Artivion Reports Second Quarter 2022 Financial Results

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ATLANTA, Aug. 4, 2022 -- 

Second Quarter and Recent Business Highlights:

  • Achieved revenue of $80.3 million in the second quarter 2022 versus $76.1 million in the second quarter of 2021, an increase of 6% on a GAAP basis and 9% on a non-GAAP constant currency basis
  • Enrolled first patients in U.S. AMDS clinical trial, PERSEVERE
  • Completed on-site facility inspections for BioGlue CE Mark renewal

Artivion, Inc. (NYSE: AORT), a leading cardiac and vascular surgery company focused on aortic disease, today announced its financial results for the second quarter ended June 30, 2022.

"During the second quarter we made substantial progress on each of our key three-year strategic growth initiatives. We delivered year-over-year revenue growth of 6% on a GAAP basis and 9% on a non-GAAP constant currency basis. These results were driven primarily by 23% growth in aortic stent graft revenue and 12% growth in On-X revenue, both on a constant currency basis. We also executed internationally, delivering 38% revenue growth on a constant currency basis in Asia Pacific and 59% revenue growth in Latin America. In those regions, we continue to work to further expand our commercial footprint and secure additional regulatory approvals. Importantly, we grew revenue 10% year-over-year on a constant currency basis through the first half of 2022. We expect our strong momentum to continue 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 this year. Meanwhile, we have now enrolled four patients in the PERSEVERE trial to secure FDA approval for AMDS, a simple, elegant stent graft solution to treat aortic arch disease. We also made significant progress toward completion of enrollment in our PROACT Xa trial, which we believe will revolutionize the use of mechanical heart valves in the United States and ultimately around the world."

Second Quarter 2022 Financial Results
Total revenues for the second quarter of 2022 were $80.3 million, reflecting an increase of 6% on a GAAP basis and 9% on a non-GAAP constant currency basis, both compared to the second quarter of 2021.

Net loss for the second quarter of 2022 was ($4.3) million, or ($0.11) per fully diluted common share, compared to net loss of ($2.2) million, or ($0.06) per fully diluted common share for the second quarter of 2021. Non-GAAP net loss for the second quarter of 2022 was ($1.3) million, or ($0.03) per fully diluted common share, compared to non-GAAP net income of $4.8 million, or $0.12 per fully diluted common share for the second quarter of 2021. Net loss in the second quarter of 2022 includes pretax losses related to foreign currency revaluation of $3.8 million.

2022 Financial Outlook
Artivion continues to expect constant currency revenue growth of between 9% and 11% 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) depreciation and amortization expense; interest income and expense; stock-based compensation expense; business development, integration, and severance income or expense; loss or gain on foreign currency revaluation; income tax expense or benefit; corporate rebranding expense; and non-cash interest expense. 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, August 4, 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 13730843.

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 continue to anticipate FDA PMA approval for PROACT Mitral and for PerClot this year; we have made also made significant progress toward completion of enrollment in our PROACT Xa trial, which we believe will revolutionize the use of mechanical heart valves in the United States and ultimately around the world; 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, and continued hospital staffing shortages 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
June 30,


Six Months Ended
June 30,


2022


2021


2022


2021

Revenues:








Products

$           58,936


$           56,076


$         116,478


$         109,421

Preservation services

21,404


20,072


41,075


37,814

Total revenues

80,340


76,148


157,553


147,235









Cost of products and preservation services:








Products

18,230


16,178


35,638


31,089

Preservation services

9,938


9,457


19,024


17,795

Total cost of products and preservation services

28,168


25,635


54,662


48,884









Gross margin

52,172


50,513


102,891


98,351









Operating expenses:








General, administrative, and marketing

38,983


40,830


77,938


79,468

Research and development

8,648


8,360


18,776


16,114

Total operating expenses

47,631


49,190


96,714


95,582









Operating income

4,541


1,323


6,177


2,769









Interest expense

4,101


4,855


8,049


8,895

Interest income

(30)


(18)


(46)


(42)

Other expense (income), net

3,770


(1,331)


3,903


600









Loss before income taxes

(3,300)


(2,183)


(5,729)


(6,684)

Income tax expense (benefit)

959


(5)


1,919


(1,368)









Net loss

$            (4,259)


$            (2,178)


$            (7,648)


$            (5,316)









Loss per share:








Basic

$              (0.11)


$              (0.06)


$              (0.19)


$              (0.14)

Diluted

$              (0.11)


$              (0.06)


$              (0.19)


$              (0.14)









Weighted-average common shares outstanding:








Basic

40,031


38,943


39,941


38,841

Diluted

40,031


38,943


39,941


38,841









Net loss

$            (4,259)


$            (2,178)


$            (7,648)


$            (5,316)

Other comprehensive (loss) income:








Foreign currency translation adjustments

(14,796)


2,973


(18,571)


(7,317)

Comprehensive (loss) income

$          (19,055)


$                 795


$          (26,219)


$          (12,633)

 

Artivion, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
In Thousands






June 30,
2022


December 31,
2021


(Unaudited)



ASSETS




Current assets:




Cash and cash equivalents

$             40,382


$             55,010

Trade receivables, net

57,558


53,019

Other receivables

7,995


5,086

Inventories, net

74,318


76,971

Deferred preservation costs, net

44,785


42,863

Prepaid expenses and other

15,390


14,748

Total current assets

240,428


247,697





Goodwill

240,939


250,000

Acquired technology, net

154,866


166,994

Operating lease right-of-use assets, net

42,659


45,714

Property and equipment, net

36,268


37,521

Other intangibles, net

32,470


34,502

Deferred income taxes

9,916


2,357

Other assets

7,318


8,267

Total assets

$           764,864


$           793,052





LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable

$             10,545


$             10,395

Accrued compensation

9,732


13,163

Accrued expenses

7,842


7,687

Taxes payable

4,709


3,634

Accrued procurement fees

2,130


3,689

Current maturities of operating leases

3,207


3,149

Current portion of long-term debt

1,590


1,630

Other liabilities

1,891


1,606

Total current liabilities

41,646


44,953





Long-term debt

306,941


307,493

Contingent consideration

44,400


49,400

Non-current maturities of operating leases

42,141


44,869

Non-current finance lease obligation

3,766


4,374

Deferred income taxes

32,609


28,799

Deferred compensation liability

5,154


5,952

Other liabilities

6,698


6,484

Total liabilities

$           483,355


$           492,324





Commitments and contingencies








Shareholders' equity:




Preferred stock


Common stock (issued shares of 41,744 in 2022 and 41,397 in 2021)

417


414

Additional paid-in capital

329,871


322,874

Retained (deficit) earnings

(5,673)


1,975

Accumulated other comprehensive loss

(28,458)


(9,887)

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

(14,648)


(14,648)

Total shareholders' equity

281,509


300,728





Total liabilities and shareholders' equity

$           764,864


$           793,052

 

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




Six Months Ended
June 30,


2022


2021

Net cash flows from operating activities:




Net loss

$            (7,648)


$            (5,316)





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




Depreciation and amortization

11,497


11,999

Non-cash compensation

6,100


4,595

Non-cash lease expense

3,803


3,575

Write-down of inventories and deferred preservation costs

2,177


2,988

Change in fair value of contingent consideration

(5,000)


4,270

Deferred income taxes

(1,611)


(4,269)

Other

940


2,174

Changes in operating assets and liabilities:




Prepaid expenses and other assets

(205)


(2,076)

Inventories and deferred preservation costs

(3,653)


(11,712)

Receivables

(9,635)


(5,454)

Accounts payable, accrued expenses, and other liabilities

(5,677)


(1,166)

Net cash flows used in operating activities

(8,912)


(392)





Net cash flows from investing activities:




Capital expenditures

(4,055)


(7,249)

Other

(939)


205

Net cash flows used in investing activities

(4,994)


(7,044)





Net cash flows from financing activities:




Proceeds from exercise of stock options and issuance of common stock

2,318


2,321

Payment of debt issuance costs


(2,219)

Redemption and repurchase of stock to cover tax withholdings

(1,739)


(1,831)

Repayment of term loan

(1,370)


(1,405)

Other

(241)


(603)

Net cash flows used in financing activities

(1,032)


(3,737)





Effect of exchange rate changes on cash and cash equivalents

310


242

Decrease in cash and cash equivalents

(14,628)


(10,931)





Cash and cash equivalents beginning of period

55,010


61,958

Cash and cash equivalents end of period

$           40,382


$           51,027

 

Artivion, Inc. and Subsidiaries
Financial Highlights
In Thousands
(Unaudited)






Three Months Ended
June 30,


Six Months Ended
June 30,


2022


2021


2022


2021

Products:








Aortic stent grafts

$             23,833


$             21,064


$             49,339


$             41,269

Surgical sealants

15,967


17,864


31,648


35,692

On-X

16,255


14,726


30,626


27,821

Other

2,881


2,422


4,865


4,639

Total products

58,936


56,076


116,478


109,421









Preservation services

21,404


20,072


41,075


37,814

Total revenues

$           80,340


$           76,148


$         157,553


$         147,235

 

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






Three Months Ended
June 30,


Six Months Ended
June 30,


2022


2021


Growth Rate


2022


2021


Growth Rate

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












Total revenues, GAAP

$   80,340


$    76,148


6 %


$  157,553


$  147,235


7 %

Impact of changes in currency exchange


(2,442)





(4,071)



Total constant currency revenue, non-GAAP

$   80,340


$    73,706


9 %


$  157,553


$  143,164


10 %

 


Three Months Ended
June 30,


Six Months Ended
June 30,


2022


2021


2022


2021

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








General, administrative, and marketing expense,

GAAP

$            38,983


$            40,830


$            77,938


$            79,468

Business development, integration, and severance (income) expense

(3,101)


3,359


(4,680)


4,829

Corporate rebranding expense

289


47


1,172


62

Adjusted G&A, non-GAAP

$            41,795


$            37,424


$            81,446


$            74,577

 

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






Three Months Ended
June 30,


Six Months Ended
June 30,


2022


2021


2022


2021

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








Net loss, GAAP

$            (4,259)


$            (2,178)


$            (7,648)


$            (5,316)

Adjustments:








Depreciation and amortization expense

5,616


5,993


11,497


11,999

Interest expense

4,101


4,855


8,049


8,895

Stock-based compensation expense

2,934


2,115


6,100


4,595

Loss (gain) on foreign currency revaluation

3,754


(1,364)


3,887


522

Income tax expense (benefit)

959


(5)


1,919


(1,368)

Corporate rebranding expense

289


47


1,172


62

Interest income

(30)


(18)


(46)


(42)

Business development, integration, and severance (income) expense

(3,101)


3,359


(4,680)


4,829

Adjusted EBITDA, non-GAAP

$           10,263


$           12,804


$           20,250


$           24,176

 

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
June 30,


Six Months Ended
June 30,


2022


2021


2022


2021

GAAP:








Loss before income taxes

$              (3,300)


$              (2,183)


$              (5,729)


$              (6,684)

Income tax expense (benefit)

959


(5)


1,919


(1,368)

Net loss

$              (4,259)


$              (2,178)


$              (7,648)


$              (5,316)









Diluted loss per common share

$                (0.11)


$                (0.06)


$                (0.19)


$                (0.14)









Diluted weighted-average common shares outstanding

40,031


38,943


39,941


38,841









Reconciliation of loss before income taxes, GAAP to adjusted (loss) income, non-GAAP:








Loss before income taxes, GAAP:

$              (3,300)


$              (2,183)


$              (5,729)


$              (6,684)

Adjustments:








Amortization expense

3,905


4,238


7,989


8,498

Corporate rebranding expense

289


47


1,172


62

Non-cash interest expense

457


1,004


913


1,572

Business development, integration, and severance (income) expense

(3,101)


3,359


(4,680)


4,829

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

(1,750)


6,465


(335)


8,277









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

(438)


1,616


(84)


2,069

Adjusted net (loss) income, non-GAAP

$              (1,312)


$               4,849


$                 (251)


$               6,208









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








Diluted loss per common share, GAAP:

$                (0.11)


$                (0.06)


$                (0.19)


$                (0.14)

Adjustments:








Amortization expense

0.10


0.11


0.20


0.22

Effect of 25% pro forma tax rate

0.05


0.01


0.08


0.01

Corporate rebranding expense

0.01



0.03


Non-cash interest expense

0.01


0.03


0.02


0.04

Tax effect of non-GAAP adjustments

(0.01)


(0.05)


(0.03)


(0.09)

Business development, integration, and severance (income) expense

(0.08)


0.08


(0.12)


0.12

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

$                (0.03)


$                 0.12


$                (0.01)


$                 0.16









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:

40,031


38,943


39,941


38,841

Adjustments:








Effect of dilutive stock options and awards


554



599

Diluted weighted-average common shares outstanding, non-GAAP

40,031


39,497


39,941


39,440

 

Contacts:

Artivion

Gilmartin Group LLC

D. Ashley Lee

Brian Johnston / Lynn Lewis

Executive Vice President &

Phone:  332-895-3222

Chief Financial Officer

[email protected]

Phone: 770-419-3355


 

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SOURCE Artivion, Inc.