Provider of portable blood analysis systems for human and
) reported fourth-quarter fiscal 2013 earnings per share ("EPS")
of 30 cents, a beat of 3 cents over the Zacks Consensus Estimate.
The result also sailed past the year-ago EPS by 42.8%.
Considering a $17.5 million gain from the company's litigation
settlement in the second quarter of fiscal 2013, the annual EPS
was pegged at $1.23, compared with the year-ago 58 cents. The
Zacks Consensus Estimate for EPS in fiscal 2013 was 80 cents.
Revenues soared 17% year over year to $50 million, although
missing the Zacks Consensus Estimate of $51 million in the
quarter. For the full year, revenues came in at $186 million,
recording annualized growth of 19% and ahead of the Zacks
Consensus Estimate by a million.
Quarter in Detail
On a geographic basis, revenues from North America (accounting
for 84% of total revenues) were up 18% to $41.9 million, while
revenues from the international market (representing 16%) climbed
10% to $8.1 million. Even amid a challenging macroeconomic
scenario in Spain and Italy, international growth came as an
encouragement for the company.
According to ABAX, this was primarily on the back of growth in
its higher margin consumable sales that represented 72% of the
total revenue in the reported quarter.
Within the customer group, Veterinary market revenues
witnessed a significant upside of 25% on a year-over-year basis
to $42.9 million, while sales in the Medical market declined 18%
year over year to roughly $6.3 million. Excluding sales to the
U.S. government, worldwide Medical sales decreased 20% year over
year to $5.7 million.
The overall disappointing performance in the medical business
during the quarter was primarily due to the transition from a
direct sales model to a distribution model with
). However, sales from the Other customer group declined 2.8%
year over year to approximately $758 million.
Total consumable sales increased 16% from the prior-year
quarter, while instrumental sales increased 8% on a
year-over-year basis. Sales of medical and veterinary reagent
discs surged 14% to $27 million in the fourth quarter. Total
medical and veterinary instrument unit sales improved 13% to
1,485 units. Moreover, service revenues from Abaxis Veterinary
Reference Laboratories (AVRL) maintained its growth momentum and
recorded sales of $1.8 million, up 31% on a sequential basis.
Despite a 12% increase in the fourth-quarter gross profit to
$26.2 million, gross margin contracted 230 basis points (bps) to
52.5%. The decline was attributed to lower ASPs on medical
products sold to Abbott and higher sales of other low-margin
The company recorded higher research and development expenses
(up 2.5% to $3.2 million) and sales and marketing (up 1% to $11.3
million) expenditure and general and administrative expenses (up
3.2% to $2.7 million) on a year-over-year basis. Despite the
increase in operating expenses (up 1.5% to $17.2 million), income
from operations surged 39.5% to $8.9 million, leading to a
significant 292 bps expansion in operating margin to 17.9%.
Abaxis exited the fiscal with cash and cash equivalents and
short-term investments of roughly $78.3 million, up from $67.5
million at the end of fiscal 2012.
In spite of number of positives including quarterly and fiscal
earnings beat, we are not so encouraged with quarter's result of
Abaxis, which seems quite sluggish. The difficult economic
conditions in Europe are still taking a toll on the company's
In addition, the distribution relationship with Abbott is yet
to bring fruitful outcomes. Besides, we are wary about the
company's increasing reliance on distributors to boost sales and
the competitive landscape with larger players. However, we
believe that Abaxis serves a niche market and is well poised to
maintain its growth momentum.
Abaxis carries a Zacks Rank #3 (Hold). Medical products
companies such as
Health Net Inc.
), which carry a Zacks Rank #1 (Strong Buy) are worth
ABAXIS INC (ABAX): Free Stock Analysis Report
ABBOTT LABS (ABT): Free Stock Analysis Report
CYBERONICS INC (CYBX): Free Stock Analysis
HEALTH NET INC (HNT): Free Stock Analysis
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