BioLife Solutions, Inc. (NASDAQ: BLFS) Third Quarter 2022 Results Conference Call November 9, 2022 4:30 p. m. Eastern Time
Participating companies
Troy Wichterman – Chief Financial Officer
Mike Rice – President and Chief Executive Officer
Rod de Greef – President and Chief Operating Officer
Conference Call Participants
Paul Knight – KeyBanc
Thomas Flaten – Lake Street
Jacob Johnson-Stephens
Stephanie Iannetta – Cowen and company
Yuan Zhi – B. Riley’s Values
Suraj Kalia-Oppenheimer
Operator
Good morning girls and gentlemen and thank you for being here. Welcome to the call for the BioLife Solutions shareholders and analyst convention. At this time, all participants are in listen-only mode. After the presentation of the speakers, there will be a response session.
I will now pass the floor to Troy Wichterman, CFO of BioLife Solutions.
Troy Wichterman
Thank you, Denis. Hello everyone and thank you for joining us. With me today are Mike Rice, president and CEO; and Rod de Greef, President and Chief Operating Officer. Today, we issued a press release announcing our monetary effects and operating highlights for the third quarter and first nine months of 2022, which is available in biolifesolutions. com.
As a reminder, in connection with this call, we may make certain forward-looking statements and other forward-looking statements regarding long-term events or the long-term financial functionality of the Company or its acquisitions. These statements are subject to risks and uncertainties that could possibly cause actual effects to differ materially from expectations. For a detailed discussion of the dangers and uncertainties affecting the Company’s business that qualify as forward-looking statements, I refer you to our periodic filings and other public filings with the SEC.
The Company’s projections and forward-looking statements are based on items that are superseding matters and, accordingly, such statements speak only as of the date they are made. The Company assumes no legal responsibility to update projections or forward-looking statements, as required by law.
During this call, we will discuss adjusted or non-GAAP effects. GAAP reconciliations with adjusted monetary measures or non-GAAP are included in our press release issued this afternoon. These adjusted or non-GAAP monetary measures deserve not to be considered as an option to GAAP. However, in light of our recent M&A activity, we believe the use of non-GAAP or adjusted measures provides investors with a clearer view of our existing currency effects compared to prior periods.
Now, I’d like to pass it on to Mike Rice, president and CEO of BioLife Solutions.
Mike Rice
Thank you, Troy, and good afternoon everyone. Thank you for joining our call. Following my comments, Troy will provide our financial statements for the third quarter and nine months of 2022, and Rob will provide an update on operations. After that, we will be happy to answer your questions.
Let’s move on to third-quarter earnings and visitor highlights. Despite several macro hurdles also cited through our peers in life science tools, our team delivered other robust functionalities in the third quarter. Total revenue was $40. 7 million, up 21% from the third quarter of 2021. with an expansion of biological utility of 18%. One of the highlights of the third quarter was the 50% expansion in bioconservation media profits.
Our expansion catalysts and business fundamentals intact. And with increased trading visibility and a reduction in COVID-related earnings, we are again adjusting our full-year 2022 earnings forecast, which Troy will cover in a few minutes.
To provide an update on how we differentiated our revenue from some of our purported competitors, in the third quarter, 44% of total revenue was high-margin consumables and 13% was high-margin recurring services revenue. So about 60% is hardware. related. With the resumption of our ULT freezing platform up and running, with greatly improved quality and no lead time, we expect to end the year strongly.
Compared to some of our competitors offering generics and primarily instruments, it is critical to note that BioLife is a very distinct company, with a hyper-expansion in our earnings from high-margin recurring consumables as an anchor from which we plan to drive expansion around the world. Our portfolio.
We, our biopreservation media franchise, can easily achieve $250 million in profits within five years, reflecting an annual expansion of more than 30%. BioLife remains one of the most correlated vendors with the expansion of the global CGT market.
In the third quarter, we sold and shipped products or serviced 193 new visitor-only sites on our 3 product and service platforms. manufacturing costs, garage and distribution, products and Array
In each of the first two quarters of this year, we gained approximately two hundred new visitor sites, creating a phenomenal source of early-stage visitors, and will nurture and drive long-term growth.
Now I will remind you what our 3 platforms are: first, mobile treatment that comes with biopreservation media and Sexton cell processing products. Second, our freeze-thaw system platform comes with Sterling ULT cryogenic liquid nitrogen freezers and automated defrosting devices and finally garage and garageArray that come with our SciSafe garage and our EVO bloodless chain control offering.
New visitor sites in the third quarter across the product line, adding 14 more now biopreservation media, 11 new ThawSTAR users, 12 new EVO bloodless chain finishing users, 14 new cryogenic freezers and accessory consumers, 114 new consumers of Sterling ULT accessories and freezers, 18 new BioStorage consumers and 10 new Cell Processing consumers are now Sexton products.
For mobileular processes in the third quarter, we obtained 24 new consumers and obtained confirmation that our Cell Posessing responses will be used in at least 20 additional clinical trials for novel mobile and gene therapies. We estimate that our biopreservation media have been used or are expected to be used in 570 clinical visitor applications.
For biopreservation environments, we also remain convinced that the consumer clinical application, if approved, can generate diversity revenue of $500,000 to $2 million consistent with the year. To date, our biopreservation media are used in 11 approved therapies, and our Sexton cell media and biographies are used in 3 approved therapies, adding BMS’s Breyanzi, [indistinguishable] JW Therapeutics.
Please note that everyone also uses our CryoStor biopreservation media. Our biopreservation media products are also incorporated into at least 10 additional approvals expected until the end of 2023. I will conclude by saying that our clinical biopreservation media visitor base includes the largest number of mobile CAR T developers with our proprietary products incorporated into most autologous and allogeneic platforms lately in development.
We look forward to continuing to participate in bioconservation cocktails as awareness grows of the critical role our technical media formulations play in reducing the threat to CGT companies.
In addition to initial approvals of novel mobile and gene therapies, we also see recent and pending approvals of CGT products for first- or second-line remedies and approvals for additional indications and new geographies such as 4 expansion catalysts for biopreservation media and other solutions.
For the other component of our mobile processing platform, adoption of our Sexton products and customers’ clinical programs come with 67 HPL carriers, 62 CellSeal vials and 3 automated film machines. So you can see that we’re running a multimedia playbook on biopreservation to drive adoption of Sexton products.
We estimate annual revenue from Sexton reagents and consumables used in approved consumer treatments to range from $500,000 to $1 million for CellSeal vials and HPL carriers.
Let’s move on to our freeze and thaw systems platform. To reiterate, we shipped the first orders to 139 new visitor sites, our hyper-concentration on the acquired Sterling platform resulted in particularly advanced quality and reduced shipping times, which Rob will communicate about this calling.
Customers continue to see our ULT freezer’s price proposition based on strict temperature regulation, reduced energy consumption, reduced heat generation and less noise pollution, as they help their purpose of reducing the negative environmental impact on their operations.
On our last 3 profit, storage and storage services platforms, which come with evo Cold Chain Rentals and SciSafe Storage Services, we shipped first-use products or initially participated with 30 new visitor sites in the third quarter, 18 for garage and 12 for evo.
Our SciSafe garage platform is developing rapidly. We are now contemplating several locations for our new biorepository scheduled to open in 2023. Through our evo bloodless chain control platform, mobile and gene treatment companies now have broad access to our definition of elegance through our expanded network. From specialized messaging partners now including World Courier, Quick International, Patheon, Thermo Fisher, Marken and Biocare, we are very excited to have the opportunity to make our evo platform a significant source of revenue and profit.
Evo’s third quarter shipments of more than 2,000 were up one hundred percent compared to the same quarter last year. Of these, we estimate that at least 75% were approved treatments and the rest were for clinical trials. We bring together a massive amount of shipping data that shapes our uninterrupted innovation in the evo IS cloud to give our CGT messaging partners and end consumers even more actionable insights to reduce risk.
We continue to expect that until the middle of next year, the evo platform will be used for all recently approved CAR T mobile therapies. This adoption confirms our confidence that the evo platform will be decided as a temperature-controlled shipping container and cloud application through leading CGT companies.
I will now turn to Troy to provide our financial statements for the third quarter. Troy?
Troy Wichterman
Thanks Mike. La total revenue for the third quarter of 2022 reached a record $40. 7 million, an increase of 21% over the third quarter of 2021. 18% organic profit expansion, driven by a 50% accumulation in bioconservation media profits of $16. 6 million. COVID-19 earnings accounted for about 9% of the quarter’s overall earnings. Mobile processing platform sales were $18. 1 million, up 57% from the same era in 2021 and biological expansion 50%.
Revenue from the freeze-thaw systems platform $15. 3 million, overall expansion and biological decreased 13% compared to the same era in 2021. COVID-19-related gains accounted for about 4% of freeze-and-thaw platform profits compared to 23% last year.
Storage platform and storage services revenue was $7. 3 million, with a 56% biological and overall expansion over the same time in 2021. COVID-19 gain accounted for about 40% of the garage platform and garage profit.
Total profit for the nine months ended September 30, 2022 $117. 5 million, a 44% cumulative over 2021 with a biological expansion of 44%. Adjusted gross margin for the third quarter of 2022 34% compared to 26% in the third quarter of 2021 and 36% for the current quarter of 2022. For the first nine months of 2022, adjusted gross margin 34% compared to 39% in the same era last year.
The quarterly sequential decline in gross margin in the third quarter was largely due to vendor quality issues that affected functionality and visitor mix, partially offset by decreased warranty costs. We expect to see increases in gross margin in the fourth quarter. GAAP operating expenses for Q3 2022 were $52. 2 million compared to $45 million in Q3 2021. And for the first nine months of 2022, GAAP operating expenses were $212. 8 million, which includes a non-cash intangible impairment of $69. 9 million similar to the Global Cooling acquisition recorded in the current quarter compared to GAAP operating expenses of $98. 5 million for nine months in 2021.
Adjusted operating expenses for the third quarter of 2022 were $20. 5 million, $17. 4 million in the third quarter of 2021 and $20. 0 million in the second quarter of 2022. For the first nine months of 2022, adjusted operating expenses were $60. 3 million to $39. 5 million during the first nine months of last year. Higher adjusted operating expenses due to Global Cooling’s 2021 acquisitions at Sexton.
In addition, operating expenses increased due to higher accounting expenses and more staff for our growth. Adjusted operating expenses increased by $420,000 compared to the previous quarter, basically due to higher accounting expenses. Adjusted operating loss for the third quarter of 2022 was $6. 7 million. , compared to an adjusted operating loss of $8. 1 million in the third quarter of 2021.
Our adjusted operating loss for the first nine months of 2022 totaled $20. 2 million, compared to an adjusted operating loss of $7. 5 million in 2021. Adjusted EBITDA for the third quarter of 2022 positive at $1. 4 million, compared to a negative $2. 1 million for the third quarter of 2021 and positive at $2. 2 million for the current quarter of 2022.
For the first nine months of 2022, positive adjusted EBITDA at $2. 8 million, compared to $4. 4 million for the same time in 2021. We expect adjusted EBITDA to accumulate in the current part of 2022 and compared to the first part of 2022. Our balance of money and marketable securities as of September 30, 2022 was $61. 7 million, compared to $46. 6 million as of June 30, 2022.
On September 20, we entered into a $50 million secured loan agreement with Silicon Valley Bank and made that line of credit more complex. We have an additional $30 million credit facility to withdraw by June 30, 2023, consisting of $10 million at the company’s discretion, $10 million at the company’s earnings milestone, and another $10 million at SEB’s discretion. The loan matures on June 1, 2026, could be extended until June 1, 2027, subject to certain conditions.
The interest rate is the maximum of 5. 75% or the Wall Street Journal Prime plus 50 basis points, subject to an overall interest rate cap of no more than 1% above the time of the advance. Our first advance of $20 million has an interest rate of 7%. cap and no monetary commitments.
Upon full repayment of the loans, we will pay an additional 5. 75% of the total amount of principal granted. Considering our loan advance and adjusted EBITDA of $1. 4 million, money used in the third quarter of 2022 similar to capital expenditures of $3. 9 million, primarily similar to the amenity structure of our $1. 8 million biodeposit and debt payment, partially offset by $1. 5 million from operations money.
Moving on to the 2022 earnings guidance, we have adjusted full-year earnings guidance to between $160 million and $164 million, up from the previous forecast of $160 million to $166 million. Our guidance reflects year-over-year expansion of 34% to 38%. and biological expansion from 37% to 40%. COVID-19 earnings are expected to make up approximately 7% to 8% of total profits.
The total earnings guidance for 2022 includes the following platform updates. For our mobile processing platform, we reduced the superior diversity of our targeting to $1. 5 million, reflecting the possibility of a challenge in the chain of origin that can delay shipments. The platform’s profit for 2022 is now expected to be between $67 million and $68 million, a buildup of 49% to 51% by 2021 and a biological expansion of 42% to 43%. All delayed orders for 2022 are expected to ship in the first quarter of 2023.
For our freeze-thaw systems platform, we have reduced diversity of decline by $4 million and diversity by $3. 5 million. The platform’s profit for 2022 is now expected to be between $66 million and $68 million, reflecting the demanding origin chain situations for our cryogenic freezing product. This line constitutes an expansion of 17% to 20% compared to 2021 and a biological expansion of 8% to 13%. COVID-19 profits are estimated to make up 3% of the freeze-thaw platform’s gain.
For our garage and garage facility platform, we have a lower diversity of $4 million and a greater diversity of $3 million and is now expected to be between $27 million and $28 million with a biological and overall expansion of 54% to 59% over 2021. COVID-19 profits are expected to account for approximately 40% to 45% of garage platform and garage facility profits. COVID-19 earnings are mostly contract-based and therefore we do not expect this figure to replace the year.
In addition, our COVID contract that was in effect until 2023 changed in November to inventory treatments instead of COVID vaccines. As a result, we expect minimal COVID-related gains in 2023.
As for the new number of shares, to date we have 42. 8 million notable issued shares and 45. 4 million shares on a fully diluted basis. Finally, since this is Rod’s last earnings call, I would like to thank you for all your contributions to BioLife. and for their true team spirit. It has had a positive effect on this organization and also for me in a private aspect. I wish you a well-deserved retirement and look forward to running with you on the board.
Now I pass the one to Rod.
Rod de Greef
Thank you, Troy. It’s been a year since I took up my current position. Looking back over the past 12 months, I am pleased to say that significant operational progress has been made, not just at Sterling, where we have had very acute issues. problems, but also on other product platforms. The efforts of our operations, quality and visitor service groups across the company have positioned us for strong and continuous execution in 2023.
Sterling’s operating metrics continued to improve, which definitely impacted gross margin through decreased warranty usage this quarter compared to previous levels. underway, and the sets are expected to be built in-house by the end of the first quarter of next year.
Our Athens plant will continue to expand the production capacity of the 780XLE freezer and prepare for the launch of the next-generation high-capacity freezer. In the third quarter, while we continued overall gross margin and operational improvements, so did the resolve to move all of our production, quality and logistics operations from EVO to our Michigan plant, while maintaining visitor service and engineering activities at a smaller Albuquerque plant.
We expect PV10 production to begin in Michigan in the first quarter of next year. In addition to bringing the EVO and two ULT production lines to our LNT freezing plant, we finalized validation of a source at the moment for a key component used in our LNT Freezing Line and plan to begin shipping products using this new supplier before the end of the year. This new relationship with suppliers eases current supply constraints, which have had a continued negative effect on revenue in recent quarters. And it also generates savings in tariffs, which has a positive effect on the gross margins of these products in 2023. .
Moving our products from the means of biopreservation, we continue to progress through the execution of existing limitations of the chain of origin. And based on increasing demand than expected, we are focusing on expanding capacity in the short and medium term. quarter, we finalized the validation procedure related to the movement of media batches from one hundred to two hundred liters and lately we are generating our leading product CryoStor in this volume.
The increase in production in the coming quarters allows us to meet the ever-increasing demand and complete our protective stock, which has been depleted over the last year. In addition, we are lately executing our plan to identify a small but scalable biopreservation media production suite at our Indianapolis facility and anticipate that these facilities will begin generating our products at a lower volume through mid-2023, allowing us to concentrate our bottle production niche in larger volumes.
Finally, with respect to the other two key commercial projects building a high-margin facility utility program and our NetSuite ERP implementation, I am pleased to announce that our service utilities pilot program is expected to exceed $700,000 in revenue this year. We expect facility earnings and related gross margin to have a greater impact on our monetary functionality in 2023.
While most of our accounting purposes now run on NetSuite, the rest of the deployment has experienced delays due to bandwidth limitations, and we now expect full accounting and production programs to be up and running by the middle of next year and middleware connectivity for many other entity-wide programs through the end of 2023. As I transition from my operational role to a board position early next year, I am very confident that the company’s operations will continue to grow under the new leadership team I worked so. with last year.
Now I would like to call Mike back.
Mike Rice
Thank you, Rod. Now I’m going to summarize our key findings for the third quarter and for the rest of 2022. First, BioLife Solutions is a must-have and highly reliable equipment supplier to the mobile and genetic treatment industry. We’ve built a valuable portfolio of threat mitigation solutions that help CGT developers increase their chances of success. Second, it requests our portfolio of sorting bioproduction equipment and remains robust. We expect 2022 revenue to be in line with the up-to-date Third Class we just released.
Our high-margin proprietary media business is booming, and let’s not forget that we’re only in the early rounds of CGT approvals and have a lot of penalty kicks. In reality, these are persistent and recurring consumable revenues, with classic homemade. opportunities that fit much less thought and selected.
Third, our product diversity in British pounds is differentiated and we plan to drive demand and capture market share in the high-growth global pharmaceutical and CGT segments. the fourth quarter of 2024 of $250 million in revenue, 50 adjusted gross margin issuances and 30 adjusted EBITDA issues. Fast forward to today, I’m pleased to say that overall demand for products and so far in the fourth quarter is strong and we look forward to sharing our effects for the full year 2022.
Before I call back the operator to take care of the Q&A part, I want to take a minute to acknowledge Rod’s contributions to BioLife and his long-standing agreement with the company. With his retirement at the end of the year, this is Rod’s last source of information. revenue call when you join our Board of Directors. We are very fortunate to be able to leverage his experience and direction to help us take BioLife to our next point of expansion through strong overall financial performance. Thank you, Rod, on behalf of the entire team. We wish you all the most productive in your well-deserved retirement. And this time, we think so.
Now I will call the operator back. Dennis?
Q&A session
Operator
[Operator Instructions] Our first follows in Paul Knight’s footsteps with KeyBanc. Continue.
Pablo Caballero
yes. Thank you, Rod. Rod, thank you. I think our years in combination technique is also almost double digits. So I hope this next retirement period.
Rod de Greef
Thanks Pablo
Pablo Caballero
And the questions I have, Mike, how many CGT approvals do you still expect next year?Secondly, Troy, in relation to the garage and the COVID contract, is it being replaced by other modalities, or do you think this COVID number wants to pass?Down? And finally, Mike, about the source of income through approved therapy, why do you think it’s harder than ever?Why? Thanks for those 3 questions.
Mike Rice
Yes. Hi Paul, thank you. Really smart questions. Next year, consistent with approximately 10 more approvals in which our media is cooked. And it’s a mix of the U. S. U. S. and Outdoor, U. S. In the U. S. , most commonly Europa. a Troy to take the middle part. So, what gives us confidence that the diversity of estimated annual earnings of an approved treatment of $500,000 to $2 million per year can contain, a lot of anecdotal knowledge and in the profits of our clients who have approved therapies.
Some of them are also doing clinical trials, but it’s transparent to us, Paul, that the source of income diversity we’re talking about here is justifiable. And listen, I’m going to cross the line a little bit to say that with a little more time, I feel like we’re going to build the high end of that diversity. It’s too early to do so today on this call, but at least by tracking the revenue of our approved customers, they change. I mean they buy a lot of media. And we know that the maximum of that money goes to treatments approved for production, and the rest goes to clinical trial applicants who also use our means.
So, Troy, why don’t you communicate our confidence in replacing this COVID garage contract with non-COVID garage earnings for garage?
Troy Wichterman
Exactly. So thanks for the question, Paul. As discussed above, we built this infrastructure; much of this infrastructure used Stirling freezers. As a reminder, this ranges from minus 20°C to minus 80°C, which is the best temperature diversity only for other treatments. So, really, it’s about replacing COVID contracts with other treatments and modalities. And as I mentioned in my comments, the big contract we have in the Netherlands that has been extended until 2023 has already been replaced by another modality that we are currently accumulating there, and we plan to expand that capacity with this existing modality that we are accumulating now.
Pablo Caballero
Thank you so much. Congratulations on the quarter.
Mike Rice
Thanks Pablo
Operator
The next one comes from Thomas Flaten’s lineage with Lake Street. Continue.
Tomas Flaten
Hi guys, congratulations on the quarter. Mike, only about the restrictions of the chain of origin. I suppose there are others, between bioprocesses and freezers. I was wondering if maybe he could list them a little more for us.
Mike Rice
I’ll ask Rob to do that. It’s much closer. I mean, obviously, we know what they are, but it’s closer to the details. Go ahead, Rod.
Rod de Greef
So on the media side, on the mobile processing side, it’s all about packaging, and it would be bottles and bags from a specific supplier, where they had capacity limitations that they had to overcome to open a new plant. For the record, it looks like things are relaxing a bit, there may still be some limitations here as we move into the fourth quarter in this regard. But I think 2023 is passing to relax based on its increased capacity.
With respect to cryogenic freezers that I mentioned, there is a very express restriction in terms of a supplier offering us the component for freezers, and as I mentioned, we have a source at the moment where we have 3 products or 3 components, if you want, that wants to be validated. One is finished and we ship the products in the fourth quarter. We’re working hard to validate moment one to see if we can make it to this quarter. And the third will be readyin the first quarter, which is notoriously also the lowest volume.
Then, in addition, we have restrictions on electronic components. These are probably more global and more generic in nature. And that’s also been alleviated a bit, but it’s created problems when it comes to the cards in our deep freezers, in particular, the card replacement visitor service program we introduced a few quarters ago has slowed down a bit due to a lack of and is directing service to new products rather than visitor service.
Tomas Flaten
Super. Si can only transfer to garage services. I’m curious, if we can just an update of the installation you had to open here at any time. And then, when thinking about new sites, how do you think about the location of the enjoyed?If you think about the manufacturer instead of the service site, I saw that Allogene, for example, has just opened a new factory in Shanghai. So, is this. . . How is it taken into account in the calculation due to breeding sites?
Mike Rice
Thanks Thomas. Another very smart question. Plans to open some other biodeposit this calendar year have now been delayed for a clever reason. We now have more information to help us make the best decision and are considering locations, whether it’s here in the U. S. or where it’s going to be the best decision. U. S. and outside the U. S. And for their point, by correlating them with visitor anchor sites where they have production facilities, where transportation time from their location to our garage facilities would be reduced.
So we have a lot of points that we think about. But of course, I mean our plan is to pick and get at least one new positive customer in the next calendar year in 2023. This does not reflect any minimum demand, on the contrary, we just need to reduce the speed a little. And be much more considerate in the inputs of this resolution to make sure we have a great package with a giant-scale capability.
Tomas Flaten
Any updates for us on the Coriell deal you made, I think 3 or 4 months ago?
Mike Rice
No, nothing remarkable.
Tomas Flaten
Understood. I appreciate it. Thanks guys.
Mike Rice
Thank you Tomas.
Operator
Next is from Jacob Johnson’s lineage with Stephens. Continue.
Jacob Johnson
Hello, good afternoon everyone. And Rod, I will echo my congratulations on retirement. As long as Mike does it, this time he stays.
Rod de Greef
Thanks jacob
Jacob Johnson
Maybe first, just. . . yes. First, with regard to the freezer sector, I think, as you mentioned, there is some discussion about whether macroeconomic contexts could have an effect on demand for freezers in the short term. It turns out that when you moderate your expectations revolve more around your own internal sourcing and supply chain. So can you just tell us what you hear from consumers about what the freezer looks like in terms of demand?term?
Mike Rice
Yes. Jacob, Mike speaks. Good question. As far as the call is concerned, I suppose that, from our point of view, things are going well. We have the chain of origin constraint that we are talking about. the top sugar content of COVID and the total desire to build COVID infrastructure in recent years, I wouldn’t be surprised if we were facing, to some extent, a new competitor coming in the form of resale of used freezers. And that goes for everyone who sells freezers in this space. But let’s see. There’s no real harm to that yet, yet they’re watching it. But when it comes to our cryogenic and pound turnover in those temperature ranges, we’re not seeing massive erosion, on the contrary. Rather, it is our ability to produce.
Jacob Johnson
It is ok. And then, I’m sorry to insist, but going back to garage services, there’s a fair amount of COVID in this business. It looks like you’ve already moved one of the contracts for a non-COVID type of apps. But I think investors are worried, do we see business declining next year if COVID develops?So maybe you can communicate to us about the dynamics of how we think about that COVID revenue in the short term, and then your ability to move that capacity for non-COVID purposes, maybe to know, how do we think about 2023?
Mike Rice
Yes. We can give color. And of course, when we release guidance for all of 2023, we’ll have more granularity on this platform and a narrative that will help you understand how we got there.
But as Troy just mentioned, a big COVID contract has already contractually committed to be replaced, and that’s great. We will reduce our reliance on COVID gains across the portfolio as we move into the next year and beyond. It is particularly smaller than last year and next year will be even smaller.
So everything was fine. We and other corporations who appreciate this, that bolo, when it was there, but at least for us, we’re not going to anticipate garage relief for next year. We’re not going to tell you yet where we’re going with this, however, a healthy expansion rate will be implemented, based only on biological expansion, but also on replacing this big big COVID contract.
Jacob Johnson
Thank you so much. It’s super useful. Just a little explanation here. The contract that was replaced, the COVID contract that was replaced for purposes other than COVID, is there a replacement in revenue?Do they pay the same amount, I guess, is the question?
Mike Rice
Oui. Je, thanks for asking, but too many details. Yes. We would communicate about this detail.
Jacob Johnson
It is ok. That’s fine with me. I had to try. Thank you, Mike, and congratulations again, Rod.
Rod de Greef
Thanks.
Operator
The following is from Max Masucci’s lineage with Cowen. Go ahead.
Stephanie Iannetta
Stephanie speaks to Max. Thank you for answering my questions and congratulations, Rod, on your retirement. Are there rapid changes in demand across consumer end markets that you can identify in the platform segment?Do you see symptoms of slowing among biotech or biopharmaceutical consumers at an early level due to recession fears?
Mike Rice
On the contrary, you will possibly remember in my comments a few minutes ago, that the 4 catalysts that we believe are driving the demand for self-treatment are new approvals, more indications for existing approved therapies, new geographies.
And I think the most important thing, in the interest of cancer patients, would be to advance those treatments in the regimen of remedies. So, you don’t have to be really out of breath, after failing systemic chemotherapy two or 3 times to get a CAR. -T.
It’s a line for now. And I believe, obviously, in our lifetime, if not in the next two years, that we’re going to see first-line therapies. And the clinical outcomes are stellar, pharmacoeconomics works for this kind of expense. So, yes, there is no slowdown.
Stephanie Iannetta
That’s smart to listen. And some others in garage and bloodless chain services. So, for your partnership with SciSafe, we have indicated in this press release that we plan 10,000, 12,000 shipments of evo for CGCT raw fabrics and production doses over the next 12 months. How do we think about this rate of increase in deliveries in the coming quarters?Is there a point of seasonality that we deserve to take into account?
Mike Rice
I would say no to seasonality, Stéphanie. Il it’s about how temporarily we can onboard and exercise the SciSafe team and how temporarily they can do their homework with their own sales and marketing engine.
As for the execution rate, at the moment it is quite a lot every quarter, the number of evo shipments has doubled compared to the quarter of the same was last year or the year before. So, I mean, with the expansion of recently approved treatments and all the catalysts that I mentioned a minute ago, it’s going to be the modulators that are going to expire in terms of how temporarily we get there.
Stephanie Iannetta
Súper. Es useful. And one last part from me. Thus, some of their more sensible production peers have indicated that consumers are operating on overstocking and normalization, and are seeing orders normalize rather than annual bulk orders. Have you noticed a similar habit of sorting trends with your consumers?And if so, can you elaborate on the espresso products?
Mike Rice
Yes. Only one for the opposite. For example, in our last third quarter, one of our largest suppliers ordered slightly more than last quarter. And they have a good discount. So this combination of visitors has an obvious effect on gross margin. But no, on the contrary, it is not about reduced orders or running out of protective stock or anything like that.
In any case, on the media side, I mean, it is the company that will continue to give. We’re incorporated with so many consumers and especially with those big global pharmaceutical corporations that have CGT operations, either de novo or acquired, and that’s going to tip over for a while here.
You may have heard me say in my ready comments that it’s enough to use a modest annual expansion rate of 30%. We believe that the media loan can achieve a profit of $250 million over five years, just like this component of the business, not the overall profit, but only the means of conservation.
Stephanie Iannetta
they gave it to me It’s useful. Thank you for answering my questions and congratulations.
Mike Rice
You are welcome. Thank you.
Operator
Next is from Yuan Zhi’s line with B. Riley Securities. Continue.
YuanZhi
Mike, thank you for answering our questions and congratulations on a strong quarter in this challenging macroeconomic environment. And Rod, we will surely miss him there. So here I have some questions. First, pleased to see the new partnership with CSafe, stand firm there. Can you remind us how CSafe is adapting to your offering lately?In this context, it has already established other messaging associations. And now, with CSafe within cryogenic logistics, what can you offer in combination with sales and genetic treatment companies?
Mike Rice
Yes, a smart position to start with, so Yuan. Merci. CSafe is a well-run company. They have the right relationships with the CGT. Es in essence, just the extension of EVO’s spousal network. Therefore, consumers have many options. They can access the EVO platform through several messengers, all primary messengers. CSafe evidently has very strong aspirations to be a much more dominant provider of those critical facilities in the C CGT Safe space, and we are excited to have them on the grid. sure. So I think we’re definitely going to see some productivity from this team once they’re trained and compete with specific shipping opportunities unlike other carriers, however, it’s smart for them and very smart for consumers to have broad access and ultimately smart for BioLife. So we only have one force multiplier in the form of our marriage with CSafe.
YuanZhi
they gave it to me AND maybe a follow-up there. So what can CSF bring to your table to strengthen your current position in terms of visitor offers?
Mike Rice
We’ll have to watch and see how they fare with the existing regimen of autologous single sending therapies. Obviously, because they are also in the big game of shipping boxes, they will offer a lot of the allogeneic [ph] area of flexibility and very tight garage with controlled temperature of pallet-sized boxes that are both active and passive. Containers.
So I feel like we’re going to start with them and see how they do, give them wonderful support, and in the end, they’ll also end up with consumers, many of whom we already know, and many of whom already use our media or others. portions of our solution. So, to use my term from a minute ago, it’s some other force multiplier here so that we can have even wider exposure in the CGT area through some other highly reliable and highly reputable service provider.
YuanZhi
Sí. Es’s great to hear. And perhaps one last consultation on the CCF partnership. So, as you know, inspections or regulatory filings are required for those 2 platforms to be incorporated together. So maybe you can tell us how long this procedure will take?And when will consumers have those characteristics they should have for them?
Mike Rice
Yes, of course. Well, when it comes to a visitor in your own regulatory updates, designate a messenger on an IND or BLA. I’m not sure how it’s going, John. I think it’s more of a generic description than the last dose manufactured. It will have to be transported in the liquid nitrogen vapour phase to the final destination. My feeling is not that they call Carport or World Courier or third parties like that with that degree of specificity. So I don’t think it’s going to be a necessity unless you know something that I don’t know, however, that’s not our concept of how this specific documentation would play out.
And regarding your last query about when we can communicate about the productivity of the CCF relationship. Well, they have to go through that, obviously they have to complete education and we have to do a lot with them. But I feel like in the coming quarters, we’re starting to see them come into play, and we’re glad to have them at the party with us in the boat.
YuanZhi
Yes, I understand. And maybe one last fast for Troy. Can you specify what percentage of your earnings comes from outside the U. S. ?U. S. compared to the domestic market?
Troy Wichterman
Johan, yes, it’s at 10-Q, and I think it’s 80% in the U. S. 20% outdoors in the U. S.
YuanZhi
they gave it to me It’s useful. Thank you for answering our questions.
Mike Rice
You are welcome.
Operator
The following is from Suraj Kalia’s lineage with Oppenheimer. Continue.
Suraj Kalia
Buenas tardes. Thank you for responding to my queries. And Rod, let me echo the sentiment. It’s been exciting dealing with you over the years, what, almost 15 years. So, I wish you a healthy and secure retirement. Hi Mike, many of my queries have been asked. , so I’ll limit myself to two. Mike, your comments on everything amazing and the 30% CAGR. a long time from the time they are added to the time consumers start to have a significant effect on the respective line items. That would be one of my queries. And regarding your other point about 250 million until 2024, maybe you can help us understand, is it organic or is it. . . are there implicit acquisitions also integrated? Gentlemen, thank you for responding to my query and congratulations to Rod again.
Rod de Greef
Thanks Suray.
Mike Rice
Hi Suraj, I’m Mike. Yes, you ask. I will first take moment one. No, no expected or additional extra mergers and acquisitions are required to get us to this overall fourth quarter 2024 rate of profit.
Now, in terms of the visitor earnings journey, I can say that the longest ramp would be in garage media that only relies on its own timeline to get anything from a preclinical state through the stages of clinical trials to regulatory approval. And it can take, as you know, 3 to five years or so.
Now, that will likely compress over time as regulators become more familiar with those constructions, right?And the clinical data, hopefully, holds up and those stellar effects and all that kind of thing. That’s right, it varies depending on the product or service platform, however, it is likely to be a kind of moderate estimate.
I suppose the point I would like to conclude on is that the maximum benefit of conservation means comes from existing customers who have approved treatments. Previous in the call, new indications for existing treatments, new geographies for approved existing treatments and, finally, change the trick up in the treatment regimen. It just cascades. There will be several of those catalysts that will maxle up both one quarter and another quarter and then year after year here, which we think will seamlessly help my comment a minute ago about only the media that is developed modestly, and I say modestly compared to many other equipment and services, but modestly at 30% and more consistent with the year, both with $250 million in very high margin recurring profits, very sticky in the BLA profit type. So that’s just one component of the business, but really encouraging.
Suraj Kalia
Thanks.
Operator
At this time, there are no additional questions. I will now turn to Mr. Rice for any final remarks.
A-Mike Riz
Thank you, Denis. Thank you all for your interest in BioLife. Good evening and the rest of the week. We’d like to wish you and your families a happy holiday season here, and we look forward to seeing many of you at JPMorgan in January. Good night.
Operator
Thank you all for participating in the convening of the BioLife Solutions analyst and shareholder convention. Thank you for your participation. You can now log out.