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Haemonetics (HAE) Q4 Earnings Meet, Revenues Beat Estimates

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Haemonetics Corporation (HAE - Free Report) reported adjusted earnings per share (EPS) of 43 cents in the fourth quarter of fiscal 2018, a 10.3% rise year over year. The bottom line, however, was on par with the Zacks Consensus Estimate.

On a reported basis, Haemonetics posted net earnings of 22 cents per share against a net loss of 98 cents a year ago.

Fiscal 2018 adjusted EPS came in at $1.87, up 22.2% from the prior fiscal.

Total Revenues

Revenues were up 2.4% year over year (up 0.2% at constant exchange rate or CER) to $233.6 million in the reported quarter. The top line also exceeded the Zacks Consensus Estimate of $225 million. The year-over-year growth was backed by strong results in North America and improving international results.

Fiscal 2018 revenues totaled $903.9 million, up 2% from the prior fiscal (up 1.1% at CER).

Haemonetics Corporation Price, Consensus and EPS Surprise

 

Revenues by Product Categories

Haemonetics reports operating results under four business franchises: Plasma, Haemostasis Management, Cell Processing and Blood Center.

At Plasma, reported revenues of $111.6 million (47.8% of total revenues) were up 10.6% year over year (up 8.9% at CER).

Revenues at BloodCenter (31.4% of total revenues) declined 10.8% (down 13.3% at CER) to $73.4 million.

Hemostasis Management franchise revenues (8.5% of total revenues) rose 14.2% (up 11.9% at CER) to $19.9 million. Revenues from Cell Processing were up 4.4% (up 0.7% at CER) to $28.6 million (12.2% of total revenues).

Margins

Haemonetics’ fourth-quarter adjusted gross margin was 45.6%, up 260 basis points (bps) year over year on favorable mix and currency along with reduced non-cash inventory charges.

Adjusted operating income was $27.3 million in the quarter, showing a 2.3% decline year over year. Adjusted operating margin contracted 60 bps year over year to 11.7% in the quarter under review.

Financial Position

Haemonetics exited fiscal 2018 with cash and cash equivalents of $180.2 million, compared with $139.6 million at fiscal 2017-end.

The company generated operating cash flow of $220.4 million at the end of fiscal 2018, compared with $159.7 million in fiscal 2017. At the end of fiscal 2018, the company reported free cash flow (before transformation, restructuring costs and VCC capital expenditures) of $161.8 million, compared with $113.0 million a year ago. Capital expenditures of $72.0 million have been recorded in the year, lower than $73.3 million in 2017.

Fiscal 2019 Guidance

Haemonetics issued its fiscal 2019 revenue guidance. The company expects full-year revenue growth of 3-5%. Plasma revenue growth is expected in the 7-10% band. Hospital revenues are expected to rise 5-8%. Blood Center revenues are likely to decline 3-6%. The Zacks Consensus Estimate for 2019 revenues is pegged at $953.8 million.

The company expects 2018 adjusted EPS in the band of $2.00-$2.30. The Zacks Consensus Estimate of $2.15 is within the guided range.

Our Take

Haemonetics exited fourth-quarter fiscal 2018 on a mixed note. Continued momentum in new business generation and geographical expansion have helped the company deliver strong results. However, we are disappointed with the company’s sluggish Blood Center business moderating overall growth despite encouraging progress in the Plasma and Hospitals.

The company also seems to be upbeat about the receipt of some major regulatory clearances for the Plasma business. These should drive the top line in fiscal 2019. Also, the company’s strong cash position boosts investors’ confidence.

Zacks Rank & Key Picks

Haemonetics has a Zacks Rank #3 (Hold). 

A few better-ranked stocks in the broader medical space which have reported solid results this season are Intuitive Surgical (ISRG - Free Report) , Chemed Corporation (CHE - Free Report) and Baxter International Inc. (BAX - Free Report) . While Intuitive Surgical sports a Zacks Rank #1 (Strong Buy), Chemed and Baxter carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical reported first-quarter 2018 adjusted EPS of $2.44, which beat the Zacks Consensus Estimate by 22.6%. Revenues totaled $848 million, also surpassing the consensus estimate by 10.6%.

Chemed posted first-quarter 2018 adjusted EPS of $2.72, surpassing the Zacks Consensus Estimate of $2.37. Revenues came in at $439.2 million, beating the Zacks Consensus Estimate of $420 million.

Baxter posted first-quarter 2018 adjusted EPS of 70 cents, which beat the Zacks Consensus Estimate by 12.9%. Revenues of $2.68 billion also edged past the Zacks Consensus Estimate of $2.62 billion.

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