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CYRX: Revenue Streak Continues, Positive Gross Profit

By Brian Marckx, CFA

Q1 2014 10-Q

CryoPort (OTC BB:CYRX) filed their 10-Q for the fiscal first quarter 2014 ending June 30, 2013 on August 14th.  See below for access to our full updated report on CYRX.

Revenue continues to increase on both a sequential and yoy basis, setting another new quarterly record.  Q1 revenue of $488k was up 155% yoy and up 32% sequentially and beat our $433k estimate.  This now marks the 7th straight quarter of sequential revenue growth.  Another highlight was that Q1 was the first period that revenue covered COGS with CYRX generating $55k in positive gross income in the quarter.

We think the continued sequential revenue growth is indicative of increasing the customer base, increasing shipments per customer, and customer "stickiness", all of which bode well for continued growth.  And as the recent and new revenue opportunities begin to contribute, the rate of revenue growth should steepen.  As we have noted in the past, customer adoption can be a fairly drawn out process but once initially committed, customer retention is high.

Despite the record revenue, operating expenses fell yoy and sequentially and were the lowest of any period since fiscal Q4 2011 (ending 3/31/2011).  Fiscal Q1 net income and EPS were ($1.3) million and ($0.03), compared to our ($1.6) million and ($0.04) estimates.

CYRX exited fiscal Q1 with $228k in cash and equivalents, down from $563k at the end of fiscal 2013.  Cash used in operations was $1.2 million in Q1, up slightly from $1.1 million used in Q4 and equal to the average quarterly burn rate in fiscal 2013.  Subsequent to the end of fiscal Q1 CYRX raised an additional $410k from the issuance of additional unsecured 15% convertible promissory notes ("bridge notes").  In the event CYRX issues common or preferred equity, the notes are convertible into the issued stock.  Richard Rathmann, a newly appointed member of CYRX's board of directors, participated in the bridge financing.  CYRX will look to issue a larger financing in the near term.  We note that CYRX and Emergent Financial have been very successful in raising capital in the past.  The company's improving financial results, committed larger shareholder base, increasing customer count and operational progress with hopefully bode well for a successful near-term larger capital raise. 

Recent New Revenue Opportunities

CryoPort continues to be very active in expanding their network of customers and increasing their revenue opportunities.  This includes over the last few months;

CYRX is seeing increased interest from the reproductive medicine market and now appears to have an even greater focus to exploit the potential opportunity in this segment.  In particular, in-vitro fertilization which requires eggs to be frozen at cryogenic temperatures for storage and transport and where there exists a need for reliable, long cryogenic holding time shipping.  Reproductive medicine and in-vitro fertilization is a fast growing market especially overseas which is ideal for CYRX.  In August CYRX showcased its shipping offerings at the European Society of Human Reproduction and Embryology in London where they noted they generated several customer leads.  Then just this week CYRX announced an agreement with The World Egg Bank.  The World Egg Bank, which provides the world's largest service to match egg donors with recipients, could be a key partner for CYRX in introducing the company to IVF firms. 

The agreement with Zoetis, which was initially penned in December and included managing domestic and some international shipments of a poultry vaccine, was expanded in July to now include all domestic and international shipments.  As we noted following announcement of the initial agreement, given Zoetis' stature as one of the largest animal health businesses in the world, we view this relationship as a meaningful vote of confidence in CryoPort's offerings.

A copy of the full research report can be downloaded here >> 
 CryoPort Report

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