Artivion Reports First Quarter 2022 Financial Results

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Achieved revenue of $77.2 million in the first quarter 2022 versus $71.1 million in the first quarter of 2021, an increase of 8.6% on a GAAP basis and 11.2% on a non-GAAP constant currency basis

ATLANTA, May 5, 2022 -- Artivion, Inc. (NYSE: AORT), a leading cardiac and vascular surgery company focused on aortic disease, today announced its financial results for the first quarter ended March 31, 2022.

"In the first quarter we made great progress on our recently unveiled three-year strategic growth initiatives announced at our analyst and investor day on March 23rd. Year-over-year revenue rose 8.6% on a GAAP basis and 11.2% on a constant currency basis. Constant currency revenue growth was driven by 34% growth in aortic stent grafts and 11% growth in On-X. We also posted, on a constant currency basis, 39% growth in Asia Pacific and 93% growth in Latin America as we continue to expand our commercial footprint in those regions and secure additional regulatory approvals. We believe our differentiated products supported by our global sales organization will continue to deliver strong results for the remainder of 2022," said Pat Mackin, Chairman, President, and Chief Executive Officer.

"We also made progress in advancing our product pipeline, which is expected to drive growth in both the near and longer term. We continue to expect to receive FDA PMA approval for PROACT Mitral and for PerClot this year. Meanwhile, we have made significant progress with enrollment in our PROACT Xa trial and have made good progress on several other programs that are expected to deliver significant incremental growth beginning in 2025."

First Quarter 2022 Financial Results
Total revenues for the first quarter of 2022 were $77.2 million, reflecting an increase of 8.6% on a GAAP basis and 11.2% on a non-GAAP constant currency basis, both compared to the first quarter of 2021.

Net loss for the first quarter of 2022 was ($3.4) million, or ($0.08) per fully diluted common share, compared to net loss of ($3.1) million, or ($0.08) per fully diluted common share for the first quarter of 2021. Non-GAAP net income for the first quarter of 2022 was $1.1 million, or $0.03 per fully diluted common share, compared to non-GAAP net income of $1.4 million, or $0.03 per fully diluted common share for the first quarter of 2021.

2022 Financial Outlook
Artivion continues to expect constant currency revenue growth of between 9.0% and 11.0% for the full year 2022 as compared to the full year 2021.

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) business development, integration, and severance expense; depreciation and amortization expense; interest income and expense; non-cash interest expense; loss on foreign currency revaluation; stock-based compensation expense; corporate rebranding expense; and income tax expense (benefit). 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 non-GAAP to GAAP financial measures.

Webcast and Conference Call Information
The Company will hold a teleconference call and live webcast later today, May 5, 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 201-689-8261 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 13728477.

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 our differentiated products supported by our global sales organization will continue to deliver strong results for the remainder of 2022; our product pipeline will drive growth in both the near and longer term; we will receive FDA PMA approval for PROACT Mitral and for PerClot in 2022; the PROACT Xa trial, if successful, and several other programs will deliver significant incremental growth beginning in 2025; and we will deliver year over year constant currency revenue growth of 9-11% in 2022. 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, hospital staffing shortages, and decelerating vaccination or vaccine adoption rates 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
(In thousands, except per share data)
(Unaudited)

 




Three Months Ended


March 31,



2022



2021

Revenues:






Products

$

57,542


$

53,345

Preservation services


19,671



17,742

     Total revenues


77,213



71,087







Cost of products and preservation services:






Products


17,408



14,911

Preservation services


9,086



8,338

     Total cost of products and preservation services


26,494



23,249







     Gross margin


50,719



47,838







Operating expenses:






General, administrative, and marketing


38,955



38,638

Research and development


10,128



7,754

     Total operating expenses


49,083



46,392







     Operating income


1,636



1,446







Interest expense


3,948



4,040

Interest income


(16)



(24)

Other expense, net


133



1,931







Loss before income taxes


(2,429)



(4,501)

Income tax expense (benefit)


960



(1,363)







     Net loss

$

(3,389)


$

(3,138)







Loss per share:






     Basic

$

(0.08)



(0.08)

     Diluted

$

(0.08)


$

(0.08)







Weighted-average common shares outstanding:






     Basic


39,850



38,738

     Diluted


39,850



38,738







Net loss

$

(3,389)


$

(3,138)

Other comprehensive loss:






     Foreign currency translation adjustments


(3,775)



(10,290)

          Comprehensive loss

$

(7,164)


$

(13,428)

 

Artivion, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)








March 31,


December 31,


2022


2021


(Unaudited)




ASSETS






Current assets:






Cash and cash equivalents

$

51,408


$

55,010

Trade receivables, net


54,998



53,019

Other receivables


4,577



5,086

Inventories, net


76,208



76,971

Deferred preservation costs, net


43,964



42,863

Prepaid expenses and other


13,378



14,748

     Total current assets


244,533



247,697







Goodwill


247,829



250,000

Acquired technology, net


162,458



166,994

Operating lease right-of-use assets, net


44,365



45,714

Property and equipment, net


37,459



37,521

Other intangibles, net


33,697



34,502

Deferred income taxes


3,489



2,357

Other assets


8,026



8,267

     Total assets

$

781,856


$

793,052







LIABILITIES AND SHAREHOLDERS' EQUITY






Current liabilities:






Accounts payable

$

9,230


$

10,395

Accrued compensation


9,571



13,163

Accrued expenses


9,396



7,687

Taxes payable


5,575



3,634

Accrued procurement fees


2,206



3,689

Current maturities of operating leases


3,362



3,149

Current portion of long-term debt


1,622



1,630

Other liabilities


1,875



1,606

     Total current liabilities


42,837



44,953







Long-term debt


307,232



307,493

Contingent consideration


47,600



49,400

Non-current maturities of operating leases


43,679



44,869

Non-current finance lease obligation


4,156



4,374

Deferred income taxes


26,373



28,799

Deferred compensation liability


5,766



5,952

Other liabilities


6,721



6,484

     Total liabilities

$

484,364


$

492,324







Commitments and contingencies












Shareholders' equity:






Preferred stock


--



--

Common stock (issued shares of 41,688 in 2022 and 41,397 in 2021)


417



414

Additional paid-in capital


326,799



322,874

Retained (deficit) earnings


(1,414)



1,975

Accumulated other comprehensive loss


(13,662)



(9,887)

Treasury stock, at cost, 1,487 shares as of March 31, 2022
 and December 31, 2021, respectively


(14,648)



(14,648)

     Total shareholders' equity


297,492



300,728







     Total liabilities and shareholders' equity

$

781,856


$

793,052

 

 

Artivion, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)








Three Months Ended


March 31,



2022



2021

Net cash flows from operating activities:






Net loss

$

(3,389)


$

(3,138)







Adjustments to reconcile net loss to net cash from operating activities:






     Depreciation and amortization


5,881



6,006

     Non-cash compensation


3,166



2,480

     Non-cash lease expense


1,920



1,758

     Write-down of inventories and deferred preservation costs


989



1,274

     Change in fair value of contingent consideration


(1,800)



970

     Deferred income taxes


(2,966)



(4,241)

     Other


496



787

Changes in operating assets and liabilities:






     Prepaid expenses and other assets


1,494



(1,291)

     Inventories and deferred preservation costs


(1,359)



(5,933)

     Receivables


(1,710)



(3,301)

     Accounts payable, accrued expenses, and other liabilities


(3,320)



1,590

          Net cash flows used in operating activities


(598)



(3,039)







Net cash flows from investing activities:






     Capital expenditures


(2,239)



(1,502)

     Other


(469)



692

          Net cash flows used in investing activities


(2,708)



(810)







Net cash flows from financing activities:






     Proceeds from exercise of stock options and issuance of common stock


2,318



861

     Repayment of debt


(694)



(701)

     Redemption and repurchase of stock to cover tax withholdings


(1,730)



(1,813)

     Other


(129)



(442)

          Net cash flows used in financing activities


(235)



(2,095)







Effect of exchange rate changes on cash and cash equivalents


(61)



1,088

Decrease in cash and cash equivalents


(3,602)



(4,856)







Cash and cash equivalents beginning of period


55,010



61,958

Cash and cash equivalents end of period

$

51,408


$

57,102

 

Artivion, Inc. and Subsidiaries
Financial Highlights
(In thousands)










(Unaudited)



Three Months Ended



March 31,



2022


2021

Products:







     Aortic stent grafts


$

25,506


$

20,205

     Surgical sealants



15,681



17,828

     On-X



14,371



13,095

     Other



1,984



2,217

          Total products



57,542



53,345








Preservation services



19,671



17,742

Total revenues


$

77,213


$

71,087








Revenues:







     U.S.


$

37,735


$

36,318

     International



39,478



34,769

          Total revenues


$

77,213


$

71,087

 

Artivion, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP
Revenues and General Administrative, and Marketing Expense
(In thousands)









(Unaudited)


Three Months Ended


March 31,


2022


2021

Growth Rate

Reconciliation of total revenues, GAAP to







  total revenues, non-GAAP:







Total revenues, GAAP

$

77,213


$

71,087

8.6%

  Impact of changes in currency exchange


--



(1,629)


     Total constant currency revenue,
     non-GAAP

$

77,213


$

69,458

11.2%

 








(Unaudited)


Three Months Ended


March 31,


2022


2021

Reconciliation of G&A expenses, GAAP to






  adjusted G&A, non-GAAP:






General, administrative, and marketing expense, GAAP

$

38,955


$

38,638

  Business development, integration, and severance expense


1,579



(1,470)

  Corporate rebranding expense


(883)



(15)

     Adjusted G&A, non-GAAP:

$

39,651


$

37,153

 

Artivion, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP
Adjusted EBITDA
(In thousands)








(Unaudited)


Three Months Ended


March 31,


2022


2021

Reconciliation of net loss, GAAP to






     adjusted EBITDA, non-GAAP:






     Net loss, GAAP

$

(3,389)


$

(3,138)

     Adjustments:






     Depreciation and amortization expense


5,881



6,006

     Interest expense


3,948



4,040

     Stock-based compensation expense


3,166



2,480

     Income tax expense (benefit)


960



(1,363)

     Corporate rebranding expense


883



15

     Loss on foreign currency revaluation


133



1,886

     Interest income


(16)



(24)

     Business development, integration, and severance expense


(1,579)



1,470

          Adjusted EBITDA, non-GAAP

$

9,987


$

11,372

 

Artivion Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP
Net Loss and Diluted Loss Per Common Share
(In thousands, except per share data)








(Unaudited)


Three Months Ended


March 31,



2022



2021

GAAP:






Loss before income taxes

$

(2,429)


$

(4,501)

Income tax expense (benefit)


960



(1,363)

     Net loss

$

(3,389)


$

(3,138)







Diluted loss per common share:

$

(0.08)


$

(0.08)







Diluted weighted-average common shares outstanding


39,850



38,738







Reconciliation of loss before income taxes,






     GAAP to adjusted income, non-GAAP






Loss before income taxes, GAAP:

$

(2,429)


$

(4,501)

Adjustments:






     Amortization expense


4,084



4,260

     Corporate rebranding expense


883



15

     Non-cash interest expense


456



568

     Business development, integration, and severance expense


(1,579)



1,470

          Adjusted income before income taxes,






          non-GAAP


1,415



1,812







Income tax expense calculated at a






pro forma tax rate of 25%


354



453

          Adjusted net income, non-GAAP

$

1,061


$

1,359







Reconciliation of diluted loss per common share, GAAP






     to adjusted diluted income per common share, non-GAAP:






Diluted loss per common share, GAAP:

$

(0.08)


$

(0.08)

Adjustments:






     Amortization expense


0.10



0.11

     Effect of 25% pro forma tax rate


0.04



(0.01)

     Corporate rebranding expense


0.02



--

     Non-cash interest expense


0.01



0.01

     Tax effect of non-GAAP adjustments


(0.02)



(0.04)

     Business development, integration, and severance expense


(0.04)



0.04

          Adjusted diluted income per common share,






          non-GAAP

$

0.03


$

0.03







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:


39,850



38,738

Adjustments:






     Effect of dilutive stock options and awards


441



615

          Diluted weighted-average common shares outstanding, non-GAAP


40,291



39,353

 

Contacts:




Artivion

D. Ashley Lee

Executive Vice President &

Chief Financial Officer

Phone: 770-419-3355                  

Gilmartin Group LLC

Brian Johnston / Lynn Lewis

Phone: 332-895-3222

investors@artivion.com

 

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SOURCE Artivion, Inc.