Renalytix plc, a medical laboratory services company, has received a notice from the Nasdaq Stock Market LLC indicating a potential delisting of its American Depositary Shares (ADSs) due to noncompliance with certain listing requirements. As of Monday, the company has not met the minimum bid price and market value standards set by Nasdaq.
On December 22, 2023, Renalytix was first notified that its ADSs, each representing two ordinary shares, had fallen below the $1.00 minimum bid price for over 30 consecutive business days, violating Nasdaq's Listing Rule 5450(a)(1). Additionally, the company's market value of listed securities failed to meet the $50 million threshold required by Nasdaq Listing Rule 5450(b)(2)(A).
Renalytix was granted a 180-day compliance period, which ended on June 19, 2024, to address these deficiencies. However, on June 21, 2024, Nasdaq concluded that Renalytix did not regain compliance within the allotted time.
Unless Renalytix appeals this decision by June 28, 2024, trading of its securities will be suspended on July 2, 2024. A Form 25-NSE will subsequently be filed with the SEC, leading to the removal of Renalytix's securities from Nasdaq listing and registration.
The company plans to request an appeal hearing with a Nasdaq Hearings Panel to present a strategic plan for regaining compliance. This appeal will temporarily stay the suspension and delisting process until the Panel reaches a decision. In the interim, Renalytix's ADSs will continue to trade on Nasdaq.
There is no guarantee that the Panel will accept Renalytix's plan or that the company will be able to comply with Nasdaq's listing requirements in the future. Delisting could negatively impact the company's ability to trade its ADSs and raise capital.
In other recent news, Renalytix has made several notable changes and developments. The medical laboratory services company has appointed CohnReznick LLP as its new independent registered public accounting firm, replacing Ernst & Young LLP. In financial matters, Renalytix reported a decrease in third-quarter revenue to $535,000, down from the previous year's $724,000, despite a 40% reduction in operating expenses to $6.5 million.
Analysts from H.C. Wainwright and BTIG have revised their price targets for Renalytix shares to $3.00 and $2.00 respectively, while maintaining a Buy rating. These adjustments follow updates on Medicare coverage for the KidneyIntelX.dkd test and reflect the slower than expected commercial progress of the KidneyIntelX product.
Renalytix has also announced executive changes, including the resignation of O. James Sterling as Chief Financial Officer and the appointment of Joel R. Jung as Interim Chief Financial Officer. These are the recent developments in the company's operations.
InvestingPro Insights
Renalytix's financial and market performance metrics provide a deeper understanding of the company's current valuation and challenges. With an adjusted market capitalization of $71.21 million, the company's valuation reflects its market position. However, a negative price-to-earnings (P/E) ratio over the last twelve months as of Q3 2024, currently at -0.96, and a price-to-book ratio of -2.86, indicate market skepticism about future profitability and asset valuation.
Revenue trends further emphasize the company's difficulties, with a significant decline of 40.23% in the last twelve months as of Q3 2024, and a quarterly drop of 26.1% in Q3 2024. These figures align with the InvestingPro Tips that analysts anticipate a sales decline in the current year and that Renalytix suffers from weak gross profit margins, with a gross profit margin of -1.58%.
For investors considering the future prospects of Renalytix, the InvestingPro Tips highlight critical areas of concern, such as the company's rapid cash burn and the fact that short-term obligations exceed liquid assets. These insights suggest caution, particularly as the stock price has shown considerable volatility, with a one-year price total return as of Y2024.D176 at -77.5%. For a comprehensive analysis and additional InvestingPro Tips, which total 12 in number, visit InvestingPro. Subscribers can utilize the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, enhancing their investment research with valuable insights.
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