IVF 8-K
INVO Fertility, Inc. (IVF)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 2.02. Results of Operations and Financial Condition.
On August 14, 2023, INVO Bioscience, Inc. (the “Company”) issued a press release announcing financial results for the period ended June 30, 2023. The text of the press release is furnished as Exhibit 99.1 to this current report.
The information in this Item 2.02 and Exhibit 99.1 hereto shall not be deemed “filed” for the purposes of or otherwise subject to the liabilities under Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Unless expressly incorporated into a filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, the information contained in this Item 2.02 and Exhibit 99.1 hereto shall not be incorporated by reference into any Company filing, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
Description | |
| 99.1 | Press Release dated August 14, 2023. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document.) |
| -2- |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: August 14, 2023 | INVO BIOSCIENCE, INC. |
| /s/ Steven Shum | |
| Steven Shum | |
| Chief Executive Officer |
| -3- |
Exhibit 99.1
INVO Reports Second Quarter 2023 Financial Results
Company to Host Conference Call Today at 4:30pm ET
SARASOTA, Fla., August 14, 2023 /PRNewswire/ — INVO Bioscience, Inc. (Nasdaq: INVO) (“INVO” or the “Company”), a healthcare services 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, 2023 and provided a business update.
Q2 2023 Financial Highlights (all metrics compared to Q2 2022 unless otherwise noted)
| ● | Revenue was $315,902, an increase of 116% compared to $146,135. | |
| ● | Clinic revenue increased 126% to $254,364, compared to $112,358. All reported clinic revenue is derived from the Company’s INVO Center in Atlanta, Georgia, which is 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 $712,433, an increase of 145% compared to $290,517. |
Recent Operational and Strategic Highlights
| ● | Acquired Wisconsin Fertility Institute (WFI), a profitable Madison-based fertility center that primarily offers conventional IVF procedures and generated approximately $5.4 million in revenue and approximately $1.7 million of net income in 2022. | |
| ● | Acquisition further accelerates INVO’s transition to a healthcare services company and provides an opportunity to advance IVC volume and the ability to secure a greater share of total fertility cycle revenue. | |
| ● | Implemented expense reductions as part of go-forward plan to focus on its healthcare service strategy and a near-term path to profitability. | |
| ● | Buildout of the Company’s new Tampa, Florida clinic – Tampa Fertility Institute, an INVO Center – is nearing completion. | |
| ● | Raised approximately $4.5 million in gross proceeds in a public offering of common stock and warrants. The Company used approximately $2.15 million of proceeds for the initial payment for the WFI acquisition. | |
| ● | Received 510(k) FDA clearance for expanded use of the INVOcell device. |
Management Commentary
“We believe we have successfully transformed INVO into a rapidly growing, innovative healthcare services company which allows us to help accelerate IVC volume and obtain a greater share of the total fertility cycle revenue,” commented Steve Shum, CEO of INVO. “The closing of the WFI acquisition last week, coupled with the rapid 145% revenue growth in our existing INVO Center’s during this past quarter, should position our clinic operations to be cash flow positive in the third quarter of this year. Further, we have implemented a number of expense reductions as part of our go-forward plan to focus on our healthcare service strategy, which when coupled with the elimination of substantive costs associated with our successful 510(k) submission, should drive the business towards overall operating cash flow positive in 2024.”
Acquisition Details
On August 11, 2023, INVO announced it closed the acquisition of Wisconsin Fertility Institute, one of the state’s leading fertility centers, having assisted in welcoming over 5,000 babies since opening its doors in 2007 and completing approximately 550 conventional IVF cycles in 2022. The acquisition provides operational scale and complements the Company’s new-build INVO Center strategy. The Madison-based fertility center primarily offers conventional IVF procedures, having generated approximately $5.4 million in revenue and net income of approximately $1.7 million for the year ended December 31, 2022. INVO will look to further expand the center through the introduction of the IVC procedure as an added service offered to patients.
The purchase price of the acquisition is $10 million payable over a three-year period. There was an initial $2.15 million cash payment made at closing (net of a $350,000 holdback), with subsequent $2.5 million payments due annually for the following three years. At the discretion of the sellers, subsequent payments may be paid in cash or in a fixed amount of shares of INVO common stock at presently agreed values. Wisconsin Fertility Institute becomes a wholly owned subsidiary, and its financial statements will be consolidated with those of INVO.
Financial Results
Revenue for the three months ended June 30, 2023, was $315,902 compared to $146,135 for the three months ended June 30, 2022, an increase of 116%
Clinic revenue from the Company’s consolidated INVO Center was $254,364 during the second quarter of 2023, an increase of 126% compared to $112,358 for the three months ended June 30, 2022. Revenue from all INVO Centers combined was $712,433, an increase of 145% compared to the year-ago period.
Selling, general and administrative expenses for the three months ended June 30, 2023, were approximately $2.0 million compared to approximately $2.4 million for the three months ended June 30, 2022. The decrease of approximately $0.4 million was primarily the result of approximately $0.2 million in decreased personnel expenses and approximately $0.2 million in decreased marketing expenses. Non-cash, stock-based compensation expense, which was $0.4 million in the period, compared to $0.7 million for the same period in the prior year.
R&D expenses were approximately $0.1 million and $0.2 million for the three months ended June 30, 2023, and June 30, 2022, respectively.
Gain from equity investments for the three months ended June 30, 2023, was approximately $4,000 compared to a $0.1 million loss for the three months ended June 30, 2022. The gain is due to an increase in revenue from the equity method JV’s and a decrease in expenses associated with one-time startup costs.
Adjusted EBITDA (see Adjusted EBITDA Table) for the three months ended June 30, 2023, was $(1.6) million, compared to adjusted EBITDA of $(2.2) million for the quarter ended June 30, 2022.
As of June 30, 2023, the Company had approximately $0.1 million in cash. Subsequent to the end of the quarter, the company completed a public offering generating $4.5 million in gross proceeds.
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 14, 2023, 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/y0l43MO6o9Z, or via the Investor Relations section of the Company’s website at https://www.invobio.com/investors. A teleconference replay of the call will be available through August 21, 2023, at (877) 344-7529 or (412) 317-0088, confirmation #8863258. A webcast replay will be available in the Investor Relations section of the Company’s website at https://www.invobio.com/investors for 90 days.
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.
INVO BIOSCIENCE, INC.
CONSOLIDATED BALANCE SHEETS
| June 30, 2023 | December 31, 2022 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 112,485 | $ | 90,135 | ||||
| Accounts receivable | 74,908 | 77,149 | ||||||
| Inventory | 280,018 | 263,602 | ||||||
| Prepaid expenses and other current assets | 374,714 | 190,201 | ||||||
| Total current assets | 842,125 | 621,087 | ||||||
| Property and equipment, net | 659,442 | 436,729 | ||||||
| Lease right of use | 4,004,962 | 1,808,034 | ||||||
| Investment in joint ventures | 1,132,365 | 1,237,865 | ||||||
| Total assets | $ | 6,638,894 | $ | 4,103,715 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 1,844,629 | $ | 1,349,038 | ||||
| Accrued compensation | 1,202,420 | 946,262 | ||||||
| Notes payable, net | 263,888 | 100,000 | ||||||
| Notes payable - related parties, net | 770,000 | 662,644 | ||||||
| Deferred revenue | 161,187 | 119,876 | ||||||
| Lease liability, current portion | 227,026 | 231,604 | ||||||
| Total current liabilities | 4,469,150 | 3,409,424 | ||||||
| Lease liability, net of current portion | 3,873,289 | 1,669,954 | ||||||
| Deferred tax liability | 1,949 | 1,949 | ||||||
| Total liabilities | 8,344,388 | 5,081,327 | ||||||
| Stockholders’ equity (deficit) | ||||||||
| Common Stock, $.0001 par value; 6,250,000 shares authorized; 826,886 and 608,611 issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | 83 | 61 | ||||||
| Additional paid-in capital | 52,869,346 | 48,805,860 | ||||||
| Accumulated deficit | (54,574,923 | ) | (49,783,533 | ) | ||||
| Total stockholders’ equity (deficit) | (1,705,494 | ) | (977,612 | ) | ||||
| - | ||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | 6,638,894 | $ | 4,103,715 | ||||
INVO BIOSCIENCE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue: | ||||||||||||||||
| Clinic revenue | $ | 254,364 | $ | 112,358 | $ | 551,745 | $ | 218,206 | ||||||||
| Product revenue | 61,538 | 33,777 | 112,182 | 90,527 | ||||||||||||
| Total revenue | 315,902 | 146,135 | 663,927 | 308,733 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Cost of revenue | 235,714 | 170,526 | 466,719 | 367,207 | ||||||||||||
| Selling, general and administrative | 2,042,609 | 2,444,586 | 4,373,443 | 4,991,714 | ||||||||||||
| Research and development | 83,850 | 190,761 | 157,370 | 294,941 | ||||||||||||
| Depreciation and amortization | 19,705 | 22,083 | 38,792 | 37,630 | ||||||||||||
| Total operating expenses | 2,381,879 | 2,827,956 | 5,036,324 | 5,691,492 | ||||||||||||
| Loss from operations | (2,065,977 | ) | (2,681,821 | ) | (4,372,397 | ) | (5,382,759 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Gain (loss) from equity method joint ventures | 3,788 | (117,978 | ) | (23,947 | ) | (189,095 | ) | |||||||||
| Interest income | - | 48 | - | 273 | ||||||||||||
| Interest expense | (175,192 | ) | (102 | ) | (391,781 | ) | (1,558 | ) | ||||||||
| Foreign currency exchange loss | (265 | ) | (888 | ) | (400 | ) | (1,914 | ) | ||||||||
| Total other income (expense) | (171,669 | ) | (118,920 | ) | (416,128 | ) | (192,294 | ) | ||||||||
| Loss before income taxes | (2,237,646 | ) | (2,800,741 | ) | (4,788,525 | ) | (5,575,053 | ) | ||||||||
| Income taxes | 2,865 | 800 | 2,865 | 800 | ||||||||||||
| Net loss | $ | (2,240,511 | ) | (2,801,541 | ) | (4,791,390 | ) | (5,575,853 | ) | |||||||
| Net loss per common share: | ||||||||||||||||
| Basic | $ | (3.06 | ) | $ | (4.62 | ) | $ | (7.07 | ) | $ | (9.23 | ) | ||||
| Diluted | $ | (3.06 | ) | $ | (4.62 | ) | $ | (7.07 | ) | $ | (9.23 | ) | ||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 732,255 | 605,760 | 677,684 | 604,123 | ||||||||||||
| Diluted | 732,255 | 605,760 | 677,684 | 604,123 | ||||||||||||
ADJUSTED EBITDA
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30 | June 30 | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net loss | $ | (2,240,511 | ) | $ | (2,801,541 | ) | $ | (4,791,390 | ) | $ | (5,575,853 | ) | ||||
| Interest expense | 52,474 | 54 | 90,683 | 1,285 | ||||||||||||
| Foreign currency exchange loss | 265 | 888 | 400 | 1,914 | ||||||||||||
| Stock-based compensation | 99,338 | 135,102 | 295,741 | 445,314 | ||||||||||||
| Stock option expense | 326,916 | 432,796 | 652,750 | 861,284 | ||||||||||||
| Non-cash compensation for services | 45,000 | 30,000 | 90,000 | 30,000 | ||||||||||||
| Amortization of debt discount | 122,718 | - | 301,098 | - | ||||||||||||
| Depreciation and amortization | 19,705 | 22,082 | 38,792 | 37,629 | ||||||||||||
| Adjusted EBITDA | $ | (1,574,095 | ) | $ | (2,180,619 | ) | $ | (3,321,926 | ) | $ | (4,198,427 | ) | ||||
| (Gain) Loss from equity method JV | $ | (3,788 | ) | $ | 117,978 | $ | 23,947 | $ | 189,095 | |||||||
| Loss from consolidated JV (less depreciation) | 61,486 | 132,827 | 82,354 | 311,524 | ||||||||||||
| Adjusted EBITDA for INVO corporate | $ | (1,516,397 | ) | $ | (1,929,814 | ) | $ | (3,215,625 | ) | $ | (3,697,808 | ) | ||||
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 June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Statements of operations: | ||||||||||||||||
| Operating revenue | $ | 712,433 | $ | 290,517 | $ | 1,359,141 | $ | 440,947 | ||||||||
| Operating expenses | (798,670 | ) | (679,940 | ) | (1,529,317 | ) | (1,175,379 | ) | ||||||||
| Net income | $ | (86,237 | ) | $ | (389,423 | ) | $ | (170,176 | ) | $ | (734,432 | ) | ||||
| June 30, 2023 | December 31, 2022 | |||||||
| Balance sheets: | ||||||||
| Current assets | $ | 597,453 | $ | 447,422 | ||||
| Long-term assets | 1,873,382 | 2,000,841 | ||||||
| Current liabilities | (921,886 | ) | (735,767 | ) | ||||
| Long-term liabilities | (996,892 | ) | (1,042,167 | ) | ||||
| Net assets | $ | 552,057 | $ | 670,329 |