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Patterson Companies (PDCO) Q1 Earnings & Sales Miss Estimates

Patterson Companies, Inc. PDCO reported adjusted earnings per share (EPS) of 32 cents for first-quarter fiscal 2023, which missed the Zacks Consensus Estimate of 38 cents by 15.8%. The bottom line decreased 25.6% from the prior-year quarter.

GAAP EPS in the quarter was 25 cents, down 28.6% from the prior-year quarter.

Revenue Details

Net sales in the quarter were $1.52 billion, which lagged the Zacks Consensus Estimate by 2.6%. The top line decreased 5.7% year over year.

Segmental Analysis

The company currently distributes products through subsidiaries — Patterson Dental and Patterson Animal Health.

Dental Segment

This segment provides a complete range of consumable dental products, equipment, software, turnkey digital solutions and value-added services to dentists and laboratories throughout North America.

In the fiscal first quarter, dental sales decreased 8.1% year over year to $557.9 million.

Dental Consumable

Sales in the sub-segment totaled $337.8 million, down 10.3% year over year.

Patterson Companies, Inc. Price, Consensus and EPS Surprise

Patterson Companies, Inc. Price, Consensus and EPS Surprise
Patterson Companies, Inc. Price, Consensus and EPS Surprise

Patterson Companies, Inc. price-consensus-eps-surprise-chart | Patterson Companies, Inc. Quote

Dental Equipment & Software

Sales in the segment declined 6.7% on a year-over-year basis to $146.5 million.

Value-added Services and Other

This segment comprises technical service, parts and labor, software support services and office supplies. Sales at the segment fell 2.4% on a year-over-year basis to $87.6 million.

Animal Health Segment

This segment is a leading distributor of veterinary supplies to clinics, public and private institutions and shelters across the United States.

In the fiscal first quarter, the segment sales decreased 4.2% on a year-over-year basis to $960.3 million.

Corporate

Sales at the segment were $5 million compared with $5.2 million in the year-ago quarter.

Margin Analysis

Gross profit in the reported quarter was $312.1 million, up 12.4% year over year. As a percentage of revenues, the gross margin of 20.5% expanded approximately 330 basis points (bps) on a year-over-year basis.

Operating expenses in the reported quarter amounted to $277.3 million, down 12.6% from the prior-year quarter.

The company reported an operating income of $34.8 million against an operating loss of $39.5 million in the year-ago quarter.

Financial Position

The company exited the fiscal first quarter with cash and cash equivalents of $149.6 million, compared with $142 million on a sequential basis.

Cumulative net cash used in operating activities at the end of the fiscal first quarter was $302.5 million compared with the year-ago quarter’s net cash utilized in operating activities of $313.4 million.

Fiscal 2023 Earnings Outlook

Patterson Companies maintained its earnings outlook for fiscal 2023. The company projects adjusted EPS in the range of $2.25 to $2.35. The Zacks Consensus Estimate for the same is pegged at $2.30 per share.

Our Take

Patterson Companies ended first-quarter fiscal 2023 on a dismal note, wherein both earnings and revenues missed the consensus mark. The company also witnessed a decline in the performance of both its segments in the quarter under review, a key reason being currency movement. A prudent cost-savings approach and solid sales execution worked in favor of the stock, expanding gross margin. Sustained momentum in the Animal Health business bodes well.

A broad spectrum of products cushions the company against economic downturns in the MedTech space. We believe that a diverse product portfolio, strong veterinary business prospects, accretive acquisitions and strategic partnerships are key catalysts.

Zacks Rank

Patterson Companies currently carries a Zacks Rank #2 (Buy).

Earnings of Other MedTech Majors at a Glance

Some stocks in the broader medical space that have announced quarterly results are Bio-Rad Laboratories, Inc. BIO, AMN Healthcare Services, Inc. AMN and McKesson MCK.

Bio-Rad, carrying a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $3.38, which beat the Zacks Consensus Estimate by 37.4%. Revenues of $691 million outpaced the consensus mark by 3.9%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Bio-Rad has a historical earnings growth rate of 31.2%. BIO’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 46.75%.

AMN Healthcare, sporting a Zacks Rank #1, reported second-quarter 2022 adjusted EPS of $3.31, which beat the Zacks Consensus Estimate by 11.8%. Revenues of $1.43 billion outpaced the consensus mark by 4.8%.

AMN Healthcare has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 15.66%.

McKesson reported fiscal first-quarter 2023 adjusted EPS of $5.83, which surpassed the Zacks Consensus Estimate by 9.8%. Revenues of $67.2 billion outpaced the Zacks Consensus Estimate by 5.2%. It currently has a Zacks Rank of 2.

McKesson has an earnings yield of 6.6% compared with the industry’s yield of 4.5%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 13%.


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