Allurion Technologies Implements Reverse Stock Split Strategy

Allurion Technologies Executes Reverse Stock Split

Allurion Technologies, Inc. (NYSE: ALUR), a prominent entity in the field of obesity treatment solutions, has announced the implementation of a one-for-twenty-five reverse stock split of its common stock. This pivotal action is set to commence as of the opening of the market on January 3, 2025. Such a move is anticipated to enhance the company's stock price and align it with regulatory requirements.

Understanding the Reverse Stock Split

The reverse stock split will recombine every twenty-five shares of issued common stock into a single share, while leaving the par value per share unchanged. This means that Allurion, which currently has approximately 67.78 million shares outstanding, will see that number reduced to around 2.71 million shares post-split. Such actions are often taken to raise stock prices, especially when a company's shares are trading below a required minimum price.

Background of the Decision

This strategic decision was prompted by a notification from the New York Stock Exchange regarding Allurion's stock performance, as it had fallen below the minimum bid price threshold of $1.00 over a thirty-day time frame. The reverse stock split aims to rectify this situation and ensure compliance with the NYSE’s standards.

Impact on Stockholders and Equity Plans

Allurion's stockholders holding shares in book-entry form or through brokers need not take any action, as the adjustments will be automatically executed in their accounts after January 3, 2025. Additionally, modifications will be made to Allurion's equity incentive plans, outstanding stock options, restricted stock units, convertible notes, and warrants to reflect the reverse stock split appropriately.

Company Operations and Recent Developments

Allurion Technologies operates in a competitive field, with a notable portfolio including the Allurion Program. This program features the Allurion Gastric Balloon, a unique swallowable device designed to assist with weight loss, and the Allurion Virtual Care Suite. It's noteworthy that the gastric balloon is still under investigation in the United States.

Recent Financial Performance

In recent updates, Allurion reported a third-quarter revenue of $5.4 million for the fiscal year, marking a decrease compared to the previous year. Consequently, the company has adjusted its full-year revenue forecast to a range of $30 million to $35 million. Despite these hurdles, Allurion continues to showcase impressive gross profit margins of 73%, which reflects positive operational efficiency amidst its financial challenges.

Corporate Governance and Analyst Opinions

In light of shareholder feedback, Allurion has secured approval for crucial corporate governance decisions. Among these were the re-election of three Class I directors and endorsement of the reverse stock split. Moreover, Deloitte & Touche LLP has been ratified as the independent public accounting firm for the ongoing fiscal year.

On the analyst front, TD Cowen has maintained a Buy rating for Allurion, acknowledging the company's strategic initiatives aimed at enhancing commercial performance and significantly reducing operating expenses. However, Chardan Capital Markets has downgraded Allurion’s stock from Buy to Neutral, citing concerns regarding a pattern of underperforming business results.

Future Directions and Outlook

Allurion Technologies is bracing for significant operational modifications aimed at fostering growth and sustainability. The company is proactively planning to slash its operating expenses by half and reduce its workforce by 50% within the next two years. This restructuring is part of Allurion's commitment to improving its financial position while capitalizing on the potential of its Virtual Care Suite to drive future revenue growth.

Frequently Asked Questions

What is a reverse stock split?

A reverse stock split is a procedure where a company consolidates its shares, reducing the number of shares outstanding while increasing the share price proportionately.

Why did Allurion Technologies decide to implement a reverse stock split?

The primary reason for the reverse stock split was to comply with the NYSE's minimum bid price requirement, as the company’s stock had been trading below the $1.00 threshold.

How will the reverse stock split affect current shareholders?

Current shareholders will see their shares consolidated, meaning if they held 25 shares, they will now own 1 share post-split, but the overall value of their investment should remain the same.

What are Allurion's main products?

Allurion's main products include the Allurion Gastric Balloon and the Allurion Virtual Care Suite, both designed to assist with weight loss and patient care.

How has Allurion performed financially in recent quarters?

Allurion reported third-quarter 2024 revenue at $5.4 million, a decline from the previous year, prompting the company to lower its full-year revenue guidance.

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