Contraception device maker, Conceptus Inc. (CPTS) reported EPS of 1 cent during the second quarter of fiscal 2011 beating both the Zacks Consensus Estimate and the year-ago quarter’s net loss per share of 1 cent.
Revenues in the reported quarter declined 8.2% year over year to $33.8 million, but were marginally ahead of the Zacks Consensus Estimate of $33 million. The significant decline in sales was primarily attributed to macroeconomic headwinds, which in turn resulted in persistent unemployment, challenging insurance trends with loss of insurance coverage and competitive market.
Conceptus derives a major share of its revenues from Essure, which is a permanent birth control system. Domestic sales of Essure plunged 11.4% year over year to $24.8 million impacted by lower patient visits to OB/GYN offices and ongoing competitive product trialing. Moreover, Conceptus experienced incremental sales in the year-ago quarter from a short-term, multiple-city consumer awareness marketing campaign, which was not repeated in the reported quarter. However, the company is expanding its sales coverage and is gradually achieving success in reducing the impact of competitive trialing. Further, with the full launch of Gynecare Thermachoice to US physician offices, Conceptus expects to gain traction in its domestic business.
International sales inched up 1.1% on a year-over-year basis to $9.0 million. This improvement was due to channel mix and favorable currency exchange, offset by lower unit volume. Moreover, increased sales in France, Spain and Holland also favorably impacted the result.
Sales of the Essure system depends on the number of physicians trained 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 on performing the procedure.
During the reported quarter, the company expanded its physician penetration by enrolling 538 new physicians into preceptorship, certifying approximately 290 physicians and transitioning approximately 110 physicians to performing procedures in the office setting. Till date, around 13,553 physicians are fully equipped to perform the Essure procedure.
Conceptus reported gross profit of $27.7 million, down 6.4% year over year. Moreover, continued reduction in product cost during the quarter resulted in lower gross margin (down 170 basis points to 81.9%).
Operating expenses plummeted 8% to $25.8 million driven by a 10.3% decline in selling, general and administrative expenses due to lower marketing expenses. This led to a 180 basis points expansion in operating margin.
Conceptus exited the quarter with cash, cash equivalents and short-term investments of $78.7 million, up from $77.8 million at the end of December 2010. During the quarter, the company generated $8.6 million in cash from operations.
Guidance
Conceptus narrowed down its revenue guidance for fiscal 2011. For the full year, the company expects revenues of $135–$140 (previous guidance was $135–$150 million). The Zacks Consensus Estimate of $133 million is below the guidance range.
CONCEPTUS INC (CPTS): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment