CryoLife Reports Fourth Quarter and Full Year 2020 Financial Results

February 11, 2021 |

14 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, 2020.

ATLANTA, Feb. 11, 2021 /PRNewswire/ --

Fourth Quarter and Recent Business Highlights:

Achieved total revenues of $67.9 million in the fourth quarter 2020 versus $69.7 million in the fourth quarter of 2019
- Total revenues decreased 3% on a GAAP basis and 5% on a non-GAAP proforma constant currency basis versus fourth quarter 2019
- Excluding TMR, fourth quarter revenues decreased 2% on a non-GAAP proforma basis and 3% on a non-GAAP proforma constant currency basis versus fourth quarter 2019
Achieved net loss of ($3.5) million, or ($0.09) per share
Achieved non-GAAP net income of $7.9 million, or $0.20 per share

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, 2020.

“Despite the ongoing impact of COVID-19 on our business, we were able to generate solid quarterly results and advance our key operational goals. We completed the integration of Ascyrus, launched our newest JOTEC products, and made good progress on enrollment in our PROACT Xa clinical trial,” commented Pat Mackin, Chairman, President, and Chief Executive Officer. “Additionally, our manufacturing facilities continued to run at near capacity and our supply chain remains largely intact. We also continued to invest in our commercial channels and R&D programs related to products that we believe will deliver revenue in 2021 and 2022, including our regulatory approvals for U.S. PerClot, BioGlue China and PROACT Mitral. We also progressed in our efforts to obtain regulatory approval for Ascyrus in the US and other countries. These fundamental drivers, combined with declining COVID-19 infection rates and accelerating vaccination programs in various regions around the world, make us optimistic that the second half of 2021 should be the start of a prolonged period of growth for CryoLife.”

Fourth Quarter 2020 Financial Results
Total revenues for the fourth quarter of 2020 were $67.9 million, reflecting a decrease of 3% on a GAAP basis and a decrease of 5% on a non-GAAP proforma constant currency basis, both compared to the fourth 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 fourth quarter of 2020 was $(3.5) million, or $(0.09) per fully diluted common share, compared to net loss of ($0.7) million, or ($0.02) per fully diluted common share for the fourth quarter of 2019. Non-GAAP net income for the fourth quarter of 2020 was $7.9 million, or $0.20 per fully diluted common share, compared to non-GAAP net income of $4.2 million, or $0.11 per fully diluted common share for the fourth quarter of 2019. Loss for the fourth quarter of 2020 includes pretax expense of $4.8 million of business development costs primarily related to the Ascyrus acquisition, partially offset by pretax benefit of $1.2 million resulting from a change in the Company’s paid time off policy and a non-cash pretax benefit of $3.0 million related to the reversal of performance-based stock compensation because financial targets were not met due to the impact of COVID-19.

Full Year 2020 Financial Results
Total revenues for 2020 were $253.2 million, reflecting a decrease of 8% on both a GAAP and non-GAAP proforma constant currency basis, both compared to the full year 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 2020 was ($16.7) million, or ($0.44) per fully diluted common share, compared to net income of $1.7 million, or $0.05 per fully diluted common share for the full year of 2019. Non-GAAP net income for the full year of 2020 was $9.7 million, or $0.25 per fully diluted common share, compared to non-GAAP net income of $12.9 million, or $0.34 per fully diluted common share for the full year of 2019. Loss for the full year of 2020 includes pretax expense of $12.3 million of business development costs primarily related to the Ascyrus and Endospan transactions, partially offset by pretax benefit of $1.2 million resulting from a change in the Company’s paid time off policy and a non-cash pretax benefit of $3.0 million related to the reversal of performance-based stock compensation because financial targets were not met due to the impact of COVID-19.

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. Accordingly, the financial results reported in this earnings release are preliminary pending completion of the audit.

2021 Financial Outlook
Due to continued uncertainties resulting from the COVID-19 global pandemic, the Company is not issuing 2021 financial guidance at this time.

The Company’s financial performance for 2021 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; depreciation and amortization expense; interest income and expense; non-cash interest expense; loss on foreign currency revaluation; stock-based compensation expense; corporate rebranding expense; and income tax expense (benefit). 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, February 11, 2021 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 18, 2021 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415. The Conference ID for the replay is 13715710.

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. Readers are cautioned not to place undue reliance on these foreword-looking statements, which are made as of the date of this press release and reflect the view of management as of the date of this press release. Such forward-looking statements reflect the views of management at the time such statements are made. These statements include our beliefs that, despite the ongoing impact of COVID-19 on our business, we were able to generate solid quarterly results, advance on our key operational goals, and make good progress on enrollment in our PROACT Xa clinical trial; our R&D programs in which we continued to invest in 2020, such as U.S. PerClot, BioGlue China and PROACT Mitral, will deliver revenue in 2021 and 2022, and our fundamental drivers, combined with declining COVID-19 infection rates and accelerating vaccination programs in various regions around the world, starting in the second half of 2021, should lead to a prolonged period of growth for CryoLife. 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 could adversely impact our results. 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, 2020. CryoLife does not assume any obligation, and expressly disclaims any duty to update any of 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)
	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
		2020		2019		2020		2019
Revenues:
Products	$	50,502	$	50,193	$	179,299	$	197,246
Preservation services		17,394		19,504		73,928		78,976
Total revenues		67,896		69,697		253,227		276,222

Cost of products and preservation services:
Products		14,050		14,001		50,128		55,022
Preservation services		9,255		9,144		35,315		38,187
Total cost of products and preservation services		23,305		23,145		85,443		93,209

Gross margin		44,591		46,552		167,784		183,013

Operating expenses:
General, administrative, and marketing		36,103		37,609		141,136		143,011
Research and development		6,574		5,312		24,207		22,960
Total operating expenses		42,677		42,921		165,343		165,971

Operating income		1,914		3,631		2,441		17,042

Interest expense		4,718		3,626		16,698		14,886
Interest income		(36)		(130)		(217)		(738)
Other (income) expense, net		(2,676)		(1,412)		3,134		1,250

(Loss) income before income taxes		(92)		1,547		(17,174)		1,644
Income tax expense (benefit)		3,366		2,228		(492)		(76)

Net (loss) income	$	(3,458)	$	(681)	$	(16,682)	$	1,720

(Loss) income per common share:
Basic	$	(0.09)		(0.02)	$	(0.44)	$	0.05
Diluted	$	(0.09)		(0.02)	$	(0.44)	$	0.05

Weighted-average common shares outstanding:
Basic		38,613		37,274		37,861		37,118
Diluted		38,613		37,274		37,861		37,860

CryoLife, Inc. and Subsidiaries
Financial Highlights
(In thousands)

	Unaudited				Unaudited
	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2020		2019		2020		2019
Products:
BioGlue	$	17,083	$	17,777	$	62,068	$	68,611
Aortic stents and stent grafts		17,731		16,038		61,663		64,974
On-X		13,668		13,345		48,053		50,096
PhotoFix		1,113		1,002		4,169		3,754
PerClot		801		981		2,882		3,795
CardioGenesis cardiac laser therapy		106		1,050		464		6,016
Total products		50,502		50,193		179,299		197,246

Preservation services:
Cardiac tissue		9,135		10,145	$	37,893	$	40,879
Vascular tissue		8,195		9,359		35,852		38,097
NeoPatch		64		--		183		--
Total preservation services		17,394		19,504		73,928		78,976

Total revenues	$	67,896	$	69,697	$	253,227	$	276,222

Revenues:
U.S.	$	35,103	$	37,005	$	138,274	$	150,553
International		32,793		32,692		114,953		125,669
Total revenues	$	67,896	$	69,697	$	253,227	$	276,222

	December 31,		December 31,
	2020		2019
Cash, cash equivalents, and restricted securities	$	61,958	$	34,294
Total current assets		234,589		187,390
Total assets		789,404		605,654
Total current liabilities		60,468		45,195
Total liabilities		460,691		319,958
Shareholders’ equity		328,713		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				Twelve Months Ended
	December 31,				December 31,
		2020		2019		2020		2019
*GAAP:*
(Loss) income before income taxes	$	(92)	$	1,547	$	(17,174)	$	1,644
Income tax expense (benefit)		3,366		2,228		(492)		(76)
Net (loss) income	$	(3,458)	$	(681)	$	(16,682)	$	1,720

Diluted (loss) income per common share:	$	(0.09)	$	(0.02)	$	(0.44)	$	0.05

Diluted weighted-average common
shares outstanding		38,613		37,274		37,861		37,860

*Reconciliation of (loss) income before income taxes,*
*GAAP to adjusted net income, non-GAAP*
(Loss) income before income taxes, GAAP	$	(92)	$	1,547	$	(17,174)	$	1,644
Adjustments:
Business development, integration, and severance expense		4,839		526		12,320		3,088
Amortization expense		4,334		3,054		13,764		10,850
Non-cash interest expense		1,395		406		3,656		1,631
Corporate rebranding expense		15		--		336		--
Adjusted income before income taxes,
non-GAAP		10,491		5,533		12,902		17,213

Income tax expense calculated at a
pro forma tax rate of 25%		2,623		1,383		3,226		4,303
Adjusted net income, non-GAAP	$	7,868	$	4,150	$	9,676	$	12,910

*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:	$	(0.09)	$	(0.02)	$	(0.44)	$	0.05
Adjustments:
Business development, integration, and severance expense		0.12		0.02		0.32		0.28
Amortization expense		0.11		0.08		0.36		0.08
Non-cash interest expense		0.04		0.01		0.09		0.04
Effect of 25% pro forma tax rate		0.09		0.05		0.10		(0.01)
Corporate rebranding expense		--		--		0.01		--
Tax effect of non-GAAP adjustments		(0.07)		(0.03)		(0.19)		(0.10)
Adjusted diluted income per common share,
non-GAAP:	$	0.20	$	0.11	$	0.25	$	0.34

Diluted weighted-average common
shares outstanding		39,100		37,914		38,369		37,860

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					Twelve Months Ended
	December 31,					December 31,
	2020		2019		Growth Rate	2020		2019		Growth Rate
*Reconciliation of total revenues, GAAP to*
*total revenues, non-GAAP:*
Total revenues, GAAP	$	67,896	$	69,697	-3%	$	253,227	$	276,222	-8%
Including AMDS prior to acquisition		--		547			2,088		2,339
Total GAAP revenues including AMDS		67,896		70,244	-3%		255,315		278,561	-8%
Impact of changes in currency exchange		--		1,024			--		(708)
Total constant currency revenues including AMDS, non-GAAP	$	67,896	$	71,268	-5%	$	255,315	$	277,853	-8%

*Reconciliation of total revenues, GAAP to*
*total revenues, non-GAAP:*
Total revenues, GAAP	$	67,896	$	69,697	-3%	$	253,227	$	276,222	-8%
Including AMDS prior to acquisition		--		547			2,088		2,339
Excluding CardioGenesis cardiac laser therapy		(106)		(1,050)			(464)		(6,016)
Total GAAP revenues including AMDS and excluding CardioGenesis		67,790		69,194	-2%		254,851		272,545	-6%
Impact of changes in currency exchange		--		1,024			--		(708)
Total constant currency revenues including AMDS and excluding CardioGenesis, non-GAAP	$	67,790	$	70,218	-3%	$	254,851	$	271,837	-6%

	(Unaudited)				(Unaudited)
	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2020		2019		2020		2019
*Reconciliation of net (loss) income, GAAP to*
*adjusted EBITDA, non-GAAP:*
Net (loss) income, GAAP	$	(3,458)	$	(681)	$	(16,682)	$	1,720
Adjustments:
Depreciation and amortization expense		5,894		5,060		20,712		18,317
Interest expense		4,718		3,626		16,698		14,886
Business development, integration, and severance expense		4,839		526		12,320		3,088
Stock-based compensation expense		(520)		2,218		6,912		8,799
Corporate rebranding expense		15		--		336		--
Interest income		(36)		(130)		(217)		(738)
Income tax expense (benefit)		3,366		2,228		(492)		(76)
(Income) loss on foreign currency revaluation		(2,688)		(1,437)		(1,829)		1,232
Adjusted EBITDA, non-GAAP	$	12,130	$	11,410	$	37,758	$	47,228