American Medical Systems Holdings, Inc. (AMMD) reported fiscal first-quarter earnings per share of 29 cents, outperforming both the Zacks Consensus Estimate and the year-ago earnings of 25 cents. EPS results came in higher than the company’s own expectations of 23 to 26 cents.
Sales
Total revenues in the first quarter increased 9.1% year over year to $134.9 million. Excluding a favorable foreign currency translation, net sales increased 7.1% year over year.
In terms of business segments: Men’s Health sales increased 8.4% year over year to $64.5 million. Growth was primarily due to higher demand for the Erectile Restoration product line, partly offset by lower demand for Male Continence products.
Women’s Health revenues increased 17.8% year over year to $42.7 million. Growth can be primarily attributed to higher sales of Pelvic Floor Repair products buoyed by the launch of Elevate anterior in mid-2009. BPH Therapy revenues increased 2.1% year over year to $25.9 million.
Geographically, the U.S. contributed 73% to total revenues and increased 9.6% year over year. International revenues contributed the balance and increased 7.8% year over year.
American Medical witnessed an expansion in margins in the first quarter. Gross margin increased 330 basis points (bps) year over year to 84.4%. Operating margin increased 270 bps year over year to 27.0%.
Balance Sheet and Cash Flow
American Medical ended the first quarter with cash and short-term investments of $59.9 million, registering a sequential growth of 18.5%. The company had outstanding debt and other long-term liabilities of $388.4 million at the end of the first quarter. American Medical generated $26.6 million of cash from operations in the first quarter, a decline of roughly 5.7% year over year.
Outlook
American Medical has provided guidance for the second quarter and raised its outlook for fiscal 2010. For the second quarter, the company expects total revenues to range between $135 and $139 million. Adjusted earnings per share should be in the range of 29 to 31 cents.
For fiscal 2010, American Medical expects total revenues to range between $544 and $560 million, compared to the previous guidance of $540 to $560 million. Adjusted earnings per share should be in the range of $1.19 to $1.27, versus the previous guidance of $1.16 to $1.24.
Headquartered in Minnetonka, Minnesota and founded in 1972, American Medical focuses on men’s and women’s pelvic health. The company’s major competitors are Johnson & Johnson (JNJ) and Boston Scientific Corp. (BSX).
Currently, we are ‘Neutral’ on American Medical.
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