Source: MiMedx Group.
What: After reporting preliminary third-quarter results and offering up guidance below Wall Street expectations, shares in MiMedx Group (MDXG 0.16%) dropped by 14.2% today.
So what: The drop in MiMedx's shares would seem to indicate a lackluster quarter for the company, but MiMedx's third-quarter results outpaced analyst estimates on the top line.
Overall, MiMedx preliminary revenue grew 46% to $49 million last quarter, leading to the company reporting its 15th consecutive quarter of positive adjusted EBITDA. The $49 million in third-quarter sales was slightly better than industry watchers' prediction for $48.6 million.
Given that the top-line results eclipsed analysts' assumptions, investors' disappointment probably stems from its fourth-quarter sales forecast for revenue of between $49.5 million and $52.5 million. Overall, analysts were predicting $52.1 million in sales for the fourth quarter.
Now what: MiMedx may not be a well-known player in healthcare, but it's enjoying rapid demand growth for its lineup of tissue grafts. Doctors use those grafts, which are created from donated placentas, to encourage wounds to heal more quickly and with minimal scarring.
In 2015, MiMedx expects its total sales will be between $185 million and $188 million and that it will enjoy operating margin of between 12% and 14%. As a result, analysts are forecasting full-year EPS of $0.20 per share this year.
Importantly, MiMedx believes that underlying demand for its grafts will increase over time because of an aging population and a larger population of diabetics who are susceptible to ulcers.
Because long-term demand for grafts could increase, investors may want to consider MiMedx for high-risk portfolios. The company's EPS is expected to climb to $0.28 next year, and assuming there aren't any surprises when the company provides its 2016 forecast in December, current share prices don't seem too unreasonable for a profitable, high-growth company.
