CryoLife Reports Third Quarter 2020 Financial Results

 

ATLANTA, Nov. 4, 2020 /PRNewswire/ --

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, 2020. 

"Our performance in the third quarter further validated our belief that the majority of products in our portfolio are used in procedures that cannot be postponed or delayed for long.  We believe our business is weathering the pandemic well and we continue to progress on our strategic initiatives," commented Pat Mackin, Chairman, President, and Chief Executive Officer.  "We saw an improvement in procedure volumes sequentially month to month from July to September 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.  Lastly, we completed the acquisition of Ascyrus Medical LLC, further strengthening our innovative portfolio of products focused on aortic repair and increasing our total addressable market opportunity to over $6 billion, providing us adequate opportunity to drive our financial performance for years to come.  Given these achievements in the third quarter, we remain optimistic that we will deliver on our growth strategy and remain in a position of strength through 2021."

Third Quarter Financial Results
Total revenues for the third quarter of 2020 were $65.1 million, reflecting a decrease of (4%) on a GAAP and non-GAAP constant currency basis, both compared to the third quarter of 2019.  Revenue performance across all product lines reflected the impact of the COVID-19 pandemic on the number of procedures using our products.

Net loss for the third quarter of 2020 was ($2.9) million, or ($0.08) per fully diluted common share, compared to net loss of ($134,000), or less than $0.01 per fully diluted common share for the third quarter of 2019.  Non-GAAP net income for the third quarter of 2020 was $4.9 million, or $0.13 per fully diluted common share, compared to non-GAAP net income of $2.5 million, or $0.07 per fully diluted common share for the third quarter of 2019. 

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

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, integration, and severance expense, amortization expense, non-cash interest 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, November 4, 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 November 11, 2020 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415.  The Conference ID for the replay is 13712302.

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 the majority of products in our portfolio are used in procedures that cannot be postponed or delayed for long; our business is weathering the pandemic well; we continue to progress on our strategic initiatives; certain of our products will deliver revenue in 2021 and 2022; and, with the  acquisition of Ascyrus Medical LLC, our portfolio of products focused on aortic repair is strengthened, increases our total addressable market opportunity to over $6 billion, and will provide us adequate opportunity to drive our financial performance for years to come. They also include that we remain optimistic that we will deliver on our growth strategy and remain in a position of strength through 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 that the benefits anticipated from the Ascyrus Medical LLC transaction may not be achieved and 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

 

Nine Months Ended

 

September 30,

 

September 30,

   

2020

   

2019

   

2020

   

2019

 

(Unaudited)

 

(Unaudited)

Revenues:

                     

Products

$

45,109

 

$

47,484

 

$

128,797

 

$

147,053

Preservation services

 

20,022

   

20,397

   

56,534

   

59,472

Total revenues

 

65,131

   

67,881

   

185,331

   

206,525

                       

Cost of products and preservation services:

                     

Products

 

12,998

   

12,706

   

36,078

   

41,021

Preservation services

 

9,001

   

9,953

   

26,060

   

29,043

Total cost of products and preservation services

 

21,999

   

22,659

   

62,138

   

70,064

                       

Gross margin

 

43,132

   

45,222

   

123,193

   

136,461

                       

Operating expenses:

                     

General, administrative, and marketing

 

33,743

   

34,259

   

105,033

   

105,402

Research and development

 

5,755

   

6,259

   

17,633

   

17,648

Total operating expenses

 

39,498

   

40,518

   

122,666

   

123,050

                       

Operating income

 

3,634

   

4,704

   

527

   

13,411

                       

Interest expense

 

4,940

   

3,555

   

11,980

   

11,260

Interest income

 

(13)

   

(259)

   

(181)

   

(608)

Other expense, net

 

2,888

   

2,400

   

5,810

   

2,662

                       

(Loss) income before income taxes

 

(4,181)

   

(992)

   

(17,082)

   

97

Income tax benefit

 

(1,311)

   

(858)

   

(3,858)

   

(2,304)

                       

Net (loss) income

$

(2,870)

 

$

(134)

 

$

(13,224)

 

$

2,401

                       

(Loss) income per common share:

                     

Basic

$

(0.08)

 

$

(0.00)

 

$

(0.35)

 

$

0.06

Diluted

$

(0.08)

 

$

(0.00)

 

$

(0.35)

 

$

0.06

                       

Weighted-average common shares outstanding:

                     

Basic

 

37,912

   

37,255

   

37,608

   

37,065

Diluted

 

37,912

   

37,255

   

37,608

   

37,850

                       

Net (loss) income

$

(2,870)

 

$

(134)

 

$

(13,224)

 

$

2,401

Other comprehensive income (loss):

                     

Foreign currency translation adjustments

 

8,698

   

(8,017)

   

8,669

   

(8,803)

Comprehensive income (loss)

$

5,828

 

$

(8,151)

 

$

(4,555)

 

$

(6,402)

 

CryoLife, Inc. and Subsidiaries

Financial Highlights

 (In thousands)

 
 

(Unaudited)

 

(Unaudited)

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2020

 

2019

 

2020

 

2019

Products:

                     

BioGlue

$

15,811

 

$

15,679

 

$

44,985

 

$

50,834

JOTEC

 

15,290

   

15,774

   

43,932

   

48,936

On-X

 

12,067

   

12,610

   

34,385

   

36,751

PhotoFix

 

1,134

   

1,087

   

3,056

   

2,752

PerClot

 

724

   

980

   

2,081

   

2,814

CardioGenesis cardiac laser therapy

 

83

   

1,354

   

358

   

4,966

          Total products

 

45,109

   

47,484

   

128,797

   

147,053

                       

Preservation services:

                     

Cardiac tissue

$

10,679

 

$

11,304

   

28,758

   

30,734

Vascular tissue

 

9,285

   

9,093

   

27,657

   

28,738

NeoPatch

 

58

   

--

   

119

   

--

Total preservation services

 

20,022

   

20,397

   

56,534

   

59,472

                       

Total revenues

$

65,131

 

$

67,881

 

$

185,331

 

$

206,525

                       

Revenues:

             

U.S.

$

36,332

 

$

37,981

 

$

103,171

 

$

113,548

International

 

28,799

   

29,900

   

82,160

   

92,977

Total revenues

$

65,131

 

$

67,881

 

$

185,331

 

$

206,525

 

           
 

(Unaudited)

     
 

September 30,

 

December 31,

 

2020

 

2019

Cash, cash equivalents, and restricted securities

$

64,635

 

$

34,294

Total current assets

 

233,699

   

187,390

Total assets

 

782,200

   

605,654

Total current liabilities

 

53,667

   

45,195

Total liabilities

 

456,434

   

319,958

Shareholders' equity

 

325,766

   

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

 

Nine Months Ended

 

September 30,

 

September 30,

   

2020

   

2019

   

2020

   

2019

GAAP:

                     

(Loss) income before income taxes

$

(4,181)

 

$

(992)

 

$

(17,082)

 

$

97

Income tax benefit

 

(1,311)

   

(858)

   

(3,858)

   

(2,304)

Net (loss) income

$

(2,870)

 

$

(134)

 

$

(13,224)

 

$

2,401

                       

Diluted (loss) income per common share

$

(0.08)

 

$

(0.00)

 

$

(0.35)

 

$

0.06

                       

Diluted weighted-average common shares outstanding

 

 

37,912

   

37,255

   

37,608

   

37,850

                       

Reconciliation of (loss) income before income taxes, GAAP to adjusted net  income, non-GAAP

                     

(Loss) income before income taxes, GAAP:

$

(4,181)

 

$

(992)

 

$

(17,082)

 

$

97

Adjustments:

                     

Amortization expense

 

3,397

   

2,660

   

9,430

   

7,796

Business development, integration, and severance expense

 

6,005

   

1,250

   

7,481

   

2,562

Non-cash interest expense

 

1,371

   

407

   

2,261

   

1,225

Corporate rebranding expense

 

--

   

--

   

321

   

--

                       

Adjusted income before income taxes, non-GAAP

 

6,592

   

3,325

   

2,411

   

11,680

                       
                       

Income tax benefit calculated at a

                     

pro forma tax rate of 25%

 

1,648

   

831

   

603

   

2,920

Adjusted net  income, non-GAAP

$

4,944

 

$

2,494

 

$

1,808

 

$

8,760

                       

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:

$

(0.08)

 

$

(0.00)

 

$

(0.35)

 

$

0.06

Adjustments:

                     

Amortization expense

 

0.09

   

0.07

   

0.25

   

0.20

Business development, integration, and severance expense

 

0.16

   

0.03

   

0.20

   

0.06

Non-cash interest expense

 

0.04

   

0.01

   

0.06

   

0.03

Corporate rebranding expense

 

--

   

--

   

0.01

   

--

Tax effect of non-GAAP adjustments

 

(0.07)

   

(0.02)

   

(0.13)

   

(0.06)

Effect of 25% pro forma tax rate

 

(0.01)

   

(0.02)

   

0.01

   

(0.06)

Adjusted diluted income per common share, non-GAAP

$

0.13

 

$

0.07

 

$

0.05

 

$

0.23

                       

Diluted weighted-average common shares outstanding

 

38,357

   

37,940

   

38,151

   

37,850

 

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

 

Nine Months Ended

 

September 30,

 

September 30,

 

2020

 

2019

Growth
Rate

 

2020

 

2019

Growth
Rate

Reconciliation of total revenues, GAAP to total revenues, non-GAAP:

                         

Total revenues, GAAP

$

65,131

 

$

67,881

-4%

 

$

185,331

 

$

206,525

-10%

Impact of changes in currency exchange

 

--

   

4

     

--

   

(1,719)

 

Total constant currency revenues, non-GAAP

$

65,131

 

$

67,885

-4%

 

$

185,331

 

$

204,806

-10%

                           

Reconciliation of total revenues, GAAP to total revenues, non-GAAP:

                         

Total revenues, GAAP

$

65,131

 

$

67,881

-4%

 

$

185,331

 

$

206,525

-10%

Less CardioGenesis cardiac laser therapy

 

(83)

   

(1,354)

     

(358)

   

(4,966)

 

Total GAAP revenues excluding CardioGenesis

 

65,048

   

66,527

-2%

   

184,973

   

201,559

-8%

Impact of changes in currency exchange

 

--

   

4

     

--

   

(1,719)

 

Total constant currency revenues excluding CardioGenesis, non-GAAP

$

65,048

 

$

66,531

-2%

 

$

184,973

 

$

199,840

-7%

                           

 

                         
 

(Unaudited)

   

(Unaudited)

 

Three Months Ended

   

Nine Months Ended

 

September 30,

   

September 30,

 

2020

 

2019

   

2020

 

2019

Reconciliation of net (loss) income, GAAP to adjusted EBITDA, non-GAAP:

                       

Net (loss) income, GAAP

$

(2,870)

 

$

(134)

   

$

(13,224)

 

$

2,401

Adjustments:

                       

Depreciation and amortization expense

 

5,176

   

4,526

     

14,818

   

13,257

Interest expense

 

4,940

   

3,555

     

11,980

   

11,260

Business development, integration, and severance expense

 

6,005

   

1,250

     

7,481

   

2,562

Stock-based compensation expense

 

2,358

   

2,462

     

7,432

   

6,581

(Income) loss on foreign currency revaluation

 

(2,073)

   

2,419

     

846

   

2,669

Corporate rebranding expense

 

--

   

--

     

321

   

--

Income tax benefit

 

(1,311)

   

(858)

     

(3,858)

   

(2,304)

Interest income

 

(13)

   

(259)

     

(181)

   

(608)

Adjusted EBITDA, non-GAAP

$

12,212

 

$

12,961

   

$

25,615

 

$

35,818

 

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.

 
 
Company Codes: NYSE:CRY
 

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