BioLife Solutions, Inc. — Form 10-Q Summary
Business context and period. This unaudited filing covers the quarter and six months ended June 30, 2015. BioLife develops and sells cell- and tissue-preservation media, including CryoStor and HypoThermosol, and is developing biologistex, a cloud-based cold-chain service and smart-shipping platform through a joint venture with SAVSU.
Financial performance and position
| Metric | Q2 2015 | Six months 2015 |
|---|---|---|
| Total revenue | $1.497 million, up 24% year over year | $2.997 million, down 9% |
| Gross profit and margin | $819,000; 55% (45% in 2014) | $1.701 million; 57% (44% in 2014) |
| Operating loss | $1.156 million | $2.316 million |
| Net loss attributable to BioLife | $994,000; $0.08 per share | $2.026 million; $0.17 per share |
| Cash used in operating activities | Not separately presented for the quarter | $2.535 million |
- Proprietary product revenue was $1.433 million in Q2, up 33%; six-month core product revenue was $2.911 million, up 32%. Contract-manufacturing revenue fell sharply, contributing to the six-month decline in total revenue.
- At June 30, cash and cash equivalents were $3.896 million and short-term investments were $2.956 million, totaling $6.853 million. Total assets were $13.870 million; total liabilities were $1.993 million, including $1.160 million of current liabilities. The filing reports no outstanding debt after the prior-year conversion of notes to equity.
- Cash increased $1.358 million in the first half, principally as investment sales exceeded purchases; operating activities consumed $2.535 million. The company spent $497,000 in cash on internal-use software development and capitalized $0.8 million of software costs during the first half.
Changes versus the prior comparable period
- Q2 revenue and gross margin improved year over year, driven by proprietary media sales and lower low-margin contract-manufacturing revenue. For the first half, core product growth was more than offset by the loss of contract-manufacturing revenue, including a contract terminated in May 2014.
- First-half operating expenses rose 48% to $4.018 million, with higher research and development, sales and marketing, and general and administrative spending. Management attributed increases to added personnel, biologistex development and launch activity, and related costs.
- First-half net loss attributable to BioLife widened from $1.443 million to $2.026 million. Management cited lower first-quarter contract-manufacturing revenue and increased headcount and biologistex spending.
- Operating cash use increased from $1.768 million in the first half of 2014 to $2.535 million in 2015. The 2014 period included $13.6 million of net proceeds from a public stock offering; 2015 financing cash flow was about $80,000 from option exercises.
Outlook, risks and unusual items
- Management estimated 20%–30% growth in 2015 core product revenue and a full-year gross margin of 55%–60%; it expected biologistex service revenue to begin in Q3 2015.
- Management expected year-end cash, cash equivalents and short-term investments of approximately $4 million, considered available liquidity sufficient for the foreseeable future, and did not expect to raise operating capital in 2015 or 2016. These are forward-looking expectations, not guarantees.
- Biolife’s joint venture had a $2.4 million commitment to purchase smart containers from SAVSU. BioLife also agreed to pay SAVSU $1.0 million subject to performance requirements; $0.4 million had been recorded by June 30, 2015.
- Revenue can fluctuate with customers’ clinical-trial enrollment and orders; sales are concentrated among a relatively small number of customers and market sectors. One customer represented about 15% of Q2 product revenue, and two customers represented about 29% of gross receivables at period-end.
- BioLife reported approximately 200 preclinical validation projects and human clinical trials using its products, including programs in advanced clinical stages. Adoption and project activity do not assure future commercial revenue.
- The company had 7.428 million warrants outstanding and 2.602 million options outstanding; potential dilution is material to monitor. The filing reports no material litigation and no off-balance-sheet arrangements.
Important facts for investors to verify
- Whether core product growth and the stated 20%–30% 2015 growth outlook are achieved, and how biologistex contributes to revenue and cash use.
- Whether gross margins remain within management’s 55%–60% outlook as product mix and manufacturing utilization change.
- Cash burn, investment liquidity, and the timing and full cost of the $2.4 million smart-container commitment and SAVSU-related payments.
- Customer concentration, clinical-trial progress, and the conversion of reported validation projects into recurring commercial orders.
- Potential dilution from outstanding options and warrants, and the assumptions supporting management’s no-financing expectation for 2015–2016.