Provider of portable blood analysis systems for human and
) reported third quarter fiscal 2013 earnings per share (EPS) of
22 cents, a beat of 10% over the Zacks Consensus Estimate. The
result also sailed past the year-ago EPS by 69.2%.
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Quarter in Detail
Revenues soared 32% year over year to $49.8 million, surpassing
the Zacks Consensus Estimate of $46 million in the quarter. On a
geographic basis, revenues from North America (accounting for 84%
of total revenues) were up 31% to $41.8 million while revenues
from the international market (representing 16%) climbed 33% to
$8 million due to robust growth across Europe and Asia.
Within the customer group, Veterinary market revenues witnessed a
significant upside of 40% on a year-over-year basis to $39.9
million, while sales in the Medical market increased 10% year
over year growth to roughly $9 million. Excluding sales to the
U.S. government, worldwide Medical sales escalated 15% year over
year to $8.6 million. However, sales from the Other customer
group declined 22.3% year over year to approximately $1 million.
Total consumable sales increased 22% from the prior-year quarter
while instrumental sales increased 54% on a year-over-year basis.
Sales of medical and veterinary reagent discs surged 31% to $26.7
million in the third quarter. Total medical and veterinary
instrument unit sales improved 52% to 1,818 units. Moreover,
service revenue from Abaxis Veterinary Reference Laboratories
(AVRL) maintained its growth momentum and recorded sales of $1.4
million, up 28% on a sequential basis.
With third quarter gross profit declining 27.3% year over year to
$26.1 million, gross margin also contracted 170 basis points
(bps) to 52.4%. The decline was attributed to the negative margin
on AVRL and unfavorable product mix. The company recorded higher
research and development expenses (up 46.2% to $3.8 million) and
sales and marketing (up 25.3% to $12.4 million) expenditure.
However, general and administrative expenses declined (down 31.3%
to $2.2 million) on a year-over-year basis due to absence of
legal expenses following
) lawsuit settlement. Despite the increase in operating expenses
(up 16.5% to $18.4 million), income from operations surged 67.4%
to $7.7 million, leading to a significant 330 bps expansion in
operating margin to 15.5%.
Abaxis exited the third quarter with cash and cash equivalents
and short-term investments of roughly $70 million, up from $67.5
million at the end of fiscal 2012.
Abaxis posted a strong quarter with several takeaways. The
company's robust growth in the international market amidst the
macroeconomic uncertainty is encouraging. The distribution
MWI Veterinary Supply
) and Abbott Point of Care should expand its market presence in
North America as well as Europe.
We believe that Abaxis serves a niche market and is well poised
to maintain its growth momentum. However, we are wary about the
company's increasing reliance on distributors to boost sales and
the competitive landscape with larger players.
Abaxis carries a Zacks Rank #3 (Hold). While we have a neutral
stance on the stock, medical stock like
), carrying a Zacks Rank #1 (Strong Buy) is expected to do