Intricon Corporation (NASDAQ: IIN), an international joint development manufacturer engaged in designing, developing, engineering, manufacturing, and packaging miniature interventional, implantable, and body-worn medical devices, announced financial results for its third quarter ended September 30, 2021.
Third Quarter 2021 Highlights:
- Revenue of $31.1 million, a 13.5% increase compared to the prior year period;
- Gross profit margin of 23.1%, compared to 26.3% in the prior year period;
- GAAP net income of $337,000 versus net income of $644,000 in the prior year period;
- Non-GAAP adjusted net income of $1.7 million versus $2.4 million in the prior year period;
- Cash and investment securities of $33.1 million as of September 30, 2021;
- Completed Summative Usability Validation for self-fitting hearing aid technology clinical trial.
“Strong customer demand persisted in each of our core markets throughout the third quarter, leading to another period of year-over-year and sequential revenue growth. Our business continued to see increased order flow in our diabetes business, expansion in our hearing health pilot programs with a ramp up in activity ahead of the final OTC regulation, along with sustained growth in our interventional catheter business,” said Scott Longval, President and Chief Executive Officer. “While ongoing impact from pandemic-related supply chain and labor shortages resulted in margin pressure, we view this as transitory and are actively implementing measures that we believe will mitigate these constraints to meet the demand of our customers.
“As we enter the final quarter of the year, I’m more encouraged than ever by several exciting catalysts on the horizon that we are tracking for accelerated growth,” Longval concluded.
Third Quarter 2021 Financial Results
Net revenue for the third quarter 2021 increased 13.5% to $31.1 million versus $27.4 million in the comparable prior-year period. The increase was primarily driven by the company’s Diabetes, Interventional Catheter, and Surgical Navigation markets, Intricon said.
Diabetes revenue increased 24.2% to $18.0 million compared to $14.5 million in the prior-year third quarter. The growth was primarily attributable to “the continued launch success of the Medtronic MiniMed 780G in certain international markets and the Medtronic MiniMed 770G in the US.”
Interventional Catheter revenue increased 22.2% to $3.4 million from $2.8 million in the comparable prior-year period. The year-over-year increase was driven primarily by the continued expansion of Medtronic’s Chocolate balloon manufactured by Emerald Medical Systems (EMS), the company said.
Surgical Navigation revenue was $2.0 million an increase of 31% year-over-year and 18% sequentially from the second quarter of 2021. This increase was driven by added production capacity as the company worked through specific labor challenges faced earlier in the year.
Hearing Health revenue decreased 14.3% to $4.7 million compared to $5.5 million in the prior-year third quarter. The primary driver in this market was supply chain input constraints, which the company says it has mostly addressed in early Q4. As orders continue to remain strong, the company “anticipates Hearing Health to rebound in the 2021 4th quarter.”
Gross Profit Margin and Operating Expenses
Gross profit margin in the third quarter of 2021 was 23.1%, compared to 26.3% in the prior-year third quarter. The lower margin was due, in part, to supply chain constraints, higher labor costs, and product mix.
Operating expenses were flat for the third quarter at $6.7 million dollars for both the current and prior-year periods. During the 2021 third quarter wthe company reduced the EMS earnout liability by approximately $460,000, which was offset by increased business development and marketing investments.
GAAP Net Income
The company posted GAAP net income of $337,000 or $0.04 per diluted share in the third quarter of 2021, versus net income of $644,000 or $0.07 per diluted share, for the 2020 third quarter.
The company posted non-GAAP adjusted net income of $1.7 million or $0.17 per diluted share in the third quarter of 2021, versus net income of $2.4 million or $0.25 per diluted share, for the 2020 third quarter.
Intricon expects 2021 revenue to range between $123 million to $125 million, representing year-over-year growth of 20-22%. This compares to the previous 2021 guidance range of $121 million to $125 million, or 18-22% year-over-year growth, according to the company.