), a neurological device maker, reported earnings per share ("EPS")
of 38 cents in the fourth quarter of fiscal 2012, up 46% year over
year and surpassing the Zacks Consensus Estimate of 35 cents. For
the full year, EPS came in at $1.28, a penny short of the Zacks
Consensus Estimate but ahead of the previous year's adjusted EPS of
Revenues increased 13% year over year during the quarter to $58
million, marginally beating the Zacks Consensus Estimate of $57
million. Cyberonics recorded robust growth in US epilepsy sales (up
10% to $48 million) and international sales (up 33% at constant
exchange rate or CER to $9 million). The company provides vagus
nerve stimulation ("VNS") therapy for the treatment of refractory
epilepsy. During the fiscal revenues were up 15% to $219 million,
ahead of the Zacks Consensus Estimate of $217 million.
The company successfully launched the new AspireHC (High
Capacity) generator witnessing positive initial demand. The
re-designed device received US approval in January this year.
Besides, key studies were presented during the year validating the
clinical efficacy and economic value of the VNS Therapy for
Adding to the 13% revenue increase in the quarter, improved
margin performance had a positive effect on the bottom line. Gross
margin expanded 440 basis points (bps) to 92.2% during the quarter.
Despite a 7.2% rise in selling, general and administrative expenses
to $26 million and a 20% rise research and development expenses,
operating margin increased 570 bps to 31.2% during the reported
Cyberonics also benefited from a 53% year-over-year reduction in
interest expense to $46.4 million. We believe the drop in interest
expense was possible because of the $7 million retirement of debt.
The company exited the fiscal with cash and cash equivalents of
$96.6 million, up from $89.3 million at the end of fiscal 2011.
Approximately $50 million of shares were repurchased during the
Cyberonics unveiled its guidance for fiscal 2013. The company
expects to report revenues of $241−$244 million and $70−$72 million
of income from operations resulting in EPS of $1.49−$1.59. The
current Zacks Consensus Estimates of $242 million in revenues and
EPS of $1.52 for fiscal 2013 are in line with the
The company noted that the anticipated amount of medical device
tax, scheduled to be implemented from January 1, 2013, has not been
considered in the guidance for income from operations but included
in the EPS forecast.
Cyberonics witnessed an expansion in the top line on the back of
its strong position in the US and international epilepsy market.
Additionally, the company's effort to expand in Europe, Japan,
Latin America, China and India should further boost its
The company faces mounting third-party reimbursement issues
along with stiff competition in the neuromodulation space from
players such as
St. Jude Medical Inc.
Over the long term, we have a Neutral recommendation on
Cyberonics. The stock retains a Zacks #3 Rank (Hold) in the short
CYBERONICS INC (CYBX): Free Stock Analysis
MEDTRONIC (MDT): Free Stock Analysis Report
ST JUDE MEDICAL (STJ): Free Stock Analysis
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