INVO Reports Fourth Quarter and Full Year 2023 Financial Results

Rhea-AI Summary

INVO Bioscience, Inc. (INVO) reports significant revenue growth in Q4 2023 and FY 2023, with a focus on expanding access to advanced fertility treatments. The company's revenue increased by 397% in Q4 and 267% in FY 2023, driven by clinic revenue growth and strategic acquisitions. Despite a net loss, adjusted EBITDA improved, reflecting a positive outlook for future profitability.

Positive

• Significant revenue growth of 397% in Q4 2023 and 267% in FY 2023 compared to the previous year.
• Clinic revenue increased by 519% in Q4 and 366% in FY 2023, driven by INVO Centers and strategic acquisitions.
• Total operating expenses decreased by $1.6 million in FY 2023, contributing to improved financial performance.
• Net loss decreased from $(10.9) million to $(8.0) million in FY 2023.
• Adjusted EBITDA improved from $(8.4) million to $(5.1) million in FY 2023, indicating progress towards profitability.
• CEO Steve Shum highlights the company's focus on revenue growth and profitability, with a goal to achieve break-even or profitability in 2024.

Negative

• None.

Insights

Financial Analyst

INVO Bioscience's report reveals a striking 397% increase in quarterly revenue and a 267% annual revenue growth. This growth trajectory is primarily due to clinic revenue surges, reflective of successful expansion strategies. However, it's noteworthy that despite revenue increases, the company operates at a loss with a net loss of $(2.0) million for the quarter and $(8.0) million annually. Investors should consider the company's ability to maintain growth rates in clinic revenues and whether they can effectively control operating expenses, which although decreased, may still hinder profitability. The Adjusted EBITDA improvements are encouraging signs of operational optimization, yet achieving break-even in 2024 remains an ambitious target given the historical loss figures.

Healthcare Industry Analyst

From an industry standpoint, INVO's focus on fertility services via the INVOcell® device aligns with the increasing demand for fertility treatments. The revenue uptick from the clinics suggests strong market reception and operational growth. However, this sector is known for high upfront costs and long payback periods. It is important to monitor how INVO's strategy to acquire and establish clinics continues to affect their financials, especially as the sector grapples with regulatory changes and competitive pressures. The planned merger with NAYA Biosciences represents a strategic move to consolidate market positioning but also adds a layer of financial and execution risk that stakeholders should watch closely.

M&A Analyst

Analyzing the merger aspect, the all-stock transaction with NAYA Biosciences is pivotal. The deal's terms and the strategic fit should be scrutinized to understand the dilution effects on current shareholders and the synergistic potential of NAYA's integration. Mergers can provide economies of scale and access to new technologies or markets – in this case, potentially strengthening INVO's positioning in the fertility industry. On the flip side, merging operations can lead to integration challenges and additional costs in the short term. With INVO already operating at a loss, managing this merger without impacting the company's trajectory towards profitability will be a delicate balance.

SARASOTA, Fla., April 16, 2024 (GLOBE NEWSWIRE) -- INVO Bioscience, Inc. (Nasdaq: INVO) ("INVO" or the "Company"), a healthcare services fertility company focused on expanding access to advanced treatment worldwide through the establishment and acquisition of fertility clinics, and with the intravaginal culture ("IVC") procedure enabled by its INVOcell® medical device, today announced financial results for the fourth quarter and fiscal year ended December 31, 2023 and provided a business update.

Q4 2023 Financial Highlights (all metrics compared to Q4 2022 unless otherwise noted)

• Revenue was $1,381,754, an increase of 397% compared to $278,142.
• Clinic revenue increased 519% to $1,362,938, compared to $220,253. All reported clinic revenue is derived from the Company's INVO Center in Atlanta, Georgia, and fertility clinic in Madison, Wisconsin which are consolidated in the Company's financial statements.
• Revenue from all clinics, inclusive of both those accounted for as consolidated and under the equity method, was $1,634,912, an increase of 140% compared to $682,055.
• Total operating expenses were $2.9 million, a $0.1 million decrease compared to $3.0 million. Included in the Q4 2023 operating expenses were approximately $250,000 pertaining to the definitive merger agreement with NAYA Biosciences, Inc. ("NAYA") to acquire NAYA in an all-stock transaction.
• Net loss was $(2.0) million compared to $(2.8) million.
• Adjusted EBITDA (see table included) was $(1.2) million, including transaction costs related to the potential merger, compared to $(2.2) million in the prior year.

2023 Financial Highlights (all metrics compared to 2022 unless otherwise noted)

• Revenue was $3,020,575, an increase of 267% compared to $822,196.
• Clinic revenue increased 366% to $2,862,574, compared to $614,854. All reported clinic revenue is derived from the Company's INVO Center in Atlanta, Georgia, and fertility clinic in Madison, Wisconsin which are consolidated in the Company's financial statements.
• Revenue from all clinics, inclusive of both those accounted for as consolidated and under the equity method, was $4,346,933, an increase of 158% compared to $1,686,705.
• Total operating expenses were $9.8 million, a $1.6 million decrease compared to $11.4 million.
• Net loss was $(8.0) million compared to $(10.9) million.
• Adjusted EBITDA (see table included) was $(5.1) compared to $(8.4) million.

Management Commentary

"We continue to execute on our plan to capture a greater share of the total fertility cycle revenue and profit through the transformation of INVO into an innovative healthcare services company, driven by our existing INVO Centers and recently acquired Wisconsin-based IVF Center,” commented Steve Shum, CEO of INVO. “During 2023, our revenue increased to more than $3.0 million, a 267% increase from the previous year, and included approximately 4.5 months of revenue from our Wisconsin revenue. In total, revenue from all clinics, inclusive of both those accounted for as consolidated and under the equity method, was more than $4.3 million. The growth in revenue has also had a positive impact on our adjusted EBITDA, as we work towards our stated goal of reaching break-even or profitability within our current operations (excluding the potential merger with NAYA) in 2024. With a full year of revenue from our Wisconsin clinic and further expected growth overall, we believe we remain on track to reach that objective. We are excited about our position in the fertility market, and the opportunity we have to make advanced fertility care more accessible and inclusive to people around the world.”

Definitive Merger Agreement

On October 23, 2023, INVO and NAYA, a company dedicated to increasing patient access to breakthrough treatments in oncology and regenerative medicine, jointly announced that they had entered into a definitive merger agreement (the "Merger") for INVO to acquire NAYA Biosciences in an all-stock transaction. Under the terms of the agreement, NAYA Biosciences' shareholders will receive 7.3333 shares of INVO for each share of NAYA Biosciences at closing, for a total of approximately 18,150,000 shares of INVO. Following the closing of the Merger, the combined company is expected to operate under the name "NAYA Biosciences."

As described in greater detail in the Company's SEC filings and press releases, the Merger remains subject to certain closing conditions including shareholder approval, an interim private financing in INVO at a premium of INVO's market price at time of financing ("Interim PIPE") of at least $2 million plus an amount to fund the Company’s fertility operations for twelve months and address the Company’s outstanding payables, and a private offering by the combined company at a target price of $5.00 per common share of INVO. To date, NAYA has provided approximately $805,000 in financing.

“INVO and NAYA remain committed to completing the merger between our two companies, creating a company uniquely positioned in both the fertility and oncology space,” commented Shum. "With the 10-K now on file, we plan to update our Proxy S-4 and schedule the stockholder meeting as soon as possible pending completion of the various closing conditions outlined in the agreement.”

Financial Tables

Included in this press release is a reconciliation of Adjusted EBITDA. All additional financial tables are included in the Company’s 10-K, which can be found on the Company’s website at https://www.invobioscience.com/sec-filings/ or at https://www.sec.gov/.

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.

About INVO Bioscience

We are a healthcare services fertility company dedicated to expanding the assisted reproductive technology ("ART") marketplace by making fertility care accessible and inclusive to people around the world. 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), the acquisition of US-based, profitable in vitro fertilization ("IVF") clinics and the sale and distribution of our technology solution into existing fertility clinics. Our proprietary technology, INVOcell®, is 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 IVF and is a significantly more effective treatment than intrauterine insemination ("IUI"). 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.

ADJUSTED EBITDA
	Three Months Ended								Year Ended
	December 31								December 31
		2023				2022				2023				2022
Net loss	$	(1,994,782	)		$	(2,767,035	)		$	(8,034,612	)		$	(10,892,511	)
Interest expense		74,174				4,097				205,781				7,109
Foreign currency exchange loss		4				541				420				3,463
Stock-based compensation		34,727				83,225				344,386				608,018
Stock option expense		144,804				328,974				1,049,109				1,616,401
Non-cash compensation for services		45,000				45,000				180,000				120,000
Amortization of debt discount		107,869				52,644				720,128				52,644
Loss from debt extinguishment		163,278				-				163,278				-
Impairment on equity method JV		89,794				-				89,794				-
Tax provision		23,035				2,072				27,786				2,872
Depreciation and amortization		141,598				19,940				200,894				77,301
Adjusted EBITDA	$	(1,170,499	)		$	(2,230,542	)		$	(5,053,036	)		$	(8,404,703	)
Proforma net loss	$	(1,994,782	)		$	(2,403,453	)		$	(7,123,212	)		$	(9,208,504	)
Interest expense		74,174				4,097				205,781				7,109
Foreign currency exchange loss		4				541				420				3,463
Stock-based compensation		34,727				83,225				344,386				608,018
Stock option expense		144,804				328,974				1,049,109				1,616,401
Non-cash compensation for services		45,000				45,000				180,000				120,000
Loss from debt extinguishment		163,278				-				163,278				-
Impairment on equity method JV		89,794				-				89,794				-
Amortization of debt discount		107,869				52,644				720,128				52,644
Tax provision		23,035				2,072				27,786				2,872
Depreciation and amortization		141,598				19,940				200,894				77,301
Proforma adjusted EBITDA	$	(1,170,499	)		$	(1,866,960	)		$	(4,141,636	)		$	(6,720,696	)

CONTACT

INVO Bioscience:
Steve Shum
978-878-9505
sshum@invobio.com

INVO Investor Contact:
Robert Blum (Lytham Partners, LLC)
602-889-9700
INVO@lythampartners.com

FAQ

What was INVO Bioscience's revenue in Q4 2023?

INVO Bioscience reported revenue of $1,381,754 in Q4 2023, representing a 397% increase from the previous year.

How much did clinic revenue increase in FY 2023?

Clinic revenue increased by 366% in FY 2023, reaching $2,862,574 compared to $614,854 in the previous year.

What was the net loss for INVO Bioscience in FY 2023?

INVO Bioscience reported a net loss of $(8.0) million in FY 2023, an improvement from $(10.9) million in the previous year.

What is the goal of INVO Bioscience for 2024?

INVO Bioscience aims to achieve break-even or profitability within its current operations (excluding the potential merger with NAYA) in 2024.