Yesterday, the company announced that Arun will be presenting at the JPMorgan healthcare conference on 1/13/15 at 8:30am.
On 1/14/14, the day of the 2014 JPMorgan healthcare conference, Novadaq preannounced 4th quarter and full year revenues. The preannouncement allowed Arun to discuss those revenues when he made his presentation that morning.
During the 4th quarter of this year, Arun, on more then one occasion, and as late as late November, indicated that the company would meet it's overall 2014 revenue growth rate forecast of 40%. That would require 2014 revenues of at least $49 million. Given the fact that aggregate revenue for the first three quarters of 2014 was $33.6 million, the company will have to do revenues of $15.4 million in the 4th quarter. That would represent a 50% year over year increase in the 4th quarter and a 27% increase quarter to quarter. I believe everyone here would agree that those would be great numbers. So, let's hope for a preannouncement.
There are 3 possible reasons for the current weakness:
1) Word is getting around that 4th quarter revenues did not meet expectations.
2) One or more institutional holders are selling.
3) A bad reaction by institutions to the sudden leaving of the CFO.
Unless, they preannounce revenues, I guess we'll have to wait
until Arun's presentation on 1/13 to get a better fix. Have to admit this weakness
Most Institutions have now reported their exposure as of 12/31/14. The Institutions now own 87% of the stock as of that date. I have to admit, I expected institutional ownership to decline.
just back from overseas.
Listened to the recent presentation and would agree that when Arun was speaking of
50%,25% and 25%, he was discussing the state of affairs of the old lifecell customers.
Over the too many decades i have been investing in the medical industry, I have seen so many
companies in the current situation of Novadaq. They all reached a bridge they had to cross; namely, crossing over from a medical device developer to a medical device marketeer. It is oftentimes a difficult passage, particularly for the CEO, who's background is science and not business development.
I love this company's products from every perspective. Given the current size of the sales force, I am somewhat disappointed in revenue growth.
One last point for now. I have never owned another company like this where the institutional ownership has grown to such a level, while at the same time, so has the short interest. Both at record levels for the company.
I cannot help but wonder if there is a connection between the CFO suddenly resigning, the company badly missing 4th quarter revenue projections in spite of Arun projecting they would as late as mid November, and now still not announcing when 4th quarter results will be released. Just a thought.
During the month of December, short interest increased by over 800,000 shares and ended the month at 4.1 million. Trying to digest the revenue miss, especially given Arun's comments as late as mid November.
I do not believe the sudden ups and downs of the stock price is due to either shorting or short covering. As Institutions continue to report their 12/31/14 exposure to this company, I believe the rapid shifts in the stock price at the end of last year was primarily due to Institutional activity. For example, one of the 5 largest institutional holders sold out their entire position of 1.7 million shares in the 4th quarter. In total, there were slightly over 3 million shares involved in Institutions selling out their entire positions. Did these Institutions sell at a steady pace throughout the quarter or did circumstances require them to sell rapidly? Your guess is as good as mine. Fortunately, there were also 3 million shares bought by new institutional investors. At this point institutional exposure seems to be holding in the 83% of outstanding shares range. Fidelity has not as yet reported.
One other point. is it acceptable that a sales force of 80 experienced salesmen will do only $65 million in 2015. I hope the $65 million is a low ball target because if you assume an equipment cost of $150 thousand that's only 5 sales per year per salesman. Imho, that's soft.