What: Shares of medical device maker Spectranetics (NASDAQ:SPNC) fell more than 29% this morning after the company lowered its revenue guidance for the rest of 2015 when it reported second quarter results last night.
So what: Revenue for the company grew a strong 42% year-over-year, but the majority of that growth was related to last year's acquisition of AngioScore for its cardiovascular surgery device AngioSculpt. Excluding the acquisition, revenue grew a more modest 9% after adjusting for currency fluctuations. Earnings per share landed at -0.22 for the quarter, which was ahead of the -0.31 loss that analysts were expecting.
The company noted that competitive pressure is causing AngioSculpt to perform below original expectations, and lowered revenue guidance for the year to a range of $240 million to $250 million, down from its previous guidance of $258 million. On the plus side, GAAP estimated net loss for the year was reduced to a range of $65 to $69 million from the previous $78 to $82 million, though on a Non-GAAP basis the net loss for the year is expected to remain unchanged at $41 to $45 million.
Now what: Investors in growth companies like Spectranetics rarely look kindly on lowered revenue expectations, especially while the company is still operating at a loss. This huge movement today also follows a large share price drop after the company reported disappointing results last quarter as well.
While the company is certainly taking actions to try and reinvigorate sales of AngioSculpt, the rapid adoption of competitive products is a worrying sign for the future of AngioScult, and the market is hammering the stock accordingly. Investors may be wise to sit on the sidelines to see if the company's actions prove to be successful before they consider buying shares on this dip.