CryoLife Reports Fourth Quarter and Full Year 2018 Financial Results

PRNewswire 13-Feb-2019 7:30 PM

ATLANTA, Feb. 13, 2019 /PRNewswire/ --  

Cryolife logo. (PRNewsFoto/CryoLife, Inc.) (PRNewsFoto/CRYOLIFE_ INC_) (PRNewsFoto/CRYOLIFE, INC.)

Fourth Quarter and Recent Business Highlights:

  • Total revenues were $67.8 million in the fourth quarter of 2018, reflecting year over year growth of 28% and an 8% increase on a non-GAAP constant currency basis compared to the fourth quarter of 2017
    • On-X® revenues increased 13% in the fourth quarter of 2018 compared to the fourth quarter of 2017
    • JOTEC® revenues were $16.7 million in the fourth quarter of 2018, an increase of 303% year over year and a 17% increase on a non-GAAP basis compared to the fourth quarter of 2017
  • Total revenues for the full year 2018 were $262.8 million, reflecting year over year growth of 39% and a 10% increase on a non-GAAP constant currency basis compared to full year 2017
  • Net loss was ($1.7) million or ($0.05) per fully diluted common share for the fourth quarter of 2018; Non-GAAP net income was $1.9 million, or $0.05 per fully diluted common share for the fourth quarter of 2018

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, 2018. 

"2018 was a very successful year for CryoLife highlighted by strong revenue growth and progress on our clinical and R&D programs," said Pat Mackin, Chairman, President, and Chief Executive Officer.  "Looking ahead, we remain confident in our ability to deliver high single digit annual revenue growth over each of the next five years driven by our highly differentiated JOTEC and On-X product portfolios and new introductions from our extensive product pipeline."

Fourth Quarter 2018 Financial Results

Total revenues for the fourth quarter of 2018 were $67.8 million, reflecting growth of 28% on a reported basis and 8% on a non-GAAP constant currency basis compared to the fourth quarter of 2017.  The increase was primarily driven by $16.7 million in revenues from JOTEC in the fourth quarter of 2018 compared to $4.1 million in the fourth quarter of 2017 and strong revenue growth from On-X and tissue processing. 

Net loss for the fourth quarter of 2018 was ($1.7) million, or ($0.05) per fully diluted common share, compared to net loss of ($3.0) million, or ($0.09) per fully diluted common share for the fourth quarter of 2017.  Non-GAAP net income for the fourth quarter of 2018 was $1.9 million, or $0.05 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 fourth quarter of 2017.  Earnings reflect higher than anticipated costs in the fourth quarter due to the acceleration of spending on our product pipeline, and increased costs related to international growth.

Full Year 2018 Financial Results

Total revenues for 2018 were $262.8 million, reflecting growth of 39% on a reported basis and 10% on a non-GAAP constant currency basis compared to 2017.  The increase was driven by growth in the On-X and JOTEC product lines as well as the tissue processing business.  For 2018, On-X and JOTEC non-GAAP revenues increased by 21% and 25%, respectively, versus 2017. 

Reported net loss for 2018 was ($3.8) million, or ($0.10) per share compared to net income of $3.7 million or $0.11 per share for 2017.  Non-GAAP net income for 2018 was $9.7 million, or $0.26 a share compared to non-GAAP net income of $16.7 million, or $0.48 per share in 2017.

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, including its evaluation of the effectiveness of internal controls over financial reporting.  Accordingly, the financial results reported in this earnings release are preliminary pending completion of the audit.

2019 Financial Outlook

CryoLife expects total revenues for 2019 to be in the range of $280 million to $284 million and non-GAAP earnings per share of between $0.28 and $0.32.  

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 2019 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 eleven-month period in 2017 prior to the closing of the acquisition of JOTEC on December 1, 2017.  The Company did not own JOTEC until the eleven-month period ended December 1, 2017, so the Company is unable to report its GAAP revenue growth for the twelve-month period ended December 31, 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, February 14, 2019 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 February 20, 2019 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415.  The Conference ID for the replay is 13687369.

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 financial guidance, including our expected total revenues and non-GAAP earnings per share; and our statement that we remain confident in our ability to deliver high single digit annual revenue growth over each of the next five years driven by our highly differentiated JOTEC and On-X product portfolios and new introductions from our extensive product pipeline.  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, 2018.  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 - Unaudited

(In thousands, except per share data)



Three Months Ended


Twelve Months Ended


December 31,


December 31,


2018


2017


2018


2017

Revenues:












Products

$

49,331


$

35,112


$

187,394


$

119,631

Preservation services


18,468



17,714



75,447



70,071

Total revenues


67,799



52,826



262,841



189,702













Cost of products and preservation services:












Products


13,606



8,601



53,772



29,798

Preservation services


9,002



7,862



36,085



31,262

Total cost of products and












preservation services


22,608



16,463



89,857



61,060













Gross margin


45,191



36,363



172,984



128,642













Operating expenses:












General, administrative, and marketing


35,628



30,195



140,574



101,211

Research and development


6,784



6,363



23,098



19,461

Total operating expenses


42,412



36,558



163,672



120,672

Operating income (loss)


2,779



(195)



9,312



7,970













Interest expense


3,925



2,396



15,788



4,881

Interest income


(85)



(53)



(226)



(212)

Other expense (income), net


398



(190)



141



(260)













(Loss) income before income taxes


(1,459)



(2,348)



(6,391)



3,561

Income tax expense (benefit)


282



659



(2,586)



(143)













Net (loss) income

$

(1,741)


$

(3,007)


$

(3,805)


$

3,704













(Loss) income per common share:












Basic

$

(0.05)


$

(0.09)


$

(0.10)


$

0.11

Diluted

$

(0.05)


$

(0.09)


$

(0.10)


$

0.11













Weighted-average common shares outstanding:












Basic


36,652



34,025



36,412



33,008

Diluted


36,652



34,025



36,412



34,163














 

CRYOLIFE, INC. AND SUBSIDIARIES

Financial Highlights - Unaudited

(In thousands)



Three Months Ended


Twelve Months Ended


December 31,


December 31,


2018


2017


2018


2017

Products:












BioGlue and BioFoam

$

17,975


$

17,845


$

66,660


$

65,939

JOTEC


16,672



4,136



63,341



4,136

On-X


11,337



9,993



44,832



37,041

CardioGenesis cardiac laser therapy


1,703



1,736



6,217



6,866

PerClot


945



892



3,767



3,533

PhotoFix


699



510



2,577



2,116

          Total products


49,331



35,112



187,394



119,631













Preservation services:












Cardiac tissue


9,023



8,599



35,683



32,510

Vascular tissue


9,445



9,115



39,764



37,561

Total preservation services


18,468



17,714



75,447



70,071













Total revenues

$

67,799


$

52,826


$

262,841


$

189,702













Revenues:












   U.S.

$

36,528


$

34,648


$

144,651


$

135,102

International


31,271



18,178



118,190



54,600

Total revenues

$

67,799


$

52,826


$

262,841


$

189,702













 

CRYOLIFE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP

Net Income (Loss) and Diluted Income (Loss) per Common Share - Unaudited

(In thousands, except per share data)



Three Months Ended


Twelve Months Ended


December 31,


December 31,


2018


2017


2018


2017

GAAP:












(Loss) income before income taxes

$

(1,459)


$

(2,348)


$

(6,391)


$

3,561

Income tax expense (benefit)


282



659



(2,586)



(143)

Net (loss) income

$

(1,741)


$

(3,007)


$

(3,805)


$

3,704













Diluted (loss) income per common share:

$

(0.05)


$

(0.09)


$

(0.10)


$

0.11













Diluted weighted-average common












shares outstanding


36,652



34,025



36,412



34,163

























Reconciliation of (loss) income before income












taxes, GAAP to adjusted net income, non-GAAP:
























(Loss) income before income taxes, GAAP

$

(1,459)


$

(2,348)


$

(6,391)


$

3,561

Adjustments:












Business development and integration expenses


1,399



6,555



8,332



10,935

Amortization expense


2,597



1,662



10,792



5,085

Gain on On-X escrow settlement


--



--



(2,675)



--

Inventory basis step-up expense


--



584



2,805



2,728

Adjusted income before income taxes,












non-GAAP


2,537



6,453



12,863



22,309













Income tax expense calculated at 25% pro forma












tax rate


634



1,613



3,216



5,577

Adjusted net income, non-GAAP

$

1,903


$

4,840


$

9,647


$

16,732













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:

$

(0.05)


$

(0.09)


$

(0.10)


$

0.11

Adjustments:












Business development and integration expenses


0.04



0.18



0.22



0.31

Amortization expense


0.07



0.05



0.29



0.15

Gain on On-X escrow settlement


--



--



(0.07)



--

Inventory basis step-up expense


--



0.02



0.07



0.08

Tax effect of non-GAAP adjustments


(0.03)



(0.06)



(0.12)



(0.14)

Effect of 25% pro forma tax rate


0.02



0.04



(0.03)



(0.03)

Adjusted diluted income per common share,












 non-GAAP:

$

0.05


$

0.14


$

0.26


$

0.48













Diluted weighted-average common












shares outstanding


37,658



35,090



37,437



34,163













 

CRYOLIFE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP

Revenues and Gross Margin - Unaudited

(In thousands, except per share data)



Three Months Ended


Twelve Months Ended


December 31,


December 31,


2018


2017

Growth

Rate


2018


2017

Growth

Rate

Reconciliation of total revenues, GAAP














to total revenues, non-GAAP:














Total revenues, GAAP

$

67,799


$

52,826

28%


$

262,841


$

189,702

39%

Plus: JOTEC pre-acquisition revenues


--



10,068




--



46,507


Total revenues, non-GAAP

$

67,799


$

62,894

8%


$

262,841


$

236,209

11%

Impact of changes in currency exchange


--



(402)




--



2,757


Total constant currency revenues, non-GAAP

$

67,799


$

62,492

8%


$

262,841


$

238,966

10%
















Three Months Ended



Twelve Months Ended



December 31,



December 31,



2018


2017



2018


2017


Reconciliation of gross margin %,














GAAP to gross margin %,














non-GAAP:














Total revenues, GAAP

$

67,799


$

52,826



$

262,841


$

189,702


Gross margin, GAAP

$

45,191


$

36,363



$

172,984


$

128,642


Gross margin %, GAAP


67%



69%




66%



68%
















Gross margin, GAAP

$

45,191


$

36,363



$

172,984


$

128,642


Plus: Inventory basis step- up














expense


--



584




2,805



2,728


Gross margin, non-GAAP

$

45,191


$

36,947



$

175,789


$

131,370


Gross margin %, non-GAAP


67%



70%




67%



69%
















 

CRYOLIFE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP

Net Income (Loss) to Adjusted EBITDA - Unaudited

(In thousands)



Three Months Ended



Twelve Months Ended



December 31,



December 31,



2018


2017



2018


2017


Reconciliation of net (loss) income,














GAAP to adjusted EBITDA, non-GAAP:














Net (loss) income, GAAP

$

(1,741)


$

(3,007)



$

(3,805)


$

3,704


Adjustments:














Interest income


(85)



(53)




(226)



(212)


Interest expense


3,925



2,396




15,788



4,881


Income tax expense (benefit)


282



659




(2,586)



(143)


Depreciation and amortization expense


4,459



3,050




18,095



9,733


Loss (gain) on foreign currency revaluation


437



(206)




2,578



(284)


Business development and integration expenses


1,399



6,555




8,332



10,935


Gain on On-X escrow settlement


--



--




(2,675)



--


Inventory basis step-up expense


--



584




2,805



2,728


Stock-based compensation expense


1,641



1,256




6,326



6,908


Adjusted EBITDA, non-GAAP

$

10,317


$

11,234



$

44,632


$

38,250
















 

Contacts:




CryoLife       
D. Ashley Lee                                                
Executive Vice President, Chief Financial Officer
and Chief Operating Officer    
Phone: 770-419-3355

Gilmartin Group LLC
Greg Chodaczek / Lynn Lewis
Phone:  646-924-1769
investors@cryolife.com

 

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SOURCE CryoLife, Inc.

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