Envista (NVST) Q4 Earnings Miss Estimates, Margins Down
Envista Holdings Corporation NVST reported fourth-quarter 2023 adjusted earnings per share (EPS) of 29 cents, down 44.2% year over year. The bottom line missed the Zacks Consensus Estimate by 12.1%.
The adjustments include charges and benefits related to the amortization of acquired intangible assets, goodwill and intangible asset impairment, among others.
The company’s loss from continuing operations was $1.27 in the quarter compared with the year-ago quarter’s EPS of 45 cents.
For the full year, adjusted earnings were $1.53 per share, reflecting a 21.2% fall from the year-ago period. It also missed the Zacks Consensus Estimate by 3.2%.
Revenues in Detail
Revenues totaled $645.6 million in the reported quarter, down 2.3% year over year. However, the metric topped the Zacks Consensus Estimate by 2.3%.
Total revenues for 2023 were $2.57 billion, dropping 0.1% from the year-ago period’s levels. The figure beat the Zacks Consensus Estimate by 0.8%.
Segments in Detail
In the fourth quarter, Speciality Products & Technologies totaled $415.9 million, up 4.4%. Within the segment, Envista’s Orthodontic business rose nearly 15%, with Spark continuing to outperform.
Revenues in the Equipment & Consumables segment fell 12.5% year over year to $229.7 million in the quarter under review. The downside was primarily due to the timing of orders in the North American distribution channel.
Operational Update
Gross profit in the reported quarter fell 8.3% year over year to $335.9 million. Gross margin contracted 339 basis points (bps) to 52%.
Selling, general and administrative expenses were up 2.6% year over year to $260.2 million. Research and development expenses fell 17.9% year over year to $20.2 million.
Envista Holdings Corporation Price, Consensus and EPS Surprise
Envista Holdings Corporation price-consensus-eps-surprise-chart | Envista Holdings Corporation Quote
Operating profit of $55.5 million fell 36.9% year over year. The operating margin contracted 472 bps to 8.6%.
Financial Update
Envista ended 2023 with cash and cash equivalents of $940 million compared with $606.9 million at the end of 2022. Total long-term debt was $1.39 billion at the end of 2023 compared with $870.7 million at the end of 2022.
Net cash provided by operating activities at the end of 2023 was $275.7 million compared with $182.7 million a year ago.
2024 Guidance
Envista provided 2024 guidance.
For the full year 2024, Envista expects core sales to grow by low-single digits. The Zacks Consensus Estimate for 2024 revenues is pegged at $2.60 billion.
Adjusted EBITDA margins are expected to be 16-17%.
Our Take
Envista ended fourth-quarter 2023 on a mixed note with better-than-expected revenues and earnings miss. Within the Equipment & Consumables segment, Envista’s Orthodontic business grew as Spark continues to outperform. The Bracket & Wires business delivered mid-single-digit growth, with emerging markets performing especially well. The company’s IOS business registered strong growth in the fourth quarter, driven by strong unit demand and a stabilizing price environment.
However, revenues in the Equipment & Consumables segment fell due to the timing of orders in the North American distribution channel. The contraction of both margins looks discouraging, too.
Zacks Rank and Key Picks
Envista currently carries Zacks Rank #5 (Strong Sell).
Some better-ranked stocks from the broader medical space are Stryker Corporation SYK, Boston Scientific BSX and Cardinal Health CAH.
Stryker, carrying a Zacks Rank #2 (Buy), reported a fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.
Boston Scientific, carrying a Zacks Rank #2, reported a fourth-quarter 2024 adjusted EPS of 55 cents, which beat the Zacks Consensus Estimate by 7.8%. Revenues of $3.73 billion outpaced the Zacks Consensus Estimate by 3.8%.
BSX has a long-term estimated earnings growth rate of 12.7%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 7.4%.
Cardinal Health reported second-quarter fiscal 2024 adjusted earnings of $1.82, beating the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion increased 11.6% on a year-over-year basis and topped the Zacks Consensus Estimate by 1.1%.
CAH has a long-term estimated earnings growth rate of 15.3% compared with the industry’s 11.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%.
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