Abaxis Reports Financial Performance with Record Sales for the Second Quarter of Fiscal 2011

Oct 26, 2010, 16:00 ET from Abaxis, Inc.

UNION CITY, Calif., Oct. 26 /PRNewswire-FirstCall/ -- ABAXIS, Inc. (Nasdaq: ABAX), a medical products company manufacturing point-of-care blood analysis systems, today reported financial results for the fiscal quarter ended September 30, 2010.

Record quarterly highlights include:

  • Revenues of $35.3 million, up 17% over last year's comparable quarter.
  • North America revenues of $29.5 million, up 19% over last year's comparable quarter.

Other quarterly highlights include:

  • Net income of $3.7 million, up 17% over last year's comparable quarter.
  • Total medical and veterinary instrument sales of $7.6 million, up 17% over last year's comparable quarter.
  • Veterinary market sales of $26.6 million, up 23% over last year's comparable quarter.
  • Medical market sales of $6.9 million, up 8% over last year's comparable quarter.
  • Total medical and veterinary reagent disc sales of $19.3 million, up 6% over last year's comparable quarter.
  • Cash, cash equivalents and investments as of September 30, 2010 of $100.6 million, compared to $87.6 million as of September 30, 2009.

Quarterly Results: For the fiscal quarter ended September 30, 2010, Abaxis reported revenues of $35.3 million, as compared with revenues of $30.3 million for the comparable period last year, an increase of 17 percent.  Revenues from instrument sales, which include chemistry analyzers, hematology instruments, coagulation analyzers and i-STAT analyzers, increased by an aggregate of $1.1 million, or 17 percent, over the same period last year.  Total medical and veterinary instrument sales were 988 units, up 7 percent over the same period last year.  Revenues from consumables, which include reagent discs, hematology reagent kits, coagulation cartridges, i-STAT cartridges and heartworm rapid tests, increased by an aggregate of $4.3 million, or 21 percent, over the same period last year.  The company reported net income of $3.7 million for the fiscal quarter ended September 30, 2010, compared to $3.2 million for the same period last year.  The company's effective tax rate in both three-month periods was 39 percent.  The company reported diluted net income per share of $0.17 (calculated based on 22,691,000 shares) for the three-month period ended September 30, 2010, compared to $0.14 per share (calculated based on 22,574,000 shares) for the same period last year.

Six-Month Results:  For the six-month period ended September 30, 2010, Abaxis reported revenues of $70.2 million, as compared with revenues of $59.9 million for the comparable period last year, an increase of 17 percent.  Revenues from instrument sales increased by an aggregate of $2.1 million, or 17 percent, over the same period last year.  Total medical and veterinary instrument sales were 2,013 units, up 14 percent over the same period last year.  Revenues from consumables increased by an aggregate of $8.7 million, or 21 percent, over the same period last year.  The company reported net income of $7.3 million, compared to $7.0 million for the same period last year.  The company's effective tax rate in the six-month period ended September 30, 2010, was 39 percent, compared to 40 percent for the same period last year.  The company reported diluted net income per share of $0.32 (calculated based on 22,736,000 shares) for the six-month period ended September 30, 2010, compared to $0.31 per share (calculated based on 22,492,000 shares) for the same period last year.

Other Reported Information:  Consumables revenues for the second quarter of fiscal 2011 were $25.3 million, up 21 percent over the $21.0 million reported for the same period last year.  Total sales in the medical market for the second quarter of fiscal 2011 were $6.9 million, an increase of 8 percent compared to the same period last year.  Medical sales worldwide, excluding sales to the U.S. government, during the second quarter of fiscal 2011 were $6.0 million, an increase of 7 percent compared to the same period last year.  Total sales in the veterinary market for the second quarter of fiscal 2011 were $26.6 million, an increase of 23 percent compared to the same period last year.  Veterinary reagent disc sales for the second quarter of fiscal 2011 were $14.8 million, an increase of 8 percent compared to the same period last year.  Non-cash compensation expense recognized for share-based awards during the second quarter of fiscal 2011 was $1.1 million, compared to $1.4 million for the same period last year.

Clint Severson, chairman and chief executive officer of Abaxis, commented, "On a year-over-year basis revenues and net income for the quarter were both up 17%, led by a 23% increase in veterinary market revenues and a 38% increase in the number of Piccolo chemistry analyzer units sold in the medical market compared to last year's second quarter.  We also achieved strong growth in consumables sales of 21% for the quarter.  We are very pleased with the traction that we are gaining across our various markets.  A strong focus on more effective sales and marketing efforts across all of our platforms has driven those gains."

Mr. Severson continued, "We are also very pleased that our razor/razorblade model continues to deliver outstanding results; 72% of our quarterly revenues are recurring and we believe that there is still headroom to drive this percentage higher in the coming years.  In that regard, we believe that the substantial increase in the number of medical instruments placed in urgent care centers and in the internal medicine markets during the quarter will be solid contributors to our recurring revenue model.  Additionally, we are dedicated to a strong and consistent research and development process to introduce new products that effectively diagnose conditions in both the veterinary and medical markets and that provide an additional cash flow stream to the medical professionals that rely on Abaxis technology.  We also look forward to entering into the rapid testing market by taking full advantage of the lateral flow technology that we licensed.  We believe there are exciting growth opportunities ahead in the coming years."

Conference Call

Abaxis has scheduled a conference call to discuss its results at 4:15 p.m. Eastern Time on Tuesday, October 26, 2010.  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 is available by visiting http://www.abaxis.com for the next 30 days or by calling (877) 344-7529 or (412) 317-0088, access code 445369, through October 29, 2010.  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.

Use of Financial Measures

To supplement the financial statements presented in accordance with United States generally accepted accounting principles (GAAP), Abaxis uses operating income per share, a non-GAAP financial measure.  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 this non-GAAP financial measure, refer to the table captioned "Operating Income Per Share" included at the end of this release.  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.

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 of new or planned product offerings, process improvements and product manufacturing quality and efficiencies in future production of our products.  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 the market acceptance of the company's products and 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 entering the human diagnostic market on a larger scale, risks related to the protection of the company's intellectual property or claims of infringement of intellectual property asserted by third parties, risks related to condition of the United States economy, risks involved in carrying of inventory and other risks detailed under "Risk Factors" in Abaxis' Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2010 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 on Following Pages

ABAXIS, INC.

Condensed Consolidated Statements of Income

(in thousands, except per share data)

(Unaudited)

Three Months Ended

Six Months Ended

September 30,

September 30,

2010

2009

2010

2009

Revenues

$            35,277

$            30,262

$            70,230

$            59,887

Cost of revenues

15,527

12,411

30,696

24,881

Gross profit

19,750

17,851

39,534

35,006

Operating expenses:

  Research and development

3,296

2,594

6,374

5,167

  Sales and marketing

8,408

7,582

17,041

13,942

  General and administrative

2,652

2,689

4,776

5,187

Total operating expenses

14,356

12,865

28,191

24,296

Income from operations

5,394

4,986

11,343

10,710

Interest and other income (expense), net

757

292

652

806

Income before income tax provision

6,151

5,278

11,995

11,516

Income tax provision

2,402

2,081

4,666

4,563

Net income

$              3,749

$              3,197

$              7,329

$              6,953

Net income per share:

 Basic net income per share

$                0.17

$                0.15

$                0.33

$                0.32

 Diluted net income per share

$                0.17

$                0.14

$                0.32

$                0.31

Shares used in the calculation of net income per share:

 Weighted average common shares outstanding - basic

22,317

22,005

22,264

21,985

 Weighted average common shares outstanding - diluted

22,691

22,574

22,736

22,492

ABAXIS, INC.

Condensed Consolidated Balance Sheets

(Unaudited and in thousands)

September 30,

March 31,

2010

2010

Current assets:

Cash and cash equivalents

$         40,650

$         27,857

Short-term investments

31,293

32,343

Receivables, net

24,878

23,714

Inventories

17,950

19,067

Prepaid expenses and other current assets

2,307

1,588

Net deferred tax assets, current

3,297

3,773

Total current assets

120,375

108,342

Long-term investments

28,683

36,319

Property and equipment, net

15,772

15,544

Intangible assets, net

4,313

4,600

Net deferred tax assets, non-current

2,935

2,935

Other assets

103

76

Total assets

$       172,181

$       167,816

Current liabilities:

Accounts payable

$           5,483

$           9,404

Accrued payroll and related expenses

5,754

5,615

Accrued taxes

267

400

Other accrued liabilities

1,217

1,256

Deferred revenue

975

1,157

Warranty reserve

798

1,183

 Total current liabilities

14,494

19,015

Non-current liabilities:

Deferred rent

328

163

Deferred revenue

1,674

1,359

Warranty reserve

53

160

 Total non-current liabilities

2,055

1,682

Shareholders' equity:

 Common stock

126,234

125,050

 Retained earnings

29,398

22,069

  Total shareholders' equity

155,632

147,119

  Total liabilities and shareholders' equity

$       172,181

$       167,816

Operating Income Per Share

(In thousands, except per share data)

Three Months Ended

Six Months Ended

September 30,

September 30,

2010

2009

2010

2009

Shares used in the calculation of operating income per share:

 Weighted average common shares outstanding - basic

22,317

22,005

22,264

21,985

 Weighted average common shares outstanding - diluted

22,691

22,574

22,736

22,492

Operating income per share - basic

$            0.24

$            0.23

$            0.51

$            0.49

Operating income per share - diluted

$            0.24

$            0.22

$            0.50

$            0.48

Revenues by Geographic Region

(In thousands)

Three Months Ended

Six Months Ended

September 30,

September 30,

2010

2009

2010

2009

North America

$        29,528

$        24,774

$        57,317

$        48,885

International

5,749

5,488

12,913

11,002

Total revenues

$        35,277

$        30,262

$        70,230

$        59,887

Revenues by Customer Group

(In thousands)

Three Months Ended

Six Months Ended

September 30,

September 30,

2010

2009

2010

2009

Medical Market

$          6,857

$          6,345

$        13,295

$        12,108

Veterinary Market

26,649

21,684

53,467

43,507

Other

1,771

2,233

3,468

4,272

Total revenues

$        35,277

$        30,262

$        70,230

$        59,887

SOURCE Abaxis, Inc.



RELATED LINKS

http://www.abaxis.com