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Haemonetics (HAE) Q4 Earnings Top Estimates, Gross Margin Up

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Haemonetics Corporation (HAE - Free Report) delivered adjusted earnings per share (EPS) of 65 cents in the fourth quarter of fiscal 2022, reflecting growth of 41.3% year over year. The bottom line also surpassed the Zacks Consensus Estimate by 8.3%.

On a GAAP basis, EPS was 19 cents against the year-ago loss of 22 cents.

For the full year, adjusted earnings were $2.58 per share, 9.8% up from the year-ago period. It also beat the Zacks Consensus Estimate by 2.2%.

Total Revenues

Revenues increased 17.8% (up 19% on an organic basis) to $265 million in the fourth quarter of fiscal 2022. The top line beat 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.

Full-year revenues were $993 million, reflecting a 14% increase from the year-ago period (up 7% at constant exchange rate or CER). Revenues surpassed the Zacks Consensus Estimate by 0.7%.

At Plasma, revenues of $101 million (accounting for 38.2% of total revenues) rose 20.8% year over year (up 30.6% on an organic basis) in the reported quarter.

Haemonetics Corporation Price, Consensus and EPS Surprise

Revenues at Blood Center (27.6%) fell 0.9% (up 7.5% on an organic basis) to $73.1 million.

Hospital revenues (32.4%) rose 37.9% (up 18.6% on an organic basis) to $85.7 million. Under the Hospital segment, revenue growth in the Hemostasis Management product line was 4.5% in the fourth quarter of fiscal 2022.

Service revenues (1.9%) fell 5.9% (down 3.9% on an organic basis) to $5 million.

Margins

The company-adjusted gross margin was 53.6%, up 360 basis points (bps) year over year. The primary drivers of this improvement were the acquisition of the Vascular Closure business, price and productivity savings from the Operational Excellence Program, partially offset by inflationary pressures in the global manufacturing and supply chain, and increased depreciation expenses.

Adjusted operating expenses in the fourth quarter of fiscal 2022 were $95.4 million, up 16.4% 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 $46.6 million in the quarter under discussion, up 52.8% year over year. Adjusted operating margin was 17.6%, down 410 bps from the year-ago quarter.

Financial Position

Haemonetics exited 2022 with cash and cash equivalents of $259.5 million compared with $192.3 million at the end of third-quarter 2022. Long-term debt at the end of 2022 was $559.4 million, down from $690.6 million at the end of third-quarter fiscal 2022.

Cumulative net cash flow from operating activities at the end of 2022 was $172.3 million compared with a $108.8 million net cash flow from operating activities a year ago.

Cumulative capital expenses (net of proceeds from the sale of property, plant and equipment) were $94.5 million, up from the year-ago $35.3 million. It also reported free cash flow (before restructuring and turnaround costs) of $117.4 million during the same period, up 18.4% from $99.2 million a year ago.

2023 Guidance

The company has issued an outlook for 2023.

For 2023, the company expects GAAP total revenue growth in the range of 5-9% on a reported basis and organic revenue growth in the range of 6-10%. The Zacks Consensus Estimate for 2023 revenues is pegged at $1.02 billion.

The company expects full-year adjusted EPS in the band of $2.50-$2.90. The Zacks Consensus Estimate for the same is pegged at $2.66.

Our Take

Haemonetics ended the fourth quarter of fiscal 2022 with better-than-expected earnings and revenues. 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 Blood Center businesses raises apprehension. Further, escalating operating expenses resulting in a contraction in adjusted operating margin does not bode well either.

Zacks Rank and Key Picks

Haemonetics currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the broader medical space that have announced quarterly results are UnitedHealth Group Incorporated (UNH - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Alkermes plc (ALKS - Free Report) .

UnitedHealth, having a Zacks Rank #2 (Buy), reported first-quarter 2022 earnings per share (EPS) of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 14.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

UnitedHealth has an estimated long-term growth rate of 14.8%. UNH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.7%.

Medpace reported first-quarter 2022 adjusted EPS of $1.69, which surpassed the Zacks Consensus Estimate by 34.1%. Revenues of $330.9 million outpaced the Zacks Consensus Estimate by 1.1%. It currently has a Zacks Rank #2.

Medpace has a historical growth rate of 27.3%. MEDP’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.1%.

Alkermes reported first-quarter 2022 adjusted EPS of 12 cents, which surpassed the Zacks Consensus Estimate of a penny. Revenues of $278.6 million outpaced the Zacks Consensus Estimate by 6.2%. It currently sports a Zacks Rank #1.

Alkermes has an estimated long-term growth rate of 25.1%. ALKS’ earnings surpassed estimates in the trailing four quarters, the average surprise being 350.5%.