HAEMONETICS CORP Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Revenue and Growth: Total revenue was $1.4 billion, 4% reported growth and 1% organic, with organic growth ex-CSL at 8%. Hospital became the largest business with double-digit growth in Blood Management Technologies and Interventional Technologies.
• Leadership and Investments: Strengthened leadership team with promotions and hires. Executed $150 million share buyback, repurchasing ~2.4 million shares.
• Margin Expansion: Adjusted gross margin improved, with Q4 adjusted gross margin at 60.2% and fiscal 2025 at 57.4%. Adjusted operating expenses managed, with Q4 adjusted operating expenses down 3% year-over-year.
• Cash Flow: Strong cash flow generation, free cash flow grew 24% to $145 million in fiscal 2025, with free cash flow conversion ratio at 63% of adjusted net income.

Segment Performance

• Hospital: Total revenue grew with Blood Management Technologies and Interventional Technology franchises. Hospital revenue grew 12% in Q4 and 24% in fiscal 2025 on reported basis, with organic growth of 9% and 12% respectively. Blood Management Technologies grew 6% in Q4 and 10% in fiscal 2025. Hemostasis Management had U.S. revenue growth of 20% in Q4 and 23% in fiscal 2025. Interventional Technologies grew 21% in Q4 and 46% in fiscal 2025.
• Plasma: Revenue declined 9% in Q4 and 6% in fiscal 2025 due to CSL transition. Excluding CSL, Plasma revenue grew 11% in Q4 and 5% in fiscal 2025, driven by U.S. growth through technology adoption and share gains.
• Blood Center: Declined 22% in Q4 and 8% in fiscal 2025 due to Whole Blood divestiture. Apheresis revenue grew 2% in Q4 and fiscal 2025, driven by global Plasma share gains and strong U.S. red cell collections.

Guidance

• Revenue: Reported revenue expected to decline 3%-6% in fiscal 2026 due to Whole Blood divestiture, CSL transition, and liquids business exits. Organic growth ex-CSL expected 6%-9%.
• Margins: Adjusted operating margin expected to improve 200-300 basis points to 26%-27% in fiscal 2026.
• EPS: Adjusted EPS range $4.70-$5 in fiscal 2026. Free cash flow expected $160M-$200M in fiscal 2026.
• Tariffs: Anticipated adjusted EPS impact of up to $0.20 from tariffs, with midpoint of guidance reflecting prior actions and mitigation efforts.

Risks

• Macroeconomic Headwinds: Ongoing macroeconomic conditions posing challenges to business operations.
• Tariff Environment: Dynamic tariff landscape with potential impacts on earnings, though majority of revenue is from U.S. and U.S. MCA-compliant regions.
• Market Disruptions: Impacts from pulsed field ablation on Esophageal Protection business and challenges in certain markets like China.

Question and Answer

• Q: Rohin Patel of JPMorgan on Plasma collections and fiscal 2026 guide A: Chris Simon noted Plasma had a beat in Q4, with 11%-14% organic growth ex-CSL in fiscal 2026 driven by share gains and technology adoption. Collection volume expected modest growth in second half of fiscal 2026.
• Q: Marie Thibault of BTIG on Vascular Closure portfolio A: Chris Simon discussed Vascular Closure's opportunity, with strong growth in electrophysiology products like MVP and MVP XL, and efforts to improve performance in coronary and peripheral procedures through reorganized field force and dedicated focus.
• Q: Mike Matson of Needham & Company on M&A and Investor Day A: Chris Simon mentioned long-term appetite for M&A, with focus on Hospital sectors, and plans to detail future growth at Investor Day in December, including progress with Vivasure Medical's PerQseal.
• Q: Joanne Wuensch of Citi on Plasma revenue progression and share gains A: Chris Simon explained Plasma revenue progression with back half weighting, driven by annualizing benefits of technology upgrades and known share gains from new contracts with leading collectors.
• Q: Anthony Petrone of Mizuho Financial Group on VASCADE and Plasma divisional margins A: Chris Simon discussed VASCADE's utilization game and growth potential, and Plasma divisional margins improving due to technology adoption and share gains, targeting mid-50s gross margin.