Cryolife Inc (NYSE: CRY) surprised many investors and analysts with its massive swing to profit in 2Q2016. But understanding what fueled the gains in the quarter could help you know how to play the stock in the future.
What happened in 2Q?
Cryolife Inc (NYSE: CRY) generated revenue of $47.1 million in 2Q2016, which increased 33% over the same quarter last year. The company credited the revenue expansion to strong sales of its product called On-X.
Coming to the bottom-line, the company posted EPS of $0.07, which increased from EPS loss of $0.02 in the like quarter a year ago. But if you adjust the earnings in the latest quarter for one-time impacts, you see that adjusted EPS came in at $0.13, implying an improvement of more than 200% over the year-ago quarter.
Reason behind the growth
As an investor, you might wonder what underpinned Cryolife Inc. (NYSE: CRY)’s robust performance in 2Q2016. It turns out that a shift in sales strategy is paying off for Cryolife, especially in the cardiac surgery market.
The company is taking control of the distribution of its products through a direct sales model. As a result, the company is seeing improvement in gross margins, which is having a positive impact on the bottom-line.
According to the management of Cryolife, the direct sales model is also strengthening the company’s competitive position in the global arena.
CEO Makin also said that the sales force that Cryolife has on the ground is also doing a great job in increasing awareness and availability of On-X product. The team has also continued to drive sales of BioGlue.
2016 guidance sweetened – Cryolife Inc. (NYSE: CRY)
Buoyed by strong 2Q2016 results, Cryolife Inc. (NYSE: CRY) has improved revenue and earnings guidance for full-year 2016. The company now expects revenue in the band of $180 to $182 million, up from the original guidance of $178 to $180 million. EPS for 2016 is expected to come in the range of $0.32 to $0.34, up from the previously guided range of $0.29 to $0.32.