Strategic Review and Asset Sale - The company initiated a strategic review a year ago to unlock shareholder value, with the ultimate goal of selling its assets [1] - Despite initial expectations, no asset sale agreements have been reached as of late August 2024 [1] - The company remains committed to selling its assets, as evidenced by management restructuring to focus on strategic alternatives [5] Challenges and Investor Concerns - A major hurdle was a reimbursement issue, which was resolved in the company's favor but delayed the asset sale process [1] - Investor concerns include impatience with management's ability to close a deal, potential equity issuance for capital, and doubts about finding interested buyers [3][4] - The stock price has fallen back to pre-strategic review levels, reflecting investor frustration [2] Financial Sustainability and Recent Developments - The company's glaucoma business is a money-loser, while its retina business is profitable [6] - In early August, the company secured a convertible note financing, providing 1.5M if needed, ensuring financial stability during the strategic review [6] - The financing strengthens the company's bargaining position with potential acquirers [6] Potential Asset Sale Scenarios - Selling the entire company at once could result in a quicker sale but potentially at a lower total share price [9] - Selling the profitable retina business first could significantly increase the share price, while retaining the glaucoma business for future potential [9] - Selling the glaucoma business first would provide immediate financial stability, as the retina business is cash-flow positive [9] Valuation and Expectations - The retina business is estimated to generate an annual net profit of 60-80M (6-8x multiple) [10] - The glaucoma business is estimated to have a 25M, though this may decrease due to delays in the strategic review [10] - Initial expectations for a total sale price of 3.50-$4.50/share, reflecting the prolonged strategic review process [10] Conclusion and Outlook - The company remains serious about selling its assets, with management restructuring and financial measures in place to support the process [11] - The CEO expects an agreement for the sale of certain assets by the end of 2024 [7] - Patient investors could see a doubling of the current share price within the next 3-6 months, driven by the underlying value of the retina division [11]
Iridex Frustrates, But Expect A Transaction By Year-End