Why Patterson Companies Stock Dropped

 Shares of Patterson Companies (PDCO -7.77%) fell as much as 14.2% early Wednesday, then partially recovered to trade down 5.6% as of 11.50 a.m. EDT after the company announced slightly weaker-than-expected revenue for its fiscal 2024 first quarter ended July 29, 2023.

Patterson's quarterly revenue climbed 3.5% year over year to $1.577 billion, translating to generally accepted accounting principles (GAAP) net income of $31.2 million, or $0.32 per share. On an adjusted (non-GAAP) basis, Patterson's earnings were $38.6 million, or $0.40 per share, up 25% from $0.32 per share in the same year-ago period. Analysts, on average, were modeling roughly the same adjusted earnings but on slightly higher revenue of $1.58 billion.

Delving deeper into Patterson's results, internal sales -- a metric that adjusts for the effects of acquisitions and currency translation -- grew 2.8% year over year. Management credited their outsize earnings growth to margin-improvement initiatives within both the company's dental and animal health segments. Dental segment internal sales grew a modest 2.1% year over year, while animal health segment revenue climbed 4%.

"Continued execution of our proven strategy and the resilient end markets in which we operate make us well positioned to drive improved performance over the long term," added Patterson CEO Don Zurbay.

Patterson also reiterated its previous fiscal year 2024 earnings guidance, calling for GAAP earnings of $2.14 to $2.24 per share and adjusted (non-GAAP) earnings of $2.45 to $2.55 per share -- roughly in line with Wall Street's consensus estimates. The company did not provide forward revenue guidance but did note it expects its global end markets will "be affected by the ongoing challenges of inflationary trends and higher interest rates as well as a potential slowdown in the broader economy."

To be clear, Patterson certainly isn't alone in voicing concerns over a possible macroeconomic slowdown, and there's nothing particularly surprising about its results to start the new fiscal year. But there was also nothing particularly awe-inspiring, either. And with shares still up more than 34% over the past three months on the heels of Patterson's strong fiscal Q4 2023 report in mid-June, it's not terribly surprising to see this healthcare stock giving back some of its gains today.

https://www.fool.com/investing/2023/08/30/why-patterson-companies-stock-dropped-today/