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Intersect ENT (XENT) Q1 Loss Wider Than Expected, Revenues Top

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Intersect ENT Inc. XENT reported first-quarter 2021 adjusted loss per share of 51 cents, wider than the Zacks Consensus Estimate of a loss of 42 cents. However, the bottom line was narrower than the year-ago adjusted loss of 54 cents. The quarter’s adjustments exclude the impact of certain integration costs and others.

Meanwhile, without adjustments, GAAP net loss for the first quarter was 61 cents compared with the year-ago loss of 54 cents.

Revenues in Detail

Reported revenues in the first quarter increased 22.7% year over year to $24.3 million and exceeded the Zacks Consensus Estimate by 4.4%. This year-over-year growth was led by higher PROPEL revenues resulting from the lower impact on demand from the COVID-19 pandemic on elective surgical procedures. The company also generated increased SINUVA revenues from improved access and coverage and a shift in sinus procedures toward ambulatory surgery centers and the office setting of care.

Margins

Cost of sales was $8.5 million in the reported quarter, up 31.9% year over year. Gross profit rose 18.3% to $15.9 million. Gross margin was 65.3%, reflecting a contraction of 242 basis points (bps) year over year.

Selling, general and administrative expenses rose 7.2% to $28.1 million in the quarter under review. Research and development expenses were $6.4 million, up 23.8% year over year. Total operating expenses were $34.4 million in the first quarter, up 9.9% 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 $18.6 million, wider than the year-ago adjusted operating loss of $17.9 million.

Cash Position

Intersect ENT exited the first quarter of 2021 with cash, cash equivalents and short-term investments of $70.5 million compared with $88 million on a sequential basis.

2021 Guidance Raised

Taking into account the ongoing improvement in the pandemic situation, the rebound in elective procedures and gradual reopening of the hospital setting of care plus to leverage its wide portfolio of products, the company has raised its 2021 revenue guidance.

Intersect ENT now expects revenues in the range of $117-$121 million (up from the previously guided range of $116-$120 million). The Zacks Consensus Estimate for revenues is pegged at $118.9 million.

Gross margin is expected to be in the low-to-mid 70% range.

The company’s 2021 guidance represents the estimated recovery of COVID-impacted elective sinus procedures supported by a substantial rise in the number of individuals getting vaccinated against COVID-19.

Our Take

Intersect ENT reported mixed results for first-quarter 2021. Revenues improved year over year on increased PROPEL revenues resulting from the reduced impact on demand from the COVID-19 pandemic on elective surgical procedures. The company also generated increased SINUVA revenues from improved access and coverage and a shift in sinus procedures toward ambulatory surgery centers and the office setting of care. The company also registered revenues from the newly-added Global Balloon and Navigation product portfolio.

On the flip side, the company reported adjusted net loss wider than expected in the first quarter. The increase in operating costs and contraction in gross margin does not bode well either.

Zacks Rank and Key Picks

Intersect ENT currently carries a Zacks Rank #4 (Sell).

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 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 Zacks Rank #2.

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