Executive Summary

ABMC delivered sequential net sales growth of 16.1% QoQ to $614,000 in Q3 2021 vs $529,000 in Q2 2021, while net sales fell 30.5% YoY vs $883,000 in Q3 2020; management cited recovery in core drug testing, increased contract manufacturing, stabilized clinical sales, and higher rapid Covid-19 test sales from new offerings .
EPS swung to $0.02 vs $(0.01) in Q2 and $(0.01) in Q3 2020, driven by non-operating items: PPP loan forgiveness of $332,000 and Employee Retention Credit (ERC) income of $44,000 plus $537,000 from amended returns; net income reached $663,000 despite an operating loss of $(204,000) .
Gross margin expanded to 30.1% (Q2: 25.7%, Q1: 18.6%) on product mix and sequential sales growth; operating margin remained negative at -33.2% and core profitability relies on further recovery and cost control .
Supply chain delays left $336,000 of open drug test orders at quarter-end; management expects a second consecutive quarter of sales growth in Q4 and sees potential for contract manufacturing sales to increase into 2022—key near-term stock catalysts .

What Went Well and What Went Wrong

What Went Well

Sequential growth returned: “sales actually increased 16.1% in the third quarter 2021” vs Q2 on recovery in drug testing, higher contract manufacturing, stabilized clinical, and new Covid-19 tests .
Non-operating tailwind: PPP loan forgiveness ($332,000) and ERC ($44,000 current plus $537,000 refunds) turned quarterly net income positive to $663,000 and EPS to $0.02 .
Forward momentum: “we believe a second consecutive quarter of sales growth is possible in 2021… potential for contract manufacturing sales to further increase into 2022” .

What Went Wrong

YoY top-line pressure: Net sales down 30.5% YoY on reduced Covid-19 test sales; nine-month net sales down 49.3% YoY for the same reason .
Supply chain constraints: $336,000 in open drug test orders at quarter-end due to raw material and component delays, though purchasing schedules are being adjusted .
Core market fragility: Through H1 management flagged “uncertainty in our core drug testing markets” and reduced demand from lower workforce, telecommuting, and budget constraints; Q2 drug test sales decreased YoY by $112,000 .

Financial Results

Quarterly Performance vs Prior Periods

Metric	Q1 2021	Q2 2021	Q3 2021
Net Sales ($USD Thousands)	$566	$529	$614
EPS (Basic & Diluted) ($USD)	$(0.01)	$(0.01)	$0.02
Gross Profit ($USD Thousands)	$105	$136	$185
Gross Margin (%)	18.6%	25.7%	30.1%
Operating Income (Loss) ($USD Thousands)	$(509)	$(244)	$(204)
Operating Margin (%)	-89.9%	-46.1%	-33.2%
Net Income (Loss) ($USD Thousands)	$(556)	$(245)	$663
Net Income Margin (%)	-98.2%	-46.3%	108.0%
Weighted Avg Shares (Basic & Diluted)	38,859,032	40,950,729	44,020,650

Notes: Margins are computed from press release-reported figures in cited cells.

Year-over-Year (Q3 2021 vs Q3 2020)

Metric	Q3 2020	Q3 2021	YoY Change
Net Sales ($USD Thousands)	$883	$614	-30.5%
EPS (Basic & Diluted) ($USD)	$(0.01)	$0.02	+$0.03 (non-operating driven)
Gross Profit ($USD Thousands)	$235	$185	-21.3%
Gross Margin (%)	26.6%	30.1%	+350 bps
Operating Income (Loss) ($USD Thousands)	$(172)	$(204)	-$32
Net Income (Loss) ($USD Thousands)	$(216)	$663	+$879 (PPP/ERC)

KPIs and Notable Items

KPI / Item	Q1 2021	Q2 2021	Q3 2021
Open Drug Test Sales Orders ($USD Thousands)	—	$128	$336
PPP Loan Forgiveness Recognized ($USD Thousands)	—	—	$332
ERC Recognized ($USD Thousands)	—	—	$44 current; $537 refunds via amended returns
ERC Tax Receivable on Balance Sheet ($USD Thousands)	—	—	$537
Cash and Cash Equivalents ($USD Thousands)	$63	$30	$41
Line of Credit ($USD Thousands)	$245	$287	$446
Current Portion of Long-Term Debt ($USD Thousands)	$1,290	$1,290	$1,290

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales (sequential growth)	Q4 2021	None	“We believe a second consecutive quarter of sales growth is possible in 2021.”	Raised (directional)
Operating Expenses	Q4 2021 onward	None	“Barring any unexpected expense, we believe this level of operating expenses will continue as we closely examine all expenses so they remain in line with sales.”	Maintained
Contract Manufacturing Sales	FY2022	None	“Based on current information, there is potential for contract manufacturing sales to further increase into 2022.”	Raised (directional)

No formal numeric guidance ranges (revenue, margins, tax rate, etc.) were provided in Q3 2021 .

Earnings Call Themes & Trends

Note: No earnings call transcript was available for Q3 2021; themes below reflect press release commentary across quarters.

Topic	Previous Mentions (Q2 & Q1)	Current Period (Q3)	Trend
Supply Chain & Lead Times	Longer lead times for raw materials and plastics; adjusted purchasing schedules . Core markets uncertain due to pandemic recovery .	$336k open drug test orders due to delays; mitigating increased lead times .	Persistent constraint but mitigation underway
Product Mix & Covid-19 Tests	Covid test demand declined vs 2020; new offerings introduced in late Apr/May .	Higher sales of rapid Covid-19 tests from new products offered within last few months .	Stabilizing off lows; contribution from new products
Contract Manufacturing	Orders from 2020 shipping in Q2/Q3; new order in April; increased RSV orders; pilot did not convert .	Increased contract manufacturing sales; potential further increase into 2022 .	Improving trajectory
Core Drug Testing Demand	“Uncertainty in our core drug testing markets” with reduced testing volumes .	Markets “continuing to return to normal” supporting QoQ growth .	Gradual recovery
Regulatory/EUA for Covid Tests	Compliance with EUA policy emphasized; product changes due to manufacturer restrictions .	Continued distribution of Covid tests; no new regulatory issues disclosed .	Stable compliance posture
Operating Expenses	Aggressive management of OpEx; Q2 OpEx down 32.9% YoY .	OpEx expected to remain at current levels barring unexpected expense .	Steady cost control
Non-operating Items (PPP/ERC)	PPP forgiveness expected; SBA reviewing application .	PPP fully forgiven; ERC recognized and refunds filed .	Realized tailwinds

Management Commentary

“We are encouraged by the fact that when compared to the second quarter 2021, sales actually increased 16.1% in the third quarter 2021.”
“At the end of the third quarter, we had open sales orders of ABMC drug tests in the amount of $336,000 due to continued delays in our supply chains… As of today, our open sales order levels have decreased to a more reasonable level.”
“Net sales declined 30.5% in the third quarter 2021 when compared to the third quarter 2020… the primary reason… was decreased sales of Covid-19 rapid tests.”
“Our PPP loan (in the amount of $332,000) was forgiven in August 2021… we began claiming the Employee Retention Credit (ERC)… other income in the amount of $44,000… and… $537,000 in the third quarter 2021.”
“We believe a second consecutive quarter of sales growth is possible in 2021… potential for contract manufacturing sales to further increase into 2022.”

Q&A Highlights

No earnings call/Q&A transcript was available for Q3 2021; management disclosures were provided via the 8-K press release .

Estimates Context

Wall Street consensus estimates via S&P Global were unavailable for ABMC for Q1–Q3 2021 due to missing CIQ mapping; therefore, no comparison to consensus EPS or revenue can be provided at this time.

Key Takeaways for Investors

Sequential recovery is real: net sales up 16.1% QoQ to $614k; gross margin improved to 30.1%—watch for follow-through in Q4 as management expects another quarter of growth .
Profitability boost was non-operating: Q3 EPS $0.02 and net income $663k driven by PPP forgiveness and ERC; core operations still loss-making (operating margin -33.2%)—normalize expectations accordingly .
Product mix is stabilizing: new rapid Covid-19 offerings plus recovering drug testing demand supported margin gains; contract manufacturing looks like a 2022 growth lever .
Supply chain remains a swing factor: $336k open orders at quarter-end highlight ongoing constraints; mitigation steps are in place—monitor backlog conversion and lead times .
Liquidity is tight and near-term maturities loom: cash $41k, line of credit $446k, and $1.29M current portion of long-term debt—balance sheet discipline and ERC inflows are key .
No formal guidance: directional commentary suggests stable OpEx and potential sales growth; absence of numeric guidance increases result variability .
Trading setup: near-term stock reactions likely tied to sequential sales confirmation in Q4 and visibility into contract manufacturing ramp; risks are demand normalization pace and supply chain timing .

AMERICAN BIO MEDICA CORP (ABMC)·Q3 2021 Earnings Summary