INVO Bioscience Reports Second Quarter 2022 Financial Results
INVO Bioscience, Inc. (Nasdaq: INVO) reported its second quarter financial results for 2022, showing revenue of approximately $146,000, down 30% from $208,000 in Q2 2021. The decrease was attributed to lost Ferring licensing revenue. However, patient inquiries rose 20% quarter-over-quarter as the company plans to open new INVO Centers and has signed a $14 million distribution deal for China. Management anticipates significant revenue growth in Q3 2022 based on increased clinic activity.
- 20% increase in patient inquiries and consultations from Q1 2022.
- Plans to open new INVO Centers in strategic locations.
- Signed exclusive distribution agreement for $14 million in mainland China over five years.
- Potential acquisitions of established fertility clinics to enhance growth and revenue.
- Q2 2022 revenue decreased by 30% compared to Q2 2021.
- Gross margins fell from 93% in Q2 2021 to 46% in Q2 2022 due to lost licensing revenue.
- SG&A expenses increased by 25% year-over-year.
Company to Host Conference Call Today at 4:30pm ET
SARASOTA, Fla., Aug. 15, 2022 /PRNewswire/ -- INVO Bioscience, Inc. (Nasdaq: INVO) ("INVO" or the "Company"), a commercial-stage fertility company focused on expanding access to advanced treatment worldwide with its INVOcell® medical device and the intravaginal culture ("IVC") procedure it enables, today announced financial results for the second quarter ended June 30, 2022 and provided a business update.
Recent Operational Highlights
- Existing INVO Centers experienced a
20% increase in patient inquiries and consultations compared to the first quarter of 2022, as key activities continue to build. - Progressing toward planned openings of additional INVO Centers in Tampa, Florida, Kansas City, Kansas, and the San Francisco Bay Area.
- In May 2022, signed an exclusive distribution agreement with Onesky Holdings Limited ("Onesky") for mainland China (excludes Hong Kong, Macau and Taiwan). Onesky will be responsible for registering the product in the country, and upon government approval, will be obligated to purchase minimum quantities of INVOcell totaling approximately
$14 million over the subsequent five-year term. - Increased U.S.-based expansion opportunities post-Ferring, including both greenfield INVO Centers and potential acquisitions of established fertility clinics.
INVO Acquisition Strategy
Today, INVO also announced its intention to opportunistically pursue acquisitions of established fertility clinics in the U.S. to complement its existing strategy of opening new INVO Centers and to accelerate growth. Since regaining control of INVOcell's distribution in the U.S., INVO has engaged with over one hundred domestic IVF clinics. These interactions have yielded renewed interest in the adoption of INVOcell and the IVC procedure in existing clinics, led to new INVO Center partnership discussions and generated potential acquisition opportunities. A growing number of like-minded physicians that share INVO's mission to democratize fertility care are now in discussions with the Company to join forces in expanding access to treatment. Management believes that acquisitions represent a logical extension of the Company's strategy, as INVO looks to integrate profitable businesses run by established and successful physicians. Furthermore, acquisitions would allow INVO the opportunity to fully implement INVOcell and the IVC procedure within an acquired IVF center, which, in turn, would help to support the Company's distribution business. In the pursuit of this strategy, INVO is entertaining potential acquisitions and recently signed a non-binding letter for one specific opportunity. INVO and the key principals are working to consummate the acquisition and are developing a plan to incorporate INVOcell and the IVC procedure into the clinic's existing operations with a goal of further growing revenue and earnings. Such implementation is not expected to require significant investment since IVC procedures can be added without additional equipment, space and/or human resources. The Company also executed a non-binding letter of intent with a lender to provide non-dilutive funding payable to close the transaction.
Management Commentary
"During the last few months, we have focused on driving improved operational performance at our existing INVO Centers and advancing the opening of new locations, while simultaneously exploring acquisition opportunities that would help add immediate and significant scale to our overall operations and accelerate our path to profitability," commented Steve Shum, CEO of INVO. "In our existing clinics, we continue to see growing volume in patient inquiries and consultations, a leading indicator of future IVC cycles. Based on current cycle expectations, we are anticipating third quarter clinic revenue to increase significantly compared to our second quarter results. We are actively working within our U.S. distribution business and with international partners to enhance end-market awareness and to obtain necessary regulatory approval in key markets, such as China."
"On the acquisition front, we are excited by the prospect of bringing one or more established and profitable fertility centers into our operations," Shum expanded. "The practitioners we are in discussion with share our vision of leveraging the INVOcell solution to expand access to fertility and agree with our position that IVF and IVC are complementary to one another."
Financial Results
Revenue for the three months ended June 30, 2022, was approximately
Gross margins were approximately
Selling, general and administrative expenses for the three months ended June 30, 2022, were approximately
R&D expenses were approximately
Loss from equity investments for the three months ended June 30, 2022, was approximately
Other income was
Interest expense and financing fees were approximately
Adjusted EBITDA (see Adjusted EBITDA Table) for the three months ended June 30, 2022, was
As of June 30, 2022, the Company had approximately
Use of Non-GAAP Measure
Adjusted EBITDA is a non-GAAP measure. This measure is not intended to be a substitute for those financial measures reported in accordance with GAAP. Adjusted EBITDA has been included because management believes that, when considered together with the GAAP figures, it provides meaningful information related to our operating performance and liquidity and can enhance an overall understanding of financial results and trends. Adjusted EBITDA may be calculated by us differently than other companies that disclose measures with the same or similar terms. See our attached financials for a reconciliation of this non-GAAP measure to the nearest GAAP measure.
Conference Call Details
INVO has scheduled a conference call for Monday, August 15, 2022, at 4:30 pm ET (1:30 pm PT) to review these results and recent events. Interested parties can access the conference call by dialing (833) 756-0861 or (412) 317-5751 or can listen via a live Internet webcast at https://app.webinar.net/LARy8Ay8DBw, which is also available in the Investor Relations section of the Company's website at https://www.invobioscience.com/investors/ . A teleconference replay of the call will be available through August 22, 2022, at (877) 344-7529 or (412) 317-0088, confirmation # 2909191. A webcast replay will be available in the Investor Relations section of the Company's website at https://www.invobioscience.com/investors/ for 90 days.
About INVO Bioscience
We are a commercial-stage fertility company dedicated to expanding the assisted reproductive technology ("ART") marketplace by making fertility care accessible and inclusive to people around the world. Our primary mission is to implement new medical technologies aimed at increasing the availability of affordable, high-quality, patient-centered fertility care. Our flagship product is INVOcell®, a revolutionary medical device that allows fertilization and early embryo development to take place in vivo within the woman's body. This treatment solution is the world's first intravaginal culture technique for the incubation of oocytes and sperm during fertilization and early embryo development. This technique, designated as "IVC", provides patients a more natural, intimate, and more affordable experience in comparison to other ART treatments. We believe the IVC procedure can deliver comparable results at a fraction of the cost of traditional in vitro fertilization ("IVF") and is a significantly more effective treatment than intrauterine insemination ("IUI"). Our commercialization strategy is focused on the opening of dedicated "INVO Centers" offering the INVOcell® and IVC procedure (with three centers in North America now operational), in addition to continuing to distribute and sell our technology solution into existing fertility clinics. For more information, please visit www.invobio.com.
Safe Harbor Statement
This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company invokes the protections of the Private Securities Litigation Reform Act of 1995. All statements regarding our expected future financial position, results of operations, cash flows, financing plans, business strategies, products and services, competitive positions, growth opportunities, plans and objectives of management for future operations, as well as statements that include words such as "anticipate," "if," "believe," "plan," "estimate," "expect," "intend," "may," "could," "should," "will," and other similar expressions are forward-looking statements. All forward-looking statements involve risks, uncertainties, and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. Factors that may cause actual results to differ materially from those in the forward-looking statements include those set forth in our filings at www.sec.gov. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.
INVO BIOSCIENCE, INC. | |||||
CONSOLIDATED BALANCE SHEETS | |||||
June 30, 2022 | December 31, | ||||
ASSETS | |||||
Current assets | |||||
Cash | $ | 1,962,159 | $ | 5,684,871 | |
Accounts receivable | 56,485 | 50,470 | |||
Inventory | 281,996 | 287,773 | |||
Prepaid expenses and other current assets | 247,682 | 282,751 | |||
Total current assets | 2,548,322 | 6,305,865 | |||
Property and equipment, net | 473,049 | 501,436 | |||
Intangible assets, net | 132,706 | 132,093 | |||
Lease right of use | 1,923,020 | 2,037,052 | |||
Investment in joint ventures | 1,347,776 | 1,489,934 | |||
Total assets | $ | 6,424,873 | $ | 10,466,380 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
Current liabilities | |||||
Accounts payable and accrued liabilities | $ | 466,975 | $ | 443,422 | |
Accrued compensation | 508,804 | 581,689 | |||
Deferred revenue, current portion | 77,357 | 5,900 | |||
Lease liability, current portion | 226,749 | 221,993 | |||
Total current liabilities | 1,279,885 | 1,253,004 | |||
Lease liability, net of current portion | 1,787,424 | 1,901,557 | |||
Deferred tax liability | 1,139 | 1,139 | |||
Total liabilities | 3,068,448 | 3,155,700 | |||
Stockholders' equity | |||||
Common Stock, $.0001 par value; 125,000,000 shares authorized; 12,130,298 and | 1,213 | 1,193 | |||
Additional paid-in capital | 47,822,087 | 46,200,509 | |||
Accumulated deficit | (44,466,875) | (38,891,022) | |||
Total equity | 3,356,425 | 7,310,680 | |||
Total liabilities and stockholders' equity | $ | 6,424,873 | $ | 10,466,380 |
INVO BIOSCIENCE, INC. | ||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||
Revenue: | ||||||||||||
Product revenue | $ | 33,777 | $ | 29,900 | $ | 90,527 | $ | 535,852 | ||||
Clinic revenue | 112,358 | - | 218,206 | - | ||||||||
License revenue | - | 178,572 | - | 357,143 | ||||||||
Total revenue | 146,135 | 208,472 | 308,733 | 892,995 | ||||||||
Cost of goods sold: | ||||||||||||
Production costs | 64,307 | 12,163 | 121,840 | 72,477 | ||||||||
Depreciation | 13,945 | 2,432 | 21,373 | 4,863 | ||||||||
Total cost of goods sold | 78,252 | 14,595 | 143,213 | 77,340 | ||||||||
Gross profit | 67,883 | 193,877 | 165,520 | 815,655 | ||||||||
Operating expenses | ||||||||||||
Selling, general and administrative | 2,558,943 | 2,049,422 | 5,253,338 | 4,164,725 | ||||||||
Research and development | 190,761 | 31,016 | 294,941 | 97,283 | ||||||||
Total operating expenses | 2,749,704 | 2,080,438 | 5,548,279 | 4,262,008 | ||||||||
Loss from operations | (2,681,821) | (1,886,561) | (5,382,759) | (3,446,353) | ||||||||
Other income (expense): | ||||||||||||
Loss from equity method joint ventures | (117,978) | - | (189,095) | - | ||||||||
Other income | - | 159,126 | - | 159,126 | ||||||||
Interest income | 48 | 2,425 | 273 | 4,438 | ||||||||
Interest expense | (102) | (91,125) | (1,558) | (986,351) | ||||||||
Foreign currency exchange loss | (888) | (1,028) | (1,914) | (1,492) | ||||||||
Total other income (expense) | (118,920) | 69,398 | (192,294) | (824,279) | ||||||||
Loss before income taxes | (2,800,741) | (1,817,163) | (5,575,053) | (4,270,632) | ||||||||
Income Taxes | 800 | - | 800 | - | ||||||||
Net loss | $ | (2,801,541) | $ | (1,817,163) | $ | (5,575,853) | $ | (4,270,632) | ||||
Net loss per common share: | ||||||||||||
Basic | $ | (0.23) | $ | (0.17) | $ | (0.46) | $ | (0.42) | ||||
Diluted | $ | (0.23) | $ | (0.17) | $ | (0.46) | $ | (0.42) | ||||
Weighted average number of common shares outstanding: | ||||||||||||
Basic | 12,115,205 | 10,444,150 | 12,082,457 | 10,167,624 | ||||||||
Diluted | 12,115,205 | 10,444,150 | 12,082,457 | 10,167,624 | ||||||||
ADJUSTED EBITDA | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
June 30 | June 30 | |||||||||
2022 | 2021 | 2022 | 2021 | |||||||
Net loss | $ (2,801,541) | $ (1,817,163) | $ (5,575,853) | $ (4,270,632) | ||||||
Other Income | $ - | $ (159,126) | $ - | $ (159,126) | ||||||
Interest expense | 54 | 9,707 | 1,285 | 44,778 | ||||||
Foreign currency exchange loss | 888 | 1,028 | 1,914 | 1,492 | ||||||
Stock-based compensation | 135,102 | 235,144 | 445,314 | 427,208 | ||||||
Stock option expense | 432,796 | 384,083 | 861,284 | 760,606 | ||||||
Non-cash compensation for services | 30,000 | - | 30,000 | - | ||||||
Amortization of debt discount | - | 76,980 | - | 937,135 | ||||||
Depreciation and amortization | 22,082 | (2,695) | 37,629 | 5,959 | ||||||
Adjusted EBITDA | $ (2,180,619) | $ (1,272,042) | $ (4,198,427) | $ (2,252,580) | ||||||
Loss from equity method JV | $ 117,978 | $ - | $ 189,095 | $ - | ||||||
Loss from consolidated JV (less depreciation) | 132,827 | - | 311,524 | - | ||||||
Adjusted EBITDA for INVO corporate | $ (1,929,814) | $ (1,272,042) | $ (3,697,808) | $ (2,252,580) | ||||||
INVO Center RESULTS | ||||||||||||||||||||||
The following tables summarize the combined financial information of our consolidated and equity method joint venture INVO Centers: | ||||||||||||||||||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Statements of operations: | ||||||||||||||||||||||
Operating revenue | $ 212,990 | $ - | $ 440,947 | $ - | ||||||||||||||||||
Operating expenses | (602,414) | - | (1,175,379) | - | ||||||||||||||||||
Net income | $ (389,424) | $ - | $ (734,432) | $ - | ||||||||||||||||||
June 30, 2022 | December 31, | |||||||||||||||||||||
Balance sheets: | ||||||||||||||||||||||
Current assets | $ 825,437 | $ 660,877 | ||||||||||||||||||||
Long-term assets | 2,064,946 | 2,374,471 | ||||||||||||||||||||
Current liabilities | (779,233) | (585,226) | ||||||||||||||||||||
Long-term liabilities | (690,492) | (743,972) | ||||||||||||||||||||
Net assets | $ 1,420,657 | $ 1,706,150 | ||||||||||||||||||||
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SOURCE INVO Bioscience, Inc.
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