Intersect ENT Inc. XENT reported fourth-quarter 2019 loss per share of 25 cents, narrower than the Zacks Consensus Estimate of a loss of 35 cents. However, the reported loss is significantly wider than the year-ago loss of 16 cents.
Full-year loss per share was $1.37, significantly wider than the year-ago loss of 76 cents. However, the metric was narrower than the Zacks Consensus Estimate of loss per share of $1.48.
Revenues in Detail
Reported revenues in the fourth quarter declined 3.1% year over year to $31.8 million but beat the Zacks Consensus Estimate by 2.9%. The year-over-year downside resulted from lower unit sales of the PROPEL product portfolio. However, SINUVA contributed 4% to fourth-quarter 2019 revenues.
For the year, revenues were $109.1 million, reflecting a 0.6% increase from the year-ago period. Revenues beat the Zacks Consensus Estimate by 0.4%. The year-over-year upside resulted from growth in the adoption of SINUVA, which contributed 4% to 2019 revenues.
Cost of sales was $7.2 million in the reported quarter, up 13.1% year over year. Gross profit declined 7.1% to $24.5 million. Gross margin was 77.3%, reflecting a contraction of 326 basis points (bps) year over year.
Selling, general and administrative expenses were up 3.5% to $27.2 million in the quarter under review. Research and development expenses were $5.8 million, up 1.5% year over year. Adjusted operating expenses were $33.1 million in the fourth quarter, up 3.1% year over year.
The company reported adjusted operating loss of $8.5 million, wider than the year-ago adjusted operating loss of $5.7 million.
Intersect ENT exited the year with cash, cash equivalents and short-term investments of $90.6 million compared with $100.8 million at the end of 2018.
Intersect ENT issued revenue guidance with its preliminary results on Jan 13, 2020. The company reiterated its revenue expectations for the year at $115-$119 million. The Zacks Consensus Estimate for the metric is pegged at $117.6 million.
The company expects quarterly revenue growth to improve throughout the year, with first-quarter 2020 revenues likely to be flat compared with the first quarter of 2019.
Gross margin is estimated to be 70-75%. However, quarterly margins are expected to decline in the first half of the year before improving.
Operating expenses are expected to be between $141 million and $145 million.
Intersect ENT ended the year on a disappointing note, with a wider net loss per share along with a year-over-year decline in revenues.
However, we are upbeat about the company's revenue growth on the increased adoption of the SINUVA Sinus Implant. Management is optimistic that a renewed focus on PROPEL market development should enhance SINUVA product access. The increase in customer adoption of SINUVA buoys optimism as well.
However, the pending J code reimbursement rate from Centers for Medicare & Medicaid Services for 10% of the population covered under Medicaid and Medicare is disappointing. Declining year-over-year revenues, resulting from lower sales of the PROPEL product portfolio, and wider loss per share are other headwinds for the company.
Zacks Rank & Other Key Picks
Intersect ENT currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks, which reported solid results this earnings season, are Stryker Corporation SYK, STERIS plc STE and ResMed Inc. RMD.
Stryker delivered fourth-quarter 2019 adjusted earnings per share (EPS) of $2.49, outpacing the Zacks Consensus Estimate by 1.2%. Its fourth-quarter revenues of $4.13 billion surpassed the consensus estimate by 0.7%. The company currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
STERIS reported third-quarter fiscal 2020 adjusted EPS of $1.45, outpacing the Zacks Consensus Estimate by 1.4%. Net revenues of $774.3 million outpaced the consensus estimate by 3.3%. The company carries a Zacks Rank #2 at present.
ResMed currently carries a Zacks Rank #2. It reported second-quarter fiscal 2020 adjusted EPS of $1.21, surpassing the Zacks Consensus Estimate by 19.8%. Its revenues of $736.2 million outpaced the consensus mark by 1.5%.
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