Full Press Release Details
| Phone: 770-419-3355 | / Lynn Lewis |
| 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 |
CryoLife Reports Fourth Quarter and Full Year 2019 Financial Results
Fourth Quarter and Recent Business Highlights:
ATLANTA, GA (February 13, 2020) 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, 2019.
The fourth quarter was marked by significant progress on our key initiatives, highlighted by European approvals for two next generation JOTEC products, E-nside and E-nya, the approval to commence the PROACT Xa trial to study the use of Eliquis with the On-X Aortic Valve, the initial launch of NEXUS into select European markets, as well as our collaboration with Misonix, said Pat Mackin, Chairman, President, and Chief Executive Officer. Additionally, we anticipate the approval for E-vita OPEN NEO in the first quarter of 2020, and we continue to increase JOTEC and vascular tissue supply. The full launch in 2020 of three next generation JOTEC products and NEXUS, as well as the commencement of the PROACT Xa trial, positions us well to deliver high single-digit revenue growth over the next several years.
Fourth Quarter 2019 Financial Results
Total revenues for the fourth quarter of 2019 were $69.7 million, reflecting growth of 3%, and 4% on a non-GAAP constant currency basis, both compared to the fourth quarter of 2018. The non-GAAP constant currency increase was driven by revenue growth from On-X, tissue processing, and JOTEC, excluding JOTEC OEM.
Net loss for the fourth quarter of 2019 was ($681,000), or ($0.02) per fully diluted common share, compared to a net loss of ($776,000), or ($0.02) per fully diluted common share for the fourth quarter of 2018. Non-GAAP net income for the fourth quarter of 2019 was $3.8 million, or $0.10 per fully diluted common share, compared to non-GAAP net income of $1.9 million, or $0.05 per fully diluted common share for the fourth quarter of 2018.
Full Year 2019 Financial Results
Total revenues for 2019 were $276.2 million, reflecting growth of 5% on a reported basis and 7% on a non-GAAP constant currency basis compared to 2018. The increase was driven by growth in the On-X, BioGlue and JOTEC product lines as well as the tissue processing business. For 2019, On-X and JOTEC non-GAAP constant currency revenues increased by 12% and 9%, respectively, versus 2018.
Net income for 2019 was $1.7 million or $0.05 per share compared to a net loss of ($2.8) million or ($0.08) per share for 2018. Non-GAAP net income for 2019 was $11.7 million, or $0.31 a share compared to non-GAAP net income of $9.6 million, or $0.26 per share in 2018.
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.
2020 Financial Outlook
CryoLife expects constant currency revenue growth of between 6.3% and 8.5% for the full year of 2020 compared to 2019. Assuming a Euro/USD exchange rate of 1.10, revenues are expected to be in the range of $292 million to $298 million. Our 2020 revenue guidance assumes no contribution during 2020 from BioGlue in China, PerClot in the U.S., or TMR handpieces.
Non-GAAP earnings per share for 2020 are expected to be between $0.15 and $0.17. Non-GAAP earnings per share reflect approximately $0.12 per share in planned incremental investment in the Company's pipeline, an estimated $0.06 per share additional investment in our Asia Pacific and Latin American infrastructure, and approximately $0.05 per share in planned incremental spending related to new product launches.
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 2020 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 net income and non-GAAP EBITDA results exclude (as applicable) business development and integration expenses, rebranding expenses, amortization expense, inventory basis step-up expense, loss on foreign currency revaluation, and stock-based compensation expense. The Company believes that these non-GAAP presentations provide useful information to investors regarding unusual non-operating items; 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 acquisitions, or non-cash expense related to amortization of previously acquired tangible and intangible assets. The Company has excluded the impact of changes in currency exchange from certain revenues to evaluate 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.
Webcast and Conference Call Information
The Company will hold a teleconference call and live webcast later today, February 13, 2020 at 4:30 p.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, 2020 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415. The Conference ID for the replay is 13698400.
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 revenue and non-GAAP earnings per share guidance, including projected exchange rates, our planned incremental investment in our pipeline and in our Asia Pacific and Latin American infrastructure, and planned incremental spending related to new product launches; and our beliefs regarding the anticipated approval of Evita Open NEO in the first quarter of 2020, that we will continue to increase JOTEC and vascular tissue supply and that the full
launches in the EU of three of our next-generation JOTEC products, and NEXUS, and commencement of the PROACT Xa trial position us well to deliver high single digit growth over the next several years. 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, 2019. 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, | ||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||
| Revenues: | |||||||||||
| Products | $ | 50,193 | $ | 49,331 | $ | 197,246 | $ | 187,394 | |||
| Preservation services | 19,504 | 18,468 | 78,976 | 75,447 | |||||||
| Total revenues | 69,697 | 67,799 | 276,222 | 262,841 | |||||||
| Cost of products and preservation services: | |||||||||||
| Products | 14,001 | 13,606 | 55,022 | 53,772 | |||||||
| Preservation services | 9,144 | 9,002 | 38,187 | 36,085 | |||||||
| Total cost of products and preservation services | 23,145 | 22,608 | 93,209 | 89,857 | |||||||
| Gross margin | 46,552 | 45,191 | 183,013 | 172,984 | |||||||
| Operating expenses: | |||||||||||
| General, administrative, and marketing | 37,609 | 35,628 | 143,011 | 140,574 | |||||||
| Research and development | 5,312 | 6,784 | 22,960 | 23,098 | |||||||
| Total operating expenses | 42,921 | 42,412 | 165,971 | 163,672 | |||||||
| Operating income | 3,631 | 2,779 | 17,042 | 9,312 | |||||||
| Interest expense | 3,626 | 3,925 | 14,886 | 15,788 | |||||||
| Interest income | (130) | (85) | (738) | (226) | |||||||
| Other (income) expense, net | (1,412) | 398 | 1,250 | 141 | |||||||
| Income (loss) before income taxes | 1,547 | (1,459) | 1,644 | (6,391) | |||||||
| Income tax expense (benefit) | 2,228 | (683) | (76) | (3,551) | |||||||
| Net (loss) income | $ | (681) | $ | (776) | $ | 1,720 | $ | (2,840) | |||
| (Loss) income per common share: | |||||||||||
| Basic | $ | (0.02) | $ | (0.02) | $ | 0.05 | $ | (0.08) | |||
| Diluted | $ | (0.02) | $ | (0.02) | $ | 0.05 | $ | (0.08) | |||
| Weighted-average common shares outstanding: | |||||||||||
| Basic | 37,274 | 36,652 | 37,118 | 36,412 | |||||||
| Diluted | 37,274 | 36,652 | 37,860 | 36,412 |
CRYOLIFE, INC. AND SUBSIDIARIES
Financial Highlights - Unaudited
| Three Months Ended | Twelve Months Ended | ||||||||||
| December 31, | December 31, | ||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||
| Products: | |||||||||||
| BioGlue | $ | 17,777 | $ | 17,975 | $ | 68,611 | $ | 66,660 | |||
| JOTEC | 16,038 | 16,672 | 64,974 | 63,341 | |||||||
| On-X | 13,345 | 11,337 | 50,096 | 44,832 | |||||||
| CardioGenesis cardiac laser therapy | 1,050 | 1,703 | 6,016 | 6,217 | |||||||
| PerClot | 981 | 945 | 3,795 | 3,767 | |||||||
| PhotoFix | 1,002 | 699 | 3,754 | 2,577 | |||||||
| Total products | 50,193 | 49,331 | 197,246 | 187,394 | |||||||
| Preservation services: | |||||||||||
| Cardiac tissue | 10,145 | 9,023 | 40,879 | 35,683 | |||||||
| Vascular tissue | 9,359 | 9,445 | 38,097 | 39,764 | |||||||
| Total preservation services | 19,504 | 18,468 | 78,976 | 75,447 | |||||||
| Total revenues | $ | 69,697 | $ | 67,799 | $ | 276,222 | $ | 262,841 | |||
| Revenues: | |||||||||||
| U.S. | $ | 37,005 | $ | 36,528 | $ | 150,553 | $ | 144,651 | |||
| International | 32,692 | 31,271 | 125,669 | 118,190 | |||||||
| Total revenues | $ | 69,697 | $ | 67,799 | $ | 276,222 | $ | 262,841 |
| December 31, | December 31, | ||||
| 2019 | 2018 | ||||
| Cash, cash equivalents, and restricted securities | $ | 34,294 | $ | 42,236 | |
| Total current assets | 187,390 | 179,168 | |||
| Total assets | 605,654 | 571,091 | |||
| Total current liabilities | 45,195 | 34,523 | |||
| Total liabilities | 319,958 | 296,024 | |||
| Shareholders' equity | 285,696 | 275,067 |
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, | ||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||
| GAAP: | |||||||||||
| Income (loss) before income taxes | $ | 1,547 | $ | (1,459) | $ | 1,644 | $ | (6,391) | |||
| Income tax expense (benefit) | 2,228 | (683) | (76) | (3,551) | |||||||
| Net (loss) income | $ | (681) | $ | (776) | $ | 1,720 | $ | (2,840) | |||
| Diluted (loss) income per common share: | $ | (0.02) | $ | (0.02) | $ | 0.05 | $ | (0.08) | |||
| Reconciliation of income (loss) before income taxes, | |||||||||||
| GAAP to adjusted net income, non-GAAP | |||||||||||
| Income (loss) before income taxes, GAAP | $ | 1,547 | $ | (1,459) | $ | 1,644 | $ | (6,391) | |||
| Adjustments: | |||||||||||
| Business development and integration expenses | 526 | 1,399 | 3,088 | 8,332 | |||||||
| Amortization expense | 3,054 | 2,597 | 10,850 | 10,792 | |||||||
| Gain on On-X escrow settlement | -- | -- | -- | (2,675) | |||||||
| Inventory basis step-up expense | -- | -- | -- | 2,805 | |||||||
| Adjusted income before income taxes, | |||||||||||
| non-GAAP | 5,127 | 2,537 | 15,582 | 12,863 | |||||||
| Income tax expense calculated at a | |||||||||||
| pro forma tax rate of 25% | 1,282 | 634 | 3,896 | 3,216 | |||||||
| Adjusted net income, non-GAAP | $ | 3,845 | $ | 1,903 | $ | 11,686 | $ | 9,647 | |||
| 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: | $ | (0.02) | $ | (0.02) | $ | 0.05 | $ | (0.08) | |||
| Adjustments: | |||||||||||
| Business development and integration expenses | 0.02 | 0.04 | 0.08 | 0.22 | |||||||
| Amortization expense | 0.08 | 0.07 | 0.28 | 0.29 | |||||||
| Gain on On-X escrow settlement | -- | -- | -- | (0.07) | |||||||
| Inventory basis step-up expense | -- | -- | -- | 0.07 | |||||||
| Tax effect of non-GAAP adjustments | (0.03) | (0.03) | (0.09) | (0.12) | |||||||
| Effect of 25% pro forma tax rate | 0.05 | (0.01) | (0.01) | (0.05) | |||||||
| Adjusted diluted income per common share, | |||||||||||
| non-GAAP: | $ | 0.10 | $ | 0.05 | $ | 0.31 | $ | 0.26 | |||
| Diluted weighted-average common | |||||||||||
| shares outstanding | 37,914 | 37,658 | 37,860 | 37,437 |
CRYOLIFE, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP
Revenues - Unaudited
(In thousands, except per share data)
| Three Months Ended | Twelve Months Ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| 2019 | 2018 | Growth Rate | 2019 | 2018 | Growth Rate | ||||||||
| Reconciliation of total revenues, GAAP to | |||||||||||||
| total revenues, non-GAAP: | |||||||||||||
| Total revenues, GAAP | $ | 69,697 | $ | 67,799 | 3% | $ | 276,222 | $ | 262,841 | 5% | |||
| Impact of changes in currency exchange | -- | (933) | -- | (4,708) | |||||||||
| Total constant currency revenues, non-GAAP | $ | 69,697 | $ | 66,866 | 4% | $ | 276,222 | $ | 258,133 | 7% | |||
| Reconciliation of total revenues, GAAP to | |||||||||||||
| total revenues, non-GAAP: | |||||||||||||
| Total revenues, GAAP | $ | 69,697 | $ | 67,799 | 3% | $ | 276,222 | $ | 262,841 | 5% | |||
| Impact of changes in currency exchange | -- | (933) | -- | (4,708) | |||||||||
| Less CardioGenesis cardiac laser therapy | (1,050) | (1,703) | (6,016) | (6,217) | |||||||||
| Total constant currency revenues excluding CardioGenesis, non-GAAP | $ | 68,647 | $ | 65,163 | 5% | $ | 270,206 | $ | 251,916 | 7% | |||
| Reconciliation of total JOTEC revenues, GAAP, to | |||||||||||||
| total JOTEC revenues, non-GAAP: | |||||||||||||
| Total JOTEC revenues, GAAP | $ | 16,038 | $ | 16,672 | -4% | $ | 64,974 | $ | 63,341 | 3% | |||
| Impact of changes in currency exchange | -- | (691) | -- | (3,471) | |||||||||
| Total constant currency JOTEC revenues, non-GAAP | $ | 16,038 | $ | 15,981 | 0% | $ | 64,974 | $ | 59,870 | 9% |
CRYOLIFE, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP
Adjusted EBITDA - Unaudited
(In thousands, except per share data)
| Three Months Ended | Twelve Months Ended | |||||||||||
| December 31, | December 31, | |||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Reconciliation of net (loss) income, GAAP to | ||||||||||||
| adjusted EBITDA, non-GAAP: | ||||||||||||
| Net (loss) income, GAAP | $ | (681) | $ | (776) | $ | 1,720 | $ | (2,840) | ||||
| Adjustments: | ||||||||||||
| Depreciation and amortization expense | 5,060 | 4,459 | 18,317 | 18,095 | ||||||||
| Income tax expense (benefit) | 2,228 | (683) | (76) | (3,551) | ||||||||
| Interest income | (130) | (85) | (738) | (226) | ||||||||
| Interest expense | 3,626 | 3,925 | 14,886 | 15,788 | ||||||||
| Gain on On-X escrow settlement | -- | -- | -- | (2,675) | ||||||||
| Inventory basis step-up expense | -- | -- | -- | 2,805 | ||||||||
| Business development and integration expenses | 526 | 1,399 | 3,088 | 8,332 | ||||||||
| (Gain) loss on foreign currency revaluation | (1,437) | 437 | 1,232 | 2,578 | ||||||||
| Stock-based compensation expense | 2,218 | 1,641 | 8,799 | 6,326 | ||||||||
| Adjusted EBITDA, non-GAAP | $ | 11,410 | $ | 10,317 | $ | 47,228 | $ | 44,632 |