Q4 2021 BioLife Solutions Inc Earnings Call
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Yeah.
Ladies and gentlemen, thank you for standing by and welcome to Q4 and full year 2021 Biolife Solutions, Inc. Earnings Conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time.
It sounded like you would require assistance during the conference. Please press star zero on your Touchstone telephone.
As a reminder, this conference call is being recorded I.
I would now like to turn the conference over to your host Mr. Try with Chairman. Please go ahead Sir.
Thank you Grace.
Good afternoon, everyone and thank you for joining this call.
Joining me on today's call are Mike <unk>, Chairman, and Chief Executive Officer and <unk>.
Rod degrees, President and Chief operating Officer.
Earlier today, we issued a press release announcing our financial results and operational highlights for the fourth quarter and full year of 2021.
As a reminder, during this call we may.
They 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 companys 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.
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, Chairman and CEO of Biolife solutions.
Thanks, Troy and good afternoon, everyone. Thank you for joining our call.
After my remarks forward will present, our financials for Q4 and the full year of 2021, and our initial revenue guidance for 2022.
And Rod will provide an update on key operational initiatives. He is managing targeting gross margin improvements specifically for our Sterling <unk> freezer platform after that we'll be glad to take your questions.
Turning to the Q4 revenue and customer highlights it's clear that our acquisitions of fast growing assets are complementary stellar growth in bio preservation media revenue top line total revenue was $37 million in Q4, this was up 153% year over year and 10% sequentially.
Organic revenue growth in the fourth quarter was 64% year over year, driven by bio preservation media revenue growth of 64% compared to Q4 of 2020.
Starting in Q4, and one large distributor who began increasing their inventory par levels to get to a 90 day stock in response to strong downstream demand. We believe this will continue in Q1 2022, and then level off.
In Q4, we gained at least 235, 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 second is our freezers and thoughts systems platform comprised of CBS liquid nitrogen.
Freezers, and Sterling mechanical freezers and fast our systems and finally.
George in Cold chain services, which includes our <unk> storage services, and our Evo cold chain management offering.
New Q4 customers by product line included.
<unk> now using bio preservation media seven new thoughts star users 11, new Evo cold chain end users 17, new cryogenic freezer customers 159, new Sterling freezer customers 14, new bio storage customers and 12, new cell processing customers now using sexton prop.
<unk>.
These 235, new customers in Q4 compared to 213 in all of 2020.
For the full year of 2021, we gained at least 700, new direct customers and we also benefited from very productive distributors are two largest having sold and shipped our bio preservation media products to more than 4200 unique end customers in 2021.
This is really impressive and should help continue to build brand awareness of Biolife cryo store and hypothermia salt.
Based on order volume so far this year, we expect another stellar year for our direct team and indirect distribution partners and driving much broader adoption of our portfolio of bio production tools and services.
Cross selling to capture revenue synergies is a key focus for us during 2021 46 customers purchased at least one additional portfolio of solution and they were previously using we expect.
To continue to capture revenue synergies by driving broader adoption of our portfolio of components at our strategic accounts.
Now I will make some qualitative comments about our three revenue platforms and let Troy speak to revenue for each.
<unk> processing in Q4, we received confirmation that our cell processing media products will be used in at least 17 additional clinical trials for new <unk> therapies, we estimate that our bio preservation media products have been incorporated into more than 530 customer clinical applications up from 450 at the end of 2020.
Yes.
For bio preservation media.
Also we remain confident that each customer clinical application if approved could generate annual revenue in a range of $502 million based on the estimated number of doses are customers would manufacturer in a year the volume of our media in each dose in millimeters and the average selling price per mill.
To date, our bio preservation media is used in eight approved therapies and our second in cell processing media in vials are used in three approved therapies.
Our bio preservation media products are also embedded in at least 10 additional CGT applications for which BLA or other regulatory approval filings are expected to be submitted this year and next year.
I'll conclude by saying that our bio preservation media clinical customer base includes most of the car T cell developers with our products embedded in a majority of the autologous and allogeneic platforms currently in development.
We expect to be able to continue to take share from our home brew preservation cocktails as awareness grows as the critical role our engineered media formulations play and reducing risk for CCT companies.
Turning to our freezes and thoughts systems platform as noted, we're hyper focused on improving quality and reducing cost of our sterling <unk> freezer products.
The growing pains, we are experiencing a result of customer demand and saw our <unk> team more than double unit production in 2021 compared to 2020, we shipped nearly 8000 freezers last year and this demand surge strained our supply chain and exposed some latent quality issues that we inherited.
I will speak in more detail in a recovery and mitigation activities I can say that while a few youll see customers had to order from our competitors overall demand remains strong and we are working nearly around the clock to fulfill customer orders.
Additionally, we are in discussion with one of our largest <unk> free to distributors to add our Cvs liquid I shouldn't freeze your platform to their biolife offering we expect to finalize this amendment to our distribution agreement in the next few months.
Specific to our thoughts our product family one of our largest bio preservation media customers our distributor.
As expected to add <unk> to their biolife offering this year.
And our final III revenue platforms stores in cold chain services, which includes Evo cold chain rentals and Si safe storage services. We gained 25 new customers in Q4 14 for storage services in 11 for Evo.
<unk> storage services platform continues to grow rapidly and we remain very optimistic about our ability to profitably scale. This platform to meet demand our.
Our opportunities list of potential new storage services customers is long and robust.
With our Evo cold chain management platform <unk> therapy companies now have full optionality to access our class defining offering through our expanded specialty Courier partner network that now includes World Courier quick International Patheon at Thermo Fisher Martin and <unk>.
We expect to onboard another marquee courier partner for our <unk> network in the next few months.
Total 2021, Evo shipments were nearly 4000 to more than 600 unique destinations shipment volume was up 81% over 2020.
Another highlight for our Evo platform is an ongoing evaluation and validation by a second global pharma company that is successful will support their adoption of the Evo platform for shipping there to existing approved car T cell therapies.
And the earlier prove customer we announced have traditionally been served solely by a legacy cold chain logistics services provider.
As I've mentioned before we believe most CGT companies will move to validate and approved more than one shipping container and logistics partner over the next few years and that our Evo platform will emerge as a leading selection.
We also recently deployed our new <unk> cellular radio across our carrier partners fleets of Evo shippers and can report very solid performance, so far supporting our careers and end users in the transition from the sunsetting <unk> cell towers to the new <unk> system.
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 Troy to present, our financials for Q4 and the full year of 2021 truck. Thank you Mike.
I'll start off with the review of our financial results for Q4, and full year 2021, and then provide a summary of our 2022 revenue guidance.
Revenue for the fourth quarter totaled $37 3 million, representing a 153% increase over 2000 Twenty's fourth quarter revenue.
Organic revenue increased 64% in Q4 2021 compared to Q4 2020. This was driven by bio preservation media revenue of $13 4 million, which was up 64% in Q4 2021 compared to 2020.
COVID-19 related revenue accounted for approximately 15% of our total revenue in the fourth quarter.
Cell processing platform revenue was $14 8 million up 81% over the same period in 2020 organic growth was 64%.
Freezers and thought systems platform revenue was $16 6 million up 285% over the same period in 2020.
COVID-19 related revenue accounted for approximately 15% of the freezer and thought systems platform revenue organic growth was 13%.
Storage and storage services platform revenue was $5 9 million up 164% over the same period in 2020 Covid.
COVID-19 related revenue accounted for approximately 50% of the storage and storage services platform revenue organic growth was 164%.
Revenue for the full year ended December 31, 2021 totaled $119 2 million, representing a 148% increase over 2020.
Organic revenue increased 37% in 2021 compared to 2020, driven by bio preservation media revenue of $43 1 million, which was up 39%.
COVID-19 related revenue accounted for approximately 15% of total revenue for full year 2021.
Cell processing platform revenue was $45 million up 45% over 2020 organic growth was 39%.
<unk> and <unk> systems platform revenue was $56 6 million up 318% over 2020.
COVID-19 related revenue accounted for approximately 20% of the freezer and thought systems platform revenue organic growth was 30%.
Storage and storage services platform revenue was $17 6 million up 389% over 2020.
COVID-19 related revenue accounted for approximately 40% of the storage and storage services platform revenue <unk>.
Organic growth was 54%.
Our adjusted gross margin for the fourth quarter of 2021 was 18% compared to 54% for the fourth quarter of 2020.
For the full year of 2021, adjusted gross margin was 33% compared to 58% in 2020.
In Q4, we had $6 5 million of unusual cost of sales charges related to the Sterling product line.
Primarily due to a change in the warranty estimate in Q4 due to a higher than expected warranty utilization in Q4.
This resulted in a warranty expense that was $4 9 million above our expected Q4 expense.
In addition, we had $1 3 million in charges related to abnormal scrap and purchase price variances and 300, K and labor variances related to operational issues at Sterling.
In addition, we experienced abnormal scrap and other product lines of approximately $700000.
And the channel mix impact to margin of approximately 750000.
Without these charges our impacts our adjusted gross margin for Q4 would have been approximately 39%.
We believe we will see a positive impact on margin throughout 2022 due to an increase in average selling prices leveraging operational overhead a decrease in warranty expense for your LTM freezers and realizing the benefits of our vendor efforts.
Adjusted operating expenses for Q4 of 2021 totaled $20 1 million compared with $8 2 million in Q4 of 2020.
For the full year 2021, adjusted operating expenses totaled $59 6 million compared with $27 6 million in 2020.
Given the M&A activity, which makes it difficult to look at operating expenses on a year over year basis I'd like to note. Our 2021 budgeted operating expenses came within 5% of our plan on a same store basis, which excludes the sterling and <unk> acquisitions.
The increase in operating expenses was primarily driven by the absorption of operating costs related to our <unk> Sterling and <unk> acquisitions.
In addition, operating expenses increased due to the opening of three bio repository facilities throughout the year increased accounting costs associated with large accelerated filer status.
As well as head count and stock based compensation expense necessary to support our overall growth objectives.
Our adjusted operating loss for the fourth quarter of 2021 was $13 2 million compared with an operating loss of 255000 in Q4 2020.
Our adjusted operating loss for the full year 2021 totaled $20 7 million compared to adjusted operating income of 293000 in 2020.
Adjusted EBITDA for the fourth quarter of 2021 was negative $5 5 million, which does not back out the $8 1 million of the unusual costs and margin impacts mentioned earlier compared with positive $2 5 million in the fourth quarter of 2020.
For the full year 2021, adjusted EBITDA was negative $1 1 million compared with positive $8 3 million in the same period in 2020.
Our cash balance at December 31, 2021 was $69 9 million compared to $95 million at December 31, 2020.
Taking into consideration, our adjusted EBITDA of negative $1 1 million cash.
Cash used in 2021 was primarily related to paying off $4 2 million of acquired debt and the Sterling acquisition <unk>.
$14 6 million to purchase equipment.
Including $9 $2 million to build out bio repository facilities.
And an increase of working capital of $5 1 million.
Now I'll review the 2022 revenue guidance issued to date in our press release.
Total revenue for 2022 is expected to be in the range of $159 5 million to $171 million.
Reflecting year over year revenue growth of 34% to 44%.
Organic growth of 28% to 39%.
Cell processing platform revenue is expected to be between 64, and $67 5 million accounting for approximately 40% of total revenue.
Freezers and THAAD system revenue is expected to be between 74, and $77 5 million accounting for approximately 45% of total revenue.
Storage and storage services revenue is expected to be between 21, five and 26 million accounting for approximately 15% of total revenue.
Well, we don't give guidance below the revenue line.
We expect positive 2021 full year adjusted EBITDA.
Finally in terms of our new share count as of today, we have $42 3 million shares issued and outstanding and $44 5 million shares on a fully diluted basis now I will turn the call over to Rod.
Thanks Troy.
Our last call in mid November I was in my current role for about a week and a half and over the last 90 days, we have gained a much better understanding of the operational dynamics related to the drilling product line.
As we identified and drilled down on the most critical items, it's clear that the root cause of the operational issues is the increase in unit production, which exceeded 100% between 2020 and 2021.
This rapid and unexpected growth expose certain weaknesses in product design.
Manufacturing processes supply chain and organization.
As I mentioned on the last call, we believe the design and manufacturing issues impacting quality have largely been mitigated over the last 12 months through the implementation of a number of engineering improvements significant changes to the manufacturing workflow on the factory floor and the development of a more robust quality program.
The incremental warranty accrual we took in Q4 reflects a change in estimate related to the scope and scale of the historical quality issues and we believe that more recent production will not have the same warranty costs as evidenced by increased first pass yield metrics and lower 90 day field failure rates over the last several months.
<unk>.
The doubling of units produced also expose the weakness in our supply chain in two ways.
First many of our critical components were sole sourced and second a number of those sole source vendors simply could not scale fast enough with the level of quality we need it.
We've largely completed the key vendor transition we spoke about on the last call and we will issue that original vendor to support our dual source approach going forward.
We have identified a number of other critical sole source components and are in the process of securing and qualifying secondary sources for those items.
While we're focused on the supply chain issues at Sterling some of the other product lines are also being impacted by the general global supply chain constraints and a dual source approach is being pursued across all product platforms as well.
With respect to the operations organization at Sterling, We have made several key management changes to ensure that the right people are in the right positions, which was not necessarily the case we've.
We've added another senior operations team member at the Athens facility and have also reorganized that supply chain team.
We have consolidated the management of all critical vendor relationships companywide, including those in Sterling under our VP of manufacturing who has been with the company since 2019, and who has been tasked with implementing the dual source strategy is.
As leveraging larger purchasing volumes to target cost savings.
As I mentioned on the last call. Our key operations objective for this year is to establish a revenue generating service offering and while our customer service team is primarily focused on supporting customer issues. We do have a pilot service offering being tested on two product lines will speak to that opportunity in further detail on future calls.
Finally, ERP implementation continues to progress largely according to plan.
We expect to go live on the accounting modules of net suite on the non freezer platforms by the end of this month, which is generally an alignment with your initial plan.
We have re prioritized the freezer platform and the overall implementation schedule to better support those manufacturing operations sooner rather than later.
At this point, we still see a full company wide deployment by year end or early Q1 of next year as an achievable target.
Finally I'll.
I'll close by saying that while the gross margin impact of the onetime and transitory issues at Sterling last year had been disappointing I believe we've been.
Identified the critical issues and have a plan in place to execute against we.
We believe that absent these issues the sterling product line should have a normalized gross margin in the low to mid thirties, and with increasing volume and new product introduction, we expect that to move into the low to mid <unk> by the end of next year.
We also expect gross margin improvement this year, particularly in the back half of the year and I look forward to sharing that progress as we move throughout the year now I will turn the call back over to Mike.
Thanks Rod.
To summarize two key takeaways from Q4 and the full year 2021.
It's clear that demand for our bio production tools and services portfolio continues to grow as more CGT and biopharma companies realize the value our solutions can provide and reducing risk.
We built a phenomenal customer base and can see great potential in cross selling to capture revenue synergies.
Have very high trust sticky customer relationships and are determined to provide stellar experiences with all of our products and services.
Second.
While the issues at Sterling are clearly disappointing our Sterling <unk> freezer platform is differentiated and I am confident that our leadership team and what I can file team members will continue to resolve the issues to position our <unk> platform as truly class defining although the other platforms of the business are performing well.
Finally, I am pleased to say that overall product demand. So far in Q1 is strong and we're looking forward to sharing our results on our next earnings call.
Now I'll turn the call back over to the operator to take your questions Grace.
Thank you ladies and gentlemen, if you have a question at this time. Please press Star then the number one key on your thoughts on the telephone.
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Your first question comes from the line of Max Masucci from Cowen and company. Your line is open.
Hey, Thanks, guys.
Just maybe to start I think it would be great.
<unk>.
If there's any way for us to frame expectations for the <unk>.
Margins, whether it's in Q1 based on what Youre seeing so far or even from a first half versus first and second half perspective.
I think it would be great to hear how your visibility has changed into what those incremental warranty accrual estimate surcharges write offs could look like.
Going forward compared to your visibility at the time of the Q3 call.
Events, leveraging product volumes and new product introductions, so I think what youre going to see through 2022 is more of a improvement throughout the year versus a one time improvement in Q1.
And Max it's rod here to add to that I think that.
With respect to warranty.
Everything we know is out today right. So we don't anticipate any sort of additional.
One offer incremental warranty accruals at this point in time, and we're sort of halfway through the quarter. So nothing has changed from our perspective, when we took a look at the Q4 numbers.
Okay got it.
<unk> added a solid 159, new customers for Sterling in Q4.
It would be great to hear whether there is or is there a backlog building in that in that segment of the freezer business or how does that current manufacturing capacity for sterling sort of match up with your demand at this point and how that might how could that play out during the year.
Yes, IMAX Mike here.
There is there is a backlog building, we don't quantify or to report on it but Rob maybe you could just speak to capacity.
I think the capacity as well there I think the challenges that we've had Max over the last couple of three quarters really have to do with supplier issues really impacting factory flow production levels.
That has gotten better for sure in Q4 was better than Q3, and so far in Q1, it's been better as well.
But I would not say, it's completely where it needs to be but.
We were eating into the backlog and our objective is to make sure that our lead times are no more than two weeks for any particular model that we have on the sterling side.
Great I appreciate it.
Beth.
Thank you.
Paul Knight from Keybanc. Your line is open Sir.
Hi, guys could you.
If you look at the contributors to the impact.
Impact on EBIT and a few specifically operating income you mentioned sycee Sterling public costs bio storage sites would it be fair to say.
Significant factor as Sterling.
That.
Operating income impact.
Hi, Paul It's Troy, Yeah, I would say that's a fair statement.
Hey.
And then.
Were you added three bile storage sites, where are those being added.
They are added in the Netherlands, Massachusetts, and New Jersey.
And then lastly, it looks like your customer count went up a lot.
700 versus 218 in 2020.
What are the factors behind that is that the direct sales force you've added the sterling.
What is it behind that large increase.
Paul Mike Here, Yes, you hit on the head for sure having the new integrated a freezer sales team, which is comprised mostly of the folks that came over from Sterling has been great. They and the other folks can now speak.
Fluently enough to identify opportunities across the platforms, particularly with large accounts, where we already have relationships. So it's really a combination of their efforts our marketing just they're really uplift and awareness of the Biolife brand, particularly that these new companies are now part of Biolife. So as you can imagine we're maximizing that and explore.
In every way possible through social media, and our direct marketing and what the sellers have in their arsenal as far as talking point, so all of the above.
Okay. Thank you.
Sure.
Thank you next up we have Jacob Johnson from Stephens. Your line is open.
Hey, good afternoon, everybody, maybe just following up on Max's question about gross margins Troy I certainly appreciate the improving throughout 2022.
But maybe just kind of as a starting point you talked about 39% gross margins kind of ex the one time items. So if we use that as a starting point are there any kind of these charges are related to sterling that we should assume kind of continue into <unk> and then maybe roll off and then you can maybe improve from that 39%.
Using that 39% of the bridge would be kind of helpful. As we think about 2022.
Jacob it's rod here I think that we are going to continue to have some not immaterial ppvs as we go through.
At least the first and second quarter, which is why I kind of referenced the second half of the year versus the first half of the year.
So I know thats, not giving you a specific number but I do think that sterling is going to be a drag for the next quarter. This first quarter here and then into the second quarter I think at that point in time.
A number of sources suggest that the supply chain will ease a bit.
At that point in time also we'll have the benefit of having.
A number of critical components have second sources. So that we are not held hostage so to speak by one company, who feels like they can pretty much do what they want to do.
So I think those things will be in place by the second half of the year.
One thing to add there too Jacob Mike mentioned too that we have a distributor that is increasing their par value and thats going to continue into Q1, and Q2, which is a few percentage points impact on gross margin.
Okay. Thanks.
Thanks for that Roger.
And then then on the media side, I mean really strong <unk> really strong outlook into 2022, I guess two questions. One can you just talk about the strength here between commercial.
Customers may be clinical customers and distributors and then Mike I think you mentioned a large distributor of building inventory can you just give us some more color around that dynamic it sounds like it will play out in <unk> and then maybe taper off after that.
So glad.
Glad to Jacob.
This distributor.
As one of the two that I cited that.
In combination with the other one found more than 4200 homes for our media products. So they are just completely wired in they've got dedicated marketing resources for the <unk> portfolio, we are in constant communication.
<unk> with them. It's also the distributor that I mentioned that is distributing the fast or <unk> and soon to add the cryo bag of the CB format. So just just a fantastic partner now they do enjoy a pretty hefty discount on so because their revenue is significant choice point that does have a margin impact but it's.
It's nothing we would ever try to engineer ourselves out of there are so productive they are finding so many homes for the products several of which are end users that will become clinical applications and for real commercial customers at some point and we know that just based on the transition of some already of communication to us where we can provide better scientific <unk> support.
Dr. Matthew and some other folks so that's just a fantastic relationship and I think that the other distributor of the two I mentioned, while not as productive as still doing a really good job, but they are more focused on the research use only market now with respect to your comment about commercial applications.
I count up.
From the arm data from the Jpmorgan inaugural address there I want to say that we're in perhaps 10 of the.
Two three years or so applications that are listed in 2022, and 2023 for which a Reg filings approval filings will be made so it's really strong the inbound inquiries to use media.
Continue at a really strong pace.
Dr. Matthew and now Sean Warner Dr. Warner from Sexton, who is also helping support customers on the Clinton Reg scientific side are really busy to put it mildly I mean, they are handling many many customer inquiries and I will say that with some serious pride in.
And kudos to what <unk> been able to do here in the last year has been to.
Support our media use in applications clinical applications outside the U S, which has been quite a quagmire for ABB to navigate and he's done it masterfully, particularly where the initial inquiries from all of these customers and or they're in country. Reg bodies is give us the formula and we don't do that as you know the proprietary media.
In fact proprietary nobody knows the formula other than the U S. FDA and maybe has done a masterful job, helping those customers adopt and us seeing the media being incorporated into approved products. So just just really phenomenal that that tide is really lifting the media both for us and we would expect that to continue over the next several years.
Got it thanks for that Mike and then just two quick last questions.
I appreciate the kind of COVID-19 disclosure around the storage business.
But I think inevitably we'll get questions around the duration of it. So I'll ask you kind of how should we think about that.
The durability of those revenues and then another quick follow up.
I got a question around the 10-K being delayed I just figure I gave you the.
The forum to maybe comment on.
What's going on there. Thank you go ahead, you can start yes, so I'll start with the Covid question and the duration there Jacob.
Duration on those is depending on what facility and what customer we're serving but as you noticed in our guidance for the storage and storage services, which includes the <unk> business, it's a pretty wide range.
The reason for that is because there is a U S COVID-19 contract that tails off in Q2.
So as that customer renewed their contract rate that's going to be another.
Tailwind of revenue there for Biolife, So thats kind of why you see that wider range in the stores and start services business.
And then in regards to the late filing. Thanks. Thank you for bringing that up because we do pride ourselves on filing on time and realize this is important.
It really just the simple fact that our auditors have not completed the audit report yet.
This was primarily driven by the 2021 acquisition and now that Biolife as an accelerated filer, a large accelerated filer. This compress the timeline by 30 days. So that's kind of the really the two reasons.
Perfect. Thanks for that appreciate it.
Yeah.
Thank you. Your next question comes from the line of Thomas <unk> from Lake Street Capital. Your line is open.
Great. Thanks, guys for taking the questions.
Interesting to see the positive impact of the more positive impact that the distributors are having.
As you guys build the business out new product lines et cetera.
Should we think about the impact of distributors distributors will have maybe over the.
Medium term horizon, how do you guys think about integrating product lines into them and will they become a lesser force in terms of revenue growth or I'm. Just wondering if you guys can put some color around that.
Hey, Thomas Mike Here. Good question, well I think the early evidence is as I mentioned on the call one of our largest media customers is carrying thought star.
<unk> format will add most likely the <unk> format. This year that'll be very helpful. One of our other largest ULC freezer distributors is going to be adding the liquid nitrogen freezers as well. So we've got full leverage there to expand those relationships and to do it in a smart way, where it makes sense, where we can reduce overlap and leverage the strengths of those.
The group so.
More to come on that for sure.
Great and then just a question you guys provided overall growth.
Organic growth and also COVID-19 related revenue.
Can you just walk us through how those are related what are the discounts from overall organic given that most of your acquisitions have been on board for a while and I would've expected. The line, maybe a little bit more can you just walk us through how we should think about those numbers, yes sure. So we only do it obviously right organic would be the same store comparable so we have to own it for that full period.
So we acquired <unk> in Q4 of 2020. So there are comparable for Q4 2021, but not a comparable for full year over full year.
And then the Sterling and <unk> acquisitions acquired in 2021 did not factor into the organic growth that we're disclosing.
Okay.
The only delta there, Okay, just wanted to make sure.
Yes, yes exactly.
Thank you.
Yes.
Thank you next up we have <unk> from <unk> Securities. Your line is open.
Hi, good afternoon. So I have two questions. The first one is across the cell therapy supply chain.
Do you guys see the market opportunity is in <unk>. For example, you guys how sample sizing freezer of stoneridge in those days and let's just take just wanted to hear your thoughts and even beyond your possible product portfolios.
Hi, Ron Mike here, Great question, well I am happy to tell you and everyone that we.
We see tremendous lift in opportunities for us throughout the portion of the workflow, where we participate whether its preservation media, whether it's storage distribution cell processing. So we fully intend to be a dominant supplier of products and services in those particular workflows segments. Our sockets. If you want to call on that so I would say.
Storage is going to boom clearly media is going to boom cell processing. Our team at section are knocking out of the park doing really really well so across the board.
Got it thanks for the.
Some color there Amazon. Another question can you guys comment what's your competitive ads on your email system like is it because of pricing compatibility.
Your comments, how we should regions are those two customers are testing to equal online.
Yeah. Good question, we can give a little help but not the full answer youre seeking okay.
So in a nutshell the Evo platform is differentiated by a number of <unk>.
Approved patented and also patents applied for features which translate directly into some benefits for customers, which are all about reducing risk. So the number one differentiator would be thermal whole time or the ability for the evo container.
To maintain the <unk> payload temperature for much longer than competing systems, particularly in dynamic environments, which I'm going to define that now for the world as a doer being kept on its side or even upside down in some cases now im being.
Intentional there because other companies may describe dynamic is something which is really more of a static nature. So just to get that out there and thats important all liquid nitrogen doers of event and when they get tipped over the island to gas escapes and off gases to use the fancy word for it and when that happens the internal payload cavity starts to warm up and as you.
No you on and other folks temperature cycling or temperature variation or excursions are the death knell over a desk now for cell and gene therapies. They don't like that at all and again in the interest to help customers reduce risk of delivering a nonviable dose how do we do that well the evo container can protect this and maintain the temperature if cells.
Our destroyed from temperature excursions theyre not viable anymore. They did not elicit the desired therapeutic effect the patient doesn't respond and hence our customer doesn't get paid because as you know reimbursement is predicated on that initial and sustained positive patient response. So that's really important I'd also say that our go to market strategy with Evo to not.
Engage transact business with the cell and gene therapy companies, but rather to supply the doors and just.
Amazing level of Tech and scientific support to our carrier partners and their end customers is really working out well as I mentioned in my prepared remarks now customers have really the best Optionality to get the Evo platform through for the most part whatever courier partner or partners. They may choose to contract with depending on their own assessment of who.
Has the best coverage in different geographic lanes or customer service or whatever they're thrilled to criteria. They may apply. So we believe that we're going to emerge as a leading selection is more and more cell and gene therapy companies.
Try to reduce risk by qualifying more than one container and by contracting with perhaps a primary but then a secondary carrier providers. So they can make sure their stuff gets moved safely and effectively from point a to point b. So that's really at the <unk> cloud applications. Certainly has some differentiated features that are meaningful for customers.
Detailed to go into at this point, but that would be the the response to your question.
Yes, thanks for the helpful color.
And maybe a quick follow up here kind of Commonwealth.
<unk> regional content ecosystem being tested.
America, or Europe , or Asia Pacific just the ones with hearing all comments there.
I'll say that the Evo platform is currently in use in although the developed confidence of the world and of those nearly 4000 shipments to 600 or so and unique destinations those are all over the globe.
And I can say with a little more specificity that the.
The current approved car T cell company that is using evo.
As deploy Evo in Western Europe countries and now in the U S and we would expect that they're used to increase over time.
As more and more clinical centers get trained up on whats this new container it looks a little bit different that whole kind of thing now with respect to the second approved car T cell therapy company I mentioned that has two therapies already approved.
Our U S and if not soon to be European approvals as you can imagine so really just great great adoption across the globe and something that we see continuing clearly this year and beyond.
Yes got it.
Very helpful. Thank you welcome.
Thank you. Your next question comes from the line of Joslin Macquarie from Maxim Your line is open.
Okay.
Hey, this is Michael accumulates on the line for Jason Mccarthy.
Hi, Mike.
Hi, Thanks for taking the question Youre welcome though.
Yes.
I wanted to.
I wanted to see if you add any data on the total number of new cell and gene therapy applications, which are entering clinical studies in 2021, and my reason for asking is that it will.
If we get something like 63, new master file references over the.
Over the past year and that has to be some significant percentage of the total number that are entering clinical studies. So could you give any additional color on that.
Yes, I can and look I can't cite it from memory, but if you looked at the arm data for their Jan one 2021.
<unk>.
J P. Morgan is state of the Union address and get the total from that deck and do the same thing for this year you can see how it goes and its certainly up a fair amount no doubt about it but I will say that.
Our master files I, just want a component of the increase in our numbers because we have some outside U S applications, which as you know don't use the use master file mechanism okay.
Okay.
And then.
One more I guess on Sterling I, just wanted to get an idea of how the relationship looks with a customer. After a unit is late so are there any significant recurring revenues or is that more of a.
One time capital expense and then how often would pace.
Customers and end users replace one of those freezers, yes, really good questions, Mike I would say that <unk>.
For the most part once the freezer is bought it's kind of done other than initiative Rod is working on his customer service team to establish a profitable revenue center of service revenue, so that'll be really cool.
Just a little bit of an aside when I started my career I wasn't field service Rep and the service manager. So I've got a strong interest in helping rod and his team flesh this out and build the right business practices and the right margin goals and all that so we're really bullish about that for sure, but there arent really.
A meaningful.
Follow on revenue of racks are assessors or things like that there is some but it's basically kind of a one and done until they need more but the useful life just figure rod five to seven to nine years something like that.
Alright, Thank you very much thanks, Mike.
Thank you. Your next question comes from the line of Mike <unk> from Oppenheimer. Your line is open.
Good afternoon. Thanks for taking my question I'm on for Suraj. This evening, Rod Hey, Guy.
Yes.
Rod curious if you can share just any additional specifics around the sterling issues. Now you gave a lot of color, but beyond the scale up in their volumes staffing issues. You cited was anything design or I guess broadly manufacturing related.
Did you know I guess of those issues at the time of the acquisition.
Yes, I think that.
The issue of what we knew we didn't know that I think is something that we're going to kind of hold close to our best based on company counsel advice as it relates to.
More specifics.
I think you can it can be really boiled down into too well really three categories. The first is actual some design limitations, particularly around the engine manufacturing.
Manufacturing process that.
That had to be revamped in a pretty big way.
From going from a couple of thousand freezers to nearly 8000 freezers Thats, one I think probably the one that had the biggest impact with respect to overall quality was vendors and the inability of a handful of really critical vendors to simply not scale.
Non increase of 100 plus percent with the quality that we need it.
That particularly in the last half of last year created a significant amount of problems.
That were.
We're not completely done with all of that but we're largely through it.
Now we are starting to face some issues around.
Just the availability of components, which is why again the second source piece becomes so important.
Not just in terms of the geographical location of those single source vendors, but just the ability to leverage other parts of our company.
For example, electronic components that we might use.
That can be obtained by our contract manufacturer on our thought device that can be used for the boards on the Sterling Freezers Thats just a real time example of something that we've done we're consolidating those activities just makes a lot of sense.
Alright that was great additional color I'll leave it at one Tonight. Thanks, guys. Thank you.
Mike.
Thank you and I'm showing no further question at this time I would now like to turn the conference back to our chairman and CEO of Biolife solutions, Mike Chris for some closing remarks, Sir thank.
Thank you Grace and thanks again, everyone for your interest in Biolife.
2022 will be another inflection year as we capture demand and realize the benefits of the quality and margin improvement initiatives currently underway.
We remain confident in reaching our stated midterm financial goals. Thank you for support of Biolife and good evening.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you all for joining you may now disconnect.
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