Attached files
| file | filename |
|---|---|
| 8-K/A - AMENDMENT TO FORM 8-K - CRYOLIFE INC | d389361d8ka.htm |
| EX-23.1 - CONSENT OF BAKER TILLY VIRCHOW KRAUSE, LLP - CRYOLIFE INC | d389361dex231.htm |
| EX-99.1 - HEMOSPHERE FINANCIAL STATEMENTS - CRYOLIFE INC | d389361dex991.htm |
Exhibit 99.2
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma combined condensed consolidated financial statements are based upon the historical consolidated financial statements of CryoLife, Inc. and its subsidiaries (“CryoLife,” the “Company,” “we,” or “us”) and Hemosphere, Inc. (“Hemosphere”) and have been prepared to illustrate the effect of the acquisition of Hemosphere for approximately $22.0 million in cash.
The unaudited pro forma combined condensed consolidated balance sheet combines the historical consolidated balance sheets of CryoLife and Hemosphere as of March 31, 2012 and reflects the pro forma effect as if the acquisition of Hemosphere had occurred on that date. The unaudited pro forma combined condensed consolidated statements of operations for the three months ended March 31, 2012 and the year ended December 31, 2011 combine the historical statements of operations of CryoLife and Hemosphere, adjusted to reflect the pro forma effect as if the acquisition of Hemosphere had occurred on January 1, 2011 (the first day of our 2011 fiscal year). The historical consolidated financial statements referred to above for CryoLife were included in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 and Annual Report on Form 10-K for the year ended December 31, 2011. The historical financial statements referred to above for Hemosphere for the comparable periods are included in this Current Report on Form 8-K. The accompanying unaudited pro forma combined condensed consolidated financial information and the historical consolidated financial information presented therein should be read in conjunction with the historical consolidated financial statements and notes thereto for CryoLife described above. The historical financial statements of Hemosphere have been adjusted to reflect certain reclassifications to conform to the Company’s financial statement presentation.
The unaudited pro forma combined condensed consolidated balance sheet and statements of operations include pro forma adjustments which reflect transactions and events that (a) are directly attributable to the acquisition, (b) are factually supportable, and (c) with respect to the statement of operations, do not have a continuing impact on consolidated results. The pro forma adjustments are described in the accompanying combined notes to the unaudited pro forma combined condensed consolidated financial statements.
The unaudited pro forma combined condensed consolidated financial information does not reflect future events that may occur after the acquisition, including potential general and administrative savings. The unaudited pro forma combined condensed consolidated financial information is provided for informational purposes only and is not necessarily indicative of the results of operations that would have occurred if the acquisition of Hemosphere had occurred on January 1, 2011 nor is it necessarily indicative of our future operating results. The pro forma adjustments are subject to change and are based upon currently available information.
1
CryoLife, Inc. and Subsidiaries
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 2012
(In Thousands)
| CryoLife | Hemosphere | Pro Forma Adjustments |
Pro Forma | |||||||||||||
| ASSETS |
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| Current Assets: |
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| Cash and cash equivalents |
$ | 21,146 | $ | 3,471 | $ | (20,195 | )b | $ | 4,091 | |||||||
| (331 | )a | |||||||||||||||
| Restricted securities |
318 | — | — | 318 | ||||||||||||
| Receivables, net |
18,208 | 760 | (107 | )a | 18,861 | |||||||||||
| Deferred preservation costs |
29,215 | — | — | 29,215 | ||||||||||||
| Inventories |
7,932 | 495 | 59 | c | 8,486 | |||||||||||
| Deferred income taxes |
5,294 | — | — | 5,294 | ||||||||||||
| Prepaid expenses and other |
2,416 | 82 | 156 | a | 2,654 | |||||||||||
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| Total current assets |
84,529 | 4,808 | (20,418 | ) | 68,919 | |||||||||||
| Property and equipment, net |
12,018 | 83 | — | 12,101 | ||||||||||||
| Investment in equity securities |
6,248 | — | — | 6,248 | ||||||||||||
| Restricted securities |
5,000 | — | — | 5,000 | ||||||||||||
| Goodwill |
4,220 | — | 7,570 | d | 11,790 | |||||||||||
| Patents, net |
2,595 | — | — | 2,595 | ||||||||||||
| Trademarks and other intangibles, net |
17,398 | — | 5,790 | e | 23,188 | |||||||||||
| Deferred income taxes |
13,056 | — | 4,963 | f | 18,019 | |||||||||||
| Other |
2,810 | 9 | — | 2,819 | ||||||||||||
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| Total Assets |
$ | 147,874 | $ | 4,900 | $ | (2,095 | ) | $ | 150,679 | |||||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
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| Current liabilities: |
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| Accounts payable |
$ | 4,269 | $ | 104 | $ | — | $ | 4,373 | ||||||||
| Accrued compensation |
2,660 | 32 | 490 | e | 3,182 | |||||||||||
| Accrued procurement fees |
3,922 | — | — | 3,922 | ||||||||||||
| Accrued expenses and other |
8,211 | 245 | 94 | a | 8,550 | |||||||||||
| Deferred income |
1,739 | — | — | 1,739 | ||||||||||||
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| Total current liabilities |
20,801 | 381 | 584 | 21,766 | ||||||||||||
| Other |
5,301 | — | 1,840 | e | 7,141 | |||||||||||
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| Total liabilities |
26,102 | 381 | 2,424 | 28,907 | ||||||||||||
| Shareholders’ equity: |
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| Preferred stock |
— | 201 | (201 | )a | — | |||||||||||
| Common stock |
301 | 11 | (11 | )a | 301 | |||||||||||
| Additional paid-in capital |
135,127 | 33,024 | (33,024 | )a | 135,127 | |||||||||||
| Retained deficit |
(46 | ) | (28,717 | ) | 28,717 | a | (46 | ) | ||||||||
| Accumulated other comprehensive loss |
(4 | ) | — | — | (4 | ) | ||||||||||
| Treasury stock at cost |
(13,606 | ) | — | — | (13,606 | ) | ||||||||||
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| Total shareholders’ equity |
121,772 | 4,519 | (4,519 | ) | 121,772 | |||||||||||
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| Total liabilities and shareholders’ equity |
$ | 147,874 | $ | 4,900 | $ | (2,095 | ) | $ | 150,679 | |||||||
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See accompanying notes to unaudited pro forma combined condensed consolidated financial statements.
2
CryoLife, Inc. and Subsidiaries
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter Ended March 31, 2012
(In Thousands Except Per Share Amounts)
| CryoLife | Hemosphere | Pro Forma Adjustments |
Pro Forma | |||||||||||||
| Preservation Services |
$ | 15,659 | $ | — | $ | — | $ | 15,659 | ||||||||
| Products |
16,454 | 1,389 | — | 17,843 | ||||||||||||
| Research grants and other |
188 | — | — | 188 | ||||||||||||
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| Total revenues |
32,301 | 1,389 | — | 33,690 | ||||||||||||
| Cost of Preservation Services |
8,496 | — | — | 8,496 | ||||||||||||
| Cost of Products |
2,513 | 443 | — | 2,956 | ||||||||||||
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| Total costs |
11,009 | 443 | — | 11,452 | ||||||||||||
| Gross margin |
21,292 | 946 | — | 22,238 | ||||||||||||
| General, administrative and marketing |
17,970 | 1,394 | 90 | g | 19,454 | |||||||||||
| Research and development |
1,693 | 168 | — | 1,861 | ||||||||||||
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| Operating expenses |
19,663 | 1,563 | 90 | 21,316 | ||||||||||||
| Operating income |
1,629 | (617 | ) | (90 | ) | 922 | ||||||||||
| Interest expense |
65 | — | — | 65 | ||||||||||||
| Interest income |
(2 | ) | (1 | ) | — | (3 | ) | |||||||||
| Other expense (income), net |
(15 | ) | — | 37 | g | 22 | ||||||||||
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| Total other expenses (income) |
48 | (1 | ) | 37 | 84 | |||||||||||
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| Income before income taxes |
1,581 | (616 | ) | (127 | ) | 838 | ||||||||||
| Income tax expense |
590 | — | (277 | )h | 313 | |||||||||||
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| Net Income |
$ | 991 | $ | (616 | ) | $ | 150 | $ | 525 | |||||||
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| Net income allocated to participating securities |
(21 | ) | — | 10 | i | (11 | ) | |||||||||
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| Net income applicable to common shares |
$ | 970 | $ | (616 | ) | $ | 160 | $ | 514 | |||||||
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| Income Per Common Share - Basic |
$ | 0.04 | $ | 0.02 | ||||||||||||
| Income Per Common Share - Diluted |
$ | 0.04 | $ | 0.02 | ||||||||||||
| Weighted Average Common Shares Outstanding |
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| Basic |
27,180 | 27,180 | ||||||||||||||
| Diluted |
27,530 | 27,530 | ||||||||||||||
See accompanying notes to unaudited pro forma combined condensed consolidated financial statements.
3
CryoLife, Inc. and Subsidiaries
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, 2011
(In Thousands Except Per Share Amounts)
| CryoLife | Hemosphere | Pro Forma Adjustments |
Pro Forma | |||||||||||||
| Preservation Services |
$ | 59,793 | $ | — | $ | — | $ | 59,793 | ||||||||
| Products |
59,387 | 5,251 | — | 64,638 | ||||||||||||
| Research grants and other |
446 | — | — | 446 | ||||||||||||
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| Total revenues |
119,626 | 5,251 | — | 124,877 | ||||||||||||
| Cost of Preservation Services |
34,340 | — | — | 34,340 | ||||||||||||
| Cost of Products |
9,442 | 1,807 | — | 11,249 | ||||||||||||
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| Total costs |
43,782 | 1,807 | — | 45,589 | ||||||||||||
| Gross margin |
75,844 | 3,444 | — | 79,288 | ||||||||||||
| General, administrative and marketing |
57,302 | 5,307 | 350 | g | 62,959 | |||||||||||
| Research and development |
6,899 | 672 | 7,571 | |||||||||||||
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| Operating expenses |
64,201 | 5,979 | 350 | 70,530 | ||||||||||||
| Operating income |
11,643 | (2,534 | ) | (350 | ) | 8,759 | ||||||||||
| Interest expense |
142 | — | — | 142 | ||||||||||||
| Interest income |
(14 | ) | (3 | ) | — | (17 | ) | |||||||||
| Other expense (income), net |
49 | (3 | ) | 153 | g | 199 | ||||||||||
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| Total other expenses (income) |
177 | (6 | ) | 153 | 324 | |||||||||||
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| Income before income taxes |
11,466 | (2,528 | ) | (503 | ) | 8,435 | ||||||||||
| Income tax expense |
4,095 | — | (1,083 | )h | 3,012 | |||||||||||
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| Net Income |
$ | 7,371 | $ | (2,528 | ) | $ | 580 | $ | 5,423 | |||||||
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| Net income allocated to participating securities |
(149 | ) | — | 41 | i | (108 | ) | |||||||||
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| Net income applicable to common shares |
$ | 7,222 | $ | (2,528 | ) | $ | 621 | $ | 5,315 | |||||||
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| Income Per Common Share - Basic |
$ | 0.26 | $ | 0.19 | ||||||||||||
| Income Per Common Share - Diluted |
$ | 0.26 | $ | 0.19 | ||||||||||||
| Weighted Average Common Shares Outstanding |
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| Basic |
27,441 | 27,441 | ||||||||||||||
| Diluted |
27,759 | 27,759 | ||||||||||||||
See accompanying notes to unaudited pro forma combined condensed consolidated financial statements.
4
CRYOLIFE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(In Thousands)
Description of Transaction and Basis of Presentation
The unaudited pro forma combined condensed consolidated financial statements are based upon the historical consolidated financial statements of CryoLife, Inc. and its subsidiaries (“CryoLife,” the “Company,” “we,” or “us”) which were included in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 and Annual Report on Form 10-K for the year ended December 31, 2011 and Hemosphere, Inc. (“Hemosphere”) financial statements for the comparable periods which are included in this Current Report on Form 8-K. The unaudited pro forma combined condensed consolidated statements of operations reflect the acquisition of Hemosphere as if it had occurred on January 1, 2011 (the first day of our 2011 fiscal year). The unaudited pro forma combined condensed consolidated balance sheet as of March 31, 2012 reflects such acquisition as if it had occurred on that date.
In accordance with generally accepted accounting principles in the United States, the acquisition of Hemosphere is being accounted for using the purchase method of accounting. As a result, the unaudited pro forma combined condensed consolidated balance sheet has been adjusted to reflect the preliminary allocation of the purchase price to identifiable net assets acquired based primarily on the Company’s review of a fair value assessment and the excess purchase price to goodwill. The purchase price allocation in these unaudited pro forma combined condensed consolidated financial statements is based upon a purchase price of approximately $22.0 million.
Pro Forma Adjustments
On May 16, 2012 CryoLife completed its acquisition of 100% of the outstanding equity of Hemosphere, a privately held company, for $17.1 million in cash, an additional $3.1 million to pay for cash acquired, and contingent consideration with a fair value estimated to be approximately $1.8 million at acquisition, for a total purchase price of approximately $22.0 million. CryoLife used cash on hand to fund the transaction and operates Hemosphere as a wholly owned subsidiary.
The following pro forma adjustments are included in the unaudited pro forma combined condensed consolidated balance sheet and/or the unaudited pro forma combined condensed consolidated statements of operations:
| (a) | The elimination of Hemosphere non-retained assets, liabilities and equity. |
| (b) | Total purchase price paid in cash to the Sellers. |
| (c) | Fair value adjustment to inventories. |
5
CRYOLIFE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(In Thousands)
| (d) | The preliminary allocation of purchase price as a result of the acquisition and estimated goodwill as summarized below: |
| Total purchase price |
$ | 22,035 | ||
| Assets acquired and liabilities assumed: |
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| Cash |
3,140 | |||
| Receivables |
653 | |||
| Inventories |
554 | |||
| Intangible assets |
5,790 | |||
| Net deferred tax assets |
4,963 | |||
| Other assets |
330 | |||
| Liabilities assumed |
(965 | ) | ||
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| Goodwill (estimated) |
$ | 7,570 | ||
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| (e) | Fair value of intangible assets acquired and liabilities assumed. |
| (f) | Estimated deferred tax assets acquired. |
| (g) | Net increase in amortization of intangible assets acquired and loss on revaluation of contingent consideration. |
| (h) | The effect on income taxes as result of the transaction. |
| (i) | The change in net income allocated to common shareholders as a result of the transaction. |
6