Sell These 7 Health Care Supplies Companies Now

NEW YORK (TheStreet) -- An aging population means the outlook is positive for health care equipment and supplies companies, but not every stock in the industry is a buy. In fact, some you should avoid or, if you own them, sell immediately.

The industry is made up of two lines of business -- supplying health care equipment to hospitals and patients in outpatient care, while the other creates high-tech medical equipment to improve efficiency and accuracy of patient care.

"Not only is the average life span increasing, but people are also remaining much more active later in life than in the past," according to industry analysis by TheStreet Ratings. "This has expanded demand for many products supplied by this industry ranging from medical devices for serious conditions that, more often than not, affect the older population (such as pacemakers and stents) to devices that help improve the quality of life (such as joint replacements and laser eye surgery).

Still investors should be wary of just blindly investing in the industry. The stocks on this list are all health care supplies companies that are rated sell with a D or worse. When you're done be sure to check out the nine office REITs to buy.

TheStreet Ratings, TheStreet's proprietary ratings tool, projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

Note: Year-to-date returns are based on June 3, 2015 closing prices.

ATRS Chart ATRS data by YCharts

1. Antares Pharma Inc. (ATRS)
Market Cap: $349 million
Year-to-date return: -10.5%

Antares Pharma, Inc. operates as a specialty pharmaceutical company that focuses on developing and commercializing self-administered parenteral pharmaceutical products and technologies worldwide.

TheStreet Ratings: Sell, D
TheStreet Ratings said: "We rate ANTARES PHARMA INC (ATRS) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, ANTARES PHARMA INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$10.66 million or 53.12% when compared to the same quarter last year. Despite a decrease in cash flow ANTARES PHARMA INC is still fairing well by exceeding its industry average cash flow growth rate of -74.03%.
  • ATRS's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 30.58%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The gross profit margin for ANTARES PHARMA INC is rather high; currently it is at 60.52%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, ATRS's net profit margin of -81.31% significantly underperformed when compared to the industry average.
  • ANTARES PHARMA INC has improved earnings per share by 28.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ANTARES PHARMA INC reported poor results of -$0.27 versus -$0.16 in the prior year. This year, the market expects an improvement in earnings (-$0.10 versus -$0.27).

 

 

BLFS Chart BLFS data by YCharts

2. Biolife Solutions Inc. (BLFS)
Market Cap: $34 million
Year-to-date return: 70%

BioLife Solutions, Inc. develops, manufactures, and markets patented hypothermic storage and cryopreservation solutions for cells and tissues in the United States.

TheStreet Ratings: Sell, D
TheStreet Ratings said: "We rate BIOLIFE SOLUTIONS INC (BLFS) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income has significantly decreased by 88.6% when compared to the same quarter one year ago, falling from -$0.48 million to -$0.91 million.
  • Net operating cash flow has significantly decreased to -$0.70 million or 992.30% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • BLFS has underperformed the S&P 500 Index, declining 22.00% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • BIOLIFE SOLUTIONS INC has improved earnings per share by 42.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, BIOLIFE SOLUTIONS INC reported poor results of -$0.32 versus -$0.14 in the prior year. For the next year, the market is expecting a contraction of 15.6% in earnings (-$0.37 versus -$0.32).
  • The revenue fell significantly faster than the industry average of 22.6%. Since the same quarter one year prior, revenues fell by 27.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

 

CERS Chart CERS data by YCharts

3. Cerus Corp. (CERS)
Market Cap: $500 million
Year-to-date return: -16%

Cerus Corporation operates as a biomedical products company focuses on developing and commercializing the INTERCEPT Blood System to enhance blood safety.

TheStreet Ratings: Sell, D
TheStreet Ratings said: "We rate CERUS CORP (CERS) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income has significantly decreased by 4104.4% when compared to the same quarter one year ago, falling from -$0.23 million to -$9.46 million.
  • Net operating cash flow has significantly decreased to -$15.75 million or 60.31% when compared to the same quarter last year. Despite a decrease in cash flow CERUS CORP is still fairing well by exceeding its industry average cash flow growth rate of -74.03%.
  • CERUS CORP's earnings per share declined by 41.7% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CERUS CORP reported poor results of -$0.69 versus -$0.64 in the prior year. This year, the market expects an improvement in earnings (-$0.58 versus -$0.69).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, CERUS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • 43.82% is the gross profit margin for CERUS CORP which we consider to be strong. Regardless of CERS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CERS's net profit margin of -122.98% significantly underperformed when compared to the industry average.

 

DSCI Chart DSCI data by YCharts

4. Derma Sciences Inc. (DSCI)
Market Cap: $185 million
Year-to-date return: -23%

Derma Sciences, Inc. operates as a tissue regeneration company in the wound care market.

TheStreet Ratings: Sell, D
TheStreet Ratings said: "We rate DERMA SCIENCES INC (DSCI) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Health Care Equipment & Supplies industry average, but is greater than that of the S&P 500. The net income has decreased by 3.3% when compared to the same quarter one year ago, dropping from -$10.27 million to -$10.61 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, DERMA SCIENCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • DSCI's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 32.62%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • DERMA SCIENCES INC has improved earnings per share by 8.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, DERMA SCIENCES INC reported poor results of -$1.62 versus -$1.41 in the prior year. For the next year, the market is expecting a contraction of 8.0% in earnings (-$1.75 versus -$1.62).
  • DSCI, with its decline in revenue, underperformed when compared the industry average of 22.6%. Since the same quarter one year prior, revenues slightly dropped by 1.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

 

STAA Chart STAA data by YCharts

5. STAAR Surgical Co. (STAA)
Market Cap: $371 million
Year-to-date return: 4.7%

STAAR Surgical Company, together with its subsidiaries, designs, develops, manufactures, and sells implantable lenses for the eye, and delivery systems to deliver lenses into the eye.

TheStreet Ratings: Sell, D
TheStreet Ratings said: "We rate STAAR SURGICAL CO (STAA) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income has significantly decreased by 72.2% when compared to the same quarter one year ago, falling from -$1.36 million to -$2.34 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, STAAR SURGICAL CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 38.71%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 50.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • STAAR SURGICAL CO's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, STAAR SURGICAL CO swung to a loss, reporting -$0.23 versus $0.01 in the prior year. This year, the market expects an improvement in earnings (-$0.15 versus -$0.23).
  • STAA, with its decline in revenue, underperformed when compared the industry average of 22.6%. Since the same quarter one year prior, revenues slightly dropped by 6.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

 

 

TEAR Chart TEAR data by YCharts

6. TearLab Corp. (TEAR)
Market Cap: $82.5 million
Year-to-date return: -7.5%

TearLab Corp. operates as an ophthalmic device company in the United States. It develops and markets lab-on-a-chip technologies that enable eye care practitioners to enhance standard of care by objectively and quantitatively testing for disease markers in tears at the point-of-care.

TheStreet Ratings: Sell, D
TheStreet Ratings said: "We rate TEARLAB CORP (TEAR) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income has significantly decreased by 47.0% when compared to the same quarter one year ago, falling from -$5.56 million to -$8.17 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, TEARLAB CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 53.31%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 47.05% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • TEARLAB CORP's earnings per share declined by 47.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, TEARLAB CORP continued to lose money by earning -$0.73 versus -$1.01 in the prior year. For the next year, the market is expecting a contraction of 30.1% in earnings (-$0.95 versus -$0.73).
  • 41.57% is the gross profit margin for TEARLAB CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, TEAR's net profit margin of -151.03% significantly underperformed when compared to the industry average.

 

UNIS Chart UNIS data by YCharts

7. Unilife Corp. (UNIS)
Market Cap: $304 million
Year-to-date return: -24.8%

Unilife Corporation designs, manufactures, and supplies injectable drug delivery systems in the United States and internationally.

TheStreet Ratings: Sell, D-
TheStreet Ratings said: "We rate UNILIFE CORP (UNIS) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally high debt management risk, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income has significantly decreased by 52.9% when compared to the same quarter one year ago, falling from -$15.11 million to -$23.11 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, UNILIFE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is very high at 18.93 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 2.68, which shows the ability to cover short-term cash needs.
  • The share price of UNILIFE CORP has not done very well: it is down 20.73% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • UNILIFE CORP's earnings per share declined by 33.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, UNILIFE CORP continued to lose money by earning -$0.59 versus -$0.78 in the prior year. For the next year, the market is expecting a contraction of 24.6% in earnings (-$0.74 versus -$0.59).

 

 

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