Enzo Biochem, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Segment reporting

Segment reporting

12 Months Ended

Jul. 31, 2018

Segment Reporting Disclosure [Text Block]

Note 15 - Segment reporting

The Company has three reportable segments: Life Sciences Products, Clinical Laboratory Services and Therapeutics. The Company’s Life Sciences Products segment develops, manufactures, and markets products to research and pharmaceutical customers. The Clinical Laboratory Services segment provides diagnostic services to the health care community. The Company’s Therapeutics segment conducts research and development activities for therapeutic drug candidates. The Company evaluates segment performance based on segment income (loss) before taxes. Costs excluded from segment income (loss) before taxes and reported as “Other” consist of corporate general and administrative costs which are not allocable to the three reportable segments.

Legal fee expense incurred to defend the Company’s intellectual property, which may result in settlements recognized in another segment and other general corporate matters are considered a component of the Other segment. Legal fee expense specific to other segments’ activities have been allocated to those segments.

Legal settlements, net, represent activities for which royalties would have been received in the Company’s Life Sciences Products segment and expenses related to an investigation within the Clinical Laboratory Services segment. Management of the Company assesses assets on a consolidated basis only and therefore, assets by reportable segment have not been included in the reportable segments below. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.

The following financial information represents the operating results of the reportable segments of the Company:

Year ended July 31, 2018	Clinical Laboratory Services			Life Sciences Products			Therapeutics			Other			Consolidated
Revenues:
Clinical laboratory services	$	74,777			—			—			—		$	74,777
Product revenues		—		$	29,224			—			—			29,224
Royalty and license fee income		—			712			—			—			712
Total revenues		74,777			29,936			—			—			104,713

Operating costs and expenses:
Cost of clinical laboratory services		46,008			—			—			—			46,008
Cost of product revenues		—			14,377			—			—			14,377
Research and development		—			2,305		$	905			—			3,210
Selling, general and administrative		24,656			11,627			—		$	8,182			44,465
Provision for uncollectible accounts receivable		3,700			(10	)		—			—			3,690
Legal fee expense		67			58			—			5,002			5,127
Total operating costs and expenses		74,431			28,357			905			13,184			116,877

Operating income (loss)		346			1,579			(905	)		(13,184	)		(12,164	)

Other income (expense)
Interest		(91	)		50			—			894			853
Other		29			11			—			128			168
Foreign exchange gain		—			(275	)		—			—			(275	)
Income (loss) before taxes	$	284		$	1,365		$	(905	)	$	(12,162	)	$	(11,418	)

Depreciation and amortization included above	$	1,667		$	1,387		$	—		$	76		$	3,130

Share-based compensation included in above:
Selling, general and administrative		125			79			—		$	609			813
Total	$	125		$	79		$	—		$	609		$	813

Capital expenditures	$	1,685		$	203		$	—		$	—		$	1,888

The following financial information represents the operating results of the reportable segments of the Company:

Year ended July 31, 2017	Clinical Laboratory Services			Life Sciences Products			Therapeutics			Other			Consolidated
Revenues:
Clinical laboratory services	$	77,407			—			—			—		$	77,407
Product revenues		—		$	29,192			—			—			29,192
Royalty and license fee income		—			1,205			—			—			1,205
Total revenues		77,407			30,397			—			—			107,804

Operating costs, expenses and legal settlements, net:
Cost of clinical laboratory services		45,400			—			—			—			45,400
Cost of product revenues		—			14,078			—			—			14,078
Research and development		—			2,311		$	617			—			2,928
Selling, general and administrative		24,465			11,232			—		$	8,395			44,092
Provision for uncollectible accounts receivable		2,718			57			—			—			2,775
Legal fee expense		146			79			—			1,454			1,679
Total operating costs, expenses and legal settlements, net		72,729			27,757			617			9,767			110,952

Operating income (loss)		4,678			2,640			(617	)		(9,767	)		(3,148	)

Other income (expense)
Interest		(112	)		46			—			450			384
Other		137			(60	)		—			48			125
Foreign exchange gain		—			135			—			—			135
Income (loss) before taxes	$	4,703		$	2,761		$	(617	)	$	(9,269	)	$	(2,504	)

Depreciation and amortization included above	$	1,586		$	1,913		$	—		$	99		$	3,598

Share-based compensation included in above:
Cost of clinical laboratory services	$	6		$	—		$	—		$	—		$	6
Selling, general and administrative		111			74			—		$	640			825
Total	$	117		$	74		$	—		$	640		$	831

Capital expenditures	$	1,363		$	390		$	—		$	—		$	1,753

The following financial information represents the operating results of the reportable segments of the Company:

Year ended July 31, 2016	Clinical Laboratory Services			Life Sciences Products			Therapeutics			Other			Consolidated
Revenues:
Clinical laboratory services	$	70,915			—			—			—		$	70,915
Product revenues		—		$	30,337			—			—			30,337
Royalty and license fee income		—			1,521			—			—			1,521
Total revenues		70,915			31,858			—			—			102,773

Operating costs, expenses and legal settlements, net:
Cost of clinical laboratory services		42,859			—			—			—			42,859
Cost of product revenues		—			14,331			—			—			14,331
Research and development		—			2,720		$	804			—			3,524
Selling, general and administrative		22,882			11,761			—		$	9,098			43,741
Provision for uncollectible accounts receivable		2,375			(39	)		—			—			2,336
Legal fee expense		134			11			—			6,239			6,384
Legal settlements, net		1,500			(58,750	)		—			—			(57,250	)
Total operating costs, expenses and legal settlements, net		69,750			(29,966	)		804			15,337			55,925

Operating (loss) income		1,165			61,824			(804	)		(15,337	)		46,848

Other income (expense)
Interest		(105	)		47			—			(78	)		(136	)
Other		10			38			—			74			122
Foreign exchange gain		—			(474	)		—			—			(474	)

(Loss) income before income taxes	$	1,070		$	61,435		$	(804	)	$	(15,341	)	$	46,360

Depreciation and amortization included above	$	1,676		$	2,091		$	—		$	73		$	3,840

Share-based compensation included in above:
Cost of clinical laboratory services	$	6		$	—		$	—		$	—		$	6
Selling, general and administrative		51			30			—		$	438			519
Total	$	57		$	30		$	—		$	438		$	525

Capital expenditures	$	1,216		$	314		$	—		$	—		$	1,530

Geographic financial information is as follows:

Net sales to unaffiliated customers:	2018		2017		2016
United States	$	95,388	$	99,469	$	94,016
Switzerland		2,584		2,371		2,709
United Kingdom		1,851		1,673		1,730
Other international countries		4,890		4,291		4,318
Total	$	104,713	$	107,804	$	102,773


Long-lived assets at July 31,		2018		2017
United States	$	16,210	$	17,241
Switzerland		502		649
United Kingdom		127		185
Other international countries		135		173
Total	$	16,974	$	18,248

The Company’s reportable segments are determined based on the services they perform, the products they sell, and the royalties and license fee income they earn, not on the geographic area in which they operate. The Company’s Clinical Laboratory Services segment operates 100% in the United States with all revenue derived there. The Life Sciences Products segment earns product revenue both in the United States and foreign countries and royalty and license fee income in the United States. The following is a summary of the Life Sciences Products segment revenues attributable to customers located in the United States and foreign countries:

	2018		2017		2016
United States	$	19,898	$	22,062	$	23,102
Foreign countries		9,326		8,335		8,756
	$	29,224	$	30,397	$	31,858