Investors in Retractable Technologies Inc. (NYSE:RVP) tell Medical Design & Outsourcing that they are quietly upping their stakes in the syringe maker, believing the company could be poised for a breakthrough with the latest iteration of its retracting needle technology.
Although Retractable Technologies swung to second-quarter red ink, posting losses of -$833,000, or -3¢ per share, sales grew 12.8% to $7.6 million compared with Q2 2015. And absent a one-time, $7.7 million payment from Becton Dickinson (NYSE:BDX) during the second quarter last year, Retractable Technologies actually pared its losses in Q2 2016.
Investors reacted to the August 15 earnings release by adding 10.9% to RVP shares, pushing them to a $2.63 close the next day. Sources who asked to remain anonymous tell us that several signs indicate that another bump could be in store.
One investor tells MDO that the company might be close to a big payout from its long-running legal battle with BD over its retracting needle technology. Another source, who works closely with RTI, said the company “may be close to wrapping up” the courtroom wrangling with BD.
Apart from that potential payout, however, investors are looking at RTI’s new product, the EasyPoint syringe – specifically, at the strength of the intellectual property backing the new tech. The company put a lot of time and effort into foolproofing the patent.
A long-time stockholder says RTI agreed to swap preferred shares for a larger amount of non-dividend-paying common stock – meaning the investor left a significant amount of unpaid dividends in arrears and any future income associated with the shares on the table.
Chairman, president & CEO Thomas Shaw clearly believes in the company’s prospects. Shaw exercised 1 million options at a strike price of 81¢ back in April, when the stock was trading in the low $2s per share. He exercised 2 million options in the summer of 2012, when the stock was less than $1 per share; he has yet to sell any of the shares accumulated from options.
RVP shares closed at $2.50 apiece August 29.
