Cesca Therapeutics, Inc. :KOOL-US: Earnings Analysis: 2017 By the Numbers : September 25, 2017

Cesca Therapeutics, Inc. reports financial results for the year ended June 30, 2017.

We analyze the earnings along side the following peers of Cesca Therapeutics, Inc. – Kewaunee Scientific Corporation, Cerus Corporation, Stryker Corporation, Haemonetics Corporation and Cytori Therapeutics, Inc. (KEQU-US, CERS-US, SYK-US, HAE-US and CYTX-US) that have also reported for this period.


  • Gross margins widened from 23.00% to 40.20% compared to the same period last year, operating (EBITDA) margins now -58.33% from -81.29%.
  • Year-on-year change in operating cash flow of 25.04% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • One-time items weakened operating performance.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017 2016 2015 2014 2013
Relevant Numbers (Annual)
Revenues 14.53 11.93 16.04 15.99 17.96
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings -29.1 -18.59 -14.85 -8.63 -3.09
Earnings Growth (YOY) -56.53 -25.15 -72.08 -179.68 38.11
Net Margin -200.31 -155.82 -92.58 -53.99 -17.18
EPS -3.27 -7.57 -7.4 -7.2 -3.8
Return on Equity -92.2 -55.34 -35.53 -27.83 -21.13
Return on Assets -60.09 -36.77 -26.04 -21.2 -15.58

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Earnings Growth Analysis

The company’s year-on-year earnings decline did not come as a result of a contraction in gross margins or because of any cost control issues. Both gross margins and operating margins (EBITDA) margins actually improved over this time frame. Gross margins went from 23.00% to 40.20%, while operating margins improved from -81.29% to -58.33% over this period. For comparison, gross margins were 23.00% and EBITDA margins -81.29% in the immediate last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

KOOL-US’s improvement in gross margin has been accompanied by an improvement in its balance sheet as well. This suggests that gross margin improvements are likely from operating decisions and not accounting gimmicks. Its working capital days are now 175.39 days compared to 192.86 days for the same period last year.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

KOOL-US’s change in operating cash flow of 25.04% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The expansion in operating (EBIT) margins from -91.08% to -63.61% has also impacted the company’s earnings growth. However, one-time items have been a drag on the operating performance. As a result, the company’s pretax margins contracted from -155.82% to -204.94%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Cesca Therapeutics, Inc. engages in the research, development, and commercialization of autologous cell-based therapeutics for use in regenerative medicine. It operates through the Clinical Development Division and Device Division business segments. The Clinical Development Division segment involves in developing autologous stem cell-based therapeutics that address significant unmet medical needs for applications within the vascular, cardiology, and orthopedic markets. The Device Division segment includes development and commercialization of automated technologies for cell-based therapeutics and bio-processing. The company was founded by Philip H. Coelho in 1986 and is headquartered in Rancho Cordova, CA.

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