CryoLife Reports Second Quarter 2020 Financial Results

Rhea-AI Summary

CryoLife reported total revenues of $53.8 million for Q2 2020, a 24% decline from Q2 2019. This decrease reflects the impact of the COVID-19 pandemic on surgical procedures. The company also incurred a net loss of $3.7 million or ($0.10) per diluted share, contrasting with a net income of $2.8 million or $0.07 per share in the previous year. Despite these challenges, CryoLife completed a $100 million convertible debt financing for corporate purposes and initiated enrollment in the PROACT Xa clinical trial.

Positive

• Completed $100 million convertible debt financing.
• Initiated enrollment in PROACT Xa clinical trial.
• Manufacturing facilities operating near capacity.
• Anticipated revenue growth from ongoing R&D programs.

Negative

• Total revenues decreased by 24% year-over-year.
• Net loss of $3.7 million in Q2 2020 compared to net income in Q2 2019.
• No financial guidance issued for 2020 due to pandemic uncertainties.

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 investors@cryolife.com

 

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SOURCE CryoLife, Inc.

FAQ

What are the financial results for CryoLife in Q2 2020?

CryoLife reported total revenues of $53.8 million for Q2 2020, a 24% decline compared to Q2 2019.

What was CryoLife's net loss in Q2 2020?

CryoLife incurred a net loss of $3.7 million, or $0.10 per diluted share, compared to a net income of $2.8 million in Q2 2019.

Did CryoLife issue financial guidance for 2020?

No, due to uncertainties from the COVID-19 pandemic, CryoLife is not issuing 2020 financial guidance.

What significant financing did CryoLife complete?

CryoLife completed $100 million in convertible debt financing for general corporate purposes.

What clinical trials has CryoLife initiated?

CryoLife initiated enrollment in the PROACT Xa clinical trial during Q2 2020.