Repligen Corporation (RGEN) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Repligen Corporation Acquisition of BioLife Solutions Conference Call. My name is Elizabeth, and I will be your coordinator. [Operator Instructions] I would now like to turn the call over to your host for today's call, Jacob Johnson, Vice President of Investor Relations for Repligen. Please go ahead.

Thank you, Elizabeth, and good morning, everyone. Thanks for joining us on short notice. Earlier today, we announced a definitive agreement to acquire BioLife Solutions. In addition to the press release this morning, we have published a presentation, which we will reference in our remarks. The presentation is available on our Investor Relations website. Joining us on the call today are Repligen's President and Chief Executive Officer, Olivier Loeillot; and our Chief Financial Officer, Jason Garland. As a reminder, the forward-looking statements that we make during this call, including those regarding our business goals and expectations for the financial performance of the company, are subject to risks and uncertainties that may cause actual events or results to differ. Additional information concerning risks related to our business is included in our quarterly reports on Form 10-Q, our annual report on Form 10-K and our current reports, including the Form 8-K that we are filing today and other filings that we make with the Securities and Exchange Commission. Today's comments reflect management's current views, which could change as a result of new information, future events or otherwise. The company does not oblige or commit itself to update forward-looking statements, except as required by law. During this call, we are providing non-GAAP financial results unless otherwise noted. Reconciliations of GAAP to non-GAAP financial measures are included in the press release that we issued this morning, which is posted to Repligen's website and on sec.gov. These adjusted financial measures should not be viewed as an alternative to GAAP measures, but are intended to best reflect the performance of our ongoing operations. With that, I'll turn the call over to Olivier.

Good morning, everyone. Thank you so much for joining us today as we share some very exciting news about an important milestone in Repligen's journey. We are thrilled to announce that we have signed a definitive agreement to acquire BioLife Solutions for a total consideration of $1.5 billion using 36% of cash, 64% of Repligen common stock. The transaction is well aligned with our strategy and financially compelling. Before we discuss the acquisition further, I wanted to quickly confirm that our business continued to execute diligently, and we delivered another excellent quarter. We released select preliminary highlights from our second quarter results, headlined by delivering approximately 12% reported and 13% organic revenue growth. We have also continued to operate incredibly well and saw strong year-over-year margin expansion. We continue to deliver and execute on the strategy we have shared. This includes meeting or beating consensus revenue for the past 12 quarters. As we have always been, we will remain transparent about the trends we see in our business. And as evidenced by our Q2 organic growth, we clearly have momentum, and we remain excited about the back half of the year. We look forward to discussing our second quarter results and our promising 2026 outlook in more detail on our earnings call next Tuesday, July 28. We are delivering on our strategy and see strong momentum across the business. We will share more next week, but separate from this transaction, our team recently went through our annual strategic planning process, and we remain excited about the growth opportunities that exist across all of our franchises. We are highly confident in our current portfolio and continue to see a path to our expectation of doubling the size of our company over the medium term while expanding margins. We believe BioLife will complement this momentum. It represents a unique opportunity for us to add a scaled, highly complementary business that is accretive to our financial profile while strategically enriching a new platform for future growth in one of the most attractive end markets in the bioprocessing ecosystem, cell therapy. Before we discuss the rationale and benefits of this exciting acquisition, as Jacob mentioned, we posted an investor presentation that I will reference during our prepared remarks, starting on Slide 4. This morning, we announced we have signed an agreement to acquire BioLife Solutions for $31 per share or a total enterprise value of approximately $1.5 billion. The consideration is comprised of 64% in Repligen common stock and 36% in cash. The Boards of both companies have unanimously approved the acquisition, and we expect the deal to close in the fourth quarter, subject to regulatory requirements and a BioLife shareholder vote. For those less familiar with the company, BioLife is headquartered in Bothell, Washington, with sites across the U.S. and Canada. As we perform due diligence, it became apparent the Repligen and BioLife teams have a shared culture of innovation and customer centricity. We are very excited to have BioLife's talented associates join our team upon closing. BioLife generated $96 million of revenue in 2025, which represented 29% pro forma growth. This growth is driven by BioLife's differentiated offerings, most notably their cryopreservation media, CryoStor, which represents 80% to 85% of the business. In addition, BioLife offers other consumables, including HypoThermosol to preserve cells at refrigerated temperatures, hPL growth factors, CellSeal bags and vials. Further, BioLife's capital equipment revenue includes their Signata feeding machine and ThawSTAR automated thawing system. We see this acquisition as a one-step adjacency. Our combination with BioLife will add a complementary set of products and customer solutions to our offering in this fast-growing new modality without drifting from our bioprocessing core. Jason will share more details, but the transaction is very attractive financially. We expect it will improve our revenue growth trajectory and margin profile. And with that, we believe it will be a straightforward integration, including the realization of at least $20 million in year 1 synergies. We expect to deliver immediate adjusted EPS accretion in year 1. Putting this together, we're buying a unique and differentiated asset that helps accelerate our strategic growth with a compelling financial profile. This checks all the boxes of the M&A criteria we have previously outlined. Moving to Slide 5. We see 4 reasons why we expect BioLife to strengthen our business. First, BioLife fast-tracks our cell therapy leadership by adding a differentiated portfolio of products serving this rapidly growing end market. Our combination expands Repligen's leadership and increases our exposure to one of the fastest-growing biologic modalities. Commercial cell therapies are projected to grow at a 23% CAGR through the end of the decade, and these therapies represent a meaningful portion of our customers' pipeline. BioLife will enhance our offering and provide us with additional opportunities for both organic and inorganic growth. Second, it adds a deeply embedded and highly trusted platform to our portfolio. BioLife has been a partner to cell therapy developers for over a decade and is seen as a gold standard in cryopreservation. Their differentiated biopreservation media, led by CryoStor, supports 18 commercially approved therapies and the majority of U.S. commercially sponsored cell-based therapy trials. BioLife generates 46% of its revenue from commercial therapies and 98% from high-margin recurring consumables, which creates a sticky recurring revenue base. As you would expect, all of this will enhance Repligen's financial profile. Third, the future combination of our companies will bring important benefits to customers by expanding our robust offering of cell therapy workflow solutions. BioLife's critical cryopreservation solutions are highly complementary to Repligen's existing offering for the cell therapy market. This will expand our shared customer touchpoints, with Repligen benefiting from BioLife's trusted customer relationships, while BioLife will benefit from Repligen's broad commercial reach, including our growing presence in Asia Pacific. The combination will also accelerate Repligen's plan to launch an integrated solution offering for the cell therapy market to better serve our customer base. Finally, we expect to see long-term value creation from this deal. As we have done historically, we plan to invest in BioLife to drive innovation and to enhance the customer experience. Given BioLife's margin profile and attractive end markets, this should accelerate our profitable growth. In addition, by adding a new growth vertical, we see the potential for additional accretive M&A opportunities. I'll turn the call over to Jason to discuss how this acquisition fits with our M&A criteria.

Thanks, Olivier. I want to echo Olivier's excitement about this transaction. This is a unique opportunity for us to add a differentiated and scaled asset that serves a growing end market and is accretive to our financial profile across the board. As you can see on Slide 6, this acquisition fully aligns with the deal criteria we have previously outlined. First, BioLife brings a highly differentiated offering through its leading cell processing solutions. It is a trusted platform with significant regulatory recognition. This includes their leading biopreservation media platform backed by a proprietary formulation. In addition, BioLife offers a portfolio of cell processing tools like hPL and CellSeal containment solutions, which are used across the cell therapy workflow. Second, BioLife advances our strategy by strengthening our position in the cell therapy market, providing additional touchpoints and levers to add value for customers. And third, from a financial perspective, this deal checks all the boxes. It is accretive to growth, margins, and year 1 adjusted earnings per share. In addition, we expect a high single-digit ROIC over the medium term. This is backed by a sizable synergy opportunity.

Thanks, Jason. Moving to Slide 7. We want to share our view of how important the cell therapy modality is to the bioprocessing industry and why we see this as such a rapidly growing end market. We recognize that development of the new modality market has not always been linear, but there are clear reasons for optimism as it relates to the cell therapy end market. If you look at the pipeline, there are more than 1,100 global cell therapies in clinical trials currently. This makes cell therapy the second largest biologic modality behind traditional proteins and antibodies. Following acquisition close, our pro forma new modalities exposure will be approximately 25%, of which half will be cell therapy. That said, new modalities currently represent 50% of our customer pipeline. Cell therapies represent 22% of the overall biopharma customer pipelines. We see strong growth from this end market in coming years, given commercial demand is forecasted to grow at a 23% CAGR through the end of this decade, driven by strong efficacy data, including the potential for additional approvals. In fact, there are already 3 cell therapies that are generating over $1 billion in annual revenue. As I previously mentioned, there is a robust development pipeline, creating an additional opportunity as these customers move through the clinical trial process. Therapies are moving to earlier lines of treatment, opening up larger patient populations. And some of these cell therapies are seeing approvals across a growing number of indications and geographies, further increasing volumes. This also includes the potential for larger volumes from allogeneic therapies and indications for larger patient populations. Finally, there are regulatory changes that are reducing barriers and increasing access for patients. This is an incredibly exciting market, and we are well positioned to play a larger role in the development of this innovative modality. As you follow the presentation, we'd like to now discuss how this combination will benefit customers with an expanded and broader offering for the cell therapy workflow. On Page 8, we highlight how BioLife complements our existing solutions for the cell therapy market. Today, we at Repligen offer solutions for this market across our portfolio, including ATF and fluid management in filtration, resins and growth factors in proteins, and our upstream analytics capabilities. BioLife will complement these existing solutions. Further, we will continue to innovate for customers by leveraging our common scientific and commercial expertise in the cell therapy workflow. In addition, we plan to keep investing in BioLife's product portfolio to best serve our customers. While not a meaningful driver of our assumed accretion, we have identified revenue synergies from the deal. Most notably, we see cross-selling opportunities given our overlapping customer base. Repligen will benefit from BioLife's trusted customer relationships, while BioLife will benefit from our exceptional commercial team's broad reach, including a lot of opportunities in Asia Pacific. We also see this combination accelerating our plan to launch an integrated solutions offering for cell therapy. As we will discuss more next week, we recently launched this initiative for the antibody-drug conjugate end market, and we look forward to building this capability in cell therapy as well. Finally, this acquisition gives us a platform to further expand our presence in this market. We believe this is a multibillion-dollar addressable market, and we have identified multiple other areas of interest. This includes, but is not limited to, cytokines, where BioLife has announced a multiyear supply agreement with a partner. We believe the strategic fit of this transaction is undeniable. Let me hand the call over to Jason to discuss the financials of the deal, and I'll be back shortly to wrap the discussion.

Thanks, Olivier. Slide 9 helps frame our thinking around the overall deal terms. We believe we have structured the transaction to mutually benefit both companies. The deal values BioLife at $31 per share. The consideration will consist of an $11.25 per share cash component and 0.1442 Repligen common shares per 1 BioLife share. This translates to $564 million of cash that would be funded with cash on hand. The equity component will result in the issuance of 7.2 million Repligen shares. This represents a $1.5 billion enterprise value or 11x 2027 consensus revenue, and a compelling enterprise value to EBITDA multiple when fully synergized. We believe this reflects BioLife's unique value proposition, while also being accretive to our shareholders. For Repligen, the structure allows us to preserve balance sheet flexibility for further investment as we will have more than $300 million of pro forma cash following the deal closing, representing approximately 1x net leverage. Finally, as Olivier has underscored, we believe that it is a financially compelling transaction as it is accretive to our revenue growth, our margins, and we expect to achieve 1-year adjusted earnings per share accretion. On the top line, our deal model assumes BioLife is accretive to our medium-term growth algorithm. BioLife grew 25% in the first quarter. And as included in the press release this morning, BioLife has also pre-released strong second quarter revenue growth of 21%. Longer term, the cell therapy market is expected to grow greater than 20% through the end of the decade. As our deal model only assumes limited revenue synergies, we see this as potential upside when we begin cross-selling and expanding our opportunity in Asia Pacific. Moving to margins. BioLife will be immediately accretive to our adjusted gross margin at closing. BioLife's adjusted EBITDA margin as reported for 2025 was 26%, which excludes the burden of stock-based compensation. As recalculated to align with Repligen's presentation, adjusted EBITDA margin was 4%. When we account for year 1 synergies, we would expect a 2025 pro forma view of approximately 25% adjusted EBITDA margin for BioLife, and we see this growing over time as we further realize synergies and volume leverage. As it relates to synergies, we expect at least $20 million in year 1, which increases to more than $30 million in year 2. This is composed of public company and G&A cost savings, along with supply chain and manufacturing efficiencies. The public company and G&A savings are straightforward, so I want to spend a minute on the supply chain and manufacturing efficiencies. As BioLife has mentioned publicly, they have faced some margin headwinds associated with their manufacturing process. Given our operations experience, we have the ability to support the improvement of their yield. Beyond this, we see the opportunity to leverage our internal capabilities and collaborate with suppliers to generate further gross margin improvement once the deal closes. This represents a double-digit million annual synergy, which we expect to fully realize over 3 years. Putting this all together, we see at least $0.05 of adjusted earnings per share accretion in year 1 and more than $0.25 in year 2. Though this deal is larger than we have executed in the past, we have a clear plan to deliver the straightforward synergies we have outlined and a plan to fully integrate over the next 12 to 24 months following the deal close. We are confident we have the team and a playbook to manage a successful integration, aided by the fact that as a public company, BioLife has built strong processes and procedures. Now I'll turn the call back to Olivier for closing comments.

Thanks, Jason. In closing, on Slide 11, we want to leave you with the following thoughts. First, the acquisition of BioLife fast-tracks our leadership position in cell therapy. This is a rapidly growing market and a meaningful portion of our customers' pipelines. Second, it adds a deeply embedded trusted platform to our portfolio. BioLife has a highly differentiated portfolio of cell processing tools for the cell therapy market. This is a unique opportunity, a scaled asset that meets all of our deal criteria. Third, BioLife is a market leader, which provides an opportunity for us to combine our commercial relationships and R&D engine for future growth. In addition, it adds a new growth vector, which we can further add to over time. And finally, the transaction is financially compelling. It's accretive to our growth, our margins, and year 1 adjusted EPS with very straightforward synergies. We're excited to announce the addition of this growth vertical to our strong foundation. We look forward to discussing our Q2 results next week. Operator, please open the line for questions.

[Operator Instructions] Your first question comes from Mac Etoch with Stephens Inc.

Congratulations on the transaction. Just one for me. Just given BioLife's broad penetration across cell therapy programs and commercial therapies, how meaningful of an opportunity is it to use those customer relationships to expand the adoption of Repligen's existing bioprocessing portfolio?

Mac, that's a really excellent question. And I think we said that a couple of times in the script today that we are really going to benefit from each other's contacts in the industry because where, obviously, Repligen has a much bigger sales organization than BioLife does, these guys have been really working with all of these cell therapy companies for more than a decade now. And with the track record on the regulatory side they have, they've built really a lot of trust with those big cell therapy customers, including as well the smaller ones. So I think we're really going to benefit from each other quite a bit. We are really going to build a portfolio of cell therapy bioprocessing tools that's going to be really broad, Mac. And I mean, we mentioned like we are about to put in place an integrated solutions offering for cell therapy. When you're combining what they have and what we have, we're probably going to have one of the broadest, if not the broadest, overall solutions for the cell therapy market. So we are going to open each other's doors at some specific accounts. We are going to also combine our portfolio together that will give us a real great story for those very important customers of both of us here.

Your next question comes from the line of Anna Snopkowski with KeyBanc Capital Markets.

This is Anna Snopkowski on for Paul Knight. Congrats on the acquisition. Maybe just a follow-up of the last question. On the cross-selling side, which Repligen products in particular do you think are most likely to be bundled with BioLife offerings? Would it be like the specialty resins or maybe ATF? And then do you think you have now an end-to-end portfolio on the cell therapy side? And if not, what gaps remain there?

Yes. No, I think it's really pretty much across the board. If I would have to pick up among all the products we have in our portfolio that I mentioned earlier, I would probably pick up fluid management first. And when you think about it, there is a bunch of single-use components that are being used for the manufacturing of cell therapies. And in fact, I think Jason mentioned it earlier, I mean, one of the challenges BioLife had recently was switching from some of their bottle customers to bag customers where they had some specific quality issues. So we're also going to be able to leverage our knowledge in the field to help on that side very heavily. But for customers specifically, and BioLife has done an amazing job to develop also very interesting solutions like CellSeal and a few other products, we're going to have several single-use product opportunities to push across the entire board with those customers. But it's not going to be limited to that. I mean, we're going to tell you next week a little bit more about this integrated solutions business that we are putting in place. We started doing it with antibody-drug conjugates a few months ago. Now that we've got both the BioLife and the Repligen offering together, we are going to speed up accelerating that integrated solutions offering for customers on the cell therapy side, and it's going to be about helping them, supporting them for their entire workflow. And in terms of the gaps we have, yes, we still have some gaps. I mean, we also mentioned like we're going to stay tuned on potential next acquisitions, which is why we love the deal we've made, because we still have a lot of dry powder in the bank account that we want to potentially complement with other parts of the cell therapy portfolio. Whether some more cytokines, whether some more single-use solutions, whether some more technologies that are specific to cell therapies, we're going to figure that out in the next few months and years for sure.

And I just wanted to add for clarity, we mentioned that even with all these cross-selling opportunities, right now, we've been conservative in our model, and we've got limited sales synergy baked in. So we do see this as a strong area of potential upside as we continue forward. We just wanted to get time for the teams to really build out that integration.

Your next question comes from the line of Daniel Markowitz with Evercore ISI.

Congrats on the deal. I'll try the cross-selling synergies question as well. If I look at BioLife, they have really impressive participation on both the commercial therapies and also participation on the clinical trial side. I guess how would you characterize where your participation rate is today, and to use that to help frame where you think these cross-selling synergies could possibly go?

Yes. No, I mean, BioLife has been almost 100% focused to where the cost synergies are.

Daniel, we lost the second half of your question. If you could repeat it, please.

Sorry. I was asking in terms of quantifying it, could this come anywhere near the size of the cost synergies or just framing what the upside opportunity could look like?

Okay. Let me start maybe with the first part, and I'll let Jason tackle the second part. So it's the fact that BioLife has been almost 100% focused on cell therapy. I mean, we have not. I mean, as you know, we are dealing with every single market segment for the biopharma industry and so on. So it's fair to assume like particularly at the earlier phase and so on for where the technology, the processes are being developed, I would imagine the BioLife team had multiple touchpoints over the last decade and so on, and we want to benefit from that very grandly. One thing I'd like to mention is BioLife is very well known for their biopreservation media. They have a lot of other very interesting products. And I just mentioned a couple of them. I mean, the hPL one, the human platelet lysate, it's a culture supplement that is derived from human blood, and that is kind of continuing to be a growth factor, which is slowly but surely replacing fetal bovine serum. And I mean, we are very excited about that, because we know, and I've been in that business for quite a while in my past life. I mean, we know like partly on the cell therapy side, everybody is trying to switch to these types of products. So BioLife has had multiple touchpoints over the last few years, early phases with those customers. That's going to be a fantastic synergy for us to come and also talk about our technology like ATF, our fluid management product line, and obviously, all of our PAT technologies. As you know, we acquired 908 last year. And I mean, a big chunk of the products from 908 are probably focused on cell therapy. So the synergies for us are actually obvious. As Jason just mentioned, we wanted to -- and also to show you how straightforward the synergies are, we assume like limited sales synergies for the next few years. But I personally assume we have a huge amount of upside on that side. But we wanted to just be a little bit careful on the potential synergies, at least in the short term here.

Yes. I mean, we obviously did an extensive due diligence, but I think we need that time once the deal closes to really build out our broader knowledge and build out the integration plan.

Your next question comes from the line of Matt Hewitt with Craig-Hallum.

Like others, congratulations on the acquisition. You noted, and I think people understand that there's a significant opportunity to grow BioLife's products outside of the U.S. Obviously, just getting this started here. But as you look at it, what is the low-hanging fruit to really drive the growth OUS?

Yes, Matt, I mentioned Asia a couple of times. Asia has always been close to my heart. I mentioned it several times. If there is really one geography where we can help BioLife accelerating their growth, it's definitely going to be in Asia. And then for multiple reasons. First of all, we've had a lot of focus on it now for the last 1.5 years, 2 years with incredible growth, as you know, including China since the beginning of this year. We've got a lot of team on the ground. We've got a lot of customer contacts on the ground. And in Asia, specifically, BioLife always went through distribution. So obviously, we love distributors, and we're going to make sure the relationship stays very strong with those distributors who have done an amazing job, but we think we can really help each other accelerating the growth by sitting directly with some of these big accounts, partly in China. I mean, I don't know if you all know that, but out of these 1,100 cell therapy products under development, 40% of these drugs are being developed in China right now. So there is a huge opportunity in China, specifically across all of Asia as well, but that's really where we are going to focus our efforts to start with very much. And then again, on the distribution partner side, making sure we support those distributors as well as BioLife and continue to grow together across the entire portfolio here.