During the first quarter of 2010 CryoLife management embarked on an aggressive corporate acquisition strategy to strengthen the company's product offerings in the areas of cardiovascular and vascular surgery. The Company has been able to implement this strategy due to the unusual economic conditions that presently exist in the U.S. financial markets related to the lack of funding that is available for new technologies and start-up companies. CryoLife's unique cash flow position and our ability to access working capital have given us the opportunity to acquire and fund new technologies that are under development or acquire and fund small companies unable to successfully access U.S. capital markets.
Additionally, management's thinking behind this strategy was based upon the fact that the aging U.S. population, 78 million "baby boomers," would increasingly be confronted by complications from cardiovascular diseases. Historically, the company has focused on unique products for the treatment of complex cardiac and vascular reconstruction procedures. It was management's thinking that expanding the treatment options for people with cardiac and vascular issues would enable us to bring life and limb saving technologies to more people throughout the world.
To that end, in September of 2010, CryoLife signed a manufacturing and distribution agreement with Starch Medical, Inc., of San Jose, California, for PerClot®, a powdered hemostat that they were marketing in Europe. This agreement helps solidify our participation in a worldwide market for powdered hemostats that industry analysts estimate to be about $2 billion. Our agreement covers the entire world except for China and certain Middle Eastern countries. PerClot is CE Marked for distribution in many European countries at this time. CryoLife has conducted animal trials and biocompatibility testing and submitted its investigational device exemption, or IDE to the FDA at the end of March 2011. PerClot is not approved for use in the U.S. at this time.
PerClot is a complementary product to our surgical adhesive BioGlue® that has been available for clinical use since 1998 and has been used in over 615,000 surgical procedures throughout the world. PerClot may be used in wet surgical fields and initiates hemostasis immediately when it is confronted by blood from a wound. In tests conducted in our research laboratory it appears that PerClot absorbs two to three times as much water as the other powdered hemostats that are commercially available.
In May of 2011 the company completed the acquisition of Cardiogenesis corporation. Cardiogenesis, a wholly owned subsidiary of CryoLife, Inc., is a pioneer in the development and use of laser technology for transmyocardial revascularization (TMR) in patients with severe or refractory angina. It is approved by the FDA for distribution in the U.S. and is CE Marked for use in Europe. It is a Medicare approved therapy and is reimburseable. TMR is accepted as a meaningful therapy and treatment for refractive angina by the American College of Cardiology, American Heart Association and the Society of Thoracic Surgery. Cardiogenesis has a CE Mark for the use of autogenous (the patient's own) stem cells in conjunction with TMR.
CryoLife management is excited by the acquisition of Cardiogenesis. The company almost doubled its sales force focused on cardiac surgeons upon closing the transaction. Cardiogenesis' revenues in 2010 were $11.3 million.
Calendar year 2010 proved to be a very successful year for CryoLife. We set all time fourth quarter and full year revenue records of $29.2 million and $116.6 million, respectively, for the periods ending December 31, 2010. Net income for the full year of 2010 was $3.9 million, or $0.14 cents per basic and fully diluted share. Another indicator of the company's ability to thrive in a difficult economy was that we generated operating cash flow of $7 million in the fourth quarter and $20.8 million for the year ended December 31, 2010.
For a more detailed discussion of the company's operations, products and services you may request a copy of the company's Annual Report on Form 10-K for 2010 or you may view it on the company's website by clicking on Investor Relations.
Very truly yours,
Steven G. Anderson
Founder, President and CEO