Shares of Avid Bioservices (NASDAQ:CDMO), a provider of contract development and manufacturing services for biopharma companies, had risen 10% as of 12:20 p.m. EST on Tuesday. The double-digit move is a response to the release of results from the third quarter of fiscal 2019.
Here are the headline numbers from the period:
- Revenue more than doubled to $13.78 million. This was slightly ahead of what Wall Street had expected.
- Backlog at quarter's end was $43 million.
- Gross margin was 15% for the quarter, which is a significant improvement from the negative 61% reported in the year-ago period.
- Non-GAAP (generally accepted accounting principles) net loss was $1.1 million, or $0.05 per share. That was much lower than the $0.23 loss in the year-ago period and compared favorably to the $0.07 loss that Wall Street expected.
- Cash balance at quarter end was $27.8 million.
Management also tweaked its revenue guidance for the year, stating that it now expects to end within the "lower half" of its range of $51 million to $55 million. For context, Wall Street was expecting $52.8 million in revenue for the year.
Traders appear to be squarely focused on the better-than-expected quarterly results and are shaking off the weak guidance.
Avid's CEO Roger Lias nicely summarized the progress that has been made over the last year:
During the past 12 months we have significantly diversified our client base, thus reducing risk and building a pipeline of future manufacturing opportunities. We have built commercial and operational infrastructure to support growth, right-sized the organization, significantly cut costs, and increased capacity utilization resulting in improved margins. As a result, we are firmly on-track toward profitability and positive EBITDA.
Overall, revenue is rising, the backlog is growing, margins are heading in the right direction, and the net loss is shrinking. That's a lot of positive developments for investors to be excited about.
On the flip side, the company is still losing money, so this is still a risky business. However, there is a lot going right for this company right now, so I look forward to tracking this company's progress from the sidelines.