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 quarter was $[amount], with cost of goods sold and operating expenses totaling $[amount] and $[amount], respectively. The company’s cash and cash equivalents as of October 31, 2024, were $[amount]. The report also includes the company’s management’s discussion and analysis of its financial condition and results of operations, as well as its quantitative and qualitative disclosures about market risk.
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%) due to the inclusion of Cornerstone and ongoing clinical trials at LipoMedix.
- 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.
- 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
- 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%) due to a decrease in Cyclo’s stock price.
- Unrealized loss on convertible notes receivable due from Cyclo was $1,588,000.
- Interest expense was $162,000 related to liabilities assumed in the Cornerstone acquisition.
- The consolidated net loss was $9,211,000, up $5,451,000 (145%) compared to the prior year.
Liquidity and Capital Resources
- As of October 31, 2024, the company held $8.2 million in cash and cash equivalents and $46.1 million in available-for-sale securities.
- Cash used in operating activities increased by $909,000 (43%) to $3.0 million due to the higher net loss.
- Cash provided by investing activities was $8.6 million, up $15.4 million (226%) due to higher proceeds from sales of securities, partially offset by purchases and the issuance of convertible notes to Cyclo.
- Cash used in financing activities was $48,000, down $855,000 (106%) due to lower payments related to shares withheld for employee taxes.
Critical Accounting Estimates
There were no material changes to the critical accounting estimates previously disclosed in the Annual Report on Form 10-K for fiscal 2024.
Off-Balance Sheet Arrangements
The company does not have any off-balance sheet arrangements.
Foreign Currency Risk
Revenue from tenants located in Israel represented 60% and 100% of consolidated revenues for the three months ended October 31, 2024 and 2023, respectively. The company’s foreign currency exchange risk is somewhat mitigated by its ability to offset a portion of these non-U.S. Dollar-denominated revenues with operating expenses paid in the same currencies.
