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Patterson Companies, Inc. (PDCO - Free Report) reported adjusted earnings per share (EPS) of 50 cents for the second quarter of fiscal 2024, missing the Zacks Consensus Estimate of 59 cents by 15.3%. The bottom line decreased 20.6% from the prior-year quarter’s level.
GAAP EPS in the quarter was 42 cents, down 23.6% from that recorded in the year-ago period.
Revenue Details
Net sales in the quarter were $1.65 billion, which lagged the Zacks Consensus Estimate by 3.2%. However, the top line improved 1.6% year over year. Internal sales, adjusted for the effects of currency translation, increased 1% from the prior-year quarter’s figure.
Segmental Analysis
The company currently distributes products through its subsidiaries, Patterson Dental and Patterson Animal Health.
Dental Segment
This segment provides a complete range of consumable dental products, equipment, software, turnkey digital solutions and value-added services to dentists and laboratories throughout North America.
In the second quarter of fiscal 2024, dental sales declined 0.2% year over year to $626.4 million. Steady growth of consumables and value-added services was more than offset by lower equipment sales.
Dental Consumable
Sales in the sub-segment totaled $346.5 million, up 2.7% from the year-ago quarter’s number.
Dental Equipment
Sales in the segment declined 6.5% on a year-over-year basis to $200.1 million.
Value-added Services and Other
This segment comprises technical services, parts and labor, software support services and office supplies. Sales improved 3% year over year to $79.8 million.
Animal Health Segment
This segment is a leading distributor of veterinary supplies to clinics, public and private institutions, and shelters across the United States.
In the fiscal second quarter, sales increased 0.9% to $972.9 million from the prior-year period’s level.
Corporate
The segment recorded revenues of $1.8 million against expenses of $5.7 million in the year-ago quarter.
Margin Analysis
Gross profit in the reported quarter was $339 million, up 3.3% year over year. As a percentage of revenues, the gross margin of 20.5% expanded approximately 30 basis points on a year-over-year basis.
Operating expenses amounted to $282.1 million, up 5.3% from the prior-year quarter’s figure.
The company reported an operating income of $56.9 million, down 5.3% from the year-ago quarter’s level.
Financial Position
PDCO exited the fiscal second quarter with cash and cash equivalents of $113.9 million compared with $108.6 million on a sequential basis.
Cumulative net cash used in operating activities at the end of the quarter totaled $485.3 million compared with $520.2 million in the year-ago period.
Fiscal 2024 Earnings Outlook
Patterson Companies lowered its earnings guidance for fiscal 2024. The company now projects adjusted EPS in the range of $2.35-$2.45, down from the previous guidance of $2.45-$2.55. The Zacks Consensus Estimate for the same is pegged at $2.50.
Patterson Companies, Inc. Price, Consensus and EPS Surprise
Patterson Companies ended second-quarter fiscal 2024 on a dismal note, wherein earnings and revenues missed the consensus mark significantly. The quarter’s results were impacted by ongoing challenges of inflationary trends and higher interest rates, as well as additional slow-down in the broader economy. Shares of the company were down 10.6% in pre-market trading following the earnings results.
Sales in the dental segment reflected steady demand for its consumable portfolio, as well as value-added services. However, soft demand for certain high-tech dental equipment categories continues to hurt sales. In the animal segment, the production animal business remained strong, while the companion animal business was hurt by moderating veterinary clinic visits.
A broad spectrum of products cushions the company against economic downturns in the MedTech space. We believe that a diverse product portfolio, strong veterinary business prospects, accretive acquisitions and strategic partnerships are the key catalysts.
However, ongoing macroeconomic and geopolitical issues raise uncertainty. The company’s operating expenses increased this quarter and the trend is likely to continue for the rest of fiscal 2024.
Zacks Rank and Stocks to Consider
Patterson Companies currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Biodesix (BDSX - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 18.3%. DVA’s earnings surpassed estimates in all the trailing four quarters, delivering an average surprise of 36.55%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 33.1% year to date compared with the industry’s 2.7% growth.
Biodesix, carrying a Zacks Rank of 2 (Buy) at present, has an estimated growth rate of 32.3% for 2024. BDSX’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 9.76%.
Biodesix’s shares have lost 36.5% year to date compared with the industry’s 10.7% decline.
Integer Holdings, sporting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in all the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 31.7% year to date against the industry’s 4.7% decline.
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Patterson Companies (PDCO) Q2 Earnings Miss, EPS View Lowered
Patterson Companies, Inc. (PDCO - Free Report) reported adjusted earnings per share (EPS) of 50 cents for the second quarter of fiscal 2024, missing the Zacks Consensus Estimate of 59 cents by 15.3%. The bottom line decreased 20.6% from the prior-year quarter’s level.
GAAP EPS in the quarter was 42 cents, down 23.6% from that recorded in the year-ago period.
Revenue Details
Net sales in the quarter were $1.65 billion, which lagged the Zacks Consensus Estimate by 3.2%. However, the top line improved 1.6% year over year. Internal sales, adjusted for the effects of currency translation, increased 1% from the prior-year quarter’s figure.
Segmental Analysis
The company currently distributes products through its subsidiaries, Patterson Dental and Patterson Animal Health.
Dental Segment
This segment provides a complete range of consumable dental products, equipment, software, turnkey digital solutions and value-added services to dentists and laboratories throughout North America.
In the second quarter of fiscal 2024, dental sales declined 0.2% year over year to $626.4 million. Steady growth of consumables and value-added services was more than offset by lower equipment sales.
Dental Consumable
Sales in the sub-segment totaled $346.5 million, up 2.7% from the year-ago quarter’s number.
Dental Equipment
Sales in the segment declined 6.5% on a year-over-year basis to $200.1 million.
Value-added Services and Other
This segment comprises technical services, parts and labor, software support services and office supplies. Sales improved 3% year over year to $79.8 million.
Animal Health Segment
This segment is a leading distributor of veterinary supplies to clinics, public and private institutions, and shelters across the United States.
In the fiscal second quarter, sales increased 0.9% to $972.9 million from the prior-year period’s level.
Corporate
The segment recorded revenues of $1.8 million against expenses of $5.7 million in the year-ago quarter.
Margin Analysis
Gross profit in the reported quarter was $339 million, up 3.3% year over year. As a percentage of revenues, the gross margin of 20.5% expanded approximately 30 basis points on a year-over-year basis.
Operating expenses amounted to $282.1 million, up 5.3% from the prior-year quarter’s figure.
The company reported an operating income of $56.9 million, down 5.3% from the year-ago quarter’s level.
Financial Position
PDCO exited the fiscal second quarter with cash and cash equivalents of $113.9 million compared with $108.6 million on a sequential basis.
Cumulative net cash used in operating activities at the end of the quarter totaled $485.3 million compared with $520.2 million in the year-ago period.
Fiscal 2024 Earnings Outlook
Patterson Companies lowered its earnings guidance for fiscal 2024. The company now projects adjusted EPS in the range of $2.35-$2.45, down from the previous guidance of $2.45-$2.55. The Zacks Consensus Estimate for the same is pegged at $2.50.
Patterson Companies, Inc. Price, Consensus and EPS Surprise
Patterson Companies, Inc. price-consensus-eps-surprise-chart | Patterson Companies, Inc. Quote
Our Take
Patterson Companies ended second-quarter fiscal 2024 on a dismal note, wherein earnings and revenues missed the consensus mark significantly. The quarter’s results were impacted by ongoing challenges of inflationary trends and higher interest rates, as well as additional slow-down in the broader economy. Shares of the company were down 10.6% in pre-market trading following the earnings results.
Sales in the dental segment reflected steady demand for its consumable portfolio, as well as value-added services. However, soft demand for certain high-tech dental equipment categories continues to hurt sales. In the animal segment, the production animal business remained strong, while the companion animal business was hurt by moderating veterinary clinic visits.
A broad spectrum of products cushions the company against economic downturns in the MedTech space. We believe that a diverse product portfolio, strong veterinary business prospects, accretive acquisitions and strategic partnerships are the key catalysts.
However, ongoing macroeconomic and geopolitical issues raise uncertainty. The company’s operating expenses increased this quarter and the trend is likely to continue for the rest of fiscal 2024.
Zacks Rank and Stocks to Consider
Patterson Companies currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Biodesix (BDSX - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 18.3%. DVA’s earnings surpassed estimates in all the trailing four quarters, delivering an average surprise of 36.55%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 33.1% year to date compared with the industry’s 2.7% growth.
Biodesix, carrying a Zacks Rank of 2 (Buy) at present, has an estimated growth rate of 32.3% for 2024. BDSX’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 9.76%.
Biodesix’s shares have lost 36.5% year to date compared with the industry’s 10.7% decline.
Integer Holdings, sporting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in all the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 31.7% year to date against the industry’s 4.7% decline.