Q1 2025 BioLife Solutions Inc Earnings Call & Business Update
[music].
Good afternoon, ladies and gentlemen, and thank you for standing by.
Welcome to the Biolife solutions first quarter 2025 shareholder and Analyst Conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Speaker Change: I will now turn the call over to Detroit with Kurman, Chief Financial Officer of Biolife solutions. Please go ahead. Thank you operator, good afternoon, everyone and thank you for joining the Biolife solutions 2025 first quarter earnings Conference call.
Speaker Change: On the call with me today is roderic degrees CEO and chairman of the board.
Speaker Change: We will cover business highlights and financial performance for the quarter and affirm our full year 2025 financial guidance.
Speaker Change: Earlier today, we issued a press release announcing our financial results and operational highlights for the first quarter of 2025, which is available at Biolife solutions dotcom.
Speaker Change: As a reminder, during this call we will make forward looking statements.
Speaker Change: These statements are subject to risks and uncertainties that can be found in our SEC filings.
Speaker Change: These statements speak only as of the date, given and we undertake no obligation to update them.
Speaker Change: We will also speak to non-GAAP or adjusted results.
Speaker Change: Reconciliations of GAAP to non-GAAP or adjusted financial metrics are included in our press release, we issued this afternoon.
Speaker Change: Now I'd like to turn the call over to Rod degrees, Chairman and CEO of Biolife. Thanks, Troy and good afternoon, and thank you for joining us for our bio lifes first quarter 2025 conference call.
Speaker Change: First quarter marked a strong start to 2025 meeting our expectations as we continued to execute our strategic priorities and build on the momentum of 2024.
Speaker Change: We delivered solid top line performance with our cell processing revenue, increasing 33% compared.
Speaker Change: Compared with Q1 last year, and total revenue up 30% year over year.
Speaker Change: With another sequential increase in cell processing revenue and meaningful expansion of our adjusted EBITDA margin, which came in at 24% were realizing the operating leverage and financial strength of our optimized portfolio and streamlined operations, resulting from the strategic initiatives, we carried out last year.
Speaker Change: With a fortified balance sheet with over $100 million in cash at the end of the quarter. We are on solid footing to navigate what remains a dynamic operating environment and to invest in growth initiatives support innovation and drive market share.
Speaker Change: We remain steadfast in our commitment to delivering leading solutions to the cell and gene therapy market and are confident in our strategy competitive positioning and ability to deliver sustainable growth throughout 2025.
Speaker Change: Looking at our first quarter revenue and a little more detail our cell processing platform delivered $21 6 million or 33% year over year increase and up 6% sequentially over Q4 last year, marking our sixth consecutive quarter of revenue growth.
Speaker Change: This performance was driven by continued strength in our core bio preservation media or BPM product line, which represents the majority of our cell processing platform in.
Speaker Change: In Q1, our top 20 customers continue to account for approximately 80% of BPM revenue, which provides us with heightened visibility to a large and critical part of our business.
Speaker Change: Approximately 60% of our BPM revenue comes from direct sales and 40% through distribution.
Speaker Change: Notably around 40% of total BPM revenue came from customers with an approved commercial therapy setting.
Speaker Change: Said another way this translates into about 60% of our direct BPM revenue coming from customers that have an approved commercial therapy.
Speaker Change: While a portion of that demand supports clinical pipeline programs and process development validation rather than patient dosing. We expect these commercial customers to drive growth throughout the remainder of the year.
Speaker Change: I highlight this because it provides an important measure of resilience in our business model mitigating exposure to earlier stage programs that may be more vulnerable to funding or regulatory constraints.
Speaker Change: Overall these metrics remained broadly consistent with what we saw in 'twenty 'twenty four reinforcing the stability and durability of our cell processing business.
Speaker Change: At the end of the first quarter, our BPM products were utilized in a total of 17 approved therapies as we've shared before we estimate our BPM products are used in at least 70% of relevant commercially sponsored C. G. T trials in the U S.
Speaker Change: Our share of late stage clinical trials exceeding 75%.
Speaker Change: At this point, the only meaningful alternative to our offering is homebrew formulations, which while perhaps functional at a small scale lack the rigor consistency and scalability that our GMP grade solutions provide.
Speaker Change: Our sales and marketing team remains focused on deepening relationships with our key B P. M customers, both commercial and clinical in order to create cross sell opportunities and drive adoption of our broader cell processing platform.
Speaker Change: Today, our self feel an H P. L products are integrated into for approved therapies in the U S and internationally.
In addition to being used in numerous clinical trials.
Speaker Change: We see a significant opportunity to scale these products over time.
Speaker Change: Importantly, each additional product integrated into a commercial therapy kept materially enhance our revenue on a per dose basis with the potential to generate up to two to three times the revenue per dose compared to our P. P M products alone.
Speaker Change: I would emphasize that this opportunity is not hypothetical we have demonstrated success with customers who have adopted multiple components of our platform validating both our product quality and our role as a trusted scalable partner.
Speaker Change: As we continue to execute we believe expanding our footprint with these commercial therapies will be a durable mid to long term growth engine for biolife.
Speaker Change: In April we further advanced our strategy with the acquisition of Panther Cryo solutions and innovative addition that expands our bio preservation portfolio with proprietary ice recrystallization inhibitor technology and enhances the scientific capabilities of our team.
Speaker Change: This transaction reflects our ongoing commitment to selectively deploy capital to strengthen our offerings and reinforce our leadership as a pure play provider of bio production and consumables.
Speaker Change: While we remain optimistic that the underlying longer term industry fundamentals remain intact, we recognize that near term uncertainty persists, whether from tariffs NIH funding cuts or leadership changes at the FDA all of which have the potential of creating near term headwinds across the ecosystem.
Speaker Change: We continue to closely monitor and assess these factors from both the supplier and a customer perspective.
Speaker Change: And at this time, we do not expect any material impact on our financial outlook.
Speaker Change: Accordingly, we are reaffirming our full year revenue guidance of 95.5 to 99 million with growth continuing to be led by our cell processing platform and more specifically our commercial customers.
Speaker Change: With that I'll hand, the call over to Troy, who will provide an overview of our full Q1 results Troy.
Troy: Thank you Rod.
Speaker Change: We reported Q1 revenue of $23 9 million, representing an increase of 30% year over year.
Speaker Change: Year over year increase was primarily related to a 33% increase in our salad processing platform driven by an increase in bio preservation media revenue.
Speaker Change: GAAP gross margin for Q1, 2025 was 63% compared with 63% in Q1 2024.
Speaker Change: Adjusted gross margin for the first quarter was 66% compared with 66% in the prior year, although our adjusted gross margin percentage remained consistent year over year, we had an increase of $3 5 million or 29% and gross margin dollars, reflecting strong revenue growth compared to the prior year.
Speaker Change: GAAP operating expenses for Q1, 2025, or $25 2 million versus $21 7 million in Q1, 'twenty 'twenty four.
Speaker Change: The increase compared to the prior year was largely due to increases in cost of sales from revenue growth and acquisition related fees from our parent there are acquisition, which we closed on April 4th.
Speaker Change: Adjusted operating expenses for Q1, 2025 totaled $14 9 million compared with $14 6 million in the prior year.
Speaker Change: GAAP operating loss for Q1, 2025 was $1 2 million versus $3 3 million in the prior year.
Speaker Change: Our adjusted operating income for the first quarter of 2025 was 900000 compared with an adjusted operating loss of $2 4 million in Q1 2020 for.
Speaker Change: The decrease in GAAP operating loss was primarily due to an increased revenue of $5 5 million compared to the same period in the prior year.
Speaker Change: Our GAAP net loss was 400000 or one cents per share in Q1 compared to $3 2 million or seven cents per share in the prior year.
Speaker Change: The decrease in net loss was primarily due to a $3 5 million dollar improvement in gross margin.
Speaker Change: Yeah.
Speaker Change: Adjusted EBITDA for the first quarter of 2025 was $5 7 million or 24% of revenue compared with $2 6 million or 14% of revenue in the prior year.
Speaker Change: Adjusted EBITDA increased from the prior year, primarily due to a $3 $5 million improvement in gross margin driven by increased sales of bio preservation media.
Speaker Change: Turning to our balance sheet.
Speaker Change: Our cash and marketable securities balance reported as of March 31st 2025 was $107 6 million compared with $109 2 million as of December 31, 2024.
Taking into consideration, our adjusted EBITDA of $5 7 million in Q1.
Speaker Change: Cash usage was primarily driven by unfavorable working capital of $3 2 million debt principal payments of $2 5 million and.
Speaker Change: And capital expenditures of $1 million.
Speaker Change: Our SBB longterm debt balance at quarter end was $12 5 million.
Speaker Change: We expect to continue making quarterly repayments of $2 5 million going forward.
Speaker Change: Turning to our 2025 financial guidance, which we are affirming our original guidance from our Q4 earnings call.
Speaker Change: Total revenue is expected to be $95 5 million to 99 million, reflecting an overall growth of 16% to 20%.
Speaker Change: Our cell processing platform.
Speaker Change: Did they contribute $86 5 million to $89 million or 18% to 21% growth over 2024.
Speaker Change: Our Evo and thought platform is expected to contribute 9 million to $10 million.
Speaker Change: Our 3% to 15% growth over 2024.
Speaker Change: We expect adjusted gross margin for the full year to be in the mid sixties, a reduction in GAAP net loss and expansion in adjusted EBITDA margin in 2025 due to higher expected revenue.
Speaker Change: Offset by increases in R&D expenses related to development projects and an estimated $1 million in R&D related expenses from our Panther acquisition for the balance of 2025.
Speaker Change: We do not expect any material revenue from Panther in 2025.
Speaker Change: Finally in terms of our share count as of May 1st which includes shares issued from our Panther acquisition, We had $47 6 million shares issued and outstanding and 51 million shares on a fully diluted basis.
Speaker Change: Now I'll turn the call back to the operator to open up for questions.
Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: And the first question comes from Matt Stanton with Jefferies. Please go ahead.
Matt Stanton: Hey, Thanks for taking my question, maybe Rod first you appreciate all the color on the progress on the commercial side of the business, but maybe just to focus a little bit on the non commercial and more you know clinical side of the business, which is the other 60 or so can you just kind of talk about level of visibility into trends there what you're hearing from customers.
Matt Stanton: <unk>, obviously, you know there's no shortage of headlines around the F D. A funding and things like that maybe it's a bit of avid have lots on the funding side, but just a little bit more clarity or update on what you're hearing and seeing in terms of demand trends and patterns from that clinical side of the business today. Thanks.
Matt Stanton: Sure.
Matt Stanton: The clinical customers.
Matt Stanton: Does that buy direct from us.
Matt Stanton: Actually came in a reasonably well for the quarter right. So we don't really see anything in the near term are at that point. It's it's it's not a significant up the growth for the quarter was definitely driven by our commercial customers, where we would see the majority of any kind of impact.
Matt Stanton: From the the issues you are raising here would be on the distribution side and while we don't have perfect visibility to the customer segmentation of those distributors distributors came in the the two large ones in particular came in as we had expected so right now and we're in contact with them on a pretty regular basis.
Matt Stanton: A couple of times a month.
Matt Stanton: Last week I sat in on a quarterly business review with our largest distributor also our largest customer.
Matt Stanton: They are not signaling any sort of.
Matt Stanton: Slow down in demand at this point in time, although there are clearly aware of the potential impact of let's say NIH funding cuts.
Matt Stanton: I think the the potential for delays relative to changes and cuts at the FDA I think that's going to play out over a longer period of time as opposed to.
Matt Stanton: This quarter next quarter, if it plays out at all.
Speaker Change: Great. That's really helpful color and then maybe just on the paint their deal maybe you can talk a little bit about more you know why it makes sense proof points. We can expect going forward you, obviously had kind of a front row seat there. The last few years with your involvement and your asset prior and then you know what does it bring you today that you didn't have before and is there kind of a.
Speaker Change: Product pipeline, you know, where where you have the opportunity to layer. Some of this stuff that's working.
Speaker Change: Working on onto your existing offering thank you.
Speaker Change: Yeah, I think that you know from a timing perspective. The reason we did this now is.
Speaker Change: Is because they had demonstrated proof of concept with their first generation molecules. So we felt comfortable that the fundamental technology worked and what we wanted to do is be in a position to be able to vary.
Speaker Change: Completely control the future development of the next Gen molecule. So that the focus in all of the effort from a scientific perspective was in combining that nextgen molecule with our cryo store product line.
Speaker Change: So that's what the focus is for the next 18 months and I think as we've said really the opportunity for us is to have a nextgen.
Speaker Change: Line of Cryopreservation products, which can do one of three things Ah if not more than one of those three things combined one would be having just Ah Ah Ah cryopreservation products that has more efficacy.
Speaker Change: In general with maybe some different types of cell types. The other is to have the same efficacy, but with potentially lower concentrations of D. M. S O, which some customers have have signaled is important to them and then I think the third opportunity really is to create.
Speaker Change: The product that would allow us to cryo preserve cells and tissues that could be held in transported at minus 80. So that's a dry ice kind of temperature range versus minus 196, which would be L. N too. So the logistics around L N to transportation and storage are significantly more.
Speaker Change: Sophisticated than dry eye shipments so from a scientific team. We added two very experienced very well regarded scientists what that does is not only just backfill from a risk mitigation perspective, given that we had a very small team of a one or two folks depending on how you want to look at it.
Speaker Change: But it also allows us to increase the throughput of the scientific experiments that are going to be done here in the next 12 to 18 months.
Speaker Change: Thanks, I appreciate it and congrats on the strong quarter.
Speaker Change: Thank you.
Paul Knight: And your next question comes from Paul Knight with Keybanc. Please go ahead hi.
Speaker Change: Ron Hydroid, congrats on a corner Rod where are you in the.
Paul Knight: Pricing.
Paul Knight: Journey that you.
Paul Knight: Our on I know that you're working on.
Paul Knight: Across the board changes or you have done a third done and it happened over one three years.
Paul Knight: Yeah, we're we're more than half done Paul on sort of that four or five key customers that had.
Paul Knight: A significant legacy discounts that are not applicable to the world we are in today.
Paul Knight: Some of them kick in one large one kicks in in the second half of the year just based on their own fiscal year end and just the negotiations that took place and they are for the most part given the magnitude of the clawback of the discounts they are spread out over a 36 month period on an annual basis.
Paul Knight: So we will see a bit of a tailwind there over the next three years.
Paul Knight: And then a last question would be.
Speaker Change: How's the pipeline on M&A look.
Speaker Change: We are definitely looking at a few things Paul but you know we have a pretty strict filter criteria.
Speaker Change: We are in the process of actually working through a more robust sort of tech strategic technology.
Speaker Change: Summit, if you will that's coming up here internally, which will include a couple of our directors Tony Hunt being one of them.
Speaker Change: So that we have a very clear and and tight filter criteria as we look at things going forward that said there are a couple of things small tuck ins not dissimilar to a pan Sara as it relates to how they would fit on the horizon.
Speaker Change: Okay. Thanks.
Speaker Change: You bet.
Speaker Change: And your next question comes from Chad why Trotsky with TD Cowen. Please go ahead.
Jeremy: Hey, This is Jeremy I Trust you on for Brendan Smyth.
Jeremy: What was the limited impact from sort of tariffs NIH funding more of caused by maybe the limited exposure or where did you have to take steps like with your global distributors to sort of insulate yourself from some of that and maybe it's for a man that manufacturing standpoint, and I'm just in.
Jeremy: General and what about that sort of 14% exposure to European revenues.
Speaker Change: Yeah. Thanks, Chad I think that when we did our analysis internally here around tariffs.
Speaker Change: And NIH cuts, we really looked at the tariff side of it between suppliers first and then customers. So on the supplier side all of our products for cell processing revenue are manufactured here in the United States and we have very little exposure to four and raw material inputs. So.
Speaker Change: We're pretty comfortable that theres not going to be any impact on our cost of goods certainly not any material impact on our cost of goods at this point in time, if that were to change. We would go ahead and implement some sort of surcharge program, which we did.
Speaker Change: With respect to the freezer businesses, we owned during Covid on the customer side on the direct customer side, which represents about 60% of our revenue. We also think we have very little exposure almost no exposure to China. So we do have exposure to Europe, but we believe that the product.
Speaker Change: That's being sold into Europe direct is primarily sold to customers that are in late stage clinical and or have a commercial therapy that is already for the most part manufactured there. So our product is such a critically enabling tool.
Speaker Change: For the development of their therapies that we don't believe a 10 or 20%.
Speaker Change: [noise] tariff on our product is going to make a bit of difference in terms of their utilization, it's certainly not going to be enough to make them think about switching so we're pretty comfortable with the customers on the direct side, we do have some greater exposure on the distribution side, but we've been spending a lot of time in particular with our largest distributor again our loss.
Speaker Change: Or just customer understanding their exposure to China.
Speaker Change: Which is more than ours by a bid and their view on the Chinese exposure from their perspective is that they expect the Chinese government to either.
Speaker Change: Exempt and or subsidize these particular products, so that they're protecting their own biotech industry. That's number one.
Speaker Change: For the rest of the world from a distribution perspective, they also feel that the.
Speaker Change: The incremental amount or increase in cost of product relative to tariffs would be relatively de minimis to those customers and therefore, they to date at least have.
Speaker Change: Have not changed their rolling 12 month forecast for us although I can tell you it's something that we're in constant conversation with them, probably two times a month.
Speaker Change: Really helpful color. Thanks.
Speaker Change: You bet.
Speaker Change: And your next question comes from Thomas Flaten with Lake Street. Please go ahead.
Thomas Flaten: Hey, good afternoon, guys. Congrats on a great quarter, Hey, Rob just a follow up kind of on a prior question with respect to the pipeline for M&A, obviously, you've got a.
Thomas Flaten: Nice little cash warrant at this point any other big projects, we should be aware of Capex facility build outs other than M&A that we should be thinking about.
Thomas Flaten: Yeah, I think we definitely are in the process of planning. So I think I may have mentioned on a previous call that we have leased a earlier this year, we leased the third floor.
Thomas Flaten: The building that houses our current manufacturing, which is on the first floor. So that gives us an additional $75 million or so of capacity with respect to bio preservation media. So that's a.
Thomas Flaten: 10 million dollar kind of investment more like five to six when you netted with the T is so the larger Capex project is in Indianapolis, where our lease runs out in the facility that we're in and have been in for a number of years. So we're in the process of identifying another facility.
Thomas Flaten: We will be building out a clean room for the manufacturing of H P. L, which is what we do in Indianapolis.
Thomas Flaten: And also plan on.
Thomas Flaten: Doing the fulfillment of all of our products from a business continuity standpoint, keeping our NIE.
Thomas Flaten: Nine months of finished goods inventory there in India, so that will be a larger capex expense, but its really a 26 event as opposed to 25.
Speaker Change: Got it thank you and Troy just a quick one on revenues anything we should be cognizant now that we've shed the other businesses in terms of seasonality pacing of revenues across the balance of the year.
Speaker Change: Yeah, we don't really have much seasonality in our business in general are summer months can be a little bit slow in Europe, but other than that we don't have that much of an impact for seasonality.
and Pat for Seasonality.
Darrell, thank you.
Thank you.
Speaker Change: Your next question comes from Matt Hewitt with Craig Hallum Capital Group. Please go ahead.
Speaker Change: You could see maybe even a commercial program already using a media swap yours in, specifically the panthera.
Speaker Change: Yeah, so a good question. Last year we did do, we engaged with a third party consulting group that has expertise in CGT and we posed the question to them, what is the switching cost?
Swap out the BioPreservation Media.
Speaker Change: So it's unlikely that we would have any companies that have a...
In part because the product works well for them today.
Speaker Change: Makes sense. And maybe separately regarding tariffs on the off chance that you do start to face some headwinds there. Do you have the ability to pass?
Speaker Change: The tariff cost onto your customers via your current contracts or is that something that you would have to negotiate or figure out at that point?
Speaker Change: Are you speaking to tariffs that might be attached to raw material inputs and therefore increasing
Correct.
Speaker Change: Yes, so I think that yeah, the answer is we would, if there's anything material, we would go ahead and put a surcharge.
Speaker Change: on it for our customers. As I said, we have done that in the past. There's nothing in our supply agreements that prohibits us from doing that. Obviously, we'd want to be pretty judicious about that. But we would do it if it turns out to be a material increase in any way to our own cobs. [inaudible]
Makes sense. Alright, thank you.
Thank you.
Carl Burns: And your next question comes from Carl Burns with Northland Capital Markets. Please go ahead.
Carl Burns: Congratulations on the results on the quarter. Most of the questions have been answered. I'm wondering if we can go back to Pantera in terms of what you expect the incremental outfits would be. I'm imagining, as you mentioned, your comments. Most of it's going to be in the R&D line. Thanks.
Carl Burns: Yeah, that's correct, Carl, to the tune of about called a million dollars for the remaining nine months of the year.
Carl Burns: Okay, that's what I thought you said, but I wanted to check. Cool. Excellent. Congrats again. Thanks.
Thank you.
And your next question comes from Yi Chen, with...
H.C. Winner.
Alright, please go ahead.
Speaker Change: Thank you for taking my question. Just curious, is BioLife likely to benefit at all from pharmaceutical and biotechnology manufacturing, I'm sorry, due to tariff over the course of the coming quarters and if so, to what extent?
of a CGT manufacturer's cost of goods.
Speaker Change: So, you know, the fact that they're manufacturing product abroad and then importing their crop preservation for the drugs that are being sold in say Europe or Asia, I just think it's a diminimous amount and it's just simply not an issue at this point as far as we can see.
Donner, thank you.
Thank you.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Roderick Greef for any closing remarks.
For more information visit www.FEMA.gov
Roderick DeGrief: Thank you, Mike. In closing, the first quarter positions us well for the year ahead. We remain confident in our ability to navigate potential headwinds with minimal impact to our financial results.
Roderick DeGrief: Thank you for your time this afternoon and we look forward to updating you as we move through the year as well as seeing some of you and investor conferences later this year.
Roderick DeGrief: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Roderick DeGrief: Paul Knight, Matthew Hewitt, Matthew Hewitt, Thomas Flaten, Edward Marks, Chad Witt