SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 1, 2003
CRYOLIFE, INC.
(Exact name of registrant as specified in its charter)
Florida
(State or other jurisdiction of incorporation)
1-13165 59-2417093
(Commission File Number) (IRS Employer Identification No.)
1655 Roberts Boulevard N.W., Kennesaw, Georgia 30144
----------------------------------------------------
(Address of principal executive offices, including zip code)
(770) 419-3355
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS.
On May 1, 2003, CryoLife, Inc. ("CryoLife") issued a press release announcing
its results of operations for the first quarter ended March 31, 2003. CryoLife
hereby incorporates by reference herein the information set forth in its Press
Release dated May 1, 2003, a copy of which is attached hereto as Exhibit 99.1.
The Press Release contains information regarding measurement of "revenues prior
to adjustment to estimated tissue recall returns," and pro forma earnings per
share, which may be non-GAAP financial measures as defined in Item 10(e) of
Regulation S-K. Management believes that presentation of these measurements is
useful to investors to provide information comparable to revenues in prior
periods, which do not contain any such adjustments. Revenues in prior periods do
not include substantial increases resulting from adjustment to estimated recall
returns, and costs of tissue preservation services in prior periods do not omit
substantial costs which were previously written down. Presentation of revenues
and earnings per share without excluding such adjustment and presentation of pro
forma earnings per share without including costs associated with written down
tissue might mislead investors with respect to the magnitude of the Company's
revenues and earnings per share, respectively, since the "adjustment to
estimated tissue recall returns" included in "revenues as reported" does not
represent revenues earned from actual tissues shipped during the period and the
costs of preservation services, as reported, does not include costs associated
with tissue that has been written down.
This information, filed under Item 5, is also being provided pursuant to Item 12
of Form 8-K.
Except for the historical information contained in this report, the statements
made by CryoLife are forward looking statements that involve risks and
uncertainties. All such statements are subject to the safe harbor created by the
Private Securities Litigation Reform Act of 1995. CryoLife's future financial
performance could differ significantly from the expectations of management and
from results expressed or implied in the Press Release. For further information
on other risk factors, please refer to the "Risk Factors" contained in
CryoLife's Annual Report on Form 10-K for the fiscal year ended December 31,
2002 as filed with the Securities and Exchange Commission.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
Exhibit Number Description
-------------- -----------
99.1 Press Release dated May 1, 2003
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ITEM 9. REGULATION FD DISCLOSURE (INCLUDING ITEM 12 INFORMATION).
Pursuant to the interim guidance contained in SEC Release 34-47583, the
information set forth under Item 5 and required by Item 12 of this report is
being furnished under this Item 9 and is hereby incorporated herein by
reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, CryoLife
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
CRYOLIFE, INC.
Date: May 1, 2003 By: /s/ D. Ashley Lee
---------------------------------------
Name: D. Ashley Lee
Title: Vice President, Chief Financial
Officer and Treasurer
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EXHIBIT INDEX
Exhibit Number Description Page
- -------------- ----------- ----
99.1 Press Release dated May 1, 2003 5
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EXHIBIT 99.1
[COMPANY LOGO]
FOR IMMEDIATE RELEASE
CONTACT: JOSEPH T. SCHEPERS KATIE BRAZEL
VICE PRESIDENT, CORPORATE COMMUNICATIONS FLEISHMAN HILLARD
(770) 419-3355 (404) 739-0150
CRYOLIFE REPORTS FIRST QUARTER 2003 FINANCIAL RESULTS
STRONG PERFORMANCE OF SURGICAL ADHESIVE, BIOGLUE(R)
POSITIVE TREND IN HEART VALVE AND VASCULAR REVENUES
PROCUREMENT OF TISSUES FROM DONORS INCREASED IN APRIL
ATLANTA (May 1, 2003) CryoLife, Inc. (NYSE: CRY), a human tissue processing and
medical device company, today reported financial results for the first quarter
of 2003.
Revenues for the first quarter of 2003 were $15.9 million, compared to
$25.5 million in the first quarter of 2002. Net loss for the first quarter of
2003 was $434,000, compared to net income of $3.1 million in the first quarter
of 2002. On a fully diluted basis, loss per common share for the first quarter
of 2003 was $0.02, as compared to net income per share of $0.16 for the same
period in 2002. Total revenues were $15.1 million, excluding a favorable
adjustment to estimated tissue recall returns of $848,000. In the first quarter
of 2003, there was an estimated $2.3 million that was not included in the cost
of tissue preservation services because it related to tissues shipped during the
quarter that were written-down in prior periods. If not for these two items, the
fully diluted loss per share would have been $0.121.
BioGlue sales in the first quarter of 2003 increased 33% to $6.5 million
compared to $4.9 million in the first quarter 2002 and increased 16% compared to
the fourth quarter 2002. BioGlue is approved in the United States for use in
adult patients as an adjunct method for open surgical repair of large vessels.
It is approved in the European Community and Canada as an adjunct method for
surgical repair of vascular and additional soft tissues, including cardiac, dura
mater, vascular, pulmonary, abdominal, and gastrointestinal.
____________________________________
(1) The effect of these two items of $0.10 per share is calculated as follows:
$848,000 (adjustment to estimated tissue recalls) plus $2.3 million (amount that
would have included in cost of preservation services had tissue shipped not
previously been written-down) less tax effect of $1.1 million divided by diluted
weighted average shares outstanding of 19,634,000. This information is included
to provide information comparable to prior periods.
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"We are pleased with the strong performance of BioGlue in the US and
Europe. We are on track to achieve full year 2003 sales of $26-27 million, a 25%
increase over last year," said Steven G. Anderson, CryoLife President and CEO.
Tissue processing revenues were $9.1 million, as reported, and $8.3
million, excluding a favorable adjustment to estimated tissue recall returns of
$848,000, as compared to $6.3 million in the fourth quarter 2002. Tissue
processing revenues, as reported, increased 45%. Excluding the adjustment to
recall returns the increase was 31% in the first quarter of 2003 compared to the
fourth quarter of 2002. This improvement resulted from a 41% increase in
cardiovascular revenue and a 22% increase in vascular revenue excluding the
adjustment to recall returns. Including the adjustment to recall returns,
cardiovascular revenue increased 44% and vascular revenue increased 46% as
compared to fourth quarter of 2002.
We expect revenues in the second quarter to be between $16.2 and $16.8
million. We expect allograft tissue revenue to be between $9.0 and $9.6 million
and BioGlue revenues to be between $6.8 and $7.0 million.
We are currently in discussions with the FDA regarding the reclassification
of certain SynerGraft processed human valves and vascular grafts. The FDA has
advised the Company that its SynerGraft heart valves and CryoVein used for AV
access will be regulated as medical devices. The Company is in discussions with
the FDA about the type of clearances necessary for these products. The Company
is not processing tissues using the SynerGraft process at this time.
Human heart procurement in April increased to more than 300 donors as
compared to the first quarter monthly average of 275. Vascular procurement in
April was over 325 donors as compared to the first quarterly monthly average of
268.
As of April 24, 2003 CryoLife had approximately $20.2 million in the
aggregate of cash and cash equivalents and marketable securities, and the
Company anticipates receiving approximately $8.7 million in tax refunds in early
May.
"The positive trends we are experiencing in tissue procurement and
processing revenues, along with continued strong growth of BioGlue revenues,
lead us to believe that we will meet our full-year 2003 revenue projection of
approximately $70 million. We are confident in the Company's outlook and its
ability to maintain its leadership position in processing human tissues
implanted for cardiac, vascular, and orthopaedic surgeries," said Steven G.
Anderson.
Mr. Anderson will host a teleconference and live web cast at 11:15 a.m.
(EST) this morning, May 1. To listen to the live teleconference please dial
973-339-3086 a few minutes prior to 11:15 a.m. No identification number is
required. Those interested in listening to a replay of the teleconference may do
so by calling (toll free) 877-519-4471 or 973-341-3080. The identification
number for the replay is 3868830. The replay will be available May 1 through May
8, 2003. A live webcast can be accessed by going to the Investor Relations
section of the CryoLife web site at www.cryolife.com. A replay of the webcast
will be available on the CryoLife web site until May 8.
Founded in 1984, CryoLife, Inc. is a leader in the processing and
distribution of implantable living human tissues for use in cardiovascular and
vascular surgeries throughout the United States and Canada. The Company's
BioGlue(R) Surgical Adhesive is FDA approved as an adjunct to sutures and
staples for use in adult patients in open surgical repair of large vessels and
is CE marked in the European Community and approved in Canada for use in soft
tissue repair and approved in Australia for use in vascular and pulmonary
sealing and repair. The Company also manufactures the SynerGraft(R) Vascular
Graft, which is CE marked for distribution within the European Community.
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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 future events may not occur as and when expected, if at all, and,
together with the Company business, are subject to various risks and
uncertainties. Such risks and uncertainties include that revenues may not meet
expectations, that the Company may not commence distribution of orthopaedic
tissue this quarter, that demand for CryoLife preserved tissues, particularly
orthopaedic tissues, may never return to prior levels and physicians and
hospital risk managers may be unwilling to approve the use of Company-processed
tissues, the possibility that the FDA could impose additional restrictions on
the Company's distribution of orthopaedic tissues, FDA regulation of the
Company's CryoValve SG and CryoVein SG or other tissues and products may require
premarketing approvals that the Company does not have and may not be able to
obtain without great time and expense, if at all, the Company may not have
sufficient borrowing or other capital availability to fund its business over the
long-term, current and future litigation may not be resolved within the limits
of the Company's insurance policies or may otherwise be resolved in a matter
that is materially adverse to the Company, the possibility that current severe
decreases in the Company's revenues and working capital will continue, the
possibility that CryoLife will not satisfactorily address the observations
contained in the most recent Form 483 issued by the FDA, changes in laws and
governmental regulations applicable to CryoLife and other risk factors detailed
in CryoLife's Securities and Exchange Commission filings, including CryoLife's
Form 10-K filing for the year ended December 31, 2002, and the Company's other
SEC filings.
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CRYOLIFE, INC.
Unaudited Financial Highlights
(In thousands, except share data)
Three Months Ended
March 31,
-----------------------------
2003 2002
------------ -------------
Revenues:
Human tissue preservation services $ 9,130 $ 20,238
Products 6,599 5,065
Distribution and grant 191 168
------------ -------------
Total revenues 15,920 25,471
Costs and expenses:
Human tissue preservation services 2,443 8,063
Products 1,641 2,235
General, administrative, and marketing 11,592 9,478
Research and development 917 1,153
Interest expense 132 192
Interest income (131) (298)
Other expense, net (26) (56)
------------ -------------
Total costs and expenses 16,568 20,767
(Loss) earnings before income taxes (648) 4,704
Income tax (benefit) expense (214) 1,600
------------ -------------
Net (Loss) income $ (434) $ 3,104
============ =============
(Loss) earnings per share:
Basic $ (0.02) $ 0.16
============ =============
Diluted $ (0.02) $ 0.16
============ =============
Weighted average shares outstanding:
Basic 19,634 19,096
============ =============
Diluted 19,634 19,796
============ =============
Revenues from:
Cardiovascular $ 4,725 $ 7,307
Vascular 4,255 7,017
Orthopaedic 150 5,914
------------ -------------
Total cryopreservation 9,130 20,238
------------ -------------
BioGlue 6,494 4,873
Implantable medical devices 105 192
Distribution and grant 191 168
------------ -------------
Total revenues $ 15,920 $ 25,471
============ =============
International revenues $ 1,710 $ 1,662
Domestic revenues 14,210 23,809
------------ -------------
Total revenues $ 15,920 $ 25,471
============ =============
CRYOLIFE, INC.
Financial Highlights
(In thousands)
Unaudited Audited
March 31 Dec. 31
2003 2002
----------- -----------
Cash and cash equivalents
and marketable securities, at market $ 20,225 $ 24,860
Trade receivables, net 7,769 6,930
Other receivables, net 9,090 11,824
Deferred preservation costs, net 7,564 4,332
Inventories 4,703 4,585
Total assets 100,548 106,414
Shareholders' equity 79,326 79,800
For additional information about the company,
visit CryoLife's web site:
http://www.cryolife.com
END