ABAXIS INC UNION CITY, Calif., Oct. 25, 2016 /PRNewswire/ -- Abaxis, Inc. (NasdaqGS: ABAX), a global diagnostics company manufacturing point-of-care blood analysis instruments and consumables for the medical and veterinary markets worldwide, today reported financial results for the second fiscal quarter ended September 30, 2016.
Second quarter overview:
-- Revenues of $58.6 million, up 5% over last year's comparable quarter.
-- Diluted net income per share from continuing operations of $0.51,
compared to $0.34 from last year, up 50%. Diluted net income per share
for the second quarter includes the effect of the gain from the sale of
an equity method investment. Excluding the effect of this gain, non-GAAP
net income per share from continuing operations was $0.34 for the second
quarter of fiscal 2017.
Revenues highlights:
-- Medical market revenues of $9.4 million, up 9% over last year's
comparable quarter.
-- Veterinary market revenues of $48.3 million, up 4% over last year's
comparable quarter.
-- Revenues from sales of consumables, which include reagent discs,
hematology reagent kits, VSpro specialty cartridges, i-STAT cartridges
and rapid tests, of $45.5 million, up 9% over last year's comparable
quarter.
-- Total medical and veterinary reagent disc revenues of $31.7 million, up
3% over last year's comparable quarter.
-- Total medical and veterinary reagent disc sales of 2.6 million units, up
8% over last year's comparable quarter.
-- Total medical and veterinary instrument revenues of $9.8 million, down
15% compared to last year's comparable quarter.
-- Total medical and veterinary instrument sales of 1,443 units, down 4%
compared to last year's comparable quarter.
-- North America revenues of $47.0 million, up 4% over last year's
comparable quarter.
-- International revenues of $11.5 million, up 7% over last year's
comparable quarter.
Other financial highlights:
-- Gross profit of $32.3 million, up 1% over last year's comparable
quarter.
-- Cash, cash equivalents and investments as of September 30, 2016 of
$161.1 million.
-- Abaxis paid dividends of $2.7 million, or $0.12 per share during the
second quarter of fiscal 2017.
Management Discussion
Clint Severson, chairman and chief executive officer of Abaxis, said, "The results of the second quarter of fiscal 2017 continued to build on the progress achieved in the first quarter of the year. Medical market revenues increased nine percent and veterinary market revenues grew by four percent, compared to the same period last year. Consumables sales accounted for 78% of total revenues and increased by nine percent during the quarter, compared to the same period last year. Additionally, we achieved international sales growth of seven percent over the same period last year. We were particularly pleased with revenue growth of 19% in medical reagent discs over the same period last year and unit sales of medical reagent discs now account for 40% of total reagent disc unit sales. We have made consistent progress in building our medical business, which we believe has significant growth prospects in the coming years. Our business model has generated consistent growth as we have continued to invest and work on a number of new initiatives that we believe will move us to the next level of our development.
"During the second quarter, we achieved some key milestones with the successful completion of development of our FUSE web-based integration system that provides connectivity between our point-of-care diagnostic instruments and the veterinary practice management systems, which we refer to as PMS. We believe the seamless connectivity between PMS and our leading edge point-of-care diagnostic instruments is a significant advantage in the market place. We have successfully completed the rollout of our VetScan hematology instruments into Banfield Pet Hospitals. We are pleased with positive feedback on the instrument performance and our level of service. Additionally, our VetScan VUE, an app-based automated rapid assay test reader released last quarter, continued to gain positive traction, as our rapid test revenues grew 37% during the quarter, compared to the same period last year."
Mr. Severson concluded, "All of this is done against the backdrop of the strong financial foundation of the company. At the end of the quarter, cash, cash equivalents and short- and long-term investments totaled $161.1 million. We continued to manage the company conservatively and fund operations, as well as our quarterly dividend, from internally generated cash flow."
Results of Operations
Quarterly Results
For the fiscal quarter ended September 30, 2016, Abaxis reported revenues from continuing operations of $58.6 million, as compared with revenues of $56.0 million for the comparable period last year, an increase of 5%. Revenues from sales of instruments, which include chemistry analyzers, hematology instruments, VSpro specialty analyzers and i-STAT analyzers, decreased by $1.8 million, or 15%, compared to the same period last year. Revenues from sales of consumables, which include reagent discs, hematology reagent kits, VSpro specialty cartridges, i-STAT cartridges and rapid tests, increased by $3.8 million, or 9%, over the same period last year. Abaxis reported net income from continuing operations of $11.5 million (which includes a gain from sale of an equity method investment of $3.8 million after tax) for the fiscal quarter ended September 30, 2016, compared to $7.8 million for the fiscal quarter ended September 30, 2015. Abaxis' effective tax rate in the fiscal quarter ended September 30, 2016 was 36%, compared to 36% for the same period last year. Abaxis reported diluted net income per share of $0.50 (calculated based on 22,745,000 shares) for the fiscal quarter ended September 30, 2016, compared to $0.34 per share (calculated based on 22,863,000 shares) for the same period last year.
Six-Month Results
For the six-month period ended September 30, 2016, Abaxis reported revenues from continuing operations of $116.2 million, as compared with revenues of $109.1 million for the comparable period last year, an increase of 7%. Revenues from instrument sales decreased by $0.4 million, or 2%, compared to the same period last year. Revenues from consumables sales, increased by $6.7 million, or 8%, over the same period last year. Abaxis reported net income from continuing operations of $18.4 million (which includes a gain from sale of an equity method investment of $3.8 million after tax) for the six-month period ended September 30, 2016, compared to $14.8 million for the six month period ended September 30, 2015. Abaxis' effective tax rate in the six-month period ended September 30, 2016 was 36%, compared to 36% for the same period last year. Abaxis reported diluted net income per share of $0.81 (calculated based on 22,720,000 shares) for the six-month period ended September 30, 2016, compared to $0.65 per share (calculated based on 22,876,000 shares) for the same period last year.
Other Reported Information
In August 2016, Abaxis sold its 15% equity ownership interest in Scandinavian Micro Biodevices APS ("SMB") as a result of Zoetis Inc.'s acquisition of SMB. The total purchase price for Abaxis' equity method investment in SMB was approximately $9.7 million in cash, subject to a holdback for certain adjustments that may occur. The holdback payment is expected to be released 18 months following the closing date. In connection with the sale, Abaxis received a cash payment of $8.5 million and recorded a pre-tax gain of $6.1 million ($3.8 million after tax) on the sale of its equity method investment during the three and six months ended September 30, 2016.
Non-cash compensation expense recognized for share-based awards during the three months ended September 30, 2016 and 2015 was $3.1 million and $3.0 million, respectively. Abaxis paid $2.7 million in cash dividends to shareholders during the second quarter of fiscal 2017.
Conference Call
Abaxis has scheduled a conference call to discuss its financial results at 4:15 p.m. Eastern Time on Tuesday, October 25, 2016. Participants can dial (844) 855-9498 or (412) 317-5496 to access the conference call, or can listen via a live Internet webcast, which is available in the Investor Relations section of the company's website at http://www.abaxis.com. A replay of the call will be available by visiting http://www.abaxis.com for the next 30 days or by calling (877) 344-7529 or (412) 317-0088, confirmation code 10094876, through November 1, 2016. This press release is also available prior to and after the call via Abaxis' website or the Securities and Exchange Commission's website at http://www.sec.gov.
About Abaxis
Abaxis, Inc. is a worldwide developer, manufacturer and marketer of portable blood analysis systems that are used in a broad range of medical specialties in human or veterinary patient care to provide clinicians with rapid blood constituent measurements. Our mission is to improve the efficiency of care delivery to and the quality of life of patients in the medical and veterinary markets. We provide leading edge technology and tools that support best medical practices, enabling physicians and veterinarians to respond to the health needs of their clients at the point of care while operating economical and profitable practices. For more information, visit http://www.abaxis.com.
Non-GAAP Financial Measures
To supplement the financial statements presented in accordance with United States generally accepted accounting principles (GAAP), Abaxis uses the non-GAAP financial measures of non-GAAP net income per share. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Abaxis defines non-GAAP net income per share as net income per share excluding from net income the recognized gain from the sale of an equity method investment and related costs, including the portion of our income tax provision associated with such gain. Abaxis uses this non-GAAP financial measure for financial and operational decision making and as a means to evaluate period-to-period comparisons. Management believes that this non-GAAP financial measure provides meaningful supplemental information regarding Abaxis' performance and liquidity by excluding certain income, such as gain from sale of an equity method investment and related costs, that may not be indicative of recurring core business operating results or operating performance. A reconciliation from GAAP net income per share to non-GAAP net income per share has been provided in the financial statement tables included below in this press release.
Forward Looking Statements
This press release includes, and our conference call will include, statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"), including but not limited to statements related to Abaxis' growth prospects in the coming years, the ability of Abaxis' investments and work on new initiatives to move Abaxis to the next level of development, the advantage that seamless connectivity between PMS and Abaxis' leading edge point-of-care diagnostics instruments provides in the market place, the strength of Abaxis' performance in future periods and payment of future cash dividends. Abaxis claims the protection of the safe-harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterized by the terms "may," "believes," "projects," "expects," "anticipates," or words of similar import, and do not reflect historical facts. Specific forward-looking statements contained in this press release or in Abaxis' conference call may be affected by risks and uncertainties, including, but not limited to, those related to risks related to Abaxis' manufacturing operations, including the vulnerability of its manufacturing operations to potential interruptions and delays and its ability to manufacture products free of defects, Abaxis' ability to compete effectively, market acceptance of Abaxis' products, fluctuations in quarterly operating results and difficulty in predicting future results, the performance of Abaxis' independent distributors and Abaxis' ability to manage their inventory levels effectively, expansion of Abaxis' sales and marketing and distribution efforts, Abaxis' dependence on Abbott Point of Care, Inc. for its U.S. medical sales, dependence on sole or limited source suppliers, the effect of exchange rate fluctuations on international operations, dependence on key personnel, risks related to the protection of Abaxis' intellectual property or claims of infringement of intellectual property asserted by third parties. Readers should also refer to the section entitled "Risk Factors" in Abaxis' Annual Report on Form 10-K, and subsequently filed quarterly reports on Form 10-Q filed with the United States Securities and Exchange Commission. Forward-looking statements speak only as of the date the statements were made. Abaxis does not undertake and specifically disclaims any obligation to update any forward-looking statements.
Financial Tables to Follow
ABAXIS, INC.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
September 30, September 30,
------------- -------------
2016 2015 2016 2015
---- ---- ---- ----
Revenues $58,552 $55,975 $116,248 $109,065
Cost of revenues 26,294 24,013 51,989 47,711
Gross profit 32,258 31,962 64,259 61,354
------ ------ ------ ------
Operating expenses:
Research and
development 4,906 4,689 10,139 9,412
Sales and marketing 11,254 10,785 23,078 21,371
General and
administrative 4,353 4,319 8,555 7,777
Total operating
expenses 20,513 19,793 41,772 38,560
------ ------ ------ ------
Income from
operations 11,745 12,169 22,487 22,794
Interest and other
income (expense),
net 6,279 126 6,249 485
----- --- ----- ---
Income from
continuing
operations before
income tax
provision 18,024 12,295 28,736 23,279
Income tax
provision 6,537 4,472 10,359 8,461
----- ----- ------ -----
Income from
continuing
operations 11,487 7,823 18,377 14,818
Discontinued operations
Loss from
discontinued
operations, net of
tax (55) (7) (55) (7)
Net income $11,432 $7,816 $18,322 $14,811
======= ====== ======= =======
Net income per share:
Basic
Continuing
operations $0.51 $0.34 $0.82 $0.65
Discontinued
operations - - (0.01) -
Basic net income
per share $0.51 $0.34 $0.81 $0.65
===== ===== ===== =====
Diluted
Continuing
operations $0.51 $0.34 $0.81 $0.65
Discontinued
operations (0.01) - - -
Diluted net income
per share $0.50 $0.34 $0.81 $0.65
===== ===== ===== =====
Shares used in the calculation of net income per share:
Weighted average
common shares
outstanding -
basic 22,522 22,701 22,494 22,663
====== ====== ====== ======
Weighted average
common shares
outstanding -
diluted 22,745 22,863 22,720 22,876
====== ====== ====== ======
ABAXIS, INC.
Condensed Consolidated Balance Sheets
(Unaudited and in thousands)
September 30, March 31,
2016 2016
---- ----
Current assets:
Cash and cash equivalents $90,393 $88,323
Short-term investments 55,120 41,474
Receivables, net 35,269 35,148
Inventories 36,233 35,131
Prepaid expenses and other
current assets 4,795 6,351
Net deferred tax assets,
current 4,811 4,810
Current assets of
discontinued operations 48 961
Total current assets 226,669 212,198
Long-term investments 15,584 22,458
Investment in
unconsolidated affiliate 3,000 2,705
Property and equipment,
net 32,452 26,842
Intangible assets, net 1,248 1,324
Net deferred tax assets,
non-current 4,508 3,903
Other assets 4,978 1,950
Total assets $288,439 $271,380
======== ========
Current liabilities:
Accounts payable $7,270 $7,292
Accrued payroll and
related expenses 9,238 8,349
Accrued taxes 31 1,145
Current liabilities of
discontinued operations 76 112
Other accrued liabilities 9,629 9,393
Deferred revenue 1,634 1,600
Warranty reserve 1,539 1,281
Total current liabilities 29,417 29,172
------ ------
Non-current liabilities:
Deferred revenue 1,790 2,274
Warranty reserve 2,411 1,927
Net deferred tax
liabilities 277 384
Notes payable, less
current portion 328 379
Other non-current
liabilities 1,089 932
Total non-current
liabilities 5,895 5,896
----- -----
Total liabilities 35,312 35,068
------ ------
Shareholders' equity:
Common stock 130,906 127,016
Retained earnings 122,222 109,303
Accumulated other
comprehensive loss (1) (7)
Total shareholders' equity 253,127 236,312
------- -------
Total liabilities and
shareholders' equity $288,439 $271,380
======== ========
The following table presents our revenues by source for the three and six months ended September 30, 2016 and 2015.
Revenues by Geographic Region and Customer Group
(Unaudited and in thousands)
Three Months Ended Six Months Ended
September 30, September 30,
------------- -------------
2016 2015 2016 2015
---- ---- ---- ----
Revenues by Geographic Region
North America $47,017 $45,176 $93,790 $87,487
International 11,535 10,799 22,458 21,578
Total revenues $58,552 $55,975 $116,248 $109,065
======= ======= ======== ========
Revenues by Customer Group
Medical Market $9,381 $8,631 $18,478 $17,315
Veterinary Market 48,290 46,599 96,021 90,188
Other 881 745 1,749 1,562
Total revenues $58,552 $55,975 $116,248 $109,065
======= ======= ======== ========
The following table presents our calculation of non-GAAP net income and non-GAAP net income per share to exclude from net income the recognized gain from the sale of an equity method investment and related costs, including the portion of our income tax provision associated with such gain in the three and six months ended September 30, 2016.
Non-GAAP Net Income and Non-GAAP Net Income Per Share
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
September 30, 2016 September 30, 2016
------------------ ------------------
GAAP Non-GAAP GAAP Non-GAAP
Results Adjustments (1) Results Results Adjustments (1) Results
------- -------------- ------- ------- -------------- -------
Income from
operations $11,745 $ - $11,745 $22,487 $ - $22,487
Interest and
other income
(expense), net 6,279 (6,054) 225 6,249 (6,054) 195
----- ------ --- ----- ------ ---
Income from
continuing
operations
before income
tax provision 18,024 (6,054) 11,970 28,736 (6,054) 22,682
Income tax
provision 6,537 (2,292) 4,245 10,359 (2,292) 8,067
----- ------ ----- ------ ------ -----
Income from
continuing
operations 11,487 (3,762) 7,725 18,377 (3,762) 14,615
Discontinued
operations
Loss from
discontinued
operations, net
of tax (55) - (55) (55) - (55)
Net income $11,432 $(3,762) $7,670 $18,322 $(3,762) $14,560
======= ======= ====== ======= ======= =======
Net income per
share:
Basic
Continuing
operations $0.51 $0.34 $0.82 $0.65
Discontinued
operations - - (0.01) -
Basic net income
per share $0.51 $0.34 $0.81 $0.65
===== ===== ===== =====
Diluted
Continuing
operations $0.51 $0.34 $0.81 $0.64
Discontinued
operations (0.01) - - -
Diluted net
income per share $0.50 $0.34 $0.81 $0.64
===== ===== ===== =====
Shares used in
the calculation
of net income
per share:
Weighted average
common shares
outstanding -
basic 22,522 22,522 22,494 22,494
====== ====== ====== ======
Weighted average
common shares
outstanding -
diluted 22,745 22,745 22,720 22,720
====== ====== ====== ======
(1) To eliminate adjustments for gain on sale of an equity method investment and related income tax effect recorded in the three and six months ended September 30, 2016.
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SOURCE Abaxis, Inc.
