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Here's Why Novocure Is Tumbling Today

By Brian Feroldi – Oct 25, 2018 at 3:11PM

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Shares plunged after the company reported mixed quarterly results. Here are the must-know details for investors.

What happened

In response to the company posting mixed third-quarter results, shares of Novocure (NVCR 4.46%), a medical device maker that is focused on cancers of the brain, fell 16% as of 2:50 p.m. EDT on Thursday.

So what

Here's a look at the highlights from the quarter:

  • Revenue grew 29% to $64.8 million. That result was short of the $65.4 million that Wall Street was looking for.
  • Net loss was $11.7 million, or $0.13 per share. That was better than the $0.15 net loss that analysts had expected.
  • Active patients grew 34% year over year. This number was ahead of revenue growth, which could indicate that average selling prices are slipping. That's likely being caused by the company's continued expansion in international markets such as Germany and Japan.
  • Prescription volumes grew 16%. That's a decent -- but far from stellar -- result. 
  • Cash balance at quarter-end was $227 million.
  • The company submitted a Humanitarian device exemption application to the FDA to potentially use Optune in mesothelioma. 
Man slapping head with chart heading down in background

Image source: Getty Images.

In a separate announcement, Novocure stated that its founder, Dr. Yoram Palti, has decided to retire from its board of directors.

Given the mixed quarterly results and sudden departure of the founder, it is not surprising to see this red-hot stock getting whacked today.

Now what

This isn't the first time this year that Novocure has come up short of expectations on the top line. That's not a trend that I like to see, especially when the company is a high-growth stock that is utterly void of competition

Having said that, Novocure's financials are trending in the right direction, and the opportunity ahead of the company is enormous. This bull continues to see plenty of reasons to own this stock, but if the company continues to come up short of Wall Street's expectations I may have to re-examine my investing thesis. 

Brian Feroldi owns shares of Novocure. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

NovoCure Stock Quote
$78.71 (4.46%) $3.36

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