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CryoLife Inc. Message Board

  • dlhild May 18, 2010 2:51 PM Flag

    CRY = Buy Out “Anti-Matter”

    From time to time posters have suggested CRY would be an attractive “Buy-Out Candidate”. This suggestion is laughable.

    1. 52% of CRY’s sales come from “tissue” related products. Tissue is a low margin, highly regulated, high fixed cost business subject to litigation risk business. I’m not sure that CRY generates any “net cash flow’ from the tissue product lines. Posters here get excited when CRY increases tissue related sales. When you have a $0 “net cash flow” product line, you can increase sales to infinity and you still have a $0 "net cash flow" product line. I sometimes wonder if CRY is running a "blood bank”. At CRY's annual meeting, SGA or DAL will have the opportunity to tell us what the “net cash flow” numbers for tissue really are. If they don’t talk about it, my guess is because it is a $0 "net cash flow" business, and they don't want to have to admit this to shareholders.

    2. CRY gets the bulk of it's “net cash flow” from BioGlue. My guess is that BioGlue generated $14 million “net cash flow” during 2009. But, BioGlue has a BIG problem. Sales are likely to trend lower. It goes off patent in 2012-13. Competitors may start entering this market in 2011. Looking forward, it is likely that the "net cash flow" from this product line will go lower. If a rapid drop in BioGlue sales were to occur, CRY's aggregated "net cash flow" would plummet, and so would the stock price. Declining BioGlue sales could get really ugly should sales decline.

    3. CRY has destroyed their working relationship with Medafor. CRY had hoped to replace declining BioGlue sales with increasing HemoStase sales. So for now anyway, HemoStase doesn't make CRY attractive to a buyer.

    4. Everything else CRY has to offer is developmental and/or unproven. To a buyer, this would be equivalent to buying a “pig in a poke”.

    Conclusion: CRY doesn’t have anything to offer a buyer. CRY is the equivalent of buy out “Anti-Matter”.

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