Markets

C.R. Bard (BCR) Beats Q3 Earnings & Sales, FY16 View Up

Murray Hill, NJ-based C.R. Bard Inc . BCR reported adjusted earnings of $2.64 in the third quarter of 2016, exceeding the Zacks Consensus Estimate by 9 cents and also improving 15.8% from the year-ago quarter. Adjusted earnings were also better than management's guided range of $2.51 to $2.55.

Net sales increased 8.8% on a year-over-year basis to $941.9 million, better than the Zacks Consensus Estimate of $932 million. At constant currency (cc), net sales increased 10% from the year-ago quarter, surpassing management's guided range of 8% to 9%.

Quarter Highlights

Organic growth was 6%, slightly lower than 6.4% reported in the previous quarter. However, the figure was in line with management's guidance of 6% to 6.5%.

Unfavorable foreign currency exchange rate impact was 90 basis points (bps) year over year, higher than 70 bps in the second quarter of 2016.

CR Bard Inc. - Earnings Surprise | FindTheBest

U.S.net sales rose 7% to $646.0 million. International sales increased 14% on a reported basis to $295.9 million. At cc, international sales improved 17% in the quarter.

At cc, Europe and other international territories reported sales increase of 5% and 19%, respectively. Sales in Japan surged 44%, while emerging market sales (10% of total sales) remained strong.

Segment Details

Vascular product sales increased 3% year over year (up 4% at cc) to $258.1 million. Excluding the Gore royalty payment, divestiture of Electrophysiology products to Boston Scientific (BSX), sales of products from Liberator Medical and improved sales in Japan, global vascular sales grew 5%. Vascular platform sales in the U.S. increased 2%, whereas international sales were up 10%.

Coming to the surgical graft platform under the vascular product line, sales were flat in the quarter on a year-over-year basis. Sales at the Endovascular business improved 7%. Within the Endovascular business, peripheral PTA line sales increased 7%, driven by accelerating demand for the Lutonix drug-coated balloon (DCB) in the U.S.

BARD C R INC Price, Consensus and EPS Surprise

BARD C R INC Price, Consensus and EPS Surprise | BARD C R INC Quote

Notably, growth was commendable in the vascular product line as the year-over-year comparisons were difficult for the segment, due to the agreement of C.R. Bard with Boston Scientific for distribution of Lutonix DCB in the second and third quarter of 2015. Nevertheless, management at C.R. Bard noted good sequential momentum in both the U.S. and international markets for the product line. Sales of biopsy products climbed 10%. Sales from the stent business increased 6%, while Vena cava filter line sales decreased 18% in the quarter.

Coming to Urology, sales increased 14% on a year-over-year basis (up 15% at cc) to $242.1 million. Excluding the acquisition of Liberator Medical and the company's joint venture in Japan, sales in the U.S. increased 2%. International sales improved 7% on a year-over-year basis.

Within Urology, sales from the basic drainage business soared 19% globally. Excluding the two acquisitions, sales grew 5% in international markets and 4% in the United States.

Sales of Infection Control Foley increased 1% in international markets but remained flat on a year-over-year basis in the U.S. Sales from the continence business surged 28%, driven by higher contributions from recent acquisitions.

Temperature management product sales were up 4%. Sales from urological specialties were up 9%, including the Brachytherapy product line, which increased 6% in Japan. StatLock catheter stabilization line reported sales growth of 2% in the reported quarter.

Oncology sales were up 8% (up 9% at cc) to $258.4 million. Excluding the Japan acquisition, sales climbed 3% in the U.S. and 15% outside the U.S.

PICC sales grew 8% globally while port line sales were up 9% on a year-over-year basis. Meanwhile, sales from the vascular access ultrasound product line were up 8%. Lastly, sales from the dialysis catheter business rose 7% in the quarter.

Surgical Specialties sales increased 13.6% on both reported and cc basis to $158.8 million. Performance irrigation business declined 6% in the reported quarter.

Sales at the bio-surgery business surged 22% on a year-over-year basis, while soft tissue repair business grew 14%, delivering the strongest quarter in six years. Within soft tissue, synthetic hernia products sales grew 23% from the year-ago quarter.

Moreover, hernia fixation business sales improved 34%, while natural tissue products decreased 35% on a year-over-year basis.

Sales from the 'other product line' increased 2.9% on a year-over-year basis to almost $24.5 million.

Product Pipeline Update

C.R. Bard stated that DCB long lesion and in-stent restenosis supplements are under review with the U.S. FDA. The company expects to gain approval of both of these expanded indications early next year.

For the Below-the-Knee product, the company announced the receipt of an Investigational Device Exemption (IDE) approval from the U.S. FDA for its Lutonix 014 Drug Coated Balloon (DCB) to extend the 'primary endpoint' of the product to a 6-month time frame. The Lutonix 014 DCB is an angioplasty balloon which uses a 'minimal-dosage coating' of the paclitaxel drug. The approval for the Lutonix 014 device marks the clinical trial for treatment of stenosis or occlusion of arteries below the knee (with a cumulative lesion length up to 320 mm).

In Japan, the company's Shonin submission for the Lutonix SFA indication is under review. The company anticipates a mid-2017 launch. In China, the company continues to enroll patients for its Levant China study that began last quarter.

At the Vascular segment, the final PMA module of 'LifeStream balloon expandable covered stent trial' was submitted last quarter with the FDA. Once approved, the company expects its launch in mid-2017.

The Covera next-generation AV access circuit stent graft platform of the company received IDE approvals for both the fistula and the graft study. Notably, both the studies initiated recruitment in the reported quarter.

VENOVO venous stent IDE study is also in active recruitment and the company expects a positive feed back from Europe in this platform. C.R. Bard expects to continue enrollment throughout this year with follow-up in 2017 and PMA submission in 2018.

In the third quarter, the company launched its female version of the MAGIC3 GO self-hydrating hydrophilic catheter in Europe. In fact, C.R. Bard started direct-to-consumer advertising of this product in the U.S.

The company expects to start enrollment under its new IDE study of neurogenic fever prevention and control. Coming to Oncology, C.R. Bard is awaiting a 510(k) clearance of the new Provena family of PowerPICCs designed to reduce the risk of DVT.

C.R. Bard also expects to launch the additional versions of PowerMidline and PowerGlide Pro in early 2017. The products were launched last quarter and have received highly positive feedback.

In BioSurgery, the company is gearing up for the launch of the Tridyne aortic sealant in the first quarter of fiscal 2017. Additionally, the company is scheduled to launch Progel Emerald lung sealant in the second quarter of fiscal 2017. Notably, the Progel platform has been devised to improve visibility during minimally invasive and robotic thoracic surgery.

In the hernia repair platform, the company continues to launch 'Phasix resorbable mesh sizes'. Additionally, expansion of the company's XenMatrix AB platform with multiple new sizes is on track. Notably, in mesh fixation, the company launched the 15-count version of its OptiFix resorbable fixation device. Further launches in this category are expected in the first half of 2017.

Operating Performance

Adjusted gross margin expanded 150 basis points (bps) on a year-over-year basis to 62.6%. Favorable product mix (110 bps) and cost improvements (100 bps) were partially offset by pricing pressure (10 bps) and unfavorable foreign exchange rate (50 bps).

Marketing, selling & administrative expenses increased 10.3% year over year to $272.6 million. The rise was primarily due to acquisition-related expenses. Research & development (R&D) expenses increased 13.8% to $74.2 million.

Guidance

For the fourth quarter of 2016, sales growth is forecasted between 9.5% and 10.5%. At cc, management estimates sales growth in the 10% and 11% band. Notably, this estimates organic growth between 6% and 7% for the fourth quarter. Adjusted earnings are projected in the range of $2.70 to $2.75 per share, demonstrating 11% to 13% growth on a reported basis.

For full-year 2016, C.R. Bard now projects organic revenue growth of around 7%. The company expects full-year constant currency sales growth between 9% and 10% with reported sales growth between 8% and 9%, implying the same currency headwind of about 1%.

Earnings are forecasted in the range of $10.23 to $10.28 per share, up from the earlier guided range of $10.10 to $10.20, reflecting year-over-year growth of 13%. Currency headwind is expected to have a 23--25 cent impact on full-year 2016 results.

Zacks Rank & Key Picks

Currently, C.R. Bard carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader medical sector are ABIOMED Inc. ABMD , AngioDynamics Inc. ANGO and Glaukos Corporation GKOS . Notably all the companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here

ABIOMED has a long-term expected earnings growth rate of approximately 26.7%. Notably, the stock represents an impressive one-year return of 29.6%.

AngioDynamics has a long-term expected earnings growth rate of 15.00%. The company posted a solid one-year return of 39.2%.

Glaukos Corporation recorded a stellar one-year return of almost 69.7%. Notably, the company posted positive surprises in the past four quarters, the average being 110.9%.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ANGIODYNAMICS (ANGO): Free Stock Analysis Report

ABIOMED INC (ABMD): Free Stock Analysis Report

BARD C R INC (BCR): Free Stock Analysis Report

GLAUKOS CORP (GKOS): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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.

In This Story

ABMD ANGO GKOS

Other Topics

Earnings Stocks

Latest Markets Videos