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Resuscitation devices maker ZOLL Medical posted strong first-quarter fiscal 2012 (ended January 1) results on the heels of robust revenues from its flagship LifeVest wearable defibrillator, backed by its Temperature Management business.
The Massachusetts-based company reported earnings per share of 29 cents for the quarter, which beat the Zacks Consensus Estimate by 3 cents and exceeded the year-ago earnings of 18 cents. Profit zoomed 70% year over year to $6.6 million as the company witnessed growth across the board.
Revenues for the quarter soared 18% year over year to $133.7 million, ahead of the Zacks Consensus Estimate of $132 million. Total order backlog surged 85% year over year to $24 million at the end of the first quarter.
Sales in the North American market spiked 18% to $68.3 million in the quarter. Revenues in the North American hospital market climbed 12%. Revenues from the company’s U.S. Military business tanked 57% year over year to $3.7 million. Barring the military business, sales from North American hospital market jumped 38% to $30.5 million.
ZOLL Medical saw healthy sales in the North American pre-hospital market in the quarter, which spurted 25% to $34.1 million. The company’s international sales crept up 1% to $33.2 million.
LifeVest continues to be the key driving force with revenues propelling 45% year over year to $32.3 million in the quarter. The Centers for Medicare and Medicaid Services (“CMS”), in December 2011, reaffirmed the existing coverage policy for LifeVest for all indications.
The announcement removed a major headwind as the CMS, in August 2011, considered changes to the Medicare coverage for wearable cardioverter defibrillators, leading to significant reimbursement risk for LifeVest (given the potential for reimbursement rate cuts).
The company’s Temperature Management business also posted strong results in the quarter with sales surging 28% of $7.5 million. On a somber note, revenues from AutoPulse cardiac support pump fell 17% to $4 million.
Gross margin climbed to 59% in the quarter from 54% a year-ago, benefiting from a better product mix, lower factory expenses and improved pricing in the North American capital equipment business.
ZOLL Medical exited the quarter with cash and cash equivalents and short-term investments of roughly $77.9 million, up 9.7% year over year, with no debt.
ZOLL Medical is a leading player in the global market for external defibrillators, a market worth more than $1 billion. In the U.S. defibrillation market, the company competes with Physio-Control, a wholly-owned unit of Medtronic (MDT - Analyst Report), and Philips (PHG - Analyst Report).
ZOLL Medical’s solid fundamentals, its broad product range, healthy revenue/margin mix and upbeat prospect for LifeVest remain encouraging. Our Outperform recommendation on the stock is backed by a short-term Zacks #2 Rank (Buy).