8-K: INVO Fertility Completes Divestiture of NAYA Therapeutics, Streamlining Operations and Impacting Balance Sheet

INVO Fertility, Inc. has completed the divestiture of a majority of its holdings in NAYA Therapeutics Inc., a move expected to streamline operations but resulting in a significant pro forma reduction in total assets and a shift to negative equity.

Summary

• INVO Fertility, Inc. (IVF) completed the divestiture of a majority of its holdings in NAYA Therapeutics Inc. (NTI), previously a wholly-owned subsidiary, effective June 2, 2025.
• The divestiture was executed by redeeming all outstanding shares of INVO's Series C-1 Non-Voting Convertible Preferred Stock, exchanging them for 3,227,813 shares of NTI Class A Common Stock at a rate of 113.855837742504 NTI shares per Series C-1 Preferred share.
• Following the redemption, INVO Fertility no longer holds common shares of NTI but retained 6,300 shares of NTI Series A Preferred Stock, representing 19.9% of NTI's outstanding common stock on an as-if converted basis.
• NTI also issued a secured convertible promissory note to INVO Fertility in the principal amount of $4,803,175 on May 28, 2025.
• Unaudited pro forma financial statements illustrate the impact of the divestiture, showing a reduction in total assets from $31,744,110 to $21,150,702 as of March 31, 2025.
• Pro forma total equity shifted from a positive $3,335,365 to a deficit of $(2,805,334) as of March 31, 2025.
• For the three months ended March 31, 2025, pro forma net loss improved from $(17,403,586) to $(16,175,379), and pro forma net loss per common share improved from $(12.53) to $(11.64).
• For the fiscal year ended December 31, 2024, pro forma net loss improved from $(9,095,838) to $(5,662,982), and pro forma net loss per common share improved from $(29.25) to $(19.10).
• The pro forma adjustments reflect significant reductions in selling, general and administrative expenses and research and development expenses due to the divestiture of NTI.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive. While the divestiture significantly reduced total assets and shifted total equity to a deficit, it also led to substantial pro forma improvements in net loss and operating expenses, particularly R&D and SG&A. This suggests a strategic streamlining that could benefit the company's core operations and financial efficiency moving forward, despite the immediate balance sheet impact. The elimination of a large preferred stock liability is also a positive.

Positives

• The divestiture is expected to streamline INVO Fertility's operations, as indicated by significant pro forma reductions in operating expenses.
• Pro forma selling, general and administrative expenses decreased by $959,113 for the three months ended March 31, 2025, and by $1,110,892 for the year ended December 31, 2024.
• Pro forma research and development expenses were nearly eliminated, decreasing by $265,663 for the three months ended March 31, 2025, and by $484,780 for the year ended December 31, 2024.
• The pro forma net loss improved by $1,228,207 for the three months ended March 31, 2025, and by $3,432,856 for the year ended December 31, 2024.
• The company received a secured convertible promissory note from NTI in the principal amount of $4,803,175, providing a new asset.
• The redemption of Series C-1 Preferred Stock eliminates a significant preferred stock liability of $30,375,000 from the balance sheet.

Negatives

• Total assets significantly decreased by $10,593,408, from $31,744,110 to $21,150,702, on a pro forma basis as of March 31, 2025.
• Total equity shifted from a positive $3,335,365 to a deficit of $(2,805,334) on a pro forma basis as of March 31, 2025, representing a decrease of over $6 million.
• The accumulated deficit increased by approximately $2 million on a pro forma basis, from $(84,873,449) to $(86,857,421).
• The divestiture resulted in an estimated pro forma loss on disposal of assets of $(1,833,972) for the year ended December 31, 2024.
• Despite operational improvements, the company continues to report significant net losses on a pro forma basis, with $(16,175,379) for Q1 2025 and $(5,662,982) for FY 2024.

Risks

• The unaudited pro forma financial statements are for illustrative purposes only and may not be indicative of the Company's future financial position or operating results.
• The actual financial position and results of operations may differ significantly from the pro forma amounts due to a variety of factors.
• The estimated loss on disposal of NTI is subject to change and the actual net loss will be recorded in the second quarter of 2025, potentially differing from the current estimate.

Future Outlook

The unaudited pro forma financial statements are presented for informational purposes only and are not necessarily indicative of the future financial position or operating results of INVO Fertility, Inc. after the disposition of NAYA Therapeutics Inc. The actual financial position and results of operations may differ significantly from the amounts reflected.

Management Comments

• Management believes the assumptions used for the pro forma adjustments are reasonable.
• The Company previously reported that the redemption became effective on May 31, 2025; however, as May 31, 2025 fell on a weekend, the redemption became effective on the following business day, June 2, 2025.

Industry Context

This divestiture suggests a strategic realignment for INVO Fertility, potentially focusing more on its core fertility clinic and product revenue streams by shedding a majority stake in a therapeutics subsidiary. This could allow for a more concentrated allocation of resources and management attention within the competitive fertility and healthcare sectors. The retention of a minority preferred stake and a promissory note indicates a continued, albeit reduced, financial interest in NTI's potential future, possibly as a strategic investment rather than a core operational segment.

Comparison to Industry Standards

• The document does not provide specific comparable companies, projects, or results to assess INVO Fertility's performance against global industry benchmarks. The pro forma statements are internal adjustments reflecting a specific transaction rather than a performance comparison.

Related Party Transactions

• NTI, a former wholly-owned subsidiary and now 19.9% owned by INVO Fertility (on an as-if converted basis), issued a secured convertible promissory note in the principal amount of $4,803,175 to INVO Fertility.

Stakeholder Impact

• **Shareholders (Series C-1 Preferred):** These holders received Class A Common Stock of NTI in exchange for their preferred shares in INVO Fertility, effectively converting their investment in INVO into a direct stake in NTI.
• **Common Shareholders:** The pro forma financial changes, including the reduction in total assets and the shift to negative equity, will impact the company's financial structure and potentially its valuation. However, the improved pro forma net loss and reduced operating expenses could be seen as beneficial for the long-term viability of the remaining core business.
• **Employees:** While not explicitly detailed, the divestiture of a subsidiary could imply changes in staffing or operational focus for employees previously associated with NTI's activities.

Next Steps

• The actual net loss on the disposition of NTI will be recorded in INVO Fertility's financial statements for the second quarter of 2025.

Key Dates

Keywords

INVO Fertility, NAYA Therapeutics, Divestiture, SEC Filing, 8-K, Preferred Stock Redemption, Promissory Note, Pro Forma Financials, Fertility Treatment, Therapeutics, Corporate Restructuring