NASHVILLE, TN - i3 Verticals , Inc. (NASDAQ:IIIV), a provider of integrated payment and software solutions with a market capitalization of approximately $798 million, announced on Thursday that it has completed a series of recapitalization actions to address excess cash on its balance sheet.
According to InvestingPro analysis, the company maintains a GOOD overall financial health score, suggesting strong operational fundamentals despite not being profitable over the last twelve months. The Nashville-based company, which operates under a unique "Up-C" structure, found itself with additional cash following a tax distribution related to the sale of its merchant services business in September 2024.
The tax distribution, which occurred earlier in January 2025, resulted from taxable income associated with the aforementioned sale. Due to the different net taxable income allocable to i3 Verticals and its Continuing Equity Owners, as well as their varying assumed tax rates, the company ended up with more cash than necessary for its tax liabilities, payments under its tax receivables agreement, and other expected liabilities.
In response, i3 Verticals made a Capital Contribution of approximately $21.4 million in cash to its subsidiary, i3 Verticals, LLC, on Thursday, January 23, 2025, in exchange for 896,763 newly-issued common units at a price per unit of $23.86. This price corresponds to the 50-day volume-weighted average price of i3 Verticals' Class A common stock as of January 22, 2025.
Following the capital injection, a reverse unit split of the common units was implemented at a ratio of approximately 0.9631 to 1. This action maintained the one-to-one ratio between the number of common units owned by the company and the number of outstanding shares of Class A common stock.
Wall Street analysts maintain a bullish stance on the company, with InvestingPro data showing price targets ranging from $22 to $33 per share. As a result, 369,256 shares of Class B common stock were retired without consideration to preserve the alignment between the common units owned by the Continuing Equity Owners and the outstanding shares of Class B common stock.
After these recapitalization steps, i3 Verticals now holds approximately 70.83% of the outstanding common units, an increase from its previous ownership of approximately 70.05%. Conversely, the Continuing Equity Owners' stake has decreased to about 29.17% from roughly 29.95%.
The company's Chief Financial Officer, Geoff Smith, signed off on the SEC filing, confirming the completion of these financial maneuvers.
This strategic move is based on information contained in a press release statement and aims to optimize the company's cash position for operational purposes. With the company's next earnings report scheduled for February 5, 2025, investors seeking deeper insights can access comprehensive analysis and additional ProTips through InvestingPro's detailed research reports, which transform complex financial data into actionable intelligence for smarter investment decisions.
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