Like most stocks, Avid Bioservices (CDMO -2.60%) plunged earlier this year in the wake of the COVID-19 pandemic. However, the contract development and manufacturing organization (CDMO) has bounced back nicely and isn't too far away from its share price at the beginning of 2020.
The company could get some help with its rebound after announcing its fiscal 2020 fourth-quarter and full-year results after the market closed on Tuesday. Here are the highlights from Avid's Q4 update.
By the numbers
Avid Bioservices announced Q4 revenue of $12.6 million, a 26% decrease from the $17.1 million reported in the same quarter of the previous year. However, this figure still handily topped the average analysts' revenue estimate of $8.5 million.
The company reported a net loss in the fourth quarter of $4.8 million, or $0.11 per share, based on generally accepted accounting principles (GAAP). This reflected significant deterioration from the GAAP earnings of $336 million, or $0.02 per share, in the prior-year period. Again, though, Avid beat the consensus Wall Street expectation of an adjusted net loss of $0.16 per share.
Avid's revenue backlog as of April 30, 2020, the end of its fiscal 2020, totaled $65 million. This was 12% higher than its revenue backlog at the end of the previous quarter and a 41% year-over-year increase.
Behind the numbers
It's no surprise what caused Avid's revenue decline in the fourth quarter. In March, the company announced that it was having problems with a specific piece of equipment. Those problems forced Avid to discard in-process manufacturing runs, delay some of its scheduled manufacturing, and slash its full-year fiscal 2020 revenue guidance.
However, the good news for Avid was that it experienced an increase in customer projects. This increase enabled the company to deliver better-than-expected revenue.
Avid's worsening bottom-line compared to the prior-year period was primarily a result of its lower revenue. The production problems were also a major factor behind gross margin falling to negative 10% from 21% in the same quarter of fiscal 2019.
The future looks brighter for Avid Biosciences. The company's revenue backlog is at an all-time high. Avid expects that it will recognize most of this backlog during fiscal 2021. Interim CEO Rick Hancock stated that the company anticipates "meaningful growth" in the new fiscal year.
Hancock also said that the equipment that caused the production problems in Q3 and Q4 is "now operational". However, he noted that the company is in the process of confirming the issues are fully resolved. This effort should wrap up in the next few months.
While the COVID-19 pandemic has presented challenges for many companies in the healthcare sector, Avid could benefit from the viral outbreak. Hancock mentioned that Avid is in talks with third parties about assisting with programs to fight COVID-19.
Avid also will soon have a new CEO. The company recently announced that Nicholas Green will take the top spot. Green previously served as president and CEO of Therapure Biopharma.