Biomerica, Inc. — FY2024 Form 10-K Summary
Reporting period: Fiscal year ended May 31, 2024; filed August 28, 2024. This is an annual report, not a calendar-year 2023 or standalone fourth-quarter filing.
Business context
Biomerica develops, manufactures, and sells diagnostic and therapeutic products for clinical laboratories, physicians’ offices, retail, and online channels. Its principal strategic products are inFoods IBS, a blood-test-based diagnostic-guided dietary product, and hp+detect, an FDA-cleared H. pylori test. The company operates in the United States, Mexico, and Europe and sells through distributors in about 30 countries.
Financial performance and liquidity
| Metric | FY2024 | FY2023 |
|---|---|---|
| Net sales | $5.415 million | $5.339 million |
| Gross profit / gross margin | $611,000 / 11.3% | $446,000 / 8.4% |
| Operating expenses | $6.978 million | $7.669 million |
| Operating loss | $6.367 million | $7.223 million |
| Net loss | $5.978 million | $7.140 million |
| Net loss per share | $0.36 | $0.50 |
| Cash used in operating activities | $5.361 million | $5.474 million |
| Cash and cash equivalents at year-end | $4.170 million | $9.719 million |
| Working capital at year-end | $5.527 million | $10.852 million |
Cost of sales was $4.804 million, or 89% of sales, versus $4.893 million, or 92%, in FY2023. Dividend and interest income increased to $431,000 from $133,000, primarily due to higher interest rates. Investing activities used $115,000; financing activities used $81,000, including deferred offering costs. The company reported no off-balance-sheet arrangements.
At May 31, 2024, total assets were $9.254 million and total liabilities were $2.663 million. The balance sheet reports lease liabilities of $785,000; it does not report conventional borrowing debt. Cash and working capital fell substantially year over year. The auditor and management state that available cash is insufficient for operating needs over the next 12 months, and the auditor’s report raises substantial doubt about the company’s ability to continue as a going concern.
Material changes versus FY2023
- Sales increased 1%; management reports a 5% increase excluding FY2023 COVID-test sales. FY2024 had no COVID-related product sales.
- By channel, OTC sales rose 22% to $1.426 million and contract manufacturing rose 21% to $741,000. Clinical-lab sales declined 2% to $3.236 million; physician-office sales fell 95% to $12,000.
- Gross profit improved by $165,000 and gross margin expanded by about 3 percentage points. SG&A declined 10% to $5.487 million, while R&D declined 6% to $1.491 million. Net loss narrowed by $1.162 million but remained substantial.
- Cash declined by $5.549 million during the year. FY2023 included $9.309 million in net stock-sale proceeds; the company reported no stock-sale proceeds in FY2024.
- Inventory reserves declined to $467,000 from $672,000. Net inventory increased to $2.376 million from $2.056 million.
Outlook, risks, and notable items
- Commercialization: Management says launches of inFoods IBS and hp+detect were slower than expected. It is expanding physician relationships and promoting hp+detect to laboratories, while evaluating distribution, partnership, and licensing opportunities. No numerical revenue or earnings guidance is provided.
- Cost and funding plans: The company says it is reducing expenses, pursuing sales growth, considering sales of non-core assets, and seeking additional debt or equity financing and other strategic alternatives. It cautions these steps may not be sufficient. A nearly 15% workforce reduction was implemented in July 2024, after year-end.
- Going concern and dilution: Cash was $4.170 million against FY2024 operating cash use of $5.361 million. The company has an ATM prospectus supplement allowing up to $5.5 million in common-stock sales, but proceeds depend on trading price and volume. Management warns financing may be unavailable on acceptable terms and equity issuance could dilute holders.
- Nasdaq listing: Nasdaq notified the company in May 2024 that it failed the $1.00 minimum bid-price requirement. The initial compliance period ran through November 4, 2024; the filing says the share price had not regained compliance as of the report date. A reverse stock split was among the options being considered.
- Concentration: One distributor accounted for 33% of FY2024 sales. Four distributors represented 64% of year-end gross receivables; one Asian distributor alone represented 37%. Most of year-end backlog of $755,000 was intended for an Asian distributor.
- Regulatory and execution risks: The company must meet evolving European IVDR requirements and maintain product certifications. It reported that the May 2024 FDA inspection had no observations. Competition, slow adoption, distributor performance, international collection and geopolitical risks, and dependence on key personnel may affect results.
- Other items: No legal proceedings were pending at May 31, 2024. The company reported effective disclosure controls and internal control over financial reporting as of that date; the auditor did not attest to internal-control effectiveness.
Important facts for investors to verify
- Current cash runway, subsequent cash use, and whether financing or strategic transactions have been secured since the filing.
- Progress in commercial adoption and revenue contribution from inFoods IBS and hp+detect, including repeat orders and customer retention.
- Nasdaq bid-price compliance and any subsequent listing determination or reverse stock split.
- Collection of concentrated distributor receivables, particularly the amount owed by the Asian distributor, and the status of the backlog.
- Actual effects of the July 2024 workforce reduction on costs, operations, and commercialization capacity.
- European IVDR transition milestones and the company’s ability to maintain relevant product certifications.