Teleflex Tops Q2 Earnings Estimates, Raises 2024 Outlook

Teleflex Incorporated TFX posted adjusted earnings per share from continuing operations of $3.42 in the second quarter of 2024, up 0.3% from the year-ago quarter's figure. The metric topped the Zacks Consensus Estimate by 2.7%.

GAAP EPS came in at $1.69 in the second quarter compared with $2.35 during the same period last year.

Revenues in Detail

Net revenues in the second quarter rose 0.9% year over year (up 3.4% at constant exchange rate or CER) to $749.7 million. However, the metric missed the Zacks Consensus Estimate by 1.8%.

Segmental Details

Americas' net revenues of $426.8 million increased 0.5% from the year-ago period's levels (up 0.6% at CER). This compares with our model's projection of $436.2 million for the second quarter. In the prior year, MSA revenues were booked in the Americas, which resulted in a tough year-over-year comparison. Management stated that the impact of the MSA termination in the second quarter was similar to the first quarter.

EMEA's (Europe, the Middle East and Africa) net revenues of $147.1 million fell 0.5% year over year (up 9.8% at CER). Our model projected revenues to be $158.7 million in the second quarter. The growth was driven by a targeted strategy to increase the geographic availability of Teleflex products and improve utilization in Europe.

Revenues from Asia (Asia Pacific) rose 0.4% to $83.7 million (up 4% at CER). Our model's projection was $83.7 million. Revenue growth was broad-based across the region, with double-digit increases in China, India and Southeast Asia.

OEM (Original Equipment Manufacturer and Development Services) revenues were $84.9 million, an increase of 0.9% year over year (up 3.4% at CER).

Product Revenues in Detail

In the second quarter, the Vascular Access segment recorded net revenues of $181.1 million, up 4.8% year over year at CER. This compares with our model's projection of $184.4 million for the second quarter.

The Interventional business registered net revenues of $141.2 million, up 13.8% at CER from the same period last year. This compares with our model's projection of $139.9 million for the second quarter.

Within the Anesthesia segment, net revenues increased 2.3% year over year at CER to $102.5 million. This compares with our model's projection of $105.1 million for the second quarter.

Revenues from the Interventional Urology segment were $83.1 million, up 7.1% year over year. This compares with our model's projection of $81.1 million for the second quarter.

OEM recorded revenue growth of $88.8 million, up 5.8% from the year-ago figure. This compares with our model's projection of $86.8 million for the second quarter.

The Other product segment's (consisting of the company's respiratory products not included in the divestiture to Medline, manufacturing service agreement revenues and Urology Care products) net revenues of $41.7 million registered a year-over-year decline of 26.4%. This compares with our model's projection of $54.8 million for the second quarter.

Margins

In the reported quarter, the gross profit totaled $416.5 million, up 2.1% year over year. The gross margin expanded 68 basis points (bps) to 55.6% due to a 0.7% fall in the cost of goods sold.

Overall, the adjusted operating profit was $124.7 million, down 14% year over year. The adjusted operating margin saw a 288 bps contraction year over year to 16.6%.

Liquidity Position

Teleflex exited the second quarter of 2024 with cash and cash equivalents of $238.6 million compared with $237.4 million at the end of the first quarter.

Cumulative cash flow provided by operating activities from continuing operations was $204.5 million compared with $170.6 million in the year-ago period.

In conjunction with the earnings release, the company announced that its board of directors has authorized a share repurchase program for up to $500 million of common stock, including the commencement of an accelerated share repurchase program for $200 million. The program will take effect on Aug 2, 2024.

2024 View

Teleflex updated its financial guidance for 2024.

GAAP revenue growth for 2024 is expected in the range of 3.40%-4.40% (previously 3.35%-4.35%). The company's constant currency revenue growth expectation for 2024 has been increased to 4.25%-5.25% (earlier 3.75%-4.75% range). The Zacks Consensus Estimate for total revenues is pegged at $3.09 billion.

Teleflex has raised its 2024 adjusted EPS from continuing operations to a new range of $13.80-$14.20 (from the earlier band of 13.60-$13.95). The Zacks Consensus Estimate is currently pegged at $13.75.

Our Take

Teleflex delivered better-than-expected earnings in the second quarter of 2024, while revenues missed estimates. However, performance was consistent with the company's ongoing strategy to grow durable revenues. The broad portfolio of vascular access drove the year-over-year growth in revenues, including the PICC portfolio and central access. The underlying trends in the surgical franchise were solid, with growth in the company's largest franchises led by instrumentation and chest drainage.

Additionally, the Interventional business continued to perform well, including contributions from growth drivers such as MANTA, complex catheters, right heart catheters and intra-aortic balloon pumps. Revenue momentum for Barrigel remained strong, and the integration of Palette Life Sciences AB is also on track. The gross margin expansion in the quarter looks optimistic. Also, the upbeat revised guidance for the full year is highly encouraging.

Meanwhile, within Asia, Teleflex's business in South Korea posted a softer performance due to the ongoing impact of the doctors' strike.

Zacks Rank and Key Picks

Teleflex currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Intuitive Surgical, Abbott Laboratories, Inc. and Quest Diagnostics.

Intuitive Surgicalreported a third-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1 (Strong Buy).

Intuitive Surgicalhas an estimated long-term earnings growth rate of 16.1% in 2024 compared with the industry's 14.1%. The company's earnings surpassed estimates in each of the trailing four quarters, the average being 8.97%.

Abbott, carrying a Zacks Rank #2 (Buy), reported third-quarter 2024 earnings of $1.14, which surpassed the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion topped the Zacks Consensus Estimate by 0.3%. 

ABT has an estimated earnings growth rate of 10.1% for 2025 compared        with the S&P 500's 9.3%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 2.34%.

Quest Diagnostics, carrying a Zacks Rank #2, reported a third-quarter adjusted EPS of $2.35, which surpassed the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion exceeded the Zacks Consensus Estimate by 0.5%.

DGX's historical five-year earnings growth rate of 7.4% compared favorably with the industry's 4.2%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 3.31%.

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