T2 Biosystems (NASDAQ:TTOO) stock is plummeting lower following the company’s announcement of a 1-for-100 reverse stock split and its preliminary third-quarter earnings. The reverse split was effective as of yesterday, with shares of TTOO beginning trading on a reverse split-adjusted basis as of this morning.
T2 also reported preliminary Q3 revenue of $1.5 million, down by a significant 60% year-over-year (YOY) and falling short of the analyst estimate of $3 million. T2 attributed the falling revenue to a $1 million reduction in Biomedical Advanced Research and Development Authority (BARDA) revenue. The company’s milestone-based product development BARDA contract ended on Sept. 15.
Furthermore, sepsis test panel revenue tallied in at $1.1 million, which declined by 31% YOY. This was primarily due to “ending the third quarter with a sepsis test backorder of $380,000.” Overall revenue was also affected by a $300,000 decline in international T2Dx instrument sales and a $300,000 decline in Covid-19 test sales.
TTOO Stock Falls on Weak Earnings, Reverse Split
CEO and Chairman John Sperzel said the following amid the preliminary Q3 results:
“Operationally, we have taken aggressive measures to address the sepsis test backorder, we have significantly improved our balance sheet by raising capital and by reducing our debt, and we have taken steps to maintain our Nasdaq listing, all of which will allow the Company to further advance our corporate priorities.”
In terms of guidance, T2 expects sepsis and related product revenue of $2.4 million during Q4, which would imply sequential growth of 60%. T2 also forecasts full-year total sepsis and related product revenue of $7.5 million, implying a 10% decline from the year-ago period. The company will report its final Q3 earnings sometime in November. As of Sept. 30, the firm had $24.3 million in cash and cash equivalents, of which $21.9 million was raised through an at-the-market (ATM) offering during the quarter.
On the same day that T2 reported its preliminary earnings, it also disclosed that it had submitted a 510(k) premarket notification to the U.S. Food and Drug Administration (FDA). The notification seeks to add the detection of Acinetobacter baumannii (A. baumannii) to the company’s FDA-cleared T2Bacteria Panel. The pathogen carries a “crude ICU mortality rate of 34.0% to 43.4%.”
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
