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Cardiovascular Systems (CSII) Earnings Match Estimates in Q4

Zacks Equity Research

Cardiovascular Systems, Inc. CSII delivered earnings per share (EPS) of 4 cents in fourth-quarter fiscal 2019, down 63.6% year over year. The reported figure was in line with the Zacks Consensus Estimate.

For the full year, loss per share came in at a cent, reflecting a sharp decline from the year-ago earnings of 5 cents.

Net Sales

Cardiovascular Systems’ revenues of $68.2 million in the fourth quarter mark a 15.4% year-over-year increase. Meanwhile, the top line beat the Zacks Consensus Estimate by 3.33%.

For the full year, revenues totaled $248 million, up 14.3% from a year ago.

Segment Details

In the quarter under review, global Coronary device revenues jumped 24% year over year to $20 million. Total U.S. revenues increased 13% to $65.7 million. Domestic coronary revenues grew 16%, primarily driven by expanded unit volumes. Domestic peripheral revenue registered growth of 12% to $48.2 million. International revenues totaled $2.5 million.

Cardiovascular Systems, Inc. Price, Consensus and EPS Surprise

 

Cardiovascular Systems, Inc. Price, Consensus and EPS Surprise

Cardiovascular Systems, Inc. price-consensus-eps-surprise-chart | Cardiovascular Systems, Inc. Quote

Margin

Gross margin in the reported quarter was 80.3%, down 145 basis points (bps) year over year.

Meanwhile, selling, general and administrative (SG&A) expenses rose 16.2% to $43.9 million plus research and development (R&D) expenses escalated 41.8% to $9.5 million. As a result, operating expenses increased 20.1% to $53.5 million. Operating margin in the reported quarter contracted 454 bps to 1.8%.

Financial Position

The company exited fiscal 2019 with cash and cash equivalents of $74.2 million compared with $116.3 million at the end of fiscal 2018.

2020 Outlook

Cardiovascular Systems initiated its fiscal 2020 guidance. The company projects revenues within $278-$283 million for fiscal 2020. The Zacks Consensus Estimate for fiscal 2020 revenues is pegged at $277.2 million, just below the company's view.

Moreover, the company anticipates gross profit margin within 79-80%.

Our Take

Cardiovascular Systems exited fiscal 2019 with in-line earnings and revenue beat. We are upbeat about the year-over-year uptick in both Coronary and peripheral device revenues within the company’s domestic market. It is making concerted efforts in product innovation through R&D investments. The acquisition of WIRION Embolic Protection System during the quarter buoys optimism. The enrollment of the first patient inREACH PVI Clinical Study is encouraging as well.

On the flip side, contraction in both margins is disappointing. Also, Cardiovascular Systems faces cut-throat competition in the niche space.

Zacks Rank and Key Picks

Cardiovascular Systems currently carries a Zacks Rank #5 (Strong Sell).

A few better-ranked companies, which posted solid results this earnings season, are Stryker Corporation SYK, Baxter International Inc. BAX and Intuitive Surgical, Inc. ISRG.

Baxter delivered second-quarter 2019 adjusted EPS of 89 cents, which surpassed the Zacks Consensus Estimate of 81 cents by 9.9%. Revenues of $2.84 billion beat the Zacks Consensus Estimate of $2.79 billion by 1.9%. The company holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker delivered second-quarter 2019 adjusted EPS of $1.98, beating the Zacks Consensus Estimate by 2.6%. Revenues of $3.65 billion surpassed the Zacks Consensus Estimate by 1.4%. The company carries a Zacks Rank of 2.

Intuitive Surgical reported second-quarter 2019 adjusted EPS of $3.25, which beat the Zacks Consensus Estimate of $2.85. Revenues were $1.1 billion, surpassing the Zacks Consensus Estimate of $1.03 billion. The company has a Zacks Rank #1.

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