ATLANTA, Feb. 16, 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 fourth quarter and full year of 2011. Revenues for the fourth quarter increased 4 percent to a record $30.4 million compared to $29.2 million for the fourth quarter of 2010. Revenues for the full year increased 3 percent to a record $119.6 million compared to $116.6 million for the full year of 2010.
Steven G. Anderson, president and chief executive officer, said, “In 2011 we made significant progress in repositioning CryoLife with earlier stage, growth oriented products while also continuing to generate strong cash flow from our core business. We expect to begin accelerating our growth in 2012, led by expanded adoption of PerClot®, BioGlue®, and TMR. Revenues from our product segment are expected to increase by 10 percent to 15 percent for the year, with significant upside potential over the next several years as we execute on the clinical and regulatory pathways for our pipeline. In 2012 our strategic initiatives include enrolling our U.S. clinical trials for PerClot and BioFoam®, potentially expanding the indications for BioGlue in Japan, initiating our pilot study to evaluate TMR with biologics in Europe, and increasing revenues for PerClot in Europe. We believe that our portfolio of complementary, high margin products has the potential to significantly expand our market opportunity, leverage our core infrastructure and build value for the Company and its shareholders.”
Net income for the fourth quarter of 2011 was $1.9 million, or $0.07 per basic and fully diluted common share, compared to net income of $2.1 million, or $0.08 per basic and $0.07 per fully diluted common share, for the fourth quarter of 2010.
Net income for the full year of 2011 was $7.4 million, or $0.26 per basic and fully diluted common share, compared to net income of $3.9 million, or $0.14 per basic and fully diluted common share, for the full year of 2010. Excluding pretax expenses of $4.2 million related to the Company’s acquisition of Cardiogenesis and other business development activities, non-GAAP adjusted net income for the full year of 2011 was $10.0 million, or $0.35 per fully diluted common share.
Surgical sealant and hemostat revenues, which consist primarily of sales of BioGlue and PerClot, were $13.0 million for the fourth quarter of 2011 compared to $15.1 million for the fourth quarter of 2010, a decrease of 14 percent. The decrease in surgical sealant and hemostat revenues was primarily due to the lack of HemoStase revenues in the fourth quarter of 2011, partially offset by a 3 percent increase in BioGlue revenues and a 134 percent increase in PerClot revenues. The increase in BioGlue revenues was primarily attributable to shipments into Japan. The Company discontinued 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.
Surgical sealant and hemostat revenues were $53.7 million for the full year of 2011 compared to $56.4 million for the full year of 2010, a decrease of 5 percent. The decrease in surgical sealant and hemostat revenues in the full year of 2011 was primarily due to a decrease in HemoStase revenues, partially offset by the full year addition of PerClot revenues and a 4 percent increase in BioGlue revenues.
Revascularization technologies revenues were $2.4 million for the fourth quarter and $5.7 million for the full year of 2011 as a result of the Company’s acquisition of Cardiogenesis in May 2011.
Preservation services revenues for the fourth quarter of 2011 increased 5 percent to $14.8 million compared to $14.0 million for the fourth quarter of 2010. The increase in preservation services revenues for the fourth quarter of 2011 was primarily due to an increase in shipments of vascular tissues and an increase in average preservation service fees, partially offset by a decrease in shipments of cardiac tissues.
Preservation services revenues for the full year of 2011 were $59.8 million compared to $59.7 million for the full year of 2010. Preservation services revenues for the full year of 2011 were favorably affected by an increase in shipments of vascular tissue and an increase in average preservation service fees, offset by a decrease in shipments of cardiac tissues.
Total gross margins increased to 64 percent in the fourth quarter of 2011, up from 60 percent in the fourth quarter of 2010, 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 42 percent and 39 percent for the fourth quarters of 2011 and 2010, respectively. Product gross margins were 85 percent and 80 percent for the fourth quarters of 2011 and 2010, respectively.
Total gross margins were 63 percent and 58 percent for the full year of 2011 and 2010, respectively. Preservation services gross margins were 43 percent and 40 percent for the full year of 2011 and 2010, respectively. Product gross margins were 84 percent and 78 percent for the full year of 2011 and 2010, respectively. Total gross margins for the full year of 2010 included a pretax charge of $1.6 million to write down HemoStase inventory that the Company did not believe it would be able to distribute.
General, administrative, and marketing expenses for the fourth quarter of 2011 were $14.6 million compared to $12.2 million for the fourth quarter of 2010. General, administrative, and marketing expenses for the fourth quarter of 2011 have increased compared to 2010 to support the sales personnel and ongoing operations of Cardiogenesis. General, administrative, and marketing expenses for the fourth quarter of 2011 included approximately $843,000 in costs related to ongoing litigation.
General, administrative, and marketing expenses for the full year of 2011 were $57.3 million compared to $49.1 million for the full year of 2010. General, administrative, and marketing expenses for the full year of 2011 included approximately $4.2 million in costs related to the Company’s acquisition of Cardiogenesis and other business development activities and approximately $1.9 million related to ongoing litigation. General, administrative, and marketing expenses for the full year of 2010 included approximately $1.0 million in costs related to business development activities and $2.3 million related to ongoing litigation.
Research and development expenses were $1.8 million and $2.0 million for the fourth quarters of 2011 and 2010, respectively. Research and development expenses were $6.9 million and $5.9 million for the full year of 2011 and 2010, respectively. Research and development spending in 2011 was primarily focused on SynerGraft® tissues and products, PerClot, BioFoam Surgical Matrix, and BioGlue.
Acquired in-process research and development expense of $3.5 million in the full year of 2010 was related to an intangible asset for PerClot distribution and manufacturing rights in the U.S. and certain other countries in which PerClot does not have current regulatory approvals. Therefore the cost allocated to this asset was expensed upon acquisition.
Other expense was $177,000 for the full year of 2011 compared to $2.6 million for the full year of 2010. Other expense of $2.6 million in the full year of 2010 consisted primarily of the $3.6 million charge related to the impairment of the investment in Medafor common stock, partially offset by a $1.3 million gain on valuation of the derivative related to the investment in Medafor common stock.
During the fourth quarter and full year ended December 31, 2011, the Company purchased 313,000 and 593,000 shares of the Company’s common stock at average prices of $4.52 and $4.90, respectively, resulting in aggregate purchases of $1.4 million and $2.9 million, respectively. During January 2012, the Company purchased 121,000 shares of the Company’s common stock at an average price of $5.15, resulting in aggregate purchases of $627,000.
As of December 31, 2011, the Company had $27.0 million in cash, cash equivalents, and restricted securities, compared to $40.8 million at December 31, 2010. The decrease in cash, cash equivalents, and restricted securities is largely a result of the $21.7 million paid for the acquisition of Cardiogenesis in the second quarter of 2011 and $3.5 million paid for the purchase of Series A Preferred Stock of ValveXchange in early July 2011, and $2.9 million in common stock repurchases as discussed above, partially offset by operating cash flows. Of this $27.0 million in cash, cash equivalents, and restricted securities, $1.2 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 $16.8 million for the full year of 2011 and $20.8 million for the full year of 2010.
2012 Financial Guidance
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, which represents growth of between 38 percent to 78 percent compared to 2011. The Company expects revenues from revascularization technologies to be between $10.5 million and $11.5 million in 2012, which represents growth of 9 percent to 19 percent compared to the annualized fourth quarter 2011 run rate. 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. We have estimated litigation expense conservatively on the high end of our anticipated range, 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 February 16 through February 23 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 388168.
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. 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 and approved in Canada, Brazil and Australia for use in soft tissue repair and was recently approved in Japan for use in the repair of aortic dissections. 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. CryoLife distributes PerClot®, an absorbable powdered hemostat, in the European Community. 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 console and single use, fiber-optic handpieces are used to perform a surgical procedure known as Transmyocardial Revascularization (TMR).
For additional information about CryoLife, visit CryoLife’s website, www.cryolife.com.
