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Aytu BioPharma, Inc. (AYTU)

NasdaqCM - NasdaqCM Real Time Price. Currency in USD
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0.5718+0.0198 (+3.59%)
At close: 04:00PM EDT
0.5556 -0.02 (-2.83%)
After hours: 07:37PM EDT
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  • H
    Harold Patterson
    My analysis of Q3 2022 results: As I noted in my pre-results post, in the past AYTU has used several accounting tools; this time was no different (goodwill impairment $37.7M + intangible assets write-down $4.9M + inventory write-down $2.0M + other assets write-down $0.4M + property and equipment write-down $0.2M = $45.196M). These non-cash write-downs resulted in a loss of $53.073M or $1.79 per share based on the 29,689,856 average weighted shares. Without the impairment costs, the loss would have been $7.887M or $0.2653 per share. Last year I posted about how high goodwill and intangible assets were; in the annual report for fiscal 2021 goodwill was $65.802M and intangible assets were $85.464M. In Q1 and Q2 this year goodwill was $46.349M, but with the $37.7M write-down goodwill is now a more reasonable $8.637M. Even with the write-down, intangible assets remain at $74.428M.

    Income Statement: My estimate on revenue of $24.9M was too high again, with the actual revenue being $24.199M. The INNV Consumer Health unit continues to set records in performance, with revenue of $10.337M and a loss of $762K. In a post in reply to Edmund, I noted that if no costs were purposefully shifted from the consumer unit, this might indicate that INNV had reached the point where an extra dollar in revenue was generating more than a dollar in profit and if the PR was correct when it said, “…with continued growth expected through portfolio expansion and increased sales of its established consumer brands.”, then in two or three quarters the Consumer Health unit may be near profitability; but the prerequisites “…continued growth expected through portfolio expansion and increased sales” are necessary before profitability can occur. The RX side is not doing as well. AYTU has divested of the $7.3M revenue products they were selling before they acquired INNV, the CERC portfolio, and NEOS. The CERC portfolio revenue has grown little from the $3.1M per quarter when it was first acquired and now AYTU is divesting of two of the five CERC products they acquired. NEOS ADHD revenue of $9.7M this quarter is much less than the $12.8M NEOS averaged per quarter the year before the merger. Although AYTU reported in the PR that ADHD prescriptions had increased 5% since NEOS merged with AYTU in Q3 2021, sales decreased from $11.1M in Q2 2022 to $9.7M in Q3 2022. R&D Expenses decreased from $4.9M in Q2 to $3.7M in Q3.

    Cash Flow: Cash decreased from $35.277M to $27.613M, with $9.115M used for Operating Activities, $70K used in Investing Activities, and $1.521M raised in Financing Activities. The impairment adjustments were the main change to Operating Activities; Investing Activities was not much changed from Q2. With Financing Activities, over $11.9M after costs was raised from the sale of shares. About $4.549M in payments were made than were received on the short-term line of credit. On borrowings, about $1.075M more in payments were made than proceeds. Also, a $3.277M payment on a fixed payment arrangement was made. So, the proceeds from the sale of shares were used mostly to pay down debt.

    Balance sheet: Total Assets decreased from $223.8M to $168.8M, mainly because of reductions from Q2 in the aforementioned Goodwill ($37.7M), as well as Cash ($7.664M), Inventory ($2.7M), Prepaid Expenses ($3.4M), and Intangible Assets ($6.9M). Accounts Receivables increased in Q3 from $23M to $27.6M, or $4.6M. Total Liabilities also decreased from Q2 to Q3 ($118.3M to $107.7M). Accounts Payable, which increased $6.221M in Q2, decreased $4.474M in Q3. Contingent Considerations, including the $1.2M current portion, decreased $8.4M. Short Term Line of Credit also decreased from $7.2M the previous quarter to $3.4M.

    Existing shareholders should be pleased if the impairment adjustment is an indication that AYTU may be attempting to clean up some of the items on the financials thereby portending a new direction for the company. The fact that in the past AYTU has used the accounting tools causes me to remain skeptical. SP has been below a dollar for almost 30 days and NASDAQ should be sending a letter of warning in the next several days. AYTU will need to push hard to reduce costs, increase revenue and move toward profitability if they hope to drive SP higher and avoid delisting or another RS. If SP does not move above a dollar in the first 180 days, AYTU can ask for a 180 day extension. And, at the current cash burn rate AYTU will need to raise additional money by early next calendar year, especially with the projected increase in R&D expenses as the AR101 study begins.
  • J
    Johnny
    Cantor proceeds to very rigorous analyzes based on extremely advanced calculations to arrive at a very precise one year target price. Cantor believes that it is necessary to inform the most seasoned investors in order to be assured that it is not sham or fraud.

    To do this, it bases itself on the number of shares issued (33.5M and which continues to grow each quarter) its assets (including the $35.3M money in the bank which constantly evolves at the rate of losses and financing has each quarter), its revenues per quarter ($24.2M in the last quarter), its financial potential and its future sales forecasts and so on.

    Without updating all the data to prove his analysis, it is still incredible to note that the figure re-estimated by Cantor after having noted that the SP is moving further and further away from the price of $11 issued 15 months more earlier, his calculation now comes to exactly $5 no more, no less. Very impressive!
  • J
    Jeff
    where did all the "expert" traders/investors go?
    Quantscalper
    WiskeyD
    Socal
    Anitfa
    come on guys show yourself, we need some wisdom!
  • E
    Edmund
    As of 5/13/2021, the short interest declined from 1,680,306 to 1,388,220. So, the short interest, as a percentage of the OS of 38.6 million shares, is down to ~3.6%.
  • H
    Harold Patterson
    Earnings releases have been known to move SP, so I find it troubling that the CFO, Mark Oki, continues to divulge information to MD841 that is not supplied to the public, especially when a PR advising all shareholders of the impending announcement on results would give all investors advanced notification of what could be an event that may influence their investment. As for my take on what to expect, the losses reported for Q3 should be less than the last quarter due to several factors. The increase in the average weighted shares over the last reported quarter from the $7.6M direct public offering, plus any shares that may have been issued under the Cantor ATM, will dilute the loss per share. The one-time milestone $3M payment for Tuzixtra and the $2.5M milestone payment for AR101 will not be repeated. Interest on the $15M Capital Avenue loan (over $250k) will not increase the loss much as the rate in Q3 was not much changed from the Deerfield loan rate; increases in the Prime Interest rate will cause this interest payment to increase in future quarters. Last quarter the company allowed Accounts Payable to increase $6.221M over Q1, so if this was paid down in Q3 that will increase the loss. So, my guesses, because that is all they are since in the past the company has used manipulations of inventories, goodwill, contingency considerations and accounts payable to skew results, are that revenues will be $24.9M, the loss will be $11.75M or about -$0.37 per share based on an estimated 31.5M weighted average shares and the cash left will be somewhere around $38.6M.

    The delay in starting the AR101 trials, as I opined in an earlier post, is beneficial in that it allows AYTU to move toward profitability with its revenue producing products, realize the benefits from the synergies from the merger, and get closer to increasing margins with the movement of production of the ADHD drugs. However, this delay also allows management and the BOD to continue to draw what many consider excessive compensation while the company makes no headway on achieving results from trials that may or may not result in success in the studies or a change in SP.
  • W
    Wiggle Room
    Mean tweets gone for quite some time now...
  • E
    Edmund
    Key takeaways from a skim of the 8K and 10Q:

    Net loss was impacted by impairment of $45.2 million due to the $37.7 million impairment of goodwill associated with its 2021 Neos acquisition, primarily driven by the decline in Aytu's market capitalization, and $7.5 million impairment due to the discontinuation of five non-core, negative margin commercial assets.

    When backing out the 45.2 million, loss from operations was 9.459 mil or (.318 per share). It would have been a beat since the expected loss was (.41).

    Revenue was 24.2 million versus 24.5 million expectation so a slight miss.

    Shares outstanding as of 3/31/22 remained at ~ 33.5 million. The ATM wasn't used.

    Cash balance as of 12/31/21 was ~35.3 million, and was 27.6 million as of 3/31/22. +7.6 million from the direct offering to Stephen Boyd at 1.25 PPS and it looks like they burned - 8.398 mil and - 2.5 mil to Rumpus for the milestone payment for AR101 Orphan Drug Designation - 4 paying down the revolving line. This would bring the cash to ~28 million so pretty close. I am sure Harold will nail it down to the penny as he does his more extensive analysis.

    Adjusted EBITDA for just the commercialized products was (2.9 million) an improvement from (3.5 million) the quarter before.
  • H
    Harold Patterson
    In a filing this morning, in case anyone overlooked it, AYTU announced the BOD had voted to change the bylaws, "On and effective as of May 4, 2022, the Board of Directors of Aytu Biopharma, Inc. (the “Company”) adopted an amendment and restatement of the Company’s bylaws (the “Amended and Restated Bylaws”) to reduce the stockholder quorum requirement to thirty-three and one-third percent (33.3%), rather than a majority, of shares entitled to vote in order to constitute a quorum for any meeting of stockholders." The BOD and management seem intent that the items up for vote pass, even if that means changing the rules in the middle of the vote. The drop in SP may well be because the market is down, but such a move certainly does not bolster the confidence of any investor who is trying to hold onto any ray of hope with this stock.
  • J
    Johnny
    Here is another great example of how AYTU works. They pay an analyst to give smoke and mirrors as an ROI to convince retail investors to put their money in. Meanwhile, the price per share is headed in a completely different direction as it descends to new lows and new record after new record. When the level of mediocrity is made so low, this analyst reiterated his call to buy but with a drop in his one year target price.

    This is what AYTU has been doing for over 6 years.

    Last week, the super analyst recommends buying this stock and from behind, it lowered its one year price target from $11 to $5, more than half of its call made 15 month ago.

    What is most impressive about their analysis is how well they arrive at an adjusted price exactly to the nearest unit with no tenths. As if he had gotten up while having a coffee and made a most arbitrary call.

    Well done Cantor, you have a lot of credibility.
  • C
    Chatty Off Topic Queen
    Product revenue, net $24,199,000
    Loss from operations ($54,655,000)
    Market Cap 17.345
    lol
  • E
    Edmund
    I attended the virtual shareholder meeting, as I am sure others here did as well. I am the one who asked the question concerning the 'enrollment' of patients to do with the Healight Phase II trial in Spain, and 'why we weren't able to recruit during the height of the Omicron variant in Jan - end of February 2021'. Josh answer was that there weren't many hospitalizations requiring the device. Well, if there weren't many at that time there certainly won't be now. But, he did mention there is a more extensive pre-clinical trial for VAP that has begun and will conclude toward year end. Simply from an investor perspective, Healight for VAP is much, much, much more valuable than Covid. It appears, to me, that they are in no hurry for the Healight Phase II trial for Covid but are very much in a hurry to get more info on Healight as it pertains to VAP. And, the cost for this is probably considerably less than what the Phase II trial would be-- 🤔. So, despite getting in early because of Healight, I think they have a good plan moving forward and we could hit profitability on the consumer health segment as early as next quarter and potentially 'break even' for the commercialized portfolio by year end ''if'' the ADHD segment continues to grind higher from here and gets a boost for back to school / seasonality effect. If this occurs, the stock should be priced closer to $5.0. But, this is as long as the 'short game shenanigans' ends from here on out. IMHO.
  • J
    Johnny
    Josh once again activated his carrot to convince donkey to conitnu to walk up front with their big bag of cash during his investor conference call. Healight is going well.... a FEW more years of testing but it will be huge......

    ..... but it will take a lot of money to market it the day it is ready!

    Oh, that means more funding to come. Thanks buddy. We love you Josh.
  • W
    Wiggle Room
    1-5-16. SP was $132,205.18
  • C
    Chatty Off Topic Queen
    @Harold I thought you said these inconvenient “ Impairment expenses” were over? lol
  • M
    MM
    Where did the 36.8 million shares traded on on 4/19 come from? Could it be a lot of naked shorts? If so, at some point, all shares must be accounted for, reconciled!
  • c
    chris
    I don't like to post very often but this company deserves the disrespect it is getting. The top salaries in this company should be slashed by 75 percent. Anyone on the board more than six months should be thrown out. I've worked in the biomed world. You can't throw your cash flow away to executives. You make your money once the company is successful. There better be some great numbers coming up. The stock is this cheap because of excessive compensation, period. I don't know if I want to sell or buy a enough to throw the overcompensated CEO out. He doesn't put his money in so he doesn't believe in his ability. Come earnings I will either dump everything I own or buy enough to make a difference.
  • M
    Marlin
    The company has received "Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing" as we, all, expected.

    I would only add that although a reverse stock split may seem imminent, the stock price more than reflects it, imo. In my opinion it is overextended in that regard.

    It is true that a higher stock price may be more attractive to shorts vis-a-vi the current price. But shorting a stock is not solely based on stock price. If anything, it is based on the market cap, and expected financial results. My point is that it does not mean necessarily that the short interest margin will rise as a result of a reverse split.

    As I've said in the past, the company is working to reverse the operations to profitability. We've seen signs of same in the last report. The new CFO is seemingly more transparent as evidenced in the 10-Q which is more detailed than in quarters past.

    I am expecting another capital raise. Yes, we may have dilution, but it will come with the benefit of keeping the company solvent and liquid. When it comes, the stock will appreciate in value from current levels, imo, because, again, the stock price is overextended in the expectation of the additional capital raise or something worse if a capital raise does not come to fruition. So, if you are going to hold the stock, you should expect it.
  • H
    Harold Patterson
    For anyone who has not voted their shares, there is little time. Many investors on this MB have expressed a desire to vote against the slate of directors as well as their compensation. But, the frequency of votes on executive compensation is the reason I believe once management saw not enough votes were being cast that the rules were changed. In 2021, shareholders voted against compensation for GE's top management. With the way the stock market is performing and the way this stock in particular has done, management is recommending that votes on executive compensation only be taken every three years, thereby locking in what some consider excessive compensation. I voted that shareholders should vote on this every year, but if shareholders allow compensation to be voted on every three years, the BOD will be even less accountable to those who have invested.
  • A
    Andras
    What's happening with the share price? Did Josh book a cruise in the Caribbeans with his family and the company is issuing new shares to cover the expense?
  • J
    Johnny
    Cantor Aytu one year price calculation!
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