UNITED
STATES
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): April 30,
2009
_______________________
CRYOLIFE,
INC.
(Exact
name of registrant as specified in its charter)
_________________________
|
Florida
|
1-13165
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59-2417093
|
|
(State
or Other Jurisdiction
of
Incorporation)
|
(Commission
File Number)
|
(IRS
Employer
Identification
No.)
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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
_____________________________________________________________
(Former
name or former address, if changed since last report)
_________________________
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):
|
o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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|
o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Section 2 Financial
Information
Item 2.02 Results of Operations and Financial
Condition.
On April 30, 2009, CryoLife, Inc.
(“CryoLife” or the “Company”) issued a press release announcing its financial
results for the first quarter ended March 31, 2009. CryoLife hereby incorporates
by reference herein the information set forth in its Press Release dated April
30, 2009, 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 it shall not create any implication that the
affairs of CryoLife have continued unchanged since such date. The
press release includes certain supplemental non-GAAP financial
measures:
|
·
|
non-GAAP
tissue processing revenue growth, which has been obtained by adjusting the
comparable tissue processing GAAP revenue growth number to exclude
revenues related to orthopedic tissue processing
services;
|
|
·
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non-GAAP
tissue processing revenues, which have been obtained by adjusting the
comparable tissue processing segment revenue numbers to exclude revenues
related to orthopedic tissue processing
services;
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·
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non-GAAP
BioGlue Surgical Adhesive (“BioGlue”) revenue growth, which has been
obtained by excluding the effects of changes in foreign currency exchange
rates; and
|
|
·
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non-GAAP
BioGlue revenues, which have been obtained by excluding the effects of
changes in foreign currency exchange
rates.
|
Tissue processing revenue growth has
been adjusted to obtain non-GAAP tissue processing revenue growth, and tissue
processing segment revenues have been adjusted to obtain non-GAAP tissue
processing revenues, by excluding revenues from orthopedic tissue processing,
because the Company discontinued procuring and processing such tissue as of
January 1, 2007 and ceased distributing its remaining orthopedic tissue as of
June 30, 2008. Because the Company’s revenues from orthopedic tissue
have been effectively reduced to zero and should remain at that level for the
foreseeable future, the Company believes that the non-GAAP revenue growth
numbers presented, as well as the non-GAAP tissue processing revenues presented,
provide investors with a more accurate measure of the relative revenue
performance of the Company’s continuing tissue processing
business.
BioGlue revenues and revenue growth
have been adjusted to obtain non-GAAP revenues and revenue growth by excluding
the effects of changes in foreign currency exchange rates in order to show the
underlying trend in demand for the product and the impact of that demand on
revenues, as fluctuations in foreign exchange rates may tend to obscure the
trend in overall demand.
Accordingly, CryoLife believes that
these non-GAAP measures, when read in conjunction with the Company’s GAAP
financials, provide useful information to investors by offering:
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·
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the
ability to make more meaningful period-to-period comparisons of the
Company’s on-going operating
results;
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-2-
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·
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the
ability to better identify trends in the Company’s underlying business and
perform related trend analyses; and
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·
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a
better understanding of how management plans and measures the Company’s
underlying business.
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The additional non-GAAP financial
information is not meant to be considered in isolation or as a substitute for
measures calculated in accordance with GAAP. With respect to the
BioGlue financial information, investors are cautioned to avoid overreliance on
the non-GAAP financial measures, as a substantial portion of BioGlue sales occur
in European denominated currency and foreign currency exchange rates have, and
will continue to have, a material impact on CryoLife dollar-denominated
revenues. Management considers both the GAAP and non-GAAP BioGlue
financial measures when evaluating the Company’s business prospects and overall
health and continues to evaluate alternatives to ameliorate the impact of
foreign exchange rate fluctuations on the Company’s revenues.
The information provided pursuant to
this Item 2.02 is to be considered “furnished” pursuant to Item 2.02 of Form 8-K
and shall not be deemed to be “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of
1933, as amended, nor shall it be deemed incorporated by reference into any of
CryoLife’s reports or filings with the Securities and Exchange Commission
(“SEC”), whether made before or after the date hereof, except as expressly set
forth by specific reference in such report or filing.
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. Please refer to the last paragraph of the press release for
further discussion about forward-looking statements. For further information on
risk factors, please refer to “Risk Factors” contained in CryoLife’s Form 10-K
for the year ended December 31, 2008, as filed with the SEC, and any subsequent
SEC filings. CryoLife disclaims any obligation or duty to update or modify these
forward-looking statements.
Section
9 Financial Statements and
Exhibits.
Item
9.01(d) Exhibits.
(a)
Financial Statements.
Not applicable.
(b) Pro
Forma Financial Information.
Not applicable.
(c) Shell
Company Transactions.
Not applicable.
(d)
Exhibits.
-3-
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Exhibit Number
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Description
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99.1*
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Press
release dated April 30,
2009
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|
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* This
exhibit is furnished, not
filed.
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-4-
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.
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CRYOLIFE,
INC.
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|||
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Date:
April 30, 2009
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By:
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/s/ D.A. Lee | |
| Name | D. Ashley Lee | ||
| Title | Executive Vice President, Chief | ||
| Operating Officer and Chief | |||
| Financial Officer | |||
-5-
EXHIBIT
99.1
N E W S R E L E A S E
FOR
IMMEDIATE RELEASE
Media
Contacts:
|
D.
Ashley Lee
|
Katie
Brazel
|
|
Executive
Vice President, Chief Financial Officer and
|
Fleishman
Hillard
|
|
Chief
Operating Officer
|
Phone:
404-739-0150
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|
Phone:
770-419-3355
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CryoLife
Reports Record First Quarter Revenues of $26.7 Million
Operating
income increases 26 percent in first quarter of 2009 compared to
2008
ATLANTA, GA…(April 30,
2009)…CryoLife, Inc. (NYSE: CRY), an implantable biological medical
device and cardiovascular tissue processing company, announced today that
revenues for the first quarter of 2009 increased 4 percent to a first quarter
record of $26.7 million compared to $25.6 million for the first quarter of
2008.
Operating
income for the first quarter of 2009 increased 26 percent to $3.5 million
compared to $2.7 million for the first quarter of 2008. Operating
margin increased to 13 percent in the first quarter of 2009 compared to 11
percent in 2008.
The Company’s net income for 2009 was
adversely affected by a normalized effective income tax rate of 41 percent for
the first quarter of 2009, compared to 4 percent in the first quarter of
2008. The Company did not record income tax expense at a normalized
rate in 2008 due to the valuation allowance on the Company’s deferred tax assets
during 2008. As a result, net income for the first quarter of 2009
was $1.9 million, or $0.07 per basic and fully diluted common share, compared to
$2.8 million, or $0.10 per basic and fully diluted common share for the first
quarter of 2008. The Company has net operating loss carryforwards
that will largely reduce required cash payments for federal and state income
taxes for the 2009 tax year.
- more
- -
Tissue
processing revenues for the first quarter of 2009 increased 1 percent to
$13.5 million compared to $13.4 million for the first quarter of 2008. Excluding
orthopaedic tissue processing revenues of $85,000 and $327,000 in the first
quarter of 2009 and 2008, respectively, tissue processing revenues increased 3
percent to $13.5 million for the first quarter of 2009 compared to $13.1 million
in the first quarter of 2008. The increase in cardiac and vascular tissue
processing revenues was primarily due to increased revenues from vascular tissue
in the first quarter of 2009 of $7.9 million as compared to $6.9 million in the
first quarter of 2008. This increase was partially offset by reduced
revenues from cardiac tissues primarily from the Company’s standard processed
pulmonary valves. Revenues from the distribution of CryoValve® SG
pulmonary heart valves increased to $1.2 million in the first quarter of 2009
from $218,000 in the first quarter of 2008, representing 21
percent of the Company’s cardiac tissue processing revenues in the first quarter
of 2009.
BioGlue® Surgical
Adhesive revenues were $11.8 million for the first quarter of 2009 compared
to $11.9 million for the first quarter of 2008. Although there was a
2 percent increase in the milliliters of BioGlue shipped,
revenues decreased 1 percent. Excluding the effects of
changes in foreign currency exchange rates quarter over quarter, which reduced
BioGlue revenues by $306,000 in the first quarter of 2009, BioGlue revenues
would have been $12.1 million, or a 2 percent increase in revenues for the first
quarter of 2009 compared to the first quarter of 2008.
U.S.
BioGlue revenues were $8.4 million and $8.6 million for the first quarters of
2009 and 2008, respectively. International BioGlue revenues were $3.3
million for each of the first quarters of 2009 and 2008.
Other
medical device revenues for the first quarter of 2009 were $1.2 million compared
to $93,000 for the first quarter of 2008. Included in this
revenue category for the first quarter of 2009 was $1.1
million in sales of HemoStase™.
Total
tissue processing and product gross margins were 64 percent and 63 percent
for the first quarters of 2009 and 2008, respectively. Tissue
processing gross margins for each of the first quarters of 2009 and 2008 were 45
percent.
General,
administrative, and marketing expenses for the first quarter of 2009 were $12.7
million compared to $12.1 million for the first quarter of 2008. The
increase in these 2009 first quarter expenses was primarily due to increased
marketing expenses. These expenses included personnel costs,
advertising, physician education and training, and promotional materials to
support the Company’s expanding tissue processing service and product offerings,
and revenue growth.
Research
and development expenses were $1.0 million for the first quarter of
2009 compared to $1.4 million for the first quarter of
2008. Research and development spending in 2009 is primarily
focused on the Company’s protein hydrogel technologies and SynerGraft® tissues
and products.
As of
March 31, 2009, the Company had $23.7 million in cash, cash equivalents, and
marketable securities, compared to $12.9 million at March 31,
2008. Of this $23.7 million, $2.0 million was received from the U.S.
Department of Defense as advance funding for the development of BioFoamÒ
protein hydrogel technology, and $5.0 million was designated as long-term
restricted money market funds due to a financial covenant requirement under the
Company’s credit agreement.
“The
Company continues to thrive and expand even in a very adverse world economy, as
witnessed by the Company’s record revenues and operating income in the first
quarter of 2009,” stated Steven G. Anderson, president and chief executive
officer. “We are very encouraged by our continued growth and the trend we
are establishing for 2009 and we will continue to look for opportunities to
expand our cardiac and vascular surgery portfolios.”
2009
Financial Guidance
The
Company is reiterating its guidance for the full year of 2009. The
Company's GAAP revenues are composed of tissue processing and product revenues
plus other revenues. The
Company expects total revenues for the full year of 2009 to be between $113.0
million and $119.0 million. The Company expects tissue processing
revenues to be between $58.0 million and $60.5 million and BioGlue revenues to
be between $50.0 million and $52.0 million for the full year of
2009. Other medical device revenues, which consist primarily of sales
of HemoStase, are expected to be between $4.5 million and $5.5 million in
2009. Tissue processing and product revenues could be affected
by several factors, including but not limited to, the general economic
environment and its effect on demand for the Company’s tissues and
products and changes in foreign currency exchange rates and their effects
on revenues generated in international markets.
Other
revenues for 2009 may reach between $500,000 and $1.0 million, related to
funding received from the Department of Defense in connection with the
development of BioFoam. The amount of other revenues is largely
dependent upon actual expenses incurred related to the development of
BioFoam.
The
Company expects general, administrative, and marketing expenses of between $52.0
million and $54.0 million and research and development expenses of between $5.0
million and $6.0 million for the full year of 2009. The research and
development expectations include an estimated $500,000 to $1.0 million to
be funded by the Department of Defense in connection with the development of
BioFoam.
The
Company expects operating income to increase for the full year of 2009 compared
to 2008. However, the Company expects its effective income tax rate
to be approximately 41 percent in 2009 compared to a tax benefit in
2008. As a result, earnings per share in 2009 will be lower than in
2008, when the Company reversed a significant portion of the valuation allowance
on its deferred tax assets, which resulted in the recognition of significant
income tax benefits.
Webcast
and Conference Call Information
The
Company will hold a teleconference call and live webcast today at 10:00 a.m.
Eastern Time to discuss the results followed by a question and answer session
hosted by Mr. Anderson.
To listen
to the live teleconference, please dial 201-689-8261 a few minutes prior to
10:00 a.m. A replay of the teleconference will be available from
April 30 through May 7 and can be accessed by calling 877-660-6853 (toll free)
or 201-612-7415. The account number for the replay is 244 and the
conference number is 319410.
The live
webcast and replay can be accessed by going to the Investor Relations section of
the CryoLife Web site at www.cryolife.com and
selecting the heading Webcasts & Presentations.
About
CryoLife, Inc.
Founded
in 1984, CryoLife, Inc. is a leader in the processing and distribution of
implantable living human tissues for use in cardiac and vascular surgeries
throughout the U.S. and Canada. The Company received FDA clearance
for the CryoValve® SG
pulmonary heart valve, processed using CryoLife’s proprietary SynerGraft®
technology. 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. BioGlue is also CE
marked in the European Community and approved in Canada and Australia for use in
soft tissue repair. CryoLife distributes HemoStase™, a
hemostatic agent, in much of the U.S. for use in cardiac and vascular surgery
and in the European Community and Canada for cardiac, vascular, and general
surgery, subject to certain exclusions.
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 statements include those regarding anticipated 2009
performance and our growth prospects. These future events may not
occur as and when expected, if at all, and, together with our business, are
subject to various risks and uncertainties. These risks and
uncertainties include that we are significantly dependent on revenues from
BioGlue and there are a variety of risks affecting BioGlue, CryoValve SG
pulmonary heart valves and other SynerGraft processed tissues and products may
not be accepted by the marketplace, the CryoValve SG pulmonary heart valve has a
one year shelf life, we are dependent on the availability of sufficient
quantities of tissue from human donors, the CryoValve SG pulmonary heart valve
post-clearance study requested by the FDA may not provide the expected positive
results, our products and tissues we process and preserve have allegedly caused
and may in the future cause injury to patients, and we have been and may be
exposed to tissue processing and product liability claims and additional
regulatory scrutiny as a result, the possibility that the FDA could impose
additional restrictions on the Company's operations, issue a 483, or warning
letter, or require a recall, or prevent the Company from processing and
distributing tissues or manufacturing and distributing other products, our
failure to adequately comply with government regulations could result in loss of
revenues and customers as well as additional compliance expense, our ability to
borrow under our credit facility may be limited, the credit facility limits our
ability to pursue significant acquisitions, the financial and credit liquidity
crisis may adversely affect our ability to borrow money or raise capital, there
are limitations on our use of net operating loss carry-forwards, adverse
regulatory action outside of the U.S. could affect our business, physicians have
been and may be reluctant to implant or use our preserved tissues or products,
our existing insurance policies may not be sufficient to cover our actual claims
liability, current economic conditions may impact demand for our tissues and
products, intense competition may affect our ability to operate profitably, we
may be unable to obtain adequate insurance at a reasonable cost or at all,
uncertainties related to patents and protection of proprietary technology may
adversely affect the value of our intellectual property, uncertainties related
to patents and protection of proprietary technology for products distributed by
us may adversely affect our ability to distribute those products, we are
dependent on key personnel, we may not be successful in obtaining necessary
clinical results and regulatory approvals for products and services in
development, and our new products and services may not achieve market
acceptance, we may be unable to effectively leverage our existing sales force to
sell HemoStase, the lawsuit we filed against Medafor regarding our distribution
agreement with Medafor may adversely impact our relationship with Medafor and
could hamper or prevent us from distributing HemoStase, rapid technological
change could cause our services and products to become obsolete, extensive
government regulation may adversely affect our ability to develop and sell
products and services, we have experienced operating losses and negative cash
flows in the past, and we must continue to address the underlying causes in
order to continue to operate profitably and generate positive cash flows,
investments in new technologies and acquisitions of products or distribution
rights may not be successful, if we are not successful in expanding our business
activities in international markets, we will be unable to pursue one of our
strategies for increasing our revenues, continued deflation of foreign
currencies relative to the U.S. dollar could materially and adversely impact our
business, and future healthcare policies, healthcare reimbursement methods, and
healthcare reimbursement policies may affect the availability, amount, and
timing of our revenues. These risks and uncertainties include the
risk factors detailed in our Securities and Exchange Commission filings,
including our Form 10-K filing for the year ended December 31, 2008, our most
recent Form 10-Q, and the Company's other SEC filings. The Company does not undertake to
update its forward-looking statements.
CRYOLIFE,
INC. AND SUBSIDIARIES
Financial
Highlights
(In
thousands, except per share data)
|
Three
Months Ended
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||||||||
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March 31,
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||||||||
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2009
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2008
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|||||||
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(Unaudited)
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||||||||
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Revenues:
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||||||||
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Preservation
services
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$ | 13,548 | $ | 13,424 | ||||
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Products
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12,945 | 11,980 | ||||||
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Other
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195 | 164 | ||||||
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Total
revenues
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26,688 | 25,568 | ||||||
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Cost
of preservation services and products:
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||||||||
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Preservation
services
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7,491 | 7,318 | ||||||
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Products
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1,962 | 1,992 | ||||||
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Total cost of preservation services and products
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9,453 | 9,310 | ||||||
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Gross
margin
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17,235 | 16,258 | ||||||
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Operating
expenses:
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||||||||
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General,
administrative, and marketing
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12,748 | 12,067 | ||||||
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Research
and development
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1,026 | 1,445 | ||||||
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Total
operating expenses
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13,774 | 13,512 | ||||||
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Operating
income
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3,461 | 2,746 | ||||||
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Interest
expense
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49 | 70 | ||||||
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Interest
income
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(43 | ) | (122 | ) | ||||
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Other
expense (income), net
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152 | (82 | ) | |||||
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Income
before income taxes
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3,303 | 2,880 | ||||||
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Income
tax expense
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1,354 | 115 | ||||||
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Net
income
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$ | 1,949 | $ | 2,765 | ||||
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Income
per common share:
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||||||||
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Basic
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$ | 0.07 | $ | 0.10 | ||||
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Diluted
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$ | 0.07 | $ | 0.10 | ||||
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Weighted
average common shares outstanding:
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||||||||
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Basic
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28,009 | 27,566 | ||||||
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Diluted
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28,230 | 28,002 | ||||||
CRYOLIFE,
INC. AND SUBSIDIARIES
Financial
Highlights
(In
thousands)
|
Three
Months Ended
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||||||||
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March 31,
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||||||||
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2009
|
2008
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|||||||
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(Unaudited)
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||||||||
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Revenues
from:
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||||||||
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Cardiac
tissue
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$ | 5,592 | $ | 6,238 | ||||
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Vascular
tissue
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7,871 | 6,859 | ||||||
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Orthopaedic
tissue
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85 | 327 | ||||||
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Total
preservation services
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13,548 | 13,424 | ||||||
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BioGlue
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11,764 | 11,887 | ||||||
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HemoStase
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1,110 | -- | ||||||
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Other
medical devices
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71 | 93 | ||||||
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Total
products
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12,945 | 11,980 | ||||||
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Other
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195 | 164 | ||||||
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Total
revenues
|
$ | 26,688 | $ | 25,568 | ||||
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Revenues:
|
||||||||
|
U.S.
|
$ | 22,744 | $ | 22,000 | ||||
|
International
|
3,944 | 3,568 | ||||||
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Total
revenues
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$ | 26,688 | $ | 25,568 | ||||
|
March
31,
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December
31,
|
|||||||
|
2009
|
2009
|
|||||||
|
(Unaudited)
|
(Audited)
|
|||||||
|
Cash
and cash equivalents, marketable securities,
|
$ | 18,747 | $ | 17,763 | ||||
|
at
market, and restricted marketable securities
|
||||||||
|
Receivables,
net
|
15,166 | 13,999 | ||||||
|
Deferred
preservation costs
|
35,769 | 34,913 | ||||||
|
Inventories
|
7,306 | 7,077 | ||||||
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Restricted
money market funds, long-term
|
5,000 | 5,000 | ||||||
|
Total
assets
|
127,394 | 125,995 | ||||||
|
Shareholders’
equity
|
102,209 | 99,326 | ||||||
For
additional information about the company, visit CryoLife’s Web
site:
www.cryolife.com.
END