CryoLife Reports Third Quarter 2018 Results
ATLANTA, Oct. 31, 2018 /PRNewswire/ -- CryoLife, Inc. (NYSE: CRY), a leading cardiac and vascular surgery company focused on aortic disease, announced today its financial results for the third quarter ended September 30, 2018.
Third Quarter and Recent Business Highlights:
-- Total revenues increased 47 percent to $64.6 million in the third
quarter of 2018 compared to the third quarter of 2017
-- Non-GAAP total revenues increased 17 percent in the third quarter of
2018 compared to the third quarter of 2017; Non-GAAP total revenues
increased 17 percent on a constant currency basis
-- On-X(®) revenues increased 36 percent in the third quarter of 2018
compared to the third quarter of 2017
-- JOTEC(®) revenues were $15.0 million in the third quarter of 2018, a 32
percent increase on a Non-GAAP basis compared to the third quarter of
2017
-- Net income was $1.6 million or $0.04 per fully diluted common share;
Non-GAAP net income was $3.1 million, or $0.08 per fully diluted common
share
"We had a very successful third quarter which included strong revenue growth, market share gains, new account growth and progress on our clinical and R&D programs," said Pat Mackin, Chairman, President, and Chief Executive Officer. "Our On-X and JOTEC products continue to gain momentum as our direct salesforce is effectively conveying the differentiating attributes of these products. We expect our business momentum to continue and we are therefore updating our full year guidance. Looking ahead, we have many internal initiatives that we believe can drive substantial future growth. Given our highly experienced leadership team, we are confident we can deliver on our goals and objectives for 2018."
Third Quarter 2018 Financial Results
Total revenues for the third quarter of 2018 increased 47 percent to $64.6 million, compared to $44.0 million for the third quarter of 2017. The increase was primarily driven by $15.0 million in revenues from JOTEC and strong revenue growth from On-X and tissue processing. Non-GAAP total revenues for the third quarter of 2018 increased 17 percent, compared to the third quarter of 2017, a 17 percent increase on a constant currency basis.
Net income for the third quarter of 2018 was $1.6 million, or $0.04 per fully diluted common share, compared to net income of $1.3 million, or $0.04 per fully diluted common share for the third quarter of 2017. Non-GAAP net income for the third quarter of 2018 was $3.1 million, or $0.08 per fully diluted common share, compared to non-GAAP net income of $3.1 million, or $0.09 per fully diluted common share for the third quarter of 2017.
2018 Financial Outlook
The Company is updating its full-year 2018 financial guidance, as summarized below, and expects total revenues in the fourth quarter of 2018 to be between $66.5 million and $67.5 million.
Previous
Revised
Total
Revenues
$256.0 million - $260.0 million
$261.5 million - $262.5 million
---
Gross
Margins 65.5% - 66.5% 65.5% - 66.5%
(includes $3.5 million non-cash (includes $2.8 million non-cash
charges related to acquired JOTEC charges related to acquired JOTEC
inventory and distributor inventory and distributor
inventory buy backs) inventory buy backs)
---
R&D
Expenses
$23.0 million - $25.0 million
$22.0 million - $23.0 million
---
Non-GAAP
Tax Mid 20%
same
Rate
(excludes effect of nondeductible
transaction costs and the tax
effect of stock compensation
expenses)
---
Non-GAAP
EPS
$0.29 - $0.32
(assumes approximately 37.5 million
fully diluted shares outstanding
and 25% effective tax rate)
$0.30 - $0.33
(assumes approximately 37.5 million
fully diluted shares outstanding
and 25% effective tax rate)
---
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 2018 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 revenues include JOTEC revenues for the same nine-month period in 2017 prior to the closing of the acquisition of JOTEC on December 1, 2017. The Company did not own JOTEC during the nine-month period ended September 30, 2017, so the Company is unable to report its GAAP revenue growth for the nine-month period ended September 30, 2018 compared to the same period in 2017. The Company's other non-GAAP results exclude (as applicable) business development and integration expenses, amortization expense, and inventory basis step-up expense. The Company believes that these non-GAAP presentations provide 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 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. 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 does, however, expect to incur similar types of expenses 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 tomorrow, November 1, 2018 at 8:30 a.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 November 8, 2018 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415. The Conference ID for the replay is 13684106.
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 forecasted revenues, gross margins, R&D expenses, non-GAAP income tax rate and non-GAAP earnings per share; and our beliefs that our On-X and JOTEC products continue to gain momentum as our direct salesforce is effectively conveying the differentiating attributes of these products, that we expect our business momentum to continue, that we have many internal initiatives that we believe can drive substantial future growth and that we are confident we can deliver on our goals and objectives for 2018. 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, 2017. 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
(In thousands, except per share data)
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
---
Revenues:
Products $
45,152 $
27,029 $
138,063 $
84,519
Preservation services 19,446 16,970 56,979 52,357
Total revenues 64,598 43,999 195,042 136,876
Cost of products and preservation
services:
Products 12,459 6,220 40,166 21,196
Preservation services 9,425 7,917 27,083 23,401
Total cost of products and
preservation services 21,884 14,137 67,249 44,597
Gross margin 42,714 29,862 127,793 92,279
Operating expenses:
General, administrative, and marketing 32,871 24,756 104,946 71,016
Research and development 5,225 4,277 16,314 13,098
Total operating expenses 38,096 29,033 121,260 84,114
Operating income 4,618 829 6,533 8,165
4,104 851 11,863 2,486
Interest expense
Interest income (52) (64) (141) (159)
Other (income) expense, net (1,542) 21 (257) (70)
Income (loss) before income taxes 2,108 21 (4,932) 5,908
Income tax expense (benefit) 543 (1,304) (2,868) (803)
Net income (loss) $
1,565 $
1,325 $
(2,064) $
6,711
===
Income (loss) per common share:
Basic $
0.04 $
0.04 $
(0.06) $
0.20
===
Diluted $
0.04 $
0.04 $
(0.06) $
0.19
===
Weighted-average common shares
outstanding:
Basic 36,526 32,887 36,331 32,665
Diluted 37,610 34,057 36,331 33,851
CRYOLIFE, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands)
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Products:
BioGlue and BioFoam $
15,646 $
15,730 $
48,685 $
48,094
JOTEC 15,004 46,669
On-X 11,298 8,326 33,495 27,048
CardioGenesis cardiac laser therapy 1,590 1,489 4,514 5,130
PerClot 882 886 2,822 2,641
PhotoFix 732 598 1,878 1,606
Total products 45,152 27,029 138,063 84,519
Preservation services:
Cardiac tissue 9,502 7,932 26,660 23,911
Vascular tissue 9,944 9,038 30,319 28,446
Total preservation services 19,446 16,970 56,979 52,357
Total revenues $
64,598 $
43,999 $
195,042 $
136,876
Revenues:
U.S. $
36,516 $
32,208 $
108,123 $
100,454
International 28,082 11,791 86,919 36,422
Total revenues $
64,598 $
43,999 $
195,042 $
136,876
(Unaudited) December 31,
September 30,
2018 2017
Cash, cash equivalents, and restricted securities $
35,311 $
40,753
Total current assets 173,952 179,280
Total assets 569,695 589,693
Total current liabilities 30,749 42,940
Total liabilities 292,888 312,635
Shareholders' equity 276,807 277,058
CRYOLIFE, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP
Net Income (Loss) and Diluted Income (Loss) per Common Share
(In thousands, except per share data)
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---
2018 2017 2018 2017
---
GAAP:
Income (loss) before income taxes $
2,108 $
21 $
(4,932) $
5,908
Income tax expense (benefit) 543 (1,304) (2,868) (803)
Net income (loss) $
1,565 $
1,325 $
(2,064) $
6,711
===
Diluted income (loss) per common share: $
0.04 $
0.04 $
(0.06) $
0.19
===
Diluted weighted-average common
shares outstanding 37,610 34,057 36,331 33,851
Reconciliation of income (loss) before income
taxes, GAAP to adjusted net income,
non-GAAP:
Income (loss) before income taxes, GAAP $
2,108 $
21 $
(4,932) $
5,908
Adjustments:
Business development and integration expenses 1,917 2,998 6,933 4,380
Amortization expense 2,707 1,140 8,195 3,423
Gain on On-X escrow settlement (2,675) (2,675)
Inventory basis step-up expense 62 32 2,805 2,144
Adjusted income before income taxes,
non-GAAP 4,119 4,191 10,326 15,855
Income tax expense calculated at 25% pro forma
tax rate 1,030 1,048 2,582 3,964
Adjusted net income, non-GAAP $
3,089 $
3,143 $
7,744 $
11,891
Reconciliation of diluted income (loss) per
common share, GAAP to adjusted diluted
income per common share, non-GAAP:
Diluted income (loss) per common share, GAAP: $
0.04 $
0.04 $
(0.06) $
0.19
Adjustments:
Amortization expense 0.08 0.04 0.22 0.10
Business development and integration expenses 0.05 0.09 0.19 0.13
Gain on On-X escrow settlement (0.07) (0.07)
Inventory basis step-up expense 0.07 0.06
Tax effect of non-GAAP adjustments (0.02) (0.04) (0.10) (0.07)
Effect of 25% pro forma tax rate (0.04) (0.04) (0.07)
Adjusted diluted income per common share,
non-GAAP: $
0.08 $
0.09 $
0.21 $
0.34
Diluted weighted-average common
shares outstanding 37,610 34,057 37,351 33,851
CRYOLIFE, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP
Revenues; Gross Margin; General, Administrative, and Marketing
(In thousands, except per share data)
(Unaudited)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
---
2018 2017 Growth 2018 2017 Growth
Rate Rate
---
Reconciliation of total revenues, GAAP
to total revenues, non-GAAP:
Total revenues, GAAP $
64,598 $
43,999 47% $
195,042 $
136,876 42%
Plus: JOTEC pre-acquisition
revenues 11,339 36,439
Total revenues, non-GAAP $
64,598 $
55,338 17% $
195,042 $
173,315 13%
Impact of changes in currency exchange (203) 3,625
Total constant currency $
64,598 $
55,135 17% $
195,042 $
176,940 10%
revenues, non-GAAP
(Unaudited)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Reconciliation of gross margin %,
GAAP to gross margin %,
non-GAAP:
Total revenues, GAAP $
64,598 $
43,999 $
195,042 $
136,876
Gross margin, GAAP $
42,714 $
29,862 $
127,793 $
92,279
Gross margin %, GAAP 66% 68% 66% 67%
Gross margin, GAAP $
42,714 $
29,862 $
127,793 $
92,279
Plus: Inventory basis step- up
expense 62 32 2,805 2,144
Gross margin, non-GAAP $
42,776 $
29,894 $
130,598 $
94,423
Gross margin %, non-GAAP 66% 68% 67% 69%
(Unaudited)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Reconciliation of general,
administrative, and marketing,
GAAP to general, administrative,
and marketing, non-GAAP:
General, administrative, and marketing,
GAAP $
32,871 $
24,756 $
104,946 $
71,016
Less: Business development and
integration expenses (1,917) (2,998) (6,933) (4,380)
General, administrative, and
marketing, non-GAAP $
30,954 $
21,758 $
98,013 $
66,636
CRYOLIFE, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP
Net Income (Loss) to Adjusted EBITDA
(In thousands)
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Reconciliation of net income (loss),
GAAP to adjusted EBITDA,
non-GAAP:
Net income (loss), GAAP $
1,565 $
1,325 $
(2,064) $
6,711
Adjustments:
Interest income (52) (64) (141) (159)
Interest expense 4,104 851 11,863 2,486
Income tax expense (benefit) 543 (1,304) (2,868) (803)
Depreciation and amortization expense 4,530 2,331 13,636 6,683
Loss (gain) on foreign currency 683 21 2,141 (78)
revaluation
Business development and integration 1,917 2,998 6,933 4,380
expenses
Gain on On-X escrow settlement (2,675) (2,675)
Inventory basis step-up expense 62 32 2,805 2,144
Stock-based compensation expense 1,565 1,856 4,685 5,652
Adjusted EBITDA, non-GAAP $
12,242 $
8,046 $
34,315 $
27,016
Contacts:
CryoLife
Gilmartin Group LLC
D. Ashley Lee
Greg Chodaczek / Lynn Lewis
Executive Vice President,
Chief Financial Officer
Phone: 646-924-1769
and Chief Operating Officer
investors@cryolife.com
Phone: 770-419-3355
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SOURCE CryoLife, Inc.
