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Cardiovascular Systems (CSII) Q3 Earnings Top, Revenues Meet

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Cardiovascular Systems, Inc. CSII reported earnings per share of a penny in third-quarter fiscal 2018 against the year-ago quarterly loss of 5 cents.

The figure remained ahead of the earlier guided range of a loss of 3 cents to breakeven. Moreover, the bottom line compared favorably with the Zacks Consensus Estimate of a loss of 2 cents.

Net Sales

Cardiovascular Systems recorded revenues of $55.6 million in the fiscal third quarter, marking a 6.6% year-over-year increase. Also, the metric was within the guided range of $55-$56.5 million. Moreover, the top line matched the Zacks Consensus Estimate.

Segment Details

Coronary device revenues increased 8% year over year to $14.6 million. In the United States, coronary units sold increased 5%, partially offset by a low-single-digit decline in ASP (average selling price).

Cardiovascular Systems, Inc. Price, Consensus and EPS Surprise

Cardiovascular Systems, Inc. Price, Consensus and EPS Surprise | Cardiovascular Systems, Inc. Quote

 

Meanwhile, peripheral device revenues rose 6% to $41 million on a year-over-year basis. This improvement came on the back of continued strength in the hospital setting.

Margin

Gross margin in the reported quarter was 82.1%, up 343 basis points (bps) year over year.

Meanwhile, selling and administrative (SG&A) expenses inched up 1.2% to $37.8 million whereas research and development (R&D) expenses were up 34.9% to $7.3 million. As a result, adjusted operating expenses increased 5.5% to $45.1 million.

Per management, operating expenses were about $400,000, lower than the previous projection. Operating income was around $489 million against operating loss of $1.8 million in the year-ago quarter.

Financial Position

The company exited the third quarter of fiscal 2018 with cash and cash equivalents of $109.3 million compared with $107.3 million at the end of the preceding quarter. On a positive note, it has no long-term debt.

Outlook

The company expects revenues in the range of $57.5-$59 million for fourth-quarter fiscal 2018. The Zacks Consensus Estimate is pegged at $58.6 million, falling within the company’s estimated range.

Moreover, the company is likely to earn a gross profit, accounting for 81% of revenues while operating expenses are anticipated at around $45 million for the fiscal fourth quarter.

The company projects net income of $1.7--$2.6 million. Net earnings per share are predicted between 5 cents and 8 cents. The consensus mark is pegged at a couple of cents, lying below the company’s expected range.

Our Take

Cardiovascular Systems exited third-quarter fiscal 2018 on a solid note with year-over-year increase in both Coronary device and peripheral device segment. Overall, revenues grew the back of strength in both the company segments year over year. Also, the expansion in gross margin buoys optimism. The company is putting efforts in product innovation through R&D investments. On the flip side, Cardiovascular Systems faces a cut-throat competition in the niche space.

Zacks Rank & Key Releases

Cardiovascular Systems has a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader medical sector with solid results this reporting cycle are Intuitive Surgical ISRG, Chemed Corp. CHE and Baxter International Inc. BAX. While Intuitive Surgical sports a Zacks Rank #1 (Strong Buy), Chemed and Baxter carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical reported first-quarter 2018 adjusted earnings per share (EPS) of $2.44, which beat the Zacks Consensus Estimate by 22.6%. Revenues of $848 million also surpassed the consensus estimate by 10.6%.

Chemed posted first-quarter 2018 adjusted EPS of $2.72, outshining the Zacks Consensus Estimate of $2.37. Revenues came in at $439.2 million, surpassing the Zacks Consensus Estimate of $420 million.

Baxter released first-quarter 2018 adjusted EPS of 70 cents, which crossed the consensus mark by 12.9%. Revenues of $2.68 billion also exceeded the Zacks Consensus Estimate of $2.62 billion.

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