ENZO BIOCHEM INC (ENZ)·Q1 2025 Earnings Summary

Executive Summary

• Q1 FY2025 (quarter ended October 31, 2024) revenue was $6.21M with GAAP EPS of $(0.07); gross margin was approximately 41% per 10‑Q, with an additional 4% of revenue reserved as inventory provision, reflecting market demand headwinds and portfolio optimization .
• Sequentially, Q2 FY2025 improved: revenue rose to $7.33M (+18% q/q) and gross margin increased to 52%; the Products segment swung to a $0.5M operating profit from a $1.5M loss in Q1, driven by mix and cost actions .
• The Board declared and paid a $0.10 per share dividend (Dec 2, 2024) while cash declined from $52.37M (Q4 FY2024) to $47.74M (Q1) and $40.30M (Q2), reflecting operating losses, discontinued operations paydowns and the dividend, partially offset by release of $5.0M escrow proceeds .
• Catalysts: NYSE non‑compliance notice (Jan 14, 2025), voluntary delisting to OTCQX (effective April 21, 2025), and initiation of a strategic alternatives review following inbound inquiries — all likely to drive stock narrative and liquidity considerations .

What Went Well and What Went Wrong

What Went Well

• Sequential margin expansion: Q2 FY2025 gross margin rose to 52% (from 37% in Q1 when including inventory provision), aided by cost efficiency and product mix improvement .
• Products segment profitability: Q2 FY2025 Products delivered a $0.5M operating profit vs a $1.5M loss in Q1, signaling operating leverage as volumes and mix improved .
• Management execution on cost: SG&A and R&D declined 22% and 27% YTD through Q2 FY2025, underscoring cost discipline; management continued SKU rationalization and product launches, doubling new products vs prior full year .

Management quotes:

• “In a challenging life sciences market… we reported single-digit revenue growth for the year with significant gross margin improvement… stabilize revenue… improve gross margin performance, and launch new products.” — Kara Cannon, CEO (Q4 FY2024 PR) .
• “The Board is committed to acting in the best interests of shareholders and intends to run a thorough review process.” — Steven Pully, Chairman (strategic alternatives PR) .

What Went Wrong

• Demand headwinds: Q1 FY2025 revenue fell 20% YoY due to reduced orders in the clinical market and lack of repeat large industrial orders; broad geographic declines cited .
• Inventory write‑downs: Q1 FY2025 recorded a $0.252M raw‑material inventory provision (4% of revenue), compressing margin when included in COGS .
• Cash drawdown: Cash declined to $47.74M in Q1 and further to $40.30M in Q2 due to losses, discontinued ops paydowns, and the dividend payment ; working capital fell from $45.24M (Q4 FY2024) to $36.3M (Q1) and $35.04M (Q2) .

Financial Results

Quarterly Financials (oldest → newest)

Note: Q1 gross margin appears as ~41% in the 10‑Q MD&A excluding inventory provision, while Q2 PR cites 37% for Q1 when including the $0.252M provision in cost of revenues; this definitional difference explains the discrepancy .

YoY Comparison – Q1

Geographic Revenue Breakdown

KPIs (oldest → newest)

Guidance Changes

No formal quantitative guidance was provided for revenue, margins, OpEx, EPS, or other financial items in Q1 FY2025 or surrounding periods.

Earnings Call Themes & Trends

No Q1 FY2025 earnings call transcript was available. Narrative themes across filings and press releases:

Management Commentary

• Kara Cannon (CEO): “Enzo has delivered on the objectives set last year to stabilize revenue, leverage an efficient global infrastructure, improve gross margin performance, and launch new products.” .
• Steven Pully (Chairman): “It makes sense to form the Special Committee and fully evaluate the range of possibilities… including a potential strategic transaction, business combination, full sale of the Company or return of excess capital to shareholders.” .

Q&A Highlights

No Q1 FY2025 earnings call transcript was filed; therefore, no Q&A highlights are available for this quarter.

Estimates Context

S&P Global consensus estimates for ENZ were unavailable due to a missing mapping at the time of retrieval; therefore, beats/misses vs Wall Street cannot be assessed in this recap. Values would be retrieved from S&P Global if available.

Key Takeaways for Investors

• Sequential operating improvement: Q2 FY2025 delivered higher revenue (+18% q/q) and materially higher gross margin (52%), with the Products segment turning profitable — a sign of improving mix and cost efficiencies .
• Understand Q1 margin optics: The 10‑Q cites ~41% gross margin excluding a $0.25M inventory provision; including it yields ~37% as referenced in Q2 PR — watch for ongoing portfolio optimization impacts on reported margins .
• Cash discipline vs outflows: Cash fell to $40.30M by Q2 after losses, discontinued operations paydowns, and the $5.32M dividend; the $5.0M escrow release provided partial offset — monitor liquidity trajectory and working capital (now ~$35.0M) .
• Legal overhang moderating: Regulatory settlements paid; EDNY class action preliminarily approved with $7.5M accrued and $0.8M notice cost paid — remaining matters (OCR, SDNY whistleblower) continue; outcome timing uncertain .
• Listing transition: Voluntary delisting from NYSE to OTCQX likely affects trading liquidity/coverage; the strategic alternatives process (special committee; advisors) introduces potential corporate actions as catalysts .
• Near‑term trading implication: Watch for continued sequential margin/operating improvements and any updates on strategic alternatives; liquidity and legal developments may drive volatility .
• Medium‑term thesis: If demand normalizes and launches sustain mix benefits, ENZ’s Products platform could demonstrate operating leverage; capital allocation (e.g., dividends, potential transactions) and resolution of legal matters are key de‑risking steps .