Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

November 9, 2023

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______.

Commission File Number: 001-34632

Graphic

CRYOPORT, INC.

(Exact Name of Registrant as Specified in its Charter)

Nevada

88-0313393

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

112 Westwood Place, Suite 350

Brentwood, TN 37027

(Address of principal executive offices, including zip code)

(949470-2300

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

    

Trading Symbol(s)

    

Name of each exchange on which registered:

Common Stock, $0.001 par value

CYRX

The Nasdaq Stock Market LLC (The Nasdaq Capital Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

  

Smaller reporting company

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes      No  

As of November 3, 2023 there were 48,963,717 shares of the registrant's common stock outstanding.

Table of Contents

TABLE OF CONTENTS

 

Page

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Condensed Consolidated Balance Sheets at September 30, 2023 (Unaudited) and December 31, 2022

3

Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022

4

Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022

5

Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022

6

Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022

7

Notes to Condensed Consolidated Financial Statements (Unaudited)

8

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

39

ITEM 4. Controls and Procedures

38

PART II. OTHER INFORMATION

40

ITEM 1. Legal Proceedings

39

ITEM 1A. Risk Factors

40

ITEM 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

40

ITEM 3. Defaults Upon Senior Securities

40

ITEM 4. Mine Safety Disclosures

40

ITEM 5. Other Information

40

ITEM 6. Exhibits

42

SIGNATURES

43

Table of Contents

Cryoport, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share data)

September 30, 

December 31, 

    

2023

    

2022

(unaudited)

ASSETS

Current Assets:

  

  

Cash and cash equivalents

$

59,473

$

36,595

Short-term investments

 

406,389

 

486,728

Accounts receivable, net

42,626

43,858

Inventories

 

29,104

 

27,678

Prepaid expenses and other current assets

 

11,548

 

9,317

Total current assets

 

549,140

 

604,176

Property and equipment, net

 

74,520

63,603

Operating lease right-of-use assets

32,561

26,877

Intangible assets, net

 

192,962

191,009

Goodwill

148,954

151,117

Deposits

 

1,656

1,017

Deferred tax assets

863

947

Total assets

$

1,000,656

$

1,038,746

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

Current Liabilities:

 

 

Accounts payable and other accrued expenses

$

27,875

$

28,046

Accrued compensation and related expenses

 

10,426

8,458

Deferred revenue

 

1,580

439

Current portion of operating lease liabilities

4,759

3,720

Current portion of finance lease liabilities

 

195

128

Current portion of notes payable

70

60

Total current liabilities

 

44,905

 

40,851

Convertible senior notes, net of discount of $7.6 million and $10.1 million, respectively

377,955

406,708

Notes payable

307

355

Operating lease liabilities, net of current portion

29,757

24,721

Finance lease liabilities, net of current portion

632

216

Deferred tax liabilities

4,708

4,929

Other long-term liabilities

484

451

Contingent consideration

4,380

4,677

Total liabilities

 

463,128

 

482,908

Commitments and contingencies

 

 

  

Stockholders’ Equity:

 

 

  

Preferred stock, $0.001 par value; 2,500,000 shares authorized:

 

 

  

Class A convertible preferred stock - $0.001 par value; 800,000 shares authorized; none issued and outstanding

 

 

Class B convertible preferred stock - $0.001 par value; 585,000 shares authorized; none issued and outstanding

 

 

Class C convertible preferred stock, $0.001 par value; 250,000 shares authorized; 200,000 issued and outstanding

24,275

18,275

Common stock, $0.001 par value; 100,000,000 shares authorized; 48,963,717 and 48,334,280 issued and outstanding at September 30, 2023 and December 31, 2022, respectively

49

48

Additional paid-in capital

 

1,127,335

 

1,114,896

Accumulated deficit

 

(580,030)

 

(542,832)

Accumulated other comprehensive loss

 

(34,101)

 

(34,549)

Total stockholders’ equity

 

537,528

 

555,838

Total liabilities and stockholders’ equity

$

1,000,656

$

1,038,746

See accompanying notes to condensed consolidated financial statements.

3

Table of Contents

Cryoport, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2023

    

2022

    

2023

    

2022

Service revenues

$

36,022

$

33,296

$

107,062

$

100,791

Product revenues

20,135

27,168

68,933

76,128

Total revenues

56,157

60,464

175,995

176,919

Cost of service revenues

20,803

18,913

59,887

56,742

Cost of product revenues

 

11,088

15,134

 

40,037

42,581

Total cost of revenues

31,891

34,047

99,924

99,323

Gross margin

 

24,266

26,417

 

76,071

77,596

 

 

Operating costs and expenses:

 

 

  

 

 

Selling, general and administrative

 

36,023

 

30,235

 

108,066

 

87,420

Engineering and development

 

5,152

 

3,985

 

13,291

 

11,045

Total operating costs and expenses

 

41,175

 

34,220

 

121,357

 

98,465

 

 

 

 

  

Loss from operations

 

(16,909)

 

(7,803)

 

(45,286)

 

(20,869)

Other income (expense):

 

 

 

 

  

Investment income

2,848

2,485

7,962

5,797

Interest expense

 

(1,357)

 

(1,609)

 

(4,197)

 

(4,686)

Gain on extinguishment of debt, net

5,679

5,679

Other income (expense), net

 

(3,059)

 

1,668

 

242

 

(7,377)

Total other income (expense), net

4,111

 

2,544

9,686

 

(6,266)

Loss before provision for income taxes

 

(12,798)

 

(5,259)

 

(35,600)

 

(27,135)

Provision for income taxes

 

(471)

 

(57)

 

(1,598)

 

(762)

Net loss

$

(13,269)

$

(5,316)

$

(37,198)

$

(27,897)

Paid-in-kind dividend on Series C convertible preferred stock

(2,000)

(2,000)

(6,000)

(6,000)

Net loss attributable to common stockholders

$

(15,269)

$

(7,316)

$

(43,198)

$

(33,897)

Net loss per share - basic and diluted

$

(0.31)

$

(0.15)

$

(0.89)

$

(0.69)

Weighted average shares outstanding – basic and diluted

 

48,904,102

 

48,520,696

 

48,660,646

 

49,148,558

See accompanying notes to condensed consolidated financial statements.

4

Table of Contents

Cryoport, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

(unaudited, in thousands)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2023

    

2022

    

2023

    

2022

Net loss

$

(13,269)

$

(5,316)

$

(37,198)

$

(27,897)

Other comprehensive income (loss), net of tax:

 

 

 

 

Net unrealized gain (loss) on available-for-sale debt securities

 

624

 

(6,537)

 

3,076

 

(25,912)

Reclassification of realized loss on available-for-sale debt securities to earnings

758

1,389

46

Foreign currency translation adjustments

 

(995)

 

(7,215)

 

(4,017)

 

(15,819)

Other comprehensive income (loss)

 

387

 

(13,752)

 

448

 

(41,685)

Total comprehensive loss

$

(12,882)

$

(19,068)

$

(36,750)

$

(69,582)

See accompanying notes to condensed consolidated financial statements.

5

Table of Contents

Cryoport, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

(unaudited)

Class A

Class B

Class C

Other

Total

Preferred Stock

Preferred Stock

Preferred Stock

Common Stock

Additional

Accumulated

Comprehensive

Stockholders’

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Paid–In Capital

    

Deficit

    

Loss

    

Equity (Deficit)

  

  

  

  

  

  

  

  

  

  

Balance at June 30, 2022

 

$

 

$

200,000

$

14,275

 

48,482,502

$

49

$

1,081,747

$

(498,471)

$

(29,176)

$

568,424

Net loss

 

 

 

 

 

 

 

 

(5,316)

 

 

(5,316)

Other comprehensive loss, net of taxes

 

 

 

 

 

 

 

 

 

(13,752)

 

(13,752)

Stock-based compensation expense

 

 

 

 

 

 

 

5,366

 

 

 

5,366

Paid-in-kind preferred stock dividend

2,000

(2,000)

Vesting of restricted stock units

4,500

Proceeds from exercise of stock options

 

 

 

 

 

71,429

 

 

999

 

 

 

999

Balance at September 30, 2022

$

$

200,000

$

16,275

48,558,431

$

49

$

1,086,112

$

(503,787)

$

(42,928)

$

555,721

Balance at June 30, 2023

 

$

 

$

200,000

$

22,275

 

48,879,018

$

49

$

1,123,180

$

(566,761)

$

(34,488)

$

544,255

Net loss

 

 

 

 

 

 

 

 

(13,269)

 

 

(13,269)

Other comprehensive loss, net of taxes

 

 

 

 

 

 

 

 

 

387

 

387

Stock-based compensation expense

 

 

 

 

 

 

 

5,976

 

 

 

5,976

Paid-in-kind preferred stock dividend

 

 

 

 

2,000

 

 

 

(2,000)

 

 

 

Vesting of restricted stock units

12,499

Proceeds from exercise of stock options

 

 

 

 

 

72,200

 

 

179

 

 

 

179

Balance at September 30, 2023

$

$

200,000

$

24,275

48,963,717

$

49

$

1,127,335

$

(580,030)

$

(34,101)

$

537,528

Balance at December 31, 2021

 

$

 

$

200,000

$

10,275

 

49,616,154

$

50

$

1,100,287

$

(467,541)

$

(1,243)

$

641,828

Net loss

 

 

 

 

 

 

 

 

(27,897)

 

 

(27,897)

Other comprehensive loss, net of taxes

 

 

 

 

 

 

 

 

 

(41,685)

 

(41,685)

Stock-based compensation expense

 

 

 

 

 

 

 

14,749

 

 

 

14,749

Paid-in-kind preferred stock dividend

6,000

(6,000)

Issuance of common stock for Cell&Co acquisition

15,152

479

479

Repurchase of common stock

(1,341,571)

(1)

(24,999)

(8,349)

(33,349)

Vesting of restricted stock units

 

 

 

 

 

97,062

 

 

 

 

 

Proceeds from exercise of stock options

 

 

 

 

171,634

 

 

1,596

 

 

 

1,596

Balance at September 30, 2022

$

 

$

200,000

$

16,275

 

48,558,431

$

49

$

1,086,112

$

(503,787)

$

(42,928)

$

555,721

Balance at December 31, 2022

 

$

$

200,000

$

18,275

48,334,280

$

48

$

1,114,896

$

(542,832)

$

(34,549)

$

555,838

Net loss

 

 

 

 

 

 

 

 

(37,198)

 

 

(37,198)

Other comprehensive income, net of taxes

 

 

 

 

 

 

 

 

 

448

 

448

Stock-based compensation expense

 

 

 

 

 

 

 

16,960

 

 

 

16,960

Paid-in-kind preferred stock dividend

6,000

(6,000)

Vesting of restricted stock units

 

 

 

 

 

221,623

 

 

 

 

 

Proceeds from exercise of stock options

 

 

 

 

407,814

 

1

 

1,479

 

 

 

1,480

Balance at September 30, 2023

$

 

$

200,000

$

24,275

 

48,963,717

$

49

$

1,127,335

$

(580,030)

$

(34,101)

$

537,528

See accompanying notes to condensed consolidated financial statements.

6

Table of Contents

Cryoport, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited, in thousands)

For the Nine Months Ended

September 30, 

    

2023

    

2022

Cash Flows From Operating Activities:

 

  

 

  

Net loss

$

(37,198)

$

(27,897)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

  

Depreciation and amortization

 

20,038

 

16,631

Amortization of debt discount

 

1,928

 

1,930

Non-cash operating lease expense

3,403

2,688

Unrealized (gain) loss on investments in equity securities

 

2,255

 

12,436

Realized loss on available-for-sale investments

62

113

Stock-based compensation expense

 

16,960

 

14,749

Loss on disposal of property and equipment

 

277

 

574

Gain on extinguishment of debt, net

(5,679)

Gain on insurance settlement

 

(2,642)

 

(4,815)

Change in credit losses

(135)

13

Excess and obsolete inventory

546

Insurance proceeds for operations

1,212

6,429

Change in contingent consideration

(205)

145

Changes in operating assets and liabilities:

Accounts receivable

 

1,088

 

(8,307)

Inventories

 

(1,572)

 

(11,179)

Prepaid expenses and other current assets

 

(2,298)

 

(1,419)

Deposits

 

(652)

 

9

Operating lease liabilities

(3,009)

(2,372)

Accounts payable and other accrued expenses

 

(36)

 

(3,172)

Accrued compensation and related expenses

 

2,013

 

(1,218)

Deferred revenue

 

1,141

 

(420)

Net deferred tax liability

(190)

(969)

Net cash used in operating activities

 

(3,239)

 

(5,505)

 

 

  

Cash Flows From Investing Activities:

 

 

  

Purchases of property and equipment

 

(27,212)

 

(14,250)

Insurance proceeds for loss of fixed assets

976

3,000

Software development costs

(4,830)

(965)

Purchases of short-term investments

(155,353)

Acquisitions

(6,554)

Sales/maturities of short-term investments

 

82,487

 

107,835

Patent and trademark costs

(616)

(518)

Net cash provided by (used in) investing activities

 

50,805

 

(66,805)

 

 

  

Cash Flows From Financing Activities:

 

 

  

Proceeds from exercise of stock options

 

1,480

 

1,596

Repurchase of common stock

(33,349)

Cash paid for repurchase of 2026 Senior Notes

(25,003)

Repayment of notes payable

(26)

(2,069)

Repayment of finance lease liabilities

(123)

(46)

Net cash used in financing activities

 

(23,672)

 

(33,868)

Effect of exchange rates on cash and cash equivalents

 

(1,016)

 

(2,199)

Net change in cash and cash equivalents

22,878

(108,377)

Cash and cash equivalents — beginning of period

 

36,595

 

139,101

Cash and cash equivalents — end of period

$

59,473

$

30,724

Supplemental Disclosure of Cash Flow Information:

Cash paid for interest

$

1,792

$

1,904

Cash paid for income taxes

$

951

$

1,276

Supplemental Disclosure of Non-Cash Financing Activities:

Operating lease right-of-use assets and operating lease liabilities

$

9,581

$

5,084

Net unrealized gain (loss) on available-for-sale debt securities

$

3,076

$

(25,912)

Reclassification of realized gain (loss) on available-for-sale debt securities to earnings

$

1,389

$

(46)