Healthcare Business

Inovalon Holdings Slides on Updated Full-Year Guidance

Chris Lange

Inovalon Holdings Inc. (NASDAQ: INOV) saw its shares drop early on Tuesday after the company provided an update on its 2016 full-year financial guidance. Overall, the firm said that its reduction in guidance was due to the inability to enter into an expected collaboration agreement as a result of unforeseen circumstances having an impact on the counterparty.

Over the past nine months, Inovalon has been developing an application of its platform and negotiating an associated multiyear collaboration agreement for which execution and significant revenue recognition was expected in December 2016. However on December 7, the company was informed by the counterparty that, due to an unexpected material development affecting it, but unrelated to Inovalon’s product offerings, the counterparty was unable to consummate the transaction at that time.

The company updated its 2016 full-year guidance to EPS in the range of $0.32 to $0.33 and revenues between $426 million and $428 million. The previous guidance was EPS in the range of $0.39 to $0.46 and revenue of $470 million to $490 million.

The consensus estimates from Thomson Reuters call for $0.44 in EPS and $472.75 million in revenue for the full year.

Despite the update, the company is maintaining a positive view toward its future growth and margin expansion and expects to issue 2017 guidance after reporting fourth quarter fiscal 2016 results on or around February 23, 2017.

Keith Dunleavy, M.D., CEO and board chair of Inovalon, commented:

While this is certainly not the situation we expected or desired, it does demonstrate the level of market opportunity for our platform capabilities, the significance of value that can be driven by those capabilities, and the size and scale at which Inovalon is being called upon to partner and deliver them.

Shares of Inovalon closed Monday at $14.85, with a consensus analyst price target of $15.13 and a 52-week trading range of $13.30 to $20.05. Following the update, the stock was down about 38% at $9.20 in early trading indications Tuesday.