OrthofixOFIX reported fourth-quarter 2018 adjusted earnings of $55 cents per share, up 5.8% year over year. The figure beat the Zacks Consensus Estimate by 17%. Adjusting for the operating loss incurred due to the acquisition of Spinal Kinetics, adjusted EPS in the quarter was 62 cents, reflecting 19.2% growth over the prior-year quarter.
Reported EPS in the quarter came in at 46 cents, showing a massive year-over-year surge of 475%.
For the full year, the company delivered an adjusted EPS of $1.79, marking an increase of 10.5% from a year ago. The bottom line beat the Zacks Consensus Estimate by 2.3%.
Revenues in the fourth quarter came in at $121.1 million, up 3.6% year over year. The figure, however, missed the Zacks Consensus Estimate by 0.6%. Excluding contributions from Spinal Kinetics, net sales increased 1.4% on a reported basis and 1.7% at constant exchange rate or CER.
For the full year, revenues totaled $453 million, up 4.4% from the year-ago period. The top line missed the Zacks Consensus Estimate by a meager 0.2%.
The key operating segment of Orthofix is Orthofix Spine which comprises product lines like Bone Growth Therapies, Spinal Implants, Biologics, Orthofix Extremities. For the quarter under review, revenues from Bone Growth Therapies totaled $52.8 million, up 6.1 % year over year both on a reported basis and at CER.
Spinal implants posted revenues of $24.9 million, up 17.9% (18.5% at CER). This included $3.59 million from spinal kinetics. Biologics recorded revenues of $16 million, down 4.8%, both on a reported basis and at CER. Revenues from Orthofix Extremities grossed $27.2 million, down 6.4% on a reported basis and 3.6% at CER.
In the fourth quarter of 2018, gross profit increased 2.3% year over year to $95.4 million. However, gross margin contracted 100 basis points (bps) to 78.8%. Adjusted operating profit declined 28% from the year-ago quarter to $12.8 million. The decline was led by a year-over-year increase in operating expenses. As a result, operating margin contracted 472 bps to 10.6%.
Orthofix exited 2018 with a cash equivalent of $69.6 million compared with $81.2 million at the end of 2017. Net cash from operating activities at the end of 2018 was $49.9 million, reflecting an increase from $38.9 million in the year-ago period.
Guidance for 2019
Orthofix issued the 2019 financial guidance. Adjusted EPS at the end of 2019 is projected in the band of $1.75-$1.82 million. The Zacks Consensus Estimate of $1.86 is above the high end of the guidance. Revenues at the end of 2019 are projected in the range of $472-$477 million. The Zacks Consensus Estimate of $480.5 million is also above the high end of the guidance provided by the company.
Orthofix ended 2018 on a mixed note with earnings surpassing estimates but revenues missing the same by a narrow margin. Barring Extremities and Biologics, the other key operating segments saw year-over-year revenue growth. It is concerning to note that both gross and operating margin contracted in the fourth quarter. However, the recent FDA approval of the M6-C Artificial Cervical disc reflects the steady progress in the company's spine business.
Zacks Rank & Other Key Picks
Abbot t report ed fourth-quarter 2018 adjusted EPS of 81 cents, in line with the Zacks Consensus Estimate. Revenues of $7.77 billion were below the Zacks Consensus Estimate of $7.79 billion. The stock has a Zacks Rank #2 (Buy).
AngioDynamics' fiscal second-quarter adjusted EPS of 22 cents exceeded the Zacks Consensus Estimate by a penny. Revenues totaled $91.5 million, beating the consensus estimate by 2.9%. The stock carries a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.
CONMED delivered fourth-quarter adjusted EPS of 73 cents, in line with the Zacks Consensus Estimate. Revenues of $242.4 million beat the Zacks Consensus Estimate of $229.2 million. The stock carries a Zacks Rank of 2.
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