Rafael Holdings, Inc. (RFL), a company focused on healthcare and real estate, recently reported a decrease in related party rental income as part of their latest quarterly report. The company experienced a drop in related party rental income from approximately 60% for the three months ended April 30, 2022, to 39% for the three months ended April 30, 2023. This decline was also observed in the nine months ended report, with related party rental income decreasing from 58% in 2022 to 43% in 2023.
This decrease in related party rental income has had an impact on the company’s total revenue, which dropped from $341,000 in the nine months ended April 30, 2022, to $211,000 in the nine months ended April 30, 2023. The company’s overall loss before income taxes also increased from $135.3 million during the nine months ended April 30, 2022, to $10.2 million during the nine months ended April 30, 2023.
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Healthcare Segment and Real Estate Segment
Rafael Holdings’ healthcare segment, which comprises equity interests in Cornerstone Pharmaceuticals, LipoMedix, Barer, Farber, and Rafael Medical Devices, has yet to generate any revenues. In contrast, the company’s real estate segment has generated modest revenues, primarily through the leasing of space in a commercial building located in Israel.
LipoMedix Shares Purchase
To broaden their pharmaceutical market, Rafael Holdings purchased 70,000,000 ordinary shares in LipoMedix with an aggregate purchase price of $2.1 million on February 9, 2023. As a result of this purchase, the company’s ownership of LipoMedix increased to approximately 95%.
Real Estate Holdings Values
Rafael Holdings’ real estate holdings have seen a slight decrease in property, plant, and equipment values, with a total value of $1,713,000 in 2023 compared to $1,770,000 in 2022. The company’s total assets in 2023 were $96,355,000, a slight decrease from $118,320,000 in 2022.
Financial Strategies and Transactions
In response to the decrease in related party rental income, the company has pursued several financial strategies and transactions. Among those strategies is a share repurchase program authorized by the Board of Directors in April 2023. The program gives the company the opportunity to repurchase up to $5 million of its Class B common stock until June 16, 2023.
Additionally, Rafael Holdings entered into a securities purchase agreement with institutional investors and a subsidiary of I9 Plus, LLC in August 2021 for an aggregate sale price of $6 million. This transaction resulted in the issuance of 2,833,425 shares of Class B common stock to institutional investors and 112,501 shares of Class B common stock to I9 Plus.
Company Outlook
Despite the current challenges faced by Rafael Holdings, the company remains vigilant in its pursuit of growth and financial stability. With an aggressive investment strategy in place, the company looks forward to expanding upon its successes in the healthcare and real estate sectors while mitigating the potential risks that these industries may present.
Note that we may hold securities mentioned in this article. The source of this article are the SEC filings available at https://www.sec.gov/Archives/edgar/data/1713863/000121390023048592/f10q0423_rafaelhold.htm that we extracted with the help of various software tools. Even though we have implemented various fact-checking processes, some incorrect information may have remained in the article (false positive). Let us know if you find any inconsistencies!