BioLife Solutions, Inc. — FY2022 Form 10-K
Reporting period: Year ended December 31, 2022; filed March 31, 2023. BioLife develops and sells bioproduction tools and services for cell and gene therapy and broader biopharma markets, including cell-processing products, freezers and thaw systems, storage, and cold-chain services.
Financial performance
| Metric | FY2022 | FY2021 | Change / note |
|---|---|---|---|
| Total revenue | $161.8 million | $119.2 million | Up 36% |
| GAAP gross profit / margin | $48.8 million / 30.2% | $32.5 million / 27.3% | Margin improved, but remains below FY2020’s 52.2% |
| Operating loss | $145.5 million | $35.2 million | Includes $110.4 million of intangible-asset impairment charges |
| Net loss | $139.8 million | $8.9 million | Loss per diluted share was $3.29, versus $0.23 |
| Operating cash flow | $(8.5) million | $(4.6) million | Higher cash use |
| Cash, cash equivalents and available-for-sale securities | $64.0 million | $69.9 million | Year-end 2022 amount is approximately $64.1 million including restricted cash, per management |
| Total debt | $25.6 million | $7.2 million | Includes a $20 million term-loan draw in September 2022 |
Revenue growth reflected organic expansion and a full year of revenue from the Global Cooling and Sexton acquisitions. Cell-processing revenue rose 52% to $68.5 million; freezer and thaw product revenue rose 18% to $66.7 million; storage and cold-chain service and rental revenue also grew. Cost of product, rental, and service revenue was 70% of revenue, compared with 69% in 2021. Research and development, sales and marketing, and general and administrative expenses increased 25%, 54%, and 42%, respectively. Stock-based compensation was $25.3 million, up from $14.0 million.
Current assets were $138.5 million and current liabilities were $44.6 million at year-end. The company said cash, securities, operating cash generation, and credit availability should meet liquidity needs for at least 12 months from filing. Investing activities used $58.1 million, including purchases of available-for-sale securities and capital investment. Debt obligations, including interest, totaled $25.6 million; lease obligations totaled $18.1 million.
Material changes and unusual items
- Revenue increased 36%; management attributed $27.7 million of the increase to organic growth and $14.9 million to a full year of Global Cooling and Sexton revenue versus partial-year contributions in 2021.
- The company recorded $110.4 million in non-cash impairment charges related to Global Cooling intangible assets, following revised forecasts and abandonment of an in-process R&D project. Goodwill was not impaired at the 2022 testing dates; year-end goodwill was $224.7 million.
- A fourth-quarter review identified sales-tax collection and remittance errors dating to 2019. The company recorded an estimated $3.7 million liability for 2019–2022 and corrected prior-period financial statements, concluding the errors were immaterial to those periods.
- FY2021 and FY2020 comparative statements were corrected for the sales-tax issue. FY2021 net loss increased by $1.3 million to $8.9 million; FY2020 net income decreased by $684,000 to $2.0 million.
- One customer accounted for 18% of 2022 revenue; CryoStor represented 36% and the 780XLE freezer 22%. Third-party distributors accounted for 50% of revenue.
Outlook, risks, and contingencies
- No specific FY2023 revenue or earnings guidance is provided. Management expects operating expenses to increase in 2023, including R&D spending, and plans continued product development, commercial expansion, and investment in manufacturing capacity.
- Management reported semiconductor and electrical-component supply constraints at year-end, while stating that electrical-component supply was sufficient for the foreseeable future. It was transitioning ULT freezer manufacturing in-house, with completion anticipated during 2023.
- The September 2022 term loan matures June 2026 and bears interest at the prime rate plus 0.5%, subject to a rate ceiling. Additional borrowing capacity is conditional. Silicon Valley Bank, the loan issuer, was placed in FDIC receivership in March 2023; the filing says deposit balances were guaranteed by March 13, 2023.
- Disclosure controls and internal control over financial reporting were ineffective at December 31, 2022 due to material weaknesses involving entity-level controls and staffing, financial-system access, accounting procedures, and indirect-tax liabilities. The auditor issued an adverse opinion on internal control, but an unqualified opinion on the financial statements. Remediation is ongoing.
- Other key risks include acquisition integration and further impairments, customer and product concentration, supplier dependence, CGT market and customer demand variability, competition, product quality and liability exposure, and cybersecurity. The company disclosed an immaterial 2022 incident in which customer payments were redirected to unauthorized accounts.
Important facts for investors to verify
- Reconcile organic-growth disclosures: MD&A attributes $27.7 million of 2022 growth to organic sources, while the compensation discussion cites $29.9 million.
- Track progress and independent testing of the internal-control remediation plan, particularly controls over revenue, procurement, system access, and indirect taxes.
- Assess the assumptions supporting the Global Cooling impairment, future product-line forecasts, and the remaining carrying value of intangible assets.
- Confirm the status, cost, covenants, and availability of additional term-loan tranches, including the implications of the lender’s receivership.
- Monitor resolution of the estimated sales-tax liability, customer concentration, and any continuing supply constraints; compare subsequent results with management’s liquidity and expense outlook.