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Haemonetics (HAE) Q3 Earnings Top Estimates, Margin Contracts

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Haemonetics Corporation (HAE - Free Report) delivered adjusted earnings per share (EPS) of 81 cents in the third quarter of fiscal 2021, reflecting a 13.8% year-over-year decline. The bottom line, however, exceeded the Zacks Consensus Estimate by 19.1%.

On a GAAP basis, net income was 62 cents per share, up 6.9% from the year-ago EPS figure.

Total Revenues

Revenues declined 7.2% (down 5.7% on an organic basis) to $240.4 million in the third quarter of fiscal 2021. However, the top line surpassed the Zacks Consensus Estimate by 6.8%.

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

Quarterly Revenues by Product Categories

At Plasma, revenues of $101.9 million (accounting for 42.4% of total revenues) decreased 15.4% year over year (down 13.4% on an organic basis) in the reported quarter. According to the company in the quarter, the pandemic continued to have a pronounced effect on the U.S.-sourced plasma donor pool. However, the revenue decline was partially offset by one-time safety stock order of plasma disposables worth $6 million.

Revenues at Blood Center (33.7%) fell 3% (down 1.4% on an organic basis) to $80.9 million.

Hospital revenues (21.9%) were up 4.7% (up 5% on an organic basis) to $52.7 million. Under the Hospital segment, organic revenue growth in the Hemostasis Management product line was 11.3% in the third quarter of fiscal 2020, driven by strong U.S. disposable sales.

Service revenues (2%) were down 0.1% (up 4.3% on an organic basis) to $4.9 million.

Margins

Per the company, adjusted gross margin was 51.4%, down 71 basis points (bps) year over year on higher operational costs, lower volume and unfavorable product mix. However, this was partially offset by gross productivity savings from the Operational Excellence Program and lower depreciation.

Haemonetics Corporation Price, Consensus and EPS Surprise

 

Haemonetics Corporation Price, Consensus and EPS Surprise

Haemonetics Corporation price-consensus-eps-surprise-chart | Haemonetics Corporation Quote

Adjusted operating expenses in the third quarter of fiscal 2021 were $80.9 million, down 5% from $85.3 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 $39.3 million in the quarter under discussion, down 8.1% from $42.8 million in the year-ago quarter. Meanwhile, adjusted operating margin contracted 16 bps year over year to 16.4%.

Financial Position

Haemonetics exited the third quarter of fiscal 2021 with cash and cash equivalents of $189 million compared with $279.2 million at the end of the second quarter of fiscal 2021. Long-term debt at the end of the third quarter of fiscal 2021 was $293 million, down from $297 million at the end of the first quarter of fiscal 2021.

Cumulative net cash flow from operating activities at the end of the fiscal third quarter was $107.3 million compared with $111.8 million a year ago.

Capital expenses (net of proceeds from sale of property, plant and equipment) incurred by the company were $24.3 million, up from the year-ago $21.8 million. It also reported free cash flow (before restructuring and turnaround costs) of $99.1 million during the same period, up 4.1% from $95.2 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.

Our Take

Haemonetics exited the third quarter of fiscal 2021 with better-than-expected results. However, the company’s sluggish Plasma and Blood Center businesses due to the pandemic-led business disruptions are concerning. Contraction of both margins due to lower revenues and higher operational costs associated with the pandemic is worrying. The company’s inability to provide guidance for fiscal 2021 raises apprehensions.

The company’s Hospital business was robust along with uptick in the Hemostasis Management product line. Gross productivity savings from the Operational Excellence Program and cost-containment actions partially offset the contraction of gross margin, raising optimism. Strong customer end-market demand along with the receipt of the FDA’s 510(k) clearance for its NexSys PCS system with Persona technology buoys optimism.

Zacks Rank and Key Picks

Currently, Haemonetics carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have already announced their quarterly results are NextGen Healthcare, Inc. (NXGN - Free Report) , Abbott Laboratories (ABT - Free Report) and AngioDynamics, Inc. (ANGO - Free Report) . While AngioDynamics sports a Zacks Rank of 1 (Strong Buy), both Abbott and NextGen Healthcare carry a Zacks Rank #2 (Buy). You can see the complete list of Zacks #1 Rank stocks here.

NextGen Healthcare reported third-quarter fiscal 2021 adjusted EPS of 26 cents, beating the Zacks Consensus Estimate by 8.3%. Revenues of $141.7 million surpassed the consensus mark by 0.6%.

Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%.

AngioDynamics reported second-quarter fiscal 2021 adjusted EPS of a penny against the Zacks Consensus Estimate of a loss per share of 2 cents. Revenues of $72.8 million beat the consensus mark by 8%.

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