CryoLife Reports Third Quarter 2004 Financial Results BioGlue(R)
Sales Increased 33% Over Third Quarter 2003 ATLANTA, Nov. 4
/PRNewswire-FirstCall/ -- CryoLife, Inc. (NYSE:CRY), a biomaterials
and biosurgical device company, today reported financial results
for the third quarter and first nine months of 2004. Revenues for
the third quarter of 2004 were $16.1 million compared to $15.1
million in the third quarter of 2003. The net loss in the third
quarter of 2004 was $6.0 million compared to $4.7 million in the
third quarter of 2003. The net loss in the third quarter of 2004
included a legal liability accrual of $2.4 million. On a fully
diluted basis, net loss per common share for the third quarter of
2004 was $.26 compared to a loss of $.24 in the same period of
2003. Revenues for the first nine months of 2004 were $46.5 million
compared to $46.7 million in the first nine months of 2003. The net
loss in the first nine months of the year was $16.4 million
compared to a net loss of $25.1 million in the first nine months of
2003. On a fully diluted basis, the net loss per common share was
$.72 in the first nine months of 2004 compared to a net loss of
$1.27 per common share in the same period of 2003. In the third
quarter of 2004, BioGlue(R) sales increased 33% to $8.9 million
compared to $6.7 million in the third quarter of 2003. U.S. BioGlue
sales increased 37% to $6.9 million in the third quarter of 2004
compared to $5.0 million in the same period in 2003. International
BioGlue sales increased 21% to $2.0 million in the third quarter of
2004 compared to $1.7 million in the same period last year. BioGlue
revenues are expected to be between $8.6 - $9.0 million in the
fourth quarter of 2004. "We are pleased with the successful launch
of the BioGlue Syringe Delivery Device in the U.S. and Europe.
BioGlue sales remain on track to increase at least 25% to $35.0 -
$35.5 million in 2004 from $27.8 million in 2003," said Steven G.
Anderson, CryoLife President and Chief Executive Officer. Tissue
processing revenues, which include cardiac, vascular, and
orthopaedic tissues, were $7.0 million in the third quarter of 2004
compared to $8.1 million in the third quarter of 2003. Cardiac
tissue processing revenues were $3.5 million in the third quarter
of 2004 compared to $4.5 million in the third quarter of 2003.
Vascular tissue processing revenues were $2.6 million in the third
quarter of 2004 compared to $3.1 million in the third quarter of
2003. Orthopaedic revenues were $843,000 in the third quarter of
2004 compared to $467,000 in the third quarter of 2003. "Tissue
processing revenues increased in the third quarter of 2004 to $7.0
million from $6.1 million in the second quarter of 2004. The gross
margin significantly improved again to -2% in the third quarter of
2004 from -25% in the second quarter of 2004 due to processing
improvements that were implemented by the Company. Our orthopaedic
business has achieved strong revenue increases in each quarter this
year and revenues are expected to be $6.0 - $8.0 million in 2005,"
stated Anderson. Total tissue processing revenues are expected to
be between $6.0 - $7.0 million in the fourth quarter of 2004 and
$25.0 - $26.0 million for the full year 2004. Total tissue
processing and product revenues are projected to be $15.0 - $16.5
million in the fourth quarter and $61.5 - $63.0 million for full
year 2004. In the third quarter 2004, general, administrative, and
marketing expenses were $12.1 million, which included an increase
in the legal liability accrual of $2.4 million, compared to $10.6
million in the third quarter of 2003. In the third quarter of 2004,
research and development expenses were $904,000 as compared to
$823,000 in third quarter of 2003. For the fourth quarter of 2004,
the Company expects general, administrative, and marketing expenses
of approximately $9.5 - $11.0 million and approximately $41.5 -
$43.0 million for the full year 2004. The Company expects research
and development expenses to be approximately $1.0 million in the
fourth quarter of 2004 and approximately $3.7 million in 2004. The
Company expects strong revenue growth and margin improvement in
2005. Guidance for 2005 is the following: BioGlue revenues are
expected to be $40.0 - $42.0 million in 2005. Total tissue
processing revenues are expected to be $32.0 - $37.0 million in
2005. The Company expects tissue processing and product revenues of
$73.0 - $80.0 million in 2005. The Company expects its tissue
processing business to have a positive gross margin in the first
quarter of 2005. The combined tissue processing and product gross
margin is expected to be approximately 45% to slightly more than
50%. General, administrative, and marketing expenses are expected
to be $41.0 - $45.0 million in 2005. Research & Development is
expected to be approximately $4.0 million in 2005. The Company's
protein hydrogel research and development initiatives include the
following: The Company is developing BioDisc(TM), a spinal disc
nucleus repair system, and expects to begin a human feasibility
study in the U.K. with initial implants in the first half of 2005.
The Company plans to file an IDE for BioDisc with the FDA in the
first half of 2005. The Company is developing a proprietary,
bioresorbable stent based on its protein hydrogel technology, that
is designed to open stenotic blood vessels and increase blood flow
by providing a contiguous intravascular paving of the arterial
walls. These biological stents have been implanted in animals and
were found to be patent after removal. The technology is intended
to be a long-term solution, which has the potential to allow the
arteries to return to normal function, and may have applications in
a wide array of medical conditions, such as athlerosclerosis and
vulnerable plaque. In late July, the Company announced that the
2005 Defense Appropriations Conference Report included $1.0 million
to develop BioFoam(TM) for rapid hemostasis in penetrating wounds
and severe trauma on the battlefield. The Company will hold a
teleconference call and live web cast at 11:15 a.m. Eastern
Standard Time, Thursday, November 4, 2004, to discuss third quarter
2004 results, followed by a question and answer session hosted by
Steven G. Anderson, CryoLife President and Chief Executive Officer.
To listen to the live teleconference, please dial 973-582-2749 a
few minutes prior to 11:15 a.m. No identification number is
required. A replay of the teleconference will be available November
4 through November 10, and can be accessed by calling (toll free)
877-519-4471 or 973-341-3080. The identification number for the
replay is 5284237. The live webcast can be accessed by going to the
Investor Relations section of the CryoLife website at
http://www.cryolife.com/ . About CryoLife, Inc. 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 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 SG Model #100 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 the Company's 2004 and
2005 revenues and expenses may not meet its expectations, that the
Company's 2004 and 2005 BioGlue revenues may not meet its
expectations, that the demand for CryoLife preserved tissues may
not return to prior levels, that the orthopaedic business will not
grow as expected in 2005, that the gross margins in the tissue
processing business may not improve, that the Company may
experience delays in filing its IDE for BioDisc, that the Company's
general administrative and marketing expenses may not meet
expectations due to higher than expected costs of resolving
existing and future litigation, 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 FDA
regulation of the Company's CryoValve SG and CryoVein SG may
require significant time and expense, that the protein hydrogel
products under development, such as the bioresorbable stent, may
not be commercially feasible, 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 severe decreases in the Company's revenues and
working capital, 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, 2003, and the Company's other SEC filings.
The Company does not undertake to update its forward-looking
statements. For additional information about the company, visit
CryoLife's website: http://www.cryolife.com/ Contact: Joseph T.
Schepers Vice President, Corporate Communications (770) 419-3355
CRYOLIFE, INC. Unaudited Financial Highlights (In thousands, except
share data) Three Months Ended Nine Months Ended September 30,
September 30, 2004 2003 2004 2003 Revenues: Products $9,151 $6,831
$27,213 $20,362 Human tissue preservation services 6,955 8,097
19,234 25,842 Distribution and grant 12 169 71 526 Total revenues
16,118 15,097 46,518 46,730 Costs and expenses: Products 1,998
1,782 5,839 5,429 Human tissue preservation services 7,124 7,481
23,770 15,084 General, administrative, and marketing 12,127 10,575
31,968 45,706 Research and development 904 823 2,716 2,828 Interest
expense 54 87 156 366 Interest income (71) (101) (201) (348) Other
(income) expense, net (10) (94) 27 46 Total costs and expenses
22,126 20,553 64,275 69,111 Loss before income taxes (6,008)
(5,456) (17,757) (22,381) Income tax (benefit) expense -- (761)
(1,371) 2,669 Net loss $(6,008) $(4,695) $(16,386) $(25,050) Net
loss per share: Basic $(0.26) $ (0.24) $(0.72) $(1.27) Diluted
$(0.26) $(0.24) $(0.72) $(1.27) Weighted average shares
outstanding: Basic 23,287 19,701 22,928 19,669 Diluted 23,287
19,701 22,928 19,669 Revenues from: Cardiovascular $3,476 $4,547
$9,737 $14,308 Vascular 2,636 3,083 7,771 10,637 Orthopaedic 843
467 1,726 897 Total cryopreservation 6,955 8,097 19,234 25,842
BioGlue 8,914 6,694 26,519 20,027 Implantable medical devices 237
137 694 335 Distribution and grant 12 169 71 526 Total revenues
$16,118 $15,097 $46,518 $46,730 International revenues $2,346
$1,951 $6,764 $5,508 Domestic revenues 13,772 13,146 39,754 41,222
Total revenues $16,118 $15,097 $46,518 $46,730 CRYOLIFE, INC.
Financial Highlights (In thousands) Unaudited Audited September 30,
Dec. 31, 2004 2003 Cash and cash equivalents and marketable
securities, at market $15,193 $11,916 Trade receivables, net 8,938
6,377 Other receivables, net 1,505 1,865 Deferred preservation
costs, net 8,038 8,811 Inventories 4,829 4,450 Total assets 78,525
75,027 Shareholders' equity 51,620 48,338 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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