Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

May 8, 2024

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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 March 31, 2024

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 May 1, 2024 there were 49,257,444 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 March 31, 2024 (Unaudited) and December 31, 2023

3

Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023

4

Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2024 and 2023

5

Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2024 and 2023

6

Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023

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

33

PART II. OTHER INFORMATION

40

ITEM 1. Legal Proceedings

34

ITEM 1A. Risk Factors

40

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

40

ITEM 3. Defaults Upon Senior Securities

40

ITEM 4. Mine Safety Disclosures

35

ITEM 5. Other Information

35

ITEM 6. Exhibits

42

SIGNATURES

43

Table of Contents

Cryoport, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share data)

March 31, 

December 31, 

    

2024

    

2023

(unaudited)

ASSETS

Current Assets:

  

  

Cash and cash equivalents

$

49,663

$

46,346

Short-term investments

 

398,881

 

410,409

Accounts receivable, net

41,253

42,074

Inventories

 

25,020

 

26,206

Prepaid expenses and other current assets

 

10,887

 

10,077

Total current assets

 

525,704

 

535,112

Property and equipment, net

 

86,008

84,858

Operating lease right-of-use assets

31,029

32,653

Intangible assets, net

 

190,088

194,382

Goodwill

107,588

108,403

Deposits

 

1,674

1,680

Deferred tax assets

758

656

Total assets

$

942,849

$

957,744

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

Current Liabilities:

 

 

Accounts payable and other accrued expenses

$

27,376

$

26,995

Accrued compensation and related expenses

 

14,062

11,409

Deferred revenue

 

1,777

1,308

Current portion of operating lease liabilities

5,356

5,371

Current portion of finance lease liabilities

 

301

286

Current portion of notes payable

110

149

Current portion of contingent consideration

92

Total current liabilities

 

48,982

 

45,610

Convertible senior notes, net of discount of $6.4 million and $7.0 million, respectively

379,153

378,553

Notes payable

1,305

1,335

Operating lease liabilities, net of current portion

27,798

29,355

Finance lease liabilities, net of current portion

916

954

Deferred tax liabilities

2,414

2,816

Other long-term liabilities

312

601

Contingent consideration, net of current portion

9,779

9,497

Total liabilities

 

470,659

 

468,721

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

28,275

26,275

Common stock, $0.001 par value; 100,000,000 shares authorized; 49,256,794 and 48,971,026 issued and outstanding at March 31, 2024 and December 31, 2023, respectively

49

49

Additional paid-in capital

 

1,135,257

 

1,131,183

Accumulated deficit

 

(661,314)

 

(642,419)

Accumulated other comprehensive loss

 

(30,077)

 

(26,065)

Total stockholders’ equity

 

472,190

 

489,023

Total liabilities and stockholders’ equity

$

942,849

$

957,744

See accompanying notes to condensed consolidated financial statements.

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Cryoport, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

Three Months Ended

March 31, 

    

2024

    

2023

    

Life Sciences Services revenue

$

36,786

$

35,836

Life Sciences Products revenue

17,806

26,981

Total revenue

54,592

62,817

Cost of services revenue

21,602

19,076

Cost of products revenue

 

11,215

16,669

Total cost of revenue

32,817

35,745

Gross margin

 

21,775

27,072

 

Operating costs and expenses:

 

 

  

Selling, general and administrative

 

38,304

 

33,241

Engineering and development

 

4,752

 

3,876

Total operating costs and expenses

 

43,056

 

37,117

 

 

Loss from operations

 

(21,281)

 

(10,045)

Other income (expense):

 

 

Investment income

2,600

2,467

Interest expense

 

(1,338)

 

(1,509)

Other income, net

 

1,339

 

4,005

Total other income, net

2,601

 

4,963

Loss before provision for income taxes

 

(18,680)

 

(5,082)

Provision for income taxes

 

(215)

 

(492)

Net loss

$

(18,895)

$

(5,574)

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

(2,000)

(2,000)

Net loss attributable to common stockholders

$

(20,895)

$

(7,574)

Net loss per share - basic and diluted

$

(0.43)

$

(0.16)

Weighted average shares outstanding – basic and diluted

 

49,019,964

 

48,362,501

See accompanying notes to condensed consolidated financial statements.

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Cryoport, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

(unaudited, in thousands)

Three Months Ended

March 31, 

    

2024

    

2023

    

    

Net loss

$

(18,895)

$

(5,574)

Other comprehensive income (loss), net of tax:

 

 

Net unrealized gain on available-for-sale debt securities

 

261

 

3,675

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

(2,314)

99

Foreign currency translation adjustments

 

(1,959)

 

1,204

Other comprehensive income (loss)

 

(4,012)

 

4,978

Total comprehensive loss

$

(22,907)

$

(596)

See accompanying notes to condensed consolidated financial statements.

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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 December 31, 2022

 

$

 

$

200,000

$

18,275

 

48,334,280

$

48

$

1,114,896

$

(542,832)

$

(34,549)

$

555,838

Net loss

 

 

 

 

 

 

 

 

(5,574)

 

 

(5,574)

Other comprehensive loss, net of taxes

 

 

 

 

 

 

 

 

 

4,978

 

4,978

Stock-based compensation expense

 

 

 

 

 

 

 

5,184

 

 

 

5,184

Paid-in-kind preferred stock dividend

2,000

(2,000)

Vesting of restricted stock units

 

 

 

 

 

156,588

 

 

 

 

 

Proceeds from exercise of stock options

 

 

 

 

10,538

 

 

92

 

 

 

92

Balance at March 31, 2023

$

 

$

200,000

$

20,275

 

48,501,406

$

48

$

1,118,172

$

(548,406)

$

(29,571)

$

560,518

Balance at December 31, 2023

 

$

$

200,000

$

26,275

48,971,026

$

49

$

1,131,183

$

(642,419)

$

(26,065)

$

489,023

Net loss

 

 

 

 

 

 

 

 

(18,895)

 

 

(18,895)

Other comprehensive income, net of taxes

 

 

 

 

 

 

 

 

 

(4,012)

 

(4,012)

Stock-based compensation expense

 

 

 

 

 

 

 

5,456

 

 

 

5,456

Paid-in-kind preferred stock dividend

2,000

(2,000)

Vesting of restricted stock units

 

 

 

 

 

169,904

 

 

 

 

 

Proceeds from exercise of stock options

 

 

 

 

115,864

 

 

618

 

 

 

618

Balance at March 31, 2024

$

 

$

200,000

$

28,275

 

49,256,794

$

49

$

1,135,257

$

(661,314)

$

(30,077)

$

472,190

See accompanying notes to condensed consolidated financial statements.

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Cryoport, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited, in thousands)

For the Three Months Ended

March 31, 

    

2024

    

2023

Cash Flows From Operating Activities:

 

  

 

  

Net loss

$

(18,895)

$

(5,574)

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

 

 

  

Depreciation and amortization

 

7,469

 

6,404

Amortization of debt discount

 

601

 

641

Non-cash operating lease expense

1,360

1,099

Unrealized (gain) loss on investments in equity securities

 

678

 

(1,510)

Realized (gain) loss on available-for-sale investments

(2,416)

86

Stock-based compensation expense

 

5,456

 

5,184

Loss on disposal of property and equipment

 

131

 

77

Gain on insurance settlement

(2,642)

Change in credit losses

99

(103)

Insurance proceeds for operations

1,212

Change in contingent consideration

293

46

Changes in operating assets and liabilities:

Accounts receivable

 

437

 

(1,414)

Inventories

 

1,113

 

1,239

Prepaid expenses and other current assets

 

(1,174)

 

(271)

Deposits

 

(9)

 

(198)

Operating lease liabilities

(1,302)

(1,004)

Accounts payable and other accrued expenses

 

264

 

(3,276)

Accrued compensation and related expenses

 

2,719

 

1,962

Deferred revenue

 

462

 

570

Net deferred tax liability

(551)

246

Net cash provided by (used in) operating activities

 

(3,265)

 

2,774

 

 

  

Cash Flows From Investing Activities:

 

 

  

Purchases of property and equipment

 

(4,006)

 

(9,569)

Insurance proceeds for loss of fixed assets

976

Software development costs

(443)

(463)

Purchases of short-term investments

(14,038)

Sales/maturities of short-term investments

 

25,250

 

7,850

Patent and trademark costs

(318)

(177)

Net cash provided by (used in) investing activities

 

6,445

 

(1,383)

 

 

  

Cash Flows From Financing Activities:

 

 

  

Proceeds from exercise of stock options

 

618

 

92

Repayment of notes payable

(36)

10

Repayment of finance lease liabilities

(70)

(31)

Net cash provided by financing activities

 

512

 

71

Effect of exchange rates on cash and cash equivalents

 

(375)

 

481

Net change in cash and cash equivalents

3,317

1,943

Cash and cash equivalents — beginning of period

 

46,346

 

36,595

Cash and cash equivalents — end of period

$

49,663

$

38,538

Supplemental Disclosure of Cash Flow Information:

Cash paid for interest

$

38

$

Cash paid for income taxes

$

417

$

433

Supplemental Disclosure of Non-Cash Financing Activities:

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

$

$

4,436

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

$

261

$

(3,675)

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

$

(2,314)

$

99

Paid-in-kind preferred stock dividend, including beneficial conversion feature

$

2,000

$

2,000

Fixed assets included in accounts payable and accrued liabilities

$

542

$

707

See accompanying notes to condensed consolidated financial statements.

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Cryoport, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

For the Three Months Ended March 31, 2024 and 2023

(Unaudited)

Note 1. Management’s Representation and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by Cryoport, Inc. (the “Company”, “Cryoport”, “our” or “we”) in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statement presentation. However, the Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (consisting primarily of normal recurring accruals) considered necessary for a fair presentation have been included.

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The Company has evaluated subsequent events through the date of this filing and determined that no subsequent events have occurred that would require recognition in the unaudited condensed consolidated financial statements or disclosure in the notes thereto other than as disclosed in the accompanying notes.

Note 2. Nature of the Business

Cryoport is a leading global provider of innovative products and services supporting the life sciences. Our mission is to enable the future of medicine for a new era of life sciences. With over 50 strategic locations covering the Americas, EMEA (Europe, the Middle East and Africa) and APAC (Asia Pacific), Cryoport's global platform provides mission-critical bio-logistics, bio-storage, bio-processing, and cryogenic systems to over 3,000 customers worldwide. Our platform of solutions and services, together with our global team of over 1,100 dedicated colleagues, delivers a unique combination of innovative supply chain technologies and services through our industry-leading brands, including Cryoport Systems, MVE Biological Solutions, CRYOPDP, and CRYOGENE.

The Company is a Nevada corporation and its common stock is traded on the NASDAQ Capital Market exchange under the ticker symbol “CYRX.”

Note 3. Summary of Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies during the three months ended March 31, 2024, as compared to the significant accounting policies disclosed in Note 2 – Summary of Significant Accounting Policies to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Foreign Currency Transactions

Management has determined that the functional currency of its subsidiaries is the local currency. Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at the period-end exchange rates. Income and expenses are translated at an average exchange rate for the period and the resulting translation gain (loss) adjustments are accumulated as a separate component of stockholders’ equity. The translation gain (loss) adjustment totaled $(2.0) million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively. Foreign currency gains and losses from transactions denominated in other than respective local currencies are included in earnings.

Recently Adopted Accounting Pronouncements

In June 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions,” which amends the guidance in Topic 820,

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Fair Value Measurement, to clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. In addition, the ASU introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years for public business entities. We adopted ASU 2022-03 on January 1, 2024. The adoption of this standard did not have an impact on the Company’s consolidated financial statements or disclosures.

Accounting Guidance Issued but Not Adopted at March 31, 2024

In March 2024, the FASB issued ASU 2024-02 “Codification Improvements—Amendments to Remove References to the Concept Statements,” which amends the Codification to remove references to various FASB Concepts Statements and impacts a variety of Topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and are not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities. ASU 2024-02 is effective for the Company for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Entities may apply the guidance either retrospectively to the beginning of the earliest comparative period presented or prospectively to all new or modified transactions recognized on or after the date of adoption. We are currently evaluating the impact of this standard on our consolidated financial statements.

In March 2024, the FASB issued ASU 2024-01, “Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards,” which clarifies how an entity determines whether a profits interest or similar award is within the scope of Topic 718, or is not a share-based payment arrangement and therefore within the scope of other guidance. ASU 2024-01 adds an example with multiple fact patterns and illustrates how an entity evaluates common terms and characteristics of profits interests and similar awards to reach a conclusion about whether an award meets the conditions in Topic 718. It also amends certain language in the “Scope” and “Scope Exceptions” sections of Topic 718 to improve its clarity and operability without changing the guidance. ASU 2024-01 is effective for the Company for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Entities may apply the guidance either retrospectively to all periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. We are currently evaluating the impact of this standard on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which is intended to enhance the transparency and decision usefulness of income tax disclosures. Notably, the ASU requires entities to disclose specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, as well as disclosures of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis. Retrospective application to each period presented in the financial statements is permitted. We are currently evaluating the impact of this standard on our consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires all public entities, including those that have a single reportable segment, to provide enhanced disclosures primarily about significant segment expenses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The new guidance is required to be applied on a retrospective basis, with all required disclosures to be made for all prior periods presented in the financial statements. The segment expense categories and amounts disclosed in prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. We are currently evaluating the impact of this standard on our consolidated financial statements.

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements—Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” This ASU modifies the disclosure or presentation requirements of a variety of Topics in the Codification by aligning them with the SEC’s regulations. The amendments to the various Topics should be applied prospectively, and the effective date for the Company for each amendment will be determined based on the effective date of the SEC’s removal of the related disclosure from Regulation S-X or Regulation S-K. If the SEC has not removed the applicable requirement by June 30, 2027, then the related amendment in ASU 2023-06 will be removed from the Codification and will not become effective. Early adoption of this ASU is prohibited. We do not expect the amendments in this ASU to have a material impact on the disclosures or presentation in our consolidated financial statements.

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Note 4. Revenue, Concentrations and Geographic Information

Customers

The Company grants credit to customers within the U.S. and international customers and does not require collateral. Revenue from international customers is generally secured by advance payments except for established foreign customers. The Company generally requires advance or credit card payments for initial revenue from new customers. The Company’s ability to collect receivables can be affected by economic fluctuations in the geographic areas and industries served by the Company.

The Company’s customers are in the biopharma, pharmaceutical, animal health, reproductive medicine, and other life science industries. Consequently, there is a concentration of accounts receivable within these industries, which is subject to normal credit risk. There were no customers that accounted for more than 10% of net accounts receivable at March 31, 2024 and December 31, 2023.

The Company has revenue from foreign customers primarily in the United Kingdom, France, Germany, China and India. During the three months ended March 31, 2024 and 2023, the Company had revenue from foreign customers of approximately $24.7 million and $29.2 million, respectively, which constituted approximately 45.2% and 46.5%, respectively, of total revenue. No single customer generated over 10% of revenue during the three months ended March 31, 2024 and 2023.

Revenue Disaggregation

The Company views its operations, makes decisions regarding how to allocate resources and manages its business as one reportable segment and one reporting unit. As a result, the financial information disclosed herein represents all of the material financial information related to the Company. When disaggregating revenue, the Company considered all of the economic factors that may affect its revenue. Effective first quarter of 2024, we began reporting our services revenue in the following categories: BioLogistics Solutions and BioStorage/BioServices as Life Sciences Services, and our products revenue as Life Sciences Products. This change will better align our revenue categories with our strategic priorities. The following table disaggregates our revenue by category for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended

March 31, 

    

2024

    

2023

    

BioLogistics Solutions

$

33,258

$

32,604

BioStorage/BioServices

 

3,528

 

3,232

Life Sciences Services

36,786

35,836

Life Sciences Products

17,806

26,981

Total revenue

$

54,592

$

62,817

Given that the Company’s revenue is generated in different geographic regions, factors such as regulatory and geopolitical factors within those regions could impact the nature, timing and uncertainty of the Company’s revenue and cash flows. Our geographical revenue, by origin, for the three months ended March 31, 2024 and 2023, was as follows (in thousands):

Three Months Ended

March 31, 

    

2024

    

2023

    

Americas

$

29,904

$

33,617

Europe, the Middle East, and Africa (EMEA)

 

15,610

 

18,159

Asia Pacific (APAC)

 

9,078

 

11,041

Total revenue

$

54,592

$

62,817

Contract Liabilities (Deferred Revenue)

Contract liabilities are recorded when cash payments are received in advance of the Company’s performance. Deferred revenue was $1.8 million and $1.3 million at March 31, 2024 and December 31, 2023, respectively. During the three months ended March 31, 2024 and 2023, the Company recognized revenue of $0.4 million and $0.4 million, respectively, from the related contract liabilities outstanding as the services were performed.

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Credit Losses

Accounts receivable at March 31, 2024 and December 31, 2023 are net of allowance for credit losses of $2.2 million and $2.0 million, respectively. The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected at March 31, 2024 and December 31, 2023:

March 31,

 

December 31,

    

2024

    

2023

Balance of allowance for credit losses, beginning of period

$

1,992

1,275

Change in expected credit losses

246

812

Write-offs, net of recoveries

 

2

(95)

Balance of allowance for credit losses, end of period

$

2,240

1,992

Note 5. Net Loss Per Share

We calculate basic and diluted net loss per share using the weighted average number of common shares outstanding during the periods presented. In periods of a net loss position, basic and diluted weighted average common shares are the same. For the diluted earnings per share calculation, we adjust the weighted average number of common shares outstanding to include dilutive stock options, unvested restricted stock units and shares associated with the conversion of the Company’s 0.75% Convertible Senior Notes due in 2026 (the “2026 Senior Notes”), the Company’s 3.0% Convertible Senior Notes due in 2025 (the “2025 Senior Notes”) together with the 2026 Senior Notes, the “Convertible Senior Notes”) and the Company’s 4.0% Series C Convertible Preferred Stock (“Series C Preferred stock”) outstanding during the periods, using the treasury stock method or the “if converted” method as applicable.

The following shows the amounts used in computing net loss per share (in thousands except per share data):

Three Months Ended

March 31, 

    

2024

    

2023

    

Net loss

$

(18,895)

$

(5,574)

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

 

(2,000)

 

(2,000)

Net loss attributable to common shareholders

$

(20,895)

$

(7,574)

Weighted average common shares issued and outstanding - basic and diluted

49,019,964

48,362,501

Basic and diluted net loss per share

$

(0.43)

$

(0.16)

The following table sets forth the number of shares excluded from the computation of diluted loss per share, as their inclusion would have been anti-dilutive:

Three Months Ended

March 31, 

    

2024

    

2023

    

Stock options

 

2,201,358

 

3,438,314

 

Restricted stock units

1,207,323

665,110

Series C convertible preferred stock

5,953,481

5,721,177

Conversion of 2026 Senior Notes

3,156,483

3,422,780

Conversion of 2025 Senior Notes

599,954

599,954

 

13,118,599

 

13,847,335

 

Note 6. Acquisitions

2022 Acquisitions

In April 2022, we completed the acquisition of Cell&Co BioServices in Clermont-Ferrand, France with additional operations in Pont-du-Château, France to further enhance our existing global temperature-controlled supply chain capabilities. Cell&Co BioServices is a bioservices business providing biorepository, kitting, and logistics services to the life sciences industry. The purchase

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consideration was €5.7 million ($6.2 million), comprised of upfront consideration of €3.2 million ($3.5 million) in cash, 15,152 shares of the Company’s common stock with a fair value of $0.4 million, and an earn-out provision with a fair value of €2.0 million ($2.2 million) based on achieving annual EBITDA targets through 2025, as defined in the share purchase agreement. Through March 31, 2024, the Company has made $0.3 million in earn-out payments to the sellers. Of the purchase consideration, $2.7 million was allocated to goodwill and $3.4 million to identifiable intangible assets. The acquired goodwill and intangible assets are not deductible for tax purposes.

In July 2022, the Company completed the acquisition of Polar Expres based in Madrid, Spain, which provides temperature-controlled logistics solutions dedicated to the life sciences industry. Polar Expres operates logistics centers in Madrid and Barcelona supporting the rapidly growing life science market. This acquisition further expands CRYOPDP’s footprint which enhances our existing global temperature-controlled supply chain capabilities and provides us with additional growth opportunities in the EMEA region. The purchase consideration was €2.8 million ($2.8 million), comprised of cash consideration of €1.4 million ($1.4 million) and an earn-out provision with a fair value of €1.4 million ($1.4 million) based on achieving 2024 and 2026 EBITDA targets as defined in the share purchase agreement. Of the purchase consideration, $1.7 million was allocated to goodwill and $1.0 million to identifiable intangible assets. The acquired goodwill and intangible assets are not deductible for tax purposes.

In July 2022, the Company also completed the acquisition of Cell Matters based in Liège, Belgium, which provides cryo-process optimization, cryoprocessing, and cryopreservation solutions to the life sciences industry. The purchase consideration was €3.9 million ($4.0 million). The purchase consideration, including the reimbursement of financial indebtedness at the closing date, in the amount of €4.7 million ($4.7 million) in aggregate was allocated to goodwill. The value of this acquisition is assigned to Cell Matters’ assembled workforce which has significant expertise in cryo-process optimization and cryopreservation. Through September 30, 2023, the Company recorded a measurement period adjustment of $0.1 million comprised of a refund from the sellers following payments made from Cell Matters to the sellers between the locked box date and the closing date, in accordance with the locked box mechanism as defined in the share purchase agreement. The acquired goodwill is not deductible for tax purposes.

2023 Acquisitions

In October 2023, the Company completed the asset acquisition of SCI JA8, consisting substantially of real estate property used as administrative offices and a Global Supply Chain Center located in Clermont Ferrand, France. The purchase consideration was €0.6 million ($0.6 million), comprised of property with a fair value of €1.8 million ($1.9 million) and note payable of €1.0 million ($1.1 million).

Tec4med Life Science Acquisition

In November 2023, the Company completed the acquisition of TEC4MED LifeScience GmbH (Tec4med) based in Darmstadt, Germany. Tec4med provides next generation pharmaceutical supply chain visibility by integrating condition monitoring, cloud and artificial intelligence (AI) solutions. ISO 9001-certified, Tec4med works with pharmaceutical-compliant, ready-to-use devices and software, offering customer-specific integrations. Tec4med broadens Cryoport’s portfolio of condition monitoring solutions and provides additional resources and capabilities to drive new product development and accelerate its European market expansion, particularly in the DACH region (Germany, Austria, Switzerland). The purchase consideration was €3.0 million ($3.2 million), of which €2.5 million ($2.7 million) was allocated to goodwill and €0.3 million ($0.4 million) to identifiable intangible assets. The valuation of the intangible assets and opening balance sheet are preliminary estimates subject to change as we complete our procedures. The acquired goodwill and intangible assets are not deductible for tax purposes.  

Bluebird Express Acquisition

In November 2023, we also acquired Bluebird Express, LLC ("Bluebird Express"), a provider of time-sensitive domestic and international transportation services with key operations centers in Los Angeles (LAX) and New York (JFK). Bluebird Express has over 20 years of experience in providing these services, is a fully accredited cargo agent certified by the International Air Transport Association (IATA) and an indirect air carrier (IAC) authorized and regulated by the Transportation Security Administration (TSA).

The Bluebird Express acquisition was accounted for under the acquisition method of accounting in accordance with FASB ASC Topic 805, “Business Combinations,” and, therefore, the total purchase price was allocated to the identifiable tangible and intangible assets acquired and the liabilities assumed based on their respective fair values on the acquisition date. Fair values were determined by management based in part on an independent valuation performed by a third-party valuation specialist and required the use of significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including

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projected revenue and expenses, and the applicable discount rates. These estimates were based on assumptions that the Company believes to be reasonable; however, actual results may differ from these estimates.

The purchase consideration was $10.2 million, comprised of upfront consideration of $4.5 million and an earn-out provision with a fair value of $5.7 million, based on achieving certain revenue and EBITDA targets through 2026, as defined in the share purchase agreement. Of the purchase consideration, $4.4 million was allocated to goodwill and $3.7 million to identifiable intangible assets. The valuation of the intangible assets, contingent consideration liability and opening balance sheet are preliminary estimates subject to change as we complete our procedures. The acquired goodwill and intangible assets are deductible for tax purposes.

The following table summarizes the allocation of the purchase price as of the acquisition date (in thousands):

Total purchase consideration paid

$

10,229

Purchase price allocation:

 

  

Cash and cash equivalents

 

868

Accounts receivable

 

2,299

Prepaid and other current assets

 

38

Property and equipment

 

89

Operating lease right-of-use assets

 

709

Intangible assets

 

3,650

Accounts payable and other accrued expenses

 

(1,160)

Operating lease liabilities

 

(709)

Total identifiable net assets

 

5,784

Goodwill

 

4,445

$

10,229

The following table summarizes the estimated fair values of Bluebird Express’ identifiable intangible assets at the date of acquisition and their estimated useful lives and amortization expense based on their respective useful lives (in thousands):

    

    

    

    

    

    

    

Annual

Estimated

Estimated

Amortization

Amortization

Fair Value

Useful Life

Method

Expense

Customer relationships

$

220

 

8.3

 

Straight-line

$

27

Non-competition agreement

 

420

 

5

 

Straight-line

 

84

Agent network

 

2,890

 

4

 

Straight-line

 

723

Trade names/trademarks - finite-lived

 

120

 

1.5

 

Straight-line

 

80

Total

$

3,650

 

  

 

  

$

914

Goodwill is calculated as the excess of the purchase price over the fair value of net assets acquired and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Among the factors that contributed to a purchase price in excess of the fair value of the net tangible and intangible assets acquired were the acquisition of an assembled workforce, the expected synergies, and other benefits that we believe will result from combining the operations of Bluebird Express with our operations. The goodwill recognized of $4.4 million is deductible for income tax purposes. The valuation of the intangible assets, contingent consideration liability and opening balance sheet are preliminary estimates subject to change as we complete our procedures.

Acquisition-related transaction costs (included in selling, general and administrative expenses) totaled approximately $0.4 million.

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Note 7. Cash, Cash Equivalents and Short-Term Investments

Cash, cash equivalents and short-term investments consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):

March 31, 

December 31, 

    

2024

    

2023

Cash

$

42,582

$

40,979

Cash equivalents:

 

Money market mutual fund

 

7,081

5,367

Total cash and cash equivalents

 

49,663

46,346

Short-term investments:

 

U.S. Treasury notes and bills

 

126,738

136,665

Mutual funds

 

100,407

101,085

Corporate debt securities

171,736

172,658

Total short-term investments

 

398,881

410,409

Cash, cash equivalents and short-term investments

$

448,544

$

456,755

Available-for-sale investments

The amortized cost, gross unrealized gains, gross unrealized losses and fair value of available-for-sale investments by type of security at March 31, 2024 were as follows (in thousands):

Amortized

Unrealized

Unrealized

    

Cost

    

Gains

    

Losses

    

Fair Value

U.S. Treasury notes

$

126,776

$

321

$

(359)

$

126,738

Corporate debt securities

171,437

572

(273)

171,736

Total available-for-sale investments

$

298,213

$

893

$

(632)

$

298,474

The following table summarizes the fair value of available-for-sale investments based on stated contractual maturities as of March 31, 2024:

    

Amortized Cost

    

Fair Value

Due within one year

$