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Patterson Companies (PDCO) Q4 Earnings Miss, Revenues Beat

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Patterson Companies, Inc. (PDCO - Free Report) reported adjusted earnings per share (EPS) of 38 cents in fourth-quarter fiscal 2021, which missed the Zacks Consensus Estimate of 53 cents by 28.3%. Moreover, the bottom line declined 11.6% from the prior-year quarter.

GAAP EPS in the quarter was 30 cents, against the year-ago quarter’s loss of $6.44 per share.

For fiscal 2021, the company reported adjusted EPS of $1.61, which lagged the consensus mark of $2.06 per share. The company reported a loss of $6.25 per share in fiscal 2020.

Revenue Details

Net sales in the quarter were $1.56 billion, outpacing the Zacks Consensus Estimate by 1.4%. Also, the top line improved 21.4% year over year.

Patterson Companies, Inc. Price, Consensus and EPS Surprise

Patterson Companies, Inc. Price, Consensus and EPS Surprise

Patterson Companies, Inc. price-consensus-eps-surprise-chart | Patterson Companies, Inc. Quote

For fiscal 2021, net sales were $5.91 billion, up 7.7% from that of fiscal 2020. The figure beat the consensus mark of $5.88 billion by 0.5%.

Segmental Analysis

The company currently distributes products through 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 fiscal fourth quarter, dental sales surged 50.4% year over year to $616 million.

Dental Consumable

Sales in the sub-segment totaled $357.2 million, up 54.3% year over year.

Dental Equipment & Software

Sales in the segment improved 64.9% on a year-over-year basis to $182.9 million.

Value-added Services and Other

This segment comprises technical service, parts and labor, software support services and office supplies. Sales at the segment climbed 13% on a year-over-year basis to $75.8 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 fourth quarter, the segment sales increased 10.1% on a year-over-year basis to $939.3 million.

Corporate

Sales at the segment were $6.4 million, which plunged 72.7% from $23.6 million in the year-ago quarter.

Margin Analysis

Gross profit in the reported quarter was $304.4 million, up 3.5% year over year. As a percentage of revenues, gross margin of 19.5% contracted 340 basis points (bps) on a year-over-year basis.

Operating expenses in the reported quarter amounted to $267.1 million, up 14.4% from the prior-year quarter.

The company reported operating income of $37.3 million, against the year-ago quarter’s operating loss of $614.5 million.

Financial Position

The company exited the fiscal fourth quarter with cash and cash equivalents of $143.2 million, compared with $155.9 million on a sequential basis.

Cumulative net cash used in operating activities in the fiscal fourth quarter was $730.5 million, significantly wider than the year-ago quarter’s net cash utilized in operating activities of $243.5 million.

Fiscal 2022 Earnings Outlook

Patterson Companies projects adjusted EPS in the range of $1.90 to $2.05. The Zacks Consensus Estimate for the same is pegged at $2.13 per share.

Our Take

Patterson Companies ended fourth-quarter fiscal 2021 on a mixed note, wherein earnings missed the consensus mark but revenues beat the same. Moreover, the company witnessed improved performance across its segments in the quarter under review. Prudent cost savings approach and solid sales execution worked in favor of the stock.

Also, 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 key catalysts.

However, contraction in gross margin remains a headwind.

Zacks Rank

Patterson Companies has a Zacks Rank #3 (Hold).

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks in the broader medical space that have announced their quarterly results are Veeva Systems, Inc. (VEEV - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Henry Schein, Inc. (HSIC - Free Report) . While both Veeva Systems and West Pharmaceutical carry a Zacks Rank #2 (Buy), Henry Schein sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Veeva Systems reported first-quarter fiscal 2022 adjusted EPS of 91 cents, which surpassed the Zacks Consensus Estimate by 16.7%. Revenues of $433.6 million outpaced the Zacks Consensus Estimate by 5.9%.

West Pharmaceutical reported first-quarter 2021 adjusted EPS of $2.05, outpacing the Zacks Consensus Estimate by 44.4%. Net sales of $670.7 million exceeded the Zacks Consensus Estimate by 9.1%.

Henry Schein reported first-quarter 2021 adjusted EPS of $1.24 beat the Zacks Consensus Estimate by 49.4%. Net sales of $2.92 billion topped the Zacks Consensus Estimate by 3.6%.

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