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Press Release Details

Haemonetics Reports Double Digit Growth in Earnings for First Quarter Fiscal 2010

Aug 3, 2009
--Company Affirms Full Year Guidance
BRAINTREE, Mass., Aug 03, 2009 /PRNewswire-FirstCall via COMTEX/ -- Haemonetics Corporation (NYSE: HAE) reported first quarter GAAP net revenues of $154 million, up 7%; net income of $18 million, up 26%, and earnings per share of $0.69, up 28%. Excluding restructuring charges in fiscal 2009 which did not recur in fiscal 2010, adjusted first quarter net income growth was 16%, and adjusted earnings per share growth was 18%.(1)

Haemonetics ended the first quarter with $174 million in cash and $22 million of debt, and generated $5 million of free cash flow.

Brian Concannon, Haemonetics' President and CEO, said, "I'm extremely pleased with our start to fiscal 2010. We continue to deliver strong financial results while making excellent progress in execution to our full year goals for blood management solutions. Haemonetics remains extremely well positioned in the current economic environment."

In addition to revenue and earnings growth, Haemonetics reported strong margin expansion in the quarter. Gross margin grew 310 basis points to 53.8%. Despite incremental expenses from acquired businesses, the Company managed operating expenses to $57 million, up 9% as adjusted, leading to operating income of $26 million, up 24% as adjusted. Operating margin was 17.1%, up 240 basis points as adjusted.(1)

The Company also affirmed its full year guidance of 8-11% revenue growth, operating income growth of 12-15%, and earnings per share in a range of $2.75 to $2.85.


Haemonetics continues to make progress expanding its business. The Company reported the following highlights:

    --  Early positive results with the new Express(TM) plasma collection
        protocol consistently achieving a reduction in plasma donation time of
        more than 20%
    --  Success with its recent acquisition, Neoteric Technologies, signing two
        new contracts for the BloodTrack(R) system

    --  Progress implementing customized blood management solutions with 3
        hospitals currently engaged in Haemonetics' InSight(TM) program and
        13 hospitals engaged in Haemonetics' Impact program (InSight
        accounts leverage a full range of Haemonetics' devices and services
        to realize economic and clinical benefits across an entire hospital
        system; Impact accounts leverage a specific device implementation and
        measure economic benefit for discreet departments)

As noted, Haemonetics' first quarter fiscal 2010 reported revenues were $154 million, up 7%. Excluding the effects of currency, first quarter net revenues grew 6.2%. Reported revenues break down as follows:

Plasma disposables revenue was $59 million for the quarter, up 26%. Haemonetics' plasma business benefited from long-term contract implementation, global growth in plasma collections, and pricing increases. Haemonetics expects its plasma business will continue to be an ongoing revenue growth driver for the Company and increased its annual Plasma revenue growth estimate to 19-22% growth.

Platelet disposables (formerly reported as Blood Bank disposables) revenue was $34 million for the quarter, down 4%. The Platelet business was impacted by two, temporary factors: currency devaluations in Korea which put pressure on Haemonetics' distributor's sales and distributor changes in key markets. The planned distributor changes are expected to have a positive impact on the full year. Additionally, Japan platelet sales were down modestly. Haemonetics said it now expects full year Platelet revenue growth in a range of 0-2%.

Red Cell disposables revenue was $12 million for the quarter, level with the first quarter fiscal 09. Higher red cell inventories, stemming partly from the reduction in elective surgeries, reduced demand for Haemonetics' automated red cell collection systems. Haemonetics is seeing growth with some key customers and believes that once blood inventories stabilize, the Company can capitalize on red cell growth opportunities. In fact, in July, blood bank customers were beginning to report red cell shortages. Haemonetics double red cell collection technology positively impacts blood supplies because it can collect two units of red cells from one donor. Haemonetics affirmed its annual Red Cell revenue growth estimate of 6-8%.

Software Solutions revenue was $8 million for the quarter, up 17%. Because Haemonetics provides the information management platforms for plasma centers on a per donor fee, increased plasma collections positively impacted the Software Solutions line. Additionally, Haemonetics benefited from sales from its acquired companies, Altivation(R) and Neoteric, whose sales were not included in the first quarter of last fiscal year. Haemonetics affirmed its annual Software Solutions revenue growth rate estimate of 9-13%.

Haemonetics' Hospital disposable systems were impacted by the current economic environment. Fewer elective surgeries impacted the Surgical and OrthoPAT(R) product lines, and reduced hospital spending on equipment impacted a portion of the Diagnostics line. By product line, Surgical revenues were $17 million, up 1%; OrthoPAT revenues were $9 million, down 2%, and Diagnostics revenues were $5 million, down 2%. However, excluding TEG(R) equipment sales, Diagnostics disposables revenues grew 9%. Haemonetics estimates revenue will be flat in Surgical and expects growth of 5-7% in OrthoPAT and 15-20% in Diagnostics for the year.

Mr. Concannon added, "Haemonetics' business solutions address a critical need in healthcare to lower costs and improve patient care, and many economic factors favor our value proposition. We are well positioned to continue to deliver strong operating results with 8-11% revenue growth and 12-16% EPS growth in the year."

Haemonetics has posted several items on its website: fiscal 2010 guidance; income scenarios reflecting guidance ranges; and potential fiscal 2010 product line growth. The information is posted at


Haemonetics will host a webcast on Monday, August 3rd at 10:00 am Eastern to discuss these results. Interested parties can participate at

Haemonetics (NYSE: HAE) is a global healthcare company dedicated to providing innovative blood management solutions for our customers. Together, our devices and consumables, information technology platforms, and consulting services deliver a suite of business solutions to help our customers improve clinical outcomes and reduce the cost of healthcare for blood collectors, hospitals, and patients around the world. Our technologies address important medical markets: blood and plasma component collection, the surgical suite, and hospital transfusion services. To learn more about Haemonetics, visit our web site at

This release contains forward-looking statements that involve risks and uncertainties, including technological advances in the medical field and standards for transfusion medicine and our ability to successfully implement products that incorporate such advances and standards, product demand, market acceptance, regulatory uncertainties, the effect of economic and political conditions, the impact of competitive products and pricing, blood product reimbursement policies and practices, foreign currency exchange rates, changes in customers' ordering patterns, the effect of industry consolidation as seen in the plasma market, the effect of communicable diseases and the effect of uncertainties in markets outside the U.S. (including Europe and Asia) in which we operate and other risks detailed in the Company's filings with the Securities and Exchange Commission. The foregoing list should not be construed as exhaustive. The forward-looking statements are based on estimates and assumptions made by management of the Company and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results and experience could differ materially from the forward-looking statements.

(1) A reconciliation of GAAP to adjusted financial results is included at the end of the financial sections of this press release as well as on the web at In the first quarter of fiscal 2009, Haemonetics incurred $1.9 million in pre-tax restructuring costs. Haemonetics incurred no restructuring costs in the first quarter of fiscal 2010.

    Julie Fallon
    Tel. (781) 356-9517
    Alternate Tel. (617) 320-2401

                    Haemonetics Corporation Financial Summary
              (Unaudited data in thousands, except per share data)

          Consolidated Statements of Income for the First Quarter FY10

                                     6/27/09      6/28/08     % Inc/(Dec)
                                   As Reported  As Reported  vs Prior Year
                                   -----------  -----------  -------------
    NET REVENUES                      $154,087     $144,116        6.9%
    Gross Profit                        82,943       73,037       13.6%

      R&D                                6,777        5,844       16.0%
      S,G&A                             49,839       47,859        4.1%
                                        ------       ------
    Operating Expenses                  56,616       53,703        5.4%
                                        ------       ------

    Operating Income                    26,327       19,334       36.2%
      Interest Expense                    (214)         (24)     791.7%
      Interest Income                      157          654      (76.0%)
      Other (Expense)/Income, Net         (335)         375     (189.3%)
                                          ----          ---

    Income Before Taxes                 25,935       20,339       27.5%

    Tax Expense                          7,862        5,998       31.1%

                                       -------      -------
    NET INCOME                         $18,073      $14,341       26.0%
                                       =======      =======

    Net Income per Common Share
    Assuming Dilution                    $0.69        $0.54       27.5%

    Weighted Average Number of Shares
      Basic                             25,658       25,607
      Diluted                           26,201       26,517

                                                               Inc/(Dec) vs
                                                                prior year
                                                              profit margin %
    Profit Margins:                                           ---------------
    Gross Profit                          53.8%        50.7%       3.1%
    R&D                                    4.4%         4.1%       0.3%
    S,G&A                                 32.3%        33.2%      (0.9%)
    Operating Income                      17.1%        13.4%       3.7%
    Income before Taxes                   16.8%        14.1%       2.7%
    Net Income                            11.7%        10.0%       1.7%

                Revenue Analysis for the First Quarter FY10

                                              First Quarter
                                6/27/09       6/28/08       % Inc/(Dec)
                              As Reported   As Reported    vs Prior Year
                              -----------   -----------    -------------
    Revenues by Geography
      United States               $75,013       $65,789        14.0%
      International               $79,074       $78,327         1.0%
                                  -------       -------
      Net Revenues               $154,087    $  144,116         6.9%
                                 ========      ========

    Disposable Revenues
     by Product Family

      Plasma Disposables          $58,869       $46,868        25.6%

      Blood Bank Disposables
          Platelet                $34,307       $35,659        (3.8%)
          Red Cell                $11,779       $11,842        (0.5%)
                                  -------       -------
                                  $46,086       $47,501        (3.0%)
                                  -------       -------
      Hospital Disposables
          Surgical                $17,425       $17,269         0.9%
          OrthoPAT                 $8,584        $8,796        (2.4%)
          Diagnostics              $4,997        $5,094        (1.9%)
                                   ------        ------
                                  $31,006       $31,159        (0.5%)
                                  -------       -------

      Subtotal                   $135,961      $125,528         8.3%

      Software Solutions           $8,454        $7,258        16.5%
      Equipment & Other            $9,672       $11,330       (14.6%)
                                   ------       -------
      Net Revenues               $154,087      $144,116         6.9%
                                 ========      ========

                   Consolidated Balance Sheets

                                                Period ending
                                       6/27/09                3/28/09
                                       -------                -------

    Cash & Cash Equivalents           $173,822               $156,721
    Accounts Receivable, Net           114,161                113,598
    Inventories, Net                    76,097                 76,522
    Other Current Assets                32,074                 35,552
                                        ------                 ------
      Total Current Assets             396,154                382,393
    Net PP&E                           150,387                137,807
    Other Assets                       145,402                129,493
                                       -------                -------

       Total Assets                   $691,943               $649,693
                                      ========               ========

                                                Period ending
                                       6/27/09                3/28/09
                                       -------                -------

    Liabilities & Stockholders' Equity
    S/T Debt & Current
     Maturities                        $17,200                   $695
    Other Current Liabilities           86,852                 92,168
                                        ------                 ------
    Total Current Liabilities          104,052                 92,863
    Long-Term Debt                       5,160                  5,343
    Other Long-Term
     Liabilities                        18,878                 11,603
    Stockholders' Equity               563,853                539,884
                                       -------                -------

       Total Liabilities &
        Equity                        $691,943               $649,693
                                      ========               ========

                        FREE CASH FLOW RECONCILIATION

                                                          Three Months
                                                        6/27/09  6/28/08
                                                        -------  -------

    GAAP CASH FLOW FROM OPERATIONS                      $25,706  $13,842
                                                        -------  -------

    Capital Expenditures                                (21,204) (12,395)
    Proceeds from Sale of Property, Plant and Equipment     201    2,476
                                                            ---    -----
    Net Investment in Property, Plant and Equipment     (21,003)  (9,919)
                                                        -------   ------

    Free Cash Flow                                       $4,703   $3,923
                                                         ======   ======

Haemonetics Corporation Financial Summary

Reconciliation of Non-GAAP Measures

Haemonetics has presented supplemental non-GAAP financial measures as part of this earnings release. A reconciliation is provided below that reconciles each non-GAAP financial measure with the most comparable GAAP measure. The presentation of non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the most directly comparable GAAP measures. There are material limitations to the usefulness of non-GAAP measures on a standalone basis, including the lack of comparability to the GAAP financial results of other companies.

These measures are used by management to monitor the financial performance of the business, inform business decision making, and forecast future results. Performance targets for management are established based upon these non-GAAP measures. In the reconciliations below, we have removed restructuring costs from our GAAP expenses. These restructuring costs result from a significant transformation of our business during our fiscal years 2009 and 2008. This transformation resulted in the formation of a shared service center in Europe, exiting various offices across Europe and Japan and, most recently, in repositioning our technical operations organization. We believe this information is useful for investors because it allows for an evaluation of the Company with a focus on the performance of our core operations.

Non-GAAP Gross Profit

The use of these non-GAAP measures allows management to monitor the level of total gross profits without the costs of our business transformation. We establish our budgets, forecasts, and performance targets on this basis.

Non-GAAP S,G&A and Non-GAAP Operating Expenses

The use of this non-GAAP measure allows management to monitor the ongoing level of spend that is necessary to support the business in a period when we are not transforming our business or completing an acquisition of in-process research and development. We establish our budgets, forecasts, and performance targets excluding these costs.

Non-GAAP Operating Income and Non-GAAP Income before Income Taxes

The use of these non-GAAP measures allows management to monitor the level of operating and total pre-tax profits without the costs of our business transformation. We establish our budgets, forecasts, and performance targets on this basis.

Non-GAAP Net Income and Earnings per Share

The use of these non-GAAP measures allows management to monitor the level of net income and earnings per share excluding both the costs of our business transformation, as well as any related tax effects. We establish our budgets, forecasts, and performance targets on this basis.

    Reconciliation of Non-GAAP Measures for
      the First Quarter of FY10 and FY09

                                                 06/27/09 06/28/08
                                                 -------- --------
    Non-GAAP Gross Profit
    GAAP Gross Profit                             $82,943  $73,037
    Restructuring Costs                                 0       72
                                                   ------   ------
    Non-GAAP Gross Profit                         $82,943  $73,109
                                                  =======  =======

    Non-GAAP S,G&A
    GAAP S,G&A                                    $49,839  $47,859
    Restructuring Costs                                 0   (1,781)
                                                   ------   ------
    Non-GAAP S,G&A                                $49,839  $46,078
                                                  =======  =======

    Non-GAAP Operating Expenses
    GAAP Operating Expenses                       $56,616  $53,703
    Restructuring Costs                                 0   (1,781)
                                                   ------   ------
    Non-GAAP Operating Expenses                   $56,616  $51,922
                                                  =======  =======

    Non-GAAP Operating Income
    GAAP Operating Income                         $26,327  $19,334
    Restructuring Costs                                 0    1,853
                                                   ------   ------
    Non-GAAP Operating Income                     $26,327  $21,187
                                                  =======  =======

    Non-GAAP Income Before Taxes
    GAAP Income Before Taxes                      $25,935  $20,339
    Restructuring Costs                                 0    1,853
                                                   ------   ------
    Non-GAAP Income Before Taxes                  $25,935  $22,192
                                                  =======  =======

    Non-GAAP Net Income
    GAAP Net Income                               $18,073  $14,341
    Restructuring Costs                                 0    1,853
    Tax Benefit Associated
    With Restructuring Costs                            0     (650)
                                                   ------    -----
    Non-GAAP NET INCOME                           $18,073  $15,544
                                                  =======  =======

    Non-GAAP Net Income per Common Share Assuming Dilution
    GAAP Net Income per Common
    Share Assuming Dilution                         $0.69    $0.54
    Restructuring Costs After Tax per
    Common Share Assuming Dilution                  $0.00    $0.05
                                                    -----    -----
    Non-GAAP Net Income per
    Common Share Assuming Dilution                  $0.69    $0.59
                                                    =====    =====

SOURCE Haemonetics Corporation