CryoLife, Inc. (CRY)
Q1 2010 Earnings Conference Call
April 28, 2010 10:00 AM ET
Steven Anderson – Chairman, President and CEO
Ashley Lee – EVP, COO and CFO
Matt Dolan – Roth Capital Partners
Greg Brash – Sidoti & Company
Raymond Myers – The Benchmark Company
Previous Statements by CRY
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Greetings, and welcome to the CryoLife first quarter 2010 financial conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.
(Operator Instructions). As a reminder this conference is being recorded. It is now my pleasure to introduce your host Steve Anderson, President and CEO for CryoLife. Thank you Mr. Anderson you may begin.
Good morning everyone, this is Steve Anderson CryoLife’s CEO and I would like to welcome you to our first quarter 2010 earnings conference call. With me today is Ashley Lee the company's Executive VP, COO and CFO. We were very pleased to release our earnings report today as we reported record quarterly revenues of $29.7 million and 11% increase over the same period a year ago and earnings of $1.9 million or $0.07 per share. Revenues were up in all parts of our business. It was an all time record quarter for vascular tissue and our best first quarter record for BioGlue and BioFoam combined. This is the 13th consecutive quarter of profitability for the company. The agenda for today's call is as follows. Ashley will comment in detail on the company's operating results for the first quarter. He will comment on our significant cash position and how we intend to use that cash to enhance shareholder value.
After Ashley completes his comments, I will comment on the initial clinical outcomes with BioForm in Europe and the overall European launch plans. I will also comment on the Department of Defense approval process for the BioForm IDE study and the timeline for patient enrollment once final approval is achieved. I will comment on the company's participation in the upcoming American Association for Thoracic Surgery meeting. After my comments, Ashley will return for the purpose of updating the company's financial guidance for the rest of the year. After his guidance comments, we will open the call for questions. At this time Ashley will comment on today's press release.
Thank you, Steve. To comply with the Safe Harbor requirements of the Private Securities Litigation Reform Act of 1995 I'd like to make the following statement. Comments made in this call, which look forward in time involve risk and uncertainties in our forward-looking statements within the Private Securities Litigation Reform Act of 1995. The forward-looking statements include statements made as to the company's or management’s intentions, hopes, beliefs, expectations or predications of the future. Additional information concerning risk and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings including the risk factor section of our Form 10-K for the year ended December 31, 2009. Our Form 10-Q for the quarter ended March 31, 2010, which we expect to file by the end of this week and in the press release that went out this morning a copy of which is contained on the Investor Relations portion of our website.
This morning we reported our results for the first quarter of 2010. We set an all time quarterly revenue record of $29.7 million in the first quarter of 2010. This represent an 11% increase compared to the corresponding period in 2009. As of March 31, 2010 we had $37.7 million or roughly $1.30 per diluted share in cash, cash equivalents and restricted securities, compared to $35.1 million at December 31, 2009. Of this $37.7 million, $2.5 million was received from the US Department of Defense as advance funding for the development of BioForm Protein Hydrogel Technology and $5.3 million was designated as restricted securities primarily due to our financial covenant requirement under our credit agreement.
Our cash, cash equivalents and restricted securities balances as of today are approximately $40 million. Net income for the first quarter of 2010 was $1.9 million or $0.07 per basic and fully diluted common share compared to $1.9 million or $0.07 for per basic and fully diluted share for the first quarter of 2009. We recorded pretax charges in the first quarter of 2010 of $729,000 in connection with the write off of capitalized legal expenses associated with our BioGlue intellectual property rights in Germany. Approximately $380,000 in business development cost primarily associated with our proposal to acquire Medafor and approximately $415,000 in cost associated with our litigation with Medafor.
Additionally, we recorded an $817,000 gain on the change in value of the derivatives related to the investment in Medafor common stock. Cardiac revenues for the first quarter 2010 increased to 23% compared to the corresponding period of 2009. The increase in first quarter compared to the prior year is primarily due to a 21% increase in cardiac tissue unit shipments. We believe that this is in large part due to the efforts of our cardiac specialist sales force.
Additionally, we're seeing growing interest in international markets for our preserved cardiac tissues. The vascular business continues to be very well driven by strong unit growth. Vascular revenues for the first quarter of 2010 increased to 10% compared to the corresponding period in 2009. This increase primarily resulted from an 8% increase in unit shipments for the first quarter of 2010 compared to the comparable period of 2009.