BioLife Solutions, Inc. — 2021 Form 10-K Summary
Business context and reporting period. This annual report covers the year ended December 31, 2021; it is not a quarterly report. BioLife develops and sells bioproduction tools and services for cell and gene therapy and broader biopharma markets, including cell-processing products, freezers and thaw systems, biological storage, and cold-chain services. Results include Global Cooling from May 3 and Sexton from September 1, 2021.
Financial performance
| Metric | 2021 | 2020 |
|---|---|---|
| Total revenue | $119.2 million | $48.1 million |
| Cost of product, service and rental revenue | $82.1 million | $20.6 million |
| Gross profit / gross margin | $37.0 million / 31% | $27.4 million / 57% |
| Operating loss | $33.9 million | $5.6 million |
| Net income (loss) | $(7.6) million | $2.7 million |
| Diluted earnings (loss) per share | $(0.20) | $(0.03) |
| Cash from (used in) operating activities | $(4.6) million | $6.6 million |
- Revenue rose 148%. The filing attributes $40.9 million of the increase to the Global Cooling and Sexton acquisitions, and $30.2 million primarily to organic growth, including storage services and biopreservation media.
- Freezer and thaw product revenue increased 318% to $56.6 million; cell-processing product revenue rose 45% to $45.0 million. Service revenue was $9.8 million and rental revenue $7.4 million.
- Gross margin fell from 57% to 31%, primarily reflecting the acquired businesses’ product mix, Global Cooling warranty costs and supply-chain-related costs. Operating expenses also increased substantially, including R&D of $11.8 million, sales and marketing of $14.0 million, and general and administrative expense of $32.4 million.
- Cash and cash equivalents were $69.9 million at year-end, down from $90.4 million. Current assets were $125.9 million and current liabilities $40.4 million. Management stated available cash, operating cash flow and credit lines were expected to meet liquidity needs for at least 12 months.
- Year-end debt was $7.2 million, including $0.9 million current and $6.4 million long-term. The company also reported $19.2 million of operating lease liabilities and $10.0 million of contingent consideration.
- Total assets were $554.1 million, including $224.7 million of goodwill and $152.1 million of net intangible assets. Shareholders’ equity was $480.1 million.
Material changes, outlook and risks
- Acquisitions and dilution: Global Cooling was acquired for consideration of approximately $234.9 million, primarily BioLife shares; Sexton was acquired for approximately $39.9 million, also involving shares. Common shares outstanding increased from 33.0 million to 41.8 million during 2021. The company continued to evaluate further acquisitions.
- Unusual items: Net results included a $20.1 million income tax benefit, primarily related to losses and release of valuation allowance following the Global Cooling acquisition, and a $6.5 million non-cash gain from remeasuring BioLife’s existing Sexton investment. Warranty expense included a $9.8 million provision; year-end warranty liability was $9.4 million. These items affect comparability and should be considered when assessing underlying performance.
- Management outlook: The filing provides no numerical revenue or earnings guidance. Management expected 2022 operating expenses to increase as the company expands its tools business, product lines and commercial capabilities. It also expected ongoing investment in R&D, facilities and growth; future performance will depend partly on integration and cross-selling from acquisitions.
- Supply chain and COVID-19: Sheet-metal and semiconductor-component shortages reduced freezer production and increased costs in the second half of 2021. Management said sheet-metal risks were substantially mitigated and supplier arrangements secured semiconductor components for the foreseeable future, but did not assure that disruptions would not recur. The company reported inventory it believed sufficient for six to nine months of forecast demand.
- Concentration: One customer accounted for 17% of 2021 revenue; third-party distributors accounted for 46%. Two customers represented 32% of year-end gross accounts receivable.
- Financial reporting controls: Management concluded internal control over financial reporting and disclosure controls were not effective at year-end due to multiple material weaknesses, including in entity-level controls, IT access, complex accounting, lease assets, acquisition valuations and financial statement disclosures. The auditor issued an adverse opinion on internal control. The auditor separately issued an unqualified opinion on the financial statements. Global Cooling and Sexton were excluded from management’s controls assessment during their first year after acquisition.
- Other risks: The filing highlights acquisition integration and impairment risk, fixed-cost exposure, competition, supplier dependence, product liability and warranty claims, cybersecurity, potential limitations on tax-loss utilization, and stock-price volatility. The company reported no known legal proceedings expected to have a material adverse effect.
Important facts for investors to verify
- Whether acquired businesses can sustain revenue growth, improve margins and deliver anticipated integration and cross-selling benefits.
- Whether freezer supply constraints and elevated warranty costs have eased, and how they affect future production, margins and cash requirements.
- How much of the reported tax benefit and acquisition-related gains are nonrecurring, and how operating losses and cash burn evolve.
- Progress in remediating material weaknesses, including whether controls at Global Cooling and Sexton are incorporated into the company-wide control environment.
- Customer and distributor concentration, accounts-receivable collections, and the recoverability of goodwill, intangible assets and contingent consideration.