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Haemonetics (HAE) Q4 Earnings Top Mark, Operating Margin Up

Zacks Equity Research

Haemonetics Corporation HAE delivered adjusted earnings per share (EPS) of 61 cents in the fourth quarter of fiscal 2019, reflecting a 41.9% year-over-year surge. The bottom line also surpassed the Zacks Consensus Estimate by 10.9%.

Moreover, on a reported basis, net income came in at 40 cents per share, representing an 81.8% jump from the year-ago period.

Further, full-year adjusted EPS came in at $2.39, mirroring a 27.8% rise from the year-ago period and also exceeding the Zacks Consensus Estimate by 2.6%.

Total Revenues

Revenues rose 6.7% year over year (up 7.8% at constant exchange rate or CER) to $249.3 million in the quarter under review. However, the top line lagged the Zacks Consensus Estimate of $250 million.

Revenues registered in fiscal 2019 were $967.6 million, up 7% from the year-ago period (same at CER).

Revenues by Product Categories

At Plasma, revenues of $128.8 million (accounting for 51.7% of total revenues) increased 15.4% year over year (up 15.9% at CER) in the reported quarter. Plasma revenue growth in North America was 17.6% including 17.6% growth in disposables.

Haemonetics Corporation Price, Consensus and EPS Surprise

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

Revenues at BloodCenter (27.8%) declined 5.6% (down 4.6% at CER) to $69.3 million.

Hospital revenues (20.5%) were up 5.4% (up 7.2% at CER) to $51.2 million. 

Margins

Adjusted gross margin was 44.6%, down 10 basis points (bps) year over year.

Adjusted operating income was $42.8 million in the quarter under discussion, soaring 56.7% year over year. Meanwhile, adjusted operating margin expanded 540 bps year over year to 17.1%.

Financial Position

Haemonetics exited fiscal 2019 with cash and cash equivalents of $169.4 million compared with $154.9 million at the end of third-quarter fiscal 2019.

For the full fiscal, the company generated operating cash flow of $159.3 million compared with $220.4 million a year ago. The company also reported free cash flow (before restructuring and turnaround costs) of $70.7 million during the period, down 56.3% from the year-ago time frame.

Fiscal 2020 Guidance

Haemonetics has provided its fiscal 2020 financial guidance. The company expects full-year organic revenue growth of 6-8%. Coming to segmental revenues, on an organic basis, Plasma and Hospital revenue growth is expected in the 11-13% band each. However, Blood Center revenues are likely to decline 6-8% from the year-earlier number. The Zacks Consensus Estimate for fiscal 2020 revenues is pegged at $1.03 billion.

The company predicts 2020 adjusted EPS in the range of $2.80-$3. The consensus estimate of $2.83 is within this guided range.

Our Take

Haemonetics exited fiscal 2019 on a mixed note with fourth-quarter earnings coming ahead of the Zacks Consensus Estimate while revenues falling shy of the mark by a short margin. Per the company, benefits from complexity reduction and investments along with strength in market demand and success from early launches helped the company pull off an impressive performance. Continued momentum in new business generation and geographical expansion contributed to such healthy results. However, we are not pleased with the company’s sluggish Blood Center business’ moderating overall growth despite progress in Plasma and Hospitals.

Zacks Rank & Key Picks

Haemonetics carries a Zacks Rank #3 (Hold). Some better-ranked medical stocks boasting solid results this earnings season are Stryker Corp. SYK, Abbott Laboratories ABT and CONMED Corp. CNMD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker delivered first-quarter 2019 adjusted EPS of $1.88, beating the Zacks Consensus Estimate by 2.2%. Meanwhile, revenues of $3.52 billion matched the consensus estimate.

Abbott reported first-quarter 2019 adjusted EPS of 63 cents, topping the Zacks Consensus Estimate by 3.3%. Moreover, worldwide sales of $7.54 billion came above the consensus estimate of $7.47 billion.

CONMED posted first-quarter 2019 adjusted EPS of 57 cents, which exceeded the Zacks Consensus Estimate of 54 cents. Also, revenues of $218.4 million outshined the consensus mark of $213 million.

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