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CERUS CORP (CERS)·Q3 2024 Earnings Summary

Executive Summary

  • Strong Q3 execution: product revenue rose 16% YoY to $46.0M with North America leading; total revenue up 7% YoY to $50.7M, product gross margin expanded 200 bps YoY to 56.9%, and adjusted EBITDA turned positive to $4.4M . Net loss per share narrowed to $0.02 vs $0.04 LY; operating cash flow was +$4.1M .
  • Guidance raised: FY24 product revenue target increased to $177–$179M (from $175–$178M); IFC guidance lifted at the low end to $9–$10M (from $8–$10M) on demand momentum and added manufacturing BLAs . Management expects gross margins to remain near Q3 levels and reiterated the path to FY24 adjusted EBITDA breakeven .
  • Strategic catalysts: new BARDA contract valued up to $248M to support U.S. RBC PMA and commercialization; LED illuminator CE submission completed in Europe, with 2025 EU launch targeted; EU RBC CE review concluded without approval, with plans for an enhanced resubmission leveraging ReCePI and RedeS data .
  • Call color: U.S. platelet adoption remains robust (~two-thirds of platelets pathogen reduced), IFC demand broadening (three new BLAs in Q3), supply chain performance solid despite port strike; management raised FY24 outlook accordingly .

What Went Well and What Went Wrong

  • What Went Well

    • “We are raising our full year product revenue guidance… and increasing the lower end of our IFC guidance,” reflecting broad-based strength and execution on EBITDA/cash flow targets .
    • Platelet and IFC momentum: U.S. platelet franchise led growth; IFC revenue rose to $2.3M (from $1.7M LY), aided by three new BLAs expanding interstate distribution .
    • Margin and cash discipline: product gross margin reached 56.9% (+200 bps YoY), operating cash flow +$4.1M in Q3; adjusted EBITDA +$4.4M .

  • What Went Wrong

    • Government contract revenue declined to $4.6M (from $7.5M LY) due to completion of the ReCePI trial, partially weighing on total revenue growth .
    • EU RBC CE Mark review concluded without approval; company plans a new, enhanced submission in consultation with TÜV-SÜD .
    • International seasonality and macro/logistics: EMEA growth was modest (stable/slightly up YoY), and the company navigated a U.S. East Coast dockworkers strike; still met all Q3 customer requests .

Financial Results

Overall P&L (USD Millions except per-share and %). Periods shown oldest → newest.

MetricQ1 2024Q2 2024Q3 2024
Product Revenue$38.4 $45.1 $46.0
Government Contract Revenue$5.0 $5.4 $4.6
Total Revenue$43.4 $50.5 $50.7
Net Loss per Share (Basic & Diluted)$(0.05) $(0.03) $(0.02)
Product Gross Profit$21.3 $24.7 $26.2
Product Gross Margin %55.4% 54.7% 56.9%
Operating Expenses$34.3 $33.9 $31.8
Adjusted EBITDA (Non-GAAP)$(2.7) $0.8 $4.4

Product Revenue by Region (USD Millions)

RegionQ1 2024Q2 2024Q3 2024
North America$25.47 $30.80 $31.51
EMEA$12.71 $13.73 $13.81
Other$0.18 $0.56 $0.70
Total Product Revenue$38.37 $45.08 $46.02

Key KPIs and Operating Metrics

KPIQ1 2024Q2 2024Q3 2024
IFC Revenue (USD M)$1.9 $2.0 $2.3
Platelet Kit Growth YoYNA: 44%; Int’l: -9%; WW: 25% NA: 17%; Int’l: 7%; WW: 14% NA: 18%; Int’l: 1%; WW: 13%
Change in Treatable Platelet Doses YoYNA: 48%; Int’l: -5%; WW: 25% NA: 21%; Int’l: 11%; WW: 18% NA: 21%; Int’l: 0%; WW: 14%
Operating Cash Flow (USD M)$2.0 $0.4 $4.1
Cash, Cash Equivalents & ST Inv. (USD M, end of period)$72.2 $71.2 $75.6

Notes:

  • Q3 product revenue growth +16% YoY (to $46.0M), with North America +21% and EMEA +1% YoY .
  • Q3 adjusted EBITDA turned positive to $4.4M; YTD adjusted EBITDA +$2.5M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Product RevenueFY 2024$175–$178M $177–$179M Raised
IFC RevenueFY 2024$8–$10M $9–$10M Raised (low end)
Product Gross MarginFY 2024“Relatively consistent with Q2’24” “Remain relatively consistent for Q4 near Q3 levels” Maintained
Adjusted EBITDA (Non-GAAP)FY 2024Breakeven target Breakeven or slightly positive trend; “increasingly confident” Maintained
SG&A2H 2024Stable; leverage expected No significant swings; continued leverage Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2024)Current Period (Q3 2024)Trend
U.S. Platelet Adoption & DemandReturn to growth; CBS approaching 100% adoption; extended shelf life benefits supply ~2/3 of U.S. platelets pathogen reduced; NA growth drove Q3; seasonality abroad Strengthening in U.S.; steady abroad
IFC Adoption & CapacityIFC $1.9M (Q1), $2.0M (Q2); expanding via blood center partners; additional BLAs pending IFC $2.3M; 3 new BLAs expand interstate supply; demand broadening across departments Accelerating demand and supply
RBC Program (U.S./EU)ReCePI positive topline; RedeS enrolling; EU MDR review pending; PMA modular plan New BARDA up to $248M; EU CE concluded without approval; planning enhanced resubmission with ReCePI/RedeS U.S. support strengthened; EU reset
LED IlluminatorDemo at ISBT; CE submission planned; 180-day review anticipated; 2025 EU launch targeted CE dossier submitted; 2025 EU roll-out, U.S. PMA likely 2026; margin neutral near-term On track, foundational platform
Supply Chain & LogisticsInventory normalization; working capital improvements; stable gross margin outlook Navigated U.S. port strike; met all Q3 requests; margin tailwinds from lower product/warehousing/freight costs Execution resilient
Cash & EBITDAPositive OCF in Q1/Q2; path to FY breakeven EBITDA OCF +$4.1M in Q3; adjusted EBITDA +$4.4M; confidence in FY24 goals Improving

Management Commentary

  • “We are raising our product revenue guidance… and increasing the lower end of our IFC guidance… [and] have also delivered on our bottom-line and cashflow targets for Q3.” — CEO, Obi Greenman .
  • “Product gross margins… 56.9%, up 200 bps YoY… driven by lower product costs and lower supply chain costs… expect margins to remain relatively close to Q3 levels for the balance of the year.” — CFO, Kevin Green .
  • “We estimate that nearly 2/3 of all platelets distributed to U.S. hospitals are pathogen reduced.” — COO, Vivek Jayaraman .
  • “New $248M BARDA contract… designed to see the INTERCEPT RBC program through potential regulatory approval and product launch.” — CEO, Obi Greenman .
  • LED illuminator: EU launch targeted for 2025; U.S. PMA submission likely 2026; ASP/COGS slightly higher but margin neutral overall. — Management .

Q&A Highlights

  • IFC capacity and demand: Three new BLAs add supply headroom; company continues to recruit blood centers as demand expands; growth from both new accounts and deeper penetration in existing hospitals .
  • LED illuminator timing and economics: EU 2025 roll-out; U.S. PMA around 2026; ASPs and COGS slightly higher; margin neutral near-term; platform strengthens IP and future iteration flexibility .
  • FY24 cadence and 4Q: Q4 implied mid-single-digit growth; some new account openings may slip to early 2025 due to holidays, but overall tailwinds into 2025 remain .
  • Government contracts: Q3 light due to ReCePI completion; expect increase from RedeS ramp and new BARDA activities in 2025; $32M committed over several years .
  • Cash flow sustainability and R&D funding: Working capital rebuild expected in 2025 but offset by operating performance; majority of R&D funded by BARDA and other agencies .

Estimates Context

  • We attempted to retrieve S&P Global consensus EPS and revenue estimates for Q1–Q3 2024, but the data could not be fetched due to provider request limits at this time. As a result, we cannot quantify beats/misses versus Wall Street consensus for Q3 in this report. We note management raised FY24 product revenue guidance to $177–$179M and increased the low end of IFC guidance to $9–$10M, which typically implies upward pressure on consensus revenue forecasts .

Key Takeaways for Investors

  • Execution + operating leverage: Q3 delivered higher product growth, 200 bps GM expansion, positive adjusted EBITDA, and stronger cash generation — a tangible step toward sustained profitability .
  • Top-line momentum de-risked: Raising FY24 product revenue and IFC guidance reflects resilient U.S. platelet demand and widening IFC adoption with added manufacturing capacity (new BLAs) .
  • Medium-term catalysts: BARDA’s up-to-$248M award strengthens the U.S. RBC path to PMA and commercialization; LED illuminator CE submission positions for a 2025 EU launch and platform-led innovation .
  • EU RBC reset manageable: CE review concluded without approval, but strategy to resubmit with expanded ReCePI/RedeS data aims to support a broader indication; investors should monitor EU regulator feedback and timelines .
  • Margin/FCF focus: Management expects gross margins to hold near Q3 levels and SG&A to stay stable, supporting continued adjusted EBITDA improvement and operating cash flow, with working capital investment likely in 2025 .
  • IFC as a growth vector: Run-rate exiting 2024 trending higher with both new accounts and same-hospital expansion; supply scaling via additional BLAs supports unconstrained demand pursuit into 2025 .
  • Watch list: Q4 seasonality, EU regulatory steps for RBCs and LED, RedeS enrollment cadence, international growth (Germany, Middle East), and continued platelet shelf-life/operations benefits .