Q3 2021 BioLife Solutions Inc Earnings Call
Good day and thank you for standing by welcome to the third quarter 2021, Biolife Solutions earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question you will need to press star one on your Tullow.
Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero.
Now I'd like to hand, the conference over to your first speaker for today, Mr. Ed try Wickman, Chief Financial Officer of Biolife solutions. Please go ahead, Sir Thank you Eli good afternoon, everyone and thank you for joining our third quarter earnings call. Joining me today to discuss our results are Mike <unk>, Chairman and Chief Executive Officer and Rob.
Degree President and Chief operating Officer.
Earlier. This afternoon, we issued a press release, which details our financial results and operational highlights for the three and nine months ended September 32021.
As a reminder, during this call we may make certain projections and other forward looking statements regarding future events or the future financial performance of the company or its acquisitions.
These statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations.
For a detailed discussion of the risks and uncertainties that affect the company's business and that qualify as forward looking statements I refer you to our periodic and other public filings filed with the SEC.
Company projections and forward looking statements are based on factors that are subject to change and therefore these statements speak only as of the date they are given.
The company assumes no obligation to update any projections or forward looking statements, except as required by law.
During this call we will 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.
These non-GAAP or adjusted financial metrics should not be viewed as an alternative to GAAP. However in light of our M&A activity. We believe that the use of non-GAAP or adjusted metrics provides investors with a clearer view of our current financial results when compared to prior periods now I'd like to turn the call over to Mike Rice Biolife Chairman.
And CEO.
Thanks, Troy and it's great to have you in the CFO role and on your first earnings call with Rod and me and Rod. It's just great that you'll be on the team with us for another year or so.
Thank you everyone for joining our call after my remarks.
Rob will provide an update on key initiatives. He is managing targeting integration and gross margin improvements then Troy will present, our financials for Q3 in the first nine months of 2021.
And speak to another guidance increase were making for 2021 based on continued strong demand for our bio preservation media products. After that we'll be glad to take your questions.
Turning to Q3 revenue and customer highlights we sustained our strong momentum this year with topline revenue of nearly $34 million in the quarter.
This was up 200% versus Q3 of last year and 8% above Q2 this year.
Organic revenue growth was up 37% over Q3 of last year, driven by bio preservation media revenue growth of nearly 50% year over year. In Q3, we gained at least 213, new customers across our three product and services platforms and I'll remind you know what those are.
First cell processing, which includes bio preservation media and Sexton products.
As our freezers and thoughts systems platform comprised of CBS liquid nitrogen freezers, and Sterling mechanical freezers and thought star systems, and finally storage in cold chain services, which includes our <unk> storage services and our Evo cold chain management offering.
These more than 200, new customers in Q3 compares to 213 in all of 2020 and 183 in Q2 of this year for the first nine months of 2021, the gain of nearly 500, new customers, but as noted before the actual count should be significantly higher and we'll report on that after year end.
When we get data from our key indirect distribution partners he.
You might recall that in 2020 for our bio preservation media products alone two of our largest distributors shipped products to more than 2300 different end users.
Based on order volume so far this year, we expect another stellar year for our direct team and indirect partners in driving much broader adoption of our portfolio of our production tools and services.
Cross selling to capture revenue synergies is a key focus for us and in the first nine months of this year more than 30 customers, who purchased at least one additional portfolios solution than they were previously using.
Note that we also disclosed earlier this year at a leading pharmacy GMO is using every portfolio offering and more recently that we have a multipoint engagement with a top 10 global pharma company that uses our cryo store bio preservation media Evo cold chain management, offering and size safe storage services, we expect to continue to capture rep.
The new synergies by driving broader adoption of our portfolio components at our strategic accounts.
I will make some qualitative comments about our three revenue platforms and let Troy speak to the overall metrics for each.
For cell processing in Q3, we gained 42, new customers and received confirmation that our cell processing media products will be used in at least 24 additional clinical trials for new Celgene therapies, we estimate that our bio preservation media products have been incorporated into more than 530 customer clinical applications.
For our bio preservation media, we also remain confident that each customer clinical application if approved could generate annual revenue in a range of 500000 to $2 million.
Based on the estimated number of doses are customers would manufacturer in a year the volume of our media in each dose in milliliters and the average selling price per mill.
To date, our bio preservation media is huge and seven approved therapies and our sex and cell processing media and vials are used in three approved therapies for bio preservation media and approved therapies actual and forecasted annual revenue is supporting the revenue range I just mentioned.
With our freezers and thoughts systems platform. Despite the operational challenges we continue to work through we gained 162 new customers in early October we shipped another high value high margin high capacity control grade freezer to a leading allogeneic cell therapy company.
Dissipate shipping another this quarter.
And our final three revenue platform stores in cold chain services, which includes Evo cold chain rentals and <unk> storage services. We gained 26 new customers for the second consecutive quarter 15 for storage services in 11 for Evo.
Specific to our storage services platform, we recently announced the opening of our first European bio repository in Amsterdam.
Our opportunities list of potential new storage service customers is long and robust we're very bullish on how we can grow this business and as you can imagine are well into the planning process for where additional facilities will be located so we can capture our growth opportunities.
With our Evo cold chain management platform cell and gene therapy companies now have full optionality to access our class defining offering through our expanded specialty Courier partner network and now includes World Courier quick International patio that Thermo Fisher Marcan and bio care.
We're also well engaged in our new product development roadmap for the Evo platform and look forward to sharing details when we can but I can't say, we're committed to defining the class to innovation, both internal and external.
Now I will turn the call over to Rod to give you an update on some of the supply chain and gross margin improvement initiatives, he's leading rod.
Thanks, Mike.
To start by addressing wide delayed the date of my retirement.
<unk> was originally based on two things first that the company was on a solid growth trajectory, which I believe is clearly the case and which is demonstrated by the revenue strength, we realized in Q3 and continue to see in Q4.
The second factor was the full team was in place to manage that growth based on best These resignation. The second half of the equation has changed and given the 20 years that I've been associated with the company in one form or another by offered to step in and fill the gap based on my previous experience as COO from late 2019 to earlier this.
This year.
In this role I currently have manufacturing and logistics customer service.
Reporting to me and what's new is the addition of the Sterling and <unk> product lines, and that's where I'll be focusing a significant amount of my time.
A key area of attention will be to finish the integration.
Work that has been started particularly in the area of consolidating the company's supply chain.
With the objective of realizing opportunities for gross margin improvement in.
In addition, we will continue to build out our company wide customer service organization with the specific goal of adding at least one new service revenue stream in 2022.
On the it side of things the priority is to work with the existing cross functional team already in place and continue the deployment of the net suite ERP project, which is well underway and on track to be fully implemented across the company by the end of next year.
I'll end my remarks by addressing some operational issues, we faced during the third quarter, which resulted in a total charge to Cogs, a $4 3 million or 13% of revenue in Q3.
Approximately $4 million of the total was related to two issues with the Sterling <unk> product line.
And was comprised of $1 5 million in purchase price variance charges, and $2 5 million and increased warranty and scrap expense.
As is the case with many companies operating in today's supply chain constrained environment. The Sterling operation realize the significant increase in Q3 PPV charges when compared to prior quarters.
A large part of these charges were directly related to an ongoing transition away from a large vendor which will be completed in the coming months.
This transition also resulted in raw material delivery issues, which negatively impacted our actual versus standard labor costs.
The warranty and scrap charges are the result of certain defined and contained quality issues the magnitude of which came to light during the quarter.
Which fundamentally stem from the 52% year over year increase in freezer production.
These problems have now been largely addressed through process and design improvements, but the increase in warranty expense reflects the amount necessary to establish an adequate warranty accrual on the balance sheet.
To summarize while we may see some continued issues on the supplier side impacting ppvs in Q4, they should be lower.
And we fully expect to see improved gross margins in Q4, and then solid expansion during 2022.
Now I'd like to turn the call over to <unk>, our CFO to recap the quarter's financials results Troy. Thanks Rod.
I'll start off with a brief review of our financial results for Q3, 2021, and then provide updates to the guidance for the remainder of 2021.
Revenue for the third quarter totaled $33 8 million, representing a 200% increase over 2000, Twenty's third quarter revenue of $11 3 million.
Organic revenue increased 37% in Q3 2021 compared to Q3 2020, driven by bio preservation media revenue of $11 1 million, which was up 49%.
Revenue from the cell processing platform for Q3, 2021 was $11 5 million, which includes our bio preservation media revenue and sex and cell processing tool.
<unk> contributed 425000 in revenue since our acquisition on September one and was in line with our expectations.
Revenue from the Freezers in <unk> systems platform for Q3, 2021 was $17 6 million, which includes our CBS Sterling and thoughts star brands.
Revenue from our storage and storage services platform for Q3, 2021 was $4 7 million, which includes our Evo and <unk> brands.
Revenue for the nine months ended September 32021 totaled $81 9 million, an increase of 145% over 2000, Twenty's nine month revenue of $33 4 million and organic growth was 34%.
Bio preservation media revenue for the first nine months of 2021 increased 31% to $29 7 million.
Our adjusted gross margin for the third quarter of 2021 was 28% compared with 57% last year for.
For the first nine months of 2021, adjusted gross margin was 39% compared to 60% in the same period last year.
As Rod stated, we had $4 3 million of unusual cost of sales charges in the quarter. This was primarily related to the Sterling freezer products without these charges. Our adjusted gross margin for Q3 would have been approximately 40% which is more in line with our historical range.
We believe we will see sequential margin growth throughout the next few quarters.
Operating expenses for Q3 of 2021 totaled $17 4 million compared with $6 8 million in Q3 of 2020.
And for the first nine months of 2021, adjusted operating expenses totaled $39 5 million compared with $19 3 million in the first nine months of 2020.
The increase in both periods was primarily driven by the absorbing absorption of operating costs related to our size say sterling and sex and acquisitions as.
As well as increased head count and stock based compensation expense necessary to support our overall growth objectives.
Our adjusted operating loss for the third quarter of 2021 was $8 1 million compared with an operating loss of 359000 in Q3 2020.
Our adjusted operating loss for the first nine months of 2021 totaled $7 5 million compared to adjusted operating income of 547000 in 2020.
Our adjusted net loss for the third quarter of 2021 was $8 3 million or negative <unk> 19 per share compared with an adjusted net loss of 346000 or negative <unk> <unk> per share in 2020.
For the first nine months of 2021.
Adjusted net loss was $7 8 million or negative <unk> 20 per share.
Paired with adjusted net income of 606000 or <unk> <unk> per diluted share in 2020.
Adjusted EBITDA for the third quarter of 2021 was negative $2 1 million compared with positive $1 7 million in the third quarter of 2020.
For the first nine months of 2021.
<unk> EBITDA was positive $4 4 million compared with positive $5.
$5 8 million in the same period in 2020.
Our cash balance at September 30 was $75 1 million.
I'll conclude my remarks, with our updated revenue guidance for 2021.
Total revenue for 2021 is expected to be in the range of $115 million to $119 million.
<unk> year over year revenue growth of 139% to 147% and organic growth of 30% to 35%.
Cell processing platform revenue is expected to be between 42% and 43 million accounting for approximately 37% of total revenue, which includes the contributions of <unk>, which we closed on September one.
Freezers and thought systems revenue is expected to be between 57, and 59 million accounting for approximately 49% with total revenue.
Storage and storage service revenue is expected to be between 16% and $17 million accounting for approximately 14% of total revenue.
Finally in terms of our new share count taking into consideration the 530000 shares.
We issued in connection with the second transaction transaction.
We have 41 6 million shares issued and outstanding and $43 8 million shares on a fully diluted basis.
Now I'll turn the call back to Mike.
Thanks Troy.
To summarize two key takeaways from Q3 <unk>.
First demand for our bio production tools and services portfolio is at record levels in each platform, we built a phenomenal customer base and with the anticipated growth in the cell and gene therapy industry have the potential to build biolife into a significantly larger enterprise and Sarah stated aspirational financial goals.
The operational issues were tackling are not uncommon growing pains typical in acquisitions.
Our team will continue to execute well as we further integrate our various teams and steadily improve in our focus areas.
I am pleased to say that product demand. So far in Q4 is very strong and we're looking forward to sharing our results for Q4 and the full year of 2021.
Now I'll turn the call back over to the operator to take your questions Eli.
Thank you Mike.
I remind you again to our audio attendance. If you would like to register a question. Please press star followed by the number one on your telephone keypad.
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One moment for the first question.
Alright and for the first question, we have Max Masucci from Cowen <unk> Company. Your line is open.
Hi, Thanks for taking the questions.
Hi, Max.
Hey, so yes.
Related to the supply chain disruption it sounds like the issues more on them.
Input side of things can you just give us a bit more detail around the issue that came about with the.
Specific vendor, which raw materials, where they call. It if you could share that and then whether you expect to reconcile the issue with <unk>.
<unk> vendor or to seek an alternative.
No. It's a good question, Max, but I'm going to be a little bit circumspect since we still have a relationship with this vendor right and so.
Really it's fundamentally driven by the fact that a couple of months back we made a decision to transition from this vendor to another vendor for a variety of reasons.
And that transition has not gone as smoothly as we had hoped.
There have been a lot of surcharges unexpected surcharges involved in the transition and in addition, as I mentioned.
<unk>.
Supply has not been.
Consistent in terms of its delivery, which has had a negative impact on the shop floor as it relates to labor rates. So.
It's something that I think it's clearly transitory because their relationship will be fully transitioned and we've been transitioning.
Different parts over over the last several months, we've probably got another month or two of that activity.
So we expect the impact to come down and then in 2020 to be eliminated completely.
Great.
And then just when you think about the.
The implied Q4 results and just looking at the raised guidance netted against the beat versus our expectations in Q.
Q3, I would just love to get your latest view on the embedded assumptions for Sterling for the core business.
And then also new customer wins versions same customer growth.
So I'll make a comment and then turn it over to Mike but.
Macs that we don't we don't split out that particular product lines within our platform. So we've been pretty clear in terms of what we expect the platforms to do in the guidance that Troy laid out.
And in terms of customer wins I'll, let Mike address that piece, yes. Good question Max well look we're winning in both categories both.
Having success, having new groups adopt one or more platforms, but also going deeper within our key strategic accounts and we do have some concentration or at least we did with media and I'm sure to some degree that carries over to the other platforms, but.
I guess the.
The way I would want to characterize it as you've obviously seen from many other life science tools companies this quarter and even the quarter before the demand is really remarkable.
Our proprietary products are doing really well everything else that we've tucked into the platform portfolio are doing really well. So it's just a really it's a really frothy time now based on the level of investment and how that investment has translated translating into spend here. So it's really both but very very bullish I'm sure you heard that come across in my voice with my remarks, but it really <unk>.
Really strong.
Yeah, absolutely makes sense and if I could squeeze one more in.
Look at the past two years your customer base has grown your product portfolio has evolved just with that in mind, how do you view the opportunity to expand from within and cross sell the broader portfolio. Once you really get your foot in the door are there any product center.
Being cross sold effectively it seems like there were some some positive data points in the prepared remarks.
Most definitely Max and Thats, a key focus area and I have and as a management team, particularly in our sales and marketing.
Functional groups, we have really high expectations about our ability to capture those revenue synergies by seeing these cross selling opportunities leveraging relationships finding homes for more parts of the portfolio based on now obviously in a good way physically being back on site.
Seeing our friends, but also seeking at other decision makers and Influencers to present, the other parts of the portfolio I have to say the integrated freezer sales teams doing a great job and we've got a lot going on there to pitch for <unk> storage services. The Evo platform. So the good news is there just arent tens of thousands of prospects of finding enough.
The universe for us to get our arms around through our both our direct team and our distribution partners and it's great to see the way that we're leveraging these various relationships and being introduced to other folks. So yes key focus area for sure.
Great. Thanks for taking the questions Youre welcome Matt.
Next we have Jacob Johnson from Stephens. Your line is open.
Hey, good afternoon, and Rod it's good to have you back, but I guess you never left.
Hey, just one.
One follow up on just kind of the Sterling operational stuff.
Has this impacted your relationship with customers.
The perception of the brand.
Or maybe more simply do you any of these kind of issues impact your outlook for revenues that Sterling yes.
Yes, really good question Jacob as you can imagine for competitive reasons I'll be.
Fairly brief in my remarks, but I think it's obvious that every time, a customer or as a freezer if it doesn't work or doesn't work like it's supposed to.
Bad experience and we don't like that so we're all over that to try to reduce those and to get things to return to a normal sort of expected warranty rate of of touch points and service calls and all of that but.
Yes, so far so good but we're on it because we understand how customer loyalty works and they have options, which may not be the best options, but they have other options to consider so.
Hyper focused on it.
Thanks for that Mike and then just sticking on the freezer side and kind of a bigger picture question that I get from investors.
You guys are seeing strong demand for your freezers, we're seeing it elsewhere too.
Can you just talk about the demand in freezers Youre seeing is this.
New.
New customers coming to you is it existing customers kind of scaling up or out just to prepare for a commercial product launches.
For research just any kind of color you can give on kind of the broader demand backdrop, you're seeing on the freezer side of the business, yes, I could give a little bit it's all of the above and it depends on the segment, you're talking about within cell and gene therapy, clearly the high capacity control great freezer from our CBS <unk> line has an appeal there and there is demand for that.
There's really good interest those are as you know high value half million dollar kind of range freezers with good margins on them in the broader biopharma market.
There is really obviously demand for LNG storage, but really more demand for mechanical freezers and in that space, you think about the free markets.
Academia government, and then corporate or industrial with really strong demand amongst all of those so I would just say that.
We are the beneficiary of this tide, that's lifting all the boats.
I'll just sneak in one more nice quarter in the services business can you just on.
The build out at <unk>.
The Amsterdam facility can you talk broadly about the footprint of <unk> today, and then if you will.
When I look ahead to maybe hint at any other regions that could be of interest in the future I suspect Asia Pacific with one that would be one that would come to mind.
Yes. So today there are five facilities.
And.
If you think how are we making this filter criteria for selection of locations, it's really about where are the clusters of.
Biotech companies in cell and gene therapy companies that would have a need or an interest in outsourced storage and we all know what those clusters are in.
Each of those has a certain footprint from competitors, who offer outsourced <unk> storage. So we've got a lot of factors going into it but you can imagine where we're not in the U S and of course, those are going to kind of loyalty to the top of the list just to put some color on that and Rod you can chime in our tour. If you want but we think we've got a really good handle on.
What it cost to turn up the facility in terms of Capex and timing and all of that and it's an interesting.
Opportunity for us where people are coming to us because they see some differentiation based on quality, how we engage so we're really bullish about how we can grow that business out.
Great I'll leave it there thanks for taking questions Mike sure.
Next we have Paul Knight from Keybanc. Your line is open.
Hi, Mike.
More references in the industry about.
Increasing importance.
The cell and gene therapy market are you seeing your.
Customers per customer sales increase or are they moving into phase II phase III, what are you seeing on per customer.
On the media side of the business.
Most definitely Paul.
Clearly as they move into later stage or later phase trials of a particular candidate, but also our ability because it relationship very sticky so our ability to get the media embedded in their follow on development projects is really strong.
So that whole gestation periods and customer revenue journey, it's going to be repeated several times with many many customers where we may be in an approved cell therapy, but we're also in.
Most if not all of the follow on candidates out there.
Evaluating through clinical trials, so you bet.
It seems like PD, one approved therapy doesn't.
Your product I mean would they have not had gone through a lot of safety studies for for that approval.
I think they would have and Youre speaking specifically of <unk> from Novartis, who uses the the homebrew cocktail for preservation that came from the U Penn process that they scaled up.
And in their shoes, it's always the balance of if we switch to cryo store, we can improve.
Functionality and post preservation viability and functional recover yourselves, but at least to date and their assessment of the lift to do that.
Particularly as it relates to how the agency in the U S might mandate that they do some bridging studies or maybe small animal studies or something.
Haven't convinced themselves they should do that however, I would tell you that novartis has a strategic customer on media and we're in lots of other projects they've got going on there and clinical trials.
Okay, Okay, Great and then lastly on the.
The integration of Sterling too with CBS and other products.
Sterling presence in the.
More ill call it.
20% to 80 market is that.
Is there any integration issues with CBS in terms of their higher end, let's call it colder ultra cold products.
Not integration as it relates to on our side, Paul but definitely opportunities as it relates to how we can now offer freezers that cover the complete temperature continuum. So if a customer needs. The coldest of the coal that minus 150 year calls with LNG. We've got it covered if they don't need that but they are in the mechanical space of minus 20 to minus 80%, we obviously got to the class.
Defining sterling offering two to pitch as well and Paul it's right to the extent, there's integration work to be done relative to the manufacturing side of things and customer service to a degree it really revolves around consolidating the supply chain. So that we can leverage certain components, both electronic and.
Metal that both.
Both platforms use.
Okay.
And then last on Covid I know Sterling add some COVID-19 benefit.
What's the direction of Covid demand right now.
Yes, its actually coming down so if you look at the sort of.
Year to date number it's going to be around 20%, but if you look at Q3, it's down sorted in the 15% to 18% range, we expect that to come down further in Q4, and and maybe normalize next year I think it is going to go longer than we had originally expected.
So maybe it's 10% next year going forward.
Okay. Thanks.
Okay.
Okay.
Next we have you won Z from B Riley Securities. Your line is open.
Hi team. Thank you for taking our questions and congratulations on another strong quarter.
A while ago, you mentioned pulp time being pharma selected a portfolio of services from Biolife to support its regulatory application to the extend that you can share can you provide some color of Basel III.
We witnessed company like how long the relationship has been how the services provided to the company has evolved over time and what are the key factors that you think that differentiates you from other competitors. Thank you.
Super Super Insightful question well. This relationship is very long term I think this relationship was in its nascent days when I joined the company almost 16 years ago.
On the media side Okay.
And they evaluated cryo store for a number of early phase cell therapy candidates.
And that relationship ebbed and flowed as some of those candidates.
<unk> didn't progress so on and so forth.
And then it transitioned into the evaluation and the validation and the adoption of the Evo platform to transport their car T cell therapy around which is just fantastic.
Obviously that was a joint kind of win if you will you on with select Courier partners of ours concurrent with that Gerry and Sai safe team engaged.
To provide storage services and our relationship with this customer is really great. It's a true partnership and we continue to go deeper and to increase.
The reach and the revenue increases based on more things that we can offer so it's really just a great mutually beneficial relationship.
Yes, Thanks, Paul that's helpful color and maybe can you provide an overview of your rental business.
We spin the settlement Hugh this is.
Rental business and is it like <unk> and the user who got upgrade every couple of years. Thank you.
Sure so the Evo cold chain management business.
As reported in our storage services and cold chain services platform, we don't break out the revenue of each the revenue is based on the rental of containers to the specialty carriers, who then in turn use those to move customers temperature sensitive biologic material from point a to point b.
Yeah got it thank you.
Youre welcome.
Next we have some latent from.
Lake Street capital markets. Your line is open.
Hey, guys. Thanks for taking the questions and congrats Troy on the position just a quick one on the gross margins. So if we adjust out the charges and get to 40% was that a bit below where you guys had anticipated margins being for the quarter.
Yes, I think it was I think it.
It really has to do with some stock comp that was issued to a couple of 100 people at Sterling facility in Q3 that was not in place in Q2. So I think if you look at Q2 as sort of a benchmark. If you will a baseline I think the bulk of the delta between those.
Two has to do with that stock comp piece right, Yes, and I would just like to add to that we actually did stock comp grants for everyone. Throughout the company in Q3, so thats, what youre seeing to drop to the gross margin as well.
Got it.
Switching gears a bit with Dusty has raised litigation in and.
And rod unrest Ignatius.
How do you think about it.
A company grows both in size and complexity, how do you think about building our bench.
Of capable leaders for the future, obviously, I'm, assuming you're going to continue to be acquisitive in the business. When we continue to grow I was just curious to get your thoughts on that and in light of recent announcements, yes, I think thats a good question Thomas I think clearly with respect to choice promotion that that has been in the works in terms of getting him ready for that.
For quite some time.
As it relates to our future potential chief operating officer.
There are a couple of candidates internally.
We're going to evaluate those candidates over the next year and I think.
Barring some strangeness that we can't see today, it's likely that one of those folks would step up into the role say early 'twenty three when I'm ready to formally and finally retire so thats the plan there.
Got it I appreciate the questions. Thanks, guys you bet.
Okay.
Remind me again to ask a question.
Press Star one on your telephone keypad next we have Suraj Kalia from open Hymer and company. Your line is open.
Good afternoon, Mike Rod Troy can you hear me Alright, Yes, hi, Suraj.
Hey, Mike Hope, everyone is safe and healthy.
One.
Multi part question for you and one I'll pose it to either Rob or Troy, So Mike to the extent that you can share.
Mentioned 500, new customers in the quarter, yes, how many de novo versus pulled through from acquisitions.
Let me just curious here I'll take that one none were inherited from acquisitions, they're all de novo okay. Okay.
Okay perfect.
It might.
Just given the number of.
Tools in your toolbox now so to speak.
Average time, it's taking you to close a new account.
If you want to compare from a euro two years ago.
If you if you were in a position to share.
The trend line for average revenues per customer looking like.
And I'll just throw it my second question, and therefore, rog order or Troy, maybe gentlemen, I understand the one time issues with Sterling at the cross margin that stock comp.
Rod on on a broader level. If you could just kind of remind us way youll are in the trajectory of normalizing corporate gross margins. There was a dip at sterling yield we're going to take some initiatives forgive me just jumping in between calls maybe you can walk us through how the normalization of the timeline. Thank you for.
Taking my questions sure Super all really good questions through our so with respect to your question about sales closing time.
Versus previous well it really depends on the platform I can say specific to media, which because so much of the business comes direct we're closest to that we understand the sales process and that makes them very very well that is certainly getting compressed and has been compressed.
Over the last several years, where it now.
Much much of the.
The whole lead generation is inbound due to our brand awareness people understanding what we can do for them and you're using the products at a different engagement and moving to a new place and taking that best practice that positive learning experience with them. So I think it's certainly getting compressed.
On the freezer side, because we do sell to a large degree through distributors and then we have now this new integrated direct team, but that's all a transition it really depends on most likely I would say based on some segments of the time of year.
And if we're in the academic market or the government market and they've got to spend money by a certain date. So as you can imagine suraj all of our sales presentations are talking points of elevator pitch is it's all about making sure that every customer or prospect conversation includes the entire portfolio with these sellers being fluent enough too.
To identify opportunities, where we can do more and we can solve our customer problems and I think.
We're good at that and I believe we will be that will compress the sales cycle across all the platforms.
So suraj in terms of your question I think the best way for me to answer. It is as follows. So I think if you look at let's just use the word normalized gross margin blended for the full company on an adjusted basis, it's running $40 to 42% right. So that's sort of the floor.
Sure.
The issues that we faced in Q3 are fundamentally trend transitory, we may have a little slop over in Q4, but as you look into 2022, we have a stated goal of a.
Three to four year gross margin target of 50 plus percent. So youre really looking at increasing we're expanding gross margin by 10 percentage points over that period of time.
Portion of that is going to come from.
Some things we do fairly quickly that we'll be able to see happen in 2022, and then the balance of it is going to be driven by fundamentally higher levels of revenue leveraging fixed costs and new product introduction with lower bombs. So 2022 is going to be more about executing on the manufacturing side on the purchasing side.
And I'm not going to put out a target there. We obviously have one internally, but then the balance of the gross margin expansion is going to come based on revenue increases and new product introduction by that three to four year period.
Thank you you.
You bet.
And there are no further questions at this time that concludes the Q&A session I will now turn the call back to Mike Rice, Chairman and Chief Executive Officer for closing remarks. Thanks.
Thanks, Eli Thanks again, everyone for your interest in Biolife.
We're in a great space with a nearly 500 person strong team of folks dedicated to quality customers and each other.
Our success is only made possible by their commitment and teamwork.
Looking forward to closing Q4 in 2021 with demonstrated execution and strong results. We appreciate your support and wish you a good evening Goodnight.
And this concludes today's conference call. Thank you all for participating in the rest of your day and you may now disconnect.
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