CRY - Earnings call transcript Q3 2021

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Operator

Good day, ladies and gentlemen, and welcome to the CryoLife Third Quarter 2021 Financial Conference Call. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host, Brian Johnston. Sir, the floor is yours. [Technical Difficulties]

J. Patrick Mackin

This is Pat Mackin CEO of CryoLife. quarter headwinds solid Delta by a variant. posted despite caused the the We

the $XX.X to quarter on results midpoint third Our for guidance. QX were were in forma currency of our which a constant million, basis XXXX, compared QX right the pro growth X%

quarter constant valve as to performance from encouraged quarter third U.S. by forma signs was the third aortic stent a segment and to revenue growth growth More we in the our line Our of these stents results and launches in XXXX product of the showing XXXX. in improvement graft I'm given benefited pro which into On-X On-X three the valve basis. XXXX, move in strength compared business particularly in currency quarter that significant stent North compared headwinds XX% product and XX% that grew on On-X led our by grew had all QX. new the America, we are our stent of The On-X aortic grew specifically, each XX%, graft and

First, and an on the an QX variant Delta our therefore, results. impact procedure on spike of impact the volumes, had

we COVID volume the cases in that have increase. however, stabilize We nationally, which seen and past procedure month, believe should have over the means declined QX,

added which, more discussed have release release we third tissue, a of our resulting our result review Second, this In quarter temporarily Tris staffing third you of to been charge capacity cardiac able quarantine issue. the tissue had declined backlog been in from to a and the to XXXX, will XX% previously and quarter, compared charts. as in donor recall, tissue as

we've in year-over-year revenue seen already an compared October cardiac As X% tissue to improvement XXXX. result, a growth in with significant

which any growth. in handpieces our add them begin to selling sell and this did revenue we QX expect should not month, to Third, TMR QX

growth revenue post also our quarter this QX, reiterating headwinds, fourth in year we full of expect the guidance. Given compared We're double-digit of in XXXX three these XXXX. mitigation to the year our to fourth of quarter

our of in more Ashley on this will commentary for year provide the the call. later outlook remainder

Moving our I our review is growth granular call, progress near-term quarter, in to on initiatives. explained more of with in the last as accelerate plan third main to a three revenue our

Our first initiative Europe. commercialize in new NEXUS, stent These E-nside, products five is NEO include AMDS, to E-nya. stent aortic our and graft and

Pacific and local Our regulatory is Asia and second gaining expand our initiative continue America expanding to approvals to by into Latin channels.

treatment U.S. the in approvals in the of in each U.S., device A aortic we Acute world's initiatives. Our third PROACT the secure an through PerClot Mitral first use remain very with Starting hybrid I three these for major walk in in to initiative dissections, for China. on regulatory markets update remodeling Type is will the and you arch AMDS, BioGlue of optimistic.

of quarter, a regional million where growth $X.X the third XX% majority an posted our constant quarter This in revenue, the lockdowns we During occurred over basis AMDS we have pro of forma third XXXX. sales. despite Europe, currency in the of increase on

secured in UAE, AMDS. Hong this additional also position We which including countries well with further marketing four quarter, authorizations growth for Kong us and

'XX. third of approved other to revenue, basis for for as $XXX,XXX quarter during a have in currency as an not NEXUS NEXUS of if the XX% as these constant increase was third We in in XXXX the travel and for Second, posted products, on portion compared COVID-XX of renewed the well of NEXUS third results revenue a restrictions been better believe quarter. would Europe not lockdowns quarter

an factors, we rates uptick COVID-XX to procedures expect infection in NEXUS Given in the anticipated in other see decline and QX.

grafts. device is newest with treat stent thoracoabdominal endovascular portfolio which to aneurysms in our E-nside, our Third,

Design this plus E-xtra for product release in revenues from currency a line, release trunk aneurysms include newest E-vita XXXX. the which line, Our grew this our our product compared limited XX% E-nside regarding when 'XX. QX dissections on aortic XX% devices, to to of NEO Plus, the and to device our the product early on full elephant Fourth, of include basis move a Open basis to expect we Fifth, NEO QX E-nya, a constant 'XX. Engineering frozen Revenues constant and arch. and continues of compared market the currency market grew to in category which treat

We for build in well continue rise. the as levels these as the Europe the expands adoption vaccine continue to to demand expect to five as product the market products for

international Moving revenues quarter on Pacific America footprint grew Latin and regulatory compared quarter third of next both on pro in revenues XX%, a approvals constant of third the XX%, the new 'XX. through America our grew Latin commercial and currency initiative, expansion, while forma 'XX Asia Pacific to basis expansion. Asia In in to and

in regions initiatives our regions. the as years these over We we continue across to coming expect these growth continue

Regarding the in make PMA earlier PerClot our submitted we continue and with quarter, to progress three third we during the approvals PMA authorities the achieving the submitted specifically, major we regulatory regulatory in approval initiative, month, dialogue we More on third continue this of the markets. to to China. Chinese BioGlue PROACT facilitate have Mitral

expect during we of XXXX. the to from receive FDA PerClot, second the approval For half

a supply our we'll revenue FDA of Baxter agreement. period the years services approval, transition product for generate two to approximately and under Following

to On-X for valve. lower label INR label We mitral aortic for PMA approval valve. On-X our also for to is INR expect similar This receive our lower the

XXXX. expect come half approval to We this first in the of

has share X.X advantage in reminder, it's A would mechanical aortic INR valve to X.X. our of a FDA-approved the a valves. X.X other to mechanical by only valve valves to X.X will the This clinical that, On-X at us that reminder, can lower INR run competitor lower versus standard take X.X is Coumadin of be significant patients. a the for a care for valve. label, valve maintained be care over label on approval significant will will the with we able standard As aortic patients If On-X X.X. benefits of patients than of to valve a aortic rather the X.X implanted We if a new mitral On-X to our for to dose with approved, enable patients the market translate FDA, significant X.X believe approved to compared be just with market the took clinical as share mitral this On-X to

and approval line an relates in as approval to the actively when regulatory we further China, providing BioGlue Lastly, it NMPA update forward clarity. with on engaged time to our have remain we look of

AMDS. each in and U.S. our products year. our Xa, three to These others with start currently clinical these of pipeline later to key products addition to also expected we progress trials NEXUS initiatives, strides continue on on PROACT In midterm this are and make

share for significant trial aortic Feedback under patients aortic maintained obtain valve with continue if patients should participating effectively We Eliquis XXXX. believe enrolled quarter the valve we remain of trial And our is be the can the leader surgeons FDA this by approval, We patients progress positive. PROACT and completing on market clinical trial. successfully very of make enrollment warfarin. early in in approval could valve This patients Xa our On-X from have prospective become of the we to new the safely If on to the or assuming enrollment this year. trial in XXXX aortic determine its trial we study. indication anticipate versus late in meets the we next On-X such second randomized endpoints, age during achieve the believe XX. and XXX currently We the

begin As AMDS we hope our year-end. third for AMDS, submitted clinical the we IDE by trial the to to FDA the during quarter and

us 'XX AMDS and NEXUS which NEXUS If addition the opportunity we trials time. In FDA for known progress as PROACT our to give TRIOMPHE. IDE turn $X company our AMDS these early or proceed the With PROACT additional I'll to continues as for market Xa, the an make Ashley, give partner, we billion CFO. by over Xa to trial, U.S. and of that the trial its expect, now on - at 'XX, anticipate call trial late approval Endospan that, would

D. Ashley Lee

move contained we'll before morning our release everybody in factors our like contain risk that tomorrow. this does in and and this refer And issued we you to should file that I'd Pat. in that XX-Q Thanks, forward-looking the to press statements, statements forward-looking on, I remind call the

increased BioGlue EMEA XXXX, a XXXX. third total increased America basis and Pacific anticipated disposable handsets. to and in midpoint stent revenues revenues increased third of pro increased Delta constant So, valve slower of cardiac stent GAAP revenues in On Latin quarter basis, forma currency reflecting XX%, increased revenues XXXX. XX%, tissue valve less position, regional temporary XX%, basis, $XX.X revenues of currency quarter quarter On pro to aortic X%, increased procedure tissue and constant and September our of XX% revenues of on compared to increased America and revenues compared graft processing XX%, XXXX. Asia XX% XX% graft of X%, third to volumes compared X% relative than aortic JOTEC and above a in On currency addition Latin On-X in processing improving basis increased adoption On-X On-X of X% were volumes impact of of in basis, a million the XX%, the a Pacific revenues third variant, restarting third quarter, pro revenues X%. the forma improved revenues X% the for on stent TMR XX% the of AMDS decreased up revenues North pro improved increased X%. XX%, cardiac XX% X%, quarter less delay a of a XX%, increased increased revenues tissue XX% delay forma the revenues to and and NEXUS than America XXXX, of sales Asia year-over-year chart EMEA clearances Revenues EU. third aortic in decreased of compared in and BioGlue inventory XXXX stent in and and a the constant On basis, increased America XXXX revenues procedure to than XXXX, the compared quarter quarter currency stent increased third basis third On BioGlue constant all North despite our and releases. all guidance XXXX, increased and to quarter a the and reflecting forma due increased the the increased increased the graft QX came the the decreased both stent

Ascyrus and both XXXX. the gross primarily amortization Our $XX.X of related XXXX. acquisition for in the in $XX.X to $X.X value compared in of increase third increase expenses, increase relates an The and quarter of million were of to million were million $X.X third XXXX and in the a adjustments XX% the third margins quarters expenses quarter resulting to contingent million consideration personnel-related fair travel XXXX. salaries, September including from commissions and G&A

third $X also from a $XX on million our payment in certain PerClot, reflecting offset gain a to in payment advance of the the quarter R&D to sale million $XX.X Baxter, our expenses PROACT SMI of partially for aortic related the pre-tax third spending U.S. the and and the assets. were trial to $X.X intangible by compared 'XX We to $XX pipeline million work XXXX, write-off increased recorded of reflecting of million million primarily the Xa quarter stent

includes Other losses. of Third Loan and amortization quarter $XXX,XXX expense convertible of our $X.X cost. interest million B, translation expense currency QX $X.X million debt origination to $X.X million approximately approximately foreign Term related our unrealized in in related of in and realized to debt million $X.X expense includes

$X.X for GAAP year afternoon. in that share bottom per this the million Adjusted translation share $X.X quarter. acquisitions $X.XX of $X.XX earnings the Reconciliations the and Adjusted gain quarter income the and the third per GAAP $XX.X reflects prior million of third or $X.XX included and in we net release pre-tax FX. from million diluted operating of amortization press for 'XX. of loss to Non-GAAP non-GAAP and income expense quarter per or or third losses income operating to line, operating in foreign was share of GAAP income. are compared million approximately million includes XXXX. share non-recurring reported add-backs net On of of related 'XX to a fully approximately charges third loss $X.X the was $X.X issued the we non-GAAP quarter other the per and currency to included income $X.XX EPS

by our quarter leverage third times. compared Gross in leverage, as Adjusted for of cash, times we the As debt XX, facility XXXX, stood million available September $XX 'XX was net and at $X.X full X.X $XX.X credit million in $XX.X and million approximately third had under EBITDA of million revolving the quarter to our defined million XXXX. credit $XXX X.X for of our stood at facility.

for strengthening fourth for over the $XXX million reflecting constant factors several currency that revenue confidence. the between dollar our between between of expect including GAAP million, million our of forma and XX.X% maintaining of full to of quarter now results because refer our growth are these to growth forecast is half call, and can our There of additional You are give second XXXX and pro to fourth outlook reconciliation But press our we results, last X% constant our non-GAAP XXXX. we currency since $XXX of million, $XX.X information revenues a forma release year and and outlook, of XXXX. our compared $XX.X And second the XX% about for results. half of between pro us the quarter now X.X%

AMDS, to performance America. perform Our well. anticipate E-nside new strong and from North product NEO We continued OPEN continued On-X launches in NEXUS, very seeing E-vita

beginning We improved cardiac see tissue releases. are already to

We to from continue expect Latin and America, this see restarting to TMR sales we handset strong APAC month. anticipate and performance

Our strengthened our quarter. has has versus during dollar the our nominal fact revenue million an drag that on guidance which $X the expectations, fourth approximate guidance also the reflects prior

Finally, impact will the our of guidance continue to COVID assumes diminish. that throughout the quarter

included IDE the SG&A. amounts recording the adjustments related begin our charges we clinical in value be in These Additionally, anticipated, will contingent trial million fair approximately anticipate receive $X if in to to acquisition. approval fourth of to we consideration AMDS as AMDS quarter,

that ongoing be designed able commercial R&D to investments to back for our our comfortably will and call and to and these as having to America operations believe fuel capital. I investments now raise comments. our invest our future we growth, in the debt channels make Latin through to without well in these continue additional intend Asia fund we our Regarding investments service that Pacific to his ongoing as closing turn pipeline. will in we Pat We can

J. Patrick Mackin

we positions Thanks, lack afternoon, growth that Ashley. In all us TMR XXXX. XXXX, variant, as handpiece heard faced this cardiac you've the processing chart improving. in headwinds tissue of QX double-digit QX well and in surge QX of of This are closing, three a Delta XXXX versus the the for

this also QX momentum expect We into for 'XX continue to XXXX.

that initiatives of drive has throughout now that we've built the through call, from explained a As I plan end will three XXXX. growth the

see First, stents aortic we stent E-nside, in and continued AMDS, new growth NEXUS, our and five grafts, should NEO E-nya.

our further and new anticipate in Pacific we and Second, channels upside from our investments America. in regulatory Latin Asia approvals

get Third, expect PROACT in for approval On-X low approval Mitral for PMA indication. PerClot we the as XXXX, to PMA as INR well

PMAs enrolling plan, Finally, robust delivering Xa very pipeline about are on PROACT on consistent like focused and we all basis. enrolling trial. that a persevere with a AMDS three start double-digit we're TRIOMPHE, to relentlessly U.S. have midterm the we're our in growth NEXUS currently confident I'm and

have having statements, started because don't reread going over Ashley we it at I technical questions, the turn beginning. to up the those because were I picked think actually as were I'm I Before difficulties to forward-looking

just run could quickly Ashley, through that? you

D. Ashley Lee

absolutely. Yes,

involve forward-looking So, in the made statements look assumptions that uncertainties statements Litigation expectations are to comments and as number results the cause beliefs, statements. within risks, Private of are include or may to a uncertainties, estimates of and Reform during management's forward-looking that statements we differ these meaning company's to These predictions XXXX. materially forward of Act or forward-looking actual future. risks forward-looking of call The hopes, from the intentions, subject that made statements the and the time Securities

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

J. Patrick Mackin

Ashley. Okay. Thanks,

I start. open So, the at questions? operator, and for technical for apologize statements. Question-and-Answer line the forward-looking now could Session And difficulties you We've read ahead the the go

Operator

first Suraj. [Operator go from ahead. comes Instructions] Our question Please

J. Patrick Mackin

We can't hear him.

Operator

line your if line? unmute your is Suraj, muted, please

Suraj Kalia

you Pat, hear me? can

J. Patrick Mackin

now. can, I

Suraj Kalia

issues. having goodness, my Oh,

the we enrollment terms understand some Xa expand QX Xa? the at I - know finishing, that interim one looking two get on So, on every When to could we Pat, is quarters, is PROACT basis on an PROACT can earliest visibility 'XX it. DSMB of as you in

J. Patrick Mackin

previously. Yeah, this talked think we've I about

because X,XXX So, very - with a have non-inferiority trial. valve design, the set this the And trial which is we - - interesting low, it's patient events this a is is why an are it's as thromboembolic such a to Coumadin. way up

difference a you're the so familiar situation look. where but trials, Eliquis, statistic could there to to interim significant for mean stop and you you This Coumadin is from And a is early, powered had can where get really don't non-inferiority. to and trial have happen. is very which, we how with a standpoint, this works no they between going would a be have you again, I think

by, will, assuming means quarter quarter of would Eliquis means in some So, trial X,XXX patients at years. I half know, have And I that way started already once we enrolls every answer Coumadin. XXX half I this in next enrolls, XXXX. it maybe the That with on this two That to Eliquis. And this Eliquis, on trial, is you about trial, May the think, we're the valves, another second had trial we goes the on on think patients as you've got of that it's first quarter that think the for point, way year.

the won't end, So, the to question answer we we until full enrollment. our in to get know the X-year

time. I that's the at think best probably can So, this I answer

Suraj Kalia

still plug Pat, hear Pat, you in. I'll can just me?

J. Patrick Mackin

Yes.

Suraj Kalia

Xa Just and others hop in one and additional let chime back in. queue I'll question PROACT on

He's enrollment trial four say, gets Pat follow-up. enrolled So, You XXXX, Suraj on for for two to Suraj completed And years, enrolled Eliquis follow-up your gets say March gets Pat Xa, right? XX, by PROACT Mackin the time remind also. let's need alive in let's And you right? March XXXX, years the is fine. already Pat, But March in right? on

J. Patrick Mackin

That's right.

Suraj Kalia

the of analyze I the know questions. curious with mean how eventually to years, data duration right? these I at interesting, increases, incidence follow-up and they also? that ask And is how the - am rates Eliquis. cumulative over term, presented, a kind could event I going data the is for it's taking because are you When is, also be if final multiply my stratification be by time patients they but there longer presented, to going Thank subgroup of just would on do looking two reason we is

J. Patrick Mackin

Yeah, no problem.

So, points one your we're years I think valve is - XXX I - of mean, follow-up. question of trial is, to FDA need the XXX back a patient earlier about about typical you

mentioned X,XXX PROACT and clinicians That to FDA has for been a of years and been for both you're But of I patient part collecting our would on in on Suraj change years. I the submitted. for because right. And your Mitral follow-up I trial. patient bar think an the follow-up. of XXX two this So, We're have example, Under been any to that Eliquis PMA years years you're four is going time is wanted two drug, Eliquis of example, see have data. will years

the analysis the have to trial will in then enrolled do the under curve. Kaplan-Meier for So, and followed two on years patient we this area last be

a The you And mentioned trial it's going, there DSMB, then So, as reviews as long interim keeps no green the light. data. every earlier, meets is months six and as the analysis.

Suraj Kalia

you. Thank

J. Patrick Mackin

take can next We question Okay. the

Operator

are Mr. for There comments. at to no further floor at this the closing over there questions back I'd Mackin, this like are management [Operator time. Instructions] no to time. turn further questions

J. Patrick Mackin

at the for Yeah, again difficulties beginning I apologize and call. the of the

speak. we about, just Delta, solid of tissue couple about talked with We years. - TMR we clear we've is for charge. those headwinds with situation our to news actually had of headwinds that's But out them a charts. lots we're tissue. that not is think We good cardiac having a with I the just some handpieces need We're got clearing we growing X% send And some already quarter. the tissue As improving October. as after our And in to had

PMAs fourth of being putting quarter with growth So, got headwinds up shape and number. forward in advancing. is those The We a mitigated, all good think look kind we're next for I we two to pipeline the double-digit expect with now be by enrolling we've get approved enrolling PMA are and three will of the year FDA got the either end clinical the that to or trials that year. right

look we're and the So, quarter. in have to joining double-digit up number very putting again, growth this Thanks in. we portfolio a confident for forward

Operator

conclude and this Ladies gentlemen, today's does teleconference.

enjoy and day. You the your may now disconnect your of lines rest

J. Patrick Mackin	Chairman, President and Chief Executive Officer
D. Ashley Lee	EVP, Chief Operating Officer, and Chief Financial Officer
Suraj Kalia	Oppenheimer & Co

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