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Cardiovascular Systems (CSII) Loss Wider Than Estimates in Q1

Zacks Equity Research

Cardiovascular Systems, Inc. CSII reported a loss per share of 17 cents in first-quarter fiscal 2020, wider than the loss per share of 9 cents in the prior-year period. The reported figure was also wider than the Zacks Consensus Estimate of a loss of 9 cents.

Net Sales

Cardiovascular Systems’ revenues of $64.5 million in the first quarter marked a 14.6% year-over-year increase. Meanwhile, the top line beat the Zacks Consensus Estimate by 0.7%.

Segment Details

In the quarter under review, global Coronary device revenues jumped 26% year over year to $19 million. Domestic coronary revenues rose 17% to $16.3 million.  

Global peripheral revenue increased 10% to $45.5 million,led by the launch of new peripheral orbital atherectomy devices. Domestic peripheral revenue increased 10% to $45.2 million.

Cardiovascular Systems, Inc. Price, Consensus and EPS Surprise

 

Cardiovascular Systems, Inc. Price, Consensus and EPS Surprise

Cardiovascular Systems, Inc. price-consensus-eps-surprise-chart | Cardiovascular Systems, Inc. Quote

Total U.S. revenues increased 12% to $61.5 million while International revenue totaled just under $3 million.

Margin

Gross margin in the reported quarter was 80.3%, down 85 basis points (bps) year over year on a 19.8% rise in cost of goods sold.

Meanwhile, selling, general and administrative (SG&A) expenses rose 13.4% to $46.8 million plus research and development (R&D) expenses escalated 46.2% to $10.8 million. As a result, operating expenses increased 18.3% to $57.5 million. Operating loss in the reported quarter came in at $5.7 million, wider than the operating loss of $2.9 million in the year-ago period.

Financial Position

The company exited first-quarter fiscal 2020 with cash and cash equivalents of $58.9 million compared with $74.2 million at the end of fiscal 2019.

2020 Outlook

Cardiovascular Systems reaffirmed its fiscal 2020 guidance. The company projects revenues within $278-$283 million for fiscal 2020,indicating 12% to 14% growth over fiscal 2019. The Zacks Consensus Estimate for fiscal 2020 revenues is pegged at $280.4 million, below the company's view.

Moreover, the company reiterates gross profit margin at the band of 79-80%.

Our Take

Cardiovascular Systems exited the first quarter of fiscal 2020 on a mixed note with wider-than-estimated loss and a revenue beat. We are upbeat about the year-over-year uptick in both Coronary and peripheral device revenues within the company’s domestic market. The company is making concerted efforts in product innovation through R&D investments. Treatment of the first patient in the Middle East with peripheral orbital atherectomy system is another crucial highlight of the quarter. The FDA approval of Viperwire Advance Coronary Guide Wire with Flex Tip instills optimism.

On the flip side, operating loss and contraction of margins during the quarter are disappointing. Also, Cardiovascular Systems faces cut-throat competition in the niche space.

Earnings of Other MedTech Majors at a Glance

Cardiovascular Systems carries a Zacks Rank #3 (Hold).

Some better-ranked companies, which posted solid results this earnings season, are Edwards Lifesciences EW, Thermo Fisher Scientific Inc. TMO and ResMed Inc. RMD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Edwards Lifesciences delivered third-quarter 2019 adjusted earnings per share (EPS) of $1.41, outpacing the Zacks Consensus Estimate by 15.6%. Third-quarter net sales of $1.09 billion surpassed the Zacks Consensus Estimate by 5.5%.

Thermo Fisher delivered third-quarter 2019 adjusted EPS of $2.94, which surpassed the Zacks Consensus Estimate by 2.1%. Revenues of $6.27 billion outpaced the Zacks Consensus Estimate by 1.3%.

ResMed reported first-quarter fiscal 2020 adjusted EPS of 93 cents, which beat the Zacks Consensus Estimate of 87 cents by 6.9%. Revenues were $681.1 million, surpassing the Zacks Consensus Estimate by 3.6%.

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