) reported second-quarter fiscal 2014 earnings per share of 18
cents, missing the Zacks Consensus Estimate by 2 cents. This
reflects a fall of 68% from the year ago quarter, at 58 cents.
Revenues improved 4% year over year to $45.9 million, but lagged
the Zacks Consensus Estimate of $48 million. It generated
revenues of $44.2 million in the prior year quarter.
Segment in Detail
On a geographical-region basis, revenues from North America
(accounting for 81.2% of total revenues) rose 4% to $37.3
million, while revenues from the international market
(representing 18.5%) increased 2% to $8.5 million. However,
excluding the impact of the CRO deal that was closed in the first
quarter of fiscal 2013, overseas revenues improved 11% year over
Abaxis operates three main segments, namely Veterinary, Medical
and Other. In the reported quarter, 16% of total sales were
medical sales, 83% were vet sales and 1% other.
Veterinary market revenues grew 8% year over year to $37.9
million, while sales in the Medical market declined 10% year over
year to roughly $7.2 million. Excluding sales to the U.S.
government, worldwide Medical sales decreased 8% year over year
to $6.9 million. Sales from Other segment declined 32% year over
year to approximately $0.8 million.
The fiscal second-quarter gross profit was $21.8 million, as
compared to $23.1 million in the previous year quarter, a
downfall of 5.4%. In terms of basis points, it contracted a
massive 450 basis points (bps) to 47.7% from 52.2%. The decline
was attributed to unfavorable sales mix consisting of lower
margin of vet consumable, with higher instrument and fewer disc
Research and development expenses were $3.4 million or 7.5% of
revenue, compared with $3.5 million or 8% of revenue in the prior
Selling and Marketing Expenses amounted to $9.9 million or 21.6%
of revenue compared with $11.5 million or 26% of revenue in the
year ago period.
General and administrative expenses of $2.9 million, accounted
for 6.3% of revenues, compared with $4.6 million or 10.4% in
second quarter fiscal 2013.
On a reported basis, Abaxis posted net income of $4 million
compared with $12.9 million in the prior-year quarter. It must be
however, noted that the year-ago figure included gains from a
legal settlement of $17.3 million.
Abaxis exited the quarter with cash, cash equivalents and short
and long term investments of $103.9 million as of Sep 30, 2013
versus $95.2 million as on Mar 31, 2013.
Abaxis continues to fall short of expectations, as it has missed
the previous two quarterly estimates as well. Barring a slight
growth in the veterinary market, the overall quarterly
performance was nevertheless weak.
The consistent downfall in margin is a serious cause of concern
as it might have an impact on the bottom line performance of the
company. Moreover, the company's dependence on the distributors
to sell its products has to be tactfully managed as smooth long
term relationships with the vendors ultimately ensure healthy
business for the company. Low worldwide penetration rates and a
tough competitive market further lower the confidence of the
investors on the future growth prospects of the company.
Currently, Abaxis carries a Zacks Rank #5 (Strong Sell). Other
well-placed stocks that are worth a look are
Bio-Rad Laboratories, Inc.
INSYS Therapeutics, Inc.
), each carrying a Zacks Rank #1 (Strong Buy), and
Boston Scientific Corp.
), carrying Zacks Rank #2 (Buy).
ABAXIS INC (ABAX): Free Stock Analysis Report
BIO-RAD LABS -A (BIO): Free Stock Analysis
BOSTON SCIENTIF (BSX): Free Stock Analysis
INSYS THERAP (INSY): Free Stock Analysis
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