Avalon GloboCare Corp. (NASDAQ:ALBT) is a commercial stage company dedicated to developing and delivering innovative, transformative, precision diagnostics and clinical laboratory services. The company is establishing a leading role in the innovation of diagnostic testing, utilizing proprietary technology to deliver precise, genetics-driven results.
Financials
In the first quarter of 2024, ALBT reported revenue of $314,588, up 6.2% from $296,165 in the same period of the prior year. This increase was primarily attributable to an increase in the number of tenants occupying the company's commercial real estate property in New Jersey. Gross profit from the real estate operations was $51,462, up 7.8% from $47,720 in Q1 2023.
ALBT also reported income of $107,469 from its 40% equity investment in Laboratory Services MSO, LLC ("Lab Services MSO"), a significant improvement from the $89,091 loss recorded in the prior year period. Lab Services MSO, which ALBT acquired a stake in during February 2023, is focused on delivering high-quality services related to toxicology and wellness testing, and provides a broad portfolio of diagnostic tests.
On the expense side, ALBT reported total operating expenses of $1,001,993 in Q1 2024, down 63.0% from $2,711,956 in Q1 2023. This decrease was primarily driven by lower advertising and marketing expenses, as well as decreases in professional fees, compensation, and research and development costs.
Net loss for the quarter was $1,367,513, or $0.12 per share, compared to a net loss of $2,919,744, or $0.29 per share, in the prior year period. The improvement in net loss was largely due to the increase in income from the Lab Services MSO investment and the reduction in operating expenses.
Looking at the full year 2023, ALBT reported annual revenue of $1,255,681, annual net loss of $16,707,010, annual operating cash flow of -$6,504,718, and annual free cash flow of -$6,526,877.
Liquidity
ALBT's balance sheet remains challenged, with a working capital deficit of $7,025,517 as of March 31, 2024. The company has been actively raising capital to fund its operations, including through the issuance of convertible notes and an at-the-market (ATM) equity offering program. As of March 31, 2024, ALBT had cash of $305,468.
Business Overview
In terms of the company's business segments, ALBT operates in two main areas: real property operations and laboratory testing services. The real property operations segment generated $314,588 in revenue and $51,462 in operating income in Q1 2024, with the company's commercial real estate property in New Jersey maintaining an occupancy rate of 89.4% as of the end of the quarter.
The laboratory testing services segment, which commenced with ALBT's acquisition of a 40% stake in Lab Services MSO in February 2023, contributed $107,469 in income during the first quarter. Lab Services MSO has been focused on expanding its capabilities, including the acquisition of Merlin Technologies, Inc., a medical equipment retail company, and the opening of a new laboratory, Veritas Laboratories LLC, in Scottsdale, Arizona.
Outlook
Looking ahead, ALBT is focused on several key initiatives to drive growth and profitability. The company is continuing to pursue its laboratory rollup strategy, seeking to acquire additional laboratories that are accretive to its commercial strategy. ALBT is also working to commercialize its versatile breathalyzer system, the KetoAir, which it plans to target towards the diabetes and obesity markets.
Risks and Challenges
In terms of risks, ALBT faces challenges related to its limited operating history, the need for additional financing to fund its operations and growth initiatives, and the competitive nature of the diagnostic testing and laboratory services industries. The company also recently experienced an event of default under its convertible note agreements due to its market capitalization falling below $5 million, though it has since received waivers from its lenders.
Conclusion
Overall, ALBT is a company in transition, working to establish a leading position in the precision diagnostics and laboratory services markets through a combination of organic growth and strategic acquisitions. While the company's financial performance has been mixed, the potential upside from its laboratory rollup strategy and product commercialization efforts make ALBT an interesting stock to watch in the healthcare technology space.