ATLANTA, Feb. 18 /PRNewswire-FirstCall/ -- CryoLife, Inc. , an implantable biological medical device and cardiovascular tissue processing company, announced today that revenues for the fourth quarter of 2009 increased 12 percent to a quarterly record of $28.6 million compared to $25.5 million for the fourth quarter of 2008. This was the 12th consecutive quarter of profitability for the Company.
Net income for the fourth quarter of 2009 was $2.4 million, or $0.08 per basic and fully diluted common share, compared to $21.7 million, or $0.78 per basic and $0.76 per fully diluted common share for the fourth quarter of 2008. The Company’s effective income tax rate was 36 percent for the fourth quarter of 2009, compared to a tax benefit for the fourth quarter of 2008. The Company had a tax benefit in 2008 due to the reversal of the Company’s valuation allowance on its deferred tax assets during 2008. If the Company had recorded 2008 income taxes at a comparable 36 percent effective tax rate, net income for the fourth quarter of 2008 would have been $1.7 million and fully diluted earnings per share would have been $0.06. The Company recorded a pretax charge of approximately $377,000 in the fourth quarter of 2009 in connection with a reduction in workforce, which resulted from several process improvements and expense control and cost cutting initiatives that the Company implemented during the fourth quarter of 2009. Excluding these charges, net income for the fourth quarter of 2009 would have been $2.6 million, or $0.09 per fully diluted common share.
Net income for the full year of 2009 was $8.7 million, or $0.31 per basic and fully diluted common share, compared to $32.0 million, or $1.15 per basic and $1.13 per fully diluted common share for the full year of 2008. The Company’s effective income tax rate was 40 percent for the full year of 2009, compared to a tax benefit for the full year of 2008. If the Company had recorded 2008 income taxes at a comparable 40 percent effective tax rate, net income for the full year of 2008 would have been $8.1 million and fully diluted earnings per share would have been $0.29. Excluding pretax charges of $377,000 in the fourth quarter of 2009 as mentioned above, net income for the full year of 2009 would have been $8.9 million, or $0.32 per fully diluted common share.
Preservation service revenues for the full year of 2009 increased 5 percent to $56.5 million compared to $53.7 million for the full year of 2008. Excluding orthopaedic tissue processing revenues of $181,000 and $725,000 for the full year of 2009 and 2008, respectively, preservation service revenues increased 6 percent to $56.3 million for the full year of 2009 compared to $52.9 million for the full year of 2008. The increase in preservation service revenues was primarily due to increased revenues from vascular tissue for the full year of 2009 compared to the full year of 2008.
Product revenues, which consist primarily of sales of BioGlue(R) Surgical Adhesive and HemoStase(R), were $14.5 million for the fourth quarter of 2009 compared to $13.0 million for the fourth quarter of 2008, an increase of 12 percent. Product revenues were $54.2 million for the full year of 2009 compared to $50.5 million for the full year of 2008, an increase of 7 percent. The increase year over year primarily reflects the growing usage of HemoStase in cardiac and vascular surgical indications in the U.S., and cardiac, vascular and general surgery indications in many markets outside of the U.S.
Preservation services gross margins were 39 percent and 45 percent for the fourth quarters of 2009 and 2008, respectively. Preservation services gross margins were 42 percent and 46 percent for the full year of 2009 and 2008, respectively.
General, administrative, and marketing expenses for the fourth quarter of 2009 were $12.6 million compared to $12.3 million for the fourth quarter of 2008. General, administrative, and marketing expenses for the full year of 2009 were $50.0 million compared to $48.8 million for the full year of 2008. These expenses included personnel costs, advertising, physician education and training, and promotional materials to support current revenue growth and the Company’s efforts to increase its preservation service and product offerings.
Research and development expenses were $1.4 million for each of the fourth quarters of 2009 and 2008. Research and development expenses were $5.2 million and $5.3 million for the full years of 2009 and 2008, respectively. Research and development spending in 2009 was primarily focused on the Company’s BioGlue and related products and SynerGraft(R) tissues and products.
The Company expects total revenues for the full year of 2010 to be between $118.0 million and $123.0 million, which includes between $1.5 million and $2.5 million related to funding received from the Department of Defense in connection with the development of BioFoam. The Company expects tissue processing revenues and BioGlue revenues to each increase between mid-single and low-double digits on a percentage basis in 2010 compared to 2009, with HemoStase revenues increasing significantly more than that on a percentage basis.
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.
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, Inc.
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. These statements include those regarding anticipated 2010 performance and statements regarding the expected impact of our net operating loss carryforwards on our cash outlays for tax obligations. These future events may not occur as and when expected, if at all, and, together with our business, are subject to various risks and uncertainties. These risks and uncertainties include that we are significantly dependent on our revenues from BioGlue and are subject to a variety of risks affecting this product, we are subject to stringent domestic and foreign regulation which may impede the approval process of our tissues and products, hinder our development activities and manufacturing processes and, in some cases, result in the recall or seizure of previously cleared or approved tissues and products, our proposed acquisition of Medafor poses a number of risks, Medafor’s management has rejected our acquisition offer and refused to negotiate with us, and if we attempt to launch a hostile offer to acquire Medafor we will incur significant expense and may not succeed; in the event such a hostile offer does succeed, we will not have the benefit of due diligence and may incur unanticipated costs or liabilities, the lawsuit we filed against Medafor regarding our distribution agreement with Medafor may adversely impact our relationship with Medafor and could hinder our distribution of HemoStase or prevent us from distributing HemoStase, healthcare policy changes, including pending proposals to reform the U.S. healthcare system, may have a material adverse effect on us, uncertainties related to patents and protection of proprietary technology may adversely affect the value of our intellectual property, uncertainties related to patents and protection of proprietary technology for products distributed by CryoLife may adversely affect our ability to distribute those products, the tissues we process and our products allegedly have caused and may in the future cause injury to patients, and we have been and may be exposed to product liability claims and additional regulatory scrutiny as a result, we are dependent on the availability of sufficient quantities of tissue from human donors, our CryoValve SGPV post-clearance study may not provide expected results, demand for our tissues and products could decrease in the future, which could have a material adverse effect on our business, the success of many of our tissues and products depends upon strong relationships with physicians, consolidation in the health care industry could lead to demands for price concessions or limits or eliminate our ability to sell to certain of our significant market segments, our existing insurance policies may not be sufficient to cover our actual claims liability, we may be unable to obtain adequate insurance at a reasonable cost, if at all, the loss of any of our sole-source suppliers could have an adverse effect on our revenues, financial condition, profitability, and cash flows, intense competition may affect our ability to operate profitably, regulatory action outside of the U.S. has affected our business in the past and may affect our business in the future, rapid technological change could cause our services and products to become obsolete, continued fluctuation of foreign currencies relative to the U.S. dollar could materially and adversely impact our business, our credit facility limits our ability to pursue significant acquisitions, key growth strategies may not generate the anticipated benefits, there are limitations on the use of our net operating loss carryforwards, our ability to borrow under our credit facility may be limited, we may not be successful in obtaining necessary clinical results and regulatory approvals for services and products in development, and our new services and products may not achieve market acceptance, extensive government regulation may adversely affect our ability to develop and market services and products, investments in new technologies and acquisitions of products or distribution rights may not be successful, if we are not successful in expanding our business activities in international markets, we may be unable to increase our revenues, we are not insured against all potential losses, and natural disasters or other catastrophes could adversely affect our business, financial condition, and profitability, and we are dependent on key personnel. These risks and uncertainties include the risk factors detailed in our Securities and Exchange Commission filings, including our Form 10-Q filing for the quarter ended March 31, 2009, our Form 10-Q filing for the quarter ended June 30, 2009, our Form 10-Q filing for the quarter ended September 30, 2009, our Form 10-K to be filed for the year ended December 31, 2009 and the Company’s other SEC filings. The Company does not undertake to update its forward-looking statements.
For additional information about the company, visit CryoLife’s Web site: www.cryolife.com.
CONTACT: Media: D. Ashley Lee, Executive Vice President, Chief Financial
Officer and Chief Operating Officer of CryoLife, +1-770-419-3355; or Nina
Devlin of Edelman, +1-212-704-8145
Web site: http://www.cryolife.com/
