ABAXIS INC UNION CITY, Calif., Oct. 24, 2017 /PRNewswire/ -- Abaxis, Inc. (Nasdaq: 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, 2017.
Second quarter results include:
-- Revenues of $58.9 million, up 1% over last year's comparable quarter.
-- Veterinary market revenues of $48.5 million, up 1% over last year's
comparable quarter.
-- International revenues of $11.9 million, up 3% over last year's
comparable quarter.
-- Revenues from sales of consumables, which include reagent discs,
hematology reagent kits, VSpro specialty cartridges, i-STAT cartridges,
rapid tests and urinalysis strips, of $46.4 million, up 2% over last
year's comparable quarter.
-- Gross profit of $32.2 million, compared to $32.3 million, in last year's
comparable quarter.
-- Cash, cash equivalents and investments as of September 30, 2017 of
$177.7 million.
-- Abaxis paid dividends of $3.2 million, or $0.14 per share, during the
second quarter of fiscal 2018.
Management Discussion
Clint Severson, chairman and chief executive officer of Abaxis, said, "There is no question that the past number of quarters have been challenging. We are, however, targeting an acceleration of our year-over-year growth in the second half of fiscal year 2018. We anticipate growth will be led by a number of new product introductions, including the recently released VetScan UA, a hand held urine chemistry analyzer that we started shipping in the last week of September 2017; and the recent launches of our VetScan Phenobarbital Profile and our VetScan Canine Pancreatic Lipase Rapid Test. In addition, we enhanced the capabilities of our VetScan FUSE, a bi-directional connectivity system that provides integration between Abaxis point-of-care analyzers and veterinary practice management systems worldwide. We plan to update the VetScan FUSE further in the third quarter of fiscal 2018 with functionality that will allow the VetScan FUSE to be installed with the majority of new veterinary instrument placements. In conjunction with the new product introductions, we continue to expand our sales and marketing team to more fully support our distribution channel partners with the goal of moving these new products through the channel and generating increased sales."
Mr. Severson continued, "In support of our loyal shareholders our Board of Directors expanded our share repurchase program by an additional $21 million, bringing the total available to $75 million. The Board of Directors also increased our quarterly dividend to shareholders by 14% to $0.16 per share. We are committed to rewarding our shareholders and providing value to them. We have a strong business that has operated off its internally generated cash flow for many years. We continue to manage our business conservatively and maintain cash, cash equivalents and short- and long-term investments of $177.7 million. We are excited with the opportunities ahead in the coming years."
Dividend Declared
Abaxis today announced that its Board of Directors declared a quarterly cash dividend of $0.16 per share of common stock, to be paid on December 15, 2017, to all shareholders of record as of the close of business on December 1, 2017.
Share Repurchase Program
Abaxis' Board of Directors has approved a $21.0 million increase to its existing share repurchase program, to a total of $75.0 million. As of September 30, 2017, Abaxis had $54.0 million of its common stock available for repurchase under its share repurchase program.
Results of Operations
Quarterly Results
For the fiscal quarter ended September 30, 2017, Abaxis reported revenues of $58.9 million, as compared with revenues of $58.6 million for the comparable period last year. Revenues from sales of instruments, which include chemistry analyzers, hematology instruments, VSpro specialty analyzers, i?STAT analyzers and urinalysis instruments, decreased by $0.7 million, or 7%, 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, rapid tests and urinalysis tests, increased by $0.9 million, or 2%, over the same period last year.
Abaxis reported income from continuing operations of $9.4 million and net income from continuing operations of $6.6 million for the fiscal quarter ended September 30, 2017, compared to $11.7 million and $11.5 million for the fiscal quarter ended September 30, 2016, respectively. Net income from continuing operations for the fiscal quarter ended September 30, 2016 includes a gain from sale of an equity method investment of $3.8 million after tax.
Abaxis' effective tax rate in the fiscal quarter ended September 30, 2017 was 35%, compared to 36% for the same period last year. Abaxis reported diluted net income per share of $0.29 (calculated based on 22,997,000 shares) for the fiscal quarter ended September 30, 2017, compared to $0.50 per share (calculated based on 22,745,000 shares) for the same period last year. Diluted net income per share for the second quarter of fiscal 2017 includes the effect of the gain from the sale of an equity method investment. Excluding the effect of the gain, non-GAAP diluted net income per share was $0.34 for the second quarter of fiscal 2017.
Six-Month Results
For the six-month period ended September 30, 2017, Abaxis reported revenues of $117.1 million, as compared with revenues of $116.2 million for the comparable period last year. Revenues from instruments sales decreased by $2.0 million, or 10%, compared to the same period last year. Revenues from consumables sales increased by $2.2 million, or 2%, over the same period last year.
Abaxis reported income from continuing operations of $17.9 million and net income from continuing operations of $12.9 million for the six-month period ended September 30, 2017, compared to $22.5 million and $18.4 million for the six-month period ended September 30, 2016, respectively. Net income from continuing operations for the six-month period ended September 30, 2016 includes a gain from sale of an equity method investment of $3.8 million after tax.
Abaxis' effective tax rate in the six-month period ended September 30, 2017 was 35%, compared to 36% for the same period last year. Abaxis reported diluted net income per share of $0.56 (calculated based on 22,991,000 shares) for the fiscal quarter ended September 30, 2017, compared to $0.81 per share (calculated based on 22,720,000 shares) for the same period last year. Diluted net income per share for the six month period ended September 30, 2016 includes the effect of the gain from the sale of an equity method investment. Excluding the effect of the gain, non-GAAP diluted net income per share was $0.64 for the six month period ended September 30, 2016.
Other Reported Information
Non-cash compensation expense recognized for share-based awards during the three months ended September 30, 2017 and 2016 was $3.5 million and $3.1 million, respectively. Abaxis paid $3.2 million in cash dividends to shareholders during the second quarter of fiscal 2018.
Conference Call
Abaxis has scheduled a conference call to discuss its financial results at 4:15 p.m. Eastern Time on Tuesday, October 24, 2017. 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 10113411, through October 31, 2017. 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 diluted 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 diluted net income per share as net income per share on a diluted basis 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 diluted 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 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' ability to accelerate its year-over-year growth in the second half of fiscal year 2018, anticipated drivers of any such growth, Abaxis' ability to implement product updates and the expected timing thereof, long-term growth opportunities in the medical market, the effects of Abaxis' investments in sales and marketing, Abaxis' expansion of its product portfolio and its effect on Abaxis' revenue growth, the expansion of Abaxis' sales and marketing team and its ability to move new products through the channel and generate increased sales and Abaxis' opportunities in the coming years. 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. Forward-looking statements contained in this press release may be affected by risks and uncertainties that may cause actual results to differ materially from those projected or implied in such forward-looking statements, including, but not limited to, risks and uncertainties 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,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Revenues $58,854 $58,552 $117,112 $116,248
Cost of revenues 26,693 26,294 53,007 51,989
Gross profit 32,161 32,258 64,105 64,259
------ ------ ------ ------
Operating expenses:
Research and development 6,075 4,906 12,507 10,139
Sales and marketing 12,484 11,254 24,985 23,078
General and administrative 4,167 4,353 8,717 8,555
Total operating expenses 22,726 20,513 46,209 41,772
------ ------ ------ ------
Income from operations 9,435 11,745 17,896 22,487
Interest and other income (expense), net 773 6,279 2,084 6,249
--- ----- ----- -----
Income before income tax provision 10,208 18,024 19,980 28,736
Income tax provision 3,607 6,537 7,049 10,359
----- ----- ----- ------
Income from continuing operations 6,601 11,487 12,931 18,377
Discontinued operations
Loss from discontinued operations, net of tax - (55) - (55)
Net income $6,601 $11,432 $12,931 $18,322
====== ======= ======= =======
Net income (loss) per
share:
Basic
Continuing operations $0.29 $0.51 $0.57 $0.82
Discontinued operations - - - (0.01)
--- --- --- -----
Basic net income per share $0.29 $0.51 $0.57 $0.81
===== ===== ===== =====
Diluted
Continuing operations $0.29 $0.51 $0.56 $0.81
Discontinued operations - (0.01) - -
--- ----- --- ---
Diluted net income per share $0.29 $0.50 $0.56 $0.81
===== ===== ===== =====
Shares used in the
calculation of net income
per share:
Weighted average common shares outstanding - basic 22,679 22,522 22,648 22,494
====== ====== ====== ======
Weighted average common shares outstanding - diluted 22,997 22,745 22,991 22,720
====== ====== ====== ======
Cash dividends declared per share $0.14 $0.12 $0.28 $0.24
===== ===== ===== =====
ABAXIS, INC.
Condensed Consolidated Balance Sheets
(Unaudited and in thousands)
September 30, March 31,
2017 2017
---- ----
Current assets:
Cash and cash equivalents $58,874 $91,332
Short-term investments 89,877 51,561
Receivables, net 40,714 40,568
Inventories 39,050 39,010
Prepaid expenses and other
current assets 4,831 4,997
Net deferred tax assets,
current - 5,644
Current assets of
discontinued operations 19 66
Total current assets 233,365 233,178
Long-term investments 28,951 22,171
Investment in
unconsolidated affiliates 2,778 2,850
Property and equipment,
net 34,384 34,260
Intangible assets, net 1,094 1,171
Net deferred tax assets,
non-current 10,472 4,392
Other assets 8,904 7,624
Total assets $319,948 $305,646
======== ========
Current liabilities:
Accounts payable $8,393 $7,517
Accrued payroll and
related expenses 10,101 9,606
Accrued taxes 1,489 2,151
Current liabilities of
discontinued operations 29 85
Other accrued liabilities 13,811 11,006
Deferred revenue 1,043 1,415
Warranty reserve 1,934 1,663
Total current liabilities 36,800 33,443
------ ------
Non-current liabilities:
Deferred revenue 1,290 1,460
Warranty reserve 2,825 2,695
Net deferred tax
liabilities 219 234
Notes payable, less
current portion 227 278
Other non-current
liabilities 1,498 1,312
Total non-current
liabilities 6,059 5,979
----- -----
Total liabilities 42,859 39,422
------ ------
Shareholders' equity:
Common stock 140,235 135,932
Retained earnings 136,886 130,304
Accumulated other
comprehensive loss (32) (12)
Total shareholders' equity 277,089 266,224
------- -------
Total liabilities and
shareholders' equity $319,948 $305,646
======== ========
Revenues by Geographic Region and Customer Group
(Unaudited and in thousands)
The following table presents our revenues by source for the three and six months ended September 30, 2017 and 2016.
Three Months Ended Six Months Ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Revenues by Geographic Region
North America $46,920 $47,017 $93,889 $93,790
International 11,934 11,535 23,223 22,458
Total revenues $58,854 $58,552 $117,112 $116,248
======= ======= ======== ========
Revenues by Customer Group
Medical Market $9,282 $9,381 $18,144 $18,478
Veterinary Market 48,536 48,290 96,904 96,021
Other 1,036 881 2,064 1,749
Total revenues $58,854 $58,552 $117,112 $116,248
======= ======= ======== ========
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 the 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.
