CryoPort, Inc.

Good afternoon and welcome to Cryoport's third quarter 2025 earnings conference 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 Frommer from KCSA Strategic Communications. Please go ahead.

Thank you, Operator. 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 are forward-looking statements. These forward-looking statements are based on management's beliefs and assumptions and not on information currently available to our management. Our management team believes that these forward-looking statements are reasonable as and when made. However, you should not place any 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 due information or future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties. They 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 to be filed with the Securities and Exchange Commission, and those described from time to time in the other reports usually filed with the Securities and Exchange Commission. As a reminder, CryoPort has uploaded their third quarter 2025 in-review document to the main page of the CryoPort Inc. website. This document provides a review of CryoPort's financial and operational performance and the general business outlook. Before I turn the call over to Jerry, please note that because of the strategic partnership that has been established with DHL Group and the related sale of Cryo PDP to DHL, Cloud PDP's financials, which were previously a part of CloudPort's life sciences services reportable segment, are now presented at discontinued operations. CloudPort previously provided quarterly historical information on this basis for fiscal year 2024 and our first quarter 2025 review document, which remains available on the CloudPort page website. This information is intended to support the financial modeling efforts of those needing this information. Please note that unless otherwise indicated, all revenue figures discussed today will refer to continuing operations. This includes CryoPort's fiscal year 2025 revenue guidance. It is now my pleasure to turn the call over to Mr. Gerald Shelton, Chief Executive Officer of CryoPort. Jerry, the floor is yours.

Thank you, Todd, and good afternoon, everyone. With us this afternoon is our Chief Financial Officer, Robert Stavanovich, our Chief Scientific Officer, Dr. Mark Zwicky, and our Vice President of Corporate Development and Investor Relations, Thomas Heinsohn. During the third quarter, we continued our strong momentum delivering double-digit growth in both our life sciences services and life sciences product segments. Notably, revenue from our support of commercial cell and gene therapy grew 36% year-over-year to $8.3 million, driven by the continuing global adaptation of these lifesaving therapies. It is impressive that the growth of the regenerative therapies market which we believe is still in very early stage of developments, has remained resilient despite ongoing challenging microeconomic, political, and geopolitical backdrops. Within life sciences, revenue increased 16% year over year and represented 55% of our total revenue from continuing operations for the quarter. This included a 21% increase in the biostorage bioservices revenue, underscoring the persistent demand for our integrated platform. Driving this growth is the rising prevalence of chronic and rare diseases, prevalence of chronic and rare diseases, coupled with continued advancements in cell and gene therapies, targeting solid tumors and autoimmune diseases. We also are encouraged by signs of stability in our life sciences product market. where revenue grew 15% year-over-year, driven by improved demand for our market-leading cryogenic systems. In the third quarter, we expanded our product portfolio with a launch of MBE Biological Solutions next-generation SC4-2V and SC4-3V vapor shippers. These cryogenic systems models have been redesigned utilizing innovative technologies to offer customers added protection during extended or challenging shipments and include several key advancements designed to enhance the performance and reliability. MBE's newly designed condition monitoring solutions for these doers are integrated with each unit, combining our trusted cryogenic systems with advanced real-time condition monitoring technology supplied by Tech4Med, another Crawford company. These innovations reflect MBE's unwavering commitment to support the life sciences with advanced intelligent connected assets to safeguard vital biological materials. Beyond our core systems and services, we are progressing on a number of other growth initiatives designed to better serve our clients and diversify our revenue streams. These initiatives include the onboarding of our first clients for IntegraCell, our cryopreservation services located in Liège, Belgium, and Houston, Texas. These cryopreservation services are designed to address a critical aspect in optimizing the supply chain for the development and commercialization of cell-based therapies through high-quality standardized cryopreserved starting materials. We're excited by IntegraCell's recent progress as it moves forward to become a significant revenue and profit generator. Additionally, in late October, we opened the logistics portion of Crown Port Systems' new state-of-the-art Global Supply Chain Center at the Charles de Gaulle Airport in Paris, France. This 55,000 square foot facility provides us with increased ability to serve our clients in the European and global markets. It is designed to support complex life sciences supply chain needs, including biologistics, bioservices, and future cryopreservation services. An official grand opening is scheduled to celebrate the launch of this facility, will be held on November 20th, with bioservices opening in mid-2026. In addition, We are also advancing toward opening a global supply chain center in Santa Ana, California, which is expected to come online in the second half of 2026. This facility will consolidate three existing locations and feature next-generation technology to optimize operations and client support. Complementing all of these activities, we have begun implementing our recently established strategic partnership with DHL Group. Due to DHL's size, this strategic relationship will take some time, and when completed, it will enhance our positioning in the APAC and EMEA regions and reshape our competitive profile within the industry by leveraging DHL's global scale and capabilities. Regenerative medicine has been advancing steadily, largely driven by the expanding pipeline of regenerative therapeutics entering the clinical development, and commercialization. Despite any short-term headwinds, cell and gene therapies have continued to enter and move through the clinical pipeline, which should ultimately result in growing revenue from commercially supported therapies. Crawford's temperature control supply chain solutions are supporting the largest portfolio of clinical and commercial gene therapies in the world, with a record total of 745 global clinical trials and 83 of these in phase three, representing approximately 70% of the cell and gene therapy clinical trials. In the third quarter, Four BLA-MAA filings occurred, and three more were filed in October. For the remainder of 2025, we anticipate up to an additional seven application filings, one new therapy approval, and two additional approvals for label or geographic expansions or moves to earlier lines of treatment. Of course, the timing of these filings may be impacted by the current government shutdown of the FDA in the United States. While global trade conditions remain dynamic, Crowdport did not experience any new material impact from tariffs in the third quarter. Furthermore, we have, of course, taken steps to diversify our supply chain to mitigate potential impacts that could come as a result of tariffs. Impacts not covered by these mitigations are covered by surcharges. With strong momentum we have achieved year-to-date and our progress across the board, We are updating our full year 2025 outlook for total revenue from continuing operations to the range of $170 million to $174 million. Our team is dedicated to building long-term value for our shareholders. Cryoport is maintaining and growing its competitive differentiators as the only pure play end-to-end temperature control supply chain platform that supports the largest portfolio of clinical and commercial cell and gene therapies globally. This concludes my remarks, so I'll now ask the operator to open the lines for your questions.

Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please flip the handset before pressing any keys. Your first question comes from the line of Kyle Cruz from UBS. Your line is now open.

Thank you for taking the questions and congratulations on the quarter. Maybe just to start, The high end of guidance implies a sequential decline in revenues. At the same time, you know, you're seeing positive momentum across the entire business. You have an increased number of commercial therapies supported, higher number of clinical trials, and you've, you know, launched new products within MBE. Can you help us reconcile that with the implied sequential decline in guidance? And then for a second question, can you discuss if the recent release of the triple FDA draft guidance is that support making clinical trials easier or has resulted in an uptick in clinical trial interest at your company. Thank you.

Well, you had a lot of questions in there, and I think Robert will start answering your financial questions, and Mark will address your FDA questions.

Yeah, happy to. Yeah, look, you know, you're certainly right in terms of how you phrased the question. You know, given all of the macro uncertainties right now, we think it's a responsible guide It balances the momentum that we are seeing versus the macro conditions such as the current government shutdown and the ever-changing tariff landscape. I think we've managed it to date very well, and we're obviously, of course, focused on profitable and disciplined growth. If you look at the revenue guidance and the increase in revenue guidance represents about 8% to 11% revenue growth over the prior year from continuing operations. But as you said, at the same time, we continue to be very bullish on our market-leading position We feel that our long-term growth rate will be close to that of the cell and gene therapy market, as you can see in our Q3 performance, and as more and more commercial therapies come to market. In fact, if you look at our commercial revenue right now, it's already a fairly significant portion of our total revenue. I think it's roughly about 18%, 19% of total revenue. So we're trying to balance those two parts, one, the cautious view on kind of the macro uncertainties, but yet at the same time, we are very bullish in terms of the outlook and bullish in terms of, you know, finishing the year strongly.

Mark, you want to answer the FDA portion? Sure. Assuming you're referring to the REMS requirement. Is that correct?

No. They recently released three new draft guidances relating to clinical trials. Yes.

Yeah, so obviously, yeah, so the draft guidance announcements that you're talking about that came out recently, some of them are targeting some generic small molecule programs. Those don't have a significant bearing on our market. Those that are aimed at the orphan markets and those that are focused around driving biologics approvals much more quickly. are impactful to us and our clients. And we do believe that those will help drive more activity in the future from a BLA standpoint. You know, just turning to REMS, because I think it's important to understand that one too. So the REMS requirement, which has been also one that's been announced, you know, that'll have an even more impactful, you know, positive impact for us as it'll drive the implementation and utilization of cell therapies into the community care setting. And I think if you look at both BMSs and J&J's CARVICTI revenue in Q3, both of them had very strong growth. And in fact, you know, CARVICTI folks even came out and said, you know, almost 80% of the patients are being referred from community oncology centers at this point. So I think those both are very predictive of strong growth in the near future.

Great. Thank you for that. And then maybe just one last one. Can you discuss if you're seeing increasingly different trends within gene therapy and cell therapy within the broader cell and gene therapy market? Thank you so much.

Yeah, you know, I mean, obviously there's a little bit of tentativeness around financing in the gene therapy space because of some of the challenges that, you know, have been seen. But that doesn't impact the long-term opportunity. And so there's still a lot of new startups in the gene therapy space. There's a lot of activity and investment that's going into the gene therapy space. But obviously, you know, the lion's share of funding at this point is still going into the cell therapy side of things. And, you know, obviously with the number of potential approvals moving forward, you know, later this year, we've got another potential, as you already mentioned, those introductory comments and potentially another seven filings this year and potentially even another one new and two supplemental approvals this year. So there's very strong activity in the cell therapy space as well.

Just to round that off, Mark, Just to point out in our review piece, we broke down by percentages the clinical trial portfolio that we have, and the number of gene therapies in there is a single-digit percentage, and the number of vaccines is even smaller. It's like 3%. So we're much more exposed to the cell therapy side of the world.

Yeah, correct. Thank you, Tom.

Thank you. Your next question comes from the line of David Saxon from Needham. Your line is now open.

Oh, great. Thanks for taking my questions and congrats on another strong quarter here. Maybe, Robert, I'll start with you. I didn't hear anything on EBITDA guidance. I think the expectation was you'd reach profitability on a quarterly basis sometime this year. So is that still the expectation, and then how should we think about profitability as it relates to 2026? Could you see that on a four-year basis, or are there any meaningful investments we should be aware of?

Yeah, no, thank you. As you can see from our 25 performance to date, the approved adjusted EBITDA, we approved it by over $10 million for the first nine months, bringing our adjusted EBITDA loss in Q3 to 600,000. So we are getting very, very close to getting and crossing the line to positive adjusted EBITDA. From a cash flow perspective, cash flow from operating activities was positive for the quarter. We had about 2.2 million positive cash flow from operating activities. And we think we can get to positive EBITDA. We're very close to it as early as year end. That was our target. At the same time, I do want to highlight we're obviously trying to balance some of the growth initiatives that we have with driving towards solid positive EBITDA. There are some specific client-driven growth initiatives that we have, including the global supply chain center that we're opening in Paris this month, as well as the IntegraCell platform that we started out a while back. And those, in some cases, require some upfront investments. So that's really balancing those two parts, but we're certainly making very strong progress towards that goal. And overall, we like our momentum. We like the positioning that we're in. And our teams are working towards executing on that goal. In terms of profitability itself and crossing the line to profitability, we have not given guidance. Our main focus is really on executing on our initiatives. driving positive EBITDA and obviously creating that pathway to profitability.

You know, David, you've heard us talk about the pathway to profitability before, and we certainly are on that pathway to profitability. And as Robert points out, you know, we're moving toward positive adjusted EBITDA. And so we think possibly we can get there in the fourth quarter and certainly early next year. And then that's a surrogate for cash flow. Remember, we have a number of facilities, which I went over in my opening comments. I just mentioned a couple of examples, a number of capital investments taking place. We know that those are the right capital investments. We vetted them thoroughly. We know that they're the right thing to do for the future. But as we're building those out, you know, in today's accounting, it does affect your income statement. So our pathway to profitability includes all the things that Robert said, plus, you know, building out those facilities and then starting to experience the operating leverage that comes with getting those facilities up and running and utilized.

Great. That was super helpful. Thanks, Robert and Jerry, for all that color. Jerry, maybe my second one's for you. Just on product, that growth really improved versus kind of the first half. So maybe talk about what's driving that strength. How much of that is market versus some of those new products you called out maybe driving some mixed benefit? And then in terms of the backlog, I guess, can you talk about that at least qualitatively? and then what level of visibility does that give you into the product growth outlook as we head into 2026? Thanks so much.

Yeah, you're welcome. David, we talked about backlog a lot during the COVID period because we had an extraordinary period, but we don't talk about backlog now as much because we are on more normal, we're in a more normal market, which is about a six to eight-week lead time. It's no longer six months or a year lead time. It's back to the normal, which is about six weeks lead time. So we do monitor our sales trends. We do monitor our order intake, and that order intake does give us indication that the market is beginning to stabilize. And of course, government shutdown hasn't helped us there any, but it still continues to go on. It hasn't helped us because it does slow down the government sales that are associated. So we're doing well in terms of the industry and the stabilization. There was no impact on the new things that I talked about in my comments in opening up. No revenue coming in from that. It wasn't time. It does take time for these things to get out. The two doers that were developed with the integrated condition monitoring at MBE are focused on the animal health business and so that's a seasonal business and there will be an uptake there but we have a number of things going on at MBE. Does that answer your question David or is there other parts to it?

That was super helpful so thanks for that. I guess maybe if I could rephrase it like how you know the market has been stable uh year to date um i guess as we think about our models for 2026 like do you is is making the assumption that that continues a fair assumption and then with um you know i guess those products product launches in the animal health space maybe some some increased demand across the other end markets like maybe how should we frame or how would you frame product growth potential for 2026?

I would look at it with stability and use a very high single-digit growth rate.

Okay, perfect. Thanks so much, Jerry.

Thank you. Your next question comes from the line of Punit Suda from Leary Partners. Your line is now open.

Yeah, hi, guys. Thanks for the question. So maybe first one on some of the cell therapy exits that we have seen. I mean, you're delivering relatively strong growth. Some of it is comps, but some of it is just overall market stability, which you talked about. But just trying to understand, you know, if you could contrast with what we're seeing Takeda you know, exiting its allogeneic programs. Galapagos is winding down their programs. NOVA is divesting its cell therapy assets. Are you seeing any downstream impact from those exits on your pipeline or the service demand overall? And then within that, you know, as Jerry said, high single digit growth, is that, you know, still something you're, I mean, is that you're contemplating You know, into 2026 and 27, just given, you know, sort of these exits and maybe just provide us any context for backfilling some of these programs that might have been lost.

Yeah, we're honored that you're on the call because we thought you might miss it because of conflicts, but let me start and then Mark will add to what I have to say. 1st of all, the 9%, I said high single digits. So you said 9. That's fine, but that applies to MVE product segment, and you mix product and services. And so, you know, in the service segment where you have Galapagos, you know, you've cited, and some of the other activity that's happening, that's normal to me. You probably know this, but it's normal to have puts and takes. And people, you know, make their investments, and sometimes they can support them. financially going forward. Sometimes they can't. Sometimes they're rationalizing what they're doing, and we have no insight on that. What we do know is we are continuing to grow. We continue to see robustness. We have an increase in the clinical trials that we support, with 83 being in phase three. I think it was 83 in phase three. And we're doing well, and we see a continued buoyancy in the market. This science is not going to stop. It's going to change the way medicine is practiced around the world. It just takes time, and it has had some headwinds, but it's buoyant, it's strong, and we're growing, and we intend to continue to. You want to add to that?

I think you answered it pretty well. And the only thing I would just add is Jerry's right. I mean, I think some of the changes that you mentioned are really strategic portfolio decisions. I don't think they're market-driven decisions. You know, there's also other companies that are putting a lot more money into and expanding their programs from a, you know, top five pharma standpoint. So we don't have a level of concern around that. You know, as Jerry had mentioned, very strong pipeline activity. You know, a very strong activity from a regulatory standpoint. You know, as we had mentioned, upwards of another seven filings this year, upwards of potentially another 25 filings next year. So there's a lot of activity in the space which will continue to expand the number of commercialized therapies and the revenue associated with those therapies as the market matures.

Could I just add one more thing in there just to pile on? Yeah, Tom, please. Just to point out, September funding in BioPharm was quite strong, and October was the best month of the year so far. We had over 20 IPOs and follow-on offerings of greater than $100 million in October alone. So some of the programs you mentioned are falling off, but certainly other ones are coming up and taking their place.

But go ahead.

Yeah, that's about the point.

Yeah, yeah. Thanks, Tom. On the government shutdown piece and the implied 4Q guide, I'm just trying to understand how should we think about the segments within the guide for the fourth quarter, biologistics versus biostorage, bioservices versus the MBE life sciences product line. Maybe just help us understand, you know, how should we think about modeling, you know, each of those if you could provide some segment commentary. And just maybe just if you could pinpoint in the government shut down exactly. I mean, what, what are customers telling you? What are some of the worries here? If this shutdown extends into December.

You know, on the 1st, part of your question, it depends on what you think about the government shutdown. You know, frankly, um. You know, the government shutdown is temporary. Right now, you can't make a filing. You can't pay your fees for a filing. But that's going to end soon. It can't go on forever. And there's an election coming up, which I think will motivate a political end to the shutdown. And then we'll see some things open up. We'll see things start to move through, and we'll catch up. So I I don't, it's not going to last forever. The government shutdown isn't. And again, under the backdrop we've had, we've shown substantial growth in spite of any headwinds there. Mark, do you have anything to add to that?

Yeah, I think you answered it well. I mean, yeah, on a service standpoint, we haven't seen any impact other than the delay in filing activity, which they just can't do because they can't pay the, as Jerry mentioned, their filing, their application fees. That's the only impact that we've seen is there may be a short-term delay in some of the filing activity, but the service activity still remains very robust.

Yeah, and just looking at Q4 without going into too Too much detail, you know, obviously we expect year-over-year increase on the services side. On the product side, it largely depends on, you know, timing, especially if you look at some of the larger freezer orders or even, you know, some of the potential delays in government shutdown. That could, you know, just have an impact on timing of whether those are going to come in in Q4 or be shifted in Q1.

That's because they're capital expenditures and somebody has to sign off on them.

All right. Thank you, guys. I appreciate it.

Does that help? Yes.

Thank you.

Thank you.

Thank you.

Thank you. Your next question comes from the lineup. Matt Stanton from Jefferies. Your line is now open.

Hey, thanks. Maybe one for Mark. Just on the commercial trends, you're tracking up, you know, over 30% here year to date. Sounds like you saw some approvals here early in the quarter, continue more filings, and then I think next year, 25, which is a a big number. Can you talk about the durability of the growth in terms of what you see and hear from customers? And as we think about that kind of 30% plus, how you feel about that on the commercial side into 26? And I mean, is there opportunity for that to accelerate even further if some of these things kick in on RAMs or some of these filings kick in and, to your point earlier, start to get signed off and get out there? But just talk about the kind of growth algorithm on the commercial side. Thanks.

Yeah, you know, I think as you focus, you've got to focus on two things. One is the existing therapies as they mature. They move to earlier line and they go through global expansion. And, you know, as we had mentioned earlier, I mean, both BMS and Johnson and J&J have come out with very positive comments around growth and their data, their financial data supports that. You know, Johnson said, you know, their goal is 10,000 doses by year end and 20,000 patients by the end of 2027. which is a substantial increase. And then you have the newer therapies. As they launch, they're also expecting significant ramps. Vertex has come out and said they expect to see Casgevi start to ramp more significantly. And then we have other data on some of these earlier launches, which most of it has come out at or ahead of guidance. So if you take those in addition to the new filing activity, we think it'll remain robust in 26 and beyond.

All right, great. Thanks. And then, Robert, maybe just to go back, and it's been brought up a few times, just on the 4Q ramp. I mean, I know last quarter you guys were kind of saying, you know, 4Q probably higher than 3Q, part of that seasonality. Obviously, 3Q came in better than we expected. Is it fair to say that, you know, the sequential quarter over quarter implied 4Q? I mean, the government shut down maybe some of the time you talked about. I mean, is that kind of a low single digit million impact tied to those and, you know, maybe erring on the side of conservatism? Just kind of thinking about three months ago, 4Q higher than 3Q. And now we have kind of the opposite playing out. And maybe just confirm there was nothing kind of that fell in 3Q that you had previously expected to fall in 4Q. Thanks.

No, there's not, but you already really framed it. I think it's really balancing that and looking at our guidance. Certainly, we have upside potential, no question, but given some of the uncertainties, we felt that that guidance kind of reflects where we stand right now to acknowledge some of those other aspects that we discussed earlier.

Super. Thank you. Thank you.

Your next question comes from the line of Suvunanbi from Kuganai. Your line is now open.

Hey, guys. Thank you for taking my question. You recently announced the tripod systems received ISO certification. Could you speak to what this means in terms of your customer win rate or any competitive dynamics? How meaningful is this?

You know, I want Mark to speak to that, but in addition to that ISO, we've also won an award or two, and certainly one that we're proud of, and we did help on that ISO. So, Mark, take it away.

Yeah, so ISO 21973, which is really around the governing of handling of cell therapy-based materials, is what we received that certification in. We are the first entity that has received a formal ISO certification. Others have claimed that they have compliant with it, but we actually have received the certification from the ISO governing body related to that on a global basis. So what it really does is it reinforces us as the best in class and the gold standard as it relates to the management of these therapies on a global basis. and reinforces, obviously, the quality paradigm that we have. And I think as you look at our growth as it relates to commercial revenue as well as our clinical trial ads, the market continues to respond very favorably to that as they continue to put a larger share of the overall clinical trial count as well as the commercial activity into our portfolio. So we believe that'll be a continued positive influence on decision-making by our clients and sponsors.

You might mention that award that we won also, Mark.

Yeah, we actually won two awards, a CPHI award, which is one of the larger chemical industry awards for excellence of temperature control supply chain solutions. And then we also won another one from a biotech agency, which also reinforces that in the quarter. So I think the markets are absolutely responding to our platform as best in class.

That's great. Thank you for that. Any updates you can share on how you're progressing with your China first strategy? What milestones can we expect as we look to growth in that region for you guys?

You know, we have not assumed any growth in China for the – will not be assuming any growth in 2026. There's no change right now. We do have some efforts underway. It does take time to implement strategies of that nature, and we hope by 2027 it will be. Certainly one thing, we cannot ignore China. It is an advanced country. It has a very big population, and it has resources, and it can move very quickly. So we will continue to work on our China strategies, but we don't have anything we can report farther right now.

Perfect. And a last one for me. Is there a potential for a catch-up heading into 2026, just given the environment is improving, something that you touched on previously?

You're talking about a catch-up in terms of? What are you talking about, Sabu, in terms of catch-up?

So catch-up has been ordering. Just do you anticipate that could be some sort of catch-up order next year?

I think she's referring to the product side.

Yeah, when you talk about the products, I think what we said is it's really stabilizing. I don't think we can speak of that at this point in time. In general, conceptually, obviously, more and more material is being developed that requires cryogenic storage, and MBE being the largest global provider of storage and cryogenic systems, certainly we will be the first beneficiary of that, but at this point, it's just stabilization of the market that we can see.

Perfect. Thank you so much, Vince.

Thank you. Your next question comes from the line of David Larsen from BTIG. Your line is now open.

Hi. Congratulations on another very good quarter. It looks like the number of clinical trials, the growth rate year over year was the highest. It's been in like two and a half years. Just any thoughts on the big, beautiful Bill Act, reductions in Medicaid enrollment, reductions in exchange enrollment, maybe as high as 10 or 30%. Does that matter or not? Any thoughts on payer mix? Are most people getting cell and gene therapies? Are they covered by commercial plans, not Medicaid and exchanges? Just any thoughts there would be helpful.

Yeah, I personally don't think it's much impact at all. You know, the vast majority of therapies, by understanding, are not being covered by public funds. They're traditionally or typically private plans that are a reimbursement at this point.

Okay. And then do you have any concerns around drug pricing, like with price caps due to the Inflation Reduction Act or, you know, rebate flow, limits on price increases? Has that entered into any conversations at all or not?

The cell and gene therapies are exempt from all of that, Dave.

Yeah. Yeah, I was going to say the same thing. I said, yeah, I mean, you know, the White House has actually come out and supported Cell and Gene, and they're interested and continue to support it in an aggressive manner. And they are exempt from some of the pricing constraints that the White House is currently working through.

They're also not impacted by any tariff talk either.

Okay, great. So minimal regulatory risk heading into 26. Fantastic. And then in quarters past, you talked about the growth in number of clients at these bio storage facilities, I think in New Jersey and also like allogeneic storage, any color there in terms of like capacity or number of client growth?

Yeah, I mean, we're still continuing to onboard a significant number of clients at those sites, both existing and new clients. And so that rate continues to be very robust as evidenced by the sales data that we put forth publicly. We anticipate continued growth in the bioservices area in the 26,

based on that. By the way, David, this is not a singular thing. This is not a singular strand. I mean, we built these on a strategic basis. We built them to support our clients and to create more of a one-stop shop because clients actually prefer doing business with less vendors and especially one that they can trust. So it's kicking in and our clients are beginning to take hold of our bio-storage, bio-services operations within Crown Port Systems.

Yeah, we're averaging almost two audits a week at this point. So that's obviously a significant volume of new workflow that's coming into the facility.

So you're witnessing a strategy play out right now?

Great. One more quick one. IntegraCell, I get questions on that all the time. If there's anyone to call there, it would be helpful. It sounds like you're building a new facility there. Is that going to support global efforts for IntegraCell, and do you have revenue coming in for that business yet or not? Just any more color would be helpful.

Well, let me start, and Mark can give you more detail. But, you know, IntegraCell is another strategic endeavor, and we do have a network in mind, but we are carefully going into the development of IntegraCell. As Mark said earlier, we have revenue coming in at both locations, But I want to see those locations closer to cash flow, to positive cash flow before we add other operations. We do have plans for other operations. They will be added. The network will work. All the information that we've gotten so far is very encouraging. And now we're on the uptick by getting customers, clients, and revenue coming through those two facilities. I'll just turn it to Mark after that.

No, yeah, Jerry, as Jerry, what Jerry said is exactly right. You know, we opened those facilities at the end of Q3 last year. And, you know, the tech transfer process takes time because it's part of the production process. So there's regulatory activity that needs to occur for adoption. But we have completed our first tech transfers from both biotech and top 10 pharma. And we have started to generate revenue from both sites, both the site in Belgium as well as the site in Houston, Texas. And, you know, our expectation is that, you know, revenue will ramp modestly in 26 with a significant ramp, almost on a hockey stick modality post-26. Great.

Congrats on a good quarter. Hop back in the queue. Thank you. Thanks, Stephen.

Thank you. Your next question comes from the line of Mark Keatock from Stephen Inc. Your line is now open.

Hey, guys. Thanks for taking my questions. Robert, maybe just a quick one on margins. As this new facility comes online, can you just walk us through how these startup costs and the ramp in timing have been factored into your model and just how you expect that to influence margins over the next few quarters? Thanks.

Oh, it's a very good question, and it's, again, one of those balancing acts, because you're absolutely right. We have new facilities going online. IntegraCell went online, as Mark mentioned. We have a global supply chain center in Paris by the Charles de Gaulle Airport going online, with the official opening being in a few weeks from now. At the same time, we are seeing some operating leverage already of the existing facilities, and that allowed us to show gross margins reaching 48% and even higher on the service side in particular. We do typically have startup costs that we run the SG&A, but then as we open the facilities, you'll see some impact on the margins. So while we see operating leverages in some of the existing facilities that are driving higher margins, you'll have some margin depression by these new facilities coming online and starting to see revenue ramp over time. So that's, you know, as we start, and really 26, 27 is our, you know, really about that operating leverage, really about driving utilization of the existing footprint, global footprint that we have that will, you know, ultimately drive the gross margins. Our target is 55% gross margins overall and the 30% EBITDA margin. And actually there's still some time to go to get to the gross margins. But we'll see that operating leverage kick in, you know, later in 2026.

Appreciate that. And just touching on those long-term margins, can you just highlight your thinking in terms of timing around those as well? I know it's been a longer-dated proposition. I just kind of want to get your updated thoughts there.

Yeah, we're not giving guidance on that at this point in time because it's really, if you look at the cell and gene therapies market, It is still a fairly new market when it comes to actually the commercialization of therapies. So we want to see more progression and more therapies come to market. But we're clearly on that pathway, as you can see, in terms of the significant improvements to adjusted EBITDA as a first indicator. And we'll certainly drive that further into 26 and 27.

I appreciate the context, Oliver, there. Thank you. Thank you.

Thank you. There are no further questions at this time. Turning over back to Jarrell Shelton, your line.

Thank you very much. Thank you for your questions and our discussions. In closing, in the third quarter, we continued to see strong momentum in our business. This included double-digit revenue growth in both our core business segments. Our life sciences services segment, the key driver of our future growth, grew 16% year over year. driven by 21% increase in biostorage bioservices revenue and a 36% increase in commercial cell and gene therapy support. We also continue to see further steadiness in our life science product business, where revenue grew 15% for the quarter. Cryoport is positioned as the critical temperature control supply chain company supporting the life sciences industry. that de-risk the end-to-end delivery of cell and gene therapies worldwide. Thank you for joining us today. We appreciate your continued support and interest in our company and look forward to speaking with you again when we report our fourth quarter and our full year financial results.

Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.