Cryo-Cell International, Inc. — Form 10-Q
Reporting period: Third quarter and nine months ended August 31, 2026. The company provides private cord blood and cord tissue processing and storage, PrepaCyte CB products, and public cord blood banking services.
Financial results and liquidity
| Metric | Q3 2026 | Q3 2025 | Nine months 2026 | Nine months 2025 |
|---|---|---|---|---|
| Revenue | $7.82 million | $7.83 million | $23.28 million | $23.72 million |
| Operating income | $2.19 million | $1.90 million | $4.16 million | $4.45 million |
| Net income | $1.27 million | $0.75 million | $1.87 million | $1.39 million |
| Diluted EPS | $0.16 | $0.09 | $0.23 | $0.17 |
| Operating cash flow | Not separately presented for the quarter | $3.64 million | $4.20 million |
- Margins: Gross margin was approximately 79% in Q3 versus 77% a year earlier, and 79% for the nine months versus 76%. Operating margin was approximately 28% in Q3 versus 24%, but 18% for the nine months versus 19%.
- Cash and liquidity: Cash was $1.43 million at August 31, 2026, up from $0.32 million at November 30, 2025. Marketable securities were $2.80 million. Current assets of $13.17 million were below current liabilities of $15.33 million, a working capital deficit of approximately $2.16 million.
- Debt: The revolving credit balance was zero at quarter-end; the facility commitment is $8 million and matures October 18, 2027. Net term debt, after debt issuance costs, was $8.24 million; the term loan rate was 6.89%. The credit agreement includes leverage and debt-service coverage covenants.
- Deferred revenue: Total contract liabilities were $63.97 million, including $9.72 million expected to be recognized over the next 12 months. This reflects advance payments and future service obligations.
Changes versus comparable periods
- Nine-month revenue decreased 1.9%; Q3 revenue was essentially unchanged. Management attributed processing and storage fee trends to a 3% increase in recurring annual storage revenue offset by a 15% decline in new domestic specimens processed year to date (16% in Q3).
- Nine-month cost of sales decreased 12%, partly reflecting fewer new specimens processed. Nine-month operating income declined 7%, while net income increased 35%, helped by lower interest expense and smaller marketable-securities losses than in 2025.
- Nine-month SG&A increased 5%, primarily due to a $1.98 million increase in legal fees and expenses. Q3 SG&A declined 3% year over year, although quarterly legal costs increased by $126,000.
- Operating cash flow declined to $3.64 million from $4.20 million. The company repaid $3.5 million on its revolving line and $129,517 on its term note during the nine months, while drawing $1.2 million on the line. No dividends or share repurchases were made in the period.
Outlook, risks, and unusual items
- Management expects cash, marketable securities, operating cash flow, and external capital sources to fund known cash needs for at least the next 12 months. It cautions that weaker revenue, higher expenses, or unavailable financing could require spending reductions or deferrals.
- The Duke University license agreement was terminated effective May 17, 2025, and the company says it is unlikely to pursue the related clinic and biopharmaceutical expansion through that agreement. The Cryo-Cell Institute is paused and the proposed Celle Corp. spin-off is on hold. The arbitration hearing concluded in late July 2026. The filing gives inconsistent timing for a decision: elsewhere it anticipates a ruling by the end of 2026 and in Note 12 says early 2027.
- Cryo-Cell seeks damages it says exceed $100 million; Duke asserts counterclaims for unspecified damages. The company says an unfavorable resolution could materially affect its business or financial results. Legal fees and related defense costs are not included in its loss-contingency estimate.
- The company disclosed that NYSE American notified it of noncompliance with continued listing standards in March 2026. The exchange accepted its compliance plan and extended the deadline to September 9, 2027; compliance is not assured. The filing warns of possible delisting and potential capital raising that could dilute shareholders.
- Management reported effective disclosure controls and no material change in internal control over financial reporting during the period. No off-balance-sheet arrangements material to investors were reported.
Key facts for investors to verify
- Progress toward NYSE American listing compliance before the September 9, 2027 deadline, and whether additional capital or share issuance will be required.
- The timing and outcome of the Duke arbitration, including potential exposure from Duke’s counterclaims and the status of the company’s claims.
- Whether new customer enrollments and recurring storage revenue stabilize, given the reported decline in new domestic specimens processed.
- Cash generation, working capital, covenant compliance, and the company’s ability to meet debt and future service obligations.
- The basis for management’s 12-month liquidity expectation and the status of the paused institute and Celle Corp. spin-off.