Dive Brief:
- Hain Celestial received the exception it requested from Nasdaq's filing requirement, according to a news release Thursday.
- The Nasdaq Listing Rule requires companies to file timely periodic financial reports with the Securities and Exchange Commission (SEC), but Hain has yet to release its fourth quarter or full-year 2016 results.
- Hain now has until Feb. 27 to resume its formal report filing with the SEC.
Dive Insight:
Hain and its investors are undoubtedly relieved to have received this extension after Hain submitted its official plan to return to compliance to Nasdaq earlier this week. Hain received a delisting notice from Nasdaq in early September, which prompted the company to formulate a plan, even though the notice didn't have an immediate effect on the company or its shares.
Continuing to be on the Nasdaq exchange is obviously a huge benefit to Hain and its investors. Prior to this notice, Hain had been facing the unique "challenge" of overcoming high single-digit quarterly sales growth, a dip below its 20 consecutive quarters of double-digit sales growth.
But the company still needs to quickly determine where its financial calculations went wrong or risk significant complications for the company and investors. Hain attributes the delay to accounting errors regarding concessions the company granted to certain U.S. distributors. Hain is now figuring out whether it accurately accounted for the revenue associated with those concessions in the corresponding time period.
While Hain may have until the end of February, the company should consider moving faster to work out these accounting errors. Hain's shares plunged as much as 27.5% in premarket trading the day after the announced filing delay, and its share price has continued to plummet ever since. That includes hitting a new 52-week low of $34.25 as of Sept. 28, amid fluctuations.
The sooner Hain can correct its accounting errors and file its delayed reports, the sooner the company can work toward restoring investors' fleeting confidence and returning its share price to steady growth.