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BioTelemetry (BEAT) Q3 Earnings Miss, Revenues Meet Estimates

Zacks

BioTelemetry Inc. BEAT reported third-quarter 2017 adjusted earnings of 16 cents per share, which widely missed the Zacks Consensus Estimate of 24 cents as well as the year-ago equivalent of 21 cents.

Revenue Details

Revenues increased 52.7% year over year to $81 million, in line with the Zacks Consensus Estimate. Revenues were however slightly below the company’s expectations due to the hurricanes. The year-over-year upside has been primarily driven by a $29.1-million increase in Healthcare revenues owing to the acquisition of LifeWatch and rising MCOT patients. However, this was partially offset by the $1-million impact from the slower Medicare rate effective Jan 1.

Notably, this marked the 21st straight quarter of year-over-year revenue growth.


BioTelemetry, Inc. Price, Consensus and EPS Surprise

BioTelemetry, Inc. Price, Consensus and EPS Surprise | BioTelemetry, Inc. Quote

However, research revenues declined $1.1 million due to lower cardiac study revenues, partially offset by higher imaging revenues. Technology revenues were flat with the prior-year quarter level.

Margins

Gross profits increased 49.3% from the year-ago quarter to $46.1 million, primarily driven by higher revenues. The gross margin contracted 139 basis points (bps) due to the impact of the Medicare rate reduction and the recent acquisitions which carry lower margins than the existing businesses. The decline was partially offset by volume-driven efficiencies.

Adjusted operating expenses totaled $38.3 million, reflecting a 66.5% increase from the year-ago quarter. The upside was led by increases in general and administrative, sales and marketing (S&M) and research and development (R&D) expenses by 82.8%, 38.5% and 53.3% year over year, respectively.

Meanwhile, adjusted operating margin contracted 530 bps to 13.3%.

Financial Update

BioTelemetry exited the third quarter of 2017 with cash and cash equivalents of $26.2 million, as compared with $26.9 million at the end of the second quarter.

Guidance

BioTelemetry currently expects 2017 reported revenues in the range of $283 million to $284 million, lower than the earlier range of $285 million to $290 million. The Zacks Consensus Estimate for 2017 revenues is pegged at $284.2 million.

The company reaffirmed the fourth-quarter revenue range at $89 million to $92 million. The Zacks Consensus Estimate for the same is pegged at $88.6 million.

Our Take

BioTelemetry exited the third quarter on a mixed note. The year-over-year improvement in revenues buoys optimism. We are encouraged by the company’s efforts toward product innovation through research and development. However, a decline in gross and operating margin is a matter of concern.

Zacks Rank & Key Picks

BioTelemetry has a Zacks Rank #5 (Strong Sell).

A few better-ranked stocks in the broader medical sector are PetMed Express, Inc. PETS, Luminex Corporation LMNX and Myriad Genetics, Inc. MYGN. Notably, PetMed, Luminex and Myriad Genetics sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed reported earnings per share of 43 cents in the second quarter of fiscal 2018, up 79.2% from the year-ago quarter’s 24 cents. Also, gross margin expanded 548 bps year over year to 35.2% in the reported quarter.

Luminex reported adjusted earnings per share of 19 cents in the third quarter of 2017, up 216.7% year over year. Revenues increased almost 4.1% year over year to $74.1 million.

Myriad Genetics reported adjusted earnings per share of 26 cents in the first quarter of fiscal 2018, up 13% year over year. Total revenues rose 7.2% year over year to $190.2 million in the first quarter.

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