Contraception device maker-
) reported earnings per share (EPS) of 17 cents during the fourth
quarter of fiscal 2012, compared with a net loss of 8 cents per
share in the year-ago quarter. The reported EPS surpassed the
Zacks Consensus Estimate by 5 cents. The improvement in the
bottom line was primarily driven by low interest and other
expenses during the quarter. For fiscal 2012, EPS was 16 cents
compared with a net loss of 25 cents per share in 2011.
Revenues in the reported quarter recorded a robust hike of
21.5% year over year (up 23.6% at constant exchange rate or CER)
to $40.7 million, beating of the Zacks Consensus Estimate of $40
million. This includes a 19.3% increase in domestic sales to
$32.2 million and growth of 30.8% in international sales to $8.5
million. Net sales for fiscal 2012 were $140.7 million, up 10.8%
and beating the Zacks Consensus Estimate of $140 million.
Revenues remained in line with the company's guided range of
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 13.5% 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 7.1% 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 20.6% 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 expanded its U.S.
physician penetration by enrolling 427 new physicians into
preceptorship, certifying approximately 288 physicians and
transitioning approximately 77 physicians to performing
procedures in the office setting. To date, around 16,000
physicians are fully equipped to perform the Essure
Conceptus reported gross profit of $34.2 million, up 22.5%
from $27.9 million in the fourth quarter of 2011. Gross margin
during the quarter expanded 66 basis points (bps) to 84.1%.
Operating expenses declined 19.1% to $24.9 million, driven by
the company's lower marketing expenditures related to the
direct-to-consumer campaign, lower selling expenses associated
with sales force headcount reductions and lower legal fees. As a
result, operating margin during the reported quarter expanded a
huge 3133 bps to 22.9%.
Conceptus exited the fiscal with cash, cash equivalents and
short-term investments of $69.9 million compared with $101.4
million at the end of fiscal 2011. In the third quarter, the
company's cash flow from operations was $11.2 million.
Conceptus provided its fiscal 2013 outlook. The company expects
annual revenues in the range of $155-$159 million, up 10%-13%
year over year. The current Zacks Consensus Estimate of $159
million remains at the upper end of the guided range.
The exit of Adiana from the permanent birth control market
should be highly beneficial for Conceptus. The company is upbeat
regarding the fact that under the Patient Protection and
Affordable Care Act of 2010 ("PPACA"), the entire list of
contraceptive methods approved by the U.S. Food and Drug
Administration ("FDA"), including the Essure procedure, will be
covered by all private insurance plans. We believe that these
recent tailwinds will largely benefit the company's sales
performance as it will increase access and affordability of the
Essure procedure worldwide. However, we remain concerned about
the limited growth visibility arising from difficult
macroeconomic conditions, resulting in a weak hysteroscopic
Currently, Conceptus retains a Zacks Rank #2 (Buy). Other
medical stocks such as
Acadia Healthcare Company
), carry a Zacks Rank #1 (Strong Buy) and warrant a look.
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