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Intersect ENT (XENT) Hit by Low ENT Office Visits Amid COVID-19

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Zacks Equity Research
·3 min read
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On Mar 22, we issued an updated research report on Intersect ENT, Inc. XENT. While the company’s long-term prospects, driven by the favorable Chronic Sinusitis market, encourage us, its choppy pricing scenario raises concerns.

The stock carries a Zacks Rank #5 (Strong Sell), at present.

Over the past three months, shares of Intersect ENT have underperformed the industry It belongs to. The stock has lost 11.3% compared with 4.9% decline of the industry.

In the fourth quarter of 2020, revenues declined year over year as a result of hospitals suspending elective surgical procedures and significantly reduced ENT office visits. Significant contraction in gross margin and a higher adjusted operating loss are discouraging as well. The full-year 2020 sales decline was 26% from 2019 resulting from the impact of hospitals suspending elective procedures and reduced ENT office visits related to the COVID-19 pandemic.

Further, the company is worried about its first-quarter performance as well on the significant surge in COVID-19 cases that began in mid-December and continued into the first quarter and adversely impacted ENT procedures through January and February.

Intersect ENT has been incurring net losses since its inception in 2003. It incurred net losses of $72.3 million, $43 million and $22.9 million in 2020, 2019 and 2018, respectively. Further, its sustainability is a matter of question as the company expects this trend to continue in the foreseeable future.

Intersect ENT, Inc. Price

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

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

On a positive note, SINUVA business transformed dramatically in 2020, achieving record revenues in the third and the fourth quarters. This acceleration in growth was driven by expanded SINUVA payer coverage (now at more than 75% of private lives and over 90% of public lives) and an enhanced go-to-market model enabling coverage, benefit verification, distribution and payment to physicians, who are initiating drug therapy in the office with SINUVA.

Additionally, SINUVA also benefited from the pandemic-led accelerated shift of care from the hospital and ambulatory surgery centers (ASC) to the office setting, particularly as an offering that comes in lieu of revision surgery and a hospital visit.

The company’s fee schedule additions utilizing its unique J code, J7401, have been put in place with UnitedHealthcare, Aetna, Humana, various Blue Cross Blue Shields and Highmark, among others. In addition, in July 2020, CMS granted SINUVA an additional C code (C9122) for pass-through status for use in the ASC and outpatient environment for Medicare patients. This additional code has been consolidated into the new single SINUVA code with pass-through status reaffirmed through July 2023.

Stocks Worth a Look

Some better-ranked stocks from the broader medical space are Hologic, Inc. HOLX, IDEXX Laboratories, Inc. IDXX and Abbott Laboratories ABT.

Hologic’s long-term earnings growth rate is estimated at 15.4%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

IDEXX’s long-term earnings growth rate is estimated at 15.8%. It currently carries a Zacks Rank #2.

Abbott’s long-term earnings growth rate is estimated at 14.1%. The company presently carries a Zacks Rank #2.

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