On Thursday, H.C. Wainwright adjusted its outlook on Femasys Inc. (NASDAQ:FEMY), a medical technology company. The firm lowered its price target to $12 from the previous $13 while maintaining a Buy rating on the stock. This decision comes after Femasys reported a decrease in diagnostic sales for the second quarter of 2024, with revenues reaching $0.2 million, an 18% drop from the first quarter of the year.
Femasys's total diagnostic sales in 2023, which include products such as FemVue, FemCath, and FemCerv, amounted to $1.1 million. The company has encountered challenges with FemVue sales as it shifts focus to the commercial efforts for FemaSeed, its new product. For the second quarter of 2024, Femasys incurred an operating loss of $4.5 million, with an earnings per share (EPS) of -$0.21 and operating expenses totaling $4.7 million.
H.C. Wainwright has revised its sales estimates for Femasys, particularly for FemaSeed, anticipating slower launch progress. The firm now projects total sales for 2024 to be $1.6 million, with FemaSeed contributing $0.6 million. The company is expected to see limited sales from FemaSeed within this year as it prepares for the product's launch. Operating expenses for 2024 are forecasted at $19.6 million, driven by the FemaSeed launch and the enrollment in the FemBloc pivotal study.
The firm also reduced its total sales estimate for 2025 to $8.8 million, down from the previously projected $16.5 million. The revised sales figures and the near-term expectations for FemaSeed led to the price target adjustment. As of the end of the second quarter of 2024, Femasys had $13.5 million in cash and equivalents.
The company's convertible notes are set to expire in November 2025, and it may receive up to an additional $15.4 million if warrants are exercised for cash. With these resources, Femasys is estimated to have sufficient funds to sustain its operations into mid-2025.
InvestingPro Insights
As investors evaluate the recent adjustments to Femasys Inc.'s financial outlook by H.C. Wainwright, InvestingPro data provides a deeper dive into the company's financial health. With a market capitalization of $19.77 million and a negative P/E ratio indicating no earnings, the company's financial metrics reflect some challenges. However, a notable gross profit margin of 65.35% in the last twelve months as of Q1 2024 suggests that Femasys is efficient at converting sales into profit, despite their overall operating loss.
InvestingPro Tips highlight that Femasys holds more cash than debt on its balance sheet, which aligns with the company's reported $13.5 million in cash and equivalents, providing a cushion for its operations. On the other hand, the company's cash burn rate is a concern, as reflected by the tip that Femasys is quickly burning through cash. This is an important consideration for investors, given the company's operating loss and the need to fund the launch of new products like FemaSeed.
Despite the recent price target adjustment, Femasys has seen a high return over the last year, with a 110.0% price total return, which could be an indicator of volatility or investor optimism for the company's long-term prospects. For investors seeking more detailed analysis and additional tips, InvestingPro offers a comprehensive list, with 9 more tips available to help inform investment decisions regarding Femasys Inc.
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