ABAXIS REPORTS FINANCIAL PERFORMANCE WITH RECORD REVENUES FOR
THE SECOND QUARTER OF FISCAL 2012
Union City, California – October 25, 2011 - 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, 2011.
Record quarterly highlights include:
| · | Revenues of $40.0 million, up 13% over last year’s comparable quarter. |
| · | North America revenues of $32.0 million, up 8% over last year’s comparable quarter. |
| · | Veterinary market sales of $31.5 million, up 18% over last year’s comparable quarter. |
| · | Total medical and veterinary reagent disc sales of $22.8 million, up 18% over last year’s comparable quarter. |
Other quarterly highlights include:
| · | Medical market sales of $7.3 million, up 7% over last year’s comparable quarter. |
| · | Total medical and veterinary instrument sales of $8.8 million, up 15% over last year’s comparable quarter. |
| · | Total medical and veterinary instrument sales of 1,227 units, up 24% over last year’s comparable quarter. |
| · | Total medical and veterinary reagent disc sales of 1.8 million units, up 16% over last year’s comparable quarter. |
Quarterly Results: For the fiscal quarter ended September 30, 2011, Abaxis reported revenues of $40.0 million, as compared with revenues of $35.3 million for the comparable period last year, an increase of 13 percent. Revenues from instruments, which include chemistry analyzers, hematology instruments, VSpro coagulation and specialty analyzers and i-STAT analyzers, increased by an aggregate of $1.1 million, or 15 percent, over the same period last year. Revenues from consumables, which include reagent discs, hematology reagent kits, VSpro coagulation and specialty cartridges, i-STAT cartridges and rapid tests, increased by an aggregate of $4.2 million, or 17 percent, over the same period last year. Abaxis reported net income of $3.3 million for the fiscal quarter ended September 30, 2011, compared to $3.7 million for the same period last year. Abaxis’ effective tax rate in the quarter ended September 30, 2011 was 37 percent, compared to 39 percent for the same period last year. Abaxis reported diluted net income per share of $0.15 (calculated based on 22,564,000 shares) for the three-month period ended September 30, 2011, compared to $0.17 per share (calculated based on 22,691,000 shares) for the same period last year.
Six-Month Results: For the six-month period ended September 30, 2011, Abaxis reported revenues of $76.0 million, as compared with revenues of $70.2 million for the comparable period last year, an increase of 8 percent. Revenues from instrument sales increased by an aggregate of $1.3 million, or 9 percent, over the same period last year. Revenues from consumables increased by an aggregate of $5.6 million, or 11 percent, over the same period last year. The company reported net income of $5.5 million, compared to $7.3 million for the same period last year. The company’s effective tax rate in the six-month period ended September 30, 2011, was 37 percent, compared to 39 percent for the same period last year. The company reported diluted net income per share of $0.24 (calculated based on 22,850,000 shares) for the six-month period ended September 30, 2011, compared to $0.32 per share (calculated based on 22,736,000 shares) for the same period last year.
Other Reported Information: Total sales in the medical market for the second quarter of fiscal 2012 were $7.3 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 2012 were $6.3 million, an increase of 6 percent, compared to the same period last year. Total sales in the veterinary market for the second quarter of fiscal 2012 were $31.5 million, an increase of 18 percent, compared to the same period last year. Veterinary reagent disc sales for the second quarter of fiscal 2012 were $17.6 million, an increase of 18 percent compared to the same period last year. Non-cash compensation expense recognized for share-based awards during the second quarter of fiscal 2012 was $1.6 million, compared to $1.1 million for the same period last year. Cash, cash equivalents and investments decreased during the second quarter of fiscal 2012 by $24.2 million due to our stock repurchase program. Costs related to development of our full service commercial laboratory for veterinarians, Abaxis Veterinary Reference Laboratories (AVRL), during the three and six months ended September 30, 2011, were $1.1 million and $1.6 million, respectively.
“This was a very solid quarter for Abaxis,” commented Clint Severson, chairman and chief executive officer of Abaxis. “We achieved record revenues for the quarter exceeding $40.0 million, total instrument sales in units grew 24%, total reagent disc sales increased 18%, and we experienced solid international sales growth, approaching 40%. We were particularly pleased with the growth in sales in Europe and Asia; which we believe bodes well for the future. Our markets, by and large, appear to be very strong at the moment. While we still have work to do in accelerating medical instrument sales, we are confident in the accuracy and reliability of our Piccolo medical instrument and of our ability to gain market share going forward. We are very pleased with the results of the second quarter.”
Mr. Severson continued, “On another front, in our second quarter of fiscal 2012, AVRL went live with our partners at Kansas State University. We have completed the bulk of the initial investment to get this venture operational and we look forward to serving the veterinary community nationwide with our leading-edge technology and customer service. Over the past 16 years we have built a high level of credibility with the segment of the veterinary community that relies on our point-of-care instruments to compassionately care for their patients on a timely basis. We believe that this community will give AVRL the opportunity to earn their reference laboratory business. Our expectation is to leverage that credibility and develop a consistently growing business in the years to come.”
“We are also devoted to enhancing the market capitalization of the company for the benefit of our loyal shareholders. The Board has authorized us to acquire up to $40.0 million of Abaxis common stock in the open market. In our second quarter of fiscal 2012, we acquired approximately 1.2 million shares in the open market for approximately $27.3 million. We believe this is a sound investment and we will take the opportunity to support our shareholders in the future when we believe the price is appropriate. We are very upbeat about the prospects of the company 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 25, 2011. 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 10005496, through November 1, 2011. 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 in dogs, Parvovirus and Giardia. Abaxis, through its AVRL Division, provides routine laboratory testing as well as specialty testing for veterinarians nationwide. This state-of-the-art commercial laboratory will be the hub of the Abaxis Veterinary Reference Laboratories (AVRL).
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 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, the continuing development of its products and the Abaxis Veterinary Reference Laboratories, 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, 2011 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, | |
| | | 2011 | | | 2010 | | | 2011 | | | 2010 | |
| Revenues | | $ | 40,025 | | | $ | 35,277 | | | $ | 76,028 | | | $ | 70,230 | |
| Cost of revenues | | | 18,004 | | | | 15,527 | | | | 34,784 | | | | 30,696 | |
| Gross profit | | | 22,021 | | | | 19,750 | | | | 41,244 | | | | 39,534 | |
| Operating expenses: | | | | | | | | | | | | | | | | |
| Research and development | | | 3,008 | | | | 3,296 | | | | 6,462 | | | | 6,374 | |
| Sales and marketing | | | 9,335 | | | | 8,408 | | | | 18,487 | | | | 17,041 | |
| General and administrative | | | 4,495 | | | | 2,652 | | | | 7,914 | | | | 4,776 | |
| Total operating expenses | | | 16,838 | | | | 14,356 | | | | 32,863 | | | | 28,191 | |
| Income from operations | | | 5,183 | | | | 5,394 | | | | 8,381 | | | | 11,343 | |
| Interest and other income (expense), net | | | 56 | | | | 757 | | | | 350 | | | | 652 | |
| Income before income tax provision | | | 5,239 | | | | 6,151 | | | | 8,731 | | | | 11,995 | |
| Income tax provision | | | 1,918 | | | | 2,402 | | | | 3,196 | | | | 4,666 | |
| Net income | | $ | 3,321 | | | $ | 3,749 | | | $ | 5,535 | | | $ | 7,329 | |
| Net income per share: | | | | | | | | | | | | | | | | |
| Basic net income per share | | $ | 0.15 | | | $ | 0.17 | | | $ | 0.25 | | | $ | 0.33 | |
| Diluted net income per share | | $ | 0.15 | | | $ | 0.17 | | | $ | 0.24 | | | $ | 0.32 | |
| | | | | | | | | | | | | | | | | |
| Shares used in the calculation of net income per share: | | | | | | | | | | | | | | | | |
| Weighted average common shares outstanding - basic | | | 22,290 | | | | 22,317 | | | | 22,484 | | | | 22,264 | |
| Weighted average common shares outstanding - diluted | | | 22,564 | | | | 22,691 | | | | 22,850 | | | | 22,736 | |
ABAXIS, INC.
Condensed Consolidated Balance Sheets
(Unaudited and in thousands)
| | | September 30, | | | March 31, | |
| | | 2011 | | | 2011 | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 37,994 | | | $ | 43,471 | |
| Short-term investments | | | 17,649 | | | | 25,981 | |
| Receivables, net | | | 27,490 | | | | 27,880 | |
| Inventories | | | 19,109 | | | | 19,814 | |
| Prepaid expenses and other current assets | | | 5,068 | | | | 3,496 | |
| Net deferred tax assets, current | | | 3,048 | | | | 3,422 | |
| Total current assets | | | 110,358 | | | | 124,064 | |
| Long-term investments | | | 29,099 | | | | 36,237 | |
| Investment in unconsolidated affiliate | | | 2,697 | | | | 2,769 | |
| Property and equipment, net | | | 22,913 | | | | 19,637 | |
| Intangible assets, net | | | 3,919 | | | | 4,216 | |
| Net deferred tax assets, non-current | | | 1,203 | | | | 1,203 | |
| Other assets | | | 111 | | | | 134 | |
| Total assets | | $ | 170,300 | | | $ | 188,260 | |
| | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 6,996 | | | $ | 6,173 | |
| Accrued payroll and related expenses | | | 6,873 | | | | 6,129 | |
| Accrued taxes | | | 232 | | | | 559 | |
| Other accrued liabilities | | | 1,788 | | | | 1,677 | |
| Deferred revenue | | | 1,103 | | | | 953 | |
| Warranty reserve | | | 1,123 | | | | 1,031 | |
| Total current liabilities | | | 18,115 | | | | 16,522 | |
| Non-current liabilities: | | | | | | | | |
| Deferred rent | | | 530 | | | | 416 | |
| Deferred revenue | | | 2,105 | | | | 1,737 | |
| Warranty reserve | | | 313 | | | | 191 | |
| Notes payable, less current portion | | | 834 | | | | 746 | |
| Total non-current liabilities | | | 3,782 | | | | 3,090 | |
| Total liabilities | | | 21,897 | | | | 19,612 | |
| Shareholders' equity: | | | | | | | | |
| Common stock | | | 106,262 | | | | 132,042 | |
| Retained earnings | | | 42,141 | | | | 36,606 | |
| Total shareholders' equity | | | 148,403 | | | | 168,648 | |
| Total liabilities and shareholders' equity | | $ | 170,300 | | | $ | 188,260 | |
Operating Income Per Share
(In thousands, except per share data)
| | | Three Months Ended | | | Six Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2011 | | | 2010 | | | 2011 | | | 2010 | |
| Shares used in the calculation of operating income per share: | | | | | | | | | | | | |
| Weighted average common shares outstanding - basic | | | 22,290 | | | | 22,317 | | | | 22,484 | | | | 22,264 | |
| Weighted average common shares outstanding - diluted | | | 22,564 | | | | 22,691 | | | | 22,850 | | | | 22,736 | |
| | | | | | | | | | | | | | | | | |
| Operating income per share - basic | | $ | 0.23 | | | $ | 0.24 | | | $ | 0.37 | | | $ | 0.51 | |
| Operating income per share - diluted | | $ | 0.23 | | | $ | 0.24 | | | $ | 0.37 | | | $ | 0.50 | |
Revenues by Geographic Region
(In thousands)
| | | Three Months Ended | | | Six Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2011 | | | 2010 | | | 2011 | | | 2010 | |
| North America | | $ | 31,985 | | | $ | 29,528 | | | $ | 61,693 | | | $ | 57,317 | |
| International | | | 8,040 | | | | 5,749 | | | | 14,335 | | | | 12,913 | |
| Total revenues | | $ | 40,025 | | | $ | 35,277 | | | $ | 76,028 | | | $ | 70,230 | |
Revenues by Customer Group
(In thousands)
| | | Three Months Ended | | | Six Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2011 | | | 2010 | | | 2011 | | | 2010 | |
| Medical Market | | $ | 7,333 | | | $ | 6,857 | | | $ | 14,489 | | | $ | 13,295 | |
| Veterinary Market | | | 31,548 | | | | 26,649 | | | | 59,217 | | | | 53,467 | |
| Other | | | 1,144 | | | | 1,771 | | | | 2,322 | | | | 3,468 | |
| Total revenues | | $ | 40,025 | | | $ | 35,277 | | | $ | 76,028 | | | $ | 70,230 | |
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