Hill-Rom Reports Flat EarningsPosted: Updated:
Batesville-based Hill-Rom Holdings Inc. (NYSE: HRC) is reporting fiscal third quarter net income of $23.4 million, compared to the same amount for the same period the previous year. Chief Executive Officer John Greisch says revenue was slightly below projections, but earnings were in-line with guidance. July 24, 2013
BATESVILLE, Ind. - Hill-Rom Holdings, Inc. (NYSE: HRC) announced financial results for its fiscal third quarter ended June 30, 2013 and provided its fourth quarter and updated full year outlook. Adjusted earnings per diluted share of $0.49 were in line with the Company's guidance, but down 13 percent from $0.56 in the prior year. Reported earnings per diluted share increased to $0.39 from $0.37 in the prior year. Adjustments to reported earnings and EBITDA are detailed in the reconciliation schedules provided.
Hill-Rom's quarterly revenue was $424 million, a 4 percent increase compared to last year on both a reported and constant currency basis. Excluding the impact of Aspen, revenue declined approximately 3 percent. Domestic revenue was $281 million, up 9 percent, while revenue outside the United States decreased 3 percent to $143 million.
"Despite revenue slightly below our expectations, we are pleased to report adjusted earnings in line with our guidance and stable adjusted gross margin compared to the prior year," stated John Greisch, President and CEO. "The healthcare environment remains challenging and we will continue our focus on initiatives to improve margins and maintain our strong, consistent cash flow."
Financial and Operational Highlights
-- Third quarter revenue highlights include:
-- North America. North America revenue declined 1 percent to $239 million. Capital sales increased 2 percent with U.S. Patient Support Systems revenue flat versus the prior year and up 16 percent sequentially. Rental revenue declined 6 percent due partially to our exit from certain home care categories.
-- International. International segment revenue decreased 8 percent to $123 million (9 percent on a constant currency basis) due to declines in capital sales in Eastern Europe and the Middle East.
-- Surgical/Respiratory Care. Surgical/Respiratory Care revenue increased 95 percent to $62 million, due to the addition of the Aspen business. Excluding Aspen, segment revenue increased 2 percent on higher Allen Medical revenues.
-- Year to date operating cash flow was $168 million, compared to $187 million in the prior year.
-- Year to date adjusted EBITDA was $223 million, compared to $237 million in the prior year.
-- Share repurchases for nine months through June 30 amounted to approximately $70 million.
-- During the quarter, Hill-Rom announced a 10 percent increase of its quarterly dividend to $0.1375 per share, bringing the annual dividend rate per share to $0.55.
-- During the quarter, we launched the Allen Advance Table. This innovative product provides an advanced surgical platform for complex neurologic and spine procedures and provides enhanced surgical access regardless of patient position.
-- The Company also launched the Hill-Rom Hand Hygiene Compliance Solution to monitor proper hand-washing protocols to aid in the reduction of hospital associated infections. The new offering provides real-time monitoring, staff reminders, simplified reporting, and can use the same hardware as other Hill-Rom real-time locating solutions.
Please see the attached schedules for additional information, including condensed financial information, summary balance sheet, cash flow statement and reconciliations of GAAP to adjusted financial measures.
For a more complete review of Hill-Rom's results, please refer to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 to be filed later this week.
Financial Guidance Summary
For the fourth quarter of fiscal 2013, Hill-Rom expects reported revenue of $435 to $440 million. This reflects:
organic constant currency revenue essentially flat with the prior year;
no material currency impact at current rates; and
incremental revenue from Aspen of approximately $6 million.
Adjusted earnings per diluted share are expected to be $0.59 to $0.61 for the quarter.
Hill-Rom now expects full year reported revenue growth of approximately 5 percent compared to prior guidance of 5 to 6 percent. This reflects:
organic constant currency revenue decline of approximately 4 percent;
no material currency impact at current rates; and
incremental revenue from fiscal 2012 acquisitions of approximately $140 million.
For the full year, adjusted earnings per diluted share are now expected to be $2.04 to $2.06 compared to prior guidance of $2.03 to $2.09.
Cash flow from operations for the full year is expected to be $255 to $265 million compared to prior guidance of $270 to $280 million. Adjusted EBITDA is now expected to be approximately $310 million compared to prior guidance of $315 to $320 million.
Additional assumptions and discussion will be provided during the Company's conference call to be held tomorrow morning. Information to access the webcast is provided below.
Discussion of Adjusted Financial Measures
Hill-Rom Holdings, Inc. routinely provides earnings per share results and guidance on an adjusted basis because the Company's management believes that the presentation provides useful information to investors. In addition, we are providing adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) for the same reason. These measures exclude strategic developments, special charges or other unusual events. Such items may be highly variable, difficult to predict and of a size that sometimes have substantial impact on the Company's reported operations for a period. Often, prospective quantification of such items is not feasible. Management uses these measures internally for planning, forecasting and evaluating the performance of the business. Investors should consider non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.
About Hill-Rom Holdings, Inc.
Hill-Rom is a leading worldwide manufacturer and provider of medical technologies and related services for the health care industry, including patient support systems, safe mobility and handling solutions, non-invasive therapeutic products for a variety of acute and chronic medical conditions, medical equipment rentals, surgical products and information technology solutions. Hill-Rom's comprehensive product and service offerings are used by health care providers across the health care continuum and around the world in hospitals, extended care facilities and home care settings to enhance the safety and quality of patient care.
Hill-Rom...enhancing outcomes for patients and their caregivers.
Source: Hill-Rom Holdings Inc.