Here's Why NeoGenomics Is Tumbling Today
Shares of NeoGenomics (NASDAQ: NEO) fell as much as 10.6% today after the company announced two fundraising transactions. The one dragging down the stock price today is the public offering of common stock. The oncology reference lab intends to offer up to approximately 5 million shares at $28.50 apiece. If all shares are gobbled up by investors, then the company would realize gross proceeds of up to $144 million.
Whereas the public offering of common stock will dilute shareholders immediately, the other fundraising transaction, an offering of convertible debt, is a more distant concern. NeoGenomics will sell $175 million in 1.25% convertible debt that comes due in 2025. The debt is called "convertible" because it can be cashed in for shares of common stock but likely not until the maturity date in the middle of the decade. It basically represents the potential for future dilution, although the company can also purchase the debt with cash.
The two fundraising transactions could provide the business with up to $319 million in gross proceeds. Investors tuned into management's strategy don't have to be too imaginative to guess what the proceeds will be used for. As of 11:22 a.m. EDT, the growth stock had settled to a 9.2% loss.
Source Fool.com
