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CryoLife Inc. Message Board

  • dlhild Jan 23, 2010 11:24 AM Flag

    Offer a fair price...othewise let's get along

    If you read my earlier post "Reason #1 why $2/share is unacceptable", you will see that the real value of CRY's offer for Medafor stock is closer to $0.75/share than it is to $2/share. Now, if CRY stock continues to fall…which may happen if the market generally goes down some more, it becomes even more difficult for CRY to buy Medafor. This is because it is likely that most of any acquisition cost would be paid via issuing new CRY stock.

    Instead, I think SGA should look beyond ego and focus instead on running a successful company. The way to do this would for CRY to stop all litigation. Quit with any proxy threat activity. Then focus on CRY’s top line growth. If CRY focused on revenue growth, everything would work out well, because CRY has very acceptable gross profit margins. So if you get the top line growth, it works it way down the income statement to higher EPS and translates into a substantially higher share price as well. Under the existing contract, CRY may be able to sell $40+M in HemoStase in 2012, $60+M in 2013, and growth just would project forward from there. If this happened, CRY’s market cap divided by sales ratio would double or triple. This would likely put CRY’s stock price in the $20 range.

    If instead CRY decides to take Medafor into the ring for a "death match", who knows what will ultimately happen. It was SGA’s decision to start this fight. He could end it at any time too. I think he should run a company rather than a litigation factory. A revenue factory has high gross profit. A litigation factory runs a huge loss.

    If SGA is serious about acquiring Medafor, then he needs to put a simple, fair, plain vanilla offer on the table. Then both companies could have a professional, frank, and reasonable discussion on the subject. It’s possible this could then end well for everyone.

    If he is unwilling to offer a fair price, then he should just focus on growing CRY’s top line. That would work wonderfully for both shareholders as well.

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    • CryoLife doesn't have great prospective growth with the status quo, but with Medafor to complete the puzzle, both companies combined together would have great earnings growth looking forward, more so than either company would alone. That's what makes stocks go up, anticipation of the speed of future earnings growth. Neither company should do better than they would as a team. They would have close to a monopoly in the operating room, and after the merged stock zoomed up, a larger company would probably come into the mix and buy out CRY.

    • Could not agree more....
      The only ones making any profit now are the lawyers......

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