Envista (NVST) Q1 Earnings Miss Estimates, Margins Down

Envista Holdings Corporation NVST reported adjusted earnings per share (EPS) of 26 cents in first-quarter 2024, down 31.6% year over year. The bottom line missed the Zacks Consensus Estimate by 16.1%.

The adjustments include charges and benefits related to the amortization of acquired intangible assets, restructuring costs and asset impairment, among others.

The company’s GAAP EPS was 14 cents in the quarter compared with the year-ago quarter’s figure of 25 cents.

Revenues in Detail

Revenues totaled $623.6 million in the reported quarter, down 0.6% year over year. The metric missed the Zacks Consensus Estimate by 0.9%.

Segments in Detail

In the first quarter, Speciality Products & Technologies totaled $408.7 million, down 0.3%.

Revenues in the Equipment & Consumables segment dropped 1.1% year over year to $214.9 million in the quarter under review.

Operational Update

Gross profit in the reported quarter fell 1.8% year over year to $356.3 million. Gross margin contracted 69 basis points (bps) to 57.1%.

Selling, general and administrative expenses were up 7.1% year over year to $284.9 million. Research and development expenses fell 4.9% year over year to $23.3 million.

Operating profit of $48.1 million fell 33.3% year over year. The operating margin contracted 378 bps to 7.7%.

Financial Update

Envista ended first-quarter 2024 with cash and cash equivalents of $948.5 million compared with $940 million at the end of fourth-quarter 2023.  Long-term debt in the first quarter declined to $1,390.5 million from $1,398.1 million at the end of the fourth quarter.

Envista Holdings Corporation Price, Consensus and EPS Surprise

 

Envista Holdings Corporation Price, Consensus and EPS Surprise

Envista Holdings Corporation price-consensus-eps-surprise-chart | Envista Holdings Corporation Quote

 

Net cash provided by operating activities at the end of the reported quarter was $40.3 million, surging from $3.1 million a year ago.

Our Take

Envista ended first-quarter 2024 on a lower note, with revenues and earnings missing estimates. The company witnessed a decline in both segments. NVST stated ongoing investments aimed at accelerating growth and improving profitability as reasons for the lower performance. Further, the contraction of both margins looks discouraging, too.

Despite these challenges, Envista’s Spark division kept up its strong performance during the quarter, with double-digit growth. As the market for consumables stabilized, Envista’s value implant business started to rise again. The company's goals for 2024 are to continue increasing Spark margins, growing its implant business in North America and streamlining its organizational structure through the adoption of the Envista Business System.

Zacks Rank and Key Picks

Envista currently carries Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Align Technology, Inc. ALGN, ResMed Inc. RMD and Boston Scientific Corporation BSX.

Align Technology, carrying a Zacks Rank of 2 (Buy), reported first-quarter 2024 adjusted EPS of $2.14, beating the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Align Technology has a long-term estimated growth rate of 6.9%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.

ResMed reported third-quarter of fiscal 2024 adjusted EPS of $2.13, beating the Zacks Consensus Estimate by 10.9%. Revenues of $1.19 billion surpassed the Zacks Consensus Estimate by 1.9%. It currently carries a Zacks Rank #2.

ResMed has a long-term estimated growth rate of 10.9%. RMD’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 2.8%.

Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, beating the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank #2.

Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in all of the trailing four quarters, the average surprise being 7.5%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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