ATLANTA, Aug. 6, 2018 /PRNewswire/ — CryoLife, Inc. (NYSE: CRY), a leading cardiac and vascular surgery company focused on aortic disease, announced today its financial results for the second quarter ended June 30, 2018.
Second Quarter and Recent Business Highlights:
- Total revenues increased 43% to $68.5 million in the second quarter of 2018 compared to the second quarter of 2017
- Non-GAAP total revenues increased 12% in the second quarter of 2018 compared to the second quarter of 2017; Non-GAAP total revenues increased 10% on a constant currency basis
- On-X® revenues increased 21% in the second quarter of 2018 compared to the second quarter of 2017
- JOTEC® revenues were $17.2 million in the second quarter of 2018, a 31% increase on a Non-GAAP basis compared to the second quarter of 2017
- Net income was $226,000 or $0.01 per fully diluted common share; Non-GAAP net income was $3.9 million, or $0.10 per fully diluted common share
“We had a very successful second 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 sales force is effectively conveying the attributes of our differentiated products. We expect our business momentum to continue, which has led us to raise our full year revenue guidance. Looking ahead, we have a number of initiatives that can drive substantial future growth. Given our highly experienced leadership team, we are confident we can deliver on our goals and objectives.”
Second Quarter 2018 Financial Results
Revenues for the second quarter of 2018 increased 43% to $68.5 million, compared to $47.8 million for the second quarter of 2017. The increase was primarily driven by $17.2 million in revenues from JOTEC and strong revenue growth from On-X. Non-GAAP total revenues for the second quarter of 2018 increased 12%, compared to the second quarter of 2017, a 10% increase on a constant currency basis.
Net income for the second quarter of 2018 was $226,000, or $0.01 per fully diluted common share, compared to net income of $3.2 million, or $0.09 per fully diluted common share for the second quarter of 2017. Non-GAAP net income for the second quarter of 2018 was $3.9 million, or $0.10 per fully diluted common share, compared to non-GAAP net income of $4.8 million, or $0.14 per fully diluted common share for the second quarter of 2017.
2018 Financial Outlook
The Company is increasing its full-year 2018 total revenues financial guidance, as summarized below, and expects total revenues in the third quarter of 2018 to be between $61.0 million and $63.0 million. Except for total revenues, the Company is reiterating its full year 2018 financial guidance.
|
Previous |
Revised |
|
|
Total Revenues |
$250.0 million – $256.0 million |
$256.0 million – $260.0 million |
|
Gross Margins |
65.5% – 66.5% (includes $3.5 million non-cash charges related to |
same |
|
R&D Expenses |
$23.0 million – $25.0 million |
same |
|
Non-GAAP Tax Rate |
Mid 20% (excludes effect of nondeductible transaction |
same |
|
Non-GAAP EPS |
$0.29 – $0.32 (assumes approximately 37.5 million fully |
same |
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 six-month period in 2017 prior to the closing of the acquisition of JOTEC on December 1, 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, August 7, 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 August 14, 2018 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415. The Conference ID for the replay is 13681499.
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 90 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; our On-X and JOTEC products are continuing to gain momentum as our direct sales force is effectively conveying the attributes of our differentiated products; our expectation that our business momentum will continue; we have a number of internal initiatives that can drive substantial future growth; and given our highly experienced leadership team, we are confident we can deliver on our goals and objectives. 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. These risks and uncertainties also include that our beliefs may be incorrect regarding the benefits of the On-X and JOTEC acquisitions, including that these acquisitions provide us with product portfolios that are technologically and clinically differentiated and offer strong competitive advantages, substantially enhance our growth potential and ability to drive profitable growth, strengthen our direct sales force, significantly accelerate our going direct strategy, increase our cross-selling opportunities, and significantly enhance our R&D capabilities and pipeline; they also include that our projections of markets sizes and revenue growth rates for our four main product lines, clinical trial timelines and clearance or approval times for new products or new indications may be incorrect or may change over time. As with most acquisitions, the successful integration of JOTEC’s business with ours may take longer and prove more costly than expected, and we may experience currently unforeseen difficulties related to the JOTEC products and our combined sales forces’ ability to successfully market them; we may not be able to secure the anticipated financial and operational benefits of the acquisition as soon as anticipated, or at all. We may also inherit unforeseen risks and uncertainties related to JOTEC’s business, particularly if the information received by CryoLife during the due diligence phase of this transaction was incomplete or inaccurate. 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 |
||||||||||||
|
(Unaudited) |
(Unaudited) |
|||||||||||
|
Three Months Ended |
Six Months Ended |
|||||||||||
|
June 30, |
June 30, |
|||||||||||
|
2018 |
2017 |
2018 |
2017 |
|||||||||
|
Revenues: |
||||||||||||
|
Products |
$ |
49,313 |
$ |
30,094 |
$ |
92,911 |
$ |
57,490 |
||||
|
Preservation services |
19,183 |
17,724 |
37,533 |
35,387 |
||||||||
|
Total revenues |
68,496 |
47,818 |
130,444 |
92,877 |
||||||||
|
Cost of products and preservation services: |
||||||||||||
|
Products |
13,550 |
6,959 |
27,707 |
14,976 |
||||||||
|
Preservation services |
9,095 |
7,954 |
17,658 |
15,484 |
||||||||
|
Total cost of products and |
||||||||||||
|
preservation services |
22,645 |
14,913 |
45,365 |
30,460 |
||||||||
|
Gross margin |
45,851 |
32,905 |
85,079 |
62,417 |
||||||||
|
Operating expenses: |
||||||||||||
|
General, administrative, and marketing |
34,727 |
23,389 |
72,075 |
46,260 |
||||||||
|
Research and development |
5,719 |
4,728 |
11,089 |
8,821 |
||||||||
|
Total operating expenses |
40,446 |
28,117 |
83,164 |
55,081 |
||||||||
|
Operating income |
5,405 |
4,788 |
1,915 |
7,336 |
||||||||
|
Interest expense |
4,103 |
834 |
7,759 |
1,635 |
||||||||
|
Interest income |
(30) |
(55) |
(89) |
(95) |
||||||||
|
Other expense (income), net |
1,466 |
(134) |
1,285 |
(91) |
||||||||
|
(Loss) income before income taxes |
(134) |
4,143 |
(7,040) |
5,887 |
||||||||
|
Income tax (benefit) expense |
(360) |
980 |
(3,411) |
501 |
||||||||
|
Net income (loss) |
$ |
226 |
$ |
3,163 |
$ |
(3,629) |
$ |
5,386 |
||||
|
Income (loss) per common share: |
||||||||||||
|
Basic |
$ |
0.01 |
$ |
0.09 |
$ |
(0.10) |
$ |
0.16 |
||||
|
Diluted |
$ |
0.01 |
$ |
0.09 |
$ |
(0.10) |
$ |
0.16 |
||||
|
Weighted-average common shares outstanding: |
||||||||||||
|
Basic |
36,318 |
32,664 |
36,233 |
32,552 |
||||||||
|
Diluted |
37,249 |
33,814 |
36,233 |
33,739 |
||||||||
|
CRYOLIFE, INC. AND SUBSIDIARIES Financial Highlights (In thousands) |
|||||||||||||||||
|
(Unaudited) |
(Unaudited) |
||||||||||||||||
|
Three Months Ended |
Six Months Ended |
||||||||||||||||
|
June 30, |
June 30, |
||||||||||||||||
|
2018 |
2017 |
2018 |
2017 |
||||||||||||||
|
Products: |
|||||||||||||||||
|
BioGlue and BioFoam |
$ |
17,069 |
$ |
16,683 |
$ |
33,039 |
$ |
32,364 |
|||||||||
|
JOTEC |
17,205 |
— |
31,665 |
— |
|||||||||||||
|
On-X |
11,888 |
9,862 |
22,197 |
18,722 |
|||||||||||||
|
CardioGenesis cardiac laser therapy |
1,578 |
2,056 |
2,924 |
3,641 |
|||||||||||||
|
PerClot |
968 |
936 |
1,940 |
1,755 |
|||||||||||||
|
PhotoFix |
605 |
557 |
1,146 |
1,008 |
|||||||||||||
|
Total products |
49,313 |
30,094 |
92,911 |
57,490 |
|||||||||||||
|
Preservation services: |
|||||||||||||||||
|
Cardiac tissue |
9,055 |
8,477 |
17,158 |
15,979 |
|||||||||||||
|
Vascular tissue |
10,128 |
9,247 |
20,375 |
19,408 |
|||||||||||||
|
Total preservation services |
19,183 |
17,724 |
37,533 |
35,387 |
|||||||||||||
|
Total revenues |
$ |
68,496 |
$ |
47,818 |
$ |
130,444 |
$ |
92,877 |
|||||||||
|
Revenues: |
|||||||||||||||||
|
U.S. |
$ |
36,719 |
$ |
34,712 |
$ |
71,607 |
$ |
68,246 |
|||||||||
|
International |
31,777 |
13,106 |
58,837 |
24,631 |
|||||||||||||
|
Total revenues |
$ |
68,496 |
$ |
47,818 |
$ |
130,444 |
$ |
92,877 |
|||||||||
|
(Unaudited) June 30, |
December 31, |
||||
|
2018 |
2017 |
||||
|
Cash, cash equivalents, and restricted securities |
$ |
25,719 |
$ |
40,753 |
|
|
Total current assets |
169,698 |
179,280 |
|||
|
Total assets |
570,448 |
589,693 |
|||
|
Total current liabilities |
34,121 |
42,940 |
|||
|
Total liabilities |
298,961 |
312,635 |
|||
|
Shareholders’ equity |
271,487 |
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 |
Six Months Ended |
||||||||||
|
June 30, |
June 30, |
||||||||||
|
2018 |
2017 |
2018 |
2017 |
||||||||
|
GAAP: |
|||||||||||
|
(Loss) income before income taxes |
$ |
(134) |
$ |
4,143 |
$ |
(7,040) |
$ |
5,887 |
|||
|
Income tax (benefit) expense |
(360) |
980 |
(3,411) |
501 |
|||||||
|
Net income (loss) |
$ |
226 |
$ |
3,163 |
$ |
(3,629) |
$ |
5,386 |
|||
|
Diluted income (loss) per common share: |
$ |
0.01 |
$ |
0.09 |
$ |
(0.10) |
$ |
0.16 |
|||
|
Diluted weighted-average common |
|||||||||||
|
shares outstanding |
37,249 |
33,814 |
36,233 |
33,739 |
|||||||
|
Reconciliation of (loss) income before income |
|||||||||||
|
taxes, GAAP to adjusted net income, non-GAAP: |
|||||||||||
|
(Loss) income before income taxes, GAAP |
$ |
(134) |
$ |
4,143 |
$ |
(7,040) |
$ |
5,887 |
|||
|
Adjustments: |
|||||||||||
|
Business development and integration expenses |
1,294 |
1,094 |
5,016 |
1,382 |
|||||||
|
Amortization expense |
2,753 |
1,141 |
5,488 |
2,283 |
|||||||
|
Inventory basis step-up expense |
1,273 |
63 |
2,743 |
2,112 |
|||||||
|
Adjusted income before income taxes, |
|||||||||||
|
non-GAAP |
5,150 |
6,441 |
6,207 |
11,664 |
|||||||
|
Income tax expense calculated at 25% pro forma |
|||||||||||
|
tax rate |
1,288 |
1,610 |
1,552 |
2,916 |
|||||||
|
Adjusted net income, non-GAAP |
$ |
3,862 |
$ |
4,831 |
$ |
4,655 |
$ |
8,748 |
|||
|
Reconciliation of diluted income (loss) per |
|||||||||||
|
common share, GAAP to adjusted diluted |
|||||||||||
|
Diluted income (loss) per common share, GAAP: |
$ |
0.01 |
$ |
0.09 |
$ |
(0.10) |
$ |
0.16 |
|||
|
Adjustments: |
|||||||||||
|
Business development and integration expenses |
0.03 |
0.03 |
0.13 |
0.04 |
|||||||
|
Amortization expense |
0.07 |
0.03 |
0.14 |
0.06 |
|||||||
|
Inventory basis step-up expense |
0.03 |
— |
0.07 |
0.06 |
|||||||
|
Tax effect of non-GAAP adjustments |
(0.03) |
(0.01) |
(0.08) |
(0.04) |
|||||||
|
Effect of 25% pro forma tax rate |
(0.01) |
— |
(0.04) |
(0.03) |
|||||||
|
Adjusted diluted income per common share, |
|||||||||||
|
non-GAAP: |
$ |
0.10 |
$ |
0.14 |
$ |
0.12 |
$ |
0.25 |
|||
|
Diluted weighted-average common |
|||||||||||
|
shares outstanding |
37,249 |
33,814 |
37,152 |
33,739 |
|||||||
|
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 |
Six Months Ended |
||||||||||||
|
June 30, |
June 30, |
||||||||||||
|
2018 |
2017 |
Growth |
2018 |
2017 |
Growth |
||||||||
|
Reconciliation of total revenues, GAAP |
|||||||||||||
|
to total revenues, non-GAAP: |
|||||||||||||
|
Total revenues, GAAP |
$ |
68,496 |
$ |
47,818 |
43% |
$ |
130,444 |
$ |
92,877 |
40% |
|||
|
Plus: JOTEC pre-acquisition |
— |
13,094 |
— |
25,101 |
|||||||||
|
Total revenues, non-GAAP |
$ |
68,496 |
$ |
60,912 |
12% |
$ |
130,444 |
$ |
117,978 |
11% |
|||
|
Impact of changes in currency exchange |
— |
1,639 |
— |
3,827 |
|||||||||
|
Total constant currency |
$ |
68,496 |
$ |
62,551 |
10% |
$ |
130,444 |
$ |
121,805 |
7% |
|||
|
(Unaudited) |
(Unaudited) |
||||||||||||
|
Three Months Ended |
Six Months Ended |
||||||||||||
|
June 30, |
June 30, |
||||||||||||
|
2018 |
2017 |
2018 |
2017 |
||||||||||
|
Reconciliation of gross margin %, |
|||||||||||||
|
GAAP to gross margin %, |
|||||||||||||
|
non-GAAP: |
|||||||||||||
|
Total revenues, GAAP |
$ |
68,496 |
$ |
47,818 |
$ |
130,444 |
$ |
92,877 |
|||||
|
Gross margin, GAAP |
$ |
45,851 |
$ |
32,905 |
$ |
85,079 |
$ |
62,417 |
|||||
|
Gross margin %, GAAP |
67% |
69% |
65% |
67% |
|||||||||
|
Gross margin, GAAP |
$ |
45,851 |
$ |
32,905 |
$ |
85,079 |
$ |
62,417 |
|||||
|
Plus: Inventory basis step- up |
|||||||||||||
|
expense |
1,237 |
63 |
2,743 |
2,112 |
|||||||||
|
Gross margin, non-GAAP |
$ |
47,088 |
$ |
32,968 |
$ |
87,822 |
$ |
64,529 |
|||||
|
Gross margin %, non-GAAP |
69% |
69% |
67% |
69% |
|||||||||
|
(Unaudited) |
(Unaudited) |
||||||||||||
|
Three Months Ended |
Six Months Ended |
||||||||||||
|
June 30, |
June 30, |
||||||||||||
|
2018 |
2017 |
2018 |
2017 |
||||||||||
|
Reconciliation of general, |
|||||||||||||
|
administrative, and marketing, |
|||||||||||||
|
GAAP to general, administrative, |
|||||||||||||
|
and marketing, non-GAAP |
|||||||||||||
|
General, administrative, and marketing, |
|||||||||||||
|
GAAP |
$ |
34,727 |
$ |
23,389 |
$ |
72,075 |
$ |
46,260 |
|||||
|
Less: Business development and |
|||||||||||||
|
integration expenses |
(1,294) |
(1,094) |
(5,016) |
(1,382) |
|||||||||
|
General, administrative, and |
|||||||||||||
|
marketing, non-GAAP |
$ |
33,433 |
$ |
22,295 |
$ |
67,059 |
$ |
44,878 |
|||||
|
CRYOLIFE, INC. AND SUBSIDIARIES Reconciliation of GAAP to Non-GAAP Net Income (Loss) to Adjusted EBITDA (In thousands) |
||||||||||||
|
(Unaudited) |
(Unaudited) |
|||||||||||
|
Three Months Ended |
Six Months Ended |
|||||||||||
|
June 30, |
June 30, |
|||||||||||
|
2018 |
2017 |
2018 |
2017 |
|||||||||
|
Reconciliation of net income (loss), |
||||||||||||
|
GAAP to adjusted EBITDA, |
||||||||||||
|
Net income (loss), GAAP |
$ |
226 |
$ |
3,163 |
$ |
(3,629) |
$ |
5,386 |
||||
|
Adjustments: |
||||||||||||
|
Depreciation and amortization expense |
4,730 |
2,184 |
9,106 |
4,352 |
||||||||
|
Income tax (benefit) expense |
(360) |
980 |
(3,411) |
501 |
||||||||
|
Interest income |
(30) |
(55) |
(89) |
(95) |
||||||||
|
Interest expense |
4,103 |
834 |
7,759 |
1,635 |
||||||||
|
Loss (gain) on foreign currency |
1,477 |
45 |
1,458 |
(99) |
||||||||
|
Inventory basis step-up expense |
1,237 |
63 |
2,743 |
2,112 |
||||||||
|
Business development and integration |
1,294 |
1,094 |
5,016 |
1,382 |
||||||||
|
Stock-based compensation expense |
1,872 |
2,001 |
3,120 |
3,796 |
||||||||
|
Adjusted EBITDA, non-GAAP |
$ |
14,549 |
$ |
10,309 |
$ |
22,073 |
$ |
18,970 |
||||
Contacts:
|
CryoLife |
Gilmartin Group LLC |
SOURCE CryoLife, Inc.
