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Haemonetics (HAE) Q3 Earnings Beat Estimates, Margins Down
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Haemonetics Corporation (HAE - Free Report) delivered adjusted earnings per share (EPS) of 85 cents for the third quarter of fiscal 2023, reflecting growth of 1.2% year over year. The bottom line surpassed the Zacks Consensus Estimate by 7.6%.
On a GAAP basis, EPS was 64 cents, a 42.2% surge year over year.
Total Revenues
Revenues increased 17.5% (up 21.2% on an organic basis) to $305.3 million in the third quarter of fiscal 2023. The top line beat the Zacks Consensus Estimate by 4.4%.
The year-over-year increase in revenues was supported by strong revenue performance across all the company’s business units despite a difficult macroeconomic environment.
Segments in Detail
At Plasma, revenues of $135.5 million (accounting for 44.4% of total revenues) rose 40.4% year over year (up 42.3% on an organic basis) in the reported quarter.
Revenues at Blood Center (24%) fell 3.1% (up 3.1% on an organic basis) to $73.4 million.
Hospital revenues (29.9%) rose 11.3% (up 14.4% on an organic basis) to $91.6 million. Under the Hospital segment, despite continued macroeconomic challenges, including hospital staffing shortages, budgetary constraints and COVID-related challenges in China., the company’s revenues and market share grew meaningfully.
Service revenues (accounting for the rest) declined 8% (down 1.2% on an organic basis) to $4.9 million.
Margins
The fiscal-third quarter gross margin was 51.9%, down 136 basis points (bps) year over year. The company-adjusted gross margin was 52.5%, reflecting a decline of 240 bps compared with the year-ago period when Haemonetics reported one of its highest-ever adjusted gross margins of 54.9%.
Adjusted operating margin was 16.8%, down 158 bps from the year-ago quarter. Haemonetics noted that higher adjusted operating expenses in both periods were due to higher performance-based compensation, continuous investments in sales and marketing, higher freight costs and normalized spending levels, partially offset by additional savings from the operational excellence program. In the fiscal third quarter, the company also had higher research and development costs, primarily due to increased investments in product innovation.
Financial Position
Haemonetics exited the third quarter of fiscal 2023 with cash and cash equivalents of $224 million compared with $241.2 million at the end of the second quarter of fiscal 2022. Long-term debt at the end of the fiscal third quarter was $756.8 million, down from $759.6 million at the end of fiscal second quarter.
Cumulative net cash flow from operating activities at the end of the third quarter of fiscal 2023 was $193.4 million compared with a $104.2 million net cash used in operating activities a year ago.
As part of its previously announced $300 million share repurchase program, the company repurchased 997,406 shares of its common shares for $75.0 million via an accelerated share repurchase program in the fiscal second quarter. However, it has not repurchased any additional stock in fiscal Q3.
2023 Guidance
The company updated its outlook for 2023.
For 2023, the company now expects GAAP total revenue growth in the range of 15-17% on a reported basis (up from the prior projection of 12-15%). Organic revenue growth is currently expected in the range of 18-20% (up from the prior projection of 15-18%). The Zacks Consensus Estimate for 2023 revenues is pegged at $1.12 billion.
The company now expects full-year adjusted earnings per share in the band of $2.90-$3.00 (compared with the previous estimate of $2.70-$3.00). The Zacks Consensus Estimate for the same is pegged at $2.87.
Our Take
Haemonetics exited the third quarter of fiscal 2023, with better-than-expected earnings and revenues. The robust performance of the Plasma and Hospital business, with continued strength in the Hemostasis Management product line, instills optimism. Robust contributions from the Vascular Closure business also seem promising. The full-year outlook for revenues and EPS with strong year-over-year growth indicates the continuity of this growth momentum.
However, the year-over-year decline in the company’s Blood Center business raises apprehension. The contraction of both margins in the face of macroeconomic challenges is an added woe.
Zacks Rank and Other Key Picks
Haemonetics currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space that have announced quarterly results are Cardinal Health, Inc. (CAH - Free Report) , McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Cardinal Health, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2023 adjusted EPS of $1.32, beating the Zacks Consensus Estimate by 16.8%. Revenues of $51.47 billion outpaced the consensus mark by 2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 6.4%.
McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.
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Haemonetics (HAE) Q3 Earnings Beat Estimates, Margins Down
Haemonetics Corporation (HAE - Free Report) delivered adjusted earnings per share (EPS) of 85 cents for the third quarter of fiscal 2023, reflecting growth of 1.2% year over year. The bottom line surpassed the Zacks Consensus Estimate by 7.6%.
On a GAAP basis, EPS was 64 cents, a 42.2% surge year over year.
Total Revenues
Revenues increased 17.5% (up 21.2% on an organic basis) to $305.3 million in the third quarter of fiscal 2023. The top line beat the Zacks Consensus Estimate by 4.4%.
The year-over-year increase in revenues was supported by strong revenue performance across all the company’s business units despite a difficult macroeconomic environment.
Segments in Detail
At Plasma, revenues of $135.5 million (accounting for 44.4% of total revenues) rose 40.4% year over year (up 42.3% on an organic basis) in the reported quarter.
Revenues at Blood Center (24%) fell 3.1% (up 3.1% on an organic basis) to $73.4 million.
Hospital revenues (29.9%) rose 11.3% (up 14.4% on an organic basis) to $91.6 million. Under the Hospital segment, despite continued macroeconomic challenges, including hospital staffing shortages, budgetary constraints and COVID-related challenges in China., the company’s revenues and market share grew meaningfully.
Service revenues (accounting for the rest) declined 8% (down 1.2% on an organic basis) to $4.9 million.
Margins
The fiscal-third quarter gross margin was 51.9%, down 136 basis points (bps) year over year. The company-adjusted gross margin was 52.5%, reflecting a decline of 240 bps compared with the year-ago period when Haemonetics reported one of its highest-ever adjusted gross margins of 54.9%.
Adjusted operating margin was 16.8%, down 158 bps from the year-ago quarter. Haemonetics noted that higher adjusted operating expenses in both periods were due to higher performance-based compensation, continuous investments in sales and marketing, higher freight costs and normalized spending levels, partially offset by additional savings from the operational excellence program. In the fiscal third quarter, the company also had higher research and development costs, primarily due to increased investments in product innovation.
Financial Position
Haemonetics exited the third quarter of fiscal 2023 with cash and cash equivalents of $224 million compared with $241.2 million at the end of the second quarter of fiscal 2022. Long-term debt at the end of the fiscal third quarter was $756.8 million, down from $759.6 million at the end of fiscal second quarter.
Cumulative net cash flow from operating activities at the end of the third quarter of fiscal 2023 was $193.4 million compared with a $104.2 million net cash used in operating activities a year ago.
As part of its previously announced $300 million share repurchase program, the company repurchased 997,406 shares of its common shares for $75.0 million via an accelerated share repurchase program in the fiscal second quarter. However, it has not repurchased any additional stock in fiscal Q3.
2023 Guidance
The company updated its outlook for 2023.
For 2023, the company now expects GAAP total revenue growth in the range of 15-17% on a reported basis (up from the prior projection of 12-15%). Organic revenue growth is currently expected in the range of 18-20% (up from the prior projection of 15-18%). The Zacks Consensus Estimate for 2023 revenues is pegged at $1.12 billion.
The company now expects full-year adjusted earnings per share in the band of $2.90-$3.00 (compared with the previous estimate of $2.70-$3.00). The Zacks Consensus Estimate for the same is pegged at $2.87.
Our Take
Haemonetics exited the third quarter of fiscal 2023, with better-than-expected earnings and revenues. The robust performance of the Plasma and Hospital business, with continued strength in the Hemostasis Management product line, instills optimism. Robust contributions from the Vascular Closure business also seem promising. The full-year outlook for revenues and EPS with strong year-over-year growth indicates the continuity of this growth momentum.
However, the year-over-year decline in the company’s Blood Center business raises apprehension. The contraction of both margins in the face of macroeconomic challenges is an added woe.
Zacks Rank and Other Key Picks
Haemonetics currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space that have announced quarterly results are Cardinal Health, Inc. (CAH - Free Report) , McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Cardinal Health, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2023 adjusted EPS of $1.32, beating the Zacks Consensus Estimate by 16.8%. Revenues of $51.47 billion outpaced the consensus mark by 2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 6.4%.
McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.