Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the BioLife Solutions Third Quarter 2025 Shareholder and Analyst Conference Call. [Operator Instructions] I will now turn the call over to Troy Wichterman, Chief Financial Officer of BioLife Solutions. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining the BioLife Solutions 2025 Third Quarter Earnings Conference Call. On the call with me today is Roderick de Greef, CEO and Chairman of the Board. We will cover business highlights and financial performance for the quarter and provide an update for our increased 2025 revenue guidance as adjusted for the sale of our evo Cold Chain product line. Earlier today, we issued a press release announcing our financial results and operational highlights for the third quarter of 2025, which is available at biolifesolutions.com. As a reminder, during this call, we will make forward-looking statements. These statements are subject to risks and uncertainties that can be found in our SEC filings. These statements speak only as of the date given, and we undertake no obligation to update them. We will also speak to non-GAAP or adjusted results. Reconciliations of GAAP to non-GAAP or adjusted financial metrics are included in the press release we issued this afternoon. Now I'd like to turn the call over to Rod de Greef, Chairman and CEO of BioLife.

Thanks, Troy. Good afternoon, and thank you for joining us for BioLife's Third Quarter 2025 Conference Call. We delivered another strong quarter, and we are raising our full year 2025 guidance as our team continues to execute and build on the momentum we've seen develop over recent quarters. On the top line, cell processing revenue increased 33% year-over-year, driving a 31% increase in total revenue for the quarter. This growth reflects sustained strength across our biopreservation media franchise and broader cell processing portfolio. Importantly, the mix of higher-margin recurring revenue continues to translate into improved profitability with adjusted EBITDA margin expanding 500 basis points year-over-year to 28%. This demonstrates that the operating leverage inherent in our business model is flowing through to the bottom line, driven by the benefits of our streamlined operations and focused product portfolio. In early October, we announced the sale of our evo Cold Chain logistics product line for approximately $25 million in cash. This transaction further strengthens our balance sheet, bringing cash and marketable securities to approximately $125 million. Strategically, the sale allows us to focus entirely on what is now a fully optimized portfolio, which is aligned with our core competencies and operational strengths, advancing our transformation into a leading pure-play cell processing company. Over the last 2 years, our actions have reshaped BioLife into a more focused, high-margin enterprise, positioning us to deliver sustainable growth and expanding profitability for the balance of 2025 and beyond, both from continued organic growth and potentially inorganically through the disciplined allocation of capital. Looking at the third quarter more closely, cell processing revenue reached $25.4 million, a 33% year-over-year increase, driven by strong growth across our BPM franchise and our broader cell processing tools portfolio. It's important to note that at the request of a commercial customer,…

Thank you, Rod. We reported Q3 revenue of $28.1 million, representing an increase of 31% year-over-year. The year-over-year increase was primarily related to a 33% increase in our cell processing platform, driven by strong demand from biopreservation media customers with commercially approved therapies. In addition, Q3 included a biopreservation media sales order of approximately $1.3 million that was anticipated to ship in Q4, but based on the customer's request was shipped in Q3. GAAP gross margin for Q3 2025 was 62% compared with 63% in Q3 2024. Adjusted gross margin for the third quarter was 64% compared with 67% in the prior year. The decrease in adjusted gross margin percentage compared with the prior year was primarily attributed to a $600,000 onetime inventory reserve we took in Q3 2025, which represented approximately 2% of our Q3 2025 revenue. Additionally, there was a less favorable product mix compared to the prior year. GAAP operating expenses for Q3 2025 were $28.2 million versus $21.8 million in Q3 2024. The increase compared to the prior year can be attributed to increases in cost of sales related to our increased revenues and an increase in stock-based comp expense of $1.8 million over Q3 2024 related to performance-based awards. Adjusted operating expenses for Q3 2025 totaled $16.6 million compared with $14.1 million in the prior year. GAAP operating loss for Q3 2025 was $89,000 versus $418,000 in the prior year. The decrease in GAAP operating loss was primarily due to increased revenue compared to the prior year. Our adjusted operating income for the third quarter of 2025 was $1.3 million compared with an adjusted operating income of $167,000 in Q3 2024. Our GAAP net income was $621,000 or $0.01 per share in Q3 compared to GAAP net loss of $471,000 or $0.01 per share in…

[Operator Instructions] And our first question will come from the name of Paul Knight with KeyBanc.

Congrats on the quarter. What's pricing like? What was it in 3 or 9 months year-to-date? And what do you anticipate pricing to be in years ahead?

So, I'll take the last part and let Troy address the first one. So, we're expecting to increase prices in '26 between 4% and 6% depending on the SKU.

And if you're talking about price growth in year-to-date Q3, we did have price growth that was higher than our list price increases due to those customer contract negotiations we've been talking about.

And on your direct sales, I know you're trying to sell a variety of products now. What have you been doing with headcount, non-media sales? Could you give us color about do you continue to increase that direct sales level in the future quite a bit? Where are you with headcount to give us a gauge of kind of what your efforts are maybe headcount versus a year ago on direct sales?

Yes. So, I'd say that we've added perhaps one that's focused on the cross-selling opportunity that we have, bringing that to a total of about 6, right? But until we're confident, Paul, of the return on that investment, we're going to hold fire, although I do suspect we'll add some in 2026. I think what it comes down to is that it doesn't take a lot of people for us to focus on sort of the first -- the top 20 of our direct customers who are the key candidates to absorb or adopt some additional technology. So, the numbers are pretty small. I think the sales team is also going out and speaking with the sort of 30% of the biopreservation media clinical trials that we are not known to be spec-ed in. We may well be spec-ed in some of them, but it's not obvious to us to determine what we can do there. But if I look at the clinical pipeline of our core direct customers that have commercial therapies in the market today, let's call it, half a dozen of those, their clinical pipeline is very robust, and the focus is on getting those folks to adopt whether it's the CryoCase, the CellSeal or our HPL or CT5. Those are the 4 key products that we're trying to cross-sell into that base.

Our next question will come from the name of Matt Stanton. Just one second. Matt Stanton?

Rod, maybe one for you. Just in terms of what you saw in 3Q, obviously, it sounds like the commercial was chugging along nicely. Would love to just get a little bit more color. It sounds like trends were solid across the broader cell processing tools portfolio, albeit that's a smaller piece. And then just curious on the clinical side. We've seen a couple of months here of a little bit better biotech funding, but would love a little more color on what your discussions are like there as well.

Yes. To your point, I think across the board from a customer segment perspective, we had growth, but the rates of growth over these different segments are definitely pretty dramatic with the core commercial customers really driving the overall growth in terms of their own growth rate year-over-year. Again, we keep in good touch with our key distributors. And at least as of our last quarterly business review with stem cell, our largest distributor and who would be the most susceptible to the sort of funding issues that you're talking about, there's nothing that they can point to either good or bad that would explain sort of the progress that they're seeing this year. So, they're not raising any red flags, and they're also not saying, "Hey, there's nothing to worry about." So, it's still a bit of a wait-and-see mode. With the government shutdown, we have not seen anything specific. But if we were, it might be some relatively small amount of revenue that would hit in Q4. And we've built that in to the extent we believe that's going to happen -- we've already built that into the rest of the guidance that we have for the year.

And then maybe just taking a step back and thinking about the framing around '26. I know it's early days, but you have evo gone. I think the rest of the portfolio, you have pretty good visibility. And if we start to think about '26, you'll have a tougher comp relative to this year. It sounds like there's been nice pricing this year, but you also expect to take pricing next year. Just can you help kind of help us frame how you're thinking about '26?

Yes. I'll do it qualitatively, Matt. We believe we've got really strong momentum going into '26. We expect that a lot of the growth in '26 that we're going to realize will be driven by those commercial customers. But we do expect to see growth across all of our customer segments in the year. We're expecting to receive the full '26 forecast from these large customers in January. And that's a key part of our methodology relative to developing guidance. And so, we're going to have that by the end of January so that we'll be ready to provide a very specific guidance, which is based on some pretty good visibility on our FY '25 call in mid-February.

And our next question will come from Mac Etoc with Stephens.

I'll add my congrats as well. Maybe just a few for me. Now that the evo platform has gone and kind of removed from numbers, do you anticipate any lingering costs in Q4 and into FY '26? And then secondly, this is essentially the last piece of the strategic review puzzle that's now complete. So, what are you thinking in terms of capital allocation with the cash that you have on your balance sheet?

Troy, do you want to take the first one?

Yes. So as far as your question about lingering costs in Q4, if you look at the earnings release, and we provide an estimate of our financial results, excluding evo. So, you look at that Q3 number, that's a good baseline for Q4 as well. There's -- at this point, there's really no lingering OpEx in our corporate structure. It's really what's in that results that we've presented in the earnings release is how we see it today.

And on your capital allocation question, Mac, I think that we are definitely interested in exploring adjacencies relative to not only our existing product line, but things that dovetail with our core competencies. So, we're definitely going to be getting a little more aggressive in that exploration activity in '26 now that sort of the strategic transformation work is behind us. It also dovetails with developing our own 3-year product road map for the technology we have today. I will say, though, that given the fact that we're going to be pretty disciplined about what we look at, and a key filter criteria for us when we look at something inorganic would be that there is not a negative or at least materially negative impact on our financial profile. And while there are assets out there that would fit with us, that piece of the criteria is going to make some of these deals just not pass muster. And that's -- I'm pretty set on not going backwards from a financial profile standpoint. We've achieved a lot. I think that we have significant margin expansion in front of us, and I don't want to retard that in any way or attenuate that.

Our next question comes from Brendan Smith with TD Cowen.

Nice to see the steady demand across the segment and the new guidance, too. I kind of just piggybacking on some of the earlier questions here. Just trying to get a little bit better sense for the really next wave of growth for you all. I guess in conversations with customers, how are you kind of feeling like a potentially more stable funding environment for pharma and biotech might impact their risk appetite to either expand some of these use cases for CNGT or even maybe rotate out of these modalities altogether? Just kind of trying to understand some of the puts and takes for maybe the next 18, 24 months.

Yes. So, when you look at the contribution to total revenue that our commercial and our late-stage clinical customers provide, which is in excess of 50% of our BPM revenue, we believe that, that's going to continue to grow and accelerate. And so really, that's what we're relying on for the next 18 to 20 months -- 24 months, let's say, for growth drivers. We do believe everything else will grow. But in terms of the growth -- stronger growth rate, it's going to come from there. So, the good news is that most of our commercial customers also have a pretty deep clinical pipeline. I mean we're in 30 Phase III clinical trials, and we believe that a good portion of those over the next 24 months will get across the line, which will just be additive to the growth that's coming from our existing commercial therapies.

[Operator Instructions] Our next question comes from Thomas Flaten with Lake Street.

Rod, on some prior calls, there had been some discussion around you had a customer evaluating the CryoCase. Any update on how that project is going?

Yes, it's going. And I think we're getting closer to a point where we're getting them to make a commitment to us in exchange, as I've talked about before, for doing some development work. We're not going to do the development work on the come per se. But these are large organizations. They've got a lot of things going on. The good news is that, again, deep clinical pipeline, we're not going to be in their commercial therapy, which is going great guns. But they definitely have a pain point on bags. They've expressed that to us a number of times. So, it's really our product development team working with their process development folks about exactly what changes they want made. I think we're pretty close to that part. And now it's really coming down to the more commercial discussion of, okay, what level of commitment can you make to us for us to go ahead and expand the resources to make this happen. And we could, of course, do it just on the come, but I think it's important to solidify their commitment to adopting the technology into their clinical pipeline before we start spending money on it.

And then just to follow up on a prior question regarding the strategic review process being complete. So Thaw is with us, right? Thaw is not going anywhere. That was never on the table, just to confirm?

It was never on the table. We feel that Thaw is almost a reverse razor-razor blade type of product. We recently -- well recently, I'd say in the last 1.5 years, we were able to get the Thaw unit to work with CellSeal vials because the CellSeal vials were of a different size. The Thaw vial device was set up to Thaw. We're now in the process of doing that for our CryoCase so that we have an automated Thaw device for CryoCase. And it's just extremely complementary relative to those 2 products. So that's -- it's got good margins. We put very little sales and marketing effort into it at this point, and yet it delivers consistent growth at a really attractive rate. So, it's definitely a keeper.

There's no further questions, this will conclude the question-and-answer session. I would like to turn the conference back over to Roderick de Greef, CEO and Chairman of the Board, for any closing remarks.

Thank you, Wyatt. In closing, it's been 2 years since I returned to the company in an operating role. As I look back, I'm very pleased with the progress the BioLife team has made in executing a fundamental strategic transformation. In the last 24 months, we have solidified and built upon our market leadership position in biopreservation media, driving strong top line growth and significant margin expansion. We have optimized our product portfolio so that we can focus our efforts on our higher growth and higher margin recurring revenue products. We have also strengthened our balance sheet and have the resources to explore inorganic product portfolio expansion into relevant adjacencies in a measured and disciplined manner. All of this, in combination with what is still a relatively nascent but very exciting market, leaves us confident in our ability to continue to deliver sustainable revenue growth, margin expansion and shareholder value creation in 2026 and beyond. Thank you for your time today, and I look forward to seeing some of you at upcoming investor conferences.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.