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Hill-Rom Holdings, Inc. is witnessing solid growth in domestic revenues, driven by sturdy performance in Patient Support Systems (PSS) and Front Line Care. However, general domestic and global economic headwinds, unfavorable foreign exchange and competitive landscape are major downsides. The stock currently carries a Zacks Rank #3 (Hold).
Over the past year, Hill-Rom has outperformed its industry. The stock has gained 42.9% compared with the industry's 9.8% growth.
Hill-Rom exited third-quarter fiscal 2021 with better-than-expected earnings and revenues. Excluding the COVID headwind, revenues advanced 10% at CER, fueled by stronger-than-expected performance across the vast majority of the portfolio. The year-over-year growth in Front Line Care (led by accelerated recovery across key Welch Allyn products) and Surgical Solutions (led by growth in demand for operating room tables) segments contributed to top-line growth.
At the end of fiscal third quarter, the company noted that it is on track to exceed its objective of $620 million in new product revenuesfor 2021. Year to date, Hill-Rom has achieved new product revenues of more than $480 million and launched 10 new products. According to Hill-Rom, its new product pipeline is robust and remains weighted toward the company’s connected care growth platforms. This is intended to boost its overall weighted average market growth rate toward mid-single digits in the years to come.
The company’s recent launches including the Helion Integrated Surgical System for the United States market buoy optimism. Its raised financial guidance for 2021, indicating growth in revenues and earnings, is encouraging.
On the flip side, Hill-Rom’s revenues in the fiscal third quarter were down 6.5% year over year (down 8.8% at constant exchange rate or CER). The year-over-year decline can be attributed to the challenging comparison with third-quarter fiscal 2020 figures that had benefited from a one-time surge in COVID-related demand. Patient Support Systems business generated record revenue growth of 21% in the year-ago quarter. The business benefited from the global surge in demand for ICU and Med-Surg bed systems as hospitals around the world expanded capacity in the early phase of the COVID outbreak.
This unfavorable comparison translated into a PSS headwind of more than $105 million, resulting in Q3 revenue decline of 18% when compared to the prior year. In Front Line Care, third-quarter fiscal 2021 revenues were dull impacted by year-ago ventilator stockpile orders of approximately $25 million.
This apart, escalating costs and expenses are dragging down margins. A tough competitive landscape continues to remain a major downside for the company.
Key Picks
A few better-ranked stocks from the Medical-Products industry include VAREX IMAGING (VREX - Free Report) , Envista Holdings Corporation (NVST - Free Report) and BellRing Brands, Inc. (BRBR - Free Report) .
Image: Bigstock
Hill-Rom (HRC) PSS Growth Solid Despite Tough Y/Y Comparison
Hill-Rom Holdings, Inc. is witnessing solid growth in domestic revenues, driven by sturdy performance in Patient Support Systems (PSS) and Front Line Care. However, general domestic and global economic headwinds, unfavorable foreign exchange and competitive landscape are major downsides. The stock currently carries a Zacks Rank #3 (Hold).
Over the past year, Hill-Rom has outperformed its industry. The stock has gained 42.9% compared with the industry's 9.8% growth.
Hill-Rom exited third-quarter fiscal 2021 with better-than-expected earnings and revenues. Excluding the COVID headwind, revenues advanced 10% at CER, fueled by stronger-than-expected performance across the vast majority of the portfolio. The year-over-year growth in Front Line Care (led by accelerated recovery across key Welch Allyn products) and Surgical Solutions (led by growth in demand for operating room tables) segments contributed to top-line growth.
At the end of fiscal third quarter, the company noted that it is on track to exceed its objective of $620 million in new product revenuesfor 2021. Year to date, Hill-Rom has achieved new product revenues of more than $480 million and launched 10 new products. According to Hill-Rom, its new product pipeline is robust and remains weighted toward the company’s connected care growth platforms. This is intended to boost its overall weighted average market growth rate toward mid-single digits in the years to come.
HillRom Holdings, Inc. Price
HillRom Holdings, Inc. price | HillRom Holdings, Inc. Quote
The company’s recent launches including the Helion Integrated Surgical System for the United States market buoy optimism. Its raised financial guidance for 2021, indicating growth in revenues and earnings, is encouraging.
On the flip side, Hill-Rom’s revenues in the fiscal third quarter were down 6.5% year over year (down 8.8% at constant exchange rate or CER). The year-over-year decline can be attributed to the challenging comparison with third-quarter fiscal 2020 figures that had benefited from a one-time surge in COVID-related demand. Patient Support Systems business generated record revenue growth of 21% in the year-ago quarter. The business benefited from the global surge in demand for ICU and Med-Surg bed systems as hospitals around the world expanded capacity in the early phase of the COVID outbreak.
This unfavorable comparison translated into a PSS headwind of more than $105 million, resulting in Q3 revenue decline of 18% when compared to the prior year. In Front Line Care, third-quarter fiscal 2021 revenues were dull impacted by year-ago ventilator stockpile orders of approximately $25 million.
This apart, escalating costs and expenses are dragging down margins. A tough competitive landscape continues to remain a major downside for the company.
Key Picks
A few better-ranked stocks from the Medical-Products industry include VAREX IMAGING (VREX - Free Report) , Envista Holdings Corporation (NVST - Free Report) and BellRing Brands, Inc. (BRBR - Free Report) .
VAREX, sporting a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Envista Holdings, sporting a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 26.8%.
BellRing Brands, carrying a Zacks Rank #2, has a long-term earnings growth rate of 25.3%.