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Why Zomedica Stock Plunged Today

By Joe Tenebruso - Apr 15, 2021 at 8:22PM

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Initial sales of a key product may be lower than investors were hoping for.

What happened

Shares of Zomedica Pharmaceuticals (ZOM -5.59%) fell 13.7% on Thursday after the veterinary health company announced a change to its sales strategy. 

So what

Zomedica will build out its internal sales team as it transitions away from its current distributor-based approach. CEO Robert Cohen said the move was precipitated by "changes at our current distributor that we believe have impacted its ability to market our products effectively." Those words likely startled investors, many of whom decided to sell their shares.

A downwardly sloping red  line on a black background.

Zomedica's stock price dropped sharply on Thursday. Image source: Getty Images.

To be fair, Cohen said that while the shift might negatively impact near-term sales of its Truforma diagnostic platform for dogs and cats, it could have some long-term benefits.

"While this effort may slow initial sales of Truforma, we have taken this action now to avoid any disruption to our customers and to provide a stronger foundation on which to build the marketing and sales of both Truforma and any future products developed or acquired by Zomedica," Cohen said in a press release.

Now what 

Zomedica recorded its first veterinarian sale of Truforma in mid-March. The diagnostic platform lies at the core of the company's commercial strategy and is likely to remain its only revenue generator for some time. Investors, in turn, are understandably concerned about a potential slower sales rollout for Truforma.

That said, Zomedica raised roughly $200 million via a share offering in February, so it has the cash it needs to ramp up its sales team. Shareholders will need to be patient with Zomedica's new approach, but if Truforma is the game changer management says it is, then sales should eventually materialize. 

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