Haemonetics (HAE) Earnings Top, Revenues Lag Estimates In Q3

Haemonetics Corporation (NYSE:HAE) reported adjusted earnings per share (EPS) of 63 cents in the third quarter of fiscal 2019, reflecting a year-over-year rise of 1.6%. The bottom line surpassed the Zacks Consensus Estimate of 59 cents by 6.8%.

On a reported basis, net income came in at 35 cents per share, compared with net loss of 12 cents in the year-ago quarter.

Total Revenues

Revenues rose 5.7% year over year (same at constant exchange rate or CER) to $247.4 million in the quarter under review. However, the top line lagged the Zacks Consensus Estimate by 1.1%.

Revenues by Product Categories

At Plasma, revenues of $131.8 million (accounting for 53.3% of total revenues) rose 16.6% year over year (up 16% at CER). Plasma revenue growth in North America was 20.7%, including 19.2% growth in disposables.

Haemonetics Corporation Price, Consensus and EPS Surprise

Revenues at BloodCenter (27.1%) dropped 9.5 % (down 9.2% at CER) to $67.2 million.

Hospital revenues (19.6%) rose 3.6% (up 4.5% at CER) to $48.4 million.

Margins

Adjusted gross margin was 47.3%, down 30 basis points (bps) year over year on unfavorable currency movement.

Adjusted operating income was $42.7 million in the quarter under discussion, showing a 2% rise year over year. Meanwhile, adjusted operating margin contracted 60 bps year over year to 17.3%.

Financial Position

Haemonetics exited the third quarter of fiscal 2019 with cash and cash equivalents of $154.9 million compared with $199.8 million at the end of second quarter of fiscal 2019.

The company generated operating cash flow of $138.6 million in the first nine months of the fiscal year compared with $162.7 million a year ago. The company also reported free cash flow (before restructuring and turnaround costs) of $57.5 million during the same period compared with $113.4 million a year ago. Capital expenditures totaled $105.2 million in the period, higher than $55.7 million in the same period last year.

Fiscal 2019 Guidance

Haemonetics updated its fiscal 2019 revenue guidance at CER. The company now expects full-year revenue growth of 6-8% compared with 3-5% stated previously. Coming to segmental revenues, Plasma revenue growth is expected in the 14-16% band (7-10% stated earlier) while Hospital revenues are estimated to increase 6-9% (5-8%).

However, Blood Center revenues are likely to decline 3-6%. The Zacks Consensus Estimate for fiscal 2019 revenues is pegged at $972.5 million.

The company predicts 2019 adjusted EPS in the range of $2.25-$2.35. The consensus estimate of $2.32 is within this guided range.

Our Take

Haemonetics exited third-quarter fiscal 2019 on a promising note. Per the company, benefits from complexity reduction and investments along with strength in market demand and success from early launches helped the company put up an impressive performance. Continued momentum in new business generation and geographical expansion have contributed to the results.

However, we are not pleased with the company’s sluggish Blood Center business moderating overall growth despite progress in Plasma and Hospitals. Meanwhile, we are upbeat about the company’s steady progress with the launch of NexSys PCS devices and NexLynk DMS donor management software.

Zacks Rank & Other Key Picks

Haemonetics has a Zacks Rank #2 (Buy). A few other top-ranked MedTech stocks boasting solid quarterly results are Varian Medical Systems (NYSE:VAR) , AngioDynamics (NASDAQ:ANGO) and CONMED Corporation (NASDAQ:CNMD) .

Varian reported fiscal first-quarter adjusted EPS of $1.06, in line with the Zacks Consensus Estimate. Revenues of $741 million outpaced the consensus mark of $717.9 million. The stock has a Zacks Rank #2.

AngioDynamics’ fiscal second-quarter adjusted EPS of 22 cents exceeded the Zacks Consensus Estimate by a penny. Revenues totaled $91.5 million, which surpassed the consensus estimate by 2.9%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CONMED delivered fourth-quarter adjusted EPS of 73 cents, in line with the Zacks Consensus Estimate. Revenues of $242.4 million outshined the Zacks Consensus Estimate of $229.2 million. The stock carries a Zacks Rank of 2.

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