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Biolife Solutions Inc (BLFS 1.23%)
Q1Â 2020 Earnings Call
May 14, 2020, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Ladies and gentlemen, thank you for standing by and welcome to today's First Quarter 2020 BioLife Solutions, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder today's program is being recorded.
I would now like to introduce your host for today's program, Roderick de Greef, Chief Financial Officer. Please go ahead, sir.
Rod de Greef -- Chief Financial Officer and Chief Operating Officer
Thank you, Jonathan. Good afternoon everyone and thank you for joining us for the BioLife Solutions conference call to review the operating and financial results for the first quarter of 2020. Earlier this afternoon, we issued a press release, which summarizes our financial results for the three months ended March 31.
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. 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 to the date they are given. The company assumes no obligation to update any projections or forward-looking statements except as required by law.
During the 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 clearer view of our current financial results when compared to prior periods.
Now I'd like to turn the call over to Mike Rice, President and CEO of BioLife.
Michael Rice -- Chief Executive Officer
Thanks, Rod, and good afternoon everyone, thank you for joining our call. Despite significant COVID-19 related disruption to our operations in Q1, the team performed flawlessly, delivering record revenue and gaining 40 new customers in a very challenging environment. For the last month or so of the quarter, we had our team members either working from home, part of an essential reduced on site workforce who are not working through all the transition to get our customer support teams up and running remotely, we stayed in close contact with our customers and shipped more media products than in any other period and BioLife history. Many of our biopreservation media customers responded to our proactive outreach and placed safety stock or replenishment orders. So their cell and gene therapy research and development projects could continue unabated during the coronavirus pandemic.
While it's clear that cell and gene therapy clinical trials have been significantly affected by the reallocation of hospital beds to COVID patients, our customers are planning for success and clearly demonstrated through their order volume that our media products are considered mission critical to their cell and gene therapy manufacturing workflow. In retrospect, the business continuity plans we began to put in place two years ago, which included offsite media product inventory storage proved well thought out.
Turning now to Q1 revenue. We finished at $12.2 million, which was 111% growth over Q1 last year and 47% sequential growth over the fourth quarter of 2019. Biopreservation media sales were the key driver in Q1 with $8.7 million in revenue, representing 50% year-over-year growth and 67% sequential growth over Q4 last year. We gained 16 new biopreservation media customers that placed first time orders in Q1. Some notable new accounts include, Cellfire, [Indecipherable], PACT Pharma, Sanofi, Trevira, [Indecipherable]. We also processed 13 additional US FDA master file cross-reference request for the use of CryoStor or HypoThermosol in human clinical trials of cell or gene therapies. We estimate that our media products have been used in over 100 customer clinical applications. I'm also pleased to tell you that we're supplying our proprietary biopreservation media products to several customers working on cell-based treatments or vaccines for COVID-19.
Turning to an update on our ThawSTAR line of automated, water-free thawing products for frozen biologics. Q1 revenue was in line with our expectation at just under $400,000. In the first quarter, we shipped the first batch of our new ThawSTAR CB product. This new product is designed to safely automate the falling of biologic materials frozen and cryo bags. We also gained at six new ThawSTAR customers including Alvotech, [Indecipherable] and Honeycomb Biotechnologies. With our evo, cold chain management platform including smart shipping, containers and the evo.is cloud app, we continue to gain traction in the cell and gene therapy space with our carrier partners adding 10 new customers in Q1. We are now supporting nearly 100 cell and gene therapy clinical trials with our evo platform through our relationships with two of the largest specialty carriers serving the region in med space. While Q1 revenue remained modest at $435,000 as customer use ramps up, we are seeing increased inbound interest in the evo platform and are continuing to support existing product validations by leading cell and gene therapy companies. This activity has been impacted by COVID-19 resulting in delay in completing the transition to evo, but we're confident that this will emerge as a strong competitor to the existing non-optimize shipping, containers and information systems in use.
On our last product revenue stream, the Custom Biogenic Systems or CBS line, we booked revenue of $2.7 million in the quarter. This was slightly below our plan but as capital equipment, some customers could have delayed large purchases due to cash conservation plans during the COVID pandemic. Q1 CBS revenue included product shipments to several of the leading cell and gene therapy companies, many of whom also use our media, thaw and cold chain management products. We gained eight new CBS freezer customers, with two notable accounts being Lacerta Therapeutics and NexImmune. For perspective, our freezer customer base now totals more than 750 accounts and includes many of the leading cell and gene therapy developers and pharma companies such as AbbVie, Astellas, Velcom [Phonetic], Celgene, Fate, Fisher Scientific, Fujifilm, Glaxo, Hitachi, Juno, Kite, Lonza, Mayo, Northwest [Phonetic], Orchard, Precision Bio, Sigma and Sorrento Therapeutics.
I'd now I'd like to give an update on our intellectual property estate. In the first quarter of 2020, we were granted three new patents related to our cold chain management technologies. This brings our total of issued patents to 50 with 34 additional pending patent applications submitted and in the review process.
Before I turn the call back over to Rod, I'll provide some comments on the new growth capital investment we announced today by existing shareholder Casdin Capital. We're fortunate to have a growth equity partner in Casdin Capital that enables us to strengthen our balance sheet to aggressively grow our portfolio of high-value bioproduction tools and services targeting the cell and gene therapy market. We believe that through a combination of internal innovation, acquisitions, co-investments and licensing of external assets, we have a strategy to significantly expand our business over the next few years. We're committed to playing a role in consolidating the bioproduction tools supplier space and anticipate continuing to jointly identify targets with Casdin that mainly to additional co-investments or outright acquisitions with their financial support.
I will pass the call back over to Rod to present our financials for Q1. Rod?
Rod de Greef -- Chief Financial Officer and Chief Operating Officer
Thanks Mike. Revenue for the first quarter totaled $12.2 million as you mentioned, representing a 111% increase over last year's first quarter revenue of $5.8 million. Media revenue for the first quarter of 2020 was $8.7 million or 71% of total revenue and represented an increase of 50% compared to the last year, largely driven by the buying behavior Mike alluded to earlier. This quarter's revenue also included $394,000 sales related to the automated thaw product line, $438,000 of evo cold chain related revenue and $2.7 million in freezers and accessories. All of these revenue streams were acquired subsequent to the first quarter of 2019.
Our adjusted gross margin for the first quarter of this year was 64.1%, compared with 71.5% last year. The decrease in adjusted gross margin for the first quarter reflects the lower margin profile of the automated thaw, evo, and freezer product lines, which accounted for 29% of revenue compared with media-only revenue last year. Adjusted operating expenses, excluding cost of revenue for Q1 totaled $6.4 million compared with $3.3 million in Q1 of 2019. The increase primarily reflects the fact that this quarter was the first full quarter of operating expenses related to the acquisitions we made last year and secondarily to increased headcount and stock-based compensation expense necessary to support our overall growth.
Adjusted operating profit for the first quarter of 2020 was $1.4 million compared with adjusted operating profit of $774,000 in the first quarter of 2019. Our adjusted net income for the first quarter of 2020 was $1.4 million or $0.06 per share compared with adjusted net income of $942,000 or $0.04 per diluted share in the same period last year. GAAP net income for the first quarter included $21.9 million of other income related to the change in fair value of outstanding warrants, whereas GAAP net income in the first quarter of 2019 included other expense of $19.7 million also related to the change in the fair value of outstanding warrants.
Adjusted EBITDA for the first quarter was $2.9 million, which was an increase of 110% compared with $1.4 million in the same period last year. For both periods adjusted EBITDA equaled 24% of revenue. Our cash balance at March 31, totaled $6.4 million. We believe that this amount when added to the $20 million in capital we're receiving from the placement of common shares to Casdin Capital, will be sufficient to fund our operations as well as provide additional capital to take advantage of any strategic operations -- opportunities that may arise.
Finally, in addition to the 1.9 million shares issued to Casdin in the private placement, we entered into an agreement with our two large Swiss warrant holders to immediately exercise all of their warrants on a cashless basis, resulting in the issuance of 2.7 million shares and the elimination of 3.9 million warrants. This puts our total issued and outstanding share count at 25.8 million and 29.1 million on a fully diluted basis.
Now I'd like to turn the call back over to Mike.
Michael Rice -- Chief Executive Officer
Thanks again, Rod. In summary, we demonstrated solid execution in Q1 and drove the business to record revenue and an impressive adjusted EBITDA margin, demonstrating the operating leverage we envisioned as the enterprise scales. We built a highly valued business as a supplier of critical class defining bioproduction tools for cell and gene therapy manufacturing. COVID-19 continues to create uncertainty and how the rest of 2020 will play out, but we're focused on the things we can control in serving our customers.
Now I will turn the call back over to the operator to take your questions. Jonathan?
Questions and Answers:
Operator
Certainly. [Operator Instructions] Our first question comes from the line of Paul Knight from Janney Montgomery, your question please.
Paul Knight -- Janney Montgomery -- Analyst
Hey, Mike. What was the portion of the revenue from stocking orders?
Michael Rice -- Chief Executive Officer
Hi, Paul. You know, we don't have complete visibility. Some CEOs came in and said COVID-19 related, but not all, it's probably 1 million to 1.5, maybe it's 2 million. We're not exactly sure, but that's probably a decent guess.
Paul Knight -- Janney Montgomery -- Analyst
[Technical Issues]
Michael Rice -- Chief Executive Officer
Something like that, 1.5 to 2 in that range.
Paul Knight -- Janney Montgomery -- Analyst
Okay. And then regardless --.
Michael Rice -- Chief Executive Officer
That's not on my end. Sorry, about that.
Paul Knight -- Janney Montgomery -- Analyst
And then regarding CBS, can you talk about how things are going in the April period?
Michael Rice -- Chief Executive Officer
Somewhat Paul, I guess I could say that as capital equipment, you know that's big ticket items and so we are seeing some delays in the closing period from quotes and all that. On the media side, the quarter-to-date has started about relatively strong and so fingers crossed on that and how the quarter is going to end up, but there definitely is a different buying behavior on the capital equipment side versus the reagents.
Paul Knight -- Janney Montgomery -- Analyst
How much is CBS as service?
Michael Rice -- Chief Executive Officer
Very little.
Paul Knight -- Janney Montgomery -- Analyst
Okay. Is capital equipment?
Michael Rice -- Chief Executive Officer
Yes. On the freezers and then the related accessories are obviously not capitalized, but there a decent accessory business, but most of the revenue comes from the big hire, yeah.
Paul Knight -- Janney Montgomery -- Analyst
Okay, thank you.
Operator
Thank you. Our next question comes from the line of Suraj Kalia from Oppenheimer, your question please.
Suraj Kalia -- Oppenheimer -- Analyst
Good afternoon, everyone. Can you hear me all right?
Michael Rice -- Chief Executive Officer
Yes, hi, Suraj.
Suraj Kalia -- Oppenheimer -- Analyst
Hey, Mike. Hey, Rod. I hope everyone is safe and healthy. Thank you. So Mike, in terms of the -- you know now you guys have anniversaried the last three acquisitions, can you help us in terms of what all optimization has been done on the sales force side of the equation? What all remains to be done as we progress through FY '20, any color would be great?
Michael Rice -- Chief Executive Officer
Sure Suraj, really good question. So we've analyzed across the line now the various external distributors, the indirect partners who have been ramping the various lines, particularly at CBS. And you know the strategy that we have is to optimize and deploy the best resources based on market segments. And so the CBS crew was selling into cell and gene therapy, into biopharma and some other ancillary markets. We're obviously looking to maximize our own media relationships, which are the strongest and leverage those for direct selling. So it's a process that will unfold over the next several quarters.
On the marketing side, we have several initiatives under way to expose the entire new customer base to all the products in the portfolio. Obviously travel is difficult now to get on site in many places, but nevertheless the inbound interest and the referral leads, we're getting from people have been really quite remarkable. So more work to do in that regard, but we've got a good plan and we look forward to really leveraging those relationships and maximizing that cross-selling opportunity that's there.
Suraj Kalia -- Oppenheimer -- Analyst
Got it. Keeping on that theme Mike, you know obviously there has been an infusion of new investment. I guess one question is, are there any inorganic opportunities that you all have already identified, which is driving this decision? And second, sub part of that question for Rod specifically is, what is the current ownership stake of Casdin? If you don't mind my asking.
Michael Rice -- Chief Executive Officer
Sure Suraj, good question. I'll take the first part and then I'll let Rod answer the second part. My part is, yes, there are some, some near-to mid-term opportunities. Really shouldn't get into the size of opportunities or technologies, but there is some definitely some activity under way. And you know to the other question about well is that all there is? We're opportunistic. We see what fits and clearly this infusion of capital is helpful. It may not be helpful enough for larger opportunities if so, then we'll be opportunistic to make sure that we can fund those should those arise. Rod?
Rod de Greef -- Chief Financial Officer and Chief Operating Officer
They're going to be right at around 18.4% of the issued and outstanding shares Suraj.
Suraj Kalia -- Oppenheimer -- Analyst
Got it. And Mike, you said, if I heard you correctly about 1.5 million to 2 million was sort of the pull-through into Q1 demand COIVD related for media. How did the remaining three buckets stack up for ThawStar, evo, and CBS, was there any unusual ordering patterns or where they somewhat depressed maybe in CBS? I guess my point being, was there any offsetting factors or could there be -- was there more impact just the media itself?
Michael Rice -- Chief Executive Officer
A little bit difficult to know in that, the CBS revenue comes through distributors, Suraj, but the media where we have the direct relationships and the closest relationships, while not perfect we certainly have more clarity. So really nothing, nothing really outstanding on the far side, the evo line or in the freezer side. The media is where we definitely saw customers responding to our outreach and making sure that they had enough media to make sure their clinical programs could continue.
Suraj Kalia -- Oppenheimer -- Analyst
Got it. And finally, I'll hop back in queue, forgive me, squeezing one in, any update on the -- the big fish, you guys were for swimming for -- on the evo side of the equation. I guess you guys have made some brief comments last quarter, I believe it was that your 80% there. Any updates there. Thank you.
Michael Rice -- Chief Executive Officer
Sure, thanks for asking. Yeah, pertinent. Yeah, still on track. COVID has caused some delays in some of the validation work, but still on track and checking in regularly with this account to make sure that we understand what they're going through and providing all the support we can.
Operator
Thank you. Our next question comes from the line of Jacob Johnson from Stephens. Your question please.
Jacob Johnson -- Stephens -- Analyst
Hey, thanks. Hope you guys are doing well. [Speech Overlap] Hi Mike, hi Rod. First question, obviously strong start to the year, but is there any way to estimate any impact you're seeing from delayed clinical trials into [Indecipherable] if at all, and does this vary by product line?
Michael Rice -- Chief Executive Officer
Yeah. Jacob, you're breaking up a little bit on our side. I think we got it. Really hard to try to assess the impact on clinical trials. I think based on some of the safety stock replenishment ordering we could infer from that the customer is fully expect that has beds get freed up, they'll be back in business enrolling at the pace that they were before this whole thing started. So if anything just validation that our stuff is really, really important, it's critical and they had to have to make sure that they can continue on. As far as how the rest of the year will shake out with that, anybody's crystal ball is as good as anybody else at this point, right.
Jacob Johnson -- Stephens -- Analyst
Got it. And then just one another question for me. Really strong gross margins in the quarter. So we just chalk that up to good media sales quarter, anything else to call out on the gross margin line?
Rod de Greef -- Chief Financial Officer and Chief Operating Officer
No, I think that's exactly it Jacob is that the percentage of revenue that we got from the higher level of media revenue with the higher margin definitely played a positive role on that.
Jacob Johnson -- Stephens -- Analyst
Got it. Thanks, Rod. Thanks, Mike.
Michael Rice -- Chief Executive Officer
Thank you.
Operator
Thank you. Our next question comes from the line of Raghuram Selvaraju from H.C. Wainwright, your question please.
Blair -- H.C. Wainwright -- Analyst
All right, this is Blair [Phonetic] call in on for Ram. Just a few from me. Could you provide a rough update -- an update on the rough percentage of your customers that are directly been impacted by COVID-19 restrictions in their clinical development programs?
Michael Rice -- Chief Executive Officer
Sure, 100% and any customer that was running a clinical trial of a cell and gene therapy has clearly been impacted to some degree none have not been impacted to any degree they've all been impacted to some degree. I'm not sure I can get any more granular than that Blair.
Blair -- H.C. Wainwright -- Analyst
Okay. And just qualitatively, are you seeing any impact of COVID-19 related to restrictions on FDA review timelines, particularly those pertinent to manufacturing processes for cell and gene therapy products?
Michael Rice -- Chief Executive Officer
Well, there's no doubt the FDA is marshaling resources to evaluate cell and gene therapy based treatments or vaccines for COVID, but for the other stuffs, the normal cell and gene therapy stuff targeting the other clinical disease state, we haven't seen any. Weather that's going on or not, it could be, but we haven't seen any.
Blair -- H.C. Wainwright -- Analyst
Okay and then just last one for me is your business being impacted at all by the significant reduction airline flight and effect it may have on shipping logistics?
Michael Rice -- Chief Executive Officer
That's a great question. And I would say no. Through our carrier partners, they have been very creative and they have found other ways to get this very temperature and time sensitive biologic material pushed around whether it was through the cargo part of commercial flights versus or cargo only flights, but not at this point. In fact, some carrier partners are reporting that their business has increased dramatically because the treatment location for some medicines that they've been shipping is transitioned from the hospital to the patient's home. I'm not talking about cell-based therapies. I'm talking about other types of medicine that are cold chain dependent or time with temperature sensitive. So, yeah, they certainly figure it out.
Blair -- H.C. Wainwright -- Analyst
Perfect. And if I can just get one more in, how defensible do you think the evo.is cloud application from an intellectual property standpoint is?
Michael Rice -- Chief Executive Officer
I love that question, not just because I'm an inventor on some of the patents, but definitely, we've got a bunch of novel processes and functional areas in the evo.is and that really differentiated from the other alternatives that are out there. So we'll continue to write and submit patents on as much of as we can. As you may know, software patents are really hard to get. We have been successful I think with three or four so far. And so we're going to keep at that.
Blair -- H.C. Wainwright -- Analyst
Perfect. Thanks guys.
Michael Rice -- Chief Executive Officer
You're welcome.
Operator
Thank you. Our next question comes from the line of Thomas Flaten from Lake Street Capital, your question please.
Thomas Flaten -- Lake Street Capital -- Analyst
Hi, good afternoon guys. Thanks for taking my question. Just two from me. Hi guys. With respect to the capital infusion. I know there's a question about inorganic opportunities, are there organic opportunities you think you might deploy some of their capital at are the growth opportunities inside the -- inside the business that could be assisted by that.
Michael Rice -- Chief Executive Officer
There are, although I would say the use of cash will be modest. Rode, go ahead.
Rod de Greef -- Chief Financial Officer and Chief Operating Officer
Yeah, I think it's really about continuing to build out the sales and marketing effort throughout the organization and get that integrated. That's really were the internal opportunity would be Thomas for deploying that cash.
Thomas Flaten -- Lake Street Capital -- Analyst
Yeah. Got it. And then with respect to broadening the portfolio across all the customers, can you either qualitatively or quantitatively speak to the extent to which you've seen the ability to cross sell products between customers?
Michael Rice -- Chief Executive Officer
Yeah, at least at this point, it will have to be in a qualitative perspective. We're doing OK at that, we can certainly do better and we have a significant project under way with Salesforce.com to make sure that we've got good visibility and the right tracking analytics and all that so we can really measure how our activities and campaigns are going, but it's certainly my intention that we'll be able to give us some quantitative granularity on that in coming quarters.
Thomas Flaten -- Lake Street Capital -- Analyst
Great. I appreciate the opportunity. Thanks. Thanks guys.
Michael Rice -- Chief Executive Officer
You are welcome.
Operator
Thank you. Our next question comes from the line of Marc Wiesenberger with B. Riley FBR. Your question please.
Marc Wiesenberger -- B. Riley FBR -- Analyst
Yeah, thank you. Good afternoon. I'm wondering if you could provide some insight into the discussions you're having with your distributors and maybe how the discussions relative to their geography and the activity they are seeing across the globe?
Michael Rice -- Chief Executive Officer
Hi, Marc. Well, we're certainly talking to them. I'm really not sure how I could limit my comments without getting into a little too much of inside baseball, but no doubt the distributors or after it and we've signed some new distributors. We're evaluating all the distributors for productivity, but this is a product line that is highly valued, to the extent they're concerned about competing against us, I guess all I can say is that it's a really target rich environment. There are a lot of prospects. We don't have a lot of channel conflict. And our distributors, at least the Top 4, who have worldwide footprint in terms of where they're sellers and support areas are they are doing fantastic just really phenomenal.
Marc Wiesenberger -- B. Riley FBR -- Analyst
Understood, thank you for that. You talked about maybe potential capex spending slowdown related to the freezers. Can you also add some color on potential the delay in capex may be because of the new freezers that might be coming out later in the year and anticipating that? And what's the kind of mix there?
Michael Rice -- Chief Executive Officer
Yeah good question. Really related to COVID right now as opposed to people just waiting to get the next improved model. We've got a lot of stuff going on, a lot of conversations under way and these are big projects and these are expensive product. So there is a lot of work that has to happen both on our side as well as the customers with site assessments and then factory acceptance testing, site acceptance testing and so on and so forth. So they're long-term and we don't really sense right now that many of these opportunities are being delayed or customers are waiting because they just want to hang out for the next -- the next rendition that might be coming up here.
Marc Wiesenberger -- B. Riley FBR -- Analyst
Understood. And last one from me. In light of kind of the global supply chain disruptions and your contract manufacturers in China making the [Indecipherable] and potentially moving that to Detroit, has that been -- that thought process been accelerated? And kind of what's the progress on that front? Thank you very much.
Michael Rice -- Chief Executive Officer
Yeah. Thanks for asking. Rod, you can go ahead on that one.
Rod de Greef -- Chief Financial Officer and Chief Operating Officer
Yeah. So it is a definitely the plan for 2019. It's going to happen toward the end of the year, we've not had any supply issues with [Indecipherable] coming out of China, to date, at least. And we have what we believe is adequate inventory in Albuquerque for the next couple of quarters. We do have some units that are on order to come in throughout the summer. But we have no indication that there is anything that would prevent those coming in.
Marc Wiesenberger -- B. Riley FBR -- Analyst
Great, thank you.
Operator
Thank you. Our next question comes from the line of Christopher Hillary from Roubaix Capital, your question please.
Christopher Hillary -- Roubaix Capital -- Analyst
Hi, good afternoon.
Michael Rice -- Chief Executive Officer
Hey, Chris. How are you doing?
Christopher Hillary -- Roubaix Capital -- Analyst
Great. How are you guys doing? Everyone staying healthy?
Michael Rice -- Chief Executive Officer
Yeah, thanks for asking. Hopefully in your side as well.
Christopher Hillary -- Roubaix Capital -- Analyst
Yes, indeed. I wanted to ask, just part of the broader discussion about having more of the healthcare supply chain domestic are there certain areas that you think would be of particular interest to the company to either expand or invest in?
Michael Rice -- Chief Executive Officer
Definitely. Yeah. And I'll try to be just broad as opposed to being too specific so we don't tip our hand to other folks who might be shopping for the similar assets or something, but. But really, broadly speaking, Chris. Our interest is looking at the cell and gene therapy manufacturing workflow, which starts with the acquisition of some starting material from a patient that which gets moved to some factory where someone makes a dose out of it. And then that manufactured dose gets moved back to a clinic where it is administered to a patient. And whether we're talking about autologous therapies or allogeneic for that matter. So really anything that's used in that continuum that I just described is of interest. Now several of those segments are supplied by really large companies that have really good solutions. So we're obviously not going to be poking around there, but there is enough opportunity here. We believe around the edges and coming in toward the center there or there are some disruptive innovative technologies that we believe over time could really start to command some decent market share. So that's what we're focusing on. Now that could be in the form of reagents, containers, devices analytics, instruments, product contact layers, you name it. So anything in that continuum. There's a lot -- there's a lot of stuff that's used in the manufacture of a cell or gene therapy, and a lot of areas that really have not been optimized for a while and innovation could certainly play a key to reduce cost and also improve quality for our customers.
Christopher Hillary -- Roubaix Capital -- Analyst
Okay, great. Good luck on the -- with the rest of the year.
Michael Rice -- Chief Executive Officer
Thanks very much.
Rod de Greef -- Chief Financial Officer and Chief Operating Officer
Thank you.
Operator
Thank you. Our next question is a follow-up from the line of Paul Knight from Janney Montgomery, your question please.
Paul Knight -- Janney Montgomery -- Analyst
Rod, have you -- have your K filed now?
Rod de Greef -- Chief Financial Officer and Chief Operating Officer
No, we are on track, Paul to file tomorrow kind of 5 o'clock Eastern is the target. And it's a pretty hard stop for us. So we're, we've got all hands on deck trying to make that happen with our new auditor, BDO, so fingers crossed.
Paul Knight -- Janney Montgomery -- Analyst
Okay. And the adjustments effectively will all hit on the other line item or below operating income. Is that correct?
Rod de Greef -- Chief Financial Officer and Chief Operating Officer
Yeah, for the most part. That is correct, there is some small adjustments that will flow through. But they're not material in anyway.
Paul Knight -- Janney Montgomery -- Analyst
Okay, thanks.
Rod de Greef -- Chief Financial Officer and Chief Operating Officer
You bet.
Operator
Thank you. Our next question comes from the line of Carl Burns from Northland Capital, your question please.
Carl Burns -- Northland Capital -- Analyst
Thanks. And congratulations on the progress. I was just curious [Speech Overlap] going back to potential acquisition opportunities, do you see the environment will be becoming a little more, some more over the wire and any thoughts in terms of what the valuations, may be if capex, for example if capex may be under pressure, would you be potential opportunities to tuck under acquisitions and the valuations may come in and be more compelling?
Michael Rice -- Chief Executive Officer
Perhaps, Carl, I think that's -- every company is reacting to this COVID environment and trying to figure out what it means to them. And some companies have assets that may not be able to be fully utilized or marketed depending on how those companies are reacting and what's going on in the world. We don't know that each case is different. I don't think we've got a strong signal right now that valuations are through the roof nor are they significantly depressed. So things are status quo from my view. Rod, you want to add anything to that?
Rod de Greef -- Chief Financial Officer and Chief Operating Officer
No, I think that's right. And it's just really about keeping an eye out for what's happening and things definitely will be impacted. If this if this issue of COVID continues throughout the year. We would expect some impact on valuations.
Carl Burns -- Northland Capital -- Analyst
Thanks again.
Michael Rice -- Chief Executive Officer
Thanks, Carl.
Operator
Thank you. I'm not showing any further questions in the queue at this time, I'd like to hand the program back to Mike Rice, CEO for any further remarks.
Michael Rice -- Chief Executive Officer
Thanks again. Jonathan. Thanks again everyone for your interest in BioLife. Please a stay safe and we look forward to speaking with you during our follow-up calls and when we report our Q2 results. Good night.
Operator
[Operator Closing Remarks]
Duration: 33 minutes
Call participants:
Rod de Greef -- Chief Financial Officer and Chief Operating Officer
Michael Rice -- Chief Executive Officer
Paul Knight -- Janney Montgomery -- Analyst
Suraj Kalia -- Oppenheimer -- Analyst
Jacob Johnson -- Stephens -- Analyst
Blair -- H.C. Wainwright -- Analyst
Thomas Flaten -- Lake Street Capital -- Analyst
Marc Wiesenberger -- B. Riley FBR -- Analyst
Christopher Hillary -- Roubaix Capital -- Analyst
Carl Burns -- Northland Capital -- Analyst
