After Cerus Corporation (CERS 2.84%) provided investors with an unwelcome business update, shares of the biomedical products maker fell 24% as of 3:15 p.m. EDT on Tuesday.
Cerus told investors that it was notified of an upcoming supply shortage of a platelet additive solution (PAS) that is manufactured and sold by Fresenius Kabi. This supply disruption is expected to temporarily impact some of the company's U.S. blood centers that utilize PAS to produce the company's INTERCEPT platelets.
In response to this news, Cerus once again updated its financial guidance for 2017. The company now expects full-year revenue to land between $38 million and $46 million. This new range represents a significant reduction from its recently reduced outlook of $43 million to $48 million.
Cerus CEO William Greenman stated that the company is doing "everything we can" to minimize this supply disruption and get the product to the impacted blood centers and hospitals that wish to continue using the company's INTERCEPT platelets. However, those comments did little to comfort investors, which is why shares are currently trading near a multiyear low.
It has been a rough month for Cerus investors. Just a few weeks ago Cerus said that it missed its own internal goals to have deals signed in France and South Africa and reduced its full-year revenue guidance, sending shares tumbling. When adding in today's plunge, the company might have trouble raising capital, which isn't great news since it ended March with just over $53 million in cash after burning nearly $18 million in the first three months of the year alone.
While there are still reasons to believe in the company's long-term potential, the company's short-term financial issues shouldn't be overlooked. For that reason, I'd caution investors against looking at today's drop as a buying opportunity.