CryoLife Reports Fourth Quarter and Full Year 2018 Financial Results

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. 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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