CryoLife Reports Second Quarter 2020 Financial Results

News provided by

CryoLife, Inc.

Jul 30, 2020, 16:05 ET

ATLANTA, July 30, 2020 /PRNewswire/ --

Second Quarter and Recent Business Highlights:

  • Achieved total revenues of $53.8 million in the second quarter 2020 versus $71.1 million in the second quarter of 2019
    - Total revenues decreased 24% and decreased 23% on a non-GAAP constant currency basis versus second quarter 2019
  • Completed $100.0 million convertible debt financing for general corporate purposes, including the repayment of approximately $30.0 million outstanding under the revolving credit facility
  • Initiated enrollment in PROACT Xa clinical trial
  • Initiated limited market release of E-vita Open NEO and E-nside and limited relaunch of NEXUS™

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, 2020. 

"Despite the disruptions to our business from COVID-19, we posted a solid second quarter and advanced on several of our key initiatives.  We believe our business is weathering the pandemic well, as we believe the majority of products in our portfolio are used in procedures that cannot be postponed or delayed for long," commented Pat Mackin, Chairman, President, and Chief Executive Officer.  "We saw an improvement in procedure volumes sequentially month to month from April to June with a corresponding increase in revenue growth over those months.  Our manufacturing facilities continue to run at near capacity and our supply chain remains largely intact.  We have continued to fund R&D programs related to products that we believe will deliver revenue in 2021 and 2022, including our regulatory approvals for U.S. PerClot PMA, BioGlue China and PROACT Mitral.  We initiated limited market releases for Evita Open NEO and E-nside, with E-nya anticipated to follow by October, and a limited relaunch of NEXUS.  We also initiated enrollment in our PROACT Xa clinical trial.  Lastly, we completed a $100.0 million convertible debt financing to use for general corporate purposes, including the repayment of our $30.0 million revolver draw down.  We have the financial strength to be opportunistic on the business development front.  Given these achievements in the second quarter, we anticipate continued momentum in the second half of 2020 and are optimistic that we will have a strong 2021."

Second Quarter Financial Results
Total revenues for the second quarter of 2020 were $53.8 million, reflecting a decrease of (24%), and (23%) on a non-GAAP constant currency basis, both compared to the second quarter of 2019.  Decreases in all product lines reflect the impact of the COVID-19 pandemic on the number of procedures using our products.

Net loss for the second quarter of 2020 was ($3.7) million, or ($0.10) per fully diluted common share, compared to net income of $2.8 million, or $0.07 per fully diluted common share for the second quarter of 2019.  Non-GAAP net loss for the second quarter of 2020 was ($835,000), or ($0.02) per fully diluted common share, compared to non-GAAP net income of $4.1 million, or $0.11 per fully diluted common share for the second quarter of 2019. 

2020 Financial Outlook 
Due to uncertainties resulting from the COVID-19 pandemic, the Company is not issuing 2020 financial guidance at this time.

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 performance 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 expense, severance expense, amortization expense, inventory basis step-up expense, loss on foreign currency revaluation, stock-based compensation expense, and corporate rebranding expense.  The Company believes that these non-GAAP presentations provide useful information to investors regarding unusual non-operating transactions; 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, July 30, 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 August 6, 2020 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415.  The Conference ID for the replay is 13706961.

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 beliefs that our business us weathering the pandemic well; our belief that the majority of products in our portfolio are used in procedures that cannot be postponed or delayed for long; that we are continuing to fund R&D programs for products that will deliver revenue in 2021 and 2022, including our regulatory approvals for U.S. PerClot PMA, BioGlue China and PROACT Mitral; we will relaunch E-nya on a limited basis by October, 2020; we have the financial strength to be opportunistic on the business development front; and we will have continued momentum in the second half of 2020 and a strong 2021.  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, including the continued effects of COVID-19 and government mandates implemented to address the pandemic.  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

(In thousands, except per share data)













(Unaudited)

(Unaudited)

Three Months Ended

Six Months Ended


June 30,

June 30,


2020

2019

2020

2019

Revenues:










Products

$

37,268

$

51,168

$

83,688

$

99,569

Preservation services

16,503

19,971

36,512

39,075

Total revenues

53,771

71,139

120,200

138,644












Cost of products and preservation services:










Products

10,040

14,489

23,080

28,315

Preservation services

7,841

9,684

17,059

19,090

Total cost of products and preservation services

17,881

24,173

40,139

47,405












Gross margin

35,890

46,966

80,061

91,239












Operating expenses:










General, administrative, and marketing

32,288

34,623

71,290

71,143

Research and development

5,522

5,841

11,878

11,389

Total operating expenses

37,810

40,464

83,168

82,532












Operating (loss) income

(1,920)

6,502

(3,107)

8,707












Interest expense

3,652

3,811

7,040

7,705

Interest income

(66)

(233)

(168)

(349)

Other (income) expense, net

(740)

185

2,922

262












(Loss) income before income taxes

(4,766)

2,739

(12,901)

1,089

Income tax benefit

(1,077)

(93)

(2,547)

(1,446)












Net (loss) income

$

(3,689)

$

2,832

$

(10,354)

$

2,535












(Loss) income per common share:










Basic

$

(0.10)

$

0.08

$

(0.27)

$

0.07

Diluted

$

(0.10)

$

0.07

$

(0.27)

$

0.07












Weighted-average common shares outstanding:










Basic


37,520

37,156

37,455

36,968

Diluted

37,520

37,838

37,455

37,789












Net (loss) income

$

(3,689)

$

2,832

$

(10,354)

$

2,535

Other comprehensive income (loss):










Foreign currency translation adjustments

4,434

2,995

(29)

(786)

Comprehensive income (loss)

$

745

$

5,827

$

(10,383)

$

1,749

CryoLife, Inc. and Subsidiaries

Financial Highlights

(In thousands)













(Unaudited)

(Unaudited)

Three Months Ended

Six Months Ended


June 30,

June 30,

2020

2019

2020

2019

Products:










BioGlue

$

12,437

$

17,933

$

29,174

$

35,155

JOTEC

13,174

17,208

28,642

33,162

On-X

10,116

12,410

22,318

24,141

PhotoFix

880

935

1,922

1,665

PerClot

497

784

1,357

1,834

CardioGenesis cardiac laser therapy

164

1,898

275

3,612

          Total products

37,268

51,168

83,688

99,569












Preservation services:










Cardiac tissue

$

8,061

$

10,500

18,079

19,430

Vascular tissue

8,396

9,471

18,372

19,645

NeoPatch

46

--

61

--

Total preservation services

16,503

19,971

36,512

39,075












Total revenues

$

53,771

$

71,139

$

120,200

$

138,644












Revenues:






U.S.

$

30,392

$

38,239

$

66,839

$

75,563

International

23,379

32,900

53,361

63,081

Total revenues

$

53,771

$

71,139

$

120,200

$

138,644







(Unaudited)



June 30,

December 31,

2020

2019

Cash, cash equivalents, and restricted securities

$

126,118

$

34,294

Total current assets

287,121

187,390

Total assets

693,254

605,654

Total current liabilities

48,933

45,195

Total liabilities

396,698

319,958

Shareholders' equity

296,556

285,696

CryoLife, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP

Net (Loss) Income and Diluted (Loss) Income Per Common Share

(In thousands, except per share data)













(Unaudited)

(Unaudited)

Three Months Ended

Six Months Ended


June 30,

June 30,


2020

2019

2020

2019

GAAP:










(Loss) income before income taxes

$

(4,766)

$

2,739

$

(12,901)

$

1,089

Income tax benefit

(1,077)

(93)

(2,547)

(1,446)

Net (loss) income

$

(3,689)

$

2,832

$

(10,354)

$

2,535












Diluted (loss) income per common share

$

(0.10)

$

0.07

$

(0.27)

$

0.07












Reconciliation of (loss) income before income taxes,












GAAP to adjusted net (loss) income, non-GAAP










(Loss) income before income taxes, GAAP:

$

(4,766)

$

2,739

$

(12,901)

$

1,089

Adjustments:










Amortization expense

3,000

2,557

6,033

5,136

Business development, integration, and severance expense

653

203

1,476

1,312

Corporate rebranding expense

--

--

321

--

Adjusted (loss) income before income taxes,












non-GAAP

(1,113)

5,499

(5,071)

7,537

Income tax (benefit) expense calculated at a










pro forma tax rate of 25%

(278)

1,375

(1,268)

1,884

Adjusted net (loss) income, non-GAAP

$

(835)

$

4,124

$

(3,803)

$

5,653












Reconciliation of diluted (loss) income per common share, GAAP










to adjusted diluted (loss) income per common share, non-GAAP:










Diluted (loss) income per common share, GAAP:

$

(0.10)

$

0.07

$

(0.27)

$

0.07

Adjustments:










Amortization expense

0.08

0.06

0.16

0.13

Business development, integration, and severance expense

0.02

--

0.04

0.03

Corporate rebranding expense


--

--

0.01

--

Tax effect of non-GAAP adjustments

(0.02)

--

(0.05)

(0.03)

Effect of 25% pro forma tax rate

--

(0.02)

0.01

(0.05)

Adjusted diluted (loss) income per common share,










 non-GAAP

$

(0.02)

$

0.11

$

(0.10)

$

0.15












Diluted weighted-average common










shares outstanding

37,520

37,838

37,455

37,789

CryoLife, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP

Revenues and Adjusted EBITDA

(In thousands, except per share data)















(Unaudited)

(Unaudited)

Three Months Ended

Six Months Ended


June 30,

June 30,

2020

2019

Growth
Rate

2020

2019

Growth
Rate

Reconciliation of total revenues, GAAP to












total revenues, non-GAAP:












Total revenues, GAAP

$

53,771

$

71,139

-24%

$

120,200

$

138,644

-13%

Impact of changes in currency exchange

--

(1,095)


--

(1,723)

Total constant currency revenues, non-GAAP

$

53,771

$

70,044

-23%

$

120,200

$

136,921

-12%




























(Unaudited)

(Unaudited)

Three Months Ended

Six Months Ended


June 30,

June 30,

2020

2019

2020

2019

Reconciliation of net (loss) income, GAAP to













adjusted EBITDA, non-GAAP:











Net (loss) income, GAAP

$

(3,689)

$

2,832

$

(10,354)

$

2,535

Adjustments:











Depreciation and amortization expense

4,743

4,381


9,642

8,731

Interest expense

3,652

3,811


7,040

7,705

Stock-based compensation expense

2,510

2,266


5,074

4,119

Business development, integration, and severance expense

653

203


1,476

1,312

Corporate rebranding expense

--

--


321

--

Interest income

(66)

(233)


(168)

(349)

(Income) loss on foreign currency revaluation

(744)

176


2,919

250

Income tax benefit

(1,077)

(93)


(2,547)

(1,446)

Adjusted EBITDA, non-GAAP

$

5,982

$

13,343

$

13,403

$

22,857

Contacts:


CryoLife

D. Ashley Lee

Executive Vice President, Chief Financial Officer and

Chief Operating Officer

Phone: 770-419-3355

Gilmartin Group LLC

Brian Johnston / Lynn Lewis

Phone:  631-807-1986

[email protected]

SOURCE CryoLife, Inc.

Related Links

http://www.cryolife.com

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