GTH - Sinking Burning Rock Faces De-Listing. But Could Privatization Bid Come First? | Benzinga
Key Takeaways:
- Burning Rock announced its shares could be delisted due to prolonged trading below the required $1 threshold
- The cancer detection specialist’s former biggest revenue source tumbled 40.6% in the third quarter amid an industry crackdown, spotlighting a major risk for Chinese companies
By Doug Young
Its name is Burning Rock Biotech Ltd. (NASDAQ: BNR), but these days the maker of cancer screening-products might be better named "Burning Cash.”
Its dwindling cash pile as the company continues to lose money is weighing heavily on investors’ minds these days, pushing its formerly high-flying stock below the $1 level since Nov. 10, or for the last two months. That prompted the Nasdaq, where Burning Rock’s shares are traded, to inform the company last week that it was in danger of being delisted for non-compliance with rules requiring its price to be above $1.
It’s always possible Burning Rock’s shares could rally back above the $1 mark on their own, especially if it can return to revenue growth following sharp declines in its latest reporting quarter. There’s also the possibility the company will conduct a reverse share split, which is the most common way to bring a price back above the $1 level.
But another possibility is that Burning Rock might simply choose to privatize, which would take its messy situation out of the public spotlight while it re-engineers its business model to focus on the more promising of its two main business areas. We’ll detail that transformation shortly and why it could eventually return Burning Rock back to a healthier growth track like the 18% revenue growth it posted in 2021, a year after its Nasdaq IPO.
Such a privatization would mimic a similar move by rival Genetron Holdings (NASDAQ: GTH), which announced a privatization deal last October which it expects to complete by March. Any investors with a big stomach for risk could earn a small profit by buying Burning Rock’s beaten-down shares in hopes that a similar offer is coming, since such offers usually carry premiums of 10% to 20%. But given current ...