) reported net income of $9.9 million or earnings of 19 cents per
share in the third quarter of fiscal 2013, down 46% and 47% year
over year, respectively. However, after taking into account
certain one-time items, adjusted earnings came in at 50 cents per
share, surpassing both the Zacks Consensus Estimate of 47 cents
and the year-ago quarter's adjusted earnings of 43 cents per
Revenues increased 29% year over year (up 31% at CER) to
$247.4 million, missing the Zacks Consensus Estimate of $252
million. After taking into account the recently acquired whole
blood business from
), the company recorded organic net revenue of $192.5 million, up
1% year over year.
Revenues from the US and the international market increased
36.1% and 23.2% to $125.4 million and $112.0 million,
respectively. Barring North Americaand Japan,where organic
revenues declined a respective 1% and 2% year over year, growth
was recorded across the other regions namely, Asia (11%) and
Haemonetics earns about 86% of its revenues from the sale of
disposables - plasma, blood center, and hospital disposables.
Revenues from these segments stood at $68.1 million, (down 1.4%
year over year), $111.8 million (up 97.7%) and $32.8 million (up
6.4%), respectively. The rest of the revenue was derived from
software solutions and equipment, which recorded respective sales
of $16.0 million (up 1% year over year) and $18.7 million (down
Haemonetics expects its plasma business growth to be at the
low end of its earlier projection of 4−6% growth in fiscal 2013.
Within blood center disposables, revenues from platelets
disposables inched up 2% to $45.1 million while red cell
disposables were down 3% at $11.8 million. Subsequent to the
completion of the acquisition, whole blood was inducted in the
company's portfolio in the earlier quarter and recorded $54.9
million of sales in the reported quarter. The company restated
that this business is expected to gross $135−$145 million in
Platelet revenues continued to benefit from strong sales in
emerging markets. The decline 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
expects its blood center business to remain flat organically in
fiscal 2013 (0−2% expected previously).
OrthoPAT (orthopedic perioperative autotransfusion system)was
down 9% year over year at $7.1 million. However, the company
expects the impending launch of its new OrthoPAT Advance system
in thefirst half of fiscal 2014 followed by its recent 510(k)
approval will start driving growth in OrthoPAT in fiscal
Revenues from Surgical disposables and Diagnostics increased
9% to $56.0 million and 19% to $6.8 million, respectively. While
the former benefited from the 6
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
Analyzer business. 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 50% in China.
The company expects its hospital business to grow 11% (versus
12−15% expected previously) in fiscal 2013, which will be
supported by growth in surgical, diagnostics and disposables,
mostly in emerging markets.
The company reported a 29.9% increase in adjusted gross profit
to $124.6 million accompanied by 20 basis points (bps) expansion
in gross margin to 50.4% during the quarter. Margin improvement
in the core business offset the impact of revenue mix toward
low-margin whole blood disposables.
Despite an increase in adjusted operating expenses (up 26.4%
to $83.7 million), the adjusted operating margin expanded 100 bps
to 16.5%. The rise in operating expenses was due to inclusion of
$14 million in the new whole blood collection business
andinvestments in global growth initiatives, emerging markets and
Haemonetics completed its earlier approved 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
393.100 shares for $40.24 per share. The board of directors had
previously approved the repurchase of up to $50 million of shares
during the remainder of fiscal 2013.
Haemonetics now expects its organic revenue to grow 4%, at the
low end of its earlier growth forecast of 4−6% for fiscal 2013,
resulting in total revenue of $888-$898 million(earlier guidance
was $890−$915 million), up 22−23% (23−26%) year over year.
Adjusted EPS guidance of $1.65-$1.70was reiterated.
The company still expects to report adjusted 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 $80 million ($80 million).
The company also reiterated its outlook for fiscal 2014, with
organic revenue growth of 5-7% (more than $1 billion of total
revenue) resulting in adjusted EPS of $1.95-$2.05(representing
20% growth over the expected EPS for fiscal 2013.
Haemonetics reported a mixed quarter with earnings beating the
Zacks Consensus Estimate and revenues falling 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.
The stock holds a Zacks Rank #2 (Buy). Other medical device
stocks worth a look are
Cantel Medical Corp.
). Both the stocks carry a Zacks Rank #1 (Strong Buy).
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