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Haemonetics (HAE) Q1 Earnings Beat Estimates, Margins Up

Haemonetics Corporation HAE delivered adjusted earnings per share (EPS) of 58 cents in the first quarter of fiscal 2023, reflecting growth of 16% year over year. The bottom line also surpassed the Zacks Consensus Estimate by 9.4%.

On a GAAP basis, EPS were 38 cents against the year-ago quarter’s loss of 9 cents.

Total Revenues

Revenues increased 14.4% (up 17% on an organic basis) to $261.5 million in the first quarter of fiscal 2023. The top line beat the Zacks Consensus Estimate by 4.2%.

The year-over-year increase in revenues was supported by strong revenue performance across the Hospital business, particularly in Hemostasis Management and Vascular Closure.

Segments in Detail

At Plasma, revenues of $102.4 million (accounting for 39.2% of total revenues) rose 42.5% year over year (up 43.9% on an organic basis) in the reported quarter.

Revenues at Blood Center (25.1%) fell 9.9% (down 7.2% on an organic basis) to $65.7 million.

Haemonetics Corporation Price, Consensus and EPS Surprise

 

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

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

 

Hospital revenues (33.9%) rose 12.7% (up 14.9% on an organic basis) to $88.5 million. Under the Hospital segment, revenue growth in the Hemostasis Management and Vascular Closure product lines were 4.1% and 35.9% in the first quarter of fiscal 2023, respectively.

Service revenues (1.9%) fell 6.8% (down 2.5% on an organic basis) to $4.9 million.

Margins

The company-adjusted gross margin was 54.4%, up 712 basis points (bps) year over year. The primary drivers of this improvement were the strong volume growth in Plasma and Hospital, price and additional savings from the Operational Excellence Program, partially offset by inflationary pressures in the global manufacturing and supply chain and increased depreciation expenses.

Adjusted operating expenses in the first quarter of fiscal 2023 were $103.1 million, down 0.8% from the year-ago quarter.

The company-adjusted operating income was $39.1 million in the quarter under discussion. Adjusted operating margin was 14.9%, up 1314 bps from the year-ago quarter.

Financial Position

Haemonetics exited the first quarter of fiscal 2023 with cash and cash equivalents of $214.9 million compared with $259.5 million at the end of fiscal 2022. Long-term debt at the end of the fiscal first quarter was $763.1 million, down from $559.4 million at the end of fiscal 2022.

Cumulative net cash flow from operating activities at the end of the first quarter of fiscal 2023 was $41.9 million compared with a $1.7 million net cash used in operating activities a year ago.

Cumulative capital expenses (net of proceeds from the sale of property, plant and equipment) were $44.9 million, up from the year-ago $13.4 million. It also reported free cash flow (before restructuring and turnaround costs) of $4.5 million during the same period, up 144.5% from $1.8 million a year ago.

2023 Guidance

The company has updated its outlook for 2023.

For 2023, the company now expects GAAP total revenue growth in the range of 8-11% on a reported basis (up from the prior projection of 5-9%). Organic revenue growth is currently expected in the range of 10-14% (up from the prior projection of 6-10%). The Zacks Consensus Estimate for 2023 revenues is pegged at $1.06 billion.

The company now expects full-year adjusted earnings per share in the band of $2.60-$2.90 (compared to the previous estimate of $2.50 - $2.90). The Zacks Consensus Estimate for the same is pegged at $2.72.

Our Take

Haemonetics exited the first quarter of fiscal 2023 with better-than-expected earnings and revenues. The robust performance in the Hospital business, on continued strength in the Hemostasis Management product line, instills optimism. Robust contributions from the Vascular Closure business also seem promising. Expansion of both margins is an added advantage. The raised full-year outlook for revenues and EPS indicates the continuity of this growth momentum.

However, the year-over-year decline in the company’s Blood Center business raises apprehension. A fall in short-term cash level is worrisome too.

Zacks Rank and Key Picks

Haemonetics currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated DGX, Molina Healthcare, Inc. MOH and Merck & Co. MRK.

Quest Diagnostics, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quest Diagnostics has an earnings yield of 6.9% compared with the industry’s 3.9%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.

Molina Healthcare, having a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $4.55, which beat the Zacks Consensus Estimate by 4.8%. Revenues of $8.1 billion outpaced the consensus mark by 6.2%.

Molina Healthcare has a long-term estimated growth rate of 16.4%. MOH’s earnings surpassed estimates in the trailing four quarters, the average being 3.2%.

Merck reported second-quarter 2022 adjusted earnings of $1.87 per share, beating the Zacks Consensus Estimate of $1.67. Revenues of $14.6 billion surpassed the Zacks Consensus Estimate by 5.4%. It currently has a Zacks Rank #2.

Merck has a long-term estimated growth rate of 10.1%. MRK’s earnings surpassed estimates in the trailing four quarters, the average surprise being 16.8%.


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