INVO Fertility, Inc. Q2 FY2023 earnings call

• Completed the acquisition of the Wisconsin fertility Institute, which had over $5 million in revenue and approximately $1.7 million in net income last year. This acquisition doubles the existing run rate of clinic operations and improves overall profitability.
• Existing INVO Centers in Birmingham, Atlanta, and Monterrey recorded $712,000 in revenue in Q2, a 145% increase year-over-year, and are operating close to breakeven. The Tampa INVO Center is expected to open in 60-90 days.
• Achieved FDA 510(k) clearance for a 5-day incubation period on INVOcell, validating improved patient outcomes and allowing elimination of related costs.
• Implemented corporate expense reductions, improving the operating picture and bringing the company closer to adjusted EBITDA profit in 2024.
• Transitioned from a medical device company to a healthcare services provider focused on the fertility market, aiming to capture more revenue and profitability from fertility treatments.

Revenue for the second quarter totaled approximately $316,000. Approximately 81% ($254,000) of Q2 revenue consisted of consolidated service revenue from the Atlanta INVO Center, while the remaining 19% was product revenue from INVOcell sales to IVF clinics. Revenue from all three clinics (Birmingham, Atlanta, Monterrey) was $712,000 in the quarter, compared to $291,000 in the prior year period, representing an 81% increase. Product revenue increased by 82% during the second quarter. Operating expenses decreased to approximately $2.4 million from approximately $2.8 million in the prior year period. The adjusted EBITDA loss, net of non-cash charges, improved to approximately $1.6 million compared to an adjusted EBITDA loss of approximately $2.2 million in the prior year.

• Target to achieve operating cash flow breakeven in 2024.
• Expect further improvements in EBITDA with the inclusion of the Wisconsin acquisition and ongoing expense reductions.
• Tampa INVO Center is expected to contribute to growth.
• Anticipate incremental growth from existing centers and potential additional acquisitions to accelerate scale.

• Forward-looking statements involve risks, uncertainties, and contingencies beyond the company's control that may cause actual results to differ materially from anticipated ones. Factors include those set forth in the company’s filings at www.sec.gov.

Q: Expand on what sort of assumptions go into your breakeven 2024 target?

A: Key assumptions include incremental growth from the Wisconsin acquisition, the opening and operation of the Tampa INVO Center, continued growth from existing centers, and cost reductions (30% of corporate costs reduced). We are not factoring in additional acquisitions but see them as a potential accelerator.