CryoLife Reports Third Quarter 2016 Financial Results

ATLANTA, Oct. 26, 2016 /PRNewswire/ --

Third Quarter Highlights:

• Revenue Increased 23 Percent Year-over-Year to $45.3 Million; Non-GAAP Revenues Increased Six Percent Year-over-Year
• Gross Margins Increased to 66 Percent; Non-GAAP Gross Margins Increased to 67 Percent
• GAAP Net Income was $3.0 Million, or $0.09 Per Fully Diluted Common Share; Non-GAAP Net Income was $4.4 Million, or $0.13 Per Fully Diluted Common Share

CryoLife, Inc. (NYSE: CRY), a leading medical device and tissue processing company focused on cardiac surgery, announced today its results for the third quarter and first nine months of 2016. 

Pat Mackin, Chairman, President and Chief Executive Officer, said, "We posted strong financial and operating results in the third quarter by executing on our core goals and objectives.  These results demonstrate that our decision to expand the sales team through the acquisition of On-X and focus on the cardiac surgery market is facilitating cross-selling opportunities and broadening awareness of our On-X valves, as anticipated.  Our results were strengthened by our initiative to transition to a direct sales model in several key markets in Europe.  We also made solid progress advancing our other 2016 key initiatives.  The enhancements to our tissue processing operations are improving our ability to meet the strong demand for our tissue products, particularly for vascular tissue, which represents a near-term growth opportunity.  In addition, we expect to resume enrollment in the PerClot IDE trial during the fourth quarter of 2016, keeping us on track for potential FDA approval for this product in the first half of 2019.  Looking forward, we expect to finish the year with a solid fourth quarter and deliver meaningful revenue growth and additional margin expansion in 2017." 

Revenues for the third quarter of 2016 increased 23 percent to $45.3 million, compared to $36.7 million for the third quarter of 2015.  The increase was primarily driven by the acquisition of On-X Life Technologies (On-X) in January 2016, along with revenue increases in BioGlue and cardiac tissues.  Non-GAAP revenues for the third quarter of 2016 increased six percent compared to the third quarter of 2015.  A reconciliation of GAAP financial metrics to non-GAAP financial metrics is included as part of this press release.

Revenues for the first nine months of 2016 increased 28 percent to $135.4 million, compared to $106.1 million for the first nine months of 2015.  The increase was primarily driven by the acquisition of On-X, along with revenue increases in BioGlue and in cardiac and vascular tissues.  Non-GAAP revenues for the first nine months of 2016 increased eight percent compared to the first nine months of 2015. 

GAAP net income for the third quarter of 2016 was $3.0 million, or $0.09 per basic and fully diluted common share, compared to net income of $2.1 million, or $0.08 per basic and $0.07 per fully diluted common share, for the third quarter of 2015.  Non-GAAP net income for the third quarter of 2016 was $4.4 million, or $0.13 per fully diluted common share, compared to non-GAAP net income of $3.3 million, or $0.11 per fully diluted common share for the third quarter of 2015. 

GAAP net income for the first nine months of 2016 was $7.9 million, or $0.24 per basic and fully diluted common share, compared to net income of $1.4 million, or $0.05 per basic and fully diluted common share, for the first nine months of 2015.  Non-GAAP net income for the first nine months of 2016 was $12.0 million, or $0.36 per fully diluted common share, compared to non-GAAP net income of $4.7 million, or $0.16 per fully diluted common share for the first nine months of 2015.  

Based on its financial results through the first nine months of 2016 and the current business outlook, the Company is raising its 2016 financial guidance as summarized below. 

All numbers are GAAP 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 the full year of 2016 is subject to the risks identified below in the last paragraph of this press release before the financial tables.  

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 On-X revenues for the period in 2016 prior to the closing of the acquisition and On-X revenues for the comparable periods of 2015 and excludes revenues for the HeRO Graft and ProCol product lines for 2016 and 2015.  The Company's other non-GAAP results exclude (as applicable) business development expenses, including the acquired inventory basis step-up expense; gain on sale of business components; amortization expenses; severance expenses associated with certain employee departures; the gain on the sale of Medafor investment; the write-off of PerClot Topical inventory; and intangible impairment.  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 and can vary significantly between periods as a result of factors such as new acquisitions, amortization of previously acquired tangible and intangible assets, or unusual compensation expenses.  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 at 8:00 a.m. Eastern Time to discuss the results followed by a question and answer session hosted by Mr. Mackin.

To listen to the live teleconference, please dial 201-689-8261 a few minutes prior to 8:00 a.m.  A replay of the teleconference will be available October 27 through November 2 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415.  The conference number for the replay is 13647654.

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 living tissues used in cardiac surgical procedures.  CryoLife markets and sells products in more than 80 countries worldwide.  For additional information about CryoLife, visit our website, www.cryolife.com. 

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 those regarding the continued benefit from our decision to expand the CryoLife sales team through the acquisition of On-X and to focus on the cardiac surgery market, including the facilitation of cross-selling opportunities and broader awareness of the On-X valve; the continued benefit from our other key 2016 initiatives including enhancing our tissue processing operations, our ability to meet demand for our cardiac and vascular tissues, our expectation that such demand will be strong and that vascular tissue represents a near-term growth opportunity, and our expectation that we will be able to resume enrollment in the PerClot IDE in the fourth quarter of 2016 and stay on track for FDA approval in the first half of 2019; and our ability to post a solid fourth quarter of growth in 2016, including achieving our updated 2016 guidance for revenues, gross margins, R&D expenses, and non-GAAP income per common share; and to deliver meaningful revenue growth and additional margin expansion in 2017. 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 that the expected benefits of a larger sales force or our market opportunities due to our focus on the cardiac surgery market may be incorrect or may not be achieved; the expected benefits from enhancements to our tissue process operations may be incorrect or may not be achieved; the expected growth opportunity in our vascular tissue services may be incorrect or may not be achieved; and the expected timing for enrollment in the PerClot IDE or FDA approval of PerClot may be incorrect or may not be achieved.  These risks and uncertainties include the risk factors detailed in our Securities and Exchange Commission filings, including our Form 10-K for the year ended December 31, 2015, and our subsequent filings with the SEC. CryoLife does not undertake to update its forward-looking statements.

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SOURCE CryoLife, Inc.