WEST LAFAYETTE, Ind., Dec. 20, 2018 (GLOBE NEWSWIRE) — Bioanalytical Systems, Inc. (NASDAQ:BASI) (“BASi”, the “Company”, “We” or “Our”) today announced financial results for the three and twelve months ended September 30, 2018.
Over the last five months, we acquired the business of Seventh Wave Laboratories, LLC, commenced the expansion of our facilities in Evansville, Indiana, and obtained funding to support these initiatives in order to support future growth and enhance our scientific capabilities, client service offerings and client experience.
Jill Blumhoff, BASi’s Vice President of Finance and Chief Financial Officer commented, “We are proud to report revenue growth during the fourth and final quarter of fiscal 2018 as compared to fiscal 2017, and even more proud of the foundation we have been building for future growth. Our earnings in fiscal 2018 were impacted by over $550,000 in one-time costs for acquisition and integration activities as well as retirement and recruiting expenses; however, we believe these investments will positively impact our future.”
Ms. Blumhoff continued, “In fiscal 2018, we made improvements to our facilities, strategically invested in new laboratory equipment, added critical leadership positions and invested in new product development. We also completed plans and funding for the 2019 Evansville expansion. In addition to our expansion plans, we plan to further develop and integrate our scientific service offerings. We also expect to invest in sales and marketing resources. We are encouraged by the traction of all of these growth initiatives, further setting the foundation for enhancing the client experience and growth in the future.”
“We remain encouraged by these results and recent events, which would not be possible without the consistently outstanding work from our dedicated team” Ms. Blumhoff concluded.
Fourth Quarter Results
For the quarter, revenue amounted to $8,986,000, a 53% increase from $5,873,000 in the fourth quarter of fiscal 2017. Revenue growth was mainly driven by the incremental sales associated with the Seventh Wave acquisition plus increased sales in both the Services and Products segments.
Net loss for the fourth quarter of fiscal 2018 amounted to $200,000, or $0.02 per diluted share, compared to net income of $229,000, or $0.03 per diluted share for the fourth quarter of fiscal 2017. One-time expenses related to the Seventh Wave acquisition and integration in the fourth quarter of fiscal 2018 amounted to approximately $345,000.
Net income and earnings per share were also impacted by lower archive revenues, higher new product development expenses and higher stock option expense attributable to the grants of options to our directors and certain employees in October 2017.
Adjusted EBITDA for the fourth quarter of fiscal 2018, amounted to $1,029,000, compared to Adjusted EBITDA for the fourth quarter of fiscal 2017 of $672,000.
Due to recent financing activities, and to support 2019 growth plans, the Company had $773,000 in cash, $3,500,000 available on its general line of credit, $4,445,000 available on its construction line of credit and $1,429,250 available on an equipment line of credit as of September 30, 2018.
Fourth Quarter Segment Results
Service revenue for the fourth quarter of fiscal 2018 increased 60% to $8,019,000 compared to $5,002,000 for the same period in fiscal 2017. Revenues from the Seventh Wave acquisition added $2,982,000 in the fourth quarter of fiscal 2018. Also, Preclinical services revenues increased $260,000 due to a more favorable mix of studies in the fourth quarter of fiscal 2018. Other laboratory services revenues were negatively impacted by lower archive revenues, which impact was partially offset by higher pharmaceutical analysis revenues in the fourth quarter of fiscal 2018 versus the comparable period in fiscal 2017.
Cost of Service revenue as a percentage of Service revenue decreased to 65.9% during the fourth quarter of fiscal 2018 from 67.7% in the comparable period in fiscal 2017. The principal cause of this decrease was the increase in revenues, which led to higher absorption of the fixed costs in our Service segment.
Sales in our Products segment increased 11% in the fourth quarter of fiscal 2018 from $871,000 to $967,000 when compared to the same period in the prior fiscal year. The majority of the increase stems from an increase in sales of our Culex automated in vivo sampling systems and related consumables in the fourth quarter of fiscal 2018. Increased sales of our analytical instruments and PalmSens instruments also contributed to the increase.
Cost of Products revenue as a percentage of Products revenue in the fourth quarter of fiscal 2018 decreased to 54.9% from 71.5% in the comparable prior-year period. This decrease is mainly due to the mix of product sales during the fourth quarter of fiscal 2018, principally higher sales of the Culex automated in vivo sampling system, which carries higher margins.
Fiscal Year Results
For fiscal 2018, revenue amounted to $26,346,000 an 8.7% increase from $24,242,000 for fiscal 2017. Revenue growth was mainly driven by the incremental sales associated with the Seventh Wave acquisition offset slightly by a decline in other service revenues as compared to fiscal 2017.
Net loss amounted to $194,000, or $0.02 per diluted share, for fiscal 2018 compared to net income of $884,000, or $0.10 per diluted share, for fiscal 2017. One-time expenses related to the Seventh Wave acquisition and integration, as well as higher recruiting, retirement and relocation costs amounted to approximately $550,000. Net loss was also impacted by lower archive revenues of $253,000, and other increased operating costs including new product development expenses and higher stock option expense attributable to the grants of options to our directors and certain employees in October 2017.
Adjusted EBITDA was $2,822,000 for fiscal 2018, compared to Adjusted EBITDA of $2,424,000 for fiscal 2017.
Fiscal Year Segment Results
Service revenue increased 11.2% in fiscal 2018, to $22,440,000 from $20,182,000 in fiscal 2017. Revenues from the Seventh Wave acquisition added $2,982,000 in fiscal 2018. Also, Preclinical services revenues increased $168,000 due to a more favorable mix of studies in fiscal 2018. Other laboratory services revenues were negatively impacted by lower archive revenues of $253,000, which impact was partially offset by higher pharmaceutical analysis revenues of $178,000 in fiscal 2018 versus the comparable period in fiscal 2017.
Cost of Service revenue as a percentage of Service revenue increased to 70.9% during fiscal 2018 from 69.3% in fiscal 2017. The principal cause of this increase was the mix of revenues, specifically the decline in archiving revenues which carry higher margins.
Sales in our Products segment decreased 3.8% in fiscal 2018, from $4,060,000 to $3,906,000 when compared to fiscal 2017. The majority of the decrease stems from lower sales of our Culex automated in vivo sampling systems during fiscal 2018, partially offset by an increase in sales of our analytical instruments in fiscal 2018.
Cost of Product revenue as a percentage of Product revenue in fiscal 2018 decreased to 59.5% from 62.9% in the fiscal 2017. This decrease is mainly due to a change in the mix of products sold favoring higher-margin instruments fiscal 2018.
Cash Provided by Operating Activities
Cash provided by operating activities was $3,487,000 for fiscal 2018 compared to $1,236,000 for fiscal 2017.
As of September 30, 2018, the Company had $773,000 in cash and cash equivalents and $3,500,000 available on its general line of credit. The Company had a zero balance on its $4,445,000 construction line of credit and a zero balance on its $1,429,250 equipment line of credit. During fiscal 2018, cash from new financing and operations funded the Seventh Wave acquisition of $6,759,000. In addition, the Company funded capital expenditures for laboratory equipment and building improvements as well as computer equipment and software of approximately $1,317,000.
Amendments to Credit Arrangements
On July 2, 2018, the Company and First Internet Bank (“FIB”) entered into an amendment to the Company’s credit agreement to, among other things, provide the Company with an additional term loan in the amount of $5,500,000, the proceeds of which were used to fund a portion of the cash consideration for the Seventh Wave acquisition, and increased borrowing availability under the Company’s general revolving line of credit from $2,000,000 to $3,500,000. The new term loan and the general revolving line of credit mature July 2, 2023, and June 30, 2019, respectively. Amounts outstanding under the new term loan bear interest at a fixed per annum rate of 5.06%, while interest accruing on the principal balance of the general revolving line of credit remains unchanged, at a floating per annum rate equal to the Prime Rate (as defined in the credit agreement). At September 30, 2018, the balance on the Company’s original term loan under the credit agreement was $4,222,000.
In addition, on September 28, 2018, in connection with the announced expansion of our Evansville nonclinical services site, the Company and FIB amended the Company’s credit agreement to provide a construction draw loan in a principal amount not to exceed $4,445,000 and an equipment draw loan in a principal amount not to exceed $1,429,250. These draw loans mature on March 28, 2025, and bear interest at a fixed rate of 5.20%. Each loan requires monthly payments of accrued interest on amounts outstanding through March 28, 2020, and thereafter monthly payments of principal and interest on amounts then outstanding through maturity.
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 Adjusted EBITDA for the three and twelve month periods ended September 30, 2018 and 2017. Adjusted EBITDA as reported herein refers to a financial performance measure that excludes from net income
(loss) income statement line items, interest expense and income taxes (benefit) expense, as well as non-cash charges for depreciation and amortization, stock option (benefit) expense and non-recurring acquisition and integration costs.
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 Adjusted 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 our results and to illustrate our 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, emerging pharmaceutical companies and medical research organizations. The Company focuses on developing innovative services and products that increase efficiency, improve decision making and allow accelerated goal attainment for our clients. 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 except as may be required by law. 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 OPERATIONS AND COMPREHENSIVE INCOME (In thousands, except per share amounts) |
|||||||||||||
| Three Months Ended September 30, (Unaudited) |
Fiscal Year Ended September 30, |
||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||
| Service revenue | $ | 8,019 | $ | 5,002 | $ | 22,440 | $ | 20,182 | |||||
| Product revenue | 967 | 871 | 3,906 | 4,060 | |||||||||
| Total revenue | 8,986 | 5,873 | 26,346 | 24,242 | |||||||||
| Cost of service revenue | 5,285 | 3,386 | 15,904 | 13,990 | |||||||||
| Cost of product revenue | 531 | 623 | 2,326 | 2,555 | |||||||||
| Total cost of revenue | 5,816 | 4,009 | 18,230 | 16,545 | |||||||||
| Gross profit | 3,170 | 1,864 | 8,116 | 7,697 | |||||||||
| Operating expenses: | |||||||||||||
| Selling | 624 | 245 | 1,541 | 1,053 | |||||||||
| Research and development | 166 | 125 | 596 | 465 | |||||||||
| General and administrative | 2,455 | 1,202 | 5,965 | 4,901 | |||||||||
| Total operating expenses | 3,245 | 1,572 | 8,102 | 6,419 | |||||||||
| Operating income (loss) | (75 | ) | 292 | 14 | 1,278 | ||||||||
| Interest expense | (125 | ) | (53 | ) | (274 | ) | (375 | ) | |||||
| Other income | 1 | 1 | 6 | 6 | |||||||||
| Net income (loss) before income taxes | (199 | ) | 240 | (254 | ) | 908 | |||||||
| Income tax expense (benefit) | 1 | 11 | (60 | ) | 24 | ||||||||
| Net income (loss) | $ | (200 | ) | $ | 229 | $ | (194 | ) | $ | 884 | |||
| Other comprehensive income (loss): | – | 13 | – | 35 | |||||||||
| Comprehensive income (loss) | $ | (200 | ) | $ | 229 | $ | (194 | ) | $ | 919 | |||
| Basic net income (loss) per share | $ | (0.02 | ) | $ | 0.03 | $ | (0.02 | ) | $ | 0.11 | |||
| Diluted net income (loss) per share | $ | (0.02 | ) | $ | 0.03 | $ | (0.02 | ) | $ | 0.10 | |||
| Weighted common shares outstanding: | |||||||||||||
| Basic | 10,229 | 8,241 | 8,771 | 8,178 | |||||||||
| Diluted | 10,229 | 8,780 | 8,771 | 8,733 | |||||||||
| BIOANALYTICAL SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) |
||||||||
| September 30, 2018 |
September 30, 2017 |
|||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 773 | $ | 434 | ||||
| Accounts receivable | ||||||||
| Trade, net of allowance of $1,948 at September 30, 2018 and | ||||||||
| $2,404 at September 30, 2017 | 4,128 | 2,530 | ||||||
| Unbilled revenues and other | 1,012 | 615 | ||||||
| Inventories, net | 1,182 | 913 | ||||||
| Prepaid expenses | 966 | 814 | ||||||
| Total current assets | 8,061 | 5,306 | ||||||
| Property and equipment, net | 16,610 | 14,965 | ||||||
| Goodwill | 3,072 | 38 | ||||||
| Other intangible assets, net | 3,318 | — | ||||||
| Lease rent receivable | 115 | 87 | ||||||
| Deferred tax asset | 62 | — | ||||||
| Other assets | 30 | 21 | ||||||
| Total assets | $ | 31,268 | $ | 20,417 | ||||
| Liabilities and shareholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 3,192 | $ | 2,052 | ||||
| Restructuring liability | 1,117 | 1,117 | ||||||
| Accrued expenses | 1,571 | 1,202 | ||||||
| Customer advances | 4,925 | 2,980 | ||||||
| Income taxes payable | — | 20 | ||||||
| Current portion of capital lease obligation | 87 | 128 | ||||||
| Current portion of long-term debt | 909 | 224 | ||||||
| Total current liabilities
|
11,801 | 7,723 | ||||||
| Capital lease obligation, less current portion | 37 | 69 | ||||||
| Long-term debt, less current portion, net of debt issuance costs | 8,546 | 4,158 | ||||||
| Total liabilities | 20,384 | 11,950 | ||||||
| Shareholders’ equity: | ||||||||
| Preferred shares, authorized 1,000,000 shares, no par value: | ||||||||
| 35 Series A shares at $1,000 stated value issued and outstanding at September 30, 2018 and 1,035 at September 30, 2017 | 35 | 1,035 | ||||||
| Common shares, no par value: | ||||||||
| Authorized 19,000,000 shares; 10,245,277 issued and outstanding at September 30, 2018 and 8,243,896 at September 30, 2017 |
2,523 | 2,023 | ||||||
| Additional paid‑in capital | 24,557 | 21,446 | ||||||
| Accumulated deficit | (16,231 | ) | (16,037) | |||||
| Total shareholders’ equity | 10,884 | 8,467 | ||||||
| Total liabilities and shareholders’ equity | $ | 31,268 | $ | 20,417 | ||||
|
BIOANALYTICAL SYSTEMS, INC. |
|||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP EARNINGS | |||||||||||||
| (In thousands) (Unaudited) |
|||||||||||||
| Three Months Ended | Fiscal Year Ended | ||||||||||||
| September 30, | September 30, | ||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||
| GAAP Net income (loss) | $ | (200 | ) | $ | 229 | $ | (194 | ) | $ | 884 | |||
| Add back: Interest expense | 125 | 53 | 274 | 372 | |||||||||
| Income taxes (benefit) expense | 1 | 11 | (60 | ) | 24 | ||||||||
| Depreciation and amortization | 726 | 373 | 1,875 | 1,520 | |||||||||
| Stock option (benefit) expense | 32 | 6 | 134 | 19 | |||||||||
| Acquisition and integration costs | 345 | — | 395 | — | |||||||||
| Adjusted EBITDA | $ | 1,029 | $ | 672 | $ | 2,424 | $ | 2,822 | |||||
| Adjusted EBITDA – Earnings before interest expense, income taxes (benefit) expense, depreciation and amortization, stock option (benefit) expense and non-recurring acquisition and integration costs. | |||||||||||||
| FOR MORE INFORMATION: | Company Contact: |
| Jill Blumhoff | |
| Chief Financial Officer & | |
| Vice President of Finance | |
| Phone: 765.497.8381 | |
| jblumhoff@BASinc.com | |