INVO Fertility, Inc. Q4 FY2021 earnings call

• INVO Center Progress: Opened three new INVO Centers in Birmingham, Alabama; Atlanta, Georgia; and Monterrey, Mexico in the latter part of 2021, all now operational. - Market Goals: Set a goal of 20 INVO centers over the next three years, with each center aiming for 600 annualized treatment cycles, which would equate to approximately $4.5 million in annual revenue and $1.5 million in operating profit per center. - Market Selection: Taking a data - centric approach to select new markets, with the Northern California center in the build process and Tampa planning underway. - Marketing: Launched physician referral programs (e.g., in Atlanta, targeted 300 high - potential OB - GYNs and saw positive referral trends) and consumer engagement efforts via social media, advertising, and media outreach. - Distribution Business: Selling INVOcell technology to existing IVF clinics, with progress in the U.S. market after resuming direct control, and international efforts in Spain, Malaysia, Pakistan, etc., with initiatives like mobile INVO Centers in Pakistan.

Revenue for the year totaled $4.2 million, compared to $1 million in the prior - year period. Product revenue increased from $323,000 in 2020 to $545,000 in 2021. The company had three operating INVO Center joint ventures. The Georgia JV generated $44,000 in revenue from September through December 2021, with operating expenses of approximately $0.6 million. The Alabama and Mexico JVs generated $152,000 in revenue in 2021 with a net loss of $670,000. License revenue in 2021 included approximately $2.9 million scheduled for future recognition due to the termination of the distribution agreement with Ferring.

• Aim to have 20 INVO centers over the next three years. - Each INVO Center is targeted to reach 600 annualized treatment cycles in three years, resulting in approximately $4.5 million in annual revenue and $1.5 million in operating profit per center. - Evaluating ways to accelerate the plan and drive down startup costs, and considering collaboration with existing infrastructure to potentially expand and reduce costs faster.

• Supply chain logistic challenges that can impact the timeline of opening new INVO Centers. - Market expansion may be impeded by various factors such as comprehensive insurance in some areas, health systems owning both OB - GYN networks and fertility clinics. - Collaboration with partners may face delays or setbacks, e.g., issues with the India partner due to COVID - 19 and slow progress in some international markets.

Q: John Heerdink asked about the market potential, revenue opportunity, and clinic revenue components.

A: Steven Shum and Michael Campbell discussed that the market has a large under - served patient population with potential for significant growth. The IVF market in the U.S. has an existing revenue of around $5 billion, and there is potential for expansion. Clinics have various revenue components beyond just treatment cycles, including diagnostics and other services like IUI cycles.

Q: Lawrence Fidel asked about international clinics, accounting for clinics, and the five - day trial.

A: Steven Shum mentioned that the India partner deal was terminated due to COVID - 19 and delays. Andrea Goren explained the accounting methods for clinics, with some being consolidated and others using the equity method. Steven Shum stated that the five - day trial has been a lengthy process due to data collection and scrubbing to meet FDA requirements, but is nearing completion for submission.

Q: Scott Proctor asked about revenue opportunity on device sales and clinic performance.

A: Steven Shum said device transfer pricing varies by center but is slightly better than non - INVO center pricing. He noted that Birmingham's performance is in line, while Atlanta and Mexico are a couple of months behind initially due to learning and slower marketing implementation, but align with the plan when month - by - month is adjusted.