BioLife Solutions, Inc. — 2023 Form 10-K
Business context and period. This annual report covers the year ended December 31, 2023, with comparisons to 2022. BioLife supplies bioproduction tools and services for cell and gene therapy and broader biopharma markets, including cell-processing products, freezers and thaw systems, and biostorage and cold-chain services. The company reports one operating segment. It began seeking a divestiture of its freezer product lines during 2023.
Key financial results
| Metric | 2023 | 2022 | Change |
|---|---|---|---|
| Total revenue | $143.3 million | $161.8 million | Down 11% |
| GAAP gross profit / margin | $44.0 million / 30.7% | $48.8 million / 30.2% | Margin up 0.5 percentage points |
| Operating loss | $70.8 million | $145.5 million | Loss narrowed |
| Net loss | $66.4 million | $139.8 million | Loss narrowed |
| Net loss per share, diluted | $1.52 | $3.29 | Loss per share narrowed |
| Adjusted EBITDA (non-GAAP) | $(4.7) million | $3.6 million | Declined |
| Cash used in operating activities | $12.5 million | $8.5 million | Use increased |
- Revenue mix: Product revenue was $117.7 million, service revenue $17.6 million, and rental revenue $8.0 million. Freezer and thaw product revenue fell 24% to $50.6 million; cell-processing product revenue fell 4% to $65.8 million; biostorage service revenue increased 8% to $16.5 million.
- Costs and unusual items: Operating expenses included $15.5 million of asset impairment charges, compared with $110.4 million in 2022. The 2023 impairment included $9.7 million for freezer-business property and equipment and $5.8 million for definite-lived intangible assets. The company also recorded a $5.7 million inventory write-down.
- Other income: A $5.1 million non-cash gain arose from settlement of the Global Cooling acquisition escrow. The company recorded a $2.2 million benefit from changes in the fair value of contingent consideration, whose remaining liability was written off.
- Balance sheet and liquidity: At year-end, cash and cash equivalents were $35.4 million and available-for-sale securities were $16.8 million, totaling $52.3 million with restricted cash. Total current assets were $120.6 million and current liabilities $42.2 million. Total assets were $412.7 million; shareholders’ equity was $337.7 million.
- Debt: Total debt was $25.1 million, including $6.8 million classified as current. Debt and interest contractual obligations were $25.2 million. The $20 million term loan matures in 2026; its stated implied rate was 6.7% at December 31, 2023. The loan is secured by substantially all assets of BioLife and specified subsidiaries, excluding intellectual property.
Changes, outlook and risks
- Revenue fell as customers reduced freezer purchases and managed cash and inventory amid higher interest rates and weaker biopharma spending. Cell-processing sales also reflected customer and distributor destocking. The same customer contributed 16% of revenue, down from 18%; CryoStor represented 39% of revenue and the 780XLE freezer 19%.
- Management stated that available liquidity, operating cash flows, securities and credit lines were expected to meet requirements for at least 12 months from the filing date. It expected 2024 operating expenses to decrease as it pursued the freezer divestiture, while continuing investment in other product lines and commercial capabilities. No specific revenue or earnings guidance was provided.
- Management expected the freezer-business divestiture to conclude in the first half of 2024, but no buyer or sale agreement had been secured as of the filing. A sale below carrying value, failure to sell, or liquidation could cause further charges or costs.
- Management reported material weaknesses in internal control over financial reporting, including control-environment and resourcing deficiencies, weaknesses in certain financial statement processes, and IT change-management controls. Disclosure controls were deemed ineffective; the auditor issued an adverse opinion on internal control, while giving an unqualified opinion on the financial statements. Remediation was underway but not yet demonstrated as effective.
- The company recorded an estimated $5.4 million sales-tax liability for historical activity in certain states; management noted the final liability could exceed its estimate. The company also disclosed a January 2024 term-loan covenant default relating to deposit-account requirements; the lender waived the defaults and amended the agreement on February 26, 2024.
- Other key risks include customer and product concentration, dependence on outside and some single-source suppliers, competition, potential future impairment of goodwill or intangible assets, cybersecurity threats, and continued operating losses and cash outflows.
Important facts for investors to verify
- Progress, terms, net proceeds and any further impairment or shutdown costs related to the freezer-business divestiture.
- Whether cash burn moderates and liquidity remains adequate, considering working capital, capital spending and debt payments.
- Remediation and independent testing of the disclosed material weaknesses, particularly revenue recognition, procure-to-pay and financial-system change controls.
- Final sales-tax exposure and the status of the amended term-loan agreement and ongoing covenant compliance.
- Customer demand, distributor inventory levels and revenue concentration in CryoStor, freezers and the largest customer.