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CryoLife Inc. Message Board

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  • thebuckeye777 thebuckeye777 Aug 15, 2012 10:23 AM Flag

    Catch 22:

    I think the macro could improve dramatically if the Romney Ryan ticket gets lucky. ( On the other side of the coin the macro might be a lot worse with Obama.)

    I look at CRY at providing some very important services and being undervalued. They have a lot of growth opportunities looking out a couple years. I think they will hit some winners that could drive profitability a lot higher.

    This is my own opinion. Do your own homework.

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    • I would have to agree as I recently have bought in here as a private individual investor. Fear mongering scare tactics have most always been in vogue when the economic climate is undergoing hard times. There is gold and other financial instruments for those who would agree with that agenda. Henry Kaufman & Joe Granville just couldn't hold the markets down for very long back then. IMO-Any administration who would impose a tax on medical device companies. RE: 2.3% excise tax on the gross sales amount for medical-device manufacturers. Those imposing clearly IMO don't understand the consequences of their economic policies. I remember all to well the imposition (a tax the rich) for a tax on expensive watercraft. IMO it seemingly didn't workout well for US jobs and was repealed. If left without revisions. I see the same type of tax destroying jobs of small medical device companies. Either way, I like this companies prospects going forward and still think its a buy in the low five range. IMO a possible catalyst could be a change in administrations and a repeal of the medical device tax. With regard to the medical device tax. I've not looked into the details as to what may actually applies to this company. If any apply at all to this company? If Anybody with such knowledge knows. I'd sure like to see details. TIA

      • 1 Reply to rreding1
      • First of all, the regulations involving the device tax have not been settled and that has to be done before the effect on CRY can be measured exactly. It will take effect in 2013 unless Republicans take control of the Senate and Romney is elected although there are some Democrat Senators who also want to repeal it.

        However, at this point, it seems safe to write this:

        The tax is 2.3% of the sales price of a medical device.

        Only Cryolife's domestic sales would be affected.

        CRY's products affected include Bioglue, SynerGraft processed tissues, and HeRO Graft.

        If Bioform ever gets distributed domestically, it would be subjected to the tax. CRY thinks because they're subcontracting the TMR products (Cardiogenesis), the responsibility for that tax lies elsewhere. Regularly processed tissues are not affected. CRY estimates the tax would have been $519,000 if it had been collected on the first half of 2012's sales.

        Offhand, I see a potential for this hurting CRY's SynerGraft tissues where they've just started making significant progress after the FDA decided 10 years ago to rule Synergraft tissues were a medical device. The tax amounts to an immediate price hike on SynerGraft which of course broadens the cost gap further between normally processed tissues. A worst case for CRY would be if it further tightens when insurance will pay for SynerGraft tissues. Until the FDA's ruling in circa 2002, Synergraft was the "Holy Grail" that was to give CRY a near monopoly on heart valve tissue and the only tissue that would be sterilized. Ironically, CRY's GAAP tax rate for 2012 is going to be about twice that for MSFT.

    • dlhild Aug 15, 2012 7:04 PM Flag

      Buckeye, if you are optimistic over a Romney-Ryan ticket, it has to be based upon a world view, not analysis.

      The cake is baked. Neither party can turn this thing around. If both parties came together and looked at real problems and solutions, then there is a slight chance but slight never the less. They aren't going to come together, so it won't.

      I suggest you spend 70 minutes watching this video. It is not political. It is pure analysis, and explains the current situation quite well.

      Europe, England, Japan, and the USA are all screwed by excessive debt. It is going to be a slow deleveraging process, and all assets classes are going to be affected I think. If not for the 'Bernanke Put" the world would be in deflation and it would be 1935. We may circle back to that point yet. Please watch the video and give me your thoughts.

      Before we bottom we will likely see gold over $2,500, the Dow under 8,000, and bonds get killed at some point as well. My bet would be some level of deflation first followed by quite high inflation. Either way, P/E's are coming down. Also, I would bet that we are near the peak of the earnings cycle (may have 12-18 months left) then we will likely see earnings come down. S&P earnings are around $85 now, projected to go to around $100. I'm betting that 18 to 36 months out, S&P earnings will be ball park $80. Put a 12x P/E on it and it is easy to seee the S&P at 960...or lower. This is the macro force pushing CRY down. What is pushing CRY up I think may be an improving earnings cycle. My simple pencil pushing comes up with EPS numbers higher that the high numbers the analysts are currently showing.

      Also, the USA has to stop fighting wars. If we destroy the economy, we will not be able to field a military capable of invading Granada. Read "The Rise and Fall of the Great Powers", by Paul Kennedy, a Harvard Business school mandatory read. What this showed is the wars, and other commitments and promises, destoy great powers. Happened to every single one from 1450 to the present. The USA will be no exception.

      Another suggested book is the "End Game" by John Mauldin. It shows the debt problem too.

      • 1 Reply to dlhild
      • Mr. Kennedy's book covers a period largely before there were democracy created welfare-nations. It's not surprising his book is so popular with academics since the majority of them hover between liberalism and socialism. He also wants to declare the fall of the Soviet Union was due to the "Cold War" and have that as another example of an empire destroyed by war. I consider both of these claims debatable.

        The U.S. is indeed headed for insolvency but little of it is due to actually fighting in wars. Right now the spending problems are Medicaid and Medicare. I'm not including Social Security and Defense because I believe they can be fixed. For example, from the mid-eighties to about 2000, we lowered the defense spending's percentage of the GNP every year until it was cut by more than 50%.

        Wars like those in Afghanistan and Iraq are not expensive enough to destroy the U.S. economy. Also, what was the correct response after 9/11 other than to invade Afghanistan since al-Qaeda was based in that country? (Iraq is a different story and I'm of the opinion that even Bush would not invade now). We didn't start having colossal deficits until 2008 which is over 5 years after the Iraq invasion. Those two wars have cost a total of about $1.3 trillion which is enormous but still slightly less than the average yearly deficit under Obama. Neither the wars or the recession are what has caused these unprecedented peace time deficits. The major cause is runaway Federal Government spending since fiscal year 2007 (Ended 9/30/07). For 2007, total federal spending was $2.7 trillion. It grew to $3.0 trillion in '08 and then for 2009, it moved to $3.5 trillion. This past year, 2011, it was $3.6 trillion. In 4 years, we went from $2.7 to $3.6 trillion, a 33% increase in Federal spending. The biggest drivers of the increase were pensions and health care.

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