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):  February 15, 2016

________________________

CRYOLIFE, INC.
(Exact name of registrant as specified in its charter)
_________________________

Florida 	1-13165	59-2417093	
(State or Other Jurisdiction
of Incorporation)	(Commission File Number)	(IRS Employer
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

_____________________________________________________________
(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):
 
☐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))

 

 
Section 2 Financial Information
 
Item 2.02 Results of Operations and Financial Condition.
 
On February 15, 2016, CryoLife, Inc. (“CryoLife” or the “Company”) issued a press release announcing its financial results for the year and quarter ended December 31, 2015.   CryoLife hereby incorporates by reference herein the information set forth in its press release dated February 15, 2016, 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 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, 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 text portion 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 filed for the year ended December 31, 2014 and its subsequent filings with the Securities and Exchange Commission,  as well as in the press release attached as Exhibit 99.1 hereto. CryoLife disclaims any obligation or duty to update or modify these forward-looking statements.
 
Section 9Financial 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.

 	 	
Exhibit Number	Description	
99.1*	Press release dated February 15, 2016	

*  This exhibit is furnished, 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 16, 2016
 	 	
By:	/s/ D. Ashley Lee	
Name:	D. Ashley Lee	
Title:	Executive Vice President, Chief
Operating Officer and Chief
Financial Officer	

 

 

 
 
-3-

Exhibit 99.1 

 
FOR IMMEDIATE RELEASE
 
Contacts:
 
CryoLife
D. Ashley Lee
Executive Vice President, Chief Financial Officer and Chief Operating Officer                                                                              Phone: 770-419-3355	The Ruth Group
Nick Laudico / Zack Kubow
646-536-7030 / 7020
nlaudico@theruthgroup.com
zkubow@theruthgroup.com	
 
CryoLife Reports Fourth Quarter and Full Year 2015 Financial Results
 
Recent Highlights:
 	·	 	Completed Acquisition of On-X® Life Technologies (On-X) and Sale of HeRO ®  Product Line, Strengthening Focus on Cardiac Surgery and Enhancing Growth Potential	

 	·	 	Fourth Quarter Revenues Increased 7 Percent Year-over-Year to a Record $39.8 Million	

 	·	 	Fourth Quarter Gross Margin Improved to 67 Percent	

ATLANTA, GA – (February 15,  2016) – CryoLife, Inc. (NYSE: CRY),  a leading medical device and tissue processing company focused on cardiac surgery, announced today its results for the fourth quarter and full year of 2015. 
 
J. Patrick Mackin, Chairman, President, and Chief Executive Officer, said, “2015 was a year of significant progress for CryoLife, with positive momentum on key strategic initiatives throughout the year.  As a result, we achieved record quarterly revenues of $39.8 million in the fourth quarter, with gross margin of 67 percent, a significant year-over-year and sequential improvement.  As we look to 2016, we added to our growth and margin expansion potential with the recent acquisition of On-X, which expands our market opportunity with a differentiated mechanical heart valve technology and more than doubles our U.S. cardiac surgery sales force.  We also strengthened our focus on cardiac surgery through the sale of the HeRO product line.   Overall, we are optimistic that our internal and business development initiatives have positioned the Company to deliver an enhanced growth trajectory and profitability.”  
 
Revenues for the fourth quarter of 2015 increased 7 percent to $39.8 million, compared to $37.2 million for the fourth quarter of 2014.  Foreign currency exchange adversely affected revenues for the fourth quarter of 2015 by $379,000, or  1 percent.  Product revenues were $23.9 million for the fourth quarter of 2015, up 10 percent from $21.7 million in the fourth quarter of 2014.  This primarily reflects increases in revenues in CardioGenesis cardiac laser therapy, PhotoFix™,  and ProCol ® .    Tissue processing revenues were $15.9 million for the fourth quarter of 2015, up 3 percent compared to $15.5 million for the fourth quarter of 2014, driven primarily by an increase in average service fees.    

 

Revenues for the full year of 2015 increased 1 percent to $145.9 million, compared to $144.6 million for the full year of 2014.  Foreign currency exchange adversely affected revenues for the full year of 2015 by $1.5 million, or 1 percent.  Product revenues were $83.1 million for the full year of 2015, up 1 percent from $81.9 million in the full year of 2014.  Product revenues reflect increased revenues from CardioGenesis cardiac laser therapy and from the recent launches of ProCol and PhotoFix, partially offset by a decrease in BioGlue ®  revenues   primarily due to the transition to a direct sales model in France on October 1st and the strengthening U.S. dollar.  Tissue processing revenues were $62.8 million for the full year of 2015,  flat compared to the full year of 2014. 
 
Net income for the fourth quarter of 2015 was $2.6 million, or $0.09 per basic and fully diluted common share, compared to net income of $1.8 million, or $0.06 per basic and fully diluted common share, for the fourth quarter of 2014.  Excluding certain items as shown in the schedules below, adjusted non-GAAP fully diluted earnings per share was $0.13 in the fourth quarter of 2015, compared to $0.06 in the fourth quarter of 2014.  
 
Net income for the full year of 2015 was $4.0 million, or $0.14 per basic and fully diluted common share, compared to net income of $7.3 million, or $0.26 per basic and $0.25 per fully diluted common share, for the full year of 2014.  Excluding certain items as shown in the schedules below, adjusted non-GAAP fully diluted earnings per share was $0.30 in the full year of 2015, compared to $0.26 in the full year of 2014. 
 
The Company’s 2016 financial guidance is summarized below. 
 
2016 Financial Guidance Summary	
Total revenues	$178 million - $180 million
Mid-single digits % pro-forma increase over 2015	
Product revenues	Mid-single digits % pro-forma increase over 2015	
Tissue processing revenues	Mid-single digits % increase over 2015	
Gross margins	Approximately 63%	
R&D expenses	$13.0 million - $15.0 million	
Non-GAAP adjusted income per common share	$0.29 - $0.32	
 
The Company’s financial guidance for the full year of 2016 is subject to the risks described below in the last paragraph of this press release, prior to the financial tables.    The guidance does not include any effect related to future business development activities,  transaction and integration costs, acquisition related amortization, and other unusual charges.
Non-GAAP Financial Measures 
This press release contains non-GAAP financial measures.  Investors should consider this non-GAAP information in addition to, and not as a substitute for, financial measures prepared in accordance with U.S. GAAP.  In addition, this non-GAAP financial information may not be the same as similar measures presented by other companies.  Non-GAAP adjusted net income and adjusted income per common share excludes business development expenses; severance expenses associated with certain
Page 2

 

employee departures, including the retirement of the Company’s former President, CEO, and Executive Chairman; amortization expenses; the write-off of PerClot Topical inventory related to the injunction from the Medafor Litigation; intangible impairment; the allowance for uncollectable notes receivable; the gain on contingent consideration; and the gain on sale of Medafor investment.  The non-GAAP disclosures have been calculated using a proforma tax rate of 38% for all periods.  The non-GAAP disclosures presented below differ from the non-GAAP disclosures previously presented in 2015 due to the addition of amortization expenses as an adjustment item.  The Company expects amortization expenses to increase significantly in 2016 due to the acquisition of On-X and believes adjusting amortization expenses will provide better comparative information to investors regarding the Company’s on-going operating performance.  The Company intends to present this non-GAAP format in future reports.  The Company believes that this non-GAAP presentation provides useful information to investors regarding unusual non-operating transactions and the operating expense structure of the Company’s existing and recently acquired operations, without regard to its on-going efforts to acquire additional complementary products and businesses and the transaction expenses incurred in connection with recently acquired product lines.  The Company believes it is useful to exclude certain expenses because such amounts in any specific period may not directly correlate to the underlying performance of our business operations and can vary significantly between periods as a result of factors such as, new acquisitions, amortization of previously acquired tangible and intangible assets, or unusual compensation expenses.  The Company does, however, expect to incur similar types of expenses in the future, and this non-GAAP financial information should not be viewed as a promise or indication that these types of expenses will not recur.
 
Webcast and Conference Call Information
 
The Company will hold a teleconference call and live webcast tomorrow at 8:00 a.m. Eastern Time to discuss the results followed by a question and answer session hosted by Mr. Mackin.
 
To listen to the live teleconference, please dial 201-689-8261 a few minutes prior to 8:00 a.m.  A replay of the teleconference will be available February 16 through February 23 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415.  The conference number for the replay is 13629845.
 
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.
 
Headquartered in suburban Atlanta, Georgia, CryoLife is a leader in the manufacturing, processing, and distribution of implantable living tissues and medical devices used in cardiac surgical procedures.  CryoLife markets and sells products in more than 80 countries worldwide.  For additional information about CryoLife, visit our website,  www.cryolife.com .
 
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.  Such forward-looking statements reflect the views of management at the time such statements are made.  These statements include those regarding CryoLife’s expected increased growth and margin expansion potential and expanded market opportunity resulting from the recent acquisition of On-X our ability to focus more on cardiac surgery as a result of the divestiture of our HeRO product line, and CryoLife being positioned for enhanced growth trajectory and profitability as a result of internal and business
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development initiatives.  These forward-looking statements are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from current expectations.   These risks and uncertainties include that the expected market opportunities for mechanical heart valves may be incorrect and/or may shrink due to factors beyond our control; and the expected benefits of focusing market opportunities may be incorrect.  These risks and uncertainties include the risk factors detailed in our Securities and Exchange Commission filings, including our Form 10-K for the year ended December 31, 2015, and our subsequent filings with the SEC. CryoLife does not undertake to update its forward-looking statements.
Page 4

 

CRYOLIFE, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands, except per share data)

 	Three Months Ended	 	Twelve Months Ended	 	
 	December 31,	 	December 31,	 	
 	2015	 	2014	 	2015	 	2014	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	
Products	$	23,913 	 	$	21,673 	 	$	83,081 	 	$	81,883 	
Preservation services	 	15,925 	 	 	15,478 	 	 	62,817 	 	 	 62,758	
Total revenues	 	39,838 	 	 	37,151 	 	 	145,898 	 	 	144,641 	
 	 	 	 	 	 	 	 	 	 	 	 	
Cost of products and preservation services:	 	 	 	 	 	 	 	 	 	 	 	
Products	 	5,108 	 	 	5,068 	 	 	18,663 	 	 	17,167 	
Preservation services	 	8,214 	 	 	9,448 	 	 	36,516 	 	 	36,183 	
Total cost of products and	 	 	 	 	 	 	 	 	 	 	 	
preservation services	 	13,322 	 	 	14,516 	 	 	55,179 	 	 	53,350 	
 	 	 	 	 	 	 	 	 	 	 	 	
Gross margin	 	26,516 	 	 	22,635 	 	 	90,719 	 	 	91,291 	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	
General, administrative, and marketing	 	19,139 	 	 	18,638 	 	 	74,929 	 	 	73,754 	
Research and development	 	2,540 	 	 	2,092 	 	 	10,436 	 	 	8,699 	
Total operating expenses	 	21,679 	 	 	20,730 	 	 	85,365 	 	 	82,453 	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	   4,837	 	 	1,905 	 	 	    5,354	 	 	8,838 	
 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense	 	      (44)	 	 	       65	 	 	(62)	 	 	     175	
Interest income	 	     (16)	 	 	       (1)	 	 	      (45)	 	 	    (50)	
Gain on sale of Medafor investment	 	        --	 	 	(530)	 	 	(891)	 	 	(530)	
Other expense, net	 	280 	 	 	     746	 	 	484 	 	 	   540	
 	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes	 	4,617 	 	 	1,625 	 	 	5,868 	 	 	8,703 	
Income tax expense (benefit)	 	1,981 	 	 	(151)	 	 	1,863 	 	 	   1,381	
 	 	 	 	 	 	 	 	 	 	 	 	
Net income	$	2,636 	 	$	1,776 	 	$	4,005 	 	$	7,322 	
 	 	 	 	 	 	 	 	 	 	 	 	
Income per common share:	 	 	 	 	 	 	 	 	 	 	 	
Basic	$	0.09 	 	$	0.06 	 	$	0.14 	 	$	0.26 	
Diluted	$	0.09 	 	$	0.06 	 	$	0.14 	 	$	0.25 	
 	 	 	 	 	 	 	 	 	 	 	 	
Dividends declared per common share	$	0.0300 	 	$	0.0300 	 	$	0.1200 	 	$	0.1175 	
 	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average common shares outstanding:	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	27,914 	 	 	27,273 	 	 	27,744 	 	 	27,379 	
Diluted	 	28,687 	 	 	28,238 	 	 	28,542 	 	 	28,313 	
 
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CRYOLIFE, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands)

 	Three Months Ended	 	Twelve Months Ended	
 	December 31,	 	           December 31,	
 	2015	 	2014	 	2015	 	2014	
Products:	 	 	 	 	 	 	 	 	 	 	 	
BioGlue and BioFoam	$	16,488 	 	$	16,346 	 	$	59,332 	 	$	62,091 	
PerClot	 	1,096 	 	 	1,232 	 	 	4,083 	 	 	4,289 	
CardioGenesis cardiac laser therapy	 	3,487 	 	 	2,151 	 	 	9,419 	 	 	8,225 	
HeRO Graft	 	2,008 	 	 	1,827 	 	 	7,546 	 	 	7,131 	
ProCol	 	397 	 	 	117 	 	 	1,305 	 	 	147 	
PhotoFix	 	437 	 	 	--	 	 	1,396 	 	 	--	
         Total products	 	23,913 	 	 	21,673 	 	 	83,081 	 	 	81,883 	
 	 	 	 	 	 	 	 	 	 	 	 	
Preservation services:	 	 	 	 	 	 	 	 	 	 	 	
Cardiac tissue	 	6,970 	 	 	  7,456	 	 	28,059 	 	 	29,437 	
Vascular tissue	 	  8,955	 	 	  8,022	 	 	34,758 	 	 	33,321 	
Total preservation services	 	15,925 	 	 	15,478 	 	 	62,817 	 	 	62,758 	
 	 	 	 	 	 	 	 	 	 	 	 	
Total revenues	$	39,838 	 	$	37,151 	 	$	145,898 	 	$	144,641 	
 	 	 	 	 	 	 	 	 	 	 	 	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	
  U.S.	$	30,797 	 	$	27,931 	 	$	114,978	 	$	110,533 	
International	 	9,041 	 	 	9,220 	 	 	  30,920	 	 	34,108 	
Total revenues	$	39,838 	 	$	37,151 	 	$	145,898 	 	$	144,641 	

 

 
 	December 31,	 	December 31,	
 	2015	 	2014	
 	 	 	 	 	 	
Cash, cash equivalents, and restricted cash and securities	$	43,418 	 	$	39,259 	
Total current assets	 	109,663 	 	 	106,028 	
Total assets	 	181,179 	 	 	176,157 	
Total current liabilities	 	19,605 	 	 	20,627 	
Total liabilities	 	25,928 	 	 	27,472 	
Shareholders’ equity	 	155,251 	 	 	148,685 	
 
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CRYOLIFE, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Disclosures
(In thousands, except per share data)

 	Three Months Ended	 	Twelve Months Ended	
 	December 31,	 	December 31,	
 	2015	 	2014	 	2015	 	2014	
 	 	 	 	 	 	 	 	 	 	 	 	
GAAP:	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes	$	4,617	 	$	1,625	 	$	5,868	 	$	8,703	
Income tax expense (benefit)	 	1,981	 	 	(151)	 	 	1,863	 	 	1,381	
Net Income	$	2,636	 	$	1,776	 	$	4,005	 	$	7,322	
 	 	 	 	 	 	 	 	 	 	 	 	
Diluted income per common share:	$	0.09	 	$	0.06	 	$	0.14	 	$	0.25	
 	 	 	 	 	 	 	 	 	 	 	 	
Reconciliation of income before income taxes,	 	 	 	 	 	 	 	 	 	 	 	
GAAP to adjusted net income, non-GAAP:	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes, GAAP	$	4,617 	 	$	1,625 	 	$	5,868 	 	$	8,703 	
Adjustments:	 	 	 	 	 	 	 	 	 	 	 	
Business development expenses	 	1,126 	 	 	9 	 	 	3,006 	 	 	27 	
Severance expenses	 	--	 	 	565 	 	 	2,965 	 	 	2,004 	
Amortization expenses	 	615 	 	 	524 	 	 	2,135 	 	 	2,027 	
Write-off of PerClot Topical inventory	 	--	 	 	--	 	 	498 	 	 	--	
Intangible impairment	 	--	 	 	--	 	 	457 	 	 	--	
Allowance for uncollectable notes receivable	 	--	 	 	2,000 	 	 	--	 	 	2,000 	
Gain on contingent consideration	 	--	 	 	(1,392)	 	 	--	 	 	(1,884)	
Gain on sale of Medafor investment	 	--	 	 	(530)	 	 	(891)	 	 	(530)	
Adjusted income before income taxes,	 	 	 	 	 	 	 	 	 	 	 	
non-GAAP	 	6,358 	 	 	2,801 	 	 	14,038 	 	 	12,347 	
 	 	 	 	 	 	 	 	 	 	 	 	
Income tax expense calculated at a	 	 	 	 	 	 	 	 	 	 	 	
    pro-forma tax rate of 38%  	 	2,416 	 	 	1,064 	 	 	5,334 	 	 	4,692 	
Adjusted net income, non-GAAP	$	3,942 	 	$	1,737 	 	$	8,704 	 	$	7,655 	
 	 	 	 	 	 	 	 	 	 	 	 	
Reconciliation of diluted income per common	 	 	 	 	 	 	 	 	 	 	 	
share, GAAP to adjusted diluted income per	 	 	 	 	 	 	 	 	 	 	 	
common share, non-GAAP:	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Diluted income per common share – GAAP	$	0.09	 	$	0.06	 	$	0.14	 	$	0.25	
Adjustments:	 	 	 	 	 	 	 	 	 	 	 	
Business development expenses	 	0.02	 	 	--	 	 	0.06	 	 	--	
Severance expenses	 	--	 	 	0.01	 	 	0.06	 	 	0.04	
Amortization expenses	 	0.01	 	 	0.01	 	 	0.05	 	 	0.05	
Write-off of PerClot Topical inventory	 	--	 	 	--	 	 	0.01	 	 	--	
Intangible impairment	 	--	 	 	--	 	 	0.01	 	 	--	
Allowance for uncollectable notes receivable	 	--	 	 	0.04	 	 	--	 	 	0.04	
Gain on contingent consideration	 	--	 	 	(0.03)	 	 	--	 	 	(0.04)	
Gain on sale of Medafor investment	 	--	 	 	(0.01)	 	 	(0.02)	 	 	(0.01)	
Effect of 38% pro-forma tax rate	 	0.01	 	 	(0.02)	 	 	(0.01)	 	 	(0.07)	
Adjusted diluted income per common share,	 	 	 	 	 	 	 	 	 	 	 	
non-GAAP:	$	0.13	 	$	0.06	 	$	0.30	 	$	0.26	
 	 	 	 	 	 	 	 	 	 	 	 	
Diluted-weighted average common	 	 	 	 	 	 	 	 	 	 	 	
shares outstanding:	 	28,687 	 	 	28,238 	 	 	28,542 	 	 	28,313 	

 

 
 
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