Thursday, December 9, 2021

A Small Cap Equity holding: CryoLife, Inc. (CRY, $21.03): “Hold on, Don’t CRY” By: Luke Hunneke, AIM Student at Marquette University

 CryoLife, Inc. (CRY, $21.03): “Hold on, Don’t CRY”

By: Luke Hunneke, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.


CryoLife, Inc. (NYSE:CRY) manufactures and distributes medical devices and implantable human tissues. Cryolife has two product segments including Medical Devices and Preservation Services. The Medical Devices segment offers BioGlue products, aortic stents, stent grafts, On-X products, CaridoGenesis laser therapy, PerClot, and LaserFix. Preservation Services includes the preservation of implantable human tissues.

• In Quarter 2 of 2021, CRY reported an EPS of -$0.06, lower than the consensus EPS of 0.00 for the quarter. CRY’s Quarter 3 earnings call is November 4, and the consensus EPS estimates are $0.03.

• On July 29, 2021, CRY sold its PerClot product line to Baxter, a company that specializes in blood management. The proceeds from the transaction are reportedly going to be used for potential debt repayment and corporate purposes.

Key points: CryoLife has had relatively steady sales in the past three years, and the current year seems to be shaping out with similar numbers. The earnings call on November 4th will be a great insight into the profitability of the company and an indicator of how the price will react in coming weeks. The CryoLife EPS has underperformed in recent quarters compared to estimates, indicating this quarter’s earnings call might follow a similar trend.

CryoLife’s PerClot product that was sold to Baxter on July 29th is one of 7 products in the Medical Devices segment of the company. The Medical Devices segment created 70.9% of the revenues for CryoLife in 2020, and the segment will continue to provide majority of revenue. The loss of PerClot seems to have not impacted revenues substantially, and the other products in the Medical Devices segment continue to be in demand. CryoLife’s products have mainly been around for more than 5 years, and CryoLife has yet to produce an innovative product throughout that time. The lack of innovation could keep investors away, however would not necessarily cause investors to sell.

What has the stock done lately?

The stock has been slowly steadily declining since the announcement of the sale of PerClot, down around 23% since July 29th. The Russell 2000, on the other hand, is up around 5%.

Past Year Performance: In the last year, CryoLife is down 25.48%, with a high of $32.34 and a low of $16.60. The Russell 2000 is up 53.28% in the same period. However, these numbers are also reflective of the COVID-19 pandemic.

Source: FactSet

My Takeaway

CryoLife’s performance will be heavily dependent on November 4th’s earnings call. Several down quarters in terms of earnings has scared investors, and this earnings call will be no different. My recommendation is to hold the security and watch its movement in the coming weeks.

Source: FactSet