CryoLife Reports Second Quarter Financial Results

Recent Highlights:

- Received Expanded Indication for BioGlue® in Japan

- Announced Plans to Transition to Direct Sales Model in France

Jul 28, 2015, 08:04 ET from CryoLife, Inc.

ATLANTA, July 28, 2015 /PRNewswire/ -- CryoLife, Inc. (NYSE: CRY), a leading medical device and tissue processing company focused on cardiac and vascular surgery, announced today its results for the second quarter and first six months of 2015. 

Pat Mackin, Chairman, President and Chief Executive Officer, said, "During the quarter we continued to execute on our growth strategy with solid progress on several of our top organizational objectives.  In June, we announced plans to transition to a direct sales model in France, advancing our strategic presence in international markets.  Earlier this month, we received an expanded indication for BioGlue in Japan, which doubled our market opportunity and is consistent with our strategy to gain new indications for our product portfolio."

Revenues for the second quarter of 2015 increased 2 percent to $35.5 million, compared to $34.7 million for the second quarter of 2014.  Product revenues were $19.9 million for the second quarter of 2015, down slightly from $20.4 million in the second quarter of 2014.  This reflects a year-over-year increase in HeRO® Graft revenues and the recent launches of ProCol® and PhotoFix™, offset by decreases in CardioGenesis® cardiac laser therapy, BioGlue, and PerClot® revenues.  The change in product revenues was primarily due to changes in distribution models and the strengthening U.S. dollar.  Tissue processing revenues were $15.6 million for the second quarter of 2015, up 9 percent compared to $14.3 million for the second quarter of 2014, driven primarily by an increase in average service fees. 

Revenues for the first six months of 2015 decreased 2 percent to $69.4 million, compared to $70.4 million for the first six months of 2014.  Product revenues were $39.3 million for the first six months of 2015, down slightly from $39.8 million in the first six months of 2014.  Product revenues reflect recent launches of ProCol and PhotoFix, and the year-over-year increases in CardioGenesis cardiac laser therapy and HeRO Graft revenues, offset by decreases in BioGlue and PerClot revenues due to changes in distribution models and the strengthening U.S. dollar.  Tissue processing revenues were $30.0 million for the first six months of 2015, down slightly compared to $30.6 million for the first six months of 2014. 

Net loss for the second quarter of 2015 was ($502,000), or ($0.02) per basic and fully diluted common share, compared to net income of $2.2 million, or $0.08 per basic and  fully diluted common share, for the second quarter of 2014.  Excluding certain items as shown in the schedules below, proforma non-GAAP fully diluted earnings per share was $0.03 in the second quarter of 2015, compared to $0.05 in the second quarter of 2014. 

Net loss for the first six months of 2015 was ($776,000), or ($0.03) per basic and fully diluted common share, compared to net income of $3.2 million, or $0.12 per basic and $0.11 per fully diluted common share, for the first six months of 2014.  Excluding certain items as shown in the schedules below, proforma non-GAAP fully diluted earnings per share was $0.03 in the first half of 2015, as compared to $0.09 in the first half of 2014.

The Company's updated 2015 financial guidance is summarized below.  The guidance does not include any effect related to future business development activities.

2015 Financial Guidance Summary

Previous

Current

Total revenues

 

$148.5 million – $150.5 million

3% – 4% increase

$148.5 million – $150.5 million

3% – 4% increase

Product revenues

 

Mid-single digits % increase

 

Low-single digits % increase

 

Tissue processing revenues

 

Low-single digits % increase

 

Low-single digits % increase

 

Gross margins

 

Approximately 60%

 

Approximately 60%

 

R&D expenses

 

$13.0 million - $14.0 million

 

$13.0 million - $14.0 million

 

Earnings per share

Breakeven

 

Breakeven

 

The Company's financial guidance for the full year of fiscal 2015 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. Mackin.

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 July 28 through August 4 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415.  The conference number for the replay is 13614274.

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.

Headquartered in suburban Atlanta, Georgia, CryoLife is a leader in the manufacturing, processing, and distribution of implantable living tissues and medical devices used in cardiac and vascular surgical procedures.  CryoLife markets and sells products in more than 75 countries worldwide.  For additional information about CryoLife, visit our website, www.cryolife.com.

Statements made in this press release and during the accompanying earnings webcast 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 and are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from current expectations.  These statements include those regarding: the timing of patient enrollment in our PerClot IDE clinical trial and FDA approval of various indications for PerClot; the timing and effect on our financial performance of implementing improvements in our tissue processing business; our plans, expectations, and the market opportunities for ProCol and PhotoFix; our plans to transition to a direct sales organization in France and our expectations regarding the benefits of that transition; the market opportunity related to the expansion of the indication for BioGlue in Japan; our 2015 effective tax rate; our expectations regarding foreign exchange rates; and our anticipated performance for the remainder of fiscal 2015. The risks and uncertainties affecting these statements include that: our anticipated performance for fiscal 2015 is subject to the general risks associated with our business; there is no guarantee that the FDA will approve the surgical version of PerClot for distribution in the U.S. in accordance with our expected timeframe, or at all; our PerClot clinical trial is subject to a number of execution risks,  and it may ultimately be unsuccessful; there is no guarantee that we will be able to attain the levels of revenue and profitability that we anticipate for PerClot; as part of our patent litigation against Medafor, Inc. regarding PerClot (the "Medafor Litigation"), we have been enjoined from selling, marketing, and distributing PerClot in the U.S.; there is no guarantee that we will ultimately prevail in the Medafor Litigation, and if we do not prevail, we will continue to be prohibited from selling PerClot in the U.S., or we may have to pay substantial royalties to sell PerClot in the U.S., until Medafor's patent expires; the financial benefits expected from our tissue processing improvements could be less than anticipated and may not be realized within the timeframes anticipated; our beliefs regarding the market opportunities for ProCol and PhotoFix may be incorrect, and even if correct, there is no guarantee that we will successfully grow ProCol and PhotoFix sales; we may not complete the transition to a direct sales organization in France, or recognize the anticipated benefits of such transition, within our anticipated timeframe, or at all; the market opportunity for the expanded BioGlue indication in Japan and sales with respect to that indication may begin later and/or be less than anticipated; continued fluctuation of foreign currencies relative to the U.S. dollar could materially, adversely affect our business; and although our guidance does not reflect activities related to ongoing or future business development activities, consummation of material business development transactions during fiscal 2015 could have a significant impact on our business and could cause our actual performance for 2015 to change materially from our current predictions. These risks and uncertainties include the risk factors detailed in our Securities and Exchange Commission filings, including our Form 10-K for the year ended December 31, 2014 and our subsequent filings with the SEC. CryoLife does not undertake to update its forward-looking statements. 

 

CRYOLIFE, INC. AND SUBSIDIARIES

Financial Highlights

(In thousands, except per share data)

Three Months Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Revenues:

Products

$

19,918

$

20,350

$

39,309

$

39,805

Preservation services

15,608

14,340

30,048

30,616

Total revenues

35,526

34,690

69,357

70,421

Cost of products and preservation services:

Products

4,244

4,131

9,277

7,932

Preservation services

9,728

8,175

18,859

17,632

Total cost of products and

preservation services

13,972

12,306

28,136

25,564

Gross margin

21,554

22,384

41,221

44,857

Operating expenses:

General, administrative, and marketing

19,327

17,959

38,296

36,234

Research and development

2,684

2,203

4,936

4,705

Total operating expenses

22,011

20,162

43,232

40,939

Operating (loss) income

(457)

2,222

(2,011)

3,918

Interest expense

30

(16)

60

45

Interest income

(12)

(45)

(15)

(48)

Gain on sale of Medafor investment

(891)

--

(891)

--

Other expense (income), net

250

(111)

442

(210)

Income (loss) before income taxes

166

2,394

(1,607)

4,131

Income tax expense (benefit)

668

233

(831)

911

Net (loss) income

$

(502)

$

2,161

$

(776)

$

3,220

(Loss) Income per common share:

Basic

$

(0.02)

$

0.08

$

(0.03)

$

0.12

Diluted

$

(0.02)

$

0.08

$

(0.03)

$

0.11

Dividends declared per common share

$

0.0300

$

0.0300

$

0.0600

$

0.0575

Weighted-average common shares outstanding:

Basic

27,713

27,502

27,619

27,439

Diluted

27,713

28,317

27,619

28,382

 

CRYOLIFE, INC. AND SUBSIDIARIES

Financial Highlights

(In thousands)

Three Months Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Products:

BioGlue and BioFoam

$

14,519

$

15,389

$

28,561

$

30,629

PerClot

1,036

1,143

2,012

2,059

CardioGenesis cardiac laser therapy

1,943

2,084

4,080

3,768

HeRO Graft

1,744

1,705

3,604

3,320

ProCol

333

29

537

29

PhotoFix

343

--

515

--

          Total products

19,918

20,350

39,309

39,805

Preservation services:

Cardiac tissue

6,889

6,454

13,552

13,644

Vascular tissue

8,719

7,886

16,496

16,972

Total preservation services

15,608

14,340

30,048

30,616

Total revenues

$

35,526

$

34,690

$

69,357

$

70,421

Revenues:

   U.S.

$

27,777

$

26,351

$

54,811

$

53,783

International

7,749

8,339

14,546

16,638

Total revenues

$

35,526

$

34,690

$

69,357

$

70,421

 

June 30,

December 31,

2015

2014

Cash, cash equivalents, and restricted cash and securities

$

40,944

$

39,259

Total current assets

108,632

106,028

Total assets

176,068

176,157

Total current liabilities

19,187

20,627

Total liabilities

26,526

27,472

Shareholders' equity

149,542

148,685

 

CRYOLIFE, INC. AND SUBSIDIARIES

Reconciliation of

Non-GAAP Adjusted Net Income and Adjusted Income per Common Share – Diluted

(In thousands, except per share data)

Three Months Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

GAAP:

Income (loss) before income taxes

$

166

$

2,394

$

(1,607)

$

4,131

Income tax expense (benefit)

668

233

(831)

911

Net (loss) income

$

(502)

$

2,161

$

(776)

$

3,220

Diluted (loss) income per common share:

$

(0.02)

$

0.08

$

(0.03)

$

0.11

Diluted weighted-average common

shares outstanding:

27,713

28,317

27,619

28,382

Reconciliation excluding items:

Income (loss) before income taxes, GAAP

$

166

$

2,394

$

(1,607)

$

4,131

Excluding:

Severance expenses

1,389

--

1,857

--

Business development expenses

857

5

1,063

17

Intangible impairment

--

--

457

--

Gain on sale of Medafor investment

(891)

--

(891)

--

Write-off of PerClot Topical inventory

--

--

498

--

Adjusted income before income taxes,

 non-GAAP

1,521

2,399

1,377

4,148

Income tax expense calculated at a

     proforma tax rate of 38%

578

912

523

1,576

Adjusted net income, non-GAAP

$

943

$

1,487

$

854

$

2,572

Adjusted net income, non-GAAP allocated to

    participating securities – diluted

21

25

50

47

Adjusted net income, non-GAAP

applicable to common shareholders

– diluted

$

922

$

1,462

$

804

$

2,525

Diluted adjusted income per common share,

non-GAAP:

$

0.03

$

0.05

$

0.03

$

0.09

Diluted-weighted average common

shares outstanding, non-GAAP:

28,393

28,317

28,335

28,382

 

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.  Non-GAAP adjusted net income and adjusted income per common share excludes expenses related to the retirement of the Company's former President, CEO, and Executive Chairman, expenses related to business development, expenses related to intangible impairment, the gain on sale of Medafor investment, and the write-off of PerClot inventory related to the injunction from the Medafor Litigation stating that the Company cannot sell PerClot Topical in the U.S. The above non-GAAP items have been calculated using a proforma tax rate of 38% for all periods. The Company believes that this non-GAAP presentation provides useful information to investors regarding unusual non-operating transactions and the operating expense structure of the Company's existing and recently acquired operations, without regard its ongoing efforts to acquire additional complementary products and businesses and the transaction expenses incurred in connection with recently acquired businesses. The Company does, however, expect to incur similar types of expenses in the future, and this non-GAAP financial information should not be viewed as a promise or indication that these types of expenses will not recur.

CryoLife

D. Ashley Lee

Executive Vice President, Chief Financial Officer

and Chief Operating Officer

Phone: 770-419-3355

The Ruth Group

Nick Laudico / Zack Kubow

646-536-7030 / 7020

nlaudico@theruthgroup.com

zkubow@theruthgroup.com

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SOURCE CryoLife, Inc.



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http://www.cryolife.com