Q2 2022 BioLife Solutions Inc Earnings Call

August 9, 2022

[music].

Good day my name is shantou and I'll be your conference operator today at this time I would like to welcome everyone to the Biolife Solutions, Inc. Q2, 2022 earnings conference call.

Reminder, today's conference call is being recorded all lines have been placed on mute to prevent any background noise.

The Speakers' remarks, there'll be a question and answer session if you'd like to ask a question. During this time, we can cluster followed by the number one on your telephone keypad. If he would like to withdraw your question. Please press star one again, Thank you Troy Mcewen Chief Financial Officer, you May begin your conference.

Shanteau 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 Rod degree President and Chief operating Officer.

Earlier today, we issued a press release announcing our financial results and operational highlights for the second quarter of 2022.

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 for its acquisitions. These.

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.

We 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.

These non-GAAP or adjusted financial metrics should not be viewed as an alternative to GAAP. However in light of our recent 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, Terry will present, our financials for Q2, then Rob will provide an update on key operational initiatives. His team is focused on after that we'll be glad to take your questions.

Turning to Q2 revenue and customer highlights.

Very pleased with our team's performance in delivering another quarter of record revenue and in completing key operational initiatives that are driving meaningful improvements in our financial results.

Total revenue was $40 5 million up 30% from Q2, 2021 with organic revenue growth of 44% and bio preservation media revenue growth of 46%.

Our growth catalyst and business fundamentals remain intact and with improved business visibility, we're tightening our full year 2022 revenue guidance, which Troy will cover in a few minutes.

I also want to express my confidence in our operations quality and engineering teams for their sustained commitment to optimizing our production processes supply chains, and QC and QA function, specifically for our Sterling <unk> freezer products.

We again realized important sequential improvements in gross margin and adjusted EBITDA and remain confident that we will continue to do so for the rest of the year I.

I would also like to echo the strong growth sentiments in the cell and gene therapy space that other life science tools companies have expressed on their recent earnings calls.

Now I'll go right to the noncash intangible asset write down on the Sterling acquisition Troy will provide additional color on this but we're confident that we're now clearly on the upswing of recovery.

It is important that we convey our strong belief in the innovation and disruptive potential of this acquired technology.

And both our current Sterling products and in our product roadmap for new Stirling engine based smart freezers to put a bow on it. This was a noncash accounting adjustment and it does not reduce our confidence in meeting both our guidance for 2022, nor our 2024 exiting aspirational financial goals, which include.

$250 million in revenue 50 points of adjusted gross margin and 30 points of adjusted EBITDA margin.

In Q2, we sold and shipped products to 202, new unique customer sites across our three products and services platforms and I'll remind you know what those buckets are.

First self processing, which includes bio preservation media and section in cell processing products.

<unk> is our freezes and thaws systems platform comprised of cryogenic liquid nitrogen freezers and Sterling <unk> mechanical freezers and automated thawing devices, and finally stores in cold chain services, which includes our <unk> storage services and our Evo cold chain management offering.

New Q2 customer sites by product line included 17, now using bio preservation media 10, New thoughts star users 11, New Evo cold chain end users 10, new cryogenic freezer and accessory customers 110, new Sterling <unk> freezer customers.

New bio storage customers and 14, new cell processing customers now using sexton products for self processing in Q2, we gained 31 new customers in total and received confirmation that our bio preservation media products will be used in at least 23 additional clinical trials for new <unk> therapies.

Some notable confirmations were from instill bio community <unk> bonus therapeutics Aloneness therapeutics turned to stone biologics reps adjourn select goes sell evolve in <unk>.

We estimate that our bio preservation media products have been used in or are planned to be used in more than 550 customer clinical applications for bio preservation media. We also remain confident that each customer clinical application if approved could generate annual revenue in a range of $502 million.

To date, our bio preservation media is used in 10 approved therapies and our sex and cell processing media in vials are used in three approved therapies.

<unk> bio preservation media products are also embedded in at least 10 additional CGT applications for which a 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 <unk>.

<unk> of the autologous and allogeneic platform is currently in development.

We expect to be able to continue to take share from home brew preservation cocktails as awareness grows of the critical role our engineered media formulations play and reducing risk for our CCT companies.

We also see the recent and pending approvals of CDT products for first and second line treatments and approvals for new indications and new geographies as three growth catalyst for our bio preservation media and other solutions.

The other part of our cell processing platform, our section products adoption in clinical customer applications include 67, using HP all media 61, using cell Seo vials and three using automated fill machines. So you can see we're running our bio preservation media playbook to drive adoption of <unk> products.

We estimate that annual revenue per section and reagents and consumables used and approved customer therapies ranges from 500, K to $1 million for both <unk> and <unk> media.

Turning to our freezers and thoughts systems platform.

To reiterate we shipped first time orders to 130, new customer sites.

Our hyper focus on the acquired Sterling platform has resulted in greatly improved quality and reduced shipping lead times with Roger which Rob will speak to that.

It's off to our sales team for hanging in there while we complete our field service updates to the acquired installed base of <unk> freezers.

This has been a sales headwind and we will be to some degree until we're finished with the field updates later this year.

We're all very appreciative of our loyal customers, who selected Sterling freezers for the specific differentiated value they provide a.

A couple of notes in our indirect distribution partners for our freezes and Thaws systems platform first on our last call I mentioned that we added our cryogenic liquid nitrogen freezers to a key distribution agreement. This is with avant or VW are and we're already seeing some sales pull through from this expanded relationship specifically with U S government accounts.

We're also in the process of adding our thoughts are CBE <unk> automated far to our distribution agreement with stem cell technologies.

As you know is one of our most treasured customers and indirect sales partners.

And our final of three revenue platform the stores in cold chain services, which includes Evo cold chain rentals and <unk> storage services, we either shipped first use products or engage for initial services with 41, new customer sites in Q2 30 for storage services in 11 for Evo our <unk> storage services platform has grown.

<unk> rapidly and are on plan for the start of Buildout for nearly 60000 square foot state of the art bio repository in the U S to support demand for our storage services.

With our Evo cold chain management platform cell and gene therapy companies now have broad access to our class defining offering through our expanded specialty carrier partner network that now includes World Courier quick International paper on Thermo Fisher Martin and <unk>.

Very excited about our market opportunity to derive our evo platform to become a meaningful revenue and profit contributor.

Q2, Evo shipments were up 100% over the same quarter last year full year 2020 to evo shipments could exceed 8000 double from 2021.

Collecting a huge amount of shipment information that is shaping our continued evo is cloud innovation to give our courier partners and end customers, even more actionable data to reduce risk.

Our Evo cold chain platform is currently used to store and transport two approved car T cell therapies.

And we anticipate two additional global pharma companies will commence use of evo for the storage and shipment of the remaining for approved car T cell therapies. This means by mid next year, we expect the Evo platform will be used for all of the currently approved car T cell therapies.

This adoption validates our belief that the evo platform will increasingly be selected as a class defining temperature controlled shipping container and related cloud app by the leading CDT companies now.

Now I'll turn the call over to Troy to present, our financials for Q2 Troy. Thank you Mike revenue for the second quarter 2022 totaled a record $40 5 million, representing a 30% increase over 2021 organic revenue increased 44% driven by bio preservation media revenue.

<unk> thousand $14 1 million, which was up 46% versus Q2 2021.

COVID-19 related revenue accounted for approximately 9% of total revenue in the quarter.

Cell processing platform revenue was $15 4 million up 58% over the same period in 2021 and organic growth was 46%.

Freezers and thought systems platform revenue was $18 7 million up 6% over the same period in 2021 and organic growth was 23%.

COVID-19 related revenue accounted for approximately 4% of the freezer and Pos systems platform revenue.

Storage and storage services platform revenue was $6 5 million total and organic growth was 65% over the same period in 2021.

COVID-19 related revenue accounted for approximately 45% of the storage and storage services platform revenue.

Revenue for the six months ended June 32022 totaled $76 8 million, an increase of 60% over 2021 with organic growth of 45%.

Adjusted gross margin for the second quarter of 2022 was 36% compared with 43% for the second quarter of 2021, and 33% for the first quarter of 2022.

For the first six months of 2022, adjusted gross margin was 34% compared with 47% in the same period last year.

The sequential quarterly improvement in Q2 2022 gross margin was largely due to sequential improvement at our <unk> platform as well as favorable product mix.

We expect to see increases in gross margin in Q3, and Q4 net of newly granted stock Awards.

GAAP operating expenses for Q2, 2022 was $116 8 million versus $35 8 million in Q2, 2021 and year to date operating expenses was $160 6 million compared with $53 6 million in 2021.

GAAP operating expenses in Q2, 2022 and year to date include a noncash intangible impairment of $69 9 million related to the global cooling acquisition.

The noncash impairment the global calling intangible assets, primarily resulted from changes in our assumptions for royalty free their product development projects, including lower forecasted cash flow due to inflationary pressures on materials reduced revenue expectations and delays in launch.

Despite the accounting adjustment, we continue to believe there is significant value and the uniqueness of the Sterling technology.

Adjusted operating expenses for Q2, 2022 totaled $20 million compared with $13 3 million in Q2, 2021, and $19 8 million in Q1 2022.

For the first six months of 2022, adjusted operating expenses totaled $39 8 million compared with $22 2 million in the first six months of last year.

Adjusted operating expenses increased due to the 2021 acquisitions of global cooling in Sexton. In addition, operating expenses increased due to higher accounting cost and increased head count to support our growth.

Adjusted operating expenses increased by 200000 over the previous quarter due to increased head count, partially offset by lower accounting fees.

Adjusted operating loss for the second quarter of 2022 was $5 4 million compared with adjusted operating income of 65000 in the second quarter of 2021.

Our adjusted operating loss for the first six months of 2022 totaled $13 4 million compared to operating income of 560000 in 2021.

Adjusted EBITDA for the second quarter of 2022 was positive $1 5 million compared with positive $3 7 million for the second quarter of 2021 and negative 814000 for.

For the first quarter of 2022.

For the first six months of 2022.

Adjusted EBITDA was positive $679000 compared with positive $6 5 million in the same period in 2021, we.

We expect an improvement in adjusted EBITDA in the second half of 2022 compared to the first half of 2022.

Our cash and marketable securities balance at June 32022 was $47 million compared to $59 4 million at March 31 2022.

Taking into consideration our adjusted EBITDA of positive $1 5 million cash used in Q2 2022 was related to working capital adjustments of $13 4 million, primarily due to timing, which includes a $7 million increase in accounts receivable and a $3.

$1 million increase in inventories.

In addition capital expenditures were $2 million in the quarter, primarily related to the buildout of our bio repository facilities we.

We do not expect the same level of cash use going forward.

Turning to 2022 revenue guidance, we have tightened full year 2022 revenue guidance to be in the range of $160 million to 166 million, reflecting year over year growth of 34% to 39%.

And organic growth of 37% to 43%.

COVID-19 related revenue is expected to account for approximately 8% of total revenue.

Total revenue expectations for 2022 include the following platform updates.

Cell processing platform <unk>.

Increased the low range by $3 million and the high range increased by $2 million, reflecting high demand for bio preservation media and the platform is expected to be between 67 million to $69 5 million, an increase of 49% to 50 by 55% over 2021 and.

Organic growth of 42% to 47%.

Freezers and process in this platform decreased the low range by $4 million and decreased the high range by $6 million and is expected to be between 70 million and $71 5 million, reflecting lower than expected revenue for our <unk> product line.

This is an increase of 24% to 26% over 2021 and organic growth of 31% to 34%.

COVID-19 related revenue is estimated to account for less than 5% of the freezer and Pos systems platform revenue.

Storage and storage services platform increased LOE range by $1 5 million and reduced high range by $1 million and is expected to be between 23 million to $25 million.

This is a total and organic increase of 31% to 42% over 2021.

COVID-19 related revenue is expected to account for an estimated 40% to 45% of the storage and storage services platform revenue.

The COVID-19 related revenue is primarily based on contracts and therefore, we don't expect to see variability on this number to throw out the balance of the year.

In regard to our aspirational financial goals for the Q4 2024 run rate we are confident in our targets of $250 million in revenue, 50% adjusted gross margin and 30% adjusted EBITDA.

Bio preservation media, which has the highest margin profile is currently growing at a faster pace than expected, partially offset by lower revenue expectations for our <unk> LTE freezer line.

Demand for our portfolio is strong and we believe we will show continuing improvements in financial performance.

Finally in terms of our new share count as of today, we have $42 6 million shares issued and outstanding and $44 5 million shares on a fully diluted basis now I will turn the call to rod.

Thanks Troy.

I mentioned on our last quarterly call continued progress at Sterling has allowed the operations team to begin to focus on additional opportunities for improvement for other product lines and these activities continued throughout the last quarter.

Four I get to that however, I will start with some comments on the Sterling operation.

Based on the operational metrics, we track at Sterling on a regular basis, we continue to make progress across the board. If I were to pick just one operational metric, which summarizes the overall improvements in production and quality. It would be the lead time associated with our large capacity 780, <unk> freezers, which contribute.

The majority of <unk> freezer revenue in the first six months of 2022.

In February of this year the lead time for this product stood at 10 weeks and since then the team in Athens has been able to bring this down to one week, which not only speaks to the overall progress made but also positively impacts our competitiveness.

And this decrease in lead time has been achieved with higher first pass yields and a substantial improvement in gross margin compared to Q1 of this year.

As part of the overall recovery plan for Sterling.

We recently announced internally that we are going to take to U L. T. Freezer products, which are currently produced for us by an outside CMO and bring them back in house. These two products were originally outsourced in 2021 due to space and labor constraints in Athens, we.

We will consolidate the production of these two products at our <unk> freezer manufacturer manufacturing facility in Michigan, we have the space and the team members there to make it happen and expect the move to be completed in Q4 generating higher levels of quality and modest increases in gross margin for these two products.

The Athens facility will continue to focus on the production of the 780 <unk> and prepare for the planned 2023 launch of the next generation large capacity freezer.

In addition to bringing the two <unk> products into our Michigan facility last quarter. We began the validation of a second source for our key component used in the <unk> freezer line.

The validation has gone well and we expect to begin shipping products using this new supplier in September or October not only does this new relationship mitigate supply constraints, which have had an impact on revenue in recent quarters. It also yields cost savings, which should translate into a gross margin pickup of 2% to three percentage points on these.

<unk> two products. So we're pleased with the overall results of this effort.

Moving to our bio preservation media products, we're focused on increasing capacity in the near and mid term based on the continued strength in demand.

We're in the final phase of increasing our media batch size from 100 to 200 leaders, which will effectively double the capacity of the Boswell facility, allowing us to comfortably meet demand and replenish our safety stock, which has been depleted over the past several quarters.

In addition, we've also kicked off the planning phase of establishing a small but scalable bio preservation media production suite at our facility in Indianapolis, which currently makes our HPA products and expect.

That facility to begin producing our smaller volume media runs by mid 2023.

Finally, with respect to two other key operational initiatives, which are to establish a high margin service revenue program and implement the Netsuite ERP system I am pleased to report that our pilot service revenue program generated solid revenue growth in Q2 versus Q1.

While still only utilizing one full time team member.

The net suite ERP implementation remains largely on track.

All in all operationally things are moving up into the right and we will push hard to ensure that trend continues in the coming quarters.

Now I will turn the call back over to Mike.

Thanks Rod.

I will leave you with our key takeaways from Q2 and for the rest of 2022.

Demand for our portfolio of class defining bio production tools and services remains strong and we fully expect to meet or beat our full year revenue guidance number two we made real progress addressing supplier and quality issues with our Sterling product line and expect a demonstrated continued sequential improvements throughout the rest of 2022.

And beyond.

And three to say it one more time, we remain very confident that we will achieve our Q4 2024 run rate aspirational financial goals of $250 million in revenue 50 points of adjusted gross margin and 30 points of adjusted EBITDA.

Fast forward to today I'm pleased to say that overall product and service demand. So far in Q3 is strong and we're looking forward to sharing our results in November now.

Now I will turn the call back over to the operator to take your questions Chantelle.

At this time I would like to remind everyone to ask a question. Please press star one we'll pause for just a moment to compile the Q&A roster.

Our first question comes from Thomas Flaten with Lake Street Capital markets. Your line is open.

Hey, Thanks, Good afternoon, guys congrats on another great quarter.

Couple of questions with respect to guidance. So there was some there was some really positive news that rod shared around the improvements at Sterling.

Yet.

Layered into the write down was reduced revenue expectations and delays in launch can you maybe add some color there have customers walked away is it just a natural evolution of the market just to get some more thoughts from you on the freezer business in particular.

Yes, Thomas Thanks, Good question I'll give a little more color as it relates to the sales headwinds that I mentioned.

No doubt we've had some customers have to buy from somebody else and.

The guidance tightening is really just prudent based on the fact that we're not done with the field update yet once we get through that I think everything will be really really strong and back to the kind of the normal flow but.

We're tightening or just a little bit based on that remaining sales headwinds that's what I can say on that.

Great and then.

I know, we usually don't talk about things below the revenue line from a guidance perspective, but there was there was a really nice improvement in gross margins is the.

Is that level of improvement is something we can continue to see or will it moderate more as we move through Q3 and Q4.

Yes, Thomas I think we'll see it more of a moderate level from Q3 going into Q4 and again in my commentary I mentioned that was net of newly issued stock grants.

Which again I would like to remind.

I'd like to remind you too that when we do the adjusted gross margin number we do not back out stock comp so stock comp does flow through our Cogs and hence the adjusted gross margin.

Got it and then.

I'm wondering if you could give some commentary on the stock for cash compensation program, which expired I think it was August 1st.

Curious to get your thoughts on whether or not that's been extended I am assuming no and just some color there would be great.

Yeah, we haven't commented on it and it runs actually a little bit longer, but we havent commented publicly on whether we're going to extend that or not.

Excellent. Thanks for taking the questions guys. Thank you. Thanks.

Thank you.

Our next question comes from Jacob Johnson with Stephens. Your line is open.

Hi.

Hannah on for Jacob Good afternoon, a couple questions Sterling margins were below historic levels last year, how should we think about the timeline to get back to 30% margins and is there additional opportunity to expand that longer term.

Okay.

Yes, it's Rob here.

So we don't provide specific guidance to product line gross margins, but what we will say is that we do expect as Troy just mentioned continued improvement in gross margin, particularly in the Sterling facility net of new share new stock option grants.

Do expect that it's going to take some time to get back up into the sort of 30 mid 30 level.

Gross margin for that particular product line, but we're not going to put ourselves in a box and say when that might happen. We're just confident of continued improvement.

Okay, and one quick follow up.

Think about the portfolio of assets and capabilities that you've built up over the years.

The cross selling opportunities are there any particular products, where you're seeing traction from cross selling initiatives.

Yes, really insightful question. Thanks, Ana you bet. One example, I would point to is the crossover between our bio preservation media and our Sexton self processing products, both the <unk> media, which is another a liquid media actual.

Serum replacement media in this case used in cell manufacturing, but also the <unk>, which is a really cool novel small form factor final packaging option as a replacement or an ultimate for bags for cell and gene therapies and <unk>.

Just to point to one example of that I can tell you that.

Public but.

BMS with <unk> uses <unk> preservation media, but they also use the <unk>, which is really cool none of those were independent conversations underway, but.

No a lot of the same decision makers.

Ultimately that would've resulted in the same final resolve and we're obviously looking for those sort of easy wins and early wins that we can go capture that are similar to that story and we.

We would expect to continue to talk about cross selling.

For the foreseeable future that was a big thesis of the whole acquisition spree and we're seeing a lot of really good anecdotal wins as a result of expanding the sales team, but also leveraging our key relationships.

Alright, I'll leave it there thank you.

Beth.

Our next question comes from Matt <unk> with Cowen <unk> Company. Your line is open.

Hey, Thanks for taking the question.

Hi.

Hey.

So storage and cold chain really continues to emerge as a nice contributor to growth.

I think the segment has been our model and I think for the past five straight quarters. So.

Can you just give us some detail around what spring than the non COVID-19 growth in storage and cold chain.

Obviously, there's been a slew of new launches.

Customers seem to be a bit more.

Were looking towards solving for logistics and transportation factors compared to call. It 12 24 months ago.

Yes, Max right on well, let's split them out so on the storage services side.

That demand is just booming, let's just revisit the factors.

<unk> biopharma companies, they have a build or buy sort of dilemma right are they going to go and build a bio repository and staff it and put all the gear and maintain it and all their precious biologic materials under one roof, that's very risky and so theres a real appeal to outsourcing that.

Two a partner such as Biolife, notwithstanding safe, who can take really good care of their precious samples.

And have really good management of that stuff chain of custody chain of IV chain of condition all of those buzz phrases that we tossed around but they are very important they are critical and it's a key value differentiator for us and we just can't build stuff fast enough and we're just really excited about how we're going to continue to expand that platform and you mentioned I mentioned earlier the big 60000.

Square foot facility that we're going to be kicking off here fairly soon so that will be great. We'll fill it up I'm sure and on the Evo side I, just want to remind you and the listeners here that.

A couple of years ago. When we first started talking about Hey, we've got this approved car T cell therapy company, that's looking at Evo and Theyre, putting us through this really extensive evaluation and validation and it's taking so long where are we ever going to get some traction now fast forward to mid next year, we're going to be.

Shipping with evil all of the approved car T cell therapy. So.

Definitely worth the wait.

Ill, just kudos shot out to our key competitor in that regard who educated the market, but now there's room for two and clearly were a primary or at least a secondary choice for all of those I would call sophisticated customers, who really are on the path to derisk their entire shipping logistics chain and we're not in logistics, that's not our gig.

We're just providing the best technology to enable the logistics providers to to reduce risks for these companies. So we're really proud of that and we're not slowing down I mean, I mentioned the approved car T cell therapy companies, but I look at the Evo customer shipment list every quarter and this is a marquee list of companies and I'm sure. Some of those are going to make it over the goal line and we'll be glad to talk about.

When they do obviously, if we get permission, but feeling really good about that and then I'll just say Additionally, with the new product roadmap for the Evo platform with Kate containers and radios in sensors and all of that we've got some really exciting stuff coming in too soon to talk about it for competitive reasons, but yeah, it's going to be a fundraise and we're going to win in our own.

So really excited about that.

That's great. It seems like a key area of 2022 innovation.

Exciting thing.

So maybe another one.

Zooming out a bit.

We've seen some competitors mega, making M&A Porsche and cold chain.

Yes.

<unk> announced the acquisition of <unk> group.

<unk> made a few acquisitions themselves so.

Just at a higher level as you look across your three distinct business segments.

Would you point to any one of them and say.

And that segment, we're seeing a lot of growth coming from competitive wins there.

Taking share versus just sort of organic penetration.

Really good question as well so.

You bet and we have to look at media bio preservation media is so strong and it's not just existing customers buying mortgage capturing more customers every quarter getting confirmation of more planned adoption in clinical trials. So that that is the engine that just keeps cranking and let's remember all of us folks and it's still really early right I mean really early in this.

CDT approval game right now there arent that many just a couple of handfuls in.

While we could probably all agree that that space in the at least the U S. If not outside U S. Health care systems are not going to support 50 car Ts for the same indication I don't think we would agree with that we don't need that kind of level of adoption for us to drive that really really strong. So we're just really bullish on that so it would be media first and then storage services Ulta.

Emily and then I think not too.

Not to be all Doom and gloom, but we're really really bullish about what's unique about sterling and particularly once we get the field update Dan we can get back to leading with our front foot as opposed to being defensive in some cases, but the product roadmap for Sterling is really innovative and at the right time, we'll be glad to talk about that.

Okay, Great and now I'll, just wrap up here.

Just looking at my monitor here.

A reminder, that we're likely to remain in the <unk>.

Ball at all market environment, our Smith cap stocks so.

Great to see positive adjusted EBITDA progress on the margin when you exited the quarter with around $47 million in cash so.

It's just a broad based question.

The cash ins obviously.

No.

Okay.

Dwindling lower than it's been in recent quarters, but youre also turning the corner on profitability.

No.

I guess, how are you thinking about how comfortable you feel with that cash balance I mean is there a certain level that you don't want to go below.

Do you feel like you have all of them.

Access to funding in place.

Chad.

I would imagine fund more of the internal growth initiatives.

But eventually return to an M&A strategy over time.

Right, Yes, Max Troy here as you mentioned, we did have a positive adjusted EBITDA quarter and as I mentioned in my commentary a lot of that cash was tied up in working capital in particular, we.

We had a lot of AAR due to late orders in the quarter, so that really built.

Our balance and then as far as needing cash are raising cash we do not foresee the need to raise cash with our current operations.

Great.

Thanks, a lot for the App.

The color much appreciated as always.

Thanks Max.

Again, if you would like to ask a question. Please press star one. Our next question comes from Suraj Kalia with Oppenheimer. Your line is open.

Okay.

Good afternoon, everyone. Mike can you hear me all right.

Hi, Suraj how are you.

Doing well hope everyone is safe and healthy.

Thank you Troy.

Troy forgive me if I misunderstood your comments.

Impairment charge.

Is there any.

Change in the long term revenue outlook.

And part of the reason I ask is.

How is that being incorporated and Mike. Please feel free to jump in how is that being incorporated into the 2020 for $250 million outlook that you all have maintained still.

Yes, I'll take the last part first then Troy can talk about the first part yes.

Super Insightful question Suraj, the good positive answer with competences.

That noncash adjustment as I mentioned on the call it doesn't affect our confidence in our ability to hit those exiting 2024 financial aspirational goals not in the least Troy do you want to take the first part yes, suraj the evaluation and the result really was how the discounted cash flow worked out and as I mentioned my commentary there are a few changes in assumptions such as higher costs.

Slightly lower revenue expectation and higher cost to completion. So those are really the three main factors that contributed to the impairment.

But there was no change in the long term revenue outlook for you LTE right Troy.

It was slightly lowered yeah as.

As I mentioned in my commentary.

But as we also mentioned to the bio preservation media is exceeding our expectations and again thats the highest margin product we have in our portfolio, So again, giving us confidence in our long term goals.

Fair enough.

So Mike when I look at $250 million right and a couple of years.

Covid is what.

8% FY 'twenty two are estimated to be so roughly around $15 million right. If you will that has been a slight compression.

And you look at next year.

Just trying to understand what are all the moving parts, especially for example of what contribution Evo is going to be are you all are thinking through from Novartis and Gilead, just kind of walk us through the.

How the different valves in the cylinders are firing well at least as we look out over the next two years.

Yes.

I think.

I think I'll start by asking Troy to remind us all of that in our sort of exiting 2024 analysis. The revenue split from let's call a consumables reagents versus instruments, such as color that I'll make a comment consumables over 60% of the $2 50, and capital equipment, which will be the freezers and fast systems under.

40% of the $2 50.

So against that so against that perspective, Suraj I would say that we're in.

Not going to quantify evo revenue by customer or anything else like that but we are bullish about what we can grow that into and we've got obviously internal modeling about where that can go and what the Tam in the Sams are and things like that but bio preservation media Super strong Super strong and storage services as well. So those are the key levers that are going on and then.

The instrument side as traditionally as you would imagine like other companies not nearly the margin profile, yet very complementary and as a sum of the parts kind of portfolio. We can offer our customers. We are anticipating obviously, a certain amount of pull through and crossover from having a broader portfolio.

That's fair enough, Mike quickly and ill hop back in queue.

You guys have obviously made a lot of progress in different initiatives and there is a cross fertilization effort going on between the different segments, Mike whichever bucket youll want to position it has right, whether it's consumables and capital or.

Bio preservation in storage and this and that different buckets how.

How should we think about the number of customers in each bucket.

So that we can share we'll start triangulating. Okay. This is with average revenues per customer because there are a ton of new customers being added every quarter.

Just help us understand you'll get very im headed I'd love. Some guideposts just to help us start thinking about maybe added folks. Thank you for taking my questions. You bet. You bet. Good question. So I think I can give you some rough some rough range is right now and then we'll think about maybe in a more formal way if we could put that out but generally speaking we.

Have.

Bio preservation media customers and a range of 4% to 5000, ranging from approved companies to a single research in the lab was going to buy one bottle of media in a year, okay, but definitely weighted heavily concentrated amongst the clinical side and the late stage, Andrew witty approved customers augmented by a couple of really key distributors, who have a lot of it.

Product.

In the freezer platform, that's more in the range of one hundreds of customers right and then the other platforms or less and that just that's probably the level of detail I do want to disclose on this call. Okay.

Fair enough. Thank you.

You bet.

Yeah.

Our next question comes from <unk> <unk> with B Riley Your line is open.

Hi, This is Brandon on for you on <unk>.

Thanks for taking our questions.

Hi, Brian .

Hi.

There are $70 million impairment charge, how much of the remaining goodwill on the balance is related to the <unk>.

Yes. This is Troy here, that's a different analysis, we are one reporting unit goodwill is not affected.

Okay. Thanks.

So great quarter for bio preservation media can you breakdown how much of the growth is driven by volume and how much of that is driven by price increase.

Our channel check shows our year to date increase.

Price of 9% and some of your media products.

And third party channels.

Yes, it's definitely weighted by volume or just cracking at current customers approved customers there could be some price appreciation. It does not coming to mind in the last quarter. I know, we did a price increase that was effective one one in the first quarter, but we have some flexibility to do that based on PPV and that constrained somewhat by some <unk>.

Certain supply agreements, but its definitely a volume game here and we're killing it you heard rob's comments about doubling the batch size. So we cannot only meet demand for media, but also replenish our safety stocks.

And again I would just remind everybody that the.

Still early game here right. These 10 approved products. We're in those are products that werent in existence from an approval standpoint three years ago. So this is really early and look you can hear it in my voice the upside on bio preservation media and related consumables. Once we're locked in as a sole supplier. It's just tremendous we've got so many shots on goal.

And even if there was tremendous attrition from the current clinical trial bucket of applications for this.

This thing is going to rock for years to come.

Thanks Thats helpful.

Last question from US, we want to hear more about the growth potential for the Evo platform.

So I'm wondering if you can share whats the portion of the total shipment volume of car T products that are using the Evo platform and if you can comment on what can drive higher adoption in customers' planned shipments.

Yes, I don't want to I don't want to cite.

Shipment market share est.

Estimate right here I can tell you that with the first customer that we won they are intimated to us that we're getting between 50 and 80% of their shipments Okay and you can do a little math and you can figure out.

Using 350 Grand has a dose divided by two because it's an <unk> plus.

Our final product in there and Theyre reported revenues you can figure out how many patients were dosed and we're getting a lion's share of that which is great. The other ones not as much yet, but those are very early wins in the coming on board and there is an actual limiter and thats the pace at which the clinical centers get trained upon receiving the therapy in a new package right. So there's a little bit of work that the farm.

Our company has to do too.

With the carriers to get the receiving clinicians up to speed on what's this new thing.

You guys might know the Evo I mean, it looks state of the art. It doesn't look like anything like these all traditional really ugly Ellen to containers that these things have been shipped and for years. So.

As innovative as it is from a design our technologies side, it's equally as potent from just an aesthetic.

And the clinicians love it because it doesn't scare the heck out of these pediatric cancer patients. When this goofy all greater base thing as we go into their room and there is gas hitting out on all of that so yeah. We got a really really differentiated offering and it's going to take off but.

We're obviously going to track that and over time, if we feel that we have confidence in some evo shipment of our car T shipment market share data then we'll of course going to be proud about that and put it out a little bit early for that now though.

Okay. Thanks.

Okay.

We have reached the end of the question and answer session I will now turn the call back over to Mike <unk> CEO for closing remarks.

Thank you, Sean Tom and Thanks again, everyone for your interest in Biolife have a great evening and the rest of the week Goodnight.

This concludes today's conference call you may now disconnect.

Okay.

Yes.

[music].

Good day my name is shantou and I'll be your conference operator today at this time I would like to welcome everyone to the Biolife Solutions, Inc. Q2, 2022 earnings conference call.

As a reminder, today's conference call is being recorded all lines have been placed on mute to prevent any background noise.

After the Speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time when Cooper Star followed by the number one on your telephone keypad.

If he would like to withdraw your question. Please press star one again, thank you Troy Mcewen Chief Financial Officer, you May begin your conference.

Thank you Chantal good afternoon, everyone and thank you for joining this call.

Turning me on today's call are Mike <unk>, Chairman, and Chief Executive Officer, and Rod degree President and Chief operating Officer.

Earlier today, we issued a press release announcing our financial results and operational highlights for the second quarter of 2022.

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 companys business and that qualify as forward looking statements.

We refer you to our periodic and other public filings filed with the SEC.

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.

I'd like to turn the call over to Mike Rice, Chairman and CEO of Biolife solutions, Thanks, Troy and good afternoon, everyone and thank you for joining our call.

After my remarks Terry.

We'll present our financials for Q2, then Rob will provide an update on key operational initiatives. His team is focused on and after that we will be glad to take your questions.

Turning to Q2 revenue and customer highlights I'm very pleased with our team's performance in delivering another quarter of record revenue and in completing key operational initiatives that are driving meaningful improvements in our financial results.

Total revenue was $40 5 million up 30% from Q2, 2021 with organic revenue growth of 44% and bio preservation media revenue growth of 46%.

Our growth catalyst and business fundamentals remain intact and with improved business visibility, we're tightening our full year 2022 revenue guidance, which Troy will cover in a few minutes.

We again realized important sequential improvements in gross margin and adjusted EBITDA and remain confident that we will continue to do so for the rest of the year.

I'd also like to Echo the strong growth sentiments in the cell and gene therapy space that other life science tools companies have expressed on their recent earnings calls.

As important that we convey our strong belief in the innovation and disruptive potential of this acquired technology.

<unk> hundred $50 million in revenue 50 points of adjusted gross margin and 30 points of adjusted EBITDA margin.

In Q2, we sold and shipped products to 202, new unique customer sites across our three products and services platforms and I'll remind you know what those buckets are.

First self processing, which includes bio preservation media and Sexton cell processing products second is our freezes and thaws systems platform comprised of cryogenic liquid nitrogen freezers and Sterling <unk> mechanical freezers and automated thawing devices, and finally stores in cold chain services, which include.

Our <unk> storage services, and our Evo cold chain management offering.

Some notable confirmations were from instill bio community <unk> bonus therapeutics, Aloneness Therapeutics Turnstone, biologics Brexit Jen <unk> sell evolve in <unk>.

To date, our bio preservation media is used in 10 approved therapies and our sex and 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 a BLA or other regulatory approval filings are expected to be submitted this year and next year.

Ill 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 also see the recent and pending approvals of CVT products for first and second line treatments and approvals for new indications and new geographies as three growth catalyst for our bio preservation media and other solutions.

But the other part of our cell processing platform, our sextant products adoption in clinical customer applications include 67, using HP all media 61, using cell seal vials and three using automated fill machines. So you can see we're running our bio preservation media playbook to drive adoption of Sexton products.

We estimate that annual revenue per section reagents, and consumables used and approved customer therapies ranges from 500, K two 1 million for both <unk> and <unk> media.

Turning to our freezes and thoughts systems platform to reiterate we shipped first time orders to 130, new customer sites. Our hyper focus on the acquired Sterling platform has resulted in greatly improved quality and reduced shipping lead times with Roger which Rob will speak to.

That's off to our sales team for hanging in there, while we complete our field service updates to the acquired installed base of royalty freezers.

This has been a sales headwind and will be to some degree until we're finished with the field updates later this year.

We're all very appreciative of our loyal customers, who selected Sterling freezers for the specific differentiated value they provide a.

A couple of notes in our indirect distribution partners for our freezes and Thaws systems platform first on our last call I mentioned that we added our cryogenic liquid nitrogen freezers to a key distribution agreement. This is with avant door VW are and we're already seeing some sales pull through from this expanded relationship specifically with U S government accounts.

We're also in the process of adding our thoughts are CBE <unk> automated far to our distribution agreement with stem cell technologies.

As you know is one of our most treasured customers and indirect sales partners.

And our final of three revenue platform of stores in Cold chain services, which includes Evo cold chain rentals, and <unk> storage services with either shipped first use products or engage for initial services with 41, new customer sites in Q2, 30, <unk> storage services in 11 for Evo, our <unk> storage services platform has grown.

Rapidly and are on plan for the startup Buildout for nearly 60000 square foot state of the art bio repository in the U S to support demand for our storage services.

We're excited about our market opportunity to derive our evo platform to become a meaningful revenue and profit contributor.

Q2, Evo shipments were up 100% over the same quarter last year full year 2020 to evo shipments could exceed 8000 double from 2021.

Collecting a huge amount of shipment information that is shaping our continued evo Ias cloud innovation to give our courier partners and end customers, even more actionable data to reduce risk.

Our Evo cold chain platform as current used to store and transport two approved car T cell therapies.

And we anticipate two additional global pharma companies will commence use of eagle for the storage and shipment of the remaining for approved car T cell therapies. This means by mid next year, we expect the Evo platform will be used for all of the currently approved car T cell therapies.

Now I'll turn the call over to Troy to present, our financials for Q2.

Thank you Mike revenue for the second quarter 2022 totaled a record $40 5 million, representing a 30% increase over 2021 organic revenue increased 44% driven by bio preservation media revenue of $14 1 million, which was up 46% versus Q.

Two 2021.

COVID-19 related revenue accounted for approximately 9% of total revenue in the quarter.

Cell processing platform revenue was $15 4 million up 58% over the same period in 2021 and organic growth was 46%.

Freezers in power systems platform revenue was $18 7 million up 6% over the same period in 2021 and organic growth was 23%.