Artivion Inc AORT

NYS: AORT | ISIN: US2289031005   28/03/2024
21,16 USD (-2,17%)
(-2,17%)   28/03/2024

Artivion Reports Fourth Quarter and Full Year 2022 Financial Results

Fourth Quarter and Recent Business Highlights:

  • Achieved revenue of $79.4 million in the fourth quarter of 2022 versus $79.4 million in the fourth quarter of 2021, flat on a GAAP basis and an increase of 5% on a non-GAAP constant currency basis
  • Achieved revenue of $313.8 million for the full year of 2022 versus $298.8 million for the full year of 2021, an increase of 5% on a GAAP basis and 9% on a non-GAAP constant currency basis
  • On-X revenues increased 8% on a GAAP basis and 11% on a non-GAAP constant currency basis in the fourth quarter of 2022 compared to the fourth quarter of 2021
  • Aortic stent graft revenues increased 2% on a GAAP basis and 16% on a non-GAAP constant currency basis in the fourth quarter of 2022 compared to the fourth quarter of 2021
  • Received CE mark for BioGlue

ATLANTA, Feb. 16, 2023 /PRNewswire/ -- Artivion, Inc. (NYSE: AORT), a leading cardiac and vascular surgery company focused on aortic disease, today announced its financial results for the fourth quarter and full year ended December 31, 2022.

"We achieved on-target constant currency revenue growth of 9% for the full year 2022 and remain well positioned to continue executing on our strategy to deliver strong top line and bottom line growth in 2023 and beyond. Through 2022, aortic stent graft revenue grew 20% year-over-year while On-X revenue grew 13%, and tissue processing revenue grew 8%, all on a constant currency basis. Asia Pacific and Latin American revenue grew 30% and 38%, respectively, on a constant currency basis compared to last year. During the fourth quarter, revenue growth was driven by aortic stent grafts, where revenue growth rebounded sequentially from the third quarter and increased 16%, and On-X, which grew 11% on a constant currency basis in the fourth quarter compared to 2021," said Pat Mackin, Chairman, President, and Chief Executive Officer.

Mr. Mackin added, "In addition, we received in the fourth quarter 2022 CE Mark for BioGlue under the MDR and, based on recent interactions with the FDA, we are confident that we will receive PMA approval for PerClot. We have also had strong recent success in recruiting, hiring, and retaining production employees at our German manufacturing facility, so that this facility is now nearly fully staffed. A larger production workforce will facilitate future growth in aortic stent graft revenue. Meanwhile, patient enrollment continues in the PERSEVERE trial to secure FDA approval for AMDS, a simple, elegant stent graft solution to treat aortic arch disease. We remain confident that we have meaningful opportunities to grow our total addressable market through pipeline development. We also anticipate maintaining momentum with our existing portfolio in our current markets. In light of these factors, we are optimistic that we will meet our commitments to deliver, by year-end 2024, double-digit compounded annual constant currency revenue growth and achieve adjusted EBITDA in excess of $75 million."

Fourth Quarter 2022 Financial Results
Total revenues for the fourth quarter of 2022 were $79.4 million, flat on a GAAP basis and an increase of 5% on a non-GAAP constant currency basis, both compared to the fourth quarter of 2021.

Net income for the fourth quarter of 2022 was $2.2 million, or $0.05 per fully diluted common share, compared to net loss of ($20.1) million, or ($0.51) per fully diluted common share for the fourth quarter of 2021. Non-GAAP net income for the fourth quarter of 2022 was $4.2 million, or $0.10 per fully diluted common share, compared to non-GAAP net loss of ($141,000), or $0.00 per fully diluted common share for the fourth quarter of 2021. Non-GAAP net income for the fourth quarter of 2022 includes pretax gains related to foreign currency revaluation of $4.5 million.

Full Year 2022 Financial Results
Total revenues for 2022 were $313.8 million, reflecting an increase of 5% on a GAAP basis and 9% on a non-GAAP constant currency basis compared to the full year of 2021.

Net loss for 2022 was ($19.2) million, or ($0.48) per fully diluted common share, compared to net loss of ($14.8) million, or ($0.38) per fully diluted common share for the full year of 2021. Non-GAAP net income for the full year of 2022 was $2.1 million, or $0.05 per fully diluted common share, compared to non-GAAP net income of $4.9 million, or $0.12 per fully diluted common share for the full year of 2021. Non-GAAP net income for the full year of 2022 includes pretax losses related to foreign currency revaluation of $3.1 million.

The independent registered public accounting firm's audit report with respect to the Company's fiscal year-end financial statements will not be issued until the Company completes its annual report on Form 10-K. Accordingly, the financial results reported in this earnings release are preliminary pending completion of the audit and the Company's filing of its annual report on Form 10-K.

2023 Financial Outlook
Artivion expects its constant currency revenue growth to be between 8.0% and 12.0% for the full year 2023 compared to 2022, and expects revenues to be in a range of between $331 million and $343 million. Artivion expects adjusted EBITDA, as reported, to increase greater than 20% in 2023 compared to 2022, resulting in adjusted EBITDA in excess of $50.0 million in 2023.

The Company's financial performance for 2023 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; clinical trial termination expense; 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, February 16, 2023, 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 13735085.

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 remain well positioned to continue executing on our strategy to deliver strong top line and bottom line growth in 2023 and beyond; we are confident that we will receive PMA approval for PerClot; our larger production workforce in Hechingen Germany will facilitate future growth in aortic stent graft revenue; we remain confident that we have meaningful opportunities to grow our total addressable market through pipeline development; we anticipate maintaining momentum with our existing portfolio in our current markets; we are optimistic that, in light of these factors, we will meet our commitments to deliver, by year-end 2024, double-digit compounded annual constant currency revenue growth and achieve adjusted EBITDA in excess of $75 million; we will deliver year-over-year constant currency revenue growth of 8 to 12% in 2023 versus 2022; and our projections for 2023 financial results, including that 2023 revenues are expected to be between $331 million and $343 million and 2023 adjusted EBITDA is expected to increase greater than 20% in 2023 compared to 2022 and to be in excess of $50 million. 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 at all or at the levels we had originally anticipated; 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 pandemics, including COVID-19 and 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, 2022. 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
Consolidated Statements of Operations and Comprehensive Income (Loss)
In Thousands, Except Per Share Data



(Unaudited)






Three Months Ended
December 31,


Twelve Months Ended
December 31,


2022


2021


2022


2021

Revenues:








Products

$           58,627


$           59,069


$         230,353


$         221,597

Preservation services

20,771


20,325


83,436


77,239

Total revenues

79,398


79,394


313,789


298,836









Cost of products and preservation services:








Products

18,785


18,604


72,166


65,196

Preservation services

9,725


9,416


39,100


36,126

Total cost of products and preservation services

28,510


28,020


111,266


101,322









Gross margin

50,888


51,374


202,523


197,514









Operating expenses:








General, administrative, and marketing

38,454


51,253


157,443


169,774

Research and development

8,304


9,460


38,879


35,546

Total operating expenses

46,758


60,713


196,322


205,320

Gain from sale of non-financial assets




(15,923)

Operating income (loss)

4,130


(9,339)


6,201


8,117









Interest expense

5,370


3,892


18,224


16,887

Interest income

(61)


(19)


(147)


(79)

Other (income) expense, net

(4,456)


2,875


3,108


6,136









Income (loss) before income taxes

3,277


(16,087)


(14,984)


(14,827)

Income tax expense

1,108


4,013


4,208


7









Net income (loss)

$              2,169


$          (20,100)


$          (19,192)


$          (14,834)









Income (loss) per share:








Basic

$                0.05


(0.51)


$              (0.48)


(0.38)

Diluted

$                0.05


$              (0.51)


$              (0.48)


$              (0.38)









Weighted-average common shares outstanding:








Basic

40,127


39,161


40,032


38,983

Diluted

40,509


39,161


40,032


38,983









Net income (loss)

$              2,169


$          (20,100)


$          (19,192)


$          (14,834)

Other Comprehensive income (loss):








Foreign currency translation adjustments

23,744


(4,303)


(11,722)


(16,630)

Comprehensive income (loss)

$           25,913


$          (24,403)


$          (30,914)


$          (31,464)

 

Artivion, Inc. and Subsidiaries
Consolidated Balance Sheets
In Thousands, Except Per Share Data



December 31,


2022


2021

ASSETS








Current assets:




Cash and cash equivalents

$           39,351


$           55,010

Trade receivables, net

61,820


53,019

Other receivables

7,764


5,086

Inventories, net

74,478


76,971

Deferred preservation costs, net

46,371


42,863

Prepaid expenses and other

17,550


14,748





Total current assets

247,334


247,697





Goodwill

243,631


250,000

Acquired technology, net

151,263


166,994

Operating lease right-of-use assets, net

41,859


45,714

Property and equipment, net

38,674


37,521

Other intangibles, net

31,384


34,502

Deferred income taxes

1,314


2,357

Other long-term assets

7,339


8,267





Total assets

$         762,798


$         793,052

 

Artivion, Inc. and Subsidiaries
Consolidated Balance Sheets
In Thousands, Except Per Share Data



December 31,


2022


2021

LIABILITIES AND SHAREHOLDERS' EQUITY








Current liabilities:




Accounts payable

$           12,004


$           10,395

Accrued compensation

13,810


13,163

Accrued expenses

12,374


7,687

Taxes payable

2,635


3,634

Current maturities of operating leases

3,308


3,149

Accrued procurement fees

2,111


3,689

Current portion of long-term debt

1,608


1,630

Current portion of finance lease obligation

513


528

Other

1,312


1,078





Total current liabilities

49,675


44,953





Long-term debt

306,499


307,493

Non-current maturities of operating leases

41,257


44,869

Contingent consideration

40,400


49,400

Deferred income taxes

24,499


28,799

Deferred compensation liability

5,468


5,952

Non-current finance lease obligations

3,644


4,374

Other

7,027


6,484





Total liabilities

478,469


492,324





Commitments and contingencies








Shareholders' equity:








Preferred stock $0.01 par value per share, 5,000 shares authorized, no shares issued


Common stock $0.01 par value per share, 75,000 shares authorized, 41,830 and 41,397
shares issued as of December 31, 2022 and 2021, respectively

418


414

Additional paid-in capital

337,385


322,874

Retained (deficit) earnings

(17,217)


1,975

Accumulated other comprehensive loss

(21,609)


(9,887)

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

(14,648)


(14,648)





Total shareholders' equity

284,329


300,728





Total liabilities and shareholders' equity

$         762,798


$         793,052

 

Artivion, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
In Thousands



Year Ended December 31,


2022


2021





Net cash flows from operating activities:




Net loss

$          (19,192)


$          (14,834)





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




Depreciation and amortization

22,442


23,977

Non-cash compensation

12,344


10,711

Non-cash lease expense

7,432


7,521

Write-down of inventories and deferred preservation costs

4,374


5,377

Non-cash interest expense

1,832


2,005

Write-off of Endospan Option


4,944

Change in fair value of long-term loan receivable


409

Gain on sale of non-financial assets


(15,923)

Deferred income taxes

(1,717)


(4,470)

Change in fair value of contingent consideration

(9,000)


8,870

Other

2,268


2,060





Changes in operating assets and liabilities:




Accounts payable, accrued expenses, and other liabilities

(1,958)


(1,893)

Prepaid expenses and other assets

(2,234)


(1,404)

Inventories and deferred preservation costs

(8,404)


(18,375)

Receivables

(13,340)


(11,560)

Net cash flows used in operating activities

(5,153)


(2,585)





Net cash flows from investing activities:




Proceeds from sale of non-financial assets, net


19,000

Payments for Endospan agreement


Ascyrus Acquisition, net of cash acquired


Acquisition of intangible assets

(1,699)


(972)

Capital expenditures

(9,016)


(13,091)

Other


723

Net cash flows (used in) provided by investing activities

(10,715)


5,660





Net cash flows from financing activities:




Proceeds from exercise of stock options and issuance of common stock

3,368


3,756

Proceeds from issuance of convertible debt


Proceeds from revolving line of credit


Proceeds from financing insurance premiums


Repayment of revolving line of credit


Payment of debt issuance costs


(2,219)

Payment of contingent consideration


(8,200)

Redemption and repurchase of stock to cover tax withholdings

(1,795)


(1,914)

Repayment of debt

(2,753)


(3,085)

Other

(459)


(561)

Net cash flows used in financing activities

(1,639)


(12,223)





Effect of exchange rate changes on cash and cash equivalents

1,848


2,200

Decrease in cash and cash equivalents

(15,659)


(6,948)





Cash and cash equivalents, beginning of year

55,010


61,958

Cash and cash equivalents, end of year

$            39,351


$            55,010

 

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



Three Months Ended
December 31,


Twelve Months Ended
December 31,


2022


2021


2022


2021

Products:








Aortic stent grafts

$             23,739


$             23,222


$             92,752


$             85,387

Surgical sealants

16,357


18,478


65,379


70,714

On-X

16,822


15,520


63,904


57,363

Other

1,709


1,849


8,318


8,133

Total products

58,627


59,069


230,353


221,597









Preservation services

20,771


20,325


83,436


77,239

Total revenues

$           79,398


$           79,394


$         313,789


$         298,836









Revenues:








U.S.

$           41,175


$           39,622


$         161,113


$         151,151

International

38,223


39,772


152,676


147,685

Total Revenues

$           79,398


$           79,394


$         313,789


$         298,836

 

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



Three Months Ended
December 31,


Twelve Months Ended
December 31,


2022


2021


Growth
Rate


2022


2021


Growth
Rate

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












Total revenues, GAAP

$    79,398


$    79,394


— %


$  313,789


$  298,836


5 %

Impact of changes in currency exchange


(3,827)





(11,185)



Total constant currency revenue, non-GAAP

$    79,398


$    75,567


5 %


$  313,789


$  287,651


9 %

 


Three Months Ended
December 31,


Twelve Months Ended
December 31,


2022


2021


2022


2021

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








General, administrative, and marketing expense, GAAP

$       38,454


$       51,253


$     157,443


$     169,774

Corporate rebranding expense

499


905


1,908


1,428

Business development, integration, and severance (income) expense

(3,934)


10,012


(7,750)


16,150

Adjusted G&A, non-GAAP

$       41,889


$       40,336


$     163,285


$     152,196

 

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



Three Months Ended
December 31,


Twelve Months Ended
December 31,


2022


2021


2022


2021

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








Net income (loss), GAAP

$           2,169


$       (20,100)


$       (19,192)


$       (14,834)

Adjustments:








Depreciation and amortization expense

5,426


5,969


22,442


23,977

Interest expense

5,370


3,892


18,224


16,887

Stock-based compensation expense

3,155


3,240


12,344


10,711

Clinical trial termination expense

(197)



4,544


Income tax expense

1,108


4,013


4,208


7

(Gain) loss on foreign currency revaluation

(4,470)


2,447


3,085


5,545

Corporate rebranding expense

499


905


1,908


1,428

Gain from sale of non-financial assets




(15,923)

Interest income

(61)


(19)


(147)


(79)

Business development, integration, and severance (income) expense

(2,036)


10,421


(5,852)


16,559

Adjusted EBITDA, non-GAAP

$         10,963


$         10,768


$         41,564


$         44,278

 

Artivion Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP
Net Income (Loss) and Diluted Income (Loss) Per Common Share
In Thousands, Except Per Share Data
(Unaudited)



Three Months Ended
December 31,


Twelve Months Ended
December 31,


2022


2021


2022


2021

GAAP:








Income (loss) before income taxes

$      3,277


$  (16,087)


$  (14,984)


$  (14,827)

Income tax expense

1,108


4,013


4,208


7

Net income (loss)

$      2,169


$  (20,100)


$  (19,192)


$  (14,834)









Diluted income (loss) per common share

$        0.05


$       (0.51)


$       (0.48)


$      (0.38)









Diluted weighted-average common shares outstanding

40,509


39,161


40,032


38,983









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








Income (loss) before income taxes, GAAP:

$      3,277


$  (16,087)


$  (14,984)


$  (14,827)

Adjustments:








Amortization expense

3,635


4,119


15,310


16,820

Clinical trial termination expense

(197)



4,544


Corporate rebranding expense

499


905


1,908


1,428

Non-cash interest expense

460


454


1,832


2,479

Gain from sale of non-financial assets




(15,923)

Business development, integration, and severance (income) expense

(2,036)


10,421


(5,852)


16,559

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

5,638


(188)


2,758


6,536









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

1,409


(47)


689


1,634

Adjusted net income (loss), non-GAAP

$      4,229


$        (141)


$      2,069


$      4,902









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








Diluted income (loss) per common share, GAAP:

$        0.05


$       (0.51)


$       (0.48)


$      (0.38)

Adjustments:








Amortization expense

0.09


0.10


0.38


0.43

Effect of 25% pro forma tax rate

0.01


0.21


0.20


0.09

Clinical trial termination expense

(0.01)



0.11


Corporate rebranding expense

0.02


0.03


0.05


0.04

Non-cash interest expense

0.01


0.01


0.04


0.06

Gain from sale of non-financial assets




(0.41)

Tax effect of non-GAAP adjustments

(0.02)


(0.10)


(0.11)


(0.13)

Business development, integration, and severance (income) expense

(0.05)


0.26


(0.14)


0.42

Adjusted diluted income per common share, non-GAAP

$        0.10


$            —


$        0.05


$        0.12









Reconciliation of diluted weighted-average common shares outstanding








Diluted weighted-average common shares outstanding, GAAP:

40,509


39,161


40,032


38,983

Adjustments:








Effect of dilutive stock options and awards



464


560

Diluted weighted-average common shares outstanding, non-GAAP

40,509


39,161


40,496


39,543

 

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


 

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SOURCE Artivion, Inc.

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