CryoLife(R) Reports Third Quarter 2003 Financial Results BioGlue(R)
Revenues on Track to Reach $26-27 Million for 2003 Files
Application for AATB Accreditation ATLANTA, Nov. 4
/PRNewswire-FirstCall/ -- CryoLife, Inc. , a human tissue
processing and bio-surgical device company today reported financial
results for the third quarter 2003. Revenues for the third quarter
2003 were $15.1 million compared to $16.9 million in the third
quarter of 2002. Net loss in the third quarter of 2003 was $4.7
million compared to $19.6 million in the third quarter of 2002. On
a fully diluted basis, net loss per common share for the third
quarter was $0.24 compared to a net loss of $1.01 per share for the
same period in 2002. Revenues for the first nine months of 2003
were $46.7 million compared to $65.6 million in the first nine
months of 2002. The net loss for the first nine months of 2003 was
$25.1 million compared to a net loss of $22.1 million in the same
period last year. On a fully diluted basis, the net loss per common
share was $1.27 compared to a $1.14 net loss in the first nine
months of 2002. Separately, the Company is reporting a restatement
of previously reported financial results for the second quarter
2003, reflecting an additional $2.4 million of anticipated income
tax refunds resulting from tax loss carrybacks. Accordingly,
restated results of operations reflect a $2.4 million decrease in
income tax expense for the three and six months ended June 30,
2003. Basic and diluted net loss per share for the three and six
months, as restated, is $1.01 and $1.04, respectively, reflecting a
favorable impact of $0.13 per share. A summary of the previously
reported and restated amounts is attached. The Company expects to
receive the tax refund in the first half of 2004. In the third
quarter of 2003, worldwide BioGlue sales increased 29% to $6.7
million compared to $5.2 million in the third quarter of 2002.
BioGlue revenues increased 31% for the first nine months of 2003 to
$20.0 million from $15.3 million in the same period last year.
BioGlue is on track to reach $26-27 million in sales for the
full-year 2003. BioGlue is now approved in 48 countries and
achieved 48% growth internationally to $1.7 million in the third
quarter of 2003 compared to $1.1 million in the same period last
year. "International BioGlue sales growth was driven by the success
of the UK direct sales team, strong distribution support throughout
Europe, increased usage of BioGlue in the core applications of
cardiac and large vessel vascular surgery, and expanded usage in
neuro, pulmonary and general surgery," stated Steven G. Anderson,
CryoLife President and CEO. Tissue processing revenues were $8.1
million(1) in the third quarter of 2003 compared to $11.3 million
in the third quarter of 2002. Cardiac tissue processing revenues
were $4.5 million in the third quarter of 2003 compared to $5.5
million in the third quarter of 2002. Vascular tissue processing
revenues were $3.1 million in the third quarter 2003 compared to
$3.3 million in the third quarter of 2002. The Company is
processing boned and non-boned orthopaedic tissue and distributing
non-boned orthopaedic tissue. Tissue revenues were affected in the
third quarter 2003 by limited availability of processed tissue, the
discontinuance of the processing and distribution of decellurized,
SynerGraft ("SG") processed tissues, and discontinued labeling of
its vascular tissue for use as arteriovenous access grafts.
Procurement of cardiac and vascular tissue continues to increase.
Procurement of vascular tissues increased 12% and cardiac tissues
increased 4% in the third quarter of 2003 compared to the second
quarter of 2003. CryoLife filed its application for accreditation
with the American Association of Tissue Banks (AATB) on October 13,
2003. The AATB is a scientific, not-for-profit, peer group
organization founded in 1976. Its mission is to facilitate the
provision of high quality transplantable human tissue in quantities
sufficient to meet national needs. On November 3, 2003 CryoLife
submitted a 510k premarket notification to the FDA for
decellurized, SG processed heart valves. The Company is currently
processing vascular and cardio vascular tissues without the
decellurized, SG process. Regarding insurance coverage, CryoLife
recently announced that the Company and an insurer have mutually
agreed to resolve their coverage dispute on a $10 million products
liability policy previously issued to CryoLife, representing the
last layer of insurance in place for the 2002-2003 insurance policy
year. The full amount of this policy will be placed in escrow for
CryoLife to use, together with other funds provided by the Company
and another insurer, for the purpose of defending and resolving
certain products liability litigation. Since August 5, 2003, the
Company has resolved, or reached agreements in principle to
resolve, 15 product liability matters. Full year 2003 total
revenues for the Company are projected to be approximately $60
million. CryoLife made a payment of $4.5 million paying off the
balance of a term loan in August 2003. As of September 30, 2003 the
Company had approximately $8.2 million in cash and cash
equivalents, and approximately $9.7 million in marketable
securities, for a total of $17.9 million. The Company expects to
receive a tax refund of approximately $2.4 million in the first
half of 2004 related to tax losses incurred in 2003. Founded in
1984, CryoLife, Inc. is a leader in the processing and distribution
of implantable living human tissues for use in cardiovascular 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 and is CE marked in the European
Community and approved in Canada for use in soft tissue repair and
approved in Australia for use in vascular and pulmonary sealing and
repair. The Company also manufactures the SynerGraft(R) Vascular
Graft, which is 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 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 revenues may not meet
expectations, that demand for CryoLife preserved tissues may not
return to prior levels, the possibility that the FDA could impose
additional restrictions on the Company's distribution of tissues,
require a recall, or prevent the Company from distributing tissues,
as could occur if the Company is unable to satisfactorily address
the concerns raised in the FDA's most recent Form 483s, that the
Company's 510k application for SG processed heart valves may
require significant time and expense and may not be cleared on a
timely basis or at all, that FDA regulation of the Company's
CryoValve SG and CryoVein SG may require significant time and
expense, that the Company may not have sufficient borrowing or
other capital availability to fund its business, that present and
future litigation may be resolved only by substantial payments by
the Company in excess of available insurance coverage and amounts
to be set aside for products liability cases by CryoLife since the
outcomes of products liability securities class action, and
derivative cases are inherently uncertain, 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 liabilities in excess of
available insurance, that the company may not receive all or a
portion of the expected tax refunds, the possibility of severe
decreases in the Company's revenues and working capital, that to
the extent the Company does not have sufficient resources to pay
the existing and future claims against it, it may be forced to
cease operations or to obtain protection under applicable
bankruptcy or insolvency laws, changes in laws and governmental
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, 2002,
and the Company's other SEC filings. The Company does not undertake
to update its forward-looking statements. (1) For the three months
ended Sept. 30, 2003, vascular revenues as reported include a
$41,000 favorable adjustment, orthopaedic revenues as reported
include a favorable adjustment of $18,000 and cardiac revenues as
reported include a $7,000 unfavorable adjustment. These adjustments
were due to a difference in actual tissue returns compared to
earlier estimates. CRYOLIFE, INC. Unaudited Financial Highlights
(In thousands, except share data) Three Months Ended Nine Months
Ended September 30, September 30, 2003 2002 2003 2002 Revenues:
Human tissue preservation services $8,097 $11,300 $25,842 $49,074
Products 6,831 5,354 20,362 15,892 Distribution and grant 169 235
526 658 Total revenues 15,097 16,889 46,730 65,624 Costs and
expenses: Human tissue preservation services 7,481 27,978 15,084
53,244 Products 1,782 4,739 5,429 8,817 General, administrative,
and marketing 10,575 11,193 45,706 32,118 Research and development
823 1,347 2,828 3,696 Goodwill impairment -- 1,399 -- 1,399
Interest expense 87 155 366 543 Interest income (101) (188) (348)
(725) Other (income) expense, net (94) 35 46 (37) Total costs and
expenses 20,553 46,658 69,111 99,055 Loss before income taxes
(5,456) (29,769) (22,381) (33,431) Income tax (benefit) expense
(761) (10,123) 2,669 (11,367) Net loss $(4,695) $(19,646) $(25,050)
$(22,064) Net loss per share: Basic $(0.24) $ (1.01) $(1.27)
$(1.14) Diluted $(0.24) $(1.01) $(1.27) $(1.14) Weighted average
shares outstanding: Basic 19,701 19,526 19,669 19,388 Diluted
19,701 19,526 19,669 19,388 Revenues from: Cardiovascular $4,547
$5,487 $14,308 $ 20,131 Vascular 3,083 3,260 10,637 14,918
Orthopaedic 467 2,553 897 14,025 Total cryopreservation 8,097
11,300 25,842 49,074 BioGlue 6,694 5,183 20,027 15,308 Implantable
medical devices 137 171 335 584 Distribution and grant 169 235 526
658 Total revenues $15,097 $16,889 $46,730 $65,624 International
revenues $1,951 $1,565 $5,508 $5,155 Domestic revenues 13,146
15,324 41,222 60,469 Total revenues $15,097 $16,889 $46,730 $65,624
CRYOLIFE, INC. Financial Highlights (In thousands) Unaudited
Audited September 30, December 31, 2003 2002 Cash and cash
equivalents $17,882 $24,860 and marketable securities, at market
Trade receivables, net 7,336 6,930 Other receivables, net 3,360
11,824 Deferred preservation costs, net 9,666 4,332 Inventories
4,935 4,585 Total assets 86,523 106,414 Shareholders' equity 55,319
79,800 CRYOLIFE, INC. Unaudited Financial Highlights (In thousands,
except share data) Restated Originally Reported Three and Six
Months Ended Three and Six Months Ended June 30, June 30, June 30,
June 30, 2003 2003 2003 2003 Revenues: Human tissue preservation
services $8,615 $17,745 $8,615 $17,745 Products 6,932 13,531 6,932
13,531 Distribution and grant 166 357 166 357 Total revenues 15,713
31,633 15,713 31,633 Costs and expenses: Human tissue preservation
services 5,160 7,603 5,160 7,603 Products 2,006 3,647 2,006 3,647
General, administrative, and marketing 23,539 35,131 23,539 35,131
Research and development 1,088 2,005 1,088 2,005 Interest expense
147 279 147 279 Interest income (116) (247) (116) (247) Other
expense, net 166 140 166 140 Total costs and expenses 31,990 48,558
31,990 48,558 Loss before income taxes (16,277) (16,925) (16,277)
(16,925) Income tax expense 3,644 3,430 6,069 5,855 Net loss
$(19,921) $(20,355) $(22,346) $(22,780) Net loss per share: Basic
$(1.01) $(1.04) $(1.14) $(1.16) Diluted $(1.01) $(1.04) $(1.14)
$(1.16) Weighted average shares outstanding: Basic 19,675 19,654
19,675 19,654 Diluted 19,675 19,654 19,675 19,654 Revenues from:
Cardiovascular $5,036 $9,761 $5,036 $9,761 Vascular 3,299 7,554
3,299 7,554 Orthopaedic 280 430 280 430 Total cryopreservation
8,615 17,745 8,615 17,745 BioGlue 6,839 13,333 6,839 13,333
Implantable medical devices 93 198 93 198 Distribution and grant
166 357 166 357 Total revenues $15,713 $31,633 $15,713 $31,633
International revenues $1,847 $3,557 $1,847 $3,557 Domestic
revenues 13,866 28,076 13,866 28,076 Total revenues $15,713 $31,633
$15,713 $31,633 CRYOLIFE, INC. Financial Highlights (In thousands)
Unaudited Unaudited June 30, 2003 June 30, 2003 Restated Originally
Reported Cash and cash equivalents $25,908 $25,908 and marketable
securities, at market Trade receivables, net 8,260 8,260 Other
receivables, net 1,196 616 Deferred preservation costs, net 9,559
9,559 Inventories 4,535 4,535 Total assets 96,861 95,006
Shareholders' equity 59,875 57,450 For additional information about
the company, visit CryoLife's Web site: http://www.cryolife.com/
Contact: Joseph T. Schepers Vice President, Corporate
Communications (770) 419-3355 DATASOURCE: CryoLife, Inc. CONTACT:
Joseph T. Schepers, Vice President, Corporate Communications of
CryoLife, Inc., +1-770-419-3355 Web site: http://www.cryolife.com/
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