Credit: Shutterstock photoSummary:
Cyberonics posted a meaningful 26% rise in its second-quarter fiscal 2015 EPS to $0.63 and 4.7% increase in revenues to $73.4 million. However, while the bottom line remained ahead of the Zacks Consensus Estimate, the topline failed to meet the same. Cyberonics continues to gain from a solid foothold in the epilepsy market and strong overseas business. Further penetration in the still untapped epilepsy market should catalyze growth. The company's lucrative pipeline is another upside. We are impressed with positive data from the ANTHEM-HF study. Attractive share buybacks also continue to boost investors' return. However, the reimbursement headwind remains a major downside. The margin pressure represents yet another area of concern. The company also faces a tough competitive landscape and a challenging macroeconomic scenario. Thus, we reiterate Cyberonics at Neutral.
Overview:
Cyberonics Inc. (CYBX) is a medical technology company with core expertise in neuromodulation. The company provides Vagus Nerve Stimulation (VNS) therapy for the treatment of refractory epilepsy and treatment-resistant depression (TRD). The VNS Therapy System is delivered from a small pacemaker-like generator implanted in the chest that sends preprogrammed, intermittent, mild electrical pulses through the vagus nerve in the neck to the brain.
VNS Therapy for Epilepsy: The VNS Therapy System was approved as a suitable treatment for medically refractory epilepsy in Europe in 1994 and in the U.S. and Canada in 1997. Cyberonics is developing its products for epilepsy through a direct sales force and distributors in the U.S., Europe, Latin America, (including Brazil), Russia and Asia, including India, Japan and China.
The company focuses on research and development in the field of VNS therapy for patients with refractory epilepsy specifically, seizure detection, responsive stimulation and associated technology. Over the last three years, Cyberonics' continuous investment in product development resulted in two new generators, the AspireHC and the AspireSR.
VNS Therapy for TRD: The VNS Therapy System was approved as a treatment for TRD in 2001 in Europe and Canada. Subsequently, the system received approval in the U.S. (for patients of 18 years or above) in Jul 2005. Regulatory bodies in the European Economic Area, Canada and Israel have also approved the system for patients without age restrictions. To date, an estimated 4,000 patients worldwide have been treated with the VNS Therapy System for depression. However, Cyberonics no longer actively sells or markets the product for depression in the U.S. market due to reimbursement issues. The company also does not actively market VNS Therapy for TRD in Europe and Canada.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
