Cryolife Breaks Quarterly Financials Record

In short

CryoLife, Inc. has announced its results for the fourth quarter and full year of 2011. Revenues for the fourth quarter increased 4 percent to a record $30.4 million compared to $29.2 million for the fourth quarter of 2010. Revenues for the full year increased 3 percent to a record $119.6 million compared to $116.6 million for the full year of 2010.

Revenue Highlights

Sealant and Hemostat revenues down due to discontinuation of Hemostase 

Surgical sealant and hemostat revenues were $53.7 million for the full year of 2011 compared to $56.4 million for the full year of 2010, a decrease of 5 percent. The decrease in surgical sealant and hemostat revenues in the full year of 2011 was primarily due to a decrease in HemoStase revenues, partially offset by the full year addition of PerClot revenues and a 4 percent increase in BioGlue revenues.

Revascularisation Technologies 

Revascularization technologies revenues were $2.4 million for the fourth quarter and $5.7 million for the full year of 2011 as a result of the Company’s acquisition of Cardiogenesis in May 2011.

“Preservation” services

Preservation services revenues for the full year of 2011 were $59.8 million compared to $59.7 million for the full year of 2010. Preservation services revenues for the full year of 2011 were favorably affected by an increase in shipments of vascular tissue and an increase in average preservation service fees, offset by a decrease in shipments of cardiac tissues.

Gross margin increase to 64% in Q4, 63% full year 

Total gross margins increased to 64 percent in the fourth quarter of 2011, up from 60 percent in the fourth quarter of 2010, driven by higher gross margins from the Company’s existing products, the acquisition of the Cardiogenesis product line, and the loss of lower margin HemoStase revenues. Preservation services gross margins were 42 percent and 39 percent for the fourth quarters of 2011 and 2010, respectively. Product gross margins were 85 percent and 80 percent for the fourth quarters of 2011 and 2010, respectively.

Total gross margins were 63 percent and 58 percent for the full year of 2011 and 2010, respectively. Preservation services gross margins were 43 percent and 40 percent for the full year of 2011 and 2010, respectively. Product gross margins were 84 percent and 78 percent for the full year of 2011 and 2010, respectively. Total gross margins for the full year of 2010 included a pretax charge of $1.6 million to write down HemoStase inventory that the Company did not believe it would be able to distribute.

Expenses increased 

General, administrative, and marketing expenses for the fourth quarter of 2011 were $14.6 million compared to $12.2 million for the fourth quarter of 2010. General, administrative, and marketing expenses for the fourth quarter of 2011 have increased compared to 2010 to support the sales personnel and ongoing operations of Cardiogenesis. General, administrative, and marketing expenses for the fourth quarter of 2011 included approximately $843,000 in costs related to ongoing litigation.

General, administrative, and marketing expenses for the full year of 2011 were $57.3 million compared to $49.1 million for the full year of 2010. General, administrative, and marketing expenses for the full year of 2011 included approximately $4.2 million in costs related to the Company’s acquisition of Cardiogenesis and other business development activities and approximately $1.9 million related to ongoing litigation. General, administrative, and marketing expenses for the full year of 2010 included approximately $1.0 million in costs related to business development activities and $2.3 million related to ongoing litigation.

R&D spend: year on year increase 

Research and development expenses were $1.8 million and $2.0 million for the fourth quarters of 2011 and 2010, respectively. Research and development expenses were $6.9 million and $5.9 million for the full year of 2011 and 2010, respectively. Research and development spending in 2011 was primarily focused on SynerGraft® tissues and products, PerClot, BioFoam Surgical Matrix, and BioGlue.

Company comments 

Steven G. Anderson, president and chief executive officer, said, “In 2011 we made significant progress in repositioning CryoLife with earlier stage, growth oriented products while also continuing to generate strong cash flow from our core business. We expect to begin accelerating our growth in 2012, led by expanded adoption of PerClot®, BioGlue®, and TMR. Revenues from our product segment are expected to increase by 10 percent to 15 percent for the year, with significant upside potential over the next several years as we execute on the clinical and regulatory pathways for our pipeline. In 2012 our strategic initiatives include enrolling our U.S. clinical trials for PerClot and BioFoam®, potentially expanding the indications for BioGlue in Japan, initiating our pilot study to evaluate TMR with biologics in Europe, and increasing revenues for PerClot in Europe. We believe that our portfolio of complementary, high margin products has the potential to significantly expand our market opportunity, leverage our core infrastructure and build value for the Company and its shareholders.”

Source: Cryolife