What happened

Shares of Vocera Communications (NYSE:VCRA) declined on Friday after the provider of communication solutions for the healthcare industry reported its third-quarter results. While Vocera beat analyst estimates for both revenue and earnings, disappointing guidance sent the stock 23.1% lower by 11:45 p.m. EDT.

So what

Vocera reported third-quarter revenue of $50.8 million, up 6.3% year over year and slightly higher than the average analyst estimate. Product revenue grew 4.3% to $28.5 million, driven by 11.6% growth in device sales, while service revenue jumped 8.7% to $22.3 million.

A blue declining chart with a white downward arrow.

Image source: Getty Images.

Non-GAAP (adjusted) earnings per share came in at $0.23, up from $0.20 in the prior-year period and $0.04 better than analysts were expecting. Adjusted gross margin dipped 2.3 percentage points to 66.2%, but strong revenue growth was enough to drive the bottom line higher.

Vocera's third-quarter numbers were solid, but its guidance was not. The company lowered its full-year outlook, now expecting revenue between $176.8 million and $181.8 million. That compares to a previous guidance range of $182 million to $190 million. Non-GAAP EPS is now expected between $0.22 and $0.34, down from a previous guidance range of $0.33 to $0.46.

Now what

Vocera's guidance cut led a few analysts to downgrade the stock on Friday. Cantor Fitzgerald, R.W. Baird, and Craig-Hallum all downgraded the stock to the equivalent of "hold." Cantor Fitzgerald slashed its price target from $36 to $20, while the other two brought their price targets down to $21.

Including Friday's decline, shares of Vocera are now off about 55% from their 52-week high.