Bioanalytical Systems, Inc. (NASDAQ:BASI) (“BASi” or the
“Company”) today announced financial results for the second
quarter and first six months of fiscal 2017.
Second Quarter Results
For the three months ended March 31, 2017, revenue amounted to
$6,359,000, a 19% increase from $5,339,000 in the second quarter of
fiscal 2016.
Service revenue for the second quarter of fiscal 2017 increased
22% to $4,962,000, compared to $4,053,000 for the same period in
fiscal 2016. Preclinical services revenues led the improvement due
to an overall increase in the number of studies in the second
quarter versus the prior year period. Other laboratory services
revenues were positively impacted by higher discovery and
pharmaceutical analysis revenues in the second quarter of fiscal
2017 versus the comparable period in fiscal 2016. Also, archive
services revenue added $229,000 to other laboratory services
revenue in the second fiscal quarter of 2017. Bioanalytical
analysis revenues declined due to fewer samples received and
analyzed in the second quarter of fiscal 2017 and an unfavorable
mix favoring method development and validation projects during that
time period, which generate lower revenue but involve more
dedicated resources.
Sales in our Products segment increased 9% in the second quarter
of fiscal 2017 from $1,286,000 to $1,397,000 when compared to the
same period in the prior fiscal year. The majority of the increase
stems from higher sales of our Culex automated in vivo sampling
systems and related consumables over the same period in the prior
fiscal year.
Gross profit increased to $2,043,000, or 32% of revenue, in the
second quarter of fiscal 2017, compared to $1,316,000, or 25% of
revenue, during the comparable fiscal 2016 period. The principal
causes for the improvement were the increase in revenue, which led
to a higher absorption of the fixed costs in our business, and a
more favorable sales mix.
Operating expenses for the second quarter of fiscal 2017
decreased 6% to $1,488,000 compared to $1,578,000 during the second
quarter of fiscal 2016. This decrease is mainly due to lower
salaries and benefits from the loss of business development and
other management personnel in the second fiscal quarter of 2017
compared to the same period in fiscal 2016. These reductions were
partially offset by higher consulting services.
Operating income for the second quarter of fiscal 2017 amounted
to $555,000 compared to an operating loss of $262,000 for the
second quarter of fiscal 2016. The improvement was primarily due to
higher revenue and the improved operating margins, and to a lesser
extent, to decreased operating expenses.
Net income for the second quarter of fiscal 2017 amounted to
$417,000, or $0.05 per diluted share, compared to a net loss of
$254,000, or $0.03 per diluted share for the second quarter of
fiscal 2016.
EBITDA for the second quarter of fiscal 2017, amounted to
$937,000, compared to EBITDA of $84,000 for the second quarter of
fiscal 2016.
First Half Results
For the six months ended March 31, 2017, revenue amounted to
$12,533,000 a 22% increase from $10,234,000 in the second quarter
of fiscal 2016.
Service revenue increased 26% in the six months ended March 31,
2017 to $10,226,000 from $8,108,000 in the first six months of
fiscal 2016. The increase in preclinical services led the
improvement resulting from an overall increase in the number of
studies from the prior year period. Other laboratory services
revenues were positively impacted by higher discovery and
pharmaceutical analysis revenues in fiscal 2017 versus the
comparable period in fiscal 2016. Also, archive services revenue
added $237,000 to other laboratory services revenue in fiscal 2017.
Bioanalytical analysis revenues decreased due to fewer samples
received and analyzed in fiscal 2017 in addition to an unfavorable
mix favoring method development and validation projects during this
time period, which generate lower revenue but involve more
dedicated resources.
Sales in our Products segment increased 8% in the first six
months ended March 31, 2017, from $2,126,000 to $2,307,000 when
compared to the same period in the prior fiscal year. The majority
of the increase stems from higher sales of our Culex automated in
vivo sampling systems and related consumables over the same period
in the prior fiscal year.
Gross profit in the six months ended March 31, 2017 increased to
$3,902,000, or 31% of revenue, compared to $2,300,000, or 22% of
revenue, for the same period of the prior fiscal year. The
improvement was driven by a increase in revenues which led to a
higher absorption of fixed costs and a favorable change in sales
mix in the Products segment.
Operating expenses for the six months ended March 31, 2017
increased 5% to $3,253,000 from $3,091,000 for the comparable
fiscal 2016 period. The principal reasons for the increase were the
accrual for the severance for our former Chief Executive Officer,
amounting to approximately $200,000, as well as higher consulting
services. These items were offset in part by decreased spending for
salaries and benefits, outside services and employee search
costs.
Operating income for the first six months of fiscal 2017
amounted to $649,000 compared to an operating loss of $791,000 for
the first six months of fiscal 2016. The improvement was primarily
due to higher revenue and the improved operating margins partially
offset by increased operating expenses.
Net income amounted to $434,000, or $0.05 per diluted share, for
the first six months of fiscal 2017. Net loss amounted to $760,000,
or $0.09 per diluted share, for the first six months of fiscal
2016.
EBITDA was $1,417,000 for the first six months of fiscal 2017,
compared to a negative EBITDA of $87,000 for the first six months
of fiscal 2016.
Cash Provided by Operating Activities
Cash provided by operating activities was $561,000 for the first
six months of fiscal 2017 due in part to the improved operating
income performance during the first half of the year and lower
working capital levels. The Company had $419,000 in cash and cash
equivalents at March 31, 2017. During the first six months of
fiscal 2017, cash from operations funded higher working capital
levels and capital expenditures for building improvements and
equipment of approximately $152,000. The amount outstanding under
the Company’s line of credit was $1,419,000 at March 31, 2017
compared to $1,358,000 at September 30, 2016.
Credit Arrangements Default
During fiscal 2016 and throughout the first six months of fiscal
2017 we have operated either in default of, or under forbearance
arrangements with respect to our credit agreements with Huntington
National Bank (“Huntington Bank”). Effective January 31, 2017, we
entered into a Fifth Forbearance Agreement and Sixth Amendment to
Credit Agreement (the “Fifth Forbearance Agreement”) with
Huntington Bank. Pursuant to the Fifth Forbearance Agreement,
Huntington Bank agreed to forbear from exercising its rights and
remedies under the Company’s credit facility and from terminating
the Company’s related swap agreement with respect to the Company’s
non-compliance with applicable financial covenants under the credit
agreement and any further non-compliance with such covenants until
July 31, 2017. If we are unable to refinance our indebtedness
before the end of the forbearance period, and were Huntington Bank
to demand payment on the outstanding debt under our credit
arrangements, we would have insufficient funds to satisfy that
obligation. In such case, in addition to the ability to immediately
demand payment of the outstanding debt under our term loan and
revolving loan, Huntington Bank would have the right to exercise
its security interest, to take possession of or sell the underlying
collateral, to increase interest accruing on the debt, to refrain
from making additional advances under the revolving loan, and to
terminate our interest rate swap. We have classified the entire
term loan payable to Huntington Bank and the interest rate swap
agreement with Huntington Bank as current liabilities of the
Company.
The Company’s Board of Directors has directed management to seek
alternatives that will enable the Company to repay its indebtedness
to Huntington Bank in full upon the expiration of the forbearance
period. The following alternatives, among others, are being
evaluated: replacement financing, the potential disposition of
certain assets and the possible sale of the West Lafayette
building. Management has been reviewing details of all current
account management and marketing programs as well as all invoicing
and top-line growth initiatives.
Although the Company continues to face the near term challenge
of replacing its Huntington Bank debt, the operating performance
for the three and six months ended March 31, 2017 is encouraging.
The financial results for the three and six months ended March 31,
2017 reflect Management's initiatives aimed at growing revenue,
reducing costs and generating more cash flow. The additional
revenues for archive services and the recent reductions in
inventory and accounts payable are examples of these initiatives.
For the remainder of fiscal 2017, the entire BASi team remains
committed to the Company's core priorities and is focused on
seeking additional opportunities to increase revenue and profits.
For example, we are exploring the use of distributor and reseller
arrangements to boost sales in our products business. Additionally,
we intend to increase our investment in product research and
development. We anticipate making investments to increase our
discovery and preclinical services revenues. We have recently
welcomed the Company’s founder as a scientific advisor to the team;
and we are also looking to selectively add to our scientific and
business development staff. Lastly, the Board of Directors
continues to weigh options and timing for hiring a new Chief
Executive Officer, to fill the position vacated in November of
2016.
Remarks
Jill Blumhoff, BASi’s Vice President of Finance and Chief
Financial Officer commented, “Our results demonstrate another very
good quarter for BASi. We achieved significant profitability
improvement year over year primarily due to our improved top line
performance and focus on cost controls. We continue to experience
strong demand for our preclinical services and steady improvement
in our discovery and pharmaceutical analysis revenues. We intend to
build on our positive momentum as we make progress on our strategic
imperatives including steps to refinance our indebtedness with
Huntington Bank, capture more cost savings where appropriate and
expand our business with existing customers and add new ones. I
would like to sincerely thank our employees for their continued
focus on and commitment to our strategy.”
Non-GAAP to GAAP Reconciliation
This press release contains financial measures that are not
calculated in accordance with generally accepted accounting
principles in the United States (GAAP). The non-GAAP financial
measures are EBITDA for the second quarter and first six months of
fiscal 2017 and 2016, respectively. EBITDA refers to a financial
performance measure that excludes certain income statement line
items, such as interest, taxes, depreciation, and amortization.
EBITDA may also exclude certain non-cash expenses, such as
stock-based compensation and the income or expense from the change
in the warrant liability.
The non-GAAP financial information should be considered
supplemental to, and not as a substitute for, or superior to,
financial measures calculated in accordance with GAAP. Management,
however, believes that EBITDA, when used in conjunction with the
results presented in accordance with GAAP, may provide a more
complete understanding of the Company's results and may facilitate
a fuller analysis of the Company's results, particularly in
evaluating performance from one period to another.
Management has chosen to provide this supplemental information
to investors, analysts, and other interested parties to enable them
to perform additional analyses of results and to illustrate the
results giving effect to the non-GAAP adjustments shown in the
reconciliation. Management strongly encourages investors to review
the Company's consolidated financial statements and publicly filed
reports in their entirety and cautions investors that the non-GAAP
measures used by the Company may differ from similar measures used
by other companies, even when similar terms are used to identify
such measures
About Bioanalytical Systems, Inc.
BASi is a pharmaceutical development company providing contract
research services and monitoring instruments to the world's leading
drug development companies and medical research organizations. The
Company focuses on developing innovative services and products that
increase efficiency and reduce the cost of taking a new drug to
market. Visit www.BASinc.com for more information about BASi.
This release contains forward-looking statements that are
subject to risks and uncertainties including, but not limited to,
risks and uncertainties related to our financial condition, changes
in the market and demand for our products and services, the
development, marketing and sales of products and services, changes
in technology, industry standards and regulatory standards, and
various market and operating risks detailed in the Company's
filings with the Securities and Exchange Commission. BASi assumes
no obligation to update any forward-looking statement. Actual
results may vary, and could differ materially, from those
anticipated, estimated, projected or expected in these
forward-looking statements for a number of reasons, including,
among others, the risk factors disclosed in the Company's most
recent Annual Report, as filed, with the Securities and Exchange
Commission.
(SEE BELOW FOR CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS)
BIOANALYTICAL SYSTEMS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONSAND COMPREHENSIVE INCOME (LOSS)(In thousands,
except per share amounts)(Unaudited)
Three Months EndedMarch 31,
Six Months EndedMarch 31,
2017 2016 2017 2016 Service revenue $
4,962 $ 4,053 $ 10,226 $ 8,108 Product revenue 1,397
1,286 2,307 2,126
Total revenue 6,359 5,339 12,533 10,234 Cost of
service revenue 3,546 3,316 7,296 6,655 Cost of product revenue
770 707 1,335
1,279 Total cost of revenue 4,316 4,023 8,631
7,934 Gross profit 2,043 1,316 3,902 2,300 Operating
expenses: Selling 242 360 578 667 Research and development 110 132
214 289 General and administrative 1,136
1,086 2,461 2,135
Total operating expenses 1,488 1,578 3,253 3,091
Operating income (loss) 555 (262 ) 649
(791 ) Interest expense (134 ) (70 ) (210 ) (136 ) Change in
fair value of warrant liability – decrease - 79 - 168 Other income
(expense) 1 - 2
1 Net income (loss) before income taxes
422 (253 ) 441 (758 ) Income taxes 5
1 7 2 Net
income (loss) $ 417 $ (254 ) $ 434 $ (760 ) Other
comprehensive income (loss): 8 (19 )
29 (99 ) Comprehensive income
(loss) $ 425 $ (273 ) $ 463 $ (859 )
Basic net income (loss) per share $ 0.05 $ (0.03 ) $
0.05 $ (0.09 ) Diluted net income (loss) per share $ 0.05 $ (0.03 )
$ 0.05 $ (0.09 ) Weighted common shares outstanding: Basic
8,148 8,108 8,128 8,107 Diluted 8,710 8,108 8,707 8,107
BIOANALYTICAL SYSTEMS,
INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands,
except share amounts)
March 31,2017
September 30,2016
Assets (Unaudited) Current assets: Cash and cash equivalents
$ 419 $ 386 Accounts receivable
Trade, net of allowance of $2,977 at March
31, 2017 and $565 at September 30, 2016
2,721 1,649 Unbilled revenues and other 498 2,886 591 Inventories,
net 1,119 404 1,453 Prepaid expenses 559 798
Total current assets 5,316 621 4,877 Property and
equipment, net 15,540 16,136 Lease rent receivable 69 51 Goodwill
38 38 Other assets 24 27 Total assets $
20,987 $ 21,129
Liabilities and
shareholders’ equity Current liabilities: Accounts payable $
1,803 $ 2,965 Restructuring liability 1,117 1,117 Accrued expenses
1,287 1,089 Customer advances 3,763 3,114 Income tax accruals 16 13
Revolving line of credit 1,419 1,358 Fair value of interest rate
swap 6 35 Current portion of capital lease obligation 125 126 Term
loan, net of debt issuance costs 3,387 3,656
Total current liabilities 12,923 13,473 Capital lease
obligation, less current portion 134 198 Total
liabilities 13,057 13,671
Shareholders’ equity: Preferred shares, authorized 1,000,000
shares, no par value:
1,035 Series A shares at $1,000 stated
value issued and outstanding at March 31, 2017 and 1,185 at
September 30, 2016
1,035 1,185 Common shares, no par value:
Authorized 19,000,000 shares; 8,188,896
issued and outstanding at March 31, 2017 and 8,107,558 at September
30, 2016
2,009 1,989 Additional paid-in capital
21,378
21,240 Accumulated deficit
(16,486
)
(16,921
)
Accumulated other comprehensive income (loss) (6 )
(35 ) Total shareholders’ equity 7,930 7,458
Total liabilities and shareholders’ equity $ 20,987
$ 21,129
BIOANALYTICAL SYSTEMS,
INC.RECONCILIATION OF GAAP TO NON-GAAP EARNINGS(In
thousands)(Unaudited)
Three Months Ended
Six Months Ended
March 31, March 31, 2017 2016 2017 2016 GAAP Net income
(loss) $ 417 $ (254 ) $ 434 $ (760 ) Add back: Interest
expense 134 70 210 136 Income taxes 5 1 7 2 Depreciation and
amortization 384 332 759 674 Decrease in fair value of warrant
liability - (79 ) - (168 ) Stock option expense (3 )
14 7 29 Adjusted EBITDA $ 937
$ 84 $ 1,417 $ (87 )
Adjusted EBITDA - Earnings before
interest, taxes, depreciation, amortization, stock option expenses,
impairment charges and the change in the fair value of warrant
liability.
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version on businesswire.com: http://www.businesswire.com/news/home/20170515005505/en/
Bioanalytical Systems, Inc.Jill Blumhoff, 765-497-8381Chief
Financial Officer &Vice President of
Financejblumhoff@BASinc.com
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