8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
‎Washington, D.C. 20549
‎___________________________________________

FORM 8-K

___________________________________________

CURRENT REPORT
‎PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934
‎

Date of Report (Date of earliest event reported): February 13, 2020
‎___________________________________________

CRYOLIFE, INC.

(Exact name of registrant as specified in its charter)
‎___________________________________________

Florida	1-13165	59-2417093
(State or Other Jurisdiction ‎of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1655 Roberts Boulevard, N.W., Kennesaw, Georgia 30144
‎(Address of principal executive office) (zip code)
‎

Registrant's telephone number, including area code: (770) 419-3355
‎

_________________________________________________________

(Former name or former address, if changed since last report)

Title of each class	Trading Symbol(s)	Name of each exchange ‎on which registered
Common Stock, $0.01 par value	CRY	NYSE

___________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

‎

Section 2	Financial Information
Item 2.02	Results of Operations and Financial Condition.

On February 13, 2020, CryoLife, Inc. (“CryoLife” or the “Company”) issued a press release announcing its financial results for the quarter ended December 31, 2019. CryoLife hereby incorporates by reference herein the information set forth in its press release dated February 13, 2020, a copy of which is attached hereto as Exhibit 99.1. Except as otherwise provided in the press release, the press release speaks only as of the date of such press release and it shall not create any implication that the affairs of CryoLife have continued unchanged since such date.

The information provided pursuant to this Item 2.02 is to be considered “furnished” pursuant to Item 2.02 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended, nor shall it be deemed incorporated by reference into any of CryoLife’s reports or filings with the Securities and Exchange Commission, whether made before or after the date hereof, except as expressly set forth by specific reference in such report or filing.

Except for the historical information contained in this report, the statements made by CryoLife are forward-looking statements that involve risks and uncertainties. All such statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. CryoLife’s future financial performance could differ significantly from the expectations of management and from results expressed or implied in the press release.  Please refer to the last paragraph of the text portion of the press release for further discussion about forward-looking statements. For further information on risk factors, please refer to “Risk Factors” contained in CryoLife’s most recently filed Form 10-K and its subsequent filings with the Securities and Exchange Commission, as well as in the press release attached as Exhibit 99.1 hereto. CryoLife disclaims any obligation or duty to update or modify these forward-looking statements.

Section 9	Financial Statements and Exhibits.
Item 9.01(d)	Exhibits.

(d)Exhibits.

Exhibit Number	Description
99.1*	Press Release dated February 13, 2020

*This exhibit is furnished, not filed.

‎

-2-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, CryoLife, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 13, 2020

CRYOLIFE, INC.
By:	/s/ D. Ashley Lee
Name:	D. Ashley Lee
Title:	Executive Vice President, Chief Operating Officer and Chief Financial Officer

-3-

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contacts:

Phone: 770-419-3355	/ Lynn Lewis
CryoLife D. Ashley Lee Executive Vice President, Chief Financial Officer and Chief Operating Officer Phone: 770-419-3355	Gilmartin Group LLC Greg Chodaczek / Lynn Lewis Phone:  646-924-1769 investors@cryolife.com

CryoLifeReports Fourth Quarter and Full Year 2019 Financial Results

Fourth Quarter and Recent Business Highlights:

· Total revenues were $69.7 million in the fourth quarter of 2019, reflecting year over year growth of 3% and a 4% increase on a non-GAAP constant currency basis, both compared to the fourth quarter of 2018

o On-X® revenues increased 18%, and 18% on a non-GAAP constant currency basis, both compared to the fourth quarter of 2018

o JOTEC®revenues decreased4% and increased less than 1% on a non-GAAP constant currency basis, both compared to the fourth quarter of 2018; excluding OEM, JOTEC revenues were flat and increased 4% on a constant currency basis compared to the fourth quarter of 2018

· Net loss was ($681,000), or ($0.02) per fully diluted common share; non-GAAP net income was $3.8 million, or $0.10 per fully diluted common share

· Received approval to commence our PROACT Xa trial

· Granted European approval for two next generation JOTEC products

· Entered into a distribution agreement with Misonix for NeoPatch®

ATLANTA, GA – (February 13,  2020) – CryoLife, Inc. (NYSE: CRY),  a leading cardiac and vascular surgery company focused on aortic disease, announced today its financial results for the fourth quarter and full year ended December 31, 2019. 

“The fourth quarter was marked by significant progress on our key initiatives, highlighted by European approvals for two next generation JOTEC products, E-nside and E-nya, the approval to commence the PROACT Xa trial to study the use of Eliquis® with the On-X Aortic Valve, the initial launch of NEXUS™ into select European markets, as well as our collaboration with Misonix,” said Pat Mackin, Chairman, President, and Chief Executive Officer.  “Additionally, we anticipate the approval for E-vita OPEN  NEO in the first quarter of 2020, and we continue to increase JOTEC and vascular tissue supply.  The full launch in 2020 of three next generation JOTEC products and NEXUS, as well as the commencement of the PROACT Xa trial, positions us well to deliver high single-digit revenue growth over the next several years.”

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Fourth Quarter 2019 Financial Results

Total revenues for the fourth quarter of 2019 were $69.7 million, reflecting growth of 3%, and 4% on a non-GAAP constant currency basis, both compared to the fourth quarter of 2018.  The non-GAAP constant currency increase was driven by revenue growth from On-X, tissue processing, and JOTEC, excluding JOTEC OEM.

Net loss for the fourth quarter of 2019 was ($681,000), or ($0.02) per fully diluted common share, compared to a net loss of ($776,000), or ($0.02) per fully diluted common share for the fourth quarter of 2018.  Non-GAAP net income for the fourth quarter of 2019 was $3.8 million, or $0.10 per fully diluted common share, compared to non-GAAP net income of $1.9 million, or $0.05 per fully diluted common share for the fourth quarter of 2018. 

Full Year 2019 Financial Results

Total revenues for 2019 were $276.2 million, reflecting growth of 5% on a reported basis and 7% on a non-GAAP constant currency basis compared to 2018.  The increase was driven by growth in the On-X, BioGlue and JOTEC product lines as well as the tissue processing business.  For 2019, On-X and JOTEC non-GAAP constant currency revenues increased by 12% and 9%, respectively, versus 2018. 

Net income for 2019 was $1.7 million or $0.05 per share compared to a net loss of ($2.8) million or ($0.08) per share for 2018.  Non-GAAP net income for 2019 was $11.7 million, or $0.31 a share compared to non-GAAP net income of $9.6 million, or $0.26 per share in 2018.

The independent registered public accounting firm’s audit report with respect to the Company’s fiscal year-end financial statements will not be issued until the Company completes its annual report on Form 10-K, including its evaluation of the effectiveness of internal controls over financial reporting.  Accordingly, the financial results reported in this earnings release are preliminary pending completion of the audit.

2020 Financial Outlook

CryoLife expects constant currency revenue growth of between 6.3% and 8.5% for the full year of 2020 compared to 2019.  Assuming a Euro/USD exchange rate of 1.10, revenues are expected to be in the range of $292 million to $298 million.  Our 2020 revenue guidance assumes no contribution during 2020 from BioGlue® in China, PerClot® in the U.S., or TMR handpieces.

Non-GAAP earnings per share for 2020 are expected to be between $0.15 and $0.17.  Non-GAAP earnings per share reflect approximately $0.12 per share in planned incremental investment in the Company’s pipeline, an estimated $0.06 per share additional investment in our Asia Pacific and Latin American infrastructure, and approximately $0.05 per share in planned incremental spending related to new product launches.

All numbers are presented on a GAAP basis except where expressly referenced as non-GAAP.  The Company does not provide GAAP income per common share on a forward-looking basis because the Company is unable to predict with reasonable certainty business development and acquisition-related expenses, purchase accounting fair value adjustments, and any unusual gains and losses without unreasonable effort.  These items are uncertain, depend on various factors, and could be material to results computed in accordance with GAAP.

The Company’s financial guidance for 2020 is subject to the risks identified below.

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Non-GAAP Financial Measures

This press release contains non-GAAP financial measures.  Investors should consider this non-GAAP information in addition to, and not as a substitute for, financial measures prepared in accordance with U.S. GAAP.  In addition, this non-GAAP financial information may not be the same as similar measures presented by other companies.  The Company’s non-GAAP net income and non-GAAP EBITDA results exclude (as applicable) business development and integration expenses, rebranding expenses, amortization expense, inventory basis step-up expense, loss on foreign currency revaluation, and stock-based compensation expense.  The Company believes that these non-GAAP presentations provide useful information to investors regarding unusual non-operating items; the operating expense structure of the Company’s existing and recently acquired operations, without regard to its on-going efforts to acquire additional complementary products and businesses and the transaction and integration expenses incurred in connection with recently acquired and divested product lines; and the operating expense structure excluding fluctuations resulting from foreign currency revaluation and stock-based compensation expense.  The Company believes it is useful to exclude certain expenses because such amounts in any specific period may not directly correlate to the underlying performance of its business operations or can vary significantly between periods as a result of factors such as acquisitions, or non-cash expense related to amortization of previously acquired tangible and intangible assets.  The Company has excluded the impact of changes in currency exchange from certain revenues to evaluate growth rates on a constant currency basis.  The Company does, however, expect to incur similar types of expenses and currency exchange impacts in the future, and this non-GAAP financial information should not be viewed as a statement or indication that these types of expenses will not recur.

Webcast and Conference Call Information

The Company will hold a teleconference call and live webcast later today, February 13, 2020 at 4:30 p.m. ET to discuss the results followed by a question and answer session.  To listen to the live teleconference, please dial 201-689-8261.  A replay of the teleconference will be available through February 20, 2020 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415.  The Conference ID for the replay is 13698400.

The live webcast and replay can be accessed by going to the Investor Relations section of the CryoLife website at www.cryolife.com and selecting the heading Webcasts & Presentations.

About CryoLife, Inc.

Headquartered in suburban Atlanta, Georgia, CryoLife is a leader in the manufacturing, processing, and distribution of medical devices and implantable tissues used in cardiac and vascular surgical procedures focused on aortic repair.  CryoLife markets and sells products in more than 100 countries worldwide.  For additional information about CryoLife, visit our website, www.cryolife.com. 

Forward Looking Statements

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.  Such forward-looking statements reflect the views of management at the time such statements are made.  These statements include our revenue and non-GAAP earnings per share guidance, including projected exchange rates,our planned incremental investment in our pipeline and in our Asia Pacific and Latin American infrastructure, and planned incremental spending related to new product launches; and our beliefs regarding the anticipated approval of Evita Open NEO in the first quarter of 2020, that we will continue to increase JOTEC and vascular tissue supply and that the full

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launches in the EU of three of our next-generation JOTEC products, and NEXUS, and commencement of the PROACT Xa trial position us well to deliver high single digit growth over the next several years.  These forward-looking statements are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from current expectations.  These risks and uncertainties include the risk factors detailed in our Securities and Exchange Commission filings, including our Form 10-K for year ended December 31, 2019.  CryoLife does not undertake to update its forward-looking statements, whether as a result of new information, future events, or otherwise.

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CRYOLIFE, INC. AND SUBSIDIARIES

Financial Highlights - Unaudited

(In thousands, except per share data)

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
		2019		2018		2019		2018
Revenues:
Products	$	50,193	$	49,331	$	197,246	$	187,394
Preservation services		19,504		18,468		78,976		75,447
Total revenues		69,697		67,799		276,222		262,841
Cost of products and preservation services:
Products		14,001		13,606		55,022		53,772
Preservation services		9,144		9,002		38,187		36,085
Total cost of products and preservation services		23,145		22,608		93,209		89,857
Gross margin		46,552		45,191		183,013		172,984
Operating expenses:
General, administrative, and marketing		37,609		35,628		143,011		140,574
Research and development		5,312		6,784		22,960		23,098
Total operating expenses		42,921		42,412		165,971		163,672
Operating income		3,631		2,779		17,042		9,312
Interest expense		3,626		3,925		14,886		15,788
Interest income		(130)		(85)		(738)		(226)
Other (income) expense, net		(1,412)		398		1,250		141
Income (loss) before income taxes		1,547		(1,459)		1,644		(6,391)
Income tax expense (benefit)		2,228		(683)		(76)		(3,551)
Net (loss) income	$	(681)	$	(776)	$	1,720	$	(2,840)
(Loss) income per common share:
Basic	$	(0.02)	$	(0.02)	$	0.05	$	(0.08)
Diluted	$	(0.02)	$	(0.02)	$	0.05	$	(0.08)
Weighted-average common shares outstanding:
Basic		37,274		36,652		37,118		36,412
Diluted		37,274		36,652		37,860		36,412

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CRYOLIFE, INC. AND SUBSIDIARIES

Financial Highlights - Unaudited

(In thousands)

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
Products:
BioGlue	$	17,777	$	17,975	$	68,611	$	66,660
JOTEC		16,038		16,672		64,974		63,341
On-X		13,345		11,337		50,096		44,832
CardioGenesis cardiac laser therapy		1,050		1,703		6,016		6,217
PerClot		981		945		3,795		3,767
PhotoFix		1,002		699		3,754		2,577
Total products		50,193		49,331		197,246		187,394
Preservation services:
Cardiac tissue		10,145		9,023		40,879		35,683
Vascular tissue		9,359		9,445		38,097		39,764
Total preservation services		19,504		18,468		78,976		75,447
Total revenues	$	69,697	$	67,799	$	276,222	$	262,841
Revenues:
U.S.	$	37,005	$	36,528	$	150,553	$	144,651
International		32,692		31,271		125,669		118,190
Total revenues	$	69,697	$	67,799	$	276,222	$	262,841

	December 31,		December 31,
	2019		2018
Cash, cash equivalents, and restricted securities	$	34,294	$	42,236
Total current assets		187,390		179,168
Total assets		605,654		571,091
Total current liabilities		45,195		34,523
Total liabilities		319,958		296,024
Shareholders’ equity		285,696		275,067

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CRYOLIFE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP

NetIncome (Loss) and DilutedIncome (Loss) Per Common Share - Unaudited

(In thousands, except per share data)

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
		2019		2018		2019		2018
GAAP:
Income (loss) before income taxes	$	1,547	$	(1,459)	$	1,644	$	(6,391)
Income tax expense (benefit)		2,228		(683)		(76)		(3,551)
Net (loss) income	$	(681)	$	(776)	$	1,720	$	(2,840)
Diluted (loss) income per common share:	$	(0.02)	$	(0.02)	$	0.05	$	(0.08)
Reconciliation of income (loss) before income taxes,
GAAP to adjusted net income, non-GAAP
Income (loss) before income taxes, GAAP	$	1,547	$	(1,459)	$	1,644	$	(6,391)
Adjustments:
Business development and integration expenses		526		1,399		3,088		8,332
Amortization expense		3,054		2,597		10,850		10,792
Gain on On-X escrow settlement		--		--		--		(2,675)
Inventory basis step-up expense		--		--		--		2,805
Adjusted income before income taxes,
non-GAAP		5,127		2,537		15,582		12,863
Income tax expense calculated at a
pro forma tax rate of 25%		1,282		634		3,896		3,216
Adjusted net income, non-GAAP	$	3,845	$	1,903	$	11,686	$	9,647
Reconciliation of diluted (loss) income per common share, GAAP
to adjusted diluted income per common share, non-GAAP:
Diluted (loss) income per common share, GAAP:	$	(0.02)	$	(0.02)	$	0.05	$	(0.08)
Adjustments:
Business development and integration expenses		0.02		0.04		0.08		0.22
Amortization expense		0.08		0.07		0.28		0.29
Gain on On-X escrow settlement		--		--		--		(0.07)
Inventory basis step-up expense		--		--		--		0.07
Tax effect of non-GAAP adjustments		(0.03)		(0.03)		(0.09)		(0.12)
Effect of 25% pro forma tax rate		0.05		(0.01)		(0.01)		(0.05)
Adjusted diluted income per common share,
non-GAAP:	$	0.10	$	0.05	$	0.31	$	0.26
Diluted weighted-average common
shares outstanding		37,914		37,658		37,860		37,437

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CRYOLIFE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP

Revenues - Unaudited

(In thousands, except per share data)

	Three Months Ended					Twelve Months Ended
	December 31,					December 31,
	2019		2018		Growth Rate	2019		2018		Growth Rate
Reconciliation of total revenues, GAAP to
total revenues, non-GAAP:
Total revenues, GAAP	$	69,697	$	67,799	3%	$	276,222	$	262,841	5%
Impact of changes in currency exchange		--		(933)			--		(4,708)
Total constant currency revenues, non-GAAP	$	69,697	$	66,866	4%	$	276,222	$	258,133	7%
Reconciliation of total revenues, GAAP to
total revenues, non-GAAP:
Total revenues, GAAP	$	69,697	$	67,799	3%	$	276,222	$	262,841	5%
Impact of changes in currency exchange		--		(933)			--		(4,708)
Less CardioGenesis cardiac laser therapy		(1,050)		(1,703)			(6,016)		(6,217)
Total constant currency revenues excluding CardioGenesis, non-GAAP	$	68,647	$	65,163	5%	$	270,206	$	251,916	7%
Reconciliation of total JOTEC revenues, GAAP, to
total JOTEC revenues, non-GAAP:
Total JOTEC revenues, GAAP	$	16,038	$	16,672	-4%	$	64,974	$	63,341	3%
Impact of changes in currency exchange		--		(691)			--		(3,471)
Total constant currency JOTEC revenues, non-GAAP	$	16,038	$	15,981	0%	$	64,974	$	59,870	9%

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CRYOLIFE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP

Adjusted EBITDA - Unaudited

(In thousands, except per share data)

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
Reconciliation of net (loss) income, GAAP to
adjusted EBITDA, non-GAAP:
Net (loss) income, GAAP	$	(681)	$	(776)	$	1,720	$	(2,840)
Adjustments:
Depreciation and amortization expense		5,060		4,459		18,317		18,095
Income tax expense (benefit)		2,228		(683)		(76)		(3,551)
Interest income		(130)		(85)		(738)		(226)
Interest expense		3,626		3,925		14,886		15,788
Gain on On-X escrow settlement		--		--		--		(2,675)
Inventory basis step-up expense		--		--		--		2,805
Business development and integration expenses		526		1,399		3,088		8,332
(Gain) loss on foreign currency revaluation		(1,437)		437		1,232		2,578
Stock-based compensation expense		2,218		1,641		8,799		6,326
Adjusted EBITDA, non-GAAP	$	11,410	$	10,317	$	47,228	$	44,632

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Document And Entity Information	Feb. 13, 2020
Document And Entity Information [Abstract]
Document Type	8-K
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Document Period End Date	Feb. 13, 2020
Entity Central Index Key	0000784199
Entity Registrant Name	CRYOLIFE, INC.
Entity Incorporation, State or Country Code	FL
Entity File Number	1-13165
Entity Tax Identification Number	59-2417093
Entity Address, Address Line One	1655 Roberts Boulevard, N.W.
Entity Address, City or Town	Kennesaw
Entity Address, State or Province	GA
Entity Address, Postal Zip Code	30144
City Area Code	770
Local Phone Number	419-3355
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	CRY
Security Exchange Name	NYSE
Written Communications	false
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Pre Commencement Issuer Tender Offer	false
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