Revenues increase 17 percent in 2006 compared to 2005; Recent
transactions provide platform for future growth ATLANTA, Feb. 20
/PRNewswire-FirstCall/ -- CryoLife, Inc. (NYSE:CRY), a
biomaterials, medical device and tissue processing company,
announced today that revenues for the fourth quarter of 2006
increased 17 percent to $21.1 million compared to $18.0 million in
the fourth quarter of 2005. Net loss in the fourth quarter of 2006
was ($50,000), and ($0.01) per basic and fully diluted common
share, compared to a net loss of ($681,000), and ($0.04) per basic
and fully diluted common share, in the fourth quarter of 2005. The
fourth quarter of 2006 included a non-cash charge of $2.8 million
and a net gain of $2.6 million, (comprised of a non-cash gain of
$2.9 million offset by approximately $300,000 in transaction
costs), related to the Company's exit from orthopedic tissue
processing, a $751,000 charge for stock- based compensation, and
benefits related to the adjustment of reserves for product
liability and other legal losses of $333,000. The fourth quarter of
2005 included benefits related to the adjustment of reserves for
product liability and other legal losses of $683,000, a $118,000
charge for stock- based compensation and a non-cash gain for the
change in value of the derivative related to the Company's six
percent convertible preferred stock of $512,000. Revenues for the
full year of 2006 increased 17 percent to $81.3 million compared to
$69.3 million for the full year of 2005. Net income in the full
year of 2006 was $365,000, with a net loss of ($0.02) per basic and
fully diluted common share, compared to a net loss of ($19.5)
million, and ($0.85) per basic and fully diluted common share, in
the full year of 2005. The net loss of ($0.02) per share in 2006
results primarily from dividends related to the Company's
convertible preferred stock. The full year of 2006 included a
non-cash charge of $2.8 million and a net gain of $2.6 million,
(comprised of a non-cash gain of $2.9 million offset by
approximately $300,000 in transaction costs), related to the
Company's exit from orthopedic tissue processing, a net $2.1
million gain related to the settlement of insurance coverage
disputes, a $1.6 million charge for stock- based compensation, a
$784,000 gain related to the adjustment of reserves for product
liability losses, and a $448,000 charge related to post-employment
benefits. The full year of 2005 included an $11.6 million charge
for the settlement of the shareholder class action lawsuit, an
$851,000 charge related to post-employment benefits, a $285,000
charge for stock-based compensation and a $961,000 benefit related
to the adjustment of reserves for product liability and other legal
losses. Steven G. Anderson, president and chief executive officer
of CryoLife, Inc., stated, "Our return to profitability in 2006
reflects the ongoing recovery of the Company. The recent
announcements concerning agreements with Regeneration Technologies,
the Cleveland Clinic and MAST BioSurgery reflect the continued
implementation of our strategic initiatives outlined during late
2006." BioGlue(R) revenues were $10.5 million for the fourth
quarter of 2006 compared to $9.6 million in the fourth quarter of
2005, an increase of nine percent. U. S. BioGlue revenues were $7.7
million and $7.2 million in the fourth quarter of 2006 and 2005,
respectively. International BioGlue revenues were $2.8 million and
$2.4 million in the fourth quarter of 2006 and 2005, respectively.
BioGlue revenues were $40.0 million for the full year of 2006
compared to $38.0 million in the full year of 2005, an increase of
five percent. U.S. BioGlue revenues were $29.8 million and $28.7
million in the full year of 2006 and 2005, respectively.
International BioGlue revenues were $10.2 million and $9.3 million
in the full year of 2006 and 2005, respectively. Tissue processing
revenues in the fourth quarter of 2006 increased 27 percent to
$10.2 million compared to $8.1 million in the fourth quarter of
2005. Tissue processing revenues for the full year of 2006
increased 32 percent to $40.1 million compared to $30.3 million in
the full year of 2005. In addition to increases in tissue prices,
the growth in tissue processing revenues was primarily due to an
increase in unit shipments resulting from an increase in tissue
procurement and an improvement in processing yields. Total product
and tissue processing gross margins were 47 percent in the fourth
quarter of 2006 compared to 54 percent in the fourth quarter of
2005. Tissue processing gross margins in the fourth quarter of 2006
were 10 percent compared to 21 percent in the fourth quarter of
2005. Excluding a non-cash charge of $2.8 million related to the
Company's exit from orthopedic tissue processing, total product and
tissue processing gross margins were 60 percent and tissue
processing gross margins were 37 percent in the fourth quarter of
2006. See attached schedule for a reconciliation of these numbers.
Total product and tissue processing gross margins were 54 percent
in the full year of 2006 compared to 53 percent in the full year of
2005. Tissue processing gross margins in the full year of 2006 were
25 percent compared to 20 percent in the first year of 2005.
Excluding a non-cash charge of $2.8 million related to the
Company's exit from orthopedic activities, total product and tissue
processing gross margins were 57 percent and tissue processing
gross margins were 32 percent for the full year of 2006. See
attached schedule for a reconciliation of these numbers. Tissue
processing gross margins improved in 2006 compared to 2005,
primarily as a result of price increases and improved tissue
processing yields, as well as an increase in the number of tissues
processed. General, administrative, and marketing expenses in the
fourth quarter of 2006 were $11.4 million compared to $10.5 million
in the fourth quarter of 2005. General, administrative, and
marketing expenses in the fourth quarter of 2006 included a
$751,000 charge for stock-based compensation and a $333,000 gain
related to the adjustment of reserves for product liability and
other legal losses. General, administrative, and marketing expenses
in the fourth quarter of 2005 included a $683,000 gain related to
the adjustment of reserves for product liability and other legal
losses and a $118,000 charge for stock- based compensation.
General, administrative, and marketing expenses in the full year of
2006 were $41.5 million compared to $53.2 million in the full year
of 2005. General, administrative, and marketing expenses for the
full year of 2006 included a net $2.1 million gain from the
settlement of insurance coverage disputes, a $1.6 million charge
for stock based compensation, a $784,000 gain related to the
adjustment of reserves for product liability losses, and a $448,000
charge related to post employment benefits. General,
administrative, and marketing for the full year of 2005 included an
$11.6 million charge for the settlement of the shareholder class
action lawsuit, an $851,000 charge related to post-employment
benefits, a $285,000 charge for stock-based compensation and a
$961,000 benefit related to the adjustment of reserves for product
liability and other legal losses. R&D expenses were $975,000
and $980,000 in the fourth quarters of 2006 and 2005, respectively.
R&D expenses were $3.5 million and $3.7 million in the full
year of 2006 and 2005, respectively. As of February 16, 2007, the
Company had $9.3 million in cash, cash equivalents, marketable
securities (at market), and restricted securities. 2007 Guidance
The Company expects annual product and tissue processing revenues
for the full year of 2007 to be between $89.0 million and $92.0
million, exceeding the company's previous record of $87.7 million
recorded in 2002. The Company expects tissue processing revenues
between $45.0 million and $47.0 million, and BioGlue revenues
between $43.0 million and $44.0 million for the full year of 2007.
The Company expects continuing improvements in its gross margins
for the full year of 2007. The Company believes that with more of
its tissue processing revenues being generated from cardiac and
vascular tissue shipments versus orthopedic tissue shipments, gross
margins should improve. The Company expects general, administrative
and marketing expenses of between $45.0 million and $48.0 million,
and research and development expenses of between $4.0 million and
$5.0 million, for the full year of 2007. Webcast and Conference
Call Information The Company will hold a teleconference call and
live webcast at 10:00 a.m. Eastern Time, February 20, 2007, to
discuss fourth quarter and full year 2006 financial 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 February 20 - 28, 2007 and can be accessed by calling
(toll free) 877-660-6853 or 201-612-7415. The account number for
the replay is 244 and the conference number is 230323. The live
webcast and replay, as well as a copy of this press release, can be
accessed by going to the Investor Relations section of the CryoLife
web site at http://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 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. BioGlue is also CE marked in the European
Community and approved in Canada and Australia for use in soft
tissue repair. The Company also distributes the CryoLife-O'Brien(R)
stentless porcine heart valve and the SG Model 100 vascular graft,
which are 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 statements include
those regarding anticipated revenues, expenses and gross margin
improvements for 2007 and future growth and financial improvement.
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 recently announced strategic directives may not
generate anticipated revenue and earnings growth, the RTI exchange
and service agreement may not result in some or all of the positive
benefits anticipated, that sources of cardiovascular and vascular
tissue procurement for RTI may choose not to make that tissue
available to the Company or may not be able to meet the Company's
tissue processing standards, or the Company may otherwise be unable
to replace the orthopedic revenues that it expects to decrease as a
result of the RTI agreement with cardiovascular or vascular
revenues, that expected cost savings and synergies from the RTI
agreement may not occur when and as anticipated, the Company's
efforts to continue to increase revenue may not be effective, since
their effectiveness is subject to such factors as competitive
pressures and tissue availability, that the Company's efforts to
develop and introduce new products outside the U.S. may be
unsuccessful, that the Company's efforts to improve procurement and
tissue processing yields may not continue to prove effective, 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 products and services under
development, including BioDisc, may not be commercially feasible,
the Company's SynerGraft products may not receive FDA approval when
anticipated or at all, 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
decreases in the Company's working capital if cash flow does not
improve, 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, 2005, its 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. Financial
Highlights (In thousands, except share data) Three Months Ended
Twelve Months Ended December 31, December 31, 2006 2005 2006 2005
(Unaudited) (Unaudited) (Unaudited) (Audited) Revenues: Products
$10,729 $9,830 $41,037 $38,932 Human tissue preservation services
10,239 8,088 40,078 30,307 Research grants 122 43 196 43 Total
revenues 21,090 17,961 81,311 69,282 Costs and expenses: Products
1,882 1,930 7,463 8,065 Human tissue preservation services 9,207
6,373 29,958 24,357 General, administrative, and marketing 11,439
10,499 41,545 53,225 Gain on exit activities (2,620) -- (2,620) --
Research and development 975 980 3,547 3,724 Interest expense 153
126 657 346 Interest income (105) (123) (409) (531) Change in
valuation of derivative 10 (512) 121 (140) Other expense, net 51
(13) 399 199 Total costs and expenses 20,992 19,260 80,661 89,245
Earnings (loss) before income taxes 98 (1,299) 650 (19,963) Income
tax expense (benefit) 148 (618) 285 (428) Net (loss) income $(50)
$(681) $365 $(19,535) Effect of preferred stock (243) (244) (973)
(777) Net loss applicable to common shares $(293) $(925) $(608)
$(20,312) Loss per common share: Basic $(0.01) $ (0.04) $(0.02)
$(0.85) Diluted $(0.01) $(0.04) $(0.02) $(0.85) Weighted average
common shares outstanding: Basic 24,904 24,314 24,829 23,959
Diluted 24,904 26,755 24,829 23,959 Revenues from: BioGlue $10,491
$9,645 $40,025 $37,985 Bioprosthetic devices 238 185 1,012 947
Total products 10,729 9,830 41,037 38,932 Cardiovascular 4,438
3,355 15,988 13,762 Vascular 3,890 3,172 16,956 11,453 Orthopaedic
1,911 1,561 7,134 5,092 Total preservation services 10,239 8,088
40,078 30,307 Other 122 43 196 43 Total revenues $21,090 $17,961
$81,311 $69,282 Domestic revenues $17,970 $15,275 $69,467 $58,869
International revenues 3,120 2,686 11,844 10,413 Total revenues
$21,090 $17,961 $81,311 $69,282 CRYOLIFE, INC. Financial Highlights
(In thousands) December 31, December 31, 2006 2005 (Unaudited)
(Audited) Cash and cash equivalents, marketable securities, at
market, and restricted securities $8,669 $12,159 Trade receivables,
net 12,553 10,153 Other receivables 1,403 1,934 Deferred
preservation costs, net 19,278 13,959 Inventories 5,153 4,609 Total
assets 79,865 76,809 Shareholders' equity 52,088 50,621 CRYOLIFE,
INC. Unaudited Reconciliation of Adjusted Gross Margin (In
thousands, except percent data) Three Months Ended Twelve Months
Ended December 31, December 31, 2006 2005 2006 2005 Amount
Percentage Amount Percentage in Dollars of Revenue in Dollars of
Revenue Total product and human tissue preservation services:
Revenue $20,968 $81,115 Cost (11,089) (37,421) Gross margin $9,879
47% $43,694 54% Adjustments to gross margin: Loss on exit
activities 2,779 13% 2,779 3% Adjusted gross margin $12,658 60%
$46,473 57% Human tissue preservation services: Revenue $10,239
$40,078 Cost (9,207) (29,958) Gross margin $1,032 10% $10,120 25%
Adjustments to gross margin: Loss on exit activities 2,779 27%
2,779 7% Adjusted gross margin $3,811 37% $12,899 32% For
additional information about the company, visit CryoLife's Web
site: http://www.cryolife.com/ Media Contacts: D. Ashley Lee Katie
Brazel Executive Vice President, Chief Financial Fleishman Hillard
Officer and Chief Operating Officer Phone: 404-739-0150 Phone:
770-419-3355 DATASOURCE: CryoLife, Inc. CONTACT: D. Ashley Lee,
Executive Vice President, Chief Financial Officer and Chief
Operating Officer of CryoLife, Inc., +1-770-419-3355, or Katie
Brazel of Fleishman Hillard, +1-404-739-0150, for CryoLife, Inc.
Web site: http://www.cryolife.com/
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