BioLife Solutions, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; unaudited. BioLife develops and supplies bioproduction tools and services for cell and gene therapy and broader biopharma markets, including cell-processing products, freezers and thaw systems, and storage services.
Financial results and liquidity
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Revenue | $37.7 million | $36.2 million |
| Operating loss | $13.6 million | $8.0 million |
| Net loss | $13.7 million | $7.4 million |
| Loss per diluted share | $0.32 | $0.18 |
| Cash used in operating activities | $2.7 million | $7.9 million |
- Revenue increased 4%. Product revenue was $31.6 million, service revenue $4.5 million, and rental revenue $1.6 million.
- Cell-processing product revenue grew 27% to $19.0 million; freezer and thaw product revenue fell 19% to $12.4 million. Service revenue rose 45%, while rental revenue fell 40%.
- Revenue less reported product, rental, and service costs was $14.0 million, or approximately 37% of revenue, versus $11.8 million, or approximately 33%, in Q1 2022. These cost figures exclude separately reported intangible amortization.
- Operating expenses increased 16% to $51.3 million. G&A rose 29% and sales and marketing rose 32%; stock-based compensation was $7.4 million, up from $5.4 million.
- At March 31, cash, cash equivalents, and available-for-sale securities totaled $56.9 million, down from $64.1 million at year-end. Current assets were $132.8 million and current liabilities $47.3 million.
- Total debt was $24.9 million, including $23.7 million long-term debt. The company reported a 6.8% rate on its $20 million 2022 term loan 3 and stated that up to $30 million of additional borrowing capacity was available, subject to the agreement’s conditions.
- Investing activities provided $2.9 million, primarily reflecting securities maturities, partly offset by purchases of securities and $3.3 million of property and equipment. Cash and restricted cash decreased $0.3 million during the quarter.
Changes, outlook, and risks
- Management attributed cell-processing growth to continued customer adoption in the CGT market. Lower freezer and thaw sales reflected reduced ULT freezer sales; lower rental revenue reflected the runout of a major COVID-19 vaccine-material storage agreement.
- Management believes available liquidity is sufficient for at least 12 months from filing. It may seek debt or equity capital for acquisitions or strategic investments; additional financing may not be available on reasonable terms. No numerical revenue or earnings guidance was provided.
- Management expects G&A, sales and marketing, and R&D expenses to increase as the company supports growth and expands its offerings. Supply-chain constraints, particularly for electrical components, remained a risk, although management said supply was sufficient for the foreseeable future.
- The company recorded an estimated $4.4 million liability for sales taxes relating primarily to 2019–2022, and said the timing of settlement was uncertain. It corrected prior-period sales-tax errors deemed immaterial; Q1 2022 comparative results reflect those corrections.
- Disclosure controls were deemed ineffective because of previously identified material weaknesses involving control environment and oversight, financial-system access, complex accounting, revenue and procure-to-pay processes, and indirect-tax accounting. Remediation was ongoing.
- Other unusual earnings comparisons include a $0.7 million contingent-consideration expense in Q1 2023 versus a $3.3 million benefit in Q1 2022. The company reported no material pending litigation, no material changes to its previously disclosed risk factors, and no off-balance-sheet arrangements.
Important facts for investors to verify
- Whether cell-processing growth can continue and offset weaker freezer sales and reduced rental revenue.
- Progress in remediating material weaknesses and the effect of improved controls on reporting reliability.
- Actual sales-tax exposure, payment timing, and any further revisions to the estimated liability.
- Cash burn, inventory levels, capital spending, and compliance with term-loan conditions as the business expands.
- How rising operating expenses and stock-based compensation affect the path to profitability; the filing provides no quantified profitability guidance.