MILPITAS, Calif. - Zepp Health Corporation (NYSE: ZEPP), a company specializing in smart wearables and health technology, is set to modify the ratio of its American depositary shares (ADSs) to Class A ordinary shares. The adjustment will change the current ratio from one ADS representing four Class A ordinary shares to one ADS representing sixteen Class A ordinary shares. This change is effectively a one-for-four reverse ADS split for the company's ADS holders.
The implementation of the new ADS Ratio is anticipated to take place on or about September 16, 2024, contingent upon the necessary SEC filing amendments. Zepp Health's ADSs will continue trading on the New York Stock Exchange under the ticker "ZEPP".
ADS holders will be required to exchange every four existing ADSs for one new ADS after the close of business on the effective date of the change. Deutsche Bank Trust Company Americas, the depositary bank for Zepp Health's ADS program, will manage the exchange process. Fractional new ADSs will not be issued; instead, any fractional entitlements will be sold, and the net proceeds, minus applicable fees, taxes, and expenses, will be distributed to the affected ADS holders.
The company expects the trading price of its ADSs to proportionately increase post-adjustment, although it cannot assure that the post-change trading price will be equal to or greater than four times the pre-change trading price. This action will not impact the company's underlying Class A ordinary shares, with no shares being issued or cancelled due to the ADS Ratio change.
Zepp Health, known for its consumer brands such as Amazfit, Zepp Clarity, and Zepp Aura, operates a proprietary digital health platform providing users with insights and guidance. The company has a global footprint, with operations in over 90 countries.
This announcement is based on a press release statement and contains forward-looking statements under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. The company cautions that these statements are subject to risks and uncertainties that could cause actual results to differ materially from what is projected.
In other recent news, Zepp Health Corporation has seen a narrowed net loss for the first half of 2024, despite a decline in sales. The company's strategic transformation has led to investments in new technologies, such as artificial intelligence (AI), and the planned launch of several products later in the year. Zepp Health achieved a record high gross margin of 40.3% for the quarter, with upcoming product launches including the T-Rex 3 smartwatch and Open Wearable Stereo earbuds. The company also entered the smart ring market with the Amazfit Helio Ring and has expanded its athlete ambassador roster. Despite the decline in sales, Zepp Health maintains a strong cash position of $129 million and has retired $55.2 million of debt. Operating costs have decreased, with research and development expenses down by 13.8% year over year. Zepp Health projects Q3 2024 revenue to be between $45 million and $60 million, with new product gross margins expected to be over 45% to 50%. The company plans to resolve the non-compliance notice from the NYSE before the October 31st deadline. In other recent developments, Zepp Health announced the appointment of three new directors to its board, enhancing its governance with expertise from finance and technology sectors.
InvestingPro Insights
As Zepp Health Corporation (NYSE: ZEPP) prepares for a significant change in its ADS ratio, investors are closely monitoring the company's financial health and market performance. According to InvestingPro data, Zepp Health has a current market capitalization of $50.92 million, reflecting the market's valuation of the company. Despite a challenging period with revenue declining by over 93% in the last twelve months as of Q2 2024, the company's price to book ratio stands at a low 0.16, potentially indicating undervaluation relative to its book value.
InvestingPro Tips highlight that Zepp Health is trading at a low revenue valuation multiple, which may attract investors looking for value opportunities. With a significant return over the last week and month, the stock has shown signs of recovery, yet analysts are cautious, anticipating a sales decline in the current year and not expecting the company to be profitable within this period. These insights, coupled with the fact that Zepp Health does not pay a dividend, suggest that investors may need to rely on capital gains rather than income from their investment in the near term.
For those interested in a deeper analysis, InvestingPro offers additional tips that could provide further context on Zepp Health's financial position and future prospects. With a total of 14 InvestingPro Tips available, investors can gain comprehensive insights to better inform their investment decisions.
As the company navigates through its ADS ratio adjustment, these InvestingPro Insights and Tips could be crucial for stakeholders to understand the potential impact on their investments and the company's valuation in the market.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.