EMCORE Corporation Reports $5.5 Million Net Loss, Announces Merger Agreement with Velocity One Holdings

EMCORE Corporation reported a net loss of $5.5 million for the three months ended December 31, 2024, a slight improvement from a net loss of $5.7 million in the same period last year. Revenue for the quarter decreased by 20% to $19.3 million, down from $24.1 million in the prior year, primarily due to reduced sales in fiber optic gyroscopes (FOG) and contract support. The company's gross profit increased to $6.3 million, reflecting a gross margin improvement from 25% to 36%, attributed to cost reduction efforts from recent restructuring initiatives.

The company has undergone significant restructuring, including the closure of its Alhambra, California facility and the elimination of approximately 200 positions, which represents about 50% of its workforce prior to these reductions. These actions are expected to yield annualized cost savings of approximately $17 million. EMCORE's strategic focus has shifted entirely to its Inertial Navigation business segment, following the divestiture of its broadband and defense optoelectronics businesses in late 2023 and early 2024.

In terms of operational metrics, EMCORE's cash and cash equivalents stood at $9.0 million as of December 31, 2024, down from $10.3 million at the end of the previous quarter. The company has also entered into a merger agreement with Velocity One Holdings, LP, which is expected to close in the first quarter of 2025, subject to shareholder approval and other customary conditions. Under the terms of the agreement, shareholders will receive $3.10 per share in cash.

The company continues to face challenges related to liquidity and operational efficiency, as indicated by its ongoing restructuring efforts and the need to manage cash flows carefully. EMCORE's management has expressed substantial doubt about its ability to continue as a going concern, emphasizing the importance of executing its restructuring plans and potentially raising additional capital to support operations. The company is actively exploring options to enhance its financial position, including further expense reductions and capital raising initiatives.

Overall, EMCORE's recent financial performance reflects the impact of strategic restructuring and market conditions, with a clear focus on stabilizing its operations and preparing for future growth in the Inertial Navigation sector. The upcoming merger is anticipated to play a crucial role in the company's long-term strategy and financial health.