Haemonetics Corporation (HAE Quick QuoteHAE - Free Report) delivered adjusted earnings per share (EPS) of 84 cents in the third quarter of fiscal 2022, reflecting growth of 3.7% year over year. The bottom line also surpassed the Zacks Consensus Estimate by 12%.

On a GAAP basis, EPS was 45 cents compared with the year-ago EPS of 62 cents, reflecting a 27.4% decline.

Total Revenues

Revenues increased 8.1% (down 0.8% on an organic basis) to $259.8 million in the third quarter of fiscal 2022. The top line, however, lagged the Zacks Consensus Estimate by 2.6%.

The year-over-year increase in revenues was supported by strong revenue performance across the Hospital business, particularly in Hemostasis Management and Vascular Closure, which helped reduce the impact of a prolonged recovery in plasma volumes.

Revenues by Product Categories

At Plasma, revenues of $96.5 million (accounting for 37.1% of total revenues) fell 5.4% year over year (down 2% on an organic basis) in the reported quarter.

Revenues at Blood Center (29.1%) fell 6.5% (down 7.3% on an organic basis) to $75.7 million.

Haemonetics Corporation Price, Consensus and EPS Surprise

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

Hospital revenues (31.7%) rose 56.3% (up 10.5% on an organic basis) to $82.3 million. Under the Hospital segment, revenue growth in the Hemostasis Management product line was 18% in the third quarter of fiscal 2022 on growing uptake of the company’s TEG 6s devices and increased utilization of cartridges in North America.

Service revenues (2.1%) rose 9.8% (up 9.3% on an organic basis) to $5.3 million.

Margins

The company-adjusted gross margin was 53.3%, up 331 basis points (bps) year over year. The primary drivers of this improvement were the addition of the Vascular Closure business, incremental gross savings from the Operational Excellence Program and favorable product mix, given a higher proportion of revenues being derived from the high-margin Hospital business. However, these benefits were partially offset by inflationary pressures in the global manufacturing and supply chain.

Adjusted operating expenses in the third quarter of fiscal 2022 were $90.8 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 $47.8 million in the quarter under discussion, up 1.5% year over year. Adjusted operating margin was 18.4%, down 120 bps compared to the year-ago quarter.

Financial Position

Haemonetics exited the third quarter of fiscal 2022 with cash and cash equivalents of $236.9 million compared with $192.4 million at the end of second-quarter 2022. Long-term debt at the end of third-quarter fiscal 2022 was $633.1 million, down from $698 million at the end of second-quarter fiscal 2022.

Cumulative net cash flow from operating activities at the end of third-quarter fiscal 2022 was $104.2 million compared with a $107.3-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 $59.9 million, up from the year-ago $24.3 million. It also reported free cash flow (before restructuring and turnaround costs) of $75.8 million during the same period, down 23.5% from $99.1 million a year ago.

2022 Guidance Updated

Haemonetics has narrowed its full-year 2022 financial guidance. The company expects GAAP total revenue growth in the range of 12-14% on a reported basis (down from the previously guided range of 13-17%). The organic growth projection is pinned at 5-7% (the prior growth projection was 7-10%). The Zacks Consensus Estimate for 2022 revenues is pegged at $1 billion.

The company expects full-year adjusted EPS in the band of $2.45-$2.55 (the previous guided range was $2.40-$2.65). The Zacks Consensus Estimate for the same is pegged at $2.54.

Our Take

Haemonetics ended the third quarter of fiscal 2022 with better-than-expected earnings. The robust performance in the Hospital business, on continued strength in Hemostasis Management product line, buoys optimism. An increase in short-term cash level appears promising. Expansion of gross margin is an added advantage.

However, the year-over-year decline in the company’s Plasma and Blood Center businesses raises apprehension. Further, escalating operating expenses resulting in a contraction in adjusted operating margin does not bode well either.

Zacks Rank & Key Picks

Haemonetics currently carries a Zacks Rank #3 (Hold).

Here are a few stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.

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AMN Healthcare’s long-term earnings growth rate is estimated at 16.2%. AMN’s earnings yield of 6.6% compares favorably with the industry’s 0.7%.

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Henry Schein, Inc. (HSIC Quick QuoteHSIC - Free Report) has an Earnings ESP of +0.83% and a Zacks Rank of 2. The company will report fourth quarter and full-year 2021 results on Feb 15.

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