BioLife Solutions, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; comparisons are with Q1 2020 unless otherwise noted. BioLife develops and supplies bioproduction tools and services for the cell and gene therapy industry, including preservation media, thawing devices, shipping containers, freezer technology, and biological-material storage.
Financial results and position
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Revenue | $16.8 million | $12.2 million; up 39% |
| Product revenue | $13.8 million | $11.7 million |
| Service revenue | $2.2 million | None reported |
| Rental revenue | $0.9 million | $0.4 million |
| Gross profit and margin | $9.3 million; 55% | $7.6 million; 62% |
| Operating income (loss) | $(1.0) million | $0.4 million |
| Net income (loss) | $(1.1) million | $22.3 million |
| Basic earnings (loss) per share | $(0.03) | $0.87 |
| Cash from operating activities | $1.8 million | $0.7 million |
| Cash used in investing activities | $4.4 million | $1.2 million |
At March 31, 2021, cash and cash equivalents were $89.0 million, down from $90.4 million at year-end 2020. Current assets were $116.5 million and current liabilities $16.4 million. Total assets were $240.0 million; total liabilities were $31.2 million and shareholders’ equity was $208.8 million. Loans payable totaled $2.3 million; the company also reported operating and finance lease liabilities. Management said current cash should meet liquidity needs for the foreseeable future, while noting it may raise capital for acquisitions or strategic investments.
Changes, outlook, and notable items
- Growth reflected the SciSafe acquisition, freezer sales, and higher biopreservation-media revenue. CryoStor products accounted for 48% of revenue, down from 66% a year earlier. No individual customer represented more than 10% of quarterly revenue in either period.
- Cost of revenue rose 65% to $7.6 million, faster than revenue, and gross margin fell to 55% from 62%. Management attributed the margin decline to a greater contribution from lower-margin acquired product lines.
- Operating expenses increased 51% to $17.8 million. General and administrative expense rose 54%, reflecting SciSafe, infrastructure, staffing, IT, and stock compensation; acquisition costs were $1.0 million, primarily associated with Global Cooling.
- The prior-year net income included a $21.9 million noncash gain from a change in the fair value of warrant liabilities. All remaining warrants were cashlessly exercised in March 2021; the company reported no warrants outstanding at quarter-end. This makes the reported year-over-year net-income comparison unusually distorted.
- Management expects research and development, sales and marketing, and general and administrative expenses to increase as the company expands and supports its broader acquired product portfolio. It expects revenue diversification to continue, but cautioned that customer order timing, development progress, and regulatory approvals can cause quarterly fluctuations. No numerical revenue or earnings guidance was provided.
- On May 3, 2021, after quarter-end, BioLife completed its Global Cooling acquisition, issuing 6,038,252 common shares and placing another 598,218 shares in escrow. The acquisition accounting and pro forma results were not yet available in this filing. Global Cooling’s former CEO became BioLife’s President and COO; the CEO and CFO retained their respective CEO and CFO roles.
- COVID-19 continued to pose risks involving supply chains, logistics, customer activity, staffing, and access to capital. The filing reported no material change to previously disclosed risk factors and no currently known material litigation.
- Disclosure controls were assessed as ineffective because a previously identified material weakness in accounting for certain financial instruments had not been fully remediated. Management described ongoing remediation, including risk assessment, added technical resources, and improved controls.
Important facts for investors to verify
- Whether acquired businesses deliver sustained growth and whether revenue diversification improves margins, given the Q1 gross-margin decline.
- The effect of Global Cooling’s share consideration on dilution, and the acquisition’s eventual purchase-price allocation, pro forma results, and integration costs.
- Whether operating cash generation remains positive as capital spending and investment in rental equipment continue.
- Progress in remediating the material weakness and the timing of any conclusion that disclosure controls are effective.
- The status of the acquired SciSafe PPP loan forgiveness request and the potential timing and amount of contingent acquisition consideration.
- How COVID-19-related supply-chain and customer disruptions, as well as quarterly order variability, affect results.