Why Second Sight Medical Products, Inc. Is Tumbling

By Markets Fool.com

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

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What's happening: Shares in Second Sight Medical Products, dropped by 10% earlier today after announcing fourth quarter and full year earnings results last night after the market close.

Source: Second Sight Medical Products,

Why it's happening: The maker of vision-restoring prosthetics tumbled after it announced that its revenue totaled just $1.5 million and that it had a net loss of $13.6 million, or -$0.46 per share, in the fourth quarter.

The fourth quarter results lifted full year sales to $3.4 million, up nicely -- in percentage terms -- from the $1.6 million in sales it recorded in 2013. Revenue improved due to an increase in the number of implants of its Argus II retinal prosthetic last year. During 2014, the Argus II was implanted in 29 patients, up from 22 in 2013.

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Second Sight also reported yesterday that its full year net loss increased to $35.2 million, or -$1.41 per share, from a net loss of $23 million, or -$1.02 in 2013.

Now what: Demand for Second Sight's Argus II is increasing; however, the addressable target market for this first-generation device remains small, and profit remains elusive.

The company is working on reimbursement deals with public and private payers, and the number of implants should increase again this year as the number of centers that are approved to do the procedure climbs.

Regardless, Second Sight is a highly speculative, early stage company that is still losing a lot of money. As a result, I'm content to watch and wait on this one, at least until we discover whether or not trials to expand the Argus II patient population succeed. If they don't, then my focus will shift to Second Sight's next-generation Orion device, which is advancing through its pipeline and could address more patients.

The article Why Second Sight Medical Products, Inc. Is Tumbling originally appeared on Fool.com.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.