ZOLL's EPS Beats, Profit Doubles - Analyst Blog

Resuscitation devices and software company ZOLL Medical (ZOLL) reported fourth-quarter fiscal 2010 (ended October 3) earnings of 33 cents, beating the Zacks Consensus Estimate of 31 cents and exceeding the year-ago earnings of 16 cents. Net income doubled year over year to $7.2 million.

For fiscal 2010, earnings of 87 cents per share also beat the Zacks Consensus Estimate of 85 cents. The results were driven by sustained strong performance of the company's LifeVest wearable defibrillator business.

Revenues for the quarter shot up 12% year over year to $120.4 million, but missed the Zacks Consensus Estimate of $124 million. For fiscal 2010, revenues leapt 15% to $444 million, also below the Zacks Consensus Estimate of $448 million. Sales for the year include a roughly $18.9 million contribution from the Temperature Management business (acquired in May 2009). Revenue growth was also supported by favorable foreign exchange translation. 

Sales in the North American market, which account for most of ZOLL Medical's revenues, climbed roughly 13% year over year to $89.7 million in the quarter. North American hospital market revenues rose 3% year over year to $29.9 million, manifesting signs of gradual recovery. U.S. military sales were flat year over year at $8.9 million. Revenues from North American pre-hospital market soared 20% year over year to $53.5 million. International sales rose 7% to $30.7 million.

LifeVest revenues rocketed 64% year over year to $21.2 million in the fourth quarter while AutoPulse revenues surged 28% to $5.3 million. LifeVest business is benefiting from associated sales force enhancements and increased awareness of the product. ZOLL Medical has established a direct sales force in Germany in April 2010, which exclusively focuses on the LifeVest business in that country. LifeVest has been already prescribed to more than 30,000 patients at high risk of sudden cardiac arrest.

Gross margin improved to 55% in the quarter from 50% a year-ago. The growth was primarily attributable to better pricing in the North American core defibrillator business. Total expenses increased roughly 10% year over year to $55.1 million. ZOLL Medical exited fiscal 2010 with cash and cash equivalents of $59.1 million, up 16% year over year.

ZOLL Medical is a leading player in the global market for external defibrillators, which is worth more than $1 billion. The company is expanding its presence in the international markets, representing a major impetus for growth.

In the U.S. defibrillation market, ZOLL Medical competes with Physio-Control, a wholly-owned unit of Medtronic (MDT), and Philips (PHG). The company remains committed to expanding its product range to sustain growth in this market.

We believe that ZOLL Medical's wide range of products coupled with its expansion initiatives will continue driving it forward in the coming years. However, a still soft capital spending backdrop remains a concern. Currently, we have a Neutral recommendation on ZOLL Medical.

 
MEDTRONIC (MDT): Free Stock Analysis Report
 
KONINKLIJKE PHL (PHG): Free Stock Analysis Report
 
ZOLL MEDICAL CO (ZOLL): Free Stock Analysis Report
 
Zacks Investment Research