Dear Ladies and Gentlemen:

During 2011 we made significant progress in repositioning CryoLife with earlier stage, growth oriented products while also continuing to generate strong cash flow from our core business. We expect to begin accelerating our growth in 2012, led by expanded adoption of PerClot, BioGlue and TMR. Revenues from the device segment of our business are expected to increase by 10 percent to 15 percent for the year, with significant upside potential over the next several years as we execute on the clinical and regulatory pathways for our product pipeline. In 2012 our strategic initiatives and plans include our expected enrollment of our U.S. clinical trials for PerClot and BioFoam, continued focus on growing TMR revenues in the U.S., potentially expanding the indications for BioGlue in Japan, initiating our pilot study to evaluate TMR with biologics in Europe, and increasing revenues for PerClot in Europe. We also expect the FDA to approve our HDE (humane device exemption) for SynerGraft processed human aortic valves for pediatric use about mid-year 2012. We believe that our portfolio of complementary, high margin products has the potential to significantly expand our market opportunities, leverage our core infrastructure and build value for the Company and its shareholders.

Net income for the full year of 2011 was $7.4 million, or $0.26 per basic and fully diluted common share, compared to net income of $3.9 million, or $0.14 per basic and fully diluted common share, for the full year of 2010. Total gross margins increased to 63 percent for the full year of 2011, up from 58 percent for the full year of 2010, driven by higher gross margins from the Company’s existing products and tissues, the acquisition of the Cardiogenesis product line, and the loss of a product line with low margins and the replacement with a higher-margin product. International revenues continue to account for a higher percentage of total company revenues. Total international revenues were up 21% for the full year of 2011 as compared to 2010. BioGlue and BioFoam international revenues increased 19% while powdered hemostat (PerClot) revenues increased 23% for the full year following PerClot’s introduction in fourth quarter 2010.

During the fourth quarter and full year ended December 31, 2011 the Company purchased 313,000 and 593,000 shares of the Company’s common stock at average prices of $4.52 and $4.90, respectively, resulting in aggregate purchases of $1.4 million and $2.9 million, underscoring our enthusiasm for the Company’s strategic initiatives and growth opportunities. During January 2012, the Company purchased 121,000 shares of the Company’s common stock at an average price of $5.15, resulting in aggregate purchases of $627,000. As of December 31, 2011, the Company had $27 million in cash, cash equivalents, and restricted securities. The Company’s net cash flow from operations was $16.8 million for the full year of 2011 and $20.8 million for the full year of 2010. We remain well positioned to leverage our capital resources and cash flow from our more mature business segments to invest in complementary products and technologies in high growth areas of cardiac and vascular surgery.

During 2012 we expect revenues from the Company’s higher growth, higher margin products segment (TMR, BioGlue and PerClot) to grow between 10% and 15% for the full year. We expect combined BioGlue and BioFoam revenues to increase in low to mid-single digits on a percentage basis compared to 2011. We expect PerClot revenues to grow between 38% to 78% over 2011. We expect Cardiogenesis revenues to grow between 9 percent and 19 percent over 2011. Revenues from the tissue processing segment of our business are expected to be flat in 2012 compared 2011.

During 2012 management will continue its corporate development activities that are focused on high margin, high growth products in the vascular and cardiac reconstruction space.

Very truly yours,

Steven G. Anderson
Founder, President and CEO
Atlanta, Georgia March 2012

Statements made in this letter that look forward in time or that express management's beliefs, expectations or hopes are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 that may cause actual results to differ materially from current expectations. These statements include those regarding the acceleration of our growth in 2012, led by expanded adoption of certain products, revenue projections for certain products and services, expectations regarding clinical and regulatory approvals for our products, the potential for expanded indications for BioGlue in Japan, potential benefits of our complementary, high margin products, and our ability to leverage our capital resources and cash flow from our more mature business segments to invest in complementary products and technologies in higher growth areas. These risks and uncertainties include that expanded adoption of certain products and revenue projections for products may not be correct and could be impacted by regulatory issues, the introduction of competing products and services into the market, the changing preferences and needs of patients and their physicians, and the ability of CryoLife to successfully market and distribute its products and services in multiple countries and jurisdictions. Estimates regarding the timing of regulatory approvals for CryoLife products and/or expanded indications for BioGlue in Japan are subject to factors beyond CryoLife’s control and CryoLife may not be able to obtain the necessary approvals in a timely or cost-efficient manner, if at all. Our expectations regarding revenues and clinical and regulatory pathways for our products over the next several years are particularly difficult to forecast with accuracy, and outcomes may differ from our current expectations due to factors beyond our control. Regulatory requirements may prove more difficult, time consuming, or costly to satisfy than we currently anticipate. In addition, regulators may impose new or different regulatory requirements on the products or services we offer, which could result in delays for new products or services, or disruption of sales for existing ones. Plans regarding CryoLife’s growth objectives, including plans to invest in complementary products and technologies in higher growth areas, and its use of cash are subject to change based on the various business needs of the Company. Management may choose to allocate its assets in ways that are currently unanticipated and there is no guarantee that CryoLife will continue to pursue its current strategies or invest in R&D and clinical trials. Current plans with respect to growth opportunities are subject to change, and management may ultimately determine that there are better uses for our cash based on numerous factors. Any business development efforts and/or R&D investments are subject to delays, cost overages and regulatory difficulties, and efforts to fully integrate future acquisitions and new product offerings into our business, or efforts relating to R&D and clinical trials, may not be successful and can potentially disrupt our normal business activities. CryoLife’s projections regarding annual revenues may be materially impacted by CryoLife’s ability to obtain certain regulatory approvals on a timely basis, its ability to successfully market various products and services in multiple countries and jurisdictions, and changing economic conditions generally. CryoLife has also inherited certain risks and uncertainties related to its 2011 acquisition of Cardiogenesis' business. These risks and uncertainties include that CryoLife's ability to maintain revenues and achieve growth in revenues from Cardiogenesis’ revascularization technology in the future is dependent upon physician awareness of this technology as a safe, efficacious, and appropriate treatment for their patients, we will continue to purchase some of Cardiogenesis’ key product components from single suppliers, and the loss of these suppliers could prevent or delay shipments of its products, delay clinical trials, or otherwise adversely affect our business, if Cardiogenesis’ independent contract manufacturers fail to timely deliver sufficient quantities of some of Cardiogenesis’ products and components, our Cardiogenesis operations may be harmed, and Cardiogenesis’ contract manufacturers are at locations that may be at risk from earthquakes or other natural disasters. Our anticipated future performance, including revenue projections, is subject to the general risks associated with our business, including that we are significantly dependent on our revenues from BioGlue and are subject to a variety of risks affecting this product, including that a German Patent Court has nullified our main BioGlue patent in Germany, and if the ruling is upheld on appeal, we would be prevented from suing to prevent third parties from infringing the main BioGlue patent in Germany, the continued introduction into the market of products that compete with BioGlue could have an irreversible adverse impact on our sales of BioGlue, our BioGlue patent expires in the U.S. in mid-2012 and in the rest of the world in mid-2013, we have been, and may in the future be, exposed to tissue processing and product liability claims, including one currently outstanding product liability lawsuit, and additional regulatory scrutiny as a result, 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 for PerClot in the U.S., which will require an additional commitment of funds, the FDA rejected our initial IDE application for PerClot and we are working to address its concerns, but there is no guarantee that we can do so on a timely or cost efficient basis, if at all, the receipt of impaired materials or supplies that do not meet our standards or the recall of materials or supplies by our vendors or suppliers could have a material adverse impact on our revenues, financial condition, profitability, and cash flows, our sales are impacted by challenging domestic and international economic conditions and their constraining effect on hospital budgets and demand for our tissues and products 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 effect on us, the loss of any of our sole-source suppliers could have a material adverse effect on our revenues, financial condition, profitability, and cash flows, we may be unsuccessful in our efforts to market and sell PerClot in the U.S. and internationally, we may expand through acquisitions, or licenses of, or investments in other companies or technologies, which may result in additional dilution to our stockholders and consume resources that may be necessary to sustain our business, we may not realize the anticipated benefits from acquisitions and we may find it difficult to integrate recent acquisitions or potential future acquisitions of technology or business combinations, which could disrupt our business, dilute stockholder value, and adversely impact our operating results, we are subject to stringent domestic and foreign regulation which may impede the approval process of our tissues and products, hinder our development activities and manufacturing processes, and, in some cases, result in the recall or seizure of previously cleared or approved tissues and products, our HemoStase sales ceased in late March 2011, and we will not be able to participate in the hemostats market in the U.S. or other markets where we lack regulatory approval unless we can obtain FDA or other regulatory approval for PerClot, we may not be successful in obtaining necessary clinical results and regulatory approvals for services and products in development, and our new services and products may not achieve market acceptance, uncertainties related to patents and protection of proprietary technology may adversely affect the value of our intellectual property, intense competition may affect our ability to operate profitably, if we are not successful in expanding our business activities in international markets, we may be unable to increase our revenues, we are dependent on the availability of sufficient quantities of tissue from human donors, key growth strategies may not generate the anticipated benefits, investments in new technologies and acquisitions of products or distribution rights may not be successful, regulatory action outside of the U.S. has affected our business in the past and may affect our business in the future, consolidation in the health care industry could lead to demands for price concessions, limits on the use of our tissues and products, and limitations on our ability to sell to certain of our significant market segments, extensive government regulation may adversely impact our ability to develop and market services and products, the success of many of our tissues and products depends upon strong relationships with physicians, our existing insurance policies may not be sufficient to cover our actual claims liability, we may be unable to obtain adequate insurance at a reasonable cost, if at all, we are not insured against all potential losses, and natural disasters or other catastrophes could adversely impact our business, financial condition and profitability, our credit facility, which expires in October 2014, limits our ability to pursue significant acquisitions, our ability to borrow under our credit facility may be limited, continued fluctuation of foreign currencies relative to the U.S. Dollar could materially adversely impact our business, rapid technological change could cause our services and products to become obsolete, our investment in ValveXchange, Inc. may become impaired, which could have a material adverse impact on our earnings, and we are dependent on key personnel. These risks and uncertainties include the risk factors detailed in our Securities and Exchange Commission filings, including our Form 10-K for the year ended December 31, 2011, and subsequent SEC filings. CryoLife does not undertake to update its forward-looking statements.