CryoLife Reports Fourth Quarter and Full Year 2019 Financial Results

February 13, 2020 |

13 min read

CryoLife, Inc. (NYSE: CRY), a leading cardiac and vascular surgery company focused on aortic disease, announced today its financial results for the fourth quarter and full year ended December 31, 2019.

ATLANTA, Feb. 13, 2020 /PRNewswire/ --

Fourth Quarter and Recent Business Highlights:

Total revenues were $69.7 million in the fourth quarter of 2019, reflecting year over year growth of 3% and a 4% increase on a non-GAAP constant currency basis, both compared to the fourth quarter of 2018
- On-X^® revenues increased 18%, and 18% on a non-GAAP constant currency basis, both compared to the fourth quarter of 2018
- JOTEC^® revenues decreased 4% and increased less than 1% on a non-GAAP constant currency basis, both compared to the fourth quarter of 2018; excluding OEM, JOTEC revenues were flat and increased 4% on a constant currency basis compared to the fourth quarter of 2018
Net loss was ($681,000), or ($0.02) per fully diluted common share; non-GAAP net income was $3.8 million, or $0.10 per fully diluted common share
Received approval to commence our PROACT Xa trial
Granted European approval for two next generation JOTEC products
Entered into a distribution agreement with Misonix for NeoPatch^®

CryoLife, Inc. (NYSE: CRY), a leading cardiac and vascular surgery company focused on aortic disease, announced today its financial results for the fourth quarter and full year ended December 31, 2019.

“The fourth quarter was marked by significant progress on our key initiatives, highlighted by European approvals for two next generation JOTEC products, E-nside and E-nya, the approval to commence the PROACT Xa trial to study the use of Eliquis^® with the On-X Aortic Valve, the initial launch of NEXUS™ into select European markets, as well as our collaboration with Misonix,” said Pat Mackin, Chairman, President, and Chief Executive Officer. “Additionally, we anticipate the approval for E-vita OPEN NEO in the first quarter of 2020, and we continue to increase JOTEC and vascular tissue supply. The full launch in 2020 of three next generation JOTEC products and NEXUS, as well as the commencement of the PROACT Xa trial, positions us well to deliver high single-digit revenue growth over the next several years.”

Fourth Quarter 2019 Financial Results
Total revenues for the fourth quarter of 2019 were $69.7 million, reflecting growth of 3%, and 4% on a non-GAAP constant currency basis, both compared to the fourth quarter of 2018. The non-GAAP constant currency increase was driven by revenue growth from On-X, tissue processing, and JOTEC, excluding JOTEC OEM.

Net loss for the fourth quarter of 2019 was ($681,000), or ($0.02) per fully diluted common share, compared to a net loss of ($776,000), or ($0.02) per fully diluted common share for the fourth quarter of 2018. Non-GAAP net income for the fourth quarter of 2019 was $3.8 million, or $0.10 per fully diluted common share, compared to non-GAAP net income of $1.9 million, or $0.05 per fully diluted common share for the fourth quarter of 2018.

Full Year 2019 Financial Results
Total revenues for 2019 were $276.2 million, reflecting growth of 5% on a reported basis and 7% on a non-GAAP constant currency basis compared to 2018. The increase was driven by growth in the On-X, BioGlue and JOTEC product lines as well as the tissue processing business. For 2019, On-X and JOTEC non-GAAP constant currency revenues increased by 12% and 9%, respectively, versus 2018.

Net income for 2019 was $1.7 million or $0.05 per share compared to a net loss of ($2.8) million or ($0.08) per share for 2018. Non-GAAP net income for 2019 was $11.7 million, or $0.31 a share compared to non-GAAP net income of $9.6 million, or $0.26 per share in 2018.

The independent registered public accounting firm’s audit report with respect to the Company’s fiscal year-end financial statements will not be issued until the Company completes its annual report on Form 10-K, including its evaluation of the effectiveness of internal controls over financial reporting. Accordingly, the financial results reported in this earnings release are preliminary pending completion of the audit.

2020 Financial Outlook
CryoLife expects constant currency revenue growth of between 6.3% and 8.5% for the full year of 2020 compared to 2019. Assuming a Euro/USD exchange rate of 1.10, revenues are expected to be in the range of $292 million to $298 million. Our 2020 revenue guidance assumes no contribution during 2020 from BioGlue^® in China, PerClot^® in the U.S., or TMR handpieces.

Non-GAAP earnings per share for 2020 are expected to be between $0.15 and $0.17. Non-GAAP earnings per share reflect approximately $0.12 per share in planned incremental investment in the Company’s pipeline, an estimated $0.06 per share additional investment in our Asia Pacific and Latin American infrastructure, and approximately $0.05 per share in planned incremental spending related to new product launches.

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 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 and integration expenses, rebranding expenses, amortization expense, inventory basis step-up expense, loss on foreign currency revaluation, and stock-based compensation expense. The Company believes that these non-GAAP presentations provide useful information to investors regarding unusual non-operating items; 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, February 13, 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 February 20, 2020 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415. The Conference ID for the replay is 13698400.

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 revenue and non-GAAP earnings per share guidance, including projected exchange rates, our planned incremental investment in our pipeline and in our Asia Pacific and Latin American infrastructure, and planned incremental spending related to new product launches; and our beliefs regarding the anticipated approval of Evita Open NEO in the first quarter of 2020, that we will continue to increase JOTEC and vascular tissue supply and that the full launches in the EU of three of our next-generation JOTEC products, and NEXUS, and commencement of the PROACT Xa trial position us well to deliver high single digit growth over the next several years. 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, 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 - Unaudited (In thousands, except per share data)


	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
Revenues:
Products	$	50,193	$	49,331	$	197,246	$	187,394
Preservation services		19,504		18,468		78,976		75,447
Total revenues		69,697		67,799		276,222		262,841

Cost of products and preservation services:
Products		14,001		13,606		55,022		53,772
Preservation services		9,144		9,002		38,187		36,085
Total cost of products and preservation services		23,145		22,608		93,209		89,857

Gross margin		46,552		45,191		183,013		172,984

Operating expenses:
General, administrative, and marketing		37,609		35,628		143,011		140,574
Research and development		5,312		6,784		22,960		23,098
Total operating expenses		42,921		42,412		165,971		163,672

Operating income		3,631		2,779		17,042		9,312

Interest expense		3,626		3,925		14,886		15,788
Interest income		(130)		(85)		(738)		(226)
Other (income) expense, net		(1,412)		398		1,250		141

Income (loss) before income taxes		1,547		(1,459)		1,644		(6,391)
Income tax expense (benefit)		2,228		(683)		(76)		(3,551)

Net (loss) income	$	(681)	$	(776)	$	1,720	$	(2,840)

(Loss) income per common share:
Basic	$	(0.02)	$	(0.02)	$	0.05	$	(0.08)
Diluted	$	(0.02)	$	(0.02)	$	0.05	$	(0.08)

Weighted-average common shares outstanding:
Basic		37,274		36,652		37,118		36,412
Diluted		37,274		36,652		37,860		36,412

CRYOLIFE, INC. AND SUBSIDIARIES Financial Highlights - Unaudited (In thousands)


	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
Products:
BioGlue	$	17,777	$	17,975	$	68,611	$	66,660
JOTEC		16,038		16,672		64,974		63,341
On-X		13,345		11,337		50,096		44,832
CardioGenesis cardiac laser therapy		1,050		1,703		6,016		6,217
PerClot		981		945		3,795		3,767
PhotoFix		1,002		699		3,754		2,577
Total products		50,193		49,331		197,246		187,394

Preservation services:
Cardiac tissue		10,145		9,023		40,879		35,683
Vascular tissue		9,359		9,445		38,097		39,764
Total preservation services		19,504		18,468		78,976		75,447

Total revenues	$	69,697	$	67,799	$	276,222	$	262,841

Revenues:
U.S.	$	37,005	$	36,528	$	150,553	$	144,651
International		32,692		31,271		125,669		118,190
Total revenues	$	69,697	$	67,799	$	276,222	$	262,841




	December 31,		December 31,
	2019		2018
Cash, cash equivalents, and restricted securities	$	34,294	$	42,236
Total current assets		187,390		179,168
Total assets		605,654		571,091
Total current liabilities		45,195		34,523
Total liabilities		319,958		296,024
Shareholders’ equity		285,696		275,067

CRYOLIFE, INC. AND SUBSIDIARIES Reconciliation of GAAP to Non-GAAP Net Income (Loss) and Diluted Income (Loss) Per Common Share - Unaudited (In thousands, except per share data)


	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
		2019		2018		2019		2018
*GAAP:*
Income (loss) before income taxes	$	1,547	$	(1,459)	$	1,644	$	(6,391)
Income tax expense (benefit)		2,228		(683)		(76)		(3,551)
Net (loss) income	$	(681)	$	(776)	$	1,720	$	(2,840)

Diluted (loss) income per common share:	$	(0.02)	$	(0.02)	$	0.05	$	(0.08)

*Reconciliation of income (loss) before income taxes,*
*GAAP to adjusted net income, non-GAAP*
Income (loss) before income taxes, GAAP	$	1,547	$	(1,459)	$	1,644	$	(6,391)
Adjustments:
Business development and integration expenses		526		1,399		3,088		8,332
Amortization expense		3,054		2,597		10,850		10,792
Gain on On-X escrow settlement		--		--		--		(2,675)
Inventory basis step-up expense		--		--		--		2,805
Adjusted income before income taxes,
non-GAAP		5,127		2,537		15,582		12,863
Income tax expense calculated at a
pro forma tax rate of 25%		1,282		634		3,896		3,216
Adjusted net income, non-GAAP	$	3,845	$	1,903	$	11,686	$	9,647

*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:	$	(0.02)	$	(0.02)	$	0.05	$	(0.08)
Adjustments:
Business development and integration expenses		0.02		0.04		0.08		0.22
Amortization expense		0.08		0.07		0.28		0.29
Gain on On-X escrow settlement		--		--		--		(0.07)
Inventory basis step-up expense		--		--		--		0.07
Tax effect of non-GAAP adjustments		(0.03)		(0.03)		(0.09)		(0.12)
Effect of 25% pro forma tax rate		0.05		(0.01)		(0.01)		(0.05)
Adjusted diluted income per common share,
non-GAAP:	$	0.10	$	0.05	$	0.31	$	0.26

Diluted weighted-average common
shares outstanding		37,914		37,658		37,860		37,437

CRYOLIFE, INC. AND SUBSIDIARIES Reconciliation of GAAP to Non-GAAP Revenues - Unaudited (In thousands, except per share data)


	Three Months Ended					Twelve Months Ended
	December 31,					December 31,
	2019		2018		Growth Rate	2019		2018		Growth Rate
*Reconciliation of total revenues, GAAP to*
*total revenues, non-GAAP:*
Total revenues, GAAP	$	69,697	$	67,799	3%	$	276,222	$	262,841	5%
Impact of changes in currency exchange		--		(933)			--		(4,708)
Total constant currency revenues, non-GAAP	$	69,697	$	66,866	4%	$	276,222	$	258,133	7%

*Reconciliation of total revenues, GAAP to*
*total revenues, non-GAAP:*
Total revenues, GAAP	$	69,697	$	67,799	3%	$	276,222	$	262,841	5%
Impact of changes in currency exchange		--		(933)			--		(4,708)
Less CardioGenesis cardiac laser therapy		(1,050)		(1,703)			(6,016)		(6,217)
Total constant currency revenues excluding CardioGenesis, non-GAAP	$	68,647	$	65,163	5%	$	270,206	$	251,916	7%

*Reconciliation of total JOTEC revenues, GAAP, to*
*total JOTEC revenues, non-GAAP:*
Total JOTEC revenues, GAAP	$	16,038	$	16,672	-4%	$	64,974	$	63,341	3%
Impact of changes in currency exchange		--		(691)			--		(3,471)
Total constant currency JOTEC revenues, non-GAAP	$	16,038	$	15,981	0%	$	64,974	$	59,870	9%

CRYOLIFE, INC. AND SUBSIDIARIES Reconciliation of GAAP to Non-GAAP Adjusted EBITDA - Unaudited (In thousands, except per share data)


	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
*Reconciliation of net (loss) income, GAAP to*
*adjusted EBITDA, non-GAAP:*
Net (loss) income, GAAP	$	(681)	$	(776)	$	1,720	$	(2,840)
Adjustments:
Depreciation and amortization expense		5,060		4,459		18,317		18,095
Income tax expense (benefit)		2,228		(683)		(76)		(3,551)
Interest income		(130)		(85)		(738)		(226)
Interest expense		3,626		3,925		14,886		15,788
Gain on On-X escrow settlement		--		--		--		(2,675)
Inventory basis step-up expense		--		--		--		2,805
Business development and integration expenses		526		1,399		3,088		8,332
(Gain) loss on foreign currency revaluation		(1,437)		437		1,232		2,578
Stock-based compensation expense		2,218		1,641		8,799		6,326
Adjusted EBITDA, non-GAAP	$	11,410	$	10,317	$	47,228	$	44,632

Contacts:

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

View original content to download multimedia:http://www.prnewswire.com/news-releases/cryolife-reports-fourth-quarter-and-full-year-2019-financial-results-301004843.html

SOURCE CryoLife, Inc.

Company Codes: NYSE:CRY

Earnings