Executive Summary

Q1 2023 revenue was $2.57M, down 3% YoY, while gross margin expanded to 43% (vs. 35% a year ago) on lower inventory reserves; comprehensive net loss to common widened to $(5.09)M with diluted EPS of $(4.07) as non‑cash interest expense surged on convertible note amortization .
CDMO transition advanced: build‑out of twelve class‑7 ReadyStart cGMP cleanrooms in a 35,500+ sq. ft. Sacramento facility remains on track for customer availability in Q2/Q3 2023; if fully leased, suites are expected to generate $10–$16M of annual revenue .
Liquidity improved q/q via a $3.0M March 2023 private placement; cash and equivalents rose to $5.9M at 3/31/23, but going‑concern uncertainty persists pending additional capital and ramp of CDMO services .
Mix commentary: domestic AXP disposables and BioArchive services were stronger, while CAR‑TXpress and international AXP weakened YoY; management highlighted industry CDMO capacity shortages as a key commercialization catalyst for the ReadyStart offering .
Street estimates: S&P Global consensus for Q1 2023 was unavailable; no beat/miss assessment possible (micro‑cap coverage appears limited).

What Went Well and What Went Wrong

What Went Well

Gross margin expanded to 43% (from 35% YoY) as Q1 benefited from lower inventory reserves versus elevated reserves on obsolete BioArchive parts in the prior year, per CFO commentary .
CDMO build‑out progressed with 12 ReadyStart cGMP suites targeting Q2/Q3 availability; management emphasized leveraging proprietary CAR‑TXpress technology to reduce manufacturing costs and accelerate timelines for cell and gene therapy clients .
Cash balance increased to $5.9M following a $3.0M private placement in March 2023, supporting working capital and CDMO launch activities .

What Went Wrong

Interest expense spiked to $3.9M, primarily from non‑cash amortization related to down‑round triggers on convertible notes, widening the comprehensive loss; management reiterated going‑concern risks and the need for additional capital .
Product headwinds in CAR‑TXpress and international AXP (YoY) offset strength in domestic AXP disposables and BioArchive services, keeping total revenue slightly lower YoY .
Dependence on related‑party financing/leases persists, including a 22% related‑party note (conversion price reset mechanism) and related‑party facility lease obligations, elevating financial risk .

Financial Results

Note: Q4 2022 was reported annually; quarterly detail was not disclosed in that press release. Q3 2022 is shown for trend context. Q3 2022 EPS reflects pre‑December 2022 reverse split reporting; comparability to Q1 periods is limited .

Metric	Q1 2022	Q3 2022	Q1 2023
Revenue ($USD Millions)	$2.663	$2.115	$2.572
Gross Profit ($USD Millions)	$0.940	$0.437	$1.105
Gross Margin %	35%	21%	43%
SG&A ($USD Millions)	$1.693	$1.982	$1.844
R&D ($USD Millions)	$0.456	$0.470	$0.306
Operating Loss ($USD Millions)	$(1.209)	$(2.015)	$(1.045)
Interest Expense ($USD Millions)	$(0.823)	$(1.391)	$(3.903)
Net Loss to Common ($USD Millions)	$(1.910)	$(3.240)	$(5.086)
Diluted EPS ($USD)	$(6.63)	$(0.10)	$(4.07)
Cash & Equivalents ($USD Millions)	$3.652 (end of period)	$3.903	$5.854

Segment/Product revenue mix:

Product Line Revenue ($USD Thousands)	Q1 2022	Q1 2023
AXP	$1,766	$1,539
BioArchive	$453	$657
CAR‑TXpress	$313	$146
Manual Disposables	$105	$207
Other	$26	$23
Total	$2,663	$2,572

Geographic revenue:

Geography Revenue ($USD Thousands)	Q1 2022	Q1 2023
United States	$1,958	$1,372
Singapore	$0	$404
Other	$705	$796
Total	$2,663	$2,572

KPIs and cash flow/working capital:

KPI	Q4 2022	Q1 2023
Cash & Equivalents ($USD Millions)	$4.177 (12/31/22)	$5.854 (3/31/23)
Working Capital ($USD Millions)	$(0.625) (12/31/22)	$0.498 (3/31/23)
Deferred Revenue – Short‑Term ($USD Thousands)	$782	$729
Deferred Revenue – Long‑Term ($USD Thousands)	$911	$835
Total Backlog (Expected Future Revenue) ($USD Thousands)	—	$3,746

Drivers and mix commentary:

Margin expansion driven by lower inventory reserves YoY; product mix: higher domestic AXP disposables and BioArchive services; lower CAR‑TXpress and international AXP .
Interest expense increase due to ~$3.5M non‑cash debt amortization from convertible note down‑round resets .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
ReadyStart cGMP Suites Availability	2023	Available to customers in Q2/Q3 2023	Available to customers in Q2/Q3 2023	Maintained
ReadyStart Suites Annual Revenue Potential (if fully leased)	Run‑rate	$10–$16M	$10–$16M	Maintained
Gross margin outlook (AXP CMO transition)	2023	Expect benefits after working through existing AXP inventory	Not reiterated in Q1 call/PR	—
Formal financial guidance (rev/EPS/margins)	2023	None provided	None provided	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2022, Q4 2022)	Current Period (Q1 2023)	Trend
CDMO strategy and build‑out	Announced TG Biosynthesis division; 12 cGMP suites; leveraging CAR‑TXpress; strong industry backlog and outsourcing trends	Build‑out progressing; suites marketed; availability targeted in 2Q/3Q; turnkey model highlighted	Strengthening execution
Pricing/Capacity	Revenue potential $10–$16M if fully leased; margin “in line with industry” to be determined	Pricing comparable to peers, with promotional initial offers; potential ~10,000 doses/year capacity if fully utilized	More specific datapoints
Product performance	Timing issues impacted AXP in China; domestic AXP improving	Higher domestic AXP disposables, BioArchive services up; CAR‑TXpress down YoY	Mixed
Liquidity/Funding	$2.0M raise (Oct-22) completed; $3.0M private placement announced (Mar-23)	$3.0M private placement closed; cash ↑ to $5.9M; going‑concern remains	Stabilizing but still constrained
Regulatory/Quality	Emphasis on high‑quality cGMP and regulatory support	Turnkey suites with regulatory compliance support reiterated	Consistent

Management Commentary

“We continued to make progress in building out our 35,500+ square foot state-of-the-art facility… a significant part of our transition into a … CDMO… The twelve (12) class-7 ReadyStart cGMP cleanrooms… are designed to meet the highest scientific, quality, and regulatory requirements… expected to generate $10 million to $16 million in annual revenue [if fully leased].” – Chris Xu, CEO .
“Gross profit for the quarter was $1.1 million or 43% of net revenue… The increase was driven by lower inventory reserves in the current year… Interest expense was $3.9 million… driven by noncash amortization… convertible notes.” – Jeff Cauble, CFO .
“We have begun to market this turnkey solution… We expect the ReadyStart cGMP suites to be available… in the second or third quarter of this year.” – Chris Xu, CEO .

Q&A Highlights

Pricing vs peers and demand: Management priced “comparable to industry” with initial promotions; emphasized “missing capacity” in the market and strong inbound interest; Science Magazine advertising underway .
Capacity potential: If all 12 rooms were used internally, management estimated “close to 10,000 doses” per year of GMP‑ready cell/gene therapy output .
Customer feedback: Positive reception to unique combination of high‑end cGMP suites and common lab space in one facility; management believes the model is differentiated regionally/nationally .
Business model and revenue potential (prior call): Hybrid of leasing suites and full white‑glove CDMO services; $10–$16M annual revenue tied to leasing alone, with services incremental; margins to be in line with industry averages .

Estimates Context

S&P Global/Capital IQ consensus estimates for THMO Q1 2023 (revenue and EPS) were unavailable in our feed; therefore, no beat/miss assessment versus Street is possible at this time. Focus remains on upcoming suite availability and leasing ramp to drive estimate revisions.

Key Takeaways for Investors

Margin inflection: Despite flat revenue, gross margin improved to 43% on reduced inventory reserves; monitor sustainability as mix and AXP CMO transition progress through 2023 .
Non‑cash interest headwind is material: Convertible‑note down‑round amortization drove a $3.9M interest expense in Q1; equity/convertible activity and price‑reset clauses can materially affect reported losses and dilution .
CDMO capacity launch is the core catalyst: Twelve suites targeting Q2/Q3 2023 availability with $10–$16M leasing revenue potential; early leasing traction and services cross‑sell will be key to re‑rating .
Liquidity improved but remains tight: Cash rose to $5.9M post raise; going‑concern uncertainty underscores the need for additional capital and/or faster CDMO monetization .
Product mix watch: Domestic AXP disposables/BioArchive services strength offset by CAR‑TXpress softness; geographic mix diversified with Singapore contribution in Q1 .
Related‑party exposures: High‑rate related‑party note (22%) with conversion resets and related‑party lease obligations elevate risk; investors should monitor governance and cash outflows .
Near‑term trading setup: Newsflow on first suite leases, initial services contracts, and any incremental financing are likely stock movers; absence of Street coverage/consensus can amplify volatility around company updates .

ThermoGenesis Holdings, Inc. (THMO)·Q1 2023 Earnings Summary