Bankrupt Virgin Orbit Approved for Sale as 2022 Financial Results Show Company’s Spiral

Virgin Orbit (OTCMKTS: VORBQ) has received approval from the Delaware Bankruptcy Court to proceed with a sale later this month that could see a new owner in charge by early June. The company also released its 2022 financial results, which include data that chronicle its downward spiral.

Parties that want to purchase all or part of the Richard Branson-owned launch provider must formally register their interest by May 4. Bids are due nine days later. If more than one qualified bid is received, an auction would follow three days later. The court will then hold a sales hearing, followed by the closing of any deal on or before June 2.

Virgin Orbit Sale
Key Dates & Events

Virgin Orbit declared bankruptcy on April 4 after failing to raise the funds needed to continue operations. The filing came right after the company laid off 675 of its 775 employees.

Virgin Orbit uses a modified Boeing 747 to air launch small satellites with the LauncherOne booster. The company compiled a record of four successes and two failures over the past three years.

Financial Report Shows Struggle

Last week, Virgin Orbit released its financial report for 2022, which had been delayed due to the bankruptcy. The report shows how dire the company’s financial state had become by the end of last year.

In only 12 months, the launch company’s cash reserves plunged from $194 million to $51.2 million – $45 million of which had come in the form of two loans from Branson’s Virgin Investments Ltd. (VIL) in November and December. Without the cash infusion, Virgin Orbit’s reserves would have dropped down to $6.2 million.

Virgin Orbit reported $33.1 in revenue for 2022. However, it cost the company more than twice that amount – $85.7 million – to earn the revenue.

Virgin Orbit reported a net loss of $191.2 million for 2022. The company’s total net loss for 2020 through 2022 was $470.1 million. Revenue totaled only $44.3 million for the three-year period.

Part of the problem was Virgin Orbit’s struggle to increase its launch cadence. LauncherOne failed on its maiden flight in May 2020. While the company completed two successful launches in 2021 and hoped to conduct as many as six launches in 2022, it only managed two flights that year. Meanwhile, expenses had increased as the company added more employees and built more launch vehicles.

With the company in perilous financial shape, much was riding on Virgin Orbit’s heavily publicized launch that originated from Spaceport Cornwall in England on January 9. All appeared to go well at first; the company tweeted that the second stage had reached orbit.

But, it hadn’t. The stage and its nine satellites had burned up in the atmosphere. A subsequent investigation found that a fuel filter that cost about $100 had broken loose and reduced the thrust on the engine.

Branson pumped an additional $15 million into Virgin Orbit through VIL in an effort to keep the company afloat. The company instituted a week-long pause and furloughed nearly all its employees in mid-March in an effort to conserve cash. Layoffs and bankruptcy followed after talks with several potential buyers fizzled out. Nasdaq also suspended trading of the company’s stock.

Virgin Orbit’s financial results are below.

VIRGIN ORBIT HOLDINGS, INC.
Consolidated Balance Sheets
(In thousands, except for per-share data)

See accompanying notes to consolidated financial statements.

VIRGIN ORBIT HOLDINGS, INC.
Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except for per-share data)

VIRGIN ORBIT HOLDINGS, INC.
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
(In thousands, except for per-share data)

VIRGIN ORBIT HOLDINGS, INC.
Consolidated Statements of Cash Flows
(In thousands)

VIRGIN ORBIT HOLDINGS, INC.
Consolidated Statements of Cash Flows (continued)
(In thousands)