Ecolab Partners with Hill-Rom Holdings - Analyst Blog

Ecolab Inc. ECL entered a partnership agreement with clinical workflow solutions provider Hill-Rom Holdings, Inc. HRC, though which, the former will take the help of the Hill-Rom Hand Hygiene Compliance Solution to monitor hand-hygiene compliance in the healthcare industry.

Hand hygiene is a primary and effective method for preventing costly and fatal health care-associated infections (HAIs). However, many hospitals struggle to maintain even 50% compliance with recommended protocols.

Hill-Rom Holdings' Hand Hygiene Compliance Solution features ECL hand-hygiene products and dispensers and integrated it with Hill-Rom real-time locating solution (RTLS), which will continuously monitor the patient care environment, reminding key personnel about hand-washing events, and providing the data to achieve better compliance.

Hill-Rom Hand Hygiene Compliance Solution debuted at the Association for Professionals in Infection Control and Epidemiology's (APIC) 2014 annual conference in Anaheim, CA. Health-care institutions that have implemented the Hand Hygiene Compliance Solution have experienced a significant increase in their hand hygiene compliance.

Currently, Ecolab offers Nexa hands-free dispenser, designed for the health care environment. It features soaps and sanitizers that are specifically formulated for the high-frequency hand-hygiene needs of health care workers.

ECL posted a 23.3% rise in adjusted earnings per share (excluding special gains and charges) to 74 cents for the first quarter of 2014 from 60 cents in the same quarter of 2013. However, earnings were flat compared with the Zacks Consensus Estimate.

The rise in adjusted earnings was attributable to strong sales growth and operating margin gains owing to cost efficiency programs and synergies. Adjusted net earnings rose 26.4% to $228.2 million from $180.5 million in the first quarter of 2013.

Revenues grew 16.2% year over year to $3,336.6 million. Adjusted fixed currency revenues increased 18.2% to $3,309.1 million. Revenues were slightly above the Zacks Consensus Estimate of $3,320 million.

Adjusted operating earnings rose 23.3% to $386.5 million while adjusted operating margin went up 70 basis points (bps) to 11.6% from 10.9% in the 2013-first quarter. In fixed currency, operating earnings escalated 26.7% to $383.6 million in the quarter.            

For the second quarter of 2014, ECL expects adjusted gross margin of 46% and adjusted earnings per share of $1.00 to $1.04. The Zacks Consensus Estimate of $1.02 lies within the guided range.

For full year 2014, ECL anticipates adjusted gross margin of 47% and reiterated its higher adjusted earnings per share between $4.10 and $4.20. The Zacks Consensus Estimate of $4.18 for the year lies within the guided range.

Currently, both ECL and Hill-Rom Holdings carry a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Cardica Inc. CRDC and Eagle Pharmaceuticals Inc. EGRX. Both of them carry a Zacks Rank #2 (Buy).