Blue Apron still has 'substantial doubt' it can continue as going concern if Wonder merger fails to close

By Ciara Linnane

Meal-kit company posts another quarterly loss and declining revenue

Blue Apron Holdings Inc.'s latest earnings show the meal-kit company still has "substantial doubt" it can continue as a going concern as it posts another net loss and decline in revenue.

That's if a pending deal with Wonder, a food-delivery startup that intends to purchase the company for $13 a share, does not close, the company said Thursday in a regulatory filing.

The Wonder deal, which was announced in September with a closing date expected in the fourth quarter, assigned an equity value of about $103 million to the company. That's far below the almost $2 billion valuation Blue Apron garnered when it went public in 2017.

Blue Apron (APRN) acknowledged in the filing its long history of significant net losses, which came to $89.3 million in the nine months through Sept. 30 and $87.9 million in the year-earlier period.

As of Sept. 30, it had a working-capital deficit of $47.7 million and an accumulated deficit of $866 million.

"The company's current operating plan indicates it will continue to incur net losses and generate negative cash flows from operating activities for the next twelve months, and as of September 30, 2023, the company had cash and cash equivalents of $27.2 million," said the filing.

"These conditions and events in the aggregate raise substantial doubt regarding the company's ability to continue as a going concern," it continued, adding that the only way forward is to implement its operating plan on the anticipated timeline and successfully close the merger.

"Although management continues to pursue its plans, there can be no assurance that the company will be successful in executing on its operating plan or that the merger will be consummated in a timely manner or at all," the filing cautioned.

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The company reported a third-quarter loss that was narrower than expected, while revenue inched ahead of estimates.

The company's net loss came to $10.3 million, or $1.34 a share, for the quarter, narrower than the loss of $25.9 million, or $8.93 a share, posted in the year-earlier period.

Revenue fell to $98.8 million from $109.7 million a year ago, ahead of the $97.6 million FactSet consensus.

The company said it had 1.2 million orders in the period, down from 1.5 million a year ago and 1.4 million in the second quarter. It counted 238,000 customers, down from 323,000 a year ago and 267,000 in the second quarter.

Average revenue per customer rose to $413 from $340 a year ago and from $397 in the second quarter.

The stock was flat on Thursday but is down 25% in the last 12 months, while the S&P 500 SPX has gained 14%.

-Ciara Linnane

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11-09-23 1128ET

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