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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): NOVEMBER 4, 2004
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CRYOLIFE, INC.
(Exact name of registrant as specified in its charter)
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FLORIDA 1-13165 59-2417093
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
1655 ROBERTS BOULEVARD, N.W., KENNESAW, GEORGIA 30144
(Address of principal executive office) (zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 419-3355
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(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02 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 November 4, 2004, CryoLife issued a press release announcing its results for
the quarter ended September 30, 2004. CryoLife hereby incorporates by reference
herein the information set forth in its Press Release dated November 4, 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 for the year ended December 31, 2003, CryoLife's Form S-3
(Registration No. 333-112673), as filed with the Securities and Exchange
Commission ("SEC") and any subsequent SEC filings. CryoLife disclaims any
obligation or duty to update or modify these forward-looking statements.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
(b) Pro Forma Financial Information.
(c) Exhibits.
Exhibit Number Description
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99.1 Press Release dated November 4, 2004
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
CryoLife, Inc. has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CRYOLIFE, INC.
Date: November 4, 2004 By: /s/ D. Ashley Lee
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Name: D. Ashley Lee
Title: Vice President, Chief Financial
Officer and Treasurer
3
EXHIBIT INDEX
Exhibit Number Description
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99.1 Press Release dated November 4, 2004
4
EXHIBIT 99.1
[COMPANY LOGO]
FOR IMMEDIATE RELEASE
CONTACT: JOSEPH T. SCHEPERS
VICE PRESIDENT, CORPORATE COMMUNICATIONS
(770) 419-3355
CRYOLIFE REPORTS THIRD QUARTER 2004 FINANCIAL RESULTS
BIOGLUE(R) SALES INCREASED 33% OVER THIRD QUARTER 2003
PROJECTS REVENUE GROWTH AND MARGIN IMPROVEMENT IN 2005
STRONG GROWTH IN ORTHOPAEDIC TISSUE REVENUES
PROGRESS WITH NEW PROTEIN HYDROGEL PRODUCTS
ATLANTA...(NOVEMBER 4, 2004)... CryoLife, Inc. (NYSE: CRY), a biomaterials and
biosurgical device company, today reported financial results for the third
quarter and first nine months of 2004.
Revenues for the third quarter of 2004 were $16.1 million compared to $15.1
million in the third quarter of 2003. The net loss in the third quarter of 2004
was $6.0 million compared to $4.7 million in the third quarter of 2003. The net
loss in the third quarter of 2004 included a legal liability accrual of $2.4
million. On a fully diluted basis, net loss per common share for the third
quarter of 2004 was $.26 compared to a loss of $.24 in the same period of 2003.
Revenues for the first nine months of 2004 were $46.5 million compared to
$46.7 million in the first nine months of 2003. The net loss in the first nine
months of the year was $16.4 million compared to a net loss of $25.1 million in
the first nine months of 2003. On a fully diluted basis, the net loss per common
share was $.72 in the first nine months of 2004 compared to a net loss of $1.27
per common share in the same period of 2003.
In the third quarter of 2004, BioGlue(R) sales increased 33% to $8.9
million compared to $6.7 million in the third quarter of 2003. U.S. BioGlue
sales increased 37% to $6.9 million in the third quarter of 2004 compared to
$5.0 million in the same period in 2003. International BioGlue sales increased
21% to $2.0 million in the third quarter of 2004 compared to $1.7 million in the
same period last year. BioGlue revenues are expected to be between $8.6-$9.0
million in the fourth quarter of 2004.
"We are pleased with the successful launch of the BioGlue Syringe Delivery
Device in the U.S. and Europe. BioGlue sales remain on track to increase at
least 25% to $35.0-$35.5 million in 2004 from $27.8 million in 2003," said
Steven G. Anderson, CryoLife President and Chief Executive Officer.
-more-
Page 2 of 5
Tissue processing revenues, which include cardiac, vascular, and
orthopaedic tissues, were $7.0 million in the third quarter of 2004 compared to
$8.1 million in the third quarter of 2003. Cardiac tissue processing revenues
were $3.5 million in the third quarter of 2004 compared to $4.5 million in the
third quarter of 2003. Vascular tissue processing revenues were $2.6 million in
the third quarter of 2004 compared to $3.1 million in the third quarter of 2003.
Orthopaedic revenues were $843,000 in the third quarter of 2004 compared to
$467,000 in the third quarter of 2003.
"Tissue processing revenues increased in the third quarter of 2004 to $7.0
million from $6.1 million in the second quarter of 2004. The gross margin
significantly improved again to -2% in the third quarter of 2004 from -25% in
the second quarter of 2004 due to processing improvements that were implemented
by the Company. Our orthopaedic business has achieved strong revenue increases
in each quarter this year and revenues are expected to be $6.0-$8.0 million in
2005," stated Anderson.
Total tissue processing revenues are expected to be between $6.0-$7.0
million in the fourth quarter of 2004 and $25.0-$26.0 million for the full year
2004. Total tissue processing and product revenues are projected to be
$15.0-$16.5 million in the fourth quarter and $61.5-$63.0 million for full year
2004.
In the third quarter 2004, general, administrative, and marketing expenses
were $12.1 million, which included an increase in the legal liability accrual of
$2.4 million, compared to $10.6 million in the third quarter of 2003. In the
third quarter of 2004, research and development expenses were $904,000 as
compared to $823,000 in third quarter of 2003.
For the fourth quarter of 2004, the Company expects general,
administrative, and marketing expenses of approximately $9.5-$11.0 million and
approximately $41.5-$43.0 million for the full year 2004. The Company expects
research and development expenses to be approximately $1.0 million in the fourth
quarter of 2004 and approximately $3.7 million in 2004.
The Company expects strong revenue growth and margin improvement in 2005.
Guidance for 2005 is the following: BioGlue revenues are expected to be
$40.0-$42.0 million in 2005. Total tissue processing revenues are expected to be
$32.0-$37.0 million in 2005. The Company expects tissue processing and product
revenues of $73.0-$80.0 million in 2005. The Company expects its tissue
processing business to have a positive gross margin in the first quarter of
2005. The combined tissue processing and product gross margin is expected to be
approximately 45% to slightly more than 50%.
General, administrative, and marketing expenses are expected to be
$41.0-$45.0 million in 2005. Research & Development is expected to be
approximately $4.0 million in 2005.
The Company's protein hydrogel research and development initiatives include
the following:
The Company is developing BioDisc(TM), a spinal disc nucleus repair system,
and expects to begin a human feasibility study in the U.K. with initial implants
in the first half of 2005. The Company plans to file an IDE for BioDisc with the
FDA in the first half of 2005.
-more-
Page 3 of 5
The Company is developing a proprietary, bioresorbable stent based on its
protein hydrogel technology, that is designed to open stenotic blood vessels and
increase blood flow by providing a contiguous intravascular paving of the
arterial walls. These biological stents have been implanted in animals and were
found to be patent after removal. The technology is intended to be a long-term
solution, which has the potential to allow the arteries to return to normal
function, and may have applications in a wide array of medical conditions, such
as athlerosclerosis and vulnerable plaque.
In late July, the Company announced that the 2005 Defense Appropriations
Conference Report included $1.0 million to develop BioFoam(TM) for rapid
hemostasis in penetrating wounds and severe trauma on the battlefield.
The Company will hold a teleconference call and live web cast at 11:15 a.m.
Eastern Standard Time, Thursday, November 4, 2004, to discuss third quarter 2004
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 973-582-2749 a few
minutes prior to 11:15 a.m. No identification number is required. A replay of
the teleconference will be available November 4 through November 10, and can be
accessed by calling (toll free) 877-519-4471 or 973-341-3080. The identification
number for the replay is 5284237. The live webcast can be accessed by going to
the Investor Relations section of the CryoLife website at WWW.CRYOLIFE.COM.
ABOUT CRYOLIFE, INC.
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 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 and
2005 revenues and expenses may not meet its expectations, that the Company's
2004 and 2005 BioGlue revenues may not meet its expectations, that the demand
for CryoLife preserved tissues may not return to prior levels, that the
orthopaedic business will not grow as expected in 2005, that the gross margins
in the tissue processing business may not improve, that the Company may
experience delays in filing its IDE for BioDisc, that the Company's general
administrative and marketing expenses may not meet expectations due to higher
than expected costs of resolving existing and future litigation, 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 FDA regulation of
the Company's CryoValve SG and CryoVein SG may require significant time and
expense, that the protein hydrogel products under development, such as the
bioresorbable stent, may not be commercially feasible, that the Company may not
have sufficient borrowing or other capital availability to fund its business,
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 other 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, 2003, and the Company's other SEC
filings. The Company does not undertake to update its forward-looking
statements.
For additional information about the company, visit CryoLife's website:
http://www.cryolife.com
Page 4 of 5
CRYOLIFE, INC.
Unaudited Financial Highlights
(In thousands, except share data)
Three Months Ended Nine Months Ended
September 30, September 30,
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2004 2003 2004 2003
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Revenues:
Products $ 9,151 $ 6,831 $ 27,213 $ 20,362
Human tissue preservation services 6,955 8,097 19,234 25,842
Distribution and grant 12 169 71 526
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Total revenues 16,118 15,097 46,518 46,730
Costs and expenses:
Products 1,998 1,782 5,839 5,429
Human tissue preservation services 7,124 7,481 23,770 15,084
General, administrative, and marketing 12,127 10,575 31,968 45,706
Research and development 904 823 2,716 2,828
Interest expense 54 87 156 366
Interest income (71) (101) (201) (348)
Other (income) expense, net (10) (94) 27 46
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Total costs and expenses 22,126 20,553 64,275 69,111
Loss before income taxes (6,008) (5,456) (17,757) (22,381)
Income tax (benefit) expense -- (761) (1,371) 2,669
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Net loss $ (6,008) $ (4,695) $ (16,386) $ (25,050)
============ ============ ============ ============
Net loss per share:
Basic $ (0.26) $ (0.24) $ (0.72) $ (1.27)
=========== =========== =========== ===========
Diluted $ (0.26) $ (0.24) $ (0.72) $ (1.27)
=========== =========== =========== ===========
Weighted average shares outstanding:
Basic 23,287 19,701 22,928 19,669
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Diluted 23,287 19,701 22,928 19,669
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Revenues from:
Cardiovascular $ 3,476 $ 4,547 $ 9,737 $ 14,308
Vascular 2,636 3,083 7,771 10,637
Orthopaedic 843 467 1,726 897
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Total cryopreservation 6,955 8,097 19,234 25,842
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BioGlue 8,914 6,694 26,519 20,027
Implantable medical devices 237 137 694 335
Distribution and grant 12 169 71 526
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Total revenues $ 16,118 $ 15,097 $ 46,518 $ 46,730
=========== =========== =========== ===========-
International revenues $ 2,346 $ 1,951 $ 6,764 $ 5,508
Domestic revenues 13,772 13,146 39,754 41,222
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Total revenues $ 16,118 $ 15,097 $ 46,518 $ 46,730
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Page 5 of 5
CRYOLIFE, INC.
Financial Highlights
(In thousands)
Unaudited Audited
September 30, Dec. 31,
2004 2003
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Cash and cash equivalents $ 15,193 $ 11,916
and marketable securities, at market
Trade receivables, net 8,938 6,377
Other receivables, net 1,505 1,865
Deferred preservation costs, net 8,038 8,811
Inventories 4,829 4,450
Total assets 78,525 75,027
Shareholders' equity 51,620 48,338