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It has been about a month since the last earnings report for Cardiovascular Systems (CSII). Shares have lost about 2.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Cardiovascular Systems due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Cardiovascular Systems Posts Break-Even Earnings in Q2
Cardiovascular Systems reported break-even earnings for second-quarter fiscal 2021, against the loss per share of 10 cents in the prior-year period. The reported earnings topped the Zacks Consensus Estimate of a loss of 7 cents.
Cardiovascular Systems’ revenues of $64.2 million declined 6.1% year over year. Moreover, the top line lagged the Zacks Consensus Estimate by 1.7%.
The top line was adversely impacted by the surge in COVID-19 infections and increased ICU demand impacting the procedure volumes during the final weeks of December 2020. However, the revenues improved 6% on a sequential basis primarily due to strong sequential growth in peripheral and coronary segments in the United States.
In the quarter under review, international Coronary device revenues grew 32% sequentially to $2.3 million. Domestic coronary revenues increased 97% year over year, primarily due to increased procedure volumes and strong ISD sales. Revenue from coronary interventional support devices surged 14.1%.
Domestically, peripheral unit volumes decreased 7% year over year but increased 2% on a sequential basis.
The domestic coronary revenues increased 13.1% sequentially to $18 million mainly due to strong unit growth and steady average selling prices. International revenues totaled $2.3 million, a 32% improvement on a sequential basis, led by Japan.
Gross margin in the reported quarter was 78.3%, down 162 basis points (bps) year over year due to 7.9% fall in gross profit.
Meanwhile, selling, general and administrative expenses were down 14.5% to $40.1 million. Research and development expenses declined 10.9% to $9.6 million.
Operating expenses declined 13.9% to $49.7 million. Operating profit in the reported quarter was $587K compared with operating loss of $3 million in the year-ago period.
The company exited the second quarter of fiscal 2021 with cash and cash equivalents of $73.8 million, compared with $92.7 million at the end of the first quarter of fiscal 2021.
Q3 Fiscal 2021 Guidance
Cardiovascular Systems, boosted by the improvement in domestic procedure volumes during second quarter, has provided the financial guidance for the third quarter of fiscal 2021.
Revenues are expected in the band of $60-$65 million. The Zacks Consensus Estimate for the same is currently pegged at $69 million.
The company expects to incur operating expenses in the range of $52-$54 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -71.43% due to these changes.
Currently, Cardiovascular Systems has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cardiovascular Systems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.