Scientific Industries (SCND) Q2 2024 earnings summary

Executive summary

• Genie lab products revenue rebounded to pre-COVID levels despite weakened demand from Chinese distributors and increased competition from lower-priced knockoffs.

• Net loss narrowed to $1.28M for Q2 2024 from $2.19M in Q2 2023, mainly due to cost reductions in Bioprocessing Systems and lower corporate expenses.

• Revenues declined 11.2% year-over-year to $2.65M, primarily from lower Benchtop Laboratory Equipment sales amid post-COVID destocking and market softness, especially in Asia.

• Torbal pharmacy scale business faced a temporary downturn due to industry-wide cash flow issues but is now experiencing rapid sales growth and market share gains.

• Launch of the VIVID Workstation in Q4 is expected to accelerate growth and solidify leadership in the automated pill counter market.

Financial highlights

• Q2 2024 revenue: $2.65M (down from $2.98M in Q2 2023); six-month revenue: $5.13M (down from $5.79M year-over-year).

• Net loss for Q2 2024: $1.28M; six-month net loss: $3.34M (improved from $4.66M year-over-year).

• Bioprocessing sales increased 16% year-over-year in H1, with EBITDA improving by roughly 20%.

• Gross margin improved to 48.8% from 45.3% year-over-year, driven by higher margins in Bioprocessing Systems.

• Cash and equivalents at June 30, 2024: $0.56M; investment securities: $3.30M.

Outlook and guidance

• Management does not believe current cash and internally generated cash flows are sufficient to fund operations for the next 12 months, raising substantial doubt about the company's ability to continue as a going concern.

• Plans to seek additional capital from management, significant shareholders, or third-party financing, but success is uncertain.

• Anticipated acceleration in sales and market share in the second half of 2024, especially with the VIVID Workstation launch.

• Scheduled 2025 launch of an AI-based pill recognition system to enhance competitive advantage.