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BioTelemetry (BEAT) Q2 Earnings Top, Revenues Meet Estimates

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BioTelemetry Inc. (BEAT - Free Report) reported second-quarter 2017 adjusted earnings of 23 cents per share, which beat the Zacks Consensus Estimate of 21 cents and the year-ago equivalent by a couple of cents.

Revenue Details

Revenues increased 10.3% year over year to $58.1 million, almost in line with the Zacks Consensus Estimate of $58 million. The upside has been primarily driven by a $1.9 million increase in Healthcare revenues owing to rising MCOT patients. However, this was partially offset by the $1-million impact from the slower Medicare rate effective Jan 1.

Notably, this marked the 20th consecutive quarter of year-over-year revenue growth.

Meanwhile, research revenues increased $1.6 million, led by imaging study volume growth and the full quarter impact of the acquisition of VirtualScopics, partially offset by lower cardiac revenues. Technology revenues increased by $1.9 million on higher sales of wireless blood glucose monitors through the Telcare division.

BioTelemetry, Inc. Price, Consensus and EPS Surprise

BioTelemetry, Inc. Price, Consensus and EPS Surprise | BioTelemetry, Inc. Quote

Margins

Gross profits increased 9.3% from the year-ago quarter to $35.9 million, primarily driven by increased revenues. The gross margin contracted 62 basis points (bps) due to the impact of the Medicare rate reduction and the 2016 acquisition which carries lower margins than the existing businesses. The decline was partially offset by volume driven efficiencies.

Adjusted operating expenses totaled $24.5 million, reflecting a 4.4% increase from the year-ago quarter. The upside was led by increases in selling and marketing (S&M) and research and development (R&D) expenses by 7.1% and 27.9% year over year, respectively.

Meanwhile, adjusted operating margin expanded 178 bps to 19.7%.

Financial Update

BioTelemetry exited the second quarter of 2017 with cash and cash equivalents of $26.9 million, as compared with $25.1 million at the end of the first quarter.

Guidance

Post the acquisition of LifeWatch, BioTelemetry currently expects full-year 2017 revenue in the range of $285 million to $290 million. The Zacks Consensus Estimate for full-year 2017 revenues is pegged at $231.2 million.

The company expects $82 million to $84 million of revenues in the third quarter and $89 million to $92 million in the fourth quarter. The company also expects one-time expense related to the acquisition of approximately $15 million which is further expected to be reflected in third-quarter results.

Our Take

BioTelemetry exited second quarter on a strong note with earnings exceeding the Zacks Consensus Estimate and revenues meeting the same. The raised full-year 2017 revenue guidance is also encouraging. The company also registered growth across all segments. We are encouraged to note that the company is putting efforts in product innovation through research and development. The company recently completed the acquisition of LifeWatch AG. Post acquisition, the company is looking for prospects to solidify its position in cardiac monitoring.

However, a decline in gross margin is a matter of concern.

Zacks Rank & Key Picks

BioTelemetry has a Zacks Rank #3 (Hold). A few better-ranked medical stocks are Edwards Lifesciences Corporation (EW - Free Report) , INSYS Therapeutics, Inc. (INSY - Free Report) and Align Technology, Inc. (ALGN - Free Report) . Notably, Edwards Lifesciences, INSYS Therapeutics and Align Technology sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

INSYS Therapeutics has a long-term expected earnings growth rate of 20%. The stock posted a stellar four-quarter average earnings surprise of 60.7%.

Align Technology has an expected long-term adjusted earnings growth of almost 26.6%. The stock has added roughly 26.7% over the last three months.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has gained around 5% over the last three months.

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