Financial

RTI Surgical (RTIX) Beats on Q4 Earnings and Revenues

RTI Surgical Inc. RTIX reported adjusted earnings of 9 cents per share in the fourth quarter of 2015, which beat the Zacks Consensus Estimate of 5 cents. Adjusted earnings per share (EPS) surged almost 80% on a year-over-year basis primarily buoyed by an improvement in the top line.

RTI Surgical’s fourth-quarter revenue amounted to $76.1 million, way ahead of the Zacks Consensus Estimate of $68 million. The top line reflects an improvement of 7.2% on a year-over-year basis and is also higher than management’s guided range of $68–$69 million.

The fourth-quarter performance was largely influenced by increased orders from commercial distributors. Meanwhile, the commercial business, per management, continues to be unpredictable owing to unfavorable timing of distributor orders.

The impressive top-line performance can be attributed to higher revenues from Ortho fixation (up 61.1%), Bone graft substitutes and general orthopedic (up 8.3%), Dental (up 10.4%), and Surgical specialties (up 0.6%). However, these were partially offset by lower revenues from Spine (down 12%), Sports medicine (down 4.2%) and Other (down 9.2%).

Revenues generated from the domestic market amounted to $70.6 million, which reflects year-over-year growth of almost 8%. International revenues, on the other hand, stands unchanged at $5.5 million. On a constant currency basis, international revenues increased 11% from the year-ago quarter.

For full-year 2015, revenues amounted to $282.3 million and improved 7.4% on a year-over-year basis. Domestic revenues increased nearly 9% to $260.4 million, while international revenues fell 8.4% (up 4% at constant currency) to $21.9 million.

Gross margin contracted 40 basis points (bps) to 53%, due to higher costs of processing and distribution. Adjusted EBITDA, as a percentage of revenues, improved 400 bps to 18%.

Zacks Rank and Key Picks

Currently, RTI Surgical has a Zacks Rank #3 (Hold). Better-ranked stocks in the medical sector are Abiomed ABMD, CryoLife CRY and Luminex LMNX. All the stocks sport a Zacks Rank #1 (Strong Buy).

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Josh Sandberg

Josh Sandberg is the President of Ortho Spine Partners and Partner for The De Angelis Group. He also serves as Co-Founder and Editor of OrthoSpineNews.

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