CryoLife, Inc. (CRY)

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CryoLife Inc. (CRY)

Q3 2017 Earnings Conference Call

October 31, 2017 8:00 AM ET


Ashley Lee – Chairman, President and Chief Executive Officer

Pat Mackin – Chief Financial Officer


Jason Mills – Canaccord Genuity

Jeffrey Cohen – Ladenburg Thalmann

Suraj Kalia – Northland Securities

Brooks O’Neil – Lake Street Capital Markets

Jo Munda – First Analysis



Greetings and welcome to the CryoLife Q3 2017 Financial Conference Call. At this time, all participants are in a listen-only mode. A 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, Pat Mackin, Chairman, President and CEO; and Ashley Lee, CFO for CryoLife. Thank you. You may begin.

Ashley Lee

Good morning and thanks for joining the call. I am Ashley Lee, the CFO of CryoLife. Before we begin, I would like to make the following statements to comply with the Safe Harbor requirements of the Private Securities Litigation Reform Act of 1995. 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 statements made as to the Company’s or management’s intentions, hopes, beliefs, expectations or predictions of the future.

These forward-looking statements are subject to a number of risks, uncertainties, estimates and assumptions that may cause actual results to differ materially from these forward-looking statements. 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 and in the press release that we issued last night.

Now I will turn it over to our CEO, Pat Mackin.

Pat Mackin

Thanks, Ashley, and good morning everyone. Before we dive into the results for the quarter, I wanted to share with you my thoughts where I think we are as a company from a strategic standpoint. It’s important to understand the rationale behind our strategy and why we believe that we are already capitalizing on the significant potential before CryoLife. I’ve talked many times about my goals and objectives when I first joined the company. I’m pleased to say in a relatively short period of time we’ve made considerable progress towards accomplishing what we set out to do.

As a result, we become a far more profitable company when ability to address significantly larger opportunities and compete with anyone in our markets. That transformation has been no small fee, but when JOTEC closed is, we will be there and will be – and we’ll come down to the next phase of our strategy, which is executing in the marketplace. That starts with strong leadership and if you’ve been following, as you’ve seen that we put people in place that have considerable experience in running large organizations.

Moreover during the past three years, we made meaningful changes to the product portfolio through acquisition and divestiture. Upon the acquisition of JOTEC and implementation of our post acquisition product strategy, we will operate a highly competitive product portfolio with significant opportunities for growth. The legacy CryoLife products that we kept are all well entrenched in highly regarded by our customers. As we continue to perform well in growth especially as our larger sales forces market and introduce them to new accounts. Furthermore, if our clinical initiatives are successful, our products will compete in larger new markets.

Moving onto our acquired and soon to be acquired products, On-X and JOTEC. We believe they are truly standouts in their categories. Under our M&A strategy, we seek our products that this as competitive advantages over the products of competition. And On-X and JOTEC easily meet that standard. As you’ll hear today when all the noises removed from the quarterly numbers, On-X has been a strong performer taking share from key competitors. The On-X business grew double-digits in our direct markets. We had a first full quarter of direct sales in Benelux and Canada.

But even highly differentiated technologically advanced products are not enough to carry today. It’s essential to have these products detailed by a powerful direct sales organization. Upon the completion of the JOTEC acquisition, we will have over 125 reps around the world educating physicians and hospitals on the advantages of our products many for the first time. We will be equipped to offer even more solutions to our customers than ever before. The bottom line is that the pieces will soon be in place to maximize the value of this portfolio. We believe our investments in the business on the management level, in the sales channel and with the products will make CryoLife the go-to solution in the markets we serve.

The company is not only in an excellent position to drive its growth in the coming years in this dynamic portfolio, but also from our many new products in development including PerClot and BioGlue China clinical programs. Our new product introductions and clinical trial work have the potential to dramatically increase our revenue potential in the coming years. Despite the quarterly impact of the recent hurricanes, the delay in getting AAP back on the market in Europe, and the top line effect of reversal from distributor terminations. CryoLife is performing quite well and I’m very optimistic that we’re just getting started.

Without question, our strategy is taking hold and will be topped off by the pending acquisition of JOTEC. They are an exceptional company in so many ways, which I will explain shortly. If you didn’t get a chance to listen to our call last month discussing the acquisition, I urge you to call up the webcast replay to better understand why are we so delighted with the JOTEC -- that JOTEC will be soon be on board.

Following this transaction we will be a key provider of products and solutions, focus on treating aortic disease from the aortic root to the iliac arteries. And the recent acquisition put us in a stronger position to cross sell our other products. The task ahead is to execute. I will now provide my quarterly review of our 2017 key objectives followed by Ashley who provide a detailed review of our third quarter financial results and then we’ll open up to your questions.

Read the rest of this transcript for free on seekingalpha.com