CryoLife Inc. (CRY) reported adjusted earnings per share of 8 cents in the third quarter of fiscal 2014, lower than the year-ago earnings of 11 cents.
Quarter Details
Revenues came in at $37.1 million, up 2% from the year-ago quarter. The year-over-year increase was primarily due to strong performance from the Product segment.
Product revenues increased 8% to stand at $20.4 million, driven by higher sales of BioGlue, PerClot, and HeRO Graft. Notably, HeRO Graft revenues improved an impressive 45% on a year-over-year basis to $2 million, highlighting the lack of competition for the HeRO Graft line of products.
Preservation services revenues totaled $16.7 million, down 4.2% from the year-ago quarter.
Gross margin contacted 20 basis points (bps) on a year-over-year basis to 64.2%, due to higher cost of products.
Operating expenses increased 9.6% year over year basis to $20.8 million. General, administrative, and marketing expenses stood at $18.9 million, indicating a 12.4% rise from the year-ago quarter.
Operating margin contracted 440 bps to 8.1%.
Financial Position
Cash, cash equivalents, and restricted cash and securities, as of Sep 30, 2014 grossed $35.7 million, translating into a decrease of $1.1 million from Jun 30, 2014.
Net cash flow from operations totaled $2.5 million, highlighting a decrease of $0.4 million from the previous quarter.
Guidance
Management reiterated its revenue guidance for 2014, which is in the range of $144–$146 million, representing annual growth of 2–4%.
However, the company has slashed its R&D expense projection to the $9–$10 million range from the previous guidance of $11–$12 million. Research and development of clinical trials for PerClot in the domestic market will mainly account for the expenses.
Meanwhile, adjusted earnings are now expected to range between 22 cents and 24 cents per share, which is an increase from the previous forecast of 17–20 cents.
Our Take
Management’s raised guidance is positive for CryoLife’s share price. The company is banking on new product launches.
Currently, CryoLife carries a Zacks Rank #3 (Hold). Better-ranked medical instrument stocks include AngioDynamics Inc. (ANGO), Fluidigm Corporation (FLDM) and Cynosure, Inc. (CYNO). While AngioDynamics sports a Zacks Rank #1 (Strong Buy), both Fluidigm Corporation and Cynosure carry a Zacks Rank #2 (Buy).
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