BioLife Solutions, Inc. (BLFS) Q3 2021 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Third Quarter 2021, BioLife Solutions Earnings Conference call. At this time, all participants are in a listen-only-mode. After the speaker’s presentation, there will be a question-and-answer session and to ask a question, you'll need to press star one on your telephone. Please be advised today's conference is being recorded. [Operator Instructions]. I would now like to hand the conference over to your first speaker for today, Mr. Troy Wichterman, Chief Financial Officer of BioLife Solutions. Please go ahead, sir.

Thank you, Eli. Good afternoon, everyone. And thank you for joining our Third Quarter Earnings Call. Joining me today to discuss our results are Mike Rice, Chairman and Chief Executive Officer, and Rod de Greef, President and Chief Operating Officer. Earlier this afternoon, we issued a press release which detailed our financial results and operational highlights with a 3 and nine months ended September 30th, 2021. As a reminder, during this call, we may make certain projections and other forward-looking statements regarding future events or the future financial performance of the Company or its acquisitions. These statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations. For a detailed discussion of the risks and uncertainties that affect the Company's business and that qualify as forward-looking statements, I refer you to our periodic and other public filings filed with the SEC. Company projections and forward-looking statements are based on factors that are subject to change. And therefore, these statements speak only as of the date they are given. The Company assumes no obligation to update any projections or forward-looking statements, except as required by law. During this call, we will 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. These non-GAAP or adjusted financial metrics should not be viewed as an alternative to GAAP. However, in light of our M&A activity, we believe that the use of non-GAAP or adjusted metrics provides investors with a clear view of our current financial results when compared to prior periods. Now, I'd like to turn the call over to Mike Rice, BioLife's Chairman and CEO.

Thanks, Troy, and it's great to have you in the CFO role and on your first earnings call with Rod and me. And Rod, it's just great that you'll be on the team with us for another year or so. Thank you, everyone for joining our call. After my remarks, Rod will provide an update on key initiatives he is managing, targeting integration and gross margin improvements. Then Troy will present our financials for Q3 in the first nine months of 2021 and speak to another guidance increase we're making for 2021 based on continued strong demand for our bio preservation media products. After that, we'll be glad to take your questions. Turning to Q3 revenue and customer highlights. We sustained our strong momentum this year with top-line revenue of nearly $34 million in the quarter, this was up 200% versus Q3 last year and 8% above Q2 this year. Organic revenue growth was up 37% over Q3 last year, driven by bio preservation media revenue growth of nearly 50% year-over-year. In Q3, we gained at least 213 new customers across our 3 products and services platforms. And I'll remind you know what those are: first cell processing, which includes bio-preservation, media and Sexton products. Second, is our freezers and Thaw systems platform comprised of CBS liquid nitrogen freezers and Stirling mechanical freezers and ThawSTAR systems. And finally, storage and cold chain services, which includes our SciSafe storage services and our r evo cold chain management offering. These more than 200 new customers in Q3 compares to 213 in all of 2020 and 183 in Q2 this year. For the first nine months of 2021, we gained nearly 500 new customers, but as noted before, the actual count should be significantly higher and we will report on that after year-end when we get data from our key indirect distribution partners. You might recall that in 2020 for our bio-preservation media products alone, two of our largest distributors shipped products to more than 2300 different end-users based on order volumes. So far this year, we expect another stellar year for our direct team, and indirect partners in driving much broader adoption of our portfolio, of bioproduction tools and services. Cross-selling to capture revenue synergies is a key focus for us, and in the first nine months of this year, more than 30 customers have purchased at least one additional portfolio solution than they were previously using. Note that we also disclosed earlier this year that a leading pharma CDMO is using every portfolio offering, and more recently that we have a multi-point engagement with a top 10 global pharma Company that uses our CryoStor bio preservation media, evo cold chain management offering, and SciSafe storage services. We expect to continue to capture revenue synergies by driving broader adoption of our portfolio components at our strategic accounts. Now I will make some qualitative comments about our 3 revenue platforms and let Troy speak to the overall metrics for each. For Cell processing in Q3, we gained 42 new customers and received confirmation that our Cell processing media products will be used in at least 24 additional clinical trials for new cell and gene therapies. We estimate that our bio preservation media products have been incorporated into more than 530 customer clinical applications. For bio preservation media, we also remain confident that each customer clinical application, if approved, could generate annual revenue in a range of $500,000 to $2 million, based on the estimated number of doses are customers would manufacturer in a year, the volume of our media in each dose in milliliters, and the average selling price per mill. To date, our bio preservation media is huge in seven approved therapies, and our Sexton cell processing media, and vials are used in three approved therapies. For bio preservation media and approved therapies actual and forecasted annual revenue, is supporting the revenue range I just mentioned. With our freezers and Thaw systems platform, despite the operational challenges, we continue to work through, we gained 162 new customers. In early October, we shipped another high-value, high-margin, high-capacity controlled rate freezer to a leading allogeneic cell therapy Company and anticipate shipping another this quarter. In our final of free revenue platforms, Storage and Cold Chain services, which includes evo cold chain rentals and SciSafe Storage Services, we gained 26 new customers for the second consecutive quarter, 15 for storage services and 11 for evo. Specific to our storage services platform, we recently announced the opening of our first European bio-repository in Amsterdam. Our opportunities list to potential new storage service customers is long and robust. We're very bullish in how we can grow this business and as you can imagine, are well into the planning process for where additional facilities will be located so we can capture our growth opportunities. With our evo cold chain management platform, Cell and Gene Therapy Companies now have full optionality, to access our class defining offering through our expanded specialty courier partner network that now includes World Courier, Quick international, Patheon, Thermo Fisher, Marken, and Biocair. We're also well engaged in our new product development road map for the evo platform and look forward to sharing details when we can, but I can say we're committed to finding the class through innovation, both internal and external. Now I will turn the call over to Rod to give you an update on some of the supply chain and gross margin improvement initiatives, he's leading. Rod.

Thanks. Mike. I'd like to start by addressing why I delayed the date of my retirement. The timing was originally based on two things. First, that the Company was on a solid growth trajectory, which I believe is clearly the case and which is demonstrated by the revenue strength we realized in Q3 and continue to see in Q4. The second factor was the full team was in place to manage that growth. Based on Dusty's resignation, the second half of the equation has changed. And given the 20 years that I've been associated with the Company in one form or another, I offered to step in and fill the gap based on my previous experience as COO from late 2019 to earlier this year. In this role, I currently have manufacturing and logistics, customer service, and IT reporting to me. And what's new is the addition of the Stirling and Sexton product lines, and that's where I'll be focusing a significant amount of my time. A key area of attention will be to finish the integration work that has been started, particularly in the area of consolidating the Company's supply chain, with the objective of realizing opportunities for gross margin improvement. In addition, we will continue to build out our Company wide customer service organization with the specific goal of adding at least one new service revenue stream in 2022. On the IT side of things, the priority is to work with the existing cross-functional team already in place and continue the deployment of the NetSuite ERP project, which is well underway and on track to be fully implemented across the Company by the end of next year. I'll end my remarks by addressing some operational issues we faced during the third quarter, which resulted in a total charge to COGS of $4.3 million or 13% of revenue in Q3. Approximately $4 million of the total was related to 2 issues with the Stirling ULT product line and was comprised of $1.5 million in purchase price variance charges and $2.5 million in increased warranty and scrap expense. As is the case with many companies operating in today's supply chain constrained environment, the Stirling operation realized a significant increase in Q3 PPV charges when compared to prior quarters. A large part of these charges, were directly related to an ongoing transition away from a large vendor, which will be completed in the coming months. This transition also resulted in raw material delivery issues, which negatively impacted our actual versus standard labor costs. The warranty and scrap charges are the result of certain defined and contained quality issues, the magnitude of which came to light during the quarter, and which fundamentally stem from the 52% year-over-year increase in freezer production. These problems have now been largely addressed through process and design improvements, but the increase in warranty expense reflects the amount necessary to establish an adequate warranty accrual on the Balance Sheet. To summarize, while we may see some continued issues on the supplier side impacting PPBs in Q4, they should be lower. And we fully expect to see improved gross margins in Q4 and then solid expansion during 2022. Now I'd like to turn the call over to Troy Wichterman, our CFO, to recap the quarter's financials results. Troy.

Thanks, Rod. I'll start off with a brief review of our financial results for Q3 2021, and then provide updates to the guidance for the remainder of 2021. Revenue for the third quarter totaled $33.8 million, representing a 200% increase over 2020's third quarter revenue of $11.3 million. Organic revenue increased 37% in Q3, 2021 compared to Q3 2020, driven by bio preservation media revenue of $11.1 million, which was up 49%. Revenue from the Cell processing platform for Q3 2021 was $11.5 million, which includes our bio preservation media revenue, and Sexton Cell processing tools. Sexton contributed $425,000 in revenue since our acquisition on September 1st, and was in-line with our expectations. Revenue from the freezers and Thaw systems platform for Q3 2021 was $17.6 million, which includes our CBS, Stirling, and ThawStar brands. Revenue from the storage and storage services platform for Q3 2021, was 4.7 million, which includes our Evo concise safe brands. Revenue for the nine months ended September 30th, 2021 totaled 81.9 million, an increase of 145% over 2020's, nine-month revenue of $33.4 million and organic growth was 34%. Bio preservation media revenue for the first nine months of 2021 increased 31% to $29.7 million. Our adjusted gross margin for the third quarter of 2021 was 28% compared with 57% last year. For the first nine months of 2021, adjusted gross margin was 39% compared to 60% in the same period last year. As Rod stated, we had $4.3 million of unusual cost of sales charges in the quarter. This was primarily related to the Stirling freezer products. Without these charges, our adjusted gross margin for Q3 would have been approximately 40%, which is more in line with our historical range. We believe we will see sequential margin growth throughout the next few quarters. Adjusted operating expenses for Q3 of 2021 totaled $17.4 million compared with $6.8 million in Q3 of 2020. And for the first nine months of 2021, adjusted operating expenses totaled $39.5 million compared with $19.3 million in the first nine months of 2020. The increase in both periods was primarily driven by the absorption of operating costs, related to our size safe, Stirling and Sexton acquisitions, as well as increased headcount, and stock-based compensation expense necessary to support our overall growth objectives. Our adjusted operating loss for the third quarter of 2021 was $8.1 million compared with an operating loss of $359,000 in Q3 2020. Our adjusted operating loss for the first nine months of 2021 and totaled $7.5 million compared to adjusted operating income of $547,000 in 2020. Our adjusted Net loss for the third quarter of 2021 was $8.3 million or negative $0.19 per share compared with an adjusted net loss of $346,000 or negative $0.02 per share in 2020. For the first nine months of 2021, adjusted net loss was $7.8 million, or negative $0.20 per share, compared with adjusted net income of $606,000 or $0.03 per diluted share in 2020. Adjusted EBITDA for the third quarter of 2021 was negative $2.1 million compared with positive $1.7 million in the third quarter of 2020. For the first nine months of 2021, adjusted EBITDA was positive $4.4 million compared with positive $5.8 million in the same period in 2020. Our cash balance at September 30th was $75.1 million. I'll conclude my remarks with our updated revenue guidance for 2021. Total revenue for 2021 is expected to be in the range of $115 million to $119 million, reflecting year-over-year revenue growth of 139% to 147% and organic growth of 30% to 35%. Self-processing platform revenue is expected to be between $42 million and $43 million, accounting for approximately 37% of total revenue, which includes the contributions of Sexton, which we closed on September 1st. Freezers and Thaw systems revenue is expected to be between $57 million and $59 million, accounting for approximately 49% of total revenue. Storage and storage service revenue is expected to be between $16 million and $17 million, accounting for approximately 14% of total revenue. Finally, in terms of our new share count, taking into consideration of 530,000 shares, we issued in connection with the Sexton transaction. We have 41.6 million shares issued and outstanding and 43.8 million shares on a fully diluted basis. Now, I turn the call back to Mike.

Thanks, Troy. I'd like to summarize two key takeaways from Q3. First, demand for our bioproduction tools and services portfolio is at record levels in each platform, we built a phenomenal customer base. And with the anticipated growth in the cell and gene therapy industry, have the potential to build BioLife into a significantly larger enterprise, and so our stated aspirational financial goals. Second, the operational issues we're tackling are not uncommon growing things typical and acquisitions. I'm confident our team will continue to execute well as we further integrate our various teams and steadily improve in our focus areas. Finally, I'm pleased to say that product demand so far in Q4 is very strong, and we're looking forward to sharing our results for Q4 and the full-year of 2021. Now I'll turn the call back over to the Operator to take your questions. Eli?

Thank you Mike. [Operator Instructions] And for the first question we have Max Masucci from Cowen and Company. Your line is open.

Hi, thanks for taking the questions.

Hi, Max.

So Rod, related to the supply chain disruption, it sounds like the issue is more on the inputs side of things. Can you just give us a bit more detail around the issue that came about with the specific vendor area? Which raw materials were the cooperated if you could share that and then whether you expect to reconcile the issue in the existing vendor are to seek an alternative.

Yeah. No, it is good question, Max, but I'm going to be a little bit circumspect since we still have a relationship with this vendor, And so, really it's fundamentally driven by the fact that, a couple of months back we made a decision to transition from this vendor, to another vendor for a variety of reasons. And that transition has not gone as smoothly as we had hoped. There have been a lot of surcharges -- unexpected surcharges involved in the transition. And in addition, as I mentioned, the supply has not been consistent in terms of its delivery, which has had a negative impact on the [Indiscernible] as it relates to labor rates. It's something that I think it's clearly transitory because the relationship will be fully transitioned, and we've been transitioning different parts over the last several months. We probably got another month or 2 of that activity, we expect the impact to come down and then in 2022 could be eliminated completely.

Great. And then just yet, we think about the implied Q4 results. Just looking at the raised guidance and netted against the beat versus our expectations in Q3, we just a lot of to get your latest view on the embedded assumptions for Stirling for the core business. And then also new customer wins versus same customer growth.

So I'll make a comment and then turn it over to Mike. But, you know, Max that we don't we don't split out the particular product lines within a platform, so we've been pretty clear in terms of what we expect the platforms to do in the guidance that Troy laid out. And in terms of customer wins, I'll let Mike address that piece.

Good question, Max. Well, we're winning in both categories. Both having success, having new groups adopt one or more platforms, but also going deeper within our key strategic accounts, and we do have some concentration, at least we did with media. And I'm sure to some degree that carries over to the other platforms, but I guess the way I'd want to characterize this as you've obviously seen from many other life science tools companies this quarter and even the quarter before, the demand is really remarkable, and our Proprietary products are doing really well. Everything else that we talked into the platform portfolio doing really well. So it's just a really, it's a really frothy time now based on level of investment and how that investment is translating into spend here. It's really both, but very bullish. I'm sure you've heard that come across in my voice with my remarks, but we're really strong.

Absolutely makes sense and if I could squeeze one more in [Indiscernible], if we look at the past 2 years, your customer base has grown, your product portfolio's evolved just with that in mind, how do you view the opportunity to expand from within and cross-sell the broader portfolio once you really get your foot in the door. Are there any products that being cross-sold effectively? It seems like there were some positive data points in the prepared remarks.

Most definitely Max, and that's a key focus area and I have -- and as a management team, particularly in our sales and marketing functional groups, we have really high expectations about our ability to capture those revenue synergies by seeing this cross-selling opportunities, leveraging relationships, finding homes for more parts of the portfolio based on now, obviously, in a good way, physically being back on sight, seeing our friends, but also seeking it other decision-makers and influencers to present the other parts of the portfolio. I have to say the integrated freezer sales team's doing a great job and we've got a lot going on there to [Indiscernible] size safe storage services, the Evo platform. So the good news is, there just are tens of thousands of prospects, it's a fine enough universe for us to get our arms around through our -- both our direct team and our distribution partners, and it's great to see the way that we're leveraging these various relationships and being introduced to other folks, so yes, key focus area for sure.

Great. Thanks for taking the questions.

You are welcome Max.

Next we have Jacob Johnson from Stephens. Your line is open.

Hey, good afternoon. And Rod, I'd say it's good to have you back, but I guess you never left. Maybe just one follow-up on just the Stirling operational stuff. Has this impacted your relationship with customers? The perception of the brand? Or maybe more simply that --- did any of these kind of issues impact your outlook for revenues at Stirling.

Yeah. Really good question, Jacob. And as you can imagine, for competitive reasons, I will be fairly brief in my remarks, but I think it's obvious that every time a customer owns a freezer, if it doesn't work or doesn't work like it is supposed to, that's a bad experience and we don't like that, so we're all over that to try to reduce those and to get things to return to a normal sort of expected warranty rate of touch points and service calls and all that. But yes, so far so good but we're on it because we understand how customer loyalty works and they have options which may not be the best stock options but they have other options to consider so hyper-focused on it.

Thanks for that, Mike. And then, just checking on the freezer side and kind of a bigger picture question that I get from investors. We're -- you guys are seeing strong demand for your freezers, we're seeing it elsewhere too. Can you just talk about the demand and freezers you're seeing? Is this new customers coming to you? Is it existing customers kind of scaling up or out? Is this to prepare for commercial product launches, or just for research, just any kind of color you can give on the broader demand backdrop you’re seeing on the freezers side of the business.

Yeah. I can give a little bit. It's all of the above in a depends on the segment you're talking about. Within cell and gene therapy, clearly the high-capacity control great freezer from our CBS LN2 line has an appeal there. and there's demand for that and there's really good interest and those are as you know, high-value $500,000 kind of range freezers with good margins on them. In the broader bio-farmer market, there is really -- obviously demand for LN2 storage, but really more demand for mechanical freezers. And yet in that space you think about the three markets of academia, government, and then corporate or industrial with really strong demand amongst all those. So, I would just say that, we are the beneficiary of this tide that's lifting all the boats.

I will just sneak in one more. Nice quarter in the services business. Can you just -- on the build-out at SciSafe, you added the Amsterdam facility, can you talk broadly about the footprint of SciSafe today? And then if you want to look ahead to maybe hint that any other regions that could be of interest in the future, I'd suspect Asia-Pacific would be one that would come to mind.

So today there are five facilities. And if you think, how are we making this filter criteria for selection and locations, it's really about where are the clusters of biotech companies and cell and gene therapy companies, that would have a need or an interest in outsourced storage. And we all know what those clusters are and each of those has a certain footprint from competitors who offer outsourced biological storage so we've got a lot of factors going into it. But you can imagine where we're not in the US and of course those are going to kind of roll to the top of the list. Just to put some color on that Rod you can chime in our tour if you want, We think we've got a really good handle on what it costs to turn up a facility in terms of capex and timing and all that and you know, it's an interesting opportunity for us where people are coming to us because as they see some differentiation based on quality, how we engage. So we're really bullish about how we can grow that business out.

Great. I'll leave it there. Thanks for taking the questions, Mike.

Sure.

Next we have Paul Knight from KeyBanc. Your line is open.

Hi, Mike. [Indiscernible] more references in the industry about increasing importance in spite of the cell and gene therapy market, are you seeing your customers -- per customer sales increase, or are they moving into Phase II, Phase III? What are you seeing on per customer on the media side of the business?

Most definitely Paul. Clearly as they move into later stage or later phase trials of a particular candidate. But also our ability because the relations were very sticky. Our ability to get the media embedded in their follow-on development projects is really strong. So that whole gestation period in customer revenue journey, it's going to be repeated several times with many, many customers. Where we may be end approved cell therapy, but we're also in most if not all the follow-on candidates, that they're evaluating through clinical trials, so you bet.

It seems like C-1 approved therapy doesn't your product, I mean, would they have not have had gone through a lot of safety studies for that approval?

I think there would have been in your speaking specifically of Kymriah from Novartis, who uses the home --brew cocktail for preservation that came from the UPenn process that they scaled up in their shoes. It's always the balance of if we switched to CryoStor, we can improve functionality and post preservation viability and functional recovery of cells. But at least to-date, their assessment of the lift to do that, particular as it relates to how the agency in the US might mandated they do some bridging studies or maybe small animal studies or something. They haven't convinced themselves they should do that. However, I would tell you that Novartis as a strategic customer on media, and we're in lots of other projects that got going on there in clinical trials.

Okay. Great. And then lastly on the integration of Stirling with CBS and other products, is Stirling presence in the more, I will have call it 20 to 80 market. Is that -- is there any integration issues with CBS in terms of their higher end, let's call it, colder, ultra-cold products?

Not integration as it relates to on our side, Paul, but definitely opportunities as it relates to, how we can now offer freezers that cover the complete temperature continuum. So if a customer needs the coldest of the cold, at minus 150 or colder with LN2 we've got it covered. If they don't need that but they are in the mechanical space of minus 20 to minus 80, we obviously got the class defining Stirling offering to pitch as well.

And Paul, it's Rod, to the extent there's integration work to be done relative to the manufacturing side of things and end customer service to a degree, it really revolves around consolidating the supply chain so that we can leverage certain components, both electronic and metal, that both platforms use.

Okay. And then last on COVID, I know Stirling had some COVID benefit. What's the direction of COVID demand right now?

Yeah, it's actually coming down. So if you look at the year-to-date number, it's going to be around 20%, but if you look at Q3, it's down in the 15% to 18% range. We expect that to come down further in Q4 and maybe normalize next year. I think it's going to go longer than we had originally expected, so maybe it's 10% next year going forward.

Okay, thanks.

Next we had Yuan Zhi from B. Riley Securities. Your line is open.

Thank you for taking our questions and congratulations on another strong quarter. A while ago you mentioned a top 10 big pharma selected a portfolio of service from BioLife to support its regulatory application. To the extent that you can share, can you provide some more color about your history with this Company, like how the relationship has been, how the service you provided to the Company has with over time and what are the key factors you think that differentiate you from other competitors? Thank you.

Yeah, super, super insightful question. Well, this relationship is very long term. I think this relationship was in its nascent days when I joined the Company almost 16 year ago, on the media side. And they evaluated CryoStor for a number of early phase cell therapy candidates, and that relationship had and flowed as some of those candidates progress more, it didn't progress so on and so forth. And then it transitioned into the evaluation, and the validation, and the adoption of the evo platform to transport their CAR T-cell therapy around, which has just fantastic through in obviously that was a joint kind of when, if you will, Yuan, with select courier partners of ours. Concurrent with that, Gary in the size safe team engaged to provide storage services, and our relationship with this customer is really great. It's a true partnership and we continue to go deeper and to increase the region, and the revenue increases based in more things that we can offer. So it's really just a great mutually beneficial relationship.

Yes, thanks for the helpful color. And maybe can you provide an overview of your rental business, like which business segment you are having this rental business and is it like iPhone, and the user gets upgrade every couple of years? Thank you.

Sure. So the evo cold chain management business is reported in our storage services and cold chain Services platform. We don't break out the revenue of each. The revenue is based on the rental of containers to the specialty carriers who then in turn use those to move customers' temperature sensitive biologic material from A to point B.

Yes. Got it. Thank you.

You're welcome.

Next we have Thomas Flaten from Lake Street Capital Markets. Your line is open.

Thanks for taking the questions and congrats Troy on the position. Just a quick one on the gross margins. So if we adjust out the charges to get to 40%, was that a bit below where you guys have had anticipated margins being for the quarter?

Yeah, I think it was, I think it really has to do with some stock comp that was issued to a couple of a hundred people at the Stirling facility in Q3. That was not in place in Q2. So I think if you look at Q2 as sort of a benchmark, if you will, a baseline, I think the bulk of the delta between those two has to do with that stock comp piece, Troy?

And I just like to add to that, we actually did stock comp grants for everyone throughout the Company in Q3. So that's what you're seeing to the drop to the gross margin as well.

Got it. And switching gears a bit. With Dusty's resignation and Rod's unresignation. How do you think about -- as the Company grows both in size and complexity, how do you think about building up a bench of capable leaders for the future. Obviously, I'm assuming you are going to continue to be acquisitive and the business will only continue to grow. I'm just curious to get your thoughts on that, in light of recent announcements.

Yeah, I think that's a good question, Thomas. I think clearly with respect to Troy's promotion, that has been in the works in terms of getting him ready for that seat for quite some time. As it relates to a future potential Chief Operating Officer, there are a couple of candidates internally. We're going to evaluate those candidates over the next year. And I think borrowing some strange ness that we can't see today, it's likely that one of those folks would step up into the role, say, early '23 when I'm ready to formerly and finally retire. So that's the plan there.

Got it. Appreciate the questions. Thanks guys.

[Indiscernible]

[Operator Instructions] Next we have Suraj Kalia from Oppenheimer and Company. Your line is open.

Good afternoon, Mike, Rod, Troy. Can you hear me all right?

Yes. Hi, Suraj.

Hey, Mike, hope everyone is safe and healthy. So Mike, one multi-part question for you and one I'll pose it to either Rod or Troy. So Mike to the extent that you can share. You mentioned 500 new customers in the quarter?

Yes.

How many were de novo versus pull-through from acquisitions? [Indiscernible] I'm just curious.

Yeah. I'll take that one. None were inherited from acquisitions, they're all de novo. Okay.

Okay perfect. It might -- just given the number of tools in your toolbox now, so to speak, what is the average time it's taking you all to close a new account, if you want to compare from a year or two years ago? And also if you were in a position to share, what's the trend line for average revenues per customer looking like? And I will just throw my second question and therefore Rod or Troy. Maybe gentlemen, I understand the onetime issues with Stirling and the gross margin and stock comp, Rod on a broader level, if you could just remind us where you all are in the trajectory of normalizing corporate gross margins. There was a dip with Stirling, you all were going to take some initiatives. Forgive me just jumping in between calls -- maybe you can walk us through how the normalization and the timeline. Thank you for taking my questions.

Sure, super. All really good questions or so with respect to your question about sales closing time versus previous well it really depends on the platform. I can say specific to media which because so much of the business comes direct, were closest to that we understand the sales process that makes it very-very well. That is certainly getting compressed, and has been compressed over the last several years where it now, much of the whole lead generation is inbound due to our brand awareness, people understanding what we can do for them and using the products at a different engagement and moving to a new place and taking that best practice, that positive learning experience with them. I think it's certainly getting compressed. On the freezer side because we do sell to a large degree through distributors, and then we have now this new integrated direct team, but that's all a transition, it really depends most likely I'd say based on in some segments the time of year. And if we're in the academic market or the government market and they've got to spend money and buy in certain dates. So, as you can imagine, Suraj, all of our sales presentations are talking points our elevator pitches, it's all about making sure that every customer or prospect conversation includes the entire portfolio with these sellers being fluid enough to identify opportunities where we can do more and we can solve more customer problems. And I think if good at that, and I believe we will be, that we'll compress the sales cycle across all the platforms.

So Suraj, in terms of your question I think the best way for me to answer it as follows. So I think if you look at -- let's just use the word normalized gross margin blended for the full Company on an adjusted basis, it's running 40% to 42%, so that's sort of the floor. The issues that we faced in Q3, are fundamentally trend transitory. I mean, we may have a little slop over in Q4. But as you look into 2022, we have a stated goal of a 3–4-year gross margin target of 50 plus percent. And so you're really looking at increasing or expanding gross margin by 10% points over that period of time. A portion of that is going to come from some things we do fairly quickly that we'll be able to see happen in 2022. And then the balance of it is going to be driven by fundamentally higher levels of revenue leveraging fixed costs, and new product introduction with lower bombs. So 2022 is going to be more about executing on the manufacturing side, on the purchasing side, and I'm not going to put out a target there. We obviously have one internally, but then the balance of the gross margin expansion is going to come based on revenue increases and new product introduction by that 3–4-year period.

Thank you.

You bet.

And there are no further questions at this time, that concludes the Q&A session. I will now turn the call back to Mike Rice, Chairman and Chief Executive Officer for closing remarks.

Thanks, Eli. Thanks again, everyone, for your interest in BioLife. We're in a great space with a nearly 500-person strong team of folks dedicated to quality, customers, and each other. Our success is only made possible by their commitment and teamwork. We're looking forward to closing Q4 and 2021 with demonstrated execution and strong results. We appreciate your support and wish you a good evening. Good night.

And this concludes today's conference call. Thank you all for participating. Enjoy the rest of your day, keep safe and you may now disconnect.