Why Roivant Sciences Stock Was Slipping on Monday

Key Points

• The biotech published an earnings report that fell short of expectations.

• It whiffed on both the top and bottom lines.

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Commercial-stage biotech Roivant Sciences (NASDAQ: ROIV) started the trading week with an earnings release. In retrospect, that might not have been the wisest move. Following Monday morning's unveiling of its fiscal first-quarter release, investors generally traded out of the stock. It had slid by more than 3% in late-session trading at a point when the S&P 500 index was only down marginally.

Falling short

Roivant reported that its revenue for the period was slightly under $2.2 billion, which was quite some distance down from the nearly $8 billion it reaped in the same quarter last year. The situation was hardly better on the bottom line, as the company flipped to a more than $223 million ($0.33 per share) generally accepted accounting principles (GAAP) net loss from the year-ago profit of $95 million.

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Compounding that, neither result met analyst expectations. The consensus pundit projection for revenue was far higher, at almost $7.7 billion, while that for net loss was narrower ($0.25).

Roivant did not provide details for its financial line items either in its earnings release or the 10-Q quarterly-earnings statement it filed with the Securities and Exchange Commission (SEC); this somewhat black-box quality might have contributed to the negative investor reaction.

An industry outlier

Roivant is atypical even for the extremely varied biotech sector in that it divides its business into "vants" -- subsidiaries -- based on a specific medication or cluster of drugs. Over time, some of these have been sold to business partners in order to raise capital.

Regarding that subject, Roivant said that it had cash, equivalents, restricted cash, and marketable securities amounting to roughly $4.5 billion. That was down from the nearly $4.9 billion in the year-ago quarter.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Roivant Sciences. The Motley Fool has a disclosure policy.