BioLife Solutions, Inc. — 2015 Form 10-K
Reporting period: Fiscal year ended December 31, 2015. The filing is an annual report; it does not provide a separate set of fourth-quarter results. BioLife develops and sells biopreservation media for cells, tissues and organs, and launched its biologistex cold-chain logistics service in the third quarter of 2015.
Financial performance
| Metric | 2015 | 2014 | Change / context |
|---|---|---|---|
| Revenue | $6.45 million | $6.19 million | Up 4% |
| Core product sales | $6.36 million | $4.91 million | Up 29%; regenerative medicine revenue rose 45% |
| Contract manufacturing revenue | $0.09 million | $1.28 million | Down 93%; a major customer’s contract ended in May 2014 |
| Gross profit / margin | $3.81 million / 59.1% | $3.04 million / 49.0% | Improved mainly from higher-margin product mix |
| Operating expenses | $8.83 million | $6.17 million | Up 43%, including higher staffing and biologistex development and launch spending |
| Operating loss | $5.02 million | $3.14 million | Loss widened |
| Consolidated net loss | $5.00 million | $3.30 million | BioLife-attributable loss was $4.21 million versus $3.22 million |
| Basic and diluted loss per share | $0.35 | $0.31 | Per-share loss increased |
| Cash used in operating activities | $4.97 million | $3.16 million | Higher cash use |
| Cash, cash equivalents and short-term investments | $3.82 million | $9.94 million | Down $6.11 million |
| Current assets / current liabilities | $6.97 million / $1.73 million | $12.17 million / $1.26 million | Current assets declined, while current liabilities rose |
The balance sheet reported no debt at year-end; approximately $14.3 million of related-party notes and accrued interest had been converted to equity in 2014. Total liabilities were $2.51 million at December 31, 2015. The company reported an accumulated deficit of $64.3 million.
Changes, outlook and material matters
- Management said current cash and short-term investments were expected to fund operations through 2016, based on revenue and expense expectations, including biologistex. If revenue growth disappoints or expenses cannot be managed, additional debt or equity financing may be needed. The filing gives no formal revenue or earnings guidance.
- BioLife launched biologistex in 2015, combining reusable monitored smart shippers with a subscription-based tracking application. Management expected to continue funding the venture until its revenue could cover expenses. BioLife’s remaining capital contribution commitment was $2.2 million; the venture also had a minimum purchase commitment for about $2.6 million of shippers, of which $0.2 million had been purchased by year-end.
- Research and development activity was reported at approximately $3.1 million, including $1.7 million capitalized for internal-use software. The balance sheet included $1.70 million of internal-use software; $0.42 million of related costs remained unpaid at year-end. Capitalized software is to be amortized over three years once commercially deployed.
- Customer concentration remains a risk: one distributor contributed about 10% of 2015 revenue, and three customers represented 53% of year-end gross receivables. Foreign customers accounted for 21% of revenue.
- BioLife cited dependence on successful adoption and commercialization of customers’ cell and tissue therapies, competition from larger companies, reliance on outside suppliers, and shared decision-making and execution risks in the SAVSU joint venture. HypoThermosol’s U.S. patent covering the product was due to expire in April 2019; the company said it did not plan to reformulate the product or seek patent-term extension.
- Several former-employee and related lawsuits filed in 2007 remained in discovery; BioLife said it would vigorously defend its position. The filing also states that ordinary-course proceedings were not currently material.
- Management concluded disclosure controls and internal control over financial reporting were effective at year-end. The independent auditor gave an unqualified opinion on the financial statements but did not attest to internal-control effectiveness.
Investor facts to verify
- Whether core product growth and improved gross margin can persist as contract manufacturing has largely fallen away.
- Actual biologistex sales, unit economics, ongoing cash requirements, and fulfillment of the remaining contribution and shipper-purchase commitments.
- Cash runway and financing needs against the company’s stated expectation of funding operations through 2016.
- How much of the reported software asset becomes operational and when amortization begins, including the effect on future expenses and cash flows.
- Customer and receivables concentration, the status and potential exposure of legacy litigation, and the impact of HypoThermosol patent expiration.
- Potential dilution: 7.20 million warrants and 2.56 million options were outstanding at year-end; two stockholders together held approximately 61.5% of shares, according to the filing.