Cardiovascular Systems (CSII) Business Down on COVID Resurgence
Cardiovascular Systems, Inc. CSII has been incurring net losses for a long period of time, which is concerning. Tough competition and an anticipated failure to grow business overseas continue to pose threats to this stock. The stock currently has a Zacks Rank #5 (Strong Sell).
Over the past year, Cardiovascular Systems has underperformed the industry. The stock has lost 25.2% compared with the industry’s 0.3% rise.
Cardiovascular Systems’ first quarter of fiscal 2021 loss was wider than the year-ago figure and the Zacks Consensus Estimate. The company’s revenues too lagged the consensus mark and dropped on a year-over-year basis. Peripheral revenues registered a significant decline in the reported quarter.
According to the company, the resurgence of COVID-19 and the related staffing shortages disrupted referral patterns and had the largest impact on more elective procedures like treatment with lower acuity peripheral claudication. Cardiovascular Systems noted that the severity and duration of the COVID-19 impact were greater than expected and more pronounced due to the timing and geographic location of the Delta surge.
Cardiovascular Systems, Inc. Price
Cardiovascular Systems, Inc. price | Cardiovascular Systems, Inc. Quote
On the profitability front, Cardiovascular Systems bears a long history of incurring net losses since its inception in 1989 and although it had generated a net profit of $1.7 million in fiscal 2018, sustainability is a matter of question. In fiscal 2021, the company reported a net loss of $13.4 million. In fiscal 2020 and 2019, the company reported net losses of $27.2 million and $0.3 million, respectively. In the first quarter of fiscal 2022 as well, the situation remained unchanged, with the company reporting 22 cents of net loss per share.
Further, Cardiovascular Systems’ OAS products compete with a variety of other products or devices for the treatment of vascular disease, including stents, balloon angioplasty catheters and atherectomy catheters, as well as products used in vascular surgery. The company faces price competition from large competitors in the stent and balloon angioplasty market.
On a positive note, in fiscal first quarter, Cardiovascular Systems’ coronary franchise registered strong performance globally on continued strength in Japan and the growing adoption of coronary OAS in Europe. Specifically, worldwide coronary revenues increased 10% with a 2% rise in the United States, driven by the continued adoption of coronary support products despite a 2% decline in coronary OAS procedures. Outside the United States, coronary revenues increased to $3.2 million from the year-ago period as a result of continued strength in Japan, combined with the growing adoption of coronary OAS in Europe. In Japan, the company currently has 44% of market share.
In the fiscal first quarter, the company sold $756 of support products for every coronary OAS sold. The increase, on a quarter-over-quarter basis, shows the strong resilience of the company’s ISPs even when coronary procedures modestly declined. The sales of coronary support products were $2.7 million in total in the reported quarter. The company also certified 80 new coronary users in the quarter internationally, consistent with the prior quarters.
In the fiscal second quarter, Cardiovascular Systems expects to resume sequential growth. This quarter, the company will continue the training of new PAD accounts and new users to deepen penetration in large hospital systems and OBL. It also plans to initiate the full commercial launch of the Viper cross peripheral catheter in the fiscal second quarter.
Key Picks
A few better-ranked stocks in the broader medical space are Chemed Corporation CHE, National Vision Holdings, Inc. EYE and West Pharmaceutical Services, Inc. WST, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Chemed has a long-term earnings growth rate of 7.7%. The company surpassed earnings estimates in three of the trailing four quarters and missed in one, delivering a surprise of 5.6%, on average.
Chemed has outperformed its industry over the past year. The stock has gained 3.7% against a 35.6% decline of the industry.
National Vision has a long-term earnings growth rate of 23%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 113.1%.
National Vision has outperformed the industry it belongs to in the past year. The stock has gained 18.1% versus the industry’s 0.1% decline.
West Pharmaceuticalhas a long-term earnings growth rate of 27.6%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 29.4%.
West Pharmaceutical has outperformed the industry it belongs to in the past year. The stock has gained 43.6% compared with the industry’s 16.5% growth.
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