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Cardiovascular Systems (CSII) Posts Break-Even Earnings in Q2

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Cardiovascular Systems, Inc. (CSII - Free Report) reported break-even earnings for second-quarter fiscal 2021, against the loss per share of 10 cents in the prior-year period. The reported earnings topped the Zacks Consensus Estimate of a loss of 7 cents.

Net Sales

Cardiovascular Systems’ revenues of $64.2 million declined 6.1% year over year. Moreover, the top line lagged the Zacks Consensus Estimate by 1.7%.

The top line was adversely impacted by the surge in COVID-19 infections and increased ICU demand impacting the procedure volumes during the final weeks of December 2020. However, the revenues improved 6% on a sequential basis primarily due to strong sequential growth in peripheral and coronary segments in the United States.

Segment Details

In the quarter under review, international Coronary device revenues grew 32% sequentially to $2.3 million. Domestic coronary revenues increased 97% year over year, primarily due to increased procedure volumes and strong ISD sales. Revenue from coronary interventional support devices surged 14.1%.

Domestically, peripheral unit volumes decreased 7% but increased 2% on a sequential basis.

The domestic coronary revenues increased 13.1% sequentially to $18 million mainly due to strong unit growth and steady average selling prices. International revenues totaled $2.3 million, a 32% improvement on a sequential basis, led by Japan.

Margin

Gross margin in the reported quarter was 78.3%, down 162 basis points (bps) year over year due to 7.9% fall in gross profit.

Meanwhile, selling, general and administrative expenses were down 14.5% to $40.1 million. Research and development expenses declined 10.9% to $9.6 million.

Operating expenses declined 13.9% to $49.7 million. Operating profit in the reported quarter was $587K compared with operating loss of $3 million in the year-ago period.

Financial Position

The company exited the second quarter of fiscal 2021 with cash and cash equivalents of $73.8 million, compared with $92.7 million at the end of the first quarter of fiscal 2021.

Q3 Fiscal 2021 Guidance

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

Revenues are expected in the band of $60-$65 million. The Zacks Consensus Estimate for the same is currently pegged at $69 million.

The company expects to incur operating expenses in the range of $52-$54 million.

Our Take

Cardiovascular Systems exited the second quarter of fiscal 2021 with better-than-expected earnings. Although the company reported a decline in the fiscal second-quarter top line, sequential uptick in revenues buoys optimism. Gradual recovery in atherectomy procedure volumes drove domestic revenues in fiscal second quarter, which is impressive. The peripheral revenues performed better than expected as hospital-based critical limb ischemia programs remained active throughout the quarter. Recently received CE Mark for Diamondback 360 Coronary Orbital Atherectomy System buoys optimism. The company providing its financial outlook for fiscal third quarter despite the pandemic-led unstable business environment is an encouraging sign.

However, the company’s dismal top-line performance for the reported quarter is concerning. Gross margin contraction is another cause of worry.

Zacks Rank and Key Picks

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

Some other better-ranked stocks in the broader medical space are Abbott Laboratories (ABT - Free Report) , Hologic, Inc. (HOLX - Free Report) and IDEXX Laboratories, Inc. (IDXX - Free Report) .

Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hologic reported first-quarter fiscal 2021 adjusted EPS of $2.86, beating the Zacks Consensus Estimate by 33.6%. The company currently flaunts a Zacks Rank #1.

IDEXX reported fourth-quarter 2020 adjusted EPS of $2.01 which surpassed the Zacks Consensus Estimate by 40.6%. Revenues of $720.9 million beat the consensus mark by 5.8%. The company currently carries a Zacks Rank #2.

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