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Envista (NVST) Q3 Earnings Miss Estimates, Gross Margin Down
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Envista Holdings Corporation (NVST - Free Report) reported third-quarter 2023 adjusted earnings per share (EPS) of 43 cents, down 8.5% year over year. The bottom line missed the Zacks Consensus Estimate by 6.5%.
The adjustments include charges and benefits related to the amortization of acquired intangible assets, certain asset impairment charges and asset impairments, among others.
The company’s earnings from continuing operations were 12 cents in the quarter compared with the year-ago quarter’s 28 cents, down 57.1%.
Revenues in Detail
Revenues totaled $631.3 million in the reported quarter, up 0.03% year over year. The metric lagged the Zacks Consensus Estimate by 3%.
The company witnessed the negative impact of both Russia and the weakness of higher-end specialty procedures in developed markets.
Segments in Detail
In the third quarter, Speciality Products & Technologies totaled $399.5 million, up 1%. The Speciality Products & Technologies delivered low-single-digit core growth as Spark outperformed.
Revenues in the Equipment & Consumables segment fell 1.7% year over year to $231.8 million in the quarter under review. The downside was due to the planned rationalization of our traditional imaging portfolio.
Operational Update
Gross profit for the reported quarter fell 0.4% year over year to $363.3 million. Gross margin contracted 24 basis points (bps) to 57.5%.
Selling, general and administrative expenses were down 2.5% year over year to $257.7 million. Research and development expenses fell 14.2% year over year to $22.3 million.
Operating profit of $83.3 million surged 11.8% year over year. The operating margin expanded 139 bps to 13.2%.
Financial Update
Envista ended third-quarter 2023 with cash and cash equivalents of $824.2 million compared with $651.7 million at the end of second-quarter 2023. Total long-term debt was $1.38 billion at the end of the second quarter compared with $875.6 million at the end of the second quarter of 2023.
Envista Holdings Corporation Price, Consensus and EPS Surprise
Net cash provided by operating activities at the end of the third quarter was $173.7 million compared with $72.4 million a year ago.
2023 Guidance
Due to the continued uncertainties in the macro environment, volatility in the North American distribution channel and our continued investment in its long-term growth initiatives, Envista expects full-year core sales to be down slightly.
The Zacks Consensus Estimate for 2023 revenues is pegged at $2.64 billion. Adjusted EBITDA margin is expected to be between 18% to 19%.
Our Take
Envista ended third-quarter 2023 with lower-than-expected revenues and earnings. Revenues in the Equipment & Consumables segment fell due to the planned rationalization of our traditional imaging portfolio. The impact of US sanctions on Russia and a slowdown in higher-end specialty procedures in the developed markets dented the company’s sales. The contraction of gross margin is discouraging, too.
On a positive note, the company witnessed the Equipment & Consumables segment rise in low single digits as Spark continued to deliver strong growth. The company continues to utilize the Envista Business System (EBS) to streamline our operations and improve our cost position, delivering 50 bps of sequential margin improvement in the quarter. Further, the expansion of operating margin looks encouraging.
Inari Medical, carrying a Zacks Rank #2 (Buy), reported a second-quarter 2023 adjusted EPS of 4 cents, beating the Zacks Consensus Estimate by a staggering 128.6%. Revenues of $119 million outpaced the consensus estimate by 2.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inari Medical has an estimated earnings growth rate of 725% for the following year. Inari Medical’s earnings surpassed estimates in all the trailing four quarters, the average being 66.8%.
Insulet, carrying a Zacks Rank #2, reported a second-quarter 2023 adjusted EPS of 38 cents, which beat the Zacks Consensus Estimate by 58.3%. Revenues of $396.5 million outpaced the consensus estimate by 3.3%.
Insulet has an estimated long-term earnings growth rate of 41.5% compared with the industry’s 14.4% growth. PODD’s earnings surpassed estimates in all the trailing four quarters, the average being 126.9%.
Cencora reported third-quarter fiscal 2023 adjusted earnings of $2.92, which beat the Zacks Consensus Estimate by 3.2%. Revenues of $66.9 billion surpassed the Zacks Consensus Estimate by 5.6%. It currently has a Zacks Rank #2.
Cencora has an earnings yield of 6.8% compared with the industry’s -1.1%. COR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.5%.
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Envista (NVST) Q3 Earnings Miss Estimates, Gross Margin Down
Envista Holdings Corporation (NVST - Free Report) reported third-quarter 2023 adjusted earnings per share (EPS) of 43 cents, down 8.5% year over year. The bottom line missed the Zacks Consensus Estimate by 6.5%.
The adjustments include charges and benefits related to the amortization of acquired intangible assets, certain asset impairment charges and asset impairments, among others.
The company’s earnings from continuing operations were 12 cents in the quarter compared with the year-ago quarter’s 28 cents, down 57.1%.
Revenues in Detail
Revenues totaled $631.3 million in the reported quarter, up 0.03% year over year. The metric lagged the Zacks Consensus Estimate by 3%.
The company witnessed the negative impact of both Russia and the weakness of higher-end specialty procedures in developed markets.
Segments in Detail
In the third quarter, Speciality Products & Technologies totaled $399.5 million, up 1%. The Speciality Products & Technologies delivered low-single-digit core growth as Spark outperformed.
Revenues in the Equipment & Consumables segment fell 1.7% year over year to $231.8 million in the quarter under review. The downside was due to the planned rationalization of our traditional imaging portfolio.
Operational Update
Gross profit for the reported quarter fell 0.4% year over year to $363.3 million. Gross margin contracted 24 basis points (bps) to 57.5%.
Selling, general and administrative expenses were down 2.5% year over year to $257.7 million. Research and development expenses fell 14.2% year over year to $22.3 million.
Operating profit of $83.3 million surged 11.8% year over year. The operating margin expanded 139 bps to 13.2%.
Financial Update
Envista ended third-quarter 2023 with cash and cash equivalents of $824.2 million compared with $651.7 million at the end of second-quarter 2023. Total long-term debt was $1.38 billion at the end of the second quarter compared with $875.6 million at the end of the second quarter of 2023.
Envista Holdings Corporation Price, Consensus and EPS Surprise
Envista Holdings Corporation price-consensus-eps-surprise-chart | Envista Holdings Corporation Quote
Net cash provided by operating activities at the end of the third quarter was $173.7 million compared with $72.4 million a year ago.
2023 Guidance
Due to the continued uncertainties in the macro environment, volatility in the North American distribution channel and our continued investment in its long-term growth initiatives, Envista expects full-year core sales to be down slightly.
The Zacks Consensus Estimate for 2023 revenues is pegged at $2.64 billion.
Adjusted EBITDA margin is expected to be between 18% to 19%.
Our Take
Envista ended third-quarter 2023 with lower-than-expected revenues and earnings. Revenues in the Equipment & Consumables segment fell due to the planned rationalization of our traditional imaging portfolio. The impact of US sanctions on Russia and a slowdown in higher-end specialty procedures in the developed markets dented the company’s sales. The contraction of gross margin is discouraging, too.
On a positive note, the company witnessed the Equipment & Consumables segment rise in low single digits as Spark continued to deliver strong growth. The company continues to utilize the Envista Business System (EBS) to streamline our operations and improve our cost position, delivering 50 bps of sequential margin improvement in the quarter. Further, the expansion of operating margin looks encouraging.
Zacks Rank and Key Picks
Envista currently carries Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Inari Medical (NARI - Free Report) , Insulet (PODD - Free Report) and Cencora, Inc. (COR - Free Report) .
Inari Medical, carrying a Zacks Rank #2 (Buy), reported a second-quarter 2023 adjusted EPS of 4 cents, beating the Zacks Consensus Estimate by a staggering 128.6%. Revenues of $119 million outpaced the consensus estimate by 2.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inari Medical has an estimated earnings growth rate of 725% for the following year. Inari Medical’s earnings surpassed estimates in all the trailing four quarters, the average being 66.8%.
Insulet, carrying a Zacks Rank #2, reported a second-quarter 2023 adjusted EPS of 38 cents, which beat the Zacks Consensus Estimate by 58.3%. Revenues of $396.5 million outpaced the consensus estimate by 3.3%.
Insulet has an estimated long-term earnings growth rate of 41.5% compared with the industry’s 14.4% growth. PODD’s earnings surpassed estimates in all the trailing four quarters, the average being 126.9%.
Cencora reported third-quarter fiscal 2023 adjusted earnings of $2.92, which beat the Zacks Consensus Estimate by 3.2%. Revenues of $66.9 billion surpassed the Zacks Consensus Estimate by 5.6%. It currently has a Zacks Rank #2.
Cencora has an earnings yield of 6.8% compared with the industry’s -1.1%. COR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.5%.