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Haemonetics (HAE) Beats on Q2 Earnings, Raises '20 EPS View

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Haemonetics Corporation (HAE - Free Report) delivered adjusted earnings per share (EPS) of 87 cents in the second quarter of fiscal 2020, reflecting 55.4% year-over-year growth from 56 cents. The bottom line also surpassed the Zacks Consensus Estimate by 20.8%.

On a reported basis, net income was 72 cents per share, up from the year-ago figure of 56 cents (an increase of 28.6%).

Total Revenues

Revenues rose 4.5% (up 9% on an organic basis) to $252.6 million from the second quarter of fiscal 2019. Further, the top line surpassed the Zacks Consensus Estimate by 1%.

The company continued to rollout the NexSys PCS device and NexLynk DMS donor management software.

Haemonetics Corporation Price, Consensus and EPS Surprise

 

Haemonetics Corporation Price, Consensus and EPS Surprise

Haemonetics Corporation price-consensus-eps-surprise-chart | Haemonetics Corporation Quote

Revenues by Product Categories

At Plasma, revenues of $115.9 million (accounting for 45.9% of total revenues) increased 8.5% year over year (up 14.6% on an organic basis) in the reported quarter. Plasma revenue growth in North America was 14.7%, including 11% growth in disposables.

Revenues at Blood Center (32.5%) declined 0.3% (up 0.2% on an organic basis) to $81.9 million.

Hospital revenues (19.7%) were up 3.6% (10.1% on an organic basis) to $49.7 million. Under the Hospital segment, organic revenue growth in the Hemostasis Management product line was 16% in the second quarter of fiscal 2020.

Margins

Per the company, adjusted gross margin was 52.6%, up 440 basis points (bps) year over year due to change in the pricing structure, product mix and productivity.

Adjusted operating income was $57.8 million in the quarter under discussion, up 48.6% from $38.9 million in the year-ago quarter. Meanwhile, adjusted operating margin expanded 680 bps year over year to 22.9%.

Financial Position

Haemonetics exited the second quarter of fiscal 2020 with cash and cash equivalents of $112 million compared with $190.2 million at the end of fiscal 2019. Long-term debt at the end of the fiscal second quarter was $313.9 million, marking a reduction of 1.3% from $318.1 million at the end of fiscal 2019.

The company generated operating cash flow of $32.5 million in the fiscal second quarter compared with $80.5 million a year ago (down 59.6%). It also reported free cash flow (before restructuring and turnaround costs) of $30.8 million during the same period, which was up 48.2% from $20.8 million a year ago.

Fiscal 2020 Guidance

Haemonetics reaffirmed its reported revenue guidance for fiscal 2020. The company reiterated yearly organic revenue growth at 6-8%. Coming to segmental revenues, on an organic basis, the view for Plasma revenues remained at 13-15%. Hospital revenue growth projection is maintained at 11-13%. Blood Center revenues are once again projected to decline 4-6% from the year-earlier number. The Zacks Consensus Estimate for fiscal 2020 revenues is pegged at $1.01 billion.

However, the company raised its 2020 adjusted EPS guidance to $3.10-$3.20 (up from $2.95-$3.15 mentioned earlier). The consensus estimate of $3.07 lies within the company’s guided range.

Our Take

Haemonetics exited the second quarter of fiscal 2020 on a solid note. Per the company, benefits from complexity reduction initiatives, operational excellence program and the share repurchase program along with higher market demand and success from early launches helped it pull off an impressive performance. Continued momentum in new business generation and geographical expansion contributed to results. However, the company’s sluggish Blood Center business and moderating overall top-line growth raise concern.

Zacks Rank and Stocks to Consider

Currently, Haemonetics carries a Zacks Rank #3 (Hold).

Some better-ranked medical device companies, which posted solid results this earnings season, are ResMed Inc (RMD - Free Report) , NuVasive, Inc (NUVA - Free Report) and Thermo Fisher Scientific Inc (TMO - Free Report) .

ResMed, with a Zacks Rank #2 (Buy), reported first-quarter fiscal 2020 adjusted EPS of 93 cents, surpassing the Zacks Consensus Estimate by 6.9%. Its revenues of $681.1 million outpaced the consensus mark by 3.7%.

NuVasive’s third-quarter 2019 adjusted EPS of 59 cents surpassed the Zacks Consensus Estimate by 9.3%. Its revenues totaled $290.8 million, which surpassed the consensus estimate by 2.4%. The stock currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Thermo Fisher, with a Zacks Rank #2, delivered third-quarter 2019 adjusted EPS of $2.94, beating the Zacks Consensus Estimate by 2.1%. Its revenues of $6.27 billion beat the Zacks Consensus Estimate by 1.3%.

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