MOCKSVILLE - 22nd Century (NASDAQ:XXII) Group, Inc. (NASDAQ: XXII), a company specializing in tobacco harm reduction, has reported a net loss from continuing operations of $22.1 million for the fourth quarter of 2023, a significant increase from the $11.1 million loss in the same period the previous year. This announcement comes as the company aims to restructure its business model to improve future financial performance.
The net revenue from continuing operations for the fourth quarter was $7.4 million, a decrease from the $10.0 million reported in the prior year's quarter. The company has attributed this decline to a one-time charge of $7.9 million for inventory write-down adjustments. Despite the losses, 22nd Century Group has focused on reducing operating costs, which have been substantially cut through efficiency initiatives and the sale of its hemp/cannabis operations.
The company has also initiated strategies to increase sales and improve gross margins, with a particular emphasis on its FDA authorized VLN® products. These products, which are very low nicotine content cigarettes, are part of 22nd Century's efforts to reduce the harm associated with smoking. VLN® is currently available in more than 5,100 stores across 26 states, including major markets like Texas, California, and Florida.
Larry Firestone, the recently appointed Chairman and CEO, stated that the company's turnaround is progressing rapidly, with a notable decline in cash use. Firestone expressed confidence in the company's ability to break even by the first quarter of 2025, emphasizing the importance of market awareness for VLN®.
In addition to its focus on VLN® sales and marketing, 22nd Century is seeking to grow its contract manufacturing business to cover operating expenses and invest in its proprietary reduced nicotine content cigarette technology.
The company also announced a reverse stock split at a ratio of 1-for-16, effective at market open on April 2, 2024. This move is intended to help the company regain compliance with Nasdaq's minimum bid price requirement.
As of December 31, 2023, 22nd Century Group held $2.1 million in cash and cash equivalents, with a long-term debt of $8.1 million. To discuss its fourth quarter financial results and business highlights, 22nd Century will host a live webcast, with an archived replay available shortly after the event's conclusion.
This news is based on a press release statement from 22nd Century Group, Inc.
InvestingPro Insights
As 22nd Century Group, Inc. (NASDAQ: XXII) navigates its restructuring efforts, real-time data from InvestingPro offers a snapshot of the company's financial health and market performance. With a market capitalization of just $5.76 million, the company's valuation reflects the challenges it faces. The Price / Book multiple as of the last twelve months ending Q3 2023 stands at 0.42, which suggests that the stock is trading at a low valuation relative to the company's book value, aligning with one of the InvestingPro Tips that highlights the company's trading at a low Price / Book multiple.
Revenue growth presents a mixed picture. While there was an impressive 70.35% growth in the last twelve months as of Q3 2023, the quarterly figure shows a decline of 2.42% in Q3 2023. This could be indicative of the challenges the company is facing in maintaining its revenue stream amidst its ongoing strategic changes. Another point of concern, as highlighted in the InvestingPro Tips, is the company's significant debt burden and its potential difficulty in making interest payments on that debt, which is particularly relevant given the long-term debt figure of $8.1 million.
The stock price has experienced substantial volatility, with a 1-year price total return as of the date provided showing a staggering -98.84% drop. This is consistent with the InvestingPro Tips that mention the stock price's poor performance over various time frames. For investors seeking more detailed analysis and tips, there are 16 additional InvestingPro Tips available for XXII, which can be accessed by visiting the dedicated page on InvestingPro. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
These metrics and tips can serve as valuable tools for investors trying to gauge the potential risks and opportunities associated with 22nd Century Group's stock, especially in light of the company's recent financial results and strategic initiatives.
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