CRY - Earnings call transcript Q4 2019

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Operator

Greetings. Welcome to CryoLife's Fourth Quarter and Year End 2019 Financial Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Lynn Lewis from the Gilmartin Group. Please go ahead.

Lynn Lewis

you. Thank thank the and today. for you afternoon, call joining Good

are CryoLife's CEO; Joining from team Pat me today CFO. management MacKin, Lee, and Ashley

Securities we of call Safe uncertainties statements like Reform to Before XXXX. Act risks of Litigation Private would and the made Reform the forward I statements on within in Comments following involve this Securities to Litigation forward-looking comply look of requirements the and Harbor make the Private are XXXX. meaning of that the Act with begin, time

forward-looking as statements. results uncertainties, The risks, expectations to company's differ to or subject future. statements of These are these actual of predictions number estimates beliefs, materially from hopes, and the to include statements a statements forward-looking assumptions made management's that forward-looking or the cause intentions, may

issued information in risks certain statements SEC contained from impact uncertainties the press to may the filings release today. is that company's concerning Additional in was time earlier time and these forward-looking and that

call With that, I'll turn over to CEO, MacKin. Pat Cryolife's the

Pat MacKin

and headwinds and afternoon our and today's quarter for we'll Thanks including call XXXX good our supply everyone. joining fourth On year products, chain we're pipeline us. making discuss key results progress financial on guidance. and objectives full Lynn Thanks

headwinds. quarter like fourth we financial that place in results, are positive were Before the I'd to our developments which begin, by quarter by apparent not the discuss that chain supply reviewing took only affected readily

the beginning previously see deliver of we're a market at to and multiple which products. believe We introductions, expect approved period product that of multi-year over new we'll expansion

the and at our same an Cryolife compelling most our addressable market growth one investment, rate, Our reasons address of the increase pipeline as time. has it to consider as potential the opportunity to is

technology. and competitive with received we branch stent and the and first graft believe graft graft offering. these next provide off-the-shelf E-nside, early E-nya us enhancements highly In products stent generation with into CE thoraco-abdominal Mark inner stent We designed next-generation only the thoracic our for December, comprehensive

in announced dissections to graph provides NEXUS We A billion, The with exceed rights the product. and the EU Endospan, could regulatory both immediate are distribution repair that once achieved. endovascular approvals in market aneurysms also which arch. the aortic of off-the-shelf collaboration global our $X approved the us with only

JOTEC endovascular NEXUS of complements repair us our products. and cross-sell portfolio products these allow aortic to

Xa In received a Eliquis prospective PROACT safely addition, on if to trial valve with maintained warfarin. effectively be the randomized aortic to clinical we commence On-X the and authorization FDA patients mechanical determine could than rather study,

of impacted warfarin. our endpoint we will due mechanical will be significant over that others of benefits the On-X choose Eliquis business over mechanical primary the study, this hit valve expect to we patient valve positively If as positive physicians the

we rights U.S. NeoPatch. entered into Misonix, under have exclusive for Finally, which commercialization will collaboration Misonix with

indications to product of of topics vascular tissue membrane my cardiac range broad amniotic later Our on and each I'll surgery. of outside comments. these a treat have in more

cardiac quarter Moving roughly to growth tissue quarter constant basis. and revenue year-over-year strong recorded for Total million reflecting We revenue a results. in our currency non-GAAP was the of X% financial $XX.X quarter. growth the On-X on fourth

JOTEC pieces hand supply our our for growth slightly push supply our addressed on revenue and constraints below products lack our of calls, However, the continued prior with TMR which overall the we expectations.

robust. portfolio this been news The hand quarter TMR demand in be we we'd story. expect for demand our product issues to good tell and the pieces, If innovative remains to sell different able transient products our JOTEC is, a for meet these would results financial

Revenue XX% which grew OUS America the markets Turning increased from in first GAAP while XX% a XX%. on quarter. in strength to revenue valves, were by constant and non-GAAP currency driven grew the On-X, North basis, up X% aortic

anticipate We a year GAAP grew high-single, share. continue currency revenue On-X revenue market in low take On-X double-digits remain full on to we XX% over and to non-GAAP to expect the growth For basis. and the constant

business, excluding JOTEC X% headwinds of JOTEC, And even a fourth full is the on face XX% year-over-year to the we gears an revenue year-over-year Switching year supply. currency a increased on quarter, basis. increase OEM basis despite this non-GAAP during the with constant

XX% We've and as by efforts, our I'm initiated additional continue to capacity expand hiring personnel. JOTEC train been throughout JOTEC to in pleased and [Indiscernible] has these supply announce this training addressing capacity expect we and the we year, issues additional hire Germany. manufacturing our that we to increased since

manufacturing In addition internal to increasing capabilities. our

half onboarding working additional anticipate this are to through the year. secure second of capacity We in manufacturer, which we external contract a

efforts, As of increase supply meaningfully to expect we these result a over XXXX.

anticipate growth as OPEN we for E-vita products as we supply E-nya, launch improves, such, throughout NEO year-over-year to year and year. E-nside, this inside later accelerate On-X trends As the

cardiac in our XX% quarter was in led tissue X% quarter, to business. versus XXXX. reported solid X% which the in fourth the and of Moving revenue tissue which the business, area, valve the our for fourth We performance up quarter generated full year. was this by fourth This for

We well continue renaissance of stems our improved tissue in to as a we valves, believe which availability the pediatric heart our for experience strong Ross pulmonary valves. from demand procedure as

issues, in to Revenues increased million due for to long quarter, saphenous in quarter for of the supply vein. third were business million improve year-over-year fourth down $X.X primarily our ongoing vascular the from fourth tissue due supply the quarter but to X% $X.X

for initiative supply was fourth to currency quarter constant compared Our X% full supply flat XXXX. improve to a basis last year in was starting of of on to a business. our up year, BioGlue the constant currency tissue the basis vascular of the tissue but ease on vascular

of for year, a our approval puts years, in take last the believe in Chinese an approval could which February to XXXX. to up FDA two approval We and possible application regulatory submitted

is U.S. our complete. Regarding PerClot, trial enrolment

expect the the some The half submit delay lab had now manufacturing in approximately QX. damage we to of announced However, damage PMA late minimal previously timeline; XXXX. we therefore caused to to small caused our a a second that to in fire minor the pilot three-to-six-month our FDA

second still contract are back these we of re-inspection have our XXXX. handpieces the in the half passes of TMR facility. FDA awaiting hope manufacturing market We to Regarding on hand

XXXX, to we X As core year, JOTEC X pipeline This topline well. product and contribute to to begin we perform launch to our to expect business the and Nexus. we our EU to products the next-generation look fully expect

We and will also initiate invest the XXA PROACT in we'll in our to channels America. the continue and trial sales Latin U.S. in Asia

next-generation During inventory will quarter, the our turning and building we our first products. on customers on JOTEC be

move release for quarter. during stent full patients to third for releases aortic limited E-nya, we with we low next-generation into quarter, the second As thoracic graft disease, commence the a market expect profile by market our followed

new stent is used frozen of E-vita delivery conjunction our thoracic elephant predominantly was high-deployment E-vita stent previous addresses with graft, XG thoracoabdominal and that Our system our significant new devices, graft. of forces. A trunk in design the which low challenges TAVR OPEN feature extra profile PLUS

us the well enhancement product significantly European offering gives graft will as thoracic other stent competitive improvement This that to as market. share us a allow more market in gain

the grafts the E-nside our in of E-nya perfect is device. versatile off-the-shelf most one the recently complement thoracoabdominal market, As approved to our

Many of expect quarter market to in days periods graft, in market third which characterized to which open full disease to surgical made recuperation risky patients Similar quarter. take procedures, hospitalization either with by the followed treated release can up limited be invasive lengthy the release thoracoabdominal are a to by manufacture. XX second stent the E-nya, are we prolonged and or with custom with E-nside

custom-made E-nside the graft. would patients of is typically precannulated E-nside stent period and who graft off-the-shelf stent inner with only by a require waiting thoracoabdominal experienced branches the eliminates approximately XX%

elephant receiving of trunk anticipate the of We OPEN CE is release approval XXXX. the generation in first quarter half full which market Mark year. be This by NEO, will next the second for the frozen followed E-vita in our a

developments you important on status. regarding We approval will its update

limited market Turning in of to a fourth XXXX, gradually to and throughout release a the the marked be NEXUS. XXXX. quarter We broader conducted introducing product we'll release

in NEXUS last in reminder. being most procedures frontier of one aortic of the performed aortic As endovascular today. a the repair, arch. sophisticated deployment its the utilized is arch And the is

the effort nicely. trained schedule investing There's to In deploy appropriate excitement technology. are a As this such, for and we that adequately are the time great ensure of marketplace the was in building to in the deal product. surgeons case

confident the has contributor Our our NEXUS initial product in portfolio. product experience and will that solid a been be we're positive very to

comprehensive technically aortic the advanced from most aortic to iliac aorta valve portfolio, entire the the addressed stent As and products graft arteries. our the JOTEC

addition XX sales person NEXUS, opportunity the We significant believe with E-nside of the force. portfolio, of cross-selling our a provides E-vita NEO, direct repair along OPEN E-nya, through European aortic our us rest

Switching gears to On-X.

is the XXA, our participating PROACT FDA XX recent our conduct meeting investigator the to approval With with centers. next -- of meetings investigator step an

patients X,XXX is enrollment anticipate next trial XX aortic We will expect approximately valve can proving North successful couple enrolled aortic to trial on the recipients centers and If up enrollment of America. effectively begin in months. the in in that take to maintained Eliquis. XX The be to months at valve -- the

We valves. second the CryoLife share leader taking bioprosthetic aortic in while the will valve believe segment, mechanical market from that share become existing simultaneously

significant market our the to our accelerate million. addressable could and potential has greater indication market an $XXX research to business Such on On-X than based opportunity increase Onyx for

to new the of over and Before the call Asia-Pacific we to sales we initiative for people channels number shareholders, I a begun financial have and response received of the these employees. the regions broader his sales review feedback expect and America that like to our turn double community, physicians we've Ashley investment to in Finally, I'd Latin next invest to our from in results, couple the in continue We'll of over that years, announce

of That the is acquisition we given On-X should the after JOTEC, evolution rebranding company the and the of consider company.

the considerable developing by we months with -- over devote year. intent effort end we next the of nine launching the such, brand of be a XX to As the new will to will

will pipeline constituents, represent are years timing in do. we the company all of expect to deliver further new continue come. believe new a who will this that of better made and we as of transform to to the brand We sense we to our series products the our key what The change

fourth now Ashley XXXX XXXX well on as results will over our the call turn as to full I year further who guidance. detail will provide the quarter

Ashley?

Ashley Lee

Thanks X% fourth X% the constant to compared quarter good basis $XX.X million Pat to to of and increased company Total grew revenues afternoon currency a XXXX. on everyone. non-GAAP and

on XXXX. a For increased compared full currency $XXX.X on X% the constant basis X% to to and percent a million revenues basis dollars GAAP year,

Looking at non-GAAP both than basis, quarter X% JOTEC a and on for the constant to product less the fourth the of decreased a tech XXXX. GAAP X% compared increased basis on lines. fourth currency revenues quarter

X% the revenues a fourth business, basis non-GAAP Excluding increased less quarter X% to decreased compared constant currency on GAAP OEM a the on basis than XXXX. JOTEC and of

revenues On-X a grew quarter full compared XXXX. basis and on year, of XXXX. XX% and revenues for on fourth a to increased fourth X% GAAP net X% to constant the year the JOTEC on the compared both to For currency full currency constant basis a non-GAAP quarter the of basis

XX% currency a non-GAAP currency For a less fourth and to the non-GAAP on and on than both revenues we're BioGlue full GAAP to basis. in quarter GAAP get quarter a On-X flat decreased constant the grew on compared of fourth the basis X% constant basis year, XXXX.

the full X% constant BioGlue XXXX non-GAAP a for Total the on revenue basis full revenues and close a processing X% For and of increased year. to GAAP the quarter increased X% tissue on currency fourth year compared quarter basis. for the X% fourth to

for as XX% fourth tissue and increased X% the improvement But in decreased the supply. X% the fourth from third for the see reflecting grew for revenues vascular Cardiac Vascular revenues and full to vascular quarter full revenues sequentially the we year. the quarter mentioned, quarter year. Pat quarter for XX% fourth decreased that the

for XXXX. Gross the for full margins year XX.X% and of the XX.X% fourth were quarter

for expense uncertain tax the tax reflects for income Our reserves positions. quarter fourth

loss or bottom in the On XXXX. GAAP fully net reported line, diluted the of fourth a $X.XX per quarter we of share $XXX,XXX

per was income $X.XX net Non-GAAP or share. $X.X million

results additional to $XX.X the year fully press $X.XX share. results income million for $X.X results. our our net full or to Please was non-GAAP GAAP diluted net including about information a release these For our income of GAAP share refer and per reconciliation non-GAAP million or was per $X.XX

million equivalents cash restricted cash, As had of securities. XXXX, February, approximately X, in $XX.X the we and

of credit approximately leverage XX, at million times. $XXX we As our December and leverage our was term outstanding stood our our under current four loan XXXX, gross times B based approximately on X.X approximately documents, net had and

financing needs the The We interest debt have comfortably our at can current service was end X.XX% on loan and of additional support rate model. term our XXXX. no our to business

guidance, Turning expect a X.X% compared we to between constant to X.X% revenue our XXXX basis currency to XXXX. in on increase XXXX and

of versus XXXX million dollar are range revenue is a guidance $XXX XXXX and guidance year an full of rate and year a for of $XXX Assuming euro the range our million. XX year full XXXX million average a a exchange dollar revenue a average of of XX XXX USD full $XXX is XXXX rate

contributions Our China, full PerClot handpieces. year in revenue guidance or from assumes TMR no U.S. BioGlue

Additionally, our contribution guidance nominal NeoPatch. from includes a

currency regards of second half Excluding significantly Pat of that revenue and all expect our factors from to be the constant first better the of due TMR the for year be XXXX XXXX between we compared growth the growth than year revenues to XXXX, year and rate XX.X%. In XXXX, of in the the that to both X.X% the half full mentioned previously. will would cadence XXXX

between to and throughout the Considering constant in JOTEC basis. improvement the we and first X.X% of XXXX grow a on expect currency revenues three products these supply NEXUS. factors, and Expected JOTEC year X.X% launches quarter

a a million million. rate to are USD At of range be revenues of exchange $XX $XX expected $X.XX, a to euro in

quarter the and Excluding growth XXXX first to quarter revenues $X.X of the quarter X%. be TMR currency of the would compared first XXXX, constant of million between of X% first XXXX for

our increased which $X.XX OUS in margins new and improvements and channels reflects expect gross our commercial range in pipeline. investment launches and non-GAAP infrastructure, of our and EPS be product We investment with increased $X.XX to any in

three go Asia employees scale. years and not product at our we We was one back only And America had pipeline combined. commercial XX short about you in Latin If PerClot. were Europe, in ago,

clinical we Europe are we a pipeline our scale geographies pipeline new closer over deliver and have that opportunities over of On-X and to from in multiple Through years, the products standpoint our acquisitions channel time could trials. coming in in JOTEC, and multiple now the requires but investment

a Additionally, especially we scale well are and in in Asia-Pacific near America. term. the commercial investment not Latin takes as And still that

developing said, Pacific on are Latin that side, and over Asia channels, regulatory $X with investing in infrastructure being and SG&A American So, we the million capabilities.

Middle investment to to operating going support dollars be expect We're an year in and these begin leverage We then two and $X.XX worldwide East additional Pacific we'll and SG&A NEXUS geographies. an million Asia spend in to and share. Latin XXXX in marketing investment new see efforts, combined growth three meaningful to launch in Europe, approximates the plus of other products the including Europe, per Africa, JOTEC and America

to the $X.X transaction. Additionally, million in amortization primarily expense increase to XXXX is about expected Endospan related

$X.XX an trial. on $X rate trial. $X we share clinical On could our of enrollment incremental or PROACT less will pipeline the front, more clinical the be Endospan XXA million spending approximately be million or per the than depending in on

estimated be Total R&D XXXX. clinical are $XX in the spending in low in range the to million

our per approximate for we earnings. GAAP impact Pat mentioned expect earlier, that initiative onetime $X.XX on branding share an As

determination will our be we amounts However, of non-GAAP in excluding EPS. such

JOTEC Germany in regards facility increase we In be expenses, to investing both to capital in capacity expansions and manufacturing for will On-X. Austin and

increase from XXXX. in and CapEx million As million a between $X result, anticipate in will that approximately $XX million to $XX XXXX we

during clinical paying anticipate for we Endospan, with grants trials agreement FDA U.S. $X XXXX our to million them the approval to begin pursuant assuming Additionally, NEXUS. to them

resulting non-GAAP about operating from this longer want excluded EPS margins. payment business Any development additional I to be add cost. expectations from term expense as comment our to related one will

XXA beginning We we continue time. our to will operating related believe, and late Asia-Pacific pipeline inflection America XXXX in particularly see XX will XXXX operating on that to reach have beginning beyond. achieve and plus leverage begin margin in Latin we building an and and confidence PROACT investment our over out percent significant to we point With in

for call the over closing his back Pat I'll comments. turn to

Pat MacKin

Thanks Ashley.

believe quarter, headwinds had our none at on we products. the short-term we with anything do financial on our If that key demand for this delivering we're impacted track summary, in performance to our So, look we're and objectives.

vascular headwinds in we we Entering we've despite the XXXX, confident constant And year-over-year. supply delivered growth the we faced improve our supply issues. JOTEC believe the still currency will year. We're XXXX, X% throughout of resolved

the NEXUS, to the also as have trial. well commencement addition in as we enrollment In clinical the of PROACT three launches, JOTEC XXA upcoming

years Mitral well steady as new PerClot of We a China also [Indiscernible] the the valve. approval PROACT approvals of as over and potential Mitral FDA have including next product low cadence or BioGlue few

deliver digit several years. confident We consistent ability single next growth to remain our over revenue high in the

beginning Our from the patients aortic To are and to that all vision begin disease now turn new end, our the to with unfold pipeline is I to employees thank around would reality. world in products. our innovative benefit continuing to like into of our

please line you will questions. that, to open With the proceed. can we now Operator,

Operator

Instructions]. [Operator Certainly.

from is of Canaccord Genuity. Please Jason go The first question ahead. Mills

Unidentified Analyst

drove could really then, looking both Hi. This at on growth And drivers QX. just today. as strength? On-X is drivers walk the actually through I Cecilia XXXX What this wondering, Jason was for in sustainability of you're around positive in commercial indication. term? an And kind of cadence As impact expanded XXXX? and well growth over and of in near does ahead awareness potential ramping just of your the as expectations you the

Pat MacKin

Yes.

of the the in part first primarily on but else we're On-X the you in using U.S. So, Europe, direct the U.S. saw distributors we and we're question as know and your outside was world. everywhere

You can't we'd so to look at tend of year full lumpy ordering basis. a see quarter-to-quarter, patterns to kind like

trial So, I I very repeat question. full growth think at I growing which in XX% sustainable started. at second XX%, is the the -- rate. don't is that's you look strong obviously think year a a of -- OUS before the And and frankly second On-X look growth PROACT the I XXA can

Unidentified Analyst

awareness Does that in the could impact interest XXA to over and have term driving the near On-X?

Pat MacKin

and got their is the approved life. people Eliquis, said for in custody friend that a who taken ascending it a is and needs he's guys into any on -- aback could a a valve been total run with of him. say ones an He's been benign they probably by had just And just He's changer basically by I've keep On-X impact said, been has old. who how to you how on going Eliquis years fact I've in a mine drug Yes. just that really mechanical I've are trail -- he has a aneurysm aortic of he game one since taking conversations who XX it valve. -- need the it's if by And I and FDA replaced.

end -- at thing of second protocol is clinical had recent meeting would the was of say January. The the view surgery the a a we at the I heart there STS,

weeks of the couple a exactly it’s This I've a question So And is game waiting changer. is total what was, from this first crowd ago. the been for.

options it's what could handicap it off this a I trial think But product. So it could and invasive operation I ton The think you Eliquis of minimally mean could that what about on on hard the promise have through if to what are. I promoting not for excitement a great label the you to your Clearly, compared patients that other works, fact do. there's we're go world? what incision around will the get tell one a outcome

market And in significant mechanical bioprosthetic we the market research that leader of on from the share the valves take not become patients age finally side, shows under share only we our do but XX.

So, again excited. this we're -- I think a very is

Ashley, commented $X the opportunity is trial. to for million $XXX the million earnings. But on $XXX year this that million we're company. $X.XX this of spending a That's market

money think well invested. I So it's

Unidentified Analyst

to from your limited And then to centers, up the provide helpful. well as initial you're super ability and you as to more that's just going launch, initially forward a the insight NEXUS, accounts? into guess the just little if I And takeaways competitor going open turning could target

Pat MacKin

Yes.

like competitive the no product no else this. are because there one has So accounts

about work quarter. to the my doing -- the ones town. there's totally going never launch market of also grafting, limited and good of typical has release with. a mentioned kind the commercially. This very the I the mean, been actually I single arch up We would procedure we're frontier it's system have the careful, things we're branched product, last in one say, fourth before of partner been in a a through done catheter I comments. growing is But did So being is very the only in pains. that's into This a obviously really stent We right? great

-- and for very next have means gets the you we're that what one. good we does a mean? ensure time. rigorous the we're one, very takes trained to training move first this being our obviously program outcomes. surgeon And That then Once surgeons. so on prudent careful That up a to patient and And

treated think So, are nice even build ramp. a quarter. will steady a going who see you caseload of seen be patients I of a We've this to

actually the get something think going I going as belt our and under get So this forward. cases we training to build out is that's

Operator

question go The Please Suraj you. of is next from ahead. Thank Oppenheimer. Kalia

Suraj Kalia

afternoon right? Good gentlemen. you Can hear me

Pat MacKin

afternoon Good Yes. Suraj.

Suraj Kalia

Hey, that's patch.

you how kind reverse do with patients start the one enrollment? it. many with comments in How and XXA I'll factor let patients On-x try for out So XXA made on of reverse you an me PROACT U.S. to -- PROACT existing exist XX-month the in Cumulatively, of timeline engineer

Pat MacKin

Yes. It's answer this it's never could has right? a So to good question before, Suraj. thing done hard And again, enroll been faster. like this a trial like what

numbers. do procedure hospital. There So, for PROACT valve aortic trial. in access in today again others is in patients On-X you population that the this some unique rough could the are not very a case what let XXA. a that the call that you you're pool patient is the give are going about to And U.S. me index on -- where is this This XX,XXX also

This On-X is the patients trial a drug already valve after who that three have implanted had surgery. for months are

XX,XXX. that about patient population So is

join You to the got hospital. time through this you've IRB right? thing. a XX% our think been excited the about career. hospital, is the to at a a about concept. of our have go People the with to go investigators, trial. the need and clinical we lots trial is -- through Any I've in our my you There involved ramp, contracting are with this patients From conversations doable do So I very very

that that So some includes the of enrollment.

the the jumping approved enrollment get I'd six trial. of say and you that So getting is months all it's not of starts when IRBs the wand in that just IDE The sudden like and everybody wave the contracts a you done. biggest, a

Ashley this slower. in faster. So, comments, gets we It could I think have X internal do go to an that And projection his could also go could the quick. million, -- projecting that you enrollment lot alluded a to we're the that go

on mean, calls. I our could we've So and previous this EPS about swing talked

call because enrollment in on out spending We such PROACT has EPA. it XXA the impact our a direct will meaningful a on

excitement. positive, a of we're So lot

We have our QX in and centers with the and investigator first two to March in got we here months. centers meeting expect patients the next XX enroll -- we've the next, call it,

So And this have as quickly things going see to start how we'll to and we monitor enroll, taking hold. go.

Suraj Kalia

it. Got

it now for remind persisted believe Pat, QX, So, this the JOTEC Had for JOTEC, me what normalized Obviously, to now drawing Pat, have rate guys QX. you are QX that blank, issue completely mitigate I'm and that. has and a would has anniversaried, trying supply not issue been. that growth existent. I supply

expectations? supply So beyond we requires that's control. still What is keep work issue you the side? aside know met the that JOTEC your one thing question. And be if second your the What has would on

Pat MacKin

Yes.

I so things. the couple a CEO think it's are -- supply our control totally actually issues as it's my I responsibility. chain say, would of and the in

I at XX% in grew acquired by XXXX off long one we a around time. it details supply We get point to year for a the else of without owned guard first and We want into And single with frankly and it. it me. first, was doing time, been to caught acquired issue. But product. of I've at the no XX. there's finger December the this So don't the the same it the we I

in was them European factors MDR, that can happened script, So, to hire working my hiring the XX this this going on XX behind mentioned list into a -- of get and to some some the it then takes once of control. it biggest lot our you challenge to -- The to the us But I them. of right, scholars of control, tell all. a very which things team I the but our that multitude is we've you, in of you is were supply and that three put been got out to for hard train months as some and issues a lot get on related not somebody again --

takes time three months lead in quickly. we've hiring long So that. a very it as been

any news is second of eliminate will supplier problems a we the in we're have. great The supplier process on source that basically bringing

So, part it behind good is we And move the by fourth that get standpoint the get news be investor as the us. issue is quarter from we to the an worst Each the And time gone. supply should of will better. quarter we're in into the be all we're supply, products going answer new your have XXXX. full XXXX what hard a the That's first very with been? strong revenue to I question think To to -- to going a about have question could answer.

get when portfolio. QX us. not it's quarter gone. to better XX% have grew grown have piece, the our of XX% in delays XX% And probably could've we But the a investors is product. is May news been point And XX. the been approval particularly of again, and and then, this it new in waiting hurt right. be gotten XX. going And we've other for MDR all would I if And chain every rock in supply saying one that on you products with I get you it again, closes to We're our which approvals. we'd our the got which going XXXX, I'm all new range approvals XXXX. it to XX% grew think the to to we'll all XX% got get approval. into great our We're That's would've of kind JOTEC that I also can we're we've for think going but door we more of roll and We the and north tell think coming, had quarter.

transient --it's So a is thrilled can not fix to problem. again, it. But we've about I a you I'm this tell this. very aggressively responded

Suraj Kalia

the reason slower finally, product is And help XXXX, per level I obviously we at slightly of built And ask look NEXUS. approvals, the us commentary, understand half first Pat and as the second half is conservatism your Great. new than guidance. Ashley, what FY into

that On-X, just should it if core great. at perspective? Gentlemen, So should we think from additional thank housekeeping moving How Any But core look how the JOTEC. taking get If look we questions. I we in of you up? I cadence. at terms would about a the be at color for different levers look

Pat MacKin

and a Yes. and and sat No, not and kind think around real real issues. thing -- in approvals is a JOTEC products mean, lingering the supply kind this of the this and not plant. we like of selling just is loaded I we new time. JOTEC not back doing late again, have us the I I've quarter is long is right, first this any really it And look we're products, is the been still of of we because

much changing devices quarter the all start market That is first the So build not for in We QX, quarter. than for different to starting product. right? limited new the are the now fourth release the

QX. QX. three we're marker releasing full going in start continue Supply limited have release market improve. to to So in -- unbridled JOTEC supply market We will by products a all new moved and the QX

and think products So significant QX QX, accelerate the roll every JOTEC QX, is I through will the see again, of better and number out and QX that these you be quarter.

put can't big of if conservative last we're time is, -- XX%. kind TMR re-approval. We're the a the that's of given out I of mean I I piece X% to think other year out out last is you TMR this extremely how would the a like being year. take and guidance of number. we say So I remember this piece on of

direct a my control I don't risk supplier. on have control over I not based going have control to over I'm I and over. don't reinspection don't FDA frankly total have that my direct plan And the

-- but thing the TMR is There we're it investor that It's operating back If But we've of growing it guidance does, we're I to chance line So product out the plan. happened. comes and a strategic XX%. to you take us. it's taken this totally the at an you happened think of upside. be giving X% nine if look should it as of it'll the out, is you but unfortunate it a business second underlying at this look performance But in half. not

I conservative. don't so And think it's

Suraj Kalia

Thanks.

Operator

Please is of Mike question Company. go Needham from ahead. next & Matson The

David Saxon

actually PerClot. I first Pat questions. David for just from Thanks taking the Mike. on Saxon Hi, and guess its on

wondering just Just that that you've And strategy, commercial selling and does plan your if seen data then look? on how so, if it. the on what's

to it's force given points Just a call lot then touch your currently sales of going current covers? that other

Pat MacKin

Yes.

that its approval. we of rolled from trial basically very that that endpoint confident an both efficacy receive and met data out the the the and should So, hasn't safety it we FDA came trial feel primary and

we're very in So confident actually that.

mentioned the joined Your pipeline something second we Arch when I R&D PerClot partnership PerClot. calls, Ashley correct. NEXUS with about. you're part JOTEC the your to is it our done company had obviously we've and as And these On-X we we've the traumatically aortic which the question and changed talked an company earlier, of talked be we've with on product acquisitions device and previously is about one since strategy was in and company just the the of

different obviously is very a this company. So

invested as market time, a At growing And gross also a of $XXX responsibility XX%. that's margin a money XX% at invested and we've to million we've the it's same PerClot. in lot shareholders

So it's attractive.

represents opportunity not maximize the for surgeons. is going on XX% around which obviously world our to forces PerClot, sales heart call investment. of Our vascular That about the

do the market you we with. it do companies. are options. having FDA product goal could I transaction those for -- options and approved we return we're of in We that can PMA partner at tell all We So partner margin in will for that a sell that somebody think -- process different with to of shareholders that exploring We is an and will could could my will I a who ourselves. flat-out of opportunity size our either else. I be best interesting some the an doing get provide exploring

David Saxon

quarter? fourth just And isn't Thanks. handpiece, you to forward can going quantify exiting Okay. then the given really the you have And product, just then just strategic considered that? TMR a the it on that impact

Pat MacKin

and we a it board, again, not the question. you it's this from quarter, conversation we're actually comment the want what the money Ashley, now, on time but divest the product. right fourth the -- And you'd a and we're going actual that's It's get process product which in then know I But some strategic don't good is get the to if with actually market to at well for options do. it. Yes. Ideally same we back of number the had can on may trying the explore we'll forward.

our which was that product what is We're growing. very not here think that's aortic company. to the a again legacy look investor what CryoLife for This an profitable, is it. a again part about. was of But strategic, unfortunate at an It's is that not I is product

be when we to it -- got because burned on -- But it XXXX. of regulatory took we just may we'll move approvals as So in XXXX we have out we forward. thoughtful

but So, see I'd the thing say, throughout on unfolds how that, we're being we'll year. this very conservative

Ashley Lee

hand million million pieces were approximately not sell and fourth $X.X to the to we did have able quarter, TMR the we the revenue to regards in In any $X.X impacted by quarter. in that that

David Saxon

Okay. Thanks.

Operator

The next Please Cohen Jeffrey ahead. go of Landenburg question is from Thalmann.

Jeffrey Cohen

and Ashley, the Suraj go back for Pat JOTEC questions wanted questions. I the earlier. from Hey, taking to some of thanks to

work year, far will back different and in the in half parallel is devices So, two are going Do -- different devices second or expect source toward the you as kind to supply that sides as locations? series? in the of be the the

Pat MacKin

people the same detail We're is second of to probably want about a It's in I Frankly, big really the the in we're into other thing. much do the field places, not don't other But it. selling. thing appropriate. too about talking I mean get Yes. not talking source.

look them tons our one So It's us, of this not selling. up going is at produce have which we And portfolio product facility. around for anything free and really new. will German to may for the we're capacity

We're another graft they will this other field. to So in for in do our already for and to be This companies be us show this is to both facility just going continue that supplier sell will adding Germany. stent facilities going selling. in the

approvals So, And these like very we to supply. year said, supplier, second with we option I move a leave when all and will a ability really low this of QX into think nice us. I Frank the it's we get and risk for

side, The from supply start release improving full approvals not where QX, international all it and product of supply. in supply other to think to in new QX going we in on market QX, revenue JOTEC stride with -- no full JOTEC full in limited about go from improving would thing also full have I supply. our with market ask you only with the release hitting But we're QX then with

Asia So Latin America, Pacific.

we this actually moved portfolio. kind this. as is This to a got got everything and into And So months move into I delay. great of again, it back -- XXXX, going six of see because QX think approval we're

So, I'm do portfolio is this bullish going on extremely forward. to what going

Jeffrey Cohen

new to particularly you Okay. have the And then as sales coming with as readiness commercial still what products what's force out, of done already Europe? the be the done and far in

Pat MacKin

Yes.

our at the fully limited end has whole I force, meeting trained. QX the bit training. reps to year. second we're meeting. release. We've kind the kickoff the So January. reps get every chomping the They market sales early products. about the We'll a to team and as at European do of hiring. was sales will I got meeting dedicated mentioned XX -- by ago, And That And in was was at we a been to at of are start be XXX year probably I

will away. to it's inventory each need train the And get more devices do We in to to pump JOTEC trained. support the the kind as to customers. there. far that need prime the first start building launch. we their out cases, improves So quarter, of continue not with We They're

go. ready is on mean waiting just think so I So, I product. yes, We're the sales to side

Jeffrey Cohen

you quick lastly being for of on procedures some in does the in And it one flu of Got some take risk Have related seen any that Potentially, me. territories? the Okay. a done institutions? side anything then away regular things

Pat MacKin

We there's their out I news, kind do not have mean a have of home like going of bad I going we lot where it's It's good been been people and in of business most houses. mean, in and news. not China a out profound China. -- not staying

very did around a I bullish on in think going dollars China roughly we China forward. year. million We last were

the can revenue think -- for impacts a CryoLife impact standpoint. don't two mean, from think it big be I I a I

I think impact biggest is China. potential BioGlue the

that's panel now for meeting and scheduled because days BioGlue specifically had the We been in postponed our XX the of next coronavirus.

I approval is forward. to going if pain to nobody unfold think know, going I is linger where in into continues how that -- BioGlue is our for going there's knows I China, which mean this back XXXX that's So aren't not don't we feel might people revenue way, the and the does offices thing this thing China. push for But the no BioGlue by

because XXXX just get this. a a we later do So it's XXXX not risk. It's it in of

Jeffrey Cohen

Got it.

more on great. and rebrand about focusing Thanks the we'll Okay much. top And very the you're hear line. I'm glad

Pat MacKin

Yep.

Operator

Lake Markets. ahead. from next Street Brooks is O'Neil go Capital Please The question of

Brooks O'Neil

afternoon Good guys.

the where of a give look lot think you to And of heading? revenue? kind what top What's top there the as the So you us will the What could what get you're in rate? line gross profile you for think what this the can business like? details, of parts. of maybe power when company core businesses? sort a sense you sort I the you. become? hoping summarize growth earning are What's going lot of this was terms What's And of your moving company vision line of realize Thank margin? is for

Pat MacKin

Yes.

know think you I look.

I bit. touched on think Ashley little a

The had has person in years. Latin I So, think last the in it right? had five started doubled here five one context in our we and pipeline into was one and I product company America. We Asia-Pacific put ago. years

to gross margin has Our XXX basis up points. gone XXX

our a creating are on a creating eyes We dollar set with company billion company.

this at Our XXX guidance puts XXX to like year. you

spending We're now that XX in pipeline $XX has a have pipeline. now million R&D. products in We the robust

to enough of big we EPS. some We money doing for have pay news going very one size to don't go XXA to is about great shareholders profitable, don't out is actually increase because raise a a have us capital because take so of is pipeline. few and have our worry But this which the the of companies PROACT we're

like anybody there. Asia like and we done We're because JOTEC, building and America because We're Asia takes our That America opportunity resources. to that's BioGlue like never Latin huge take to Latin also products never investing existing infrastructure. in On-X, Pacific had we that been have

through pipeline leverage channels. I drops your we don't want get hire we're And understand we're new with that pipeline at scale. biggest then invested reps not spitting and in channel the shareholders is that a starts building the the So is operating the to our think we're as are products in things to to two operative company, and right? way you investing those scale that the you out, We're need

So, Ashley in comments. talked and talked his about we've

in into goal margin moving as and XX, single give double line pipeline range a high to behind channels call our our a the expansion. revenue have small the XX, the a point we're top medical whole channels going between investing expand. the the company drive going it, digit be XX going towards of device in now -- We But late, be we're one our to pipeline The going then. operating we're purpose that growth. this XX% to cap for and And look to digits margin. value greatest and move and revenue year you to is creation to in is expansion growth We're margin to get

So that's simple the story.

Brooks O'Neil

very That I think much. great vision. and pair is you Thank a it's perfect

Operator

Munda next ahead. go Please of is question The First from Analysis. Joe

Joe Munda

but Good of real my answered, and have Ashley. Lot questions been questions. Pat afternoon two quick

about forecasting as R&D. you're as out. infrastructure you little OUS the is your talk out far there in of on you're You what as Can a as at sense touched spend give and that us infrastructure a OUS doing well guidance build you concerned bit

little incremental the occurring, R&D Maybe As spend here. a you're the up plan products through got the in us you could a as pieces? well You've trials you. launching is R&D sort spend. of the walk of line, bump launch? as But moving really Thank couple well or bit where as new for going the on

Pat MacKin

Yes.

the probably also Latin investment can now office to this person year. I'll heavy We're commercial. programs about just support. more and talk the marketing the and Asia. I America side. team of approvals, we in to We've one kind regulatory got and the be Sales XX getting sales you have more had out region and office Asia-Pacific So people, educational investment We're America. the Asia. But to right? We not real street. add in the is right? in to or of skewed The around back and that partnered. customers much really Latin also again, the on being front feet We're the in a going on back So adding in imagine, you Asia-Pacific mean in of XX

existing So, if got products of you market. into approvals of tons know think you about it, moving the just we've them

as the -- think our to we're expect So growth accelerating I years seeds and popping invest our had They significant they think rate. year be of will we contributors and regions we planting providers will are those this decent these continue that in up to Latin America our we channels be rate. growth and that Asia-Pacific

EPS. As in the the was it PROACT to and R&D, I $X.XX relates XXA change biggest that's of R&D mean

we've $X we six all and got month advancing. million for underneath. So pipeline, our it's moving parts products But in a rest there's the XX The they're XXXX. of delta -- pipeline

works, XXA really things the the We're We've in lots bringing -- is to got other portfolio the but working enrollment we've R&D highly that JOTEC to correlated trial. PROACT We're that trial. finished in on to part of be the of the U.S. the increment going PROACT of Mitral the

Joe Munda

Great. you. Thank

Operator

back Mr. questions closing are at no over comments. like for to floor there the to management I would turn this MacKin, further time.

Pat MacKin

about at in participating in issues. JOTEC four going I'm not kind minimal We launching vascular got have what's opportunity. QX. very Hopefully I this the to can a you about piece, PROACT in my front I tissue supply we're We've excited talk We our XXXX We'll we the is think trial but it supply LMR the thrilled about but the nice quarters. enrollment. is voice the into even that QX. E-nya are mean, in We'll start those back what for deal. year, doing call. that's XXA We've going Thanks of back, E-nside we're approved. got the didn't is be revenue transient NeoPatch the Great. got be in or the hand TMR us. look LMR through and I approved. hear there. Misonix of approved

XX%. full it's is throughout think new should and E-vita longer year, full take TMR NEXUS guidance point on the And ready. to quarter being talked OPEN if supply into no the is improve for when And we we're revenue and of very last because moving to issue. will that X% we'll handpiece get year it's JOTEC conservative announce in it. approved quarter. this our out year, in you where release this without JOTEC about we our taking mark And it last of it an We products it, this our out year, the QX NEO, the

company. So I this think that's a target pretty for good

in We're the that investing feel because the current are through. been changes We're We also investing looking investing we're a building do initiative, we've rebranding in don't going all brand given our at a channels. our represents be pipeline and what company. to we in we

look you future So attending. progress year. excited about updates for to and on our Thanks throughout the giving very we the forward we're

Operator

And disconnect may conference. at this you today's your you time. concludes your This lines for Thank participation.

Artivion (AORT) 13 Feb 202019 Q4 Earnings call transcript