T2 Biosystems shares dive on weak Q3 earnings and reverse stock split

Shares of T2 Biosystems (NASDAQ:) (NASDAQ: TT00), a diagnostics company specializing in sepsis and antibiotic resistance detection, plunged by 53% today following the release of preliminary Q3 earnings and a 1-for-100 reverse stock split announcement. The firm reported Q3 earnings of $1.5 million, marking a significant 60% decrease year-over-year.

The company’s stock has seen a sharp decline this year, with a 93% drop, a metric confirmed by InvestingPro data. This downward trend is expected to continue, as full-year revenue is projected to decrease by 10% to $7.5 million. The primary cause for this anticipated revenue drop is attributed to backorders of the company’s sepsis test panel. InvestingPro Tips highlight that T2 Biosystems has been quickly burning through cash and that its revenue has been declining at an accelerating rate.

In an effort to comply with Nasdaq’s minimum bid price rules, T2 Biosystems implemented a 1-for-100 reverse stock split, a measure often associated with financial distress within a company and can lead to further investor uncertainty. This action aligns with the InvestingPro Tip that T2 Biosystems operates with a significant debt burden.

Despite these challenges, the U.S. Food and Drug Administration (FDA) granted 510(k) clearance to the T2Biothreat Panel and approved the addition of Acinetobacter baumannii pathogen detection to the T2Bacteria Panel. These approvals aim to enhance the capabilities of the T2Dx Instrument, a key product in the company’s portfolio. However, analysts anticipate a sales decline in the current year, as per InvestingPro Tips.

The company’s market cap is adjusted to 25.72M USD, and its P/E ratio stands at -3.97, according to InvestingPro’s real-time metrics. For more insights and tips on this and other companies, consider subscribing to InvestingPro’s premium service, which includes additional tips on a range of companies. Visit InvestingPro for more information.

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