Back to top

Image: Bigstock

Intersect ENT (XENT) Reports Narrower-Than-Expected Q4 Loss

Read MoreHide Full Article

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.

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


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.

Margins

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.

Cash Position

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.

2020 Guidance

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.

Our Take

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%.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>