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Intersect ENT (XENT) Reports Wider-Than-Expected Q1 Loss

Zacks Equity Research

Intersect ENT Inc. XENT reported first-quarter 2020 loss per share of 54 cents, wider than the Zacks Consensus Estimate of a loss of 45 cents as well as the year-ago loss of 35 cents.

Revenues in Detail

Reported revenues in the first quarter declined 25.7% year over year to $19.8 million and lagged the Zacks Consensus Estimate by 20.8%. The year-over-year downside resulted from suspension of elective surgical procedures and reduced ENT office visits due to the coronavirus pandemic. Per the company, sales were robust till the pandemic broke out in the United States in late February.

Revenues from the PROPEL product line were $19.1 million in the quarter.


Cost of sales was $6.4 million in the reported quarter, up 37.9% year over year. Gross profit declined 39.1% to $13.4 million. Gross margin was 67.7%, reflecting a stupendous contraction of 1492 basis points (bps) year over year.

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

Selling, general and administrative expenses were down 3.7% to $26.2 million in the quarter under review. Research and development expenses were $5.1 million, down 17.9% year over year. Adjusted operating expenses were $31.3 million in the first quarter, down 6.4% year over year.

The company reported adjusted operating loss of $17.9 million, wider than the year-ago adjusted operating loss of $11.4 million.

Cash Position

Intersect ENT exited the first quarter of 2020 with cash, cash equivalents and short-term investments of $87.7 million compared with $90.6 million at the end of 2019.

2020 Guidance

Intersect ENT withdrew 2020 annual guidance due to uncertainties associated with the pandemic, as announced on Apr 23.

Although the company is not in a position to ascertain the extent or duration of the impact of the pandemic on its financial and operating results, it anticipates revenues in the second quarter of 2020 to be significantly affected. This is likely to result from the suspension of elective procedures worldwide.

Our Take

Intersect ENT ended the first quarter on a disappointing note as a result of hospitals suspending elective surgical procedures and with significantly reduced ENT office visits. Stupendous contraction in gross margin and a higher adjusted operating loss are discouraging as well. The company’s withdrawal of its 2020 guidance does not bode well.

However, management is optimistic that patients will return for procedures soon, as majority of the sinus surgery procedures were postponed due to the pandemic. Given this, the company is preparing to restart its commercial efforts and production as procedures will soon resume. We are upbeat about the restoration in elective sinus procedures and potential accelerated rebound on pent-up demand.

The company’s efforts to maintain customer focus by making available all the patient-support teams while adhering to applicable restrictions, safety precautions and procedures even during the coronavirus outbreak are commendable.

Zacks Rank and Stocks to Consider

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

Some better-ranked stocks in the broader medical space are Aphria Inc. APHA, Biogen Inc. BIIB and Eli Lilly and Company LLY.

Aphria reported third-quarter fiscal 2020 adjusted earnings per share (EPS) of 2 cents, comparing favorably with the Zacks Consensus Estimate of a loss of 4 cents. Net revenues of $64.4 million outpaced the consensus estimate by 14.6%. The company carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Biogen currently carries a Zacks Rank #2. It reported first-quarter 2020 adjusted EPS of $9.14, surpassing the Zacks Consensus Estimate by 18.1%. Revenues of $3.53 billion outpaced the consensus mark by 3.2%.

Eli Lilly delivered first-quarter 2020 EPS of $1.75, outpacing the Zacks Consensus Estimate by 12.9%. Revenues of $145.3 million surpassed the consensus estimate by 6.3%. The company currently sports a Zacks Rank #1.

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