INVO Fertility, Inc. Q2 FY2022 earnings call

Existing INVOCenters

• Existing INVOCenters making solid progress; patient trends up ~20% QoQ. Anticipate higher Q3 revenue due to completed batches and more patients in batches. Marketing programs in Atlanta, Birmingham, and Mexico working; plan to expand marketing efforts.

New INVOCenters

• Tampa lease signed, build-out underway; California center on track to open end of year; Kansas City early progress.

Acquisition Potential

• Signed non-binding LOI to acquire a profitable established fertility practice; working to consummate transaction; acquisition strategy adds scale and revenue quickly.

Clinical and Distribution Activities

• Completed data collection for 510(k) submission to enhance clinical label; distribution efforts showing increased interest in INVOcell adoption; international activities ongoing in China, Malaysia, India, Pakistan, Europe with various progress on registrations, commercialization, and center setups.

Revenue for the second quarter totaled approximately $146,000 compared to approximately $208,000 in the prior year period. Net loss was $2.8 million compared to $1.8 million in the prior year, excluding non-cash charges related to equity-based compensation. Adjusted EBITDA loss was $2.2 million compared to $1.3 million last year, with an apples-to-apple adjusted EBITDA loss of $1.9 million in the current year vs. $1.3 million last year. Revenue consisted of product revenue from INVOcell sales and consolidated revenue from the Atlanta INVO Center. The Atlanta INVO Center generated $112,000 in revenue for the quarter. Joint ventures had combined revenue of $166,000 and a combined net loss of $249,000 in the second quarter.

Forward-Looking

• Expect higher Q3 revenue due to completed batches and more patients. Acquisition strategy to accelerate scale and profitability; contemplated first acquisition could shorten pathway to profitability by at least 12 months. Patient trends and marketing efforts indicate continued growth in activity leading to higher revenues in future quarters.

Risks

• Forward-looking statements involve risks and uncertainties, including factors beyond control that may cause actual results to differ. Acquisition diligence and closing carry risks; market acceptance of INVOcell and new centers is uncertain; regulatory approvals for international activities may face delays.

Q: What's the status of the 510(k) submission for the five-day clinical label enhancement?

A: We've completed collecting data, calculated statistics, validated everything, and the final submission is imminent, likely within the coming days.

Q: What's the cost of INVOcell when sold to other clinics?

A: We're selling it more attractively priced than Ferring's previous price (~$500 per unit).

Q: Can you elaborate on the acquisition strategy?

A: We signed an LOI to acquire a profitable established fertility practice; acquisition adds revenue and earnings, and we're exploring additional acquisition opportunities which complement our build strategy.

Q: How does the acquisition strategy affect long-term growth?

A: Acquisitions can shorten the pathway to profitability, add scale quickly, and layer onto existing growth from new centers, potentially significantly increasing top-line and EBITDA faster than organic growth alone.

Q: What's the impact of insider buying on confidence?

A: Insider buying reflects confidence in the business; management and board see attractive investment opportunities and believe in the business's potential despite some delays.