Cepheid CPHD posted second-quarter 2016 adjusted loss (considering stock-based compensation expense as a regular spending) per share of 9 cents, reflecting a year-over-year improvement of 33.3%.
This adjusted loss figure also compared favorably with the Zacks Consensus Estimate of a loss of 14 cents.
Including one-time items, the company’s reported net loss in the second quarter was $10.2 million or loss of 14 cents per share, compared with the year-ago quarter’s net loss of of $16.7 million or loss of 23 cents per share.
Revenues in Detail
Cepheid witnessed a 10% year-over-year growth (up 12% at constant exchange rate or CER) in revenues of $146 million in the second quarter. The revenue figure remained in line with the Zacks Consensus Estimate.
The year-over-year improvement was driven by balanced segmental growth.
Geographically, Cepheid witnessed 7% increase in its second-quarter North American revenues of $81.2 million. This quarter recorded North American revenue’s return to growth with system placements reaching more than 2,000 and total global placements exceeding 11,000.
On the other hand, Cepheid’s international revenues improved 21% at CER to $64.8 million, driven by growth in both HBDC and commercial businesses.
CEPHEID INC Price, Consensus and EPS Surprise
CEPHEID INC Price, Consensus and EPS Surprise | CEPHEID INC Quote
Cepheid’s operating segments currently include Systems and Other and Reagents and Disposable.
Revenues at the Systems and Other segment grew 2% year over year (4% at CER) to $24.8 million with the quarter being the strongest commercial system placement quarter ever.
Revenues at the Reagents and Disposable segment improved 12% year over year (14% at CER) to $121.2 million. This segment benefited from record revenue in each of the company’s franchise families HAIs, Critical Infectious Disease, excluding Flu, Sexual Health, Virology and Oncology and Genetics.
Operational Update
Cepheid's adjusted gross margin expanded 200 basis points (bps) year over year to 51%, on account of a 5.9% hike in adjusted cost of sales.
In the reported quarter, adjusted operating expenses spiked 8.9% to $78.5 million. Adjusted operating loss incurred was $6.2 million, as against the prior-year quarter's adjusted operating loss of of $9.3 million.
Financial Position
Cepheid exited the quarter with cash and cash equivalents and short-term investments of $323.5 million compared with $292.3 million as of the first quarter 2016. Year-to-date, Cepheid witnessed $24.7 million of cash flow compared with the year-ago cash flow of $7.9 million.
Outlook
Cepheid updated its financial guidance for 2016. The company currently expects adjusted loss per share in the range of 22–25 cents (an improvement from the earlier projection of loss of 29–35 cents) on revenues of $618–$635 million (unchanged) (representing growth of 15%–18% over 2015). The current Zacks Consensus Estimate for revenues is $622 million while that for the loss figure is 32 cents per share.
Our Take
Cepheid posted a mixed second-quarter with bottom line result exceeding the Zacks Consensus Estimate while revenues in line with the same. However, the year-over-year performance on both the fronts was pretty decent. However, Cepheid’s declining margin raises concern.
Nevertheless, the record commercial system placement in the quarter buoys optimism. Moreover, the company made solid progress in terms of its test menu expansion as well as potential pipeline development. The raised EPS guidance for 2016 also indicates further recovery through the rest of 2016.
Zacks Rank & Key Picks
Currently, Cepheid carries a Zacks Rank #3 (Hold). Better-ranked medical stocks are Natus Medical Inc. BABY, Masimo Corp. MASI and ABIOMED, Inc. ABMD. All the three stocks sport a Zacks Rank #1 (Strong Buy).
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