China SXT Pharmaceuticals Inc. (Nasdaq: SXTC) tumbled 16% in pre-market trading Friday after announcing a reverse stock split.
In a statement today, the Chinese traditional medicine maker said a 1-for-4 reverse stock split will be effective today, Feb. 19, after the move had been approved by the board last month. SXTC ordinary shares are expected to begin trading on a split-adjusted basis when the market opens on Monday, according to the report.
As of Thursday, there were about 62.1 million SXTC shares outstanding. Upon the reverse stock split, the count will drop to 15.5 million.
Earlier this month, SXTC reported a 20% year-over-year increase in revenues to $3.9 million for the six months through September 2020. It was able to turn up profit during the period, posting income of $1.4 million in contrast to losses of $2.3 million in the same period of 2019.
The majority of its revenues were generated from the sales of TCM Homologous Supplements and Advanced TCMPs – traditional Chinese medicine pieces. SXTC was also able to cut both its revenue costs and operating expenses, down 24% and 20%, respectively, the report said.
The strong performance, however, failed to lure in investors. Shares in SXTC have been trading below or near the minimum bid price required by the Nasdaq Capital Market for at least the past year. Already, SXTC received a 180-day extension from the stock exchange in September to regain compliance. The reverse stock split will allow SXTC to keep trading.
Before markets opened Friday, SXTC stock was at 86 cents per share, down from yesterday’s close of $1.02.