Cryoport, Inc. Q2 FY2025 earnings call

• Strong double-digit revenue growth across all revenue streams in Life Sciences Services for Q2.
• 8% year-over-year revenue growth in Life Sciences Products due to improved demand and product portfolio expansion.
• Launch of strategic partnership with DHL Group and DHL's acquisition of CRYOPDP, including a $200 million cash payment to Cryoport.
• A client's temporary pause in distribution of their commercial therapy had minimal impact on business, with an estimated $2 million revenue impact for the remainder of the year.
• Cryoport supported a record 728 clinical trials, approximately 70% of the industry cell and gene therapy trials.
• Updates on IntegriCell: Proceeding on track with initiation of revenue production expected this quarter and meaningful revenue starting in 2026.
• MVE performed well with 8% year-over-year revenue growth, with stabilization and growth in markets despite global disruptions.

Life Sciences Services: Service revenue increased 21% year-over-year, accounting for 54% of total revenue from continuing operations. BioStorage/BioServices grew 28%, and revenue from support of commercial cell and gene therapies increased by 33%. Life Sciences Products: Posted 8% year-over-year revenue growth, driven by improved demand, especially from animal health customers, and the launch of new vapor shippers and cryogenic storage systems.

• Reaffirmed full year 2025 revenue guidance, being prudent due to global economic, geopolitical, and administrative uncertainties.
• Expectation of continued growth in the second half of 2025, with a focus on driving long-term shareholder value.
• Outlook for 2026 with more details to be provided later in the year after budgeting and other processes are completed.

• Uncertainties in the global economy, geopolitical uncertainties, and administrative uncertainties.
• Potential impact of tariffs, though no material impact seen to date.
• Impact of FDA or MAA negative opinions on clients' therapies, though clients are seeking pathways forward.

Q: Could you please provide a brief update on the non cell and gene therapy demand that appears to be driving the product revenue beat in the quarter? And could you provide an update on IntegriCell and how the adoption there is going?

A: Thomas J. Heinzen and Mark W. Sawicki responded, with MVE revenue improving and IntegriCell proceeding on track with revenue production expected this quarter and meaningful revenue starting in 2026.

Q: You maintained the guidance but had a great quarter, and it seems like there's the market seems to have improved and there is upcoming revenue streams into 2H. Can you go through the phasing on your 2H guidance and maybe go over why you didn't increase the guide?

A: Jerrell W. Shelton stated they were being prudent due to global economic and geopolitical uncertainties, so they reaffirmed the guidance.

Q: Congrats on the quarter. Maybe just a follow-up to that last question on guidance. Just comp I guess, third quarter, it looks to be an easier comp and then -- easy comp, but slightly harder in the fourth quarter. So how should we think about growth exiting the year, and any early thoughts on 2026 just given the momentum you're seeing? And then I'll have a follow-up.

A: Robert S. Stefanovich discussed 2026 outlook to be provided later, and expectations for growth in 2H 2025 with focus on gross margins and EBITDA.

Q: On the balance sheet, $426 million in cash post the sale of PDP, looks like you did some smaller share repurchases over the last couple of months, but I would love just an update on how you're thinking about capital allocation philosophy. You've done M&A in the past, you took a pause there. So would love your updated thoughts there.

A: Jerrell W. Shelton and Thomas J. Heinzen discussed share repurchases, prudent capital allocation, and opportunistic approach to M&A if compelling opportunities arise.

Q: I wanted to kind of zoom out for a higher level question, maybe for Jerry. Just in terms of the late quarter FDA update on the REMS and certain indications of approved CAR-Ts, what's the early feedback that you've heard from customers? And is there any way to kind of talk about the impact or potential impact this could do to patient volumes and any more color on timing as it relates to that update that we got late in the quarter?

A: Jerrell W. Shelton and Mark W. Sawicki discussed positive feedback from customers and expected updated forecasts from clients in the third quarter.

Q: Maybe just on biopharma, I think for the product side, you're talking about animal health, but just in terms of your biopharma customers, either buy product or region pretty robust trends in the quarter. What are you hearing from customers in terms of appetite to spend, how that might vary? We've seen kind of mixed signals from CROs and spend on certain projects, capital-related projects may be being pulled back given the macro, but would just love some updated color in terms of your discussions with your biopharma customers globally.

A: Jerrell W. Shelton and Mark W. Sawicki discussed that pullback is in preclinical and R&D, and biopharma clients in clinical and commercial space are well funded.

Q: Mark, as you've seen this commercial market accelerate, what are you seeing in terms of competitive dynamics? Are there will major players trying to be there are some customers wanting to home brew. What are you seeing or learning as the commercial side grows faster?

A: Mark W. Sawicki and Jerrell W. Shelton discussed that larger players want to work with Cryoport for integrated solutions, and the DHL deal is an example.

Q: Jerry, on MVE, do you feel like in the biopharmaceutical market that I guess it was destocking post COVID, do you think that's starting to be bottoming at this juncture?

A: Jerrell W. Shelton stated that excess capacity built during COVID has been burned off and the market is stabilizing.

Q: Robert, I guess we should expect some continuing EBITDA margin expansion because I'm assuming you have a lot of your infrastructure built in, except for IntegriCell. So top line should drive natural EBITDA progression? Is that kind of the logic?

A: Robert S. Stefanovich discussed EBITDA margin expansion depending on top line growth and initiatives like IntegriCell and facility build-outs.

Q: This is Jenny on for Dave. I apologize if you already spoke about this in the beginning of the call, I'm juggling a couple of calls here. But can you just talk about your updated view on tariffs, your expectation for costs, whether you're passing along the full costs or partial costs to customers and what their appetite to accept those higher cost has been?

A: Mark W. Sawicki discussed no material impact from tariffs and that any impact would be passed through to customers.

Q: This is Thomas on for Subbu. I just want to touch on the guide again. Can you just talk about where the offset is to that headwind from lower Sarepta revenue in the reiterated guide? Is that just stronger performance across the portfolio?

A: Robert S. Stefanovich stated it's due to strong performance across the portfolio in services and product lines.

Q: How much of the second half guide for revenue depends on pharma, clinical and commercial milestones that may be out of your control? Or is that largely derisked at this point?

A: Thomas J. Heinzen stated new approvals take time to ramp and aren't a factor in the guide.

Q: If I could just sneak 1 more in on China here. Any updates you can share on how you're progressing there and any milestones you can point us to as we look for growth in that region for you guys?

A: Jerrell W. Shelton stated no significant change in China market expansion in 2025 as reflected in guidance.

Q: Now that the DHL transaction is closed. Can you comment on how your customers are responding to Cryoport becoming a little bit more carrier agnostic? And what has the feedback been thus far?

A: Mark W. Sawicki and Jerrell W. Shelton discussed positive feedback from customers regarding the DHL partnership and carrier agnosticism.

Q: I appreciate that. And just following up on IntegriCell, obviously, it's a little margin dilutive at the moment as you ramp. But I was kind of curious if you could give some qualitative aspects of what you expect the long-term margin profile for that business line.

A: Jerrell W. Shelton and Mark W. Sawicki discussed IntegriCell ramping up with expected strong margin profile in the future, targeting 60% gross margins at maturity.

Q: So first one, I just wanted to confirm, that was $2 million headwind for annual for Sarepta, were you baking in anything for 2026 there, and are you seeing any signs of broader caution or delays among the AAV, gene therapy programs or clients. You talked about 5 of them that you're supporting, they received negative opinion by FDA. I just wanted to make sure if that's -- those 2 issues are tied together.

A: Jerrell W. Shelton and Mark W. Sawicki discussed no baking in for 2026 and that FDA changes are being navigated with positive responses seen.

Q: On MVE, could you clarify which end market where you saw the most growth. The animal side? Is it the pharma? Maybe just walk us through which business line actually drove MVE growth for you, maybe in the distributor channel.

A: Thomas J. Heinzen discussed MVE growth in APAC outside of China, EMEA, and animal health side globally.

Q: With -- you highlighted DHL, but just wondering, are you seeing any change in the competitive landscape overall? You have a number of other logistics companies that have been looking at these markets. Just wanted to get a sense of if you're seeing any change in the competitive dynamics or the market share for clinical trials?

A: Jerrell W. Shelton and Robert S. Stefanovich discussed positive competitive landscape with continued growth in clinical trials and leadership position.

Q: I hopped on the call a little late on traveling. Can you just talk about how MVE results came in relative to your own expectations. It looks like it's up 8% year-over-year on [expensive range], any more color there would be very helpful. And it looks like it's kind of turned around and it's now growing again.

A: Robert S. Stefanovich discussed MVE performing well with 8% growth, improved demand, new products, and strong margins.

Q: That's great. And then can you just talk about the broader market like the CRO space was under pressure earlier in the year. There's a lot of uncertainty around like the IRA, different like -- 3 different executive orders, tariffs, and then it looks like maybe CRO sort of came back with demand now progressing. Just what are you seeing in terms of overall sentiment from your customers clinical trial activity demand for the [dewars]? Just more color there would be very helpful.

A: Mark W. Sawicki discussed that pullback is in preclinical and R&D, and clinical and commercial clients are well funded with strong activity.