BASi Swings to Loss

Posted: Updated:

West Lafayette-based Bioanalytical Systems Inc. (Nasdaq: BASI) has announced a fiscal full-year loss of more than $1 million, compared to $773,000 during the same quarter a year earlier. Chief Executive Officer Jacqueline Lemke says despite the loss, the pharmaceutical development company's operating financial performance showed "significant improvement" over last year. December 22, 2014

News Release

WEST LAFAYETTE, Ind. - Bioanalytical Systems, Inc. (NASDAQ:BASI) today announced financial results for the fourth quarter and the full fiscal year ended September 30, 2014.

“BASi’s operating financial performance for fiscal 2014 showed significant improvement over last year, as revenue increased by 11.4%. Net income before the change in fair value of the warrant liability and before goodwill impairment increased 29% to $222,000 for fiscal 2014, or $0.03 per diluted share, compared to $172,000, or $0.02 per diluted share, for fiscal 2013. EBITDA for fiscal 2014 was a solid 9.8% of revenue, not as high as the 12.6% of revenue reported for 2013, but reflective of targeted investments in selling, research & development and growth initiatives which will improve the Company’s ability to deliver profitable growth.

Net cash provided by operating activities was $1,684,000 for fiscal 2014, an increase of 5.6% versus net cash provided by operating activities in the prior fiscal year of $1,594,000. As previously announced, in May of 2014, the Company established a new $7,500,000 credit facility substantially reducing borrowing costs and enhancing the Company’s ability to implement reinvestment and growth initiatives.” President & Chief Executive Officer, Jacqueline Lemke, stated.

“The year over year gains clearly demonstrate the benefits of our intense focus on three key areas: boosting operating efficiency, driving top-line growth, and generating free cash flow. The management team is building on BASi’s inherent strengths and reputation for innovation and regulatory excellence to leverage our costs and attain greater profits, while driving growth by delivering enhanced customer value."

Fourth Quarter Results

For the three months ended September 30, 2014, revenues increased 16.6% to $6,420,000 compared to $5,508,000 in the fourth quarter of fiscal 2013.

Service revenue for the fourth quarter of fiscal 2014 increased 23.1% to $4,901,000 compared to $3,980,000 for the same period of the prior fiscal year. This increase was primarily due to an increase in the volume of Preclinical services studies offset slightly by lower Bioanalytical services revenue.

Product revenue for the fourth quarter of fiscal 2014 amounted to $1,519,000 and was comparable to revenue of $1,528,000 for the fourth quarter of fiscal 2013. Growth in 2014 was hampered in part by lower sales of certain analytical instruments. This impact was partially offset by increased sales of Culex®Nxt in vivo sampling systems.

Gross profit decreased to $1,821,000, or 28.4% of revenue, in the fourth quarter of fiscal 2014 compared to $1,909,000, or 34.7% of revenue, during the comparable period last fiscal year, primarily reflecting the change in the mix of business between quarters.

Operating expenses for the fourth quarter of fiscal 2014 increased to $2,310,000 compared to $1,811,000 during the fourth quarter fiscal 2013, primarily due to the recognition of a goodwill impairment charge of $374,000 described below and planned increases in business development and general and administrative expenses.

Operating loss for the fourth quarter of fiscal 2014 amounted to $(489,000), which includes the goodwill impairment charge of $374,000. Excluding the impairment charge, the operating loss amounted to $(115,000) compared to operating income of $98,000 for the fourth quarter of fiscal 2013 primarily due to the relative mix of larger, more expensive studies than in prior quarters.

Net loss was $(404,000) for the fourth quarter of fiscal 2014, or $(0.05) per diluted share, compared to net income of $252,000, or $0.03 per diluted share, for the fourth quarter of fiscal 2013. Excluding the change in fair value of the warrant liability and the goodwill impairment charge in fiscal 2014, net loss was $(207,000) for the fourth quarter of fiscal 2014, or $(0.02) per diluted share, compared to a net loss of $(56,000), or $(0.01) per diluted share, for the fourth quarter of fiscal 2013.

EBITDA for the fourth quarter of fiscal 2014 amounted to $309,000 compared to EBITDA for the fourth quarter of fiscal 2013 of $547,000.

Full Year Results

For the twelve months ended September 30, 2014, revenues increased 11.4% to $24,584,000 from $22,068,000 in fiscal 2013.

Service revenue for fiscal 2014 increased 15.8% to $19,097,000 compared to $16,473,000 for fiscal 2013. This increase was primarily due to an increase in the volume of Preclinical services studies partially offset by lower Bioanalytical services revenue.

Product revenue decreased 1.9% for fiscal 2014 to $5,487,000 as compared to $5,595,000 for fiscal 2013. Results in 2014 were hampered in part by lower sales of certain analytical instruments. This impact was partially offset by increased sales of Culex® Nxt, in vivo sampling systems.

Gross profit for fiscal 2014 increased 12.9% to $7,962,000, or 32.4% of revenue, compared to $7,055,000, or 32.0% of revenue, for the prior fiscal year. The main reason for the increase was our ability to leverage the higher revenue earned in fiscal 2014 over our fixed cost base as well as strict spending controls during the fiscal year.

Operating income for fiscal 2014 amounted to $334,000 which includes the goodwill impairment charge of $374,000. Excluding the impairment charge, operating income amounted to $708,000 compared to $830,000 for the same period of the prior fiscal year. The benefit of higher sales for the fiscal year was more than offset by higher business development, engineering costs and certain one-off charges.

Net loss for fiscal 2014 was $(1,070,000), or $(0.13) per diluted share, compared to net income of $773,000, or $0.09 per diluted share, for fiscal 2013. Excluding the change in fair value of the warrant liability and the goodwill impairment charge, net income was $222,000 for fiscal 2014, or $0.03 per diluted share, compared to net income of $172,000, or $0.02 per diluted share, for fiscal 2013.

EBITDA for fiscal 2014 was $2,398,000 compared to EBITDA for fiscal 2013 of $2,785,000.

Cash Provided by Operating Activities

Cash provided by operating activities was $1,726,000 for fiscal 2014, up 8.3% from fiscal 2013. The Company had $981,000 in cash and cash equivalents at September 30, 2014. During 2014, proceeds from borrowings net of repayments, cash on hand and cash provided by operations funded capital expenditures for plant, machinery and equipment of approximately $490,000.

Goodwill Impairment Charge

The Company performed its annual goodwill impairment test for all of its reporting units at September 30, 2014. The estimated fair value of our Vetronics reporting unit, which is part of the Products Segment, was less than its related book value leading to a determination that its goodwill balance was impaired. The impairment results from rates of growth, earnings and cash flow expectations for future performance that were below the Company’s previous projections. In late fiscal 2014, the Company began shifting its market focus and will no longer actively market the Vetronics product offering. As a service to its existing customers, we will continue to service the units in the field. Accordingly, step two of the goodwill impairment test was completed for the Vetronics reporting unit, which resulted in an impairment charge totaling $374,000 in the fourth quarter of fiscal 2014. There was no indication of impairment for the Bioanalytical services and Preclinical services reporting units as of September 30, 2014.

About Bioanalytical Syste