SHU Portfolio: BioLife Solutions Marches On

Summary

• The company produced solid Q4 result and 2019 outlook, without exceeding expectations.
• The company introduced a second sensible acquisition increasing its wallet space of its customers offering them another product line.
• The company is a solid long-term prospect, although the shares are not cheap and there is not that much room for further valuation multiple expansion.

One of our top picks in the SHU portfolio is BioLife Solutions (NASDAQ:BLFS), the maker of proprietary preservation solutions for cells, tissues, and organs. The company just presented Q4 and 2018 figures, as usual, we like to start with a little overview:

These are the kind of graphs we like to see, although the growth rate is slowing down a little:

And, given guidance, the growth rate is going to slow down some more this year as the company guided 2019 growth between 37% and 52%, which includes $1-2M from its recent acquisition of Astero Bio.

We are not too worried about that slowdown, as this is still very solid growth and there were other positive takeaways from the Q4CC, but let's start with that growth.

Growth

The biggest segment for the company is its regenerative medicine segment involving cell therapy, tissue engineering, and stem cell transplants. This market is developing at a torrid pace:

• 2018 funding increased to $13B, up 73% from 2017.
• More than 1,000 clinical trials are underway at the end of 2018.
• Company revenue from this segment was $11m (56% of total), 108% above 2017.
• The company gained 84 new direct cell and gene therapy customers.
• The company processed 57 additional cross-reference request for their FDA master files, up from 47 in 2017.
• There are four potential regulatory approvals for BioLife's customers.
• There is a change in the reimbursement environment to pay on cure which could strengthen demand for the company's product (including those of its recent acquisition).

The regulatory approvals for customers are important because that's when they will experience a step change in demand for BioLife's products, which are otherwise limited by the size of the clinical trials. Here are those potential approvals (Q4CC):

a conditional approval in Europe for Kiadis Pharma for

Analyst’s Disclosure:I am/we are long BLFS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.