CryoPort, Inc.

Good afternoon and welcome to the CryoPort second quarter 2024 earnings call. All participants will start in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. As a reminder, this call is being recorded. I will now turn the call over to your host, Todd Frohmer from KCSA Strategic Communications. Please go ahead.

Thank you, operator. Just a quick correction. This is Proudport's third quarter conference call for 2024. Before we begin today, 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 forward-looking statements. These forward-looking statements are based on management's beliefs and assumptions and not on 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 take 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 events 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 with the Securities and Investing Commission, and those described from time to time in the other reports which follow the Securities and Investing Commission. It is now my pleasure to turn the call over to Mr. Gerald Shelton, Chief Executive Officer of CrowdCourt. Jerry, the floor is yours.

Thank you, Todd. Good afternoon, ladies and gentlemen. Thank you for joining our third quarter earnings call today. Joining us is our Chief Financial Officer, Robert Stavanovich, our Chief Scientific Officer, Dr. Mark Sawicki, and our Vice President of Corporate Development and Investment Relations, Thomas Heinzen. As a reminder, we've uploaded our third quarter earnings 2024 In Review document to our website. It can be found on the main page of the Crawford, Inc. website. This document provides a review of our financial and operational performance and a general business outlook. If you haven't had a chance to read it, I would encourage you to visit our website and download it. I will now provide you with a brief update on our business, and then we'll take your questions. Our life sciences services business showed 9% growth for the third quarter, with biostorage and bioservices revenue increasing over 12% compared to last year. This increase in our service revenue was coupled with a substantial improvement in gross margin to 46% for our life science services business. Reflecting on our performance through the third quarter, we are maintaining our full year revenue guidance of $225 million to $235 million dollars anticipating continued growth in life science services while acknowledging the ongoing softness in the life sciences product business. To address our current market dynamics, we have been actively executing on our cost reduction and cost realignment strategies that we shared with you earlier this year. We've made substantial progress, and we are on course to complete these adjustments by the end of the year. Our actions are showing positive results, as shown by improvements in our gross margin, adjusted EBITDA, and positive cash flow through the quarter. As planned, these strategies are moving us closer to our objectives of sustainable profitability, and we believe that these measures will lead us to a return of positive adjusted EBITDA during 2025. In addition to our focus on profitability, we continue to advance the growth plans We have underway as we balance those plans with our commitment to achieve profitability with current market conditions. In October, we launched our IntegraCell cryopreservation solution with a new state-of-the-art facility on our Houston campus. This new cryopreservation service will provide standardized cryopreservation of leukapheresis material seamlessly integrating this service with Cryoport's Indian global temperature-controlled supply chain platform to support the development and commercialization of cell-based therapies. Our IntegraCell offering addresses yet another critical aspect in optimizing the supply chain for the development and commercialization of cell-based therapies through high-quality, more consistent cryopreserved starting material. In addition, There have been other exciting recent developments across our business, which includes CryoGene's successful opening of its biorepository operations in San Antonio, Texas, and the onboarding of its first major client, a major cord blood repository. Beyond providing biostorage services for this client, CryoGene will utilize Cryoport Systems' advanced biologics capabilities to provide national and international patients with vital core bloods, ensuring the integrity of these crucial materials as we benefit from further growth in the national core blood market. Also, as a part of our company's overall mission to help patients in need, Grogene Houston responded to a Methodist hospital emergency request in the wake of Hurricane Helen's impact on the southeastern region. Mobilizing quickly, our team provided recovery freezers for the hurricane that caused severe damage to a manufacturing facility that produces essential reagent supplies for patients. These freezer units were essential to ensuring consistent patient care during the emergency situation. I'm very proud of our team, which was on the ground assisting healthcare workers during the devastation. It was a demonstration of selfless service to the community and the team's care for patients without complaint or hesitation. In my opinion, they're real heroes and great examples of the spirit of CryoPort. At Cryo PDP, we've maintained a strong focus on acquiring new customers across all geographies with the addition of nine high value contracts that Cryo PDP was awarded during the third quarter with a total value of over $6 million per year. We also continue to make strides at our MBE biological solutions business, which is core to our life science products. Our team has been implementing measures designed to align MBE's operations and workforce with our current market demand to help maximize positive cash flow contribution. Consequently, as the cryogenic systems market improves, we'll be in a better position to benefit from operating leverage. We think our initiatives, developments, and efforts will put us in a better place to take advantage of the growth of the life science and especially the substantial growth forecast for the cell and gene therapy industry. As approval for cell and gene therapies accelerate, ensuring the reliability, safety, and integrity of the supply chain is essential for these lifesaving products. Cryoport is a leader in this. As of September 30th, we supported a total of 690 one global clinical trials, a net increase of 21 clinical trials over last year, with 79 of these clinical trials in phase three. Looking ahead, we expect the macro and sector-specific challenges that have impacted many life science tools companies to continue for the near future. Consequently, as we move into 2025, we will further sharpen our focus on profitable growth and maintaining a strong balance sheet. We continue to be optimistic about our long-term business growth trajectory. We believe we are strategically positioned to leverage the anticipated long-term growth in the life sciences and the high-growth cell and gene therapy markets through our comprehensive and integrated supply chain solutions designed specifically to reduce risk and improve efficacies. This concludes my brief update, so now I will ask the operator to open the lines for your questions.