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Haemonetics (HAE) Up 18.4% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Haemonetics (HAE - Free Report) . Shares have added about 18.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Haemonetics due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Haemonetics Q1 Earnings and Revenues Beat Estimates

Haemonetics delivered adjusted earnings per share (EPS) of 46 cents in the first quarter of fiscal 2021, reflecting a 43.2% year-over-year decline. The bottom line, however, exceeded the Zacks Consensus Estimate by 12.2%.

On a GAAP basis, net income was 21 cents per share, improving from the year-ago loss per share of 17 cents.

Total Revenues

Revenues declined 18% (down 15.6% on an organic basis) to $195.6 million in the first quarter of fiscal 2021. However, the top line surpassed the Zacks Consensus Estimate by 1.4%.

The plunge in revenues was primarily due to the negative impact of the pandemic.

Quarterly Revenues by Product Categories

At Plasma, revenues of $68.2 million (accounting for 34.9% of total revenues) decreased 38.2% year over year (down 34.8% on an organic basis) in the reported quarter. Plasma revenue decline in North America was 35.8%, including 33.9% fall in disposables.

Revenues at Blood Center (39.8%) rose 2.6% (up 1.7% on an organic basis) to $77.8 million.

Hospital revenues (22.9%) were down 6% (down 3.9% on an organic basis) to $44.8 million. Under the Hospital segment, organic revenue growth in the Hemostasis Management product line was 2.2% in the first quarter of fiscal 2020 driven by increased equipment sales.

Service revenues (2.4%) were up 4.6% (up 4.5% on an organic basis) to $4.7 million.

Margins

Per the company, adjusted gross margin was 47.2%, down 400 basis points (bps) year over year on lower revenue and higher operational costs related to COVID-19. However, this was partially offset by gross productivity savings from the Operational Excellence Program and cost-containment actions.

Adjusted operating expenses as provided by the company in the first quarter of fiscal 2021 were $63.7 million, down 10.9% from $71.5 million in the year-ago quarter. The reduction in operating expenses resulted from productivity savings and cost-containment actions taken to offset the negative effects related to COVID-19 which were partially offset by continued investments.

Adjusted operating income was $28.5 million in the quarter under discussion, down 44.5% from $51.4 million in the year-ago quarter. Meanwhile, adjusted operating margin contracted 680 bps year over year to 14.6%.

Financial Position

Haemonetics exited the first quarter of fiscal 2021 with cash and cash equivalents of $275.7 million compared with $137.3 million at the end of fiscal 2020. Long-term debt at the end of the first quarter of fiscal 2021 was $296.9 million, marking a reduction of 2.8% from $305.5 million at the end of fiscal 2020.

At the end of the first quarter of fiscal 2021, net cash flow from operating activities was $11.8 million compared with $2.6 million in the year-ago period (up 349.5%).

Capital expenses incurred by the company was $7.3 million, down from the year-ago $7.9 million. It also reported free cash flow (before restructuring and turnaround costs) of $10.9 million during the same period, which recorded an increase of 106.7% from $5.3 million a year ago.

2021 Guidance

The company is currently unable to ascertain the scope and duration of the pandemic as well as quantify the actual impact and timing of the associated economic recovery. It is currently in the process of assessing the potential scenarios for the economic impact of COVID-19 and the related effect on healthcare in the coming period. The company intends to issue its full-year guidance later in the fiscal year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -29.97% due to these changes.

VGM Scores

At this time, Haemonetics has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Haemonetics has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.


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