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Haemonetics (HAE) Up 28.2% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Haemonetics (HAE - Free Report) . Shares have added about 28.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Haemonetics due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Haemonetics Q4 Earnings Top Estimates, Gross Margin Up

Haemonetics Corporation delivered adjusted earnings per share 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, earnings per share 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.

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 earnings per share in the band of $2.50-$2.90. The Zacks Consensus Estimate for the same is pegged at $2.66.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -21.82% due to these changes.

VGM Scores

At this time, Haemonetics has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Haemonetics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Haemonetics belongs to the Zacks Medical - Products industry. Another stock from the same industry, SurModics (SRDX - Free Report) , has gained 16.4% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

SurModics reported revenues of $26.11 million in the last reported quarter, representing a year-over-year change of -25.4%. EPS of -$0.22 for the same period compares with $0.62 a year ago.

For the current quarter, SurModics is expected to post a loss of $0.39 per share, indicating a change of -129.4% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

SurModics has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.


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