Why NxStage Medical Shares Bit the Dust

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Dialysis products manufacturer NxStage Medical (Nasdaq: NXTM  ) is being flushed down the drain today, with shares down as much as 17%, after the company reported disappointing second-quarter results.

So what: For the quarter, NxStage recorded a 10% increase in revenue to a record $59 million, with losses shrinking to $0.09 from a loss of $0.10 in the year-ago quarter. Home revenue provided the biggest boost with sales jumping 14%. Although these results met Wall Street's expectations, NxStage's guidance left a lot to be desired. Its third-quarter guidance of $60 million-$61 million in sales and a loss of $0.06-$0.08 per share is lower than the analyst's current projections for $61.93 million in revenue and a loss of just $0.05.

Now what: I like the long-term prospect for device makers given a growing population, a wider scope of people being insured through the Affordable Care Act, and continued improvements in treatment technology. One thing I'm not often willing to wait around for is a medical-device maker that can't turn a profit. NxStage is awfully pricey for not being profitable, and its growth rate leaves a lot to be desired. Personally, I'd pass, even at these depressed levels.

Craving more input? Start by adding NxStage Medical to your free and personalized Watchlist so you can keep up on the latest news with the company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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