On Friday, H.C. Wainwright adjusted its outlook on Scilex Holding Co. (NASDAQ:SCLX) shares, reducing the price target to $8.00 from the prior $12.00, while reiterating a Buy rating on the stock. The price target revision comes in light of recent developments within the company and market conditions affecting its financial strategies.
Scilex, which specializes in pain management treatments, had earlier launched co-pay programs for two of its products, ZTlido and ELYXYB. These programs are designed to reduce out-of-pocket expenses for commercially insured patients to a maximum of $25 per month, with some qualifying for no cost at all. The initiative is part of Scilex's strategy to enhance the affordability of its post-herpetic neuralgia (PHN) and migraine treatments.
Additionally, as of April 1, 2024, ELYXYB was included in a purchasing pool by a multi-state Medicaid pharmaceutical purchasing group, which has made it accessible to Medicaid programs across 13 states. This move is expected to broaden the reach of ELYXYB significantly.
Scilex has also been navigating through a recent challenge with the processing of insurance claims due to a cyber-attack on Change Healthcare (NASDAQ:CHNG)'s IT systems, a division of UnitedHealth Group (NYSE:UNH). The issue, which was resolved in late March 2024, disrupted the adjudication of co-pay savings card claims.
The revised price target by H.C. Wainwright reflects several factors, including the potential dilutive impact of recent equity financing and anticipated future equity dilution. Adjustments to market model assumptions and discounted cash flow (DCF) parameters were also considered in the new valuation. Despite these adjustments, H.C. Wainwright maintains a positive outlook on Scilex, as indicated by the continued Buy rating.
InvestingPro Insights
Scilex Holding Co. (NASDAQ:SCLX) has been under scrutiny in the investment community, and recent data from InvestingPro offers a clearer picture of the company's financial health. With a market capitalization of approximately $102.76 million, Scilex is navigating through a significant debt burden that could impact its financial strategies and operational decisions. Notably, the company's revenue has grown by 22.9% over the last twelve months as of Q4 2023, indicating some positive momentum in sales growth.
However, analysts remain cautious as they do not expect Scilex to be profitable this year, and the company's stock has been trading near its 52-week low. The significant price decline over the past year and short-term performance, with a 1-month price total return of -44.91%, reflect the challenges Scilex faces. Two InvestingPro Tips highlight concerns for investors: Scilex operates with a significant debt burden and may have trouble making interest payments on debt, which are crucial factors to consider when assessing the company's future.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available that shed light on Scilex's financial position and market performance. Utilize coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro for more exclusive insights and to stay ahead with real-time analytics and comprehensive research tools.
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