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ThermoGenesis Holdings, Inc. (THMO)·Q2 2023 Earnings Summary

Executive Summary

  • Q2 2023 net revenues were $2.273M, down 25.0% year over year and down 11.6% sequentially; gross margin compressed to 21% from 31% a year ago and 43% in Q1 2023, driven by lower China AXP disposables and reduced absorption. Net loss attributable to common stockholders narrowed YoY to $(2.260M), but worsened sequentially from Q1’s $(5.086M) primarily due to lower gross profit and reduced other expense versus Q1’s heavy non-cash interest amortization .
  • Management emphasized the strategic transition to an integrated CDMO, with 12 ReadyStart cGMP suites nearing completion in Sacramento and targeted customer move-ins as early as late Q3 or very early Q4 2023, positioning near-term revenue catalysts tied to room leasing and services .
  • The company disclosed new monetization detail: average lease rates of $75k–$150k per month per ~500 sq ft suite, ~$1M annual revenue per suite (12 suites ≈ $12M run-rate when fully leased), and modest annual costs of $50k–$100k per suite—supporting attractive contribution margins upon occupancy .
  • No formal financial guidance or Wall Street consensus comparisons were available; S&P Global estimates were unavailable for THMO due to a mapping issue, limiting beat/miss analysis for Q2 2023 (S&P Global consensus unavailable).
  • Near-term stock reaction catalysts: formal ISO certification and opening of the cGMP facility, initial tenant signings, and visibility into CDMO pipeline and suite occupancy rates; strategically, CAR‑TXpress is positioned to reduce manufacturing time and potentially cut CAR‑T costs by up to 50% over time, a narrative supportive of medium-term re-rating if execution follows .

What Went Well and What Went Wrong

What Went Well

  • CDMO transition progressed: “We continued to make headway in constructing our innovative ReadyStart suites… paramount to our strategy of becoming a high‑performance, integrated CDMO” .
  • Strong pricing power and revenue potential disclosed: “Average market cost per 500 square feet GMP suite is about $75,000 to $150,000 per month… roughly $1 million per suite [annualized]” .
  • Timeline visibility: management expects customers to move in “as early as towards the end of the third quarter or very early fourth quarter,” indicating near‑term commercialization of the new facility .

What Went Wrong

  • Revenue and margins declined: net revenues fell to $2.273M from $3.029M YoY, and gross margin declined to 21% (from 31% YoY; 43% in Q1), driven by lower China AXP disposables and reduced absorption .
  • Sequential deterioration: revenue down 11.6% vs Q1’s $2.572M, with gross profit down to $0.469M from $1.105M, pressuring operating results (loss from operations widened to $(1.730M) vs $(1.045M) in Q1) .
  • No explicit financial guidance; limited transparency on CDMO booking/occupancy beyond preliminary discussions and tours, which may constrain near‑term visibility for investors .

Financial Results

MetricQ2 2022Q1 2023Q2 2023
Revenue ($USD Millions)$3.029 $2.572 $2.273
Gross Profit ($USD Millions)$0.939 $1.105 $0.469
Gross Margin %31% 43% 21%
SG&A ($USD Millions)$1.989 $1.844 $1.816
R&D ($USD Millions)$0.392 $0.306 $0.383
Loss from Operations ($USD Millions)$(1.442) $(1.045) $(1.730)
Net Loss Attributable to Common Stockholders ($USD Millions)$(2.688) $(5.086) $(2.260)
EPS ($USD)$(8.98) $(4.07) $(0.91)

Liquidity snapshot

MetricDec 31, 2022Q1 2023Q2 2023
Cash & Cash Equivalents ($USD Millions)$4.177 $5.854 $4.450

Segment breakdown

  • Not disclosed as formal segments; management noted mix shift with lower China AXP disposables offset by higher domestic AXP disposables and BioArchive revenue .

KPIs (CDMO and facility)

KPIQ2 2023
ReadyStart cGMP suites (Class 7, ~500 sq ft each)12 suites; near completion
Average monthly lease rate per suite$75k–$150k
Annual revenue potential per suite~$1.0M
Annual cost per suite to THMO~$50k–$100k
Targeted initial tenant timingAs early as end of Q3 or very early Q4 2023

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
ReadyStart suite availability timeline2023“Available in the second or third quarter of this year” (Q1 release) “Availability later this year; customers may move in as early as end of Q3 or very early Q4” Slightly pushed later; initial occupancy targeted Q3/Q4
Annual revenue when fully leased2023–2024$10–$16M for 12 suites (Q4 2022/Q1 2023 releases) ~$1M per suite annualized (≈$12M for 12 suites) Maintained within prior range
Monthly lease rate per suiteOngoingNot previously disclosed$75k–$150k per month per 500 sq ft suite New disclosure
Annual cost per suite to THMOOngoingNot previously disclosed~$50k–$100k per suite per year New disclosure

Earnings Call Themes & Trends

TopicQ4 2022 (Previous Mentions)Q1 2023 (Previous Mentions)Q2 2023 (Current Period)Trend
CDMO transition roadmapAnnounced pivot to CDMO; 12 ReadyStart suites in 35k+ sq ft facility; fully leased could generate $10–$16M annually Continued progress; ReadyStart suites expected to be available in Q2/Q3; reiterated $10–$16M potential Near completion of suites; Board expansion; continued progress toward ISO certification Advancing toward operational launch
CDMO capacity/supply-demandHighlighted 12–18 month backlog industry-wide and shortage of cGMP capacity; strong outsourcing demand Demand remains high; positioning as missing capacity with competitive pricing Ongoing strong demand; tours and discussions with potential customers Demand supportive; early customer interest
Product performance (AXP, BioArchive)2022 mix: higher domestic AXP disposables; margin pressure from contract manufacturer costs Q1 mix: higher domestic AXP disposables and BioArchive service revenue Q2 decline due to lower China AXP disposables; offset by higher domestic AXP and BioArchive device revenue China distributor softness; domestic offset continues
Regulatory/certificationNot detailedExpect suites available Q2/Q3 Final steps toward ISO certification before opening; pre‑opening stage Certification near-term milestone
Pricing/monetization modelLease-only $10–$16M fully occupied; service model optional Comparable pricing to industry; missing capacity as advantage Disclosed $75k–$150k/mo per suite; ~$1M annual per suite; $50k–$100k annual cost Clearer economics
Financing/liquidity$2M Oct ‘22 + $3M Mar ‘23; YE cash $4.2M Cash $5.9M at Q1-end Cash $4.5M at Q2-end Adequate for launch; watch burn and ramp

Management Commentary

  • “We continued to make headway in constructing our innovative ReadyStart suites… paramount to our strategy of becoming a high‑performance, integrated CDMO” .
  • “We strongly believe that the CAR‑TXpress platform… has demonstrated its ability to significantly reduce processing time, enhancing cell recovery rate and potentially cut manufacturing costs… by up to 50%” .
  • “Our priority is to provide customers with solutions that optimize the supply chain, increasing manufacturer productivity and manage overall risk” .
  • CFO: “Net revenues were $2.3 million… The decrease was driven by a large AXP disposables purchase from our distributor in China last year, which was offset by increased domestic AXP disposable and BioArchive device revenue” .

Q&A Highlights

  • Facility readiness and certification: majority of infrastructure is complete; remaining steps are ISO certification. Active tours and discussions; potential customer move‑ins as early as end‑Q3 or very early Q4 .
  • Suite specialization: facility designed as small, individualized GMP units tailored for personalized cell/gene therapies—addressing a shortage of appropriately designed capacity .
  • Economics: average lease $75k–$150k per month per ~500 sq ft suite; ~$1M annual revenue per suite; annual costs per suite ~$50k–$100k for THMO, implying attractive contribution margins once leased .

Estimates Context

  • S&P Global consensus estimates were unavailable for THMO for Q2 2023 due to a mapping issue (S&P Global consensus unavailable).
  • Without consensus, we cannot assess EPS or revenue beats/misses; however, the sequential decline in revenue and gross margin and YoY revenue decline would likely prompt cautious near-term estimate revisions until suite occupancy and CDMO revenue contributions are visible .

Key Takeaways for Investors

  • Execution milestone: ISO certification and formal opening are near-term catalysts; initial tenant move‑ins targeted for late Q3/early Q4 could de‑risk revenue ramp .
  • Monetization clarity: disclosed lease rates and cost structure support ~$1M per suite annual revenue with modest direct costs—full occupancy (~12 suites) implies ~$12M run‑rate before layering additional CDMO services .
  • Legacy business headwinds: Q2 revenue decline tied to lower China AXP disposables; domestic AXP/BioArchive provided partial offset—monitor distributor dynamics and mix .
  • Margin watch: gross margin fell to 21% from 43% in Q1 and 31% YoY; absorption and product mix remain key drivers until CDMO revenues scale .
  • Liquidity adequate for launch: $4.5M cash at Q2-end; prior financings support transition—track burn vs. occupancy ramp .
  • Strategic narrative: CAR‑TXpress aims to materially reduce CAR‑T manufacturing time and cost, positioning THMO to benefit from expanding cell/gene therapy pipelines and CDMO outsourcing trends .
  • Near-term trading implication: headlines around certification, first leases, and disclosed suite economics could drive sentiment; absence of consensus estimates and formal guidance increases volatility around execution updates .