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Cardiovascular Systems (CSII) Q3 Loss Widens, Gross Margin Dips

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Cardiovascular Systems, Inc. CSII reported loss of 15 cents per share for third-quarter fiscal 2021, wider than loss per share of 8 cents in the prior-year period. The reported loss was also wider than the Zacks Consensus Estimate of a loss of 10 cents.

Net Sales

Cardiovascular Systems’ revenues of $63.3 million improved 3.4% year over year. However, the top line missed the Zacks Consensus Estimate by 0.3%.

According to the company, increase in vaccinations and simultaneous decrease in COVID-related hospitalizations in February and March resulted in improved procedure volumes during the second half of fiscal third quarter.

Segment Details

In the quarter under review, worldwide coronary revenues grew 13% to $21 million. Domestic coronary revenues increased 9% year over year, primarily led by a 9% increase in units sold and a 24% increase in the sale of coronary support products.Outside the United States, coronary revenues increased 36% to $3.5 million on continued strength in Japan combined with the successful introduction of coronary OAS in Europe.

Cardiovascular Systems, Inc. Price, Consensus and EPS Surprise

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

Worldwide peripheral revenues were flat year over year. In the quarter, the company experienced strong growth of peripheral atherectomy in the office-based lab (OBL) side of service. OBL revenues increased 21% year over year.

Margin

Gross margin in the reported quarter was 77.9%, down 216 basis points (bps) year over year on 14.6% decline in cost of goods sold.

Meanwhile, selling, general and administrative expenses were up a marginal 0.1% to $41.4 million. Research and development expenses increased 32.1% to $41.4 million.

Operating expenses rose 6.3% to $54.6 million. Operating loss in the reported quarter was $5.6 million compared with operating loss of $2.4 million in the year-ago period.

Financial Position

The company exited the third quarter of fiscal 2021 with cash and cash equivalents of $75.3 million, compared with $73.8 million at the end of the second quarter of fiscal 2021.

Q4 Guidance

Cardiovascular Systems, boosted by the improvement in domestic procedure volumes during third quarter, provided financial guidance for the fourth quarter of fiscal 2021.

Revenues are expected in the band of $67-$70 million, indicating sequential growth of 6% to 11%. The Zacks Consensus Estimate for the same is currently pegged at $72.7 million.

The company expects to incur operating expenses in the range of $53.5-$55.5 million.

Our Take

Cardiovascular Systems’ third quarter of fiscal 2021 loss was wider than the year-ago figure as well as the consensus mark. Although the company’s revenues missed the Zacks Consensus Estimate, it improved on a year-over-year basis.

Coronary franchise registered strong performance on a strong procedure volume domestically, increased sales of procedure support products and growing adoption of orbital atherectomy internationally. Peripheral revenues were flat as patients with claudication continued to defer evaluation and treatment.

Gross margin contraction was a cause of worry.

Zacks Rank and Key Picks

Cardiovascular Systems currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader medical space are Boston Scientific Corporation BSX, Illumina, Inc. ILMN and HCA Healthcare, Inc. HCA.

Boston Scientific reported first-quarter 2021 adjusted EPS of 37 cents, beating the Zacks Consensus Estimate by 23.3%. Net revenues of $2.75 billion outpaced the consensus estimate by 5.3%. It currently carries Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Illumina reported first-quarter 2021 adjusted EPS of $1.89, beating the Zacks Consensus Estimate by 38.9%. Revenues of $1.09 billion outpaced the consensus estimate of $1.08 billion. It currently carries a Zacks Rank #2.

HCA Healthcare reported first-quarter 2021 adjusted EPS of $4.14, surpassing the Zacks Consensus Estimate by 23.6%. Net revenues of $14 billion exceeded the Zacks Consensus Estimate by 2.2%. It currently carries a Zacks Rank #2.

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