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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): FEBRUARY 22, 2005
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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, GA 30144
(Address of principal executive office) (zip code)
Registrant's telephone number, including area code: (770) 419-3355
N/A
(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 FINANICAL CONDITION.
The information provided pursuant to this Item 2.02 shall not be deemed "filed"
for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange
Act") or 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. The information furnished pursuant to
this Item 2.02 shall instead be deemed "furnished."
On February 22, 2005, CryoLife issued a press release announcing its results for
the quarter and year ended December 31, 2004. CryoLife hereby incorporates by
reference herein the information set forth in its Press Release dated February
22, 2005, 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 EXHIBITS.
(a) Financial Statements
(b) Pro Forma Financial Information
(c) Exhibits
Exhibit Number Description
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99.1 Press Release dated February 22, 2005 (This
Exhibit is deemed furnished and not filed.)
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: February 22, 2005 By: /s/ D. Ashley Lee
------------------------------------
D. Ashley Lee, Executive Vice
President, Chief Operating Officer
and Chief Financial Officer
3
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
99.1 Press Release dated February 22, 2005 (This Exhibit is
deemed furnished and not filed.)
4
EXHIBIT 99.1
This Exhibit is deemed furnished and not filed.
[COMPANY LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE
CONTACT: JOSEPH T. SCHEPERS
VICE PRESIDENT, CORPORATE COMMUNICATIONS
(770) 419-3355
CRYOLIFE REPORTS FOURTH QUARTER AND FULL YEAR 2004 FINANCIAL RESULTS
o BioGlue(R) sales increased 29% to $35.7 million for full year 2004
compared to 2003.
o Continued strong growth in orthopaedic tissue processing revenues.
o Reaffirms revenue growth of at least 17% in 2005.
ATLANTA (FEBRUARY 22, 2005) - CRYOLIFE, INC. (NYSE: CRY), a biomaterials and
biosurgical device company, reported financial results for the fourth quarter
and year ended December 31, 2004.
Revenues for the fourth quarter of 2004 increased 24% to $15.9 million compared
to $12.8 million in the fourth quarter of 2003. The net loss for the fourth
quarter of 2004 was $2.4 million compared to $7.2 million in the fourth quarter
of 2003. The net loss in the fourth quarter of 2004 includes the benefit of a
$1.3 million tax refund that the Company expects to receive in 2005. On a fully
diluted basis, the net loss per common share for the fourth quarter of 2004 was
$0.10 compared to a loss of $0.37 in the same period of 2003.
Revenues for the year ended December 31, 2004, increased 5% to $62.4 million
compared to $59.5 million in 2003. The net loss for the year ended December 31,
2004, was $18.7 million compared to a net loss of $32.3 million in 2003. On a
fully diluted basis, net loss per common share for the full year 2004 was $0.81
compared to $1.64 in the same period of 2003.
In the fourth quarter of 2004, BioGlue(R) Surgical Adhesive sales increased 19%
to $9.2 million compared to $7.8 million in the fourth quarter of 2003. "BioGlue
sales accounted for 57% of corporate revenues in 2004. This success is due to
the excellent performance of BioGlue, which is used to effectively control
bleeding with sutures and staples in certain surgical procedures, and the
successful launch of the BioGlue syringe delivery device," said Steven G.
Anderson, President and CEO of CryoLife, Inc.
Tissue processing revenues, which include cardiac, vascular, and orthopaedic
tissue, increased 31% to $6.4 million in the fourth quarter of 2004 compared to
$4.9 million in the fourth quarter of 2003. Tissue processing revenues for the
full year 2004 were $25.7 million compared to $30.8 million for the same period
in 2003.
-more-
Cardiac tissue processing revenues were $2.8 million in the fourth quarter of
2004 compared to $2.8 million in the fourth quarter of 2003, and $12.5 million
for the full year 2004 compared to $17.1 million for the full year 2003.
Vascular tissue processing revenues were $2.5 million in the fourth quarter of
2004 compared to $2.0 million in the fourth quarter of 2003, and $10.3 million
for the full year 2004 compared to $12.7 million for the full year 2003.
Orthopaedic tissue processing revenues were $1.2 million in the fourth quarter
of 2004 compared to $166,000 in the fourth quarter of 2003, and $2.9 million for
the full year 2004 compared to $1.1 million for full year 2003.
"Orthopaedic tissue processing revenues increased in each quarter of 2004, and
we project orthopaedic revenues in 2005 to be $6.0 to $8.0 million. We also
expect surgeons to begin implanting our Clearant-processed orthopaedic tissue
and cryopreserved osteoarticular allografts (OA) in the first quarter of 2005,"
stated Anderson. The Clearant process is a patented technology based on gamma
irradiation and a radio protectant that is designed to inactivate
microorganisms, including pathogens, while maintaining tissue integrity.
CryoLife believes that its cryopreserved OA femoral condyle allografts, which
are used for articular resurfacing of the knee, will be the first to be
transplanted in patients.
The combined tissue processing and product gross margin in the fourth quarter of
2004 increased to 49% from 43% in the third quarter of 2004. The Company expects
further improvement in its gross margin in 2005. In the fourth quarter of 2004,
general, administrative, and marketing expenses were $10.7 million compared to
$7.9 million in the fourth quarter of 2003.
For the first quarter of 2005, the Company expects general, administrative and
marketing expenses to be $10.5 to $11.5 million and $42.0 to $45.0 million for
the full year 2005. The Company expects research and development expenses to be
approximately $1.0 million in the first quarter of 2005 and approximately $4.0
to $5.0 million for the full year 2005.
The Company reaffirms its previously announced guidance that it expects tissue
processing and product revenues to increase at least 17% to $73.0 to $80.0
million in 2005. The Company expects BioGlue revenues to be $40.0 to $42.0
million, tissue processing revenues to be $32.0 to $37.0 million in 2005, and
bioprosthetic, cardiovascular, and vascular device revenues to be approximately
$1.0 million.
In the first quarter of 2005, BioGlue revenues are expected to be $9.4 to $10.2
million and tissue processing revenues are expected to be $7.0 to $8.0 million.
Total tissue processing and product revenues for the first quarter of 2005 are
expected to be $16.4 to $18.2 million.
The Company recently strengthened its financial position after it received a
$15.0 million credit line from Wells Fargo Foothill, part of Wells Fargo and
Company. As of December 31, 2004, the Company had approximately $9.2 million in
cash, cash equivalents, and marketable securities.
The Company recently settled two product liability cases, reducing the number of
product liability cases pending against the Company to eight, of which three are
covered by insurance.
-more-
Fourth quarter and year end 2004 financial results will be released on Tuesday,
February 22, 2005. The Company will hold a teleconference call and live web cast
at 11:15 a.m. Eastern Standard Time, on February 22, 2005, to discuss fourth
quarter and year end 2004 results, followed by a question and answer session
hosted by Steven G. Anderson, President and Chief Executive Officer.
To listen to the live teleconference, please dial 973-409-9258 a few minutes
prior to 11:15 a.m. No identification number is required. A replay of the
teleconference will be available February 22 through February 28, and can be
accessed by calling (toll free) 877-519-4471 or 973-341-3080. The identification
number for the replay is 5686664.
The live web cast can be accessed by going to the Investor Relations section of
the CryoLife web site at www.cryolife.com.
ABOUT CRYOLIFE
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, CE marked in the
European Community, 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 2005 revenues and
expenses may not meet its expectations, that the Company's 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 processed osteoarticular femoral condyle allografts may
not be available when expected and may not be accepted by the marketplace, that
the gross margins in the tissue processing business may not improve, 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 BioFoam, BioDisc and 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, its registration statement on Form S-3(Reg. No. 333-121406)
filed on December17, 2004, and the Company's other SEC filings. The Company does
not undertake to update its forward-looking statements.
CRYOLIFE, INC.
Financial Highlights
(In thousands, except share data)
Three Months Ended Year Ended
December 31, December 31,
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2004 2003 2004 2003
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(Unaudited) (Unaudited) (Unaudited) (Audited)
Revenues:
Products $ 9,424 $ 7,901 $ 36,637 $ 28,263
Human tissue preservation services 6,442 4,935 25,676 30,777
Distribution and grant -- (34) 71 492
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Total revenues 15,866 12,802 62,384 59,532
Costs and expenses:
Products 1,979 2,077 7,818 7,506
Human tissue preservation services 6,037 8,892 29,807 23,976
General, administrative, and marketing 10,672 7,924 42,640 53,630
Research and development 1,222 816 3,938 3,644
Interest expense 40 49 196 415
Interest income (61) (76) (262) (425)
Other (income) expense, net (14) (35) 13 12
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Total costs and expenses 19,875 19,647 84,150 88,758
Loss before income taxes (4,009) (6,845) (21,766) (29,226)
Income tax (benefit) expense (1,646) 399 (3,017) 3,068
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Net loss $ (2,363) $ (7,244) $ (18,749) $ (32,294)
============ ============ ============ ============
Net loss per share:
Basic $ (0.10) $ (0.37) $ (0.81) $ (1.64)
=========== =========== =========== ===========
Diluted $ (0.10) $ (0.37) $ (0.81) $ (1.64)
=========== =========== =========== ===========
Weighted average shares outstanding:
Basic 23,386 19,729 23,043 19,684
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Diluted 23,386 19,729 23,043 19,684
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Revenues from:
BioGlue $ 9,226 $ 7,757 $ 35,745 $ 27,784
Cardiovascular 2,767 2,751 12,504 17,059
Vascular 2,522 2,018 10,293 12,655
Orthopaedic 1,153 166 2,879 1,063
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Total cryopreservation 6,442 4,935 25,676 30,777
----------- ----------- ----------- -----------
Implantable medical devices 198 144 892 479
Distribution and grant -- (34) 71 492
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Total revenues $ 15,866 $ 12,802 $ 62,384 $ 59,532
=========== =========== =========== ===========-
International revenues $ 2,377 $ 2,075 $ 9,140 $ 7,583
Domestic revenues 13,489 10,727 53,244 51,949
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Total revenues $ 15,866 $ 12,802 $ 62,384 $ 59,532
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CRYOLIFE, INC.
Financial Highlights
(In thousands)
Dec. 31, Dec. 31,
2004 2003
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(Unaudited) (Audited)
Cash and cash equivalents $ 9,232 $ 11,916
and marketable securities, at market
Trade receivables, net 8,293 6,377
Other receivables, net 3,957 1,865
Deferred preservation costs, net 8,822 8,811
Inventories 4,767 4,450
Total assets 73,261 75,027
Shareholders' equity 49,660 48,338
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