ABAX Abaxis, Inc. (delisted)

Abaxis Inc. (ABAX) reported second quarter 2012 EPS of 15 cents, missing the year-ago quarter EPS by 2 cents, but ahead of the Zacks Consensus Estimate of 13 cents.

Net sales during the quarter increased 13% year over year to $40 million, beating the Zacks Consensus Estimate of $38 million. The growth was based on higher sales in both North America (up 8% to $31.9 million) and in the international market (up 39.9% to $8.0 million).

Within the customer group, Veterinary market revenues witnessed an upside of 18% in the reported quarter to $31.5 million while the Medical Market grew 7% to $7.3 million. However, sales from the Other customer group plummeted 35.4% year over year to $1.1 million. Excluding sales to the US government, worldwide Medical sales spiked 6% year over year to $6.3 million.

Total consumable sales climbed 17% year over year to $4.2 million while instrumental sales jumped 15% to $1.1 million. Moreover, sales for medical and veterinary reagent discs and medical and veterinary instruments increased 18% to $22.8 million and 15% to $8.8 million, respectively.

Although gross profit in the quarter increased 11.5% year over year to $22.0 million, the company witnessed 96 basis points (bps) drag in gross margin to 55.02%. This was mainly the result of a huge 15.9% increase in cost of revenues.

Alongside, the company witnessed a 17.3% rise in operating expenses to $16.8 million. As a result, operating income decreased 3.9% to $5.2 million, leading to a 240-bp contraction in operating margin to 12.9%.

Abaxis exited the second quarter with cash and cash equivalents and short-term investments of $55.6 million, down from with $69.5 million at the end of March 2010.

Abaxis operates in a niche market of portable medical and veterinary blood analysis systems. Low worldwide penetration provides scope for substantial growth in this niche industry. The company’s margins continue to disappoint based on several challenges. The presence of many big players like Alere (ALR) has made the human and veterinary diagnostic market highly competitive. Furthermore, soft international market is also a headwind for Abaxis.

 
ABAXIS INC (ABAX): Free Stock Analysis Report
 
ALERE INC (ALR): Free Stock Analysis Report
 
Zacks Investment Research