NanoVibronix (NASDAQ: NAOV) has seen its share price sharply turn back and forth this week. Tuesday has seen it decline by around 15% after the company said it had agreed to sell 4.8 million shares of common stock to institutional investors for $0.50 a pop.
This represented a discount on the business share price at the time, which had stood at $0.63.
The news comes after NAOV stock's price more than doubled on Monday when the business announced it had won FDA approval for its PainShield Plus product.
The company’s CEO, Brian Murphy, commented:
“Securing clearance for PainShield Plus is a key milestone towards achieving permanent clearance from the FDA and full-scale commercial marketability. Increasingly, healthcare providers and patients are seeking effective, non-pharmaceutical therapies for the treatment of chronic pain.
“PainShield Plus expands on the effectiveness of its predecessor, our original PainShield M.D., by covering twice the treatment area and broadening the opportunities for application. As a result, we have started the process of making the recommended modifications to the device in order to comply with the FDA standard.
“In addition, this approval opens the door for us to submit a 510(k) application for our Over-The-Counter product, PainShield Relief, in the near term.”
But does the development make NAOV stock a good investment?
What is NanoVibronix?
NanoVibronix focuses on the manufacture and sale of noninvasive biological response-activating devices that target biofilm prevention, wound healing and pain therapy.
The company’s devices use its patented low intensity surface acoustic wave (SAW) technology.
Its principal products include UroShield, an ultrasound-based product to prevent bacterial colonization and biofilm in urinary catheters, enhance antibiotic efficacy, and decrease pain and discomfort associated with urinary catheter use.
Other products include patch-based ultrasound technology PainShield, which is used to treat pain, muscle spasm, and joint contractures, and WoundShield, which facilitates tissue regeneration and wound healing.
The company sells its products directly to patients, as well as through distributor agreements in the United States, Israel, Europe, India and internationally.
NanoVibronix was incorporated in 2003 and is based in Elmsford, New York.
NAOV Stock Financials
NanoVibronix’s most recent quarterly earnings showed a decline in revenue for the three months ended 30 September 2022. Compared to the same period last year, revenue dropped to $97,000 from $499,000.
Loss from operations increased from $868,000 to $924,000 across the same period. This increase came despite reductions in cost of sales and all operating expenses.
The company reported that, at the end of the period, it had cash of $2.0m.
NAOV has a price to sales ratio of 4.36 and a price to book value of 2.30. These compare with respective averages of 3.24 and 3.88 from the medical equipment and supplies industry, according to CSIMarket. These paint a mixed picture and potentially indicate that the stock is neither undervalued nor overvalued.
Despite the recent upsurge in share price, NAOV stock has dropped in price by 52.3% across the year to date.
NAOV Growth Potential
In a recent letter to its shareholders, the company insisted that it is continuing to sign additional contracts that increase access to its products and streamline the claims and reimbursement processes for providers and their patients.
Looking ahead, NanoVibronix says it hopes to bolster sales by adding international distribution partners. It is in the midst of negotiations with a European-based partner. The company said this would assist with obtaining qualified distributors and private label partners for sales of NanoVibronix’s UroShield product.
NAOV Investment Risks
A key risk for the business is running out of money. It had cash of $2.0m at the end of its most recent quarter, an amount which would have allowed the business to continue operating for around six months in its current state.
Additional funding has since been secured, with today’s announcement of a $2.4m share sale to institutional investors. This gives the company more breathing room, but the company is still operating on a timer.
Additionally, it’s worth bearing in mind that NanoVibronix has flirted with relegation from the NASDAQ index. Back in October, the stock was offered an extension to top the $1 minimum stock price for the index, having failed to climb above the target since early April.
The extension has given the stock until 23 February to climb above the $1 threshold. NanoVibronix will seek shareholder approval for a reverse stock split at its 15 December shareholder meeting. The business is optimistic that this will boost its share price above the target.
However, failure to reach this target and subsequent removal from the NASDAQ could seriously affect the company’s standing and future prospects.
Is NAOV Stock a Good Investment?
It’s easy to see the appeal of non-invasive devices for the prevention of pain and the improvement of healing. However, NanoVibronix has significant issues facing it in the short term.
It has failed to generate significant revenues and the business looks to be rapidly running out of time to kick-start sales. There is only so much funding a business can secure. What’s more, the company’s status as a NASDAQ-listed entity is not secure.
NanoVibronix might be able to turn things around, but right now NAOV stock looks like a risky proposition.
Just one analyst listed by Wall Street Journal covers the stock, offering it a Buy rating and a price target of $10.50 per share.