Entellus Medical plummets after guidance prompts analyst to question business

Shares of Entellus Medical (ENTL) are plunging after the company reported fourth quarter financial results and provided yearly guidance. Following the company's Q4 report, two research firms downgraded shares, with one analyst noting that "something has gone off course." WHAT'S NEW: After the close of trading on Tuesday, Entellus, which caters to patients with recurrent sinusitis, reported a net loss of 39c per share on revenue of $21.7M. Analysts were expecting EPS of 33c and revenue $21.44M. Looking ahead, the company forecast first quarter revenue of $19M-$20M against an average estimate of $20.1M. The company's full year 2017 revenue guidance of $86M-$90M fell short of analyst expectations of $90.5M. EXECUTIVE COMMENTARY: Robert White, Entellus Medical's president and chief executive officer, commented that the company "had a very successful 2016 with many accomplishments as we further extended our leadership position in the office setting." White concluded that he is "confident that we are well positioned to maintain our positive momentum into 2017, and we look forward to continuing the trend toward in-office procedures driven by our clinical, economic and strategic value within the ear, nose, and throat space." ANALYST REACTION: Both BofA/Merrill and BTIG downgraded shares of Entellus Medical this morning. BofA/Merrill downgraded shares to Underperform from Buy while BTIG analyst Sean Lavin downgraded Entellus Medical to Neutral from Buy after the company guided to 14%-20% 2017 growth and a larger loss than consensus. "Something has gone off course," the analyst wrote in a post-earnings research note. He believes the "business is changing." PRICE ACTION: Shares of Entellus Medical are down 24.6% to $12.88 in afternoon trading.