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Haemonetics (HAE) Q2 Earnings Lag Estimates, Gross Margin Grows
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Haemonetics Corporation (HAE - Free Report) delivered adjusted earnings per share (EPS) of 60 cents in the second quarter of fiscal 2022, reflecting a 3.2% year-over-year decline. The bottom line also lagged the Zacks Consensus Estimate by 4.8%.
On a GAAP basis, EPS was 29 cents compared with the year-ago EPS of 94 cents, reflecting a 69.1% decline.
Total Revenues
Revenues increased 14.5% (up 5.4% on an organic basis) to $239.9 million in the second quarter of fiscal 2022. The top line, however, lagged the Zacks Consensus Estimate by 2.4%.
The year-over-year increase in revenues was supported by recovery across major businesses, especially Hospital and the initial Plasma Persona rollouts.
Revenues by Product Categories
At Plasma, revenues of $81.9 million (accounting for 34.2% of total revenues) increased 4.5% year over year (up 6.8% on an organic basis) in the reported quarter.
Revenues at Blood Center (31.9%) rose 2.4% (up 1.6% on an organic basis) to $76.7 million.
Haemonetics Corporation Price, Consensus and EPS Surprise
Hospital revenues (31.8%) rose 49.7% (up 10.4% on an organic basis) to $76.3 million. Under the Hospital segment, organic revenue growth in the Hemostasis Management product line was 21% in the second quarter of fiscal 2022 on strong capital sales in North America and the EMEA.
Service revenues (2%) fell 5.4% (down 7.3% on an organic basis) to $4.9 million.
Margins
The company-adjusted gross margin was 52.6%, up 40 basis points (bps) year over year. The primary drivers of this improvement were the acquisition of the Vascular Closure business, productivity savings from the Operational Excellence Program and favorable product mix, partially offset by the impact of price adjustments, and inflationary pressure in the global manufacturing and supply chain.
Adjusted operating expenses in the second quarter of fiscal 2022 were $82.4 million, up 24.1% from the year-ago quarter. This increase was primarily driven by the acquisition of the Vascular Closure business and an increase in freight costs.
The company-adjusted operating income was $43.8 million in the quarter under discussion, down 18.3% year over year. Adjusted operating margin was 18.3%, down 220 bps compared to the year-ago quarter.
Financial Position
Haemonetics exited the second quarter of fiscal 2022 with cash and cash equivalents of $192.4 million compared with $173.5 million at the end of first-quarter 2022. Long-term debt at the end of second-quarter fiscal 2022 was $698 million, down from $767.3 million at the end of first-quarter 2022.
Cumulative net cash flow from operating activities at the end of second-quarter fiscal 2022 was $41.7 million compared with a $40.9-million net cash flow from operating activities a year ago.
Cumulative capital expenses (net of proceeds from the sale of property, plant and equipment) incurred by the company were $33.8 million, up from the year-ago $15.1 million. It also reported free cash flow (before restructuring and turnaround costs) of $29.4 million during the same period, up 86.1% from $15.8 million a year ago.
2022 Guidance
Haemonetics has narrowed its full-year 2022 financial guidance. The company expects GAAP total revenue growth in the range of 13-17% on a reported basis (the previous guided range was 13-18%). The organic growth projection is pinned at 7-10% (the previous guided growth projection was 8-12%). The Zacks Consensus Estimate for 2022 revenues is pegged at $1.01 billion.
The company expects full-year adjusted EPS in the band of $2.40-$2.65 (the previous guided range was $2.60-$3.00). The Zacks Consensus Estimate for the same is pegged at $2.77.
Our Take
Haemonetics exited the second quarter of fiscal 2022 with lower-than-expected results. The company’s sluggish service businesses due to the pandemic-led business disruptions are concerning. The rise in the company’s restructuring-related costs is building pressure on the bottom line. Economic uncertainty and stiff competition remain concerns. The company has also narrowed its full-year 2022 guidance, which raises apprehension. On a positive note, the company registered year-over-year growth in revenues driven by recovery across businesses, mainly at Hospital and the initial Plasma Persona rollouts. The company’s Hospital business was robust along with an uptick in the Hemostasis Management product line. Strong customer end-market demand for NexSys PCS system with Persona technology buoys optimism.
Zacks Rank and Key Picks
Haemonetics currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader medical space that have announced quarterly results are Medpace Holdings, Inc. (MEDP - Free Report) , Thermo Fisher Scientific Inc. (TMO - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) .
Medpace, currently carrying a Zacks Rank #1 (Strong Buy), reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Thermo Fisher Scientific reported third-quarter 2021 adjusted EPS of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%. It currently carries a Zacks Rank #2 (Buy).
West Pharmaceutical Services, carrying a Zacks Rank #2, reported third-quarter 2021 adjusted EPS of $2.06, which beat the Zacks Consensus Estimate by 13.2%. Revenues of $706.5 million outpaced the consensus mark by 3.2%.
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Haemonetics (HAE) Q2 Earnings Lag Estimates, Gross Margin Grows
Haemonetics Corporation (HAE - Free Report) delivered adjusted earnings per share (EPS) of 60 cents in the second quarter of fiscal 2022, reflecting a 3.2% year-over-year decline. The bottom line also lagged the Zacks Consensus Estimate by 4.8%.
On a GAAP basis, EPS was 29 cents compared with the year-ago EPS of 94 cents, reflecting a 69.1% decline.
Total Revenues
Revenues increased 14.5% (up 5.4% on an organic basis) to $239.9 million in the second quarter of fiscal 2022. The top line, however, lagged the Zacks Consensus Estimate by 2.4%.
The year-over-year increase in revenues was supported by recovery across major businesses, especially Hospital and the initial Plasma Persona rollouts.
Revenues by Product Categories
At Plasma, revenues of $81.9 million (accounting for 34.2% of total revenues) increased 4.5% year over year (up 6.8% on an organic basis) in the reported quarter.
Revenues at Blood Center (31.9%) rose 2.4% (up 1.6% on an organic basis) to $76.7 million.
Haemonetics Corporation Price, Consensus and EPS Surprise
Haemonetics Corporation price-consensus-eps-surprise-chart | Haemonetics Corporation Quote
Hospital revenues (31.8%) rose 49.7% (up 10.4% on an organic basis) to $76.3 million. Under the Hospital segment, organic revenue growth in the Hemostasis Management product line was 21% in the second quarter of fiscal 2022 on strong capital sales in North America and the EMEA.
Service revenues (2%) fell 5.4% (down 7.3% on an organic basis) to $4.9 million.
Margins
The company-adjusted gross margin was 52.6%, up 40 basis points (bps) year over year. The primary drivers of this improvement were the acquisition of the Vascular Closure business, productivity savings from the Operational Excellence Program and favorable product mix, partially offset by the impact of price adjustments, and inflationary pressure in the global manufacturing and supply chain.
Adjusted operating expenses in the second quarter of fiscal 2022 were $82.4 million, up 24.1% from the year-ago quarter. This increase was primarily driven by the acquisition of the Vascular Closure business and an increase in freight costs.
The company-adjusted operating income was $43.8 million in the quarter under discussion, down 18.3% year over year. Adjusted operating margin was 18.3%, down 220 bps compared to the year-ago quarter.
Financial Position
Haemonetics exited the second quarter of fiscal 2022 with cash and cash equivalents of $192.4 million compared with $173.5 million at the end of first-quarter 2022. Long-term debt at the end of second-quarter fiscal 2022 was $698 million, down from $767.3 million at the end of first-quarter 2022.
Cumulative net cash flow from operating activities at the end of second-quarter fiscal 2022 was $41.7 million compared with a $40.9-million net cash flow from operating activities a year ago.
Cumulative capital expenses (net of proceeds from the sale of property, plant and equipment) incurred by the company were $33.8 million, up from the year-ago $15.1 million. It also reported free cash flow (before restructuring and turnaround costs) of $29.4 million during the same period, up 86.1% from $15.8 million a year ago.
2022 Guidance
Haemonetics has narrowed its full-year 2022 financial guidance. The company expects GAAP total revenue growth in the range of 13-17% on a reported basis (the previous guided range was 13-18%). The organic growth projection is pinned at 7-10% (the previous guided growth projection was 8-12%). The Zacks Consensus Estimate for 2022 revenues is pegged at $1.01 billion.
The company expects full-year adjusted EPS in the band of $2.40-$2.65 (the previous guided range was $2.60-$3.00). The Zacks Consensus Estimate for the same is pegged at $2.77.
Our Take
Haemonetics exited the second quarter of fiscal 2022 with lower-than-expected results. The company’s sluggish service businesses due to the pandemic-led business disruptions are concerning. The rise in the company’s restructuring-related costs is building pressure on the bottom line. Economic uncertainty and stiff competition remain concerns. The company has also narrowed its full-year 2022 guidance, which raises apprehension. On a positive note, the company registered year-over-year growth in revenues driven by recovery across businesses, mainly at Hospital and the initial Plasma Persona rollouts. The company’s Hospital business was robust along with an uptick in the Hemostasis Management product line. Strong customer end-market demand for NexSys PCS system with Persona technology buoys optimism.
Zacks Rank and Key Picks
Haemonetics currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader medical space that have announced quarterly results are Medpace Holdings, Inc. (MEDP - Free Report) , Thermo Fisher Scientific Inc. (TMO - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) .
Medpace, currently carrying a Zacks Rank #1 (Strong Buy), reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Thermo Fisher Scientific reported third-quarter 2021 adjusted EPS of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%. It currently carries a Zacks Rank #2 (Buy).
West Pharmaceutical Services, carrying a Zacks Rank #2, reported third-quarter 2021 adjusted EPS of $2.06, which beat the Zacks Consensus Estimate by 13.2%. Revenues of $706.5 million outpaced the consensus mark by 3.2%.