Renalytix PLC

Health Information Services • Healthcare • London, United Kingdom • RENXF (OQB)

Quarter: Q3 2024 Reported: October 1, 2024 Sentiment: Negative

Renalytix Plc develops artificial intelligence-enabled in vitro diagnostic solutions for clinical management of kidney diseases in Europe and the United States. It offers KidneyIntelX, a diagnostic platform that employs an artificial intelligence-enabled algorithm that combines various data inputs, including validated blood-based biomarkers, inherited genetics, and personalized patient data from electronic health record systems to generate a unique patient risk score. The company's products are used in kidney disease diagnosis and prognosis, clinical care, patient stratification for drug clinical trials, and drug target discovery. It has a license agreement with Mount Sinai Health System to develop and commercialize its products in connection with the application of artificial intelligence for the diagnosis of kidney disease. The company was formerly known as Renalytix AI plc and changed its name to Renalytix Plc in June 2021. The company was incorporated in 2018 and is based in London, the United Kingdom.

Analysis Summary

Renalytix plc has undertaken critical financial and strategic adjustments as detailed in its recent 8-K filing. The company announced an agreement in principle to restructure its $11.66 million outstanding senior convertible bonds with Heights Capital Ireland LLC. This restructuring involves two key components: approximately £2.75 million of the bonds will be capitalized into 33,000,000 Ordinary Shares, and the remaining balance will be converted into new unsecured Convertible Loan Notes. These new notes will mature on July 31, 2029, accrue interest at 5.5% per annum if paid in cash or 7.5% if rolled into principal, and are not convertible before April 1, 2026, except under specific conditions. This move significantly extends the company's debt maturity profile and reduces immediate cash outflow requirements by converting a portion of debt to equity.

In parallel, an accounts payable balance of approximately $850,000 with a professional advisor has also been restructured. Half of this amount ($425,000) will be converted into Ordinary Shares, while $325,000 will become a long-term unsecured note bearing 5% annual interest, with the remaining balance settled in cash from operations. These debt-to-equity conversions and maturity extensions are crucial for improving the company's liquidity and financial flexibility.

Strategically, Renalytix notified Nasdaq of its intent to voluntarily delist its ADSs, with trading expected to be suspended around October 3, 2024, and the last official trading day on Nasdaq around October 7, 2024. The company plans to transition its ADSs to the OTCQX Marketplace. This decision likely reflects an effort to reduce the administrative burden and costs associated with maintaining a Nasdaq listing, allowing the company to reallocate resources. While moving to OTCQX provides a continued trading venue, it may impact liquidity and investor perception.

Management commentary, though not explicitly detailed in this 8-K, can be inferred to focus on strengthening the balance sheet and optimizing operational efficiency through these financial and listing changes. The restructuring provides a longer runway for the company to execute its business plan without immediate debt pressure. However, the delisting from Nasdaq and the potential for future dilution from convertible notes represent significant considerations for investors. The shift to OTCQX may also affect the company's visibility and access to institutional capital.

Key Highlights

• Renalytix plc is restructuring $11.66 million in senior convertible bonds.
• Approximately £2.75 million of bonds will be capitalized into 33 million Ordinary Shares.
• Remaining bond balance converted to new unsecured convertible loan notes maturing July 2029.
• An $850,000 advisor accounts payable balance was partially converted to equity and a long-term note.
• Company is voluntarily delisting its ADSs from Nasdaq by October 7, 2024.
• Renalytix ADSs will be quoted on the OTCQX Marketplace post-delisting.

Financial Metrics

eps

N/A

YoY: N/A

revenue

N/A N/A

YoY: N/A

guidance

net income

N/A N/A

YoY: N/A

debt capitalized bonds

2.75 million

debt restructured principal bonds

11.66 million

advisor accounts payable restructured

0.85 million

Stock Performance (90 Days)

Data through Dec 26, 2025

Positive Signals

• Successful agreement in principle for significant debt restructuring.
• Extension of debt maturity to 2029, reducing immediate financial pressure.
• Conversion of a portion of debt to equity, strengthening the balance sheet.
• Continued trading on OTCQX Marketplace ensures market access post-Nasdaq delisting.
• Restructuring of advisor payables further reduces short-term liabilities.

Risks & Concerns

— Voluntary delisting from Nasdaq may reduce liquidity and investor visibility.
— Potential dilution for existing shareholders due to debt-to-equity conversions and future convertible note conversions.
— Uncertainty regarding investor perception and access to capital on the OTCQX Marketplace.
— Interest rates on new convertible notes (up to 7.5% if rolled into principal) could increase debt burden.
— Company's ability to generate sufficient cash from operations to settle remaining obligations.