CryoLife, Inc. (CRY)

Q1 2012 Earnings Call

April 26, 2012 10:00 am ET


Steve Anderson - President and CEO

Ashley Lee - EVP, CFO and COO


Daniel Garofalo - Piper Jaffray

Jeffrey Cohen - Ladenburg Thalmann

Matt Dolan - Roth Capital Partners



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Greetings, and welcome to the CryoLife First Quarter 2012 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, sir, you may begin.

Steve Anderson

Good morning everyone. This is Steve Anderson, CryoLife's President and CEO, and welcome you to CryoLife’s first quarter 2012 conference call. With me today is Ashley Lee, the company's Executive Vice President, COO and CFO.

This morning we announced all time record revenues for first quarter $32.3 million and delivered net earnings $991,000 or $0.04. This represents 7% growth over the comparable period a year ago including strong (inaudible) growth, higher margin products.

During the first quarter just concluded continued international sales of our powdered hemostat PerClot (inaudible) also continuing to progress. BioGlue sales were up 14% over the first quarter a year ago primarily as a result of strong sales in Japan of $1.3 million. Cardiogenesis sales were $2.1 million for the first quarter; international revenues were strong up 21% over the same period a year ago.

The agenda for today's call is as follows: Ashley will discuss this morning's press release in detail and will comment on our progress by product line. He will also bring you up to date on our continuing corporate development efforts. I will discuss the filing of our IDE for PerClot in the United States and outline the parameters and time table for the clinical trial and the approximate anticipated approvable date. I will discuss our HDE submission for the SynerGraft process decellularized aortic valves. After my comments are completed Ashley will return to update you on our guidance for the rest of the year.

At this time, Ashley will comment on this morning's press release.

Ashley Lee

Thanks Steve. To company with the Safe Harbor requirements of the Private Securities Reform Act of 1995, I would like to make the following statement. Comments made in this call that look forward in time involve risk and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

The forward-looking statements include the statements made as to the company’s or management’s intentions, hopes, beliefs, expectations or predictions of the future including the guidance for 2012 that I’ll provide in a moment.

Additional information concerning risks and uncertainties that may impact these forward-looking statements is contained from time to time in the company’s SEC filings including the Risk Factors section of our previously filed Form 10-K for the year ending December 31, 2011, and our subsequently filed Form 10-Q for the quarter ended March 31, 2012, which we expect to file shortly and in the press release that went out this morning.

This morning we reported our results for the first quarter of 2012. We achieved an all-time quarterly revenue record of $32.3 million driven by strength in the BioGlue business and the recent acquisition of Cardiogenesis.

Our gross margins for the quarter expanded 460 basis points compared to the prior year and our strong balance sheet continues to position us to pursue business development opportunities to potentially accelerate the growth of our business while at the same time repurchasing shares of our common stock.

As I previously mentioned we set an all-time quarterly revenue record of $32.3 million, up 7% year-over-year. The following factors influenced our revenue performance. Total international revenues were up 21% in the first quarter compared to the prior year. Total product segment revenues grew 14% to $16.5 million. Worldwide BioGlue revenues were up 14% for the first quarter. This increase was predominantly driven by volume increases early in Japan due to the recent launch of the products in April 2011. We continue to remain enthusiastic about the opportunity in Japan and have received positive feedback and new orders from our distribution partner.

PerClot sales for the first quarter was $644,000. We continue to experience some headwinds in the EU due to austerity programs and competition but we continue to expect growth in PerClot revenues in international markets over the coming years. This will be driven by geographic expansion in new international markets as we broaden our EU sales focus beyond cardiac and vascular surgery.

We have received positive feedback on the usage of PerClot in the EU for neurosurgery and prostate surgery and believe these are growth opportunities for us. Additionally, we are working towards the potential USPMA approval which we continue to expect no later than 2014. Steve will provide additional details on the PerClot timeline in his remarks.

Residents from the Cardiogenesis product line were $2.1 million for the first quarter. We continue to press forward with our TMR training programs and believe that we’ll see low double-digit growth for this business as we train additional surgeons.

We believe that BioGlue in Japan, Cardiogenesis, and PerClot represent attractive top line growth and margin expansion opportunities for the company this year and in 2013 and beyond.

Cardiac tissue revenues for the first quarter of 2012 increased 8% compared to the corresponding period in 2011. As compared to the prior year, unit shipments of cardiac tissues went up 1% for the quarter. Vascular tissue revenues decreased 6% compared to the prior year's quarter on a 3% decrease in units for the quarter.

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