BioLife Solutions, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Unaudited results are consolidated; amounts below are in U.S. dollars unless noted. BioLife develops and supplies bioproduction tools and services for cell and gene therapy and broader biopharma markets.
Financial performance
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $40.5 million | $31.2 million | $76.8 million | $48.1 million |
| Operating loss | $76.3 million | $4.6 million | $83.9 million | $5.5 million |
| Net income (loss) | $(72.6) million | $7.9 million | $(79.6) million | $6.8 million |
| Net loss per diluted share | $(1.71) | $0.19 income | $(1.89) | $0.17 income |
| Cash used in operations | Not presented quarterly | Not presented quarterly | $17.8 million | $5.9 million |
- Q2 revenue rose 30%; first-half revenue rose 60%. Product revenue was $34.2 million in Q2 and $64.6 million for the first half. Management cited cell-processing adoption, acquired product lines, storage services, and rentals as growth drivers.
- Direct cost of product, rental, and service revenue was $26.2 million in Q2 and $50.6 million in the first half. The resulting contribution margin before intangible amortization was approximately 35% and 34%, respectively, versus approximately 41% and 46% in 2021. The filing attributes pressure to a greater mix of lower-margin acquired products, higher warranty expense, and material costs.
- Q2 and first-half results included $69.9 million of non-cash intangible-asset impairment charges. Excluding this charge, operating loss would still include other operating expenses; the filing does not present an adjusted operating result.
- At June 30, cash and cash equivalents were $24.0 million, restricted cash was $0.03 million, and available-for-sale securities totaled $23.0 million. Cash, cash equivalents, and securities together were $47.0 million, down from $69.9 million at December 31, 2021. Current assets were $118.1 million and current liabilities $33.3 million.
- Total debt was $7.6 million, including $1.4 million current and $6.2 million long-term. Total liabilities were $58.1 million.
- First-half investing cash use was $27.3 million, mainly reflecting $23.1 million invested in available-for-sale securities and capital spending. Financing cash use was $0.5 million.
Material changes and unusual items
- The $69.9 million impairment followed a decline in market capitalization, revised forecasts amid higher input costs and supply-chain challenges, and abandonment of an early-stage in-process R&D project. The impairment reduced the carrying value of acquired intangible assets; goodwill was not impaired.
- Contingent-consideration remeasurement produced a $5.7 million first-half benefit, primarily reflecting the lower BioLife share price because certain earnouts are payable in shares. A contingent-consideration payment also included issuance of 64,130 shares.
- Operating cash use increased from $5.9 million to $17.8 million year over year, which management primarily attributed to the timing of working-capital collections and payments.
- Revenue growth includes contributions from the 2021 Global Cooling and Sexton acquisitions. Management reported 36% organic growth in product revenue for the first half; organic cell-processing revenue grew 49% and organic freezer-and-thaw revenue grew 9%.
Outlook, risks, and controls
- Management believes available cash, cash equivalents, and other liquid assets will be sufficient for liquidity needs for at least 12 months from the filing date. It may seek debt or equity financing for acquisitions or strategic investments; financing may not be available on acceptable terms.
- No specific revenue or earnings guidance was provided. Management expects G&A, sales and marketing, and R&D expenses to rise as the company supports and develops its expanded product portfolio. Cost of product revenue may fluctuate with volumes, input and transportation costs, customer mix, and product mix.
- COVID-19-related supply disruptions, including sheet metal and semiconductor-component shortages, had increased supplier prices and caused production stoppages. Further disruption could affect manufacturing, shipping, costs, and results.
- Management identified disclosure controls as ineffective due to material weaknesses in internal control over financial reporting. The weakness concerning logical access to certain financial systems was reported remediated by June 30; other weaknesses remained, including those involving staffing and oversight, complex accounting, assets held for lease, valuation analyses, and financial-statement presentation and disclosure.
- The filing reported no material change to previously disclosed risk factors, no significant pending or threatened litigation known to management, and no off-balance-sheet arrangements.
Important facts for investors to verify
- Whether revenue growth—particularly organic growth—continues and whether margins recover as product mix, warranty costs, and supply constraints evolve.
- The assumptions behind the $69.9 million intangible impairment and the potential for further impairment if forecasts or market conditions worsen.
- Cash conversion and working-capital trends, including inventory and receivables, and the company’s liquidity needs if it pursues acquisitions or strategic investments.
- Progress in remediating the remaining material weaknesses and the timing of management’s conclusion that controls are effective.
- The extent and persistence of supply-chain disruption and its effects on production, costs, and delivery schedules.