Conceptus Beats Earnings, Merger Announced - Analyst Blog
April 30 2013 - 5:00AM
Zacks
Contraception device maker, Conceptus Inc.
(CPTS) reported earnings per share (EPS) of 5 cents in the first
quarter of 2013, a massive improvement from a net loss of 9 cents
per share in the year-ago quarter. The reported EPS betters the
Zacks Consensus Estimate of a loss of 2 cents.
Quarter in
Detail
Revenues in the reported quarter
recorded a robust hike of 17.5% year over year to $34.1 million,
beating the Zacks Consensus Estimate of $32 million. This includes
a 21.7% jump in domestic sales to $26.5 million and growth of 5% in
international sales to $7.6 million.
Even amid several macroeconomic
headwinds in the form of persistent unemployment and limited
consumer spending, the improvement in the reported quarter
primarily came on the back of a 17.6% increase in organic revenues
and the exit of the company’s direct peer
Hologic’s (HOLX) Adiana from the permanent birth
control market. The conversion of Adiana’s market share added 4.6%
to the company’s growth in the reported quarter. Moreover,
Conceptus’ gradual progress in improving commercial execution is
steadily accelerating its growth rate.
Conceptus derives a major share
of its revenues from the Essure permanent birth control system. The
domestic sales for Essure during the quarter were up 22.2% year
over year.
Sales of the Essure system
depends on the number of physicians trained to perform the
procedure. Conceptus is striving toward making the system available
worldwide by raising consumer and physician awareness as well as
training physicians to perform the procedure.
During the reported quarter, the
company improved its U.S. physician penetration by enrolling 341
new physicians into preceptorship, certifying approximately 83
physicians and transitioning approximately 47 physicians for
procedures performed in the office setting. To date, around 16,300
physicians are fully equipped to perform the Essure
procedure.
Conceptus reported gross profit
of $28.5 million, up 19.3% from the prior-year quarter. As a
result, gross margin during the quarter expanded 120 basis points
(bps) to 83.4%.
Operating expenses declined 11.8%
to $24.4 million, driven by the company's lower marketing
expenditures related to the direct-to-consumer campaign.
Consequently, operating income came in at $4 million compared with
$3.9 million loss incurred in the year-ago quarter.
Conceptus exited the quarter with
cash, cash equivalents and short-term investments of $87 million
compared with $69.9 million at the end of 2012.
In a separate story, Conceptus
inked a definitive merger agreement with German-based Bayer
HealthCare (BAYRY). Bayer will initiate a public tender
offer to acquire all shares of the Conceptus common stock within
the next ten days.
Based on a purchase price of $31
per share, Bayer will pay $1.1 billion for the acquisition. While
we await further details from Conceptus, the company pulled back
its guidance for 2013 as the acquisition is expected to close by
mid-2013.
Our View
The news of the buyout sparked
investor optimism as shares of Conceptus jumped 19.54% (or $5.06)
on Monday, Apr 29 to reach a new 52 week high of $30.97 on the day
of the announcement. However, we keep an eye on further
developments as the closing price of $30.96 on Monday hovers around
the purchase price of $31 per share. Thus, Conceptus' shareholders
might not benefit a great deal from the buyout.
Coming back to the quarterly
results, Conceptus reported another solid quarter to surpass the
Zacks Consensus Estimate. Margin expansion was another upside in
the quarter. Notably, the exit of Adiana from the permanent birth
control market continues to support Conceptus’ growth. However, we
remain concerned about the limited growth visibility arising from
difficult macroeconomic conditions, resulting in a weak
hysteroscopic sterilization market.
Currently, Conceptus carries a
Zacks Rank #3 (Hold). Other medical stock such as Intuitive
Surgical Inc. (ISRG), carrying a Zacks Rank #2 (Buy)
warrants a look.
BAYER A G -ADR (BAYRY): Free Stock Analysis Report
CONCEPTUS INC (CPTS): Free Stock Analysis Report
HOLOGIC INC (HOLX): Free Stock Analysis Report
INTUITIVE SURG (ISRG): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Conceptus, Inc. (MM) (NASDAQ:CPTS)
Historical Stock Chart
From Jun 2024 to Jul 2024
Conceptus, Inc. (MM) (NASDAQ:CPTS)
Historical Stock Chart
From Jul 2023 to Jul 2024