Cryoport, Inc. — FY2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020; quarterly figures below are for Q4 2020. Cryoport provides temperature-controlled logistics, storage, packaging, informatics and cryogenic equipment for life sciences, with emphasis on cell and gene therapies (C>).
Business context and material changes
- On October 1, 2020, Cryoport acquired MVE Biological Solutions for approximately $317.5 million and CRYOPDP for approximately $57.0 million. Together, they substantially expanded manufacturing, equipment, logistics and international operations. Their results are included from the acquisition date.
- The acquisitions contributed $23.0 million of MVE revenue and $12.9 million of CRYOPDP revenue in 2020. Cryoport moved from two reportable segments to one in Q4 2020.
- The company supported 528 C> clinical trials and five commercial therapies at year-end, versus 436 trials a year earlier. Seven additional supported therapies had filed for commercial approval.
Financial results and liquidity
| Metric | FY2020 | FY2019 | Q4 2020 | Q4 2019 |
|---|---|---|---|---|
| Revenue | $78.7 million | $33.9 million | $48.4 million | $9.2 million |
| Gross margin | $36.3 million; 46.2% | $17.4 million; 51.1% | $19.9 million; approximately 41.1% | $4.9 million |
| Loss from operations | $(30.0) million | $(17.7) million | $(9.8) million | $(0.9) million |
| Net loss | $(32.7) million | $(18.3) million | $(11.5) million | $(0.9) million |
| Adjusted EBITDA | $(0.04) million | $1.9 million | $3.9 million | $0.5 million |
- FY revenue grew 131.9%. Service revenue increased 62.9% to $55.3 million; product revenue was $23.4 million, primarily from MVE. Biopharma/pharma generated $66.4 million, animal health $7.8 million and human reproductive medicine $4.5 million.
- FY gross margin fell to 46.2% from 51.1%, primarily reflecting lower-margin contributions from MVE and CRYOPDP. SG&A rose 81.7% to $56.9 million, including $11.1 million of acquisition and integration costs and $6.6 million of acquired-intangible amortization.
- FY net loss attributable to common stockholders was $75.0 million, or $(1.94) per share, including a $39.5 million noncash deemed dividend and $2.8 million paid-in-kind dividend on Series C preferred stock. These dividends did not increase the reported GAAP net loss of $32.7 million.
- Operating cash flow was negative $14.9 million, compared with negative $1.3 million in 2019. Investing cash flow was negative $382.3 million, largely reflecting the acquisitions; financing cash flow was positive $385.6 million.
- At year-end, cash and cash equivalents were $36.9 million, short-term investments $56.4 million, and working capital $112.1 million. Total liabilities were $169.7 million, including $115.0 million principal amount of 3.00% convertible notes due 2025 and a $4.9 million assumed interest-free CRYOPDP note payable.
- In January 2021, the company raised approximately $269.7 million net from a common-stock offering. Management stated available cash, investments and offering proceeds were expected to fund operations and capital expenditures for at least three years, assuming no acquisitions.
Outlook, commentary and risks
- No formal financial guidance was provided. Management estimated that up to 21 additional supported C> therapies in clinical trials could file for regulatory approval during 2021; this is an estimate, not a guarantee of approvals or revenue.
- Management said longer-term demand remained strong, but COVID-19 had adversely affected revenue growth. Trial interruptions, fertility-treatment deferrals, renewed restrictions, shipping disruption and sourcing costs remained uncertain risks.
- Key risks include integrating the large acquisitions, realizing expected benefits, maintaining service and quality, product-liability exposure, reliance on some sole-source components, regulatory and cross-border compliance, and competition. The filing discusses prior MVE litigation concerning an alleged storage-tank failure; it states the company knew of no current legal proceeding expected to have a material adverse effect.
- The auditor and management reported effective internal control over financial reporting, but the 2020 assessment excluded MVE and CRYOPDP, which represented substantial portions of year-end assets and 2020 revenue.
Important facts for investors to verify
- How much of reported growth and Q4 revenue is attributable to acquired businesses versus organic growth, and whether the lower gross margin persists.
- Acquisition integration progress, purchase-price allocation assumptions, and the ability to generate expected synergies and cash flow.
- Liquidity and dilution implications of the 2025 convertible notes, Series C preferred stock, and January 2021 equity offering; the filing reports 4.0% PIK preferred dividends and conversion rights.
- Whether clinical-trial activity and anticipated therapy approvals translate into commercial revenue, particularly given COVID-19 and lengthy customer adoption cycles.
- Internal-control integration at MVE and CRYOPDP, as well as product-liability, supplier, regulatory and cybersecurity exposures.