CryoLife (CRY) said it agreed to buy JOTEC AG for $225 million, subject to certain adjustments, consisting of 75% cash and 25% in CryoLife common stock. The transaction is expected to close later this year.
It also said Q3 revenues were adversely affected due to the impact of the recent hurricanes on business in Florida and Texas, which it estimates to be approximately $1.0 million, and additionally due to the continued delay in obtaining the re-certification of our AAP. Including the impact of these factors, Q3 revenue was approximately $45.1 million, compared to guidance of between $46.5million and $47.5 million and the CapIQ mean for $47.1 million.
in connection with the transaction, CryoLife said it notified certain of its distributors that it had elected to terminate its relationship with those distributors based on a decision to distribute product through the to be combined company’s direct sales channel. As a result of this decision, at the end of the respective contract terms, CryoLife will be buying back a portion of the inventory that was previously sold to these distributors, which will result in a $1.1 million Q3 reversal of previously recorded revenues. Considering all of these factors, preliminary Q3 revenues were approximately $44.0 million. Additional revenue reversals and revisions to Q3 estimates are possible in subsequent quarters.
It said it expects pro forma compound annual revenue growth in the high single-digits on a percentage basis over the next five years. Non-GAAP earnings per share is expected to be dilutive in 2018 and accretive in 2019. Over the next five year period, the company expects 20 plus percent compound growth in non-GAAP earnings per share.