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Intersect (XENT) Q1 Loss Wider Than Estimates, Revenues Top

Zacks Equity Research

Intersect ENT Inc. XENT reported first-quarter 2019 loss per share of 35 cents, wider than the Zacks Consensus Estimate of a loss of 30 cents. The reported loss was much wider than the year-ago loss of 21 cents.

Reported revenues in the first quarter grew 8.1% year over year to $26.7 million and also exceeded the Zacks Consensus Estimate by 1.5%. The upside can be attributed to higher uptake of the PROPEL family of steroid releasing implants and the commercialization of the SINUVA Sinus Implant. SINUVA accounted for around 4% of first-quarter 2019 revenues.

Margins

Cost of sales during the reported quarter was $4.6 million, down 15.3% year over year. Gross margin came in at 82.6%, reflecting a 476-basis point (bps) expansion 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 up 26.5% to $27.2 million in the quarter under review. Research and development expenses were $6.3 million, up 46.6% year over year. The company reported operating loss of $11.4 million as compared with year-ago operating loss of $6.5 million.

Cash Position

Intersect ENT exited the first quarter of 2019 with cash, cash equivalents and short-term investments of $97.6 million compared with $100.8 million at the end of 2018.

2019 Guidance

Intersect ENT has slashed its 2019 full-year revenue view to the range of $113-$117 million compared to the prior guidance of $123-$127 million. The Zacks Consensus Estimate for the metric is pegged at $125.1 million, within the guidance.

The company’s 2019 outlook for the gross margin has been reaffirmed at 80-81%.

Our Take

Intersect ENT ended the first quarter on a mixed note. We are upbeat about the company's revenue growth on increased adoption of the PROPEL family of products and SINUVA Sinus Implant. Management is pleased with the positive patient feedback received about SINUVA. The company continues to make progress to enhance its product access and sales force balance.The preliminary decision by CMS to assign a J code and the future potential of the SINUVA buoys optimism for the company.

Meanwhile, rising operating costs in the reported quarter is a major concern. The reduced top-line guidance indicates a dull revenue scenario through 2019.

Zacks Rank & Key Picks

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

Some better-ranked stocks with solid results this earnings season are Stryker Corporation SYK, Abbott Laboratories ABT and CONMED Corporation CNMD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker delivered first-quarter 2019 adjusted earnings per share of $1.88, beating the Zacks Consensus Estimate by 2.2%. Meanwhile, revenues of $3.52 billion were in line with the consensus estimate.

Abbott reported first-quarter 2019 adjusted earnings per share of 63 cents, topping the Zacks Consensus Estimate by 3.3%. Moreover, worldwide sales of $7.54 billion was above the consensus estimate of $7.47 billion.

CONMED posted first-quarter 2019 adjusted earnings per share of 57 cents, which exceeded the Zacks Consensus Estimate of 54 cents. Also, revenues of $218.4 million outshined the consensus mark of $213 million.

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