Q2 2011 Results - In-Line With Our Numbers - Analyst Blog

Brian Marckx, CFA

Q2 2011 Results – In-Line With Our Numbers

CardioGenics (CGNH) filed their 10-Q for the second quarter ending April 30, 2011 on June 20, 2011.  Similar to the prior quarter, results were largely in-line with our estimates with no meaningful surprises.  Operating loss was $624k, $20k better than our $644 loss estimate.  Net loss and EPS came in at $716k and ($0.01) compared to our estimates of $642k and ($0.01).  The difference in net loss is mostly a result of $92k loss related to foreign exchange.

Cash flow from operations was ($490k) which is similar to the $534k used in the prior quarter (excluding investment tax credits and share subscriptions receivables, which are not fundamental to the business).  Cash burn remains very much in-line with our expectations.  CardioGenics exited Q2 2011 with $1.56MM in cash and equivalents, compared to $1.87MM at the end of Q1.  We continue to expect the rate of cash burn to increase at least up until the magnetic beads launch and for the company to remain cash flow negative throughout 2011.  Despite an eventually need to raise additional capital, the company is in decent financial shape and by no means needs to raise additional funds in the immediate term.  The balance sheet remains free of debt and preferred stock.  

The company did not provide an update to clinical trial progress of their QL Care Analyzer or development of their magnetic beads in the Q2 10-Q.  We have not made any changes to our prior assumptions relative to launch timelines of the Analyzer and magnetic beads.        

We are maintaining our Outperform rating and $2.00 price target on shares of CardioGenics.  
 

For a free copy of the full research report, please email scr@zacks.com with CGNH as the subject.

Follow Zacks Small Cap Research on Twitter at Twitter.com/ZacksSmallCap