8-K
ARTIVION, INC. (AORT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________________
FORM 8-K
___________________________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 4, 2022
___________________________________________
ARTIVION, INC.
(Exact name of registrant as specified in its charter)
___________________________________________
| Delaware | 1-13165 | 59-2417093 |
|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission File Number) | (IRS Employer<br><br>Identification No.) |
1655 Roberts Boulevard, N.W., Kennesaw, Georgia 30144
(Address of principal executive office) (zip code)
Registrant's telephone number, including area code: (770) 419-3355
___________________________________________________________________________________
(Former name or former address, if changed since last report)
| Title of each class | Trading Symbol(s) | Name of each exchange <br>on which registered |
|---|---|---|
| Common Stock, $0.01 par value | AORT | NYSE |
___________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On August 4, 2022, Artivion, Inc. (“Artivion” or the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2022. Artivion hereby incorporates by reference herein the information set forth in its press release dated August 4, 2022, a copy of which is attached hereto as Exhibit 99.1. Except as otherwise provided in the press release, the press release speaks only as of the date of such press release and it shall not create any implication that the affairs of Artivion have continued unchanged since such date.
The information provided pursuant to this Item 2.02 is to be considered “furnished” pursuant to Item 2.02 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended, nor shall it be deemed incorporated by reference into any of Artivion’s reports or filings with the Securities and Exchange Commission, whether made before or after the date hereof, except as expressly set forth by specific reference in such report or filing.
Except for the historical information contained in this report, the statements made by Artivion are forward-looking statements that involve risks and uncertainties. All such statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Artivion’s future financial performance could differ significantly from the expectations of management and from results expressed or implied in the press release. Please refer to the last paragraph of the text portion of the press release for further discussion about forward-looking statements. For further information on risk factors, please refer to “Risk Factors” contained in Artivion’s most recently filed Form 10-K and its subsequent filings with the Securities and Exchange Commission, as well as in the press release attached as Exhibit 99.1 hereto. Artivion disclaims any obligation or duty to update or modify these forward-looking statements.
Item 9.01(d) Exhibits
(d)Exhibits.
| Exhibit Number | Description |
|---|---|
| 99.1* | Press Release dated August 4, 2022 |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
*Furnished herewith, not filed.
-2-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Artivion, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: August 4, 2022
| ARTIVION, INC. | |
|---|---|
| By: | /s/ D. Ashley Lee |
| Name: | D. Ashley Lee |
| Title: | Executive Vice President, and<br><br>Chief Financial Officer |
-3-
Document
Exhibit 99.1
FOR IMMEDIATE RELEASE
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 |
Artivion Reports Second Quarter 2022 Financial Results
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
ATLANTA, GA – (August 4, 2022) – 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
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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
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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.
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Artivion, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income
In Thousands, Except Per Share Data
(Unaudited)
| Three Months Ended<br>June 30, | Six Months Ended<br>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) |
Page 4 of 10
Artivion, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
In Thousands
| June 30,<br>2022 | December 31,<br>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 |
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Artivion, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
In Thousands
(Unaudited)
| Six Months Ended<br>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 |
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Artivion, Inc. and Subsidiaries
Financial Highlights
In Thousands
(Unaudited)
| Three Months Ended<br>June 30, | Six Months Ended<br>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 |
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Artivion, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP
Revenues and General, Administrative, and Marketing Expense
In Thousands
(Unaudited)
| Three Months Ended<br>June 30, | Six Months Ended<br>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<br>June 30, | Six Months Ended<br>June 30, | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| 2022 | 2021 | 2022 | 2021 | |||||||
| Reconciliation of G&A expenses, GAAP to adjusted G&A, non-GAAP: | ||||||||||
| General, administrative, and marketing expense,<br>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 |
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Artivion, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP
Adjusted EBITDA
In Thousands
(Unaudited)
| Three Months Ended<br>June 30, | Six Months Ended<br>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 |
Page 9 of 10
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<br>June 30, | Six Months Ended<br>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 |
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