Q1 2025 Cryoport Inc Earnings Call - Q&A
Speaker Change: Good afternoon, and welcome to Cryoport First Quarter 2025 earnings call.
All participants will start.
Speaker Change: in a listen only mode. After the speaker's presentation, there will be a question and answer session, and instructions will be provided at that time. As a reminder, this call is being recorded. I will now turn the call over to your host, Todd Fromer from KCSA Strategy Communications. Please go ahead, sir.
Thank you. Thank you. Thank you.
Thank you.
Speaker Change: Before we begin today, I would like to remind everyone that this conference call contains certain forward-looking statements. All statements that address our operating performance, events or developments that we expect or anticipate according to the future are forward-looking statements. These forward-looking statements are based on management's beliefs and assumptions, and not on information currently available to our management team.
Speaker Change: A man with him believes that these four of the stations are reasonable as it was made.
Speaker Change: However, you should not please undo reliance on any such forward-looking statements because such statements speak only as of the date when made.
Speaker Change: In addition, forward-looking skaters are subject to certain risks and uncertainties that could cause actual results, events and developments to different materially from our historical experience and our present expectations or projections.
Speaker Change: These risks and uncertainties include, but are not limited to, those described in items 1A, Ritz Factor, and elsewhere in an annual report on 110K to be filed with the Security and Exchange Commission, and those described from time to time in other reports, which we file with the Security and Exchange Commission.
Speaker Change: It is now my pleasure to turn them call over to Mr. Jerrell Shelton, Chief Executive Officer of Cryoport, chairing the floor as yours.
Gerald Shelton: Thank you, Todd, good afternoon, ladies and gentlemen. With us this afternoon is our Chief Financial Officer, Robert Stefanovich, our Chief Scientific Officer, Dr. Mark Sawicki, and our Vice President of Corporate Development and Investor Relations, Thomas Heinzen.
Gerald Shelton: As a reminder, we have uploaded our first quarter 2025 in review document to our website. It can be found on the main page of the Cryoport Inc website. This document provides a review of our financial and operational performance and a general business outlook.
Gerald Shelton: Before I review our results, I would like to highlight that do you...
Gerald Shelton: That due to our recently announced strategic partnership with DHL and the related sale of Cryoppp to DHL, Cryoppp's financials.
which were previously a part of Cryoport's.
Gerald Shelton: Life Sciences Services Reportable Segment are now presented as discontinued operations. Accordingly, we have provided quarterly historical information on this basis for 2024 in our first quarter, 2025, and review document.
Gerald Shelton: This information is intended to support financial modeling efforts for those needing this information.
Gerald Shelton: Please note that unless indicated, all revenue figures discussed today will refer to continuing operations. This includes our fiscal year 2025 revenue guidance first shared alongside our DHL transaction announcement.
Gerald Shelton: Now I'll provide a brief update on our business and then we'll take your questions.
Gerald Shelton: Cryoport had a solid start to the year with $41 million of revenue from continuing operations for the first quarter, which represented 10% year-over-year growth and helped drive meaningful adjusted a bit to improvement.
Gerald Shelton: Three things that excited us about the first quarter were first client engagement and life sciences services grew substantially highlighting a new momentum in our business.
Gerald Shelton: Second, Order Patterns for our Life Sciences products continue to show signs of stabilization, and finally our strategic partnership with DHL.
Gerald Shelton: Life Sciences Services revenue and total increase 17% year-over-year, which included our support of commercial cell and gene therapies, which grew 33% over last year.
Gerald Shelton: Life Sciences Services now account for 56% of total revenue, and it continues to be driven by the increasing development and commercialization of cell and gene therapies, which we believe will persist even in the current economic environment.
Gerald Shelton: As of March 31st, Cryoport supported 19 commercial therapies and 711 clinical trials, representing approximately 70% of cell and gene therapy trials.
Gerald Shelton: Subsequent to the quarter in a new therapy from our customer of Bino, Therapeutics was approved bringing our total commercial therapy supported to 20.
Gerald Shelton: In the first quarter, six BLA MMAA filings occurred. Three filings were for new therapies and three filings were for geographic expansion.
Gerald Shelton: Additionally, DMS received a supplemental approval from the European Commission to expand the label of Brianzi as a third-line treatment for relapsed or refractory follicular lymphoma.
Gerald Shelton: for the remainder of 2025. We anticipate up to an additional 17 application followings.
Gerald Shelton: IV, Therapy Approvals, and additional IV approvals for label or geographic expansions or moves to earlier lines of treatment, all of which give us further confidence in our growth forecast.
Gerald Shelton: Our life sciences products business continues to show further signs of demand stabilization and grew 2% year-over-year.
Gerald Shelton: We are continuing to expand our product portfolio to capture new revenue streams with innovative products, including the MBE High Efficiency 800C, which was released in the first quarter and meets the needs of facilities that have limited space yet require high capacity and security.
Gerald Shelton: Another key milestone in this quarter was the announcement of our strategic partnership with
Gerald Shelton: As a part of our strategic partnership, DHL acquired Cryo PDP for an enterprise value of $195 million which we expect to close in the second or third quarter.
Gerald Shelton: We think this arrangement will enhance our positioning in Asia-Pac and Amia.
Gerald Shelton: And reshape our competitive profile within the industry by leveraging the global scale and capabilities our new strategic partner, DHL.
Gerald Shelton: Our strategic shift in responsive is is responsive to market changes driven by the evolution and progress of our industry and provides us with a strong infusion of capital, a substantial return on investment and a strategic partnership that enables us to sharpen our focus on our core of the life sciences service offerings directed toward the rapidly growing regenerative medicine space.
Gerald Shelton: Scott Squintney, we're confident in our organic growth outlook for the full year and are confirming our revenue guidance for fiscal year 2025 in the range of $165 million to $172 million.
Gerald Shelton: which at the midpoint represents a 7.5% growth relative to fiscal year 2024.
Gerald Shelton: Before we begin to take your questions, I want to briefly talk about global tariffs.
Gerald Shelton: In situations where tariffs may impact our business such as potential increases in cost of raw materials such as electronics, aluminum, stainless steel, we've already taken steps to diversify our supply chain.
Gerald Shelton: In situations where we cannot mitigate tariff charges, we will implement surcharges. We have successfully taken a similar approach in the past. For example during the supply chain challenges experienced during COVID, we were able to maintain solid financial margins.
Gerald Shelton: We feel confident in our ability to manage potential future cost increases due to tariffs. More broadly, we do not expect tariffs to impact our core support of clinical trials or commercial therapies.
Gerald Shelton: Of course, we will continue to assess the situation and keep you updated as more information becomes available.
Gerald Shelton: In closing, we made meaningful progress during the first quarter in revenue generation, operational improvements, and with the DHL Strategic Partnership.
Gerald Shelton: With this progress to accelerate our growth, we remain focused on supporting the increasing number of commercial regenerative medicine products and the world out around the world.
Gerald Shelton: We are also advancing our key initiatives such as Integral Cell, Cryopreservation Solution, our Global Supply Chain Center Network, and introducing new services and products in order to better serve our clients and open up new revenue streams.
Gerald Shelton: We remain confident that the actions we have underway and our momentum will lead us to a return to positive adjusted to debate during 2025.
Gerald Shelton: This concludes my prepared remarks, so now I will ask the operator to open the lines for your questions.
Thank you [inaudible]
Gerald Shelton: Ladies and gentlemen, we will now begin the question and answer session
Gerald Shelton: Should you have a question, please press the star followed by the number one on your touch on the phone. And you will hear a prop that your hand has been erased.
Gerald Shelton: Should you wish to decline from the polling process, please press the star followed by the number two.
Gerald Shelton: In the use of speakerphone, please leave the handset before pressing any keys. One moment please for your first question.
Speaker Change: Your first question comes from Kyle Crews with UBS. Please go ahead.
Thank you.
Speaker Change: Taking the questions here. Could you give us a brief update on the Watch of Integral Cell and how fine an adoption is going there?
Speaker Change: And could you touch upon CGT trial growth? And specifically, I think I calculated around high single digit growth there. Could you speak to the health of the market, given some of the negative news flow that we're hearing? Thank you.
Speaker Change: First of all, I'll speak to the market and then I'm going to turn it to Dr. Savicki who can answer your questions about
Speaker Change: about the market and especially in Tegrosel and our advancements. But, you know, we see the market very positively. We see all those things that I mentioned to you and my opening remarks. You know, we see commercial revenue continuing to ramp, the growth of number of commercial therapies, you know, continuing to grow.
The Growth in the Addressable Market,
Speaker Change: of our customers' therapies and the growth in the number of chronical trials we support. So we're bullish and we are well on our way to building our company to that profitable growth bridge that I've mentioned several times. Mark, would you take the rest of the questions?
Speaker Change: Sure, happy to do so. Yeah, just a further with Jerry, you know, you know, 24 was a decent year from a financing standpoint, selling dream therapy space grew about 30% from a financing standpoint, which is obviously...
Speaker Change: Stabilizing the market and providing a significant fund for our companies continue to progress there. They're a clinical commercial portfolio.
Speaker Change: You know, and commercial therapies are continuing to progress nicely. You know, we were up to 20 approved therapies that we support at this point in time. And there continues to be a robust pipeline overall, which is, you know, very exciting.
Speaker Change: You know, we anticipate, as David said, in his opening remarks, you know, up to 17 additional
Speaker Change: Potentially another four therapy approvals and four label expansions, so that's a very robust year and will be consistent with the record year that we saw last year from an approval standpoint so continues to be very nice and robust.
Speaker Change: Turning to Integressels, Integressels progressing very, very nicely, as we had mentioned previously, both facilities in Houston, Texas and Lee's Belgium are open, and we also have already had multiple commercial contracts.
Speaker Change: and are currently onboarding multiple programs into those facilities, so it's progressing nicely.
Great. Thank you.
Thank you.
Speaker Change: The next question comes from Richard Baldry with Roth's capital. Please go ahead.
Speaker Change: for contingent consideration. It changes. Your reason that isn't backed out is sort of a one-time event because I think if my math is right without that it'd be moderately positive on a just to do the dust.
Speaker Change: Sorry, Rachel, we're cut off from you. Can you please restate your question?
Speaker Change: Well, when I look at the adjusted EBITDA loss, it's sort of a minor amount, but it's including a drag it looks like from contingent consideration. I'm just curious why that as a one-time event wouldn't have been backed out of that number because it's...
Speaker Change: If my math is right, it looks like you'd be positive even without that drag.
Speaker Change: No, we did back it out, it goes the other way. So we had a contingent consideration in a year end that we released in Q1 related to one of the acquisitions.
Speaker Change: Got it. And, you know, post the divestiture, you know, whenever it closes.
Speaker Change: Rich, we will be prudent in the way we allocate that cash, the use of that cash, and so forth. Of course, we're living in some times that are, you know, have a frame out of uncertainty on them, but we'll be prudent, we'll be opportunistic, and we'll be careful about the way we allocate that cash. One of the things we will consider is the fact that our stock is highly, highly undervalued.
Speaker Change: We certainly have an authorization for stock buyback so that will be a consideration at the time we look at the uses of the cash.
Great, thank you.
Speaker Change: Thank you. The next question comes from Puneet Souda with Lering Partners. Please go ahead.
Speaker Change: Hi, you have Michael on for Puneet. Thank you for taking my question. My first one has to do with the service growth margins. I'm getting about like a 500 base point year-to-year expansion. So I'm curious if like what's driving that growth and also if we should expect a similar year-to-year expansion in the balance of the year. [inaudible]
Speaker Change: Yeah, if you look at the gross margin for the company and services and products absolutely right, we saw a significant increase.
Speaker Change: in the services Grossmargin for Q1 year of a year. And we do expect to see more leverage from our core services in the Sun from the entire space for our services.
Speaker Change: such as in Tegrosel that it's just starting to ramp. So we do expect strong growth margins to continue throughout 25 and certainly as we look into 26, 27 we expect the margin improvements beyond what you're seeing today.
Mark, what does your take then? [inaudible]
Mark Zawicki: Sure. Yeah, we've seen it be very balanced. We're seeing contribution on the ads from both the biotech as well as the large pharma environment. You know, what we're seeing overall is those
Mark Zawicki: Those biotechs that have promising pipelines are seeing additional interests from bit-large pharma where they're continuing to resource and put money into and purchase licensing agreements for a lot of these product lines. So it's maintaining robust local both.
Mark Zawicki: Maybe take that into that. In Q1 we did have 32 ads and 22 removes from art, so we reported it in net up 10, but it was a strong amount of ads in Q1 for their clinical trials.
Thank you.
Speaker Change: Thank you. The next question comes from David Larsen with BTIG. Please go ahead.
David Larson: Hi, congratulations on the good quarter, 10% year of year revenue growth looks pretty good to me.
Speaker Change: Jerry, you already mentioned some of this on your prepared comments. Thanks, guys.
Speaker Change: If you talk about just the broader macro environment, how are your clients responding to potential 25% tariffs? There was this executive order for drug pricing signed on April 15th.
Speaker Change: You know, there's the ongoing impact from the Emplacement Reduction Act.
Speaker Change: Icuvia had a year of year decline in their services bookings, the CROs are under pressure, are you seeing like what is the response from your clients and demand, the demand side of your business, if, if any. Thank you.
Speaker Change: Well, you know, David, we really don't have any significant tariff impact on cello gene therapy. So we're moving along pretty well, and Mark, you may wish to add to that.
Yeah, so, you know, [inaudible]
Mark Zawicki: The positive thing is, is the vast majority of those actions that you talked about from a government standpoint are really focused around small molecule and biological drug product, which has high volume, large revenue streams.
Mark Zawicki: You know, that's majority of the Selendine therapies out there are for very specific indications.
Mark Zawicki: You know, based on the fact that they've already gone through all the alternatives and there are many of the alternatives. So the pressure there is, I think, a lot different. We're not seeing a lot of a lot of concern. I'm actually down at ISCT right now, which is the International Society of the Cell and Gene Therapy Conference. [inaudible]
Mark Zawicki: and in the mindset here has been pretty positive so that we're not seeing a lot of concern.
Mark Zawicki: So, David, we're continuing to see the commercial revenues ramp, and we're continuing to, you know, see, you know, as we forecast it, continue to see, you know, commercial therapies, maturing and coming to market. So, we're very optimistic.
Mark Zawicki: Okay, so a lot of the source materials come from the United States, so they wouldn't be impacted by tariffs is that correct?
Mark Zawicki: Correct. David, most of the product, if you will, the therapies are the cells are taken right from the sick patients. So the patients are in the same country as where it's called manufactured and then sent back to the patient on the autogocene.
Mark Zawicki: Okay, and you also answered this already, but I'm going to ask again in terms of like your own cost of goods.
Speaker Change: Seems like there's a lot of technology you're working with. You got the doers, you got the technology on the doer, all those electronic components. There's transport costs.
Speaker Change: And I heard you say that those tariffs, if they happen, you're going to pass them through to your clients through surge charges so you're not expecting any increase in cost or margin pressure, is that correct?
Speaker Change: Partly correct, David. You know, we have an incredibly able sourcing team and we've already worked on mitigating tariffs by changing supply chain rooting or supply chain sources and so forth. And as I mentioned in the opening comments, those that are passed on to us through components or those that we cannot mitigate.
Speaker Change: We will put into surcharges because we don't think this will be permanent. We think that in surcharges we can extract at the time that they're not. But so we will protect our margins. And I don't think this is unusual for anyone but so we feel like we have this under control for sure.
It's not only bottom, but it's coming back up. What is that?
Speaker Change: You know, while global markets have been disrupted somewhat, you know, the Americas are showing resilience and incremental revenue growth as they have for the last three quarters and we predict that will continue.
Speaker Change: OK, hot back in the queue, looks like a good quarter, thank you.
Thank you.
Speaker Change: Thank you. The next question comes from Sado Nambi with Guggenheim Securities. Please go ahead.
Sido Numbi: Thank you for taking my questions. How much does supply chain initiatives actually improve margins? Any chance you could quantify that as well and will that be a long-term improvement to margins or is that a more short-term fix?
Sido Numbi: is to ensure that our margins are not negatively impacted by these tariffs.
Sido Numbi: So I think the margin improvement is really going to be driven largely by the expansion of our services, leveraging the client base that we have and leveraging the growing number of commercial therapies.
Speaker Change: for lack of better way of saying strictestance to newer modality therapy, anything that you're messaging to your current shareholders.
For more information visit www.FEMA.gov
Speaker Change: That's about the new head of Sieber, Subhalax you're asking about.
Speaker Change: The new head of Sieber is an accomplished scientist. He may have some conservative views that have been reported and so forth, but he's a conservative scientist, he's quite accomplished.
Speaker Change: And as a scientist, we feel that the data will rule. So there may be more structure, you know, in structure and so forth as we've forward, but we're very optimistic about
about his service and about his qualifications.
Speaker Change: And the Trump administration has also come out implicitly in favor of cell and gene therapy as a modality, so I do think there's an interest there from the administration to see continued progress there.
Speaker Change: At the end of the day, the safety and efficacy of these therapies is being improved out every day, and that's the main theme, I think, to keep on your mind, too.
Thank you, guys. I'll head back in the key.
Speaker Change: Thank you. The next question comes from Tejas Savant with Morgan Stanley . Please go ahead.
Teha Sevant: Edmund Apatagez, thank you for the time. Maybe to start off, can you guys share some color on how the traction has been with your new launches in the product side? How has the man been for HP3 and the new HE800 and how much of the demand stabilization can be accredited to these two products?
Mark, would you like to take that question?
Teha Sevant: On the HP3, the HP3 has been very, very well received in a market standpoint and adoption is ongoing as we speak. It will be rolling into a substantial number of our commercial therapy support mechanisms over the next 12 to 18 months.
Teha Sevant: So, you know, that's been extremely positive. What was the other product you were asking about?
Speaker Change: That's the H800 at MBE, Mark, but go ahead Robert. Yeah, I just wanted to clarify, the HV3 is related to Cryoport systems and Cryoport systems solution.
Speaker Change: So that's not related to product revenue wouldn't be reflected if you look at the product revenue that's specifically related to the MB suite of freezers and accessories and the second product that you mentioned that's just being rolled out so that's too early to talk about at the stage.
Speaker Change: Got it. And then I'm circling back to one of the earlier questions on Integral Cell. Can you guys provide some color on how the onboarding process has been and when can we expect to see some more meaningful revenue contributions from your earlier customers?
Speaker Change: So the onboarding process has been very smooth. You know, as I had mentioned, we're already under multiple contracts, including top 10 pharma, supporting, you know, that have asked us to step in and support aspects of their so-and-team therapy portfolio from a standardized cryopreservation standpoint.
Speaker Change: The process takes a little bit of time because there's a tech transfer process. We have to go through verification, which takes a few quarters. But those are running very smoothly and the feedback has been extremely positive.
Got it. Thank you guys for the time.
Thank you!
The Next
By the way,
once again.
Speaker Change: Should you have a question, please press the star, followed by the number one on your touch phone phone, and you will hear a prompt that your hand has been raised. The next question comes from Matt Stanton, with Keffrey, please go ahead.
Speaker Change: Hey guys, I wanted to touch quick on the leading indicators. You talked about both order, stabilizing for life science products but also engagement levels, increasing meaningfully for the life science solution side so
Speaker Change: Anyway, you can just put a fire pointer, claw five, the order improvement you're seeing or the nature of conversations.
with customers and potential customers. I think you talked about...
Speaker Change: on the solution side, strength both, you know, deeper penetration. I think this inclines but also new clients. So just any more kind of flavor you could provide around some of those leading indicators you talked a little bit earlier. Thank you.
I can comment on it. You want to talk a bit about the...
Speaker Change: and a total number of onboarded programs over thirty.
Speaker Change: is a very robust number, and I think that demonstrates the health in our service business. We also continue to see very nice diversification as evidenced by the increase in our bio-storage and bio-services revenue, which was up 22.5% year over year. So both of those are an indication of, you know, number one is...
Speaker Change: You know, the onboarding of new clients, which seems to be re-accelerating based on the, you know, the clinical trial acquisition, as well as, you know, you see robust growth in our other services, ancillary services like bioservices, which demonstrates a nice diversification of that revenue stream when our existing client portfolio as well as new. Thank you very much for your time.
Speaker Change: Keep building around this industry of the Syngene Therapies and Regenerative Medicine. You're seeing that with like a DHL acquiring our cryo-PDP, UPS expanding their health care.
Speaker Change: and the other players like Cardinal McKesson and St. Cora continuing to learn and to turn to the Selen Jean space. And we're really focused with our strategic pivot on enabling all of those big companies with where they're going.
Speaker Change: moving pieces and some of the news on the commercial.
Speaker Change: Todd, any change in your outlook between the sub-segments between products and...
Speaker Change: Service for the full year here, and then just to confirm on China. I think you talked about muted trends in China for the year, but just because you're not assuming any meaningful demand destruction tied to some of the tariff and trade war items out there. Thank you.
Speaker Change: So that would be on top of that. But if you look at the guidance and the overall services revenue growth and product revenue growth
Speaker Change: It still is the same in terms of the guidance. We certainly see an improved demand coming back on the product side, but still from a guidance perspective we would say...
Speaker Change: Load and mid-single growth for the product side. On the service side, you can see Strong Growth in Q1.
Mark Zawicki: I'm really on all aspects, so whether you look at overall revenue growth on services, the commercial revenue growth of 33% and like Mark mentioned, the bias storage bias services growth of 22%.
Mark Zawicki: So even if you look at commercial revenue, if you look at the trailing 12 month basis, about 26% year-over-year growth
Mark Zawicki: So we certainly expect commercial revenue to grow significantly and expect 25 to be a record revenue for the support of our commercial clients.
Great, Prishella Colors, thank you.
Thank you
Speaker Change: The next question comes from Paul Knight with Keyback. Please go ahead.
Speaker Change: Hi, this is Anna on for Paul Knight. Thanks for taking my question. I have just won, but maybe touching on the recent news with DHL. I was wondering if you could make any initial comments on the impact of this partnership, and if you've seen any benefit of being carrier-agnostic.
Speaker Change: Maybe in terms of customer conversations or if this just increases your ability to meet the incoming pipeline of larger cell and gene therapies. Thanks.
Speaker Change: The strategic relationship with the DHL is an incredibly strong relationship for us. It will help increase
Speaker Change: You know, our competitiveness in Asia, back in Amia, we will continue with our cryo-PDP as a partner and as a part of DHL and that will be cryo-PDP on steroids because it will have all of the backing and the resources of DHL at its command.
Speaker Change: and then we have all of the other resources available to us at DHL. So this is a very strong relationship and will over time ramp up to be quite significant for us on a global basis.
Speaker Change: It certainly also significantly fortifies and strengthens our balance sheet and financial position
Speaker Change: And then if you look at the margins, margins metrics for us as a company going forward, longer term, it's significantly also an improvement in margins for the continuing operations.
Thank you, that's great.
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Channel.
Thank you.
Speaker Change: There are no further questions at this time, let me turn the call over to the manager for closing remarks.
Speaker Change: Thank you, and thank you everyone for your questions and for our discussions. In closing, we reported solid first quarter results led by our life science services business, which grew 17% year over year.
Speaker Change: This included strong increases in commercial cell and gene therapy revenue and bile storage, bile services revenue, which increased year over year 33% and 23% respectively.
Speaker Change: At the same time, we continue to see further stabilization of order trends in our life science product segment.
Speaker Change: In line with our focus on growing our role in supporting Regenerative Medicine, with temperature control, supply chain solutions, we are excited about our strategic partnership with DHL.
Speaker Change: This collaboration will advance our strategy and further enable us as the regenerative medicine industry's essential supply chain company.
Speaker Change: In addition, it will strengthen our financial profile, as Robert just mentioned, while sharpening our focus on our core business.
Speaker Change: We want to thank you for joining us today. We appreciate your continued support and interest in our company. We're looking forward to updating you on our progress when we report on our second quarter financial results. Good evening to all.
Speaker Change: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.