Artivion Reports Fourth Quarter and Full Year 2023 Financial Results
Fourth Quarter and Recent Business Highlights:
-- Achieved revenue of $93.7 million in the fourth quarter of 2023 versus
$79.4 million in the fourth quarter of 2022, an increase of 18% on a
GAAP basis and 15% on a non-GAAP constant currency basis
-- Achieved revenue of $354.0 million for the full year of 2023 versus
$313.8 million for the full year of 2022, an increase of 13% on a GAAP
basis and 12% on a non-GAAP constant currency basis
-- Net loss was ($4.0) million or ($0.10) per fully diluted share and
non-GAAP net income was $4.6 million or $0.11 per fully diluted share in
the fourth quarter of 2023
-- Non-GAAP adjusted EBITDA increased 40% to $15.3 million in the fourth
quarter of 2023 compared to $11.0 million in the fourth quarter of 2022.
For the full year adjusted EBITDA increased 29.5% to $53.8 million
-- Generated $11.4 million of free cash flow for the full year of 2023
-- Closed non-dilutive credit agreement for $350.0 million of senior
secured, interest-only, credit facilities with 6-year maturities
-- Completed enrollment of the AMDS PERSEVERE clinical trial and presented
positive results of the full IDE cohort at the STS Annual Meeting
demonstrating a significant reduction of all-cause mortality and primary
major adverse events (MAEs) at 30-days following AMDS implantation
-- Appointed Lance A. Berry as Executive Vice President and Chief Financial
Officer
ATLANTA, Feb. 15, 2024 /PRNewswire/ -- Artivion, Inc. (NYSE: AORT), a leading cardiac and vascular surgery company focused on aortic disease, today announced financial results for the fourth quarter and full year ended December 31, 2023.
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"2023 was a standout year for Artivion as we exceeded our revenue and adjusted EBITDA growth targets and continued to deliver on our mission to enhance our world class, aortic focused company with a highly differentiated product portfolio and global footprint. Revenue growth in the fourth quarter was strong across all four of our product lines and all four geographies, driven by particularly strong performance in On-X with 19% constant currency growth and tissue processing with 18% constant currency growth," said Pat Mackin, Chairman, President, and Chief Executive Officer.
Mr. Mackin added, "In addition to our strong commercial results, we also completed enrollment for our PERSEVERE clinical trial which met every primary endpoint and has set the stage for success with AMDS. Trial data out to 30 days demonstrated a 72% reduction in all-cause mortality and a 52% reduction in the primary composite endpoint of major adverse events, with zero occurrence of distal anastomotic new entry, or DANE, when compared to the current standard of care hemiarch procedure. We continue to work with the FDA toward PMA approval, which we anticipate in the second half of 2025."
Mr. Mackin concluded, "Given our solid financial performance, improved capital structure, ongoing clinical progress and operational achievements in 2023, we enter 2024 with strong momentum and confidence in our ability to deliver profitable growth."
Fourth Quarter 2023 Financial Results
Total revenues for the fourth quarter of 2023 were $93.7 million, an increase of 18% on a GAAP basis and 15% on a non-GAAP constant currency basis, both compared to the fourth quarter of 2022.
Net loss for the fourth quarter of 2023 was ($4.0) million, or ($0.10) per fully diluted common share, compared to net income of $2.2 million, or $0.05 per fully diluted common share for the fourth quarter of 2022. Non-GAAP net income for the fourth quarter of 2023 was $4.6 million, or $0.11 per fully diluted common share, compared to non-GAAP net income of $4.2 million, or $0.10 per fully diluted common share for the fourth quarter of 2022. Non-GAAP net income for the fourth quarter of 2023 includes pretax gains related to foreign currency revaluation of $2.2 million.
Full Year 2023 Financial Results
Total revenues for 2023 were $354.0 million, reflecting an increase of 13% on a GAAP basis and 12% on a non-GAAP constant currency basis compared to the full year of 2022.
Net loss for 2023 was ($30.7) million, or ($0.75) per fully diluted common share, compared to net loss of ($19.2) million, or ($0.48) per fully diluted common share for the full year of 2022. Non-GAAP net income for the full year of 2023 was $8.4 million, or $0.20 per fully diluted common share, compared to non-GAAP net income of $2.1 million, or $0.05 per fully diluted common share for the full year of 2022. Non-GAAP net income for the full year of 2023 includes pretax gains related to foreign currency revaluation of $2.1 million.
2024 Financial Outlook
The Company expects revenues for the full year 2024 to be in the range of $382 to $396 million, representing growth of 8% to 12% compared to 2023 on both an as reported and constant currency basis. At current exchange rates, the company expects negligible year-over-year currency impact to revenue.
Artivion expects non-GAAP adjusted EBITDA, to increase between 26% and 34% for the full year 2024 compared to 2023, resulting in non-GAAP adjusted EBITDA to be in the range of $68 to $72 million in 2024.
The Company's financial performance for 2024 and future periods is subject to the risks identified below.
Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, including non-GAAP revenue, non-GAAP net income, non-GAAP adjusted EBITDA, non-GAAP general, administrative, and marketing expenses, and free cash flows. Investors should consider this non-GAAP information in addition to, and not as a substitute for, financial measures prepared in accordance with US 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 are adjusted for the impact of changes in currency exchange. The Company's non-GAAP net income; non-GAAP adjusted EBITDA; non-GAAP general, administrative, and marketing, and free cash flows results exclude (as applicable) depreciation and amortization expense; interest income and expense; stock-based compensation expense; loss or gain on foreign currency revaluation; income tax expense or benefit; corporate rebranding expense; business development, integration, and severance income or expense; non-cash interest expense; gain from sale of non-financial assets, and abandonment of CardioGenesis cardiac laser therapy business. The Company generally uses non-GAAP financial measures to facilitate management's review of the operational performance of the company and as a basis for strategic planning. Company management 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 impact of recent acquisitions, non-cash expense related to amortization of previously acquired tangible and intangible assets, and any related adjustments to their carrying values. The Company has adjusted for the impact of changes in currency exchange from certain revenues to evaluate comparable product 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. Company management encourages investors to review the Company's consolidated financial statements and publicly filed reports in their entirety, including the reconciliation of GAAP to non-GAAP financial measures.
Webcast and Conference Call Information
The company will hold a teleconference call and live webcast on February 15, 2024, at 4:30 p.m. ET to discuss the results, followed by a question and answer session. To participate in the conference call dial 201-689-8261 a few minutes prior to 4:30 p.m. ET. The teleconference replay will be available approximately one hour following the completion of the event and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415. The conference number for the replay is 13742847.
The live webcast and replay can be accessed by going to the Investors section of the Artivion website at www.Artivion.com and selecting the heading Webcasts & Presentations.
About Artivion, Inc.
Headquartered in suburban Atlanta, Georgia, Artivion, Inc. is a medical device company focused on developing simple, elegant solutions that address cardiac and vascular surgeons' most difficult challenges in treating patients with aortic diseases. Artivion's four major groups of products include: aortic stent grafts, surgical sealants, On-X mechanical heart valves, and implantable cardiac and vascular human tissues. Artivion markets and sells products in more than 100 countries worldwide. For additional information about Artivion, visit our website, www.Artivion.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, but are not limited to, that we are entering 2024 with strong momentum and confidence in our ability to drive profitable growth, given our financial performance in 2023, our improved capital structure, and our on-going clinical progress; we expect revenues for the full year 2024 to be in the range of $382 to $396 million, representing revenue growth of between 8% to 12% compared to 2023, both as reported and on a constant currency basis; expect, at current exchange rates, negligible impact year-over-year to revenue on a constant currency basis; and expect non-GAAP adjusted EBITDA, to increase between 26% and 34% for the full year 2024 compared to 2023, resulting in non-GAAP adjusted EBITDA in the range of $68 to $72 million in 2024. 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 but not limited to the benefits anticipated from the Ascyrus Medical LLC transaction and Endospan agreements and our operational improvements in our tissue business may not be achieved at all or at the levels we anticipate or had originally anticipated; and the benefits anticipated from our clinical trials and regulatory approvals not be achieved or achieved on our anticipated timelines. 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, 2023 and subsequent Quarterly Reports on Form 10-Q and annual reports on Form 10-K. Artivion does not undertake to update its forward-looking statements, whether as a result of new information, future events, or otherwise.
Artivion, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Loss)
In Thousands, Except Per Share Data
(Unaudited)
Three Months Ended Twelve Months Ended
December 31,
December 31,
2023 2022 2023 2022
Revenues:
Products $69,144 $58,627 $261,185 $230,353
Preservation services 24,526 20,771 92,819 83,436
Total revenues 93,670 79,398 354,004 313,789
Cost of products and preservation services:
Products 22,511 18,785 84,595 72,166
Preservation services 10,064 9,725 40,233 39,100
Total cost of products and preservation services 32,575 28,510 124,828 111,266
Gross margin 61,095 50,888 229,176 202,523
Operating expenses:
General, administrative, and marketing 50,278 38,454 208,977 157,443
Research and development 7,645 8,304 28,707 38,879
Total operating expenses 57,923 46,758 237,684 196,322
Gain from sale of non-financial assets - (14,250)
Operating income 3,172 4,130 5,742 6,201
Interest expense 6,244 5,370 25,299 18,224
Interest income (398) (61) (1,077) (147)
Other (income) expense, net (2,083) (4,456) 3,106 3,108
(Loss) income before income taxes (591) 3,277 (21,586) (14,984)
Income tax expense 3,384 1,108 9,104 4,208
Net (loss) income $(3,975) $2,169 $(30,690) $(19,192)
(Loss) income per share:
Basic $(0.10) 0.05 $(0.75) $(0.48)
Diluted $(0.10) $0.05 $(0.75) $(0.48)
Weighted-average common shares outstanding:
Basic 40,898 40,127 40,743 40,032
Diluted 40,898 40,509 40,743 40,032
Net (loss) income $(3,975) $2,169 $(30,690) $(19,192)
Other comprehensive income (loss):
Foreign currency translation adjustments 9,167 23,744 9,599 (11,722)
Comprehensive income (loss) $5,192 $25,913 $(21,091) $(30,914)
Artivion, Inc. and Subsidiaries
Consolidated Balance Sheets
In Thousands, Except Per Share Data
December 31,
2023 2022
ASSETS
Current assets:
Cash and cash equivalents $58,940 $39,351
Trade receivables, net 71,796 61,820
Other receivables 2,342 7,764
Inventories, net 81,976 74,478
Deferred preservation costs, net 49,804 46,371
Prepaid expenses and other 15,810 17,550
Total current assets 280,668 247,334
Goodwill 247,337 243,631
Acquired technology, net 142,593 151,263
Operating lease right-of-use assets, net 43,822 41,859
Property and equipment, net 38,358 38,674
Other intangibles, net 29,638 31,384
Deferred income taxes 1,087 1,314
Other long-term assets 8,894 7,339
Total assets $792,397 $762,798
Artivion, Inc. and Subsidiaries
Consolidated Balance Sheets
In Thousands, Except Per Share Data
December 31,
2023 2022
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $13,318 $12,004
Accrued compensation 18,715 13,810
Accrued expenses 12,732 12,374
Taxes payable 3,840 2,635
Current maturities of operating leases 3,395 3,308
Current portion of long-term debt 1,451 1,608
Accrued procurement fees 1,439 2,111
Current portion of finance lease obligation 582 513
Other 2,390 1,312
Total current liabilities 57,862 49,675
Long-term debt 305,531 306,499
Contingent consideration 63,890 40,400
Non-current maturities of operating leases 43,977 41,257
Deferred income taxes 21,851 24,499
Deferred compensation liability 6,760 5,468
Non-current finance lease obligations 3,405 3,644
Other 7,341 7,027
Total liabilities 510,617 478,469
Commitments and contingencies
Shareholders' equity:
Preferred stock $0.01 par value per share, 5,000 shares authorized, no shares issued -
Common stock $0.01 par value per share, 75,000 shares authorized, 42,569 and 41,830 426 418
shares issued as of December 31, 2023 and 2022, respectively
Additional paid-in capital 355,919 337,385
Retained deficit (47,907) (17,217)
Accumulated other comprehensive loss (12,010) (21,609)
Treasury stock at cost, 1,487 shares as of December 31, 2023 and 2022 (14,648) (14,648)
Total shareholders' equity 281,780 284,329
Total liabilities and shareholders' equity $792,397 $762,798
Artivion, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
In Thousands
Year Ended December 31,
2023 2022
Net cash flows from operating activities:
Net loss $(30,690) $(19,192)
Adjustments to reconcile net loss to net cash from operating activities:
Change in fair value of contingent consideration 23,490 (9,000)
Depreciation and amortization 23,076 22,442
Non-cash compensation 14,422 12,344
Non-cash lease expense 7,354 7,432
Fair value adjustment of long-term loan 5,000
Write-down of inventories and deferred preservation costs 4,785 4,374
Non-cash interest expense 1,858 1,832
Deferred income taxes (1,385) (1,717)
Gain on sale of non-financial assets (14,250)
Other 1,358 2,268
Changes in operating assets and liabilities:
Accounts payable, accrued expenses, and other liabilities 1,682 (1,958)
Prepaid expenses and other assets 535 (2,234)
Receivables (4,050) (13,340)
Inventories and deferred preservation costs (14,360) (8,404)
Net cash flows provided by (used in) operating activities 18,825 (5,153)
Net cash flows from investing activities:
Proceeds from sale of non-financial assets, net 14,250
Payments for Endospan agreement (5,000)
Capital expenditures (7,430) (9,016)
Other (2,322) (1,699)
Net cash flows used in investing activities (502) (10,715)
Net cash flows from financing activities:
Proceeds from exercise of stock options and issuance of common stock 3,955 3,368
Proceeds from financing insurance premiums 3,558
Payment of debt issuance costs (249)
Redemption and repurchase of stock to cover tax withholdings (559) (1,795)
Principal payments on short-term notes payable (2,531)
Repayment of debt (2,772) (2,753)
Other (537) (459)
Net cash flows provided by (used in) financing activities 865 (1,639)
Effect of exchange rate changes on cash and cash equivalents 401 1,848
Increase (decrease) in cash and cash equivalents 19,589 (15,659)
Cash and cash equivalents, beginning of year 39,351 55,010
Cash and cash equivalents, end of year $58,940 $39,351
Artivion, Inc. and Subsidiaries
Financial Highlights
In Thousands
(Unaudited)
Three Months Ended Twelve Months Ended
December 31,
December 31,
2023 2022 2023 2022
Products:
Aortic stent grafts $27,437 $23,739 $107,469 $92,752
On-X 20,182 16,822 74,528 63,904
Surgical sealants 18,513 16,357 68,016 65,379
Other 3,012 1,709 11,172 8,318
Total products 69,144 58,627 261,185 230,353
Preservation services 24,526 20,771 92,819 83,436
Total revenues $93,670 $79,398 $354,004 $313,789
North America 50,062 42,709 187,603 167,542
Europe, the Middle East, and Africa 30,206 25,611 114,814 104,119
Asia Pacific 8,922 7,481 33,577 27,973
Latin America 4,480 3,597 18,010 14,155
Total revenues $93,670 $79,398 $354,004 $313,789
Artivion, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP
Revenues
In Thousands
(Unaudited)
Revenues for the Percent
Three Months Ended
December 31, Change
From Prior
Year
2023 2022
US GAAP US GAAP Exchange Constant Constant
Rate Effect Currency Currency
Products:
Aortic stent grafts $27,437 $23,739 $1,604 $25,343 8 %
Surgical sealants 18,513 16,357 273 16,630 11 %
On-X 20,182 16,822 189 17,011 19 %
Other 3,012 1,709 14 1,723 75 %
Total products 69,144 58,627 2,080 60,707 14 %
Preservation services 24,526 20,771 (7) 20,764 18 %
Total $93,670 $79,398 $2,073 $81,471 15 %
North America 50,062 42,709 (15) 42,694 17 %
Europe, the Middle East, and Africa 30,206 25,611 1,907 27,518 10 %
Asia Pacific 8,922 7,481 6 7,487 19 %
Latin America 4,480 3,597 175 3,772 19 %
Total $93,670 $79,398 $2,073 $81,471 15 %
Revenues for the Percent
Twelve Months Ended
December 31, Change
From Prior
Year
2023 2022
US GAAP US GAAP Exchange Constant Constant
Rate Effect Currency Currency
Products:
Aortic stent grafts $107,469 $92,752 $1,587 $94,339 14 %
Surgical sealants 68,016 $65,379 236 65,615 4 %
On-X 74,528 $63,904 61 63,965 17 %
Other 11,172 $8,318 4 8,322 34 %
Total products 261,185 230,353 1,888 232,241 12 %
Preservation services $92,819 $83,436 (88) 83,348 11 %
Total $354,004 $313,789 $1,800 $315,589 12 %
North America 187,603 167,542 (268) 167,274 12 %
Europe, the Middle East, and Africa 114,814 104,119 1,787 105,906 8 %
Asia Pacific 33,577 27,973 (73) 27,900 20 %
Latin America 18,010 14,155 354 14,509 24 %
Total $354,004 $313,789 $1,800 $315,589 12 %
Artivion, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP
General, Administrative, and Marketing Expense, Adjusted EBITDA, and Free Cash Flows
In Thousands
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2023 2022 2023 2022
Reconciliation of G&A expenses, GAAP to adjusted G&A, non-GAAP:
General, administrative, and marketing expense, GAAP $50,278 $38,454 $208,977 $157,443
Business development, integration, and severance expense (income) 2,531 (3,934) 24,992 (7,750)
Corporate rebranding expense 72 499 355 1,908
Abandonment of CardioGenesis cardiac laser therapy business - 160
Adjusted G&A, non-GAAP $47,675 $41,889 $183,470 $163,285
Three Months Ended Twelve Months Ended
December 31, December 31,
2023 2022 2023 2022
Reconciliation of net (loss) income, GAAP to adjusted EBITDA, non-GAAP:
Net (loss) income, GAAP $(3,975) $2,169 $(30,690) $(19,192)
Adjustments:
Business development, integration, and severance expense (income) 2,425 (2,036) 29,269 (5,852)
Interest expense 6,244 5,370 25,299 18,224
Depreciation and amortization expense 5,816 5,426 23,076 22,442
Stock-based compensation expense 3,956 3,155 14,422 12,344
Income tax expense 3,384 1,108 9,104 4,208
Abandonment of CardioGenesis cardiac laser therapy business 390
Corporate rebranding expense 72 499 355 1,908
Clinical trial termination (income) expense (197) 4,544
Interest income (398) (61) (1,077) (147)
(Gain) loss on foreign currency revaluation (2,192) (4,470) (2,080) 3,085
Gain from sale of non-financial assets (14,250)
Adjusted EBITDA, non-GAAP $15,332 $10,963 $53,818 $41,564
Three Months Ended Twelve Months Ended
December 31, December 31,
2023 2022 2023 2022
Reconciliation of cash flows from operating activities, GAAP to free
cash flows, non-GAAP:
Net cash flows provided by (used in) operating activities $9,299 $(217) $18,825 $(5,153)
Capital expenditures (1,927) (2,092) (7,430) (9,016)
Free cash flows, non-GAAP $7,372 $(2,309) $11,395 $(14,169)
Artivion Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP
Net Income and Diluted Income Per Common Share
In Thousands, Except Per Share Data
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2023 2022 2023 2022
GAAP:
(Loss) income before income taxes $(591) $3,277 $(21,586) $(14,984)
Income tax expense 3,384 1,108 9,104 4,208
Net (loss) income $(3,975) $2,169 $(30,690) $(19,192)
Diluted (loss) income per common share $(0.10) $0.05 $(0.75) $(0.48)
Diluted weighted-average common shares outstanding 40,898 40,509 40,743 40,032
Reconciliation of (loss) income before income taxes, GAAP to
adjusted income, non-GAAP
(Loss) income before income taxes, GAAP: $(591) $3,277 $(21,586) $(14,984)
Adjustments:
Business development, integration, and severance expense (income) 2,425 (2,036) 29,269 (5,852)
Amortization expense 3,745 3,635 15,198 15,310
Non-cash interest expense 467 460 1,858 1,832
Abandonment of CardioGenesis cardiac laser therapy business - 390
Corporate rebranding expense 72 499 355 1,908
Clinical trial termination (income) expense - (197) 4,544
Gain from sale of non-financial assets - (14,250)
Adjusted income before income taxes, non-GAAP 6,118 5,638 11,234 2,758
Income tax expense calculated at a tax rate of 25% 1,529 1,409 2,808 689
Adjusted net income, non-GAAP $4,589 $4,229 $8,426 $2,069
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: $(0.10) $0.05 $(0.75) $(0.48)
Adjustments:
Business development, integration, and severance expense (income) 0.06 (0.05) 0.71 (0.14)
Amortization expense 0.09 0.09 0.37 0.38
Non-cash interest expense 0.01 0.01 0.04 0.04
Abandonment of CardioGenesis cardiac laser therapy business - 0.01
Corporate rebranding expense - 0.02 0.01 0.05
Clinical trial termination (income) expense - (0.01) 0.11
Tax effect of non-GAAP adjustments (0.03) (0.02) (0.20) (0.11)
Gain from sale of non-financial assets - (0.34)
Effect of 25% tax rate 0.08 0.01 0.35 0.20
Adjusted diluted income per common share, non-GAAP $0.11 $0.10 $0.20 $0.05
Reconciliation of diluted weighted-average common shares
outstanding GAAP to diluted weighted-average common
shares outstanding, non-GAAP:
Diluted weighted-average common shares outstanding, GAAP: 40,898 40,509 40,743 40,032
Adjustments:
Effect of dilutive stock options and awards 802 598 464
Diluted weighted-average common shares outstanding, non-GAAP 41,700 40,509 41,341 40,496
Contacts:
Artivion Gilmartin Group LLC
Lance A. Berry Brian Johnston /Laine
Morgan
Executive Vice President & Phone: 332-895-3222
Chief Financial Officer investors@artivion.com
Phone: 770-419-3355
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SOURCE Artivion
