10-Q: INVO Bioscience Reports Q1 2024 Results, Revenue Jumps on Clinic Acquisition
Sentiment:
Quarterly Report
INVO Bioscience's first quarter revenue significantly increased due to the acquisition of Wisconsin Fertility Institute, while the company continues to navigate financial challenges.
Capital raiseThe company received $0.5 million from the sale of preferred stock and $0.2 million from the sale of notes during the first three months of 2024.The company is pursuing a merger with NAYA Biosciences, which is subject to certain conditions, including raising additional capital.The company entered into a purchase agreement with Triton Funds LP for the sale of up to 1,000,000 shares of common stock for gross proceeds of up to $850,000.The company entered into a purchase agreement with FirstFire Global Opportunities Fund, LLC for a $250,000 investment.
Worse than expectedThe company reported a net loss of $1.6 million for the quarter, and has an accumulated deficit of $59.4 million.The company's cash balance decreased to $0.5 million as of March 31, 2024.The company received a delisting notice from Nasdaq for not meeting the minimum stockholders equity requirement.
Summary
- INVO Bioscience reported a net loss of $1.6 million for the first quarter of 2024, compared to a $2.6 million loss in the same period last year.
- The company's revenue increased to $1.6 million, a significant jump from $0.3 million in the first quarter of 2023, primarily due to the acquisition of Wisconsin Fertility Institute (WFI).
- Clinic revenue accounted for $1.5 million of the total revenue, with the remaining $0.1 million coming from product sales.
- Operating expenses totaled $2.5 million, a decrease from $2.7 million in the prior year, mainly due to reduced personnel costs.
- The company experienced a loss on disposal of fixed assets of $0.6 million related to the termination of the Tampa INVO Center project.
- INVO Bioscience has an accumulated deficit of $59.4 million as of March 31, 2024.
- The company's cash balance was $0.5 million as of March 31, 2024, compared to $2.2 million as of March 31, 2023.
- The company has been dependent on raising capital from debt and equity financings to meet its needs for cash used in operating and investing activities.
- The company received $0.5 million from the sale of preferred stock and $0.2 million from the sale of notes during the first three months of 2024.
- The company is pursuing a merger with NAYA Biosciences, which is subject to certain conditions, including raising additional capital.
Sentiment
Score: 4
Explanation: The document presents a mixed picture. While revenue growth is strong due to the WFI acquisition, the company is still operating at a loss, has a significant accumulated deficit, and faces delisting risks. The need for further capital raises and the uncertainty surrounding the NAYA merger also contribute to a negative sentiment.
Positives
- The acquisition of Wisconsin Fertility Institute significantly boosted revenue and established a foundation for future growth.
- The company is actively pursuing additional acquisitions of established and profitable IVF clinics.
- The company is focused on expanding access to fertility care through its INVO Centers and clinic acquisitions.
- The company has reduced operating expenses by 38% year-over-year.
- The company has secured additional funding through the sale of preferred stock and notes.
Negatives
- The company reported a net loss of $1.6 million for the first quarter of 2024.
- The company has an accumulated deficit of $59.4 million.
- The company has negative working capital of $7.2 million.
- The company experienced a loss on disposal of fixed assets of $0.6 million related to the termination of the Tampa INVO Center project.
- The company's cash balance decreased to $0.5 million as of March 31, 2024.
- The company is dependent on raising capital from debt and equity financings to meet its liquidity needs.
Risks
- The company has a history of operating losses and expects to continue to incur losses.
- The company's ability to continue as a going concern is in doubt.
- The company is dependent on raising additional capital, which may not be available on reasonable terms.
- The company's merger with NAYA Biosciences is subject to several conditions, including raising additional capital.
- The company received a delisting notice from Nasdaq for not meeting the minimum stockholders equity requirement.
- The company's Mexico JV is facing uncertainty due to the resignation of the primary physician.
Future Outlook
The company plans to grow the Wisconsin Fertility Institute, pursue additional IVF clinic acquisitions, and complete the merger with NAYA Biosciences. The company expects to continue to incur significant expenses and operating losses as it continues to ramp up the commercialization of INVOcell and develop new INVO Centers.
Management Comments
- The company's commercial strategy is primarily focused on operating fertility-focused clinics, which include the opening of INVO Centers and the acquisition of US-based, profitable in vitro fertilization (IVF) clinics.
- The company expects to continue to pursue additional acquisitions of established and profitable existing fertility clinics as part of its ongoing strategy to accelerate overall growth.
- The company believes that the INVOcell device, and the IVC procedure it enables, have key advantages including lower cost than IVF with equivalent efficacy, improved efficiency providing for greater capacity and improved access to care and geographic availability, and greater patient involvement.
Industry Context
The global ART market is a large, multi-billion dollar industry experiencing strong growth due to increased infertility rates, patient awareness, and acceptance of treatment options. The market remains underserved, with a high percentage of patients in need of care going untreated due to capacity constraints and cost barriers. INVO Bioscience aims to address these challenges through its INVOcell technology and clinic operations.
Comparison to Industry Standards
- The document states that the IVC procedure can be offered for less than IVF due to lower costs of supplies, labor, capital equipment and general overhead.
- The document states that the IVC procedure is currently being offered at several IVF clinics at a price range of $5,000 $11,000 per cycle and from $4,500 to $7,000 at the existing INVO Centers, thereby making it more affordable than IVF (which tends to average $11,000 to $15,000 per cycle or higher).
- The document states that by adopting the INVOcell, IVF clinics can increase fertility cycle volume by up to 30% without adding to personnel, space and/or equipment costs.
- The document states that the IVC procedure has demonstrated equivalent pregnancy success and live birth rates as IVF.
Related Party Transactions
- The company issued a series of demand promissory notes in the aggregate principal amount of $550,000 to a related party, JAG, for an aggregate purchase price of $500,000.
- The company issued demand promissory notes in the aggregate principal amount of $220,000 for an aggregate purchase price of $200,000, of which $100,000 was received from its Chief Executive Officer and $100,000 was received from an entity controlled by its Chief Financial Officer.
Stakeholder Impact
- Shareholders face the risk of losing their investment if the company cannot continue as a going concern.
- Employees may be affected by the company's financial challenges and potential restructuring.
- Customers may benefit from increased access to more affordable fertility treatments.
- Suppliers and creditors face the risk of non-payment due to the company's financial difficulties.
Next Steps
- The company plans to grow the Wisconsin Fertility Institute.
- The company plans to pursue additional IVF clinic acquisitions.
- The company plans to pursue the merger with NAYA Biosciences.
- The company plans to submit a plan to Nasdaq to regain compliance with the Equity Rule.
Key Dates
| Date | Description |
|---|---|
| 2015-11 | INVOcell received FDA clearance for marketing and use in the United States. |
| 2019-10 | The company adopted the 2019 Stock Incentive Plan. |
| 2020-09-24 | INVO CTR entered into a Pre-Incorporation and Shareholders Agreement with Francisco Arredondo, MD PLLC and Security Health LLC to commercialize the IVC procedure in Mexico. |
| 2021-03-10 | INVO CTR entered into a limited liability company agreement with HRCFG, LLC to form a joint venture for the purpose of establishing an INVO Center in Birmingham, Alabama. |
| 2021-06-28 | INVO CTR entered into a limited liability company agreement with Bloom Fertility, LLC to establish a joint venture entity, formed as Bloom INVO LLC, for the purposes of commercializing INVOcell in Atlanta, Georgia. |
| 2021-08-09 | The Alabama JV opened to patients. |
| 2021-09-07 | The Georgia JV opened to patients. |
| 2021-11-01 | The Mexico JV opened to patients. |
| 2023-02-03 | The company entered into an equity purchase agreement and registration rights agreement with an accredited investor. |
| 2023-02-03 | The company entered into securities purchase agreements for the purchase of convertible debentures. |
| 2023-03-23 | The company entered into a securities purchase agreement for a registered direct offering. |
| 2023-06 | The company received FDA 510(k) clearance to expand the labeling on the INVOcell device to provide for a 5-day incubation period. |
| 2023-06-28 | The company's board of directors approved a reverse stock split of the company's common stock at a ratio of 1-for-20. |
| 2023-07-28 | The company's reverse stock split took effect. |
| 2023-07-20 | The company entered into a Standard Merchant Cash Advance Agreement with Cedar Advance LLC. |
| 2023-08-04 | The company entered into securities purchase agreements for a public offering. |
| 2023-08-10 | The company consummated the acquisition of Wisconsin Fertility Institute. |
| 2023-09-29 | The company entered into a Revenue Loan and Security Agreement with Decathlon Alpha V LP. |
| 2023-10-13 | Shareholders of the company approved an increase to the number of authorized shares of the company's common stock from 6,250,000 shares to 50,000,000 shares. |
| 2023-10-22 | The company entered into an Agreement and Plan of Merger with NAYA Biosciences, Inc. |
| 2023-11-19 | The company entered into a share exchange agreement with Cytovia Therapeutics Holdings, Inc. |
| 2023-11-20 | The company filed a Certificate of Designation of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock. |
| 2023-12-27 | The company secured written consent by the note holders of the Q1 23 Convertible Notes for the maturity date to be extended to June 30, 2024. |
| 2023-12-29 | The company entered into a securities purchase agreement with NAYA for the purchase of Series A Preferred Stock. |
| 2024-01-04 | The company and NAYA closed on 100,000 shares of Series A Preferred Stock. |
| 2024-02-26 | The company finalized an Agreement for the Purchase and Sale of Future Receipts. |
| 2024-03-27 | The company entered into a purchase agreement with Triton Funds LP. |
| 2024-04-05 | The company entered into a purchase agreement with FirstFire Global Opportunities Fund, LLC. |
| 2024-04-15 | The company and NAYA closed on additional 61,200 shares of Series A Preferred Stock. |
| 2024-04-17 | The company reduced the exercise price of the August 2023 Warrants from $2.85 per share to $1.20 per share. |
| 2024-04-19 | INVO Centers LLC completed the assignment of its lease for the property in Tampa, Florida. |
| 2024-05-01 | The company entered into a third amendment to the Merger Agreement with NAYA. |
| 2024-05-01 | The company entered into an amendment to the Series A Preferred SPA with NAYA. |
| 2024-05-10 | The company and NAYA closed on 20,000 shares of Series A Preferred Stock. |
Keywords
fertility, INVOcell, IVF, acquisition, clinic, revenue, operating expenses, net loss, capital raise, merger, NAYA Biosciences, Wisconsin Fertility Institute
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