Shares of Establishment Labs Holdings (ESTA -0.14%) were crashing 43.8% lower as of 11:15 a.m. ET on Wednesday. The steep decline came after the medical technology company announced its third-quarter results following the market close on Tuesday.
Establishment Labs reported Q3 revenue of $38.5 million, up slightly from the $38.2 million generated in the prior-year period. The company posted a net loss of $29.3 million, or $1.12 per share. This result reflected deterioration from the net loss of $18.6 million, or $0.76 per share, reported in the same period of 2022.
Both the top- and bottom-line results for Establishment Labs in Q3 fell short of consensus estimates. However, the main reason for the huge sell-off on Wednesday was that the company lowered its 2023 full-year revenue guidance to $165 million from a range of between $200 million and $210 million.
Why did Establishment Labs slash its guidance?
Establishment Labs CEO Juan José Chacón-Quirós blamed the lower full-year guidance in part on "lower demand for breast procedures globally." The company markets multiple breast reconstruction and augmentation products, including Mia Femtech solutions and Motiva Flora tissue expanders.
However, he also stated that around one-third of Establishment Labs' guidance reduction was due to another reason. Chacón-Quirós said the company removed the impact of Chinese approval for Motiva from its full-year forecast.
Is Establishment Labs stock a buy on the sell-off?
Both factors behind Establishment Labs' full-year guidance cut should be only temporary issues. The demand for breast procedures tends to be cyclical and will likely rebound in the future. Establishment Labs also still expects to receive Chinese approval for Motiva this year.
However, the company remains unprofitable. There's also no way to know how long the downturn in the breast procedure market will continue. I think there are better stocks to buy than Establishment Labs in the meantime.