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): February 26, 2004
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 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 February 26, 2004
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The information provided pursuant to this Item 12 is to be considered "filed"
under the Securities Exchange Act of 1934 ("Exchange Act") and incorporated by
reference into those filings of CryoLife, Inc. ("CryoLife") that provide for the
incorporation of all reports and documents filed by CryoLife under the Exchange
Act.
On February 26, 2004, CryoLife issued a press release announcing its results for
the quarter ended December 31, 2003. CryoLife hereby incorporates by reference
herein the information set forth in its Press Release dated February 26, 2004, a
copy of which is attached hereto as Exhibit 99.1. Except as otherwise provided
in the press release, the press release speaks only as of the date of such press
release and such press release shall not create any implication that the affairs
of CryoLife have continued unchanged since such date.
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 Releases. For further information
on other risk factors, please refer to the "Risk Factors" contained in
CryoLife's Form 10-K/A for the year ended December 31, 2002, as filed with the
Securities and Exchange Commission. CryoLife disclaims any obligation or duty to
update or modify these forward-looking statements.
2
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: February 26, 2004 By: /s/ D. Ashley Lee
------------------------------------
Name: D. Ashley Lee
Title: Vice President, Chief Financial
Officer and Treasurer
3
EXHIBIT INDEX
Exhibit Number Description Page
99.1 Press Release dated February 2004 5
4
EXHIBIT 99.1
[COMPANY LOGO]
FOR IMMEDIATE RELEASE
CONTACT: JOSEPH T. SCHEPERS
VICE PRESIDENT, CORPORATE COMMUNICATIONS
(770) 419-3355
CRYOLIFE REPORTS FOURTH QUARTER AND FULL YEAR 2003 FINANCIAL RESULTS
REAFFIRMS TISSUE PROCESSING AND
PRODUCT REVENUE GROWTH ESTIMATE OF 12 TO 18% IN 2004
BIOGLUE SALES INCREASED 33% IN 2003 COMPARED TO 2002
$20 MILLION PIPE STRENGTHENS FINANCIAL POSITION
DEVELOPING ADDITIONAL PROTEIN HYDROGEL PRODUCTS
ATLANTA...(February 26, 2004)...CryoLife, Inc. (NYSE: CRY), a human tissue
processing and bio-surgical device company reported financial results for the
fourth quarter and year ended December 31, 2003. The Company also reaffirmed its
previously announced guidance that tissue processing and product revenues are
expected to increase 12 to 18 percent to between $66 and $70 million for the
full year 2004.
Revenues for the fourth quarter 2003 were $12.8 million, compared to $12.2
million for the fourth quarter of 2002. Net loss in the fourth quarter of 2003
was $7.2 million, compared to $5.7 million for the same period in 2002. On a
fully diluted basis, loss per common share in the fourth quarter was $0.37,
compared to $0.29 for the fourth quarter of 2002.
Revenues for the year ended December 31, 2003 were $59.5 million, compared
to $77.8 million in 2002. Net loss for full year 2003 was $32.3 million,
compared to a net loss of $27.8 million for full year 2002. On a fully diluted
basis, loss per common share was $1.64 for full year 2003, compared to $1.43 for
full year 2002.
- More -
[COMPANY ADDRESS]
In the fourth quarter of 2003, worldwide BioGlue sales increased 39 percent
to $7.8 million, compared to $5.6 million in the fourth quarter of 2002. BioGlue
revenues increased 33 percent to $27.8 million for the full year 2003, compared
to $20.9 million for the same period in 2002. BioGlue revenues are expected to
increase to $32 to $34 million in 2004. BioGlue revenues for the first quarter
of 2004 are expected to be between $7.8 to $8.0 million.
"We are pleased with the 33% year to year sales growth of BioGlue and we
expect to introduce a new BioGlue syringe delivery device in 2004. The entire
pre-filled device is disposable and will eliminate the need for resterilization
of the dispenser," stated Steven G. Anderson, President and CEO. "While BioGlue
is the first protein hydrogel marketed by the Company, we are also developing
several other promising products using protein hydrogel technology. These
development projects include: BioDisc, which is being developed for use as an
injectable nucleus pulposus replacement in minimally invasive surgery for spinal
disc repair; BioFoam, for rapid hemostasis for penetrating wounds and severe
trauma; and LiquiStent, which has promise as a biological intervascular stent
that could prove to be non-thrombogenic and biocompatible, and may avoid a
tissue response that would occlude the blood vessel."
Human tissue processing revenues were $30.8 million for the full year 2003,
compared to $55.4 million for the full year 2002. Human tissue processing
revenues were $4.9 million in the fourth quarter of 2003, compared to $6.3
million in the fourth quarter of 2002. The Company is currently processing and
distributing cardiac, vascular, and boned and non-boned orthopaedic tissue. The
Company expects human tissue processing revenues to increase by 7 to 14 percent
to between $33 and $35 million in 2004. While human tissue processing revenues
will increase in the first quarter of 2004 compared to fourth quarter of 2003,
human tissue processing revenues will be slightly below the previous guidance of
$7.0 and $7.5 million for the first quarter of 2004. Total revenues projected
for the first quarter of $14.8 to $15.5 million remains unchanged.
The Company has a comprehensive program to increase the tissues available
for distribution to patients. This program includes recently implemented
initiatives with tissue procurement organizations, operating a newly created in-
house pathology department, and several tissue processing improvements. The
Company expects to realize the positive impact of these initiatives on revenues
beginning in the second quarter of 2004.
Cardiac tissue processing revenues were $2.8 million in the fourth quarter
of 2003, compared to $3.3 million in the same period in 2002 and $17.1 million
for the full year 2003, compared to $23.4 million for the full year 2002.
Vascular tissue processing revenues were $12.7 million for the full year
2003, compared to $17.8 million for the full year 2002 and $2.0 million in the
fourth quarter of 2003, compared to $2.9 million for the same period in 2002.
Orthopaedic tissue processing revenues were $1.1 million for the full year
2003, compared to $14.1 million for the full year 2002 and $166,000 in the
fourth quarter of 2003, compared to $108,000 for the same period in 2002.
Selling, general, and administrative expenses are expected to be
approximately $42 to $46 million in 2004, while research and development
expenses are expected to be approximately $4 million in 2004. For the first
quarter of 2004, the Company expects selling, general, and administrative
expenses of approximately $10 to $11 million, and expects research and
development expenses to be approximately $1 million.
CryoLife's SG Model #100, an arteriovenous (A-V) access device made from a
bovine ureter, is approved in Europe for use in dialysis patients. The SG Model
#100 utilizes the Company's antigen reduction technology (ART). This patented
process removes antigens from tissues, which appears to allow the patient to
receive the implant without requiring immunosuppressant therapy. There are now
over 125 patients in the U.K. and Italy with SG Model #100 A-V access device
implants who are in a clinical registry.
In February 2004 the FDA requested additional information be provided to
support CryoLife's 510k premarket notification for decellularized SG processed
human heart valves. The Company is reviewing and addressing the FDA's
requirements. Since February 2003, the Company has been processing human tissues
without the decellularized SG technology. The FDA also completed an inspection
of the Company's tissue processing facility and made observations in a Form 483,
which the Company is addressing.
The Company has made significant progress on product liability cases,
resolving or reaching agreements in principle to resolve 22 product liability
lawsuits and claims and currently has two remaining lawsuits pending related to
the 2002/2003 insurance policy year. Other product liability lawsuits and claims
are also pending.
The Company recently strengthened its financial position after it raised
net proceeds of approximately $20 million in a private equity placement. As of
February 20, 2004 the Company had approximately $27 million in the aggregate of
cash, cash equivalents and marketable securities. Additionally, the Company
expects to receive tax refunds of approximately $2.4 million in 2004.
The Company will hold a teleconference call and live webcast today at 11:15
a.m. Eastern Time to discuss fourth quarter and year ended December 31, 2003
results followed by a question and answer session hosted by Steven G. Anderson,
CryoLife President and Chief Executive Officer. To listen to the live
teleconference please dial 973-582-2700 a few minutes prior to 11:15 a.m. No
identification number is required. A replay of the teleconference will be
available February 26 through March 4 and can be accessed by calling (toll free)
877-519-4471 or 973-341-3080. The identification number for the replay is
4497182. The live webcast can be accessed by going to the Investor Relations
section of the CryoLife web site at www.cryolife.com.
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 SG Model #100 vascular
graft, which is CE marked for distribution within the European Community.
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's business, are subject to various risks and
uncertainties. These risks and uncertainties include that the Company's 2004
revenues and expenses may not meet its expectations, that demand for CryoLife
preserved tissues may not return to prior levels, the possibility that the FDA
could impose additional restrictions on the Company's operations, require a
recall, or prevent the Company from processing and distributing tissues or
manufacturing and distributing other products, that the Company's new BioGlue
syringe delivery device and SG Model #100 bovine ureter product may not meet
expectations, that the Company's 510k application for SG processed heart valves
may require significant time and expense and may not be cleared on a timely
basis or at all, that FDA regulation of the Company's CryoValve SG and CryoVein
SG may require significant time and expense, that the protein hydrogel products
under development may not be commercially feasible, that the Company may not
have sufficient borrowing or other capital availability to fund its business,
that present and future litigation may be resolved only by substantial payments
by the Company in excess of available insurance coverage and amounts set aside
for products liability cases by CryoLife since the outcomes of products
liability securities class action and derivative cases are inherently uncertain,
that pending litigation cannot be settled on terms acceptable to the Company,
that the Company may not have sufficient resources to pay punitive damages which
are not covered by insurance or liabilities in excess of available insurance,
the possibility of severe decreases in the Company's revenues and working
capital, that to the extent the Company does not have sufficient resources to
pay the claims against it, it may be forced to cease operations or seek
protection under applicable bankruptcy laws, changes in laws and 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. The Company
does not undertake to update its forward-looking statements.
CRYOLIFE, INC.
(In thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
---------------------------- ----------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
(Unaudited) (Audited)
Revenues:
Human tissue preservation services $ 4,935 $ 6,299 $ 30,777 $ 55,373
Products 7,901 5,705 28,263 21,597
Distribution and grant (34) 167 492 825
------------ ------------ ------------ ------------
Total revenues 12,802 12,171 59,532 77,795
Costs and expenses:
Human tissue preservation services 8,892 2,119 23,976 55,363
Products 2,077 1,453 7,506 10,270
General, administrative, and marketing 7,924 15,412 53,630 47,530
Research and development 816 901 3,644 4,597
Goodwill impairment -- -- -- 1,399
Interest expense 49 149 415 692
Interest income (76) (170) (425) (895)
Other (income) expense, net (35) 310 12 273
------------ ------------ ------------ ------------
Total costs and expenses 19,647 20,174 88,758 119,229
Loss before income taxes (6,845) (8,003) (29,226) (41,434)
Income tax expense (benefit) 399 (2,306) 3,068 (13,673)
------------ ------------ ------------ ------------
Net loss $ (7,244) $ (5,697) $ (32,294) $ (27,761)
============ ============ ============ ============
Net loss per share:
Basic $ (0.37) $ (0.29) $ (1.64) $ (1.43)
============ ============ ============ ============
Diluted $ (0.37) $ (0.29) $ (1.64) $ (1.43)
============ ============ ============ ============
Weighted average shares outstanding:
Basic 19,729 19,526 19,684 19,432
============ ============ ============ ============
Diluted 19,729 19,526 19,684 19,432
============ ============ ============ ============
Revenues from:
Cardiovascular $ 2,751 $ 3,283 $ 17,059 $ 23,413
Vascular 2,018 2,908 12,655 17,826
Orthopaedic 166 108 1,063 14,134
------------ ------------ ------------ ------------
Total preservation services 4,935 6,299 30,777 55,373
------------ ------------ ------------ ------------
BioGlue 7,757 5,590 27,784 20,898
Implantable medical devices 144 115 479 699
Distribution and grant (34) 167 492 825
------------ ------------ ------------ ------------
Total revenues $ 12,802 $ 12,171 $ 59,532 $ 77,795
============ ============ ============ ============
Domestic revenues $ 10,727 $ 10,715 $ 51,949 $ 71,188
International revenues 2,075 1,456 7,583 6,607
------------ ------------ ------------ ------------
Total revenues $ 12,802 $ 12,171 $ 59,532 $ 77,795
============ ============ ============ ============
CRYOLIFE, INC.
Financial Highlights
(In thousands)
Audited
Dec. 31, Dec. 31,
2003 2002
------------ -------------
Cash and cash equivalents, cash held in escrow, $ 11,916 $ 24,860
and marketable securities, at market
Trade receivables, net 6,377 6,930
Other receivables, net 1,865 11,824
Deferred preservation costs, net 8,811 4,332
Inventories 4,450 4,585
Total assets 75,027 106,414
Shareholders' equity 48,338 79,800
For additional information about the company, visit CryoLife's Web site:
http://www.cryolife.com
-----------------------
END