Invitae (NYSE:NVTA) stock fell as much as 78% yesterday before it was ultimately halted because undisclosed news about the firm was pending. Many investors now expect that the SoftBank (OTCMKTS:SFTBY) backed genetic testing specialist will file for bankruptcy before the end of this week.
Invitae Is Reportedly Looking to Declare Bankruptcy
Invitae “is preparing to file for bankruptcy within weeks,” The Wall Street Journal reported late yesterday afternoon, citing unnamed sources. NVTA has hired Kirkland & Ellis, Moelis & Company, and FTI Consulting to help it find a way of dealing with its $1.5 billion debt, the newspaper added.
Kirkland & Ellis represents companies that have declared bankruptcy, while Moelis and FTI Consulting have also worked with such firms.
More Information About Invitae
NVTA refused to respond to questions from Seeking Alpha on the issue. The firm, however, referred to a statement that it had made in conjunction with its third-quarter results, which were unveiled in November:
“…engaging with stakeholders to strengthen the balance sheet, and the Board of Directors has formed a special committee focused on improving the Company’s capital structure. The Company is exploring a number of options, including, but not limited to, raising capital, asset sales, business and R&D refocusing efforts, capital expenditure and operating expense reductions and addressing its debt obligations.”
In 2020, the price of NVTA stock exceeded $50. The shares were halted yesterday at $0.089.
The firm has acquired multiple companies in recent years, while its debt has greatly increased.
On Jan. 22, DNA testing company Natera (NASDAQ:NTRA) reported that it had bought “assets relating to Invitae’s non-invasive prenatal screening and carrier screening business” for $52.5 million. However, only $10 million of that sum was paid upfront, while the remainder consists of performance-based payments that depend on the assets’ performance.
The Price Action of NVTA Stock
As of early morning trading today, NVTA stock had slumped 84% in the last month, 87% in the preceding three months, and 96% in the preceding 12 months.
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On the date of publication, Larry Ramer 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.
