ThermoGenesis Holdings, Inc. (THMO) on Q2 2021 Results - Earnings Call Transcript
Operator: Good day and welcome to the ThermoGenesis Holdings conference call and webcast to review financial and operating results for the second quarter ended June 30, 2021. . As a reminder, this conference call is being recorded. I would now like to turn the conference over to our host, Paula Schwartz of Rx Communications. Please go ahead.
Paula Schwartz: Thank you, operator. This conference call contains forward-looking statements within the meaning of the federal securities laws. The company's actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the company's periodic reports filed with the Securities and Exchange Commission. The information presented today is time sensitive and is accurate only as of the date of this call, August 12, 2021. If any portion of this call is being rebroadcast, retransmitted or redistributed at a later date, ThermoGenesis will not be reviewing or updating this material. Participating on today's call is Jeff Cauble, Chief Financial Officer. I'd like to now turn the call over to Jeff. Please go ahead.
Jeff Cauble: Thank you, Paula, and thank you to everyone for joining the call this afternoon. For more than 3 decades, ThermoGenesis has proven its ability to pioneer the development and production of a long list of cutting-edge automated technologies and products for the cell banking and cell therapy industries. Cell and gene therapies are poised to continue to revolutionize many areas of medicine. And ThermoGenesis intends to remain a leader in the development and commercialization of automated cell processing technologies that provide more efficient, higher quality and cost-effective manufacturing options to bring these therapies to clinics and patients in need. Today's drug developers must address the key challenge, how to manufacture the future cell and gene therapies at a commercial scale while making them economically feasible. We believe our proprietary automated CAR-TXpress platform will revolutionize cell processing and reduce overall cost. Therefore, we are committed to transitioning ThermoGenesis from a device-only company to a cell manufacturing service provider, or CDMO, for the global cell and gene therapy market. We hope to update you soon with more information on this exciting transition. Now I'd like to share the key financial results from the second quarter. Net revenues for the quarter ended June 30, 2021, were $2.2 million, matching revenues for the quarter ended June 30, 2020. The quarter ended June 30, 2021, saw AXP sales increase by $400,000, and BioArchive sales increase by $100,000 as compared to 2020. We believe this is a positive sign, illustrating that cord blood revenues may be starting to return to prepandemic levels. While the company does not have industry-specific data at this time regarding the number of cord blood units sold globally, AXP disposable sales increased by approximately 150 cases in the second quarter of 2021. The increased demand for AXP back sets appears to imply that global cord blood units stored are beginning to pick up. Gross profit for the quarter ended June 30, 2021, was $1 million, or 45% of net revenue, consistent with the company's standard gross margin and driven by the AXP disposable and BioArchive sales. Selling, general and administrative expenses were $3.5 million for the quarter ended June 30, 2021, as compared to $2 million for the quarter ended June 30, 2020, an increase of $1.5 million. The increase was driven by stock compensation expense, which rose by approximately $1.6 million, primarily due to the accelerated expense for certain options that were surrendered in the quarter ended June 30, 2021. For the quarter ended June 30, 2021, the company reported a basic and diluted comprehensive loss attributable to common stockholders of $4.5 million or $0.38 per share, based on 11.9 million weighted average shares outstanding. This compares to a basic and diluted comprehensive net loss of $6.4 million or $1.02 per share based on $6.3 million weighted average shares outstanding for the quarter ended June 30, 2020. In addition to the results reported under U.S. GAAP, the company also uses a non-GAAP measure, adjusted EBITDA, to evaluate operating performance and to facilitate the comparison of our historical results and trends to determine our operational cash flow. Adjusted EBITDA loss for the quarter ended June 30, 2021, was $900,000 as compared to a loss of $4.7 million for the quarter ended June 30, 2020, an increase of $3.8 million. At June 30, 2021, the company had cash and cash equivalents totaling $8.7 million compared with $7.2 million at December 31, 2020. Working capital was $4.2 million at June 30, 2021, as compared to $9.2 million at December 31, 2020. This concludes our prepared remarks. So now I'd like to open the call for your questions. Operator?
Operator: . The first question comes from Sean Lee with H.C. Wainwright.
Sean Lee: It's encouraging to see some of the cord blood revenue starting to return this quarter after the impact of the pandemic. I was just wondering how long do you think this recovery would last? And when do you think you'll be getting back to a more normal type of business level on the cord blood front?
Jeff Cauble: Thank you, Sean, for the question. It all kind of depends on where things go from here, regarding the delta variant and the virus in general. Everything recovers and continues to recover the way it had been in the previous few months, I would anticipate that by 2020, we would be back to prepandemic levels. However, if as a result of the delta variant, we end up with more shutdowns or other type of restrictions, then that could derail some of the progress we've seen in the last couple of months.
Sean Lee: Great. And regarding the transitioning to a CDMO provider, I know you mentioned you guys will be releasing more details soon. So what's the time line that you can expect on that? Is that something that's 6 months out, 12 months out or 2 years out?
Jeff Cauble: No, it's definitely more short term than long term. We would like to have -- definitely we'll have more information on this in the third quarter.
Sean Lee: I see. Looking forward to that. And finally, just what are some of the other maybe catalysts or inflection points that investors can look forward to over the next 6 to 12 months?
Jeff Cauble: Well, I think the main one is really the transition to being a CDMO, cell manufacturing provider. I mean that's the key change that we're -- the key direction that we're moving the company in. That's where we see significant opportunities for the company to grow in the future.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.
Jeff Cauble: Thank you, operator. We look forward to updating you on our progress in the third quarter. Thank you to everyone who participated today and for your interest in ThermoGenesis Holdings.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
