What happened

Shares of the medical device company Nuvectra (NASDAQ:NVTR) sank by as much as 19.5% on extremely heavy volume in early-morning trading today. What kicked off this double-digit move southward?

Nuvectra's shares appear to be falling in response to the news that CEO Scott Drees is stepping down and board member Fred Parks, Ph.D. will be his replacement, effective immediately. The reason for Drees' sudden departure hasn't been disclosed by the company at the time of writing. 

A man with a laptop folded over his head holding a sign that reads "Help!" in his right hand.

Image source: Getty Images.

So what

The market is rarely pleased with changes in key leadership positions, even under the best of circumstances. So this hefty slide in Nuvectra's share price today isn't particularly surprising. However, this abrupt leadership change was announced only two days after the U.S. Food and Drug Administration (FDA) noted that it hadn't completed its review of the company's premarket approval application for the Virtis Sacral Neuromodulation (SNM) system within the allotted 180-day review period. That's a lot of unwelcome news for shareholders to digest in an exceedingly short time. 

Now what

Is this pronounced sell-off a buying opportunity? Unfortunately, the answer to this all-important question isn't altogether clear right now. Until the FDA's review of Nuvectra's SNM system is complete, it's basically impossible to gauge where this company will be from a cash flow standpoint in a year or two. And that's key because the company doesn't have a particularly lengthy cash runway as things stand now.

Check out the latest Nuvectra earnings call transcript.

The good news is that Nuvectra's first FDA-approved product -- the Algovita Spinal Cord Stimulation System -- is performing admirably in the marketplace so far. As a result, the company's shares are trading at only a little less than three times its 2019 projected sales following this pullback. That's a fairly depressed valuation for a medical device company. So if you don't mind some near-term volatility and longer-term uncertainty on the cash flow front, Nuvectra might actually be worth adding to your portfolio on this dip.