HORSHAM, PA — STRATA Skin Sciences, Inc. (NASDAQ: SSKN) is set to undergo a significant transformation with a reverse stock split at a ratio of 1-for-10, effective June 6, 2024, the company announced on Friday. This strategic move aims to lift the company’s stock price to meet Nasdaq’s minimum bid price requirement for continued listing, ensuring STRATA’s presence on the prestigious exchange.
Dr. Dolev Rafaeli, President and CEO of STRATA, stated that the decision follows shareholder approval obtained on October 26, 2023, endorsing a reverse split between a ratio of 1-for-5 and 1-for-25. By consolidating ten shares of its common stock into one, STRATA seeks to elevate its share price above the $1.00 threshold set by Nasdaq before the June 6 deadline, thereby averting potential delisting.
The mechanism of a reverse stock split reduces the number of shares outstanding, theoretically increasing the price per share, without affecting the company’s market capitalization or the proportional equity of shareholders. Consequently, equity-based awards and rights tied to the company’s stock will be adjustably aligned with the new share structure.
Importantly, STRATA has clarified that no fractional shares will be issued post-split. Instead, shareholders entitled to fractional shares will receive cash compensation based on the pre-split closing price, adjusted to reflect the consolidation.
This maneuver by STRATA Skin Sciences underscores a common tactic employed by public companies facing compliance pressures with exchange listing standards. The reverse stock split is designed to affect all shareholders uniformly, preserving their relative stake in the company while complying with Nasdaq’s regulatory framework.
For shareholders, particularly those holding shares through brokerage accounts, the transition is expected to be seamless, with adjustments made automatically to reflect the change. STRATA has assured that detailed communication will be provided through Equiniti, the company’s transfer agent, to guide stockholders through the process.
The strategic decision to execute a reverse stock split highlights STRATA Skin Sciences’ commitment to maintaining its listing status and accessibility to investors via Nasdaq. This move not only seeks to satisfy immediate compliance requirements but also aims to bolster investor confidence by stabilizing the company’s stock value in the competitive market landscape.
While reverse stock splits are often viewed with caution due to their association with underperforming companies, they can also offer a path to recovery and growth by enhancing the attractiveness of the stock to a broader range of investors. For STRATA Skin Sciences, this adjustment represents a calculated step towards sustaining its financial health and securing its future in the dynamic biotechnology sector.
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