INVO Fertility, Inc.

Hello, and welcome to INVO Fertility Second Quarter Fiscal Year 2026 Financial Results Conference Call. All participants will be in listen-only mode for this event. Please note, this event is being recorded. I would now like to turn the call over to Robert Bloom of Litham Partners. Mr. Bloom, please go ahead.

All right, wonderful. Thank you very much, Gary, and thank you all for joining us today to discuss INVO Fertility's Second quarter, 2026 financial results, and this is for the period ended June 30th, 2026. With us on the call today are Steve Shum, the company's chief executive officer, and Tara Krigsgold, the company's chief financial officer. At the conclusion of today's prepared remarks, we will open the call for a question and answer session. If you are listening through the webcast portal and would like to ask a question, you can submit it through the ask a question feature at in the webcast player. Before we begin, we submit for the record the following statement. Statements made by the management team of Invo Fertility during the course of this conference call may contain forward-looking statements within the meaning of the federal securities laws. These statements describe future expectations, plans, results, or strategies, and are generally identified by words such as may, will, should, expect, anticipate, believe, estimate, intend, plan, or similar expressions. Listeners are cautioned that such statements are subject to risks and uncertainties that could cause actual circumstances, events, or results to differ materially from those projected, including the risks described in the company's filings with the Securities and Exchange Commission. All forward-looking statements speak only as of the date they are made and and the company undertakes no obligation to update them except as required by law. Today's discussion will also include adjusted EBITDA and clinic-level adjusted EBITDA, which are non-GAAP financial measures. Reconciliations and additional information regarding these measures are included in today's press release. With that said, I'd like to turn the call over to Steve Shum, Chief Executive Officer of Invo Fertility. Steve, please proceed.

Thank you, Robert, and good morning to everyone joining us today. This is the first conference call INVO Fertility has conducted in a while. Over the past two years, we have focused our efforts on stabilizing the company, streamlining the business, improving our financial position, and establishing a clear operating foundation. We're not suggesting every challenge is behind us, but as mentioned in recent press releases, We do believe Invo is in the strongest position in its history with a clearer strategy and a stronger clinic operating platform. For those who have followed Invo's history, the business has been through several distinct chapters. The company began primarily as a medical device business built around InvoCell. We then expanded into operating fertility clinics, which gave us a more direct role in patient care and increased the revenue opportunity associated with each fertility treatment. We also pursued the NIAID transaction and operated for a period with fertility services and therapeutics under the same corporate structure. That expanded structure ultimately created complexity and made the underlying fertility business more difficult to evaluate and was simply too much for a small company. Last year, we divested the majority interest in Nya Therapeutics and returned the company to a strategic focus solely on fertility. We have also taken important steps to address some of the complexities to our capital structure and improve our financial position. During the first quarter, all Series C2 preferred stock was converted or retired, warrant liabilities were eliminated, and the company raised approximately $7.1 million of net proceeds through warrant exercises. We used a portion of those proceeds to satisfy deferred acquisition consideration and reduce debt. We completed our delayed 2025 Form 10-K and first quarter 2026 Form 10-Q filings in June, regained compliance with NASDAQ's timely filing requirement, and have continued to add resources across finance, operations, and human resources. I want to acknowledge those items directly on this call as it sets the stage for the company moving forward. The most useful way to evaluate InVote today is through the operating platform we now have, the earnings it generates, the opportunities within each clinic, and our goal is to add additional profitable practices to a larger network. The second quarter provides tangible evidence of that progress. As you saw in the press release, revenue in Q2 increased 17% to approximately $2.2 million. The quarter included the first full three-month contribution from Family Beginnings in Indiana, which we acquired in February, as well as continued organic growth initiatives across the clinic network. More importantly, our clinic platform remained profitable on an adjusted EBITDA basis before corporate operating public company expenses. Clinic level adjusted EBITDA was approximately $333,000 for the second quarter compared with approximately $164,000 in the first quarter and approximately $951,000 for the full year of 2025. We believe this is one of the most important facts for investors to understand about INVO. The clinics we have assembled are not simply producing revenue. At the clinic level, they are generating positive operating margin earnings. That provides a real economic base from which to grow. At the same time, the consolidated company is not yet profitable on a recurring operating basis. We continue to carry corporate costs associated with operating a public company, supporting the existing clinics, building shared services, and preparing the organization to integrate additional practices. Our key objective moving forward is to grow clinic level earnings through greater patient volumes, expanded services, improved execution and acquisitions, allowing us to spread the corporate and public company infrastructure costs across a larger revenue and earnings base and bring the overall company to a profitable state. We believe that is a clear and achievable operating objective. Let me discuss the major components of that strategy. The first is growing the clinics we already own. We are building a platform that pairs strong local physicians and care teams with centralized resources across finance, billing, human resources, administration, operations, marketing, and other support functions. These resources are intended to let clinical teams spend more time on patients, improve execution and accountability, and help each clinic increase volumes and broaden services. The objective is not to impose a one size fits all model. Fertility care remains local and highly personal. Our role is to preserve the strength and reputation of each practice while providing the support and investment that can make it more successful as part of the organization. Family Beginnings is a good example of this approach. The clinic has operated for more than a decade and has an experienced physician, clinical and embryology team. It offers a broad range of services, including IVF, IVC, fertility preservation, diagnostic testing and other services. Q2 was its first full quarter as part of INVO. Our focus is on maintaining continuity of care, support the local team, expanding awareness and patient access, and identifying opportunities to grow from an established and profitable operating base. The second component is increasing our ownership and control where it improves the platform. In June, we acquired the remaining ownership interest associated with our Birmingham, Alabama clinic, That operation was originally established as a joint venture. Bringing it fully into INVO gives us greater operational control, allows us to consolidate its results prospectively, and increases our participation in the clinic's future economics. It also enables us to apply the same shared service approach more directly across billing, finance, human resources, administration, and operating support. The third component is organic growth through access, services, and innovation. Earlier this year, Wisconsin Fertility Institute joined the Progene Network, expanding access to employer-sponsored patients. We added time-lapse incubation technology at Wisconsin to support embryo monitoring and clinical decision-making and patient engagement. Our clinical team has continued to evaluate and introduce additional patient-centered services. Together these initiatives represent the operating model we are building. We want our clinics to expand access, offer clinically appropriate services, adopt technologies that support care, quality, and patient engagement, and participate in relevant research. The fourth component involves acquisitions. We continue to evaluate a robust pipeline of established fertility practices across the United States. primarily seeking clinics with experienced physicians, strong clinical reputations, established patient demand, and a history of profitability. We are not pursuing acquisitions merely to increase the number of locations. Each transaction must make strategic and financial sense. We also need confidence that the clinical team will remain engaged, that the practice can be integrated without disrupting patient care, and that InVote can add value through capital, shared services, operating expertise, or growth initiatives. Our experience owning and operating clinics has improved our credibility with prospective partners, and we strongly believe we can successfully execute on additional acquisitions. When we step back from the individual initiatives, we believe the investment thesis is becoming clear. We have four operating fertility clinics in the United States. The clinic platform EBITDA, the clinic platform generated positive EBITDA before corporate operating and public company expenses. We have opportunities to further grow within the existing base. We have centralized capabilities that can support a larger network. We have a pipeline of established practices and we have taken meaningful steps to simplify the balance sheet and focus the organization. We certainly have more work to do. We need to continue strengthening our internal processes. We need to improve that our, we need to prove that our shared services can consistently improve clinic performance and that acquisitions can be integrated with discipline. Those are the standards by which we expect to be measured. With the core fertility platform producing revenue, growth, and positive clinic-level earnings, we believe we now have a strong foundation for the next phase of INBO's development. With that, I'll turn the call over to Tara to review the second quarter financial results in more detail. I will then return with closing comments before we open the call for questions. Tara?

Thank you, Steve, and good morning, everyone. I will provide a brief review of the second quarter 2026 financial results and the company's liquidity position. Our Form 10-Q contains a more detailed discussion, and the reconciliation of our non-GAAP measures is included in today's earnings release. Revenue for the second quarter of 2026 was $2.18 million, an increase of approximately $312,000, or 17%, compared with $1.86 million in the second quarter of 2025. The increase was primarily attributable to the addition of family beginnings, which contributed for the full quarter following the February acquisition. Cost of services was approximately $1.4 million compared with approximately $1.1 million in the prior year quarter. The increase was primarily related to the addition of family beginnings and approximately $0.1 million of one-time staffing costs at the Georgia Clinic. As we move forward, our focus is on aligning staffing and other direct costs with patient volumes while maintaining the clinical quality and patient experience that are essential to the business. Test G&A expense decreased to approximately $1.9 million from approximately $2.2 million in the second quarter of 2025, primarily due to lower professional services expense. Depreciation and amortization expense was approximately $146,000 compared to approximately $170,000 in the prior year period. Loss from operations improved to approximately $1.3 million from approximately $3 million in the second quarter of 2025. The prior year period included a $1.5 million impairment charge related to the Wisconsin Acquisition Settlement. Excluding that difference, we still need to continue improving consolidated operating performance, but the year-over-year reduction reflects lower professional fees, lower stock-based compensation, and cleaner operating structure. Net income from continuing operations was approximately $0.9 million, compared to a net loss from continuing operations of approximately $1.5 million in the prior year quarter. The current year period included approximately 2.5 million non-cash gain on remeasurement related to the Birmingham acquisition. Because that gain is not part of recurring operations, we continue to focus on the operating performance and the adjusted EBITDA trends that reflect the underlying business. Adjusted EBITDA for the second quarter was approximately negative 1 million compared with approximately negative 0.6 million in the second quarter of 2025. As Steve discussed, clinic-level adjusted EBITDA before corporate operating and public company expenses was approximately $333,000 for the quarter, compared with $164,000 in the first quarter of 2026, and approximately $951,000 for fiscal year 2025. The difference between clinic-level and consolidated adjusted EBITDA reflects the corporate operating expenses and investments required to support a public company in a larger clinic platform. Turning to the balance sheet, cash was approximately $3.7 million at June 30, 2026, compared to approximately $2.1 million at December 31, 2025. Total liabilities decreased to approximately $9.3 million at June 30 from approximately $13 million at year end, while stockholders' equity increased to approximately $16.5 million from approximately $7.2 million.

During the first two

In the first six months of 2026, the company received approximately $7.1 million of net proceeds from warrant exercises. Those proceeds were partially used to pay approximately $2 million of deferred acquisition related to Wisconsin and approximately $0.2 million of debt principal. For the first six months of 2026, net cash used in operating activities was approximately $3 million, compared with approximately $5.3 million in the first six months of 2025. The improvement primarily reflects the separation from NIA and the resulting change in the operating structure. Cash provided by financing activities was approximately $4.9 million for the first six months of 2026. The company continues to require additional capital until consolidated operations generate sufficient cash to fund the business and its growth strategy. In July, we entered into an equity purchase facility that gives IMBO the right, but not the obligation, to sell up to $15 million of common stock to Alumni Capital, with the potential to increase the commitment by mutual agreement. The timing and amount of any sales are at the company's discretion. We view this as a source of financial flexibility, not as a commitment to draw the full amount, and we intend to evaluate any use of the facility in the context of market conditions, liquidity needs, and the expected return from acquisition or growth opportunities. Finally, as of August 14th, 2026, the company had 2,506,969 shares of common stock outstanding. Overall, the quarter showed revenue growth, a lower operating loss, positive net income driven by the Birmingham remeasurement gain, continued positive clinic contribution, and a stronger balance sheet than at year-end 2025. The financial priority is to convert those improvements into better consolidated adjusted EBITDA and lower cash usage by increasing clinic-level earnings, maintaining expense discipline, and deploying capital selectively. With that financial overview, I turn the call back to Steve.

Thank you, Tara. As we look ahead, we are concentrating our efforts on building a larger network of high-quality fertility clinics and driving the overall company to sustained profitability. As you've heard, our existing clinic platform independent of our corporate and public company costs is already profitable. As we expand from here, we will look to improve operating leverage and reach that sustained corporate-level profitability target. The results show that there is real operating value with our existing platform. The next step is to build on it. We believe this will ultimately create long-term shareholder value. We want to thank our physicians, embryologists, nurses, clinical personnel, and administrative teams across Wisconsin, Georgia, Alabama, and our corporate organization Fertility care is deeply personal, and the quality of the patient experience depends on the commitment of these teams every day. I also want to thank our shareholders for their patience and continued support through a period of significant change. We believe the company today is more focused, more understandable, and better positioned than it has been in several years. Robert, we're now ready to open the call for questions.

All right, very good, Steve and Tara. Thank you for the prepared remarks. Once again, to anyone listening through the webcast platform, if you would like to ask a question, you can type it into the Ask a Question box there on the webcast player. Steve and Tara, there's a question here, I guess largely pertaining to sort of the appetite in the market for clinics to be acquired right now. Anything that you can provide some details on there?

Well, I would say that there are quite a few still independently operated clinics. You know, one of the, you know, we've seen much of the investor enthusiasm within the fertility industry has been within the private markets, and we've seen over half the industry consolidated within the private market space. But that still leaves a, you know, a fair number of clinics out there that are still independently operated. And as we've said numerous times, we believe there are quite a few clinics that are interested in becoming part of a larger network. And our public platform gives them an alternative route to doing that and what we believe with some advantages. We have great conversations going on with a number of potential operators. And as I stated earlier, we're quite confident that we'll be able to execute on additional acquisitions.

All right, very good. The next question here pertains to a gain on the remeasurement, which was talked about in the financial results. And Tara, I believe you touched on anything that you can add there.

Yes, it was essentially the estimated fair value measurement of our existing investment in the Birmingham Clinic at the time that we acquired the other 50%.

Very good. Once again, just a quick reminder to everyone, if you're listening to the webcast portal and would like to ask a question, type it into the webcast player there. Tara, it looks like there's a question here just sort of pertaining to the broader market tailwinds. What are you seeing right now in the marketplace?

Well, the fertility industry has long benefited from the macro picture with a large potential patient population and steady progress towards improving affordability, specifically with better patient insurance options. So more recently, the more supportive policy efforts coming from the current administration really only enhance that backdrop. You know, many patients struggle to obtain fertility care due to affordability. So these efforts to help with affordability only drive demand. And we and the overall industry expect that to continue, which will really help further grow the entire industry. And again, this is something that the industry has been benefiting from for quite some time. And we've seen just very steady growth within this industry. And I think these factors will only continue to allow that to occur.

I'm showing no further questions here. So, Steve, I guess with that, I will turn it back over to you for any closing remarks.

Well, once again, we appreciate everyone joining us today. We appreciate the questions. Should you have any follow-up, please do not hesitate to reach out to us. On behalf of our entire team, we're very excited about what we've established so far and the future outlook for the company, and we look forward to keeping you posted on our progress from here. Thank you. Have a great day.