CryoLife's CEO Discusses Q2 2012 Results - Earnings Transcript

Start Time: 10:00

End Time: 10:43

CryoLife, Inc. (CRY)

Q2 2012 Earnings Call

July 31, 2012 10:00 a.m. ET


Steve Anderson – President and CEO

Ashley Lee – EVP, CFO and COO


Brooks West – Piper Jaffray

Matt Dolan – Roth Capital Partners

Raymond Myers – The Benchmark Company

Jeffrey Cohen – Ladenburg Thalmann



Greetings and welcome to the CryoLife Second 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, Mr. Steve Anderson, President and CEO for CryoLife. Thank you. You may begin.

Steve Anderson

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

During the second quarter we continued to execute on our growth strategy and delivered solid top and bottom line financial results. We achieved quarterly revenues of 33.2 million, an increase of 13% over the same quarter last year and up 3% quarter-to-quarter.

Our revenue growth was driven by continuing excellent sales of BioGlue in Japan, a strong quarter for Allographenes and valves, a full-quarter of Cardiogenesis sales compared to the previous year is partial quarter and the addition of $635,000 of HeRO Graft sales due to our recent acquisition of Hemosphere.

On the bottom line, we delivered net income of $0.12 per share compared to $0.06 per share in 2011. In addition to the solid quarter, we further enhanced our long-term market opportunity and growth potential with the acquisition of the HeRO Graft for end-stage in dialysis patients which will allow us to further leverage our sales force and core competencies.

During the quarter we also eliminated the ongoing legal exposure in costs related to some very material lawsuits. We will provide updates on each of these items on today’s call. The agenda is as follows.

Ashley will discuss today’s earnings press release in detail. He will discuss our performance by tissue and product line and he will discuss the recent settlement of the Medafor and CardioFocus lawsuits and the positive effect these settlements will have on our earnings going forward.

At the end of the call he will return and provide updated financial guidance for the remainder of the year. I will discuss the recent acquisition of Hemosphere and then HeRO Graft for end-stage renal disease vascular access. I will also discuss the timetable for the beginning of the PerClot human clinical trial here in the United States.

Ashley Lee

Thanks Steve. To comply 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-Qs for the quarters ended March 31, 2012 and June 30, 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 second quarter and first six months of 2012. We achieved strong financial results for the second quarter and further positioned the company for long-term revenue and earnings growth. Here are some of the highlights.

We achieved an all-time quarterly revenue record of $33.2 million driven by year-over-year increases in all lines of business and by the recent acquisition of Hemosphere. We settled three outstanding lawsuits with Medafor, CardioFocus and Tenaxis which eliminated our ongoing legal exposure and expenses related to these lawsuits.

And we completed the acquisition of Hemosphere, a company that has the only currently approved fully subcutaneous product to bypass central venous stenosis and end-stage renal disease patients undergoing hemodialysis.

As I previously mentioned, we set an all-time quarterly revenue record of 33.2 million, up 13% year-over-year. The following factors influenced our revenue performance.

Total international revenues were up 16% in the second quarter compared to the prior year. Total product revenues grew 15% to $16.7 million. Total tissue processing revenues grew 11% to $16.3 million. Worldwide BioGlue revenues were up 5% for the second quarter. This was driven by volume increases in international markets, primarily Japan. PerClot Sales for the second quarter were $691,000, which represents our best quarter since we launched the product in the fourth quarter of 2010.

We have recently made some personnel changes in certain areas in the EU as well as concentrated our EU sales efforts in our direct sales markets. We believe that these efforts are beginning to pay off with our best sales quarter for PerClot and we expect better results in future quarters.

We are also broadening our EU sales focus beyond cardiac and vascular surgery. Steve will provide details on the U.S. PerClot timeline in his remarkings.

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