BioLife Solutions, Inc. — Q1 2024 Form 10-Q
Business context and reporting period. Unaudited results cover the three months ended March 31, 2024. BioLife develops and supplies bioproduction tools and services for biologic and cell and gene therapies, including preservation media, cell-processing products, freezers, thawing devices, cold-chain shipping and storage services. The company reports one operating segment. Global Cooling remained in continuing operations for Q1; its sale on April 17, 2024 is a subsequent event.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Total revenue | $31.7 million | $37.7 million |
| Operating loss | $10.1 million | $13.6 million |
| Net loss | $10.2 million; $0.22 per share | $13.7 million; $0.32 per share |
| Net cash used in operating activities | $4.5 million | $2.7 million |
| Cash, cash equivalents and available-for-sale securities | $46.1 million at March 31 | $52.3 million at December 31, 2023 |
- Product revenue fell 21% to $24.8 million. Service revenue rose 14% to $5.1 million and rental revenue rose 12% to $1.8 million.
- Product, rental and service costs were $19.2 million; gross profit before separately reported intangible amortization was $12.6 million, approximately 39.6% of revenue. Management reported cost of revenue inclusive of acquired-technology amortization at 62% of revenue, versus 65% a year earlier.
- Operating expenses totaled $41.9 million, down 18%. Lower headcount-related expenses and lower amortization contributed; Q1 2024 also included $0.2 million of acquisition costs, while Q1 2023 included a $0.7 million contingent-consideration fair-value charge.
- Cash, cash equivalents and restricted cash decreased $5.6 million during Q1. Investing activities used $0.2 million and financing activities used $1.0 million.
- Total debt was $24.3 million, including $8.6 million current and $15.7 million long-term debt. The $20.0 million term loan matures in June 2026; the company reported compliance with its covenants at March 31.
Changes, outlook and risks
- Management attributed lower product sales to reduced biopharma capital spending, customer inventory destocking and a decline in ULT freezer sales through the largest distributor. Cell-processing revenue declined 15%; freezer-and-thaw revenue declined 33%.
- Management expects existing cash and other liquid assets to meet liquidity needs for at least 12 months from the filing date. No specific revenue or earnings guidance is provided. Additional financing may be pursued, but may not be available on reasonable terms.
- On April 17, BioLife sold Global Cooling for $1. The company funded approximately $4.9 million of cash for the transaction, repaid about $2.6 million of Global Cooling debt, and assumed certain liabilities. It estimated an $8.3 million disposal loss and approximately $10.7 million of transaction-related costs and other charges. Approximately $5.2 million of the expected costs were to be paid from operating cash in Q2.
- The transaction included a reduction in force affecting 47 employees, about 11% of full-time employees. BioLife expected approximately $1.6 million of reduction-in-force charges and approximately $4.5 million of stock-compensation expense for accelerated vesting of awards held by former employees who remained with Global Cooling.
- The April loan amendment removed Global Cooling as a loan party and imposed a $15 million limit on specified cash outflows and unsecured indebtedness related to the transaction. It also provides for a $500,000 termination fee if the loan is terminated before maturity.
- Disclosure controls and procedures were ineffective due to previously identified material weaknesses in internal control over financial reporting. Remediation was ongoing, with no material control changes reported during Q1.
- Customer concentration and supply concentration are notable: one customer represented 10% of Q1 revenue and another 11%; one supplier accounted for 13% of Q1 purchases. Management also cited economic uncertainty, high interest rates and customer purchasing patterns as business risks.
- The company corrected an immaterial prior-period stock-compensation error, increasing December 31, 2023 additional paid-in capital and accumulated deficit by $1.575 million each.
Important facts for investors to verify
- Whether the Global Cooling sale’s final disposal loss, cash costs and other Q2 charges differ from the estimates disclosed.
- Whether the sales decline and customer destocking persist, and whether service and rental growth can offset weaker product revenue.
- Progress in remediating material weaknesses in internal controls and any effect on future reporting.
- Liquidity, debt repayment capacity and compliance with the amended loan terms after the divestiture-related cash outflows.
- Changes in customer or supplier concentration, warranty exposure and the approximately $5.0 million estimated sales-tax liability.