Press Release: Quest Diagnostics Declares Quarterly Cash Dividend

Integer Holdings ITGR witnessed strong momentum year to date. Shares of the company have gained 40.8% compared with the 6.7% rise of the industry in the same time frame. The S&P 500 Composite has risen 26.1% during the same period.

With healthy fundamentals and strong growth opportunities, this Zacks Rank #3 (Hold) company appears to be a solid wealth creator for its investors at the moment.

Plano, TX-based Integer Holdings manufactures and develops medical devices and components primarily for original equipment manufacturers.

In November, ITGR announced the completion of the previously announced sale of its Electrochem business to Ultralife Corporation for $50 million in cash. Following the divestiture transaction, Integer Holdings is now completely a medical technology company with additional cash to pay down debt and execute its inorganic growth strategy.

Factors Favoring ITGR’s Growth

Integer Holdings is witnessing an upward trend in its stock price, prompted by its execution of manufacturing excellence initiatives, an improved supply chain, and a complete focus on the medical segment following the divestiture. The optimism led by a solid third-quarter 2024 performance and its strength in Medical sales are expected to contribute further.

Investors seemed optimistic about Integer Holdings’ recent facility expansions. In September, ITGR announced the completion of its facility expansions in Ireland. This announcement followed the official opening of an 80,000 sq. ft. expansion of Integer Holdings guidewire manufacturing facility in New Ross, County Wexford, Ireland, earlier in September. This expansion in Ireland provides ITGR with the capacity and differentiated capabilities to amplify its customers’ innovation and help the company bring products to market faster. Accordingly, investors seemed to be optimistic following this news.

Integer Holdings exited the third quarter of 2024 with impressive results. The strong year-over-year top-line and bottom-line performances were impressive. Robust performances by the Medical segment and strength in all the product lines of the Medical segment were encouraging. These factors must have aided in surging the stock’s price.

Integer Holdings generated a gross profit of $116.6 million in the third quarter, up 11% year over year. The gross margin in the third quarter expanded 56 basis points (bps) to 27%. Adjusted operating profit totaled $75.6 million in the third quarter, reflecting a 17.1% uptick from the prior-year quarter. Adjusted operating margin in the third quarter expanded 125 bps to 17.5%. The expansion of both margins bodes well for the stock and has contributed to raising the price of the stock.

Factors That May Offset the Gains for ITGR

Sales of Integer Holdings’ products into the energy market depend upon the condition of the oil and gas industry. Currently, oil and natural gas prices have been subject to significant fluctuation. As a result, the oil and gas exploration and production business is affected by various political and economic factors. Per management, a change in the oil and gas exploration and production industry or a reduction in the exploration and production expenditures of oil and gas companies could cause the company’s energy market revenues to decline.

A Look at Estimates

Integer Holdings’earnings per share (EPS) in 2024 and 2025 are expected to grow 14.1% and 13.3% to $5.33 and $6.04 on a year-over-year basis, respectively. The Zacks Consensus Estimate for EPS has increased 3 cents for 2024 and decreased 2 cents for 2025 in the past 30 days.

Revenues for 2024 and 2025 are anticipated to rise 8.3% and 6.9% to $1.73 billion and $1.85 billion, respectively, on a year-over-year basis.

Stocks to Consider

Some better-ranked stocks in the broader medical space are AngioDynamics ANGO, Quest Diagnostics DGX and RadNet RDNT. Each stock presently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.

AngioDynamics’ shares have lost 19.2% year to date against the industry’s6.1% growth.

Quest Diagnostics has an estimated long-term growth rate of 6.8%. DGX's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.

Quest Diagnostics’ shares have risen 42% year to date compared with the industry's 14.9% growth.

RadNet’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 98.2%.

RDNT’s shares have soared 93.7% year to date compared with the industry’s 14.8% growth.

Zacks Investment Research

Nevro Corp. NVRO reported a loss per share of 41 cents in the third quarter of 2024, narrower than the year-ago quarter’s loss of 65 cents. The Zacks Consensus Estimate is pegged at a loss per share of 82 cents.

Revenues in Detail

Nevro registered worldwide revenues of $96.9 million in the third quarter, down 6.7% year over year on a reported basis and 7% on a constant-currency basis. The year-over-year decline was primarily due to competitive pressures in the U.S. spinal cord stimulation (SCS) market and ongoing softness in the core U.S. SCS market. However, the figure topped the Zacks Consensus Estimate by 4.1%.

Quarterly Highlights

In the quarter under review, international revenues were $13 million, down 7.7% year over year on a reported basis and 9.6% at a constant exchange rate (CER). The year-over-year decline was primarily due to the short-term impact of negative SCS-related media reports in Australia, which resulted in the postponement and cancelation of cases, as well as the impact of healthcare reform in Germany, which caused a delay in procedures in the third quarter of 2024.

U.S. revenues for the quarter totaled $83.9 million, down 6.5% year over year.

Total U.S. permanent implant procedures declined 9.6% year over year, while U.S. trial procedures decreased 15.2% year over year. The year-over-year decrease in U.S. trials was primarily driven by competitive pressures and ongoing softness in the core U.S. SCS market during the quarter.

During the third quarter, Nevro announced the FDA approval and limited market release of HFX iQ AdaptivAI, a responsive, personalized pain management platform powering the HFX iQ SCS system. The company anticipates a full market release of HFX AdaptivAI in the United States in the fourth quarter of 2024.

Nevro also received regulatory approval to sell its HFX iQ system in CE-marked countries in the European Union. It expects to begin the limited market release in select regions of Europe in the fourth quarter of 2024 with the full market release planned for the first quarter of 2025.

During the reported quarter, Nevro’s comparative biomechanical data on Nevro1 was accepted for publication in Medical Devices: Evidence and Research. Nevro1 was found to provide equivalent and superior motion reduction, respectively, with a less invasive and less destructive approach while providing the largest surface area for fusion compared to other commercial SI joint transfixing devices.

Nevro Corp. Price, Consensus and EPS Surprise

Nevro Corp. price-consensus-eps-surprise-chart | Nevro Corp. Quote

Margin Trend

In the quarter under review, Nevro’s gross profit declined 7.1% year over year to $64.6 million. The gross margin in the third quarter of 2024 was 66.7% compared with 66.9% in the prior-year quarter.

Sales, general & administrative expenses decreased 15.6% year over year to $68.5 million. Research and development expenses decreased 24% year over year to $10.6 million. Operating expenses for the third quarter of 2024 were $78.5 million ($83.5 million excluding restructuring charges, intangible amortization, contingent consideration revaluations, and a year-over-year reduction in litigation-related expenses) compared with $95.1 million in the prior-year quarter.

The total operating loss in the reported quarter was $13.9 million ($18.9 million excluding restructuring charges, intangible amortization, contingent consideration revaluations, and year-over-year decrease in litigation-related expenses) compared with $25.6 million in the year-ago quarter.

Financial Position

Nevro exited the third quarter of 2024 with cash and cash equivalents and short-term investments of $277 million compared with $273.7 million at the end of the second quarter. Long-term debt at the end of third-quarter 2024 was $184.4 million compared with $180.6 million at the second-quarter end.

Guidance

Nevro has maintained its outlook for full-year 2024.

The company continues to expect its 2024 worldwide revenues in the range of $400 million-$405 million. The company's revised guidance assumes that U.S. SCS trialing growth rates are not likely to improve from the third quarter of 2024.

Per management, the guidance considers the impact of market challenges that NVRO is facing and reduced direct-to-consumer marketing spend from earlier this year. The guidance also includes some effect in the fourth quarter from the two hurricanes that hit the Southeast, causing a shortage in IV bags and, thus, a delay in procedures. The Zacks Consensus Estimate is pegged at $402.2 million.

Our Take

Nevro exited the third quarter of 2024 with better-than-expected results, with earnings and revenues beating their respective Zacks Consensus Estimate. Shares were up 14.5% during after-market trading. However, the stock plunged 75.3% year to date against the industry’s 6.7% growth and the S&P 500’s 26.1% increase.

Meanwhile, the company’s third-quarter revenues are affected by ongoing softness in the U.S. SCS market and competitive pressures. Total U.S. permanent implant procedures, as well as U.S. trial procedures, declined in the third quarter. However, NVRO is likely to witness growth opportunities in an underpenetrated SCS market with the launches of HFX AdaptivAI in the United States and HFX iQ in the EU. Also, the company’s diversification into the SI joint fusion is likely to generate additional revenues.

The gross margin is likely to face challenges during the second half of fiscal 2024 due to the accounting of inventory variances and overhead that occurred in 2023 as NVRO transitions from contract manufacturing to manufacturing in-house. Thus, NVRO expects a lower gross margin in the fourth quarter compared with the first half of this year. NVRO also expects lower production volumes from decreased sales in 2024 to continue to create certain margin headwinds next year as well.

However, NVRO continues to make progress in shifting additional work to the Costa Rica manufacturing facility to further leverage its investment there and continue on the path toward achieving a long-term gross margin in the mid-70% range and driving toward profitability.

Zacks Rank and Key Picks

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

Some better-ranked stocks in the broader medical space are AngioDynamics ANGO, Quest Diagnostics DGX and RadNet RDNT. Each stock presently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.

AngioDynamics’ shares have lost 19.2% year to date against the industry’s6.1% growth.

Quest Diagnostics has an estimated long-term growth rate of 6.8%. DGX's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.

Quest Diagnostics’ shares have risen 42% year to date compared with the industry's 14.9% growth.

RadNet’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 98.2%.

RDNT’s shares have soared 93.7% year to date compared with the industry’s 14.8% growth.

Zacks Investment Research

Insulet Corporation PODD reported third-quarter 2024 adjusted earnings per share (EPS) of 90 cents, up significantly 26.8% from the year-ago period’s figure. The bottom line surpassed the Zacks Consensus Estimate by 16.9%.

GAAP EPS was $1.08, up 45.9% from the year-ago figure of 74 cents.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Following the earnings announcement, PODD’s share price surged 2.9% to $275.7 yesterday.

PODD’s Q3 Revenues

Revenues totaled $543.9 million, which beat the Zacks Consensus Estimate by 4.9%. The top line jumped 25.7% year over year (up 25.4% at the constant exchange rate or CER). CER growth exceeded the company’s guidance of 21%.

PODD’s Q3 Segmental Revenues

Insulet’s total Omnipod revenues of $533.6 million reflected an increase of 26.4% year over year (up 26.1% at CER). International Omnipod revenues of $138.0 million rose 36.1% (up 34.8% at CER). U.S. Omnipod revenues grew 23.4% year over year to $395.6 million.

The Drug Delivery business revenues totaled $10.3 million, flat year over year.

PODD’s Q3 Margins

Gross profit in the reported quarter was $377.1 million, up 28.6% from the prior-year quarter’s figure. Gross margin of 69.3% expanded 155 basis points year over year.

Selling, general & administrative expenses rose 29.6% to $234.1 million.

Research and development expenses declined 5.0% year over year to $54.9 million.

The operating profit in the quarter totaled $88.1 million, up 60.8% from the year-ago reported actuals. Operating margin of 16.2% expanded 353 basis points year over year.

Cash Position

Insulet exited the third quarter of 2024 with cash and cash equivalents of $902.6 million compared with $821 million at the end of the second quarter of 2024.

PODD’s 2024 Revenue Guidance

Insulet updated its full-year 2024 projection for revenues. It also issued top-line guidance for fourth-quarter 2024.

For 2024, the company now expects revenue growth to be between 20% and 21% (up from the previously projected 16-19%). The Zacks Consensus Estimate for total revenues is pegged at $2.01 billion, suggesting 18.6% growth from the 2023 reported number.

Insulet’s total Omnipod revenue growth is expected to be in the range of 21-22% (previously 18-21%). The company expects Drug Delivery revenues to decline 5-10% (previously 40-50%).

For the fourth quarter, Insulet projects revenue growth of 12-15%. The Zacks Consensus Estimate for total revenues is pegged at $564.5 million, suggesting 10.7% growth from the fourth quarter of 2023.

Total Omnipod revenues are likely to grow 13-16%. Drug Delivery revenue decline is expected to be in the range of 15-20% (approximately $7-$8 million).

Insulet Corporation Price, Consensus and EPS Surprise

Insulet Corporation price-consensus-eps-surprise-chart | Insulet Corporation Quote

Our Take

Insulet exited the third quarter of 2024 with better-than-expected earnings and revenues. The company benefited from continued high demand for Omnipod 5, both in the United States and globally. However, the lowering of the Drug Delivery guidance is discouraging.

During the reported quarter, Insulet received FDA clearance for Omnipod 5, making it the first and only automated insulin delivery system indicated for both type 1 and type 2 diabetes. Additionally, the company launched Omnipod 5 App for iPhone in the United States.

The expansion of both margins is encouraging. The raised 2024 revenue guidance instills optimism among investors.

PODD’s Zacks Rank and Other Key Picks

PODD currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks from the broader medical space are Phibro Animal Health PAHC, Quest Diagnostics DGX and HealthEquity HQY.

Phibro Animal Health reported fourth-quarter fiscal 2024 adjusted earnings of 41 cents per share, which topped the Zacks Consensus Estimate by 20.6%. Revenues of $273.2 million beat the Zacks Consensus Estimate by 4.1%. PAHC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

PAHC’s fiscal 2025 earnings are expected to surge 31.9% compared with the industry’s 11.6% growth. The company’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average surprise being 4.1%.

Quest Diagnostics reported third-quarter 2024 adjusted earnings of $2.30 per share, which topped the Zacks Consensus Estimate by 1.8%. Revenues of $2.49 billion beat the consensus mark by 3.4%.

DGX carries a Zacks Rank #2 at present. DGX’s 2024 earnings are expected to surge 2.1% year over year. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.

HealthEquity, carrying a Zacks Rank #2 at present, reported a second-quarter fiscal 2025 adjusted earnings of 86 cents per share, which surpassed the Zacks Consensus Estimate by 22.9%. Revenues of $299.9 million topped the Zacks Consensus Estimate by 5.4%.

HQY has an estimated long-term earnings growth rate of 28.2% compared with the industry’s 13.4%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 19.8%.

Zacks Investment Research

Investors interested in Medical - Outpatient and Home Healthcare stocks are likely familiar with Quest Diagnostics (DGX) and The Pennant Group, Inc. (PNTG). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Quest Diagnostics is sporting a Zacks Rank of #2 (Buy), while The Pennant Group, Inc. has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DGX has an improving earnings outlook. But this is only part of the picture for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

DGX currently has a forward P/E ratio of 17.92, while PNTG has a forward P/E of 36.46. We also note that DGX has a PEG ratio of 2.76. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PNTG currently has a PEG ratio of 2.80.

Another notable valuation metric for DGX is its P/B ratio of 2.60. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, PNTG has a P/B of 5.41.

Based on these metrics and many more, DGX holds a Value grade of B, while PNTG has a Value grade of C.

DGX has seen stronger estimate revision activity and sports more attractive valuation metrics than PNTG, so it seems like value investors will conclude that DGX is the superior option right now.

Zacks Investment Research