BioLife Solutions, Inc. (NASDAQ:BLFS) Q4 2024 Earnings Call Transcript
BioLife Solutions, Inc. (NASDAQ:BLFS) Q4 2024 Earnings Call Transcript February 29, 2024
BioLife Solutions, Inc. beats earnings expectations. Reported EPS is $-0.3, expectations were $-0.36. BioLife Solutions, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the BioLife Solutions Q4, 2023 Shareholder and Analyst Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please also note today's event is being recorded. I would now like to turn the call over to Troy Wichterman, Chief Financial Officer of BioLife Solutions. Please go ahead.
Troy Wichterman: Thank you, operator. Good afternoon, everyone, and thank you for joining the BioLife Solutions 2023 Fourth Quarter Earnings Conference Call. On this call, we will cover business highlights, financial performance for the quarter and 2024 revenue guidance. Earlier today, we issued a press release announcing our financial results and operational highlights for the fourth quarter of 2023 and 2024 revenue guidance, which is available at biolifesolutions.com. As a reminder, during this call, we will make forward-looking statements. These statements are subject to risks and uncertainties that can be found in our SEC filings. These statements speak only as of the date given, and we undertake no obligation to update them.
We will also speak to non-GAAP or adjusted results. Reconciliations of GAAP to non-GAAP or adjusted financial metrics are included in the press release we issued this afternoon. Now, I'd like to turn the call over to Rod de Greef, Chairman and CEO of BioLife.
Rod de Greef: Thanks, Troy. Good afternoon and thank you for joining us for BioLife's Fourth Quarter and Full Year 2023 Conference Call. It has been a busy four months since rejoining the company as CEO, and I'm encouraged by our team's ability to navigate one of the more challenging environments for the life sciences industry in recent memory, not to mention their consistent execution throughout the organizational changes related to our strategic refocusing on higher margin recurring revenue streams. Over time, BioLife has become the industry standard in terms of biopreservation media and has established itself as a leading provider of premium bioproduction tools and services, the critical picks and shovels that support the fast-growing cell and gene therapy industry.
This is our mission and I'm convinced more than ever that BioLife is in an excellent position to benefit as this space matures, expanding upon our already dominant share of the market and offering diversified exposure to the nascent industry which we expect to grow at a 20% to 25% CAGR through 2033. As we look back on an undeniably challenging year for the CGT industry, we recognize that BioLife was not alone as companies large and small felt the impact of inventory destocking, a constrained funding environment, and weaknesses in China. Our full year results were certainly impacted by these challenges, but our initiatives to divest the freezer product lines and refocus helped us exit the year with positive momentum. With encouraging early signs that the macro headwinds facing the industry may have begun to subside, we similarly saw evidence of stabilization and momentum in the CGT industry and our business as demonstrated by our fourth quarter cell processing platform revenue growing 11% sequentially over Q3 and across our top 50 biopreservation media customers, who account for 90% of total media revenue growing 14% compared to the third quarter.
It is early and as we have said, we will need to continue to work closely with our customers to manage inventory to normalize levels, which we believe positions us well for what could be a sustained recovery as 2024 progresses. With that, let's take a closer look at our full year 2023 results. Total revenue for 2023 was $143.3 million, an 11% decrease compared to 2022. Ex-COVID revenue decreased 4% for the year as there was no COVID-related revenue in 2023. Looking across our platforms, for the full year of 23, our cell processing platform revenue declined 4% to $65.8 million from 2022 due to a 6% decrease in our biopreservation media revenue, which was partially offset by a 9% increase in our other cell processing tools which include our CellSeal, hPL and CT automated fill product lines.
In 2023, our top 20 media customers accounted for 78% of media revenue and were up slightly year-over-year by 1%, and our all other category decreased by a total of 26%. In 2023, distributors accounted for 40% of total media revenue compared to 38% in 2022. Customers with commercially approved therapies accounted for an estimated 52% of direct media revenue in 2023 compared with 49% in 2022. Keeping in mind that some of this revenue is related to validation, R&D and other clinical work in addition to patient dosing. Our full year 2023 biostorage and services platform revenue decreased 2% to $25.9 million. However, excluding prior year COVID-related revenue, this platform grew a strong 61% as Garrie Richardson's team did an excellent job of replacing the lost COVID revenue.
We are currently in the process of consolidating our two Boston area facilities, which we expect will save approximately $0.5 million in annual operating costs and which should be completed early in the third quarter. Our 2023 freezer and thaw platform revenue declined 23% or $15.1 million from 2022, primarily due to a difficult capital equipment environment and the competitive disadvantage generated by the divestiture process. As you know, we have been in the process of divesting the CBS and Stirling freezer entities since August of last year. We recently signed two separate LOIs for the sale of these freezer product lines and our goal is to close these transactions within the next 45 days to 60 days. All in all, this has been a difficult and time-consuming process and we expect no net proceeds and in fact, will realize an initial cash outflow.
This initial cash outflow will be offset by the elimination of future cash burn and certain long-term debt, as well as future product warranty liabilities, while materially improving our overall 2024 financial performance and margin profile. On a more macro industry note, 2023 was a breakthrough year for CGT approvals in the US. This momentum continued into the first quarter of 2024 with the recent approval of Iovance's groundbreaking TIL-based therapy, Amtagvi, an industry first which we support with two of our biopreservation media products. This brings us to a total of 14 unique approved therapies which have our biopreservation media embedded, and three of these unique approved therapies also utilize our CellSeal Vials. In the next 12 months, we believe there could be up to 10 additional unique therapy approvals, expanded indications or geographic expansions which include our proprietary products.
In addition to our strong market position in approved therapies, we believe there are currently more than 230 active US commercially sponsored clinical trials and estimate that our biopreservation media is embedded in more than 70% of those trials. Looking at these statistics, it's evident that BioLife is the clear industry standard when it comes to biopreservation, and as the industry grows, so do we. We have amassed a class-defining portfolio of products to improve quality and reduce risk in the manufacture and delivery of these novel therapies. We have earned a high level of trust with our marquee customer base and operate in an environment with limited credible competition, specifically in the area of biopreservation. As we look ahead, we're taking a cautious approach toward our 2024 revenue guidance, despite certain customer conversations which suggest some growing optimism around improving market conditions in the second half of the year.
At this point, we are expecting 2024 revenue excluding freezers, to range from $95.5 million to $100 million, with our cell processing platform generating between $66 million and $68.5 million, and our biostorage and services platform which now includes our thaw product line to range from $29.5 million to $31.5 million. While the total year-over-year growth rate of 2% to 7% may seem modest, I would point out that against an annualized second half 2023 run rate, which we believe is a more appropriate baseline given the industry challenges of last year, our guidance for total revenue growth is 13% to 18% with cell processing growing at 17% to 22% and biostorage and services at 4% to 11%. As we progress through 2024, we're committed to delivering increases in revenue, gross margin and adjusted EBITDA both in absolute terms and as a percent of revenue.
At this point, I'll turn the call over to Troy to provide a more detailed review of our financial results. Troy?
Troy Wichterman: Thank you, Rod. We reported Q4 revenue of $32.7 million, representing a decrease of 26% year-over-year and excluding COVID-related revenue from Q4 of 2022, the decline was 23%. The year-over-year decrease was primarily related to a $6.1 million decrease, or 35% in our freezers and thaw systems platform and a $5.4 million, or 27% decrease in our cell processing platform, reflecting the industry headwinds in destocking in 2023. However, our sequential growth in Q4 from Q3 for the cell processing platform was 11%. As Rod mentioned, we are starting to see positive indicators for future revenue growth for the cell processing platform. Turning to our biostorage and services platform, revenue for the fourth quarter was $6.6 million, a decrease of 1% over the same period in 2022.
Excluding COVID-related revenue from Q4 of 2022, revenue in Q4, 2023 increased 26% as the COVID-related revenue was backfilled. Freezers and thaw systems platform revenue for the fourth quarter was $11.4 million, a decrease of 35% over the same period in 2022. Excluding COVID-related revenue from Q4, 2022, revenue in Q4, 2023 decreased 32%. Adjusted gross margin for the fourth quarter was 35% compared with 32% in the prior year. The increase in adjusted gross margin was primarily due to product mix related to decreased revenue from our freezer business and lower warranty and scrap expense from our ULT product line. Adjusted gross margin increased approximately 450 basis points sequentially, largely due to increased cell processing revenue and product mix.
GAAP operating expenses for Q4, 2023 were $45.9 million versus $93.5 million in Q4, 2022. The decrease was largely due to the non-cash asset impairment charge we took during Q4, 2022 in the freezer businesses of $40.5 million. Adjusted operating expenses for Q4, 2023 totaled $20.4 million, compared with $22.1 million in the prior year. The decrease was largely due to reduced personnel expenses from the reduction in force in Q3, 2023, decreased consulting cost and a reduction in travel expenses. Our adjusted operating loss for the fourth quarter of 2023 was $9.3 million, compared with $8.2 million in Q4, 2022. Our GAAP net loss was $13.4 million in Q4. The decrease in net loss was primarily due to the $40.5 million non-cash intangible asset impairment charge related to Stirling and CBS taking during Q4, 2022.
Adjusted EBITDA for the fourth quarter of 2023 was $700,000 compared with $1.7 million in the prior year. Our adjusted EBITDA decreased primarily due to lower biopreservation media revenue. Adjusted EBITDA for Q4 increased sequentially by $3.8 million from Q3, largely due to higher revenue from our self-processing platform, reduced freezer R&D cost, and decreased personnel cost, and was the first positive quarterly adjusted EBITDA for the year. Turning to our balance sheet, our cash and marketable securities balance at December 31, 2023 was $52.3 million compared with $42.2 million at September 30, 2023. Taking into consideration our adjusted EBITDA of $700,000, our increase in cash during Q4, 2023 was primarily related to a $10.4 million pipe that closed on October 19, 2023 with an existing shareholder.
Our SVB long-term debt balance was $20 million, which is interest only through Q2, 2024, with quarterly repayments of $2.5 million beginning in Q3, 2024. Turning to 2024 revenue guidance. Our 2024 guidance is based on expectations for our cell processing and biostorage and services platform, which now includes the ThawStar automated thawing devices product line and does not include any revenue from freezer product lines, which are in the process of being divested. Total revenue is expected to be $95.5 million to $100 million, reflecting an overall growth of 2% to 7%. Our cell processing platform is expected to contribute $66 million to $68.5 million, or flat to 4% growth over 2023. Our biostorage and services platform is expected to contribute $29.5 million to $31.5 million, or 5% to 12% growth over 2023, and on a like-for-like basis, growth of 10% to 16%.
In addition, we expect revenue, gross margin and adjusted EBITDA growth in 2024. Finally, in terms of our share count, as of February 22, 2024, we had 45.3 million shares issued in outstanding and 48.2 million shares on a fully diluted basis. Now I'll turn the call back to the operator to open up for questions.
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