Shares of InMode (INMD 1.48%) were surging 14.7% at 3:30 p.m. EDT on Monday after management unveiled plans allowing it to repurchase up to 1 million shares in the open market.
The healthcare company's medical devices are used to perform aesthetic treatments, including liposuction, using radio frequency energy to reduce scarring and decrease recovery times.
Following robust growth last year, including a 56% jump in revenue to $156.4 million, demand for InMode's solutions has sagged this year because of COVID-19 restrictions.
In Q2, a drop in procedure volume caused revenue to decline 20.7% year over year to $30.8 million, contributing to GAAP earnings per share falling to $0.21 from $0.45 in the same quarter last year. Because of slowing sales, InMode's shares were down 21% year to date through Tuesday.
Apparently, management thinks the decline in its shares is overdone. On Wednesday, its board of directors approved a share repurchase program of up to 1 million shares, citing new product launches, a gradual return of elective surgeries, and its shares being "an attractive investment opportunity."
There's no guarantee or requirement that InMode buys any shares back under this new program. Nevertheless, a willingness to repurchase shares suggests management is confident procedure growth will bounce back and profitability will improve.
That's particularly encouraging given management indicated there was virtually no demand in March, procedure volume was still treading water in May, and was just in line with pre-COVID levels in June.