BioLife Solutions (BLFS), a cell and gene therapy supplier, has recently embarked on strategic reshaping. By divesting its freezer subsidiaries, Arctic Solutions and SciSafe Holdings, for a cash total of $79.1 million, BioLife has shifted focus to higher-margin cell processing products. This strategic pivot comes amid solid Q3 results, with the company exceeding top-and-bottom-line expectations.
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However, the company has revised its 2024 revenue guidance below consensus projections, causing investors to pull back on the stock, sending it down over 20% in the past few days. Looking past the near-term volatility, a refocused business model bodes well for long-term potential upside, as evidenced by leading analysts upgrading their price targets for BioLife Solutions’ stock post-earnings announcement, suggesting it is a buy-on-the-dip candidate for investors interested in the Medical Equipment & Supplies industry.
BioLife Completes Strategic Transition
BioLife Solutions develops, manufactures, and markets tools and services for the cell and gene therapy industry. It offers a range of products, including proprietary biopreservation media, bioproduction tools, and automated thawing devices. These products are used in basic and applied research and in the commercial manufacturing of biologic-based therapies.
BioLife sold its wholly owned biostorage subsidiary, SciSafe Holdings, generating $73 million. Further, the company recently announced it has finalized the sale of its final wholly-owned freezer subsidiary, Arctic Solutions, Inc., for $6.1 million. This marks a divestment of all its freezer and related businesses, aligning with a strategic shift towards its proprietary cell processing products.
BioLife will now exclusively focus on its proprietary, high-growth cell processing products. With a fortified balance sheet and streamlined operations, BioLife aims to leverage its biopreservation market leadership to drive revenue growth and profitability in the upcoming years.
BioLife’s Recent Financial Results & Outlook
The company recently announced its financial performance for the third quarter of 2024. Revenue of $30.6 million surpassed expectations while posting a 30% year-over-year increase. The Cell Processing platform led the revenue increase with a 43% year-over-year growth, bringing in $19.0 million. Gains were also seen in the Biostorage Services, Freezers, and Thaw Systems platforms, with 14% and 11% annual increases, respectively.
The GAAP gross margin for Q3 2024 was 51%, up from 48% in Q3 2023, with the adjusted gross margin at 54%, up from 44% in Q3 2023. Although reporting a net loss from continuing operations, the loss has significantly decreased from $15.8 million in Q3 2023 to $1.7 million in Q3 2024. The GAAP loss per share from continuing operations also dropped from $0.63 in Q3 2023 to $0.04 in Q3 2024, beating consensus expectations.
As of the quarter’s end, the company reported $39.3 million in cash, cash equivalents, and marketable securities on hand.
Management has revised its 2024 revenue forecast to $98.0 million to $100.0 million, primarily due to the sale of SciSafe. The revision includes an increased revenue forecast for the Cell Processing platform, from $70.0 million to $72-$73 million, reflecting 9% to 11% growth from 2023, or 28% to 30% compared to the second half of 2023. Conversely, the Biostorage Services platform shows a lowered forecast of $26.0 million to $27.0 million, a drop of 7% to 4% from 2023 due to the SciSafe sale.
What Is the Price Target for BLFS Stock?
Despite the recent decline in post-earnings, the stock has been on an upward trend overall, climbing over 56% in the past year. It trades near the middle of its 52-week price range of $11.69 – $28.88 and shows negative price momentum as it trades below the 20-day (24.11) and 50-day (23.97) moving averages. With a P/S ratio of 6.3x, it trades at a relative premium to the Medical Instruments & Supplies industry average of 4.3x.
Analysts following the company have been bullish on BLFS stock, receiving an upgrade in its price target from several firms following the third quarter’s solid performance. For instance, Matt Hewitt at Craig-Hallum increased the firm’s price target from $30 to $32, while Lake Street analyst Thomas Flaten increased the price target from $28 to $30. Both firms maintained a Buy rating on BLFS shares.
BioLife Solutions is rated a Strong Buy overall, based on the cumulative recommendations of six analysts. The average price target for BLFS stock is $30.00, representing a potential upside of 42.72% from current levels.
Bottom Line on BioLife
BioLife Solutions is progressively refining its strategic focus towards high-yielding cell processing products, having recently finalized divestments of its freezer and storage subsidiaries. Despite a temporary dip in stock prices following a downward adjustment of its 2024 revenue projections, the company’s resilient Q3 performance, enhanced profitability, and strong growth in its cell processing segment present a promising future outlook, making it an attractive investment opportunity in the Medical Equipment & Supplies industry.
