Investors have had a love affair with the market around underwritten initial public offerings for many years, but the other side of the underwriting world revolves around secondary offerings and capital raises. The area of secondary offerings can allow companies to raise additional capital, but they also may be filed solely to allow corporate insiders or existing shareholders to sell their shares with no underlying benefit to the company. While some of the offerings can be dilutive, if they are new shares, the offerings all have the effect of increasing the free float of shares, if they are in actual common shares.

24/7 Wall St. has tracked several underwritten secondary offerings of common stock or other instruments that were weighing on the underlying shares on Monday, June 29, 2020. Some of the declines here look even more exaggerated, considering that the stock market was seeing a strong bounce after Friday’s big sell-off.

Investors should understand that some of these shares were registered, but some of them may not come on the market for quite some time. Trading data and historical references were added for context.

AdaptHealth Corp. (NASDAQ: AHCO) traded down over 5.5% on Monday to $15.91, after the home medical equipment supplier announced that it has commenced an underwritten offering of 6.5 million Class A common shares, along with a 30-day option for underwriters to purchase up to 975,000 additional shares. AdaptHealth’s filing did note that net proceeds from the offering were being earmarked for general corporate purposes, which were shown to include acquisitions, other business opportunities, capital spending and working capital.

The company also included a note that its previously announced acquisitions of Solara Medical Supplies and ActivStyle Holdings were not dependent on this offering. AdaptHealth’s new market cap was $1.17 billion, and its 52-week trading range is $7.82 to $22.57. The underwriting syndicate was rather large considering its size: Jefferies, Deutsche Bank Securities and UBS were listed as the joint book-running managers. RBC Capital Markets and Stifel were listed as senior co-managers, and Canaccord Genuity and Regions Securities were named as co-managers.

Aravive Inc. (NASDAQ: ARAV) was down 17%at $11.70, and the 205,000 shares traded by noon was already at its average daily volume. The prospectus indicated that this was for an “offer and resale from time to time” of up to 931,098 shares by the selling stockholder (Eshelman Ventures), which had acquired the shares in a private placement transaction in April 2020. This was a $5.76 stock at the end of March, but it was up to $13.43 by the end of April.

Aravive shares traded at $14.10 as of Friday’s close, in a 52-week range of $3.34 to $15.62. It has a $187 million market cap. The company is a clinical-stage biotech outfit targeting platinum-resistant recurrent ovarian cancer, clear cell renal cell carcinoma, triple negative breast cancer, acute myeloid leukemia and pancreatic cancers.

Cancer Genetics Inc. (NASDAQ: CGIX) just issued its earnings and a strategic update in the middle of last week, but after Friday’s close, it filed an S-3 form for up to $100 million to be sold in common stock, preferred shares, warrants, debt, rights and units. Of note was that only 2,260,883 shares of common stock were issued and outstanding as of June 25, 2020, and no shares of preferred stock were issued and outstanding. The shares were down 5.7% at $3.05, with a market cap of only about $7 million. The 52-week trading range is $1.92 to $9.50.

Genius Brands International Inc. (NASDAQ: GNUS) has seen its share of ups and downs in the news. Its stock was down 5.3% at $2.31 on Monday after an S-3 filing from Friday afternoon for 59,523,812 common shares to be registered for a value of $159.2 million at the time. These shares are shown to be from holders of a convertible note offering that was closed in March of 2020, and that the common shares will be resold from time to time rather than this being a formal offering.

Genius Brands has been in the news in recent weeks, with its shares sent sky high due to the launch of its Kartoon Channel streaming lineup and also a recent investment with Arnold Schwarzenegger. The company’s draw has been the Rainbow Rangers, Llama Llama, SpacePop, Thomas Edison’s Secret Lab, Warren Buffet’s Secret Millionaire’s Club, Superhero Kindergarten and Baby Genius. With a market cap of $222 million, it has a 52-week trading range is $40.5 to $11.73, and its closing high during the excitement was $7.93.

PaySign Inc. (NASDAQ: PAYS) had first filed its S-1 for the resale of up to 1,514,166 common shares from time to time by existing stockholders. The amended filing was issued last week, and the maximum price per unit at that time was $7.35 per share, for a proposed maximum offering of just over $11.1 million. PaySign was down an additional 5% at $9.68 on Monday, with a market cap of $477 million and a 52-week trading range of $3.63 to $18.67.

RumbleON Inc. (NASDAQ: RMBL) was lower by 8.8% to $9.19 in Monday’s midday trading. The e-commerce platform for car dealers also reported earnings on Monday. An amended filing with the SEC indicated up to $38.75 million from a 6.75% convertible senior notes offering due in 2025 that was issued in January 2020, as well as 968,750 class B shares, for a total size of up to $30 million. RumbleON’s market cap is just $20 million.

Sunnova Energy International Inc. (NYSE: NOVA) filed to sell 8 million shares of stock, which would be 9.2 million shares if the overallotment option is exercised in full. The underwriting syndicate of JPMorgan, BofA Securities, Credit Suisse and Goldman Sachs is fairly large. Shares of this Houston-based solar company were down more than 1% at $18.85 as of Friday’s closing price, but they were down 12% at $16.57 in somewhat inactive trading on Monday. Its 52-week trading range is $6.12 to $20.87, and the market cap after the drop is listed as $1.4 billion.

While some companies are using secondary offerings to raise or bolster their capital, these are shareholder sales and the prospectus noted that some of the shares are issuable upon conversion of Sunnova’s 9.75% convertible senior notes due 2025, which were previously issued to certain of the selling stockholders. Those selling holders were shown to include Energy Capital Partners and Tortoise Capital Advisors.

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