Patterson Companies, Inc. PDCO delivered adjusted earnings per share (EPS) of 47 cents in the second quarter of fiscal 2025, down 6% year over year. The figure missed the Zacks Consensus Estimate by 4.1%.
GAAP EPS for the quarter was 30 cents, reflecting a decline of 28.6% from the year-ago figure.
PDCO’s Revenues in Detail
Patterson Companies registered revenues of $1.67 billion in the fiscal second quarter, up 1.3% year over year. The figure surpassed the Zacks Consensus Estimate by 2.1%.
At constant exchange rate (CER), revenues improved 0.5% year over year.
Internal sales (which are adjusted for the effects of currency translation, the net impact of an interest rate swap and contributions from recent acquisitions) increased 0.6% year over year.
Shares of this company gained nearly 6.5% in today’s pre-market trading.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Patterson Companies’ Segment Details
Patterson Companies’ operations consist of two business segments — Dental and Animal Health.
In the quarter under review, the Dental segment reported revenues of $611.7 million, down 2.3% from the year-ago quarter. This compares to the Zacks Consensus Estimate of fiscal second-quarter segmental revenues of $620.5 million.
The segment consists of three sub-segments — Consumable, Equipment and Value-added services and other.
Internal sales of consumable were $348.9 million in the reported quarter, up 0.7% from the year-ago quarter. This compares to the Zacks Consensus Estimate of fiscal second-quarter revenues of $341.5 million.
Internal sales of equipment were $185.2 million in the reported quarter, down 7.5% from the year-ago quarter. This compares to the Zacks Consensus Estimate of fiscal second-quarter revenues of $196.4 million.
Internal sales of value-added services were $77.6 million in the reported quarter, down 2.7% from the year-ago quarter. This compares to the Zacks Consensus Estimate of fiscal second-quarter revenues of $82.7 million.
Revenues in the Animal Health segment totaled $1.05 billion, up 2.9% year over year on a reported basis and 0.9% at CER. This compares to the Zacks Consensus Estimate of fiscal second-quarter segmental revenues of $1.01 billion.
Internal sales increased 1.9% year over year in the reported quarter.
The segment consists of three sub-segments — Consumable, Equipment and Value-added services and other.
Sales of Consumable were $998.3 million in the reported quarter, up 2.6% on a reported basis and 0.9% at CER from the year-ago quarter. This compares to the Zacks Consensus Estimate of fiscal second-quarter revenues of $957.8 million.
Internal sales of consumable were up 1.6% in the reported quarter.
Internal sales of Equipment were $30.6 million in the reported quarter, up 1.4% from the year-ago quarter. This compares to the Zacks Consensus Estimate of fiscal second-quarter revenues of $29.2 million.
Internal sales of Value-added services were $25.7 million in the reported quarter, up 19.1% on a reported basis and 1.9% at CER from the year-ago quarter. This compares to the Zacks Consensus Estimate of fiscal second-quarter revenues of $24.4 million.
Internal sales of Value-added services were up 17.1% in the reported quarter.
Patterson Companies, Inc. Price, Consensus and EPS Surprise
Patterson Companies, Inc. price-consensus-eps-surprise-chart | Patterson Companies, Inc. Quote
PDCO’s Margin Analysis
In the quarter under review, Patterson Companies’ gross profit decreased 3.2% year over year to $328.1 million. As a percentage of revenues, the gross margin of 19.6% contracted 92 basis points (bps) on a year-over-year basis. We had projected 20.4% of gross margin in the second quarter of fiscal 2025.
Operating expenses of $290.5 billion rose 2.9% year over year.
Operating profit totaled $37.6 million, reflecting a 33.9% plunge from the year-ago quarter. The operating margin in the fiscal second quarter contracted 120 bps to 2.2%.
Patterson Companies’ Financial Position
PDCO exited the second quarter of fiscal 2025 with cash and cash equivalents of $157.9 million compared with $148.1 million at the fiscal first-quarter end. Total debt (including current debt obligations) at the end of second-quarter fiscal 2025 was $450.4 million compared with $451 million at the fiscal first-quarter end.
Cumulative net cash used in operating activities at the end of second-quarter fiscal 2025 was $458.7 million compared with $485.3 million a year ago.
PDCO’s Fiscal 2025 Guidance
Patterson Companies has lowered its adjusted EPS outlook for fiscal 2025.
PDCO now projects its full fiscal year adjusted EPS between $2.25 and $2.35, down from the prior outlook of $2.33-$2.43. The Zacks Consensus Estimate is pegged at $2.32.
Our Take
Patterson Companies exited the second quarter of fiscal 2025 with better-than-expected revenues. Solid top-line results, along with improvements in Dental segment’s internal sales of consumable, were impressive. Robust performances by the Animal Health segment and all three sub-segments were encouraging.
Per management, the company took dedicated cost management actions to optimize its operations, made targeted investments in complementary businesses and invested in enhancing its higher-margin products and services during the quarter. This looks promising for the stock.
However, PDCO’s lower-than-expected earnings and dismal bottom-line results were disappointing. Lower revenues from the Dental segment and lower Internal sales of equipment and value-added services were discouraging as well. The contraction of both margins does not bode well.
Patterson Companies’ Zacks Rank and Stocks to Consider
PDCO currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Cardinal Health, Inc. CAH, ResMed Inc. RMD and Globus Medical, Inc. GMED.
Cardinal Health, carrying a Zacks Rank of 2 (Buy), reported first-quarter fiscal 2025 adjusted EPS of $1.88, beating the Zacks Consensus Estimate by 14.6%. Revenues of $52.28 billion outpaced the consensus mark by 1.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health has a long-term estimated growth rate of 10.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 11.2%.
ResMed reported first-quarter fiscal 2025 adjusted EPS of $2.20, beating the Zacks Consensus Estimate by 8.4%. Revenues of $1.22 billion surpassed the Zacks Consensus Estimate by 2.9%. It currently carries a Zacks Rank #2.
ResMed has a long-term estimated growth rate of 14.8%. RMD’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.4%.
Globus Medical reported third-quarter 2024 adjusted EPS of 83 cents, beating the Zacks Consensus Estimate by 27.7%. Revenues of $625.7 million surpassed the Zacks Consensus Estimate by 3.4%. It currently carries a Zacks Rank #2.
Globus Medical has a long-term estimated growth rate of 14.1%. GMED’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.7%.
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