Operating Income Increases 65% to $13.7 Million for FY 2008
ATLANTA, Feb. 19 /PRNewswire-FirstCall/ -- CryoLife, Inc.
(NYSE:CRY), an implantable biological medical device and tissue
processing company, announced today that revenues for the year
ended December 31, 2008 increased 11 percent to $105.1 million
compared to $94.8 million for the year ended December 31, 2007.
Excluding orthopaedic tissue processing revenues of $725,000 and
$4.2 million in the years ended December 31, 2008 and December 31,
2007, respectively, total revenues increased 15 percent for the
year ended 2008. Net income for the year ended December 31, 2008
was $32.9 million, or $1.18 per basic and $1.16 per fully diluted
common share, compared to $7.2 million, or $0.26 per basic and
fully diluted common share for the year ended December 31, 2007.
Net income for the year ended December 31, 2008 includes a tax
benefit of $20.1 million, or $0.71 per fully diluted common share,
related to the reversal of the Company's valuation allowance on its
deferred tax assets. Revenues for the fourth quarter of 2008
increased 2 percent to $25.5 million compared to $25.1 million for
the fourth quarter of 2007. Excluding orthopaedic tissue processing
revenues of $63,000 and $552,000 for the fourth quarters of 2008
and 2007, respectively, total revenues increased 4 percent for the
fourth quarter of 2008. Net income for the fourth quarter of 2008
was $22.7 million, or $0.81 per basic and $0.80 per fully diluted
common share, compared to $2.6 million, or $0.10 per basic and
fully diluted common share for the fourth quarter of 2007. Net
income for the fourth quarter of 2008 included a tax benefit of
$20.1 million, or $0.71 per fully diluted common share, related to
the reversal of the Company's valuation allowance on its deferred
tax assets. Tissue processing revenues for the fourth quarter of
2008 decreased 5 percent to $12.3 million compared to $13.0 million
for the fourth quarter of 2007. Tissue processing revenues for the
year ended December 31, 2008 increased 9 percent to $53.7 million
compared to $49.0 million for the year ended December 31, 2007.
Combined cardiac and vascular tissue processing revenues for the
fourth quarter of 2008 decreased 1 percent to $12.3 million
compared to $12.4 million for the fourth quarter of 2007. The
decrease in revenues was primarily due to a decrease in shipments
of cardiac tissues, which management believes is due to the current
economic conditions and its constraining effect on hospital
budgets. Combined cardiac and vascular tissue processing revenues
for the year ended December 31, 2008 increased 18 percent to $52.9
million compared to $44.8 million for the year ended December 31,
2007. The increase in tissue processing revenues was due primarily
to increased demand for the Company's cardiac and vascular
processed tissues, the introduction of the CryoValve(R) SG
pulmonary human heart valve processed with the SynerGraft(R)
technology and, to a lesser extent, fee increases. Revenues from
the distribution of CryoValve SG pulmonary human heart valves were
$1.7 million and $5.1 million for the fourth quarter and year ended
December 31, 2008, respectively. BioGlue(R) Surgical Adhesive
revenues were $12.1 million for the fourth quarter of 2008 compared
to $11.5 million for the fourth quarter of 2007, an increase of 5
percent. BioGlue revenues were $48.6 million for the year ended
December 31, 2008 compared to $43.9 million for the year ended
December 31, 2007, an increase of 11 percent. U.S. BioGlue revenues
were $8.6 million and $8.1 million for the fourth quarters of 2008
and 2007, respectively. U.S. BioGlue revenues were $34.4 million
and $31.6 million for the years ended December 31, 2008 and
December 31, 2007, respectively. International BioGlue revenues
were $3.5 million and $3.4 million for the fourth quarters of 2008
and 2007, respectively. International BioGlue revenues were $14.2
million and $12.3 million for the years ended December 31, 2008 and
2007, respectively. Other medical device revenues for the fourth
quarter of 2008 were $906,000 compared to $105,000 for the fourth
quarter of 2007. Other medical device revenues for the year ended
December 31, 2008 were $1.9 million compared to $828,000 for the
year ended December 31, 2007. Other medical device revenues for the
fourth quarter and year ended December 31, 2008 included $806,000
and $1.5 million, respectively, in sales of Hemostase, which was
added to the CryoLife product portfolio in the second quarter of
2008. Total tissue processing and product gross margins were 64
percent for the fourth quarters of 2008 and 2007. Total tissue
processing and product gross margins were 64 percent for the year
ended December 31, 2008 compared to 62 percent for the year ended
December 31, 2007. Tissue processing gross margins for the fourth
quarter of 2008 were 45 percent compared to 44 percent for the
fourth quarter of 2007. Tissue processing gross margins for the
year ended December 31, 2008 were 46 percent compared to 42 percent
for the year ended 2007. Tissue processing gross margins improved
in 2008 compared to 2007 primarily as a result of fee increases and
a favorable tissue mix in 2008. General, administrative, and
marketing expenses for the fourth quarter of 2008 were $12.3
million compared to $12.1 million for the fourth quarter of 2007.
General, administrative, and marketing expenses for the year ended
December 31, 2008 were $48.8 million compared to $46.5 million for
the year ended December 31, 2007. The increase in general,
administrative, and marketing expenses for the fourth quarter and
year ended December 31, 2008 was primarily due to increased
marketing expenses. These expenses included personnel costs,
corporate advertising, physician education and training, and
promotional materials to support the Company's expanding tissue
processing service and product offerings, and revenue growth.
Additionally, there were increases in stock compensation expense
over the same periods in the prior year. Research and development
expenses were $1.4 million for the fourth quarter of 2008 compared
to $1.3 million for the fourth quarter of 2007. Research and
development expenses were $5.3 million and $4.5 million for the
years ended December 31, 2008 and December 31, 2007, respectively.
Research and development spending in 2008 primarily focused on the
Company's SynerGraft tissues and products and protein hydrogel
technologies. As of December 31, 2008, the Company had $22.8
million in cash, cash equivalents, and marketable securities,
compared to $17.4 million at December 31, 2007. Of the $22.8
million in cash, cash equivalents, and marketable securities on
hand at December 31, 2008, $1.6 million was received from the U.S.
Department of Defense as advance funding for the development of
BioFoam(R) 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. During 2008, the Company used $4.5 million of cash to
pay off its previous line of credit facility. "In spite of
challenging economic conditions, 2008 represents our third
consecutive year of profitability, with increased margins and
operating results," stated Steven G. Anderson, president and chief
executive officer. "We believe that we are well positioned to set
records in both revenue and operating income in 2009." 2009
Financial Guidance 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 its effective income
tax rate to be approximately 40 percent in 2009. 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 accompanied by a slide presentation 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
February 19 through February 26 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 312509. The live
webcast, replay, and associated slide presentation 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 U.S. and Canada. The Company has received
FDA clearance for the CryoValve(R) SG pulmonary human heart valve,
processed using CryoLife's proprietary SynerGraft(R) technology.
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. CryoLife distributes Hemostase, a hemostatic
agent, in much of the U.S. for use in cardiac and vascular surgery
and in the United Kingdom, Germany, France, 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. 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 is significantly dependent on revenues from BioGlue and
there are a variety of risks affecting BioGlue, demand for
CryoValve SG may not reach anticipated levels, CryoValve SG may not
perform as well as expected or provide all the benefits
anticipated, SynerGraft processed heart valves have a one year
shelf life, competitive pressures and tissue availability may
adversely affect the Company's ability to grow revenues, the
SynerGraft 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, 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, the Company's growth strategies may
not generate the anticipated benefits, 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 United States could affect our business, physicians have been
and may be reluctant to implant or use our preserved tissues or
products, the Company's efforts to develop and introduce new
products outside the U.S. may be unsuccessful, FDA and other
approvals for products in development may not be obtained, and if
obtained, may be costly and require lengthy review periods, our
existing insurance policies may not be sufficient to cover our
actual claims liability, if the economic crises continues, demand
for our products and services may decrease, we may be unable to
obtain adequate insurance at a reasonable cost or at all, the
patents and proprietary technologies that we use or license could
be infringed or duplicated by third parties and we may not be
successful in preventing infringement or use, our patents and
patent applications could be held to be invalid or null, we are
dependent on key personnel, products and services under development
may not be commercially feasible, the Company may be unable to
effectively leverage its existing sales force to sell Hemostase,
that surgeons may not choose to utilize Hemostase, that Hemostase
may not perform as expected or provide all expected benefits, that
other distributors of the Hemostase product may impede our ability
to sell to new or existing customers, that a third party could
infringe patents used to make Hemostase, we are reliant on one
supplier for significant components of BioGlue, pending or future
litigation may not be settled on terms acceptable to the Company,
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 Company may be unable to
obtain sufficient financing to fully pursue its strategic plan,
adverse future changes in currency exchange rates may materially
reduce the Company's revenues, cash flow, financial position and
profitability and future healthcare policies, healthcare
reimbursement methods, and healthcare reimbursement policies may
affect the availability, amount, and timing of the Company's
revenues. These risks and uncertainties include the risk factors
detailed in CryoLife's Securities and Exchange Commission filings,
including CryoLife's Form 10-K filing for the year ended December
31, 2007, its most recent Form 10-Q, and the Company's other SEC
filings. The Company does not undertake to update its
forward-looking statements. Media Contacts: D. Ashley Lee Katie
Brazel Executive Vice President, Fleishman Hillard Chief Financial
Officer and Phone: 404-739-0150 Chief Operating Officer Phone:
770-419-3355 CRYOLIFE, INC. AND SUBSIDIARIES Financial Highlights
(In thousands, except per share data) Three Months Ended Twelve
Months Ended December 31, December 31, 2008 2007 2008 2007
(Unaudited) (Unaudited) (Audited) (Audited) Revenues: Preservation
services $12,319 $12,983 $53,656 $49,002 Products 12,994 11,616
50,493 44,712 Other 219 469 910 1,049 Total revenues 25,532 25,068
105,059 94,763 Cost of preservation services and products:
Preservation services 6,730 7,250 29,112 28,433 Products 2,293
1,664 8,153 7,108 Total cost of preservation services and products
9,023 8,914 37,265 35,541 Gross margin 16,509 16,154 67,794 59,222
Operating expenses: General, administrative, and marketing 12,334
12,053 48,831 46,470 Research and development 1,371 1,319 5,309
4,453 Total operating expenses 13,705 13,372 54,140 50,923
Operating income 2,804 2,782 13,654 8,299 Interest expense 62 159
263 677 Interest income (96) (167) (381) (527) Change in valuation
of derivative -- -- -- 821 Other expense (income), net 121 7 236
(241) Income before income taxes 2,717 2,783 13,536 7,569 Income
tax (benefit) expense (19,982) 134 (19,372) 368 Net income $22,699
$2,649 $32,908 $7,201 Effect of preferred stock dividends -- -- --
(243) Net income applicable to common shares $22,699 $2,649 $32,908
$6,958 Income per common share: Basic $0.81 $0.10 $1.18 $0.26
Diluted $0.80 $0.10 $1.16 $0.26 Weighted average common shares
outstanding: Basic 27,983 27,474 27,800 26,331 Diluted 28,478
27,873 28,351 26,974 CRYOLIFE, INC. AND SUBSIDIARIES Financial
Highlights (In thousands) Three Months Ended Twelve Months Ended
December 31, December 31, 2008 2007 2008 2007 (Unaudited)
(Unaudited) (Audited) (Audited) Revenues from: Cardiac tissue
$5,894 $6,511 $25,514 $22,098 Vascular tissue 6,362 5,920 27,417
22,702 Orthopaedic tissue 63 552 725 4,202 Total preservation
services 12,319 12,983 53,656 49,002 BioGlue 12,088 11,511 48,570
43,884 Medical devices 906 105 1,923 828 Total products 12,994
11,616 50,493 44,712 Other 219 469 910 1,049 Total revenues $25,532
$25,068 $105,059 $94,763 Revenues: U.S. $21,547 $21,364 $89,297
$81,023 International 3,985 3,704 15,762 13,740 Total revenues
$25,532 $25,068 $105,059 $94,763 December 31, December 31, 2008
2007 (Audited) (Audited) Cash and cash equivalents, marketable
securities, at market, and restricted marketable securities $17,763
$17,447 Trade receivables, net 12,824 12,311 Other receivables
1,175 1,373 Deferred preservation costs 34,913 26,903 Inventories
7,077 5,607 Restricted money market funds, long-term 5,000 -- Total
assets 125,995 92,684 Shareholders' equity 99,326 62,627 For
additional information about the company, visit CryoLife's Web
site: http://www.cryolife.com/. DATASOURCE: CryoLife, Inc. CONTACT:
D. Ashley Lee, Executive Vice President, Chief Financial Officer
and Chief Operating Officer, 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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