,831                           $4,655               $8,748


    Reconciliation of diluted income (loss) per

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


    Diluted income (loss) per common share, GAAP:                                                          $0.01                $0.09                          $(0.10)               $0.16

    Adjustments:

    Business development and integration expenses                                                         0.03                 0.03                             0.13                 0.04

    Amortization expense                                                                                  0.07                 0.03                             0.14                 0.06

    Inventory basis step-up expense                                                              0.03                    --                           0.07                 0.06

    Tax effect of non-GAAP adjustments                                                                  (0.03)              (0.01)                          (0.08)              (0.04)

    Effect of 25% pro forma tax rate                                                           (0.01)                   --                         (0.04)              (0.03)
                                                                                                -----                   ---                          -----                -----

    Adjusted diluted income per common share,

     non-GAAP:                                                                                             $0.10                $0.14                            $0.12                $0.25


    Diluted weighted-average common

    shares outstanding                                                                                  37,249               33,814                           37,152               33,739

 

 

                                                            CRYOLIFE, INC. AND SUBSIDIARIES

                                                          Reconciliation of GAAP to Non-GAAP

                                            Revenues; Gross Margin; General, Administrative, and Marketing

                                                         (In thousands, except per share data)


                                                                 (Unaudited)                                                 (Unaudited)

                                                            Three Months Ended                                      Six Months Ended

                                                                 June 30,                                               June 30,
                                                                 --------                                               --------

                                                            2018                      2017            Growth                            2018                     2017      Growth
                                                                                                   Rate                                                               Rate
                                                                                      ---                                                                      ---      ----

    Reconciliation of total revenues, GAAP

    to total revenues, non-GAAP:

    Total revenues, GAAP                                             $68,496                                 $47,818          43%                             $130,444                        $92,877 40%

    Plus: JOTEC pre-acquisition                               --                                  13,094                                                  --                        25,101
       revenues

    Total revenues, non-GAAP                                         $68,496                                 $60,912          12%                             $130,444                       $117,978 11%
                                                                     -------                                 -------                                          --------                       --------

    Impact of changes in currency exchange                    --                                   1,639                                                  --                         3,827
                                                             ---                                   -----                                                 ---                         -----

    Total constant currency                                          $68,496                                 $62,551          10%                             $130,444                       $121,805  7%
    revenues, non-GAAP


                                                               (Unaudited)                                                              (Unaudited)

                                                            Three Months Ended                                                       Six Months Ended

                                                                 June 30,                                                                June 30,
                                                                 --------                                                                --------

                                                            2018                      2017                                              2018                     2017
                                                            ----                      ----                                              ----                     ----

    Reconciliation of gross margin %,

    GAAP to gross margin %,

    non-GAAP:

    Total revenues, GAAP                                             $68,496                                 $47,818                                          $130,444                        $92,877

    Gross margin, GAAP                                               $45,851                                 $32,905                                           $85,079                        $62,417

    Gross margin %, GAAP                                     67%                                     69%                                                65%                           67%


    Gross margin, GAAP                                               $45,851                                 $32,905                                           $85,079                        $62,417

    Plus: Inventory basis step- up

    expense                                                1,237                                       63                                               2,743                          2,112
                                                           -----                                      ---                                               -----                          -----

    Gross margin, non-GAAP                                           $47,088                                 $32,968                                           $87,822                        $64,529
                                                                     =======                                 =======                                           =======                        =======

    Gross margin %, non-GAAP                                 69%                                     69%                                                67%                           69%


                                                               (Unaudited)                                                              (Unaudited)

                                                            Three Months Ended                                                       Six Months Ended

                                                                 June 30,                                                                June 30,
                                                                 --------                                                                --------

                                                            2018                      2017                                              2018                     2017
                                                            ----                      ----                                              ----                     ----

    Reconciliation of general,

    administrative, and marketing,

    GAAP to general, administrative,

    and marketing, non-GAAP

    General, administrative, and marketing,

           GAAP                                                      $34,727                                 $23,389                                           $72,075                        $46,260

    Less: Business development and

    integration expenses                                 (1,294)                                 (1,094)                                            (5,016)                       (1,382)

    General, administrative, and

    marketing, non-GAAP                                              $33,433                                 $22,295                                           $67,059                        $44,878
                                                                     =======                                 =======                                           =======                        =======

 

 

                                             CRYOLIFE, INC. AND SUBSIDIARIES

                                           Reconciliation of GAAP to Non-GAAP

                                          Net Income (Loss) to Adjusted EBITDA

                                                     (In thousands)


                                                            (Unaudited)                            (Unaudited)

                                                      Three Months Ended                   Six Months Ended

                                                           June 30,                            June 30,
                                                           --------                            --------

                                                       2018                   2017             2018            2017
                                                       ----                   ----             ----            ----

    Reconciliation of net income (loss),

    GAAP to adjusted EBITDA,
    non-GAAP:

    Net income (loss), GAAP                                       $226              $3,163                           $(3,629)   $5,386

    Adjustments:

    Depreciation and amortization expense                      4,730               2,184                              9,106     4,352

    Income tax (benefit) expense                               (360)                980                            (3,411)      501

    Interest income                                             (30)               (55)                              (89)     (95)

    Interest expense                                           4,103                 834                              7,759     1,635

    Loss (gain) on foreign currency                            1,477                  45                              1,458      (99)
      revaluation

    Inventory basis step-up expense                            1,237                  63                              2,743     2,112

    Business development and integration                       1,294               1,094                              5,016     1,382
      expenses

    Stock-based compensation expense                           1,872               2,001                              3,120     3,796
                                                               -----               -----                              -----     -----

    Adjusted EBITDA, non-GAAP                                  $14,549             $10,309                            $22,073   $18,970
                                                               =======             =======                            =======   =======

 

Contacts:

    CryoLife                                 Gilmartin Group LLC
    D. Ashley Lee                            Greg Chodaczek / Lynn Lewis
    Executive Vice President,
     Chief Financial Officer                 Phone:  646-924-1769
    and Chief Operating Officer              investors@cryolife.com
    Phone: 770-419-3355

 

View original content with multimedia:http://www.prnewswire.com/news-releases/cryolife-reports-second-quarter-2018-results-300692685.html

SOURCE CryoLife, Inc.

Company Codes: NYSE:CRY

Back to news