• Revenue: $349 million, 4% growth on a reported basis, flat organically.
• Adjusted Earnings Per Share (EPS): $1.19, up 14% year-over-year.
• Hospital Revenue Growth: 24% reported, 12% organic in the third quarter.
• Hemostasis Management Revenue Growth: 26% in the US.
• Interventional Technologies Growth: 47% reported, 16% organic in the third quarter.
• Plasma Revenue Decline: 9% in the third quarter.
• Adjusted Gross Margin: 57.7%, an increase of 240 basis points year-over-year.
• Adjusted Operating Expenses: $111.5 million, 32% of revenue, down 150 basis points year-over-year.
• Adjusted Operating Income: $89.4 million, 25.7% of revenue, a 390-basis point increase year-over-year.
• Adjusted Net Income: $60.3 million, up 13% year-over-year.
• Free Cash Flow: $49.7 million year-to-date.
• Cash on Hand: $320.8 million at the end of the quarter.
• Net Leverage Ratio: Approximately 2.42 times EBITDA.

• Warning! GuruFocus has detected 2 Warning Sign with HAE.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Haemonetics Corp (NYSE:HAE) reported a 4% increase in third-quarter revenue on a reported basis, with adjusted earnings per share up 14%.
• The company is experiencing strong growth in its hospital business, with revenue up 24% on a reported basis and 12% organically.
• Haemonetics Corp (NYSE:HAE) is gaining market share in the plasma segment, particularly in the US and Europe, through technology upgrades and new long-term agreements with BioLife and Grifols.
• The divestiture of the whole blood business is expected to align resources with higher-margin opportunities, contributing to improved profitability.
• The company achieved a record adjusted operating income margin of 25.7% in the third quarter, reflecting a 390-basis point increase year over year.

Negative Points

• Plasma revenue declined 9% in the quarter due to the planned CSL transition, impacting North America disposables revenue.
• The company is facing challenges in China, with significant cutbacks in reimbursement affecting the hemostasis management segment.
• Vascular closure growth was lower than expected due to competition in coronary and peripheral procedures.
• Haemonetics Corp (NYSE:HAE) acknowledged falling short of ambitious targets in sensor-guided technologies and esophageal cooling markets.
• Free cash flow guidance was lowered due to increased working capital needs, particularly higher inventory levels.

Q & A Highlights

Q: Could you provide more details on the decoupling of CSL's contribution and the underlying trends in plasma? A: Christopher Simon, CEO: CSL is performing as expected, with the transition on track. The rest of the field saw sequential growth consistent with historical averages. Share gains at BioLife and Grifols, along with technology upgrades, are progressing, with the full adoption of Persona expected by the end of the fiscal year.

Q: Can you clarify the discrepancy between the mid-20s growth in VASCADE MVP and the overall vascular closure growth? A: Christopher Simon, CEO: The mid-20s growth is specific to MVP and MVP XL, which are performing well in ablation therapy. VASCADE, used in PCI, has faced competition and requires more focus. We are addressing this with resource allocation and expect improvements.

Q: What are the factors contributing to the discrepancy between operating margin expansion and free cash flow? A: James D Arecca, CFO: The discrepancy is mainly due to increased inventory levels and digital transformation costs. We expect improvements in free cash flow as inventory levels stabilize and operational efficiencies are realized.

Q: Can you provide more details on the BioLife and Grifols contracts? A: Christopher Simon, CEO: These are long-term agreements, typically 5 to 7 years, focused on full-scale adoption of our Nexus platform. We expect to be the majority share player in these accounts, reflecting strong partnerships and product performance.

Q: What steps are being taken to address the challenges with ensoETM and attune businesses? A: Christopher Simon, CEO: We are focusing on identifying RF opportunities in accounts and ensuring ensoETM is used alongside RF. This involves training our teams to have upstream discussions and securing product approvals. We are also increasing resources and training to improve execution.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.