HAEMONETICS CORP Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Revenue and Earnings: Second quarter revenue was $346 million, with 9% reported growth and 4% organic growth; adjusted earnings per share were $1.12, an increase of 13% from the prior year.
• Business Units: Discussed performance of Plasma, Blood Center, and Hospital segments, including details on volume, pricing, and growth drivers.
• Margin Improvements: Adjusted gross margin reached 56.7% in the second quarter, up 270 basis points; adjusted operating margin guidance is in the range of 23% to 24%.
• Capital Allocation: Entered into an accelerated share repurchase agreement to buy back $75 million of common stock under a $300 million authorization, with $150 million remaining.

Segment Performance

• Plasma: Second quarter revenue declined 3%, year-to-date also declined; North America disposables revenue declined 3% in the quarter and 4% year-to-date. Software was flat in the second quarter and grew 10% year-to-date. Full year plasma guidance is a 3% to 6% decline, inclusive of an approximately $100 million contribution from CSL.
• Blood Center: Declined 1% in the second quarter and year-to-date. Apheresis was flat in the second quarter and grew 1% in the first half of the year. Whole Blood declined 3% in the second quarter and 10% in the first half of the year. Blood Center guidance is updated to a decline of 4% to 6%, up from 5% to 7% previously.
• Hospital: Revenue grew 31% on a reported basis in both the second quarter and year-to-date. Blood Management Technologies grew 14% in the second quarter and 12% year-to-date. Transfusion management grew double-digits. Cell Salvage revenue declined. Interventional Technologies grew 61% in the second quarter and 64% year-to-date. Newly acquired products delivered $16 million in revenue in the second quarter and $34 million year-to-date.

Guidance

• Revenue: Total revenue growth expectation for fiscal year 2025 is in the range of 5% to 8%, with organic growth guidance raised to 1% to 4% (up from flat to 3% previously).
• EPS: Adjusted earnings per diluted share guidance is $4.45 to $4.75.
• Free Cash Flow: Expectation for fiscal 2025 free cash flow is $130 million to $180 million.
• Plasma: Full year fiscal '25 plasma guidance is a 3% to 6% decline, inclusive of an approximately $100 million contribution from CSL.
• Blood Center: Blood Center guidance range is a decline of 4% to 6%, up from 5% to 7% previously.

Risks

• Currency Fluctuations: Impact on margins as a headwind.
• Market Challenges: In China for certain hospital products, and PFA impact on EnzoETM adoption.
• Regulatory Hurdles: For product approvals and label expansions, such as with VASCADE MVP XL.

Question and Answer

Q: Anthony Petrone from Mizuho on VASCADE and Plasma. Asked about VASCADE MVP XL adoption, rollout plan, pricing, and Plasma volume vs price excluding CSL.

A: Christopher Simon responded on VASCADE MVP XL adoption (200 of 600 sites, phasing in second half), pricing reflecting value proposition, and Plasma excluding CSL grew on pricing due to platform superiority.

Q: Marie Thibault from BTIG on adjusted operating margin, acquired products. Asked about cost cutting, cadence of investments, and rollout of Attune and OpSens products.

A: Christopher Simon and James D’Arecca discussed margin improvement from mix, phasing of investments, and bullish outlook on acquired products despite initial challenges.

Q: Lawrence Solow from CJS Securities on TEG market, VASCADE performance, and gross margin cadence.

A: Christopher Simon responded on TEG growth drivers, VASCADE performance recovery, and gross margin phasing in back half of year.

Q: Craig Bijou from Bank of America Securities on VASCADE label expansion, longer-term growth, and hemostasis management growth.

A: Christopher Simon discussed VASCADE label expansion importance, longer-term growth potential, and hemostasis management growth driven by heparinase neutralization cartridge.

Q: Andrew Cooper from Raymond James on clinical investments, OpSens sale complexity, and VASCADE international launch.

A: Christopher Simon talked about clinical investments as reactive to acquisition learnings, and VASCADE international expansion progress.

Q: Michael Matson from Needham on MVP XL labeling timing, currency impact, and CSL contribution.

A: Christopher Simon responded on MVP XL labeling work-in-progress, currency headwind expectation, and CSL contribution inclusion in guidance.

Q: Kristen Stewart from CL King on M&A environment and areas of interest.

A: Christopher Simon discussed M&A as a priority, tuck-in opportunities, and opportunistic return of value to shareholders via buybacks and debt paydown.