Times are so tough for urine-testing firm Rennova Health Inc. that the West Palm Beach-based company this week sent an e-mail warning employees that they might not get paid Friday, the regular payday for many workers.
However, the crisis was averted, thanks to a preferred stock offering that was just completed, Rennova Chief Executive Seamus Lagan said. UPDATE: Rennova said early Monday that the offering raised $12.35 million.
“We did inform people that we might be late,” Lagan said Friday. “We have monies to pay everybody today.”
Rennova had 144 employees as of Dec. 1, most of them in Palm Beach County. Rennova (Nasdaq: RNVA) told the Securities and Exchange Commission it hoped to raise $15 million from the offering.
“We’ve had a very difficult year,” Lagan said.
Most of Rennova’s revenue comes from its Medytox unit, which tests urine for drug-rehab centers. Tougher federal regulation has roiled the market, Lagan said.
“That picture changed very dramatically in the past year,” he said. “There has been a lot of fraud in that sector.”
For Rennova, 2016 has included a sharp drop in revenue, the resignations of the CFO and the chairman, a lawsuit from the landlord for unpaid rent at company headquarters in West Palm Beach, a 90 percent decline in the share price and a delisting notice from the Nasdaq.
Rennova hopes to stop the delisting by boosting shares back above $1. They traded at 13 cents on Friday. Its solution? A reverse stock split at a ratio between 1-for-10 and 1-for-30.
Despite the red flags, Lagan predicted a turnaround.
“The company will survive, very definitely,” he said.