Operating income increases 26 percent in first quarter of 2009
compared to 2008 ATLANTA, April 30 /PRNewswire-FirstCall/ --
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. 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(R) 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(R)
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(TM). 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(R) 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 BioFoam 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 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 received FDA
clearance for the CryoValve(R) SG pulmonary 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(TM), 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 March 31, 2009 2008 (Unaudited) Revenues:
Preservation services $13,548 $13,424 Products 12,945 11,980 Other
195 164 Total revenues 26,688 25,568 Cost of preservation services
and products: Preservation services 7,491 7,318 Products 1,962
1,992 Total cost of preservation services and products 9,453 9,310
Gross margin 17,235 16,258 Operating expenses: General,
administrative, and marketing 12,748 12,067 Research and
development 1,026 1,445 Total operating expenses 13,774 13,512
Operating income 3,461 2,746 Interest expense 49 70 Interest income
(43) (122) Other expense (income), net 152 (82) Income before
income taxes 3,303 2,880 Income tax expense 1,354 115 Net income $
1,949 $ 2,765 Income per common share: Basic $ 0.07 $ 0.10 Diluted
$ 0.07 $ 0.10 Weighted average common shares outstanding: Basic
28,009 27,566 Diluted 28,230 28,002 CRYOLIFE, INC. AND SUBSIDIARIES
Financial Highlights (In thousands) Three Months Ended March 31,
2009 2008 (Unaudited) Revenues from: Cardiac tissue $ 5,592 $ 6,238
Vascular tissue 7,871 6,859 Orthopaedic tissue 85 327 Total
preservation services 13,548 13,424 BioGlue 11,764 11,887 HemoStase
1,110 -- Other medical devices 71 93 Total products 12,945 11,980
Other 195 164 Total revenues $26,688 $25,568 Revenues: U.S. $22,744
$22,000 International 3,944 3,568 Total revenues $26,688 $25,568
March 31, 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
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:
http://www.cryolife.com/. Media Contacts: D. Ashley Lee Executive
Vice President, Chief Financial Officer and Chief Operating Officer
Phone: 770-419-3355 Katie Brazel Fleishman Hillard Phone:
404-739-0150 DATASOURCE: CryoLife, Inc. CONTACT: D. Ashley Lee,
Executive Vice President, Chief Financial Officer and Chief
Operating Officer, CryoLife, Inc., +1-770-419-3355; Katie Brazel,
Fleishman Hillard, +1-404-739-0150, for CryoLife, Inc. Web Site:
http://www.cryolife.com/
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