RE:RE:Analyst Estimate Changes vs. InitiationFrom the last earnings call some of the segments were expected to post results somewhere in between Q2 and Q4E. GIven that and looking at some of the growth rates I'm expecting revenue of $19M to $19.5M and Adj. EBITDA of -$500M to -$800M which implies a cash reduction in the quarter from operations. Where the stock is today it appears that everyone has written off Q3 as being unimportant, rather meeting or beating Q4 guidance and probably most importantly showing evidence that the Q4 bump is repeatable with at least 15% annualized revenue growth on a consolidated basis going forward will be key. Smart companies only provide a "run-rate" number as guidance if indeed it is evident of future performance, not if it's associated with a one off quarterly performance bump. Ultimately if its proved that 2023 clearly builds on the cash flows of the company combined with evidence of material operating leverage in the business then the stock could very well recover quite quickly though market environment would heavily influence the pace. If however it ultimately turns out that management used a one-off bump Q4 2022 to provide a favourable run-rate number that isn't repeatable then it would add to the sentiment of feeling misled by managment and the shares will continue to languish.
One other wild card is the contingent equity consideration from prior acquisitions. The biopharma deal closed in Sep 10, 2021 or therabouts and there was $3.25M of equity consideration (stock) to be issued to the company at the 6 and 12 month time frame post acquisition. I didn't see anything in Q1 about a payment of shares (nor an increase in the share count) and the equity consideration didn't change much from a liabilities perspective so some clarity on that issue would be helpful. During Q3 Sep 10, 2022 if the company issues shares as part of future equity consideration it would have been done at 60 cents (the 10 day moving average at the time). That's fairly dilutive, not a disaster, but management would eat a lot of humble pie in terms of expressing the accretive nature of the transaction. However, the company had the option to pay for the equity consideration in cash and if done so that would reduce cash on balance sheet by a fair amount ($3.25M plus whatever negative cash flow occured in Q3). It'll be interesting to see what happens in that regards in Q3 but I'm hopeful that management's conviction on becoming cash flow positive going forward will mean they paid cash rather than shares for the consideration and/or didn't have to pay the consideration because of poor performance in biopharma during 1H22 (assuming the equity consideration was performance based, which I don't think it was). So net, net if cash was used to fund $3.25M and add a cash drain of $800K from operations plus any remaining restructuring charges and the company could potentially have ended Q3 with just $2M or less in cash on balance sheet.