Enzo Biochem, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Segment reporting

Segment reporting

9 Months Ended

Apr. 30, 2020

Note 11 – Segment reporting

The Company has three reportable segments: Products, Clinical Services and Therapeutics. The Company’s Products segment develops, manufactures, and markets products to research and pharmaceutical customers. The Clinical 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 and related expenses 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 and related 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 Products 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:

Three months ended April 30, 2020

	Clinical Services			Products			Therapeutics			Other			Consolidated
Revenues – Services and Products	$	9,739		$	6,417			—			—		$	16,156
Grant income		747			—			—			—			747
Total		10,486			6,417			—			—			16,903

Operating costs and expenses:
Cost of revenues		9,133			3,345			—			—			12,478
Research and development		395			580		$	188			—			1,163
Selling, general and administrative		5,902			2,667			—		$	2,492			11,061
Legal and related expenses		52			—			—			1,873			1,925
Total operating costs and expenses		15,482			6,592			188			4,365			26,627

Operating loss		(4,996	)		(175	)		(188	)		(4,365	)		(9,724	)

Other income (expense):
Interest		(7	)		11			—			83			87
Other		1			4			—			130			135
Foreign exchange loss		—			(358	)		—			—			(358	)
Loss before income taxes	$	(5,002	)	$	(518	)	$	(188	)	$	(4,152	)	$	(9,860	)

Depreciation and amortization included above	$	373		$	278		$	—		$	66		$	717

Share-based compensation included in above:
Selling, general and administrative		21			14			—			172			207
Total	$	21		$	14		$	—		$	172		$	207

Capital expenditures	$	225		$	60		$	—		$	—		$	285

Three months ended April 30, 2019

	Clinical Services			Products			Therapeutics			Other			Consolidated
Revenues	$	11,751		$	7,911			—			—		$	19,662

Operating costs, expenses and legal settlements, net:
Cost of revenues		10,963			3,397			—			—			14,360
Research and development		31			527		$	223			—			781
Selling, general and administrative		5,960			2,923			—		$	2,037			10,920
Legal fee expense		35			16			—			206			257
Legal settlements, net		—			(28,925	)		—			—			(28,925	)
Total operating costs, expenses, and legal settlements, net		16,989			(22,062	)		223			2,243			(2,607	)

Operating income (loss)		(5,238	)		29,973			(223	)		(2,243	)		22,269

Other income (expense):
Interest		(18	)		19			—			257			258
Other		6			—			—			64			70
Foreign exchange loss		—			(332	)		—			—			(332	)
(Loss) income before income taxes	$	(5,250	)	$	29,660		$	(223	)	$	(1,922	)	$	22,265

Depreciation and amortization included above	$	440		$	340		$	—		$	58		$	838

Share-based compensation included in above:
Selling, general and administrative		40			24			—			135			199
Total	$	40		$	24		$	—		$	135		$	199

Capital expenditures	$	120		$	446		$	—		$	—		$	566

Nine months ended April 30, 2020

	Clinical Services			Products			Therapeutics			Other			Consolidated
Revenues – Services and Products	$	35,032		$	20,715			—			—		$	55,747
Grant income		747			—			—			—			747
Total		35,779			20,715			—			—			56,494

Operating costs and expenses:
Cost of revenues		30,351			10,223			—			—			40,574
Research and development		1,118			1,599		$	565			—			3,282
Selling, general and administrative		18,012			7,954			—		$	6,927			32,893
Legal and related expenses		140			1			—			5,540			5,681
Total operating costs and expenses		49,621			19,777			565			12,467			82,430

Operating income (loss)		(13,842	)		938			(565	)		(12,467	)		(25,936	)

Other income (expense):
Interest		(29	)		45			—			479			495
Other		20			(1	)		—			315			334
Foreign exchange loss		—			(88	)		—			—			(88	)
Income (loss) before income taxes	$	(13,851	)	$	894		$	(565	)	$	(11,673	)	$	(25,195	)

Depreciation and amortization included above	$	1,174		$	781		$	—		$	196		$	2,151

Share-based compensation included in above:
Selling, general and administrative		88			58			—			582			728
Total	$	88		$	58		$	—		$	582		$	728

Capital expenditures	$	514		$	205		$	—		$	—		$	719

Nine months ended April 30, 2019

	Clinical Services			Products			Therapeutics			Other			Consolidated
Revenues	$	38,048		$	22,201			—			—		$	60,249

Operating costs, expenses and legal settlements, net:
Cost of revenues		32,956			10,391			—			—			43,347
Research and development		31			1,645		$	668			—			2,344
Selling, general and administrative		18,220			8,828			—		$	6,339			33,387
Legal fee expense		109			24			—			2,567			2,700
Legal settlements, net		—			(28,925	)		—			—			(28,925	)
Total operating costs, expenses and legal settlements, net		51,316			(8,037	)		668			8,906			52,853

Operating income (loss)		(13,268	)		30,238			(668	)		(8,906	)		7,396

Other income (expense):
Interest		(51	)		49			—			761			759
Other		17			—			—			232			249
Foreign exchange loss (gain)		—			(530	)		—			—			(530	)
(Loss) income before income taxes	$	(13,302	)	$	29,757		$	(668	)	$	(7,913	)	$	7,874

Depreciation and amortization included above.	$	1,217		$	1,025		$	—		$	130		$	2,372

Share-based compensation included in above:
Selling, general and administrative		118			74			—			553			725
Total	$	118		$	74		$	—		$	553		$	725

Capital expenditures	$	883		$	524		$	—		$	6,147		$	7,554