Here's Why Novadaq Technologies Inc. Is Tanking Today

Here's Why Novadaq Technologies Inc. Is Tanking Today
  1. Here's Why Novadaq Technologies Inc. Is Tanking Today
    The combination of weak fourth-quarter financial results and disappointing guidance caused shares to…

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What happened

After investors received a preliminary look at the company's fourth-quarter financial results and 2017 guidance, shares of Novadaq Technologies (NASDAQ:NVDQ), a company focused on fluorescence-imaging products used to enhance surgery, fell by 19% as of 11:45 a.m. EST on Wednesday.

So what

Management provided investors with updated financial results ahead of its presentation at the J.P. Morgan Healthcare Conference. Here's a summary of the key points:

  • The company said that sales of its recurring revenue products -- which include consumables, services, and components -- grew by 42% in the fourth quarter, to $9.5 million. However, Novadaq stated that its total quarterly revenue would be only $20.2 million, which represents growth of just 1% over the year-ago period. That's well short of the $25.4 million in revenue that market watchers had expected.
  • Novadaq's financial guidance for 2017 also fell short of expectations. Management stated that the company's full-year 2017 revenue will land between $98 million and $102 million. While that represents growth of roughly 25%, the range is far below Wall Street's forecast of $111.3 million in total revenue.
  • Management stated that it has opened up a new credit facility that provides the company with up to $60 million in new financing.

Understandably, traders sold off shares hard in response to the company's disappointing financial updates.

Now what

Given that Novadaq is still just a small-cap growth company that operates at a loss, it is no surprise to see that its shares are tumbling as a result of Wednesday's disappointing financial updates. However, it should come as some comfort to shareholders to know that the company's sales of recurring revenue products are still growing rapidly. In addition, the new cre…

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