Animal Health And Dental Equipment Challenges Bite As Patterson Companies Cuts Annual Guidance, Reports Mixed Q3 Earnings

Patterson Companies Inc PDCO reported third-quarter 2024 net sales of $1.62 billion, up 1% Y/Y, almost in line with the consensus of $1.63 billion. Internal sales increased 0.3%.

“Patterson navigated a dynamic environment during our fiscal third quarter to deliver sales growth and gross margin expansion,” said Don Zurbay, President and CEO of Patterson Companies. “Our dental consumables and production animal businesses both continued to generate above-market sales growth…”

Reported net sales in the Dental segment reached $637.1 million. Internal sales increased 2.5% Y/Y. Internal sales of consumables increased 6.3% Y/Y. 

In Patterson Dental, Excluding the deflationary impact of certain infection control products, internal sales of consumables increased by 7.2% Y/Y. Compared to the prior year, internal equipment sales decreased 2.4%, and internal sales of value-added services decreased 0.2%.

Animal Health segment sales reached $967.3 million. Internal sales fell 1.5% as positive growth in the production animal business was more than offset by reduced sales in the companion animal business. 

Within the Animal Health segment, internal sales of consumables decreased by 2%, internal sales of equipment decreased by 5.9%, and internal sales of value-added services increased by 44.2%.

Adjusted EPS of $0.59, down from $0.62 a year ago, and missed the consensus of $0.60.

Outlook: “We have revised our guidance to reflect current expectations for the fourth quarter, including continued headwinds in the dental equipment market,” said Don Zurbay, President and CEO.

Patterson revised its fiscal year 2024 adjusted EPS guidance to $2.30-$2.35, down from prior guidance of $2.35-$2.45, versus the consensus of $2.36.

The guidance reflects the expectations for the North American and international end markets, which are expected to be affected by the ongoing challenges of inflationary trends, higher interest rates, and additional slow-down in the broader economy.

Price Action: PDCO shares are down 8.11% at $26.50 on the last check Wednesday.