Cryoport, Inc. (CYRX) Q2 2025 Earnings Call Transcript

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Overview

The earnings call summary and Q&A reflect a generally positive outlook. The strategic partnership with DHL, strong demand in clinical trials, and positive customer feedback indicate growth potential. Gross margins are stable, and the company's strategic focus on Life Sciences and new product launches are promising. Although there are uncertainties like the impact of FDA's REMS update and competitive dynamics, the overall sentiment is optimistic, supported by robust financial metrics and strategic initiatives. The positive response to being more carrier-agnostic post-DHL transaction further strengthens the outlook.

Key Financial Performance

Service Revenue Increased 21% year-over-year, accounting for 54% of total revenue from continuing operations. This growth is fueled by the increasing adoption and scaling of cell and gene therapies.

Revenue from Commercial Cell and Gene Therapies Increased by 33% year-over-year. This growth is driven by the growing demand for integrated temperature control supply chain platforms.

BioStorage/BioServices Revenue Grew 28% year-over-year. This increase is attributed to the growing demand for integrated temperature control supply chain platforms.

Life Sciences Products Revenue Posted an 8% year-over-year growth. This growth is driven by improved demand, particularly from animal health customers.

Total Revenue from Operations Increased by 14% year-over-year. This growth is supported by strong execution across all business units.

Gross Margin Increased during the second quarter. This improvement is a result of pathway to profitability initiatives.

Adjusted EBITDA Experienced a meaningful lift during the second quarter. This improvement is attributed to pathway to profitability initiatives.

Revenue Impact from a Gene Therapy Client Estimated revenue impact of approximately $2 million for the remainder of the year due to a temporary pause in distribution by one client.

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Operating Highlights

Launch of next-generation vapor shippers: Cryoport introduced the MVE SC 4/2 and SC 4/3 vapor shippers, enhancing safety and reliability for transporting biological materials at cryogenic temperatures.

High-efficiency cryogenic storage system: Revenue recorded from sales of MVE's 800-seat cryogenic storage system, designed for facilities with limited space.

Strategic partnership with DHL Group: Cryoport entered a partnership with DHL, including the sale of CRYOPDP for $200 million, enhancing global bio logistics capabilities, particularly in Asia Pac and EMEA.

Support for clinical trials and commercial therapies: Cryoport supported 728 clinical trials and 18 commercial therapies globally, with expectations for additional application filings and approvals in 2025.

Revenue growth: Achieved 14% total revenue growth, with service revenue up 21% and Life Sciences products revenue up 8% year-over-year.

Improved margins and adjusted EBITDA: Delivered increased gross margins and adjusted EBITDA through profitability initiatives.

Focus on regenerative medicine market: Cryoport is expanding its leadership in the regenerative medicine market, leveraging its global platform and strategic partnerships.

Client therapy distribution pause: One client temporarily paused therapy distribution, impacting revenue by $2 million, but this is not expected to materially affect overall business.

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Risk or Challenges

Client's temporary pause in therapy distribution: One of Cryoport's gene therapy clients temporarily paused the distribution of their commercial therapy for about a week in July. Although the therapy is back on the market, the client anticipates treating fewer patients than originally forecast in 2025, leading to an estimated revenue impact of approximately $2 million for the remainder of the year.

Regulatory challenges for clients: Five clients received negative opinions from the FDA or MAA regarding their therapy approvals. These clients are seeking pathways forward, but the delays could impact Cryoport's operations and revenue tied to these therapies.

Dependency on client success in clinical trials: Cryoport supports 728 clinical trials, and its growth is tied to the success of these trials. Any setbacks in these trials, such as delays or failures, could adversely affect the company's financial performance.

Economic and market uncertainties: The company operates in a complex and evolving regenerative medicine market, which requires precision and reliability. Any disruptions in the market or economic downturns could impact Cryoport's operations and revenue.

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Guidance & Outlook

Revenue Guidance for 2025: Cryoport reaffirmed its full-year 2025 revenue guidance, emphasizing strong execution across all business units and a focus on sustainable long-term profitability.

Commercial Revenue Growth: Commercial revenue is expected to drive growth for years, supported by additional Cryoport-supported therapies reaching commercialization, including a new cell therapy from Aviana Therapeutics approved by the FDA in Q2 2025.

Clinical Trials and Approvals: Cryoport anticipates up to 20 additional application filings, one new therapy approval, and three approvals for label or geographic expansion in the remainder of 2025.

Impact of Client's Therapy Pause: A gene therapy client temporarily paused distribution, leading to an estimated $2 million revenue impact for the remainder of 2025, which is already factored into the guidance.

Strategic Partnership with DHL: The partnership with DHL is expected to enhance global bio-logistics capabilities, particularly in Asia Pacific and EMEA, positioning Cryoport to expand its life sciences business and leadership in regenerative medicine.

Regulatory Approvals Outlook: Five clients received negative regulatory opinions but are seeking pathways forward. Analysts are optimistic about potential approvals later in 2025 or early 2026.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Could you provide a brief update on the non-cell and gene therapy demand driving the product revenue beat in the quarter and an update on IntegriCell adoption?

A:IntegriCell is progressing well, with revenue production expected to start this quarter and meaningful revenue anticipated in 2026. The MVE business improved with an 8% revenue increase, driven by animal health cryogenic systems sales. However, global markets remain disrupted by governmental policies, impacting capital spending.

Q:Why did you maintain guidance despite a strong quarter and improved market conditions?

A:Guidance was maintained due to prudence amidst global economic, geopolitical, and administrative uncertainties. Management considered market dynamics and decided it was more prudent to keep guidance unchanged.

Q:How should we think about growth exiting the year and any early thoughts on 2026?

A:Growth is expected to be stronger in Q4 compared to Q3. Gross margins improved to 47% in Q2, and adjusted EBITDA improved significantly. Management will provide 2026 guidance at year-end but noted positive momentum and improvements in gross margins and bottom-line performance.

Q:What is your updated capital allocation philosophy, and are there any changes in your appetite for M&A?

A:The company remains prudent and strategic in deploying capital, with a focus on internal initiatives. They repurchased 1 million shares and paid back $14 million in convertible notes. While open to accretive acquisitions, there are no current plans for M&A.

Q:What is the early feedback from customers on the late-quarter FDA update on REMS and its potential impact on patient volumes?

A:The FDA update on REMS is seen as positive, making processes easier for rural points of care. Clients have responded positively, and updated forecasts are expected in the next earnings call.

Q:What are you hearing from biopharma customers regarding their appetite to spend, and how does it vary globally?

A:The pullback is mainly in preclinical R&D tied to NIH funding. Clinical and commercial spaces remain strong, with well-funded clients. Clinical trials increased to 728, with a 44-year-over-year increase in Phase III trials, indicating robust demand.

Q:Should we expect gross margins to step down in the back half of the year?

A:Gross margins are expected to remain relatively flat in the second half due to operating leverage and new initiatives like IntegriCell. The long-term goal is to achieve gross margins above 55% and adjusted EBITDA margins of 30%.

Q:What are you seeing in terms of competitive dynamics as the commercial market accelerates?

A:The company is seeing increased demand for its scalable and secure solutions. Larger players prefer to collaborate rather than compete, as evidenced by the DHL partnership. Integrated solutions are gaining traction.

Q:Do you think the biopharmaceutical market is stabilizing post-COVID destocking?

A:Yes, the market appears to be stabilizing, with most excess capacity burned off. MVE had three good quarters, including 8% growth this past quarter, indicating a return to normalcy.

Q:Should we expect continued EBITDA margin expansion as top-line growth drives natural progression?

A:Yes, EBITDA margin expansion is expected, driven by top-line growth. However, new initiatives like IntegriCell and facility build-outs in Paris and Belgium may temporarily impact margins.

Q:What is your updated view on tariffs and their impact on costs?

A:There has been no material impact from tariffs. Any tariff-related costs would be passed through to customers, as was done during COVID.

Q:Where is the offset to the headwind from lower Sarepta revenue in the reiterated guide?

A:The offset comes from stronger performance across the portfolio, including increases in commercial revenue, clinical trial revenue, and clinical trial count.

Q:How much of the second-half guide depends on pharma milestones that may be out of your control?

A:The guide does not depend significantly on new approvals, as they take time to ramp. The guidance is largely de-risked.

Q:What updates can you share on progress in China and milestones for growth in that region?

A:No significant changes are expected in the Chinese market until 2025. The company continues to monitor customers and government stimulus programs.

Q:How are customers responding to Cryoport becoming more carrier-agnostic after the DHL transaction?

A:Customer response has been extremely positive, appreciating the flexibility and complementary logistics solutions provided by DHL.

Q:What is the long-term margin profile expectation for IntegriCell?

A:At maturity, IntegriCell is expected to achieve gross margins in the 60% range, consistent with the company's service business.

Q:What drove MVE growth, and in which regions?

A:MVE growth was driven by strong demand in animal health and cryogenic systems sales, particularly in APAC (excluding China) and EMEA. North America also contributed but was not a record.

Q:Are you seeing any changes in the competitive landscape or market share for clinical trials?

A:No significant changes in the competitive landscape. The company continues to expand its leadership position, with increased clinical trial support and strong growth in BioStorage/BioServices.

Q:How did MVE results compare to expectations, and what drove the growth?

A:MVE performed well, with 8% growth driven by improved demand and new product introductions. Margins also improved, reflecting strong performance.

Q:What is the overall sentiment from customers regarding clinical trial activity and demand for dewars?

A:The sentiment remains positive, with resilience in the cell and gene therapy space. Clinical trial counts and CDMO performance indicate strong demand.

Q:Review of Unclear Management Responses

A:Management avoided directly addressing the question about the potential impact of the FDA's REMS update on patient volumes, stating it was too early to quantify. Additionally, they did not provide specific details on the competitive dynamics in the clinical trial market, offering only general positive remarks.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

CYRX Transcript

Cryoport, Inc. (CYRX) Q3 2025 Earnings Call Transcript

Positive11-4

The earnings call highlights reaffirmed revenue guidance for 2025 and a strong outlook for commercial revenue growth, supported by FDA approvals. The strategic partnership with DHL is expected to enhance capabilities, and there is optimism for regulatory approvals. While there are some uncertainties, such as the gene therapy pause and lack of profitability guidance for 2026, the overall sentiment is positive, particularly with the potential for market expansion and strategic initiatives. The Q&A session further supports this with positive analyst sentiment and no significant concerns about market exits.

Cryoport, Inc. (CYRX) Q2 2025 Earnings Call Transcript

Positive8-5

Cryoport, Inc. (NASDAQ:CYRX) Q1 2025 Earnings Call Transcript

Positive5-8

The earnings call reveals strong financial performance with 10% revenue growth and a strategic partnership with DHL, enhancing market positioning. Guidance for 2025 shows continued growth, and management is optimistic about market conditions and shareholder value. The Q&A confirms positive market sentiment, with strong growth in services and a strategic focus on leveraging partnerships and new product launches. Despite some unclear responses, the overall sentiment is positive, supported by robust growth in key areas and strategic initiatives.

Cryoport, Inc. (CYRX) Q1 2025 Earnings Call Transcript

Positive5-7

The earnings call indicates steady growth in revenue, particularly in Life Sciences Services, and a positive market outlook with increased commercial revenue and clinical trials. The strategic partnership with DHL is expected to enhance positioning and provide capital, while the company aims for positive adjusted EBITDA in 2025. Despite some risks in tariffs and supply chain, the company's proactive measures and optimistic guidance suggest a positive sentiment, likely resulting in a 2% to 8% stock price increase.

CYRX Slides

Cryoport Q2 2025 slides: Revenue growth accelerates across all segments

2025-08-05

CYRX Report

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