Tivic Health Systems, Inc. (NASDAQ:TIVC) has terminated its Fulfillment Services Agreement with ALOM Technologies Corporation, effective Thursday, August 1, 2024. The agreement, originally signed on November 25, 2022, and later amended on March 5, 2024, involved ALOM providing various services including assembly, procurement, storage, and fulfillment to Tivic Health's customers and retailers in the U.S.
The decision to end the agreement was made by Tivic Health for convenience, aligning with the company's strategy to reduce costs related to product manufacturing and distribution. The termination did not result in any significant early termination fees for Tivic Health. Following the termination, Tivic Health has transitioned to using alternative third-party logistics and storage services and has also developed in-house assembly and testing capabilities. This change is expected to meet current demand without affecting service continuity.
Under the terms of the now-terminated agreement, ALOM was compensated based on fixed hourly rates and unit pricing for services rendered, subject to specific conditions. Beginning April 1, 2023, Tivic Health was subject to a monthly minimum purchase requirement of $25,000, which was waived from January through June 2024. The agreement was initially set to expire on December 31, 2024, with provisions for automatic annual renewals, subject to termination clauses.
This move is part of Tivic Health's broader efforts to optimize its operations and financial performance. The information is based on the company's latest filing with the Securities and Exchange Commission. The company has made forward-looking statements regarding the expected sufficiency of current capacity to meet foreseeable demand, but these statements are subject to risks and uncertainties that could affect future results.
In other recent news, Tivic Health Systems Inc. has been granted three new patents by the United States Patent and Trademark Office and the European Patent Office. These patents cover advancements in the company's microcurrent stimulation devices used for health treatments. Tivic Health has also announced terms for a public offering aiming to raise approximately $4 million, which includes around 4.7 million shares of common stock, accompanied by Series A and Series B warrants for additional shares, each priced at $0.85. Maxim (NASDAQ:MXIM) Group LLC is acting as the sole placement agent for this transaction.
In addition to these developments, Tivic Health has received a non-compliance notice from the Nasdaq Stock Market LLC due to its common stock closing bid price falling below $1.00 per share for 33 consecutive business days. Despite this, the company's stock remains listed on the Nasdaq Capital Market and has been given until December 26, 2024, to meet the minimum bid price requirement. These are among the recent developments at Tivic Health.
InvestingPro Insights
In light of Tivic Health Systems, Inc.'s recent operational changes, a glance at the company's financial health and stock performance offers additional context for investors. InvestingPro data indicates that Tivic Health holds a market cap of $4.09 million, with a notably high price volatility as reflected by a -0.06 P/E ratio and a -0.54 adjusted P/E ratio for the last twelve months as of Q1 2024. The company's revenue has seen a decline of 36.58% during the same period, underscoring challenges in financial performance.
Despite these figures, Tivic Health's strategic efforts to reduce manufacturing and distribution costs could be seen as a move to improve margins. InvestingPro Tips suggest that analysts are expecting sales growth in the current year, which could be a positive sign for the company's future. However, it's worth noting that analysts do not anticipate Tivic Health will be profitable this year, and the company has been quickly burning through cash.
For investors interested in the stock's recent movements, Tivic Health has experienced a significant return over the last week with a price total return of 46.39%. However, the broader picture shows that the stock price has fallen significantly over the last year, with a one-year price total return of -87.3%. These metrics, along with the fact that Tivic Health does not pay a dividend, may influence investment decisions.
For those considering a deeper analysis, InvestingPro offers additional tips on the company's financials and stock performance at https://www.investing.com/pro/TIVC. This includes insights into the stock's high price volatility and the company's liquidity position, with liquid assets exceeding short-term obligations.
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