BioLife Solutions, Inc. — 2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020; comparisons are with the year ended December 31, 2019. This is an annual report, not a standalone fourth-quarter filing. Amounts below are in U.S. dollars.
Business context
BioLife develops and sells bioproduction tools and services for the cell and gene therapy (CGT) industry, including biopreservation media, automated thawing devices, cold-chain shipping systems, freezers and storage services. Acquisitions broadened the portfolio; SciSafe, acquired October 1, 2020, contributed biological and pharmaceutical storage services.
Financial performance and liquidity
| Metric | 2020 | 2019 |
|---|---|---|
| Total revenue | $48.1 million | $27.4 million |
| Operating loss | $(5.6) million | $(0.2) million |
| Net income (loss) | $2.7 million | $(1.7) million |
| Operating cash flow | $6.6 million | $1.2 million |
| Cash and cash equivalents at year-end | $90.4 million | $6.4 million |
- Revenue increased 76%. Product revenue was $44.5 million, rental revenue $1.8 million and storage service revenue $1.8 million. Biopreservation media revenue rose 32% to $30.9 million; freezer and accessory revenue was $11.8 million, including a full-year contribution from the 2019 CBS acquisition.
- Cost of product, rental and service revenue was $20.6 million, or 43% of revenue, versus $8.8 million, or 32%, in 2019. The resulting gross margin was approximately 57%, compared with 68%. Management attributed the mix-related margin decline to acquired product and service lines having higher costs than biopreservation media.
- Operating expenses were $53.7 million, up 94%, including R&D of $6.7 million, sales and marketing of $6.4 million, G&A of $14.6 million, and intangible amortization of $3.0 million. Management expects these expenses to increase as the business expands.
- Net income included a $3.3 million income tax benefit related to SciSafe acquisition accounting. Other income included a $3.6 million favorable change in warrant liability fair value and a $1.3 million investment fair-value gain. Basic EPS was $0.09; diluted EPS was a loss of $0.03, reflecting the filing’s two-class and warrant-related EPS calculations.
- Operating cash flow improved to $6.6 million. Investing activities used $24.7 million, including the SciSafe acquisition, strategic investments and capital expenditures. Financing activities provided $102.1 million, principally from equity issuance.
- Current assets were $114.7 million and current liabilities $15.6 million. Total liabilities were $29.6 million. Loans payable totaled $1.3 million; the filing also reports operating and financing lease liabilities with a combined present value of approximately $9.9 million. No material off-balance-sheet financing arrangements were reported.
- Cash rose primarily after a $20.0 million private placement and a July public offering that generated approximately $80.2 million net proceeds. Shares outstanding increased from 20.8 million at year-end 2019 to 33.0 million at year-end 2020.
Changes, outlook and key risks
- Revenue growth reflects biopreservation media adoption, SciSafe’s fourth-quarter contribution and a full year of operations for three businesses acquired in 2019. Acquisitions diversified revenue, but CryoStor still represented approximately 60% of 2020 revenue, down from 74% in 2019. One customer accounted for 13% of revenue, versus 15% in 2019.
- COVID-19 affected demand unevenly: first-quarter media sales benefited from customer safety-stock purchases; clinical trial and lab disruptions weighed on the second and third quarters; media purchasing improved in the fourth quarter. Restrictions, customer budget constraints and limited access to sites hurt sales of thawing and freezer equipment and cold-chain products. Management reported no significant supply interruptions to date, but noted continuing uncertainty.
- Management said existing cash was adequate for at least the next 12 months, absent additional acquisitions, and expected 2021 operating expenses to rise. Revenue may fluctuate with customer ordering, clinical development and regulatory progress. The filing does not provide specific revenue or earnings guidance.
- On March 19, 2021, after year-end, BioLife agreed to acquire Global Cooling for 6,646,870 shares, representing 19.9% of pre-agreement shares outstanding. Closing remained subject to customary conditions, including Global Cooling stockholder and regulatory approvals; completion and expected benefits were not assured.
- Management reported that disclosure controls and internal control over financial reporting were not effective at year-end because a material weakness in accounting for certain financial instruments had not been fully remediated. The independent auditor issued an unqualified opinion on the financial statements, but was not required to audit internal control effectiveness.
- Other notable risks include acquisition integration and impairment, customer and product concentration, higher acquired-business cost structures, supplier and manufacturing dependence, competition, and potential COVID-related disruption. The company reported no currently known legal proceedings expected to have a material adverse effect.
Important facts for investors to verify
- Whether revenue growth and margins improve as acquired businesses are integrated, and how much growth is organic versus acquisition-related.
- Whether the material weakness in financial reporting controls is remediated, and whether additional accounting adjustments or restatements arise.
- Cash use, future capital needs and dilution from acquisition consideration, equity compensation or further financing.
- Global Cooling merger status, final terms, closing conditions and realized operating benefits.
- Customer concentration, CryoStor’s continuing share of revenue, and the impact of COVID-19 on clinical activity, equipment sales and supply costs.
- Valuation assumptions underlying $7.2 million of contingent consideration liabilities and $58.4 million of goodwill, including acquired-business revenue expectations.