10-Q: INVO Fertility Reports Q3 Loss Amid NAYA Divestiture, WFI Settlement

Sentiment:

Quarterly Report 17 November 2025 7:00 AM

INVO Fertility, Inc. reported a significant net loss for the nine months ended September 30, 2025, driven by the divestiture of NAYA Therapeutics and related impairment charges, despite revenue growth in its core fertility clinic services.

Capital raiseThe company completed a public offering in January 2025, raising $8.7 million in net proceeds.FNL exercised its Additional Investment Right multiple times, acquiring Series C-2 Preferred Stock for cash: $500,000 on June 26, 2025, $1,650,000 during Q3 2025, $200,000 on October 6, 2025, and $500,000 on October 16, 2025.The company converted various debt instruments into common and preferred stock, including $739,961 of an amended and restated 7.0% debenture and 6,565 shares of Series C-2 Preferred into common stock during Q3 2025, and 5,535 shares of Series C-2 Preferred into common stock since September 30, 2025.The company explicitly states its dependence on raising additional capital from debt and equity financings to meet liquidity needs and execute its business strategy, indicating ongoing capital raise efforts.

Worse than expectedThe net loss for the nine months ended September 30, 2025, was $25.3 million, significantly worse than the $5.5 million loss in the prior year, primarily due to large impairment charges and losses from discontinued operations.Net cash used in operating activities increased to $7.0 million from $2.4 million, indicating a worsening cash burn from core operations.Stockholders' equity decreased substantially from $12.7 million to $5.8 million, reflecting the impact of losses and capital restructuring.

Summary

Net loss for the nine months ended September 30, 2025, was $25.3 million, a substantial increase from $5.5 million for the same period in 2024.
Revenue for the nine months ended September 30, 2025, increased by approximately 8% to $5.2 million, primarily due to organic growth in the Wisconsin and Atlanta clinics.
The company divested 80.1% of NAYA Therapeutics, Inc. (NTI) on June 2, 2025, to refocus exclusively on the fertility marketplace, retaining a 19.9% minority stake.
The NTI divestiture resulted in a loss on disposal of $1.5 million and a loss from discontinued operations of NTI totaling $16.5 million, which included a goodwill impairment of $14.6 million.
A settlement was reached in the Wisconsin Fertility Institute (WFI) acquisition dispute, requiring Wood Violet to pay Dr. Pritts $5.0 million in installments through December 31, 2026.
The WFI settlement led to a gain on settlement of $714,500 but also an impairment loss of $1.4 million on the noncompetition agreement with Dr. Pritts.
Cash and cash equivalents decreased to $355,891 as of September 30, 2025, from $619,520 at December 31, 2024.
Net cash used in operating activities for the nine months ended September 30, 2025, was $7.0 million, up from $2.4 million in the prior year period.
The company completed a public offering in January 2025, raising $8.7 million in net proceeds, which was partially used to redeem $4.0 million of preferred stock and repay $1.2 million in debt.
Two reverse stock splits were enacted: 1-for-12 on March 18, 2025, and 1-for-3 on July 21, 2025.
The company's disclosure controls and procedures were deemed not effective as of September 30, 2025, due to a material weakness in accounting for lease liabilities.

Sentiment

Score: 3

Explanation: The company faces significant financial challenges, including a substantial net loss, increased cash burn from operations, and a 'going concern' qualification. While strategic refocusing on fertility and successful capital raises provide some positive momentum, the magnitude of losses and liquidity concerns outweigh these, indicating a precarious financial position.

Positives

Fertility clinic revenue increased by approximately 8% for the nine months ended September 30, 2025, demonstrating organic growth in existing clinics.
The company successfully divested a majority stake in NAYA Therapeutics, allowing for a strategic refocus on its core fertility business.
A binding settlement agreement was reached in the WFI acquisition dispute, resolving ongoing legal matters and providing clarity on future obligations.
The company raised $8.7 million in net proceeds from a public offering in January 2025, providing capital for operations and debt management.
Negative working capital improved to approximately $3.3 million as of September 30, 2025, from $5.6 million at December 31, 2024.

Negatives

Reported a significant net loss of $25.3 million for the nine months ended September 30, 2025, compared to $5.5 million in the prior year, largely due to discontinued operations and impairment.
Net cash used in operating activities increased substantially to $7.0 million for the nine months ended September 30, 2025, from $2.4 million in the prior year.
Cash and cash equivalents decreased to $355,891 as of September 30, 2025, indicating a low liquidity position.
Accumulated deficit grew to $93.1 million as of September 30, 2025.
Stockholders' equity decreased significantly to $5.8 million as of September 30, 2025, from $12.7 million at December 31, 2024.
Incurred a $14.6 million goodwill impairment loss related to NAYA Therapeutics and a $1.4 million impairment loss on the WFI noncompetition agreement.
Disclosure controls and procedures were deemed not effective due to a material weakness in accounting for lease liabilities.
The company has a 'going concern' qualification, indicating substantial doubt about its ability to continue operations for at least one year.

Risks

Substantial doubt exists about the company's ability to continue as a going concern for at least one year, dependent on raising additional funding.
Inability to raise additional funding on reasonable terms could force delays or reductions in growth and acquisition plans, or lead to cessation of operations.
The company is subject to legal proceedings and claims in the ordinary course of business, which can be time-consuming, expensive, and divert management resources.
Disclosure controls and procedures were not effective as of September 30, 2025, due to a material weakness in internal control over financial reporting related to lease accounting.
Future operating results may vary from expectations due to changes in healthcare regulations, general economic conditions, or other factors, potentially impacting deferred tax asset valuation allowances.

Future Outlook

The company plans to expand its fertility operations through organic growth of existing clinics and the acquisition of additional, profitable U.S.-based IVF clinics. It anticipates benefiting from ongoing growth in the ART market due to an underserved patient population, increasing infertility rates, growing awareness, and improving insurance reimbursement trends. The company will continue to grow INVOcell within its clinics and to third-party clinics, and seek out additional innovative technologies to enhance clinic operations. It expects to continue incurring significant expenses and operating losses as it pursues acquisitions and commercialization efforts, requiring additional funding until positive cash flow from operations is achieved.

Management Comments

"Our principal commercial strategy is focused on building, acquiring and operating fertility clinics, including INVO Centers dedicated primarily to offering the intravaginal culture (IVC) procedure enabled by our INVOcell medical device (INVOcell) and US-based, profitable in vitro fertilization (IVF) clinics."
"We remain enthusiastic about [NAYA Therapeutics'] prospects and will retain a minority stake in NAYA Therapeutics, which we hope to monetize in the future through value appreciation that could be generated from the clinical development of its bifunctional antibodies."
"Our active pursuit of additional acquisitions is aimed at accelerating our growth and driving our overall business to cash flow break even and beyond to profitability."
"We believe that our renewed focus on our core fertility operations best serves our growth objectives."

Industry Context

The global Assisted Reproductive Technology (ART) market is a large and growing multi-billion-dollar industry, driven by increased infertility rates, greater patient awareness, and improving financial incentives. Despite approximately 4 million ART cycles performed globally each year, less than 5% of infertile couples worldwide are treated, indicating a vastly underserved market. Capacity constraints and high costs are key barriers. INVO Fertility's strategy to acquire profitable IVF clinics and establish INVO Centers in underserved secondary markets directly addresses this supply-demand imbalance and cost barrier, aiming to democratize fertility care. The INVOcell device offers a potentially more affordable and intimate alternative to traditional IVF, aligning with the market's need for accessible solutions.

Comparison to Industry Standards

The IVC procedure enabled by INVOcell has demonstrated equivalent pregnancy success and live birth rates as traditional IVF in clinical studies and current utilization, while potentially offering a lower cost.
The global ART market treats less than 5% of infertile couples worldwide, highlighting a significant unmet need that INVO Fertility aims to address through its clinic expansion and INVOcell technology.
The company's strategy to acquire profitable U.S.-based IVF clinics and open INVO Centers in secondary markets is a direct response to the industry's capacity constraints and geographical availability issues, as identified by surveys like Resolve: The National Infertility Association.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Reverse Stock Split	A 1-for-12 reverse stock split of common stock was approved by the board on February 24, 2025, and became effective on March 18, 2025.	2025-03-18	Aimed at increasing share price to maintain Nasdaq listing compliance, but reduces the number of outstanding shares.
Reverse Stock Split	A 1-for-3 reverse stock split of common stock was approved by the board on June 30, 2025, and became effective on July 21, 2025.	2025-07-21	Further aimed at increasing share price and reducing outstanding shares, potentially for Nasdaq compliance or capital structure management.
Authorized Common Stock Increase	Stockholders approved an amendment to increase authorized common stock from 1,388,888 to 50,000,000 shares.	2025-07-23	Provides flexibility for future equity financings, acquisitions, and stock-based compensation, but could lead to dilution.
Preferred Stock Reclassification	Series C-2 Preferred Stock was reclassified from mezzanine equity to permanent equity due to amendments removing Bankruptcy Triggering Event and Change of Control redemption rights.	2025-06-27	Improves the equity structure by removing contingent redemption features, making the preferred stock more stable as a component of permanent equity.
Internal Control Weakness	Disclosure controls and procedures were not effective as of September 30, 2025, due to a material weakness in the accounting treatment of right-of-use assets and corresponding lease liabilities.	2025-09-30	Indicates a deficiency in financial reporting processes that could lead to misstatements; requires remediation to ensure accurate financial disclosures.

Legal Proceedings

A complaint was filed on May 7, 2025, by Dr. Elizabeth Pritts and the Pritts Trust against the company and its subsidiaries in Wisconsin, alleging breach of contract and other claims related to the WFI acquisition.
On May 14, 2025, a binding term sheet was entered into to settle all disputes, with Wood Violet agreeing to pay Dr. Pritts $5,000,000 in installments through December 31, 2026.
The Settlement Agreement was executed on September 30, 2025, resolving the complaint and related matters.

Related Party Transactions

The company has outstanding demand notes (JAG Notes) totaling $600,000 from JAG Multi Investments LLC, an entity where the company's CFO is a beneficiary. The maturity date was extended to December 31, 2025, contingent on a $100,000 payment by November 30, 2025, and the exercise price on a related warrant was reduced from $2.00 to $0.75 per share.
The company has demand promissory notes totaling $220,000 from its chief executive officer and an entity controlled by its chief financial officer, accruing 10% annual interest and callable with 10 days' notice. The total outstanding balance, including principal and accrued interest, was $1,105,454 as of September 30, 2025.

Stakeholder Impact

**Shareholders**: Experienced significant dilution due to multiple equity issuances and debt conversions. The reverse stock splits reduced the number of shares outstanding, potentially impacting per-share metrics. The 'going concern' warning poses a substantial risk to investment value.
**Employees**: Stock options were issued as compensation, aligning employee incentives with company performance. The divestiture of NAYA Therapeutics indicates a strategic shift that may affect employees previously involved in that segment.
**Customers**: The focus on expanding fertility clinic services and INVOcell technology aims to increase access to assisted reproductive technology, potentially benefiting patients seeking more affordable and accessible fertility treatments.
**Creditors**: Debt obligations have been partially repaid and restructured, including the extinguishment of the Second Amended and Restated Debenture. However, the company's ongoing need for capital and 'going concern' status present risks to creditors.
**Suppliers**: The company's reliance on third-party manufacturers and logistics providers for INVOcell production suggests continued engagement with these suppliers, subject to the company's liquidity and operational needs.

Next Steps

Grow the Wisconsin Fertility Institute (WFI) organically.
Pursue the acquisition of additional U.S.-based, profitable IVF clinics.
Seek out additional, innovative fertility-focused technologies to license or acquire for use within operating clinics.
Continue to engage in the sale and distribution of INVOcell technology to third-party owned and operated fertility clinics.
Raise additional funding to meet liquidity needs and execute business strategy until positive cash from operations is generated.
Address the material weakness in internal control over financial reporting related to lease accounting.

Key Dates

Date	Description
2019-10-31	Company adopted the 2019 Stock Incentive Plan.
2021-03-10	INVO Centers LLC formed a joint venture with HRCFG, LLC to establish an INVO Center in Birmingham, Alabama (Alabama JV).
2021-06-28	INVO Centers LLC formed a joint venture with Bloom Fertility, LLC to establish an INVO Center in Atlanta, Georgia (Georgia JV).
2022-10-01	Company received $550,000 through the issuance of five demand notes (JAG Notes) from JAG Multi Investments LLC.
2022-11-29	Company issued demand promissory notes for $60,000 from its CEO and $75,000 from an entity controlled by its CFO.
2022-12-02	Company issued a demand promissory note for $15,000 from its CEO.
2022-12-13	Company issued demand promissory notes for $25,000 from its CEO and $25,000 from an entity controlled by its CFO.
2022-12-29	Company received an additional $100,000 from JAG through the issuance of an additional demand note.
2023-07-10	JAG agreed to extend the date on which the JAG Notes are callable to September 30, 2023.
2023-08-10	Company consummated the acquisition of Wisconsin Fertility Institute (WFI).
2023-09-29	Company entered into a Revenue Loan and Security Agreement with Decathlon Alpha V LP for $1,500,000.
2024-02-26	Company finalized an Agreement for the Purchase and Sale of Future Receipts for $236,250.
2024-04-05	Company entered into a purchase agreement with FirstFire Global Opportunities Fund, LLC for a convertible promissory note and warrants.
2024-06-01	Wood Violet transferred ownership of Wisconsin Fertility and Reproductive Surgery Associates, S.C. (WFRSA) from Dr. Elizabeth Pritts MD to a new medical doctor.
2024-09-25	Company entered into a Standard Merchant Cash Advance Agreement with Cedar for $265,000.
2024-10-11	Company acquired 100% interest in NAYA Therapeutics, Inc. (NTI) and issued Series C-1 and C-2 Convertible Preferred Stock and a Convertible Debenture.
2024-10-14	Company filed Certificate of Designation for Series C-1 and C-2 Convertible Preferred Stock.
2024-11-30	Deadline for the company to receive $1,000,000 equity investment to avoid an increase in the Minimum Interest rate on the RSLA Loan.
2025-01-13	SEC declared effective the company's registration statement on Form S-1 for the January 2025 Public Offering.
2025-01-14	Company consummated a public offering of 378,199 units, raising $8.7 million net proceeds.
2025-01-16	Remaining balance and outstanding interest of the FirstFire Note was paid.
2025-01-21	Company received a demand notice from JAG.
2025-02-24	Board of directors approved a 1-for-12 reverse stock split.
2025-03-18	1-for-12 reverse stock split became effective.
2025-04-14	Company changed its corporate name to INVO Fertility, Inc. and filed an Amendment to Articles of Incorporation.
2025-04-28	Common stock ceased trading under NAYA and began trading under IVF on Nasdaq.
2025-04-30	Company entered into an inducement letter agreement with an institutional investor for warrant exercise.
2025-05-01	Company issued 465,840 shares upon the exercise of Existing Warrants.
2025-05-05	Company issued an additional 110,000 shares of common stock upon the exercise of additional Existing Warrants.
2025-05-07	Dr. Pritts and the Pritts Trust filed a complaint against the company and its subsidiaries in Wisconsin.
2025-05-14	Company, Dr. Pritts, and affiliates entered into a binding term sheet to settle disputes.
2025-05-23	Company agreed to exchange the Convertible Debenture for an Amended and Restated Debenture and amended the Series C-2 Certificate of Designation.
2025-05-28	NTI issued a secured convertible promissory note of $4,803,175 to the company. Company filed an amendment to the Series C-1 Certificate of Designation to allow redemption.
2025-06-02	Company divested a majority stake (80.1%) in NTI and redeemed all outstanding Series C-1 Preferred Stock.
2025-06-25	Stockholders approved an amendment to the 2019 Stock Incentive Plan to increase available shares to 400,000.
2025-06-26	FNL exercised its Additional Investment Right to acquire 500 shares of Series C-2 Preferred for $500,000 cash.
2025-06-27	Company filed a Second Certificate of Amendment to Series C-2 Certificate of Designation, removing redemption rights.
2025-06-30	Board of directors approved a 1-for-3 reverse stock split. Company entered into an Amendment to Securities Purchase Agreement with FNL and an inducement letter agreement with FNL for AIR exercise.
2025-07-18	Company filed a certificate of change for the 1-for-3 reverse stock split.
2025-07-21	1-for-3 reverse stock split became effective.
2025-07-23	Stockholders approved an amendment to increase authorized common stock from 1,388,888 to 50,000,000 shares.
2025-08-13	Company and JAG entered into a letter agreement extending the maturity date of JAG Notes and allowing conversion to common stock.
2025-08-21	Company and FNL agreed to exchange the Amended and Restated Debenture for a Second Amended and Restated Debenture, reducing principal and issuing Series C-2 Preferred.
2025-09-29	Company and FNL entered into an exchange agreement, fully extinguishing the Second Amended and Restated Debenture for Series C-2 Preferred.
2025-09-30	Company executed the Settlement Agreement with Dr. Pritts and the Pritts Trust.
2025-10-06	FNL exercised its right to acquire 200 shares of Series C-2 Preferred for $200,000 cash.
2025-10-16	FNL exercised its right to acquire 500 shares of Series C-2 Preferred for $500,000 cash.
2025-11-13	Company and JAG entered into a letter agreement extending the maturity date of JAG Notes and reducing the exercise price on the JAG Warrant.
2025-11-17	Filing date of the 10-Q report.

Recommendation

strong sell

The company's financial position is highly precarious, evidenced by a substantial net loss of $25.3 million, a significant increase in cash used in operating activities to $7.0 million, and a 'going concern' qualification. While strategic refocusing on fertility and recent capital raises provide some liquidity, these are insufficient to offset the deep accumulated deficit of $93.1 million and the ongoing cash burn. The ineffective internal controls further highlight operational risks. The stock has undergone multiple reverse splits, often a sign of underlying distress. Given the severe financial challenges, high operational risk, and the explicit 'going concern' warning, a seasoned investor would likely view this as a strong sell, as the risk of significant capital loss is very high.

Keywords

Fertility, IVF, INVOcell, Assisted Reproductive Technology, Healthcare Services, SEC Filing, 10-Q, Quarterly Report, NAYA Therapeutics, Divestiture, Wisconsin Fertility Institute, Going Concern, Capital Raise, Stock Split, Biotechnology

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