) reported net income of $6.5 million or earnings of 25 cents per
share in the second quarter of fiscal 2013, down 53% year over
year. After taking into account certain one-time items, adjusted
earnings came in at 90 cents per share, surpassing both the Zacks
Consensus Estimate of 77 cents and the year-ago quarter's
adjusted earnings of 72 cents per share.
Revenues increased 22% year over year to $218.2 million,
missing the Zacks Consensus Estimate of $224 million. After
taking into account the recently acquired whole blood business
), the company recorded organic net revenue of $189.6 million, up
Revenues from the US and the international market increased
30.9% to $113 million and 12.9% to $105.2 million, respectively.
Barring Europe where organic revenues declined 2% year over year,
growth was recorded across the other regions - North America
(8%), Asia (10%) and Japan (6%).
Haemonetics earns about 85% of its revenues from the sale of
disposables - plasma, blood center, and hospital disposables.
Revenues from these segments stood at $68.7, (up 6.6% year over
year), $83.7 million (up 55.5%) and $33.4 million (up 14.5%),
The rest of the revenue was derived from software solutions
and equipment, which recorded respective sales of $18.0 million
(up 4.9% year over year) and $14.3 million (down 3.4%).
Plasma growth in the North American market was 10% during the
reported quarter, an improvement from the mid-single digit growth
over the past two quarters. Haemonetics still expects 4−6% growth
in plasma revenues in fiscal 2013, consistent with end-market
growth rates for plasma derived biopharmaceuticals, despite lower
business in Japan in the first quarter.
Within blood center disposables, revenues from platelets and
red cell disposables inched up 2.4% to $43.2 million and 2.3% to
$11.9 million, respectively. Subsequent to the completion of the
acquisition, whole blood was inducted in the company's portfolio
and recorded $28.6 million of sales in the quarter. This business
is expected to gross $135−$145 million in fiscal 2013.
Platelet revenues continued to benefit from strong sales in
emerging markets. Despite clinical demand for blood remaining
flat, the growth in red cell disposables was a result of the
company's focus on penetration of the Impact accounts to advance
blood management solutions. The company still expects its blood
center business to grow 0−2% in fiscal 2013, with continued
growth in both platelet and red cell disposables as the year
OrthoPAT recorded a 4.8% increase in revenues in the reported
quarter to $7.6 million, an improvement from the 3% decline in
the last quarter. We are impressed to note that the impact of the
voluntary recall of the pre-2002 devices has ended and the
company is back on the growth path as expected.
Revenues from Surgical disposables and Diagnostics increased
16% to $18.8 million and 22.6% to $6.9 million, respectively.
While the former benefited from the successful launch of the Cell
Saver Elite, growth of the Diagnostics business resulted from the
company's Impact initiative that benefited the TEG
Thrombelastograph Hemostasis Analyzer business. Strong sales
of Cell Saver Elite and TEG equipments signify growth in
disposables revenue in the forthcoming period. During the
reported quarter, TEG disposables sales increased 23% in China.
The company expects its hospital business to grow 12−15% in
fiscal 2013, which will be supported by growth in surgical,
diagnostics and OrthoPAT disposables.
The company reported a 22.1% increase in adjusted gross profit
to $111.6 million accompanied by a 10 basis points (bps)
expansion in gross margin to 51% during the quarter. Despite an
increase in adjusted research and development (2.7% year over
year to $9.2 million) and selling, general and administrative
expenses (20.9% to $68.7 million), the adjusted operating margin
expanded 120 bps to 15.4%. The rise in operating expenses was due
to investments in global growth initiatives, emerging markets and
Haemonetics announced that its Board of Directors approved a
two-for-one split in the form of a 100% stock dividend, record
date being November 9, 2012. The company continued with its
stock buyback program and repurchased 74,300 shares for $5.3
million during the quarter. The Board of Directors had previously
approved the repurchase of up to $50 million of shares during the
remainder of fiscal 2013.
Haemonetics reiterated its organic revenue growth forecast of
4−6% for fiscal 2013 resulting in total revenue in the range of
$890−$915 million, up 23−26%. Adjusted EPS guidance of
$3.30−$3.40 was reiterated.
The company still expects to report gross margin in the range
of 50−51% with adjusted operating income of $127−$130 million.
The outlook for gross margin takes into account the low-margin
whole blood product line. Besides, free cash flow is still
expected to be around $85 million.
The company also reiterated its outlook for fiscal 2014 with
organic revenue growth of 5-7% ($1 billion of total revenues)
resulting in adjusted EPS of $3.90−$4.10 (representing 20% growth
over expected EPS for fiscal 2013.
Haemonetics reported a mixed quarter with earnings beating the
Zacks Consensus Estimate while revenues fell short. The
improvement in margins during the quarter was encouraging. Low
global penetration and positive demand dynamics provide an
encouraging long-term thesis for investing in the blood
processing and supply chain management industry. Besides, gradual
improvement of the plasma business should further aid growth of
Over the long term, we have a Neutral recommendation on
Haemonetics. The stock retains a Zacks #3 Rank (Hold) in the
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