Medafor Matters	12 Months Ended
Dec. 31, 2011
Medafor Matters [Abstract]
Medafor Matters	6. Medafor Matters *Overview* CryoLife began distributing HemoStase in 2008 for Medafor under an EDA. In November 2009 and in 2010 the Company executed stock purchase agreements to purchase a total of approximately 2.4 million shares of common stock in Medafor for $4.9 million. The Company's carrying value of this investment included the purchase price and adjustments to record certain of the stock purchase agreements' embedded derivative liabilities at the fair market value on the purchase date, as discussed further below. As Medafor's common stock is not actively traded on any public stock exchange, as Medafor is a non-reporting company for which financial information is not readily available, and as the Company does not exert significant influence over the operations of Medafor, the Company accounted for this investment using the cost method and recorded it as the long-term asset, investment in equity securities, on the Company's Consolidated Balance Sheets. *HemoStase Inventory* Based on Medafor's final termination of the EDA in late September 2010, the Company performed a review of its HemoStase inventory to determine if the carrying value of the inventory had been impaired. At the time of the termination, CryoLife expected to continue to sell HemoStase for a six-month period following the final termination of the EDA. As a result, the Company determined that the carrying value of the HemoStase inventory was impaired. The Company wrote down the value of its HemoStase inventory to $1.7 million and recorded additional cost of products expense of $1.6 million in the third quarter of 2010. The Company believed that the remaining $1.7 million inventory balance was a reasonable estimate of the amount of inventory it would be able to distribute during the six-month period. The amount of this write-down reflected management's estimate based on information available at that time. As of December 31, 2011 and 2010 the Company had zero and $559,000, respectively, in remaining value of HemoStase inventory on its Consolidated Balance Sheets. The Company was able to sell more HemoStase than it originally estimated and that had previously been written down; therefore, cost of products in the year ended December 31, 2011 was favorably impacted by approximately $330,000. *Investment in Medafor Common Stock* During the year ended December 31, 2010, the Company reviewed available information to determine if factors indicated that a decrease in value of the investment in Medafor common stock had occurred. CryoLife determined that the available information, particularly Medafor's termination of its largest distributor, indicated that the Company should evaluate its investment in Medafor common stock for impairment. CryoLife used a market based approach for the valuation, including comparing Medafor to a variety of comparable publicly traded companies, recent merger targets, and company groups. CryoLife considered both qualitative and quantitative factors that could affect the valuation of Medafor's common stock. Based on its analysis, the Company believed that its investment in Medafor was impaired and that this impairment was other than temporary. Therefore, in the third quarter of 2010 CryoLife recorded a non-operating expense, other than temporary investment impairment, of $3.6 million to write down its investment in Medafor common stock to $2.6 million. During the year ended December 31, 2011 the Company reviewed available information and determined that no factors were present indicating that the Company should evaluate its investment in Medafor common stock for further impairment. The carrying value of the Company's 2.4 million shares of Medafor common stock was approximately $2.6 million as of both December 31, 2011 and 2010. The Company will continue to evaluate the carrying value of this investment if changes to the factors discussed above or additional factors become known that indicate the Company should evaluate its investment in Medafor common stock for further impairment. If the Company subsequently determines that the value of its Medafor common stock has been impaired further, or if the Company decides to sell its Medafor common stock for less than the carrying value, the resulting impairment charge or realized loss on sale of the investment in Medafor could be material. *Medafor Derivative* Per the terms of certain of the stock purchase agreements for the Medafor shares discussed above, in the event that CryoLife acquires more than 50% of the diluted outstanding stock of Medafor or merges with Medafor within a three-year period from each respective agreement date (a "Triggering Event"), the last of which will expire on June 7, 2013, CryoLife is required to make a future per share payment (the "Purchase Price Make-Whole Payment") to such sellers. The payment would be equal to the difference between an amount calculated using the average cost of any subsequent shares purchased, as defined in each respective agreement, and the price of the shares purchased pursuant to each applicable stock purchase agreement. The Company was required to account for these Purchase Price Make-Whole Payment provisions as embedded derivatives (collectively the "Medafor Derivative"). CryoLife performed a valuation of the Medafor Derivative using a Black-Scholes model to estimate the future value of the shares on the purchase date. Management's assumptions as to the likelihood of a Triggering Event occurring coupled with the valuation of the Purchase Price Make-Whole Payment were then used to calculate the derivative liability. The fair value of the Medafor Derivative was initially recorded as an increase to the investment in equity securities and a corresponding derivative liability on the Company's Consolidated Balance Sheets. The Medafor Derivative was revalued quarterly, and any change in the value of the derivative subsequent to the purchase date was recorded in the Company's Consolidated Statements of Operations. During the quarter ended March 31, 2010 the Company's estimate of the likelihood of a Triggering Event decreased significantly, largely due to the Company withdrawing its offer to purchase Medafor. As of December 31, 2011 and 2010 the Company believed that the likelihood of a Triggering Event was remote. The value of the Medafor Derivative was zero as of both December 31, 2011 and 2010. The change in the value of the derivative recorded on the Consolidated Statements of Operations was zero and a gain of $1.3 million for the year ended December 31, 2011 and 2010, respectively. *Legal Action* Background of Georgia Lawsuit On April 29, 2009 CryoLife filed a lawsuit against Medafor in the U.S. District Court for the Northern District of Georgia (the "Georgia Court"). The lawsuit arises out of CryoLife's now terminated EDA with Medafor, pursuant to which CryoLife had the right to distribute a product manufactured by Medafor (the "Product") under the name HemoStase. The EDA gave CryoLife exclusive rights to market and distribute the Product in all applications in cardiac and vascular surgery in most of the U.S. and for all cardiac and vascular surgeries and most other types of general surgery applications in much of the rest of the world. On March 18, 2010 Medafor notified CryoLife of its contention that CryoLife had repudiated the EDA, and that Medafor was thereby entitled to terminate the contract. Medafor asserted that it had made a valid statutory demand, in a February 10, 2010 letter to CryoLife, for "adequate assurances" of CryoLife's future performance under the EDA, and that CryoLife had repudiated the EDA by failing to respond in a timely manner. CryoLife filed a motion for preliminary injunction, on March 29, 2010, asking the Georgia Court to enjoin Medafor from proceeding with its termination of the EDA. After two hearings, the Georgia Court, on September 20, 2010, issued an order denying CryoLife's request for a preliminary injunction against Medafor. Although the order denied the preliminary injunction, it did not address the merits of the parties' respective positions on the underlying issue of whether Medafor's termination of the EDA was wrongful. The Georgia Court stated that it viewed this question as more appropriately addressed after discovery and at summary judgment. On September 27, 2010 Medafor sent CryoLife a letter stating that Medafor was "fully, finally and immediately terminating" the EDA. CryoLife believes Medafor's termination of the EDA was wrongful. Overview of CryoLife's Claims CryoLife's lawsuit, as amended and supplemented, alleges that Medafor unlawfully terminated the EDA. It also asserts claims for breach of the EDA and fraud. CryoLife alleges that contrary to Medafor's representations in the EDA, Medafor had numerous distribution agreements regarding the Product with other distributors in the U.S. and internationally, allowing these distributors to market and distribute the Product in the medical fields and territories given exclusively to the Company. Medafor is alleged to have knowingly and purposefully withheld from CryoLife disclosure that these competing agreements existed at the time the EDA was executed and to have intentionally misrepresented to CryoLife that no similar contracts existed, or that their timely termination was being arranged. The lawsuit also alleges that Medafor failed to take reasonable steps to prevent other distributors from distributing the Product in CryoLife's exclusive field within its exclusive territory, and that Medafor failed to take necessary actions to ensure the value of CryoLife's distributorship. Medafor denies these allegations. CryoLife alleges that it brought these transgressions to Medafor's attention on numerous occasions and attempted to work with Medafor to secure its compliance with the terms of the parties' agreement, but Medafor refused to follow the terms of the EDA. Medafor's actions are alleged to have deprived CryoLife of significant sales volume and to have impaired and delayed CryoLife's development of relationships with customers in its exclusive field and territory. Medafor denies these allegations. CryoLife's Potential Damages CryoLife seeks to recover its damages from Medafor, punitive damages, and reimbursement of its attorneys' fees. In addition, CryoLife is seeking damages related to Medafor's wrongful termination of the EDA, which will be based upon CryoLife's lost profits for the period of time during which the EDA would have continued in effect but for Medafor's wrongful termination of it. The amount of these damages will be determined through discovery in the lawsuit. Also, CryoLife has alleged that Medafor has violated the Lanham Act and the Georgia Uniform Deceptive Trade Practices Act. No trial date has been set, although based on the Georgia Court's schedule, trial is not likely until 2013. Medafor's Counterclaims Medafor has asserted counterclaims against CryoLife that allege, among other things, breach of contract, violation of the Georgia Trade Secrets Act, tortious interference with business relationships, libel, violation of the Lanham Act, violation of Georgia's Uniform Deceptive Trade Practices Act, fraud and negligent misrepresentation, and conversion. In addition, Medafor requests that the Georgia Court grant a declaratory judgment that CryoLife repudiated the EDA pursuant to the provisions of the Georgia Uniform Commercial Code. Summary of Medafor's Potential Damages Claims Pursuant to its counterclaims, Medafor seeks to recover its alleged damages from CryoLife, including from the alleged repudiation of the EDA, injunctive relief, prejudgment interest, punitive damages, and attorneys' fees and expenses. Until such time as the Georgia Court rules on Medafor's counterclaims and discovery in the lawsuit has finished, assessing the potential or likelihood that Medafor could prevail and the amount of damages that could be awarded to Medafor if it were to prevail will be difficult. CryoLife intends to vigorously prosecute the case, defend itself, and contest the matter. Discovery is Ongoing Written discovery began in this case on October 8, 2010. On July 5, 2011 the Georgia Court appointed a Discovery Special Master to manage and supervise discovery pursuant to a Joint Motion for Appointment of Special Master filed by the parties. Pursuant to that appointment, the parties have met repeatedly with the Special Master regarding discovery issues. A few depositions have been taken and depositions will continue through September 15, 2012, the date on which the Georgia Court has ordered that non-expert discovery end. The Georgia Court has scheduled a status conference for parties on April 10, 2012. Expert witness testimony and other pre-trial motions likely will not be concluded until 2013. Pursuant to the Georgia Court's order, the parties have mediation scheduled for March 22 and March 23, 2012. Background of Minnesota Lawsuit On July 14, 2011 following CryoLife's demand to Medafor's Board of Directors that Medafor register its common stock under Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), Medafor filed a lawsuit against CryoLife in the U.S. District Court for the District of Minnesota ("Minnesota Court"). In that lawsuit, Medafor seeks a declaratory judgment that its December 31, 2010 reverse stock split reduced the number of Medafor shareholders to less than 500 and that, therefore, Medafor is not required to comply with the registration requirements of Section 12(g) of the Exchange Act (i.e., not required to register as a public company with the SEC). Medafor's lawsuit also requests that the Minnesota Court award Medafor its costs and expenses in the lawsuit. On August 5, 2011 CryoLife filed a Motion to Dismiss Medafor's claims, arguing that there was no subject matter jurisdiction over the claims because there was no private right cause of action under Section 12(g) of the Securities Exchange Act of 1934 and, therefore, Medafor had no right to the relief it sought vis a vis CryoLife. The Minnesota Court held a hearing on CryoLife's motion to Dismiss on October 11, 2011, and took the matter under advisement. The Minnesota Court ordered the parties to mediation, but cancelled that mediation in light of the upcoming mediation ordered by the Georgia Court. As of February 15, 2012 the Minnesota Court had not ruled on the Motion to Dismiss. At this time, CryoLife is unable to predict the outcome of this matter. The Company believes that the outcome of this Minnesota Court matter will not have a material adverse effect on its financial position, result of operations, or cash flow. But because this matter is ongoing, it is unclear whether this matter will ultimately be resolved in the Company's favor.

6. Medafor Matters

Overview

CryoLife began distributing HemoStase in 2008 for Medafor under an EDA. In November 2009 and in 2010 the Company executed stock purchase agreements to purchase a total of approximately 2.4 million shares of common stock in Medafor for $4.9 million. The Company's carrying value of this investment included the purchase price and adjustments to record certain of the stock purchase agreements' embedded derivative liabilities at the fair market value on the purchase date, as discussed further below. As Medafor's common stock is not actively traded on any public stock exchange, as Medafor is a non-reporting company for which financial information is not readily available, and as the Company does not exert significant influence over the operations of Medafor, the Company accounted for this investment using the cost method and recorded it as the long-term asset, investment in equity securities, on the Company's Consolidated Balance Sheets.

HemoStase Inventory

Based on Medafor's final termination of the EDA in late September 2010, the Company performed a review of its HemoStase inventory to determine if the carrying value of the inventory had been impaired. At the time of the termination, CryoLife expected to continue to sell HemoStase for a six-month period following the final termination of the EDA. As a result, the Company determined that the carrying value of the HemoStase inventory was impaired. The Company wrote down the value of its HemoStase inventory to $1.7 million and recorded additional cost of products expense of $1.6 million in the third quarter of 2010. The Company believed that the remaining $1.7 million inventory balance was a reasonable estimate of the amount of inventory it would be able to distribute during the six-month period. The amount of this write-down reflected management's estimate based on information available at that time. As of December 31, 2011 and 2010 the Company had zero and $559,000, respectively, in remaining value of HemoStase inventory on its Consolidated Balance Sheets.

The Company was able to sell more HemoStase than it originally estimated and that had previously been written down; therefore, cost of products in the year ended December 31, 2011 was favorably impacted by approximately $330,000.

Investment in Medafor Common Stock

During the year ended December 31, 2010, the Company reviewed available information to determine if factors indicated that a decrease in value of the investment in Medafor common stock had occurred. CryoLife determined that the available information, particularly Medafor's termination of its largest distributor, indicated that the Company should evaluate its investment in Medafor common stock for impairment.

CryoLife used a market based approach for the valuation, including comparing Medafor to a variety of comparable publicly traded companies, recent merger targets, and company groups. CryoLife considered both qualitative and quantitative factors that could affect the valuation of Medafor's common stock. Based on its analysis, the Company believed that its investment in Medafor was impaired and that this impairment was other than temporary. Therefore, in the third quarter of 2010 CryoLife recorded a non-operating expense, other than temporary investment impairment, of $3.6 million to write down its investment in Medafor common stock to $2.6 million. During the year ended December 31, 2011 the Company reviewed available information and determined that no factors were present indicating that the Company should evaluate its investment in Medafor common stock for further impairment. The carrying value of the Company's 2.4 million shares of Medafor common stock was approximately $2.6 million as of both December 31, 2011 and 2010.

The Company will continue to evaluate the carrying value of this investment if changes to the factors discussed above or additional factors become known that indicate the Company should evaluate its investment in Medafor common stock for further impairment. If the Company subsequently determines that the value of its Medafor common stock has been impaired further, or if the Company decides to sell its Medafor common stock for less than the carrying value, the resulting impairment charge or realized loss on sale of the investment in Medafor could be material.

Medafor Derivative

Per the terms of certain of the stock purchase agreements for the Medafor shares discussed above, in the event that CryoLife acquires more than 50% of the diluted outstanding stock of Medafor or merges with Medafor within a three-year period from each respective agreement date (a "Triggering Event"), the last of which will expire on June 7, 2013, CryoLife is required to make a future per share payment (the "Purchase Price Make-Whole Payment") to such sellers. The payment would be equal to the difference between an amount calculated using the average cost of any subsequent shares purchased, as defined in each respective agreement, and the price of the shares purchased pursuant to each applicable stock purchase agreement. The Company was required to account for these Purchase Price Make-Whole Payment provisions as embedded derivatives (collectively the "Medafor Derivative").

CryoLife performed a valuation of the Medafor Derivative using a Black-Scholes model to estimate the future value of the shares on the purchase date. Management's assumptions as to the likelihood of a Triggering Event occurring coupled with the valuation of the Purchase Price Make-Whole Payment were then used to calculate the derivative liability. The fair value of the Medafor Derivative was initially recorded as an increase to the investment in equity securities and a corresponding derivative liability on the Company's Consolidated Balance Sheets. The Medafor Derivative was revalued quarterly, and any change in the value of the derivative subsequent to the purchase date was recorded in the Company's Consolidated Statements of Operations.

During the quarter ended March 31, 2010 the Company's estimate of the likelihood of a Triggering Event decreased significantly, largely due to the Company withdrawing its offer to purchase Medafor. As of December 31, 2011 and 2010 the Company believed that the likelihood of a Triggering Event was remote.

The value of the Medafor Derivative was zero as of both December 31, 2011 and 2010. The change in the value of the derivative recorded on the Consolidated Statements of Operations was zero and a gain of $1.3 million for the year ended December 31, 2011 and 2010, respectively.

Legal Action

Background of Georgia Lawsuit

On April 29, 2009 CryoLife filed a lawsuit against Medafor in the U.S. District Court for the Northern District of Georgia (the "Georgia Court"). The lawsuit arises out of CryoLife's now terminated EDA with Medafor, pursuant to which CryoLife had the right to distribute a product manufactured by Medafor (the "Product") under the name HemoStase. The EDA gave CryoLife exclusive rights to market and distribute the Product in all applications in cardiac and vascular surgery in most of the U.S. and for all cardiac and vascular surgeries and most other types of general surgery applications in much of the rest of the world.

On March 18, 2010 Medafor notified CryoLife of its contention that CryoLife had repudiated the EDA, and that Medafor was thereby entitled to terminate the contract. Medafor asserted that it had made a valid statutory demand, in a February 10, 2010 letter to CryoLife, for "adequate assurances" of CryoLife's future performance under the EDA, and that CryoLife had repudiated the EDA by failing to respond in a timely manner. CryoLife filed a motion for preliminary injunction, on March 29, 2010, asking the Georgia Court to enjoin Medafor from proceeding with its termination of the EDA.

After two hearings, the Georgia Court, on September 20, 2010, issued an order denying CryoLife's request for a preliminary injunction against Medafor. Although the order denied the preliminary injunction, it did not address the merits of the parties' respective positions on the underlying issue of whether Medafor's termination of the EDA was wrongful. The Georgia Court stated that it viewed this question as more appropriately addressed after discovery and at summary judgment. On September 27, 2010 Medafor sent CryoLife a letter stating that Medafor was "fully, finally and immediately terminating" the EDA. CryoLife believes Medafor's termination of the EDA was wrongful.

Overview of CryoLife's Claims

CryoLife's lawsuit, as amended and supplemented, alleges that Medafor unlawfully terminated the EDA. It also asserts claims for breach of the EDA and fraud. CryoLife alleges that contrary to Medafor's representations in the EDA, Medafor had numerous distribution agreements regarding the Product with other distributors in the U.S. and internationally, allowing these distributors to market and distribute the Product in the medical fields and territories given exclusively to the Company. Medafor is alleged to have knowingly and purposefully withheld from CryoLife disclosure that these competing agreements existed at the time the EDA was executed and to have intentionally misrepresented to CryoLife that no similar contracts existed, or that their timely termination was being arranged. The lawsuit also alleges that Medafor failed to take reasonable steps to prevent other distributors from distributing the Product in CryoLife's exclusive field within its exclusive territory, and that Medafor failed to take necessary actions to ensure the value of CryoLife's distributorship. Medafor denies these allegations.

CryoLife alleges that it brought these transgressions to Medafor's attention on numerous occasions and attempted to work with Medafor to secure its compliance with the terms of the parties' agreement, but Medafor refused to follow the terms of the EDA. Medafor's actions are alleged to have deprived CryoLife of significant sales volume and to have impaired and delayed CryoLife's development of relationships with customers in its exclusive field and territory. Medafor denies these allegations.

CryoLife's Potential Damages

CryoLife seeks to recover its damages from Medafor, punitive damages, and reimbursement of its attorneys' fees. In addition, CryoLife is seeking damages related to Medafor's wrongful termination of the EDA, which will be based upon CryoLife's lost profits for the period of time during which the EDA would have continued in effect but for Medafor's wrongful termination of it. The amount of these damages will be determined through discovery in the lawsuit. Also, CryoLife has alleged that Medafor has violated the Lanham Act and the Georgia Uniform Deceptive Trade Practices Act. No trial date has been set, although based on the Georgia Court's schedule, trial is not likely until 2013.

Medafor's Counterclaims

Medafor has asserted counterclaims against CryoLife that allege, among other things, breach of contract, violation of the Georgia Trade Secrets Act, tortious interference with business relationships, libel, violation of the Lanham Act, violation of Georgia's Uniform Deceptive Trade Practices Act, fraud and negligent misrepresentation, and conversion. In addition, Medafor requests that the Georgia Court grant a declaratory judgment that CryoLife repudiated the EDA pursuant to the provisions of the Georgia Uniform Commercial Code.

Summary of Medafor's Potential Damages Claims

Pursuant to its counterclaims, Medafor seeks to recover its alleged damages from CryoLife, including from the alleged repudiation of the EDA, injunctive relief, prejudgment interest, punitive damages, and attorneys' fees and expenses. Until such time as the Georgia Court rules on Medafor's counterclaims and discovery in the lawsuit has finished, assessing the potential or likelihood that Medafor could prevail and the amount of damages that could be awarded to Medafor if it were to prevail will be difficult. CryoLife intends to vigorously prosecute the case, defend itself, and contest the matter.

Discovery is Ongoing

Written discovery began in this case on October 8, 2010. On July 5, 2011 the Georgia Court appointed a Discovery Special Master to manage and supervise discovery pursuant to a Joint Motion for Appointment of Special Master filed by the parties. Pursuant to that appointment, the parties have met repeatedly with the Special Master regarding discovery issues. A few depositions have been taken and depositions will continue through September 15, 2012, the date on which the Georgia Court has ordered that non-expert discovery end. The Georgia Court has scheduled a status conference for parties on April 10, 2012. Expert witness testimony and other pre-trial motions likely will not be concluded until 2013.

Pursuant to the Georgia Court's order, the parties have mediation scheduled for March 22 and March 23, 2012.

Background of Minnesota Lawsuit

On July 14, 2011 following CryoLife's demand to Medafor's Board of Directors that Medafor register its common stock under Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), Medafor filed a lawsuit against CryoLife in the U.S. District Court for the District of Minnesota ("Minnesota Court"). In that lawsuit, Medafor seeks a declaratory judgment that its December 31, 2010 reverse stock split reduced the number of Medafor shareholders to less than 500 and that, therefore, Medafor is not required to comply with the registration requirements of Section 12(g) of the Exchange Act (i.e., not required to register as a public company with the SEC). Medafor's lawsuit also requests that the Minnesota Court award Medafor its costs and expenses in the lawsuit. On August 5, 2011 CryoLife filed a Motion to Dismiss Medafor's claims, arguing that there was no subject matter jurisdiction over the claims because there was no private right cause of action under Section 12(g) of the Securities Exchange Act of 1934 and, therefore, Medafor had no right to the relief it sought vis a vis CryoLife. The Minnesota Court held a hearing on CryoLife's motion to Dismiss on October 11, 2011, and took the matter under advisement. The Minnesota Court ordered the parties to mediation, but cancelled that mediation in light of the upcoming mediation ordered by the Georgia Court. As of February 15, 2012 the Minnesota Court had not ruled on the Motion to Dismiss. At this time, CryoLife is unable to predict the outcome of this matter. The Company believes that the outcome of this Minnesota Court matter will not have a material adverse effect on its financial position, result of operations, or cash flow. But because this matter is ongoing, it is unclear whether this matter will ultimately be resolved in the Company's favor.