Cryoport, Inc. (NASDAQ:CYRX) Q1 2024 Earnings Call Transcript May 7, 2024
Cryoport, Inc. misses on earnings expectations. Reported EPS is $-0.42625 EPS, expectations were $-0.37. CYRX isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good afternoon and welcome to Cryoport Fourth Quarter and Full Year 2023 Earnings Conference Call. All participants will start in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded. I will now turn the call over to your host, Todd Fromer from KCSA Strategic Communications. Please go ahead.
Todd Fromer: Thank you, operator. Before I get started with this, I just want to correct the records. This is the Cryoport first quarter earnings conference call. Before we get started, I would like to remind everyone that this conference call contains certain forward-looking statements. All statements that address our operating performance, events, or developments that we expect or anticipate occurring in the future are forward-looking statements. These forward-looking statements are based on management’s beliefs and assumptions and not on the information currently available to our management team. Our management team believes that these forward-looking statements are reasonable as and when made. However, you should not place undue reliance on any such forward-looking statements because such statements speak only as of the date when made.
We do not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future results or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results, events, and developments to differ materially from our historical experience and our present expectations or projections. These risks and uncertainties include but are not limited to those described in Item 1A, risk factors, and elsewhere in our annual report on Form 10-K filed with the Securities and Exchange Commission and those described from time to time in the other reports which we file with the Securities and Exchange Commission.
It is now my pleasure to turn the call over to Mr. Jerrell Shelton, Chief Executive Officer of Cryoport. Jerry, the floor is yours.
Jerrell Shelton: Thank you, Todd. Good afternoon, ladies and gentlemen. Thank you for joining our first quarter earnings call today. With us this afternoon is our Chief Financial Officer, Robert Stefanovich, our Chief Scientific Officer, Dr. Mark Sawicki; and our Vice President of Corporate Development and Investor Relations, Thomas Heinzen. As a reminder, we have uploaded our first quarter 2024 and review document to our website. It can be found under Investor Relations in the News and Events section. This document provides a review of our financial and operational performance and a general business outlook. If you’ve not had a chance to read it, I would encourage you to go to our website and download it. I will provide you with a brief update on our business and then we will take your questions.
For the first quarter 2024, we continued to experience a difficult environment globally. Our quarterly results were disappointing across the board, particularly our life science products. However, as we stated when we initially provided our annual guidance, we anticipate our total revenue will progressively improve throughout the year and we maintain our full year revenue guidance of $242 million to $252 million. I am sure some of you are asking what makes us confident. Well, there are several things. For example, despite the near term challenges, we are still quite positive based on the momentum we see – we’re seeing from our cell and gene therapy clients and from the growth of our BioStorage/BioServices revenue. If you look at our results, you will see that our first quarter commercial therapies grew – rose 9% while BioStorage/BioServices revenue also rose by the same amount.
Both these services areas should continue to be growth drivers for Cryoport in 2024 and beyond. We’re also encouraged by new clients slated in the biopharma market and some positive signs recently in the cryogenic systems market. As I indicated, our life sciences services revenue growth for the first quarter was softer than anticipated, increasing 3% year-over-year. There is, however, a bright spot as the cell and gene therapy market seems to be gaining some momentum again. To date, this three year-to-date – to date this year three new therapies have been approved, three existing commercial therapies were approved to move to an early line of treatment and two therapies were approved to expand their label or geographic territory. By combining the expected revenue ramps of existing and new commercial therapies, we believe we should see revenue acceleration from our cell and gene therapy clients over the remainder of the year.
Currently, we think an additional 16 global regulatory filings will be completed before year end. As of March 31st of this year, Cryoport supported a total of 675 global clinical trials, a net increase of 23 clinical trials over the same time last year. As of the quarter end, 77 of these trials were in Phase 3 along with 312 of them in Phase 2. As we have said before, our clinical trial portfolio represents a substantial long term revenue growth opportunity for Cryoport as more therapies advance through the clinical trials toward commercialization. Our outlook for the rest of the year with commercial therapies look strong, with potentially five additional new therapy approvals and three additional label or geographic expansions. Turning to our life science products.
Similar to last quarter, this business revenue was lower than in prior years. This was due to decreased demand for MVE Biological Solutions’ Cryogenic Systems. This in turn was attributable to a continued slowdown in capital equipment investment that began last year. Although global in nature, as we have reported previously, the most severe pullback in demand continues to be in China. While we expect MVE’s Cryogenic Systems’ sales to be challenged throughout the remainder of this year as biotech funding government budgets and academic budgets are constrained, we expect to see gradual improvement in demand in the ensuing quarters. MVE is a well managed business and we want to remind investors that even in this difficult time it continues to produce free cash flow for our company.
MVE is the leading manufacturer of cryogenic systems worldwide and we’re confident in the long-term prospects of our products business. And when demand normalizes, and we believe it will, we will benefit from our position as the global leader in this space. In summary, and to put it plainly, there is simply no other company with the extensive resources Cryoport has in providing a full array of innovative, reliable, end-to-end supply chain solutions to the life sciences. With advanced services, products and information systems focused on reducing risk and located in 50 locations in 17 countries, Cryoport is well prepared to support the expansion of the life sciences and especially the growing cell and gene therapy market. Based on our clients forecast and fueled by industry indicators for cell and gene therapies and the life sciences, we continue to build out services, products and infrastructure to prepare ourselves to provide comprehensive and dependable supply chain support for these life saving treatments.
However, considering the current macroeconomic challenges and their impact on our financial results, we are implementing a number of initiatives to drive toward positive adjusted EBITDA and cash flow in the near-term. These include improved alignment of our global organization, reduction in our workforce, leveraging lower cost shared services, refining and reprioritizing planned initiatives and delays in capital spending as a result of reprioritization, all of which should positively impact the second half of 2024. We are mindful of our need to maintain a strong balance sheet to support our future growth and we ended the quarter with $448 million of cash balance – $448,500,000 cash balance. This concludes my prepared remarks. Now, we’re going to be happy to take questions from you.
Operator, please open the lines for questions.
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