Avinger Inc (NASDAQ:AVGR) Shares Drop on Revenue Concerns

Avinger Inc (NASDAQ:AVGR) Stock Tanks As Q2 Revenue Drops 47%

Avinger Inc (NASDAQ:AVGR) stock plunged 11.28% after the company reported second quarter financial results that fell short of Wall Street expectations. The company reported a net loss of $11.3 million, a disappointment compounded by a 47% decline in total revenue.

Wednesday’s sell-off of Avinger stock pushed it to near all-time lows as it continues to trade in a strong downtrend. Avinger stock continues to trade in a tight $0.40-$0.45 trading range and closing in on its 52-week lows of $0.35 a share.

Avinger stock, one-month price chart:

Avinger Inc (NASDAQ:AVGR)
One month chart for Avinger stock

Avinger Inc (NASDAQ:AVGR) is medical stage company that manufactures and sells image-guided and catheter-based systems for use in the treatment of peripheral arterial disease. The company also owns a proprietary lumivascular platform that integrates optical coherence tomography with catheters to provide real-time imaging during treatment.

Jeff Soinski, CEO, says they have made significant progress on the development of the next generation Pantheris Catheters. The next generation devices are expected to expand the company’s target market starting in 2018.

“Following our strategic reorganization in April, I’m pleased with how our more focused commercial organization has come together to drive utilization within our installed base of Lumivascular accounts,” said Mr. Soinski.

Avinger’s Disappointing Q2 Results

Total revenue in the second quarter came in at $2.5 million down by 47% compared to the second quarter of 2016. Gross margin dropped to -59% from 22% as of last year. Avinger Inc (NASDAQ:AVGR) attributes the decline to a $2.3 million charge for excesses and obsolete inventories.

In line with ongoing plans to reduce cash burn, Avinger Inc. successfully reduced its operating expenses to $9.8 million compared to $13.3 million as of Q2 2016. The decline was because of a decrease in sales and marketing expenditure this year compared to last year.

Avinger Inc (NASDAQ:AVGR) exited the second quarter with cash and cash equivalents of $14 million compared to $23 million as of March 31, 2017. Thanks to ongoing organizational restructuring, the company expects cash utilization to drop to $7 million per quarter compared to an average of 13.4 million per quarter as of last year.

Class Action Lawsuit

Separately, Avinger Inc (NASDAQ:AVGR) is the subject of a class-action lawsuit over claims its executives violated federal securities laws. Complaints allege that the Registration Statement and Prospectus filed for Avinger’s stock IPO contained false and misleading statements.

Law firms allege that Avinger failed to disclose that it did not have adequate marketing personnel for its lumivascular platform – a deficiency that has led to lackluster sales.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.