) reported a promising first-quarter fiscal 2015 with earnings per
share of 21 cents, beating the Zacks Consensus Estimate by 2 cents
or 10.5%. Earnings in the reported quarter also outpaced the
year-ago number of 14 cents by a massive 50%. Abaxis experienced
significant improvement in the quarter's earnings on the back of
strong revenue growth and robust increase in the operating margin
Abaxis, Inc - Earnings Surprise |
In the reported quarter, Abaxis' revenues grew 10% year over
year to $47.5 million. However, the Zacks Consensus Estimate of $47
million remains almost in line with the company's revenue
Segment in Detail
On a geographic-region basis, revenues from North America
(accounting for 80.8% of total revenues) were up 10.6% to $38.3
million, while revenues from the international market (representing
19.2%) increased 7.3% to $9.1 million. Sales in Europe grew 11% to
$7.3 million while the same in Pacific Rim declined by 6% year over
year to approximately $1.9 million.
Abaxis operates in three main segments, namely Veterinary,
Medical and Other. In the reported quarter, Veterinary sales
comprised 82.9% of total sales; 15.3% was from Medical sales while
the remaining 1.8% was from Other.
Veterinary market revenues increased 8.3% year over year to
$39.4 million, while sales in the Medical market rose 20% year over
year to $7.2 million. Service revenues from Abaxis Veterinary
Reference Laboratories (AVRL) escalated 55% year over year to $3.4
In the reported quarter, total medical and veterinary reagent
disc revenues rose 18% to $26.9 million. Moreover, total unit sales
of medical and veterinary reagent discs in the first quarter
totaled 2.1 million units, up 18% from the year-ago
However, total medical and veterinary instrument sales declined
12% year over year to $7.6 million in the quarter. On the other
hand, total unit sales of medical and veterinary instruments were
1,077 units, down 12% from the prior-year quarter.
Based on an encouraging top line, the fiscal first-quarter gross
profit rose 14.3% to $23.9 million. Consequently, gross margin
expanded 189 basis points (bps) year over year to 50.3%.
Research and development expenses were $3.9 million, up 24.4%.
However, selling and marketing expenses declined 4.5% to $9.6
million. General and administrative expenses also dipped 4.8% year
over year to $2.9 million. Operating margin during the quarter
expanded 493 bps to 15.7%.
Abaxis exited the quarter with cash, cash equivalents and short-
and long-term investments of $125.7 million versus $121.2 million
as on Mar 31, 2013.
Abaxis' management declared a quarterly dividend of 10 cents per
common share, which will be paid to all shareholders of record as
of the close of the business on Sep 3, 2014. The dividend will be
paid to the shareholders on Sep 17, 2014.
We are encouraged with Abaxis' first-quarter fiscal 2015
outcome. This is particularly significant as the company has been
able to overcome its disappointing performance over the last few
quarters, characterized by three consecutive earnings estimate
misses. According to the company, Abaxis' new vet contract along
with the new VetScan Instruments sales contributed to the
impressive revenue growth in North America, which is the largest
geographical segment of the company.
Further, management has spoken highly about the two strategic
long term agreements Abaxis has signed with VCA Antech. Management
is confident that both these agreements will benefit Abaxis and
will serve as potential contributors to the company's increased
level of sales in the upcoming years. In the reported quarter,
Abaxis' gross margin has already expanded by a significant amount
and at present, the company is involved in improving its sales
tools in an attempt to further boost the gross margin. We are also
encouraged with the substantial increase in operating margin that
improved the quarter's bottom line.
Currently, Abaxis carries a Zacks Rank #3 (Hold). Some
better-placed medical products stocks that are worth a look are
Alere Inc. (
), Cardiovascular Systems Inc. (
) and CareFusion Corporation (
). All these stocks carry a Zacks Rank #2 (Buy).
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