[8-K] Alto Neuroscience Inc. Reports Material Event

Rhea-AI Filing Summary

PENGUIN SOLUTIONS, INC. – FQ3 2025 (quarter ended 30 May 2025)

The first quarterly report issued after the U.S. redomiciliation (30 Jun 2025) shows continued top-line expansion but mixed bottom-line results as the company absorbs restructuring and financing costs.

• Revenue momentum: Net sales grew 7.9 % YoY to $324.3 million (nine-month YTD +20 % to $1.03 billion). Growth was driven by product sales (+11 % YoY) while service revenue slipped 2.9 %.
• Margins: Quarterly gross margin eased 30 bp to 29.3 %. An $5.3 million goodwill impairment related to the wind-down of the Penguin Edge business pushed operating margin down to 3.0 % (vs 3.8 %).
• Earnings: GAAP net income attributable to common fell to $2.7 million (-53 % YoY). After $3.0 million preferred dividends tied to the SK Telecom $200 million convertible preferred investment, common shareholders posted a -$0.01 diluted EPS versus +$0.10 a year earlier. YTD diluted EPS improved to $0.18 (FY24 YTD: -$0.53) on higher sales and lower interest expense.
• Cash & liquidity: Cash and equivalents surged to $709.9 million (Aug-24: $383.1 million) after the SKT investment, strong operating cash flow ($183.6 million YTD) and receipt of the $28.4 million deferred payment from the SMART Brazil sale. Current ratio stands at 2.6×.
• Capital structure: Total debt is stable at $659.5 million; net cash improved to ~+$50 million. $300 million TLA matures 2027; first convertible notes maturity ($20 million) in 2026.
• Shareholder returns: 2.46 million shares repurchased for $40.9 million YTD; $36.8 million remains under the $75 million January 2024 authorization.
• Corporate actions: • Completed redomiciliation to Delaware; Nasdaq ticker unchanged (PENG) effective 1 Jul 2025. • Continued wind-down of Penguin Edge expected to fully impair remaining $4.7 million goodwill by end-2025.

Outlook considerations

• Management expects positive free cash flow from the Edge wind-down but acknowledges further goodwill charges.
• Preferred dividends (6 % PIK/cash) will pressure EPS until potential conversion or redemption (earliest 2029 at company option).
• Remaining share-buyback flexibility, robust cash and lighter interest burden offer balance-sheet optionality.

Positive

• Revenue up 7.9 % YoY to $324 million, with YTD sales topping $1 billion for the first time.
• Operating cash flow jumped 56 % YoY to $183.6 million, reinforcing liquidity.
• Cash & equivalents nearly doubled to $710 million, turning the company net-cash positive.
• SK Telecom $200 million preferred investment strengthens strategic AI partnership and capital base.
• Share buybacks of $40.9 million signal confidence while leaving $36.8 million authorized.

Negative

• Quarterly diluted EPS turned to a loss of $-0.01 due to preferred dividends and impairment.
• Goodwill impairment of $11.4 million YTD highlights challenges in the Penguin Edge segment.
• Tax provision rose sharply to $7.3 million vs a benefit last year, pressuring net income.
• Service revenue declined 3 % YoY, softening overall growth.
• High leverage remains with $659 million total debt and a $300 million term loan maturing 2027.

Insights

Financial Analyst

TL;DR—Solid revenue growth and cash build offset by small EPS loss; neutral overall.

Performance: 8 % quarterly sales growth is healthy given the tougher macro backdrop, and YTD operating income quadrupled. However, narrower gross margin, goodwill impairment and the new preferred dividend swung EPS to a one-cent loss. Investors will weigh the sustainability of 30 %+ product gross margin against anticipated Edge impairment charges.

Balance sheet: The $710 million cash reserve (≈40 % of assets) and positive net cash position meaningfully de-risk the $300 million TLA and staggered convert maturities. Lower interest expense (-$5.6 million YoY) already shows the benefit of last year’s note repurchase.

Capital allocation: Management deployed $49 million on buybacks while still generating $180 million FCF, highlighting ample liquidity. Yet preferred dividends reduce distributable earnings, effectively raising the cost of capital to common holders until conversion.

Valuation impact: Modest quarterly miss on EPS but improving YTD trajectory and cash inflow from Brazil sale keep the thesis intact. I view the filing as neutral for the stock near term.

Industry Specialist – Edge & Memory Hardware

TL;DR—Edge wind-down progressing; core advanced-computing sales resilient.

The impairment confirms Penguin Edge’s planned sunset by end-2025, but the relatively small $5 million charge suggests inventory and contractual exposure are well managed. Product revenue growth indicates strong demand in advanced computing (AI server builds) and integrated memory despite lapping a 53-week FY24 period.

Service revenue softness (-3 % YoY) is typical as hardware mix shifts, but the 30 % service gross margin remains attractive. Watch for continued mix improvement as Stratus integration benefits materialise.

Overall, the operational signals are positive, though investors should monitor customer concentration and component availability as order volumes climb.

0001999480False00019994802025-07-032025-07-03

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 8-K

_____________________

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 3, 2025

_____________________

ALTO NEUROSCIENCE, INC.

(Exact Name of Registrant as Specified in its Charter)

_____________________

Delaware

001-41944

83-4210124

(State or Other Jurisdiction of Incorporation)

(Commission File Number)

(IRS Employer Identification No.)

650 Castro St, Suite 450, Mountain View, CA			94041
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (650) 200-0412

N/A

(Former name or former address, if changed since last report.)

_____________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

ANRO

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e) Repricing of Designated Underwater Options

On July 3, 2025, the Board of Directors (the “Board”) of Alto Neuroscience, Inc. (the “Company”) approved an option repricing, which was effective at the close of market on July 3, 2025 (the “Effective Date”). The repricing generally applies to options to purchase shares of the Company’s common stock that: (i) were granted under the Company’s 2019 Equity Incentive Plan (the “2019 Plan”) and the Company's 2024 Equity Incentive Plan (the “2024 Plan”, and together with the 2019 Plan the "Plans"); (ii) as of the Effective Date, are held by the Company’s then-current employees and consultants (each, an “Eligible Participant”); and (iii) have an exercise price per share greater than $2.35 (the “Eligible Options”). The Eligible Options include underwater options held by each of Dr. Amit Etkin, the Company’s President and Chief Executive Officer (options to purchase 719,910 shares with original exercise prices ranging from $4.20 to $14.88), Nicholas Smith, the Company’s Chief Financial Officer and Chief Business Officer (options to purchase 506,124 shares with original exercise prices ranging from $4.20 to $14.88) and Michael Hanley, the Company’s Chief Operating Officer (options to purchase 321,000 shares with original exercise prices ranging from $4.20 to $14.88). Options held by non-employee members of the Board are not eligible for the repricing.

As of the Effective Date, the Eligible Options were immediately repriced such that the exercise price per share for such options was reduced to $2.35 (the closing price of the Company’s common stock on the New York Stock Exchange on the Effective Date), subject to certain retention requirements outlined below. If an Eligible Participant exercises an Eligible Option in advance of the end of the relevant Retention Period (as defined below), such Eligible Participant will be required to pay a premium exercise price equal to the original exercise price per share of such Eligible Option. There will be no changes to the number of shares underlying the Eligible Options or to the vesting schedules or expiration dates of the Eligible Options.

In order to exercise the Eligible Options at the reduced exercise price, Eligible Participants are required to remain in service with the Company through the end of the relevant Retention Period (as hereinafter defined). The “Retention Period” begins on the Effective Date and ends on the earliest of the following: (i) the date 12 months following the Effective Date; (ii) a Change in Control (as defined in the applicable Plan) if the Eligible Option is not assumed or continued by the successor or acquiror entity (or its parent company) in such Change in Control or substituted for a similar award of the successor or acquiror entity (or its parent company); and (iii) the Eligible Participant’s Qualifying Termination (as hereinafter defined). A “Qualifying Termination” for purposes of the repricing means the applicable Eligible Participant’s termination of Continuous Service (as defined in the 2024 Plan) or termination of status as a Service Provider (as defined in the 2019 Plan), as applicable, (i) due to such individual’s death or Disability (as defined in the applicable Plan) or (ii) by the Company (or successor entity in a Change in Control) other than for Cause (as defined in the 2024 Plan).

The Board approved the repricing after extensive discussion, careful consideration of various alternatives and a review of other applicable factors with the advice of independent compensation consultant to the Compensation and Management Development Committee of the Board. The Board designed the repricing, with the original exercise price applicable during the Retention Period, to provide added incentive to retain and motivate the Eligible Participants to continue to work in the best interests of the Company and its stockholders without incurring the stock dilution resulting from significant additional equity grants or significant additional cash expenditures resulting from additional cash compensation. As of the date of approval of the repricing, nearly all of the stock options held by Company employees and consultants were “underwater,” with exercise prices exceeding the current market price of the Company’s common stock. The total number of shares underlying all Eligible Options is 4,225,763 shares. The Eligible Options have current exercise prices ranging from $2.44 to $16.00 per share.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			ALTO NEUROSCIENCE, INC.
Dated: July 8, 2025			By:			/s/ Amit Etkin
						Amit Etkin, M.D., Ph.D.
						President and Chief Executive Officer

FAQ

How much did PENGUIN SOLUTIONS (PENG) earn in Q3 2025?

Quarterly net income attributable to common was $2.7 million, but after $3.0 million preferred dividends EPS was -$0.01.

What drove the 8 % revenue increase for PENG in Q3 2025?

Product sales rose 11 % to $258.7 million, outweighing a 3 % dip in services.

How much cash does PENG have after the SK Telecom investment?

Cash and cash equivalents totaled $709.9 million as of 30 May 2025.

What is the status of the Penguin Edge wind-down?

Management recorded $5.3 million impairment this quarter and expects the remaining $4.7 million goodwill to be fully written off by end-2025.

How many shares did PENG repurchase in FY25 YTD?

The company bought back 2.46 million shares for $40.9 million; $36.8 million authorization remains.

When do PENG’s major debt obligations mature?

Key maturities: $20 million convertibles in 2026, $300 million term loan in 2027, $150 million converts in 2029 and $200 million converts in 2030.