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Cardiovascular Systems (CSII) Loss Wider Than Estimates in Q2

Zacks Equity Research

Cardiovascular Systems, Inc. CSII reported a loss per share of 10 cents in second-quarter fiscal 2020 against earnings per share of a penny in the prior-year period. The reported figure was also wider than the Zacks Consensus Estimate of a loss of 3 cents.

Net Sales

Cardiovascular Systems’ revenues of $68.3 million in the fiscal second quarter marked a 13.5% year-over-year increase. Meanwhile, the top line beat the Zacks Consensus Estimate by 0.6%.

Segment Details

In the quarter under review, global Coronary device revenues jumped 30% year over year to $20.8 million, driven by 14%-unit growth in domestic atherectomy business, increased adoption of procedure support product portfolio and international expansion of orbital atherectomy, particularly in Japan.Domestic coronary revenues grew 22% to $18.5 million during the quarter.

Global peripheral revenue increased 8% to $47.6 million, primarily led by 12% unit growth in domestic atherectomy business. Domestic peripheral revenues increased 9% to $47.5 million.

Total U.S. revenues rose 13% to $66 million, while International revenues totaled around $2.4 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 79.9%, down 101 basis points (bps) year over year on a 19.5% rise in cost of goods sold.

Meanwhile, selling, general and administrative (SG&A) expenses rose 18.9% to $48.9 million plus research and development (R&D) expenses escalated 50.2% to $10.8 million. As a result, operating expenses increased 23.5% to $59.6 million. Operating loss in the reported quarter came in at $5 million against operating profit of $4.4 million a year ago.

Financial Position

The company exited second-quarter fiscal 2020 with cash and cash equivalents of $65.5 million, compared with $58.9 million at the end of first-quarter fiscal 2020.

2020 Outlook

Cardiovascular Systems raised the low end of its fiscal 2020 revenue guidance. The company projects revenues within $280 million to $283 million, compared with the previous guidance of $278-$283 million. This indicates 13% to 14% growth over fiscal 2019. The Zacks Consensus Estimate for fiscal 2020 revenues is pegged at $280.8 million.

Moreover, the company reiterates gross profit margin at the band of 79-80%.

Our Take

We are upbeat about the year-over-year uptick in both global Coronary and peripheral device revenues during the quarter. The company is making concerted efforts in product innovation through R&D investments. The recently-launched next generation peripheral OAS with GlideAssist is another crucial highlight of the quarter. The recent FDA approval and launch of Viperwire Advance Coronary Guide Wire with Flex Tip instill optimism. On the flip side, operating loss and contraction of gross margin during the quarter are disappointing. Also, Cardiovascular Systems faces cut-throat competition in the niche space.

Earnings of Other MedTech Majors at a Glance

Cardiovascular Systems currently has a Zacks Rank of 3 (Hold).

Some better-ranked stocks, which reported solid results this earnings season, are Stryker Corporation SYK, Accuray Incorporated ARAY and AmerisourceBergen ABC. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker delivered fourth-quarter 2019 adjusted EPS of $2.49, outpacing the Zacks Consensus Estimate by 1.2%. Revenues of $4.13 billion surpassed the consensus estimate by 0.7%. The company carries a Zacks Rank #2 (Buy).

Accuray reported second-quarter fiscal 2020 adjusted EPS of a penny, comparing favorably with the Zacks Consensus Estimate of a loss of 7 cents. Net revenues of $98.8 million outpaced the Zacks Consensus Estimate by 0.3%. The company sports a Zacks Rank #1.

AmerisourceBergen reported first-quarter fiscal 2020 adjusted EPS of $1.76, which beat the Zacks Consensus Estimate of $1.67 by 5.4%. The Zacks Rank of 2 company has an expected long-term earnings growth rate of 7.4%.

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