Bioanalytical Systems, Inc. (NASDAQ:BASI)
(“BASi”, the “Company”, “We” or “Our”) today
announced financial results for the second quarter and first six
months of fiscal 2018.
Second Quarter Results
For the three months ended March 31, 2018,
revenue amounted to $5,944,000 a 6% decrease from $6,359,000 in the
second quarter of fiscal 2017.
Service revenue for the second quarter of fiscal
2018 increased 1% to $5,030,000 compared to $4,962,000 for the same
period in fiscal 2017. Preclinical services revenue increased due
to the mix and number of studies compared to the prior fiscal year
period. Other laboratory services revenues were negatively
impacted by lower discovery services, which impact was partially
offset by higher pharmaceutical analysis revenues in the second
quarter of fiscal 2018 versus the comparable period in fiscal 2017.
In addition, archive revenue decreased in the second quarter of
fiscal 2018, as compared to the second quarter of fiscal
2017. Bioanalytical analysis revenues remained relatively
even when compared to the prior year period.
Sales in our Products segment decreased 35% in
the second quarter of fiscal 2018 from $1,397,000 to $914,000 when
compared to the same period in the prior fiscal year. The
majority of the decrease stems from a decline in sales of our Culex
automated in vivo sampling systems. This factor was partially
offset by an increase in our analytical instruments
revenues.
Gross profit decreased to $1,740,000, or 29% of
revenue, in the second quarter of fiscal 2018, compared to
$2,043,000, or 32% of revenue, during the comparable fiscal 2017
period. The principal causes for the decrease were a decline in
product revenues and a less favorable revenue mix.
Operating expenses for the second quarter of
fiscal 2018 increased 10% to $1,630,000 compared to $1,488,000
during the second quarter of fiscal 2017. The principal reasons for
the increase were higher consulting costs related to new product
development as well as employee search fees and increased stock
option expense attributable to the grants of options to our
directors and certain employees in October 2017.
Operating income for the second quarter of
fiscal 2018 amounted to $110,000 compared to operating income of
$555,000 for the second quarter of fiscal 2017. The decrease was
primarily due to lower revenue and higher operating expenses.
Net income for the second quarter of fiscal 2018
amounted to $55,000, or $0.01 per diluted share, compared to a net
income of $417,000, or $0.05 per diluted share for the second
quarter of fiscal 2017.
Adjusted EBITDA for the second quarter of fiscal
2018, amounted to $524,000, compared to Adjusted EBITDA for the
second quarter of fiscal 2017 of $937,000.
First Half Results
For the six months ended March 31, 2018, revenue
amounted to $11,321,000 a 10% decrease from $12,533,000 for the six
months ended March 31, 2017.
Service revenue decreased 7% in the six months
ended March 31, 2018 to $9,555,000 from $10,226,000 in the first
six months of fiscal 2017. Preclinical services revenues decreased
due an unfavorable mix of studies performed year over year.
Bioanalytical analysis revenues decreased due to fewer samples
received and analyzed in the first six months of fiscal 2018 in
addition to an unfavorable mix favoring method development and
validation projects during this time period, which generate lower
revenue but involve more dedicated resources. Other
laboratory services revenues were negatively impacted by lower
discovery services and archive revenues, which were slightly offset
by higher pharmaceutical analysis revenues in the first six months
of fiscal 2018 versus the comparable period in fiscal
2017.
Sales in our Products segment decreased 23% in
the six months ended March 31, 2018, from $2,307,000 to $1,766,000
when compared to the same period in the prior fiscal year.
The majority of the decrease stems from lower sales of our Culex
automated in vivo sampling systems, offset slightly by an increase
in sales of our analytical instruments, over the same period in the
prior fiscal year.
Gross profit in the six months ended March 31,
2018 decreased to $3,321,000, or 29% of revenue, compared to
$3,902,000, or 31% of revenue, for the same period of the prior
fiscal year. The decline was driven by a decrease in revenues which
led to a lower absorption of fixed costs and an unfavorable change
in sales mix.
Operating expenses for the six months ended
March 31, 2018 decreased slightly to $3,200,000 from $3,253,000 for
the comparable fiscal 2017 period. The principal reason for the
decrease was the accrual for the severance for our former Chief
Executive Officer, amounting to approximately $200,000, recorded in
the first six months of fiscal 2017. This item was offset in
part by increased consulting costs for new product development,
employee search fees and higher stock option expense attributable
to the grants of options to our directors and certain employees in
October 2017.
Operating income for the first six months of
fiscal 2018 amounted to $121,000 compared to an operating income of
$649,000 for the first six months of fiscal 2017. The decrease was
primarily due to lower revenue partially offset by the decrease in
operating expenses.
Net income amounted to $81,000, or $0.01 per
diluted share, for the first six months of fiscal 2018 compared to
$434,000, or $0.05 per diluted share, for the first six months of
fiscal 2017.
Adjusted EBITDA was $969,000 for the first six
months of fiscal 2018, compared to Adjusted EBITDA of $1,417,000
for the first six months of fiscal 2017.
Cash Provided by Operating
Activities
Cash provided by operating activities was
$842,000 for the first six months of fiscal 2018 compared to
$561,000 for the first six months of fiscal 2017.
Accounts payable decreased by $214,000 and
inventory increased by $87,000, respectively. These items
were offset in part by an increase in accrued expenses and customer
advances of $81,000 and $127,000, respectively, and a decrease in
prepaid expenses and other assets of $72,000.
The Company had $672,000 in cash and cash
equivalents and $2,000,000 available on its line of credit as of
March 31, 2018. During the first six months of fiscal
2018, cash from operations funded capital expenditures for
laboratory equipment and building improvements as well as computer
equipment and software of approximately $433,000.
Remarks
Jill Blumhoff, BASi’s Vice President of Finance
and Chief Financial Officer commented, “We are very pleased to
report that the growth initiatives underway for fiscal 2018 that we
discussed at the end of fiscal 2017 and the first quarter of this
year are beginning to demonstrate results. The revenue reported for
our second quarter was our highest quarterly achievement since the
second quarter one year ago.”
Ms. Blumhoff continued, “We are beginning to
deliver on our commitments. For example, the recently announced
technology alliance with Phlebotics, Inc. is the latest of BASi
partnerships, including those with Joanneum Research and PalmSens,
to expand our products and services offerings that improve data and
increase the speed of bringing new drugs to market. With the
retirement of James Bourdage, Ph.D., Michael Baim, Ph.D., has
assumed the role of Vice President of Bioanalytical Operations.
Dr. Michael Baim is an energetic and passionate leader who
brings to BASi over thirty years of experience in the
pharmaceutical and lab management industries. He is well-versed in
analytical methodology and project design and has a proven track
record of delivering significant and sustainable profitable growth
across many different business segments. We plan to continue making
progress in enhancing the scientific expertise of our staff.
Lastly, we continue taking the necessary steps to make the
expansion of our preclinical services facilities a reality.
"We believe that cash on-hand and, if needed,
borrowings under our untapped revolving credit facility, should
provide our team with the liquidity and flexibility to fund our
operating initiatives in order to deliver consistent profitable
growth. We are encouraged once again by our results thanks to
the outstanding work from our dedicated employees. With the
continued support from our board members and shareholders, we will
continue to execute on our initiatives,” Ms. Blumhoff
concluded.
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 first six
months of fiscal 2018 and 2017. Adjusted EBITDA as reported herein
refers to a financial performance measure that excludes income
statement line items interest expense and income taxes (benefit)
expense, as well as non-cash charges for depreciation and
amortization and stock option (benefit) expense.
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
results and to illustrate the 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.
BASi is a pharmaceutical development company
providing contract research services and monitoring instruments to
the world's leading drug development companies and medical research
organizations. The Company focuses on developing innovative
services and products that increase efficiency and reduce the cost
of taking a new drug to market. Visit www.BASinc.com for more
information about BASi.
This release contains forward-looking statements
that are subject to risks and uncertainties including, but not
limited to, risks and uncertainties related to our financial
condition, changes in the market and demand for our products and
services, the development, marketing and sales of products and
services, changes in technology, industry standards and regulatory
standards, and various market and operating risks detailed in the
Company's filings with the Securities and Exchange
Commission. BASi assumes no obligation to update any
forward-looking statement except as may be required by law. Actual
results may vary, and could differ materially, from those
anticipated, estimated, projected or expected in these
forward-looking statements for a number of reasons, including,
among others, the risk factors disclosed in the Company's most
recent Annual Report, as filed, with the Securities and Exchange
Commission.
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FOR MORE INFORMATION: |
Company Contact: |
|
|
Jill
Blumhoff |
Chief Financial Officer & |
|
|
Vice
President of Finance |
|
|
Phone: 765.497.8381 |
|
|
jblumhoff@BASinc.com |
|
|
|
|
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(SEE BELOW FOR CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS)
BIOANALYTICAL SYSTEMS,
INC.CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONSAND COMPREHENSIVE
INCOME(In thousands, except per share
amounts)(Unaudited)
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
Service revenue |
$ |
5,030 |
|
|
$ |
4,962 |
|
|
$ |
9,555 |
|
|
$ |
10,226 |
|
Product revenue |
|
914 |
|
|
|
1,397 |
|
|
|
1,766 |
|
|
|
2,307 |
|
Total
revenue |
|
5,944 |
|
|
|
6,359 |
|
|
|
11,321 |
|
|
|
12,533 |
|
|
|
|
|
|
|
Cost of service
revenue |
|
3,662 |
|
|
|
3,546 |
|
|
|
6,935 |
|
|
|
7,296 |
|
Cost of product
revenue |
|
542 |
|
|
|
770 |
|
|
|
1,065 |
|
|
|
1,335 |
|
Total
cost of revenue |
|
4,204 |
|
|
|
4,316 |
|
|
|
8,000 |
|
|
|
8,631 |
|
|
|
|
|
|
|
Gross profit |
|
1,740 |
|
|
|
2,043 |
|
|
|
3,321 |
|
|
|
3,902 |
|
Operating
expenses: |
|
|
|
|
|
Selling |
|
303 |
|
|
|
242 |
|
|
|
597 |
|
|
|
578 |
|
Research
and development
|
|
149 |
|
|
|
110 |
|
|
|
288 |
|
|
|
214 |
|
General
and administrative |
|
1,178 |
|
|
|
1,136 |
|
|
|
2,315 |
|
|
|
2,461 |
|
Total
operating expenses |
|
1,630 |
|
|
|
1,488 |
|
|
|
3,200 |
|
|
|
3,253 |
|
|
|
|
|
|
|
Operating income |
|
110 |
|
|
|
555 |
|
|
|
121 |
|
|
|
649 |
|
|
|
|
|
|
|
Interest
expense |
|
(48 |
) |
|
|
(134 |
) |
|
|
(100 |
) |
|
|
(210 |
) |
Other
income |
|
4 |
|
|
|
1 |
|
|
|
4 |
|
|
|
2 |
|
Net income before
income taxes |
|
66 |
|
|
|
422 |
|
|
|
25 |
|
|
|
441 |
|
|
|
|
|
|
|
Income taxes (benefit)
expense |
|
11 |
|
|
|
5 |
|
|
|
(56 |
) |
|
|
7 |
|
|
|
|
|
|
|
Net income |
$ |
55 |
|
|
$ |
417 |
|
|
$ |
81 |
|
|
$ |
434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income: |
|
— |
|
|
|
8 |
|
|
|
— |
|
|
|
29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income |
$ |
55 |
|
|
$ |
425 |
|
|
$ |
81 |
|
|
$ |
463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss)
per share |
$ |
0.01 |
|
|
$ |
0.05 |
|
|
$ |
0.01 |
|
|
$ |
0.05 |
|
Diluted net income
(loss) per share |
$ |
0.01 |
|
|
$ |
0.05 |
|
|
$ |
0.01 |
|
|
$ |
0.05 |
|
|
|
|
|
|
|
Weighted common shares
outstanding: |
|
|
|
|
|
Basic |
|
8,245 |
|
|
|
8,148 |
|
|
|
8,245 |
|
|
|
8,128 |
|
Diluted |
|
8,789 |
|
|
|
8,710 |
|
|
|
8,793 |
|
|
|
8,707 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BIOANALYTICAL SYSTEMS,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands, except share amounts)
|
March 31, 2018 |
|
September 30, 2017 |
|
(Unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
672 |
|
|
$ |
434 |
Accounts
receivable |
|
|
|
Trade,
net of allowance of $2,019 at March 31, 2018 and $2,404 at
September 30, 2017 |
|
2,726 |
|
|
|
2,530 |
Unbilled
revenues and other |
|
410 |
|
|
|
615 |
Inventories, net |
|
1,000 |
|
|
|
913 |
Prepaid
expenses |
|
742 |
|
|
|
814 |
Total
current assets |
|
5,550 |
|
|
|
5,306 |
|
|
|
|
Property and equipment,
net |
|
14,625 |
|
|
|
14,965 |
Lease rent
receivable |
|
102 |
|
|
|
87 |
Deferred tax asset |
|
67 |
|
|
|
- |
Goodwill |
|
38 |
|
|
|
38 |
Other assets |
|
18 |
|
|
|
21 |
Total
assets |
$ |
20,400 |
|
|
$ |
20,417 |
|
|
|
|
Liabilities and
shareholders’ equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
1,838 |
|
|
$ |
2,052 |
Restructuring liability |
|
1,117 |
|
|
|
1,117 |
Accrued
expenses |
|
1,283 |
|
|
|
1,202 |
Customer
advances |
|
3,107 |
|
|
|
2,980 |
Income
taxes payable |
|
26 |
|
|
|
20 |
Current
portion of capital lease obligation |
|
132 |
|
|
|
128 |
Current
portion of long-term debt |
|
228 |
|
|
|
224 |
Total
current liabilities |
|
7,731 |
|
|
|
7,723 |
Capital lease
obligation, less current portion |
|
2 |
|
|
|
69 |
Long-term debt, less
current portion, net of debt issuance costs |
|
4,049 |
|
|
|
4,158 |
Total
liabilities |
|
11,782 |
|
|
|
11,950 |
|
|
|
|
Shareholders’
equity: |
|
|
|
Preferred shares,
authorized 1,000,000 shares, no par value: |
|
|
|
1,035
Series A shares at $1,000 stated value issued and outstanding at
March 31, 2018 and at September 30, 2017 |
|
1,035 |
|
|
|
1,035 |
Common shares, no par
value: |
|
|
|
Authorized 19,000,000 shares; 8,245,320 issued and outstanding at
March 31, 2018 and 8,243,896 at September 30, 2017 |
|
2,023 |
|
|
|
2,023 |
Additional paid‑in
capital |
|
21,516 |
|
|
|
21,446 |
Accumulated
deficit |
|
(15,956 |
) |
|
(16,037) |
Total
shareholders’ equity |
|
8,618 |
|
|
|
8,467 |
Total
liabilities and shareholders’ equity |
$ |
20,400 |
|
|
$ |
20,417 |
|
|
|
|
|
|
|
|
|
|
|
|
BIOANALYTICAL SYSTEMS, INC. |
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS |
(In thousands) (Unaudited) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
March 31, |
|
March 31, |
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
GAAP Net income |
$ |
55 |
|
$ |
417 |
|
|
$ |
81 |
|
|
$ |
434 |
|
|
|
|
|
|
|
|
Add back: Interest expense |
|
48 |
|
|
134 |
|
|
|
100 |
|
|
|
210 |
Income taxes (benefit) expense |
|
11 |
|
|
5 |
|
|
|
(56 |
) |
|
|
7 |
Depreciation and amortization |
|
375 |
|
|
384 |
|
|
|
775 |
|
|
|
759 |
Stock option (benefit) expense |
|
35 |
|
|
(3 |
) |
|
|
69 |
|
|
|
7 |
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
$ |
524 |
|
$ |
937 |
|
|
$ |
969 |
|
|
$ |
1,417 |
|
|
|
|
|
|
|
|
Adjusted
EBITDA - Earnings before interest expense, income taxes
(benefit) expense, depreciation and amortization and stock option
(benefit) expense. |
|
|
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