Resuscitation devices maker ZOLL Medical (ZOLL) reported second-quarter fiscal 2011 (ended April 3) earnings of 27 cents per share, beating the Zacks Consensus Estimate of 21 cents and surpassing the year-ago earnings of 17 cents. Profit rocketed 65% year over year to $6 million as revenues grew at a double-digit clip.
Revenues climbed 14% year over year to $122.5 million, ahead of the Zacks Consensus Estimate of $121 million. Sales were driven by strong revenues from the company’s LifeVest wearable defibrillator and temperature management businesses, supported by healthy international growth. Total order backlog at the end of the quarter was roughly $29 million, up 32% year over year.
Sales in the North American hospital market dipped 2% year over year to $63.2 million as revenues from the company’s U.S. Military business clipped 17.5% year over year to $3.3 million.
Revenues from North American pre-hospital market fell 4% year over year to $32.7 million while International sales surged 25% to $32.7 million. The North American pre-hospital market is expected to remain soft through fiscal 2011, partly due to a still weak capital spending backdrop.
The company’s LifeVest business remains on a solid growth track with revenues catapulting 60% year over year to $26.6 million. Revenues from the AutoPulse cardiac support pump, however, tumbled 34% to $3 million. Temperature Management sales zoomed 52% of $6.1 million.
Gross margin improved to 58% in the quarter from 55% a year-ago, reflecting a better mix of higher margin LifeVest sales. Total expenses surged roughly 17% year over year to $62.2 million. ZOLL Medical exited the quarter with cash and cash equivalents and short-term investments of roughly $57.4 million, up 11% year over year, with no debt.
ZOLL Medical is a leading player in the global market for external defibrillators, which is worth more than $1 billion. The company has innovated a wide range of product features that have become the standard of care in the external defibrillator industry.
It remains committed to expanding its product range to sustain growth in this market. Moreover, ZOLL Medical is expanding its footprint in the international markets.
We remain impressed by ZOLL Medical’s solid fundamentals, broad product range, strong international presence, healthy revenue/margin mix and upbeat prospect for LifeVest. The company has completed multiple acquisitions in the past and is seeking more such lucrative transactions to aid growth.
However, ZOLL Medical operates in a highly competitive defibrillation market In the U.S. The company competes with Physio-Control, a wholly-owned unit of Medtronic (MDT) and Philips (PHG) in this market. Moreover, the North American emergency medical services (“EMS”) market remains sluggish, in part, due to budget constraints. Currently, we have a Neutral recommendation on ZOLL Medical.
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