Cryoport, Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. Unaudited consolidated results. Cryoport provides temperature-controlled logistics, biostorage and cryogenic equipment for life sciences markets.
Financial performance
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $56.7 million | $11.2 million | $166.2 million | $30.3 million |
| Gross profit / margin | $23.5 million / 41.5% | $6.1 million / 54.2% | $73.5 million / 44.2% | $16.4 million / 54.2% |
| Operating loss | $4.6 million | $10.7 million | $9.5 million | $20.2 million |
| Net loss | $6.5 million | $11.4 million | $15.4 million | $21.2 million |
| Net loss attributable to common stockholders | $8.5 million | $11.4 million | $21.6 million | $21.2 million |
| Basic and diluted loss per share | $0.18 | $0.29 | $0.48 | $0.55 |
| Adjusted EBITDA, non-GAAP | $5.6 million | $(0.7) million | $18.5 million | $(3.4) million |
- Revenue increased 407.5% in Q3 and 447.8% for the first nine months. Management attributed most of the increase to the October 2020 MVE and CRYOPDP acquisitions; reported organic revenue growth was 37.9% in Q3 and 42.3% year to date.
- Q3 revenue comprised $30.9 million of services and $25.8 million of products. MVE contributed most product revenue; CRYOPDP contributed $15.6 million of Q3 service revenue.
- Gross margin contracted year over year, which management attributed to the acquired businesses’ margin profiles, growth investments and supply-chain and transportation constraints. MVE also faced higher labor, material and transportation costs.
- Operating cash flow was positive $5.5 million for the nine months, versus cash used of $5.2 million in 2020. Investing activities used $273.3 million, including $292.3 million of short-term investment purchases, $15.6 million of property and equipment purchases, $0.8 million of software development costs and $5.0 million for CTSA and F-airGate acquisitions; $41.0 million of investments matured. Financing activities provided $275.8 million, primarily from the January public offering.
Liquidity, debt and capital
- At September 30, cash and cash equivalents were $43.7 million and short-term investments were $305.8 million, for total cash, cash equivalents and short-term investments of $349.5 million. Working capital was $369.3 million.
- Total assets were $824.4 million; total liabilities were $177.2 million and stockholders’ equity was $647.2 million. Current liabilities were $41.1 million.
- Convertible senior notes had $115.0 million principal outstanding, a $111.9 million net carrying value and a 3.00% coupon, due June 2025. The assumed CRYOPDP interest-free note payable had a $4.5 million net carrying value; its first installment of €3.0 million was due by December 31, 2021 and the remaining €1.0 million by December 31, 2022.
- The January 2021 public offering raised $269.8 million net from 4.36 million common shares. Series C preferred stock carries a 4% paid-in-kind dividend; $6.2 million was recorded for the nine months. Common shares outstanding were 46.2 million at quarter-end, compared with 39.8 million at December 31, 2020. The filing lists approximately 17.8 million shares reserved for potential issuance or conversion.
Changes, outlook and risks
- The October 2020 MVE and CRYOPDP acquisitions materially expanded product, logistics and international operations; CTSA and F-airGate were acquired in Q2 2021 for combined consideration of $6.8 million, including contingent consideration tied to future EBITDA targets.
- Foreign customers generated 46.5% of Q3 revenue and 47.5% of nine-month revenue. The company reported 582 supported clinical trials and eight commercial therapies at quarter-end. Nine Cryoport-supported BLA or MAA applications were filed in the first nine months; management anticipated up to four more in the rest of 2021 and 21 in 2022. These are expectations, not financial guidance.
- Management stated available cash, investments and projected cash flows were expected to meet operational and capital requirements for the foreseeable future, while noting additional capital might be needed for potential acquisitions and could not be assured on acceptable terms.
- Key risks include COVID-19 and variant-related disruption, inflation and labor constraints, and component shortages or shipping delays. The filing specifically cites worldwide semiconductor and electronic-component shortages affecting MVE products and SmartPak systems, as well as the planned retirement of 2G/3G cellular networks and the need to upgrade monitoring equipment.
- The company reported no material legal proceedings known to management and no senior-note default. It reported no goodwill or intangible-asset impairment in the period. Management deemed disclosure controls effective, but excluded MVE and CRYOPDP from its controls assessment under SEC guidance for acquired businesses.
Investor verification points
- Separate acquisition-driven growth from organic growth, and assess whether acquired operations can sustain revenue and improve margins.
- Track gross-margin trends and the duration and financial effects of supply, labor and transportation constraints.
- Review operating cash generation alongside capital expenditure, acquisition spending and investment portfolio liquidity; short-term investments include securities with maturities beyond one year.
- Assess dilution and preferred-stock economics, including paid-in-kind dividends, conversion rights and the potential shares reserved for issuance.
- Monitor the note-payable installments, 2025 convertible-note obligations, and the progress and cost of 2G/3G equipment upgrades.
- Compare future clinical-trial, commercial-therapy and BLA/MAA activity with management’s stated expectations; the filing provides no quantitative revenue or earnings guidance.