Retractable Technologies Inc. (NYSE: RVP) is a micro-capped company with a valuation of only $80 million. It specializes in syringe products for the medical industry and has had the US government as a major client since the outbreak of the Covid-19 pandemic.

Retractable Technologies Hits a Slump in Q2

In its latest quarterly release, Retractable Technologies Inc. (RVP) saw much disappointment, in both its slowdown, and failure to meet expectations. Where last year, the company reeled in $42.5 million in Q2 sales, this year it delivered a mere $14.3 million. Net income during this time had seen just as dramatic a drop from a profit of $10.7 million, down to a loss of $3.6 million. This loss was primarily driven by pressure on the operational front, as the sale volume decline resulted in a per-cost surge, which dwindled profit margins by a significant degree. Rushing to keep its financials under control, the company announced the trimming down of its overall headcount by 16%.

High Reliance by RVP on US Government

Another catastrophic aspect that adversely impacts the company’s financial sustainability is its crippling reliance on the US government as its customer for syringes, since the outbreak of the Covid-19 pandemic. For a small company like Retractable, this is a crucial vulnerability, which showed its extent in the second quarter results. One reason revenue had dropped so significantly was due to a cutdown on a major order by the government, owing to improving conditions on the Covid-19 front. RVP will remain at risk unless it manages to overcome this reliance and shine on the market based on competitive strengths.

Conclusion

RVP holds a market capitalization of a mere $80 million, which makes it highly susceptible to sharp swings in either direction. In the last year, it has slid from $9 to $2, and continues this downward descent, given its poor financial performance, and unsustainable market positioning.