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ABAXIS Inc. Reports Operating Results (10-Q)

February 11, 2013 | About:
10qk

10qk

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ABAXIS Inc. (ABAX) filed Quarterly Report for the period ended 2012-12-31.

Abaxis, Inc. has a market cap of $943.9 million; its shares were traded at around $42.93 with a P/E ratio of 40.9 and P/S ratio of 5.8. Abaxis, Inc. had an annual average earning growth of 20.6% over the past 10 years.

Highlight of Business Operations:

Financial Results. In the third quarter of fiscal 2013, total revenues were $49.8 million, an increase of 32% over last year s comparable quarter. The growth included increases in both revenues from instrument sales, which were $14.0 million, an increase of 54% when compared to last year s quarter, and revenues from consumable sales, which were $32.8 million, an increase of 22% when compared to last year s quarter. These increases were primarily attributable to initial stocking orders by our two new distributors during the third quarter of fiscal 2013, Abbott Point of Care Inc. (“Abbott”) for our medical products and MWI Veterinary Supply, Inc. (“MWI”) for our veterinary products, to support their marketing and sales efforts commencing in January 2013. Gross profit in the third quarter of fiscal 2013 was $26.1 million, an increase of 27% over last year s comparable quarter primarily attributable to changes in the product mix in our veterinary market.

Europe. During the three months ended December 31, 2012, total revenues in Europe increased by 37%, or $1.7 million, as compared to the same period in fiscal 2012. Revenues from Piccolo chemistry analyzers and medical reagent discs increased by 5%, or $75,000, primarily due to sales of Piccolo chemistry analyzers to an international medical supplies sourcing and support company to support a pharmaceutical clinical trial conducted by a biotechnology company. Total VetScan chemistry analyzers and veterinary reagent discs sales increased by 63%, or $1.5 million, primarily due to an increase in the sales volume of veterinary reagent discs of 117%, or $1.6 million, primarily resulting from lower inventory purchases by a distributor in the third quarter of fiscal 2012.

Europe. During the nine months ended December 31, 2012, total revenues in Europe increased by 22%, or $3.6 million, as compared to the same period in fiscal 2012. Revenues from Piccolo chemistry analyzers and medical reagent discs increased by 74%, or $2.7 million, primarily due to (a) sales of Piccolo chemistry analyzers to an international medical supplies sourcing and support company to support a pharmaceutical clinical trial conducted by a biotechnology company and (b) an increase in the sales volume of medical reagent discs to various distributors. Total VetScan chemistry analyzers and veterinary reagent discs sales increased by 5%, or $524,000, primarily due to an increase in the sales volume of veterinary reagent discs to a distributor.

(vi) Total deferred revenue increased by $1.3 million, resulting from an increase in the current portion of deferred revenue of $176,000, from $1.2 million at March 31, 2012 to $1.4 million as of December 31, 2012, and an increase in the non-current portion of deferred revenue of $1.1 million from $2.4 million at March 31, 2012 to $3.5 million as of December 31, 2012. The increase in deferred revenue balances is due to (a) an increase in extended maintenance contracts offered to customers in the form of free services in connection with the sale of our instruments during the nine months ended December 31, 2012 and (b) selling arrangements offered from time to time in the veterinary market that include multiple deliverables, such as instruments, consumables and service agreements associated with our veterinary reference laboratory. The net increase in deferred revenue was partially offset by deferred revenue recognized ratably over the life of the maintenance contract.

(vii) Total warranty reserves decreased by $380,000, resulting from a decrease in the current portion of warranty reserves of $252,000, from $1.2 million at March 31, 2012 to $993,000 as of December 31, 2012, and a decrease in the non-current portion of warranty reserves of $128,000, from $601,000 at March 31, 2012 to $473,000 as of December 31, 2012. During the nine months ended December 31, 2012, we recorded an adjustment to pre-existing warranties of $290,000, which reduced our warranty reserves and our cost of revenues, based on both historical and projected product performance rates of instruments. Our warranty reserves is primarily based on (a) the number of instruments in standard warranty, estimated product failure rates and estimated repair costs and (b) an estimate of defective reagent discs and replacement costs. Management continually evaluates the sufficiency of the warranty provisions and makes adjustments when necessary. If an unusual performance rate related to warranty claims is noted, an additional warranty accrual may be assessed and recorded when a failure event is probable and the cost can be reasonably estimated.

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