Why Is Cardiovascular Systems (CSII) Down 4.4% Since Last Earnings Report?

It has been about a month since the last earnings report for Cardiovascular Systems (CSII). Shares have lost about 4.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cardiovascular Systems due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Cardiovascular Systems’ Q1 Earnings Top Estimates

Cardiovascular Systems reported loss per share of 5 cents for first-quarter fiscal 2021, narrower than the loss per share of 17 cents in the prior-year period. The reported loss was also narrower than the Zacks Consensus Estimate of a loss of 23 cents.

Net Sales

Cardiovascular Systems’ revenues of $60.5 million declined 6.1% year over year. However, the top line exceeded the Zacks Consensus Estimate by 7.6%.

Although the fiscal first-quarter revenues declined, it improved 42% sequentially primarily due to strong sequential growth in peripheral and coronary segments in the United States.

Segment Details

In the quarter under review, global Coronary device revenues decreased 7% year over year to $17.6 million. Domestic coronary revenues declined 2% from the year-ago period despite gradual recovery in atherectomy unit volumes.

Global peripheral device revenues decreased 6% to $42.9 million. Domestically, peripheral unit volumes decreased 5%.

Total U.S. revenues declined 4% to $58.8 million, while International revenues totaled around $1.7 million, a 42% decline due to adverse impacts from the pandemic.

Margin

Gross margin in the reported quarter was 79.2%, down 110 basis points (bps) year over year due to 7.4% fall in gross profit.

Meanwhile, selling, general and administrative expenses were down 13.8% to $40.3 million. Research and development expenses declined 15.9% to $9.1 million.

Operating expenses declined 14.2% to $49.3 million. Operating loss in the reported quarter was $1.4 million compared with operating loss of $5.7 million in the year-ago period.

Financial Position

The company exited the first quarter of fiscal 2021 with cash and cash equivalents of $92.7 million, compared with $185.5 million at the end of fiscal 2020.

Q2 Fiscal 2021 Guidance

Cardiovascular Systems, boosted by the improvement in domestic procedure volumes during first quarter, has provided the financial guidance for the second quarter of fiscal 2021.

Revenues are expected in the band of $63-$67 million, indicating sequential revenue growth of 4-11%.

Gross margin is expected in the range of 78-79%. The company expects to incur operating expenses in the range of $52-$54 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 17.65% due to these changes.

VGM Scores

At this time, Cardiovascular Systems has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Cardiovascular Systems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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