EnteroMedics Stock Drops on Q1 Results
Roseville-based EnteroMedics Inc. reported revenue of only $40,040 for the first quarter of 2017 with a net loss of $7.4 million. Despite the low sales volume, it was down from the $72,000 in revenue that the company reported in the first quarter of 2016.
The company’s stock dropped 28 percent on Tuesday to close at $4.38 per share, after the company released its financial results.
The company has developed vBloc, an implantable, pacemaker-like device, as a treatment for obesity. For 2016, the company reported a net loss of $23.4 million on revenue of $786,000. One challenge for the company is that insurers have not offered full coverage for its product.
As part of its effort to retain compliance with Nasdaq stock exchange guidelines, the company completed a 1-for-70 reverse stock split in December. In February, the company announced a Nasdaq determination that it met all of the requirements for continued listing.
In January, the company raised $19 million through a preferred stock sale. The company was incorporated in December 2002 and went public in November 2007.
“After rebuilding our capital structure through expense reduction starting in the fourth quarter of last year and continuing through the first half of the first quarter, the team at EnteroMedics has resumed our vBloc Therapy commercial operations, and we expect sales to pick up through the remainder of the fiscal year,” Dan Gladney, the company’s president, CEO and chairman, said in a statement.
The company closed the first quarter with $18.7 million in cash and cash equivalents on its balance sheets on March 31.
In recent months, owning stock in EnteroMedics has not been for the faint of heart.
On January 3, the company’s stock closed at $1.88 per share. By January 10 it had soared to close at $27.70 per share. But by January 17, it was back under $10 per share. The company’s only announcement during that time period was a press release on January 5th noting that vBloc was available through two more health systems.
New York-based class action law firm Purcell Julie & Lefkowitz announced in February that it was “investigating a potential breach of fiduciary duty claim involving the board of directors of EnteroMedics Inc.”