Bioanalytical Systems, Inc. (NASDAQ:BASI) (“BASi”, the
“Company”, “We” or “Our”), doing business as Inotiv, a
leading provider of nonclinical and analytical contract research
services, today announced financial results for the three months
ended March 31, 2020.
During the second quarter of fiscal 2020, BASi
saw significant growth compared to the second quarter of fiscal
2019. Growth initiatives including acquisitions of the
Gaithersburg, Maryland, operations of Smithers Avanza in May 2019
and Pre-Clinical Research Services, Inc’s. (“PCRS”) business
in Ft. Collins, Colorado, in December 2019, as well as expansion of
the Evansville facility and investment in the St. Louis facility,
contributed to the increase in service revenue and gross margins.
Over the last six months, we have improved our infrastructure and
platform to support future growth and additional potential
acquisitions. We believe these internal infrastucture initiatives,
investments, acquisitions and recruiting efforts, combined with our
existing team and the continuing development of our sales and
marketing team, have led and will continue to lead to growth in
revenue and the ability to improve the service offerings to our
clients. We further believe that the actions and investments since
July 2018 form a foundation upon which we can build.
Robert Leasure, Jr., BASi's President and Chief
Executive Officer commented, "Our financial results for the first
six months of fiscal 2020 were positively impacted by
increases in sales and margins from the internal growth the Company
has been experiencing in the Service business and
acquisitions. We saw an increase in overhead and corporate
expenses related to our acquisitions in May 2019 and December 2019
and expenses associated with enhancements to support internal
growth and our infrastructure development. During the COVID-19
pandemic, we have continued our operations to support our clients
in their efforts toward drug discovery and development, including
working with multiple clients, at our multiple sites, on a variety
of therapy or vaccine candidates for COVID-19."
"We plan to continue working on the integration
of our combined businesses and added services. We plan to further
develop our infrastructure, project management, sales, marketing,
client services and branding. We will continue to evaluate
additional internal and external growth opportunities and new
services to provide to existing clients." Mr. Leasure
concluded.
Second Quarter Results
For the quarter, revenue amounted to
$16,012,000, a 71.4% increase from $9,344,000 in the second quarter
of fiscal 2019. Revenue growth was driven by incremental sales
associated with organic growth of the service business, as well as
sales attributable to the Smithers Avanza and PCRS acquisitions.
Net loss for the second quarter of fiscal 2020
amounted to $588,000, or $0.05 per diluted share, compared to a net
loss of $569,000, or $0.06 per diluted share for the second quarter
of fiscal 2019.
Net loss and earnings per share were impacted by
increased costs associated with Smithers Avanza and PCRS operations
and non-recurring expenses of over $300,000 relating to recruiting
costs for leadership and scientific staff additions and consulting
fees related to the adoption of two accounting standards, and other
one-time costs for rebranding to Inotiv, new website launch and
acquisition and integration expense. We do not expect the
non-recurring expenses to continue or materially impact future
fiscal quarters.
Adjusted EBITDA for the second quarter of fiscal
2020 amounted to $1,109,000, compared to Adjusted EBITDA for the
second quarter of fiscal 2019 of $267,000. Adjusted EBITDA
for the six months ended March 31, 2020, amounted to $1,588,000
compared to Adjusted EBITDA for the six months ended March 31,
2019, of $703,000.
Second Quarter Segment
Results
Service revenue for the second quarter of fiscal
2020 increased 86.8% to $15,191,000 compared to $8,131,000 for the
same period in fiscal 2019, including $3,154,000 or 38% from growth
within existing sites and additional revenues attributable to the
Smithers Avanza acquisition and the PCRS acquisition of $2,357,000
and $1,549,000, respectively. Nonclinical services revenues
increased $6,467,000 in the three months ended March 31, 2020,
compared to the same fiscal quarter last year. Bioanalytical
analysis revenues increased by $504,000 in the three months ended
March 31, 2020, compared to the same fiscal quarter last year.
Cost of Service revenue as a percentage of
Service revenue decreased to 67.2% during the three months ended
March 31, 2020, from 73.2% in the three months ended March 31,
2019, due to an increase in sales for higher margin services and
additional revenue to cover fixed costs.
Sales in our Products segment decreased 32.2% in
the three months ended March 31, 2020, to $821,000 from $1,213,000
in the three months ended March 31, 2019. The decrease stems
from lower sales of Culex in-vivo sampling systems and Culex
related maintenance and services revenues, which decrease was
partially offset by an increase in sales for analytical
instruments. The decrease is primarily due to a reduction of orders
from universities as they closed and reduced purchasing due to the
Coronavirus (COVID-19) pandemic and our inability to go on site to
install and service client instruments.
Cost of Products revenue as a percentage of
Products revenue in the three months ended March 31, 2020,
increased to 74.6% from 68.2% in the three months ended March 31,
2019, due to reduced revenue to cover fixed costs.
First Six Months’ Results
For the first six months of fiscal 2020, revenue
amounted to $28,930,000, a 61.0% increase from $17,969,000 for the
first six months of fiscal 2019. Revenue growth was mainly driven
by $3,979,000 from internal growth from existing operations
and attributable to the acquisitions of Smithers Avanza and PCRS of
$5,052,000 and $1,930,000, respectively.
Net loss for the first six months of fiscal 2020
amounts to $2,014,000, or $0.19 per diluted share, compared to the
net loss of $65,000, or $0.06 per diluted share for the first six
months of fiscal 2019.
Net loss and earnings per share were impacted by
increased costs associated with the acquisitions of Smithers Avanza
and PCRS and expenses associated with enhancements to support
future growth and infrastructure development. Included in the
increased costs were non-recurring expenses of over $1,000,000
relating to recruiting costs for leadership and scientific staff
additions, consulting fees related to the adoption of two
accounting standards, and other one-time costs for rebranding to
Inotiv, our new website launch and acquisition and integration
expense.
Adjusted EBITDA for the first six months of
fiscal 2020 were $1,588,000 compared to $703,000 for the first six
months of fiscal 2019.
First Six Months’ Segment
Results
For the first six months of fiscal 2020, our
Service revenue increased 72.3% to $27,333,000 compared to
$15,866,000 for the first six months of fiscal 2019. Nonclinical
services revenues increased due to an overall increase in the
number of studies from the prior year and additional revenue
attributable to the Smithers Avanza acquisition and the PCRS
acquisition during the first half of fiscal 2020.
Cost of Service revenue as a percentage of
Service revenue decreased to 69.9% during the first six months of
fiscal 2020 from 72.8% in the first six months of fiscal 2019 due
to improved margins from increasing sales with improved margins
after covering fixed cost.
Sales in our Product segment decreased 24.0% in
the first six months of fiscal 2020 to $1,597,000 from $2,103,000
when compared to the first six months of fiscal 2019. The
decrease stems primarily from decreased sales of our Culex
automated in vivo sampling instruments and Other instruments,
partly offset by increased sales of our Analytical instruments in
the first six months of fiscal 2020. The decrease is primarily due
to a reduction of orders from universities as they closed and
reduced purchasing due to the Coronavirus (COVID-19) pandemic and
our inability to go on site to install and service client
instruments.
Cost of Product revenue as a percentage of
Product revenue in the first six months of fiscal 2020 increased to
71.5% from 68.5% in the six months of fiscal 2019. This
increase in the first six months of fiscal 2020 is mainly due to
the increase in material cost and adjustment of selling price for
in vivo products to stay competitive with the market and some
change in product mix.
Cash Provided by Operating
Activities
Cash provided by operating activities was
$213,000 for the six months ended March 31, 2020, compared to
$911,000 for the six month ended March 31, 2019.
As of March 31, 2020, the Company had $198,000
in cash and cash equivalents, a $2,614,000 balance on its general
line of credit, a $4,247,000 balance on its construction line of
credit and a $1,237,000 balance on its equipment line of
credit. Borrowings on our $3,000,000 Capex Line of credit
increased by $601,000 to a balance of $1,036,000, while the recent
amendment to our amended and restated credit agreement eliminated
the revolving nature of our other Capex line in favor of a term
loan in the principal amount of $948,000, equal to the amount of
borrowings outstanding on the line as of the amendment. During the
first six months of fiscal 2020, cash from operations, cash on hand
and financing activities funded capital expenditures of
approximately $3,351,000 for the expansion of our Evansville
facility and related equipment, investment in our Gaithersburg
capacity, upgrades in software, as well as laboratory and computer
equipment.
Non-GAAP to GAAP
Reconciliation
This press release contains financial measures
that are not calculated in accordance with generally accepted
accounting principles in the United States (GAAP). The non-GAAP
financial measures are Adjusted EBITDA for the three and six months
ended March 31, 2020 and 2019. Adjusted EBITDA as reported herein
refers to a financial performance measure that excludes from net
income (loss) income statement line items interest expense and
income taxes (benefit) expense, as well as non-cash charges for
depreciation and amortization, stock option (benefit) expense,
United Kingdom lease liability reversal benefit, non-recurring
acquisition and integration costs and other non-recurring third
party costs, such as recruiting costs, consulting fees related to
the adoption of two accounting standards, and expenses for
rebranding and new website launch.
The non-GAAP financial information should be
considered supplemental to, and not as a substitute for, or
superior to, financial measures calculated in accordance with GAAP.
Management, however, believes that Adjusted EBITDA, when used in
conjunction with the results presented in accordance with GAAP, may
provide a more complete understanding of the Company's results and
may facilitate a fuller analysis of the Company's results,
particularly in evaluating performance from one period to
another.
Management has chosen to provide this
supplemental information to investors, analysts, and other
interested parties to enable them to perform additional analyses of
our results and to illustrate our results giving effect to the
non-GAAP adjustments shown in the reconciliation. Management
strongly encourages investors to review the Company's consolidated
financial statements and publicly filed reports in their entirety
and cautions investors that the non-GAAP measures used by the
Company may differ from similar measures used by other companies,
even when similar terms are used to identify such measures.
About Bioanalytical Systems, Inc., operating as
Inotiv
BASi, operating as Inotiv, is a pharmaceutical
development company providing contract research services and
monitoring instruments to emerging pharmaceutical companies and the
world's leading drug development companies and medical research
organizations. The Company focuses on developing innovative
services supporting its clients’ discovery and development
objectives for improved decision-making and accelerated goal
attainment. BASi’s products focus on increasing efficiency,
improving data, and reducing the cost of taking new drugs to
market. Visit inotivco.com for more information about BASi,
operating as Inotiv.
This release may contain forward-looking
statements that are subject to risks and uncertainties including,
but not limited to, risks and uncertainties related to changes in
the market and demand for our products and services, the
development, marketing and sales of products and services, changes
in technology, industry and regulatory standards, the timing of
acquisitions and the successful closing, integration and business
and financial impact thereof, the impact of COVID-19 on the
economy, demand for our services and products and our operations,
including the measures taken by governmental authorities to address
it, which may precipitate or exacerbate other risks and/or
uncertainties and various other market and operating risks,
including those detailed in the Company's filings with the U.S.
Securities and Exchange Commission.
(SEE BELOW FOR CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS)
BIOANALYTICAL SYSTEMS,
INC.CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(In thousands, except per share
amounts) (Unaudited)
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
Service revenue |
$ |
15,191 |
|
$ |
8,131 |
|
|
$ |
27,333 |
|
$ |
15,866 |
|
Product revenue |
|
821 |
|
|
1,213 |
|
|
|
1,597 |
|
|
2,103 |
|
Total
revenue |
|
16,012 |
|
|
9,344 |
|
|
|
28,930 |
|
|
17,969 |
|
|
|
|
|
|
|
Cost of service revenue |
|
10,207 |
|
|
5,951 |
|
|
|
19,118 |
|
|
11,548 |
|
Cost of product revenue |
|
612 |
|
|
832 |
|
|
|
1,142 |
|
|
1,441 |
|
Total cost of
revenue |
|
10,819 |
|
|
6,783 |
|
|
|
20,260 |
|
|
12,989 |
|
|
|
|
|
|
|
Gross profit |
|
5,193 |
|
|
2,561 |
|
|
|
8,670 |
|
|
4,980 |
|
Operating expenses: |
|
|
|
|
|
Selling |
|
1,098 |
|
|
655 |
|
|
|
1,980 |
|
|
1,308 |
|
Research and
development |
|
162 |
|
|
145 |
|
|
|
324 |
|
|
269 |
|
General and
administrative |
|
4,128 |
|
|
2,210 |
|
|
|
7,581 |
|
|
3,811 |
|
Total operating
expenses |
|
5,388 |
|
|
3,010 |
|
|
|
9,885 |
|
|
5,388 |
|
|
|
|
|
|
|
Operating loss |
|
(195 |
) |
|
(449 |
) |
|
|
(1,215 |
) |
|
(408 |
) |
|
|
|
|
|
|
Interest expense |
|
(392 |
) |
|
(122 |
) |
|
|
(703 |
) |
|
(248 |
) |
Other income |
|
10 |
|
|
3 |
|
|
|
12 |
|
|
4 |
|
Net loss before income
taxes |
|
(577 |
) |
|
(568 |
) |
|
|
(1,906 |
) |
|
(652 |
) |
|
|
|
|
|
|
Income tax expense |
|
11 |
|
|
1 |
|
|
|
108 |
|
|
2 |
|
|
|
|
|
|
|
Net loss |
$ |
(588 |
) |
$ |
(569 |
) |
|
$ |
(2,014 |
) |
$ |
(654 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic net loss per share |
$ |
(0.05 |
) |
$ |
(0.06 |
) |
|
$ |
(0.19 |
) |
$ |
(0.06 |
) |
Diluted net loss per
share |
$ |
(0.05 |
) |
$ |
(0.06 |
) |
|
$ |
(0.19 |
) |
$ |
(0.06 |
) |
|
|
|
|
|
|
Weighted common shares
outstanding: |
|
|
|
|
|
Basic |
|
10,843 |
|
|
10,290 |
|
|
|
10,756 |
|
|
10,268 |
|
Diluted |
|
10,843 |
|
|
10,290 |
|
|
|
10,756 |
|
|
10,268 |
|
|
|
|
|
|
|
BIOANALYTICAL SYSTEMS,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands, except share amounts)
|
March 31,2020 |
September 30, 2019 |
|
|
(Unaudited) |
|
|
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash
equivalents |
$ |
198 |
|
|
$ |
606 |
|
|
Accounts
receivable |
|
|
|
|
Trade, net of allowance of $493 at March 31, 2020 and $1,759
at September 30, 2019 |
|
9,109 |
|
|
|
7,178 |
|
|
Unbilled revenues and other |
|
3,091 |
|
|
|
2,342 |
|
|
Inventories, net |
|
1,204 |
|
|
|
1,095 |
|
|
Prepaid expenses |
|
1,901 |
|
|
|
1,200 |
|
|
Total current assets |
|
15,503 |
|
|
|
12,421 |
|
|
|
|
|
|
|
Property and equipment,
net |
|
27,731 |
|
|
|
22,828 |
|
|
Operating lease right-of
use-assets, net |
|
4,507 |
|
|
|
— |
|
|
Finance lease right-to use
assets, net |
|
4,668 |
|
|
|
— |
|
|
Goodwill |
|
4,368 |
|
|
|
3,617 |
|
|
Other intangible assets,
net |
|
4,606 |
|
|
|
2,874 |
|
|
Lease rent receivable |
|
132 |
|
|
|
130 |
|
|
Deferred tax asset |
|
— |
|
|
|
31 |
|
|
Other assets |
|
153 |
|
|
|
79 |
|
|
|
|
|
|
|
|
|
Total assets |
$ |
61,668 |
|
|
$ |
41,980 |
|
|
|
|
|
|
|
Liabilities and
shareholders’ equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
$ |
4,603 |
|
|
$ |
4,941 |
|
|
Restructuring liability |
|
225 |
|
|
|
349 |
|
|
Accrued expenses |
|
2,316 |
|
|
|
2,620 |
|
|
Customer advances |
|
10,869 |
|
|
|
6,726 |
|
|
Revolving line of credit |
|
2,614 |
|
|
|
1,063 |
|
|
Capex line of credit |
|
1,036 |
|
|
|
655 |
|
|
Current portion on long-term operating lease |
|
859 |
|
|
|
— |
|
|
Current portion of long-term finance lease |
|
4,602 |
|
|
|
18 |
|
|
Current portion of long-term debt |
|
1,923 |
|
|
|
1,109 |
|
|
Total current liabilities |
|
29,047 |
|
|
|
17,481 |
|
|
Long-term operating leases,
net |
|
3,896 |
|
|
|
— |
|
|
Long-term finance leases,
net |
|
60 |
|
|
|
18 |
|
|
Long-term debt, less current
portion, net of debt issuance costs |
|
18,650 |
|
|
|
13,771 |
|
|
Deferred tax liabilities |
|
90 |
|
|
|
— |
|
|
Total liabilities |
|
51,743 |
|
|
|
31,270 |
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
Preferred
shares, authorized 1,000,000 shares, no par value: |
|
|
|
|
35 Series A shares at $1,000 stated value issued and outstanding at
March 31, 2020 and at September 30, 2019 |
|
35 |
|
|
|
35 |
|
|
Common shares,
no par value: |
|
|
|
|
Authorized 19,000,000 shares; 10,864,281 issued and outstanding at
March 31, 2020 and 10,510,694 at September 30, 2019 |
|
2,678 |
|
|
|
2,589 |
|
|
Additional paid‑in
capital |
|
26,451 |
|
|
|
25,183 |
|
|
Accumulated deficit |
|
(19,239 |
) |
|
|
(17,097 |
) |
|
Total shareholders’ equity |
|
9,925 |
|
|
|
10,710 |
|
|
Total liabilities and shareholders’ equity |
$ |
61,668 |
|
|
$ |
41,980 |
|
|
|
|
|
|
|
BIOANALYTICAL SYSTEMS, INC. |
|
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS |
|
(In thousands) (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
March 31 |
|
March 31 |
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
GAAP Net loss |
$ |
(588 |
) |
|
$ |
(569 |
) |
|
$ |
(2,014 |
) |
|
$ |
(654 |
) |
|
|
|
|
|
|
|
|
|
|
Add back: Interest expense |
|
392 |
|
|
|
122 |
|
|
|
703 |
|
|
|
248 |
|
|
Income taxes (benefit) expense |
|
11 |
|
|
|
1 |
|
|
|
108 |
|
|
|
2 |
|
|
Depreciation and amortization |
|
924 |
|
|
|
621 |
|
|
|
1,673 |
|
|
|
1,324 |
|
|
Stock option expense |
|
107 |
|
|
|
99 |
|
|
|
204 |
|
|
|
124 |
|
|
United Kingdom lease liability reversal benefit |
|
(67 |
) |
|
|
(65 |
) |
|
|
(129 |
) |
|
|
(556 |
) |
|
Acquisition and integration costs |
|
69 |
|
|
|
18 |
|
|
|
339 |
|
|
|
148 |
|
|
Other non-recurring, third party costs |
|
261 |
|
|
|
40 |
|
|
|
704 |
|
|
|
67 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
1,109 |
|
|
$ |
267 |
|
|
$ |
1,588 |
|
|
$ |
703 |
|
|
|
|
Adjusted
EBITDA - Earnings before interest expense, income taxes
(benefit) expense, depreciation and amortization, stock option
expense, United Kingdom lease liability reversal benefit,
non-recurring acquisition and integration costs and other
non-recurring third party costs. |
|
|
|
FOR MORE INFORMATION: Company
Contact:Beth A. TaylorChief Financial OfficerPhone:
765.497.8381btaylor@inotivco.com
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