Cryoport, Inc. — 2019 Form 10-K
Reporting period: Fiscal year ended December 31, 2019; filed March 10, 2020. The fourth-quarter figures below are unaudited. Cryoport provides temperature-controlled logistics and, following its May 2019 Cryogene acquisition, biostorage services to life sciences markets.
Financial performance and position
| Metric | 2019 | 2018 |
|---|---|---|
| Revenue | $33.94 million | $19.63 million |
| Gross profit / gross margin | $17.35 million / 51.1% | $10.24 million / 52.2% |
| Operating loss | $17.68 million | $8.64 million |
| Net loss | $18.33 million; $0.55 per share | $9.56 million; $0.34 per share |
| Cash used in operations | $1.32 million | $3.35 million |
- Revenue increased 72.9%, driven primarily by biopharmaceutical growth and commercial shipments of KYMRIAH and YESCARTA. Biopharmaceutical revenue rose 63.9% to $27.0 million; reproductive medicine revenue rose 34.1% to $2.9 million. Cryogene contributed $3.03 million from its May acquisition date.
- Operating expenses increased substantially. The 2019 net loss included $16.5 million of stock-based compensation, including $9.6 million from accelerated vesting tied to financial performance targets. Gross margin declined, mainly reflecting higher logistics-center costs and stock compensation.
- At year-end, cash and cash equivalents were $47.2 million, short-term investments $47.1 million, and working capital $97.5 million. Management said these resources were expected to fund operations and capital expenditures for at least 12 months.
- Investing cash outflow was $62.9 million, including the $20.3 million Cryogene acquisition, investment purchases, and capital expenditures. Financing provided $74.2 million, largely from the June stock offering’s $68.8 million net proceeds.
- The $15 million convertible note plus accrued interest converted into common shares in December 2019; no convertible note remained at year-end. Operating lease liabilities totaled $4.77 million; finance lease liabilities totaled approximately $33,000.
Fourth-quarter and year-over-year changes
- Fourth-quarter 2019 revenue was $9.24 million versus $5.69 million in fourth-quarter 2018. Gross profit was $4.93 million; net loss was $0.95 million versus $2.26 million a year earlier.
- For the full year, the net loss widened by $8.78 million despite strong sales growth, as general and administrative, sales and marketing, and engineering expenses all rose sharply. Interest expense also increased, primarily due to the convertible note.
- The company added the Global Bioservices segment through Cryogene. For 2019, that segment generated $3.03 million in revenue and $437,000 in operating profit; Global Logistics Solutions generated $30.91 million in revenue and an $18.11 million operating loss.
Outlook, commentary, and risks
- No numerical revenue, earnings, or cash-flow guidance was provided. Management cited growth opportunities from clinical trials and commercialization of cell and gene therapies. It expected ZYNTEGLO shipments to ramp in 2020 and planned a Houston Global Supply Chain Center to become operational in fourth-quarter 2020.
- The filing identified COVID-19 as a potential risk to operations, logistics-center implementation, business development, and component supply; the effect was described as uncertain and not quantifiable.
- Key risks include continued losses and possible future financing needs; lengthy customer qualification and adoption cycles; dependence on major customers and third-party carriers; sole-source components; operational and specimen-loss liability; cybersecurity and regulatory exposure; and integration and facility risks related to Cryogene.
- Two customers represented 24.1% and 12.8% of 2019 revenue. One customer accounted for 80.2% of Global Bioservices revenue, although less than 10% of consolidated revenue. The company reported no legal proceeding expected to have a material adverse effect.
- An error in third-quarter 2019 stock-compensation expense was corrected in the fourth quarter, reducing fourth-quarter general and administrative expense by $765,099. Management concluded the error was not material to either quarter.
Important facts for investors to verify
- Whether the rapid revenue growth converts into improved margins and reduced operating losses as commercial therapy shipments scale.
- Cash consumption and the adequacy of liquidity after planned Houston and other infrastructure investments; note that management’s 12-month liquidity statement is not a profitability forecast.
- Customer concentration, Cryogene’s dependence on one customer, and the acquired business’s integration and operating performance.
- The share-count and dilution impact of the 2019 offering, note conversion, outstanding options and warrants, and the authorized $15 million repurchase program; no shares were repurchased in 2019.
- Execution of the planned 2020 facility expansion and the potential effects of COVID-19 on shipments, suppliers, customers, and operations.