Why Zeltiq Aesthetics Inc. Shares Slipped

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 Zeltiq Aesthetics (NASDAQ: ZLTQ  ) , a medical technology company focused on developing aesthetic therapies using its controlled-cooling technology, dipped as much as 10% after reporting its first-quarter earnings results after the closing bell last night.

So what: For the quarter, Zeltiq announced a 55% increase in revenue to $31 million as it shipped 179 of its controlled-cooling systems compared to just 112 in the previous quarter. In total, the number of cycles performed on these systems increased 83% to 142,317 from the prior year period. Net loss from the previous year dropped 3% to $7.3 million, or $0.20 per share, from $7.5 million, or $0.21 per share. By comparison, Wall Street was anticipating a narrower $0.15 per share loss.

Looking ahead, Zeltiq revised its full-year revenue guidance to the upside with revenue expectations of $137 million to $140 million versus a prior projection of $134 million to $137 million. Its gross profit margin forecast remains unchanged at 70% and its new adjusted EBITDA margin sits at 3%. Wall Street's current projections call for full-year revenue of $136.5 million, so this new guidance appears favorable. However, with new investments in its technology and staff it's difficult to tell if EPS may continue to underperform Wall Street's consensus figures.

Now what: Zeltiq's potential is tied to sales of its CoolSculpting system. I would certainly prefer the company to be profitable, but I believe the investments it's making now are smarter than tightening its spending to produce a profit. As such, while shares have had a huge run and I'd urge caution based on that fact alone, I'd suggest more risk-willing and health-care savvy investors give Zeltiq a closer look as it could be a bargain over the long run.

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