Haemonetics Corporation
HAE
has been witnessing strong recovery in Plasma and Hemostasis Management units globally. However, the pandemic-led business disruptions in the Blood Center arm are concerning. The stock currently carries a Zacks Rank #3 (Hold).
Over the past three months, Haemonetics has outperformed its
industry
. The stock has gained 8.1% compared with the industry’s 3.1% growth. In the first quarter of fiscal 2021, the company-adjusted gross margin was 54.7%, up 750 basis points (bps) year over year.
The fiscal first quarter saw encouraging performance across Haemonetics’ business, supported by strong procedure recovery in the hospital business, resilience of blood donors in blood centers, and initial rollouts of the Persona technology and plasma. In the fiscal first quarter, Plasma collections in Europe showed continued recovery, specifically in the Czech Republic and Hungary, driven by fewer COVID-related restrictions and plasma center growth. The company also witnessed growth in the adoption and utilization of TEG disposables and strong instrument placements during the reported quarter.
Hospital business revenues grew 26% in the quarter, primarily driven by continued improvement in hospital procedures on increased utilization of disposables, strong capital sales in North America, and new business opportunities in Europe. The company saw continued recovery across all key markets. Platelet collections also recovered fully in Japan. The company experienced strong market demand for platelets in China, driven by expansion in Tier 2 markets.
Considering the recovery across businesses, Haemonetics now expects fiscal 2022 revenues in the range of $75-$85 million (up from the previous range of $65-$75 million).
On the flip side, the company’s sluggish Blood Center business performance in the first quarter of fiscal 2022 due to the pandemic-led business disruptions is concerning. The rise in the company’s restructuring-related costs is building pressure on the bottom line. Economic uncertainty and stiff competition remain concerns.
Blood Center revenues declined 6% in the fiscal first quarter due to lower collection volumes and discontinued customer contracts in North America. The company expects a decline of 6% to 8% in Blood Center revenues for fiscal 2022. Moreover, Apheresis revenues declined 3% in the quarter impacted by an unfavorable order timing.
Adjusted operating expenses in the first quarter of fiscal 2022 were up 36.7% year over year. The increase was primarily driven by a rise in variable compensation and the acquisition of Cardiva Medical, an increase in variable compensation, and continued investments.
Key Picks
A few better-ranked stocks from the broader medical space are
Alcon Inc
ALC
,
McKesson Corporation
MCK
and
Biolase, Inc.
BIOL
, each carrying a Zacks Rank #2 (Buy). You can see
the complete list of Zacks #1 Rank (Strong Buy) stocks here.
Alcon has an estimated long-term earnings growth rate of 18%.
McKesson has an estimated long-term earnings growth rate of 8%.
Biolase has a projected long-term earnings growth rate of 15%.
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