BASi posts 1st full year profit since 2007 despite Q4 loss
Weak demand, delays and pricing pressures squeezed BASi (Bioanalytical Systems, Inc) last year but there are signs of improvement. In fiscal 2011 BASi posted net income of $0.54m (€0.41m), its first full year net profit since 2007, and thinks the recovery can continue.
“We are optimistic that the company will deliver further revenue and earnings growth in fiscal 2012”, Anthony Chilton, president and CEO of BASi, said. The predicted increase in outsourcing of discovery work will drive growth, Chilton said, and begin to offset the “difficult economic environment”.
BASi again faced “delays in certain projects” in fiscal 2011, Chilton said, but still achieved double-digit revenue growth. The upturn in sales continued in the fourth quarter but BASi posted a net loss, its first of the year. Unusually high expenses and the mix of services underpinned the $0.67m loss.
Chilton told investors the loss, which went against predictions, was due to additions to the European sales and business development team. Michael Cox, chief financial officer at BASi, said it was an unusual quarter for expenses and SG&A (selling, general and administrative) costs will stabilise.
In 2011 the expanded sales team added 17 per cent to selling costs but also brought in 25 new clients. These clients “are not necessarily big dollar” accounts, Chilton said, but revenues will increase if the projects progress to toxicology.
Large clients are increasingly looking to outsource multiple tasks to a single vendor. Chilton said this shift towards strategic outsourcing has hurt BASi, with big clients now looking to use a single vendor for clinical and bioanalytical work.
In response BASi has looked at where it, as small CRO, can grow. Sales efforts are trying to attract biotechs and small pharma, Chilton said, as these companies are “more comfortable working with CROs of our size”.
“[BASi is positioned to] expand business with the growing population of small biotech and pharmaceutical companies that have become a major force in new drug discovery”, Chilton said.
Some new clients were attracted by $2m of new equipment BASi has installed. “We have been able to attract some interesting enquiries”, Chilton said. In particular adding more sensitive tools has equipped BASi to perform work on inhaled compounds.
To attract more clients BASi is looking to expand its “service offerings through accretive acquisitions if appropriate opportunities become available”, Chilton said. Charles River has also repeatedly said it is seeking to expand its portfolio of discovery services and geographic reach through acquisitions.