Misonix (MSON) Misses Q3 EPS by 2c, Revenues Miss

Misonix (NASDAQ: MSON) reported Q3 EPS of ($0.34), $0.02 worse than the analyst estimate of ($0.32). Revenue for the quarter came in at $17.9 million versus the consensus estimate of $18.58 million.

Third Quarter Fiscal Year 2020 Highlights:

• The onset of COVID-19 (“coronavirus”) materially impacted the industry and Misonix’s business in the third quarter of fiscal 2020 as hospitals were required to postpone elective procedures for non-immediate life-threatening conditions to accommodate capacity to treat patients effected by the COVID-19 pandemic.
• As a result of the challenges associated with COVID-19, on April 2, 2020, the Company pre-announced its third quarter 2020 revenue results for the three-month period ended March 31, 2020 and withdrew its previously issued financial outlook for fiscal 2020 of product revenue growth in excess of 20% and gross profit margins of 70%.
• Third quarter fiscal 2020 revenue increased 87.3% to $17.9 million, compared to $9.6 million in the third quarter of fiscal 2019. On a pro forma basis, assuming Misonix had acquired Solsys for the full third quarter of fiscal 2019, total revenue for fiscal third quarter 2020 increased 8.6%, including pro forma:
  • Domestic revenue growth of 19.7%.
  • International revenue decline of 24.7%.
• In the third quarter of fiscal 2020, Misonix continued its limited market release of the Nexus platform, yielding domestic surgical growth of 41.4%.
• Gross profit percentage on sales for the fiscal third quarter was 70.3%, compared with 70.7% in the prior fiscal year comparable quarter.
• Operating expenses increased $9.6 million during the fiscal third quarter of 2020 as compared with the fiscal third quarter of 2019, resulting from the acquisition of Solsys Medical.
• Net loss for the fiscal third quarter of 2020 was $5.6 million, or a loss of $0.34 per diluted share, compared to a net loss of $1.6 million, or a loss of $0.17 per share, in the prior year comparable period. The year-over-year decline was principally attributable to the acquisition of Solsys Medical and the negative impact of COVID-19 on market conditions.
• In January 2020, Misonix completed an underwritten public offering yielding gross proceeds to the Company of $34.6 million, through the issuance of 1,868,750 shares of common stock at $18.50 per share.

Stavros Vizirgianakis, President and Chief Executive Officer of Misonix stated, “The COVID-19 pandemic presented serious challenges for the global healthcare industry during our fiscal third quarter, as the rapid increase in coronavirus patients placed an unprecedented strain on hospital capacity requiring providers to postpone most elective procedures. Despite these challenges, Misonix generated year-over-year product revenue growth of 87.3% in the third quarter and 67.6% for the first nine months of fiscal 2020, reflecting contributions from the September 2019 acquisition of Solsys Medical, the success of our recently launched Nexus platform and organic revenue growth across our product line.

“During the third quarter, we proceeded with an accelerated launch of our Nexus product while continuing to advance the integration of Solsys onto the Misonix platform. In addition, we continued to make significant strides in the development of our wound care division, including further training and integrating our sales team and refining our go to market strategy, as well as investing in various medical studies to further prove the efficacy of our solutions. Together, these initiatives helped to partially offset the impact of COVID-19 during the second half of the quarter. Starting in late February, we began to experience a slowdown across our international markets, with the domestic market slowing down in March, significantly impacting our top-line in the latter part of the quarter.

“As procedural volumes continued to decline into the fiscal fourth quarter, we have experienced a marked slowdown across both our surgical and wound business. To offset these challenges, we have undertaken meaningful measures to reduce operating expenses and have implemented a number of initiatives across the Company including salary reductions, headcount reductions, elimination of discretionary spending, restricting travel, and generally decreasing operating expenses throughout the Company and realigning our company-wide cost structure.

“As the world continues to confront the challenges brought on by the spread of the coronavirus, our top priority is the health and well-being of our employees and the doctors, patients and hospitals we serve. While this pandemic has presented serious challenges and setbacks for the healthcare industry, we believe our leading surgical and wound products and improving competitive positions in our markets combined with the experience of our team and the actions we are taking to reduce costs and support our liquidity position will be key factors in our ability to achieve our long-term growth potential and create new value for our shareholders. As hospitals across the United States and other geographies begin to allow elective procedures to once again take place, we are confident that demand for our solutions will return and that we will once again see growth across our business reflecting the value our solutions bring to both physicians and patient outcomes."

For earnings history and earnings-related data on Misonix (MSON) click here.

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