) posted flat adjusted earnings per share of 54 cents for the
second quarter of fiscal 2014 compared with the same quarter a
year ago and were in line with the Zacks Consensus Estimate.
However, adjusted net earnings fell 4.1% to $116 million from
$121 million a year ago.
On a reported basis, earnings per share declined 6.25% or 45
cents per share from 48 cents and net earnings slipped 10.2% to
$97 million from $108 million in the second quarter of fiscal
Revenues in the quarter rose 1.4% (both in reported and constant
currency) to $922 million, topping the Zacks Consensus Estimate
of $912 million. The increase was driven by rise in Procedural
Adjusted operating expenses inched up 2.1% to $288 million from
$282 million a year ago, due to the medical device excise tax.
Consequently, adjusted operating income fell 4.2% to $181 million
from $189 million a year ago while adjusted operating margin
ebbed 120 basis points (bps) to 19.6% from 20.8% a year ago.
slid 2.5% to $587 million as strong performance in the infusion
systems business was offset by weakness in the respiratory
technologies and the impact of a product line transition in
dispensing technologies businesses. Segment profit ebbed 11.4% to
$109 million from $123 million in the prior-year quarter as
revenue mix negatively affected segment margins. Adjusted segment
profit dipped 7.5% to $124 million from $134 million in the
rose 9.1% $335 million, driven by double-digit revenue increases
in both the infection prevention and specialty disposables
businesses. However, segment profit fell 10.4% to $43 million.
However, on an adjusted basis, segment profit grew 3.6% to $57
million from $55 million in the prior-year quarter.
CareFusion's board of directors approved a two-year $750 million
share repurchase program, after completing their previous $500
million authorization in June last year. Under the present
authorization, the company repurchased 4.8 million shares for
$186 million in the fiscal second quarter, bringing total
repurchase of 9.8 million for $375 million for the first half of
CareFusion had cash and cash equivalents of $1.3 billion as of
Dec 31, 2013, down marginally from $1.8 billion as of Jun 30,
2013. Total debt was almost flat at $1.46 billion as of Dec 31,
2013 compared with $1.45 million as of Jun 30, 2013. As a result,
debt to capitalization ratio rose marginally by 20 bps to 21.4%
from 21.2% as of Jun 30, 2013.
In the first half of fiscal 2014, cash flow from operating
activities rose 15.6% to $297.0 million from $257.0 million in
the same period of 2012. Capital expenditure declined 7.5% to $37
million from $40 million in the same period of fiscal 2013.
Fiscal 2014 Guidance Reiterated
CareFusion reiterated its revenues and earnings guidance for
fiscal 2014. The company expects revenues to grow between 4 and
7% and organic revenues to rise between 1 and 4%, both on a
constant currency basis, for the year.
CareFusion expects revenue growth in the range of 1 to 4% in the
Medical Systems segment driven by strong performance of infusion
systems business, and 2 to 4% (13-15% including acquisitions) in
the Procedural Solutions segment based on strong growth in all
Adjusted earnings are also expected to lie in the previously
guided range of $2.30 to $2.40 per share. The current Zacks
Consensus Estimate of $2.34 lies within the guided range.
CareFusion is a global corporation serving the health care
industry with products and services that help hospitals
measurably improve the safety and quality of care. Its products
are considered among top-spending priorities of healthcare
providers given the pressing need for implementing infusion or
However, the transition of product line to Pyxis ES platform is
hampering CareFusions' Medical Systems businesses. The company
continues to see margin compression due to the medical device tax
and unfavorable revenue mix.
Currently, CareFusion retains a Zacks Rank #3 (Hold). Some
better-ranked stocks in the medical products industry include
Baxter International Inc.
). NuVasive carries a Zacks Rank #1 (Strong Buy), while both
Baxter and Covidien carry a Zacks Rank #2 (Buy).
BAXTER INTL (BAX): Free Stock Analysis Report
CAREFUSION CORP (CFN): Free Stock Analysis
COVIDIEN PLC (COV): Free Stock Analysis
NUVASIVE INC (NUVA): Free Stock Analysis
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