RTI Surgical (RTIX) Reports In-Line Q2 EPS, Beats on Revenues; Lowers FY17 EPS Guidance Below Consensus, Reduces High-End of FY17 Revenues Below Consensus

RTI Surgical (NASDAQ: RTIX) reported Q2 EPS of $0.02, in-line with the analyst estimate of $0.02. Revenue for the quarter came in at $72.1 million versus the consensus estimate of $69.89 million.

Fiscal 2017 Outlook

The company has developed its guidance based on its ongoing restructuring and operational improvement program, its current business profile and existing market conditions.

Within this context, based on second quarter results and the transition of the cardiothoracic closure business from a direct business to a commercial business as a result of the sale, RTI expects full year revenues for 2017 to be between $274 million and $280 million compared to prior guidance of between $274 million and $285 million, with direct revenues anticipated to grow low-to-mid single digits on a percentage basis compared to 2016, while commercial/other revenues are expected to be relatively flat on a percentage basis.

As detailed in the reconciliation provided later in this release, excluding the severance-related expenses in the first half of 2017, the expected third quarter 2017 gain on the sale of the cardiothoracic closure business, and including the transition of the cardiothoracic closure business from a direct business to a commercial business as a result of the sale, RTI expects adjusted full year net income per fully diluted common share to be between $0.04 and $0.08 compared to prior guidance of between $0.05 and $0.10, based on 60 million fully diluted shares outstanding.

RTI will continue to evaluate its operating platform throughout the year and will update its top and bottom line guidance as its actions might warrant.

GUIDANCE:

RTI Surgical sees FY2017 EPS of $0.04-$0.08, versus the consensus of $0.08. RTI Surgical sees FY2017 revenue of $274-280 million, versus the consensus of $281.39 million.

Second Quarter 2017

RTI worldwide revenues were $72.1 million for the second quarter of 2017, an increase of 7 percent. Direct revenues were $43.6 million for the second quarter of 2017, an increase of 10 percent compared to the second quarter of 2016, with double-digit growth reported in RTI’s spine, surgical specialties and cardiothoracic direct business segments. Commercial/other revenues were $28.6 million for the second quarter of 2017, an increase of 2 percent compared to the second quarter of 2016.

Net loss applicable to common shares of $2.6 million in the second quarter of 2017, or $0.04 per fully diluted common share, primarily due to a previously disclosed pre-tax charge for severance-related expenses totaling $3.4 million. As outlined in the reconciliation tables that follow, excluding these charges, adjusted net income applicable to common shares was $965,000 and adjusted net income per fully diluted common share was $0.02.

Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) were $8.3 million, or 11 percent of second quarter revenue.

For earnings history and earnings-related data on RTI Surgical (RTIX) click here.

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