Abaxis Reports Financial Performance For The Second Quarter Of Fiscal 2013

UNION CITY, Calif., Oct. 23, 2012 /PRNewswire/ --  Abaxis, Inc. (NasdaqGS: ABAX), a medical products company manufacturing point-of-care blood analysis systems, today reported financial results for the second fiscal quarter ended September 30, 2012.

Quarterly highlights include:

  • Revenues of $44.3 million, up 11% over last year's comparable quarter.
  • North America revenues of $35.9 million, up 12% over last year's comparable quarter.
  • Medical market revenues of $7.9 million, up 7% over last year's comparable quarter.
  • Veterinary market revenues of $34.9 million, up 11% over last year's comparable quarter.
  • International revenues of $8.3 million, up 4% over last year's comparable quarter.
  • Total medical and veterinary instrument revenues of $11.6 million, up 33% over last year's comparable quarter.
  • Total medical and veterinary instrument sales of 1,567 units, up 28% over last year's comparable quarter.
  • Service revenues from Abaxis Veterinary Reference Laboratories (AVRL) of $1.1 million, up 26% over first quarter of fiscal 2013.

Quarterly Results:  For the fiscal quarter ended September 30, 2012, Abaxis reported revenues of $44.3 million, as compared with revenues of $40.0 million for the comparable period last year, an increase of 11 percent.  Revenues from sales of instruments, which include chemistry analyzers, hematology instruments, VSpro coagulation and specialty analyzers and i-STAT analyzers, increased by an aggregate of $2.9 million or 33 percent, over the same period last year. Revenues from sales of consumables, which include reagent discs, hematology reagent kits, VSpro coagulation and specialty cartridges, i-STAT cartridges and rapid tests, amounted to $29.4 million, which were flat, compared to the same period last year. Abaxis reported net income of $12.9 million for the fiscal quarter ended September 30, 2012, including gain from the company's litigation settlement with Cepheid, Inc. (NasdaqGS: CPHD), described in more detail below. Abaxis' effective tax rate in the quarter ended September 30, 2012 was 38 percent, compared to 37 percent for the same period last year.  Abaxis reported diluted net income per share of $0.58 (calculated based on 22,306,000 shares) for the three-month period ended September 30, 2012, compared to $0.15 per share (calculated based on 22,564,000 shares) for the same period last year. 

Six-Month Results:  For the six-month period ended September 30, 2012, Abaxis reported revenues of $86.3 million, as compared with revenues of $76.0 million for the comparable period last year, an increase of 14 percent.  Revenues from instrument sales increased by an aggregate of $5.2 million, or 32 percent, over the same period last year.  Revenues from consumables increased by an aggregate of $2.7 million, or 5 percent, over the same period last year.  The company reported net income of $15.8 million, including gain from the company's litigation settlement with Cepheid, compared to $5.5 million for the same period last year.  The company's effective tax rate in the six-month period ended September 30, 2012, was 38 percent, compared to 37 percent for the same period last year. The company reported diluted net income per share of $0.71 (calculated based on 22,280,000 shares) for the six-month period ended September 30, 2012, compared to $0.24 per share (calculated based on 22,850,000 shares) for the same period last year. 

Other Reported Information:  Total sales in the medical market for the second quarter of fiscal 2013 were $7.9 million, an increase of 7 percent, compared to the same period last year. Medical sales worldwide, excluding sales to the U.S. government, during the second quarter of fiscal 2013 were $7.4 million, an increase of 17 percent, compared to the same period last year.  Total sales in the veterinary market for the second quarter of fiscal 2013 were $34.9 million, an increase of 11 percent, compared to the same period last year. Total medical and veterinary reagent disc sales for the second quarter of fiscal 2013 were $22.0 million, a decrease of 4 percent compared to the same period last year. Non-cash compensation expense recognized for share-based awards during the second quarter of fiscal 2013 was $1.7 million, compared to $1.6 million for the same period last year.    

In September 2012, Abaxis reached a settlement in its lawsuit with Cepheid, over several Abaxis patents relating to reagent and chemical compositions and processes.  As part of the agreement, Cepheid agreed to pay Abaxis $17.3 million, which was recorded as a gain from legal settlement during the three and six months ended September 30, 2012.  Excluding the gain from our legal settlement, net of related costs and expenses, non-GAAP net income for the second quarter was $4.1 million or $0.18 per share and for the six months ended September 30, 2012 was $7.0 million or $0.31 per share.

Clint Severson, chairman and chief executive officer of Abaxis, said, "We are very pleased with the solid results of the quarter. We had record total revenues of $44.3 million, an increase of 11% compared to last fiscal year's comparable quarter. We also benefitted from a strong increase in total instrument unit sales in the just completed quarter. Total instrument units sold were up 28% compared to last fiscal year's second quarter.  In the medical market, excluding sales to the U.S. government, Piccolo unit sales were up 86%, and in the veterinary market, veterinary units sold increased 24%, when compared to the second quarter of fiscal 2012. We continue to expand the base of instruments in the field which sets the stage for increased consumables sales in the coming years.  We are also gratified with the addition of MWI Veterinary Supply (MWI) to our veterinary distribution channel.  MWI is a leading provider of veterinary supplies nationwide and we expect that they will develop a new universe of customers for our VetScan products and consumables."

Mr. Severson concluded, "We will continue to invest our capital into R&D to develop new rapid tests, reagent test panels and improve manufacturing efficiencies to drive future sales and enhance margins.  At the completion of the quarter the underlying financial condition of the company remains very strong with over $100.0 million in cash and cash equivalents and investments.  We look forward to a continuation of our progress in the second half of the year."

Conference Call

Abaxis has scheduled a conference call to discuss its results at 4:15 p.m. Eastern Time on Tuesday, October 23, 2012.  Participants can dial (877) 317-6789 or (412) 317-6789 to access the conference call, or can listen via a live Internet web cast, 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 10019922, through October 30, 2012.  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 develops, manufactures, markets and sells portable blood analysis systems for use in any veterinary or human patient-care setting to provide clinicians with rapid blood constituent measurements.  The system consists of a compact, 5.1 kilogram (11.2 pounds), portable analyzer and a series of single-use plastic discs, called reagent discs that contain all the chemicals required to perform a panel of up to 13 tests on veterinary patients and 14 tests on human patients.  The system can be operated with minimal training and performs multiple routine tests on whole blood, serum or plasma samples.  The system provides test results in less than 12 minutes with the precision and accuracy equivalent to a clinical laboratory analyzer.  The veterinary business also provides to the animal health and research market a line of hematology instruments for point-of-care complete blood counts (CBC), a specialty instrument to screen for and detect clotting disorders and to measure equine fibrinogen levels, a handheld instrument for the rapid assessment of certain critical care tests and rapid point-of-care tests for Heartworm infections, Parvovirus, Giardia and Lyme disease.  Abaxis, through its AVRL division, provides routine laboratory testing as well as specialty testing for veterinarians nationwide.

Use of Financial Measures

To supplement the financial statements presented in accordance with United States generally accepted accounting principles (GAAP), Abaxis uses the following non-GAAP financial measures: operating income, net income, net income per share and operating 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. For more information on these non-GAAP financial measures, refer to the tables captioned "Non-GAAP Net Income and Non-GAAP Net Income Per Share" and "Non-GAAP Operating Income Per Share" included at the end of this release.

Non-GAAP Net Income and Non-GAAP Net Income per Share.  Abaxis defines non-GAAP net income and non-GAAP net income per share as net income and net income per share excluding from net income the recognized gain from our legal settlement with Cepheid and related costs and operating expenses, including the portion of our income tax provision associated with such settlement.  Abaxis uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons.  Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding Abaxis' performance and liquidity by excluding certain income, such as gain from legal settlement and related costs and operating expenses, that may not be indicative of its recurring core business operating results or operating performance.

Non-GAAP Operating Income per Share.  Abaxis defines operating income per share as operating income divided by the weighted average outstanding shares.  Management uses this measure in comparing Abaxis' operating results with historical performance and believes it provides meaningful and comparable information to management and investors to assist in their review of Abaxis' performance relative to prior periods and its competitors.

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' cash position, financial resources and potential for future growth, market acceptance and penetration of new or planned product offerings, and future recurring revenues and results of operations.  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 losses or system failures with respect to Abaxis' facilities or manufacturing operations, fluctuations in quarterly operating results, dependence on sole suppliers, the market acceptance of Abaxis' products and services, the continuing development of its products, required United States Food and Drug Administration clearance and other government approvals, risks associated with manufacturing and distributing its products on a commercial scale free of defects, risks related to the introduction of new instruments manufactured by third parties, risks associated with competing in the human diagnostic market, risks related to the protection of Abaxis' intellectual property or claims of infringement of intellectual property asserted by third parties, risks related to condition of the United States economy and other risks detailed under "Risk Factors" in Abaxis' Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2012 and Abaxis' other periodic reports filed from time to time 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





(In thousands, except per share data)





(Unaudited)











Three Months Ended

Six Months Ended


September 30,

September 30,


2012

2011

2012

2011

Revenues

$     44,258

$     40,025

$     86,272

$     76,028

Cost of revenues

21,135

18,004

40,300

34,784

Gross profit

23,123

22,021

45,972

41,244

Operating expenses:





   Research and development 

3,581

3,008

6,546

6,462

   Sales and marketing 

11,505

9,335

23,274

18,487

   General and administrative

4,621

4,495

7,943

7,914

   Gain from legal settlement

(17,250)

-

(17,250)

-

Total operating expenses

2,457

16,838

20,513

32,863

Income from operations

20,666

5,183

25,459

8,381

Interest and other income (expense), net

255

56

25

350

Income before income tax provision

20,921

5,239

25,484

8,731

Income tax provision

8,012

1,918

9,711

3,196

Net income

$     12,909

$       3,321

$     15,773

$       5,535

Net income per share:





  Basic net income per share

$         0.59

$         0.15

$         0.72

$         0.25

  Diluted net income per share

$         0.58

$         0.15

$         0.71

$         0.24






Shares used in the calculation of net income per share:





  Weighted average common shares outstanding - basic

21,920

22,290

21,869

22,484

  Weighted average common shares outstanding - diluted

22,306

22,564

22,280

22,850

 

 

ABAXIS, INC.



Condensed Consolidated Balance Sheets

(Unaudited and in thousands)





September 30,

March 31,


2012

2012

Current assets:



 Cash and cash equivalents

$             54,109

$     45,843

 Short-term investments

24,764

21,689

 Receivables, net

48,395

30,694

 Inventories

22,060

19,597

 Prepaid expenses and other current assets

2,099

5,423

 Net deferred tax assets, current

4,328

4,151

   Total current assets 

155,755

127,397

 Long-term investments

21,718

23,442

 Investment in unconsolidated affiliate

2,592

2,626

 Property and equipment, net

25,315

24,296

 Intangible assets, net

3,673

3,990

 Other assets

77

85

    Total assets

$           209,130

$   181,836




Current liabilities:



 Accounts payable

$               8,202

$       6,381

 Accrued payroll and related expenses

8,065

6,336

 Accrued taxes

3,531

266

 Other accrued liabilities

3,109

1,991

 Deferred revenue

1,280

1,212

 Warranty reserve

1,043

1,245

   Total current liabilities

25,230

17,431

Non-current liabilities:



 Deferred rent

691

641

 Net deferred tax liabilities

89

199

 Deferred revenue

2,913

2,396

 Warranty reserve

437

601

 Notes payable, less current portion

733

783

   Total non-current liabilities

4,863

4,620

   Total liabilities

30,093

22,051

Shareholders' equity:



 Common stock

113,520

110,063

 Retained earnings 

65,470

49,697

 Accumulated other comprehensive income

47

25

   Total shareholders' equity

179,037

159,785

   Total liabilities and shareholders' equity

$           209,130

$   181,836

 

 

Non-GAAP Net Income and Non-GAAP Net Income Per Share




(In thousands, except per share data)





(Unaudited)















Three Months Ended September 30, 2012

Six Months Ended September 30, 2012


GAAP


Non-GAAP

GAAP


Non-GAAP


Results

Adjustments (1)

Results

Results

Adjustments (1)

Results

Revenues

$     44,258

$                            -

$         44,258

$     86,272

$                            -

$         86,272

Cost of revenues

21,135

(112)

21,023

40,300

(112)

40,188

Gross profit

23,123

112

23,235

45,972

112

46,084

Operating expenses:







   Research and development 

3,581

(145)

3,436

6,546

(145)

6,401

   Sales and marketing 

11,505

(648)

10,857

23,274

(648)

22,626

   General and administrative

4,621

(1,957)

2,664

7,943

(1,957)

5,986

   Gain from legal settlement

(17,250)

17,250

-

(17,250)

17,250

-

Total operating expenses

2,457

14,500

16,957

20,513

14,500

35,013

Income from operations

20,666

(14,388)

6,278

25,459

(14,388)

11,071

Interest and other income (expense), net

255

-

255

25

-

25

Income before income tax provision

20,921

(14,388)

6,533

25,484

(14,388)

11,096

Income tax provision

8,012

(5,595)

2,417

9,711

(5,595)

4,116

Net income

$     12,909

$                     (8,793)

$           4,116

$     15,773

$                     (8,793)

$           6,980

Net income per share:







  Basic net income per share

$         0.59


$             0.19

$         0.72


$             0.32

  Diluted net income per share

$         0.58


$             0.18

$         0.71


$             0.31

Operating income per share:







  Basic operating income per share

$         0.94


$             0.29

$         1.16


$             0.51

  Diluted operating income per share

$         0.93


$             0.28

$         1.14


$             0.50








Shares used in the calculation of net income per share:







  Weighted average common shares outstanding - basic

21,920


21,920

21,869


21,869

  Weighted average common shares outstanding - diluted

22,306


22,306

22,280


22,280

___________







(1) To eliminate adjustments for gain from legal settlement and related costs, operating expenses and income tax effect recorded in the three and six months ended September 30, 2012.

 

 

Non-GAAP Operating Income Per Share





(In thousands, except per share data)






Three Months Ended

Six Months Ended


September 30,

September 30,


2012

2011

2012

2011

Shares used in the calculation of operating income per share:





  Weighted average common shares outstanding - basic

21,920

22,290

21,869

22,484

  Weighted average common shares outstanding - diluted

22,306

22,564

22,280

22,850






Operating income per share - basic

$         0.94

$         0.23

$         1.16

$         0.37

Operating income per share - diluted

$         0.93

$         0.23

$         1.14

$         0.37











Revenues by Geographic Region





(In thousands)






Three Months Ended

Six Months Ended


September 30,

September 30,


2012

2011

2012

2011

North America

$     35,915

$     31,985

$     69,079

$     61,693

International

8,343

8,040

17,193

14,335

Total revenues

$     44,258

$     40,025

$     86,272

$     76,028











Revenues by Customer Group





(In thousands)






Three Months Ended

Six Months Ended


September 30,

September 30,


2012

2011

2012

2011

Medical Market

$       7,874

$       7,333

$     16,290

$     14,489

Veterinary Market

34,939

31,548

67,434

59,217

Other

1,445

1,144

2,548

2,322

Total revenues

$     44,258

$     40,025

$     86,272

$     76,028

 

 

SOURCE Abaxis, Inc.



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