Enzo Biochem Inc. (NYSE:ENZ), a medical laboratory services provider with a market capitalization of $36.6 million, has reached a settlement agreement to resolve a consolidated class action lawsuit related to a ransomware attack the company experienced in April 2023.
The company's stock has declined nearly 49% over the past year, though according to InvestingPro analysis, the shares appear undervalued at current levels. The Farmingdale, New York-based company disclosed the settlement in a recent SEC filing.
Under the terms of the agreement, Enzo Biochem will create a $7.5 million settlement fund, which corresponds to the amount previously accrued for the consolidated action in the company's financial statements as of October 31, 2024. While the company maintains a current ratio of 2.55, indicating strong short-term liquidity, InvestingPro data shows the company is quickly burning through cash.
In addition to the monetary settlement, the company has committed to implementing specific upgrades to its data protection systems, which have already been completed.
The lawsuit, formally known as In re Enzo Biochem Data Security Litig., 2:23-4282, was initiated following the cyberattack that compromised the company's systems. The settlement is designed to fully and finally release Enzo Biochem and its subsidiaries from all claims that were or could have been asserted in the action.
The effectiveness of the Settlement Agreement is contingent upon the approval of the District Court for the United States, Eastern District of New York. This legal development follows the company's proactive disclosure of the cyber incident in prior public filings.
The announcement of the settlement comes as cybersecurity remains a critical concern for corporations across the globe, particularly for those in sensitive sectors such as healthcare.
Enzo Biochem, with its standard industrial classification in services-medical laboratories, is a company subject to stringent data protection regulations, given the sensitive nature of the data it handles. The settlement and the associated enhancements to its cybersecurity infrastructure reflect the ongoing efforts by companies to fortify their defenses against cyber threats.
The information regarding the settlement is based on a statement from the company's SEC filing.
In other recent news, Enzo Biochem, a life sciences company, is grappling with non-compliance issues concerning the New York Stock Exchange (NYSE) continued listing standards. The company's average market capitalization and last reported stockholder's equity have fallen below NYSE requirements. Furthermore, Enzo Biochem's common stock has been trading at an average closing price of less than $1.00, which does not meet the NYSE's minimum price criteria.
However, the NYSE has given Enzo Biochem an 18-month period to rectify the market capitalization and stockholder's equity deficiencies, and a six-month period to address the average closing stock price issue. The company's financial data shows a strong current ratio of 2.55, but with a revenue of $30.31 million and negative EBITDA of $9.19 million in the last twelve months, it faces significant challenges.
Enzo Biochem has until early 2025 to notify the NYSE of its intention to submit a plan outlining how it will return to compliance with the NYSE's listing standards. The company is considering all available options to resolve the deficiencies identified by the NYSE. Despite these challenges, the company continues its operations in the life sciences sector, specializing in labeling and detection technologies.
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