Xeris Pharmaceuticals Inc (XERS) shares plummeted 16.41% in Thursday's trading session, despite the company reporting its first-ever quarterly net income. The sharp decline came as investors reacted to the company's third-quarter earnings report and updated revenue guidance for 2025.
For the third quarter, Xeris reported total product revenue of $74.1 million, representing a 40% increase year-over-year. However, this figure slightly missed the IBES estimate of $74.2 million. The company achieved a milestone by posting a net income of $621,000 for the quarter, translating to earnings per share of $0, which met analysts' expectations.
While Xeris demonstrated strong growth, particularly in its Recorlev product line which saw a 109% year-over-year increase in revenue to $37 million, investors seemed more focused on the company's forward-looking statements. Xeris updated its 2025 revenue guidance to a range of $285-$290 million, up from the previous range of $280-$290 million. Despite this upward revision, the market's reaction suggests that investors may have been anticipating more aggressive growth projections.
The company also announced plans for a significant commercial expansion, nearly doubling its sales and patient support teams. This strategic move aims to capitalize on the growing market opportunity for Recorlev, Xeris' treatment for hypercortisolism and Cushing's syndrome. However, the associated increase in expenses may have contributed to investor concerns about near-term profitability.
Looking ahead, Xeris expects both SG&A and R&D expenses to rise starting in the fourth quarter as it invests in commercial expansion and clinical development. While these investments are aligned with the company's long-term growth strategy, they may pressure margins in the short term, potentially explaining the market's negative reaction despite the overall positive quarterly results.
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