BIOLIFE SOLUTIONS INC Q1 FY2024 earnings call

• Divestiture of the GCI freezer unit was strategic, immediately enhancing the company's financial profile. Excluding GCI in Q1, adjusted gross margin was 53% vs 40% including GCI, and adjusted EBITDA was positive 3.6 million vs negative 1.2 million. - Focus on recurring revenue by streamlining operations and exiting low-margin freezer products. - Q1 saw sequential revenue growth in cell processing and biostorage services despite year-over-year comps. - Actively working to exit the CBS business, having already reduced cash operating expenses at CBS by 1.2 million per year, allowing CBS to generate positive adjusted EBITDA. - Industry-wide headwinds easing in Q1, with less inventory destocking pressure from large customers and improvement in distributor revenue.

For the cell processing platform, Q1 revenue had a 15% year-over-year decrease but saw sequential growth. Excluding the divested GCI freezer unit in Q1, adjusted gross margin would have been 53% instead of 40%, and adjusted EBITDA would have been a positive 3.6 million instead of negative 1.2 million. The biostorage and services platform had sequential growth of 7% in Q1, with CBS representing approximately 11% of Q1 sales. The biostorage services platform, including the ThawSTAR automated thawing devices product line, is expected to contribute 29.5 million to 31.5 million in 2024, representing 5% to 12% growth over 2023 and 10% to 16% like-for-like growth.

• Affirmed 2024 revenue guidance of 95.5 million to 100 million, excluding freezer product lines. - Cell processing platform expected to contribute 66 million to 68.5 million, flat to 4% growth over 2023. - Biostorage services platform expected to contribute 29.5 million to 31.5 million, 5% to 12% growth over 2023 and 10% to 16% like-for-like. - Goal to hit adjusted EBITDA with a two in front by end of next year and aim for 20% margin by Q4 2024.

• Sensitivities around the CBS divestiture transaction, unable to share further details currently. - Macro environment uncertainties that could impact industry headwinds and customer spending. - Warranty liability removed with GCI divestiture, but other operational and market risks remain.

Q: Could you see the result of higher biotechnology financing in 4Q and the uptick in cell and gene sequentially?

A: We would see it in the sequential increase from our largest distributor, which we use as a proxy for the academic early-stage biotech market segment, and did see an uptick sequentially.

Q: What's your view on hitting a 20% EBITDA margin and long-term EBITDA margin?

A: Committed to hitting adjusted EBITDA with a two in front by end of next year, driven by media revenue growth. Longer term, achievable to get to adjusted EBITDA with a 3 in front toward end of 2025/early 2026.

Q: Any update on the sale of CBS and completion timeline?

A: Right in the middle of divesting CBS, expect cash proceeds albeit modest, and recently reduced operating expenses at CBS by 1.2 million per year.

Q: Thoughts on EBITDA margins in back half of 2024 and bridging from 1Q performance?

A: 16% to 18% back half margin still in mind, excluding CBS drag and lower media sales in Q1; goal to hit 20% margin by Q4 2024.

Q: Focus areas going forward after Sterling divestiture?

A: Finish CBS divestiture, internal product portfolio review, and working with marketing team on initiatives to expand leadership definition.

Q: Funding environment lag and ramp from new approvals?

A: Funding lag likely 2-3 quarters, visibility from rolling four-quarter forecast; one customer's forecast is better than 2023, indicating uptake of their therapy.

Q: Facility expansion at SciSafe and trigger for next facility?

A: Working on consolidating and expanding SciSafe facilities, like adding mezzanine to Boston facility and consolidating New Jersey sites into larger facility.