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Intersect ENT (XENT) Q4 Loss Wider Than Expected, Revenues Top

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Intersect ENT Inc. reported fourth-quarter 2020 adjusted loss per share of 54 cents, wider than the Zacks Consensus Estimate of a loss of 31 cents as well as the year-ago adjusted loss of 25 cents. The quarter’s adjustments exclude the impact of certain restructuring costs.

Full-year adjusted net loss was $2.05, wider than both the Zacks Consensus Estimate of loss of $1.89 and the year-ago loss of $1.37 per share.

Revenues in Detail

Reported revenues in the fourth quarter declined 11.1% year over year to $28.2 million but exceeded the Zacks Consensus Estimate by 1.1%. While there was year-over-year decline in sales, sequentially it increased approximately 24% on continued recovery in PROPEL, growth in SINUVA and initial sales of the company’s newly acquired Fiagon products.

For 2020, net sales were $80.6 million, down 26% from the year-ago comparable period but ahead of the Zacks Consensus Estimate by 0.6%. The decline was the result of hospitals suspending elective procedures and reduced ENT office visits related to the COVID-19 pandemic.

Margins

Cost of sales was $8.7 million in the reported quarter, up 20.6% year over year. Gross profit declined 20.4% to $19.5 million. Gross margin was 69.2%, reflecting a significant contraction of 811 basis points (bps) year over year.

Intersect ENT, Inc. Price, Consensus and EPS Surprise

Intersect ENT, Inc. Price, Consensus and EPS Surprise

Intersect ENT, Inc. price-consensus-eps-surprise-chart | Intersect ENT, Inc. Quote

Selling, general and administrative expenses were up 14.4% to $31.2 million in the quarter under review. Research and development expenses were $5.6 million, down 3.3% year over year. Adjusted operating expenses were $36.8 million in the fourth quarter, down 11.3% year over year.

The company reported adjusted operating loss of $17.3 million, wider than the year-ago adjusted operating loss of $8.5 million.

Cash Position

Intersect ENT exited 2020 with cash, cash equivalents and short-term investments of $88 million compared with $90.6 million at the end of 2019.

Outlook

Despite the continuing uncertainties related to the pandemic, the company expects to grow revenues in 2021 relative to 2019 (the pre-pandemic level). This assumption is based on the current and anticipated elective procedure volumes and referral trends. Anticipating recovery of elective procedures combined with a significant increase in the number of individuals vaccinated against COVID-19, Intersect ENT currently expects 2021 revenues to be in the range of $116-$120 million and gross margins to return to the low-to-mid 70% range. The current Zacks Consensus Estimate for 2020 revenues is pegged at $120 million.

Our Take

Intersect ENT reported mixed results for the fourth-quarter of 2020. Revenues declined year over year as a result of hospitals suspending elective surgical procedures, and significantly reduced ENT office visits. Significant contraction in gross margin and a higher adjusted operating loss are discouraging as well.

On a positive note, the company noted that PROPEL, SINUVA andFiagonproduct lines are gaining momentum. The 2021 revenue expectation is showing growth over the 2019 level.

Zacks Rank and Stocks to Consider

Intersect ENT currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Align Technology, Inc. (ALGN - Free Report) , HillRom Holdings, Inc. , Abbott Laboratories (ABT - Free Report) . While Align Technology sports a Zacks Rank #1 (Strong Buy), HillRom and Abbott carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Align Technology reported fourth-quarter 2020 adjusted EPS of $2.61 compared with the Zacks Consensus Estimate of $2.14. Revenues of $835 million beat the consensus mark by 6.1%.

Hill-Rom reported first-quarter fiscal 2021 adjusted EPS of $1.53, beating the Zacks Consensus Estimate by 45.7%. Revenues of $741.1 million surpassed the consensus mark by 13.2%.

Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which beat the Zacks Consensus Estimate by 6.6%. Fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%.

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