Rennova Health

Kurta Law is investigating recommendations of Rennova Health (RNVA) stock for their potential unsuitability for investors. Brokers have a duty to recommend investments that are suitable for an investor’s risk profile, and recommending especially high-risk stock can violate securities regulations.

If you lost money on Rennova Health stock or another risky investment, consider contacting a securities attorney. Brokerage firms often require investors to seek remedy through FINRA arbitration rather than suing in civil court.

Contact a securities attorney to review your case today: (877) 600-0098 or info@kurtalawfirm.com.

What is Rennova Health?

According to the prospectus, Rennova Health, Inc. (RNVA) is a company that maintains an extensive database of medical information designed to assist physicians in making treatment decisions. This database reportedly identifies links between genetic biomarkers (indicators of disease) and potential therapies.

Formerly known as CollabRx, the company changed its name following a 2015 merger with holding company Medytox Solutions, Inc. Medytox also owns other companies in the healthcare and medical fields.

Rennova Health was delisted from the Nasdaq Stock Market in October 2017.

What are the Risks Associated with Rennova Health?

Businesses involved in medicine and healthcare are subject to many government regulations regarding health insurance billing, use of patient information, and other concerns. They also face steep competition, and may feel a pressure to innovate and release new products to keep up with competitors.

In its prospectus, Rennova Health describes these and other potential risks associated with its pre-merger companies.

Successful Integration of Businesses

The merging of two companies is a complicated process. The prospectus notes that “coordinating geographically separated organizations, systems and facilities and addressing possible differences in business backgrounds, corporate cultures and management philosophies may increase the difficulties of integration.”

Relatedly, the prospectus states that “the size of the business of the combined company will increase significantly beyond the current size of either Medytox’s [sic] or CollabRx’s business.”

These difficulties may disrupt Rennova Health’s operations and its relationships to its customers, as it will need to efficiently manage its expanded operations and reconcile any differences in company policies relating to accounting, management, etc.

CollabRx’s History of Losses

In its prospectus, Rennova Health discloses that CollabRx had net losses of $5.2 million and $3.3 million for the fiscal years ending March 31, 2015 and 2014, respectively. Rennova Health also states that it expects this pattern to continue and that profitability is not certain for the company.

Risks Related to Medytox Solutions

Investors should also be aware of several potential challenges related to Medytox Solutions:

• Failure to identify promising acquisition targets and to integrate these companies effectively
• Noncompliance with federal healthcare laws and FDA regulations concerning clinical laboratories
• Slow or inaccurate billing for Medytox’s services, which could disrupt its operations and cash flow

Medytox Solutions states that its business model depends on raising working capital to fund its marketing. It also states that its business model “has changed significantly in the past few years which may make it difficult to evaluate our business and prospects.”

Aegis Capital Corp. Underwriting    

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm.  

Do You Have Concerns Related to Your Shares of Rennova Health?

If you believe Rennova Health was overly risky for your risk profile, consider reaching out to our experienced securities attorneys. Kurta Law attorneys regularly take on cases of unsuitable investment recommendations and broker misconduct. Call (877) 600-0098 or email info@kurtalawfirm.com.