The Bright Spots In Novadaq Technologies Inc. (NASDAQ:NVDQ)’s Dull Q4 Report

Novadaq Technologies Inc. (NASDAQ:NVDQ)

Novadaq Technologies Inc. (NASDAQ:NVDQ) reported Q4 2016 financial results on February 28 after market close. The report was largely dull, but there in were some bright spots.

The company posted EPS loss of $0.32 in Q4, wider than EPS loss of $0.17 in the same quarter a year earlier and worse than the consensus estimate that called for EPS loss of $0.15. Revenue of $20.1 million for the latest quarter not only missed the consensus estimate of $22.7 million, but also increased only 1% from a year earlier quarter.

The dull Q4 earnings results were caused by nearly flat revenue growth and higher costs. Novadaq Technologies Inc. (NASDAQ:NVDQ) wrote down the value of its inventory in the quarter by $4.1 million and recognized the impact on the cost of sales. That resulted in gross profit falling sharply to $7.7 million in the latest quarter compared to $14.4 million in a year-ago quarter. Gross margin also shrank to 39% from 72% as a result of the inventory write-down.

The weak bottom line metric was also a result of soaring operating costs. The company burned $11.4 million in operating activities in the latest quarter compared to $3.3 million in the comparable quarter a year earlier.

Novadaq Technologies Inc. (NASDAQ:NVDQ) finished the quarter with cash and equivalents of $62.4 million, down $9.9 million from the prior quarter.

The bright spots

Bright spots in Novadaq’s Q4 report included growth of recurring revenue. The company said it recurring revenue increased 43% from a year-earlier quarter to $9.6 million in the latest quarter.

Novadaq also continues to build out its direct sales and marketing system, which will give greater control of its product sales channels.

Novadaq provided an upbeat guidance for fiscal 2017. The company reaffirmed its 2017 revenue guidance of $98 – $102 million, suggesting that it expects the topline to grow at the pace of between 22% and 27% year-over-year. Furthermore, the company expects continued growth of its recurring revenue, guiding for recurring revenue in the band of $48 – $50 million in 2017. That implies that Novadaq is expecting to grow its recurring revenue at the rate of 45% – 51%.

Stock movements

Shares of Novadaq Technologies Inc. (NASDAQ:NVDQ) declined 0.7% to $7.21 in the regular session on Wednesday, and fell a further 1.3% in extended trading. The stock is up less than 2% since the beginning of 2017, and has retreated more than 26% over the last one year.

Ticker Symbol NVDQ
Last Price a/o, 4:02PM EST  $                           7.21
Average Volume 559,060.00
Market Cap (mlns)  $                  414.14
Sales (mlns) $80.02
Shares Outstanding (mlns) 57.44
Share Float (mlns) 51.99
Shortable Yes
Optionable Yes
Inside Ownership
Short Float 11.55%
Short Interest Ratio 10.74
Quarterly Return -4.25%
YTD Return 1.69%
Year Return -24.11%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

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Monica has an undergraduate degree in Accounting and an MBA she earned - with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.

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