Cryoport, Inc. Q3 FY2024 earnings call

• Launched IntegriCell cryopreservation solution in Houston, integrating it with the end-to-end global temperature-controlled supply chain platform. • CRYOGENE opened biorepository operations in San Antonio, Texas and responded to a Methodist Hospital emergency request during Hurricane Helene by providing recovery freezers. • CRYOPDP secured 9 high-value contracts worth over $6 million per year. • MVE Biological Solutions is implementing measures to align operations with market demand to maximize cash flow contribution. • Supported 691 global clinical trials, with 79 in Phase III and 319 in Phase II.

The Life Sciences Services business showed 9% growth in the third quarter, with BioStorage and BioServices revenue increasing over 12% year-over-year and a gross margin of 46%. For the Life Sciences Products segment, MVE Biological Solutions had an uneven market recovery; dewar sales were as expected, but cryogenic freezer demand was weak in North America and EMEA though there was a pickup in order flow from APAC excluding China. CRYOPDP maintained a strong focus on acquiring new customers, with 9 high-value contracts awarded during the third quarter totaling over $6 million per year.

• Maintained full year revenue guidance of $225 million to $235 million. • On course to complete cost reduction and realignment strategies by the end of 2024, aiming for positive adjusted EBITDA in 2025. • IntegriCell and CRYOGENE initiatives expected to contribute to growth in the future. • Expect continued growth in Life Sciences Services while acknowledging softness in Life Sciences Products.

• Market dynamics and softness in the Life Sciences Product business. • Forward-looking statements are subject to risks and uncertainties described in the company's SEC filings, including those in Form 10-K and other reports.

Q: On the clinical trial service business, it was up a little bit in the quarter year-over-year. Are you, I guess these label expansions we've seen in the market, they kind of take time. Is that the way we should read that? Because it doesn't seem like there's a share gain or loss story. But can you talk to when you would expect those label expansions to hit?

A: Yes, Paul. It takes about six to 12 months for that to have effect on our operations and Mark may have some additional comments.

Q: Hi can you please talk a bit about MVE and the products business, your dewars, sort of piece of dewars shipments, the large freezers, the smaller freezers, any color there would be very helpful. Thank you.

A: Yes, sure. We have an uneven market recovery in MVE. And as you know, we manufacture two primary cryogenic system product lines at MVE, dewars and cryogenic freezers. And while dewar sales were what we expected, we experienced weaker cryogenic freezer demand in North America and EMEA. But on the positive side, we did see a pickup in order flow from APAC, excluding China.

Q: Thank you for taking the questions. Could you please, turning to 2025, you touched on it a little bit, expecting the market to remain a bit muted. Could you touch upon how you see the cadence of end market demand evolving throughout the year? And with regards to cost actions that have been taken this year, how should we think about those flowing into 2025? And if there was any reduction in incentive comp within 2025 that played into the margin improvement, could you size that? And would that be a headwind heading into next year? Thank you.

A: Yes. I'll comment on the business first, focused on the services business, and Jerry might add some commentary around the products business. But the services business continues to progress nicely. And the biggest thing to think about as you're thinking about the service business is the opportunity associated with the clinical portfolio. We're supporting 691 programs, 79 Phase IIIs, 317 Phase 2s. We had three more BLA or MAAs filed in Q3, another two approvals in Q3, and we anticipate 4 more filings in Q4 with potentially another 2 approvals in Q4, and we already have two PDUFA dates in 2025. All of that will in addition to the recently launched therapies, will obviously continue to bolster the services side of the business for the foreseeable future. Now, Jerry, do you want to comment on product?

Q: Yes hi guys. Thanks for the questions here, so a couple. On commercial, correct me if I'm wrong, was that down sequentially and year-over-year? Can you just elaborate more on that?

A: Sure, happy to. So it was down a hair sequentially, basically flat. As you remember, we continuously talk about the commercial revenue as a stair step pattern. And so what we see is it jumps up, it goes flat, it jumps up, it goes flat, so some of our commercial customers had really good quarters. Others were more uneven. If you look at the nine-month period, and we like to look at that rolling forecast year-over-year, nine-month was up 14%, which was a good performance. We do expect to see another strong step up in Q4 as established there, these continue to ramp and then more recently launched their piece start to contribute and we're seeing several of our commercial accounts starting also leverage other Cryoport services other than their historical biologists business which will start to contribute in an increase of revenue on a per patient basis.

Q: Yes hi, this is Jack on for Matt. I appreciate the question. I guess following up on commercial, understanding you're not guiding to 2025, but you've talked about 25%, 30% as a decent go-forward rate. Is that a fair assumption on the commercial side as we think about next year as we think about next year?

A: As we had mentioned, we're in the middle of the budgeting right now in the budget process. What we do is we do a top-down and a bottom-up based on client forecasts and their demand forecast as well as the commercial launch schedules associated with new products and/or product label expansions. We'll have good clarity on that to be able to provide more oversight on that in the next quarterly call.