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Cardiovascular Systems' (CSII) Q2 Earnings Lag Estimates

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Cardiovascular Systems, Inc. reported a loss of 23 cents per share for second-quarter fiscal 2022, comparing unfavorably with the near break-even earnings reported in the prior-year period. The reported loss was also wider than the Zacks Consensus Estimate of a loss of 14 cents.

Net Sales

Cardiovascular Systems’ revenues of $59.1 million dropped 7.8% year over year. The top line missed the Zacks Consensus Estimate by 5.7%.

Segment Details

In the quarter under review, worldwide coronary revenues grew 4% to $22.2 million sequentially and increased slightly compared to the prior-year quarter.

In the United States, coronary revenues declined 7% year over year to $16.7 million. Outside the United States, coronary revenues rose 60% year over year to $3.6 million, led by continued strength in Japan coupled with the launch of the coronary Orbital Atherectomy System (OAS) in Europe.

Worldwide peripheral revenues plunged 11% year over year to $38.9 million. In the United States, peripheral revenues decreased 12% year over year.

Margin

Gross margin in the reported quarter was 69.4%, down 887 basis points (bps) year over year on a 29.8% rise in the cost of goods sold.

Selling, general and administrative expenses were up 0.9% to $40.4 million. Research and development expenses contracted 7.6% to $8.9 million. Adjusted operating expenses fell 0.8% to $49.3 million. Adjusted operating loss in the reported quarter was $8.2 million against adjusted operating profit of $0.6 million in the year-ago period.

Financial Position

The company exited the second quarter of fiscal 2022 with cash and cash equivalents of $65.9 million, compared with $66.9 million at the end of the fiscal first quarter.

2022 Guidance

Cardiovascular Systems’ management expects the easing of hospital capacity constraints in late February, which is expected to lead to gradual improvement in procedure volumes beginning mid-March. The company also expects its domestic revenues to decline sequentially in the fiscal third quarter.

Cardiovascular Systems has lowered its financial guidance for fiscal 2022.

Revenues are expected in the band of $235 million to $245 million (down from the earlier-projected band of $265-$285 million). The Zacks Consensus Estimate for the same is currently pegged at $270.5 million.

The company expects net loss in the range of 15% to 18% of revenues (up from the earlier projected band of 5-8% of revenues). The Zacks Consensus Estimate for the same is pegged at a loss of 46 cents per share.

Our Take

Cardiovascular Systems’ second quarter of fiscal 2022 loss per share was much wider than the year-ago figure and the consensus mark. Peripheral revenues registered a significant decline in the reported quarter, both domestically and internationally. The company’s domestic business was impacted by lower procedure volumes due to hospital capacity issues and staffing shortages induced by the recent COVID-19 resurgence. Per the company, the impact was more acutely felt in elective procedures like lower acuity peripheral claudication treatment. The company also lowered its 2022 outlook, raising further apprehension.

On a positive note, Cardiovascular Systems registered robust revenue growth across the coronary franchise. The company’s current pipeline is under development, including the intravascular lithotripsy technology, buoying optimism. The latest receipt of the FDA’s pre-market approval of the Scoreflex NC scoring balloon also raises investors’ confidence.

Zacks Rank and Key Picks

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

Here are a few stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.

AMN Healthcare Services, Inc. (AMN - Free Report) has an Earnings ESP of +10.29% and a Zacks Rank of #1 (Strong Buy). AMN Healthcare is slated to release fourth quarter and full-year 2021 results on Feb 17. You can see the complete list of today’s Zacks #1 Rank stocks here.

AMN Healthcare’s long-term earnings growth rate is estimated at 16.2%. AMN’s earnings yield of 6.5% compares favorably with the industry’s 0.9%.

Allscripts Healthcare Solutions, Inc. (MDRX - Free Report) has an Earnings ESP of +10.11% and a Zacks Rank of #2 (Buy). Allscripts will release fourth quarter and full-year 2021 results on Feb 24.

Allscripts’ long-term earnings growth rate is estimated at 11.1%. MDRX’s earnings yield of 5% compares favorably with the industry’s (4.9%).

Henry Schein, Inc. (HSIC - Free Report) has an Earnings ESP of +1.94% and a Zacks Rank of 2. The company will report fourth quarter and full-year 2021 results on Feb 15.

Henry Schein’s long-term earnings growth rate is estimated at 11.8%. HSIC’s earnings yield of 6.2% compares favorably with the industry’s 4.3%.


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