INVO Bioscience, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. The filing identifies the registrant as INVO Bioscience, Inc. (Nasdaq: INVO), a commercial-stage fertility company developing and commercializing INVOcell and its intravaginal culture (IVC) procedure.
Business context and operating developments
INVO sells INVOcell to fertility clinics and is building dedicated INVO Centers. Three centers—in Birmingham, Atlanta, and Monterrey—were operational during the quarter. The company reported that it resumed direct U.S. sales after its exclusive U.S. distribution agreement with Ferring terminated effective January 31, 2022.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Total revenue | $162,598 | $684,523 |
| Gross profit / gross margin | $97,637 / approximately 60% | $621,778 / approximately 91% |
| Operating expenses | $2,798,575 | $2,181,570 |
| Operating loss | $(2,700,938) | $(1,559,792) |
| Net loss | $(2,774,312) | $(2,453,469) |
| Net loss per share, basic and diluted | $(0.23) | $(0.25) |
| Net cash used in operating activities | $(2,078,119) | $(1,735,384) |
- Q1 2022 revenue comprised $56,750 of product revenue and $105,848 of clinic revenue; there was no license revenue. Q1 2021 included $505,952 of product revenue and $178,571 of license revenue.
- At March 31, 2022, cash was $3.84 million, down from $5.68 million at December 31, 2021. Current assets were $4.42 million and current liabilities $1.08 million; management reported working capital of approximately $3.3 million.
- Total liabilities were $2.93 million, including $2.07 million of operating lease liabilities. The company reported that all 2020 convertible notes had been converted or repaid by March 31, 2022; the filing does not show a material conventional borrowing balance at quarter-end.
- Net cash used in investing activities was $81,890; financing activities provided $315,000, primarily from a common-stock sale. Stockholders’ equity was $5.59 million, versus $7.31 million at year-end 2021.
Material changes versus the prior comparable period
- Revenue fell approximately 76%, mainly because the prior-year period included a bulk Ferring product order tied to minimum purchase commitments. The company also had no Q1 2022 Ferring license revenue.
- Gross margin declined from approximately 91% to 60%, reflecting the absence of license revenue and costs associated with the consolidated Atlanta center.
- Operating expenses rose approximately 28% (from $2.18 million to $2.80 million), with higher Atlanta center, personnel, marketing, and stock-based compensation costs. The operating loss increased by approximately $1.14 million.
- Net loss increased by approximately $321,000, despite interest expense falling sharply from about $895,000 to $1,456, as financing-related amortization from the prior-year convertible notes did not recur.
- Operating cash use increased by approximately $343,000 year over year. Cash was also lower than at December 31, 2021.
Outlook, risks, and notable items
- Management planned to open additional INVO Centers over the following 12 months and said it was pursuing locations including Tampa and Kansas City. It expected direct U.S. sales to become more consistent than the historically sporadic Ferring orders, but provided no quantified revenue or earnings guidance.
- The company expects continued operating losses while it expands commercialization and centers. It has relied on debt and equity financing and stated that additional funding may be needed and may not be available on reasonable terms, or at all.
- The auditor’s report on the 2021 financial statements contained a going-concern qualification expressing substantial doubt about the company’s ability to continue as a going concern. The Q1 filing reiterates the underlying losses and financing dependence.
- The company continues work toward expanding INVOcell’s labeling to cover day-five incubation; its prospective clinical trial had been placed on hold, while a retrospective-data 510(k) effort remained active.
- After quarter-end, on May 13, 2022, the company signed an exclusive distribution agreement for China, excluding Hong Kong, Macau, and Taiwan. The agreement is subject to regulatory approval and includes minimum purchase obligations; the filing gives no expected financial contribution.
- Management stated that disclosure controls were effective as of March 31, 2022, and that no material changes to internal control over financial reporting occurred during the quarter. No material legal proceedings were reported in the notes.
Important facts for investors to verify
- Whether direct U.S. sales and the three operating centers can generate recurring revenue sufficient to offset ongoing operating costs and cash burn.
- Available liquidity, expected financing requirements, and the status of the going-concern risk highlighted in the prior-year audit report.
- Progress on the day-five labeling effort, regulatory approvals, and any associated clinical or commercialization costs.
- Ferring-related transition effects and whether new distribution arrangements—including the China agreement—meet purchase, registration, and commercialization milestones.
- Future cash contributions or funding commitments to joint ventures, and the performance and funding needs of the Atlanta, Alabama, and Mexico operations.