Contraception device maker,
) reported earnings per share (EPS) of 5 cents in the first
quarter of 2013, a massive improvement from a net loss of 9 cents
per share in the year-ago quarter. The reported EPS betters the
Zacks Consensus Estimate of a loss of 2 cents.
Quarter in Detail
Revenues in the reported quarter recorded a robust hike of
17.5% year over year to $34.1 million, beating the Zacks
Consensus Estimate of $32 million. This includes a 21.7% jump in
domestic sales to $26.5 million and growth of 5% in international
sales to $7.6 million.
Even amid several macroeconomic headwinds in the form of
persistent unemployment and limited consumer spending, the
improvement in the reported quarter primarily came on the back of
a 17.6% increase in organic revenues and the exit of the
company's direct peer
) Adiana from the permanent birth control market. The conversion
of Adiana's market share added 4.6% to the company's growth in
the reported quarter. Moreover, Conceptus' gradual progress in
improving commercial execution is steadily accelerating its
Conceptus derives a major share of its revenues from the
Essure permanent birth control system. The domestic sales for
Essure during the quarter were up 22.2% year over year.
Sales of the Essure system depends on the number of physicians
trained to perform the procedure. Conceptus is striving toward
making the system available worldwide by raising consumer and
physician awareness as well as training physicians to perform the
During the reported quarter, the company improved its U.S.
physician penetration by enrolling 341 new physicians into
preceptorship, certifying approximately 83 physicians and
transitioning approximately 47 physicians for procedures
performed in the office setting. To date, around 16,300
physicians are fully equipped to perform the Essure
Conceptus reported gross profit of $28.5 million, up 19.3%
from the prior-year quarter. As a result, gross margin during the
quarter expanded 120 basis points (bps) to 83.4%.
Operating expenses declined 11.8% to $24.4 million, driven by
the company's lower marketing expenditures related to the
direct-to-consumer campaign. Consequently, operating income came
in at $4 million compared with $3.9 million loss incurred in the
Conceptus exited the quarter with cash, cash equivalents and
short-term investments of $87 million compared with $69.9 million
at the end of 2012.
In a separate story, Conceptus inked a definitive merger
agreement with German-based
). Bayer will initiate a public tender offer to acquire all
shares of the Conceptus common stock within the next ten
Based on a purchase price of $31 per share, Bayer will pay
$1.1 billion for the acquisition. While we await further details
from Conceptus, the company pulled back its guidance for 2013 as
the acquisition is expected to close by mid-2013.
The news of the buyout sparked investor optimism as shares of
Conceptus jumped 19.54% (or $5.06) on Monday, Apr 29 to reach a
new 52 week high of $30.97 on the day of the announcement.
However, we keep an eye on further developments as the closing
price of $30.96 on Monday hovers around the purchase price of $31
per share. Thus, Conceptus' shareholders might not benefit a
great deal from the buyout.
Coming back to the quarterly results, Conceptus reported
another solid quarter to surpass the Zacks Consensus Estimate.
Margin expansion was another upside in the quarter. Notably, the
exit of Adiana from the permanent birth control market continues
to support Conceptus' growth. However, we remain concerned about
the limited growth visibility arising from difficult
macroeconomic conditions, resulting in a weak hysteroscopic
Currently, Conceptus carries a Zacks Rank #3 (Hold). Other
medical stock such as
Intuitive Surgical Inc.
), carrying a Zacks Rank #2 (Buy) warrants a look.
BAYER A G -ADR (BAYRY): Free Stock Analysis
CONCEPTUS INC (CPTS): Free Stock Analysis
HOLOGIC INC (HOLX): Free Stock Analysis
INTUITIVE SURG (ISRG): Free Stock Analysis
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