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 December 31, 2019.
During the first fiscal quarter of fiscal 2020,
BASi saw significant year-over-year growth. In addition, BASi has
recently completed several initiatives intended to promote
additional growth in future periods. These initiatives included:
(1) Completing further integration, investments and hiring in the
Gaithersburg, Maryland, facility (Gaithersburg operations were
purchased from Smithers Avanza in May of 2019), (2) Closing on the
purchase of Pre-Clinical Research Services, Inc.’s (“PCRS”)
business, and related real property located in Ft Collins,
Colorado, in December of 2019, (3) Completing the construction of
the Evansville facility expansion and initiating hiring to support
growth (the Evansville facility expansion is expected to generate
attributable revenue by the end of Q-2 2020), (4) Further investing
and hiring to support the development of the Discovery business in
the St. Louis facility, (5) Completing the introduction of a new
name (Inotiv), branding and website for the services business, (6)
Closing on additional financing to support our acquisitions and
future capital plans and (7) implementing a new accounting software
system throughout the company.
Robert Leasure, Jr., BASi’s President and Chief
Executive Officer commented, “Our financial results for the first
three months of fiscal 2020 were impacted by growth initiatives and
planned third-party non-recurring expenses, along with internal
hiring and training. Our new orders remain strong, as demonstrated
by the growth in customer deposits on the balance sheet. We
continue to enhance and grow our capacity, scientific capabilities,
client service offerings and our unwavering focus on the client
experience.”
“We remain confident in what we have
accomplished and our business strategy. We believe many of our
recent investments in people, facilities, equipment and software
should allow us to enhance our service offerings and sustain growth
into 2020,” Mr. Leasure concluded.
First Quarter Results
For the quarter, revenue amounted to
$12,918,000, a 49.7% increase from $8,625,000 in the first 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 acquisition and the
inclusion of one month of sales attributable to the PCRS
acquisition.
Net loss for the first quarter of fiscal 2020
amounted to $1,426,000, or $0.13 per diluted share, compared to a
net loss of $85,000, or $0.01 per diluted share for the first
quarter of fiscal 2019.
Net loss and earnings per share were impacted
by, nonrecurring, one-time costs related to acquisitions and
integration, refinancing, costs related to launching our new
brand, recruiting costs for leadership and scientific staff
additions and consulting fees related to the adoption of two
accounting standards. Even though the Company experienced overall
service sales increases, there was a decrease in bioanalytical
sales during the quarter versus the same quarter last year.
Third-party, non-recurring charges of approximately $700,000 were
expensed in the first quarter of fiscal 2020, as were all internal
hiring, acquisition, integration, and training related costs.
We do not expect a majority of these costs to continue or
materially impact future fiscal quarters.
Additionally, in the first quarter of fiscal
2019, we benefited from the initial reduction in our United Kingdom
lease liability for a portion of the reserve for lease related
liabilities that were no longer within the statute of
limitations. This benefit of $491 compares to a benefit of
only $45 in the first quarter of fiscal 2020.
Adjusted EBITDA for the first quarter of fiscal
2020 amounted to $496,000, compared to Adjusted EBITDA for the
first quarter of fiscal 2019 of $436,000.
First Quarter Segment
Results
Service revenue for the first quarter of fiscal
2020 increased 57.0% to $12,142,000 compared to $7,735,000 for the
same period in fiscal 2019. Nonclinical services revenues increased
$4,665,000 in the first quarter of fiscal 2020. Included in the
growth was $2,695,000 and $381,000 of revenue related to the
acquisitions of the Smithers Avanza and PCRS businesses,
respectively. Bioanalytical analysis revenues decreased by
$432,000, while other laboratory revenues increased $174,000 in the
first quarter of fiscal 2020.
Cost of Service revenue as a percentage of
Service revenue increased slightly to 73.4% during the first
quarter of fiscal 2020 from 72.4% in the comparable period in
fiscal 2019. The principal cause of this increase was the mix of
service revenues favoring nonclinical revenues versus bioanalytical
service revenues.
Sales in our Products segment decreased in the
first quarter of fiscal 2020 from $890,000 to $776,000 when
compared to the same period in the prior fiscal year.
Cost of Products revenue as a percentage of
Products revenue in the first quarter of fiscal 2020 decreased to
68.2% from 68.4% in the comparable prior-year period, mainly due to
the mix of products sold.
Cash Provided by Operating
Activities
Cash provided by operating activities was
$1,454,000 for the first quarter of fiscal 2020 compared to
$907,000 for the first quarter of fiscal 2019.
As of December 31, 2019, the Company had
$511,000 in cash and cash equivalents, a $725,000 balance on its
general line of credit, a $4,247,000 balance on its construction
line of credit, a $1,236,000 balance on its equipment line of
credit, a $948,000 balance on its 2019 capex line of credit and a
$435,000 balance on its 2020 capex line of credit. During the first
three months of fiscal 2020, cash from operations, cash on hand and
financing activities funded capital expenditures of approximately
$2,165,000 for the expansion of our Evansville facility and related
equipment, investment in our Gaithersburg capacity, upgrades in
software, as well as laboratory equipment and computer
equipment.
Acquisition
On December 1, 2019, the Company acquired from
Pre-Clinical Research Services, Inc. (“Seller”) substantially all
of the assets used by the Seller in connection with the performance
of surgical and medical device in-vivo mammalian CRO services. The
Company also purchased a building and real estate, in Fort Collins
used in the Seller’s current business and real estate which will be
available for future expansions in Ft. Collins. The consideration
for the acquisition consisted of $1,500,000 in cash, subject to
certain adjustments, 240,000 of the Company’s common shares and an
unsecured promissory note in the initial principal amount of
$800,000. The consideration for the related building and real
estate amounted to $2,500,000. The Company funded the cash portion
of the purchase price for the acquisition with cash on hand and the
net proceeds from the refinancing of its credit arrangements with
First Internet Bank.
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 months ended
December 31, 2019 and 2018. 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.
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, and various 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 OPERATIONSAND COMPREHENSIVE INCOME
(LOSS)(In thousands, except per share amounts)
|
Three Months Ended December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
|
(Unaudited) |
|
|
|
|
|
Service revenue |
$ |
12,142 |
|
$ |
7,735 |
|
|
Product revenue |
|
776 |
|
|
890 |
|
|
Total revenue |
|
12,918 |
|
|
8,625 |
|
|
|
|
|
|
Cost of service revenue |
|
8,911 |
|
|
5,597 |
|
|
Cost of product revenue |
|
530 |
|
|
609 |
|
|
Total cost of revenue |
|
9,441 |
|
|
6,206 |
|
|
|
|
|
|
Gross profit |
|
3,477 |
|
|
2,419 |
|
|
Operating expenses: |
|
|
|
Selling |
|
882 |
|
|
653 |
|
|
Research and development |
|
162 |
|
|
124 |
|
|
General and administrative |
|
3,453 |
|
|
1,601 |
|
|
Total operating expenses |
|
4,497 |
|
|
2,378 |
|
|
|
|
|
|
Operating (loss) income |
|
(1,020 |
) |
|
41 |
|
|
|
|
|
|
Interest expense |
|
(311 |
) |
|
(126 |
) |
|
Other income |
|
2 |
|
|
1 |
|
|
Net loss before income
taxes |
|
(1,329 |
) |
|
(84 |
) |
|
|
|
|
|
Income taxes expense |
|
97 |
|
|
1 |
|
|
|
|
|
|
Net loss |
$ |
(1,426 |
) |
$ |
(85 |
) |
|
|
|
|
|
|
|
|
|
Comprehensive loss |
$ |
(1,426 |
) |
$ |
(85 |
) |
|
|
|
|
|
|
|
|
|
Basic net loss per share |
$ |
(0.13 |
) |
$ |
(0.01 |
) |
|
Diluted net loss per
share |
$ |
(0.13 |
) |
$ |
(0.01 |
) |
|
|
|
|
|
Weighted common shares
outstanding: |
|
|
|
Basic |
|
10,669 |
|
|
10,245 |
|
|
Diluted |
|
10,669 |
|
|
10,245 |
|
|
BIOANALYTICAL SYSTEMS,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands, except share amounts)
|
December 31,2019 |
September 30,2019 |
|
Assets |
(Unaudited) |
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
$ |
511 |
|
|
$ |
606 |
|
Accounts receivable |
|
|
|
|
Trade, net of allowance of $425 at December 31, 2019 and $1,759 at
September 30, 2019 |
|
9,498 |
|
|
|
7,178 |
|
Unbilled revenues and other |
|
1,848 |
|
|
|
2,342 |
|
Inventories, net |
|
1,034 |
|
|
|
1,095 |
|
Prepaid expenses |
|
1,990 |
|
|
|
1,200 |
|
Total current assets |
|
14,881 |
|
|
|
12,421 |
|
Property and
equipment, net |
|
27,037 |
|
|
|
22,828 |
|
Operating lease
right-of use-assets, net |
|
4,739 |
|
|
|
— |
|
Finance lease
right-of use assets, net |
|
4,641 |
|
|
|
— |
|
Goodwill |
|
6,619 |
|
|
|
3,617 |
|
Other intangible
assets, net |
|
2,781 |
|
|
|
2,874 |
|
Lease rent
receivable |
|
133 |
|
|
|
130 |
|
Deferred tax
asset |
|
— |
|
|
|
31 |
|
Other assets |
|
87 |
|
|
|
79 |
|
|
|
|
|
|
Total assets |
$ |
60,918 |
|
|
$ |
41,980 |
|
|
|
|
|
|
Liabilities and shareholders’ equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable |
$ |
5,592 |
|
|
$ |
4,941 |
|
Restructuring liability |
|
304 |
|
|
|
349 |
|
Accrued expenses |
|
3,403 |
|
|
|
2,620 |
|
Customer advances |
|
9,578 |
|
|
|
6,726 |
|
Revolving line of credit |
|
725 |
|
|
|
1,063 |
|
Capex line of credit |
|
1,383 |
|
|
|
655 |
|
Current portion on long-term operating lease |
|
864 |
|
|
|
— |
|
Current portion of long-term finance lease |
|
4,616 |
|
|
|
18 |
|
Current portion of long-term debt |
|
1,153 |
|
|
|
1,109 |
|
Total current liabilities |
|
27,618 |
|
|
|
17,481 |
|
Long-term
operating leases, net |
|
4,044 |
|
|
|
— |
|
Long-term finance
leases, net |
|
17 |
|
|
|
18 |
|
Long-term debt,
less current portion, net of debt issuance costs |
|
18,804 |
|
|
|
13,771 |
|
Deferred tax
liabilities |
|
65 |
|
|
|
— |
|
Total liabilities |
|
50,548 |
|
|
|
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
December 31, 2019 and at September 30, 2019 |
|
35 |
|
|
|
35 |
|
Common shares, no par value: |
|
|
|
|
Authorized 19,000,000 shares; 10,805,057 issued and outstanding at
December 31, 2019 and 10,510,694 at September 30, 2019 |
|
2,663 |
|
|
|
2,589 |
|
Additional paid‑in capital |
|
26,323 |
|
|
|
25,183 |
|
Accumulated deficit |
|
(18,651 |
) |
|
(17,097) |
|
Total shareholders’ equity |
|
10,370 |
|
|
|
10,710 |
|
Total liabilities and shareholders’ equity |
$ |
60,918 |
|
|
$ |
41,980 |
|
|
|
|
|
|
BIOANALYTICAL SYSTEMS, INC. |
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS |
(In thousands) (Unaudited) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
December 31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
GAAP Net loss |
$ |
(1,426 |
) |
|
$ |
(85 |
) |
|
|
|
|
|
|
|
|
Add back: Interest expense |
|
311 |
|
|
|
126 |
|
|
|
Income taxes (benefit) expense |
|
97 |
|
|
|
1 |
|
|
|
Depreciation and amortization |
|
749 |
|
|
|
703 |
|
|
|
Stock option expense |
|
97 |
|
|
|
25 |
|
|
|
United Kingdom lease liability reversal benefit |
|
(45 |
) |
|
|
(491 |
) |
|
|
Acquisition and integration costs |
|
270 |
|
|
|
130 |
|
|
|
Other non-recurring, third party costs |
|
443 |
|
|
|
27 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
496 |
|
|
$ |
436 |
|
|
|
|
|
|
|
|
|
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:Jill C.
BlumhoffChief Financial OfficerPhone:
765.497.8381jblumhoff@inotivco.com
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