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What: Shares of CryoLife (NYSE:CRY), a global human tissue preservation and distribution company, fell as much as 20% after the company reported disappointing fourth quarter earnings results before the opening bell this morning.

So what: For the quarter, CryoLife reported an 8% increase in revenue to $35.5 million, helped primarily by an 11% rise in product revenue, primarily from BioGlue and PerClot, while its adjusted profits, stripping out a number of one-time benefits, was $0.08 per share, a modest jump from the $0.07 EPS profit last year. This might appear decent on the surface, but not compared to Wall Street's estimates, which had called for $34.9 million in revenue (a slight beat) and $0.25 in EPS (a whopping $0.17 miss). Looking ahead, CryoLife is forecasting full-year revenue of $146 million-$150 million with EPS ranging from $0.21-$0.24. Comparatively, both figures were also short of the current consensus estimate on the Street of $0.38 in EPS and $152 million in revenue.

Now what: CryoLife's report itself wasn't terrible, but given how rapidly its share price has appreciated over the past couple of months, a forecast that calls for just 5.1% revenue growth at the midpoint in 2014 and an EPS decline clearly isn't up to par with shareholders. Of particular interest to me are its shrinking gross margins, which are slowly being eroded by a growing R&D budget and modestly higher marketing expenses. Even after today's tumble, CryoLife is valued at around 40 times this year's earnings, which seems a steep price to pay for mid-single-digit growth. For now, I'd much prefer to stick on the sidelines and wait for margins to resume their course upward before considering this stock as a possible buy candidate.