EX-99.1 2 cryolife8k110206ex991.htm PRESS RELEASE Press Release
Exhibit 99.1

 

 
FOR IMMEDIATE RELEASE
 

Media Contacts:

D. Ashley Lee
Katie Brazel
Executive Vice President, Chief Financial Officer and
Fleishman Hillard
Chief Operating Officer
Phone: 404-739-0150
Phone: 770-419-3355
  
 
CryoLife Reports Profitable Third Quarter 2006

Company posts third quarter net income of $2.0 Million; forecasts record revenues in 2007

ATLANTA, GA… (November 2, 2006)… CryoLife, Inc. (NYSE: CRY), a biomaterials and biosurgical device company, announced today that revenues for the third quarter of 2006 increased 22 percent to $20.0 million compared to $16.5 million in the third quarter of 2005. Net income in the third quarter of 2006 was $2.0 million, and $0.07 per basic and fully diluted common share, compared to a net loss of ($3.1) million, and ($0.14) per basic and fully diluted common share in the third quarter of 2005.

The third quarter of 2006 included a net $2.0 million gain related to the settlement of an insurance dispute. The third quarter of 2005 included a $741,000 charge related to the adjustment of reserves for product liability losses, a $701,000 charge related to post employment benefits, and a $412,000 gain for the change in the value of the derivative related to the Company’s preferred stock.

Revenues for the first nine months of 2006 increased 17 percent to $60.2 million compared to $51.3 million in the first nine months of 2005. Net income in the first nine months of 2006 was $415,000, and a net loss of ($0.01) per basic and fully diluted common share, compared to a net loss of ($18.9) million, and ($0.81) per basic and fully diluted common share in the first nine months of 2005.

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The first nine months of 2006 included a net $2.0 million gain related to the settlement of an insurance dispute, an $832,000 charge related to stock based compensation, a $451,000 gain related to the adjustment of reserves for product liability losses, and a $448,000 charge related to post employment benefits. The first nine months of 2005 included an $11.8 million charge for the settlement of the shareholder class action lawsuit, a $701,000 charge related to post employment benefits, a $403,000 benefit related to the adjustment of reserves for product liability and other legal losses, and a $372,000 charge for the change in the value of the derivative related to the Company’s preferred stock.

Steven G. Anderson, President and CEO of CryoLife, Inc., stated, “We are very pleased with the Company’s ongoing recovery. Steady improvement in the Company’s gross margins is encouraging, and the combination of increasing revenues and decreasing operating expenses bode well for the future. We expect to achieve record annual revenues and sustained profitability in 2007.”

BioGlue® revenues were $9.4 million for the third quarter of 2006 compared to $8.9 million in the third quarter of 2005, an increase of 6 percent. U. S. BioGlue revenues were $7.1 million and $6.7 million in the third quarter of 2006 and 2005, respectively. International BioGlue revenues were $2.3 million and $2.2 million in the third quarter of 2006 and 2005, respectively.

BioGlue revenues were $29.5 million for the first nine months of 2006 compared to $28.3 million in the first nine months of 2005, an increase of 4 percent. U.S. BioGlue revenues were $22.0 million and $21.5 million in the first nine months of 2006 and 2005, respectively. International BioGlue revenues were $7.5 million and $6.8 million in the first nine months of 2006 and 2005, respectively.

Tissue processing revenues in the third quarter of 2006 increased 41 percent to $10.3 million compared to $7.3 million in the third quarter of 2005. Tissue processing revenues in the first nine months of 2006 increased 34 percent to $29.8 million compared to $22.2 million in the first nine months of 2005. Tissue processing revenues increased primarily due to an increase in tissue procurement and an improvement in processing yields, which resulted in an increased number of allografts available for distribution.

Total product and tissue processing gross margins were 57 percent in the third quarter of 2006 compared to 52 percent in the third quarter of 2005. Total product and tissue processing gross margins were 56 percent in the first nine months of 2006 compared to 53 percent in the first nine months of 2005. Tissue processing gross margins in the third quarter of 2006 were 33 percent compared to 18 percent in the third quarter of 2005. Tissue processing gross margins in the first nine months of 2006 were 30 percent compared to 19 percent in the first nine months of 2005. Tissue processing gross margins improved in 2006 compared to 2005, primarily as a result of price increases and improved tissue processing yields, as well as an increase in the number of tissues processed.

General, administrative, and marketing expenses in the third quarter of 2006 were $8.5 million compared to $11.1 million in the third quarter of 2005. General, administrative, and marketing expenses in the third quarter of 2006 included a net $2.0 million gain from the settlement of an insurance dispute. General, administrative, and marketing expenses in the third quarter of 2005 included a $741,000 charge related to the adjustment of reserves for product liability losses and a $701,000 charge related to post employment benefits.

General, administrative, and marketing expenses in the first nine months of 2006 were $30.1 million compared to $42.7 million in the first nine months of 2005. General, administrative, and marketing expenses for the first nine months of 2006 included a net $2.0 million gain from the settlement of an insurance dispute, an $832,000 charge for stock based compensation, a $451,000 gain related to the adjustment of reserves for product liability losses and a $448,000 charge related to post employment benefits. General, administrative, and marketing for the first nine months of 2005 included an $11.8 million charge for the settlement of the shareholder class action lawsuit, a $701,000 charge related to post employment benefits and a $403,000 benefit related to the adjustment of reserves for product liability and other legal losses.
 

 
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R&D expenses were $826,000 and $894,000 in the third quarters of 2006 and 2005, respectively. R&D expenses were $2.6 million and $2.7 million in the first nine months of 2006 and 2005, respectively.

As of September 30, 2006, the Company had $8.2 million in cash, cash equivalents, marketable securities (at market), and restricted securities, not including the net $2.0 million in proceeds from the settlement of an insurance dispute, which was received in October 2006.

2006 Guidance

The Company expects revenues for the full year of 2006 to be within its previous range of guidance of between $80.0 and $82.0 million. Selling, general and administrative expenses are expected to be between $40.5 and $41.5 million, which includes the net $2.0 million gain from the insurance dispute. Research and development expenses are expected to be between $3.5 and $4.0 million.

2007 Guidance

The Company expects record annual revenues for the full year of 2007 exceeding its previous record of $87.7 million recorded in 2002. The Company expects to provide more detailed guidance in its year-end conference call in February 2007.

Webcast and Conference Call Information

The Company will hold a teleconference call and live webcast at 11:15 a.m. Eastern Time, November 2, 2006, to discuss third quarter 2006 financial 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 11:15 a.m. A replay of the teleconference will be available November 2 - 9, 2006 and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415. The account number for the replay is 244 and the conference number is 217256.
 
 
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The live webcast and replay, as well as a copy of this press release, 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 cardiovascular, vascular, and orthopaedic 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 distributes the CryoLife-O'Brien® stentless porcine heart valve and the SG Model 100 vascular graft, which are 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 statements include those regarding anticipated revenues for the full year of 2006 and 2007 and future growth and financial improvement. 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 recently announced strategic directives may not generate anticipated revenue and earnings growth, the Company's efforts to continue to increase revenue may not be effective, since their effectiveness is subject to such factors as competitive pressures and tissue availability, that the Company's efforts to develop and introduce new products outside the U.S. may be unsuccessful, that the Company's efforts to improve procurement and tissue processing yields may not continue to prove effective, 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 products and services under development, including BioDisc, may not be commercially feasible, the Company’s SynerGraft products may not receive FDA approval when anticipated or at all, 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 decreases in the Company's working capital if cash flow does not improve, 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, efforts by existing stockholders or others to gain influence or control over CryoLife may divert management’s attention from the Company’s operational recovery or otherwise be detrimental to the interests of the other stockholders, existing or other potential litigation initiated by stockholders or others; possible litigation by CryoLife if stockholders or others make proposals or statements which CryoLife does not believe to be fair or accurate or in the best interests of its other shareholders 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, 2005, its most recent Form 10-Q, and the Company's other SEC filings. The Company does not undertake to update its forward-looking statements.



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CRYOLIFE, INC.
Unaudited Financial Highlights
(In thousands, except share data)
 
 
   
Three Months Ended
  
Nine Months Ended
  
   
September 30,
  
September 30,
  
   
2006
  
2005
  
2006
  
2005
  
Revenues:
                  
Products
  
$
9,687
  
$
9,129
  
$
30,308
  
$
29,102
  
Human tissue preservation services
    
10,319
    
7,329
    
29,839
    
22,219
  
Research grants
    
12
    
--
    
74
    
--
  
Total revenues
    
20,018
    
16,458
    
60,221
    
51,321
  
Costs and expenses:
                          
Products
   
1,576
    
1,940
    
5,581
    
6,135
  
Human tissue preservation services
   
6,954
    
6,015
    
20,751
    
17,984
  
General, administrative, and marketing
    
8,549
    
11,085
    
30,106
    
42,726
  
Research and development
    
826
    
894
    
2,572
    
2,744
  
Interest expense
    
169
    
77
    
504
    
220
  
Interest income
    
(94
)
  
(166
)
  
(304
)
  
(408
)
Change in valuation of derivative
    
44
    
(412
)
  
111
    
372
  
Other expense, net
    
4
    
37
    
348
    
212
  
Total costs and expenses
    
18,028
    
19,470
    
59,669
    
69,985
  
                           
                           
Earnings (loss) before income taxes
    
1,990
    
(3,012
)
  
552
    
(18,664
)
Income tax expense
   
12
    
106
    
137
    
190
  
Net Income (loss)
  
$
1,978
    
$(3,118
)
$
415
  
$
(18,854
)
Effect of preferred stock
    
(243
)
  
(243
)
  
(730
)
  
(533
)
Net Income (loss) applicable to common shares
  
$
1,735
  
$
(3,361
)
$
(315
)
$
(19,387
)
                           
Income (loss) per common share:
                          
Basic
  
$
0.07
  
$
(0.14
)
$
(0.01
)
$
(0.81
)
Diluted
  
$
0.07
  
$
(0.14
)
$
(0.01
)
$
(0.81
)
                           
Weighted average common shares outstanding:
                          
Basic
    
24,847
    
24,161
    
24,804
    
23,839
  
Diluted
    
25,118
    
24,161
    
24,804
    
23,839
  
                           
                           
Revenues from:
                          
BioGlue
  
$
9,444
  
$
8,917
  
$
29,534
  
$
28,340
  
Bioprosthetic devices
    
243
    
212
    
774
    
762
  
Total products
    
9,687
    
9,129
    
30,308
    
29,102
  
                           
Cardiovascular
    
4,189
    
3,139
    
11,550
    
10,407
  
Vascular
    
4,468
    
2,825
    
13,066
    
8,281
  
Orthopaedic
    
1,662
    
1,365
    
5,223
    
3,531
  
Total preservation services
    
10,319
    
7,329
    
29,839
    
22,219
  
                           
Other
    
12
    
--
    
74
    
--
  
Total revenues
  
$
20,018
  
$
16,458
  
$
60,221
  
$
51,321
  
                           
Domestic revenues
  
$
17,297
  
$
14,011
  
$
51,497
  
$
43,595
  
International revenues
    
2,721
    
2,447
    
8,724
    
7,726
  
Total revenues
  
$
20,018
  
$
16,458
  
$
60,221
  
$
51,321
  

 
 
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CRYOLIFE, INC.
Financial Highlights
(In thousands)


   
September 30,
  
December 31,
  
   
2006
  
2005
  
   
(Unaudited)
  
Cash and cash equivalents, marketable securities,
              
at market, and restricted securities
  
$
8,157
  
$
12,159
  
Trade receivables, net
    
11,754
    
10,153
  
Other receivables
    
4,087
    
1,934
  
Deferred preservation costs, net
    
19,509
    
13,959
  
Inventories
    
5,013
    
4,609
  
Total assets
    
80,464
    
76,809
  
Shareholders’ equity
    
51,472
    
50,621
  


 
For additional information about the company, visit CryoLife’s Web site:
http://www.cryolife.com

END

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