BioLife Solutions, Inc.

Hello, my name is Mallory, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1 2023 BioLife Solutions, Inc. Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during the Q&A session, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the conference over to Troy Rickerman, Chief Financial Officer. Please go ahead.

Thank you, Mallory. Good afternoon, everyone, and thank you for joining us. With me on today's call is Mike Rice, Chairman and Chief Executive Officer. Earlier today, we issued a press release announcing our financial results and operational highlights for the first quarter of 2023, which is available at biolifesolutions.com. As a reminder, during this call, we will make certain projections and other forward-looking statements regarding future events or the future financial performance of the company. These statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations. For a detailed discussion of the risks and uncertainties that affect the company's business and that qualify as forward-looking statements, I refer you to our periodic reports and other public filings filed with the SEC. Company projections and forward-looking statements are based on factors that are subject to change, and therefore, these statements speak only as of the date they are made. The company assumes no obligation to update any projections or forward-looking statements except as required by law. During this call, we will speak to non-GAAP or adjusted results. Reconciliations of GAAP to non-GAAP adjusted financial metrics are included in the press release we issued this afternoon these non gap or adjusted financial metrics should not be viewed as an alternative to gap however in light of our historic M&A activity we believe that the use of non gap or adjusted metrics provides investors with a clearer view of our current financial results when compared to prior periods now I'd like to turn the call over to Mike Rice, Chairman and CEO of BioLife Solutions.

Thank you, Troy. I'd like to begin our call by discussing our announcement today that we are actively exploring strategic alternatives for our Sterling ULT and Custom Biogenic Systems cryogenic freezer businesses, which could include out-licensing our proprietary IP, changing our go-to-market approach, and outright divesting these assets. As you know, We had high expectations for the benefits of scale the acquisitions could bring to BioLife and for the potential to cross-sell our core high-margin biopreservation media solutions with CBS and Sterling differentiated freezers. We built BioLife organically and inorganically with acquisitions like Sterling and CBS. And while we certainly realized many benefits of scale, after much analysis and consultation with external advisors, we've now come to a decision to explore our options for these businesses. The capital intensity in a lower margin volatile sales cycle business has not been beneficial to our core growth rate and corporate profitability and has not placed us in the peer group where we belong. With the global supply chain negative impact still ongoing and the volatile market dynamics in play, the expected merits of these two acquisitions have failed to materialize to the extent we expected. I take my job responsibility to create shareholder value very seriously and I'm supportive of the board and our leadership teams' collective decision to explore a course change. To support these explorations, we've engaged a strategic advisory firm to manage outreach to and inbound inquiries from parties interested in licensing our IP and or acquiring these businesses. To be clear, our strategic decision is to explore options, one of which is to potentially put our innovative CBS and Sterling businesses in the hands of other parties that can better leverage their operations supply chain, and cost structure to maximize their business model. If divesting is ultimately the best option, and we complete both, we will have returned BioLife to a higher multiple peer group with a portfolio of leading high-margin, high-growth, recurring revenue products and services that are class-defining. We believe any potential divestitures will preserve and enhance the synergies among our biopreservation media products, sextant self-processing tools, EVO cold chain management service, and SciSafe Biologic Storage Services. This potential portfolio optimization will help us to return to an enhanced gross and EBITDA margin company with industry-leading growth. It will also importantly and significantly reduce working capital cash burn, providing more flexibility to invest in and build upon our potent complementary offering where everything fits. It's clear when we look at these assets on a go-forward basis that our exploration of strategic alternatives is the right decision at the right time for the right reasons for the company and for shareholders. We recognize that it's frustrating when strategy and tactics fail to produce anticipated results, but as business people, we work for you, the shareholders, and we must be thoughtful and decisive. In our view, looking at the key financial metrics, we've built an incredibly powerful company. Going forward, Acquiring additional high margin recurring revenue businesses still makes strategic and economic sense, and our learnings from these two deals will be applied in the future so that we focus only on high margin, high growth businesses that can deliver additive recurring revenue. To conclude, I'd like to acknowledge the sustained improvement efforts of our leadership team, middle management, and line workers at CBS and Sterling. who have put these assets in the best shape ever from the perspectives of quality, operations, supply chain, financial accounting, CRM, HR systems, and sales and marketing. The R&D activities have been focused and well managed through a rigorous stage gate review and approval process. Without this work, we would not be in a strong position to explore strategic alternatives. We appreciate and recognize that operating through a potential divestiture process can lead to uncertainty for our team members and customers, and I'm proud and grateful for their dedication and support. Our team can count on us to retain talent and reward loyalty and results. Our customers can count on us to continue to produce and deliver high-quality products. Now let's switch back to discussing our Q1 performance. The team continued to gain new CGT and biopharma customers, driving continued adoption of our self-processing and storage and storage services platforms, while our freezer platform experienced similar disruptions that others have reported in recent quarters. Turning to Q1 revenue and customer highlights, total revenue was $37.7 million, representing a 4% increase over Q1 2022. Excluding COVID-related revenue from Q1 last year, total revenue growth was 16%, driven by a 28% increase in biopreservation media revenue. In Q1, We sold and shipped products or provided services to 197 new unique customer sites across our three products and services platforms. A large portion of our total revenue continues to come from existing customers as we penetrate deeper and pitch our integrated solutions to take more share of their spend for manufacturing, storage, and distribution products and services. In each of the last five quarters, we gained over 150 new customer sites building a phenomenal pipeline of early stage users that we will carefully nurture and support to drive future growth. New Q1 customer sites by product and service line included nine more now using biopreservation media, five new Thostar users, 17 new Evo cold chain end users, 15 new cryogenic freezer and accessory customer sites, 121 new Sterling ULT freezer and accessory customer sites, 22 new biostorage customers, and eight new cell processing customers now using Sexton products. For our cell processing platform in Q1, we received confirmation that our solutions will be used in at least 20 additional clinical trials for new cell or gene therapies. We estimate that our biopreservation media products have been used in or are planned to be used in over 630 customer clinical applications, and our Sexton cell processing tools are in about 140. For both biopreservation media and Sexton products, we also remain confident that each customer clinical application, if approved, could generate annual revenue in a range of $500,000 to $2 million. To date, our cell processing solutions are used in 14 approved therapies, including the recently approved Omiserve by GametaCell. We expect to be able to continue to take share from homebrew preservation cocktails as awareness grows of the critical role our engineered media formulations play in reducing risk for CGT companies. I'll reiterate the five strong catalysts we expect to support our growth estimates, since each will increase the number of manufactured doses, and hence the demand for our biopreservation media, sectioned cell processing solutions, EVO cold chain rentals, and SciSafe storage services. Number one. new de novo CGT approvals, two, approvals of existing commercial therapies in new geographies, three, approvals of existing commercial therapies in new indications, four, approvals of existing commercial therapies as first or second line treatment, and five, the eventual shift to allogeneic therapies. Turning to our storage and storage services platform, which includes Evo Cold Chain Rentals and SciSafe Storage Services, We gained 39 new customer sites in Q1, 22 for biologic storage services, and 17 for Evo. On the SciSafe side of the platform, we also continue to penetrate further in existing customers and have a very strong pipeline of high-value, long-term contract opportunities, and we expect another banner year for SciSafe. On the Evo cold chain management side of the platform, we continue to drive the business as evidenced by a 135% increase in quarterly shipments. specifically of approved cell therapy products. As we've reported before, evaluations and validation shipments by leading CGT companies are ongoing, and we expect continued adoption. One global pharma company has confirmed that upon a completed successful validation, they intend to switch up to 100% of both of their approved cell therapy shipments from the leading provider over to our EVO platform early next year. This is excellent market validation, as internally, we modestly model a 50-50 split of shipments between Evo and the incumbent. And finally, our freezers and thaw systems platform. We ship first-time orders to 141 new customer sites, including 121 now using Sterling products. Customers continue to recognize the value proposition of our freezer offerings. Based on tight temperature regulation, reduced power consumption, reduced heat generation, and less noise pollution, as these support their goals of reducing the negative environmental impact of their operations. Q1 revenue was lumpy and off pace due to the now well understood tightening biotech capital equipment funding and delayed purchase decisions due to economic uncertainty. On a positive note, we have a strong opportunity pipeline of potential sterling freezer orders forecasted to close this year. Now I'll turn the call back over to Troy to present our financials for Q1. Troy?