10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

OR

¨    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from                          to                         

Commission file number: 1-13165

CRYOLIFE, INC.

(Exact name of registrant as specified in its charter)

Florida	59-2417093
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
1655 Roberts Boulevard, NW, Kennesaw, Georgia	30144
(Address of principal executive offices)	(Zip Code)

(770) 419-3355

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.            Yes x                        No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

          Yes x                        No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

            Yes ¨                    No x                                                                         

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at July 21, 2014
Common Stock, $.01 par value per share	27,925,435 Shares

Part I – FINANCIAL INFORMATION

Item 1. Financial Statements.

CRYOLIFE, INC. AND SUBSIDIARIES

SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(IN THOUSANDS, EXCEPT PER SHARE DATA)

	Three Months Ended June 30,					Six Months Ended June 30,
	2014			2013		2014			2013
	(Unaudited)					(Unaudited)
Revenues:
Products	$	20,350		$	18,195	$	39,805		$	37,991
Preservation services		14,340			15,317		30,616			30,994
Other		—			8		—			71
Total revenues		34,690			33,520		70,421			69,056
Cost of products and preservation services:
Products		4,131			3,721		7,932			7,186
Preservation services		8,175			8,320		17,632			17,115
Total cost of products and preservation services		12,306			12,041		25,564			24,301
Gross margin		22,384			21,479		44,857			44,755
Operating expenses:
General, administrative, and marketing		17,959			16,932		36,234			34,909
Research and development		2,203			1,736		4,705			3,724
Total operating expenses		20,162			18,668		40,939			38,633
Operating income		2,222			2,811		3,918			6,122
Interest expense		(16	)		54		45			104
Interest income		(45	)		—		(48	)		(2	)
Other (income) expense, net		(111	)		22		(210	)		241
Income before income taxes		2,394			2,735		4,131			5,779
Income tax expense		233			950		911			1,802
Net income	$	2,161		$	1,785	$	3,220		$	3,977
Income per common share:
Basic	$	0.08		$	0.06	$	0.12		$	0.14
Diluted	$	0.08		$	0.06	$	0.11		$	0.14
Dividends declared per common share	$	0.0300		$	0.0275	$	0.0575		$	0.0525
Weighted-average common shares outstanding:
Basic		27,502			26,856		27,439			26,858
Diluted		28,317			27,369		28,382			27,456
Net income	$	2,161		$	1,785	$	3,220		$	3,977
Other comprehensive income		41			54		6			21
Comprehensive income	$	2,202		$	1,839	$	3,226		$	3,998

See accompanying Notes to Summary Consolidated Financial Statements.

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CRYOLIFE, INC. AND SUBSIDIARIES

SUMMARY CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

	June 30, 2014			December 31, 2013
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	30,870		$	37,643
Restricted cash and securities		5,973			5,350
Receivables, net		19,571			18,307
Deferred preservation costs		26,514			27,297
Inventories		12,089			9,771
Deferred income taxes		5,730			5,162
Prepaid expenses and other		5,033			2,797
Total current assets		105,780			106,327
Property and equipment, net		12,261			12,171
Goodwill		11,365			11,365
Patents, net		1,898			1,934
Trademarks and other intangibles, net		19,890			19,985
Notes receivable		2,000			2,000
Deferred income taxes		16,236			16,885
Other		4,388			4,016
Total assets	$	173,818		$	174,683
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,877		$	5,514
Accrued compensation		3,699			4,886
Accrued procurement fees		5,053			5,427
Accrued expenses and other		5,106			4,579
Deferred income		398			316
Total current liabilities		19,133			20,722
Contingent consideration liability		1,588			1,884
Other		7,125			7,330
Total liabilities		27,846			29,936
Commitments and contingencies
Shareholders’ equity:
Preferred stock		—			—
Common stock (issued shares of 28,596 in 2014 and 28,244 in 2013)		286			282
Additional paid-in capital		131,011			128,585
Retained earnings		20,351			18,741
Accumulated other comprehensive income		13			7
Treasury stock at cost (shares of 723 in 2014 and 413 in 2013)		(5,689	)		(2,868	)
Total shareholders’ equity		145,972			144,747
Total liabilities and shareholders’ equity	$	173,818		$	174,683

See accompanying Notes to Summary Consolidated Financial Statements.

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CRYOLIFE, INC. AND SUBSIDIARIES

SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

	Six Months Ended June 30,
	2014			2013
		(Unaudited)
Net cash flows from operating activities:
Net income	$	3,220		$	3,977
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		2,937			2,940
Non-cash compensation		1,644			1,558
Deferred income taxes		81			474
Other non-cash adjustments to income		(472	)		791
Changes in operating assets and liabilities:
Receivables		(1,264	)		(2,279	)
Deferred preservation costs and inventories		(1,731	)		(259	)
Prepaid expenses and other assets		(2,608	)		(1,116	)
Accounts payable, accrued expenses, and other liabilities		(978	)		(2,051	)
Net cash flows provided by operating activities		829			4,035
Net cash flows from investing activities:
Capital expenditures		(2,272	)		(2,257	)
Other		(1,522	)		(115	)
Net cash flows used in investing activities		(3,794	)		(2,372	)
Net cash flows from financing activities:
Cash dividends paid		(1,610	)		(1,443	)
Proceeds from exercise of stock options and issuance of common stock		504			242
Repurchases of common stock		(2,007	)		(1,378	)
Other		(672	)		(406	)
Net cash flows used in financing activities		(3,785	)		(2,985	)
Effect of exchange rate changes on cash		(23	)		45
Decrease in cash and cash equivalents		(6,773	)		(1,277	)
Cash and cash equivalents, beginning of period		37,643			13,009
Cash and cash equivalents, end of period	$	30,870		$	11,732

See accompanying Notes to Summary Consolidated Financial Statements.

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CRYOLIFE, INC. AND SUBSIDIARIES

NOTES TO SUMMARY CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Basis of Presentation

The accompanying summary consolidated financial statements include the accounts of CryoLife, Inc. and its subsidiaries (“CryoLife,” the “Company,” “we,” or “us”). All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying Summary Consolidated Balance Sheet as of December 31, 2013 has been derived from audited financial statements. The accompanying unaudited summary consolidated financial statements as of and for the three and six months ended June 30, 2014 and 2013 have been prepared in accordance with (i) accounting principles generally accepted in the U.S. for interim financial information and (ii) the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, such statements do not include all of the information and disclosures required by accounting principles generally accepted in the U.S. for a complete presentation of financial statements. In the opinion of management, all adjustments (including those of a normal, recurring nature) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. These summary consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in CryoLife’s Annual Report on Form 10-K for the year ended December 31, 2013.

2. Financial Instruments

The following is a summary of the Company’s financial instruments measured at fair value (in thousands):

June 30, 2014	Level 1		Level 2		Level 3			Total
Cash equivalents:
Money market funds	$	892	$	—	$	—		$	892
U.S. Treasury debt securities		22,000		—		—			22,000
Restricted securities:
Money market funds		973		—		—			973
Total assets	$	23,865	$	—	$	—		$	23,865
Long-term liabilities:
Contingent consideration	$	—	$	—	$	(1,588	)	$	(1,588	)
Total liabilities	$	—	$	—	$	(1,588	)	$	(1,588	)
December 31, 2013	Level 1		Level 2		Level 3			Total
Cash equivalents:
Money market funds	$	5,349	$	—	$	—		$	5,349
Certificates of deposit		749		—		—			749
Restricted securities:
Money market funds		350		—		—			350
Total assets	$	6,448	$	—	$	—		$	6,448
Long-term liabilities:
Contingent consideration	$	—	$	—	$	(1,884	)	$	(1,884	)
Total liabilities	$	—	$	—	$	(1,884	)	$	(1,884	)

The Company used prices quoted from its investment management companies to determine the Level 1 valuation of its investments in money market funds, U.S. Treasury debt securities, and certificates of deposit. The Company recorded a contingent consideration liability, classified as Level 3, as a result of its acquisition of Hemosphere, Inc. (“Hemosphere”) in May 2012. Refer to Note 5 for further discussion of the Level 3 contingent consideration liability.

5

Changes in fair value of Level 3 liabilities are listed below (in thousands):

	Contingent Consideration
Balance as of December 31, 2013	$	1,884
Gain on remeasurement of contingent consideration		(296	)
Balance as of June 30, 2014	$	1,588

3. Cash Equivalents and Restricted Cash and Securities

The following is a summary of cash equivalents and restricted cash and securities (in thousands):

June 30, 2014	Cost Basis		Unrealized Holding Gains		Estimated Market Value
Cash equivalents:
Money market funds	$	892	$	—	$	892
U.S. Treasury debt securities		22,000		—		22,000
Restricted cash and securities:
Cash		5,000		—		5,000
Money market funds		973		—		973
December 31, 2013	Cost Basis		Unrealized Holding Gains		Estimated Market Value
Cash equivalents:
Money market funds	$	5,349	$	—	$	5,349
Certificates of deposit		749		—		749
Restricted cash and securities:
Cash		5,000		—		5,000
Money market funds		350		—		350

As of June 30, 2014 and December 31, 2013 $973,000 and $350,000, respectively, of the Company’s money market funds were designated as short-term restricted securities due to a contractual commitment to hold the securities as pledged collateral relating primarily to international tax obligations. As of June 30, 2014 and December 31, 2013 $5.0 million of the Company’s cash was designated as short-term restricted cash due to a financial covenant requirement under the Company’s credit agreement with General Electric Capital Corporation (“GE Capital”), as discussed in Note 11. This restriction lapses upon expiration of the credit agreement with GE Capital on October 28, 2014.

There were no gross realized gains or losses on cash equivalents in the three and six months ended June 30, 2014 and 2013. As of June 30, 2014 $973,000 of the Company’s restricted securities had a maturity date of between three months and one year. As of December 31, 2013 $328,000 of the Company’s restricted securities had a maturity date within three months, and $22,000 of the Company’s restricted securities had a maturity date between three months and one year. As of June 30, 2014 and December 31, 2013 $5.0 million of the Company’s restricted cash had no maturity date.

4. ProCol Distribution Agreement

In March 2014 CryoLife acquired the exclusive worldwide distribution rights for ProCol^® Vascular Bioprosthesis (“ProCol”) from Hancock Jaffe Laboratories, Inc. (“Hancock Jaffe”). The agreement between CryoLife and Hancock Jaffe (the “HJ Agreement”) has an initial three-year term and is renewable for two one-year periods at CryoLife’s option. Per the terms of the HJ Agreement, CryoLife has the option to acquire the ProCol product line from Hancock Jaffe beginning in March 2016.

ProCol, which is approved for sale in the U.S., is a biological graft derived from a bovine mesenteric vein that provides vascular access for end-stage renal disease (“ESRD”) hemodialysis patients. It is intended for the creation of a bridge graft for vascular access subsequent to at least one previously failed prosthetic access graft. ProCol is complementary to the Company’s Hemodialysis Reliable Outflow Graft (“HeRO^® Graft”), which also serves patients with ESRD. ProCol provides vascular access for earlier-stage ESRD patients, while HeRO Graft is designed for patients with limited access options and central venous obstruction.

6

In accordance with the terms of the HJ Agreement, CryoLife will make payments to Hancock Jaffe of up to $2.3 million during 2014, with no more than $650,000 payable in any quarter. In exchange for these payments, CryoLife will receive a designated amount of ProCol inventory for resale, including a small amount of existing commercially salable inventory and additional inventory. Additional inventory will be available as it is manufactured and after Hancock Jaffe receives U.S. Food and Drug Administration (“FDA”) approval of the Premarket Approval Supplement associated with its new manufacturing facilities. Subsequent to this initial inventory purchase, CryoLife can purchase additional units from Hancock Jaffe at an agreed upon transfer price.

As of June 30, 2014 the Company had made payments of $1.0 million to Hancock Jaffe, and it began distributing ProCol in the second quarter of 2014.

5. Hemosphere Acquisition

On May 16, 2012 CryoLife acquired Hemosphere, which the Company now operates as a wholly owned subsidiary. Hemosphere is the developer and marketer of the HeRO Graft, a proprietary graft-based solution for ESRD hemodialysis patients with limited access options and central venous obstruction.

As of the Hemosphere acquisition date, CryoLife recorded a contingent consideration liability of $1.8 million in long-term liabilities on its Summary Consolidated Balance Sheet, representing the estimated fair value of the contingent consideration expected to be paid to the former shareholders of Hemosphere upon the achievement of certain revenue-based milestones. The acquisition agreement provides for a maximum of $4.5 million in future consideration payments through December 2015 based on specified sales targets.

The fair value of the contingent consideration liability was based on unobservable inputs, including management’s estimates and assumptions about future revenues, and is, therefore, classified as Level 3 within the fair value hierarchy presented in Note 2. The Company will remeasure this liability at each reporting date and will record changes in the fair value of the contingent consideration liability in other (income) expense, net on the Company’s Summary Consolidated Statement of Operations and Comprehensive Income. Increases or decreases in the fair value of the contingent consideration liability can result from changes in discount periods and rates, as well as changes in the timing and amount of Company revenue estimates.

The Company recorded gains of $198,000 and $296,000 in the three and six months ended June 30, 2014, respectively, and losses of $39,000 and $78,000 in the three and six months ended June 30, 2013, respectively, on the remeasurement of the contingent consideration liability. The gains and losses in the current and prior year periods are due to the effect of the passage of time on the fair value measurements and changes in the Company’s estimates. The balance of the contingent consideration liability was $1.6 million as of June 30, 2014 and $1.9 million as of December 31, 2013.

6. ValveXchange

Preferred Stock Investment

In July 2011 the Company purchased shares of series A preferred stock of ValveXchange, Inc. (“ValveXchange”) for approximately $3.5 million. ValveXchange is a private medical device company that was spun off from Cleveland Clinic to develop a lifetime heart valve replacement technology platform featuring exchangeable bioprosthetic leaflets. As ValveXchange’s stock is not actively traded on any public stock exchange, and as the Company’s investment is in preferred stock, the Company initially accounted for this investment using the cost method. The Company initially recorded its investment as a long-term asset, investment in equity securities, on the Company’s Summary Consolidated Balance Sheets.

During the fourth quarter of 2013 the Company reevaluated its investment in ValveXchange preferred stock for impairment. Based on this analysis, the Company believed that its investment in ValveXchange was fully impaired as of December 31, 2013, and the impairment was other than temporary. Therefore, in the fourth quarter of 2013 the Company recorded an other non-operating expense of $3.2 million to write-down the remaining value of its investment in ValveXchange preferred stock. As of June 30, 2014 and December 31, 2013 the carrying value of the Company’s investment in ValveXchange preferred stock was zero.

Loan Agreement

The Company’s agreement with ValveXchange, as amended, makes available up to $2.0 million to ValveXchange in debt financing through a revolving credit facility (the “Loan”). The Loan includes various affirmative and negative covenants, including financial covenant requirements, and expires on July 30, 2018, unless terminated earlier. Amounts outstanding under the Loan earn interest at an 8% annual rate and are secured by substantially all of the tangible and intangible assets of ValveXchange.

7

The Company incurred loan origination costs, net of fees charged to ValveXchange, of approximately $117,000, which are being expensed on a straight-line basis over the expected life of the loan facility. The Company advanced $2.0 million to ValveXchange under this loan in 2012. The $2.0 million advance is recorded as long-term notes receivable on the Company’s Summary Consolidated Balance Sheets as of June 30, 2014 and December 31, 2013.

During 2013 CryoLife repeatedly notified ValveXchange that ValveXchange was in default of certain loan covenants, due to various factors including ValveXchange’s failure to obtain CryoLife’s consent for certain convertible note financings that ValveXchange previously obtained. In April 2014, in conjunction with ValveXchange’s series B preferred stock fundraising (the “Series B”), CryoLife and ValveXchange entered into an amendment to the Loan agreement pursuant to which CryoLife waived ValveXchange’s previous Loan defaults in exchange for an agreement that 10% of any amounts raised in the Series B in excess of $1.25 million would be paid to CryoLife. As of June 30, 2014 ValveXchange had raised $1.7 million under the Series B.

Management believes that ValveXchange will continue to need additional funds to support its short-term and long-term operations, as it is currently not selling any product. Specifically, ValveXchange will need to expand its clinical trial in order to obtain approval to distribute its product in Europe. ValveXchange does not currently have the funds necessary to fund this expansion, and without this expansion, ValveXchange is not expected to be able to generate revenues. However, even if ValveXchange is able to secure additional funds, if those funds are insufficient and ValveXchange cannot meet its business obligations, CryoLife may need to foreclose on the related collateral to secure repayment of the Loan. Although CryoLife currently believes that the value of the collateral is adequate to repay the Loan, there is no guarantee that the security for the notes will be sufficient to repay the Loan. If ValveXchange is forced to cease operations or seek reorganization in bankruptcy, the Company may be unable to secure payment through seizure of the collateral.

Option Agreement

Concurrently with the Loan agreement described above, CryoLife entered into an option agreement with ValveXchange pursuant to which CryoLife obtained (i) the right of first refusal to acquire ValveXchange during a period that extends through the completion of initial commercialization milestones and (ii) the right to negotiate with ValveXchange for European distribution rights. As part of the Series B, CryoLife agreed to forego its rights to negotiate with ValveXchange for European distribution rights. The Company’s rights may be further modified or reduced in connection with a future round of financing.

7. Medafor Matters

Investment in Medafor Common Stock

In 2009 and 2010 CryoLife purchased shares of common stock in Medafor, Inc. (“Medafor”). The Company initially recorded its investment using the cost method as a long-term asset, investment in equity securities, on the Company’s Summary Consolidated Balance Sheets.

On October 1, 2013 C.R. Bard, Inc. (“Bard”) completed its previously announced acquisition of the outstanding shares of Medafor common stock. The Company received an initial payment of approximately $15.4 million for its 2.4 million shares of Medafor common stock and recorded an initial gain of approximately $12.7 million on the sale in the fourth quarter of 2013. The Company could receive additional payments totaling up to $8.4 million upon the release of funds held in escrow and the satisfaction of certain contingent milestones, measurable through June 2015. The first of these additional payments, which the Company believes could be up to approximately $525,000, if released, would be received in late 2014, although this amount is subject to possible offsets. These payments will be recorded as an additional gain if, and when, received by the Company.

Legal Action

CryoLife received a letter from Medafor in September 2012 stating that PerClot^®, when introduced in the U.S., will, when used in accordance with the method published in CryoLife’s literature and with the instructions for use, infringe Medafor’s (now Bard’s) U.S. patent. CryoLife does not believe that its sales of PerClot will infringe Bard’s patent.

In April 2014 the Company filed a declaratory judgment lawsuit against Bard and certain of its subsidiaries, including Medafor, in the U.S. District Court for the District of Delaware (the “Court”). CryoLife requested that the Court confirm that CryoLife’s anticipated sales of PerClot, when it is approved by the FDA, and certain of its derivative products, such as PerClot Topical, which has been cleared by the FDA, will not infringe upon the patent held by Bard and / or that the Bard patent is invalid. CryoLife and Bard have filed various motions with respect to this matter. The Court has not ruled on any of these motions and discovery has not commenced. See also Part II, Item 1, Legal Proceedings of this Form 10-Q.

8

8. Deferred Preservation Costs and Inventories

Deferred preservation costs at June 30, 2014 and December 31, 2013 are comprised of the following (in thousands):

	June 30, 2014		December 31, 2013
Cardiac tissues	$	11,940	$	12,239
Vascular tissues		14,574		15,058
Total deferred preservation costs	$	26,514	$	27,297

Inventories at June 30, 2014 and December 31, 2013 are comprised of the following (in thousands):

	June 30, 2014		December 31, 2013
Raw materials and supplies	$	7,041	$	5,706
Work-in-process		982		767
Finished goods		4,066		3,298
Total inventories	$	12,089	$	9,771

9. Goodwill and Other Intangible Assets

Indefinite Lived Intangible Assets

As of June 30, 2014 and December 31, 2013 the carrying values of the Company’s indefinite lived intangible assets are as follows (in thousands):

	June 30, 2014		December 31, 2013
Goodwill	$	11,365	$	11,365
Procurement contracts and agreements		2,013		2,013
Trademarks		847		841

Based on its experience with similar agreements, the Company believes that its acquired procurement contracts and agreements have an indefinite useful life, as the Company expects to continue to renew these contracts for the foreseeable future. The Company believes that its trademarks have an indefinite useful life as the Company currently anticipates that these trademarks will contribute to cash flows of the Company indefinitely.

As of June 30, 2014 and December 31, 2013 the Company’s entire goodwill balance is related to its Medical Devices segment, and there has been no change from the balance recorded as of December 31, 2013.

Definite Lived Intangible Assets

As of June 30, 2014 and December 31, 2013 the gross carrying values, accumulated amortization, and approximate amortization period of the Company’s definite lived intangible assets are as follows (in thousands):

June 30, 2014	Gross Carrying Value		Accumulated Amortization		Amortization Period
Acquired technology	$	14,020	$	3,246		11 – 16 Years
Patents		4,340		2,442		17 Years
Distribution and manufacturing rights and know-how		4,059		845		15 Years
Customer lists and relationships		3,370		692		13 – 17 Years
Non-compete agreement		381		286		10 Years
Other		474		205		1 – 5 Years

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December 31, 2013	Gross Carrying Value		Accumulated Amortization		Amortization Period
Acquired technology	$	14,020	$	2,677		11 – 16 Years
Patents		4,348		2,414		17 Years
Distribution and manufacturing rights and know-how		3,559		714		15 Years
Customer lists and relationships		3,370		572		13 – 17 Years
Non-compete agreement		381		267		10 Years
Other		202		171		1 – 3 Years

Amortization Expense

The following is a summary of amortization expense as recorded in general, administrative, and marketing expenses on the Company’s Summary Consolidated Statement of Operations and Comprehensive Income (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Amortization expense	$	503	$	508	$	999	$	1,022

As of June 30, 2014 scheduled amortization of intangible assets for the next five years is as follows (in thousands):

	Remainder of 2014		2015		2016		2017		2018		2019
Amortization expense	$	1,008	$	1,986	$	1,978	$	1,924	$	1,916	$	1,909

10. Income Taxes

Income Tax Expense

The Company’s effective income tax rate was approximately 10% and 22% for the three and six months ended June 30, 2014, respectively, as compared to 35% and 31% for the three and six months ended June 30, 2013, respectively.

The Company’s income tax rate for the three and six months ended June 30, 2014 was favorably affected by the reduction of uncertain tax positions and, to a lesser extent, was unfavorably affected by the 2014 research and development tax credit, which has not yet been enacted for the 2014 tax year. The Company’s income tax rate in 2013 was favorably affected by the full year 2012 research and development tax credit, which was enacted in January 2013 and, therefore, reduced the Company’s tax expense during the first quarter of 2013.

In June 2014 the Internal Revenue Service completed a limited scope examination of certain of the Company’s federal income tax returns. At the resolution of this examination, the Company reevaluated its liabilities for uncertain tax positions, primarily related to its research and development tax credits and credit carryforwards, and, based on revised estimates and the settlement of the examination, reversed $748,000 in uncertain tax liabilities and tax expense.

Deferred Income Taxes

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and tax return purposes. The Company generates deferred tax assets primarily as a result of book write-downs, reserves, or impairments which are not immediately deductible for tax return purposes. The Company acquired significant deferred tax assets, primarily net operating loss carryforwards, from its acquisitions of Hemosphere and Cardiogenesis Corporation in the second quarters of 2012 and 2011, respectively. The Company currently estimates that a portion of its state net operating loss carryforwards will not be recoverable and has, therefore, recorded a valuation allowance against these state net operating loss carryforwards.

As of June 30, 2014 the Company had a total of $1.5 million in valuation allowances against deferred tax assets, related to state net operating loss carryforwards, and a net deferred tax asset of $22.0 million. As of December 31, 2013 the Company had a total of $1.5 million in valuation allowances against deferred tax assets and a net deferred tax asset of $22.0 million.

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11. Debt

GE Credit Agreement

CryoLife’s amended and restated credit agreement with GE Capital (the “GE Credit Agreement”) provides revolving credit for working capital, acquisitions, and other corporate purposes. The GE Credit Agreement has a borrowing capacity of $20.0 million (including a letter of credit subfacility) and expires on October 28, 2014. The commitment may be reduced or increased from time to time pursuant to the terms of the GE Credit Agreement.

The GE Credit Agreement places limitations on the amount that the Company may borrow and includes various affirmative and negative covenants, including financial covenants such as a requirement that CryoLife (i) not exceed a defined leverage ratio, (ii) maintain a minimum earnings subject to defined adjustments as of specified dates, and (iii) not make or commit capital expenditures in excess of a defined limitation. The agreement also limits the payment of cash dividends, up to a maximum of
$3.5 million per year, subject to satisfaction of specified conditions. As required under the terms of the GE Credit Agreement, the Company is maintaining cash and cash equivalents of at least $5.0 million in accounts in which GE Capital has a first priority perfected lien. These amounts are recorded as restricted cash as of June 30, 2014 and December 31, 2013 on the Company’s Summary Consolidated Balance Sheets, as they are restricted for the term of the GE Credit Agreement. Also, the GE Credit Agreement requires that, after giving effect to a stock repurchase, the Company maintain liquidity, as defined within the agreement, of at least $20.0 million. The GE Credit Agreement includes customary conditions on incurring new indebtedness. Commitment fees are paid based on the unused portion of the facility. As of June 30, 2014 the Company was in compliance with the covenants of the GE Credit Agreement.

Amounts borrowed under the GE Credit Agreement are secured by substantially all of the tangible and intangible assets of CryoLife and its subsidiaries and bear interest as determined by GE Capital at either LIBOR, with a minimum rate of 4.25%, or GE Capital’s base rate, with a minimum rate of 3.25%, plus the applicable margin. As of June 30, 2014 and December 31, 2013 the outstanding balance of the GE Credit Agreement was zero, the aggregate interest rate was 6.50%, and the remaining availability was $20.0 million.

In April 2014 the Company and GE Capital amended the GE Credit Agreement to increase to $14.0 million the maximum amount that the Company may spend, from the date of the amendment through the end of the term of the GE Credit Agreement, to purchase or redeem common stock of the Company pursuant to a stock repurchase program. The $14.0 million maximum was sufficient to cover the remaining amount under the stock repurchase program approved by the Company’s Board of Directors in February 2013, of approximately $13.5 million at the time of the amendment, as discussed further in Note 13.

Interest Expense

Interest expense was a favorable $16,000 for the three months ended June 30, 2014 and $45,000 for the six months ended June 30, 2014. Interest expense was $54,000 and $104,000 for the three and six months ended June 30, 2013, respectively. Interest expense in all periods included interest on debt and uncertain tax positions. Interest expense for the three and six months ended June 30, 2014 was favorably affected by the reversal of interest expense related to a reduction in liability for uncertain tax positions.

12. Commitments and Contingencies

Liability Claims

The Company accrues its estimate of unreported product and tissue processing liability claims as a component of other long-term liabilities and records the related recoverable insurance amount as a component of other long-term assets, as appropriate. At June 30, 2014 and December 31, 2013 the Company’s estimated unreported loss liability was $1.5 million. The related recoverable insurance amounts were $610,000 and $580,000 as of June 30, 2014 and December 31, 2013, respectively. Further analysis indicated that the liability as of June 30, 2014 could have been estimated to be as high as $2.7 million, after including a reasonable margin for statistical fluctuations calculated based on actuarial simulation techniques.

Employment Agreements

The Company’s employment agreement with its current Chief Executive Officer (“CEO”) Mr. Steven G. Anderson, as amended, confers benefits, which become payable upon the occurrence of certain events, including the voluntary retirement of Mr. Anderson or termination of his employment in conjunction with certain change in control events. As of both June 30, 2014 and December 31, 2013 the Company had $2.1 million in accrued expenses and other current liabilities on the Summary Consolidated

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Balance Sheets representing benefits payable upon Mr. Anderson’s voluntary retirement, for which he is currently eligible. Mr. Anderson’s employment agreement took effect on January 1, 2013 and terminates on December 31, 2016.

In July 2014 the Company’s Board of Directors appointed Mr. J. Patrick Mackin as President and CEO effective September 2, 2014. Mr. Anderson will continue to serve CryoLife as its President and CEO until Mr. Mackin’s employment begins, and then continue as its Executive Chairman. The Company’s Board of Directors and Mr. Anderson are renegotiating his employment agreement to make appropriate adjustments in consideration of Mr. Mackin’s appointment and anticipated changes in Mr. Anderson’s job responsibilities.

As a result of his appointment, the Company entered into an employment agreement in July 2014 with Mr. Mackin, which will become effective on September 2, 2014 and has an initial three year term. Beginning on the second anniversary of the effective date, and subject to earlier termination pursuant to the agreement, the employment term will, on a daily basis, automatically extend by one day. Mr. Mackin’s employment agreement confers certain benefits which become payable upon the effective date, including the payment of a $200,000 one-time signing bonus, as well as the issuance of grants of 400,000 stock options and 250,000 performance stock awards. The agreement also contains provision for a severance payment, which would become payable upon the occurrence of certain employment termination events, including termination by the Company without cause.

13. Shareholders’ Equity

Common Stock Repurchase

In February 2013 the Company’s Board of Directors authorized the purchase of up to $15.0 million of its common stock through October 31, 2014.

In the six months ended June 30, 2014 the Company purchased approximately 227,000 shares for an aggregate purchase price of $2.0 million. As of June 30, 2014 the Company had $11.5 million in remaining authorizations under the repurchase program. For the year ended December 31, 2013 the Company purchased approximately 253,000 shares for an aggregate purchase price of $1.5 million. These shares were recorded, at cost, as part of treasury stock on the Company’s Summary Consolidated Balance Sheets.

Cash Dividends

The Company initiated a quarterly cash dividend of $0.025 per share of common stock outstanding in the third quarter of 2012, and increased this dividend to $0.0275 per share of common stock outstanding in the second quarter of 2013. In May 2014 the Board of Directors approved an increase in the quarterly cash dividend to $0.03 per share of common stock outstanding for the second quarter 2014. The Company paid dividend payments of $838,000 and $1.6 million from cash on hand for the three and six months ended June 30, 2014, respectively, and $756,000 and $1.4 million for the three and six months ended June 30, 2013, respectively. The dividend payments were recorded as a reduction to retained earnings on the Company’s Summary Consolidated Balance Sheets.

14. Stock Compensation

Overview

The Company has stock option and stock incentive plans for employees and non-employee Directors that provide for grants of restricted stock awards (“RSA”s), restricted stock units (“RSU”s), performance stock units (“PSU”s), and options to purchase shares of Company common stock at exercise prices generally equal to the fair values of such stock at the dates of grant. The Company also maintains a shareholder-approved Employee Stock Purchase Plan (the “ESPP”) for the benefit of its employees. The ESPP allows eligible employees the right to purchase common stock on a regular basis at the lower of 85% of the market price at the beginning or end of each offering period.

Equity Grants

During the six months ended June 30, 2014 the Compensation Committee of the Company’s Board of Directors authorized awards from approved stock incentive plans of RSUs to certain employees and RSAs and PSUs to certain Company officers, which, assuming that performance under the PSUs were to be achieved at target levels, together totaled 326,000 shares and had an aggregate grant date market value of $3.3 million. The PSUs granted in 2014 represent the right to receive from 50% to 150% of the target number of shares of common stock. The performance component of PSU awards granted in 2014 is based on attaining

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specified levels of adjusted EBITDA, as defined in the PSU grant documents, for the 2014 calendar year. The Company currently believes that achievement of the performance component is probable, and it will reevaluate this likelihood on a quarterly basis.

During the six months ended June 30, 2013 the Compensation Committee of the Company’s Board of Directors authorized awards from approved stock incentive plans of RSAs to non-employee directors, RSUs to certain employees, and RSAs and PSUs to certain Company officers which, assuming that performance under the PSUs were to be achieved at target levels, together totaled 395,000 shares of common stock and had an aggregate grant date market value of $2.4 million. Shares issued under the 2013 PSU awards were earned at approximately 115% of the target number of shares.

The Compensation Committee of the Company’s Board of Directors authorized, from approved stock incentive plans, grants of stock options to purchase a total of 162,000 shares to certain Company officers during both the six months ended June 30, 2014 and 2013. The exercise prices of the options were equal to the stock prices on their respective grant dates.

Employees purchased common stock totaling 59,000 and 49,000 shares in the six months ended June 30, 2014 and 2013, respectively, through the Company’s ESPP.

Stock Compensation Expense

The following weighted-average assumptions were used to determine the fair value of options:

	Three Months Ended June 30, 2014			Six Months Ended June 30, 2014
	Stock Options	ESPP Options		Stock Options		ESPP Options
Expected life of options	N/A		.50 Years		4.25 Years		.50 Years
Expected stock price volatility	N/A		0.34		0.55		0.34
Dividends	N/A		0.99%		1.10%		0.99%
Risk-free interest rate	N/A		0.10%		1.19%		0.10%

	Three Months Ended June 30, 2013			Six Months Ended June 30, 2013
	Stock Options	ESPP Options		Stock Options		ESPP Options
Expected life of options	N/A		.50 Years		4.25 Years		.50 Years
Expected stock price volatility	N/A		0.43		0.60		0.43
Dividends	N/A		1.61%		1.91%		1.61%
Risk-free interest rate	N/A		0.16%		0.70%		0.16%

The following table summarizes total stock compensation expenses prior to the capitalization of amounts into deferred preservation and inventory costs (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
RSA, RSU, and PSU expense	$	701	$	628	$	1,413	$	1,263
Stock option and ESPP option expense		164		196		371		407
Total stock compensation expense	$	865	$	824	$	1,784	$	1,670

Included in the total stock compensation expense, as applicable in each period, were expenses related to RSAs, RSUs, PSUs, and stock options issued in each respective year, as well as those issued in prior periods that continue to vest during the period, and compensation related to the Company’s ESPP. These amounts were recorded as stock compensation expense and were subject to the Company’s normal allocation of expenses to deferred preservation costs and inventory costs. The Company capitalized $66,000 and $48,000 in the three months ended June 30, 2014 and 2013, respectively, and $140,000 and $112,000 in the six months ended June 30, 2014 and 2013, respectively, of the stock compensation expense into its deferred preservation costs and inventory costs.

As of June 30, 2014 the Company had total unrecognized compensation costs of $4.5 million related to RSAs, RSUs, and PSUs and $900,000 related to unvested stock options, before considering the effect of expected forfeitures. As of June 30, 2014 this expense is expected to be recognized over a weighted-average period of 2.00 years for stock options, 1.79 years for RSUs, 1.68 years for RSAs, and 1.23 years for PSUs. 

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15. Income Per Common Share

The following table sets forth the computation of basic and diluted income per common share (in thousands, except per share data):

	Three Months Ended June 30,						Six Months Ended June 30,
Basic income per common share	2014			2013			2014			2013
Net income	$	2,161		$	1,785		$	3,220		$	3,977
Net income allocated to participating securities		(38	)		(40	)		(60	)		(91	)
Net income allocated to common shareholders	$	2,123		$	1,745		$	3,160		$	3,886
Basic weighted-average common shares outstanding		27,502			26,856			27,439			26,858
Basic income per common share	$	0.08		$	0.06		$	0.12		$	0.14
		Three Months Ended June 30,						Six Months Ended June 30,
Diluted income per common share	2014			2013			2014			2013
Net income	$	2,161		$	1,785		$	3,220		$	3,977
Net income allocated to participating securities		(37	)		(40	)		(59	)		(90	)
Net income allocated to common shareholders	$	2,124		$	1,745		$	3,161		$	3,887
Basic weighted-average common shares outstanding		27,502			26,856			27,439			26,858
Effect of dilutive stock options and awardsa		815			513			943			598
Diluted weighted-average common shares outstanding		28,317			27,369			28,382			27,456
Diluted income per common share	$	0.08		$	0.06		$	0.11		$	0.14

^a     The Company excluded stock options from the calculation of diluted weighted-average common shares outstanding if the per share value, including the sum of (i) the exercise price of the options and (ii) the amount of the compensation cost attributed to future services and not yet recognized, was greater than the average market price of the shares because the inclusion of these stock options would be antidilutive to income per common share. Accordingly, stock options to purchase a weighted-average 485,000 shares and 182,000 shares for the three and six months ended June 30, 2014, respectively, and 1.3 million shares and 1.2 million shares for the three and six months ended June 30, 2013, respectively, were excluded from the calculation of diluted weighted-average common shares outstanding.

16. Segment Information

The Company has two reportable segments organized according to its products and services: Medical Devices and Preservation Services. The Medical Devices segment includes external revenues from product sales of BioGlue^® Surgical Adhesive (“BioGlue”), BioFoam^® Surgical Matrix (“BioFoam”), PerClot, revascularization technologies, HeRO Graft, and other products. The Preservation Services segment includes external services revenues from the preservation of cardiac and vascular tissues. There are no intersegment revenues.

The primary measure of segment performance, as viewed by the Company’s management, is segment gross margin, or net external revenues less cost of products and preservation services. The Company does not segregate assets by segment; therefore, asset information is excluded from the segment disclosures below.

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The following table summarizes revenues, cost of products and services, and gross margins for the Company’s operating segments (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Revenues:
Medical devices	$	20,350	$	18,195	$	39,805	$	37,991
Preservation services		14,340		15,317		30,616		30,994
Othera		—		8		—		71
Total revenues		34,690		33,520		70,421		69,056
Cost of products and preservation services:
Medical devices		4,131		3,721		7,932		7,186
Preservation services		8,175		8,320		17,632		17,115
Total cost of products and preservation services		12,306		12,041		25,564		24,301
Gross margin:
Medical devices		16,219		14,474		31,873		30,805
Preservation services		6,165		6,997		12,984		13,879
Othera		—		8		—		71
Total gross margin	$	22,384	$	21,479	$	44,857	$	44,755

The following table summarizes net revenues by product and service (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Products:
BioGlue and BioFoam	$	15,389	$	13,542	$	30,629	$	29,006
PerClot		1,143		940		2,059		1,804
Revascularization technologies		2,084		2,293		3,768		4,484
HeRO Graft		1,705		1,420		3,320		2,697
Other products		29		—		29		—
Total products		20,350		18,195		39,805		37,991
Preservation services:
Cardiac tissue		6,454		6,818		13,644		13,463
Vascular tissue		7,886		8,499		16,972		17,531
Total preservation services		14,340		15,317		30,616		30,994
Othera		—		8		—		71
Total revenues	$	34,690	$	33,520	$	70,421	$	69,056

^a  The “Other” designation includes grant revenue.

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PART I - FINANCIAL INFORMATION

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

CryoLife, Inc. (“CryoLife,” the “Company,” “we,” or “us”) develops, manufactures, and commercializes medical devices for cardiac and vascular applications and preserves and distributes human tissues for transplantation. CryoLife’s surgical sealants and hemostats include BioGlue^® Surgical Adhesive (“BioGlue”), BioFoam^® Surgical Matrix (“BioFoam”), and PerClot^®, a powdered hemostat, which the Company distributes internationally for Starch Medical, Inc. (“SMI”). CryoLife’s subsidiary, Cardiogenesis Corporation (“Cardiogenesis”), specializes in the treatment of coronary artery disease using a laser console system and single-use, fiber-optic handpieces to treat patients with severe angina. CryoLife and its subsidiary, Hemosphere, Inc. (“Hemosphere”), market the Hemodialysis Reliable Outflow Graft (“HeRO^® Graft”), which is a solution for end-stage renal disease (“ESRD”) in certain hemodialysis patients. The cardiac and vascular human tissues distributed by CryoLife include the CryoValve^® SG pulmonary heart valve (“CryoValve SGPV”) and the CryoPatch^® SG pulmonary cardiac patch tissue (“CryoPatch SG”), both of which are processed using CryoLife’s proprietary SynerGraft^® technology.

During the quarter ended June 30, 2014 CryoLife reported record second quarter revenues of $34.7 million, a 3% increase over the quarter ended June 30, 2013. This increase was primarily due to an increase in BioGlue revenues, partially offset by a decrease in cardiac and vascular preservation services revenues. CryoLife’s new product portfolio performed well during the quarter, as CryoLife reported the highest quarterly revenues for its PerClot and HeRO Graft products since it began distribution of those product lines.

See the “Results of Operations” section below for additional analysis of the three and six months ended June 30, 2014.

Recent Events

Appointment of J. Patrick Mackin as President and CEO

In July 2014 the Company’s Board of Directors appointed Mr. J. Patrick Mackin as President and Chief Executive Officer (“CEO”) effective September 2, 2014. Mr. Mackin is expected to be appointed to the Company’s Board of Directors after his employment begins. Mr. Steven G. Anderson will continue to serve CryoLife as its President and CEO until Mr. Mackin’s employment begins and then continue as its Executive Chairman. Mr. Mackin joins CryoLife from Medtronic, Inc. (“Medtronic”), where he most recently served as President of Cardiac Rhythm Disease Management, Medtronic’s largest operating division. Mr. Mackin is a highly respected professional with more than 20 years of medical device industry experience.

Regulatory Activity

In January 2013 CryoLife received a warning letter (“Warning Letter”) from the U.S. Food and Drug Administration (“FDA”). The Warning Letter followed a Form 483, Notice of Inspectional Observations, from the FDA (“2012 CryoLife Form 483”), related to a routine quality system inspection of the Company’s facilities by the FDA in September and October 2012.

In February and March 2014 the FDA re-inspected the Company to review the Company’s actions and responses to the Warning Letter and to conduct a quality system inspection. Following this re-inspection, on March 20, 2014 CryoLife received a Form 483, Notice of Inspectional Observations, from the FDA (“2014 CryoLife Form 483”). The 2014 CryoLife Form 483 included observations concerning design and process validations, environmental monitoring, product controls and handling, corrective and preventive actions, and employee training.

The Company responded to the 2014 CryoLife Form 483 on April 10, 2014 and provided updates on May 30, 2014 and July 15, 2014, and communications with the FDA related to these observations are ongoing. As part of the Company’s response to the 2014 CryoLife Form 483, the Company voluntarily restricted the distribution of certain cardiac and vascular tissues during the second quarter of 2014 while it performed a review of its internal training programs. The Company gradually resumed shipments of tissues during the second quarter of 2014, in accordance with its procedures, as it completed its training program review. Preservation services revenues were negatively impacted during the first two months of the second quarter as a result of reduced tissue availability during this review period. See the “Results of Operations” section below for additional discussion of preservation services revenues for the three and six months ended June 30, 2014. The Company also made changes to its procedures and incurred additional costs during the second quarter of 2014 to address the FDA’s observations. These efforts and additional costs are ongoing and are expected to continue through the end of 2014.

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The Company believes that the changes it has implemented, and will implement, will adequately address the FDA’s observations; however, it is possible that the Company may not be able to do so in a manner satisfactory to the FDA, and the FDA could issue a warning letter or take other enforcement or regulatory actions, including requiring a recall or manufacturing hold. In addition to the efforts discussed above, it is possible that actions that the FDA may take, or that the Company may be required to take, in response to the 2014 CryoLife Form 483 could materially, adversely affect the Company’s revenues, financial condition, profitability, and / or cash flows in future periods.

Regulatory Status of the CryoValve SGPV

On February 20, 2003 the Company received a letter from the FDA stating that a 510(k) premarket notification should be filed for the Company’s decellularized CryoValve SGPV. On November 3, 2003 the Company filed a 510(k) premarket notification, which was cleared by the FDA on February 7, 2008. At the FDA’s request, CryoLife committed to conducting a post-clearance study to collect long-term clinical data for the CryoValve SGPV. The follow-up study will include a minimum of 800 patient years. The Company anticipates submitting the favorable results of this study to the FDA by December 31, 2014.

On April 4, 2014 the FDA provided notice in the Federal Register that it intended to hold an advisory panel meeting to consider reclassification of more than minimally manipulated (“MMM”) allograft heart valves, which includes CryoLife’s CryoValve SGPV. MMM allograft heart valves are currently an unclassified medical device with special conditions. The FDA is proposing that MMM allograft heart valves be classified as a class III medical device. The FDA subsequently postponed the advisory panel meeting but has indicated that the meeting will be rescheduled for later in 2014. If the FDA should reclassify CryoLife’s CryoValve SGPV as a class III medical device, the Company will be required to file for and obtain a Premarket Approval (“PMA”) within thirty months following the date such reclassification rule is published in order to continue providing these tissues to customers. The costs associated with obtaining such a PMA and the potential impact upon our tissue revenues if there were delays in obtaining the PMA or if the Company were unsuccessful in obtaining the PMA could materially, adversely affect the Company’s revenues, financial condition, profitability, and / or cash flows in future periods.

Critical Accounting Policies

A summary of the Company’s significant accounting policies is included in Note 1 of the “Notes to Consolidated Financial Statements,” contained in the Company’s Form 10-K for the year ended December 31, 2013. Management believes that the consistent application of these policies enables the Company to provide users of the financial statements with useful and reliable information about the Company’s operating results and financial condition. The summary consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S., which require the Company to make estimates and assumptions. The Company did not experience any significant changes during the quarter ended June 30, 2014 in any of its Critical Accounting Policies from those contained in the Company’s Form 10-K for the year ended December 31, 2013.

New Accounting Pronouncements

There are no new accounting pronouncements relevant to the Company that management anticipates implementing during the year ending December 31, 2014.

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Results of Operations

(Tables in thousands)

Revenues

	Revenues for the Three Months Ended June 30,				Revenues as a Percentage of Total Revenues for the Three Months Ended June 30,
	2014		2013		2014		2013
Products:
BioGlue and BioFoam	$	15,389	$	13,542		45%		40%
PerClot		1,143		940		3%		3%
Revascularization technologies		2,084		2,293		6%		7%
HeRO Graft		1,705		1,420		5%		4%
Other products		29		—		—%		—%
Total products		20,350		18,195		59%		54%
Preservation services:
Cardiac tissue		6,454		6,818		18%		20%
Vascular tissue		7,886		8,499		23%		26%
Total preservation services		14,340		15,317		41%		46%
Other		—		8		—%		—%
Total	$	34,690	$	33,520		100%		100%
	Revenues for the Six Months Ended June 30,				Revenues as a Percentage of Total Revenues for the Six Months Ended June 30,
	2014		2013		2014		2013
Products:
BioGlue and BioFoam	$	30,629	$	29,006		44%		42%
PerClot		2,059		1,804		3%		3%
Revascularization technologies		3,768		4,484		5%		6%
HeRO Graft		3,320		2,697		5%		4%
Other products		29		—		—%		—%
Total products		39,805		37,991		57%		55%
Preservation services:
Cardiac tissue		13,644		13,463		19%		20%
Vascular tissue		16,972		17,531		24%		25%
Total preservation services		30,616		30,994		43%		45%
Other		—		71		—%		—%
Total	$	70,421	$	69,056		100%		100%

Revenues increased 3% and 2% for the three and six months ended June 30, 2014, respectively, as compared to the three and six months ended June 30, 2013, respectively. A detailed discussion of the changes in product revenues and preservation services revenues for the three and six months ended June 30, 2014 is presented below.

Products

Revenues from products increased 12% for the three months ended June 30, 2014, as compared to the three months ended June 30, 2013. Revenues from products increased 5% for the six months ended June 30, 2014, as compared to the six months ended June 30, 2013. These increases were primarily due to an increase in BioGlue revenues. A detailed discussion of the

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changes in product revenues for BioGlue and BioFoam, PerClot, revascularization technologies, and HeRO Graft is presented below.

The Company’s sales of products through its direct sales force to U.K. hospitals are denominated in British Pounds, and its sales to German, Austrian, and Irish hospitals and certain distributors are denominated in Euros and are, therefore, subject to changes in foreign exchange rates. If the exchange rates between the U.S. Dollar and the British Pound and/or Euro decline materially in the future, this would have a material, adverse effect on the Company’s revenues denominated in these currencies.

BioGlue and BioFoam

Revenues from the sale of surgical sealants, consisting of BioGlue and BioFoam, increased 14% for the three months ended June 30, 2014, as compared to the three months ended June 30, 2013. This increase was primarily due to an 11% increase in the volume of milliliters sold, which increased revenues by 11%, an increase in average sales prices, which increased revenues by 2%, and the favorable effect of foreign currency exchange, which increased revenues by 1%.

Revenues from the sale of surgical sealants increased 6% for the six months ended June 30, 2014, as compared to the six months ended June 30, 2013. This increase was primarily due to a 3% increase in the volume of milliliters sold, which increased revenues by 3%, an increase in average sales prices, which increased revenues by 2%, and the favorable effect of foreign currency exchange, which increased revenues by 1%.

The increase in sales volume of surgical sealants for the three months ended June 30, 2014 was due to an increase in shipments of BioGlue in both domestic and international markets, primarily Japan, the U.S., and Western Europe. The increase in sales volume of surgical sealants for the six months ended June 30, 2014 was due to an increase in shipments of BioGlue in both domestic and international markets, primarily the U.S. and Western Europe, partially offset by decreases in Japan and Latin America. The decrease in year-to-date BioGlue revenues in Japan and Latin America was due to variability in ordering patterns, which affected revenues in the first quarter of 2014.

The increase in average sales prices for the three and six months ended June 30, 2014 was primarily due to list price increases in domestic markets and due to the routine negotiation of pricing contracts with certain customers.

Revenues from shipments to Japan were $955,000 and $491,000 for the three months ended June 30, 2014 and 2013, respectively, and $2.5 million and $2.9 million for the six months ended June 30, 2014 and 2013, respectively. Management currently believes that BioGlue sales will be positively affected by increased shipments to Japan for the full year 2014, as compared to 2013, although this increase is expected to be less than the increase experienced in 2013 over 2012. Management is currently seeking expanded indications for BioGlue in Japan and regulatory approval for BioGlue in China and, if successful, believes this will provide additional international growth opportunities for BioGlue in future years.

Domestic revenues accounted for 56% of total BioGlue revenues for both the three and six months ended June 30, 2014, and 59% and 55% of total BioGlue revenues for the three and six months ended June 30, 2013, respectively. BioFoam sales accounted for less than 1% of surgical sealant sales for each of the three and six months ended June 30, 2014 and 2013. BioFoam is currently approved for sale in certain international markets.

PerClot

Revenues from the sale of PerClot increased 22% for the three months ended June 30, 2014, as compared to the three months ended June 30, 2013. This increase was primarily due to a 32% increase in the volume of grams sold, which increased revenues by 25%, and the favorable effect of foreign currency exchange, which increased revenues 3%, partially offset by a decrease in average selling prices, which decreased revenues by 6%.

Revenues from the sale of PerClot increased 14% for the six months ended June 30, 2014, as compared to the six months ended June 30, 2013. This increase was primarily due to a 27% increase in the volume of grams sold, which increased revenues by 19%, and the favorable effect of foreign currency exchange, which increased revenues 2%, partially offset by a decrease in average selling prices, which decreased revenues 7%.

Revenues during these periods were for sales in certain international markets, as PerClot was only recently approved for limited domestic distribution for topical indications, as discussed below. These increases were primarily due to increased sales in the Company’s direct markets in Europe, partially due to volume growth and new surgical indications. The Company expects that overall PerClot revenues will increase in 2014, as compared to 2013; however, revenues may show some variability from quarter-to-quarter.

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In March 2014 CryoLife received approval of its investigational device exemption (“IDE”) for PerClot from the FDA. This approval allows the Company to begin its pivotal clinical trial to gain approval to commercialize PerClot in the U.S. The Company plans to begin enrollment in the trial in the second half of 2014 and currently expects to receive PMA from the FDA in the first half of 2016.

In April 2014 CryoLife received 510(k) clearance for PerClot Topical from the FDA, which allows CryoLife to begin commercialization of PerClot Topical in the U.S. The Company plans to begin shipping PerClot Topical in the second half of 2014.

Revascularization Technologies

Revenues from revascularization technologies include revenues related primarily to the sale of handpieces and, in certain periods, revenues from the sale of laser consoles. Revenues from revascularization technologies decreased 9% for the three months ended June 30, 2014, as compared to the three months ended June 30, 2013. Revenues from the sale of laser consoles were zero and $83,000 for the three months ended June 30, 2014 and 2013, respectively. Revenues from the sale of handpieces decreased 6% for the three months ended June 30, 2014, as compared to the three months ended June 30, 2013. This decrease was primarily due to a 9% decrease in unit shipments of handpieces, which decreased revenues by 10%, partially offset by an increase in average sales prices, which increased revenues by 4%.

Revenues from revascularization technologies decreased 16% for the six months ended June 30, 2014, as compared to six months ended June 30, 2013. Revenues from the sale of laser consoles were $57,000 and $83,000 for the six months ended June 30, 2014 and 2013, respectively. Revenues from the sale of handpieces decreased 17% for the six months ended June 30, 2014, as compared to the six months ended June 30, 2013. This decrease was primarily due to a 19% decrease in unit shipments of handpieces, which decreased revenues by 19%, and an increase in average sales prices, which increased revenues by 2%.

In June 2013 the FDA approved the Company’s new handpiece design, and the Company made the decision to exclusively distribute the new handpiece beginning late in the second quarter of 2013. Following the rollout of the new handpiece, the Company’s handpiece revenues decreased sequentially in the third and the fourth quarters of 2013, due to the slower than anticipated adoption of the new handpiece design. This decrease in handpiece revenues slowed in the first quarter of 2014. Handpiece revenues increased 33% for the three months ended June 30, 2014, as compared to the three months ended March 31, 2014. Management currently believes that handpiece sales will increase in the second half of 2014, as compared to the second half of 2013, as the new handpiece becomes more widely used and adopted.

The amount of revenues from laser console sales can vary significantly from quarter-to-quarter due to the long lead time required to generate sales of capital equipment.

HeRO Graft

Revenues from HeRO Grafts include revenues related to the sale of vascular grafts, venous outflow components, and accessories, which are generally sold together as a kit. HeRO Grafts are primarily distributed in domestic markets as a solution for ESRD in certain hemodialysis patients. HeRO Graft revenues for the three months ended June 30, 2014 increased 20%, as compared to the three months ended June 30, 2013. HeRO Graft revenues for the six months ended June 30, 2014 increased 23%, as compared to the six months ended June 30, 2013, primarily due to an increase in the volume of kits sold as a result of an increase in procedure volume and an increase in the number of implanting physicians.

Management currently expects that overall HeRO Graft revenues will increase in 2014, as compared to 2013. However, because the HeRO Graft implant is currently performed by a relatively small number of physicians, HeRO Graft revenues are subject to variability quarter-to-quarter due to the timing of surgical cases. As the population of implanting physicians increases, the Company expects this variability in revenues will decrease.

Preservation Services

Revenues from preservation services decreased 6% for the three months ended June 30, 2014, as compared to the three months ended June 30, 2013. Revenues from preservation services decreased 1% for the six months ended June 30, 2014, as compared to the six months ended June 30, 2013. The decrease in preservation services revenues was primarily due to a decrease in vascular tissue service revenues for the three and six month periods, and also due to a decrease in cardiac tissue services revenues during the three month period.

During the second quarter of 2014 the Company voluntarily restricted the distribution of certain cardiac and vascular tissues while it performed a review of its internal training programs. The Company gradually resumed shipments of tissues during the second quarter of 2014, in accordance with its procedures, as it completed its training program review, and the restriction is no

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longer in effect. Preservation services revenues were negatively impacted, primarily during the first two months of the second quarter, as a result of reduced tissue availability during this review period. The Company does not believe that it will fully recover this shortfall in revenues from the second quarter of 2014 during the remainder of the year. The Company believes that preservation services revenues in the second half of 2014 will be comparable to, or increase slightly as compared to, revenues in the second half of 2013. A detailed discussion of the changes in cardiac and vascular preservation services revenues is presented below.

Preservation services revenues, particularly revenues for certain high-demand tissues, can vary from quarter-to-quarter and year-to-year due to a variety of factors including: quantity and type of incoming tissues, yields of tissue through the preservation process, timing of receipt of donor information, timing of the release of tissues to an implantable status, demand for certain tissue types due to the number and type of procedures being performed, and pressures from competing products or services. See further discussion of any specific items affecting cardiac and vascular preservation services revenues for the three and six months ended June 30, 2014 below.

Cardiac Preservation Services

Revenues from cardiac preservation services, consisting of revenues from the distribution of heart valves and cardiac patch tissues, decreased 5% for the three months ended June 30, 2014, as compared to the three months ended June 30, 2013. This decrease was primarily due to a 9% decrease in unit shipments of cardiac tissues, which decreased revenues by 11%, partially offset by an increase in average service fees, which increased revenues by 6%.

Revenues from cardiac preservation services increased 1% for the six months ended June 30, 2014, as compared to the six months ended June 30, 2013. This increase was primarily due to an increase in average service fees, which increased revenues by 6%, largely offset by a 2% decrease in unit shipments of cardiac tissues, which decreased revenues 5%.

The decrease in volume for the three and six months ended June 30, 2014 was primarily due to a decrease in volume of cardiac valve shipments, largely as a result of the timing of tissue releases for shipments to domestic markets, as compared to the prior year periods, which were impacted by reduced tissue availability as discussed above, and, to a lesser extent, a decrease in shipments into Europe. During the six months ended June 30, 2014 the Company’s revenues from shipments of cardiac tissues into Europe were $148,000, as compared to $390,000 in the corresponding period in 2013. The Company ceased the distribution of tissues into Europe as of March 31, 2014.

The increase in average service fees for the three and six months ended June 30, 2014 was primarily due to list fee increases in domestic markets that took effect in July 2013 and due to the routine negotiation of pricing contracts with certain customers.

Revenues from SynerGraft processed tissues, including the CryoValve SGPV and CryoPatch SG, accounted for 63% and 60% of total cardiac preservation services revenues for the three and six months ended June 30, 2014, respectively, and 52% and 51% of total cardiac preservation services revenues for the three and six months ended June 30, 2013, respectively. Domestic revenues accounted for 97% and 96% of total cardiac preservation services revenues for the three and six months ended June 30, 2014, respectively, and 97% and 94% of total cardiac preservation services revenues for the three and six months ended June 30, 2013, respectively.

The Company’s cardiac valves are primarily used in cardiac replacement and reconstruction surgeries, including the Ross procedure, for patients with endocarditis or congenital heart defects.

The Company expects that overall cardiac preservation services revenues in the second half of 2014 will be comparable to the revenues in 2013, notwithstanding the cessation of tissue shipments to Europe.

Vascular Preservation Services

Revenues from vascular preservation services decreased 7% for the three months ended June 30, 2014, as compared to the three months ended June 30, 2013. This decrease was primarily due to an 11% decrease in unit shipments of vascular tissues, which decreased revenues by 13%, partially offset by an increase in average service fees, which increased revenues by 6%.

Revenues from vascular preservation services decreased 3% for the six months ended June 30, 2014, as compared to revenues for the six months ended June 30, 2013. This decrease was primarily due to a 9% decrease in unit shipments of vascular tissues, which decreased revenues by 9%, partially offset by an increase in average service fees, which increased revenues by 6%.

The decrease in vascular volume for the three and six months ended June 30, 2014 was primarily due to decreases in shipments of saphenous veins, which was impacted by reduced tissue availability as discussed above.

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The increase in average service fees for the three and six months ended June 30, 2014 was primarily due to list fee increases in domestic markets that took effect in July 2013, fee differences due to physical characteristics of vascular tissues, and the routine negotiation of pricing contracts with certain customers.

The majority of the Company’s vascular preservation services revenues are related to shipments of saphenous veins, which are mainly used in peripheral vascular reconstruction surgeries to avoid limb amputations. These tissues are primarily distributed in domestic markets.

Cost of Products and Preservation Services

Cost of Products

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Cost of products	$	4,131	$	3,721	$	7,932	$	7,186

Cost of products increased 11% and 10% for the three and six months ended June 30, 2014, respectively, as compared to the three and six months ended June 30, 2013, respectively. Cost of products in 2014 and 2013 includes costs related to BioGlue, BioFoam, PerClot, revascularization technologies, HeRO Grafts, and other products.

The increase in cost of products in the three and six months ended June 30, 2014 was primarily due to the increase in the per unit cost of manufacturing HeRO Grafts, as a result of the transfer of manufacturing to a new location and lower manufacturing throughput, and, to a lesser extent, due to the increase in the cost of manufacturing BioGlue and an increase in the volume of products sold. Cost of products for the three and six months ended June 30, 2013 includes $434,000 in additional costs for revascularization technologies handpieces that were made obsolete by the Company’s decision to exclusively distribute the new handpiece design, which was approved by the FDA in June 2013.

Cost of Preservation Services

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Cost of preservation services	$	8,175	$	8,320	$	17,632	$	17,115

Cost of preservation services decreased 2% and increased 3% for the three and six months ended June 30, 2014, respectively, as compared to the three and six months ended June 30, 2013, respectively. Cost of preservation services includes costs for cardiac and vascular tissue preservation services.

Cost of preservation services decreased in the three months ended June 30, 2014 primarily due to a decrease in volume of tissues shipped during the period, partially offset by an increase in the per unit cost of processing tissues, as a result of lower processing throughput of tissues and an increase in the cost of materials. Cost of preservation services increased in the six months ended June 30, 2014 due to an increase in the per unit cost of processing tissue, partially offset by a decrease in volume of tissues shipped during the period.

Gross Margin

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Gross margin	$	22,384	$	21,479	$	44,857	$	44,755
Gross margin as a percentage of total revenues		65%		64%		64%		65%

Gross margin increased 4% for the three months ended June 30, 2014, as compared to the three months ended June 30, 2013. Gross margin for the six months ended June 30, 2014 was comparable to gross margin for the six months ended June 30, 2013. Gross margin as a percentage of total revenues in the three and six months ended June 30, 2014 was comparable to the three and six months ended June 30, 2013, respectively.

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Operating Expenses

General, Administrative, and Marketing Expenses

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
General, administrative, and marketing expenses	$	17,959	$	16,932	$	36,234	$	34,909
General, administrative, and marketing expenses as a percentage of total revenues		52%		51%		51%		51%

General, administrative, and marketing expenses increased 6% for the three months ended June 30, 2014, as compared to the three months ended June 30, 2013. General, administrative, and marketing expenses increased 4% for the six months ended June 30, 2014, as compared to the six months ended June 30, 2013. The increase in general, administrative, and marketing expenses in the current year periods was due to increased expenses to support the Company’s increasing revenue base, international expansion, new product offerings, and increasing employee headcount.

The Company expects that its general, administrative, and marketing expenses will increase for the full year 2014, as compared to 2013 due to the factors discussed above and due to additional executive compensation expense related to the appointment of Mr. Mackin as President and CEO effective September 2, 2014. In addition, the effects of business development expenses or legal fees could further increase expenses. As discussed in Part II, Item 1, Legal Proceedings, in the second quarter of 2014 the Company filed a declaratory judgment action against C.R. Bard, Inc. (“Bard”) and certain of its subsidiaries. Management expects this litigation to be protracted and the costs associated with it during 2014 will be material.

Research and Development Expenses

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Research and development expenses	$	2,203	$	1,736	$	4,705	$	3,724
Research and development expenses as a percentage of total revenues		6%		5%		7%		5%

Research and development expenses increased 27% and 26% for the three and six months ended June 30, 2014, respectively, as compared to the three and six months ended June 30, 2013, respectively. Research and development spending in these periods was primarily focused on clinical and pre-clinical work with respect to PerClot, the Company’s tissue processing, and BioGlue and BioFoam. The Company expects that research and development spending will increase materially for the full year of 2014, as compared to 2013, due to planned increases in spending on PerClot clinical studies.

Earnings

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Income before income taxes	$	2,394	$	2,735	$	4,131	$	5,779
Income tax expense		233		950		911		1,802
Net income	$	2,161	$	1,785	$	3,220	$	3,977
Diluted income per common share	$	0.08	$	0.06	$	0.11	$	0.14
Diluted weighted-average common shares outstanding		28,317		27,369		28,382		27,456

Income before income taxes decreased 12% and 29% for the three and six months ended June 30, 2014, respectively, as compared to the three and six months ended June 30, 2013, respectively. The decrease in income before income taxes for the three and six months ended June 30, 2014 was primarily due to an increase in operating expenses, as discussed above, partially offset by increased revenues.

The Company’s effective income tax rate was approximately 10% and 22% for the three and six months ended June 30, 2014, respectively, as compared to 35% and 31% for the three and six months ended June 30, 2013, respectively.

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In June 2014 the Internal Revenue Service completed a limited scope examination of certain of the Company’s federal income tax returns. At the resolution of this examination, the Company reevaluated its liabilities for uncertain tax positions, primarily related to its research and development tax credits and credit carryforwards, and, based on revised estimates and the settlement of the examination, reversed $748,000 in uncertain tax liabilities and tax expense.

The Company’s income tax rate for the three and six months ended June 30, 2014 was favorably affected by the reduction of uncertain tax positions, and, to a lesser extent, was unfavorably affected by the 2014 research and development tax credit, which has not yet been enacted for the 2014 tax year. The Company’s income tax rate in 2013 was favorably impacted by the full year 2012 research and development tax credit, which was enacted in January 2013 and, therefore, reduced the Company’s tax expense during the first quarter of 2013.

Net income and diluted income per common share increased for the three months ended June 30, 2014, as compared to the three months ended June 30, 2013, primarily due to the favorable effect of the decrease in income tax expense, partially offset by a decrease in income before income taxes, as discussed above. Net income and diluted income per common share decreased for the six months ended June 30, 2014, as compared to the six months ended June 30, 2013, primarily due to the decrease in income before income taxes, partially offset by the favorable effect of the decrease in income tax expense, as discussed above.

Diluted income per common share could be unfavorably affected in future periods by the issuance of additional shares of common stock and favorably affected by the Company’s repurchase of its common stock. Stock repurchases are influenced by many factors, including stock price, available funds, and competing demands for such funds, and as a result, may be suspended or discontinued at any time.

Seasonality

The Company believes the demand for BioGlue is seasonal, with a decline in demand generally occurring in the third quarter followed by stronger demand in the fourth quarter. Management believes that this trend for BioGlue may be due to the summer holiday season in Europe and in the U.S. The Company’s market for BioGlue in Japan is still in a growth phase; however, the Company believes that demand for BioGlue in Japan may continue to be lowest in the second quarter of each year due to distributor ordering patterns driven by the slower summer holiday season in Japan.

The Company is uncertain whether the demand for PerClot will be seasonal, as PerClot is a new product and the nature of any seasonal trends in PerClot sales may be obscured.

The Company does not believe the demand for revascularization technologies and HeRO Grafts is seasonal, as the Company’s data does not indicate a significant trend.

The Company’s demand for its cardiac preservation services has traditionally been seasonal, with peak demand generally occurring in the third quarter. Management believes this trend for cardiac preservation services is primarily due to the high number of surgeries scheduled during the summer months for school-aged patients. Based on experience in recent years, management believes that this trend is lessening as the Company is distributing a higher percentage of its tissues for use in adult populations.

The Company’s demand for its vascular preservation services is seasonal, with lowest demand generally occurring in the fourth quarter. Management believes this trend for vascular preservation services is primarily due to fewer vascular surgeries being scheduled during the winter holiday months.

Liquidity and Capital Resources

Net Working Capital

At June 30, 2014 net working capital (current assets of $105.8 million less current liabilities of $19.1 million) was $86.7 million, with a current ratio (current assets divided by current liabilities) of 6 to 1, compared to net working capital of $85.6 million and a current ratio of 5 to 1 at December 31, 2013.

Overall Liquidity and Capital Resources

The Company’s largest cash requirement for the six months ended June 30, 2014 was cash for general working capital needs, as certain of the Company’s current asset balances increased significantly from December 31, 2013. These increases are primarily due to the Company’s recent sales, which have not yet been converted to cash, payment of the Company’s annual insurance policy renewals, and cash advances related to the Company’s new ProCol product line. In addition, the Company’s other cash

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requirements included capital expenditures, common stock repurchases, and cash dividend payments. The Company funded its cash requirements through its existing cash reserves.

CryoLife’s credit agreement with General Electric Capital Corporation, as amended (the “GE Credit Agreement”), provides revolving credit for working capital, acquisitions, and other corporate purposes. The borrowing capacity under the GE Credit Agreement, which expires October 28, 2014, is $20.0 million (including a letter of credit subfacility). The borrowing capacity may be reduced or increased from time to time pursuant to the terms of the GE Credit Agreement. As required under the terms of the GE Credit Agreement, the Company is maintaining cash and cash equivalents of at least $5.0 million in accounts in which General Electric Capital Corporation has a first priority perfected lien. As a result, these funds will not be available to meet the Company’s liquidity needs during the term of the GE Credit Agreement and, as such, have been recorded as restricted cash and securities on the Company’s Consolidated Balance Sheets. Also, the GE Credit Agreement requires that, after giving effect to a stock repurchase, the Company maintain liquidity, as defined in the agreement, of at least $20.0 million. As of June 30, 2014 the outstanding balance under the GE Credit Agreement was zero, and $20.0 million was available for borrowing.

In the six months ended June 30, 2014 the Company purchased approximately 227,000 shares of its common stock for an aggregate purchase price of $2.0 million. As of June 30, 2014 the Company had $11.5 million in remaining authorizations under common stock repurchase programs authorized by the Company’s Board of Directors. The purchase of shares may be made from time to time in the open market or through privately negotiated transactions, on such terms as management deems appropriate, and will be dependent upon various factors, including: price, regulatory requirements, and other market conditions.

As of June 30, 2014 approximately 6% of the Company’s cash and cash equivalents were held in foreign jurisdictions.

On October 1, 2013 Bard completed its previously announced acquisition of the outstanding shares of Medafor common stock. The Company received an initial payment of approximately $15.4 million for its 2.4 million shares of Medafor common stock and recorded an initial gain of approximately $12.7 million on the sale in the fourth quarter of 2013. The Company could receive additional payments totaling up to $8.4 million upon the release of funds held in escrow and the satisfaction of certain contingent milestones, measurable through June 2015. The first of these additional payments, which the Company believes could be up to approximately $525,000, if released, would be received in late 2014, although this amount is subject to possible offsets. These payments will be recorded as an additional gain if, and when, received by the Company.

As discussed elsewhere in this Form 10-Q, in September 2012, CryoLife received a letter from Medafor stating that PerClot, when introduced in the U.S and used in accordance with the method published in CryoLife’s literature and with the instructions for use, will infringe Medafor’s (now Bard’s) U.S. patent. CryoLife does not believe that its sales of PerClot will infringe Bard’s patent. Accordingly, in April 2014 the Company filed a declaratory judgment action against Bard and certain of its subsidiaries, including Medafor, in federal court, requesting that the court confirm that CryoLife’s anticipated sales of PerClot and certain of its derivative products, such as PerClot Topical, will not infringe upon the patent held by Bard and/or that the Bard patent is invalid. Management expects this litigation to be protracted and the costs associated with it during 2014 will be material.

In March 2014 CryoLife received approval of its IDE for PerClot from the FDA. This approval allows the Company to begin its pivotal clinical trial to gain approval to commercialize PerClot in the U.S. The Company plans to begin enrollment in the trial in the second half of 2014. Management believes that the costs of this clinical trial will be material in 2014. In April 2014 CryoLife received 510(k) clearance from the FDA to market PerClot Topical, a version of the Company’s PerClot product, which will be manufactured by the Company at its headquarters and labeled for use in certain topical indications. As a result of this recent approval and clearance, CryoLife paid $1.0 million to SMI in the second quarter of 2014 pursuant to the terms of the agreements between CryoLife and SMI.

In March 2014 CryoLife acquired the exclusive worldwide distribution rights for ProCol from Hancock Jaffe Laboratories, Inc. (“Hancock Jaffe”). CryoLife will make payments to Hancock Jaffe of up to $2.3 million during 2014, with no more than $650,000 payable in any quarter. As of June 30, 2014 the Company had made payments of $1.0 million to Hancock Jaffe, and it began distributing ProCol in the second quarter of 2014.

During 2012 the Company advanced a total of $2.0 million in debt financing to ValveXchange, Inc. (“ValveXchange”) through a revolving credit facility (the “Loan”). The Loan is secured by substantially all of the tangible and intangible assets of ValveXchange. ValveXchange will continue to need additional funds to support its short-term and long-term operations, as it is currently not selling any product. Specifically, ValveXchange will need to expand its clinical trial in order to obtain approval to distribute its product in Europe. ValveXchange does not currently have the funds necessary to fund this expansion, and without this expansion, ValveXchange is not expected to be able to generate revenues. However, even if ValveXchange is able to secure additional funds, if those funds are insufficient and ValveXchange cannot meet its business obligations, CryoLife may need to foreclose on the related collateral to secure repayment of the Loan. Although CryoLife currently believes that the value of the collateral is adequate to repay the Loan, there is no guarantee that the security for the notes will be sufficient to repay the Loan. If

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ValveXchange is forced to cease operations or to seek reorganization in bankruptcy, the Company may be unable to secure payment through seizure of the collateral.

The Company believes that its anticipated cash from operations and existing cash and cash equivalents will enable the Company to meet its current operational liquidity needs for at least the next twelve months. The Company’s future cash requirements are expected to include cash to fund the PerClot clinical trials, to fund the PerClot declaratory judgment action, to make payments to Hancock Jaffe related to the ProCol distribution agreement, to fund business development activities, to repurchase the Company’s common stock, to fund the cash dividend to common shareholders, to fund additional research and development expenditures, for general working capital needs, for capital expenditures, and for other corporate purposes. These items may have a significant effect on the Company’s cash flows during the remainder of 2014. The Company may seek additional borrowing capacity or financing, pursuant to its shelf registration statement, for general corporate purposes or to fund other future cash requirements. If the Company undertakes further significant business development activity in 2014, it may need to finance such activities by drawing down monies under the GE Credit Agreement, obtaining additional debt financing, or using its shelf registration statement to sell equities.

The Company acquired net operating loss carryforwards from its acquisitions of Hemosphere and Cardiogenesis that the Company believes will reduce required cash payments for federal income taxes by approximately $1.5 million for the 2014 tax year.

Net Cash Flows from Operating Activities

Net cash provided by operating activities was $829,000 for the six months ended June 30, 2014, as compared to $4.0 million for the six months ended June 30, 2013.

The Company uses the indirect method to prepare its cash flow statement and, accordingly, the operating cash flows are based on the Company’s net income, which is then adjusted to remove non-cash items and for changes in operating assets and liabilities from the prior year end. For the six months ended June 30, 2014 these non-cash items included a favorable $2.9 million in depreciation and amortization expenses and $1.6 million in non-cash compensation.

The Company’s working capital needs, or changes in operating assets and liabilities, also affected cash from operations. For the six months ended June 30, 2014 these changes included unfavorable adjustments of $1.3 million due to the timing differences between the recording of receivables and the receipt of cash, increased balances of $1.7 million in inventory and deferred preservation costs, and $2.6 million in prepaid expenses and other assets for which payments have already been made.

Net Cash Flows from Investing Activities

Net cash used in investing activities was $3.8 million for the six months ended June 30, 2014, as compared to $2.4 million for the six months ended June 30, 2013. The current year cash used was primarily due to $2.3 million in capital expenditures.

Net Cash Flows from Financing Activities

Net cash used in financing activities was $3.8 million for the six months ended June 30, 2014, as compared to $3.0 million for the six months ended June 30, 2013. The current year cash used was primarily due to $1.6 million in cash dividends paid and $2.0 million in purchases of treasury stock related to the Company’s publicly announced stock repurchase plan.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Capital Expenditures

Capital expenditures were $2.3 million for both the six months ended June 30, 2014 and 2013. Capital expenditures in the six months ended June 30, 2014 were primarily related to the routine purchases of manufacturing and tissue processing equipment, including support for the Company’s HeRO Graft and PerClot product lines; revascularization technologies lasers; leasehold improvements needed to support the Company’s business; computer software; and computer and office equipment.

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Scheduled Contractual Obligations and Future Payments

Scheduled contractual obligations and the related future payments as of June 30, 2014 were as follows (in thousands):

	Total		Remainder of 2014		2015		2016		2017		2018		Thereafter
Operating leases	$	23,915	$	1,357	$	3,217	$	3,143	$	3,042	$	3,031	$	10,125
Purchase commitments		4,797		3,084		1,713		—		—		—		—
Contingent payments		3,648		148		—		3,500		—		—		—
Compensation payments		1,985		—		—		—		1,985		—		—
Research obligations		2,164		1,428		655		81		—		—		—
Total contractual obligations	$	36,509	$	6,017	$	5,585	$	6,724	$	5,027	$	3,031	$	10,125

The Company’s operating lease obligations result from the lease of land and buildings that comprise the Company’s corporate headquarters and manufacturing facilities, leases related to additional office and warehouse space, leases on Company vehicles, and leases on a variety of office equipment.

The Company’s purchase commitments include minimum purchase requirements for PerClot related to the Company’s transaction with SMI. These minimum purchases are included through 2015, which assumes that the Company receives FDA approval for PerClot in the first half of 2016. Upon FDA approval, the Company may terminate its minimum purchase requirements, per the terms of the agreements between the parties, which the Company expects to do. However, if the Company does not terminate this provision, it will have minimum purchase obligations of up to $1.75 million per year through the end of the contract term in 2025. The Company’s purchase commitments also include obligations to purchase ProCol from Hancock Jaffe and obligations from agreements with other suppliers.

The contingent payment obligations include obligations related to the Company’s acquisition of Hemosphere and transaction with SMI. The contingent payment obligation for Hemosphere represents the payments that the Company will make if certain revenue milestones are achieved. The schedule includes one contingent milestone payment for $2.5 million that the Company believes it is likely to pay in 2016, although the timing of this payment may change. The schedule excludes one Hemosphere contingent milestone payment of up to $2.0 million, as the Company cannot make a reasonably reliable estimate of when this future payment may be made, if at all. The contingent payment obligation for PerClot represents the payments that the Company will make if certain FDA regulatory approvals and other commercial milestones are achieved. The schedule excludes one PerClot contingent milestone payment of $500,000, as the Company cannot make a reasonably reliable estimate of timing of this future payment.

The Company’s compensation payment obligations represent estimated payments for post-employment benefits for the Company’s current CEO, Mr. Steven G. Anderson. In July 2014 the Company’s Board of Directors appointed Mr. J. Patrick Mackin as President and CEO effective September 2, 2014. Mr. Anderson will continue to serve CryoLife as its President and CEO until Mr. Mackin’s employment begins and then continue as its Executive Chairman. The Company’s Board of Directors and Mr. Anderson are renegotiating his employment agreement to make appropriate adjustments in consideration of Mr. Mackin’s appointment and anticipated changes in Mr. Anderson’s job responsibilities. The timing of Mr. Anderson’s post-employment benefits is based on the December 2016 expiration date of the his current employment agreement; however, payment of these benefits may be accelerated upon the occurrence of certain events, including Mr. Anderson’s voluntary retirement, for which he is currently eligible, or his termination in conjunction with certain change in control events.

The Company’s research obligations represent commitments for ongoing studies and payments to support research and development activities and largely represent commitments related to the PerClot pivotal clinical trial.

The schedule of contractual obligations above excludes (i) a $200,000 signing bonus obligation to Mr. Mackin as a result of his appointment as President and CEO and his related employment agreement dated July 2014, as this was not an obligation of the Company as of June 30, 2014, (ii) obligations for estimated liability claims unless they are due as a result of a settlement agreement or other contractual obligation and (iii) any estimated liability for uncertain tax positions and interest and penalties, currently estimated to be $1.9 million, because the Company cannot make a reasonably reliable estimate of the amount and period of related future payments as no specific assessments have been made for specific litigation or by any taxing authorities.

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Forward-Looking Statements

This Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. Forward-looking statements give the Company’s current expectations or forecasts of future events. The words “could,” “may,” “might,” “will,” “would,” “shall,” “should,” “pro forma,” “potential,” “pending,” “intend,” “believe,” “expect,” “anticipate,” “estimate,” “plan,” “future,” and other similar expressions generally identify forward-looking statements. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of the date of this Form 10-Q. Such forward-looking statements reflect the views of management at the time such statements are made and are subject to a number of risks, uncertainties, estimates, and assumptions, including, without limitation, in addition to those identified in the text surrounding such statements, those identified under “Risks and Uncertainties” and elsewhere in this Form 10-Q.

All statements, other than statements of historical facts, included herein that address activities, events, or developments that the Company expects or anticipates will or may occur in the future, are forward-looking statements, including statements regarding:

• Plans, costs, and expected timelines regarding clinical trials to obtain PMA to distribute PerClot in the U.S., regulatory approval for PerClot, the distribution of PerClot in certain markets after the requisite regulatory approvals are obtained, and the Company’s expectation that it will terminate its minimum purchase requirements after regulatory approval of PerClot;

• The Company’s belief regarding the sufficiency of its response to the 2014 CryoLife Form 483 and the Warning Letter, and that any issues related to the FDA’s observations in the 2014 CryoLife Form 483 and the Warning Letter will not have a continuing material effect on the Company;

• Expected timing and results of the Company’s CryoValve SG pulmonary valve post-clearance study submission to the FDA;

• The potential impact of the FDA review of the classification of CryoValve SG pulmonary valve tissue;

• Expectations regarding Mr. Mackin’s appointment to the Board of Directors and Mr. Anderson’s continued service as Executive Chairman;

• Plans regarding the timing, scope, and targeted indications for the commercial launch of PerClot Topical;

• Potential benefits and additional applications of the Company’s products;

• Revenue trend estimates for the Company’s products and services for 2014;

• Plans related to regulatory approval in certain markets for BioFoam, and the subsequent distribution of BioFoam in those markets;

• Expectations regarding growth opportunities for BioGlue in Japan and China;

• Expectations regarding 2014 tissue processing revenues;

• Receipt of ProCol inventory from Hancock Jaffe, and the receipt of distribution fees and profits resulting from the sale of ProCol;

• Expected payments to Hancock Jaffe pursuant to the ProCol exclusive distribution agreement;

• Potential for competitive products and services to affect the market for the Company’s products and services;

• Anticipated payment of quarterly dividends each year;

• Expectations regarding the recoverability and realizability of deferred tax assets and the anticipated benefits of net operating loss carryforwards;

• Estimates of fair value of acquired assets, and the Company’s belief that the estimates are reasonable;

• Expectations that the Company will continue to renew certain acquired contracts and procurement agreements for the foreseeable future;

• Assumptions regarding the adequacy of, and competitive advantages conferred by, its intellectual property protections;

• Plans and expectations regarding research and development of new technologies and products;

• Expectations about whether and when the Company may receive additional payments related to its sale of Medafor stock;

• Expectations that general, administrative, and marketing expenses will increase in 2014, as compared to 2013, before consideration of the effects of litigation and business development expenses;

• Expectations that research and development expenses will increase materially in 2014, as compared to 2013;

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• The Company’s belief that its sales of PerClot, upon FDA approval, and its derivative products will not infringe the patent held by Bard, that the costs associated with the declaratory judgment action against Bard and certain of its subsidiaries will be material, and that the pace at which those costs will be incurred will be unpredictable;

• Expectations regarding business consolidations in the healthcare industry that could exert downward pressure on demand for Company products and the fees charged by the Company;

• Expectations regarding sales of BioGlue, PerClot, HeRO Grafts, handpieces, and laser consoles and the factors affecting such sales;

• The Company’s belief that healthcare policy and law changes may have a material adverse effect on the business;

• The Company’s belief that the underlying collateral is sufficient to secure the Company’s $2.0 million loan to ValveXchange;

• Expectations regarding the impact of the re-labeling and change in expiration dating with respect to BioGlue 5ml syringes;

• The Company’s beliefs and underlying assumptions regarding the seasonal nature of the demand for some of its products and services;

• Adequacy of the Company’s financial resources and its belief that it will have sufficient cash to meet its operational liquidity needs for at least the next twelve months;

• Estimates of contingent payments and royalties that may be paid by the Company and the timing of such payments;

• The impact on cash flows of funding business development activities and the potential need to obtain additional borrowing capacity or financing;

• Expectations regarding the source of any future payments related to any unreported product or tissue processing liability claims;

• The anticipated impact of changes in prevailing economic conditions, interest rates, and foreign currency exchange rates;

• Constraints imposed on the Company by its lender under the existing credit facility;

• Plans regarding acquisition and investment opportunities of complementary product lines and companies;

• The anticipated effect of suppliers’/sources’ inability to deliver critical raw materials or tissues and / or the Company having to source supply from an alternate supplier;

• Expected impacts of issuance of additional shares and share repurchases on financial results calculated on a per-share basis;

• Issues that may affect the Company’s future growth, financial performance, and cash flows; and

• Other statements regarding future plans and strategies, anticipated events, or trends.

These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions, and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform with the Company’s expectations and predictions is subject to a number of risks and uncertainties which could cause actual results to differ materially from the Company’s expectations, including, without limitation, in addition to those specified in the text surrounding such statements, the risk factors set forth below, the risk factors set forth under Part I, Item 1A of the Company’s Form 10-K for the year ended December 31, 2013, and other factors, many of which are beyond the control of the Company. Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Company or its business or operations. The Company assumes no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events, or otherwise.

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Risks and Uncertainties

Along with the risks identified in Part II, Item 1A of this Form 10-Q, the risks and uncertainties which might affect the forward-looking statements and the Company, its ability to continue as a going concern, and the trading value of its common stock include concerns that:

• We are significantly dependent on our revenues from BioGlue and are subject to a variety of risks affecting this product;

• Our BioGlue patent has expired in the U.S. and most of the rest of the world. Competitors may utilize the inventions disclosed in the expired patents in competing products, although the competing product will have to be approved by the appropriate regulatory authority;

• Competitors have obtained FDA approval for indications in which BioGlue has been used off-label and for which we cannot market BioGlue, which has reduced, and could continue to reduce, the addressable procedures for BioGlue;

• Our products and tissues are subject to many significant risks, including being recalled or placed on hold by us, the FDA, or other regulatory bodies and being subjected to adverse publicity, which could lead to decreased use, additional regulatory scrutiny, and / or product liability lawsuits;

• The FDA has expressed an intent to reevaluate the classification of CryoValve SG pulmonary valve tissue. If CryoValve SG pulmonary valve tissue were to be reclassified as a class III medical device, we would be required to obtain a PMA. If we were unable to obtain a PMA, or issuance of the PMA were delayed, we would be unable to distribute CryoValve SG pulmonary valve tissue to our customers;

• Regulatory agencies could require us to change or modify our processes, procedures, and manufacturing operations, and such agencies could reclassify or reevaluate our clearances and approvals to sell our medical devices and tissue services;

• Our tissues, which are not sterile when processed, and our medical devices allegedly have caused, and may in the future cause, injury to patients, which has exposed, and could in the future expose, us to tissue processing and product liability claims and additional regulatory scrutiny and inspections as a result;

• The FDA may determine that our corrective actions have not, and/or proposed corrective actions will not, adequately address the issues raised in the 2014 CryoLife Form 483 and/or the Warning Letter. If we have failed to respond to the notice of violations in the 2014 CryoLife Form 483 or the Warning Letter to the FDA’s satisfaction, we may be subject to additional regulatory action by the FDA, including recalls, injunctions, and/or civil money penalties, and the demand for our products and services could be negatively impacted by adverse publicity with respect to the 2014 CryoLife Form 483 and/or the Warning Letter. In addition, further actions required to be taken in response to the 2014 CryoLife Form 483 and/or the Warning Letter could impact the availability of our products and tissues and our cost structure, including our revenues, financial condition, profitability, and cash flows;

• We will not fully realize the benefit of our investment in our distribution and license and manufacturing agreements with Starch Medical, Inc. unless we are able to obtain FDA approval to distribute PerClot in the U.S., which will require an additional commitment of funds;

• We will not fully realize the benefit of our distribution agreement with Hancock Jaffe unless Hancock Jaffe is able to obtain approval of a PMA with respect to its new manufacturing facility, which is beyond our control;

• If Hancock Jaffe is ultimately unable to obtain approval of a PMA with respect to its new facility, we may be unable to obtain refunds of amounts previously paid to Hancock Jaffe or to obtain sufficient value from pledged collateral, and, therefore, a portion of the amounts we have paid to Hancock Jaffe may have to be written-down or impaired, and such amounts could be material;

• We may ultimately be unsuccessful in our PerClot clinical trials and/or may be unable to obtain FDA approval to market and distribute PerClot in the U.S. Even if we receive FDA approval, we may be unsuccessful in our efforts to sell PerClot in the U.S. as other competing products may have penetrated the market by that time;

• Our declaratory judgment action against Bard and certain of its subsidiaries will be expensive, and if we lose, we may be prohibited from selling PerClot and its derivative products, such as PerClot Topical, or may have to pay substantial royalties or damages related to such sales;

• We have inherited risks and uncertainties related to Cardiogenesis’ and Hemosphere’s businesses;

• The receipt of impaired materials or supplies that do not meet our standards, the recall of materials or supplies by our vendors or suppliers, or our inability to obtain materials and supplies could have a material, adverse impact on our revenues, financial condition, profitability, and cash flows;

• As a result of the funding issues that have been affecting ValveXchange, our Loan to ValveXchange may become uncollectible, which could have a material, adverse impact on our business. Even if ValveXchange is able to secure additional financing, it may nonetheless default on the Loan in the future, we may need to foreclose on the Loan, and there is no guarantee that the security for the notes will be sufficient to repay the Loan;

30

• We continue to evaluate expansion through acquisitions, licenses, investments, and other distribution arrangements in other companies or technologies, and such actions involve the risk of unknown liabilities, and could result in the dilution of our stockholders’ value, the consumption of resources that may be necessary to operate our business, the incurrence of debt on unfavorable terms, and unfavorable tax consequences;

• We may not realize the anticipated benefits from acquisitions, and we may be unable to integrate, upgrade, or replace systems acquired in acquisitions, secure the services of key employees, or succeed in the marketplace with the acquisition;

• Our sales are impacted by challenging domestic and international economic conditions and their constraining effect on hospital budgets, and demand for our products and tissues could decrease in the future, which could have a material, adverse impact on our business;

• Healthcare policy changes, including recent federal legislation to reform the U.S. healthcare system, may have a material, adverse impact on us;

• Key growth strategies may not generate the anticipated benefits;

• We may not be successful in obtaining necessary clinical results and regulatory approvals for products and services in development, and our new products and services may not achieve market acceptance;

• Extensive government regulation may adversely impact our ability to develop and market products and services, and restrictive laws, regulations, and rules could have a material, adverse impact on our revenues, financial condition, profitability, and cash flows;

• Uncertainties related to patents and protection of proprietary technology may adversely impact the value of our intellectual property or may result in our payment of significant monetary damages and/or royalty payments, negatively impacting our ability to sell current or future products, or prohibit us from enforcing our patent and other proprietary technology rights against others;

• Our right to receive additional payments for our Medafor common stock is subject to revenue performance conditions related to the Arista product, as to which we have no control or ability to predict;

• Intense competition may impact our ability to operate profitably;

• If we are not successful in expanding our business activities in international markets, it could have a material, adverse impact on our revenues, financial condition, profitability, and cash flows;

• We are dependent on the availability of sufficient quantities of tissue from human donors;

• Consolidation in the healthcare industry could continue to result in demands for price concessions, limits on the use of our products and tissues, and limitations on our ability to sell to certain of our significant market segments;

• The success of many of our products and tissues depends upon strong relationships with physicians;

• Our existing insurance policies may not be sufficient to cover our actual claims liability, and we may be unable to obtain future insurance policies in an amount sufficient to cover our anticipated claims at a reasonable cost or at all;

• We are not insured against all potential losses. Natural disasters or other catastrophes could adversely impact our business;

• Our current plans and ability to continue to pay a quarterly cash dividend may change;

• Our credit facility, which expires in October 2014, limits our ability to pursue significant acquisitions and also may limit our ability to borrow;

• Continued fluctuation of foreign currencies relative to the U.S. Dollar could materially, adversely impact our business;

• Rapid technological change could cause our products and services to become obsolete; and

• We are dependent on our key personnel.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

The Company’s interest income and interest expense are sensitive to changes in the general level of U.S. interest rates. In this regard, changes in U.S. interest rates affect the interest earned on the Company’s cash and cash equivalents of $30.9 million and restricted cash of $5.0 million and interest paid on the Company’s variable rate line of credit as of June 30, 2014. A 10% adverse change in interest rates, as compared to the rates experienced by the Company in the six months ended June 30, 2014, affecting the Company’s cash and cash equivalents, restricted cash and securities, and line of credit would not have a material effect on the Company’s financial position, profitability, or cash flows.

Foreign Currency Exchange Rate Risk

The Company has balances, such as cash, accounts receivable, accounts payable, and accruals that are denominated in foreign currencies. These foreign currency denominated balances are sensitive to changes in exchange rates. In this regard, changes in exchange rates could cause a change in the U.S. Dollar equivalent of cash or funds that the Company will receive in payment for assets or that the Company would have to pay to settle liabilities. As a result, the Company could be required to record these changes as gains or losses on foreign currency translation.

The Company has revenues and expenses that are denominated in foreign currencies. Specifically, a significant portion of the Company’s international BioGlue revenues are denominated in British Pounds and Euros, and a portion of the Company’s general, administrative, and marketing expenses are denominated in British Pounds, Euros, and Singapore Dollars. These foreign currency transactions are sensitive to changes in exchange rates. In this regard, changes in exchange rates could cause a change in the U.S. Dollar equivalent of net income from transactions conducted in other currencies. As a result, the Company could recognize a reduction in revenues or an increase in expenses related to a change in exchange rates.

An additional 10% adverse change in exchange rates from the exchange rates in effect on June 30, 2014 affecting the Company’s balances denominated in foreign currencies would not have had a material effect on the Company’s financial position or cash flows. An additional 10% adverse change in exchange rates from the weighted-average exchange rates experienced by the Company for the six months ended June 30, 2014, affecting the Company’s revenue and expense transactions denominated in foreign currencies, would not have had a material effect on the Company’s financial position, profitability, or cash flows.

Item 4. Controls and Procedures.

The Company maintains disclosure controls and procedures (“Disclosure Controls”) as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934. These Disclosure Controls are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures.

The Company’s management, including the Company’s President and CEO and the Company’s Executive Vice President of Finance, Chief Operating Officer, and CFO, does not expect that its Disclosure Controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake. The Company’s Disclosure Controls have been designed to provide reasonable assurance of achieving their objectives.

Based upon the most recent Disclosure Controls evaluation conducted by management with the participation of the CEO and CFO, as of June 30, 2014 the CEO and CFO have concluded that the Company’s Disclosure Controls were effective at the reasonable assurance level to satisfy their objectives and to ensure that the information required to be disclosed by the Company in its periodic reports is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding disclosure and is recorded, processed, summarized, and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms.

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On May 14, 2013 the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) issued an updated version of its Internal Control - Integrated Framework (“2013 Framework”). Originally issued in 1992 (“1992 Framework”), the framework helps organizations design, implement, and evaluate the effectiveness of internal control concepts and simplify their use and application. The 1992 Framework will remain effective during the transition, which extends to December 15, 2014, after which time COSO will consider it as superseded by the 2013 Framework. As of June 30, 2014, the Company is using the 1992 Framework. During the quarter ended June 30, 2014 there were no other changes in the Company’s internal control over financial reporting that materially affected or that are reasonably likely to materially affect the Company’s internal control over financial reporting.

Part II - OTHER INFORMATION

Item 1. Legal Proceedings.

On April 28, 2014 CryoLife filed a declaratory judgment lawsuit (the “Original Complaint”) against C.R. Bard, Inc., Davol, Inc., and Medafor, Inc., (collectively, “Bard”) in the U.S. District Court for the District of Delaware (the “Court”). CryoLife requested that the Court declare that CryoLife’s manufacture, use, offer for sale, and sale of PerClot in the U.S. does not infringe and would not infringe Bard’s United States Patent No. 6,060,461 (the “‘461 Patent”). In addition, CryoLife requested that the Court declare that the claims of the ‘461 Patent are invalid. As part of the relief requested, CryoLife requested injunctive relief and an award of attorneys’ fees.

The lawsuit against Bard follows the receipt by CryoLife of a letter from Medafor, Inc. in September 2012 stating that PerClot, when introduced in the U.S., will infringe the ‘461 Patent when used in accordance with the method published in CryoLife’s literature and with the instructions for use. CryoLife received FDA 510(k) clearance for the sale of PerClot Topical in April 2014 and received approval for an IDE in late March 2014 to begin clinical trials for PerClot in certain surgical indications.

On June 19, 2014 Bard filed a motion to dismiss the Original Complaint for lack of subject matter jurisdiction and failure to state a claim on which relief can be granted. On June 26, 2014 CryoLife filed a First Amended Complaint, which contained the same declaratory judgment request and relief as the Original Complaint, with some modifications to address Bard’s motion to dismiss, therefore mooting Bard’s motion to dismiss. On June 26, 2014 Bard filed a motion to transfer the lawsuit to the U.S. District Court for the District of Minnesota. On July 14, 2014 Bard filed a new motion to dismiss CryoLife’s First Amended Complaint for lack of subject matter jurisdiction and failure to state a claim on which relief can be granted, and CryoLife filed an opposition to Bard’s motion to transfer. The Court has not ruled on any of these motions and discovery has not commenced.

Item 1A. Risk Factors.

There have been no material changes to the Risk Factors as previously disclosed in Part I, Item 1A, “Risk Factors” in our 10-K for the year ended December 31, 2013.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(c) The following table provides information about purchases by the Company during the quarter ended June 30, 2014 of equity securities that are registered by the Company pursuant to Section 12 of the Securities Exchange Act of 1934:

Issuer Purchases of Equity Securities

Common Stock and Common Stock Units

Period	Total Number of Common Shares and Common Stock Units Purchased		Average Price Paid per Common Share		Total Number of Common Shares Purchased as Part of Publicly Announced Plans or Programs		Dollar Value of Common Shares That May Yet Be Purchased Under the Plans or Programs
04/01/14 - 04/30/14		—	$	—		—	$	13,476,633
05/01/14 - 05/31/14		113,603		8.83		113,603		12,473,844
06/01/14 - 06/30/14		113,585		8.84		113,585		11,470,008
Total		227,188		8.83		227,188

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In February 2013 the Company announced that its Board of Directors had authorized the purchase of up to $15.0 million of its common stock through October 31, 2014. The purchase of shares may be made from time to time in the open market or through privately negotiated transactions, on such terms as management deems appropriate, and will be dependent upon various factors, including: price, regulatory requirements, and other market conditions. For the quarter ended June 30, 2014, the Company purchased 227,000 shares of its common stock through this authorization for an aggregate purchase price of approximately $2.0 million.

Under the Company’s credit agreement with General Electric Capital Corporation, the Company is required, after giving effect to stock repurchases, to maintain liquidity, as defined within the agreement, of at least $20.0 million. In April 2014 the Company amended the agreement to allow repurchases up to approximately $14.0 million of common stock under the February 2013 authorization without obtaining its lender’s consent. As of June 30, 2014 $12.0 million remains available under the authorization.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.

The exhibit index can be found below.

Exhibit Number	Description
3.1	Amended and Restated Articles of Incorporation of the Company. (Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form S-3 filed February 22, 2012.)
3.2	Amended and Restated By-Laws. (Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed July 27, 2011.) (File No. 001-13165)
4.1	Form of Certificate for the Company’s Common Stock. (Incorporated herein by reference to Exhibit 4.2 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997.) (File No. 001-13165)
4.2	First Amended and Restated Rights Agreement, dated as of November 2, 2005, between CryoLife, Inc. and American Stock Transfer & Trust Company. (Incorporated herein by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed November 3, 2005.) (File No. 001-13165)
10.1*	Fourth Amendment, dated April 2, 2014, to the Amended and Restated Credit Agreement, dated October 28, 2011, by and among CryoLife, Inc. and certain of its subsidiaries, as borrowers, General Electric Capital Corporation, as lender, swingline lender, as letter of credit issuer, and as the agent for all lenders, and GE Capital Markets, Inc., as sole lead arranger and bookrunner.
10.2*	First Amendment, dated as of May 28, 2014, to the Employment Agreement, dated as of October 23, 2012, by and between CryoLife, Inc. and Steven G. Anderson.
10.3	CryoLife, Inc. Second Amended and Restated 2009 Stock Incentive Plan. (Incorporated herein by reference to Appendix B to the Company’s Definitive Proxy Statement filed April 8, 2014.) (File No. 001-13165)
31.1*	Certification by Steven G. Anderson pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification by D. Ashley Lee pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
32**	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CRYOLIFE, INC.
	(Registrant)
/s/ STEVEN G. ANDERSON	/s/ D. ASHLEY LEE
STEVEN G. ANDERSON Chairman, President, and Chief Executive Officer (Principal Executive Officer)	D. ASHLEY LEE Executive Vice President, Chief Operating Officer, and Chief Financial Officer (Principal Financial and Accounting Officer)

July 24, 2014

DATE

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EX-10.1

Exhibit 10.1

FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

THIS FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (“Amendment”) is entered into as of April 2, 2014, by and among CryoLife, Inc., a Florida corporation (“CryoLife”), AuraZyme Pharmaceuticals, Inc., a Florida corporation (“AuraZyme”), CryoLife International, Inc., a Florida corporation (“International”), Cardiogenesis Corporation, a Florida corporation (“Cardiogenesis”) (CryoLife, AuraZyme, International and Cardiogenesis are sometimes referred to herein together as the “Borrowers” and individually as a “Borrower”), CryoLife, as Borrower Representative, the other Credit Parties party hereto, General Electric Capital Corporation, a Delaware corporation (the “Agent”), as administrative agent for the lenders from time to time party to the Credit Agreement described below (collectively, the “Lenders” and individually each a “Lender”) and for itself as a Lender and L/C Issuer, and such Lenders.

RECITALS

A. The Borrowers, the other Credit Parties signatory thereto, the Lenders signatory thereto from time to time and Agent are parties to that certain Amended and Restated Credit Agreement, dated as of October 28, 2011, as amended by that certain First Amendment to Amended and Restated Credit Agreement, dated as of August 20, 2012, as further amended by that certain Second Amendment to Amended and Restated Credit Agreement, dated as of May 23, 2013, and as further amended by that certain Third Amendment to Amended and Restated Credit Agreement, dated as of September 20, 2013 (as so amended and as may be further amended, supplemented, revised, restated, replaced or otherwise modified, the “Credit Agreement”). Capitalized terms used in this Amendment without definition shall have the meanings ascribed to such terms in the Credit Agreement, as applicable.

B. The Borrowers have requested that Lenders amend the Credit Agreement in certain respects and Lenders have agreed to so amend the Credit Agreement, subject to the terms and conditions hereof.

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and intending to be legally bound, the parties hereto agree as follows:

A. AMENDMENTS

1. Amendment to Section 5.11. Section 5.11 of the Credit Agreement is hereby amended by replacing subsection (d) of such Section in its entirety with the following:

(d) CryoLife may undertake purchases or redemptions of the common stock of CryoLife pursuant to a stock buyback program (each, a “Stock Buyback”) in an aggregate amount not to exceed (i) $6,300,000 during the period commencing on the Initial Closing Date and ending on April 2, 2014 and (ii) $14,000,000 during the period commencing on April 2, 2014 and ending on the Revolving Termination Date; provided, that (i) both before and after giving pro forma effect to each such Stock Buyback, the Credit Parties shall be in compliance with the covenants set forth in Article VI as of the most recently

ended fiscal quarter for which financial statements have been delivered under Section 4.1(a) or (b), (ii) both before and after giving pro forma effect to each such Stock Buyback, no Default or Event of Default shall have occurred and be continuing, (iii) after giving effect to each such Stock Buyback the Credit Parties shall have at least $20,000,000 of Liquidity and (iv) the Credit Parties shall promptly comply with the requirements of Section 5.3 of the Guaranty and Security Agreement with respect to any Stock acquired pursuant to a Stock Buyback which are not cancelled or retired and which remain issued and outstanding; and

B. CONDITIONS TO EFFECTIVENESS

Notwithstanding any other provision of this Amendment and without affecting in any manner the rights of the Lenders hereunder, it is understood and agreed that this Amendment shall not become effective, and the Borrower shall have no rights under this Amendment, until Agent shall have received duly executed signature pages to this Amendment from the Lenders, Borrowers, L/C Issuer, Agent and each Credit Party.

C. REPRESENTATIONS

Each Credit Party hereby represents and warrants to Lenders, L/C Issuer and Agent that:

1. The execution, delivery and performance by such Credit Party of this Amendment (a) are within such Credit Party’s power; (b) have been duly authorized by all necessary corporate, limited liability company or limited partnership action; (c) are not in contravention of any provision of such Credit Party’s certificate of incorporation or bylaws or other organizational documents; (d) do not violate any law or regulation, or any order or decree of any Governmental Authority; (e) do not conflict with or result in the breach or termination of, constitute a default under or accelerate any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which such Credit Party or any of its Subsidiaries is a party or by which such Credit Party or any such Subsidiary or any of their respective property is bound; (f) do not result in the creation or imposition of any Lien upon any of the property of such Credit Party or any of its Subsidiaries other than those in favor of Agent, on behalf of itself and the Lenders, pursuant to the Loan Documents; and (g) do not require the consent or approval of any Governmental Authority or any other Person.

2. This Amendment has been duly executed and delivered for the benefit of or on behalf of each Credit Party and constitutes a legal, valid and binding obligation of each Credit Party, enforceable against such Credit Party in accordance with its terms except as the enforceability hereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors’ rights and remedies in general.

3. Except as disclosed in writing to the Agent on the date hereof, both before and after giving effect to this Amendment, the representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects and no Default or Event of Default has occurred and is continuing as of the date hereof.

2

D. OTHER AGREEMENTS

1. Continuing Effectiveness of Loan Documents. As amended hereby, all terms of the Credit Agreement and the other Loan Documents shall be and remain in full force and effect and shall constitute the legal, valid, binding and enforceable obligations of the Credit Parties party thereto. To the extent any terms and conditions in any of the other Loan Documents shall contradict or be in conflict with any terms or conditions of the Credit Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified and amended accordingly to reflect the terms and conditions of the Credit Agreement as modified and amended hereby. Upon the effectiveness of this Amendment such terms and conditions are hereby deemed modified and amended accordingly to reflect the terms and conditions of the Credit Agreement as modified and amended hereby.

2. Reaffirmation of Loan Documents. Each Credit Party consents to the execution and delivery of this Amendment by all parties hereto and the consummation of the transactions described herein, and ratifies and confirms the terms of the Credit Agreement, that certain Guaranty and Security Agreement, dated as of March 27, 2008 and reaffirmed by that certain Omnibus Reaffirmation Agreement, dated as of October 28, 2011 (as amended, supplemented, modified, the “Guaranty and Security Agreement”) and each other Loan Document to which such Credit Party is a party with respect to the indebtedness now or hereafter outstanding under the Credit Agreement as amended hereby and all promissory notes issued thereunder. Each Credit Party acknowledges that, notwithstanding anything to the contrary contained herein or in any other document evidencing any indebtedness of any Borrower to the Lenders or any other obligation of Borrowers, or any actions now or hereafter taken by the Lenders with respect to any obligation of Borrowers, the Guaranty and Security Agreement (i) is and shall continue to be a primary obligation of such Credit Party, (ii) is and shall continue to be an absolute, unconditional, continuing and irrevocable guaranty of payment, and (iii) is and shall continue to be in full force and effect in accordance with its terms. Nothing contained herein to the contrary shall release, discharge, modify, change or affect the original liability of any Credit Party under the Guaranty and Security Agreement.

3. Acknowledgment of Perfection of Security Interest. Each Credit Party hereby acknowledges that, as of the date hereof, the security interests and liens granted to Agent, the L/C Issuer and the Lenders under the Credit Agreement and the other Loan Documents are in full force and effect, are properly perfected and are enforceable in accordance with the terms of the Credit Agreement and the other Loan Documents.

4. Effect of Agreement. Except as set forth expressly herein, all terms of the Credit Agreement, as amended hereby, and the other Loan Documents shall be and remain in full force and effect and shall constitute the legal, valid, binding and enforceable obligations of the Borrowers to the Lenders, the L/C Issuer and Agent. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lenders under the Credit Agreement, nor constitute a waiver of any provision of the Credit Agreement. This Amendment shall constitute a Loan Document for all purposes of the Credit Agreement.

3

5. Governing Law. This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York and all applicable federal laws of the United States of America.

6. No Novation. This Amendment is not intended by the parties to be, and shall not be construed to be, a novation of the Credit Agreement and the other Loan Documents or an accord and satisfaction in regard thereto.

7. Costs and Expenses. The Borrowers agree to pay on demand all costs and expenses of Agent in connection with the preparation, execution and delivery of this Amendment, including, without limitation, the reasonable fees and out-of-pocket expenses of outside counsel for Agent with respect thereto.

8. Counterparts. This Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, each of which shall be deemed an original and all of which, taken together, shall be deemed to constitute one and the same instrument. Delivery of an executed counterpart of this Amendment by facsimile transmission, Electronic Transmission or containing an E-Signature shall be as effective as delivery of a manually executed counterpart hereof.

9. Binding Nature. This Amendment shall be binding upon and inure to the benefit of the parties hereto, their respective successors, successors-in-titles, and assigns.

10. Entire Understanding. This Amendment sets forth the entire understanding of the parties with respect to the matters set forth herein, and shall supersede any prior negotiations or agreements, whether written or oral, with respect thereto.

[signature pages to follow]

4

IN WITNESS WHEREOF, this Amendment has been duly executed as of the date first written above.

BORROWERS:
CRYOLIFE, INC.
By:	/s/ D. A. Lee
Name:		D. Ashley Lee
Title:		Executive Vice President, Chief     Financial Officer and Chief Operating     Officer
AURAZYME PHARMACEUTICALS, INC.
By:	/s/ D. A. Lee
Name:		D. Ashley Lee
Title:		Executive Vice President, Chief     Financial Officer and Chief Operating     Officer
CRYOLIFE INTERNATIONAL, INC.
By:	/s/ D. A. Lee
Name:		D. Ashley Lee
Title:		Executive Vice President, Chief     Financial Officer and Chief Operating     Officer
CARDIOGENESIS CORPORATION
By:	/s/ D. A. Lee
Name:		D. Ashley Lee
Title:		Executive Vice President, Chief     Financial Officer and Chief Operating     Officer
HEMOSPHERE, INC.
By:	/s/ D. A. Lee
Name:		D. Ashley Lee
Title:		Executive Vice President, Chief     Financial Officer and Chief Operating     Officer

[Signature Page to Fourth Amendment to Amended and Restated Credit Agreement]

5

AGENT, L/C ISSUER AND LENDERS:
GENERAL ELECTRIC CAPITAL CORPORATION, as Agent, L/C Issuer and sole Lender
By:	/s/ Andrew Moore
	Its Duly Authorized Signatory

[Signature Page to Fourth Amendment to Amended and Restated Credit Agreement]

6

EX-10.2

Exhibit 10.2

FIRST AMENDMENT TO

EMPLOYMENT AGREEMENT

This FIRST AMENDMENT (this “Amendment”) to the Employment Agreement (the “Agreement”) dated October 23, 2012 by and between CRYOLIFE, INC., a Florida corporation, (“CryoLife,” or the “Company”) and STEVEN G. ANDERSON (the “Employee”) is dated as of the 28 day of May, 2014, and shall be effective as of the same date (the “Amendment Effective Date”).

W I T N E S S E T H:

WHEREAS, the Company and the Employee previously entered into the Agreement, and the Agreement continues in effect as of the date hereof; and

WHEREAS, the Company and the Employee have determined that it is in the best interests of the Company and the Employee to extend the Employee’s Employment Period (as such term is defined in the Agreement) for one additional year through December 31, 2016; and

WHEREAS, the Company and the Employee have determined that it is in their respective best interests to enter into this Amendment; and

WHEREAS, the Board of Directors (the “Board”) of the Company, upon recommendation of the Board’s Compensation Committee (the “Compensation Committee”), has approved this Amendment.

NOW, THEREFORE, in consideration of the premises, the promises hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by both parties, it is hereby agreed as follows, all effective as of the Amendment Effective Date:

1. Section 1(b) (Employment Period) of the Agreement is hereby amended by replacing “December 31, 2015” with “December 31, 2016”.

2. Employee acknowledges and agrees that (i) the Company previously fully satisfied its obligations to Employee under Sections 3(b) (Expenses) and 13(d) (Integration; Additional Cash Payment) of the Agreement related to reimbursement of Employee’s expenses associated with the negotiation, documentation and implementation of the Agreement and a $100,000 one-time cash payment, respectively, and (ii) the Company will not provide any expense reimbursement, one-time cash payment, or other similar payments with respect to this Amendment.

3. This Amendment shall be governed by and construed in accordance with the laws of the State of Georgia, without reference to principles of conflict of laws.

4. Except as amended pursuant to the terms of this Amendment, the Agreement shall continue in full force and effect according to its terms.

1

IN WITNESS WHEREOF, Employee has hereunder set his hand and, pursuant to the authorization from the Board, upon recommendation of the Compensation Committee, CryoLife has caused this Amendment to be executed in its name and on its behalf, all as of the day and year first written above.

/s/ Steven G. Anderson

STEVEN G. ANDERSON

CRYOLIFE, INC.

/s/ Ronald C. Elkins, M.D.

RONALD C. ELKINS, M.D.

DIRECTOR AND CHAIRMAN,

COMPENSATION COMMITTEE

2

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Steven G. Anderson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CryoLife, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 24, 2014

/s/ STEVEN G. ANDERSON

Chairman, President, and

Chief Executive Officer

EX-31.2

Exhibit 31.2

I, David Ashley Lee, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CryoLife, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 24, 2014

/s/ D. ASHLEY LEE

Executive Vice President,

Chief Operating Officer, and

Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CryoLife, Inc. (the “Company”) on Form 10-Q for the quarter ending June 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of Steven G. Anderson, the Chairman, President, and Chief Executive Officer of the Company, and David Ashley Lee, the Executive Vice President, Chief Operating Officer, and Chief Financial Officer of the Company, hereby certifies, pursuant to and for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ STEVEN G. ANDERSON	/s/ D. ASHLEY LEE
STEVEN G. ANDERSON	D. ASHLEY LEE
Chairman, President, and	Executive Vice President,
Chief Executive Officer	Chief Operating Officer, and
July 24, 2014	Chief Financial Officer
	July 24, 2014

XML

Goodwill And Other Intangible Assets (Schedule Of Carrying Values Of Indefinite Lived Intangible Assets)(Details) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Indefinite-lived Intangible Assets [Line Items]
Goodwill	$ 11,365,000	$ 11,365,000
Change in goodwill	0	0
Procurement Contracts And Agreements [Member]
Indefinite-lived Intangible Assets [Line Items]
Indefinite lived intangible assets	2,013,000	2,013,000
Trademarks [Member]
Indefinite-lived Intangible Assets [Line Items]
Indefinite lived intangible assets	$ 847,000	$ 841,000

XML

Stock Compensation (Schedule Of Weighted-Average Assumptions Used To Determine The Fair Value Of Options) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life of options			4 years 3 months	4 years 3 months
Expected stock price volatility			55.00%	60.00%
Dividends			1.10%	1.91%
Risk-free interest rate			1.19%	0.70%
ESPP Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life of options	6 months	6 months	6 months	6 months
Expected stock price volatility	34.00%	43.00%	34.00%	43.00%
Dividends	0.99%	1.61%	0.99%	1.61%
Risk-free interest rate	0.10%	0.16%	0.10%	0.16%

XML

Shareholders' Equity (Details) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	0 Months Ended		1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	May 28, 2013	Aug. 21, 2012	May 31, 2014	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Apr. 02, 2014	Feb. 28, 2013
Shareholders' Equity [Abstract]
Common stock repurchase, authorized amount										$ 15,000,000
Stock repurchased during period, shares						227		253
Stock repurchased during period, aggregate purchase price						2,000,000		1,500,000
Common stock repurchase, remaining authorized amount				11,500,000		11,500,000			13,500,000
Quarterly cash dividend per share of common stock outstanding approved	$ 0.0275	$ 0.025	$ 0.03	$ 0.0300	$ 0.0275	$ 0.0575	$ 0.0525
Dividend payment from cash on hand				$ 838,000	$ 756,000	$ 1,600,000	$ 1,400,000

XML

ProCol Distribution Agreement (Details) (USD $)	1 Months Ended	12 Months Ended
	Mar. 31, 2014 item	Dec. 31, 2014 Maximum [Member] Scenario, Forecast [Member]	Jun. 30, 2014 Hancock Jaffe Laboratories, Inc. [Member]
Distribution Agreement [Line Items]
Initial term of contract for distribution rights for ProCol	3 years
Number of contract renewals	2
Term of contract renewals	1 year
Total payments for inventory		$ 2,300,000
Amount payable per quarter for inventory		650,000
Amount of payment			$ 1,000,000

XML

Goodwill And Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2014

Goodwill And Other Intangible Assets [Abstract]

Schedule Of Carrying Values Of Indefinite Lived Intangible Assets

	June 30,		December 31,
	2014		2013
Goodwill	$	11,365	$	11,365
Procurement contracts and agreements		2,013		2,013
Trademarks		847		841

Schedule Of Gross Carrying Values, Accumulated Amortization, And Approximate Amortization Periods Of Definite Lived Intangible Assets

	Gross Carrying		Accumulated		Amortization
June 30, 2014	Value		Amortization		Period
Acquired technology	$	14,020	$	3,246	11 – 16	Years
Patents		4,340		2,442	17	Years
Distribution and manufacturing rights and know-how		4,059		845	15	Years
Customer lists and relationships		3,370		692	13 – 17	Years
Non-compete agreement		381		286	10	Years
Other		474		205	1 – 5	Years
	Gross Carrying		Accumulated		Amortization
December 31, 2013	Value		Amortization		Period
Acquired technology	$	14,020	$	2,677	11 – 16	Years
Patents		4,348		2,414	17	Years
Distribution and manufacturing rights and know-how		3,559		714	15	Years
Customer lists and relationships		3,370		572	13 – 17	Years
Non-compete agreement		381		267	10	Years
Other		202		171	1 – 3	Years

Summary Of Amortization Expense

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Amortization expense	$	503	$	508	$	999	$	1,022

Scheduled Amortization Of Intangible Assets For Next Five Years

	Remainder
	of 2014		2015		2016		2017		2018		2019
Amortization expense	$	1,008	$	1,986	$	1,978	$	1,924	$	1,916	$	1,909

XML

Income Per Common Share (Computation Of Basic And Diluted Income (Loss) Per Common Share) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Income Per Common Share [Abstract]
Net income	$ 2,161		$ 1,785		$ 3,220		$ 3,977
Net income allocated to participating securities, basic	(38)		(40)		(60)		(91)
Net income allocated to common shareholders, basic	2,123		1,745		3,160		3,886
Basic weighted-average common shares outstanding	27,502		26,856		27,439		26,858
Basic income per common share	$ 0.08		$ 0.06		$ 0.12		$ 0.14
Net income allocated to participating securities, diluted	(37)		(40)		(59)		(90)
Net income allocated to common shareholders, diluted	$ 2,124		$ 1,745		$ 3,161		$ 3,887
Effect of dilutive stock options and awards	815	[1]	513	[1]	943	[1]	598	[1]
Diluted weighted-average common shares outstanding	28,317		27,369		28,382		27,456
Diluted income per common share	$ 0.08		$ 0.06		$ 0.11		$ 0.14
Antidilutive securities excluded from computation of earnings per share	485		1,300		182		1,200

[1] The Company excluded stock options from the calculation of diluted weighted-average common shares outstanding if the per share value, including the sum of (i) the exercise price of the options and (ii) the amount of the compensation cost attributed to future services and not yet recognized, was greater than the average market price of the shares because the inclusion of these stock options would be antidilutive to income per common share. Accordingly, stock options to purchase a weighted-average 485,000 shares and 182,000 shares for the three and six months ended June 30, 2014, respectively, and 1.3 million shares and 1.2 million shares for the three and six months ended June 30, 2013, respectively, were excluded from the calculation of diluted weighted-average common shares outstanding.

XML

Goodwill And Other Intangible Assets (Scheduled Amortization Of Intangible Assets For Next Five Years) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014
Goodwill And Other Intangible Assets [Abstract]
Amortization expense, Remainder of 2014	$ 1,008
Amortization expense, 2015	1,986
Amortization expense, 2016	1,978
Amortization expense, 2017	1,924
Amortization expense, 2018	1,916
Amortization expense, 2019	$ 1,909

XML

Deferred Preservation Costs And Inventories (Schedule Of Deferred Preservation Costs) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Deferred Preservation Costs [Line Items]
Total deferred preservation costs	$ 26,514	$ 27,297
Cardiac Tissues [Member]
Deferred Preservation Costs [Line Items]
Total deferred preservation costs	11,940	12,239
Vascular Tissues [Member]
Deferred Preservation Costs [Line Items]
Total deferred preservation costs	$ 14,574	$ 15,058

XML

Segment Information (Summary Of Net Revenues By Product) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013		Jun. 30, 2014	Jun. 30, 2013
Product Information [Line Items]
Total revenues	$ 34,690	$ 33,520		$ 70,421	$ 69,056
BioGlue And BioFoam [Member]
Product Information [Line Items]
Total revenues	15,389	13,542		30,629	29,006
PerClot [Member]
Product Information [Line Items]
Total revenues	1,143	940		2,059	1,804
Revascularization Technologies [Member]
Product Information [Line Items]
Total revenues	2,084	2,293		3,768	4,484
HeRO Graft [Member]
Product Information [Line Items]
Total revenues	1,705	1,420		3,320	2,697
Other Products [Member]
Product Information [Line Items]
Total revenues	29			29
Total Products [Member]
Product Information [Line Items]
Total revenues	20,350	18,195		39,805	37,991
Cardiac Tissue [Member]
Product Information [Line Items]
Total revenues	6,454	6,818		13,644	13,463
Vascular Tissue [Member]
Product Information [Line Items]
Total revenues	7,886	8,499		16,972	17,531
Total Preservation Services [Member]
Product Information [Line Items]
Total revenues	14,340	15,317		30,616	30,994
Other Segments [Member]
Product Information [Line Items]
Total revenues		$ 8	[1]		$ 71	[1]

[1] The “Other” designation includes grant revenue.

XML

Stock Compensation (Narrative) (Details) (USD $) Share data in Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
ESPP, percentage of discounted price from market price			85.00%
Actual percentage of target number of shares of common stock granted as Performance Stock Units					115.00%
Employees purchased common stock, shares			59	49
Capitalized stock compensation expense	$ 66,000	$ 48,000	$ 140,000	$ 112,000
RSAs, RSUs, And PSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Authorized stock incentive plans to non-employee Directors and certain Company officers, shares			326
Aggregate market value of issued stock incentive plans			3,300,000
Unrecognized compensation costs	4,500,000		4,500,000
RSAs And PSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Authorized stock incentive plans to non-employee Directors and certain Company officers, shares				395
Aggregate market value of issued stock incentive plans				2,400,000
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, Shares			162	162
Unrecognized compensation costs	$ 900,000		$ 900,000
Expected weighted-average period for recognizing the unrecognized compensation costs, in years			2 years
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected weighted-average period for recognizing the unrecognized compensation costs, in years			1 year 9 months 15 days
Restricted Stock Awards (RSAs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected weighted-average period for recognizing the unrecognized compensation costs, in years			1 year 8 months 5 days
Performance Stock Units (PSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected weighted-average period for recognizing the unrecognized compensation costs, in years			1 year 2 months 23 days
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of target number of shares of common stock granted as Performance Stock Units			50.00%
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of target number of shares of common stock granted as Performance Stock Units			150.00%

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ProCol Distribution Agreement

6 Months Ended

Jun. 30, 2014

ProCol Distribution Agreement [Abstract]

ProCol Distribution Agreement

4.  ProCol Distribution Agreement

In March 2014 CryoLife acquired the exclusive worldwide distribution rights for ProCol® Vascular Bioprosthesis (“ProCol”) from Hancock Jaffe Laboratories, Inc. (“Hancock Jaffe”).  The agreement between CryoLife and Hancock Jaffe (the “HJ Agreement”) has an initial three-year term and is renewable for twoone-year periods at CryoLife’s option.  Per the terms of the HJ Agreement, CryoLife has the option to acquire the ProCol product line from Hancock Jaffe beginning in March 2016.

ProCol, which is approved for sale in the U.S., is a biological graft derived from a bovine mesenteric vein that provides vascular access for end-stage renal disease (“ESRD”) hemodialysis patients.  It is intended for the creation of a bridge graft for vascular access subsequent to at least one previously failed prosthetic access graft.  ProCol is complementary to the Company’s Hemodialysis Reliable Outflow Graft (“HeRO® Graft”), which also serves patients with ESRD.  ProCol provides vascular access for earlier-stage ESRD patients, while HeRO Graft is designed for patients with limited access options and central venous obstruction. 

In accordance with the terms of the HJ Agreement, CryoLife will make payments to Hancock Jaffe of up to $2.3 million during 2014, with no more than $650,000 payable in any quarter.  In exchange for these payments, CryoLife will receive a designated amount of ProCol inventory for resale, including a small amount of existing commercially salable inventory and additional inventory.  Additional inventory will be available as it is manufactured and after Hancock Jaffe receives U.S. Food and Drug Administration (“FDA”) approval of the Premarket Approval Supplement associated with its new manufacturing facilities.  Subsequent to this initial inventory purchase, CryoLife can purchase additional units from Hancock Jaffe at an agreed upon transfer price.

As of June 30, 2014 the Company had made payments of $1.0 million to Hancock Jaffe, and it began distributing ProCol in the second quarter of 2014.

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Income Taxes (Details) (USD $)	1 Months Ended	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Income Taxes [Abstract]
Effective income tax rate		10.00%	35.00%	22.00%	31.00%
Amount reversed in uncertain tax liabilities and tax expense	$ 748,000
Valuation allowances against deferred tax assets	1,500,000	1,500,000		1,500,000		1,500,000
Net deferred tax asset	$ 22,000,000	$ 22,000,000		$ 22,000,000		$ 22,000,000

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Financial Instruments (Summary Of Financial Instruments Measured At Fair Value) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	$ 23,865	$ 6,448
Contingent consideration	(1,588)	(1,884)
Total liabilities	(1,588)	(1,884)
Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	892	5,349
Restricted securities	973	350
Certificates Of Deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		749
U.S. Treasury Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	22,000
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	23,865	6,448
Level 1 [Member] | Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	892	5,349
Restricted securities	973	350
Level 1 [Member] | Certificates Of Deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents		749
Level 1 [Member] | U.S. Treasury Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	22,000
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	(1,588)	(1,884)
Total liabilities	$ (1,588)	$ (1,884)

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2014

Segment Information [Abstract]

Revenues, Cost Of Services And Products, And Gross Margins For Operating Segments

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Revenues:
Medical devices	$	20,350	$	18,195	$	39,805	$	37,991
Preservation services		14,340		15,317		30,616		30,994
Othera		--		8		--		71
Total revenues		34,690		33,520		70,421		69,056
Cost of products and preservation services:
Medical devices		4,131		3,721		7,932		7,186
Preservation services		8,175		8,320		17,632		17,115
Total cost of products and preservation services		12,306		12,041		25,564		24,301
Gross margin:
Medical devices		16,219		14,474		31,873		30,805
Preservation services		6,165		6,997		12,984		13,879
Othera		--		8		--		71
Total gross margin	$	22,384	$	21,479	$	44,857	$	44,755

Summary Of Net Revenues By Product

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Products:
BioGlue and BioFoam	$	15,389	$	13,542	$	30,629	$	29,006
PerClot		1,143		940		2,059		1,804
Revascularization technologies		2,084		2,293		3,768		4,484
HeRO Graft		1,705		1,420		3,320		2,697
Other products		29		--		29		--
Total products		20,350		18,195		39,805		37,991
Preservation services:
Cardiac tissue		6,454		6,818		13,644		13,463
Vascular tissue		7,886		8,499		16,972		17,531
Total preservation services		14,340		15,317		30,616		30,994
Othera		--		8		--		71
Total revenues	$	34,690	$	33,520	$	70,421	$	69,056

___________________

aThe “Other” designation includes grant revenue.

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Debt (Details) (USD $)	3 Months Ended		6 Months Ended				6 Months Ended		6 Months Ended			0 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Apr. 02, 2014	Dec. 31, 2013	Jun. 30, 2014 GE Credit Agreement [Member]	Dec. 31, 2013 GE Credit Agreement [Member]	Jun. 30, 2014 Minimum [Member] GE Credit Agreement [Member]	Jun. 30, 2014 Minimum [Member] LIBOR Rate [Member] GE Credit Agreement [Member]	Jun. 30, 2014 Minimum [Member] Base Rate [Member] GE Credit Agreement [Member]	Apr. 02, 2014 Amended [Member] Maximum [Member] GE Credit Agreement [Member]
Line of Credit Facility [Line Items]
Revolving credit facility, aggregate amount							$ 20,000,000
Revolving credit facility, restriction on cash and cash equivalents	5,973,000		5,973,000			5,350,000	5,000,000	5,000,000	5,000,000
Payment of cash dividends allowed per year, maximum							3,500,000
Revolving credit facility, expiraton date							Oct. 28, 2014
Revolving credit facility, liquidity requirement after effect to stock repurchase									20,000,000
Interest rate on amounts borrowed										4.25%	3.25%
Revolving credit facility, outstanding balance							0	0
Revolving credit facility, aggregate interest rate							6.50%	6.50%
Revolving credit facility, remaining availability							20,000,000	20,000,000
Common stock repurchase, authorized amount												14,000,000
Common stock repurchase, remaining authorized amount	11,500,000		11,500,000		13,500,000
Total interest expense	$ (16,000)	$ 54,000	$ 45,000	$ 104,000

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Financial Instruments (Reconciliation Of Changes In Fair Value Of Level 3 Liabilities) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Financial Instruments [Abstract]
Contingent consideration, balance as of December 31, 2013			$ 1,884,000
Gain on remeasurement of contingent consideration	(198,000)	39,000	(296,000)	78,000
Contingent consideration, balance as of June 30, 2014	$ 1,588,000		$ 1,588,000

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Cash Equivalents And Restricted Cash And Securities (Narrative) (Details) (USD $)	3 Months Ended		6 Months Ended												6 Months Ended	12 Months Ended		12 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2014 Money Market Funds [Member]	Dec. 31, 2013 Money Market Funds [Member]	Jun. 30, 2014 No Maturity Date [Member]	Dec. 31, 2013 No Maturity Date [Member]	Dec. 31, 2013 Maturity Date Within Three Months [Member]	Jun. 30, 2014 Maturity Date Between Three Months And One Year [Member]	Dec. 31, 2013 Maturity Date Between Three Months And One Year [Member]	Jun. 30, 2014 GE Credit Agreement [Member]	Dec. 31, 2013 GE Credit Agreement [Member]	Jun. 30, 2014 Minimum [Member] Maturity Date Between Three Months And One Year [Member]	Dec. 31, 2013 Minimum [Member] Maturity Date Between Three Months And One Year [Member]	Jun. 30, 2014 Minimum [Member] GE Credit Agreement [Member]	Dec. 31, 2013 Maximum [Member] Maturity Date Within Three Months [Member]	Jun. 30, 2014 Maximum [Member] Maturity Date Between Three Months And One Year [Member]	Dec. 31, 2013 Maximum [Member] Maturity Date Between Three Months And One Year [Member]
Restricted Cash and Cash Equivalents Items [Line Items]
Short-term restricted securities						$ 973,000	$ 350,000
Short-term restricted cash and securities	5,973,000		5,973,000		5,350,000			5,000,000	5,000,000				5,000,000	5,000,000			5,000,000
Gains or losses realized on cash equivalents	0	0	0	0
Restricted securities										$ 328,000	$ 973,000	$ 22,000
Restricted securities, period for maturity date															3 months	3 months		3 months	1 year	1 year

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Cash Equivalents And Restricted Cash And Securities

6 Months Ended

Jun. 30, 2014

Cash Equivalents And Restricted Cash And Securities [Abstract]

Cash Equivalents And Restricted Cash And Securities

3.  Cash Equivalents and Restricted Cash and Securities 

The following is a summary of cash equivalents and restricted cash and securities (in thousands):

			Unrealized		Estimated
			Holding		Market
June 30, 2014	Cost Basis		Gains		Value
Cash equivalents:
Money market funds	$	892	$	--	$	892
U.S. Treasury debt securities		22,000		--		22,000
Restricted cash and securities:
Cash		5,000		--		5,000
Money market funds		973		--		973
				Unrealized		Estimated
				Holding		Market
December 31, 2013		Cost Basis		Gains		Value
Cash equivalents:
Money market funds	$	5,349	$	--	$	5,349
Certificates of deposit		749		--		749
Restricted cash and securities:
Cash		5,000		--		5,000
Money market funds		350		--		350

As of June 30, 2014 and December 31, 2013  $973,000 and $350,000, respectively, of the Company’s money market funds were designated as short-term restricted securities due to a contractual commitment to hold the securities as pledged collateral relating primarily to international tax obligations.  As of June 30, 2014 and December 31, 2013  $5.0 million of the Company’s cash was designated as short-term restricted cash due to a financial covenant requirement under the Company’s credit agreement with General Electric Capital Corporation (“GE Capital”), as discussed in Note 11.  This restriction lapses upon expiration of the credit agreement with GE Capital on October 28, 2014. 

There were no gross realized gains or losses on cash equivalents in the three and six months endedJune 30, 2014 and 2013.  As of June 30, 2014  $973,000 of the Company’s restricted securities had a maturity date of between three months and one year.  As of December 31, 2013$328,000 of the Company’s restricted securities had a maturity date within three months, and $22,000 of the Company’s restricted securities had a maturity date between three months and one year.  As of June 30, 2014 and December 31, 2013  $5.0 million of the Company’s restricted cash had no maturity date.

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Cash Equivalents And Restricted Cash And Securities (Summary Of Cash Equivalents And Marketable Securities) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Cash [Member] | Restricted Cash And Securities [Member]
Restricted Cash and Cash Equivalents Items [Line Items]
Cost Basis	$ 5,000	$ 5,000
Unrealized Holding Gains (Losses)
Estimated Market Value	5,000	5,000
Money Market Funds [Member] | Cash Equivalents [Member]
Restricted Cash and Cash Equivalents Items [Line Items]
Cost Basis	892	5,349
Unrealized Holding Gains (Losses)
Estimated Market Value	892	5,349
Money Market Funds [Member] | Restricted Cash And Securities [Member]
Restricted Cash and Cash Equivalents Items [Line Items]
Cost Basis	973	350
Unrealized Holding Gains (Losses)
Estimated Market Value	973	350
Certificates Of Deposit [Member] | Cash Equivalents [Member]
Restricted Cash and Cash Equivalents Items [Line Items]
Cost Basis		749
Unrealized Holding Gains (Losses)
Estimated Market Value		749
U.S. Treasury Debt Securities [Member] | Cash Equivalents [Member]
Restricted Cash and Cash Equivalents Items [Line Items]
Cost Basis	22,000
Unrealized Holding Gains (Losses)
Estimated Market Value	$ 22,000

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Goodwill And Other Intangible Assets (Schedule Of Gross Carrying Values, Accumulated Amortization, And Approximate Amortization Periods Of Definite Lived Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified			3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended			3 Months Ended	12 Months Ended			6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2014 Acquired Technology [Member]	Dec. 31, 2013 Acquired Technology [Member]	Jun. 30, 2014 Patents [Member]	Dec. 31, 2013 Patents [Member]	Jun. 30, 2014 Distribution And Manufacturing Rights And Know-How [Member]	Dec. 31, 2013 Distribution And Manufacturing Rights And Know-How [Member]	Jun. 30, 2014 Customer Lists And Relationships [Member]	Dec. 31, 2013 Customer Lists And Relationships [Member]	Jun. 30, 2014 Non-Compete Agreement [Member]	Dec. 31, 2013 Non-Compete Agreement [Member]	Jun. 30, 2014 Other [Member]	Dec. 31, 2013 Other [Member]	Jun. 30, 2014 Minimum [Member] Acquired Technology [Member]	Dec. 31, 2013 Minimum [Member] Acquired Technology [Member]	Jun. 30, 2014 Minimum [Member] Customer Lists And Relationships [Member]	Dec. 31, 2013 Minimum [Member] Customer Lists And Relationships [Member]	Jun. 30, 2014 Minimum [Member] Other [Member]	Dec. 31, 2013 Minimum [Member] Other [Member]	Jun. 30, 2014 Maximum [Member] Acquired Technology [Member]	Dec. 31, 2013 Maximum [Member] Acquired Technology [Member]	Jun. 30, 2014 Maximum [Member] Customer Lists And Relationships [Member]	Dec. 31, 2013 Maximum [Member] Customer Lists And Relationships [Member]	Jun. 30, 2014 Maximum [Member] Other [Member]	Dec. 31, 2013 Maximum [Member] Other [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value	$ 14,020	$ 14,020	$ 4,340	$ 4,348	$ 4,059	$ 3,559	$ 3,370	$ 3,370	$ 381	$ 381	$ 474	$ 202
Accumulated amortization	$ 3,246	$ 2,677	$ 2,442	$ 2,414	$ 845	$ 714	$ 692	$ 572	$ 286	$ 267	$ 205	$ 171
Amortization Period			17 years	17 years	15 years	15 years			10 years	10 years			11 years	11 years	13 years	13 years	1 year	1 year	16 years	16 years	17 years	17 years	5 years	3 years

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Summary Consolidated Statements Of Operations And Comprehensive Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Revenues:
Products	$ 20,350	$ 18,195	$ 39,805	$ 37,991
Preservation services	14,340	15,317	30,616	30,994
Other		8		71
Total revenues	34,690	33,520	70,421	69,056
Cost of products and preservation services:
Products	4,131	3,721	7,932	7,186
Preservation services	8,175	8,320	17,632	17,115
Total cost of products and preservation services	12,306	12,041	25,564	24,301
Gross margin	22,384	21,479	44,857	44,755
Operating expenses:
General, administrative, and marketing	17,959	16,932	36,234	34,909
Research and development	2,203	1,736	4,705	3,724
Total operating expenses	20,162	18,668	40,939	38,633
Operating income	2,222	2,811	3,918	6,122
Interest expense	(16)	54	45	104
Interest income	(45)		(48)	(2)
Other (income) expense, net	(111)	22	(210)	241
Income before income taxes	2,394	2,735	4,131	5,779
Income tax expense	233	950	911	1,802
Net income	2,161	1,785	3,220	3,977
Income per common share:
Basic	$ 0.08	$ 0.06	$ 0.12	$ 0.14
Diluted	$ 0.08	$ 0.06	$ 0.11	$ 0.14
Dividends declared per common share	$ 0.0300	$ 0.0275	$ 0.0575	$ 0.0525
Weighted-average common shares outstanding:
Basic	27,502	26,856	27,439	26,858
Diluted	28,317	27,369	28,382	27,456
Net income	2,161	1,785	3,220	3,977
Other comprehensive income	41	54	6	21
Comprehensive income	$ 2,202	$ 1,839	$ 3,226	$ 3,998

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Commitments And Contingencies (Details) (USD $)			0 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Sep. 02, 2014 Scenario, Forecast [Member] Future Chief Executive Officer [Member]	Jun. 30, 2014 CEO Post Employment Benefits [Member]	Dec. 31, 2013 CEO Post Employment Benefits [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Unreported loss liability	$ 1,500,000	$ 1,500,000
Recoverable insurance amounts	610,000	580,000
Liability estimated after a reasonable margin for statistical fluctuations	2,700,000
Accrued expenses and other current liabilities payable upon the CEO's voluntary retirement				2,100,000	2,100,000
Term of employment			3 years
CEO signing bonus			$ 200,000
Issuance of grants of stock options to CEO			400,000
Issuance of grants of performance stock awards to CEO			250,000

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Basis Of Presentation

6 Months Ended

Jun. 30, 2014

Basis Of Presentation [Abstract]

Basis Of Presentation

1.  Basis of Presentation  

The accompanying summary consolidated financial statements include the accounts of CryoLife, Inc. and its subsidiaries (“CryoLife,” the “Company,” “we,” or “us”).  All significant intercompany accounts and transactions have been eliminated in consolidation.  The accompanying Summary Consolidated Balance Sheet as of December 31, 2013 has been derived from audited financial statements.  The accompanying unaudited summary consolidated financial statements as of and for the three and six months endedJune 30, 2014 and 2013 have been prepared in accordance with (i) accounting principles generally accepted in the U.S. for interim financial information and (ii) the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”).  Accordingly, such statements do not include all of the information and disclosures required by accounting principles generally accepted in the U.S. for a complete presentation of financial statements.  In the opinion of management, all adjustments (including those of a normal, recurring nature) considered necessary for a fair presentation have been included.  Operating results for the three and six months endedJune 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.  These summary consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in CryoLife’s Annual Report on Form 10-K for the year ended December 31, 2013.

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ValveXchange (Details) (USD $)			1 Months Ended	6 Months Ended			3 Months Ended			1 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jul. 31, 2011 ValveXchange, Inc. [Member]	Jun. 30, 2014 ValveXchange, Inc. [Member]	Dec. 31, 2013 ValveXchange, Inc. [Member]	Dec. 31, 2012 ValveXchange, Inc. [Member]	Dec. 31, 2013 Series A Preferred Stock [Member] ValveXchange, Inc. [Member]	Jun. 30, 2014 Series A Preferred Stock [Member] ValveXchange, Inc. [Member]	Jul. 31, 2011 Series A Preferred Stock [Member] ValveXchange, Inc. [Member]	Apr. 30, 2014 Series B Preferred Stock [Member] ValveXchange, Inc. [Member]	Jun. 30, 2014 Series B Preferred Stock [Member] ValveXchange, Inc. [Member]
Schedule of Cost-method Investments [Line Items]
Preferred stock purchased, value									$ 3,500,000
Preferred stock, written down investment							3,200,000
Preferred stock carrying value							0	0
Loans receivable, revolving credit line, maximum capacity			2,000,000
Loans receivable, revolving credit line, expiration date				Jul. 30, 2018
Loans receivable, revolving credit line, interest rate			8.00%
Loan origination costs net of fees			117,000
Amount of loan advanced	2,000,000	2,000,000		2,000,000	2,000,000	2,000,000
Percentage of any amounts in excess of agreed upon amount from fundraising to be paid to Cryolife										10.00%
Minimum amount raised before 10% of amounts raised in excess are paid to Cryolife										1,250,000
Amount raised											$ 1,700,000

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Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2014

Financial Instruments [Abstract]

Summary Of Financial Instruments Measured At Fair Value

June 30, 2014	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	892	$	--	$	--	$	892
U.S. Treasury debt securities		22,000		--		--		22,000
Restricted securities:
Money market funds		973		--		--		973
Total assets	$	23,865	$	--	$	--	$	23,865
Long-term liabilities:
Contingent consideration	$	--	$	--	$	(1,588)	$	(1,588)
Total liabilities	$	--	$	--	$	(1,588)	$	(1,588)

December 31, 2013	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	5,349	$	--	$	--	$	5,349
Certificates of deposit		749		--		--		749
Restricted securities:
Money market funds		350		--		--		350
Total assets	$	6,448	$	--	$	--	$	6,448
Long-term liabilities:
Contingent consideration	$	--	$	--	$	(1,884)	$	(1,884)
Total liabilities	$	--	$	--	$	(1,884)	$	(1,884)

Reconciliation Of Changes In Fair Value Of Level 3 Liabilities

	Contingent Consideration
Balance as of December 31, 2013	$	1,884
Gain on remeasurement of contingent consideration		(296)
Balance as of June 30, 2014	$	1,588

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Medafor Matters (Details) (USD $) Share data in Millions, unless otherwise specified	3 Months Ended	0 Months Ended	6 Months Ended	42 Months Ended
	Dec. 31, 2013	Oct. 21, 2013 Medafor Inc. [Member]	Dec. 31, 2014 C.R. Bard, Inc. [Member] Scenario, Forecast [Member]	Dec. 31, 2017 C.R. Bard, Inc. [Member] Scenario, Forecast [Member]
Subsidiary or Equity Method Investee [Line Items]
Initial payment received from C.R. Bard for acquisition of outstanding shares of common stock		$ 15,400,000
Outstanding shares of common stock acquired by C.R. Bard		2.4
Initial gain on sale of outstanding shares of common stock	12,700,000
Additional payments that could be received				8,400,000
Approximate amount that could be received from first possible additional payment			$ 525,000

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Deferred Preservation Costs And Inventories (Tables)

6 Months Ended

Jun. 30, 2014

Deferred Preservation Costs And Inventories [Abstract]

Schedule Of Deferred Preservation Costs

	June 30,		December 31,
	2014		2013
Cardiac tissues	$	11,940	$	12,239
Vascular tissues		14,574		15,058
Total deferred preservation costs	$	26,514	$	27,297

Schedule Of Inventories

	June 30,		December 31,
	2014		2013
Raw materials and supplies	$	7,041	$	5,706
Work-in-process		982		767
Finished goods		4,066		3,298
Total inventories	$	12,089	$	9,771

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Financial Instruments

6 Months Ended

Jun. 30, 2014

Financial Instruments [Abstract]

Financial Instruments

2.  Financial Instruments

The following is a summary of the Company’s financial instruments measured at fair value (in thousands):

June 30, 2014	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	892	$	--	$	--	$	892
U.S. Treasury debt securities		22,000		--		--		22,000
Restricted securities:
Money market funds		973		--		--		973
Total assets	$	23,865	$	--	$	--	$	23,865
Long-term liabilities:
Contingent consideration	$	--	$	--	$	(1,588)	$	(1,588)
Total liabilities	$	--	$	--	$	(1,588)	$	(1,588)

December 31, 2013	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	5,349	$	--	$	--	$	5,349
Certificates of deposit		749		--		--		749
Restricted securities:
Money market funds		350		--		--		350
Total assets	$	6,448	$	--	$	--	$	6,448
Long-term liabilities:
Contingent consideration	$	--	$	--	$	(1,884)	$	(1,884)
Total liabilities	$	--	$	--	$	(1,884)	$	(1,884)

The Company used prices quoted from its investment management companies to determine the Level 1 valuation of its investments in money market funds, U.S. Treasury debt securities, and certificates of deposit.  The Company recorded a contingent consideration liability, classified as Level 3, as a result of its acquisition of Hemosphere, Inc. (“Hemosphere”) in May 2012.  Refer to Note 5 for further discussion of the Level 3 contingent consideration liability. 

Changes in fair value of Level 3 liabilities are listed below (in thousands): 

	Contingent Consideration
Balance as of December 31, 2013	$	1,884
Gain on remeasurement of contingent consideration		(296)
Balance as of June 30, 2014	$	1,588

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Summary Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 30,870	$ 37,643
Restricted cash and securities	5,973	5,350
Receivables, net	19,571	18,307
Deferred preservation costs	26,514	27,297
Inventories	12,089	9,771
Deferred income taxes	5,730	5,162
Prepaid expenses and other	5,033	2,797
Total current assets	105,780	106,327
Property and equipment, net	12,261	12,171
Goodwill	11,365	11,365
Patents, net	1,898	1,934
Trademarks and other intangibles, net	19,890	19,985
Notes receivable	2,000	2,000
Deferred income taxes	16,236	16,885
Other	4,388	4,016
Total assets	173,818	174,683
Current liabilities:
Accounts payable	4,877	5,514
Accrued compensation	3,699	4,886
Accrued procurement fees	5,053	5,427
Accrued expenses and other	5,106	4,579
Deferred income	398	316
Total current liabilities	19,133	20,722
Contingent consideration liability	1,588	1,884
Other	7,125	7,330
Total liabilities	27,846	29,936
Commitments and contingencies
Shareholders' equity:
Preferred stock
Common stock (issued shares of 28,596 in 2014 and 28,244 in 2013)	286	282
Additional paid-in capital	131,011	128,585
Retained earnings	20,351	18,741
Accumulated other comprehensive income	13	7
Treasury stock at cost, (shares of 773 in 2014 and 413 in 2013)	(5,689)	(2,868)
Total shareholders' equity	145,972	144,747
Total liabilities and shareholders' equity	$ 173,818	$ 174,683

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Commitments And Contingencies

6 Months Ended

Jun. 30, 2014

Commitments And Contingencies [Abstract]

Commitments And Contingencies

12.  Commitments and Contingencies 

Liability Claims

The Company accrues its estimate of unreported product and tissue processing liability claims as a component of other long‑term liabilities and records the related recoverable insurance amount as a component of other long‑term assets, as appropriate.  At June 30, 2014 and December 31, 2013 the Company’s estimated unreported loss liability was $1.5 million.  The related recoverable insurance amounts were $610,000 and $580,000 as of June 30, 2014 and December 31, 2013, respectively.  Further analysis indicated that the liability as of June 30, 2014 could have been estimated to be as high as $2.7 million, after including a reasonable margin for statistical fluctuations calculated based on actuarial simulation techniques. 

Employment Agreements

The Company’s employment agreement with its current Chief Executive Officer (“CEO”) Mr. Steven G. Anderson, as amended, confers benefits, which become payable upon the occurrence of certain events, including the voluntary retirement of Mr. Anderson or termination of his employment in conjunction with certain change in control events.  As of both June 30, 2014 and December 31, 2013 the Company had $2.1 million in accrued expenses and other current liabilities on the Summary Consolidated Balance Sheets representing benefits payable upon Mr. Anderson’s voluntary retirement, for which he is currently eligible.  Mr. Anderson’s employment agreement took effect on January 1, 2013 and terminates on December 31, 2016. 

In July 2014 the Company’s Board of Directors appointed Mr. J. Patrick Mackin as President and CEO effective September 2, 2014.  Mr. Anderson will continue to serve CryoLife as its President and CEO until Mr. Mackin’s employment begins, and then continue as its Executive Chairman.  The Company’s Board of Directors and Mr. Anderson are renegotiating his employment agreement to make appropriate adjustments in consideration of Mr. Mackin’s appointment and anticipated changes in Mr. Anderson’s job responsibilities.

As a result of his appointment, the Company entered into an employment agreement in July 2014 with Mr. Mackin, which will become effective on September 2, 2014 and has an initial three year term.  Beginning on the second anniversary of the effective date, and subject to earlier termination pursuant to the agreement, the employment term will, on a daily basis, automatically extend by one day.  Mr. Mackin’s employment agreement confers certain benefits which become payable upon the effective date, including the payment of a $200,000 one-time signing bonus, as well as the issuance of grants of 400,000 stock options and 250,000 performance stock awards.  The agreement also contains provision for a severance payment, which would become payable upon the occurrence of certain employment termination events, including termination by the Company without cause.

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Document And Entity Information	6 Months Ended
	Jun. 30, 2014	Jul. 21, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Central Index Key	0000784199
Entity Registrant Name	CRYOLIFE INC
Trading Symbol	cry
Entity Common Stock, Shares Outstanding		27,925,435

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Shareholders' Equity

6 Months Ended

Jun. 30, 2014

Shareholders' Equity [Abstract]

Shareholders' Equity

13.  Shareholders’ Equity 

Common Stock Repurchase 

In February 2013 the Company’s Board of Directors authorized the purchase of up to $15.0 million of its common stock through October 31, 2014.

In the six months endedJune 30, 2014 the Company purchased approximately 227,000 shares for an aggregate purchase price of $2.0 million.  As of June 30, 2014 the Company had $11.5 million in remaining authorizations under the repurchase program.  For the year ended December 31, 2013 the Company purchased approximately 253,000 shares for an aggregate purchase price of $1.5 million.  These shares were recorded, at cost, as part of treasury stock on the Company’s Summary Consolidated Balance Sheets.  

Cash Dividends 

The Company initiated a quarterly cash dividend of $0.025 per share of common stock outstanding in the third quarter of 2012, and increased this dividend to $0.0275 per share of common stock outstanding in the second quarter of 2013.  In May 2014 the Board of Directors approved an increase in the quarterly cash dividend to $0.03 per share of common stock outstanding for the second quarter 2014.  The Company paid dividend payments of $838,000 and $1.6 million from cash on hand for the three and six months endedJune 30, 2014, respectively, and $756,000 and $1.4 million for the three and six months endedJune 30, 2013, respectively.  The dividend payments were recorded as a reduction to retained earnings on the Company’s Summary Consolidated Balance Sheets.

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Summary Consolidated Balance Sheets (Parenthetical) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Summary Consolidated Balance Sheets [Abstract]
Common stock, shares issued	28,596	28,244
Treasury stock, shares	723	413

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Medafor Matters

6 Months Ended

Jun. 30, 2014

Medafor Matters [Abstract]

Medafor Matters

7.  Medafor Matters 

Investment in Medafor Common Stock

In 2009 and 2010 CryoLife purchased shares of common stock in Medafor, Inc. (“Medafor”).  The Company initially recorded its investment using the cost method as a long-term asset, investment in equity securities, on the Company’s Summary Consolidated Balance Sheets. 

On October 1, 2013 C.R. Bard, Inc. (“Bard”) completed its previously announced acquisition of the outstanding shares of Medafor common stock.  The Company received an initial payment of approximately $15.4 million for its 2.4 million shares of Medafor common stock and recorded an initial gain of approximately $12.7 million on the sale in the fourth quarter of 2013.  The Company could receive additional payments totaling up to $8.4 million upon the release of funds held in escrow and the satisfaction of certain contingent milestones, measurable through June 2015.  The first of these additional payments, which the Company believes could be up to approximately $525,000, if released, would be received in late 2014, although this amount is subject to possible offsets.  These payments will be recorded as an additional gain if, and when, received by the Company.

Legal Action

CryoLife received a letter from Medafor in September 2012 stating that PerClot®, when introduced in the U.S., will, when used in accordance with the method published in CryoLife’s literature and with the instructions for use, infringe Medafor’s (now Bard’s) U.S. patent.  CryoLife does not believe that its sales of PerClot will infringe Bard’s patent.

In April 2014 theCompany filed a declaratory judgment lawsuit against Bard and certain of its subsidiaries, including Medafor, in the U.S. District Court for the District of Delaware (the “Court”).  CryoLife requested that the Court confirm that CryoLife’s anticipated sales of PerClot, when it is approved by the FDA, and certain of its derivative products, such as PerClot Topical, which has been cleared by the FDA, will not infringe upon the patent held by Bard and / or that the Bard patent is invalid.  CryoLife and Bard have filed various motions with respect to this matter.  The Court has not ruled on any of these motions and discovery has not commenced.  See also Part II, Item 1, Legal Proceedings of this Form 10-Q.

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ValveXchange

6 Months Ended

Jun. 30, 2014

ValveXchange [Abstract]

ValveXchange

6.  ValveXchange

Preferred Stock Investment 

In July 2011 the Company purchased shares of series A preferred stock of ValveXchange, Inc. (“ValveXchange”) for approximately $3.5 million.  ValveXchange is a private medical device company that was spun off from Cleveland Clinic to develop a lifetime heart valve replacement technology platform featuring exchangeable bioprosthetic leaflets.  As ValveXchange’s stock is not actively traded on any public stock exchange, and as the Company’s investment is in preferred stock, the Company initially accounted for this investment using the cost method.  The Company initially recorded its investment as a long-term asset, investment in equity securities, on the Company’s Summary Consolidated Balance Sheets.

During the fourth quarter of 2013 the Company reevaluated its investment in ValveXchange preferred stock for impairment.  Based on this analysis, the Company believed that its investment in ValveXchange was fully impaired as of December 31, 2013, and the impairment was other than temporary.  Therefore, in the fourth quarter of 2013 the Company recorded an other non-operating expense of $3.2 million to write-down the remaining value of its investment in ValveXchange preferred stock.  As of June 30, 2014 and December 31, 2013 the carrying value of the Company’s investment in ValveXchange preferred stock was zero. 

Loan Agreement

The Company’s agreement with ValveXchange, as amended, makes available up to $2.0 million to ValveXchange in debt financing through a revolving credit facility (the “Loan”).  The Loan includes various affirmative and negative covenants, including financial covenant requirements, and expires on July 30, 2018, unless terminated earlier.  Amounts outstanding under the Loan earn interest at an 8% annual rate and are secured by substantially all of the tangible and intangible assets of ValveXchange.  The Company incurred loan origination costs, net of fees charged to ValveXchange, of approximately $117,000, which are being expensed on a straight-line basis over the expected life of the loan facility.  The Company advanced $2.0 million to ValveXchange under this loan in 2012.  The $2.0 million advance is recorded as long-term notes receivable on the Company’s Summary Consolidated Balance Sheets as of June 30, 2014 and December 31, 2013.

During 2013 CryoLife repeatedly notified ValveXchange that ValveXchange was in default of certain loan covenants, due to various factors including ValveXchange’s failure to obtain CryoLife’s consent for certain convertible note financings that ValveXchange previously obtained.  In April 2014, in conjunction with ValveXchange’s series B preferred stock fundraising (the “Series B”), CryoLife and ValveXchange entered into an amendment to the Loan agreement pursuant to which CryoLife waived ValveXchange’s previous Loan defaults in exchange for an agreement that 10% of any amounts raised in the Series B in excess of $1.25 million would be paid to CryoLife.  As of June 30, 2014 ValveXchange had raised $1.7 million under the Series B.

Management believes that ValveXchange will continue to need additional funds to support its short-term and long-term operations, as it is currently not selling any product.  Specifically, ValveXchange will need to expand its clinical trial in order to obtain approval to distribute its product in Europe.  ValveXchange does not currently have the funds necessary to fund this expansion, and without this expansion, ValveXchange is not expected to be able to generate revenues.  However, even if ValveXchange is able to secure additional funds, if those funds are insufficient and ValveXchange cannot meet its business obligations, CryoLife may need to foreclose on the related collateral to secure repayment of the Loan.  Although CryoLife currently believes that the value of the collateral is adequate to repay the Loan, there is no guarantee that the security for the notes will be sufficient to repay the Loan.  If ValveXchange is forced to cease operations or seek reorganization in bankruptcy, the Company may be unable to secure payment through seizure of the collateral.

Option Agreement

Concurrently with the Loan agreement described above, CryoLife entered into an option agreement with ValveXchange pursuant to which CryoLife obtained (i) the right of first refusal to acquire ValveXchange during a period that extends through the completion of initial commercialization milestones and (ii) the right to negotiate with ValveXchange for European distribution rights.  As part of the Series B, CryoLife agreed to forego its rights to negotiate with ValveXchange for European distribution rights.  The Company’s rights may be further modified or reduced in connection with a future round of financing. 

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Cash Equivalents And Restricted Cash And Securities (Tables)

6 Months Ended

Jun. 30, 2014

Cash Equivalents And Restricted Cash And Securities [Abstract]

Summary Of Cash Equivalents And Marketable Securities

			Unrealized		Estimated
			Holding		Market
June 30, 2014	Cost Basis		Gains		Value
Cash equivalents:
Money market funds	$	892	$	--	$	892
U.S. Treasury debt securities		22,000		--		22,000
Restricted cash and securities:
Cash		5,000		--		5,000
Money market funds		973		--		973
				Unrealized		Estimated
				Holding		Market
December 31, 2013		Cost Basis		Gains		Value
Cash equivalents:
Money market funds	$	5,349	$	--	$	5,349
Certificates of deposit		749		--		749
Restricted cash and securities:
Cash		5,000		--		5,000
Money market funds		350		--		350

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Stock Compensation

6 Months Ended

Jun. 30, 2014

Stock Compensation [Abstract]

Stock Compensation

14.  Stock Compensation 

Overview 

The Company has stock option and stock incentive plans for employees and non-employee Directors that provide for grants of restricted stock awards (“RSA”s), restricted stock units (“RSU”s), performance stock units (“PSU”s), and options to purchase shares of Company common stock at exercise prices generally equal to the fair values of such stock at the dates of grant.  The Company also maintains a shareholder-approved Employee Stock Purchase Plan (the “ESPP”) for the benefit of its employees.  The ESPP allows eligible employees the right to purchase common stock on a regular basis at the lower of 85% of the market price at the beginning or end of each offering period. 

Equity Grants

During the six months ended June 30, 2014 the Compensation Committee of the Company’s Board of Directors authorized awards from approved stock incentive plans of RSUs to certain employees and RSAs and PSUs to certain Company officers, which, assuming that performance under the PSUs were to be achieved at target levels, together totaled 326,000 shares and had an aggregate grant date market value of $3.3 million.  The PSUs granted in 2014 represent the right to receive from 50% to 150% of the target number of shares of common stock.  The performance component of PSU awards granted in 2014 is based on attaining specified levels of adjusted EBITDA, as defined in the PSU grant documents, for the 2014 calendar year.  The Company currently believes that achievement of the performance component is probable, and it will reevaluate this likelihood on a quarterly basis.

During the six months ended June 30, 2013 the Compensation Committee of the Company’s Board of Directors authorized awards from approved stock incentive plans of RSAs to non-employee directors, RSUs to certain employees, and RSAs and PSUs to certain Company officers which, assuming that performance under the PSUs were to be achieved at target levels, together totaled 395,000 shares of common stock and had an aggregate grant date market value of $2.4 million.  Shares issued under the 2013 PSU awards were earned at approximately 115% of the target number of shares. 

The Compensation Committee of the Company’s Board of Directors authorized, from approved stock incentive plans, grants of stock options to purchase a total of 162,000 shares to certain Company officers during both the six months endedJune 30, 2014 and 2013.  The exercise prices of the options were equal to the stock prices on their respective grant dates.

Employees purchased common stock totaling 59,000 and 49,000 shares in the six months endedJune 30, 2014 and 2013, respectively, through the Company’s ESPP. 

Stock Compensation Expense 

The following weighted‑average assumptions were used to determine the fair value of options: 

	Three Months Ended				Six Months Ended
	June 30, 2014				June 30, 2014
	Stock Options		ESPP Options		Stock Options		ESPP Options
Expected life of options		N/A		.50 Years		4.25 Years		.50 Years
Expected stock price volatility		N/A		0.34		0.55		0.34
Dividends		N/A		0.99%		1.10%		0.99%
Risk-free interest rate		N/A		0.10%		1.19%		0.10%

	Three Months Ended				Six Months Ended
	June 30, 2013				June 30, 2013
	Stock Options		ESPP Options		Stock Options		ESPP Options
Expected life of options		N/A		.50 Years		4.25 Years		.50 Years
Expected stock price volatility		N/A		0.43		0.60		0.43
Dividends		N/A		1.61%		1.91%		1.61%
Risk-free interest rate		N/A		0.16%		0.70%		0.16%

The following table summarizes total stock compensation expenses prior to the capitalization of amounts into deferred preservation and inventory costs (in thousands): 

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
RSA, RSU, and PSU expense	$	701	$	628	$	1,413	$	1,263
Stock option and ESPP option expense		164		196		371		407
Total stock compensation expense	$	865	$	824	$	1,784	$	1,670

Included in the total stock compensation expense, as applicable in each period, were expenses related to RSAs, RSUs, PSUs, and stock options issued in each respective year, as well as those issued in prior periods that continue to vest during the period, and compensation related to the Company’s ESPP.  These amounts were recorded as stock compensation expense and were subject to the Company’s normal allocation of expenses to deferred preservation costs and inventory costs.  The Company capitalized $66,000 and $48,000 in the three months endedJune 30, 2014 and 2013, respectively, and $140,000 and $112,000 in the six months endedJune 30, 2014 and 2013, respectively, of the stock compensation expense into its deferred preservation costs and inventory costs.

As of June 30, 2014 the Company had total unrecognized compensation costs of $4.5 million related to RSAs, RSUs, and PSUs and $900,000 related to unvested stock options, before considering the effect of expected forfeitures.  As of June 30, 2014 this expense is expected to be recognized over a weighted-average period of 2.00 years for stock options, 1.79 years for RSUs, 1.68 years for RSAs, and 1.23 years for PSUs. 

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Income Taxes

6 Months Ended

Jun. 30, 2014

Income Taxes [Abstract]

Income Taxes

10.  Income Taxes 

Income Tax Expense

The Company’s effective income tax rate was approximately 10% and 22% for the three and six months endedJune 30, 2014, respectively, as compared to 35% and 31% for the three and six months endedJune 30, 2013, respectively. 

The Company’s income tax rate for the three and six months endedJune 30, 2014 was favorably affected by the reduction of uncertain tax positions and, to a lesser extent, was unfavorably affected by the 2014 research and development tax credit, which has not yet been enacted for the 2014 tax year.  The Company’s income tax rate in 2013 was favorably affected by the full year 2012 research and development tax credit, which was enacted in January 2013 and, therefore, reduced the Company’s tax expense during the first quarter of 2013.

In June 2014 the Internal Revenue Service completed a limited scope examination of certain of the Company’s federal income tax returns.  At the resolution of this examination, the Company reevaluated its liabilities for uncertain tax positions, primarily related to its research and development tax credits and credit carryforwards, and, based on revised estimates and the settlement of the examination, reversed $748,000 in uncertain tax liabilities and tax expense. 

Deferred Income Taxes

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and tax return purposes.  The Company generates deferred tax assets primarily as a result of book write-downs, reserves, or impairments which are not immediately deductible for tax return purposes.  The Company acquired significant deferred tax assets, primarily net operating loss carryforwards, from its acquisitions of Hemosphere and Cardiogenesis Corporation in the second quarters of 2012 and 2011, respectively.  The Company currently estimates that a portion of its state net operating loss carryforwards will not be recoverable and has, therefore, recorded a valuation allowance against these state net operating loss carryforwards. 

As of June 30, 2014 the Company had a total of $1.5 million in valuation allowances against deferred tax assets, related to state net operating loss carryforwards, and a net deferred tax asset of $22.0 million.  As of December 31, 2013 the Company had a total of $1.5 million in valuation allowances against deferred tax assets and a net deferred tax asset of $22.0 million.

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Deferred Preservation Costs And Inventories

6 Months Ended

Jun. 30, 2014

Deferred Preservation Costs And Inventories [Abstract]

Deferred Preservation Costs And Inventories

8.  Deferred Preservation Costs and Inventories

Deferred preservation costs at June 30, 2014 and December 31, 2013 are comprised of the following (in thousands):

	June 30,		December 31,
	2014		2013
Cardiac tissues	$	11,940	$	12,239
Vascular tissues		14,574		15,058
Total deferred preservation costs	$	26,514	$	27,297

Inventories at June 30, 2014 and December 31, 2013 are comprised of the following (in thousands): 

	June 30,		December 31,
	2014		2013
Raw materials and supplies	$	7,041	$	5,706
Work-in-process		982		767
Finished goods		4,066		3,298
Total inventories	$	12,089	$	9,771

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Goodwill And Other Intangible Assets

6 Months Ended

Jun. 30, 2014

Goodwill And Other Intangible Assets [Abstract]

Goodwill And Other Intangible Assets

9.  Goodwill and Other Intangible Assets 

Indefinite Lived Intangible Assets 

As of June 30, 2014 and December 31, 2013 the carrying values of the Company’s indefinite lived intangible assets are as follows (in thousands): 

	June 30,		December 31,
	2014		2013
Goodwill	$	11,365	$	11,365
Procurement contracts and agreements		2,013		2,013
Trademarks		847		841

Based on its experience with similar agreements, the Company believes that its acquired procurement contracts and agreements have an indefinite useful life, as the Company expects to continue to renew these contracts for the foreseeable future.  The Company believes that its trademarks have an indefinite useful life as the Company currently anticipates that these trademarks will contribute to cash flows of the Company indefinitely. 

As of June 30, 2014 and December 31, 2013 the Company’s entire goodwill balance is related to its Medical Devices segment, and there has been no change from the balance recorded as of December 31, 2013.

Definite Lived Intangible Assets 

As of June 30, 2014 and December 31, 2013 the gross carrying values, accumulated amortization, and approximate amortization period of the Company’s definite lived intangible assets are as follows (in thousands): 

	Gross Carrying		Accumulated		Amortization
June 30, 2014	Value		Amortization		Period
Acquired technology	$	14,020	$	3,246	11 – 16	Years
Patents		4,340		2,442	17	Years
Distribution and manufacturing rights and know-how		4,059		845	15	Years
Customer lists and relationships		3,370		692	13 – 17	Years
Non-compete agreement		381		286	10	Years
Other		474		205	1 – 5	Years
	Gross Carrying		Accumulated		Amortization
December 31, 2013	Value		Amortization		Period
Acquired technology	$	14,020	$	2,677	11 – 16	Years
Patents		4,348		2,414	17	Years
Distribution and manufacturing rights and know-how		3,559		714	15	Years
Customer lists and relationships		3,370		572	13 – 17	Years
Non-compete agreement		381		267	10	Years
Other		202		171	1 – 3	Years

Amortization Expense 

The following is a summary of amortization expense as recorded in general, administrative, and marketing expenses on the Company’s Summary Consolidated Statement of Operations and Comprehensive Income (in thousands): 

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Amortization expense	$	503	$	508	$	999	$	1,022

As of June 30, 2014 scheduled amortization of intangible assets for the next five years is as follows (in thousands): 

	Remainder
	of 2014		2015		2016		2017		2018		2019
Amortization expense	$	1,008	$	1,986	$	1,978	$	1,924	$	1,916	$	1,909

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Debt

6 Months Ended

Jun. 30, 2014

Debt [Abstract]

Debt

11.  Debt 

GE Credit Agreement 

CryoLife’s amended and restated credit agreement with GE Capital (the “GE Credit Agreement”) provides revolving credit for working capital, acquisitions, and other corporate purposes.  The GE Credit Agreement has a borrowing capacity of $20.0 million (including a letter of credit subfacility) and expires on October 28, 2014.  The commitment may be reduced or increased from time to time pursuant to the terms of the GE Credit Agreement. 

The GE Credit Agreement places limitations on the amount that the Company may borrow and includes various affirmative and negative covenants, including financial covenants such as a requirement that CryoLife (i) not exceed a defined leverage ratio, (ii) maintain a minimum earnings subject to defined adjustments as of specified dates, and (iii) not make or commit capital expenditures in excess of a defined limitation.  The agreement also limits the payment of cash dividends, up to a maximum of $3.5 million per year, subject to satisfaction of specified conditions.  As required under the terms of the GE Credit Agreement, the Company is maintaining cash and cash equivalents of at least $5.0 million in accounts in which GE Capital has a first priority perfected lien.  These amounts are recorded as restricted cash as of June 30, 2014 and December 31, 2013 on the Company’s Summary Consolidated Balance Sheets, as they are restricted for the term of the GE Credit Agreement.  Also, the GE Credit Agreement requires that, after giving effect to a stock repurchase, the Company maintain liquidity, as defined within the agreement, of at least $20.0 million.  The GE Credit Agreement includes customary conditions on incurring new indebtedness.  Commitment fees are paid based on the unused portion of the facility.  As of June 30, 2014 the Company was in compliance with the covenants of the GE Credit Agreement.

Amounts borrowed under the GE Credit Agreement are secured by substantially all of the tangible and intangible assets of CryoLife and its subsidiaries and bear interest as determined by GE Capital at either LIBOR, with a minimum rate of 4.25%, or GE Capital’s base rate, with a minimum rate of 3.25%, plus the applicable margin.  As of June 30, 2014 and December 31, 2013 the outstanding balance of the GE Credit Agreement was zero, the aggregate interest rate was 6.50%, and the remaining availability was $20.0 million. 

In April 2014 the Company and GE Capital amended the GE Credit Agreement to increase to $14.0 million the maximum amount that the Company may spend, from the date of the amendment through the end of the term of the GE Credit Agreement, to purchase or redeem common stock of the Company pursuant to a stock repurchase program.  The $14.0 million maximum was sufficient to cover the remaining amount under the stock repurchase program approved by the Company’s Board of Directors in February 2013, of approximately $13.5 million at the time of the amendment, as discussed further in Note 13.

Interest Expense

Interest expense was a favorable $16,000 for the three months endedJune 30, 2014 and $45,000 for the six months endedJune 30, 2014.  Interest expense was $54,000 and $104,000 for the three and six months endedJune 30, 2013, respectively.  Interest expense in all periods included interest on debt and uncertain tax positions.  Interest expense for the three and six months ended June 30, 2014 was favorably affected by the reversal of interest expense related to a reduction in liability for uncertain tax positions.

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Hemosphere Acquisition (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	May 16, 2012
Hemosphere Acquisition [Abstract]
Fair value of contingent consideration						$ 1,800,000
Maximum amount of future consideration payment						4,500,000
Gain (loss) on revaluation of contingent consideration	198,000	(39,000)	296,000	(78,000)
Contingent consideration liability	$ 1,588,000		$ 1,588,000		$ 1,884,000

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Segment Information (Revenues, Cost Of Services And Products, And Gross Margins For Operating Segments) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013		Jun. 30, 2014 segment	Jun. 30, 2013
Segment Reporting Information [Line Items]
Number of reportable segments				2
Total revenues	$ 34,690	$ 33,520		$ 70,421	$ 69,056
Total cost of preservation services and products	12,306	12,041		25,564	24,301
Total gross margin	22,384	21,479		44,857	44,755
Medical Devices [Member]
Segment Reporting Information [Line Items]
Total revenues	20,350	18,195		39,805	37,991
Total cost of preservation services and products	4,131	3,721		7,932	7,186
Total gross margin	16,219	14,474		31,873	30,805
Preservation Services [Member]
Segment Reporting Information [Line Items]
Total revenues	14,340	15,317		30,616	30,994
Total cost of preservation services and products	8,175	8,320		17,632	17,115
Total gross margin	6,165	6,997		12,984	13,879
Other Segments [Member]
Segment Reporting Information [Line Items]
Total revenues		8	[1]		71	[1]
Total gross margin		$ 8	[1]		$ 71	[1]

[1] The “Other” designation includes grant revenue.

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Segment Information

6 Months Ended

Jun. 30, 2014

Segment Information [Abstract]

Segment Information

16.  Segment Information

The Company has two reportable segments organized according to its products and services: Medical Devices and Preservation Services.  The Medical Devices segment includes external revenues from product sales of BioGlue® Surgical Adhesive (“BioGlue”), BioFoam® Surgical Matrix (“BioFoam”), PerClot, revascularization technologies, HeRO Graft, and other products.  The Preservation Services segment includes external services revenues from the preservation of cardiac and vascular tissues.  There are no intersegment revenues. 

The primary measure of segment performance, as viewed by the Company’s management, is segment gross margin, or net external revenues less cost of products and preservation services.  The Company does not segregate assets by segment; therefore, asset information is excluded from the segment disclosures below. 

The following table summarizes revenues, cost of products and services, and gross margins for the Company’s operating segments (in thousands): 

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Revenues:
Medical devices	$	20,350	$	18,195	$	39,805	$	37,991
Preservation services		14,340		15,317		30,616		30,994
Othera		--		8		--		71
Total revenues		34,690		33,520		70,421		69,056
Cost of products and preservation services:
Medical devices		4,131		3,721		7,932		7,186
Preservation services		8,175		8,320		17,632		17,115
Total cost of products and preservation services		12,306		12,041		25,564		24,301
Gross margin:
Medical devices		16,219		14,474		31,873		30,805
Preservation services		6,165		6,997		12,984		13,879
Othera		--		8		--		71
Total gross margin	$	22,384	$	21,479	$	44,857	$	44,755

The following table summarizes net revenues by product and service (in thousands): 

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
Products:
BioGlue and BioFoam	$	15,389	$	13,542	$	30,629	$	29,006
PerClot		1,143		940		2,059		1,804
Revascularization technologies		2,084		2,293		3,768		4,484
HeRO Graft		1,705		1,420		3,320		2,697
Other products		29		--		29		--
Total products		20,350		18,195		39,805		37,991
Preservation services:
Cardiac tissue		6,454		6,818		13,644		13,463
Vascular tissue		7,886		8,499		16,972		17,531
Total preservation services		14,340		15,317		30,616		30,994
Othera		--		8		--		71
Total revenues	$	34,690	$	33,520	$	70,421	$	69,056

___________________

aThe “Other” designation includes grant revenue.

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Stock Compensation (Tables)

6 Months Ended

Jun. 30, 2014

Stock Compensation [Abstract]

Schedule Of Weighted-Average Assumptions Used To Determine The Fair Value Of Options

	Three Months Ended				Six Months Ended
	June 30, 2014				June 30, 2014
	Stock Options		ESPP Options		Stock Options		ESPP Options
Expected life of options		N/A		.50 Years		4.25 Years		.50 Years
Expected stock price volatility		N/A		0.34		0.55		0.34
Dividends		N/A		0.99%		1.10%		0.99%
Risk-free interest rate		N/A		0.10%		1.19%		0.10%

	Three Months Ended				Six Months Ended
	June 30, 2013				June 30, 2013
	Stock Options		ESPP Options		Stock Options		ESPP Options
Expected life of options		N/A		.50 Years		4.25 Years		.50 Years
Expected stock price volatility		N/A		0.43		0.60		0.43
Dividends		N/A		1.61%		1.91%		1.61%
Risk-free interest rate		N/A		0.16%		0.70%		0.16%

Summary Of Stock Compensation Expenses

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
RSA, RSU, and PSU expense	$	701	$	628	$	1,413	$	1,263
Stock option and ESPP option expense		164		196		371		407
Total stock compensation expense	$	865	$	824	$	1,784	$	1,670

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Stock Compensation (Summary Of Stock Compensation Expenses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense	$ 865	$ 824	$ 1,784	$ 1,670
RSAs, RSUs, And PSUs Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense	701	628	1,413	1,263
Stock Option And ESPP Option Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense	$ 164	$ 196	$ 371	$ 407

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Goodwill And Other Intangible Assets (Summary Of Amortization Expense) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Goodwill And Other Intangible Assets [Abstract]
Amortization expense	$ 503	$ 508	$ 999	$ 1,022

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Summary Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Net cash flows from operating activities:
Net income	$ 3,220	$ 3,977
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	2,937	2,940
Non-cash compensation	1,644	1,558
Deferred income taxes	81	474
Other non-cash adjustments to income	(472)	791
Changes in operating assets and liabilities:
Receivables	(1,264)	(2,279)
Deferred preservation costs and inventories	(1,731)	(259)
Prepaid expenses and other assets	(2,608)	(1,116)
Accounts payable, accrued expenses, and other liabilities	(978)	(2,051)
Net cash flows provided by operating activities	829	4,035
Net cash flows from investing activities:
Capital expenditures	(2,272)	(2,257)
Other	(1,522)	(115)
Net cash flows used in investing activities	(3,794)	(2,372)
Net cash flows from financing activities:
Cash dividends paid	(1,610)	(1,443)
Proceeds from exercise of stock options and issuance of common stock	504	242
Repurchases of common stock	(2,007)	(1,378)
Other	(672)	(406)
Net cash flows used in financing activities	(3,785)	(2,985)
Effect of exchange rate changes on cash	(23)	45
Decrease in cash and cash equivalents	(6,773)	(1,277)
Cash and cash equivalents, beginning of period	37,643	13,009
Cash and cash equivalents, end of period	$ 30,870	$ 11,732

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Hemosphere Acquisition

6 Months Ended

Jun. 30, 2014

Hemosphere Acquisition [Abstract]

Hemosphere Acquisition

5.  Hemosphere Acquisition  

On May 16, 2012 CryoLife acquired Hemosphere, which the Company now operates as a wholly owned subsidiary.  Hemosphere is the developer and marketer of the HeRO Graft, a proprietary graft-based solution for ESRD hemodialysis patients with limited access options and central venous obstruction. 

As of the Hemosphere acquisition date, CryoLife recorded a contingent consideration liability of $1.8 million in long-term liabilities on its Summary Consolidated Balance Sheet, representing the estimated fair value of the contingent consideration expected to be paid to the former shareholders of Hemosphere upon the achievement of certain revenue-based milestones.  The acquisition agreement provides for a maximum of $4.5 million in future consideration payments through December 2015 based on specified sales targets.

The fair value of the contingent consideration liability was based on unobservable inputs, including management’s estimates and assumptions about future revenues, and is, therefore, classified as Level 3 within the fair value hierarchy presented in Note 2.  The Company will remeasure this liability at each reporting date and will record changes in the fair value of the contingent consideration liability in other (income) expense, net on the Company’s Summary Consolidated Statement of Operations and Comprehensive Income.  Increases or decreases in the fair value of the contingent consideration liability can result from changes in discount periods and rates, as well as changes in the timing and amount of Company revenue estimates. 

The Company recorded gains of $198,000 and $296,000 in the three and six months ended June 30, 2014, respectively, and losses of $39,000 and $78,000 in the three and six months endedJune 30, 2013, respectively, on the remeasurement of the contingent consideration liability.  The gains and losses in the current and prior year periods are due to the effect of the passage of time on the fair value measurements and changes in the Company’s estimates.  The balance of the contingent consideration liability was $1.6 million as of June 30, 2014 and $1.9 million as of December 31, 2013.

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Income Per Common Share (Tables)

6 Months Ended

Jun. 30, 2014

Income Per Common Share [Abstract]

Computation Of Basic And Diluted Income (Loss) Per Common Share

	Three Months Ended				Six Months Ended
	June 30,				June 30,
Basic income per common share	2014		2013		2014		2013
Net income	$	2,161	$	1,785	$	3,220	$	3,977
Net income allocated to participating securities		(38)		(40)		(60)		(91)
Net income allocated to common shareholders	$	2,123	$	1,745	$	3,160	$	3,886
Basic weighted-average common shares outstanding		27,502		26,856		27,439		26,858
Basic income per common share	$	0.08	$	0.06	$	0.12	$	0.14
	Three Months Ended				Six Months Ended
	June 30,				June 30,
Diluted income per common share	2014		2013		2014		2013
Net income	$	2,161	$	1,785	$	3,220	$	3,977
Net income allocated to participating securities		(37)		(40)		(59)		(90)
Net income allocated to common shareholders	$	2,124	$	1,745	$	3,161	$	3,887
Basic weighted-average common shares outstanding		27,502		26,856		27,439		26,858
Effect of dilutive stock options and awardsa		815		513		943		598
Diluted weighted-average common shares outstanding		28,317		27,369		28,382		27,456
Diluted income per common share	$	0.08	$	0.06	$	0.11	$	0.14

___________________  

aThe Company excluded stock options from the calculation of diluted weighted-average common shares outstanding if the per share value, including the sum of (i) the exercise price of the options and (ii) the amount of the compensation cost attributed to future services and not yet recognized, was greater than the average market price of the shares because the inclusion of these stock options would be antidilutive to income per common share.  Accordingly, stock options to purchase a weighted-average 485,000 shares and 182,000 shares for the three and six months endedJune 30, 2014, respectively, and 1.3 million shares and 1.2 million shares for the three and six months endedJune 30, 2013, respectively, were excluded from the calculation of diluted weighted-average common shares outstanding.

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Deferred Preservation Costs And Inventories (Schedule Of Inventories) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Deferred Preservation Costs And Inventories [Abstract]
Raw materials and supplies	$ 7,041	$ 5,706
Work-in-process	982	767
Finished goods	4,066	3,298
Total inventories	$ 12,089	$ 9,771

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Income Per Common Share

6 Months Ended

Jun. 30, 2014

Income Per Common Share [Abstract]

Income Per Common Share

15.  Income Per Common Share 

The following table sets forth the computation of basic and diluted income per common share (in thousands, except per share data): 

	Three Months Ended				Six Months Ended
	June 30,				June 30,
Basic income per common share	2014		2013		2014		2013
Net income	$	2,161	$	1,785	$	3,220	$	3,977
Net income allocated to participating securities		(38)		(40)		(60)		(91)
Net income allocated to common shareholders	$	2,123	$	1,745	$	3,160	$	3,886
Basic weighted-average common shares outstanding		27,502		26,856		27,439		26,858
Basic income per common share	$	0.08	$	0.06	$	0.12	$	0.14
	Three Months Ended				Six Months Ended
	June 30,				June 30,
Diluted income per common share	2014		2013		2014		2013
Net income	$	2,161	$	1,785	$	3,220	$	3,977
Net income allocated to participating securities		(37)		(40)		(59)		(90)
Net income allocated to common shareholders	$	2,124	$	1,745	$	3,161	$	3,887
Basic weighted-average common shares outstanding		27,502		26,856		27,439		26,858
Effect of dilutive stock options and awardsa		815		513		943		598
Diluted weighted-average common shares outstanding		28,317		27,369		28,382		27,456
Diluted income per common share	$	0.08	$	0.06	$	0.11	$	0.14

___________________  

aThe Company excluded stock options from the calculation of diluted weighted-average common shares outstanding if the per share value, including the sum of (i) the exercise price of the options and (ii) the amount of the compensation cost attributed to future services and not yet recognized, was greater than the average market price of the shares because the inclusion of these stock options would be antidilutive to income per common share.  Accordingly, stock options to purchase a weighted-average 485,000 shares and 182,000 shares for the three and six months endedJune 30, 2014, respectively, and 1.3 million shares and 1.2 million shares for the three and six months endedJune 30, 2013, respectively, were excluded from the calculation of diluted weighted-average common shares outstanding.