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CryoLife Inc. Message Board

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  • dlhild@ymail.com dlhild Dec 3, 2009 8:32 PM Flag

    2010 forecast and healthcare reform

    CRY is an interesting company. Let me shed some back of the envelope opinion/anaysis. This analysis pretains to the HemoStase product mainly. Generally speaking CRY revenues are going up overall by about 11%. If you remove HemoStase sales from the picture, revenues are probably growing in the high single digits. CRY tried to acquire Medafor, the producer of the HemoStase product for about $25 million. That was deemed unacceptable by Medafor shareholders. Prior to that time, as near as I know, CRY was friendly to Medafor until Medafor rejected one, or more offers. When Medafor rejected SGA's offer, CRY became aggressive toward Medafor. I think SGA thought he could force Medafor shareholders to fold and accept his offer. He may prove to be correct in his analysis, but I don't think so. Medafor sales are more than doubling every 2 years. Therfore, Medafor is quickly reaching the point where they can, and I think will, continue to fight for their life. Think about it. If Medafor with high gross profit margins is doubling sales every 20 months, they could be the equivalent of CRY in 6 years...at least in terms of profitability. This means that SGA has to kill Medafor in the next 12 months, or he will lose the battle against them.

    Now some ball park facts (I think). CRY has to purchase about $40 to $42 million in product from Medafor over 5 years. CRY is about 1.5 years into this contract. CRY has slowed down sales from Medafor (I think). This means they are back loading sales into the last 2.5 years of the contract. Note, failure of CRY to meet minimums could result in CRY losing the contract with Medafor (I think).

    Now some WAGS: This means that CRY has to be HemoStase product in the ball park range of $40 about 3 years out, or they may lose the contract. I think what SGA has done is to really rally the Medafor shareholder base. Medafor will fight for their turf (I think), the same as CRY is fighting for theirs. But if SGA miscalulated this, he may lose the fastest growing product line CRY has to offering. That would be a major wind fall to Medafor and a major lose to CRY. There is quite a bit of guess work in this, but I think SGA's law suit against Medafor is a real crap shoot for both Medafor and CRY.

    Medafor

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