Enzo Biochem Reports 20% Revenue Decline, Improves Operating Loss in Latest Quarter

Enzo Biochem, Inc. reported a decline in financial performance for the three months ended October 31, 2024, with revenues of $6.2 million, down 20% from $7.8 million in the same period last year. The decrease was attributed to reduced orders from key customers in the clinical market and the absence of a significant order from an industrial client that had occurred in the previous year. The company's operating loss improved to $3.6 million from $5.5 million year-over-year, reflecting a reduction in total operating costs and expenses, which fell by 26% to $9.8 million.

The company's cost of revenues decreased by 15% to $3.7 million, primarily due to lower sales volume. Gross profit margins were approximately 41%, slightly down from 44% in the prior year, impacted by inventory disposals related to a portfolio optimization initiative. Research and development expenses also saw a significant reduction, dropping 34% to $0.5 million, as the company shifted focus towards manufacturing efforts. Selling, general, and administrative expenses decreased by 30% to $4.9 million, largely due to lower share-based compensation and reduced legal expenses associated with prior executive disputes.

Enzo Biochem's operational metrics indicate a strategic shift following the sale of its clinical services business to Labcorp in July 2023 for $113.25 million. This divestiture has allowed the company to concentrate on its core life sciences division, which focuses on labeling and detection technologies. The company reported a cash balance of $47.7 million as of October 31, 2024, down from $52.3 million at the end of July 2024, primarily due to net losses and cash used to settle accrued liabilities. However, the release of $5 million from escrow related to the Labcorp transaction provided some liquidity relief.

Looking ahead, Enzo Biochem anticipates continued challenges in the life sciences tools market, which may affect revenue generation. The company remains focused on optimizing its product portfolio and enhancing operational efficiencies to navigate these market conditions. Management believes that the current working capital is sufficient to meet operational needs for at least the next twelve months. The company is also addressing the impacts of a ransomware attack that occurred in April 2023, which has led to regulatory inquiries and potential litigation, although these matters are being managed as part of ongoing operations.