INVO Fertility, Inc. Q4 FY2022 earnings call

• Initial INVO Centers (Birmingham, Atlanta, Monterrey) made steady progress in 2022, with Tampa set to open soon.
• Announced acquisition of Wisconsin Fertility Institute, a profitable IVF clinic with ~$5.5M trailing revenue and ~$1.9M net income.
• Clinical activities: submitted updated 510(k) in Q3 2022, completed tabulating additional data for FDA questions, expect to submit final response in 2-3 weeks.
• Commercial efforts: regained US commercial rights in Feb 2022, working to get IVF clinics to adopt INVOcell technology.

Revenue for the year totaled approximately $822,000 compared to approximately $4.2 million in the prior year, which included around $3.6 million from the full and final amortization of the Ferring license. Excluding the 2021 license revenue, 2022 revenue was up approximately 40% compared to adjusted revenue of $589,000 in 2021. Product revenue was down from approximately $545,000 to approximately $207,000 in 2022, but excluding Ferring license revenue, 2021 loss would have been $10.3 million. The Atlanta INVO Center generated approximately $650,000 in revenue in 2022. Our three operating INVO Center joint-ventures (Birmingham and Monterrey) had combined revenue of $1.1 million in 2022 and a combined net loss of $494,000. Excluding the Ferring license revenue, gross margin decreased to 60% from 75% due to clinic revenue becoming a larger part of the total business.

• Expect substantial revenue increase in 2023 due to Wisconsin acquisition, Atlanta's growth, and Tampa opening.
• Intend to maintain or modestly reduce corporate expenses in 2023.
• Plan to selectively pursue additional acquisitions in 2023, targeting smaller to midsized established fertility practices.

• Forward-looking statements involve risks and uncertainties beyond the company's control, which may cause actual results to differ from projections. Factors include those in SEC filings.

Q: Would it be reasonable to expect an increase in revenue range of five to six times the current income due to the recent acquisition?

A: Atlanta is growing, Wisconsin acquisition adds ~$5.5M in trailing revenue, so not exactly five to six times but has meaningful impact.

Q: Are there other IVF clinics being considered for acquisition?

A: Having good discussions with potential targets, expect to selectively do additional acquisitions this year with a large universe of potential clinics in target size range.

Q: How is INVOcell integrated into acquired clinics?

A: Aim to integrate INVOcell as an additional treatment option without disrupting existing business, expecting 15%-25% or more additional patient flow by integrating INVOcell into practices.

Q: Leveraging acquisition strategy to gain foothold in new markets?

A: Think it's an interesting concept, especially in large underserved markets where acquired practices and new INVO Centers could coexist.

Q: Clarity on Wisconsin IVF clinic and acquisition targets?

A: Wisconsin clinic has existing services, still a large universe of independent owner-operated IVF clinics targeted for acquisition, with active discussions and plans to expand the pipeline.