Back to top

Image: Bigstock

Hill-Rom's (HRC) Q1 Earnings Beat Estimates, Margins Up

Read MoreHide Full Article

Hill-Rom Holdings, Inc. (HRC - Free Report) reported first-quarter fiscal 2021 adjusted earnings per share (EPS) of $1.53, excluding the impact of certain one-time expenses. The figure increased 35.4% from the year-ago quarter and surpassed the Zacks Consensus Estimate by 45.7%.

The adjustments include acquisition-related intangible asset amortization expenses, special charges and others.

On a GAAP basis, earnings were 88 cents per share, reflecting a 49.2% surge from the year-ago reported figure.

Revenues in the fiscal first quarter came in at $741.1 million, up 8.2% from the year-ago quarter (up 6.5% at constant exchange rate or CER). The top line beat the Zacks Consensus Estimate by 13.2%. The rise in revenue is driven by accelerated recovery and expanded demand for critical care products,

Quarter in Details

Geographically, in the reported quarter, U.S. revenues climbed 1.2% as lower capital revenue like beds and surgical equipment was offset by higher demand for bed rentals and several Front Line Care products. Internationally, revenues climbed 18.9% with double-digit growth across Europe, Asia Pacific and Canada.

Segmental Update

Patient Support Systems revenues of $377.4 million increased 9.6% on a reported basis or 8% on a constant currency basis, reflecting strong international expansion of med-surg and ICU bed systems, growth in U.S. bed system rentals to support customers in the treatment of COVID-19, and continued recovery in the company's care communications platforms. Patient Support Systems performance reflects strong international growth of 33% driven by market expansion of med-surg and ICU bed systems across Europe and other markets.

HillRom Holdings, Inc. Price, Consensus and EPS Surprise

 

Revenues at the Front Line Care segment improved 6% to $269.9 million (5% at CER). According to the company, this was driven by strong demand for Welch Allyn patient monitoring and blood pressure equipment, and thermometry. Other products, including physical assessment and vision care products, continued to show sequential gains as physician office visits return to pre-COVID levels.

The Surgical Solutions segment’s revenues increased 8.8% (up 4.4% at CER) to $93.8 million, reflecting strong international growth with the completion of some large projects in EMEA, partially offset by continued project delays in the United States due to the pandemic.

Margin

In the reported quarter, gross profit totaled $379.2 million, up 10.9% year over year. Gross margin expanded 128 basis points (bps) to 51.2%.

Selling, general and administrative expenses rose 6.2% to $209 million in the quarter under review, while research and development expenses rose 10.5% to $34.8 million.

Overall adjusted operating profit was $135.4 million, up 19.4% year over year. Adjusted operating margin expanded 172 bps year over year to 18.3%.

Cash Position

The company exited first-quarter fiscal 2021 with cash and cash equivalents of $294.6 million compared with $296.5 million at the end of fiscal 2020. Long-term debt for the company at the end of the fiscal first quarter was $1.64 billion compared with $1.66 billion at the end of the fiscal 2020.

The company returned $70 million to shareholders through dividends and share repurchases during the first quarter of fiscal 2021.

At the end of the fiscal first quarter, net cash provided by operating activities was $100.2 million compared with $77 million at the end of the year-ago period.

Fiscal 2021 Guidance

The company has raised its fiscal 2021 guidance. For full-year fiscal 2021, Hill-Rom now expects revenue growth in the range of 0-2% on a reported basis. This compares to the previous guidance of a 3% to 5% decline.

Adjusted EPS is projected in the range of $5.70-$5.90 (earlier guidance was $5.25-$5.45). Operating cash flow is expected in the range of $400-$430 million. This compares to the company's previous guidance range of operating cash flow of $370 to $400 million.

The Zacks Consensus Estimate for fiscal 2021 earnings is pegged at $5.36 on revenue expectation of $2.77 billion.

It also provided guidance for the fiscal second quarter 2021. Hill-Rom expects revenues to increase 0-2% on a reported basis, and adjusted earnings, excluding special items, of $1.40 to $1.45 per diluted share. The Zacks Consensus Estimate for second-quarter fiscal 2021 earnings is pegged at $1.36 on revenue expectation of $686.4 million.

Our Take

Hill-Rom exited first-quarter fiscal 2021 with better-than-expected results. The company saw a year-over-year rise in revenues and earnings. There was a sharp recovery in emerging market businesses and U.S. core in the quarter under review.

Bed orders and backlog in the United States accelerated and the company experienced sequential recovery in the Patient Support Systems arm. The company during the quarter witnessed expansion in demand for many critical care products.

While providing the fiscal 2021 guidance, Hill-Rom projected that in this period, demand for its COVID-19 support products that peaked during fiscal 2020 will normalize. Also, a gradual recovery in other product categories is also expected.

Zacks Rank and Key Picks

Hill-Rom currently has 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%.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>