Deerfield Management and general partner James Flynn sold off another chunk of their stake in NeuroMetrix Inc. (NSDQ:NURO), nearly two weeks ahead of the nerve test equipment maker’s third-quarter earnings release.
Between the end of June, Flynn and the hedge fund ditched 80 percent of their stake in Waltham, Mass.-based NeuroMetrix, according to regulatory filings.
Back then, when NURO stock was worth $1.91 per share, Deerfield and Flynn together owned just more than 1.8 million shares, according to a federal Securities & Exchange filing. Shares peaked at $3.30 in September 2009, right after Deerfield boosted its stake in NeuroMetrix with a 2.5-million-share, $5 million buy (for $2 per share) during a NeuroMetrix private placement that month. That stake was worth about 19.9 percent of NeuroMetrix.
But the stock has declined steadily since then, prompting Flynn and his fund to ditch nearly 2 million shares since August, for $1.3 million (an average of 63 cents per share), according to regulatory filings &mdash slashing their stake in NeuroMetrix by about 64 percent.
In their latest trade Oct. 26, Flynn and Deerfield ditched a collective 99,000 shares, or 46.4 percent of their remaining stake in NeuroMetrix, for $58,400 (59 cents per share). That’s quite a haircut: Those 99,000 shares were once worth $326,700.
NeuroMetrix has struggled to regain its footing after the Centers for Medicare and Medicaid changed the reimbursement code for nerve conduction studies last year, causing a 22 percent reduction in the average selling price for the electrodes used with its equipment and a 25 percent reduction in the number of electrodes sold during the second quarter. Sales of consumables like the electrodes accounted for 87 percent of total revenues during that quarter.
The poor Q2 results prompted NeuroMetrix to lay off 25 workers — a quarter of its workforce — during the period and make other restructuring moves aimed at saving about $2.5 million a year. In September, the NASDAQ stock market warned NeuroMetrix that it risked a de-listing if it didn’t get its stock back above the exchange’s $1 per share minimum for 10 days.
NeuroMetrix is due to release its third-quarter results Nov. 9 before the markets open. NURO shares closed at 54 cents today.