CR Bard Inc.
), a global medical technologies and devices company, reported
second quarter 2012 adjusted earnings (excluding one-time charges
such as stock-based compensation) of $1.62 per share,
trailing the Zacks Consensus Estimate of $1.64 but surpassing
the year-ago earnings of $1.57 per share.
In the reported quarter, profits were $133.9 million (or $1.54 a
share) versus a net loss of $47.8 million (or loss of 55 cents) in
the year-ago quarter. Moderate revenue growth and lower expenses
contributed to higher net income.
Revenues increased 2% (up 4% in constant currency) year over year
to $742.6 million, but fell short of the Zacks Consensus Estimate
of $755 million. Year-over-year growth was driven by balanced
growth across the company's Vascular, Urology and Oncology
On a geographic basis, revenues in the U.S. and international
markets rose 2% and 3% (up 8% in constant currency) to $490 million
and $252.6 million, respectively. Both the U.S. and the European
markets remained soft during the quarter but sales in Japan
benefited from the discontinuation of a competitor's stent
business. Moreover, international sales were boosted by
double-digit growth in emerging markets.
Revenues from the core Vascular segment increased 3% (up 6% in
constant currency) year over year to $221.3 million. Within
Vascular, endovascular sales grew 9% led by the ClearStream
acquisition. Biopsy sales were flat year over year due to
prevailing softness in the U.S. economy. Electrophysiology ("EP")
revenues dropped 2% due to lower EP LabSystem sales (down 1%) along
with declining disposable EP sales (down 2%) and surgical graft
sales (down 7%).
Revenues from peripheral PTA rose 5%, driven by double-digit sales
from Chronic Total Occlusion (CTO) offerings. Vena Cava Filter
sales increased 2% in the reported quarter, which is the first
positive quarter in 3 years. Revenues from the stent franchise
jumped 22%, owing to the discontinuation of a competitor's product
line in Japan.
Sales from Urology division increased 3% (up 5% in constant
currency) to $188.8 million led by the company's latest targeted
temperature management products. Revenues from the basic drainage
division were flat in the U.S and up 1% globally. I.C. Foley sales
dropped 7% and 2% in the U.S. and globally, respectively as these
segments faced continued pricing pressure.
Continence segment's sales dropped 6% mostly due to the closure of
the Contigen product line. Following the launch of the DIGNISHIELD
product, the company's fecal management products posted
double-digit growth in the quarter, which partially offset the
decline in women's health products sales.
Urological specialties sales were down 10%, with a 14% fall in
brachytherapy sales. However, revenues from StatLock catheter
stabilization line inched up 1% in the quarter.
The company's Oncology segment reported revenue growth of 3% (up 4%
in constant currency) year over year to $199.1 million.
Peripherally inserted central catheters/PICC sales climbed 7% while
Port revenues were flat due to inventory timing-related issues in
Japan. Revenues from vascular access ultrasound products jumped 10%
in the quarter.
Sales from Surgical Specialties business were $111.4 million, flat
year over year (up 2% in constant currency). Soft tissue repair
business grew 2% whereas natural tissue products sales dipped 4% in
the quarter. Synthetic hernia products reported double-digit sales
strongly backed by new products. Revenues from hernia fixation
business plunged 26%, hurt by increased competition. Both the
performance irrigation business and the hemostasis segment inched
down 1% in the quarter.
Gross margin dropped 50 basis points from the year-ago quarter to
61.5%. Operating margin was 27.1% versus 28.4% in the year-ago
Marketing, selling and administrative expenses (as a percentage of
sales) increased to 27.7% from 27.1% a year ago. Research and
development expenses, as a percentage of sales, also increased to
6.7% from 6.5%.
C.R. Bard ended second quarter 2012 with cash, restricted cash and
short-term investments of $769.4 million, down 4.4% on a sequential
basis. Total debt decreased 2% sequentially to $1,214 million.
For third quarter 2012, C.R. Bard expects constant currency revenue
growth in the range of 3% to 5%. The company expects adjusted
earnings in a band of $1.60 and $1.64 a share. The current Zacks
Consensus Estimates for revenue and earnings per share for full
year 2012 are $3025 million and $6.68, respectively.
C.R. Bard's well-diversified end-markets and vast product portfolio
insulate it from fluctuations in any single therapeutic category.
We expect new product launches to drive organic revenue growth and
help C.R. Bard to meet its sales objective.
However, increasing competition, fluctuating currency,
pricing/volume pressure and an overall tough U.S. and European
economy remain areas of concern. C.R. Bard faces strong competition
Johnson & Johnson
). We currently have a Neutral recommendation on C.R. Bard. The
stock currently retains a Zacks #3 Rank, which translates into a
short-term "Hold" rating.
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