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Why Zeltiq Aesthetics Inc. Is Soaring Today

By Brian Feroldi - Updated Nov 10, 2016 at 11:41AM

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Shares jump in response to a strong third-quarter earnings report.

Image source: Zeltiq Aesthetics.

What happened

An upbeat third-quarter earnings report caused shares of Zeltiq Aesthetics (ZLTQ), a medical device company focused on non-invasive fat reduction procedures, to rise by 17% as of 10:58 a.m. EST on Thursday.

So what

It was an almost-perfect report all around. Here's a look at the highlights:

  • Total revenue grew by 55% to $95.2 million. System revenue jumped by 45% to $42.7 million, while revenue from consumables grew by an even faster 65%, coming in at $52.5 million. That topped Wall Street expectation of $90.5 million in total revenue.
  • International sales jumped by 43% to $20.9 million.
  • Systems shipped came in at 403 for the quarter, growing the installed base to 5,657 systems.
  • Treatment cycles grew to 386,854 during the quarter, up 56% year over year.
  • Net income for $5.2 million, or $0.12 per diluted share. That was more than double the $2.1 million, or $0.05 per diluted share, that was produced in the year-ago quarter. It was also far ahead of the $0.08 that market watchers had expected. 
  • The company's cash balance at quarter-end was $65.0 million, up more than $13 million from the end of June. 

If that wasn't good enough, management issued an upbeat forecast:

  • The full-year revenue guidance range was increased to $350 million to $352 million, which is up from its prior outlook of $340 million to $350 million. 
  • Gross margin is expected to be 70% for the full year, 2% better than its prior guidance.
  • Net margin is expected to be (1)% of revenue, which is better than its old call for (3)% to (2)%.

Given the solid quarterly results and upbeat guidance, it is no wonder that shares are jumping today.

Now what

Zeltiq's stock has been on a huge tear in 2016. It's up more than 40% year to date, which blows past the returns medical devices stocks in general, as measured by the iShares US Medical Devices ETF (IHI 0.56%).

ZLTQ Chart

ZLTQ data by YCharts.

That huge outperformance makes sense when you consider that the company has grown its top line so rapidly. Better still, Zeltiq has succeeded with its efforts to convert that huge growth into profits. 

I must admit that I've been skeptical of Zeltiq for some time. Like many others, I've been worried that CoolSculpting might just be a fad. However, results continue to prove that thesis wrong. If consumers keep warming up to the concept of freezing away stubborn fat cells, then I must admit that this company's future is looking bright.

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Stocks Mentioned

ZELTIQ Aesthetics, Inc. Stock Quote
ZELTIQ Aesthetics, Inc.
ZLTQ
iShares Trust - iShares U.S. Medical Devices ETF Stock Quote
iShares Trust - iShares U.S. Medical Devices ETF
IHI
$53.48 (0.56%) $0.30

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