Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

BioLife Solutions (OTC: BLFS) Q4/12 And FY12 Results – STRONG BUY

Net loss of $500 K or $0.01 per share

For Q4/12, BLFS reported a net loss of $500 K or $0.01 per share, compared to $400 K or $0.01 per share in Q4/11. For FY12 BLFS reported a net loss of $1.7 M, an improvement over the $2 M net loss reported for 2011.

Total revenue was $2 M, compared to $800 K in Q4/11<10th consecutive Q of record revenue>. The increase of 153% from 2011 to 2012 was due primarily to contract manufacturing revenue and higher sales to customers in the hair restoration field, where HypoThermosol is increasingly being utilized as a new standard for ex vivo storage of hair grafts to improve procedure outcome and patient satisfaction. Gross margin in the quarter was 36.7% compared to 56.5% in Q4/11. The reduction in gross margin was primarily attributable to higher cost of sales on contract manufacturing revenue and higher personnel and other costs included in cost of goods sold related to the expansion of BLFS's facilities and production capacity. Operating expenses were $1.1 M compared with $700 K in Q4/11 primarily attributable to increased personnel costs associated with strategic hires in all departments. The increase in personnel expenses was partially offset by lower legal costs during the quarter. Q4/12 was the 1st Q in BLFS's history during which cash was generated by operating activities. Loss from operations was $300 K, compared to the $200 K in Q4/11. Shares utilized in computing the net loss were 69.67 M compared to Q4/11 of 69.67 M.

BLFS closed Q4 and FY12 with $196,478. Compared to $16,864 in FY11 while accounts receivable increased to $600,153 from $547,143

Q4/12 Achievements

  • Recorded positive cash from operations for the first time in Company history;
  • Delivered over $1.2 million in aseptically formulated and filled product to a contract manufacturing customer;
  • Commenced initial private-labeled product shipments to a new distributor, a leading supplier of cell culture reagents and tools to the LifeScience industry;
  • Completed the qualification of a 2nd cGMP clean room suite, doubling manufacturing capacity and increasing the BLFS' ability to leverage contract manufacturing opportunities while its core biobanking, drug discovery, and regenerative markets continue to develop.

FY12 Results: For FY12 reported revenue of$5.7 M, compared to $2.8 M in 2011, an increase of 105%. This was the result of growth in BLFS' core business segments and the addition of a contract manufacturing customer in Q4/12. Gross margin was 40.5% for FY12 compared to 50.9% in FY11. The decrease is related primarily to the increase in contract manufacturing services revenue, which has a higher cost of sales, compared to core product sales. Additionally, gross margin declined due to additional personnel and other costs included in cost of goods sold related to the expansion of BLFS' production operations. Operating expenses increased for FY12 compared to 2011 due primarily to increased personnel costs during the year. BioLife expanded its team from 16 members at the end of 2011 to 28 members at the end of 2012, to meet growing demand for products and services. Team members were added to the production team and direct and indirect sales teams in the period. Cash provided by operations was $0.9 million for FY12, a significant improvement over cash used by operations of $1 M in FY11. Again, shares utilized in computing the net losses of FY12 and FY11 were 69.67 M.

2013 Guidance: In 2013, BLFS management expects revenue to be in the range of $6.5 M to $7 M. This increase will be driven by continued increases in sales to existing core product and contract manufacturing customers, the addition of new customers in the regenerative medicine market as BLFS' customers continue to move their cell and tissue based therapies and products through the clinical trial and regulatory approval processes, and continued focus on sales through BLFS existing distribution network. Management expects gross margin as a percentage of revenue of approximately 38% - 41% in 2013 with fluctuation occurring as a result of changes in the mix of core product sales and contract manufacturing services revenue Operating expenses are expected to increase in 2013 by 10% - 20% over 2012, with increases expected in all areas primarily in personnel related costs.

The Bottom Line: BLFS is growing its business while keeping high growth as the regenerative medicine market opportunity develops." BLFS hold the leading supplier position for pre-formulated, clinical grade biopreservation media products. We estimate that our HypoThermosol^® cell/tissue storage medium and CryoStor^® cryopreservation freeze media products are used in more than 50 clinical trial-stage cell and tissue based therapies in the regenerative medicine field; any 1 of which could generate $1 M per year in revenue, if regulatory and marketing approvals are obtained by our customers.

BLFS closed at $0.29 on no volume on Thursday, 3/29/13. As traders stayed silent post seeking profit and always seems to pop back. I am still … optimistic about BLFS, now that Q4 and FY12 results are out - my expectations are on target - yet again as BLFS focuses another "rebound" play! The 50 day moving average is up to $0.30 and the 200 day average is up $0.28. The float is only 19.02 M as compared to outstanding shares of 69.67 M. I continue to reiterate this as a "STRONG BUY"

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.