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Artivion Reports Third Quarter 2022 Financial Results
Press Releases

Artivion Reports Third Quarter 2022 Financial Results

Third Quarter and Recent Business Highlights:

  • Achieved revenue of $76.8 million in the third quarter of 2022 versus $72.2 million in the third quarter of 2021, an increase of 6% on a GAAP basis and 11% on a non-GAAP constant currency basis
  • On-X revenues increased 17% on a GAAP basis and 19% on a non-GAAP constant currency basis in the third quarter of 2022 compared to the third quarter of 2021

ATLANTA, Nov. 3, 2022 /PRNewswire/ — Artivion, Inc. (NYSE: AORT), a leading cardiac and vascular surgery company focused on aortic disease, today announced its financial results for the third quarter ended September 30, 2022.

“We remain well positioned to deliver on our growth strategy, particularly given the continued fundamental strength of our business. During the third quarter we made substantial progress on each of our key three-year strategic growth initiatives delivering year-over-year total revenue growth of 6% on a GAAP basis and 11% on a non-GAAP constant currency basis. These results were driven by growth across all four of our major product lines, including 19% growth in On-X revenue and 13% growth in tissue processing, both on a constant currency basis. Internationally, we delivered 25% revenue growth in Asia Pacific and 22% revenue growth in Latin America, both on a constant currency basis, driven by the continued expansion of our commercial footprint and securement of additional regulatory approvals. Our third quarter performance continues the momentum we have built throughout the year, resulting in a constant currency revenue growth of 11% year-over-year for the first nine months of 2022. We expect continued strong performance through the remainder of the year as we remain focused on executing on our key objectives,” said Pat Mackin, Chairman, President, and Chief Executive Officer.

Mr. Mackin added, “We also made good progress in advancing our product pipeline, which is expected to drive growth in both the near and long term. We continue to anticipate FDA PMA approval for PROACT Mitral and for PerClot by year end. Meanwhile, we continue to make progress on patient enrollment in the PERSEVERE trial to secure FDA approval for AMDS, a simple, elegant stent graft solution to treat aortic arch disease. Taken as a whole, we continue to see meaningful opportunities to grow our total addressable market through pipeline development as well as to maintain momentum with our existing portfolio in our current markets.”

Third Quarter 2022 Financial Results

Total revenues for the third quarter of 2022 were $76.8 million, reflecting an increase of 6% on a GAAP basis and 11% on a non-GAAP constant currency basis, both compared to the third quarter of 2021.

R&D expenses for the third quarter of 2022 include a $4.7 million charge for estimated costs associated with the termination and wind-down of the PROACT Xa study as recommended by the Data and Safety Monitoring Board (“DSMB”).  The majority of these costs include future administrative costs that will be incurred during the fourth quarter of 2022 and the first quarter of 2023, as well as the estimated cost of clinical drugs purchased for patients participating in the study and not expected to be recovered.  These costs are non-recurring and have been excluded for purposes of calculating adjusted EBITDA and non-GAAP earnings per share.

Net loss for the third quarter of 2022 was ($13.7) million, or ($0.34) per fully diluted common share, compared to net income of $10.6 million, or $0.26 per fully diluted common share for the third quarter of 2021. Non-GAAP net loss for the third quarter of 2022 was ($1.9) million, or ($0.05) per fully diluted common share, compared to non-GAAP net loss of ($1.2) million, or ($0.03) per fully diluted common share for the third quarter of 2021. Net loss in the third quarter of 2022 includes pretax losses related to foreign currency revaluation of $3.7 million.

2022 Financial Outlook

Artivion is narrowing its constant currency revenue growth to between 9% and 10% for the full year of 2022 compared to 2021.  With the continued appreciation of the dollar versus other major currencies, full year revenues are now expected to be between $313.0 million and $316.0 million.

The Company’s financial performance for 2022 and future periods is subject to the risks identified below.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, including non-GAAP revenue, non-GAAP net income, non-GAAP EBITDA, and non-GAAP general, administrative, and marketing expenses. Investors should consider this non-GAAP information in addition to, and not as a substitute for, financial measures prepared in accordance with US GAAP. In addition, this non-GAAP financial information may not be the same as similar measures presented by other companies. The Company’s non-GAAP revenues are adjusted for the impact of changes in currency exchange. The Company’s non-GAAP net income; non-GAAP EBITDA; and non-GAAP general, administrative, and marketing results exclude (as applicable) depreciation and amortization expense; interest income and expense; stock-based compensation expense; loss or gain on foreign currency revaluation; expenses related to the DSMB recommended termination of the PROACT Xa clinical trial; income tax expense or benefit; corporate rebranding expense; business development, integration, and severance income or expense; non-cash interest expense; and gain from sale of non-financial assets. The Company generally uses non-GAAP financial measures to facilitate management’s review of the operational performance of the company and as a basis for strategic planning. Company management believes that these non-GAAP presentations provide useful information to investors regarding unusual non-operating transactions; the operating expense structure of the Company’s existing and recently acquired operations, without regard to its on-going efforts to acquire additional complementary products and businesses, and the transaction and integration expenses incurred in connection with recently acquired and divested product lines; and the operating expense structure excluding fluctuations resulting from foreign currency revaluation and stock-based compensation expense. The Company believes it is useful to exclude certain expenses because such amounts in any specific period may not directly correlate to the underlying performance of its business operations or can vary significantly between periods as a result of factors such as impact of recent acquisitions, non-cash expense related to amortization of previously acquired tangible and intangible assets, and any related adjustments to their carrying values. The Company has adjusted for the impact of changes in currency exchange from certain revenues to evaluate comparable product growth rates on a constant currency basis. The Company does, however, expect to incur similar types of expenses and currency exchange impacts in the future, and this non-GAAP financial information should not be viewed as a statement or indication that these types of expenses will not recur. Company management encourages investors to review the Company’s consolidated financial statements and publicly filed reports in their entirety, including the reconciliation of GAAP to non-GAAP financial measures.”

Webcast and Conference Call Information

The Company will hold a teleconference call and live webcast later today, November 3, 2022, at 4:30 p.m. ET to discuss the results, followed by a question and answer session. To participate in the conference call dial 862-298-0702 a few minutes prior to 4:30 p.m. ET. The teleconference replay will be available approximately one hour following the completion of the event and can be accessed by calling (toll free) 877-660-6853 or 201-612-7415. The conference number for the replay is 13733812.

The live webcast and replay can be accessed by going to the Investors section of the Artivion website at www.Artivion.com and selecting the heading Webcasts & Presentations.

About Artivion, Inc.

Headquartered in suburban Atlanta, Georgia, Artivion, Inc. is a medical device company focused on developing simple, elegant solutions that address cardiac and vascular surgeons’ most difficult challenges in treating patients with aortic diseases. Artivion’s four major groups of products include: aortic stent grafts, surgical sealants, On-X mechanical heart valves, and implantable cardiac and vascular human tissues. Artivion markets and sells products in more than 100 countries worldwide. For additional information about Artivion, visit our website, www.artivion.com.

Forward Looking Statements

Statements made in this press release that look forward in time or that express management’s beliefs, expectations, or hopes are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the views of management at the time such statements are made. These statements include our beliefs that we expect our strong momentum to continue through the remainder of the year as we remain focused on executing on our key objectives; our product pipeline is expected to drive growth in both the near and long term; we believe there are meaningful opportunities to grow our total addressable market through pipeline development as well as to maintain momentum with our existing portfolio in our current markets; we continue to anticipate FDA PMA approval for PROACT Mitral and for PerClot this year; and we will deliver year-over-year constant currency revenue growth of 9-10% in 2022 versus 2021. These forward-looking statements are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from current expectations, including that the benefits anticipated from the Ascyrus Medical LLC transaction and Endospan agreements may not be achieved; the benefits anticipated from our clinical trials may not be achieved or achieved on our anticipated timeline; our products may not be able to consistently retain their existing regulatory approvals or special regulatory approvals in order to be commercialized; products in our pipeline may not receive regulatory approval at all or receive regulatory approval on our anticipated timelines; our products that obtain regulatory approval may not be adopted by the market as much as we anticipate or at all;  and the continued effects of COVID-19, including new COVID-19 variants, and continued hospital staffing shortages and macroeconomic factors such as inflation and currency exchange could adversely impact our results.  These risks and uncertainties include the risk factors detailed in our Securities and Exchange Commission filings, including our Form 10-K for the year ended December 31, 2021. Artivion does not undertake to update its forward-looking statements, whether as a result of new information, future events, or otherwise.

 

Artivion, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

In Thousands, Except Per Share Data

(Unaudited)



Three Months Ended

September 30,


Nine Months Ended

September 30,


2022


2021


2022


2021

Revenues:








Products

$           55,248


$           53,107


$         171,726


$         162,528

Preservation services

21,590


19,100


62,665


56,914

Total revenues

76,838


72,207


234,391


219,442









Cost of products and preservation services:








Products

17,743


15,503


53,381


46,592

Preservation services

10,351


8,915


29,375


26,710

Total cost of products and preservation services

28,094


24,418


82,756


73,302









Gross margin

48,744


47,789


151,635


146,140









Operating expenses:








General, administrative, and marketing

41,051


39,053


118,989


118,521

Research and development

11,799


9,972


30,575


26,086

Total operating expenses

52,850


49,025


149,564


144,607

Gain from sale of non-financial assets


(15,923)


$                   —


(15,923)

Operating (loss) income

(4,106)


14,687


2,071


17,456









Interest expense

4,805


4,100


12,854


12,995

Interest income

(40)


(18)


(86)


(60)

Other expense, net

3,661


2,661


7,564


3,261









(Loss) income before income taxes

(12,532)


7,944


(18,261)


1,260

Income tax expense (benefit)

1,181


(2,638)


3,100


(4,006)









Net (loss) income

$          (13,713)


$           10,582


$          (21,361)


$              5,266









(Loss) income per share:








Basic

$              (0.34)


$                0.27


$              (0.53)


$                0.13

Diluted

$              (0.34)


$                0.26


$              (0.53)


$                0.13









Weighted-average common shares outstanding:








Basic

40,115


39,086


39,999


38,924

Diluted

40,115


44,453


39,999


39,496









Net (loss) income

$          (13,713)


$           10,582


$          (21,361)


$              5,266

Other comprehensive loss:








Foreign currency translation adjustments

(16,895)


(5,010)


(35,466)


(12,327)

Comprehensive (loss) income

$          (30,608)


$              5,572


$          (56,827)


$            (7,061)

 

Artivion, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

In Thousands



September 30,

2022


December 31,

2021


(Unaudited)



ASSETS




Current assets:




Cash and cash equivalents

$             37,572


$             55,010

Trade receivables, net

57,159


53,019

Other receivables

7,880


5,086

Inventories, net

73,044


76,971

Deferred preservation costs, net

45,483


42,863

Prepaid expenses and other

16,851


14,748

Total current assets

237,989


247,697





Goodwill

234,773


250,000

Acquired technology, net

148,060


166,994

Operating lease right-of-use assets, net

41,320


45,714

Property and equipment, net

36,286


37,521

Other intangibles, net

31,112


34,502

Deferred income taxes

6,103


2,357

Other assets

7,088


8,267

Total assets

$           742,731


$           793,052





LIABILITIES AND SHAREHOLDERS’ EQUITY




Current liabilities:




Accounts payable

$             10,721


$             10,395

Accrued compensation

11,079


13,163

Accrued expenses

10,088


7,687

Taxes payable

5,293


3,634

Accrued procurement fees

2,302


3,689

Current maturities of operating leases

3,061


3,149

Current portion of long-term debt

1,562


1,630

Other liabilities

1,886


1,606

Total current liabilities

45,992


44,953





Long-term debt

306,674


307,493

Contingent consideration

44,800


49,400

Non-current maturities of operating leases

40,915


44,869

Non-current finance lease obligation

3,450


4,374

Deferred income taxes

34,058


28,799

Deferred compensation liability

5,082


5,952

Other liabilities

6,652


6,484

Total liabilities

$           487,623


$           492,324





Commitments and contingencies








Shareholders’ equity:




Preferred stock


Common stock (issued shares of 41,816 in 2022 and 41,397 in 2021)

418


414

Additional paid-in capital

334,077


322,874

Retained (deficit) earnings

(19,386)


1,975

Accumulated other comprehensive loss

(45,353)


(9,887)

Treasury stock, at cost, 1,487 shares as of September 30, 2022 and December 31, 2021

(14,648)


(14,648)

Total shareholders’ equity

255,108


300,728





Total liabilities and shareholders’ equity

$           742,731


$           793,052

 

Artivion, Inc. and Subsidiaries

Condensed Consolidated Statement of Cash Flows

In Thousands

(Unaudited)



Nine Months Ended

September 30,


2022


2021

Net cash flows from operating activities:




Net (loss) income

$          (21,361)


$              5,266





Adjustments to reconcile net (loss) income to net cash from operating activities:




Depreciation and amortization

17,016


18,008

Non-cash compensation

9,189


7,471

Non-cash lease expense

5,656


5,566

Deferred income taxes

5,097


(8,128)

Write-down of inventories and deferred preservation costs

3,116


3,987

Non-cash interest expense

1,372


2,025

Change in fair value of contingent consideration

(4,600)


4,970

Gain from sale of non-financial assets


(15,923)

Other

151


678

Changes in operating assets and liabilities:




Prepaid expenses and other assets

(1,788)


(2,268)

Accounts payable, accrued expenses, and other liabilities

(2,103)


65

Inventories and deferred preservation costs

(5,781)


(16,986)

Receivables

(10,900)


(8,032)

Net cash flows used in operating activities

(4,936)


(3,301)





Net cash flows from investing activities:




Acquisition of intangible assets

(1,123)


(726)

Capital expenditures

(6,924)


(10,524)

Proceeds from sale of non-financial assets, net


19,000

Other


722

Net cash flows (used in) provided by investing activities

(8,047)


8,472





Net cash flows from financing activities:




Proceeds from exercise of stock options and issuance of common stock

3,344


3,531

Redemption and repurchase of stock to cover tax withholdings

(1,791)


(1,898)

Repayment of term loan

(2,033)


(2,397)

Payment of debt issuance costs


(2,219)

Other

(300)


(439)

Net cash flows used in financing activities

(780)


(3,422)





Effect of exchange rate changes on cash and cash equivalents

(3,675)


1,418

(Decrease) increase in cash and cash equivalents

(17,438)


3,167





Cash and cash equivalents beginning of period

55,010


61,958

Cash and cash equivalents end of period

$           37,572


$           65,125

 

Artivion, Inc. and Subsidiaries

Financial Highlights

In Thousands

(Unaudited)



Three Months Ended

September 30,


Nine Months Ended

September 30,


2022


2021


2022


2021

Products:








Aortic stent grafts

$             19,674


$             20,896


$             69,013


$             62,165

Surgical sealants

17,374


16,544


49,022


52,236

On-X

16,456


14,022


47,082


41,843

Other

1,744


1,645


6,609


6,284

Total products

55,248


53,107


171,726


162,528









Preservation services

21,590


19,100


62,665


56,914

Total revenues

$           76,838


$           72,207


$         234,391


$         219,442









Revenues:








US

$             41,250


$             36,205


$          119,938


$          111,529

    International

35,588


36,002


114,453


107,913

Total revenues

$           76,838


$           72,207


$         234,391


$         219,442

 

Artivion, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP

Revenues and General, Administrative, and Marketing Expense

In Thousands

(Unaudited)



Three Months Ended

September 30,


Nine Months Ended

September 30,


2022


2021


Growth

Rate


2022


2021


Growth

Rate

Reconciliation of total revenues, GAAP to total revenues, non-GAAP:












Total revenues, GAAP

$   76,838


$    72,207


6 %


$  234,391


$  219,442


7 %

Impact of changes in currency exchange


(3,287)





(7,358)



Total constant currency revenue, non-GAAP

$   76,838


$    68,920


11 %


$  234,391


$  212,084


11 %

 


Three Months Ended

September 30,


Nine Months Ended

September 30,


2022


2021


2022


2021

Reconciliation of G&A expenses, GAAP to adjusted G&A, non-GAAP:








General, administrative, and marketing expense, GAAP

$            41,051


$            39,053


$          118,989


$          118,521

 Corporate rebranding expense

251


461


1,423


523

Business development, integration, and severance expense (income)

864


1,309


(3,816)


6,138

Adjusted G&A, non-GAAP

$            39,936


$            37,283


$         121,382


$          111,860

 

Artivion, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP

Adjusted EBITDA

In Thousands

(Unaudited)



Three Months Ended

September 30,


Nine Months Ended

September 30,


2022


2021


2022


2021

Reconciliation of net (loss) income, GAAP to adjusted EBITDA, non-GAAP:








Net (loss) income, GAAP

$        (13,713)


$         10,582


$        (21,361)


$            5,266

Adjustments:








Depreciation and amortization expense

5,519


6,009


17,016


18,008

Interest expense

4,805


4,100


12,854


12,995

Stock-based compensation expense

3,089


2,876


9,189


7,471

Loss on foreign currency revaluation

3,668


2,576


7,555


3,097

Clinical trial termination expense

4,741



4,741


Income tax expense (benefit)

1,181


(2,638)


3,100


(4,006)

Corporate rebranding expense

251


461


1,423


523

Gain from sale of non-financial assets


(15,923)



(15,923)

Interest income

(40)


(18)


(86)


(60)

  Business development, integration, and severance expense (income)

864


1,309


(3,816)


6,138

Adjusted EBITDA, non-GAAP

$         10,365


$            9,334


$         30,615


$         33,509

 

Artivion Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP

Net (Loss) Income and Diluted (Loss) Income Per Common Share

In Thousands, Except Per Share Data

(Unaudited)

 



Three Months Ended

September 30,


Nine Months Ended

September 30,


2022


2021


2022


2021

GAAP:








(Loss) income before income taxes

$            (12,532)


$               7,944


$            (18,261)


$               1,260

Income tax expense (benefit)

1,181


(2,638)


3,100


(4,006)

Net (loss) income

$            (13,713)


$             10,582


$            (21,361)


$               5,266









Diluted (loss) income per common share

$                (0.34)


$                 0.26


$                (0.53)


$                 0.13









Diluted weighted-average common shares outstanding

40,115


44,453


39,999


39,496









Reconciliation of (loss) income before income taxes, GAAP to

   adjusted (loss) income, non-GAAP:








(Loss) income before income taxes, GAAP:

$            (12,532)


$               7,944


$            (18,261)


$               1,260

Adjustments:








Amortization expense

3,686


4,203


11,675


12,701

Clinical trial termination expense

4,741



4,741


Corporate rebranding expense

251


461


1,423


523

Non-cash interest expense

459


453


1,372


2,025

Gain from sale of non-financial assets


(15,923)



(15,923)

Business development, integration, and severance expense (income)

864


1,309


(3,816)


6,138

Adjusted (loss) income before income taxes, non-GAAP

(2,531)


(1,553)


(2,866)


6,724









Income tax (benefit) expense calculated at a pro forma tax rate of 25%

(633)


(388)


(717)


1,681

Adjusted net (loss) income, non-GAAP

$             (1,898)


$             (1,165)


$             (2,149)


$               5,043









Reconciliation of diluted (loss) income per common share, GAAP to

   adjusted diluted (loss) income per common share, non-GAAP:








Diluted (loss) income per common share, GAAP:

$                (0.34)


$                 0.26


$                (0.53)


$                 0.13

Adjustments:








Amortization expense

0.09


0.11


0.29


0.33

Effect of 25% pro forma tax rate

0.10


(0.11)


0.19


(0.11)

Clinical trial termination expense

0.12



0.12


Non-cash interest expense

0.01


0.01


0.03


0.05

Corporate rebranding expense


0.01


0.03


0.01

Gain from sale of non-financial assets


(0.41)



(0.40)

Business development, integration, and severance expense (income)

0.03


0.04


(0.09)


0.15

Tax effect of non-GAAP adjustments

(0.06)


0.06


(0.09)


(0.03)

Adjusted diluted (loss) income per common share, non-GAAP

$               (0.05)


$                (0.03)


$               (0.05)


$                 0.13









Reconciliation of diluted weighted-average common shares outstanding

   GAAP to diluted weighted-average common shares outstanding,

   non-GAAP:








Diluted weighted-average common shares outstanding, GAAP:

40,115


44,453


39,999


39,496

Adjustments:








Effect of dilutive stock options and awards


(505)



Effect of convertible senior notes


(4,862)



Diluted weighted-average common shares outstanding, non-GAAP

40,115


39,086


39,999


39,496

 

Contacts:




Artivion

Gilmartin Group LLC

D. Ashley Lee

Brian Johnston / Lynn Lewis

Executive Vice President &

Phone: 332-895-3222

Chief Financial Officer

investors@artivion.com

Phone: 770-419-3355


Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/artivion-reports-third-quarter-2022-financial-results-301668265.html

SOURCE Artivion, Inc.

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