Please ensure Javascript is enabled for purposes of website accessibility

What Has MiMedx Group Shares Dropping 10% Today?

By Todd Campbell - Apr 11, 2016 at 1:57PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Lower-than-expected first-quarter sales cause shares to slump.


What: Following news that first-quarter revenue will be shy of forecasts, shares in MiMedx Group (MDXG 4.72%) are tumbling 10% at 1:30 p.m. ET today.

So what: MiMedx develops wound-healing technologies from human amniotic membranes taken from donated placentas and sales of the company's products, which are used in surgical procedures and to address chronic and surgical-based wounds, totaled $53.4 million in the first quarter.

That was up 31% year over year, but it was also $2 million shy of prior expectations.

The company blames the top-line miss on the rollout of a new sales software system, a realignment of some of its sales team, and the integration of a recent acquisition.

Now what: Investors hate downside surprises. However, they might want to pause for a moment given that this was the first time in 17 quarters that the company has failed to meet or beat its outlook.

MiMedx Group's CEO reports that the miss didn't stem from any competitive shift in the market, but rather from a drop-off in productivity as a result of the aforementioned factors. Assuming that's true, then the issues that contributed to this miss should be temporary.

Having said that, management is keeping tight-lipped about its potential revenue in the second quarter, a move that adds a bit of uncertainty. MiMedx Group does, however, expect to offer up more insight when it officially reports its financials on April 26, and the company did reiterate its full-year outlook for revenue of at least $260 million, so that is encouraging.

Overall, MiMedx Group is a rapidly developing company and some growing pains are to be expected. There's a lot of potential to continue to grow sales by serving an increasingly older population that could benefit from their wound care products, so investors will want to see how much of an impact the Q1 miss has on expectations for 2016 profitability. Currently, industry watchers are modeling for EPS of $0.33 this year, which gives the company a forward P/E ratio of 18.6.


Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

MiMedx Group, Inc. Stock Quote
MiMedx Group, Inc.
$3.77 (4.72%) $0.17

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.