Greetings and welcome to the CryoLife’s First Quarter 2013 Financial Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. (Operator instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Steve Anderson, President and CEO for CryoLife. Mr. Anderson, you may begin.

Good morning everyone. This is Steve Anderson, CryoLife’s President and CEO, and I would like to welcome you to CryoLife's First Quarter 2013 Conference Call. With me today is Ashley Lee, the Company’s Executive Vice President, COO and CFO. This morning, we released our operating results for the first quarter of 2013. I am pleased to report that the Company has had all time quarterly revenue record with revenues of $35.5 million. That’s a 10% increase over the first quarter of 2012. Earnings per share were $0.08, a 100% increase over the $0.04 that we posted in the first quarter of 2012. In addition to the overall revenue record, we set record revenues and worldwide BioGlue sales of 15.4 million, a 12% increase over the first quarter of 2012. PerClot revenues increased 34% over the same period in 2012. These excellent operating results for the first quarter add credence to our corporate development strategies that we began putting in place about three years ago. At that time, we made the decision to focus on the retiring baby bloomer market for medical devices and our focus on vascular and cardiac reconstruction products and markets is coming to fruition. The agenda for the conference call today is as follows. Actually, we’ll discuss the financial results in detail and by product area. He will discuss our continuing corporate development efforts. He will discuss the status of the PerClot IDE submission and the FDA clearance of the new adaptor for our HeRO device. I will discuss the recent Central Venous Pathology Summit that we held here at corporate headquarters in mid-April. I will also discuss our recent paper on PerClot given by the Martini Klinik in Germany during a recent urology meeting that we held in Milan, Italy. I will discuss increasing international sales for PerClot and what we expect from the product in the future. And I will also comment on the apparent synergy between BioGlue and PerClot in controlling hemostasis. After my comments have been completed, Ashley we’ll return to give financial guidance for the rest of the 2013. After Ashley’s guidance comments, we will open up the call for questions. At this time, Ashley will comment on this morning’s press release.

Thank you, Steve. To comply with the Safe Harbor requirements of the Private Securities Litigation Reform Act of 1995, I would like make the following statement. Comments made in this call that look forward in time involve risk and uncertainties, and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include statements made as to the company's or management's intentions, hopes, beliefs, expectations or predictions of the future, including the guidance for 2013 that I will provide in a moment. Additional information concerning risk and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings including the Risk Factors section of our previously filed Form 10-K for the year ended December 31, 2012, and our subsequently filed Form 10-Q for the first quarter of 2013, which we expect to file shortly, and in the press release that went out this morning. This morning we reported our results for the first quarter of 2013. We achieved record quarterly revenues of $35.5 million, an increase of 10% compared to the first quarter of 2012, driven by year-over-year increases in most lines of our business and the acquisition of Hemosphere in May 2012. Our first quarter earnings per share totaled $0.08, double the $0.04 from last year’s first quarter. The following factors influenced our revenue performance. Of the 10% year-over-year growth, organic growth for the first quarter totaled 6%, and growth from new products specifically HeRO Graft accounted for 4% of the top line growth. International revenues increased 28% in the first quarter of 2013, compared to the first quarter of last year, with revenues in Europe up 15% and international revenues outside of Europe up 47%. Domestic revenues increased 5% year-over-year. For the first quarter,…

As has been mentioned earlier, international sales results for PerClot are very encouraging. A 34% year to year sales increase of our powdered hemostatic agent is testimony to the fact that it is significantly more effective in initiating hemostasis than other approved powdered hemostatic agents. We continue to take market share from our powdered haemostatic agent competitors. When PerClot is approved for use in the U.S. we expect its impact on the competition to be similar to its results in Europe. From our point of view and from the viewpoint of the European physicians who have used it, PerClot is a game changing product. European physicians continue to comment about how fast it works in comparison to competitive products and the fact that it absorbs 4-5 times more fluid than at least one competitive product does. Management believes that the worldwide market for a powdered haemostatic agent is about $1.3 billion. The recent sales growth of PerClot in Europe is testimony to the effectiveness and appeal of the product. Also we need to point out that it is effective in many different kinds of surgeries across many different specialties. A recent paper given by surgeons from the Martini Clinic in Germany, attests to the haemostatic effectiveness of the product and prostatectomy surgery and it showed an additional benefit in decreasing the drainage associated with lymph node surgery. When we begin selling the PerClot that is manufactured in the U.S. we expect margins to be above 80%. Margins for the PerClot presently being sold in Europe are about 55%. On April 18th and 19th, we hosted 43 renal disease professionals and 13 faculty members at our first Central Venous Pathology Summit, featuring the HeRo graft held here at our corporate headquarters’ learning center in Georgia. Participants were nephrologists, vascular surgeons, dialysis…

We are reiterating our total revenue guidance with the full year of 2013. We expect total revenues to be between a $139 million and a $143 million. This represents annual total revenue growth between 6% and 9%. We expect earnings per share for the full year of 2013 to be between $0.25 and $0.28. The company’s earnings per share guidance excludes expenses related to potential future business development, litigation, and share repurchases, which cannot be currently estimated. The details of this guidance are in our press release that was issued this morning. Finally, we believe we’re continuing to successfully execute on our strategy of positioning the company for accelerated revenue and earnings growth by expanding our addressable market opportunities through internal R&D, expanding and leveraging our sales and marketing and executing on business development opportunities. Looking forward, we believe that we have several opportunities to expand the Company’s market opportunity with higher growth, higher margin products. These include, one, drive revenue growth in the HeRO graft through the recent launch in our broader U.S. direct sales force. The plan launched in Europe in the second quarter, and the introduction of the next generation HeRO device beginning in the fourth quarter. Two, initiate enrollment in our PerClot IDE clinical trial and gain additional marketing approvals in new international markets. Three, expand our European sales and marketing coverage for PerClot to include other surgical specialties in addition to cardiac and vascular surgery. Four, potentially gain expanded indications for BioGlue in Japan. Five, build on our commitment to the Asia Pacific region by gaining distribution partners for our products and new markets such as China and Southeast Asia. Six, drive our TMR business through our clinical registry and increase the laser console evaluations. Seven, continue our planning discussions with ValveXchange on the European distribution of their exchangeable heart valve product, and finally, eight, continuing to evaluate business development opportunities. If we executive on these initiatives we will be in a good position to drive top line growth on our higher margin medical products and further leverage our operating infrastructure to improve profitability. That concludes my comments and now I’ll turn it back over to Steve.

At this time, we’ll open the call for questions.

Thank you. We will now be conducting a question & answer session. (Operator Instructions). Our first question comes from Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.

I noticed that you’re now breaking out U.S. international revenue. Do you have any projections forward looking as far as what that might look like for the balance of ’13 or ’14?

Well in total, you know we’ve given out the revenue guidance for between 139 and 143. We continue to believe that the higher growth opportunities for us are in international markets. So, we would expect Europe to grow more than the U.S. market and international business outside of Europe to grow faster than Europe. In regards to specific guidance for those regions, we don’t get that out, but that’s generally how we see those businesses evolving over the balance of the year.

Okay, got it. The SG&A for the first quarter was similar to first quarter 2012 and your commentary is that it might look similar as far as the cadence throughout the year. But I’m wondering how that coincides with your commentary about adding more sales and marketing effort because during Q2 2012, it came off as your 17.9 down to 13.9 from our first quarter to second quarter ’12.

Yes, a couple of comments on SG&A, Jeff. Just to put the first quarter of ’13 in perspective compared to the first quarter of 2012. In the first quarter of 2012, we had a significant amount of litigation related costs. I think it approach throughout about 1.7 million. That number was significantly less in the first quarter of 2013. So, we had a decrease there. That was essentially offset by the increased sales and marketing infrastructure related to the acquisition of Hemosphere in 2013, which we did not have in the first quarter of 2012. So, those kind of largely offset each other. Now, in regards to the spend in the first quarter of 2013. The first quarter is typically always our most expensive quarter. We have our annual sales meeting. We go to industry conferences and typically from an absolute dollar stand point, it is our most expensive quarter. In absolute dollar is going forward, we expect that SG&A will be lower in the remaining quarters of 2013, both in absolute dollars and as a percentage of revenues. The comment that we made earlier about expanded sales and marketing efforts, that was really directed towards our sales efforts in Europe in regards to PerClot and a lot of the marketing related efforts are, relate to the studies that Steve mentioned that came out of the Martini Klinik and then this increased sales effort is just really focusing on those medical specialties outside of cardiac and vascular surgery. So we are looking to add nominally to the headcount, potentially this year, its more some of this other activities and initiatives that we have going on. Hopefully that answers your question.

Okay just a couple more; can you tell me where you're $240,000 are device tax are located, is that in SG&A?

It is.

Okay, in SG&A. And finally I have wondered, Steve, perhaps you could talk about the HeRO device and the new iteration with the adaptor; what will that do that generally speaking to ASPs and margins when the new device comes out?

I think that the ASPs will probably stay pretty much the same. I think that building the product is going to become less expensive because we are doing it in our own facility, down on the Georgia Tech campus, and I think that there will be a number of efficiencies of scale. Too early to telling that for sure but that's kind of what I am expecting. I think the nice feature about the adaptor is, it does give the doctor flexibility of choosing which Graft he wishes to use with our HeRO device, and it doesn’t block him in to using our devices we have put it together. He can choose, if he likes other Grafts better, he can choose to use them if he chooses to do so.

Thank you. Our next question comes from Tom Gunderson with Piper Jaffray & Co. Please proceed with your question. Tom Gunderson - Piper Jaffray & Co: So, let me follow up a little bit on BioGlue, up 12% as you pointed out; top quarter ever. And almost doubling, and doubling in Japan year-over-year. What's going on there, what's the dynamic? Is that of a small base, an aggressive distributor, is the Japanese market more accepting of these kinds of products? How should we think of Japan as an end market for BioGlue?

The current approved indication for BioGlue in Japan is for aortic dissections, and by and large almost all of the usage of BioGlue in Japan is currently on label. We think that market opportunities in the high single-digits in millions maybe approaching 10 million. Last year, in Japan, for the full year we recorded about 4 million in revenue. We think that for 2013 we expect that business to be up I think at a minimum of 15% to 20%. It just so happened that in the first quarter of this year we received several large orders from our Japanese distributor so it was really a function of timing. And so in the first quarter of this year it just so happened that the business was up about 100% almost solely due to the timing of the orders. We do see a little bit of seasonality in the business in Japan so the order pattern will slow down a little bit in the middle months but longer-term we think that we are going to be able to continue to grow this business in Japan. Another important point for consideration too is that we are currently working with our Japanese distributor to broaden the indications for use in Japan. We are working to potentially get the Japanese indication to mirror the U.S. indication which is essentially for cardiac and vascular surgery. In the U.S., that business is in the mid-$30 million range. Is the opportunity in Japan that big? It probably is not, but it is certainly much larger than the current indication is. So we think that we have got, that expanded indication could possibly come within the next year maybe a little bit longer than that and if we are successful in getting that we think that we have got a pathway to continue growing that business meaningfully in Japan. Tom Gunderson - Piper Jaffray & Co: And just a quick question on the cardiac tissue side in the press release down 6% and a comment that was made was the decline was primarily due to a decrease in cardiac shipments price I assume has been stable for a while so having a decline in revenues because you shipped less seems rather self-evident. Is there something going on, is this just a quarterly glitch, is there any trends that you are starting to see?

No there isn’t. That is a pretty seasonal business because most of the tissue is implanted in kids so you will see that increase in the vacation starts in the summer when the kids are out of school and you'll also see it if there are long periods of vacations or holidays and things like that. The kids have opportunities to recover from the surgery and return to school, so I just happen to think it's a glitch. But it is very centered around the fact that they're primarily used for pediatric reconstruction. So I wouldn't read anything into it.

The other thing that I'll point out Tom too, is we tell our investors that the tissue processing business as a whole we believe is a low growth business and you really shouldn't look at any single quarter as an indication as to what the trend in the business is. If you look at the annual revenues over a period of time, you will see that, they have grown on an annual basis and that's our expectation going forward. Tom Gunderson - Piper Jaffray & Co: And one last question, on the IDE for PerClot, this is dealing with the FDA as a medical device company is always a test of patience, have you had the same reviewers throughout this couple of year process or are you getting new reviewers and having to educate them and then I'll listen to that answer and give you the follow up right away here and that is, as you re-file and as you expect to start in Q3, are we still at 400 patients, 50-50 randomizations, 30 day follow up?

I'll start with your first question Tom, we have the same reviewers, since we initially filed the IDE and I think one of the things that has caused a little bit of delay is that we felt it was very important for us to have a conference call with the FDA prior to re-filing the IDE because we wanted to make sure that our resubmitted IDE was responsive to their last round of questions. And it took us a little bit longer than we wanted to schedule that call with the FDA, but that has occurred and we are going to re-filing in May. What the trial currently looks like and this again is subject to final FDA approval is a 320 patient study, randomized 1:1 with a 30-day follow up over across several medical specialties and if all goes well and we get the IDE approval, we believe that there's an opportunity to rapidly enroll these patients short follow up and get the PMA in to the FDA.

Our next question comes from Matt Dolan with ROTH Capital Partners, please proceed with your question.

I wanted to continue on the revenue line. It sound like everything in Q2 is starting pretty well based on your commentary, but even the top end of your full-year guidance doesn’t imply much sequential growth from the Q1 level that we saw, I think maybe a few hundred grand on average. So can you walk us through that? Is that solely the stocking orders in Japan and if so can you quantify what that was in Q1, so we can get a better basis on which to build the model throughout the year.

We had about $2.3 million in orders from Japan. And again that was roughly about 100% or double what the level of business was in the first quarter of 2012. So that kind of gives you an idea of the impact that, that had. We are one quarter into the year right now and we are very optimistic about how the year is going to play out. We will get to the end of the second quarter and we will re-evaluate and if we need to make some modifications to our guidance then we will do so with the time.

Okay, that’s all for this, making sure we’re thinking about it correctly. And then on the warning letter, you gave us some detail. Do you have any guess as to when this could be resolved? And I guess, secondly, probably more importantly it doesn’t appear that it’s had any effect on your business. But just comment if it has had any noise in the field.

: Haven’t heard any noise in the field.

As far as the timing of the resolution, it’s a guess at this point, as I stated we do have a cost schedule with the FDA this week, and we are going to get a status update and we will know exactly where we are. We are hopeful, that we can schedule re-inspection sometime this summer. But again that’s just a guess and a wish at this point. But again we should know more shortly, but to reiterate Steve’s point, we are currently not aware of any customers in the U.S. that have discontinued ordering product from us due to the warning letter.

And then on the R&D budget, you didn’t change the dollars, even though it looks like PerClot has pushed out slightly in terms of the study, walk us through the pacing, does it tick up in the second quarter or is this entirely a second half phenomenon for the R&D spent to ramp towards your guidance level?

It’s going to be a significant ramp in the third and fourth quarters. We’ve also taken a look at all of our internal projects and where we’ve added a couple of projects to our rosters, so the delay in PerClot from the first quarter is finding other opportunities to spend those hours on?

Okay and on your business development program, are you still actively looking at other acquisition, I know you’ve got a ton of things on your plate currently so just maybe frame that for us?

We have two or three things that we’re looking at currently and we’re continuing that very actively. I mean, I’m very interested in finding some additional products to fit in around the HeRO Graft and that kind of is our primary focus at the moment.

Okay great and then last one Ashley on the gross margin. I’m assuming the strength that you saw on BioGlue helped in the quarter, where should that go from here? Thank you.

We expect it to be relatively flat from current levels, if you look at the last four quarters it’s been anywhere from 64% to 66% and we think a lot of its really just going to depend on product mix.

Thanks.

Thank you. The next question comes from Joe Munda with Sidoti & Company. Please proceed with your question. Joe Munda - Sidoti & Company: All my questions were covered but Steve I’ve got a quick question for you. Let say you guys do get the PMA and in anticipation for the PerClot launch, I mean, is there any CapEx or significant CapEx that’s been devoted towards that. I know it ways off but how should we look at CapEx in 2013 with all these moving pieces.

I think we’ve already spent the money that we’re going to spend to build out our manufacturing facility that frankly is up and ready to go, it’s over here if you visit us it’s over in building two located right behind the marketing department and I think that those expense are already figured into our financials. Joe Munda - Sidoti & Company: Okay and then as far as the question before regarding acquisition, I mean, could a possible acquisition be the full buyout of ValveXchange, you guys devoted about 3.5 million there. Is that kind of wait and see mentality, and, if it interests you, would you be interested in taking the whole ownership stake?

Anything that we do there is really going to be largely predicated on progress that they’re making in their trial one so forth. So, it’s probably premature to have any commentary on that. But as I mentioned earlier I would refer you to their website, they frequently have updates on their clinical progress and I’ll refer you to that.

There is going to be a clinical update given by one of their implanters that will be at our AATS up in Minneapolis and you can get that schedule off of our website and if you’re going to be there at that meeting you might want to make sure you’re there to hear the presentation but they will go through their clinical results that they’ve experienced in Europe and which are pretty good. And bring you up-to-date there, you can even talk with the implanter, if you want. Joe Munda - Sidoti & Company: Okay. And then I had just follow up, you spoke about PerClot and HeRO Graft actually driving growth going forward with the success you’re seeing with BioGlue in Japan, I mean can you give us some color on the possibilities of PerClot in Japan, is there any cross over there?

I’m expecting the approval process to be considerably easier than it was with BioGlue simply because it’s made from potatoes, it’s a vegetable-based product, and that’s in our plans but the Japanese FDA has a reputation for being more conservative than the United States FDA, so that’s anybody’s guess. But we do intend to make an application there for PerClot and probably sometime this year that will happen. Joe Munda - Sidoti & Company: And Steve, I mean when you do get approval would it run through same I guess distributor you’re using in Japan.

Yes. We use Century Medical and we’ve very, very happy with how that relationship has developed and so they will definitely be our distributors.

Thank you. We have a follow up question from Tom Gunderson with Piper Jaffray & Company. Please proceed. Tom Gunderson - Piper Jaffray & Co: Just a quick one. R&D tax credit from 2012 I think was booked in Q1 can you tell us the amount of that Ashley?

It was approximately $200,000.

There are no further questions at this time. I would like to turn this floor back over to management for closing comments.

All right thank you for joining us and we look forward to talking with you again during the summary of the second quarter.