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CryoLife Inc. Message Board

  • dlhild@ymail.com dlhild Feb 18, 2013 11:04 PM Flag

    Hemosphere (HeRO Graft):

    May 2012: CRY paid $17 million to acquire Hemosphere. Also, there is the possibility of some sort of milestone payment for $4.5 million. When acquired, Hemosphere’s trailing 12 month revenues were $5.3 million. Hence, CRY paid roughly 3.2x trailing 12 month revenue. The HeRO Graft’s gross profit margin is about 65%. This profit margin is high enough to contribute nicely to EPS growth, assuming sales grow rapidly.
    Q2 2012 sales $635,000, acquired during quarter so partial quarterly sales number is not meaningful.
    Q3 2012 sales $1,374,000, first full quarter.
    Q4 2012 sales $1,106,000, second full quarter.
    For CY 2013, CRY is estimating sales of $6 to $7 million. It seems reasonable to expect future revenues to be roughly as follows. CY2014 sales of $10 million, CY 2015 sales of $14 million, CY 2016 sales of $19 million, and CY2017 sales of $25 million.
    If over time as SA one stated, CRY can take HeRO Graft sales up to and beyond $20 million per year. Over time this may contribute nicely to CRY’s future profits. $20 million in sales would probably generate roughly $0.15 EPS ($20 million times 65% less GA of 6 million reduced by 40% tax rate divided by 27.3 million outstanding shares = approximately $0.15 EPS). Sales are nowhere near $20 yet though.
    Conclusion: In fairness to CRY, it is still too early to tell how this product line will do as it is rolled out over time. This product looks like it has good profit potential. Presently, CRY appears to be shifting the manufacturing location and training their sales force. I feel that 4 more quarters will be needed before we will be able to determine how well CRY is doing at growing these revenues. Once CRY get the “bugs worked out”, I’m guessing that a reasonable target would be for CRY to grow revenues at 7% QoQ. Let’s say 7% QoQ revenue growth starting in the fourth quarter of 2013. Future sales growth is the key for creating value here.
    The above is just my reasoning, nothing more. You are responsible for your own due diligence.
    Conclusion: Draw your own conclusions. The above is just what I’m thinking about at the moment. You Amigo have to sort things out for yourself. You are responsible for doing your own due diligence.

 
CRY
10.21+0.07(+0.69%)Sep 19 4:08 PMEDT

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