Wednesday, Avid Bioservices Inc ( CDMO ) reported preliminary revenues for the third quarter of fiscal 2024 of $33.8 million, representing an 11% decrease Y/Y and lower than the consensus of $34.19 million.

The revenue decrease was primarily attributed to fewer manufacturing runs and reduced process development services from early-stage customers. 

The company’s commercial team signed multiple new orders during the third quarter of fiscal 2024, totaling approximately $41 million net, resulting in a revenue backlog of $206 million, representing an increase of 17%.

Gross profit for the third quarter of fiscal 2024 was $2.4 million (7% gross margin), compared to $9.8 million (26% gross margin) in the third quarter of fiscal 2023, primarily driven by fewer manufacturing runs, a reduction in process development services from early-stage customers, and an increase in costs related to expansions of both the company’s capacity and technical capabilities. 

Operating loss for the third quarter of fiscal 2024 was $(4.0) million, a turnaround from an operating income of $2.7 million.

As of January 31, 2024, Avid Bioservices ( CDMO ) held cash and cash equivalents of $30.7 million.

Avid Bioservices ( CDMO ) completed its cell and gene therapy (or CGT) facility, representing the final step in a three-year expansion program. Avid Bioservices ( CDMO ) estimates that its combined mammalian and CGT facilities have a total revenue-generating capacity of approximately $400 million annually.

Guidance: Avid Bioservices ( CDMO ) maintains fiscal year 2024 revenue of $137 million-$147 million compared to the consensus of $138.9 million.

Concurrently, the contract development and manufacturing organization priced $160 million of 7% Convertible Senior Notes due 2029. 

The conversion rate for the 2029 Notes will initially be 101.1250 shares of the company’s common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $9.89 per share).

Price Action: CDMO shares are down 29% at $6.24 on the last check Thursday.