Company posts fully diluted earnings per share of $0.07 for third
quarter of 2009; Revenues increased 5 percent for third quarter of
2009 compared to third quarter of 2008 ATLANTA, Oct. 29
/PRNewswire-FirstCall/ -- CryoLife, Inc. (NYSE:CRY), an implantable
biological medical device and cardiovascular tissue processing
company, announced today that revenues for the third quarter of
2009 increased 5 percent to a quarterly record of $28.2 million
compared to $26.8 million for the third quarter of 2008. Net income
for the third quarter of 2009 was $1.9 million, or $0.07 per basic
and fully diluted common share, compared to $3.6 million, or $0.13
per basic and $0.12 per fully diluted common share for the third
quarter of 2008. The Company's effective income tax rate was 41
percent for the third quarter of 2009, compared to 6 percent for
the third quarter of 2008. The Company's effective income tax rate
was lower in 2008 due to the valuation allowance on the Company's
deferred tax assets during 2008. If the Company had recorded 2008
income taxes at a normalized 41 percent effective tax rate, net
income for the third quarter of 2008 would have been $2.2 million
and fully diluted earnings per share would have been $0.08.
Revenues for the first nine months of 2009 increased 4 percent to a
record $83.1 million compared to $79.5 million for the first nine
months of 2008. Net income for the first nine months of 2009 was
$6.3 million, or $0.22 per basic and fully diluted common share,
compared to $10.2 million, or $0.37 per basic and $0.36 per fully
diluted common share for the first nine months of 2008. If the
Company had recorded 2008 income taxes at a normalized 41 percent
effective tax rate, net income for the first nine months of 2008
would have been $6.4 million and fully diluted earnings per share
would have been $0.22. The Company has net operating loss
carryforwards that will largely reduce required cash payments for
federal and state income taxes for the 2009 tax year. Preservation
service revenues for the third quarter of 2009 increased 6 percent
to $15.0 million compared to $14.2 million for the third quarter of
2008. The increase in preservation service revenues was primarily
due to increased shipments of cardiac and vascular tissues for the
third quarter of 2009 compared to the third quarter of 2008.
Preservation service revenues for the first nine months of 2009
increased 3 percent to $42.7 million compared to $41.3 million for
the first nine months of 2008. Excluding orthopaedic tissue
processing revenues of $148,000 and $662,000 for the first nine
months of 2009 and 2008, respectively, preservation service
revenues increased 5 percent to $42.5 million for the first nine
months of 2009 compared to $40.7 million for the first nine months
of 2008. The increase in preservation service revenues was
primarily due to increased revenues from vascular tissue for the
first nine months of 2009 compared to the first nine months of
2008. Revenues from the distribution of CryoValve® SG pulmonary
heart valves and CryoPatch® SG pulmonary cardiac patches increased
to $1.9 million for the third quarter of 2009 from $1.7 million for
the third quarter of 2008, representing 26 percent of the Company's
cardiac tissue processing revenues for the third quarter of 2009.
Revenues from the distribution of CryoValve SG and CryoPatch SG
increased to $4.6 million for the first nine months of 2009 from
$3.4 million for the first nine months of 2008, representing 24
percent of the Company's cardiac tissue processing revenues for the
first nine months of 2009. Product revenues, which consists
primarily of sales of BioGlue® Surgical Adhesive and HemoStase(TM),
were $12.8 million for the third quarter of 2009 compared to $12.2
million for the third quarter of 2008, an increase of 5 percent.
Excluding the effects of changes in foreign currency exchange rates
for the third quarter of 2009 compared to those in effect during
the third quarter of 2008, which reduced revenues by $132,000 for
the third quarter of 2009, product revenues would have been $12.9
million. Product revenues were $39.7 million for the first nine
months of 2009 compared to $37.5 million for the first nine months
of 2008, an increase of 6 percent. Excluding the effects of changes
in foreign currency exchange rates for the first nine months of
2009 compared to those in effect during the third quarter of 2008,
which reduced revenues by $804,000 for the first nine months of
2009, product revenues would have been $40.5 million. Total
preservation services and product gross margins were 60 percent and
64 percent for the third quarters of 2009 and 2008, respectively.
Total preservation services and product gross margins were 62
percent and 64 percent for the first nine months of 2009 and 2008,
respectively. Preservation services gross margins were 41 percent
and 46 percent for the third quarters of 2009 and 2008,
respectively. Preservation services gross margins were 43 percent
and 46 percent for the first nine months of 2009 and 2008,
respectively. Product gross margins were 82 percent and 83 percent
for the third quarters of 2009 and 2008, respectively. Product
gross margins were 84 percent for each of the first nine months of
2009 and 2008. General, administrative, and marketing expenses for
the third quarter of 2009 were $12.4 million compared to $12.1
million for the third quarter of 2008. General, administrative, and
marketing expenses for the first nine months of 2009 were $37.4
million compared to $36.5 million for the first nine months of
2008. These expenses included personnel costs, advertising,
physician education and training, and promotional materials to
support current revenue growth and the Company's efforts to
increase its preservation service and product offerings. General,
administrative, and marketing expenses for the first nine months of
2009 and 2008 included benefits of $405,000 and $449,000,
respectively, related to the adjustment of reserves for product
liability losses. Research and development expenses were $1.5
million and $1.2 million for the third quarters of 2009 and 2008,
respectively. Research and development expenses were $3.9 million
for each of the first nine months of 2009 and 2008. Research and
development spending in 2009 is primarily focused on the Company's
BioGlue and related products and SynerGraft® tissues and products.
As of September 30, 2009, the Company had $32.0 million in cash,
cash equivalents, and restricted securities, compared to $22.8
million at December 31, 2008. Of this $32.0 million, $2.6 million
was received from the U.S. Department of Defense as advance funding
for the development of BioFoam protein hydrogel technology, and
$5.0 million was designated as long-term restricted money market
funds due to a financial covenant requirement under the Company's
credit agreement. "We saw several key milestones during the third
quarter of 2009, including the 510(k) clearance for CryoPatch SG,
the Humanitarian Use Device designation for CryoValve SG aortic
heart valve, and the CE Mark and first human implants of BioFoam,"
stated Steven G. Anderson, president and chief executive officer.
"We will continue to drive the development of our SynerGraft and
BioGlue and related product platforms forward to bring new
innovative solutions to cardiac and vascular surgeons, and the
patients they serve." 2009 Financial Guidance The Company is
updating its guidance for the full year of 2009. The Company
expects total revenues for the full year of 2009 to be near the
lower end of its range of guidance of between $112.0 million and
$116.0 million. The Company expects preservation services revenues
to be near the lower end of its previous range of guidance of
between $57.0 million and $59.0 million. The Company expects
product revenues to be near the lower end of its previous range of
guidance of between $54.0 million and $56.0 million, with BioGlue
revenues to be slightly below its previous range of guidance of
between $49.0 million and $50.0 million for the full year of 2009
and HemoStase revenues to be near the higher end of its previous
range of guidance of between $5.0 million and $6.0 million in 2009.
Tissue processing and product revenues could be affected by several
factors, including but not limited to, the general economic
environment and its effect on demand for the Company's tissues and
products, and changes in foreign currency exchange rates and their
effects on revenues generated in international markets. Other
revenues for 2009 are expected to be approximately $1.0 million,
related to funding received from the Department of Defense in
connection with the development of BioFoam. The amount of other
revenues is largely dependent upon actual expenses incurred related
to the development of BioFoam. The Company expects general,
administrative, and marketing expenses to be near the lower end of
its previous range of guidance of between $50.0 million and $52.0
million, and research and development expenses of between $5.0
million and $6.0 million for the full year of 2009. The research
and development expectations include approximately $1.0 million to
be funded by the Department of Defense in connection with the
development of BioFoam. The Company expects operating income to
increase for the full year of 2009 compared to 2008. However, the
Company expects its effective income tax rate to be approximately
41 percent in 2009 compared to a tax benefit in 2008. As a result,
earnings per share in 2009 will be lower than in 2008, when the
Company reversed a significant portion of the valuation allowance
on its deferred tax assets, which resulted in the recognition of
significant income tax benefits. 2010 Financial Guidance The
Company plans to issue its initial 2010 financial guidance on
either December 1 or 2, 2009 in connection with its presentation at
the Piper Jaffray Healthcare Conference in New York. Webcast and
Conference Call Information The Company will hold a teleconference
call and live webcast today at 10:00 a.m. Eastern Time to discuss
the results followed by a question and answer session hosted by Mr.
Anderson. To listen to the live teleconference, please dial
201-689-8261 a few minutes prior to 10:00 a.m. A replay of the
teleconference will be available from October 29 through November 5
and can be accessed by calling 877-660-6853 (toll free) or
201-612-7415. The account number for the replay is 244 and the
conference number is 333891. The live webcast and replay can be
accessed by going to the Investor Relations section of the CryoLife
Web site at http://www.cryolife.com/ and selecting the heading
Webcasts & Presentations. About CryoLife, Inc. Founded in 1984,
CryoLife, Inc. is a leader in the processing and distribution of
implantable living human tissues for use in cardiac and vascular
surgeries throughout the U.S. and Canada. The Company's CryoValve®
SG pulmonary heart valve, processed using CryoLife's proprietary
SynerGraft® technology, has FDA 510(k) clearance for the
replacement of diseased, damaged, malformed, or malfunctioning
native or prosthetic pulmonary valves. The Company's CryoPatch® SG
pulmonary cardiac patch has FDA 510(k) clearance for the repair or
reconstruction of the right ventricular outflow tract (RVOT), which
is a surgery commonly performed in children with congenital heart
defects, such as Tetralogy of Fallot, Truncus Arteriosus, and
Pulmonary Atresia. CryoPatch SG is distributed in three anatomic
configurations: pulmonary hemi-artery, pulmonary trunk, and
pulmonary branch. The Company's BioGlue® Surgical Adhesive is FDA
approved as an adjunct to sutures and staples for use in adult
patients in open surgical repair of large vessels. BioGlue is also
CE marked in the European Community and approved in Canada and
Australia for use in soft tissue repair. The Company's BioFoam®
Surgical Matrix is CE marked in the European Community for use as
an adjunct in the sealing of abdominal parenchymal tissues (liver
and spleen) when cessation of bleeding by ligature or other
conventional methods is ineffective or impractical. BIOGLUE
Aesthetic(TM) Medical Adhesive is CE marked in the European
Community for periosteal fixation following endoscopic browplasty
(brow lift) in reconstructive plastic surgery and is distributed by
a third party for this indication. CryoLife distributes
HemoStase(TM), a hemostatic agent, in much of the U.S. for use in
cardiac and vascular surgery and in the European Community and
Canada for cardiac, vascular, and general surgery, subject to
certain exclusions. 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. These statements
include those regarding anticipated 2009 performance and our
development of our SynerGraft and BioGlue and related product
platforms and statements regarding the expected impact of our net
operating loss carryforwards on our cash outlays for tax
obligations. These future events may not occur as and when
expected, if at all, and, together with our business, are subject
to various risks and uncertainties. These risks and uncertainties
include that we are significantly dependent on revenues from
BioGlue and there are a variety of risks affecting BioGlue,
CryoValve SG pulmonary heart valves and other SynerGraft processed
tissues and products may not be accepted by the marketplace, the
CryoValve SG pulmonary heart valve has a one year shelf life, the
CryoPatch SG has a one year shelf life, we are dependent on the
availability of sufficient quantities of tissue from human donors,
the CryoValve SG pulmonary heart valve post-clearance study
requested by the FDA may not provide the expected positive results,
our products and tissues we process and preserve have allegedly
caused and may in the future cause injury to patients, and we have
been and may be exposed to tissue processing and product liability
claims and additional regulatory scrutiny as a result, the
possibility that the FDA could impose additional restrictions on
the Company's operations, issue a 483, or warning letter, or
require a recall, or prevent the Company from processing and
distributing tissues or manufacturing and distributing other
products, our failure to adequately comply with government
regulations could result in loss of revenues and customers as well
as additional compliance expense, our ability to borrow under our
credit facility may be limited, the credit facility limits our
ability to pursue significant acquisitions, the financial and
credit liquidity crisis may adversely affect our ability to borrow
money or raise capital, the current economic crisis and future
economic crises may adversely affect our business and financial
condition, there are limitations on our use of net operating loss
carry-forwards that could result in our inability to use them fully
or at all, adverse regulatory action outside of the U.S. could
affect our business, physicians have been and may be reluctant to
implant or use our preserved tissues or products, our existing
insurance policies may not be sufficient to cover our actual claims
liability, current economic conditions may impact demand for our
tissues and products, intense competition may affect our ability to
operate profitably, we may be unable to obtain adequate insurance
at a reasonable cost or at all, uncertainties related to patents
and protection of proprietary technology may adversely affect the
value of our intellectual property, uncertainties related to
patents and protection of proprietary technology for products
distributed by us may adversely affect our ability to distribute
those products, we are dependent on key personnel, we may not be
successful in obtaining necessary clinical results and regulatory
approvals for products and services in development, and our new
products and services may not achieve market acceptance, we may be
unable to effectively leverage our existing sales force to sell
HemoStase, the lawsuit we filed against Medafor regarding our
distribution agreement with Medafor may adversely impact our
relationship with Medafor and could hamper or prevent us from
distributing HemoStase, Medafor may in the future attempt to
terminate our distribution agreement, rapid technological change
could cause our services and products to become obsolete, extensive
government regulation may adversely affect our ability to develop
and sell products and services, we have experienced operating
losses and negative cash flows in the past, and we must continue to
address the underlying causes in order to continue to operate
profitably and generate positive cash flows, investments in new
technologies and acquisitions of products or distribution rights
may not be successful, if we are not successful in expanding our
business activities in international markets, we will be unable to
pursue one of our strategies for increasing our revenues, continued
deflation of foreign currencies relative to the U.S. dollar could
materially and adversely impact our foreign revenues, and future
healthcare policies, healthcare reimbursement methods, and
healthcare reimbursement policies may affect the availability,
amount, and timing of our revenues, financial condition, and
profitability. These risks and uncertainties include the risk
factors detailed in our Securities and Exchange Commission filings,
including our Form 10-K filing for the year ended December 31,
2008, our Form 10Q filing for the quarter ended March 31, 2009, our
Form 10Q filing for the quarter ended June 30, 2009, our Form 10-Q
to be filed for the quarter ended September 30, 2009, and the
Company's other SEC filings. The Company does not undertake to
update its forward-looking statements. Media Contact D. Ashley Lee
Executive Vice President, Chief Financial Officer and Chief
Operating Officer Phone: 770-419-3355 CRYOLIFE, INC. AND
SUBSIDIARIES Financial Highlights (In thousands, except per share
data) Three Months Ended Nine Months Ended September 30, September
30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ----
---- (Unaudited) (Unaudited) Revenues: Preservation services
$15,033 $14,188 $42,672 $41,337 Products 12,806 12,239 39,669
37,499 Other 380 377 729 691 --- --- --- --- Total revenues 28,219
26,804 83,070 79,527 ------ ------ ------ ------ Cost of
preservation services and products: Preservation services 8,903
7,615 24,421 22,382 Products 2,275 2,028 6,478 5,860 ----- -----
----- ----- Total cost of preservation services and products 11,178
9,643 30,899 28,242 ------ ----- ------ ------ Gross margin 17,041
17,161 52,171 51,285 ------ ------ ------ ------ Operating
expenses: General, administrative, and marketing 12,386 12,072
37,440 36,497 Research and development 1,461 1,186 3,854 3,938
----- ----- ----- ----- Total operating expenses 13,847 13,258
41,294 40,435 ------ ------ ------ ------ Operating income 3,194
3,903 10,877 10,850 ----- ----- ------ ------ Interest expense 58
62 168 201 Interest income (10) (92) (73) (285) Other expense, net
8 142 100 115 - --- --- --- Income before income taxes 3,138 3,791
10,682 10,819 Income tax expense 1,276 235 4,369 610 ----- ---
----- --- Net income $1,862 $3,556 $6,313 $10,209 ====== ======
====== ======= Income per common share: Basic $0.07 $0.13 $0.22
$0.37 ===== ===== ===== ===== Diluted $0.07 $0.12 $0.22 $0.36 =====
===== ===== ===== Weighted average common shares outstanding: Basic
28,145 27,899 28,074 27,741 Diluted 28,382 28,703 28,261 28,384
CRYOLIFE, INC. AND SUBSIDIARIES Financial Highlights (In thousands)
Three Months Ended Nine Months Ended September 30, September 30,
------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ----
(Unaudited) (Unaudited) Preservation services: Cardiac tissue
$7,315 $7,034 $19,377 $19,620 Vascular tissue 7,699 7,116 23,147
21,055 Orthopaedic tissue 19 38 148 662 -- -- --- --- Total
preservation services 15,033 14,188 42,672 41,337 ------ ------
------ ------ Products: BioGlue and related products 11,180 11,623
35,323 36,482 HemoStase 1,562 549 4,139 726 Other medical devices
64 67 207 291 -- -- --- --- Total products 12,806 12,239 39,669
37,499 ------ ------ ------ ------ Other 380 377 729 691 --- ---
--- --- Total revenues $28,219 $26,804 $83,070 $79,527 =======
======= ======= ======= Revenues: U.S. $23,941 $22,916 $70,264
$67,750 International 4,278 3,888 12,806 11,777 ----- ----- ------
------ Total revenues $28,219 $26,804 $83,070 $79,527 =======
======= ======= ======= September 30, December 31, 2009 2008 ----
---- (Unaudited) Cash and cash equivalents and restricted
securities $27,046 $17,763 Receivables, net 15,293 13,999 Deferred
preservation costs 36,737 34,913 Inventories 6,462 7,077 Restricted
money market funds, long-term 5,000 5,000 Total assets 133,299
125,995 Shareholders' equity 108,260 99,326 CRYOLIFE, INC.
Unaudited Reconciliation of Non-GAAP Net Income and Income per
Common Share (In thousands, except per share data) Three Months
Ended Nine Months Ended September 30, September 30, -------------
------------- 2009 2008 2009 2008 ---- ---- ---- ---- Income before
income taxes $3,138 $3,791 $10,682 $10,819 Income tax expense 1,276
235 4,369 610 ----- --- ----- --- Net income $1,862 $3,556 $6,313
$10,209 ====== ====== ====== ======= Income per common share: Basic
$0.07 $0.13 $0.22 $0.37 ===== ===== ===== ===== Diluted $0.07 $0.12
$0.22 $0.36 ===== ===== ===== ===== Weighted average common shares
outstanding: Basic 28,145 27,899 28,074 27,741 Diluted 28,382
28,703 28,261 28,384 Net income $3,556 $10,209 Non-GAAP adjustments
to net income: Tax calculated at 41% of income before income taxes
1,554 4,436 Less income tax expense, as reported (235) (610) -----
----- Additional income tax expense, non-GAAP 1,319 3,826 -----
----- Net income, non-GAAP $2,237 $6,383 ====== ====== Income per
common share, non-GAAP: Basic $0.08 $0.23 ===== ===== Diluted $0.08
$0.22 ===== ===== Weighted average common shares outstanding: Basic
27,899 27,741 Diluted 28,703 28,384 For additional information
about the company, visit CryoLife's Web site:
http://www.cryolife.com/. DATASOURCE: CryoLife, Inc. CONTACT: D.
Ashley Lee, Executive Vice President, Chief Financial Officer and
Chief Operating Officer, +1-770-419-3355 Web Site:
http://www.cryolife.com/
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