Haemonetics (HAE) Earnings & Revenues Beat Estimates In Q2

Haemonetics Corporation (NYSE:HAE) reported adjusted earnings per share (EPS) of 56 cents in the second quarter of fiscal 2019, reflecting a 16.7% rise year over year. The bottom line surpassed the Zacks Consensus Estimate of 54 cents by 3.7%.

On a reported basis, net income came in at 35 cents per share, down 7.9% year over year.

Total Revenues

Revenues rose 7.2% year over year (same at constant exchange rate or CER) to $241.6 million in the quarter under review. Moreover, the top line exceeded the Zacks Consensus Estimate by 3.2%.

Revenues by Product Categories

At Plasma, reported revenues of $124.4 million (accounting for 51.5% of total revenues) rose 13.3% year over year (same at CER). Plasma revenue growth in North America was 17%, including 16.2% growth in disposables along with strength in software revenues.

Haemonetics Corporation Price, Consensus and EPS Surprise

Haemonetics Corporation Price, Consensus and EPS Surprise | Haemonetics Corporation Quote

Revenues at BloodCenter (28.2% of total revenues) dropped 4.8% (down 4.7% at CER) to $68.2 million.

Hospital revenues (contributing to 20.3% of total revenues) rose 11.6% (up 11.3% at CER) to $49 million.

Margins

Adjusted gross margin was 48.2%, up 170 basis points (bps) year over year on favorable revenue volume, price and product mix and currency movements along with savings from Complexity Reduction Initiative.

Adjusted operating income was $38.9 million in the quarter under discussion, showing a 6.4% rise year over year. Meanwhile, adjusted operating margin contracted 10 bps year over year to 16.1%.

Financial Position

Haemonetics exited the second quarter of fiscal 2019 with cash and cash equivalents of $199.8 million compared with $192.1 million at the end of first quarter of fiscal 2019.

The company generated operating cash flow of $80.5 million in the first six months of the fiscal compared with $97.3 million a year ago. The company also reported free cash flow (before restructuring and turnaround costs) of $20.8 million during the same period compared with $75.3 million a year ago. Capital expenditures totaled $75.3 million in the period, higher than $27.8 million in the same period last year.

Fiscal 2019 Guidance

Haemonetics updated its fiscal 2019 revenue guidance at CER. The company now expects full-year revenue growth of 6-8% compared with 3-5% stated previously. Coming to segmental revenues, Plasma revenue growth is expected in the 14-16% band (7-10% stated earlier) while Hospital revenues are estimated to increase 6-9% (5-8%). However, Blood Center revenues are likely to decline 3-6%. The Zacks Consensus Estimate for fiscal 2019 revenues is pegged at $972.5 million.

The company predicts 2019 adjusted EPS in the range of $2.25-$2.35 compared with the prior range of $2-$2.30. The consensus estimate of $2.33 is within this guided range.

Our Take

Haemonetics exited second-quarter fiscal 2019 on a promising note. Per the company, benefits from complexity reduction and investments along with strength in market demand and success from early launches helped the company put up an impressive performance. Continued momentum in new business generation and geographical expansion has contributed to the results as well.

However, we are displeased with the company’s sluggish Blood Center business moderating overall growth despite encouraging progress in Plasma and Hospitals. Meanwhile, we are upbeat about the company’s steady progress with the ongoing rollout of NexSys PCS devices and NexLynk DMS donor management software.

Zacks Rank & Other Key Picks

Haemonetics has a Zacks Rank #2 (Buy).

Other top-ranked stocks in the broader medical space which reported solid earnings this season are Intuitive Surgical (NASDAQ:ISRG) , Stryker Corporation (NYSE:SYK) and Merit Medical Systems, Inc. (NASDAQ:MMSI) . All the stocks carry a Zacks Rank #2. 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, outpacing 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.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>