Enzo Biochem(US:ENZ)2023-03-19 16:00Revenue Performance - Revenues for the three months ended January 31, 2023, were $16,338,000, a decrease of 52% compared to $34,046,000 for the same period in 2022[146]. - Clinical services revenues for the 2023 period were $20.0 million, a decrease of $23.4 million or 54% compared to $43.4 million in the 2022 period[169]. - Revenues from COVID-19 testing decreased approximately $21.3 million, representing 6% of Clinical revenues in the 2023 period compared to 52% in the 2022 period[169]. - Product revenues were $14.6 million in the 2023 period, a decrease of approximately $2.5 million or 15% from $17.2 million in the 2022 period[172]. Operating Loss and Expenses - Operating loss for the three months ended January 31, 2023, was $12,979,000, compared to an operating loss of $1,923,000 for the same period in 2022[146]. - Total operating costs and expenses for the three months ended January 31, 2023, were $29,317,000, down from $35,969,000 in the prior year, reflecting a decrease of 18%[146]. - Selling, general and administrative expenses decreased to $23.3 million in the 2023 period, a decrease of $2.2 million or 9% from $25.5 million in the 2022 period[176]. - Legal and related expenses were $2.1 million during the 2023 period, a decrease of $2.0 million or 49% compared to $4.1 million in the 2022 period[177]. Research and Development - Research and development expenses increased by 75% to $1,431,000 for the three months ended January 31, 2023, compared to $820,000 in the same period in 2022[146]. - Research and development expenses increased to $2.4 million in the 2023 period, an increase of $0.8 million or 55% from $1.6 million in the 2022 period[175]. Cash Flow and Liquidity - The Company incurred a net loss of $21.96 million and used $14.89 million in cash for operating activities during the six months ended January 31, 2023[181]. - Cash and cash equivalents decreased to $5.1 million as of January 31, 2023, down from $21.6 million at July 31, 2022, indicating a significant liquidity challenge[183]. - Working capital decreased by $25.6 million to $4.29 million as of January 31, 2023, primarily due to cash usage for operations and capital expenditures[184]. - Net cash used in operating activities increased to $14.9 million in 2023 from $6.7 million in 2022, reflecting a negative variance of approximately $8.3 million[185]. - The Company signed a commitment letter for a revolving line of credit of up to $8 million on March 10, 2023, to address liquidity needs[182]. Foreign Exchange and Currency Risks - Foreign exchange gains for the three months ended January 31, 2023, were $1,472,000, compared to a loss of $450,000 in the same period in 2022[146]. - The foreign exchange gain recognized by the Life Sciences Products segment during the 2023 period was $1.4 million, a favorable variance of $1.9 million compared to ($0.5) million in the 2022 period[164]. - A hypothetical 10% increase in the value of the U.S. dollar could decrease net revenues by $0.8 million and net income by $0.1 million annually[215]. - The Company does not currently engage in hedging or market risk management tools to mitigate foreign currency exchange rate risk[214]. Asset Management - The Company entered into an Asset Purchase Agreement in March 2023 for the sale of assets and assignment of certain liabilities of the Clinical Labs division[142]. - An Asset Purchase Agreement was entered into on March 16, 2023, to sell substantially all operating assets of the Clinical Labs division for approximately $146 million in cash[192]. - The Company reviews the recoverability of long-lived assets annually and determined no impairment as of January 31, 2023[213]. Accounts Receivable - As of January 31, 2023, approximately 57% of the Company's net accounts receivable related to its Clinical Laboratory Services business[206]. - As of January 31, 2023, total net accounts receivable amounted to $10,866,000, a decrease from $11,516,000 as of July 31, 2022[207]. - Clinical Labs segment accounts receivable totaled $6,199,000, with third-party payers contributing 41% and patient self-pay accounting for 39%[207]. - Approximately 16% of Clinical Labs receivables are from one payer other than Medicare as of January 31, 2023, down from 23% for two payers as of July 31, 2022[207]. - The Company assesses the collectability of receivables, which is linked to the quality of billing processes and patient information accuracy[207]. Intellectual Property - The Company holds approximately 472 issued patents worldwide and over 64 pending patent applications, indicating a strong intellectual property portfolio[141]. Future Outlook - The Company expects that COVID-19 testing revenues will remain less significant in the future due to increased vaccination rates and the decline in severity of variants[135].