NeuroMetrix Hit By Lower Sales

Zacks Investment Research
updated | Zacks.com

Nerve testing devices maker NeuroMetrix (NASDAQ:NURO) reported fourth-quarter fiscal 2010 net loss per share of 18 cents, marginally missing the Zacks Consensus Estimate of a loss of 17 cents.

The Massachusetts-based company posted a net loss of $4.2 million in the quarter versus a profit of roughly $0.4 million (or 2 cents a share) a yearago as revenues sank on account of a revamp in Medicare reimbursement. For fiscal 2010, net loss per share of 73 cents was a penny higher than the Zacks Consensus Estimate and above the year-ago loss of 71 cents.

Revenues for the quarter plummeted nearly 51% year over year to $3.1 million as change in reimbursement for nerve conduction studies (“NCS”) using electrodes (electric conductors) led to declines of 14% and 47% in the average selling price and number of electrodes sold, respectively. Sales missed the Zacks Consensus Estimate of $4 million. For the full year, revenues of $13.9 million (down 47% year over year) narrowly trailed the Zacks Consensus Estimate of $14 million. 

Consumables (electrodes, needles and other accessories) sales for the quarter tanked 56% year over year to roughly $2.5 million while medical equipment (including nerve testing devices such as ADVANCE and NC-stat) revenues edged up 2.8% to $0.6 million. The installed base of active accounts dipped 4.2% sequentially to 3,875. NeuroMetrix placed 64 new systems in the quarter, down from 85 in the previous quarter.

Adjusted (excluding inventory charges associated with restructuring) gross margin in the fourth quarter reduced to 62.1% from 70.5% a year ago. Operating expenses clipped 28% year over year to roughly $4.5 million as the company spent less on R&D and sales and marketing expenses. NeuroMetrix exited fiscal 2010 with cash and investments of roughly $17 million, down 44% year over year.

NeuroMetrix focuses on the development and marketing of devices that help physicians detect and treat diseases and peripheral nerve injuries, and offer regional anesthesia and pain control. The company’s flagship products are ADVANCE and NC-stat devices for NCS. NeuroMetrix competes with Medtronic (NYSE:MDT) among others. 

NCS is considered as gold standard for diagnosis of diabetic peripheral neuropathy. However, higher cost and limited access have prevented its wide-spread adoption. Studies conducted using ADVANCE and NC-stat declined 12.5% sequentially in the fourth quarter. The company plans to launch a modified version of the NC-stat device dubbed “NC-stat-SL”, around June-July 2011, which is designed to measure diabetic neuropathy at the point-of-care.

NeuroMetrix, in January 2011, modified its operational focus in favor of diabetes, in particular the diagnosis and monitoring of diabetic neuropathy. Moreover, as part of its new strategies, the company stated that it will maintain its ongoing sustenance for its neurodiagnostic business, which has languished in recent times due to reimbursement policies.

The company has restructured this business to provide product support to its live installed base, reduce costs and optimize cash flow. The restructuring, which involves a 27% workforce reduction and realignment of responsibilities, cost NeuroMetrix roughly $2.3 million.

 
MEDTRONIC (MDT): Free Stock Analysis Report
 

 

You may also like: