Cryoport, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Amounts are in U.S. dollars; financial statement amounts below are in millions unless otherwise noted. Cryoport provides temperature-controlled supply-chain services, logistics, biostorage and cryogenic equipment for life sciences. Results include MVE Biological Solutions and CRYOPDP, acquired October 1, 2020.
Key financial results
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Revenue | $53.3 | $9.8 |
| Gross profit / gross margin | $24.6 / 46.1% | $5.3 / 53.8% |
| Operating loss | $(1.1) | $(3.6) |
| Net loss | $(3.5) | $(3.9) |
| Net loss attributable to common stockholders | $(5.7), or $(0.13) per diluted share | $(3.9), or $(0.11) per diluted share |
| Adjusted EBITDA (non-GAAP) | $7.0 | $(1.8) |
| Operating cash flow | $(6.0) | $1.1 |
Revenue grew 445%, largely because the 2020 acquisitions contributed $26.5 million from MVE and $13.5 million from CRYOPDP. Management reported organic revenue of $13.2 million, up 35.3%. Service revenue was $26.8 million; product revenue was $26.5 million. Biopharma/pharma generated $42.4 million, animal health $9.0 million and reproductive medicine $1.9 million.
Gross margin declined to 46.1% from 53.8%, reflecting the acquired businesses’ margin profiles. SG&A rose to $21.4 million, including higher acquisition-related amortization and expanded infrastructure. Engineering and development expense increased to $4.3 million. Adjusted EBITDA is a company-defined non-GAAP measure; see the filing’s reconciliation and exclusions.
Balance sheet, liquidity and debt
- Cash and cash equivalents were $85.5 million; short-term investments were $267.7 million. Combined, these totaled $353.2 million at quarter-end.
- Working capital was $381.9 million. Current assets were $419.7 million and current liabilities $37.9 million.
- Total assets were $819.7 million; total liabilities were $172.4 million; stockholders’ equity was $647.3 million.
- Convertible senior notes had $115.0 million principal due in 2025 and a net carrying value of $111.5 million. The notes bear 3.00% cash interest and are initially convertible at approximately $23.91 per share.
- The CRYOPDP acquisition included an interest-free note payable; its net carrying value was $3.5 million. Lease liabilities totaled approximately $16.7 million.
- Operating cash use was $6.0 million. Investing cash use of $215.4 million was mainly purchases of short-term investments; financing provided $271.4 million, including $269.8 million net proceeds from a January public offering.
Changes, outlook and risks
- Comparability: The sharp year-over-year revenue increase principally reflects the acquisitions, not solely organic growth. Organic revenue increased 35.3%, while gross margin compressed.
- Equity and potential dilution: The offering issued 4.36 million common shares. During the quarter, 50,000 Series C preferred shares converted into 1.31 million common shares. The preferred stock carries a 4% paid-in-kind dividend; $2.2 million was recorded for the quarter. The filing lists approximately 18.2 million shares reserved for options, restricted stock units, preferred conversion and convertible notes.
- Management outlook: Management believes available cash, investments and projected cash flows can meet operating and capital needs for at least 12 months, but says additional capital may be needed before sustained profitability and cannot be assured on acceptable terms. No specific quarterly or annual revenue or earnings guidance is provided.
- Growth indicators: Cryoport supported 543 clinical trials and seven commercial therapies at quarter-end. Management estimated that up to 21 supported cell and gene therapies in clinical trials could file for regulatory approval during 2021; this is an estimate, not a guarantee of approvals or revenue.
- Risks and uncertainties: COVID-19 may disrupt customer trials, demand and supply chains. Management also cites uncertainty around acquisition integration, future capital needs, foreign exchange and market conditions. One customer represented 12.5% of quarterly revenue; one customer represented 10.5% of receivables. Foreign customers generated about 48% of revenue.
- Other notable items: Comprehensive loss was $8.0 million, including a $3.8 million foreign-currency translation loss. The CRYOPDP purchase-price allocation remained open. India tax authorities were examining specified prior tax years. The company reported no known legal proceeding expected to have a material adverse effect and no Senior Notes default. On April 1, 2021, it acquired Australian logistics provider CTSA for approximately $5.0 million, with a contingent earnout.
Important facts for investors to verify
- How much future growth is organic versus attributable to MVE, CRYOPDP and other acquisitions, and whether acquired businesses meet integration and return expectations.
- Whether gross margins and operating cash flow improve as revenue scales; Q1 operating cash use included sizeable working-capital outflows.
- Whether supported clinical trials advance to commercial approvals and generate recurring revenue, rather than relying on pipeline estimates.
- The potential effect of preferred dividends, convertible notes, options and other reserved shares on future common-stock dilution.
- How COVID-19, foreign exchange exposure, customer concentration, acquisition accounting and the open purchase-price allocation affect future results.