Abaxis (ABAX) Q4 Earnings Beat Estimates; Dividend Raised

Abaxis, Inc.ABAX reported fourth-quarter fiscal 2016 earnings per share (EPS) of 36 cents from continuing operations, which exceeded the Zacks Consensus Estimate by a significant 12.5%. The quarter's EPS also surged 111.8% from the year-ago number. Apart from an improved top line, enhanced margins primarily contributed to the earnings upside in the fourth quarter.

Full-year adjusted earnings from continuing operations came in at $1.36, up 49% from the year-ago period.

Abaxis Inc. (ABAX) EPS BNRI & Surprise Percent - Last 5 Quarters | FindTheCompany

Total Revenue

In the fourth quarter, Abaxis delivered revenues of $56.9 million from continuing operations, reflecting a 9.4% year-over-year increase. The top line met the Zacks Consensus Estimate.

According to the company, medical sales demonstrated double-digit growth in the quarter and Vet sales were also up double digits (at constant exchange rate).

Unfavorable changes in foreign currency exchange rates reduced total revenue growth by approximately 0.5% in the fourth quarter.

Fiscal 2016 total revenue remained at $218.9 million, reflecting an increase of 8% from the fiscal 2015 level.

Segments in Detail

On a geographic-region basis, in the reported quarter, revenues from North America (accounting for 81.5% of total revenue) were up 11% at $41.8 million, while revenues from the international market (accounting for the rest) increased 2.9% to $10.5 million.

Abaxis operates under three main segments, namely Veterinary, Medical and Other. In the reported quarter, Veterinary sales comprised 81.8% of total sales; Medical sales contributed 16.7% while the remaining 1.5% was generated from Other.

Veterinary market revenues improved 9.4% year over year to $46.6 million while medical sales were down 9.2% year over year at $11 million, both primarily due to lower instrument sales. Revenues from the Other segment increased 6.7% to $0.85 million.

Abaxis also demonstrated solid consumable growth, up 14% year over year to $43.1 million, accounting for roughly 80% of the company's worldwide revenues in the reported quarter. Total Instruments sales, however, decreased 5% to $11.1 million.

Operational Updates

Fiscal fourth-quarter gross profit rose 13.7% to $32.3 million. Consequently, gross margin from continuing operations expanded 209 basis points (bps) to 56.7%.

Research and development expenses marginally declined 0.3% year over year to $4.5 million, while selling and marketing expenses fell 9.9% to $10.8 million. General and administrative expenses were down 0.7% at $4.6 million. The increased gross margin and overall 5.9% decline in operating expenses led to a 781 bps expansion in operating margin in the quarter.

Financial Update

Abaxis exited fiscal 2016 with cash, cash equivalents and short and long-term investments of $129.8 million, down from $133.1 million in fiscal 2015.

Meanwhile, Abaxis' management declared a quarterly cash dividend of 12 cents per share, representing a 9% increase from the prior quarterly dividend of 11 cents per share.

Our Take

Abaxis delivered a strong financial performance in the fourth quarter of fiscal 2016, wherein the bottom line exceeded the Zacks Consensus Estimate while the top line matched the mark. We are encouraged by the company's stupendous performance with regard to its VetScan Rapid Tests (81% increase in its annual revenue), a relatively new business that complements its VetScan reagent discs. Moreover, the strong portfolio of consumable products looks promising and is expected to generate significant cash flow down the line. However, the company faced tough currency headwinds in the international market, similar to several other U.S.-based companies with operations abroad.

Zacks Rank

Currently, Abaxis carries a Zacks Rank #3 (Hold). Some top-ranked medical product stocks are Boston Scientific Corporation BSX , Capricor Therapeutics, Inc. CAPR and Cardiovascular Systems Inc. CSII . All the three stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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