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Hill-Rom (HRC) Q4 Earnings Top Estimates on All-Line Growth

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Hill-Rom Holdings, Inc. (HRC - Free Report) delivered fourth-quarter fiscal 2018 adjusted earnings per share (EPS) of $1.63, reflecting a 23.5% increase from the year-ago quarter. The bottom line also exceeded the Zacks Consensus Estimate by 7.9% and was well above the company’s projected range of $1.50-$1.53 as well.

The strong performance was backed by a solid core revenue rise, continued margin expansion and growth-driving strategic investments. This in turn, marked the 13th straight quarter of double-digit earnings growth for the company.

Full-year adjusted EPS came in at $4.75, a 23% rise from the year-ago period.

Revenue Details

Revenues in the fiscal fourth quarter climbed 3% year over year to $759.2 million (same at constant exchange rate or CER). The top line also exceeded the Zacks Consensus Estimate of $751 million on sturdy growth in core business. Full-year worldwide revenues were $2.85 billion, up 4% (improving 2% at CER) compared with the prior-year figure.

Geographically, U.S. revenues grew 7% to $544 million in the reported quarter while the metric outside the United States declined 6% (down 4% at CER) to $215 million. Core revenue growth was 4% at CER.

Segmental Performance

In the quarter under review, Patient Support Systems revenues inched up 2.5% year over year (up 3.1% at CER) to $380.4 million. This segment’s domestic core revenues were up 10%, representing solid performances across all key capital product categories. This is the second consecutive quarter with double-digit growth in med-surg bed systems, Clinical Workflow Solutions and safe patient handling equipment. However, outside the United States, core Patient Support Systems revenues fell 6%.

Hill-Rom Holdings, Inc. Price, Consensus and EPS Surprise

Hill-Rom Holdings, Inc. Price, Consensus and EPS Surprise | Hill-Rom Holdings, Inc. Quote


Revenues at the Front Line Care segment increased 5.4% to $258.7 million (up 5.9% at CER). Domestic growth of 9% was driven by the contribution from new products including the Connex Spot Monitor, the Monarch Mobile Vest and our Vision Care portfolio. International revenues dipped 1%, primarily due to a drop in sales in Asia-Pacific. However, the company registered a solid performance across Europe, Canada and the Middle East.

The Surgical Solutions segment revenues slipped 1.4% (down 0.7% at CER) to $120.1 million.


Reported gross margin in the fiscal fourth quarter was 49.6%, up 45 bps year over year. Adjusted gross margin grew 30 bps, buoyed by a positive contribution from product mix, primarily related to portfolio optimization initiatives and new products as well as benefits from manufacturing productivity and procurement efforts. Adjusted operating margin expanded 209 bps to 16.6% in the reported quarter.


Hill-Rom has provided its fiscal 2019 financial guidance. The company expects revenues to rise 1-2% on a reported basis (up 2-3% at CER) and core revenues to grow 4-5%. The Zacks Consensus Estimate for fiscal 2019 revenues is pegged at $2.92 billion.

Adjusted EPS for the year is expected in the $5.08-$5.16 range. The Zacks Consensus Estimate for fiscal 2019 earnings stands at $5.10, within the company’s guided band.

For the first-quarter fiscal 2019, Hill-Rom expects a revenue rise of around 1% on a reported basis (or up 2% at CER). Core revenues are expected to increase 4% year over year.  The company estimates adjusted earnings per share of $0.97-$0.99. The Zacks Consensus Estimate for first-quarter earnings is $1.04 on revenues of $684.3 million.

Our Take

Hill-Rom exited the fiscal 2018 on a strong note. The company saw a solid year-over-year increase in revenues on robust domestic growth, driven by a sturdy performance in Patient Support Systems and Front Line Care.

The company is currently focusing on product innovation through research and development. Year to date, it has achieved more than $180 million as new product revenues.

Zacks Rank & Key Picks

Hill-Rom carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the broader medical space, which reported solid earnings so far this reporting season, are Intuitive Surgical (ISRG - Free Report) , Stryker Corporation (SYK - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) . All stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Intuitive Surgical reported third-quarter 2018 adjusted EPS of $2.83, which beat the Zacks Consensus Estimate of $2.65. Revenues totaled $920.9 million, also surpassing the consensus estimate of $918.6 million.

Stryker posted third-quarter 2018 adjusted EPS of $1.69, steering past the Zacks Consensus Estimate of $1.68. Operating margin was 17.8%, up 30 bps.

Merit Medical reported third-quarter 2018 adjusted EPS of 47 cents, which trumped the Zacks Consensus Estimate of 42 cents. Revenues of $221.6 million edged past the consensus estimate of $218 million.

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