RAFAEL HOLDINGS, INC. FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended October 31, 2024
Rafael Holdings, Inc. (RFL) filed its quarterly report for the period ended October 31, 2024, reporting a net loss of $[amount] and a comprehensive loss of $[amount]. The company’s consolidated balance sheet as of October 31, 2024, showed total assets of $[amount], total liabilities of $[amount], and total stockholders’ equity of $[amount]. The company’s revenue for the three months ended October 31, 2024, was $[amount], compared to $[amount] for the same period in 2023. The company’s operating expenses for the three months ended October 31, 2024, were $[amount], compared to $[amount] for the same period in 2023. The company’s cash and cash equivalents as of October 31, 2024, were $[amount].
Results of Operations
Our business consists of three reportable segments: Healthcare, Infusion Technology, and Real Estate. We evaluate the performance of our Healthcare segment based primarily on research and development efforts and results of clinical trials, and our Infusion Technology and Real Estate segments based primarily on results of operations.
Healthcare Segment
The Healthcare segment has not generated any revenues to date. The expenses in this segment relate to the activities of Barer, LipoMedix, Farber, Cornerstone, and Rafael Medical Devices.
- General and administrative expenses increased by $282,000 (14%) due to higher insurance, payroll, and professional fees, partially offset by decreases in stock-based compensation and legal fees.
- Research and development expenses increased by $672,000 (137%) primarily due to the inclusion of Cornerstone’s expenses and ongoing clinical trials.
- Depreciation and amortization increased by $68,000 (2267%) due to the inclusion of Cornerstone.
- The loss from operations in the Healthcare segment increased by $1,022,000 (41%).
Infusion Technology Segment
The Infusion Technology segment was established in January 2024 with the acquisition of a majority equity interest in Day Three.
- Infusion Technology revenue was $51,000.
- Cost of Infusion Technology revenue was $37,000.
- General and administrative expenses were $112,000.
- Research and development expenses were $165,000.
- The loss from operations in the Infusion Technology segment was $263,000.
Real Estate Segment
The Real Estate segment consists of a portion of a commercial building in Israel.
- Rental revenue from third parties increased by $9,000 (22%).
- Rental revenue from related parties was $27,000, unchanged from the prior year.
- General and administrative expenses increased by $89,000 (278%).
- Depreciation and amortization increased by $1,000 (7%).
- The loss from operations in the Real Estate segment was $59,000 compared to income of $22,000 in the prior year.
Consolidated Operations
The key points from the consolidated operations are:
- Loss from operations increased by $1,366,000 (55%) due to the increased expenses in the Healthcare and Infusion Technology segments.
- Interest income was $568,000, relatively flat compared to the prior year.
- Realized gain on available-for-sale securities was $194,000, up $17,000 (10%).
- Unrealized loss on investment in Cyclo was $4,365,000, up $2,241,000 (106%).
- Unrealized loss on convertible notes receivable due from Cyclo was $1,588,000.
- Interest expense was $162,000.
- The consolidated net loss was $9,211,000, up $5,451,000 (145%) from the prior year.
- Net loss attributable to Rafael Holdings Inc. was $9,006,000, up $5,368,000 (148%) from the prior year.
Liquidity and Capital Resources
As of October 31, 2024, the company had $8.2 million in cash and cash equivalents and $46.1 million in available-for-sale securities. The company expects its current cash and securities to be sufficient to meet obligations for at least the next 12 months.
Cash used in operating activities increased by $909,000 (43%) to $3,042,000 due to the higher net loss.
Cash provided by investing activities was $8,575,000, up $15,361,000 (226%) primarily due to proceeds from sales and maturities of available-for-sale securities, partially offset by purchases and the issuance of convertible notes to Cyclo.
Cash used in financing activities was $48,000 compared to cash provided of $807,000 in the prior year, a decrease of $855,000 (106%).
The company does not anticipate paying dividends until it achieves sustainable profitability.
Critical Accounting Estimates
There were no material changes during the quarter to the critical accounting estimates previously disclosed.
Off-Balance Sheet Arrangements
The company does not have any off-balance sheet arrangements.
Market Risks
The company has some exposure to foreign currency risk, as 60% of its consolidated revenues are denominated in currencies other than the U.S. dollar. However, this risk is mitigated by the company’s ability to offset a portion of these non-U.S. dollar revenues with operating expenses paid in the same currencies.
