) reported net income of $12.6 million or earnings per share
(EPS) of 24 cents in the fourth quarter of fiscal 2013, down 29%
and 31% year over year, respectively.
However, after taking into account certain one-time items,
adjusted earnings came in at 48 cents per share, surpassing both
the Zacks Consensus Estimate of 46 cents and the year-ago
quarter's adjusted earnings of 40 cents per share. For the full
year, adjusted EPS was $1.71, up 13% year over year exceeding the
guidance range of $1.65-$1.70.
Revenues increased 34% year over year (up 38% at CER) to
$249.9 million, in line with the Zacks Consensus Estimate. Fiscal
2013 net revenue was $892.0 million, up 23% on a year-over-year
basis and in line with the guidance range of $888-$898
After taking into account the recently acquired whole blood
), the company recorded quarterly organic revenue growth of 4%
year over year (up 6% at CER).
Revenues from the U.S. and the international market increased
48.7% and 20.8% to $130.1 million and $119.8 million,
respectively. Barring Japan, where organic revenues declined 13%
year-over-year, growth was recorded across other regions, namely
Asia (28%), North America (9%) and Europe (1%).
Haemonetics earns about 86% of its revenues from the sale of
disposables - plasma, blood centers and hospital disposables.
Revenues from these segments stood at $68.2 million, (up 10.3%
year over year), $112.9 million (up 100.2%) and $32.7 million (up
2.5%), respectively. The rest of the revenues were derived from
software solutions and equipment, which recorded respective sales
of $18.6 million (down 3.9% year over year) and $17.5 million (up
Haemonetics expects its plasma business growth in the range of
4%−6%, in fiscal 2014, consistent with the end-market growth
rates of the industry. Within blood center disposables, revenues
from platelets disposables were flat at $44 million, while red
cell disposables were up 13% at $14 million. Subsequent to the
completion of the acquisition, whole blood was inducted in the
company's portfolio in the second quarter and recorded $54.9
million of sales in the reported quarter.
Platelet revenues continued to face challenges due to tough
comparisons in Japan with Japanese Red Cross increasing
inventories of platelet disposables in advance of their system
conversion. The improved sales from red cell disposables
were a result of the company's timing of orders at the end of the
reported quarter in North America. The company expects its blood
center business to remain flat organically in fiscal 2014.
OrthoPAT (orthopedic perioperative autotransfusion system) was
down 5.1% year over year to $7.9 million. However, the company
expects that the impending launch of its new OrthoPAT Advance
system in the first half of fiscal 2014 followed by its recent
510(k) approval will likely drive growth in OrthoPAT in fiscal
Revenues from Surgical disposables and Diagnostics increased
1.2% to $17.5 million and 16.8% to $7.2 million, respectively.
While the former benefited from the 7
consecutive quarter of growth from the Cell Saver Elite, growth
of the Diagnostics business resulted from the company's Impact
initiative that benefited the TEG Thrombelastograph Hemostasis
Strong sales of Cell Saver Elite and TEG equipments signify
growth in disposables revenue in the forthcoming quarter. During
the reported quarter, TEG disposables sales increased over 66% in
The company expects its hospital business to grow 6%-9% in
fiscal 2014, which will be supported by growth in surgical,
diagnostics and a return to growth in OrthoPAT.
The company reported a 31% increase in adjusted gross profit
to $124.2 million accompanied by 110 basis points (bps)
contraction in adjusted gross margin to 49.7% during the quarter.
Margin improvement in the core business partially offset the
impact of revenue mix toward low-margin whole blood
With an increase in adjusted operating expenses (up 31.8% to
$89.3 million), the adjusted operating margin contracted 50 bps
to 14.5%. The rise in operating expenses was due to inclusion of
$14 million in the new whole blood collection business and
investments in global growth initiatives, emerging markets and
Last year, Haemonetics completed a two-for-one split in the
form of a 100% stock dividend. On a post-split basis, the company
continued with its stock buyback program and repurchased 694,600
shares for $41.52 per share in the fourth quarter. In fiscal
2013, the company repurchased 1,236,300 shares for $40.44,
completing the earlier authorized $50 million repurchase.
Haemonetics provided an update to its fiscal 2014 outlook. The
company expects its adjusted EPS in the range of $2.30-$2.40, (up
15-20% annually), in line with its preliminary outlook provided
earlier this year. In addition, total revenue is expected to
increase by 9%-12% on a yearly basis. Overall fiscal 2014 organic
revenue growth is expected in the band of 3%-5% on a reported
basis (5%-7% at CER).
The company expects to report adjusted gross margin in the
range of 51%−52% with adjusted operating income of $177−$183
million. In addition, free cash flow is still expected to be
around $125 million.
Haemonetics reported a mixed quarter with earnings beating the
Zacks Consensus Estimate and revenues in line. Low global
penetration and positive demand dynamics provide an encouraging
long-term thesis for investing in the blood processing and supply
chain management industry. However, the drag on margins during
the quarter remains a cause of concern.
The stock holds a Zacks Rank #2 (Buy). Other medical device
stocks worth a look are
). Both the stocks carry a Zacks Rank #1 (Strong Buy).
HAEMONETICS CP (HAE): Free Stock Analysis
HEALTHSOUTH CP (HLS): Free Stock Analysis
NUVASIVE INC (NUVA): Free Stock Analysis
PALL CORP (PLL): Free Stock Analysis Report
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