CryoLife, Inc. (CRY), a medical devices company which specializes in preserving and processing tissues, recently announced that its Board has approved the initiation of quarterly cash dividend of 2.5 cents per share. The company foresees payment of the quarterly dividends each year in March, June, September and December.
The foremost quarterly cash dividend will be paid on September 21, 2012, to all shareholders of record as of September 14, 2012. The shares bought and sold on or after September 12, 2012, will not offer the right to receive the initial quarterly dividend.
The company projects total annual dividend of roughly $2.7 million on the basis of the number of outstanding shares. Per management, the commencement of a quarterly cash dividend underlines CryoLife’s solid financial stability. It also mirrors the company’s long-run focus on profitability and cash flow generation.
CryoLife plans to use its cash flow from operations to enhance its product pipeline. The company will also invest in future growth opportunities and business development. Additionally, CryoLife intends to continue its share repurchase.
The mediation to re-invest in the company as well as return profits to shareholders via cash dividends and share repurchase should boost investor confidence in the business fundamentals. The initiation of quarterly cash dividend reflects the company’s financial capability to generate adequate profit for future expansion.
Earlier, the Board had approved the extension of its share buyback program to up to $15 million prior to December 31, 2012. The company repurchased 593,000 shares for $2.9 million (at an average price of $4.90 per share) in 2011. To date, it has repurchased 626,000 shares of its outstanding common stock for $3.2 million (at an average price of $5.14 per share) in 2012. CryoLife still has $10.3 million left under its current share buyback authorization.
The declaration of future dividend payments and its payment dates and record dates depend on the approval by the Board, based on CryoLife’s future earnings, cash flow generation and financial strength.
Headquartered in Kennesaw, Georgia, CyroLife is a forerunner in preserving and distributing human tissue for transplantation. It also serves the market for medical devices for cardiac and vascular purposes. The company is focused on driving revenue growth through expansion of its core business activities and strategic acquisitions. The recent acquisitions are expected to be accretive to the company’s revenues in 2012.
However, CryoLife operates in a highly competitive environment with Baxter International (BAX), St. Jude Medical (STJ) and Edwards Lifesciences (EW) in certain niches. Also, the company’s overdependence on its mainstay product — BioGlue, and the current expiration of its patent in the U.S. and in the rest of the world in mid 2013, is a matter of concern.
CryoLife currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.Read the Full Research Report on STJ
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