BioLife Solutions, Inc.

Our consumables portfolio includes critical inputs for cell and gene therapy bioproduction. And these high-margin solutions sold to customers with whom we have very sticky relationships can create enduring shareholder value. I'll let Troy speak to the numbers, but on a high level, the macro headwinds and the global economic uncertainty now being experienced across the bioprocessing industry have not just constrained biotech funding and capital equipment purchases, freezers in our world, but also more recently, led to a noticeable destocking and temporary slowdown in demand for our self-processing consumables. Our largest distributor also reported slower growth in China, consistent with the comments by several of our peers. As a result of this inventory destocking and broad lumpiness, we are adjusting our near-term forecast for demand and reducing 2023 guidance in line with that of others in the space. To be clear, We don't view this environment as a new normal for bioprocessing and bioproduction, but a temporary period of customer disruption. To remind you, our products are critical consumable components required to delivering cell and gene therapies. BioLife is a leading supplier of these solutions, and we count the vast majority of commercial and clinical stage CGT players as our core customers. Before discussing our Q2 results and an updated outlook for the rest of this year, I'll begin with an update to our Q1 announcement regarding strategic alternatives for our Sterling ULT and Custom Biogenic Systems cryogenic freezer businesses. Post-June 30th, after considering all strategic alternatives, management and the Board of Directors have concluded that divesting our Sterling and CBS freezer assets will optimize the growth and profitability of our consumable product portfolio and allow the company to focus exclusively on our recurring higher margin streams. It is the right decision for the business, our customers, and you, our shareholders. To this end, and based on the interest and feedback we've received so far, we are now able to fully commit to starting 2024 without the freezer product lines and the impact these have had on our margins, working capital requirements, and revenue lumpiness. We appreciate the value of the related IP, products, and teams, and expect a new owner to be better able to provide global access to these innovative products. In our earnings release issue today, we provided a pro forma illustration of our first half 2023 results, excluding the freezer businesses and other one-time charges. This clearly and strongly reinforces our commitment to divest these assets, and we are keenly focused on managing the process to meet our year-end completion goal. 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. We appreciate and recognize that operating through a divestiture process can lead to uncertainty for our team members and customers, and I am proud of and grateful for their dedication and support. We'll proactively communicate updates internally and externally as best we can as the process continues. Now I'll move on to discussing our Q2 performance. To some specifics, in Q2, we sold and shipped products and provided services to 188 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 an increased share of their spend for manufacturing, storage, and distribution products and services. In each of the last six quarters, we gained over 150 new customer sites and have a strong pipeline of early-stage users that we will carefully nurture and support to drive future growth. We now estimate that our BioLife and Sexton cell processing products have been used in or are planned to be used in over 800 customer clinical applications, and we remain confident that each customer clinical application, if approved, could generate annual revenue in a range of $500,000 to $2 million. 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. New Q2 customer sites by product and service line included 19 now using bar preservation media, six new Thostar users, 17 new Evo cold chain end users, 13 new cryogenic freezer and accessory customer sites, 102 new Sterling ULT freezer and accessory customer sites, 21 new BioStorage customers, and 10 new cell processing customers now using Sexton products. For our cell processing platform in Q2, we received confirmation that our solutions will be used in at least 24 additional clinical trials for new cell or gene therapies, 20 for BioLife Biopreservation Media, and four for Sexton cell processing tools. In our storage and storage services platform, which includes Evo cold chain rentals and SciSafe storage services, we gained 38 new customer sites in Q2, 21 for biological storage services and 17 for Evo. Evo shipments continue to grow as more end customers are onboarded by our courier partners. It's clear that late stage and approved CGT companies will continue to de-risk their reliance on the long-term incumbent competitor. Specific to that, a global pharma company with two approved therapies continues to work through their evaluation and validation of the EVO platform and now anticipates starting to ramp in the last half of 2024. Their conveyed demand for EVO, if fully realized, would significantly increase our fleet size and total revenue for the platform. 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. We continue to evaluate a list of potential expansion locations to increase our global biostorage capacity footprint. Of course, we look for potential synergies to co-locate a biorepository within our planned new GMP Media Manufacturing Center of Excellence. On that point, to support this anticipated admitted long-term growth, with two leading commercial real estate advisory firms that specialize in life sciences expansions, We made progress on our initial assessment of potential locations to build and validate a de novo self-processing media production facility. The objective of this initiative is to de-risk potential environmental disruptions to our Bothell and Indy facilities, but also to build sufficient additional capacity to meet anticipated demand for our proprietary high-margin recurring revenue media products. While the timeline is not yet locked, it's likely this new facility will come online toward the end of 2025. I'll wrap my comments with this. We sell critical CGT bioproduction tools that are sole source from BioLife. These are not one-time buys, but rather consumables that need to be replenished. We have a strong brand-the-track record with limited competitive substitutes. Our CGT customers participate in emerging class of therapeutic modalities that are just now becoming real, and we naturally expect demand for our products to increase as they progress their programs. The reality is that right now, the economy is tighter, and the participants in this ecosystem all want to reduce cash burn and are holding less inventory than previously. Growing demand will offset this, but for now we must weather this moment, and with the help of the planned divestitures, we'll make thoughtful adjustments to our operations to become leaner, less complex, and a significantly more profitable business starting in 2024. Now I'll turn the call back over to Troy to present our financials for Q2 in the first half of 2023. Troy?

Thank you, Mike. Total revenue for the second quarter of 2023 was $39.5 million, representing a 3% decrease from Q2 2022. And excluding COVID-related revenue from Q2 2022, growth was 7%. Revenue growth was driven by a 22% increase in our cell processing platform, offset by a 26% decline in our freezers and thaw systems platform. There was no COVID-related revenue in Q2 2023, compared to 9% of COVID-related revenue in Q2 2022. Cell processing platform revenue for the second quarter of 2023 was 18.7 million, up 22% over the same period in 2022. Freezers and thaw systems platform revenue for the second quarter was 13.9 million, down 26% over the same period in 2022. Excluding COVID-related revenue from Q2 2022, revenue in Q2 2023 decreased 23%. Storage and storage services platform revenue for the second quarter was $6.9 million, up 7% over the same period in 2022. Excluding COVID-related revenue from Q2 2022, revenue in Q2 2023 increased 94%. Total revenue for the six months ended June 30th, 2023 was 77.2 million, representing a 1% increase over the same period in 2022. And excluding COVID-related revenue from this period, growth was 11%, which was driven by a 24% increase in self-processing revenue. There was no COVID-related revenue during 2023 compared to 9% of COVID-related revenue in the six months ended June 30th, 2022. Cell processing platform revenue for the six months ended was 37.7 million, up 24% over the same period in 2022. Freezers and thaw systems platform revenue for the six months ended was 26.9 million, down 21% over the same period in 2022. Excluding COVID-related revenue from the same period in 2022, revenue decreased 18%. Storage and storage services platform revenue for the six months ended was 12.6 million, up 1% over the same period in 2022. Excluding COVID-related revenue from the same period in 2022, revenue increased 96%. Adjusted gross margin for the second quarter of 2023 was 35%, compared with 36% for the second quarter of 2022. Adjusted gross margin for the six months ended June 30th, 2023 was 36%, compared with 34% from the same period in 2022. Gap operating expenses for Q2 2023 were 54.8 million versus 117.1 million in Q2 2022. For the six months ended, gap operating expenses were 106.1 million versus 161.3 million for the same period in 2022. Adjusted operating expenses For Q2 2023 totaled 22.2 million compared with 20.3 million in Q2 2022. Adjusted operating expenses for the six months ended were 46.8 million compared with 40.4 million for the same period in 2022. The increase in operating expenses was primarily driven by increased headcount and infrastructure costs to support our long-term growth objectives. Our adjusted operating loss for the second quarter of 23 was 10.4 million compared with 5.7 million in Q2 22. For the six months ended, adjusted operating loss was 21 million versus 14.1 million for the same period in 22. Adjusted EBITDA for the second quarter of 23 was negative 1.2 million compared with positive 1.2 million for the second quarter of 2022. For the six months ended, adjusted EBITDA was negative 2.2 million compared with positive 44,000 for the same period in 2022. Next, I would like to turn to our pro forma first half 2023 financial profile, excluding Sterling and CBS. Our revenue for the first half of 2023 would have been 51.5 million with a 52% adjusted gross margin and approximately $1,600 to 18% of adjusted EBITDA. Our cash and marketable securities balance at June 30th, 2023 was $48.1 million compared with $56.9 million at March 31st, 2023. Taking into consideration our adjusted EBITDA of negative $1.2 million, cash use in Q2, 2023 was primarily related to unfavorable working capital adjustments of 4.7 million, largely due to the timing of raw material deliveries related to media, and capital expenditures of 2.2 million. Turning to 2023 revenue guidance. Management is updating four-year guidance to reflect expectations for its existing business. Total revenue for the year is now expected to be in the range from 144 million to 158 million, reflecting a year-over-year decrease of 11% to 2%. Excluding COVID-19 related revenue, this would represent a year-over-year decrease of 3% to an increase of 6%. Revenue guidance for 2023 does not include any COVID-19 related revenue. Total revenue expectations for 2023 include the following platform contributions. Cell processing platform, $65 million to $74 million. a decrease of 5% to an increase of 8% over 2022. Previous guidance for this platform was estimated to be $89 million to $93 million. Based on our customer's updated forecast, we expect a quarterly sequential decrease of approximately 30% in Q3, followed by a 40% sequential improvement in Q4. Freezers and Thaw Systems Platform, $53 million to $56 million. a decrease of 21% to 16% compared with 2022. Excluded COVID-19-related revenue, year-over-year decrease of 18% to 13%. Previous guidance for this platform was estimated to be $72.5 million to $79 million. Storage and storage service platform, $26 million to $28 million, a decrease of 2% to an increase of 6% over 2022. excluding COVID-19-related revenue, year-over-year growth of 61% to 74%. Previous guidance for this platform was estimated to be 26.5 to 30 million. The updated forecast reflects the macroeconomic issues seen by our peers and a significant decrease in anticipated 2023 sales from our largest biopreservation media direct customer. While the updated forecast from our customers are disappointing, we remain confident in the mid and long-term growth potential for biolife. I would like to note revenue from biopreservation media from 2020 to our anticipated 2023 forecast would be over a 35% compounded annual growth rate. Finally, in terms of our share count, as of today, we had 43.5 million shares issued in outstanding and 46 million shares on a fully diluted basis. Now, I'll turn the call to Mike.

Thanks, Troy. I'll summarize two key takeaways from Q2 and today's call. First, we are committed to investing Sterling and CBS by the end of the year. The first half 2023 financial pro forma without freezers, again, clearly and strongly reinforces our decision to divest these assets, and we are keenly focused on managing these process to meet our year-end completion goal. We're committed to starting 2024 with a rationalized portfolio comprised of recurring higher margin streams to create the most shareholder value. And two, demand for our portfolio of class-defining bioproduction tools and services in the exciting CDT market is modulated by customer production throughput and their inventory management strategies. We remain confident in the mid- and long-term growth rates, but demand softened in Q2, and we expect this to persist for the rest of the year. We are very well entrenched and intent on maintaining our position as a premier enabling CGT tools and services provider. We anticipate a recovery of some magnitude in 2024, and for the rest of this year, we will continue to focus on getting closer to our key customers, running the business efficiently, and completing the vestiges of Sterling and CVS. Now, I'll turn the call back over to the operator to take your questions. Savvy?