Abaxis Inc. (ABAX) reported an EPS of 16 cents in the first quarter fiscal
2011, missing both the Zacks Consensus Estimate and the year-ago quarter’s
earnings by a penny.
Net sales for the quarter increased 18% year over year to $35.0 million,
beating marginally the Zacks Consensus Estimate of $34 million. The sales
growth reflected the company’s strong investment in sales and marketing strategy
to support the improvement of existing products and introduction of new
products on a constant basis.
Geographically, Abaxis’ North America revenue increased 15% year over year
to $27.8 million, while international revenue increased 30% to $7.2
million.
Within the customer group, revenue for the quarter increased 12.2% and 23%
year over year in the Medical Market ($6.4 million) and Veterinary Market
($26.8 million), respectively, while Other customer groups saw a ($1.7
million) decreased of 15% year over year.
Within each of the Medical Market and Veterinary segment, Abaxis derives
revenue from the sale of instruments and consumables. During the reported
quarter, Instruments (including chemistry analyzers, hematology
instruments, coagulation analyzers and i-STAT analyzers) and Consumables
(including reagent discs, hematology reagent kits, coagulation cartridges,
i-STAT cartridges and heartworm rapid tests) sales increased 17% and 21%
year over year.
On the basis of units, the total medical and veterinary instrument sales
were 1,025 units, up 23% over the year-ago quarter. With regard to
Consumables, total medical and veterinary reagent disc sales (1.6 million
units) increased 10% year over year.
Gross margins were up 70 basis points sequentially but were down 131 bps
year over year to 56.1%, due to an increase of 21.6% in the costs. The
increase in costs were associated with the shifting of disc moulds, lower
royalty revenue and higher sales of OEM (original equipment manufacturing)
products.
Research and development expenses increased 19.2% year over year to $3.1
million and as a percentage of sales increased to 15.8% from 8.8% in the
year-ago quarter. The company is focused on the development of hemoglobin
on the disc for both the Veterinary and Medical Markets. Its main priority
is the expansion of the rapid test menu. Most of the product development
and submissions to the regulatory authorities is likely to be completed by
the end of fiscal 2010.
Sales and marketing expenses increased 34.4% year over year to $8.7
million and as a percentage of sales increased to 24.6% from 22.6% in the
year-ago quarter. Administration charges were $2.1 million, or 6.15% of
sales, down from 8.4% of sales in the year-ago quarter and 8.3% of sales
in the fourth quarter 2009.
Abaxis ended the first quarter 2011 with Cash, cash equivalents of $36.3
million as compared with $27.8 million at the end of March 2010.
The company operates in a niche market of portable medical and veterinary blood
analysis systems. Low worldwide penetration provides for substantial
growth within the industry. Furthermore, the company derives strong
recurring revenue from its razor/razor blade business model that hedges it
from any meaningful sales shortfall in the testing times.
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