INVO Fertility, Inc. Q3 FY2022 earnings call

• Progress at INVO Centers: Three operating centers in Birmingham, Atlanta, and Monterrey made progress; Atlanta's revenue increased, and clinics are becoming more cash flow self-supportive. Delays in opening Tampa and Bay Area clinics into the New Year, but planning and build-out underway.
• Distribution side: Regained U.S. commercialization rights in February, year-to-date product sales building, selling directly to U.S. IVF clinics.
• Acquisition efforts: Actively working to close first acquisition, which is a well-established profitable clinic; LOI executed for funding, non-dilutive capital; additional acquisition opportunities expected.
• Clinical activities: Submitted updated 510(k) to FDA with positive data expectations.
• Financial highlights: Net loss $2.5 million for the quarter, adjusted EBITDA loss $2 million including joint venture attributable amount.

Revenue for the quarter totaled approximately $235,000, compared to approximately $219,000 in the prior year period. Revenue consisted of product revenue from INVOcell sales to IVF clinics in the U.S. and to distribution partners abroad, as well as consolidated revenue from the Atlanta INVO Center. Atlanta generated $176,000 in revenue for the quarter. The three operating INVO Center joint ventures (Atlanta consolidated, Birmingham and Monterrey using equity method) had combined revenue of $274,000 in the third quarter and a combined net loss of $60,000. Product revenue grew significantly compared to the prior year as Ferring's single-order model changed to quarterly recognition based on customer demand.

• Expect further growth in the current fourth quarter with all clinics treating highest number of patients yet.
• Pending acquisition will impact financing options until closed and audited financials are public.
• Planned new INVO Centers in Tampa and Bay Area will open later into the New Year, with potential to apply learnings from existing centers to accelerate their development.
• Working to close small private funding and update on specifics in the near future.

• Forward-looking statements involve risks and uncertainties beyond the company's control that may cause actual results to differ materially.
• Limitation on financing options currently due to pending acquisition and need to close and provide audited financials publicly on the acquisition before using shelf filing or other public offerings.

Q: Good afternoon, gentlemen. Congratulations on the progress and it’s great to hear that the INVO Centers that we put in over a year ago have started to more than pay for themselves, which is very interesting and to see that you have plans for another to complete the or to extend the rollout. Could you speak to also what’s going on internationally these days? Are you making progress there? I know you have mentioned and announced Malaysia. Can you speak specifically there? Also, are there any other places in Europe or otherwise that you think are right for development and/or where are the things?

A: Sure. Since Mike is on the call with us. I think I will pass that to Mike. I think we have some pretty exciting piece of news to share on Malaysia, in fact. Mike? [Mike Campbell responds about Malaysia's first INVOcell baby, progress in China, Indonesia, Europe, etc.] Q: Switching gears to the acquisition portion of the commercialization process and I apologize because I was running a bit late, but if you haven’t talked about it, but can you speak to sort of the market dynamics like you did in the last call in regards to the 465 or so IVF clinics. Speak to that and the scope and the sort of targets that way you think it’s realistic and the other opportunities that might be in hand? What is the nature of those discussions in addition to the one that you have confirmed through the LOI that you are in the throes of tucking them in very quickly this profitable entity? What does the rest of the market look like? What are these -- where are you at with these other discussions?

A: Sure. Well, as we mentioned last time, our focus is on smaller to mid-sized clinics with single owner operators or maybe two owner-operator type clinics. Of course, we put this first one under LOI that we are working to close. But we have had, I would say, Mike and the team have had some discussions with a couple of others and these are not just simply casual discussions, I would say, there’s been a fair amount of back and forth with a couple and even talking in specific terms. So we do believe that -- this is what we keep saying, we believe there will be other opportunities. We are not necessarily exactly sure how many, but we do believe there could be other interested parties to do a similar type transaction, and again, we are certainly having detailed discussions with a couple.