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CryoLife, Inc. (CRY)
Q3 2018 Results Earnings Conference Call
November 01, 2018 08:30 AM ET
Lynn Lewis - IR, Gilmartin Group
Pat MacKin - CEO
Ashley Lee - CFO
Jason Mills - Canaccord Genuity
Frank Takkinen - Lake Street Capital
Jeffrey Cohen - Ladenburg Thalmann
Suraj Kalia - Northland Securities
Joe Munda - First Analysis
Previous Statements by CRY
» CryoLife's (CRY) CEO Pat Mackin on Q2 2018 Results - Earnings Call Transcript
» CryoLife's (CRY) CEO Pat Mackin on Q1 2018 Results - Earnings Call Transcript
» CryoLife's (CRY) CEO Pat Mackin on Q4 2017 Results - Earnings Call Transcript
It is now my pleasure to introduce Ms. Lynn Lewis, Investor Relations. Please go ahead, madam.
Thank you. Good morning. This is Lynn Lewis from the Gilmartin Group. Thank you for joining the call today. Joining me from CryoLife management team are Pat MacKin, CEO; and Ashley Lee, CFO.
Before we begin, I’d like to make the following statements to comply with the safe harbor requirements of the Private Securities Litigation Reform Act of 1995. Comments made on this call that look forward in time involve risks 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 those forward-looking statements. Additional information concerning certain risks 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 was issued last night.
With that, I’ll now turn the call over to CryoLife CEO, Pat MacKin.
Thanks, Lynn, and good morning, everyone, and thanks for joining the call. As you all know by now, CryoLife had a very strong third quarter, led by record revenue performance from our JOTEC and On-X product lines. Overall strength can be attributed to our technologically-advanced and differentiated product portfolio and the positive impact from the global realignment of our direct sales force. Later in the call, I will discuss the drivers behind our market share gains and update you on our exciting clinical and R&D programs. Before we jump into the results of the third quarter, I wanted to share with you my thoughts on where we think where things currently stand and how I envision the future. I believe we are in very good position to drive continued solid performance for the foreseeable future. My belief is based on the fact that 2 significant acquisitions we’ve made in the past 2 years, On-X and JOTEC, are performing as well or better than we anticipated at the time we acquired them due largely to the efforts of our leadership team to quickly and smoothly integrate both companies, which has allowed us to capitalize quickly on both product lines’ growth potential. With the integrations largely behind us, it is now all about our ability to execute on the significant growth opportunities presented by our existing product portfolio as well as in our R&D pipeline. We will capitalize on these opportunities by rolling out a steady stream of next-generation products and in entering large new markets with existing products. These additions to our already strong product portfolio will enhance our growth potential and increase our current addressable market of $2 billion by about $1 billion.
We offer investors a company that is well positioned in executing on its key initiatives, has a clear path to continue growth given our differentiated products, strong sales and marketing organization and experienced management team as well as the clinical trials and anticipated new product introductions. So with that, let’s go over some of the highlights of our quarter. Our third quarter top line performance was strong across all of our major product lines. Revenue was $64.6 million, up 17% on a non-GAAP constant currency basis. Our On-X and JOTEC product lines again produced strong organic revenue growth, up 36% and 32%, respectively, on a non-GAAP basis. Even considering the impact of the prior year’s hurricanes and revenue impact from inventory buybacks from distributors, our revenue still increased 13%. Given our performance to date this year and our expectations of a solid fourth quarter, we are raising our revenue expectations for 2018 from a previous range of $256 million to $260 million to a range of $261.5 million to $262.5 million.
As you have heard me say, our strategy has been to transform CryoLife into a company focused on treating aortic disease. We understood that to do so, we needed to have an end-to-end portfolio of technologically-advanced and differentiated products backed by compelling clinical data and supported by an experienced and well-trained team of direct sales professionals. We believe that if we could build and deliver on that strategy, it would deliver revenue growth, and it has. Our solid result continue to confirm the validity of our strategy.
One of our goals is to gain market share in a relatively short period of time. Based on the results from On-X and JOTEC for the first 9 months of this year, I believe we are delivering on that goal as we are already outpacing the growth of the market. We are accelerating growth due to not only our migration to a direct sales approach in key markets but also to our sales teams’ ability to quickly integrate new products into our portfolio of offerings.