Conceptus Inc. (CPTS), a contraception devices maker, reported an EPS of $2.66 in the fourth quarter of fiscal 2010 compared with 21 cents in the year-ago period.
However, after adjusting for a net income tax benefit of $79.2 million in the reported quarter, the EPS was 14 cents, missing the Zacks Consensus Estimate of 18 cents. For the full year, the adjusted EPS was 10 cents, missing both the Zacks Consensus Estimate of 13 cents and 25 cents in the previous year.
Revenues were $36.6 million during the quarter, missing both the Zacks Consensus Estimate and the year-ago period’s $37 million. For the full year, Conceptus recorded $140.7 million in revenues, up 7% from the previous year, though marginally missing the Zacks Consensus Estimate of $141 million.
Lower revenues reflect the various challenges faced by Conceptus. Economic uncertainty and high unemployment have lowered patient visits to physicians and deferred elective procedures, which turn out to be quite detrimental. Moreover, sales were impacted as its primary competitor Hologic (HOLX) has been conducting trials for its Adiana system.
Conceptus derives revenues from Essure, which is a permanent birth control system, approved for sale in many countries, including the US. Sales in both the domestic and international market declined 1% ($28.6 million) and 2% ($8 million), respectively. While domestic sales declined due to macroeconomic pressures, unfavorable currency movement impacted international sales. In the international market, unit volume increased 4% year over year.
Sales of the Essure system depends on the number of trained physicians to perform the procedure. Conceptus is working to make the system available worldwide by raising consumer and physician awareness as well as imparting training to the physicians for performing the procedure. During the quarter, the company trained about 413 physicians, certified 458 physicians and prepared 202 physicians to perform procedures in an office environment.
Conceptus reported a gross profit of $30 million, down 1.3% compared to the year-ago quarter with a 30-basis-point decline in gross margin to 81.9%. The decline in gross margin was due to lower selling prices in the international market due to foreign currency.
Operating expenses increased 7.2% driven by an 8.9% rise in selling, general and administrative expenses, partially offset by a 10.5% decline in research and development expenses. Spending on higher sales force coupled with increased litigation expenses led to higher operating expenses.
Guidance
Conceptus provided guidance for fiscal 2011. Revenues are expected in the range of $135–$150 million. The Zacks Consensus Estimate of $148 million is towards the upper-end of this range. Although the company is working towards stabilizing its market share, it believes that spending on elective procedures, such as Essure, will be lower till the first half of 2011.
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