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Intersect ENT (XENT) Q1 Earnings & Revenues Miss Estimates

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·4 min read
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Intersect ENT XENT reported first-quarter 2022 GAAP loss per share of 85 cents, wider than the year-ago adjusted loss of 61 cents. The figure was also wider than the year-ago adjusted loss of 34 cents per share.

First-quarter revenues were $21.6 million compared with the year-ago $24.3 million, representing a decline of 11.3%. The figure missed the Zacks Consensus Estimate by 16.5%.

Quarter in Detail

Cost of sales was $7.7 million in the reported quarter, down 9% year over year. Gross profit declined 12.5% to $13.9 million. Gross margin plunged to 64.4%, reflecting a contraction of 89 basis points (bps) year over year.

Selling, general and administrative expenses fell 0.2% to $28 million in the quarter under review. Research and development expenses were $9.4 million, up 47.5% year over year.

Intersect ENT, Inc. Price, Consensus and EPS Surprise

Intersect ENT, Inc. Price, Consensus and EPS Surprise
Intersect ENT, Inc. Price, Consensus and EPS Surprise

Intersect ENT, Inc. price-consensus-eps-surprise-chart | Intersect ENT, Inc. Quote

The company reported adjusted operating loss of $23.5 million compared with the year-ago adjusted operating loss of $18.6 million.

The company ended the first quarter with cash, cash equivalents and short-term investments of $50.6 million compared with $61 million at 2021-end.

Sell-Off Update

In August 2021, Intersect ENT entered into a definitive agreement with Medtronic MDT, wherein the latter agreed to acquire Intersect ENT for $1.10 billion. The deal was expected to close toward the end of Medtronic's 2021-22 fiscal year (ending April 2022), subject to the satisfaction of customary closing conditions, including receipt of regulatory clearances and approval by Intersect ENT's stockholders. On Sep 22, 2021, Intersect ENT received a second request from the Federal Trade Commission (FTC) for additional materials regarding the transaction. On Oct 8, 2021, the company’s shareholders voted to approve the transaction. As of the first-quarter 2022, the merger agreement with Medtronic is still pending.

The acquisition of Intersect ENT, which provides clinically proven PROPEL and SINUVA sinus implants that deliver an anti-inflammatory steroid to help in healing will enable Medtronic to expand its portfolio of products used in ear, nose, and throat procedures. The acquisition will allow Medtronic to leverage complementary product lines and customer base, thus advancing its efforts to aid chronic rhinosinusitis patients.

Our Take

Intersect ENT reported discouraging results for the first quarter of 2022, missing on the earnings and revenue front. The year-over-year decline in the revenues does not bode well. Escalating operating costs are building pressure on the bottom line. The company also incurred an operating loss in the first quarter.

On a positive note, significant investor optimism currently surrounds the company’s agreement to be acquired by MedTech stalwart Medtronic for $1.10 billion.

Zacks Rank & Key Picks

Intersect ENT currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Alkermes plc ALKS and UnitedHealth Group Incorporated UNH.

Alkermes reported first-quarter 2022 adjusted earnings per share (EPS) of 12 cents, which surpassed the Zacks Consensus Estimate of a penny. Revenues of $278.6 million outpaced the Zacks Consensus Estimate by 6.2%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alkermes has an estimated long-term growth rate of 25.1%. ALKS’ earnings surpassed estimates in the trailing four quarters, the average surprise being 350.5%.

UnitedHealth, having a Zacks Rank #2 (Buy), reported first-quarter 2022 adjusted EPS of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 1.9%.

UnitedHealth has an estimated long-term growth rate of 14.8%. UNH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.7%.


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