Why Sequenom Shares Got Squashed

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: Shares of diagnostic testing specialist Sequenom (NASDAQ: SQNM  ) plummeted 30% today after its quarterly results disappointed Wall Street. 

So what: Sequenom's second-quarter revenue spiked 91%, but a whopping loss of $31 million -- driven largely by cash collection problems caused by Medicare changes -- is forcing analysts to dramatically lower their short-term growth estimates. And while the volume of its MaterniT21 tests weren't affected by the seemingly temporary reimbursement issues, several signs of increasing competitive pressure have Wall Street worried about Sequenom's longer-term prospects, as well.

Now what: The annualized run rate for the MaterniT21 PLUS test at the end of the quarter surpassed 150,000 samples. "[W]e expect improvements in collections in the second half," said Chairman and CEO Dr. Harry Hixson, Jr. "We are taking actions to reduce costs and improve our overall financial performance, including curtailment of services for which there is no current reimbursement available." So while the decision to scale back services will weigh on short-term volumes and market share, long-term investors might want to capitalize on today's big drop.   

Obamacare will undoubtedly have far-reaching effects. The Motley Fool's new free report, "Everything You Need to Know About Obamacare," lets you know how your health insurance, your taxes, and your portfolio could be affected. Click here to read more. 

   


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2559336, ~/Articles/ArticleHandler.aspx, 9/21/2014 10:20:32 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement