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Intersect ENT (XENT) Banks on SINUVA Sales Amid COVID-19 Woes

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Recently, we issued an updated research report on Intersect ENT, Inc. XENT. While we are encouraged by the company’s growth prospects, driven by the favorable Chronic Sinusitis market, its difficult pricing scenario raises concerns.

Over the past six months, shares of Intersect ENT have outperformed the industry it belongs to. The stock has gained 91% compared with 20.8% rise of the industry.

Intersect ENT exited the third quarter of 2020 with better-than-expected numbers. The company noted that PROPEL implants are gaining momentum and recapturing procedure volume, following the drop in elective sinus procedures due to COVID-19. The company noted that based on its cost-reduction initiatives, sequential revenue growth and raising of $65 million capital announced in May, it has adequate capital to operate effectively through 2022.

Intersect ENT, Inc. Price

Intersect ENT, Inc. Price
Intersect ENT, Inc. Price

Intersect ENT, Inc. price | Intersect ENT, Inc. Quote

The company provided financial guidance for the fourth quarter of 2020 despite the ongoing pandemic-led business challenges. Potential in chronic sinusitis market, a well-progressing SINUVA and PROPEL product line, and a strong solvency position are added benefits.

Within a short period of time, the company’s SINUVA business line has made considerable advancement with market access and field force balance. On the clinical front, physician and patient feedback continues to be favorable. The company, during the third quarter, witnessed higher enrollments, improving conversion success rates and shorter times between benefit verification and actual procedures, leading to a 53% surge in SINUVA revenues.

As far as its PROPEL line is concerned, Intersect ENT is hopeful of the product growing on addition of accounts and extensive usage of Contour among both current and new physicians. The company, in the reported quarter, confirmed that its PROPEL product line registered a rebound in July where it was able to address pent-up demand for FESS procedures, which had been delayed during the early phase of the pandemic.

On the flip side, the pandemic has been wreaking havoc on the economy and Intersect ENT is no exception. During the third quarter of 2020, the company’s total revenues declined 5.8% year over year primarily due to the suspension of elective surgical procedures by hospitals and reduced ENT office visits owing to the pandemic. The pandemic-led business disruptions put pressure on the gross margin as well.

Intersect ENT is also facing pricing pressure from its hospital and ambulatory surgery center customers due to cost sensitivities resulting from healthcare cost containment pressure and reimbursement change. The stock has a Zacks Rank #4 (Sell).

Stocks Worth a Look

Some better-ranked stocks from the broader medical space are Merit Medical Systems, Inc. MMSI, Patterson Companies, Inc. PDCO and McKesson Corporation MCK, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Merit Medical has a projected long-term earnings growth rate of 12.6%.

Patterson Companies has an estimated long-term earnings growth rate of 9.6%.

McKesson has a projected long-term earnings growth rate of 6.6%.

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