Pro-Dex Revenue Rises 11% as Net Income Falls to $3.0 Million
Key Facts
Pro-Dex reported an 11% year-over-year increase in revenue in the first quarter of fiscal 2027, alongside a higher gross margin, while net income fell to $3.0 million from $4.7 million a year earlier. Results published on October 29 showed diluted earnings per share declined to $0.92 from $1.40. The figures present a mixed picture of the company’s performance: growth in sales, gross profit and operating income, offset by a decline in net income. The company attributed the improvement in gross margin mainly to a favorable product mix. Meanwhile, operating expenses increased, and unrealized investment gains narrowed from the year-earlier period.
The main increase in sales came from medical device revenue, which rose $3.3 million from the previous year. This included $1.8 million from the next-generation surgical handpiece for the largest customer, while revenue from repairs of the old handpiece declined $1.7 million. Subsidiary Advanced Precision Machining added $511,000 in revenue before intercompany sales were eliminated. Those sales eliminated on consolidation amounted to $814,000. These components reflect contributions to revenue growth from next-generation products and the subsidiary, alongside the continued decline in revenue from repairs of the old handpiece.
Gross profit rose 28%, an increase of $1.5 million, while gross margin reached 33%, compared with 29% in the first quarter of fiscal 2026. The company said the 4 percentage point improvement in margin was mainly due to product mix. Operating expenses, however, increased 48% to $3.3 million from $2.3 million. The increase included $442,000 in engineering expenses and $642,000 in selling, general and administrative expenses. The company attributed higher engineering expenses to personnel costs and spending on internal projects.
Despite the increase in expenses, operating income rose 13% to $3.5 million from $3.1 million, an increase of $406,000. The company said gross profit growth partly offset the impact of higher operating expenses. Net income fell to $3.0 million, compared with $4.7 million a year earlier, and diluted earnings per share declined to $0.92 from $1.40. The company said unrealized investment gains were $73,000 in the latest quarter, compared with $3.3 million in the year-earlier period. The decline in investment gains highlights one of the differences between growth in operating performance and lower net income.
Pro-Dex designs, develops and manufactures multi-function electric and battery-powered surgical tools, used primarily in orthopedic, thoracic, and oral and maxillofacial surgeries. The company also provides engineering and regulatory consulting services to its customers. In fiscal 2026, annual revenue rose 16% to $77.6 million from $66.6 million in the previous year. In the same year, repair revenue fell 36% to $9.7 million from $15.1 million. The decline in repairs of the old handpiece in the first quarter comes against a backdrop of lower repair revenue recorded in the previous fiscal year.
Chief Executive Rick Van Kirk said the company expects to ship verification units to Monogram later in the current fiscal year. In trading on October 29, the day the results were released, Pro-Dex shares closed at $61.60, down 2.52% from the previous close. The stock’s performance in the announcement session accompanied quarterly results showing higher operating income and lower net income. Separately, Orbit Garant is scheduled to report results for the first quarter of fiscal 2027 after the market closes on November 11, 2026. Management will hold a conference call for analysts and investors on November 12 at 10:00 a.m. Eastern time.