Assure Holdings Corp. (NASDAQ:IONM) is a leading provider of intraoperative neuromonitoring (IONM) services, playing a crucial role in ensuring the safety and success of complex surgical procedures. With a strong focus on clinical excellence and patient-centric care, the company has established itself as a trusted partner for healthcare providers across various surgical specialties.
Business Overview
Assure Holdings Corp. is a Nevada-based company that delivers a comprehensive suite of IONM services, including the technical and professional components. The company's in-house Interoperative Neurophysiologists (INPs) provide the technical component, monitoring patients' neurological functions during surgical procedures and relaying critical information to the surgical team. Assure's telehealth-oriented supervising practitioners offer an additional layer of expertise and risk mitigation, supporting the onsite INPs and the surgical team.
The company's strategy emphasizes clinical leadership, surgeon support, and patient care. Assure has made substantial investments in the training and development of its clinical staff, ensuring that its INPs are highly skilled and certified by the ABRET Neurodiagnostic Credentialing and Accreditation. Additionally, the company has partnered with the renowned Texas Back Institute to conduct clinical research on the safety and efficacy of IONM.
Financials
For the fiscal year ended December 31, 2023, Assure Holdings Corp. reported annual revenue of $255,000, a decrease from the previous year. The company's annual net income was -$26,078,000, and its annual operating cash flow and free cash flow were both -$4,943,000.
In the latest quarter, ended March 31, 2024, the company generated revenue of $9,000, a significant decline compared to the $115,000 reported in the same period of the prior year. The decrease in revenue is attributable to the company's efforts to exit its legacy managed service agreements during 2023, as it focuses on maintaining all revenue generated from the professional component of IONM.
The company's gross margin for the quarter was -$466,000, compared to -$564,000 in the same period of the previous year. General and administrative expenses increased to $3,911,000 from $3,211,000 in the prior-year quarter, primarily due to higher legal fees associated with the sale of clinical assets and the proposed merger.
Liquidity
As of March 31, 2024, Assure Holdings Corp. had a cash balance of $376,000, compared to $123,000 at the end of 2023. The company's working capital was negative $19.0 million as of March 31, 2024, compared to negative $15.5 million at the end of 2023. This indicates that the company's current cash position and estimated cash flows from operations during 2024 will not be sufficient to support its operating activities and obligations for the next 12 months.
To address this liquidity challenge, the company intends to seek equity or debt financing and has implemented significant cost-cutting measures. However, there is no guarantee that the company will be able to secure financing on acceptable terms, given the current market conditions.
Nasdaq Compliance
Assure Holdings Corp. has faced challenges in maintaining its listing on the Nasdaq Stock Market. On July 25, 2023, the company received a notice from Nasdaq indicating that it was not in compliance with the minimum bid price requirement of $1.00 per share. The company was provided a compliance period of 180 calendar days to regain compliance.
Additionally, on August 16, 2023, the company received notice from Nasdaq that it no longer satisfied the $2.5 million stockholders' equity requirement for continued listing. The company submitted a plan of compliance and was granted an extension until January 22, 2024, to regain compliance with the equity requirement.
On January 24, 2024, the company received a determination letter from Nasdaq stating that it had not regained compliance with the listing rules and was not eligible for a second 180-day period to regain compliance. The company appealed the decision and had a hearing with a Nasdaq Hearings Panel on April 9, 2024.
On May 16, 2024, the company received a written notice from the Nasdaq Hearings Panel that it has granted the company an extension to regain compliance with the continued listing requirements for the Nasdaq Capital Market. The Hearings Panel granted the company an extension until July 22, 2024, by which date the company will be required to demonstrate compliance with all applicable initial listing requirements in relation to its previously announced transaction with Danam Health, Inc.
Strategic Shift and Merger Agreement
During September 2023, Assure Holdings Corp.'s Board of Directors initiated a process to explore strategic alternatives for the business. As part of this review process, the company's board agreed to conduct an auction process for the sale of its clinical operations.
On March 26, 2024, the company closed the sale of certain assets of its IONM business to MPOWER Health for up to $4.5 million. The asset sale included most of the company's healthcare facility contracts, clinical equipment, and a majority of its clinical employees. Assure Holdings Corp. retained certain assets, including accounts receivable, some clinical employees, and its revenue cycle management team and management personnel.
In February 2024, Assure Holdings Corp. entered into an Agreement and Plan of Merger with Danam Health, Inc. ("Danam"). Danam is a company that delivers unique solutions for pharmacies, providers, pharmaceutical manufacturers, and payors, with a focus on improving patient lives.
Subject to the terms and conditions of the Merger Agreement, upon the closing of the transaction, the former Assure equityholders are expected to own approximately 10% of the outstanding capital stock of the combined company on a fully diluted basis, while the equityholders of Danam are expected to own approximately 90%. The combined company will be renamed Danam Health Holdings Corp., with Suren Ajjarapu serving as the Chairman of the Board of Directors and Tim Canning as the Chief Executive Officer.
Risks and Challenges
Assure Holdings Corp. faces several risks and challenges that investors should be aware of. The company's ability to maintain its Nasdaq listing is a significant concern, as delisting could have severe consequences, including reduced liquidity, limited market quotations, and decreased access to capital markets.
Additionally, the company's reliance on debt financing, particularly the Centurion debt, poses a risk. If the company is unable to meet the financial covenants or obtain the necessary add-backs and one-time adjustments from Centurion, it may default on its obligations, potentially leading to the lender foreclosing on the company's assets.
The ongoing COVID-19 pandemic and its impact on healthcare systems and elective surgical procedures also present a risk to Assure Holdings Corp.'s business. Any disruptions or delays in surgical procedures could adversely affect the company's revenue and financial performance.
Conclusion
Assure Holdings Corp. is navigating a challenging period as it transitions its business model and explores a strategic merger with Danam Health, Inc. The company's financial performance has been impacted by its efforts to exit legacy managed service agreements and the increased legal and advisory costs associated with the strategic review process and proposed merger.
While the company's liquidity position raises substantial doubt about its ability to continue as a going concern, the proposed merger with Danam Health, Inc. presents a potential path forward. Investors should closely monitor the company's progress in regaining compliance with Nasdaq's listing requirements and the successful completion of the merger transaction.
Despite the current headwinds, Assure Holdings Corp.'s focus on clinical excellence, patient care, and strategic partnerships positions the company to potentially capitalize on the growing demand for intraoperative neuromonitoring services, should it successfully navigate the ongoing challenges.