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Cardiovascular Systems (CSII) Q2 Earnings Top, Revenues Meet

Zacks Equity Research

Cardiovascular Systems, Inc. CSII delivered earnings per share of 1 cent in second-quarter fiscal 2019 against the year-ago loss of a penny.

The reported figure exceeded the Zacks Consensus Estimate of a loss of 4 cents.

Net Sales

Cardiovascular Systems recorded revenues of $60.2 million in the fiscal second quarter, marking a 14.4% year-over-year increase. Meanwhile, the top line matched the Zacks Consensus Estimate.

Segment Details

Coronary device revenues jumped above 19% year over year to $16 million. Domestic coronary revenues grew 13%, primarily driven by expanded unit volumes. Meanwhile, peripheral device revenues rose 13% to $44.2 million on a year-over-year basis. Strong sales of peripheral atherectomy devices in the United States were the primary driver of peripheral revenues.

Margin

Gross margin in the reported quarter was 80.9%, down 101 basis points (bps) year over year.

Cardiovascular Systems, Inc. Price, Consensus and EPS Surprise

Cardiovascular Systems, Inc. Price, Consensus and EPS Surprise | Cardiovascular Systems, Inc. Quote

Meanwhile, selling, general and administrative (SG&A) expenses rose 11.1% to $41.1 million plus research and development (R&D) expenses were up 13.2% to $7.2 million. As a result, adjusted operating expenses increased 11.4% to $48.3 million.

Operating profit came in at around $384 million against loss from operations of $275 million in the year-ago period.

Financial Position

The company exited second-quarter fiscal 2019 with cash and cash equivalents of $118.8 million compared with $113.4 million at the end of fiscal 2018.

Outlook

Cardiovascular Systems updated its fiscal 2019 guidance. The company expects revenues in the range of $243-$247 million for fiscal 2019, lower than the earlier prediction of $240-$250 million. The current Zacks Consensus Estimate for fiscal 2019 revenues is pegged at $244.7 million within but near the lower end of the company's view.

Moreover, the company expects gross profit to account for 80% of revenues in fiscal 2019.

The company still anticipates to incur net loss of 1-2% in revenues during fiscal 2019. The current Zacks Consensus Estimate is pegged at a loss of 9 cents.

Our Take

Cardiovascular Systems exited second-quarter fiscal 2019 with earnings ahead of the Zacks Consensus Estimate and revenues in line with the same. The company witnessed a year-over-year increase in both Coronary and peripheral device segments. It is putting efforts in product innovation through R&D investments. The commercial launch of orbital atherectomy in international markets strongly contributed to growth of coronary and peripheral businesses in the reported quarter.

On the flip side, Cardiovascular Systems faces cut-throat competition in the niche space.

Zacks Rank & Key Picks

Cardiovascular Systems has a Zacks Rank #2 (Buy). A few other top-ranked MedTech stocks flaunting solid results in the respective quarters are Varian Medical Systems VAR, Surmodics, Inc. SRDX and AngioDynamics ANGO.

Varian’s first-quarter fiscal 2019 adjusted EPS came in at $1.06, in line with the Zacks Consensus Estimate. Revenues of $741 million outpaced the consensus mark of $717.9 million. The stock carries a Zacks Rank of 2.

Surmodics reported adjusted earnings per share (EPS) of 12 cents in first-quarter fiscal 2019, comparing favorably with the Zacks Consensus Estimate of a loss of a penny. Earnings rose 20% from the year-ago quarter’s figure. The stock is a Zacks #2 Ranked player.

AngioDynamics’ second-quarter fiscal 2019 adjusted EPS of 22 cents surpassed the Zacks Consensus Estimate by a penny. Revenues totaled $91.5 million, which outshined the consensus estimate by 2.9%. The stock sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here .

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