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With its stock down 48% yesterday to its lowest single-digit-midget levels in years, it would appear the days of BioLase (BLTI) as a stock story are officially over. The stock’s plunge followed the dental laser maker’s report of dismal third-quarter results and the departure of CEO Jeff Jones and the head of sales.

BioLase is no stranger to longtime readers, thanks to its revolving door of top management and questions about aggressive accounting, unsubstantiated product claims (such as the one that lasers don’t hurt), restatements, related party dealings, SEC inquiries (including one that was ongoing as of the last 10-Q) and a laundry list of items that I’ve red-flagged over the years.

Oh, and did I mention the apparent stuffing of distribution channels throughout the world with its lasers, which wholesale for more than $60,000? In the second quarter one international distributor, believed to be from South Korea, accounted for 17% of receivables, up[ from 10% at the end of last year. Stuffing, of course, is troublesome because it can steal sales form future quarters.

Enter Henry Schein (NASDAQ:HSIC), a distributor of dental products, which a year ago August became BioLase’s American distributor. Announcement of the deal caused a multi-month rise in BioLase’s stock. It also resulted in a sharp rise in receivables at year-end, which BioLase attributed to Schein-related sales. As I wrote at the time, and will do again today: Another way of looking at that is that Schein now won’t need to order so much in the future (especially if the lasers don’t sell as well as Schein expected.)

Then, last quarter, the company touted sharply higher sales year-over-year and sequentially of its Waterlase MD laser. Speaking on its conference call at the time, Jones attributed the strength largely to “Schein leads.” He added, “This is a dramatic improvement over Q1 and shows that we are achieving the traction with Henry Schein that we hoped to achieve.”

Fast forward to yesterday: Among the reasons for the company’s poor performance, interim CEO (and former Chairman) Federico Pignatelli said, was a “significant decrease” in sales of the Waterlase MD laser.

Funny how that works.

The beat goes on…

Source: BioLase: Stock Plunges On Dismal 3Q Results