The notice, sent to ATI on June 28, said ATI’s average market capitalization over a 30-day trading period was just $41 million as of June 27, below the required $50 million. ATI’s stockholders’ equity was also less than $50 million, at just $20.5 million as of March 31.
Now the company has a little over a month to submit a plan explaining how it intends to come into compliance within 18 months. If the NYSE accepts the plan, ATI’s stock will remain listed and available for trade. If not, ATI will likely have to find a different exchange with lower listing standards.
ATI did not make an executive available for an interview, but in a statement to Crain’s, ATI said it intends to submit a plan within the required period of time and maintain compliance with the NYSE.
The notice comes about two years after ATI went public in a deal with a blank-check company, also known as a special-purpose acquisition company deal, or SPAC.
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The concept, which hit peak popularity in 2021, raises money from investors to buy private companies and is often seen as a shortcut to public markets that allows privately owned businesses to avoid the traditional initial public offering process.
In ATI’s SPAC deal, it combined with New York-based Fortress Value Acquisition Corp. II and began trading on the NYSE on June 17, 2021. But shortly after, the company dramatically lowered its earnings forecast, blaming unexpectedly high therapist attrition. The revelation quickly tanked ATI’s stock price, which fell about 50% over two days. The U.S. Securities & Exchange Commission later launched a probe into ATI over the issue.
ATI declined to comment to Crain’s on Wednesday about its stock price decline.
Amid the blowback, ATI CEO Labeed Diab stepped down. Months later, ATI named Sharon Vitti, a former CVS Health executive, its new CEO.
The company reported a net income loss of $26.3 million on net revenues of more than $167 million in the first quarter, compared with a $137.5 million loss on $153.8 million in net revenue during the same time period a year earlier.
“Their financial condition is not great,” says Bill Sutherland, an ATI analyst and director of research at New York investment bank Benchmark Co. “But they’ve improved it slightly and their performance is slowly improving year-to-date.”
In 2016, private-equity firm Advent International purchased ATI and remains its largest shareholder, holding 55% of the company, according to Bloomberg.
Since the SPAC, ATI has struggled to bounce back as it, like other healthcare companies, faces a business damaged by an industry-wide worker shortage ushered in by the COVID-19 pandemic.
ATI employed about 5,700 people at the end of 2022, but executives said on an earnings call in May that the company is still in the process of hiring and onboarding more therapists, according to a transcript.
“Until they have another big addition of (physical therapists), they’re not going to be able to generate sufficient revenue for decent profitability,” Sutherland says.
To stabilize the company, ATI has analyzed its more than 9,000 clinics around 24 states and has closed or consolidated some locations. Vitti told investors on the May earnings call that while ATI opened four new clinics, it also closed 12 and divested six in the first quarter of 2023.
“That’s a process that’s already yielding modest results,” Sutherland says. “They’re getting productivity up.”
This story first appeared in Crain's Chicago Business.
