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CryoLife Inc. Message Board

  • dlhild Feb 10, 2010 12:11 AM Flag

    The stupid balance sheet argument...

    Medafor's capital constraints have forced the company to repeatedly issue new shares...

    7.7M shares in 2005 to 20.9M shares in 2009...

    About 14.5M shares were already, in effect issued, when the current management team took over. The debt was already on the balance sheet in the form of debentures issued by the prior management groups who left for various reasons. Some of these shareholders were probably the sellers of the stock that Medafor recently acquired. So SGA, like Perkins before him, is trying to place blame on the current mangement for the dilution, when in reality it was the management that was removed that created this dilution. SGA is making an accounting argument, trying to dump blame on current management, when if fact they didn't have much to do with most of the diultion. In fact, I would suggest, it was the shares that were issued by current management that actually accomplished something beneficial to Medafor. For example, current management obtained FDA approval for surgical use of MPH. In 2006, Medafor sales were about $3M, with no significant revenues in sight. For 2009, it appears that Medafor sales are about $13,8M. I would argue that the current management team has accomplished an incredible amount. In 18 months Medafor sales are likely to be close to 26M. In 36 months Medafor sales are likely to be around $50M to $55M. If we would go out another year, Medafor may be as profitable as CRY would be at that time. These numbers are based upon projecting current Medafor sales into the future.

    SGA, how has CRY stock done for the past 16 years? CRY puts out a nice 25 year glossy, but there is no substance in the package. Instead, stock charts of CRY tell the real story. Based upon the foregoing, I would suggest Medafor management is better than CRY management based upon recent year over year sales, gross margin, and profitablity growth.

    Bottom Line: SGA, don't blame current management for the sins of former management. To pretend to do so is fundamentally dishonest. I repeat to pretend to do so is fundamentally dishonest. It appears you may have been away from Minnesota for too long.

    A CRY stock chart follow:

17.82-0.32(-1.76%)Sep 26 4:02 PMEDT