Earnings call transcript Q2 2023

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Cryoport Second Quarter 2023 Earnings Conference Call. At this time, all lines are 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 would now turn the call over to your host, Mr. Strategic KCSA from Fromer Communications. Todd Please go ahead.

Todd Fromer

operator. you, Thank

information developments to Before beliefs assumptions this that statements the address events future on like occurring statements. and or forward-looking are we today, I that based or to performance, our operating forward-looking begin are remind our we conference in and available management currently All expect anticipate everyone team. statements. would that These call statements forward-looking certain contains management’s on not

statements forward-looking these reasonable that as made. believe team management when are and Our

should not otherwise of statements revise made. or obligation you information new as the only place However, any any undue events update result law. by required when such because as any or future reliance forward-looking forward-looking We date accept speak undertake publicly on do statements, not such or whether statements to a of as

certain statements projections. reports but described our uncertainties Factors time-to-time those events report limited Commission. and developments elsewhere to to In differ actual are our addition, expectations could subject and results, from risks uncertainties forward-looking include, cause Item risks those in experience and present Commission and XA, and materially and not described we which Securities are the Form with Securities Risk the and that and XX-K in on These our other historical filed to, in file with Exchange annual from or Exchange

Executive Shelton, my now of Chief Jerrell is pleasure Jerry, It Officer Mr. the call to the is to Cryoport. turn yours. floor over

Jerrell Shelton

Financial Stefanovich, Chief Marks our Development us your Relations, of earnings afternoon, Vice Todd. and Dr. call Good appreciate Robert Sawicki, Heinzen. today. you, With our Chief afternoon our President ladies this joining Officer, Thomas and Corporate and We gentlemen. Investor Scientific is Thank Officer,

presentation It a performance uploaded As and outlook. our XXXX general website. in This review review of and we under a have operational document and document financial be our the a found the to events relations section. provides our second can investor and reminder, quarter business

have at you not to had read download would chance time. it it, this a I to If encourage you

I then on with answering brief will on update move your will business questions. and provide to a you the we

we $XX guidance million, line previously of we the furnished. in with that Today had quarter second which reported revenue was

weaker from Our and results lower demand for certain capital quarter. significantly from second than during expected ramps reflected expected the quarter China equipment than clients second

or in Specifically, quarter a drop decline China's China condition MVE year-over-year. solutions significant orders biological XX% economic second a $X.X and and derived revenue caused million of

two market fourth XX% with third-party XX% as represented on years, the revenue our Based For slowdowns to and third Chinese and most revenue. possibly of the Cryoport's has the recent overall persist these we the quarter expect well approximately previous this MVEs conversations sources, through as total of year. of clients our

forecast, in we and XXXX previously now be with to range financial full after to expected communicated. this of thorough year the our Given million $XXX for as million revised consideration, revenue $XXX

we While been and clients this situation the the actively mitigate to disappointing needs. changing in is our working short-term, serve have

MVE Management and been team objective with to meet and distributors based our recently been to has leadership Our our with along relationships. team China and clients partners with reinforcing distributors. meeting key strengths there with key of has the

confidence very MVE have And short-term strategy mitigation are this role in resilient also despite firmly drivers of long-term believe devised help and We the a critical in very serving a sciences part industry. challenges. in a have build that need. to intact growth we long-term a as this leading pivotal clear very treatments are plans our life we be that industry to we we want corporate will As effort, our I our position. market have operate

expect a iceberg. support expected grow industry, compounded providing and represent today's to headwinds, at tip therapies commercially the approved of benefit is in leader lifesaving the we from clear growth therapy a to the gene XX%. of cell the and XX-year therapies cell any than gene growth are solutions which greater annual We to and continued short-term Despite rate

cell of relationships form to continuing investments to market, are gene to therapy and our addition make prospects. strategic the positive we In further the growth dynamics and enhance

You can find XXXX document, further investments quarter I in our in details second relationships review on these which earlier. mentioned and

that believe as will the second results. therapy quarter than impacted cement stronger we our macroeconomic position We we move gene to leadership in growth through and industry and prospects ever are cell continue current our challenges our

to are position to Cryoport resolved profitable for long-term our continue further and We growth. business the strengthen and

your now prepared questions. take will Operator, we happy questions. the concludes to open for This please remarks line be my

Operator

Leerink Ladies the begin Thank question. Instructions] is session. Puneet [Operator first now you. Partners. and from from Please Souda your gentlemen, question-and-answer we ask Your question will

Puneet Souda

first specific just other if could I IntegriCell that's the the to making? you bit it a wondering related bit a G&A. elaborate making on was was little or investments for wondering investments So the business, thought the a jump sequentially question, if in I'm for you're I you're of

Jerrell Shelton

making a are investments They're number as technology capabilities. our well both overall absolutely We're Yes. correct. here, building of as you in

Houston, where out building solutions Europe significant tied acquisition of the we IntegriCell the That's of to XXXX, One to Center building well Cell as already platform. include as And Matters is have Centers IntegriCell, Belgium. of out it and of capabilities. Excellence we're we're them where in in Excellence in both

of those And from which have, forecasts to QX and fully really includes investments operational customers. 'XX. gene that in based are be of Both we our cell market the detailed on all expected therapy insight these really

base. So to market our wallet we're as capabilities well out building share expand customer as from share

Puneet Souda

that's was my other little from one Yes. of Just impact for could the commercial revenue a the something Thank about progress And wondering resolved. ramp? of we take thinking if your wondering year. about therapy if been customers you. something when that's for question, into clarity bit you offer the consideration I that's And then should

Jerrell Shelton

a our second for these period a quarter to we do as and the a like had temporary In maintenance on issue. they purposes transient have shutdowns manufacturing things. gear of guys Obviously, time a of up, things it. That's did partners, one shutdown have for other potential

Mark Sawicki

running. cleaning they're back for and up Yes. plan calibration was maintenance, It and a shut and down

Puneet Souda

Got it. Thank very much. you

Operator

from Your next David question from Saxon Needham. is

David Saxon

Hi, excluding the at and good guidance. on question questions. you second the XX like million the that's multipart I lowered Maybe midpoint, my It looks taking for to quarter thanks by afternoon guess, guide here. but start miss,

of on MVE you in sound doesn't you the of at trends And So the second first, the there. half. mean, are the improving question all. we'll then, I I'm just the how assuming it in like MVE. part back is just the in cadence components goes fill But, China that can a break of down? -- the down let details lot guide is

you think a guys million range offset the to And $XX have but $XX should million for a should out facing third kind So we you quarter? of, then, in shake I quarter? somewhere Maybe headwind low third that some, can we of in follow-up. in $XX million the

Robert Stefanovich

guidance guidance. Look, the a we took Yes. to very intact, approach previously had announced revised that providing is conservative still obviously we

the demand China. current have QX, that from take got knowledge weak economic into experiencing account, have we're and that and we then within the that experience that We and issues does certainly

the that's So for year. baked guidance full into already the

MVE I'm businesses, internally, again, approach, MC. the we the looking conservative little for increases of than we guidance terms bit definitely, about took other then perspective, Again, in where of just guidance, the So And for lower talking from made services business. to we in even revenue QX. a expect gradual a come we're not a what side into our

David Saxon

follow They're ask see holder. to All the my some those then what good China. a color Thanks mean, up you're here. plans it's on? mitigation maybe visit could mentioned in from just kind place future. low right. I'll on And following Okay. so initiatives I you much. working just XX, what Jerry, you benefit to And of the

Jerrell Shelton

a general China. one are There of Yes. that working things on we're economic a condition. couple is Number with

plan. years, some – in growing there have accelerate And they're that, China, to kitting going likely, needed economic that a is in start and buy so manufactured we're the with But help building us that months And helped eventually. them important manufacturing is in in there. market. be stainless to market we'll claiming within we're this XXXX We're most participate and thing a to to China. for there vast in materials that it's facilitated manufacturing the up and operation. the be market. China, off in products going China most we time -- market and strengthening We've six that will do going product and China sourcing more to this operationally. we'll Within that sending share two to and us But We'll of pullback be is just so our underway we're initiative China, operation be share those us

Thomas Heinzen

quarter. third the on comment to want you do Robert,

Robert Stefanovich

No.

you're your think I third quarter right.

I your would think what I modeling, That's for I assume. yes. think

Operator

you. Thank

from Sourbeer question. question Please John next Your UBS. ask is your from

Lucas Beaumont

Yes. on some I some of for could Thinking to about assets? right has my currently the potentially Do first portfolio been This the it think a has is opportunities performance acquisition, Lucas is guess Or UBS. Sourbeer mixed. at things? bit John question you on here Cryoport there since be MVE. Thank devise you.

Jerrell Shelton

the solid largely portfolio, leader then but throughout excellent that drive to have run MVE it's of the and profitable, a are produces from is by management right want poised business very benefit cell It's and global will John, company company. we cash in in it MVE as a well-run new assets. is the the And a coming the It gene is portfolio an a that mountain therapy fits own to of very flow. team. absolutely is solid is world. you approvals company, that it

assets what's think benefit So, coming. it's will the one of that from we

Robert Stefanovich

had even in of it to of good QX Yes, in in it from to million maybe Chinese add market. free spite profitability year, the over the XX weakened cash maintained demand levels, flow, MVE this XXXX, in just

Jerrell Shelton

a us. up. mean, come the I leader systems to dollars be we'll world, throughout opportunity. of John, in world, selling providing the it's region tons to gearing of mountains in every strategic industry to you the recognize hundreds And in we're importance of be the will approvals And this, therapy, cryogenic think of Yes. of gene of need I millions

number have other that our is source support companies. of And supply supply We that for the means the also systems. cryogenic one the have source internal for that we

gain an well it So as an component. market there's component offer to insurance to as

Lucas Beaumont

over more switching the And of biotech you. emerging to guess, from you the clinical I Cryoport That's mean, were then color. large or some in both? business. I delays good and saw trial systems there pharma, Thank those

Mark Sawicki

No.

large increase was entities. last numbers step quarter was the But we takes for as the more initiate, an quarter. time which have not that clinical saw the those drawdown folks, they did quarter, scale last we heavily trials once to the smaller up So weighted relates to ramp versus it this in it a nice to not

Operator

you. Thank

question next from Your BTIG. from Larsen is David

David Larsen

Hi.

Beyond the not? that China, for assuming is the in in MVE. And and freezers. demand slowdown other Thank China, how correct world, of is How dewars U.S.? I'm beyond the demand or the for really is for the Europe demand Is regions the regions you. in and small freezers, in large

Jerrell Shelton

primarily fallen and the dewars of from protein. reader the That's for is demand community, supply It back. strong. The hasn't it's

So in world, being pullback it's universal it's around solid. biggest a the is pullback, The for demand China. freezers but the

Robert Stefanovich

So add maybe little to a it. can of bit just color I

X%. the If had look U.S., the far, by about about the China's decreased XX% most year, quarter-over-quarter in EMEA you last region, In significant. we at,

So and and to Pac. compared China, to some the extent, specific Asia impact on

two solid. The still are pretty markets other

David Larsen

some some I'm you're the and with mitigation Okay. more part ongoing investments you'd mean, seems only like China, increased then, commitments forward. in kind assuming visited of had it from would And there economic region of That's that assuming going challenges? you sense despite in country future. your investing part even you were And area that more there like of reason strategy. be sort sort is, as met Jerry, your of coming of that sounds the that I'm investing folks. I be that any a the you revenue if in verbal it and

Mark Sawicki

and cell to have you that when of look space. one you think going at what's on in the is, gene things the So about

Europe cell gene and activity. and the three next activity entity years China actually States the eclipse is in as clinical the to in So number the eclipsed has for two projected space, United in

of So standpoint. a from and significant that's pipeline to equipment distribution be there's that will cryogenic resource going substantial need both a storage required

So there's strategy. a that supports that of lot behind data

Thomas Heinzen

in companies Mark's to by is an equipment China There on real take in China XXXX to quick. in only the Just China. companies initiative in buy comments to for made

so on, And one China the already that's MVE of equipment manufacture is we're for China. moving drivers in to

that's So of initiative. part that

David Larsen

region self-contained Are question also be will you regions more or this China largely of dependent self-contained? mentioned, the other Or just China. in Will products the in you'll Is U.S. feel producing then And in that going those one and area. manufactured on like like be Europe? Okay. going business? be be -- rest what's largely a for I think other it to to supplying the China you and is

Jerrell Shelton

China all company. level. of No. it at our the of of We products is is at an export the All already the manufacturing EMEA. same export, And China interchangeable. part to look Americas. plants, quality We to our are out

So quality high. And the is is broad. reach

Thomas Heinzen

the Georgia United and aluminum three the States you States that dewars, the And Does for manufactures the to the around makes States United help? mostly. Just remind United manufacturing the and David, one for China. Minnesota have the two And world. Ball AMEA in freezers we Ground, facility the United the then facilities, facility, States and in dewars in

David Larsen

I'll Yes. Thanks the queue. That's helpful. back very very hop in much.

Operator

Your next B. is Yuan Zhi from from Riley. question

Yuan Zhi

Thank you taking questions. our for

question been or about expansion think most maybe answered. with opportunity Thank MVE the But the China? synergy can see I in of do my has you opportunity you CRYOPDP? Jerry, you. And talk for

Jerrell Shelton

your understand of the it China? opportunities CRYOPDP I in was question, expansion if and So

Yuan Zhi

for That's and then with CRYOPDP the expansion in China. broadly MVE synergy opportunity on

Jerrell Shelton

Yes.

So we're order. doing our reckon

said, some Systems. a doing with looked reckon know other an It the X.X enormous billion the We of opportunity And China. operates Chinese there. CRYOPDP So at business world. we're We it CRYOPDP there's this order accounts do very than differently operates in as with Cryoport the is Mark and in any both now for opportunity. there -- government We've and world people acquisitions. part

that world. in of There's expect So activity future avoid you part Cryoport no some and CRYOPDP can China from we the Systems. way can

decade. the to the forecast eclipse in said, next next States Mark within As the -- in gene the United therapy and China's cell

Mark Sawicki

in U.S. you then capabilities. outside also build is CRYOPDPs I to And Asia activities. really looking China on intent we've CRYOPDP of broader also were think were but that strength just their you before our and for Pac continues that about something And talked out Europe

So the particular, Systems CRYOPDP works. Systems, and lot opportunities base with that's Cryoport the U.S. has. of see that actively in synergy in between customer a Cryoport And we

Jerrell Shelton

of working to those are is, that up this of all So advantage approvals coming. build to take

billion, XXXX, is Our and And biologics this business and it similar biologics situation. and where is around was is you the out billion sprung a history. $XXX at it lot biologics in revenue if $XX a like looked today in just

we're the all the for So future. preparing time

year. We potential approved. have seven it's approvals coming already this And an exciting time. Two

Thank you. Okay.

Operator

ROTH Your Richard next from Instructions] [Operator question from Baldry is MKM.

Richard Baldry

I'm on if can initiative, an blood the collection standardization on Thanks. for any the update launch give you're I that? timing the, missed but term where standing or curious, you technical

Mark Sawicki

We're Yes. making progress. great

start two well launch and Belgium for in construction So complete and year. to equipment. ready are we've next as for of to or the where the facilities activities the initiated qualification Houston validation be month site the process anticipated generate in running a QX The Both as behind are in all revenue that. is

very, similar We've next are and start processes, that business very provide the open infrastructure, processes track pre-evaluating once the number the through to folks year, base we last them already very substantial coming fast when opened we think have bio-services they're we which smoothly. a the entity, of quick for those to already our from So their running client very, year. strong facilities we will

Jerrell Shelton

needs preparing when all for built remind that on are IntegriCell market It's know I'd whim. built from efforts this, coming like not coming. you a the standardization, to is market like is market of we are is for that, these just a the again, future, there demand. And

for So it's for scale. built being built -- it's and

Richard Baldry

the newer you it that's Ultracold think elite sort that your think there X.X. does replace do shifts. we the how it the of Is in offerings the about new those tier, of Cryosphere, whether shippers, across at a changes go-to-market things, your Thanks. And is, and the we what's Cryoport as or look How sort higher as just you make economics pricing?

Jerrell Shelton

in all speaking, Ultracold That's generally has XX to minus Ultracold degrees to Ultracold. composed its one else a that Elite the monitoring this. one has the much over Cryoport as Cryosphere is And a benefits up to it control, by has as second Elite in at -- then is product. of twice nearest time, Mark because the logistics not market is it's a launch the to shippers we it gene our It's the technicians market It logistics turn opens but just along XX. provide, their that has longshot. It that elite and add therapy. is. whole the the this competitor. also example, minus of and gene I'll But fantastic network And the generally Serepta in what gene for supporting new The whole therapies speaking, one Celsius. Elite revolutionary the always, features shipments. no one a us the their Ultracold using, of require and with

And of line then, the the much other course, a Do in you Elite from in stands to line. anything, the way the in But Mark? Elite is out other marketplace. poignant the want part of Cryosphere a competitors add very

Mark Sawicki

I covered really think it Jerry well.

associated to be to the accessibility They're modeling from the continue capture to standpoint, may these build standpoint, from have new ultracold overall. the and we to us share to be a of into didn't which us product space previously, obviously, to line therapy extend for differentiators. is about And, guys aspects slight are products meant it, us allows gene may allow with thinking and that market are premium premium had mentioned, you economic consider. the you If want that as there But a it, will in guys want an a space. Jerry

Richard Baldry

X.X, maybe an And a there's back acquisition the in costs same up underneath step can quarter is or you. on And of on replacement too. you a service upgrade? it do on look kind then that, the peel decent just Cryoportal hood read, and the Thanks. Thank integration or

Jerrell Shelton

XX also sets over Robert X. information a my Part the security, in your in question. validated. expansion To and knowledge X only question us apart adding a speed And industry question the about system in anyone your [indiscernible] XX logistics comprehensiveness. cost and terms platform the for is services from it compliant, The and in the us of to in integration to just industry, Cryoportal Cryoportal on future. It the gives else is and other and CFR but to moment, management the

add that to You anything want Mark? to

Mark Sawicki

Yes.

So things you're at the the one when couple differences fundamental does, Cryoportal think to of a there's you have about as looking X of it here.

First and competency. foremost provides integration it third-party vehicle for with and readily a systems made

going huge the to this space the also is be to And in our allows data the monetize effectively to So transfer data. driver forward. it a data have ability we to more And in moving us that system. start provides manage

we and So have, historical going data step data be that change initiating from portal. moving to we're already which allow to the us some forward, a will is in a to services start cases that platform monetize

Robert Stefanovich

at tactical as that, where market And your acquisition acquisition did we strategic to Having and done opportunities We kind diligence And research the that in related we forward then are during due of opportunity stand explore what The year, acquisition-related past. decided not this but move customer said a that. to had that's the half then costs. ultimately question with we have well. look just we second just to to cost smaller the of actively globally, some are activities. first looking

Operator

Your Brandon Jefferies. Couillard next from question is from

Brandon Couillard

seeing you the in And are pressure that Couple that China? volume, macro China How MVE all XQ the not local it decline. third [indiscernible]? question, percent more within sure and unit pricing as what when competition of [indiscernible]. was specifically XXXX, with Is bought well, are business revenue a dynamic? you it's some you The

Jerrell Shelton

in I especially moment. intelligence a percentage Robert we competition, to China. we're give it the of around on going competition the just lot wasn't certain But to percentages, a on that have

of that. So we're certain

Robert Stefanovich

within looked then, MVE, distributors, for at, XX%. at derived region, for this the well they're China. our And really we're as elsewhere, destination U.S. distinction you is China, the our we China sales XX% that make in at the stores is sales of of the China, the because end outside or derived, China it's whether we're our Yes. analysis, where at destination China in where as customers, of products to our look the direct in

but to less a number, little capture of tried really all that China than So in the impact we about XX%.

Brandon Couillard

Okay.

talked reprioritization, seeing on I actually you breakdown two the we of quarter. a number question, added revenue lot you in second some thought quarter, the adds? completions reconcile And to the gross impact added of Do a trials of just have points? ago, which we Second calculations do from clinical terminated, you being number of those and files some how month have when terminations in kind or the versus were data

Mark Sawicki

Yes.

has see terminations So we XX termination in had number we QX, did QX standpoint. substantial absolutely to actually in terminated, of XX dropped a number a that from QX

nice that So softness in a second add did revenue from a full quarter. running. the the those obviously trials QX, programs start those have weren't in in QX standpoint don't at enrollment. But XX because We impacted

So those trials, really they online, they but you a of quarters come take couple to ramp. initiate

for contribution. -- full between so activity period revenue obviously in the obviously well And bodes a future. onboarding there is But and it that doesn't lag

Brandon Couillard

and them look the retain they mix the XX:XX and you recently, view going that you really XX:XX multi that dual competitor are second keeping trend companies could to what their as see to Share? a of clear said Is are and forward? business? late do just providers. it lender one, on today. you week increasingly like How it XX see an ground logistics yesterday Or from warm earlier on Last and update that source that get looking Would this dynamic point like approved to of stage your

Mark Sawicki

I'll and this foreseeable in gene going that's but space industry. time. run continue else competition in to our the put at And rate space, is the a overall So we'll up some against space any particular growing for have always at and anyone rapidly future. is to obviously, expand solutions in to disproportionate And, will this cell the

nearly the we successful very and of market that the been best-in-class. have due We captured fact are XX% to

exemplary we scale. and performance have We are for building

allowed is capture us this that to and has So share. market XX% reputation unsurpassed

So the we the in clinical foreseeable and the markets our will future. confident market, to feel the commercial solution continue very that dominate both for

Operator

I There call back now your you. time. closing further the no hand this over will for to Thank are speakers questions at the remarks.

Jerrell Shelton

for a you transforms on and is second medicine vital challenging. in closing questions position quarter substantial Thank poised gene your value-added was Cryoport as The as In continuing therapy plans is execute cell it our provider, discussion. our and which is the to for company is growth the to resource way serving the practiced. industry,

all doing actions company's so key ultimately our products and targeted new We're make making support by more us and and relationships. believe long-term introducing growth. important stronger, will forming strategic We efficient combined investments, services these organization

night. quarter our us to when interest for report again today. forward you our we results. next quarter support to on appreciate progress We on want We thank company. updating your joining We you Good third and continuing in our look XXXX

Operator

gentlemen, Thank you. joining now Ladies you conference has and for may you disconnect. all all the ended. Thank

Cryoport (CYRX) 9 Aug 232023 Q2 Earnings call transcript