Enzo Biochem(US:ENZ)2022-06-08 16:00Financial Performance - Revenues for the three months ended April 30, 2022, were $26.2 million, a decrease of $6.6 million or 20% compared to $32.8 million in the same period of 2021[140]. - The company reported a net loss of $4.9 million for the three months ended April 30, 2022, compared to a net income of $2.0 million in the same period of 2021, representing a decrease of $6.9 million[140]. - Product revenues decreased to $7.6 million in 2022 from $7.8 million in 2021, a decline of 2%[149]. - Clinical services revenues fell to $62.0 million in 2022, down 12% from $70.2 million in 2021, with COVID-19 testing representing 49% of clinical revenues in 2022[161]. Operating Costs and Expenses - The total operating costs and expenses for the three months ended April 30, 2022, were $29.4 million, a decrease of $1.4 million or 4% from $30.7 million in the same period of 2021[140]. - The cost of clinical services decreased by 7% to $35.0 million in 2022, while the gross profit margin was approximately 44% compared to 47% in 2021[165]. - Selling, general and administrative expenses rose to $37.0 million in 2022, an increase of 12% from $33.1 million in 2021[168]. - Legal and related expenses increased by 22% to $4.9 million in 2022, driven by higher legal costs associated with strategic initiatives[169]. Revenue Drivers - Clinical services revenues for the 2022 period were $18.6 million, down $6.4 million or 26% from $25.0 million in the 2021 period, with COVID-19 testing representing 43% of clinical revenues in 2022 compared to 59% in 2021[146]. - Diagnostic testing volume decreased approximately 23% period over period, contributing to the revenue decline in the 2022 period[146]. - The company anticipates that demand for COVID-19 testing will not match 2021 levels due to increased vaccination rates and the development of new therapeutics[129]. Cash Flow and Working Capital - As of April 30, 2022, the company had cash and cash equivalents of $31.1 million, down from $43.5 million at July 31, 2021, indicating a decrease of $12.4 million[174]. - Working capital decreased to $37.6 million as of April 30, 2022, from $44.5 million at July 31, 2021, a decline of $6.9 million attributed to cash usage for operations and capital expenditures[175]. - Net cash used in operating activities was approximately $7.5 million in 2022, compared to a net cash provided of $0.3 million in 2021, marking an unfavorable variance of $7.8 million due to a net loss of $9.8 million and increases in operating assets[176]. - Net cash provided by investing activities was approximately $25.6 million in 2022, contrasting with cash used of $32.9 million in 2021, as the company sold all marketable securities purchased in 2021[177]. Assets and Liabilities - The accounts receivable balance for Clinical Services was $7.775 million as of April 30, 2022, representing 66% of total net accounts receivable, an increase from $6.016 million in 2021[196]. - The contractual adjustment percentage for the three months ended April 30, 2022, was 83.3%, up from 81.2% in 2021, indicating a trend in reimbursement adjustments[189]. - A 1% change in the contractual adjustment percentage could result in a revenue change of approximately $3.5 million for the nine months ended April 30, 2022[190]. - The company had a mortgage principal balance of $4.0 million with a fixed interest rate of 5.09% per annum, requiring monthly payments of $30[179]. Research and Development - The company has a substantial portfolio of approximately 472 issued patents worldwide and over 64 pending patent applications, supporting its research and development efforts[132]. - Research and development expenses increased by 13% to $2.7 million in 2022, focusing on lab developed tests for STIs and COVID-19 detection[167]. Foreign Exchange and Impairment - The company experienced a foreign currency revaluation loss of $1.1 million in 2022, attributed to the depreciation of the Euro, British pound, and Swiss franc against the U.S. dollar[156]. - A hypothetical 10% increase in the U.S. dollar value would decrease the Company's assets by $0.3 million and net revenues by $0.9 million annually[210]. - Foreign exchange losses on intercompany balances could impact pre-tax earnings by approximately $1.9 million annually with a 10% increase in the U.S. dollar[211]. - The Company tests goodwill for impairment annually, with the option for a qualitative assessment to determine if further testing is necessary[205].