UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: December 30, 2023 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF ☐ 1934 Commission File Number: 001-14041 HAEMONETICS CORPORATION (Exact name of registrant as specified in its charter) Massachusetts 04-2882273 (State or other jurisdiction of incorporation or organizat ...

PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Q2 FY24 detail income, balance sheet, equity, and cash flow performance Condensed Consolidated Statements of Income (Six Months Ended) | Metric | Six Months Ended Sep 30, 2023 (in thousands) | Six Months Ended Oct 1, 2022 (in thousands) | | :--- | :--- | :--- | | Net revenues | $629,515 | $558,943 | | Gross profit | $337,775 | $300,141 | | Operating income | $88,962 | $77,499 | | Net income | $65,950 | $53,074 | | Diluted EPS | $1.28 | $1.03 | Condensed Consolidated Balance Sheet Highlights | Metric | Sep 30, 2023 (in thousands) | Apr 1, 2023 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $351,005 | $284,466 | | Total current assets | $865,744 | $769,722 | | Total assets | $2,011,275 | $1,934,825 | | Long-term debt | $748,662 | $754,102 | | Total stockholders' equity | $893,660 | $817,997 | Condensed Consolidated Statements of Cash Flows (Six Months Ended) | Metric | Six Months Ended Sep 30, 2023 (in thousands) | Six Months Ended Oct 1, 2022 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $118,210 | $129,032 | | Net cash used in investing activities | ($40,396) | ($89,282) | | Net cash used in financing activities | ($7,770) | ($49,081) | | Net Change in Cash and Cash Equivalents | $66,539 | ($18,296) | [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, OpSens acquisition, restructuring, impairment, debt, and legal contingency disclosures - On October 10, 2023, the company entered into a definitive agreement to acquire OpSens, Inc. for approximately **USD $253.0 million** in an all-cash transaction, expected to close by the end of January 2024[21](index=21&type=chunk) - Under the Operational Excellence Program (2020 Program), the company incurred **$4.2 million** in restructuring and related costs during the six months ended September 30, 2023. Total cumulative charges under the program are **$71.4 million**[28](index=28&type=chunk) - In Q2 fiscal 2024, the company recorded an intangible asset impairment charge of **$10.4 million** related to the enicor GmbH acquisition within the Hospital business unit[46](index=46&type=chunk) - In August 2023, a voluntary recall of certain Whole Blood products resulted in cumulative charges of **$6.5 million** for inventory, returns, and customer claims as of September 30, 2023[83](index=83&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=23&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, highlighting revenue growth, operating income changes, and strategic focus on Plasma and Hospital Financial Summary (Three Months Ended Sep 30, 2023) | Metric | Q2 FY24 (in thousands) | Q2 FY23 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Net revenues | $318,183 | $297,485 | 7.0% | | Gross profit | $170,510 | $157,878 | 8.0% | | Operating income | $35,303 | $46,732 | (24.5)% | | Net income | $24,908 | $33,197 | (25.0)% | - The company's strategy focuses on growth in the Plasma and Hospital segments, while managing the challenging Blood Center market through cost reduction and portfolio evaluation[92](index=92&type=chunk) - The company announced plans to end-of-life the ClotPro system (Hospital) and whole blood inline collection products (Blood Center), which are not expected to materially impact fiscal 2024 results[95](index=95&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) This section details Q2 FY24 revenue by business unit, gross profit, and operating expense drivers, including impairment Net Revenues by Business Unit (Three Months Ended Sep 30, 2023) | Business Unit | Q2 FY24 Revenue (in thousands) | Q2 FY23 Revenue (in thousands) | Reported Growth | | :--- | :--- | :--- | :--- | | Plasma | $141,900 | $127,893 | 11.0% | | Blood Center | $68,098 | $73,683 | (7.6)% | | Hospital | $103,143 | $90,856 | 13.5% | - The increase in operating expenses for Q2 FY24 was driven by a **$10.4 million** impairment of intangible assets related to the enicor GmbH acquisition[111](index=111&type=chunk)[115](index=115&type=chunk) - SG&A expenses increased **14.0%** in Q2 FY24 due to higher investments in sales and marketing, costs for an ERP system upgrade, and litigation-related charges[113](index=113&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity relies on cash, operations, and credit facilities, sufficient for the OpSens acquisition and future needs Key Liquidity Indicators | Metric | Sep 30, 2023 (in thousands) | Apr 1, 2023 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $351,005 | $284,466 | | Working capital | $601,529 | $517,906 | | Net debt position | ($411,223) | ($481,420) | - Net cash from operating activities decreased to **$118.2 million** for the six months ended Sep 30, 2023, from **$129.0 million** in the prior year, primarily due to an increase in inventory[126](index=126&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=32&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to foreign exchange and interest rate market risks, mitigated by derivative instruments and swaps - The company utilizes forward foreign currency contracts to hedge anticipated cash flows, primarily in Japanese Yen and Euro[134](index=134&type=chunk)[143](index=143&type=chunk) - As of September 30, 2023, the company had **$269.5 million** in variable-rate debt, with interest rate swaps on a notional amount of **$217 million** to effectively convert borrowings to a fixed rate[146](index=146&type=chunk) [Controls and Procedures](index=32&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, with a new ERP system potentially impacting future internal controls - The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2023[147](index=147&type=chunk) - The company is implementing a new global ERP system in phases, which may materially affect internal control over financial reporting in the future[149](index=149&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=33&type=section&id=ITEM%201.%20Legal%20Proceedings) This section refers to Note 14 for legal matters, including a qui tam action and a BIPA class action lawsuit - The company is cooperating with a subpoena from the U.S. Attorney's Office regarding its apheresis and autotransfusion devices. The Department of Justice has declined to intervene in the related qui tam action[81](index=81&type=chunk) - The company has recorded a total accrual of approximately **$8.7 million** related to a putative class action complaint alleging violations of the Illinois Biometric Information Privacy Act (BIPA)[82](index=82&type=chunk) [Risk Factors](index=33&type=section&id=ITEM%201A.%20Risk%20Factors) There are no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K - There are no material changes from the Risk Factors previously disclosed in the company's Annual Report on Form 10-K[151](index=151&type=chunk) [Other Information](index=33&type=section&id=ITEM%205.%20Other%20Information) This section discloses an executive officer adopted a Rule 10b5-1 trading plan for common stock sales - On August 31, 2023, Josep Llorens, EVP of Global Manufacturing and Supply Chain, adopted a Rule 10b5-1 trading plan to sell **8,857 shares** of common stock, expiring August 16, 2024[155](index=155&type=chunk)

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements, management's discussion, and market risk disclosures [Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) Unaudited Q1 FY2024 financial statements show significant revenue and net income growth, with increased assets and equity, despite reduced operating cash flow from inventory build-up [Condensed Consolidated Statements of Income and Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) This statement details the company's net revenues, gross profit, operating income, and net income for the quarter Income Statement Summary (Three Months Ended) | Metric | July 1, 2023 | July 2, 2022 | Change | | :--- | :--- | :--- | :--- | | **Net Revenues** | $311,332K | $261,458K | +19.1% | | **Gross Profit** | $167,265K | $142,263K | +17.6% | | **Operating Income** | $53,659K | $30,767K | +74.4% | | **Net Income** | $41,042K | $19,877K | +106.5% | | **Diluted EPS** | $0.80 | $0.38 | +110.5% | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and stockholders' equity at quarter-end Balance Sheet Highlights | Metric | July 1, 2023 | April 1, 2023 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $285,719K | $284,466K | | **Total current assets** | $801,607K | $769,722K | | **Total assets** | $1,962,258K | $1,934,825K | | **Total current liabilities** | $236,939K | $251,816K | | **Long-term debt, net** | $751,381K | $754,102K | | **Total stockholders' equity** | $864,616K | $817,997K | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement outlines the company's cash inflows and outflows from operating, investing, and financing activities - Net cash from operating activities decreased to **$19.1 million** from **$42.0 million** year-over-year, mainly due to a significant increase in inventories (**$29.4 million** use of cash)[17](index=17&type=chunk) - Net cash used in investing activities decreased substantially to **$15.3 million** from **$58.2 million** in the prior-year period, driven by lower capital expenditures[17](index=17&type=chunk) - Net cash used in financing activities decreased to **$0.6 million** from **$23.4 million**, primarily due to lower contingent consideration payments compared to the prior year[17](index=17&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on significant accounting policies, financial instruments, and other material events - The company made strategic investments of **$6.0 million** during the first quarter of fiscal 2024[22](index=22&type=chunk) - As of July 1, 2023, the company had **$24.6 million** of transaction price allocated to remaining performance obligations, with about **80%** expected to be recognized as revenue within the next twelve months[24](index=24&type=chunk) - Under the Operational Excellence Program, the company incurred **$2.2 million** in restructuring and related costs during the quarter, with total cumulative charges reaching **$69.4 million** towards an expected total of **$95-$105 million** by fiscal 2025[28](index=28&type=chunk) - A voluntary recall of certain Whole Blood business products was issued in August 2023, resulting in a **$3.4 million** charge for inventory in Q1 fiscal 2024[40](index=40&type=chunk) - The company has **$500.0 million** in 0% convertible senior notes due 2026 and **$273.0 million** outstanding under a term loan with an effective interest rate of **6.6%** as of July 1, 2023[43](index=43&type=chunk)[49](index=49&type=chunk) - Additional loss contingencies were recorded in Q1 fiscal 2024 related to a DOJ subpoena and a BIPA class action lawsuit, neither of which had a material impact on the financial statements[73](index=73&type=chunk)[74](index=74&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reports strong Q1 FY2024 revenue growth, driven by Plasma and Hospital segments, with surging operating income and solid liquidity [Financial Summary](index=20&type=section&id=Financial%20Summary) This section provides a concise overview of the company's key financial performance metrics for the quarter Q1 FY2024 Financial Highlights vs. Q1 FY2023 | Metric | Q1 FY2024 (ended Jul 1, 2023) | Q1 FY2023 (ended Jul 2, 2022) | % Change | | :--- | :--- | :--- | :--- | | **Net Revenues** | $311,332K | $261,458K | +19.1% | | **Operating Income** | $53,659K | $30,767K | +74.4% | | **Net Income** | $41,042K | $19,877K | +106.5% | | **Diluted EPS** | $0.80 | $0.38 | +110.5% | - Revenue growth was primarily driven by volume and price benefits in the Plasma and Hospital businesses[88](index=88&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) This section analyzes the drivers of revenue growth, gross profit, and operating expenses across business units Net Revenue Growth by Business Unit (Q1 FY2024 vs Q1 FY2023) | Business Unit | Reported Growth | Constant Currency Growth | Key Driver | | :--- | :--- | :--- | :--- | | **Plasma** | +35.4% | +35.5% | Volume and price | | **Blood Center** | +2.5% | +5.8% | Increase in apheresis business | | **Hospital** | +12.6% | +13.8% | Vascular Closure & Hemostasis Management | - Gross profit increased **17.6%** to **$167.3 million**, though the gross margin slightly decreased from **54.4%** to **53.7%** due to inventory reserves, investments, and higher depreciation, which partially offset benefits from mix, volume, and price[97](index=97&type=chunk)[98](index=98&type=chunk) - Total operating expenses increased by a modest **1.9%**, with R&D expenses up **16.0%** due to innovation investments, while SG&A expenses rose only **1.4%**[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, working capital, debt, and sources of liquidity Key Liquidity Indicators | Metric | July 1, 2023 | April 1, 2023 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $285,719K | $284,466K | | **Working capital** | $564,668K | $517,906K | | **Net debt position** | $(479,234)K | $(481,420)K | - Primary liquidity sources are cash on hand, cash from operations, and a **$420.0 million** senior unsecured revolving credit facility, which had no outstanding borrowings as of July 1, 2023[107](index=107&type=chunk)[109](index=109&type=chunk) - The company has **$273.0 million** outstanding under its term loan and **$500.0 million** in convertible senior notes due 2026[108](index=108&type=chunk)[110](index=110&type=chunk) - Operating cash flow decreased by **$22.9 million** year-over-year, primarily due to an increase in inventory[113](index=113&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=28&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company mitigates market risks from foreign exchange and interest rate fluctuations through derivative instruments like forward contracts and interest rate swaps - The company uses forward contracts to hedge anticipated cash flows from transactions in foreign currencies, primarily the Japanese Yen and Euro[130](index=130&type=chunk) - A **10%** strengthening of the U.S. Dollar would result in a **$3.4 million** increase in the fair value of forward contracts, while a **10%** weakening would cause a **$3.7 million** decrease[131](index=131&type=chunk) - The company uses interest rate swaps to convert a portion of its variable-rate debt to a fixed rate. As of July 1, 2023, swaps covered a notional amount of **$219.1 million** of the **$273.0 million** outstanding term loan[132](index=132&type=chunk) [Controls and Procedures](index=28&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[133](index=133&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[134](index=134&type=chunk) [Part II. Other Information](index=29&type=section&id=Part%20II.%20OTHER%20INFORMATION) This section provides disclosures on legal proceedings, risk factors, and other significant corporate information [Legal Proceedings](index=29&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, including a DOJ inquiry and a BIPA class action lawsuit, with related loss contingencies deemed immaterial - Information regarding legal proceedings is detailed in Note 13 to the financial statements[135](index=135&type=chunk) [Risk Factors](index=29&type=section&id=ITEM%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended April 1, 2023 - There are no material changes from the Risk Factors disclosed in the Annual Report on Form 10-K for the fiscal year ended April 1, 2023[136](index=136&type=chunk) [Other Information](index=29&type=section&id=ITEM%205.%20Other%20Information) Certain directors and officers adopted Rule 10b5-1 trading plans for future sales of company common stock during the quarter - Certain directors and officers adopted Rule 10b5-1 trading arrangements for the sale of company common stock during the quarter[140](index=140&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended April 1, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-14041 HAEMONETICS CORPORATION (Exact name of registrant as specified in its charter) Massachusetts 04-2882273 (State or other jurisdiction of incorpora ...

Financial Data and Key Metrics Changes - The company reported organic revenue growth of 17% in Q4 and 21% for fiscal 2023, with adjusted earnings per diluted share of $0.77 in Q4 and $3.03 for the full year, representing increases of 18% and 17% respectively [18][66] - Adjusted operating income for fiscal 2023 was $218.4 million, an increase of $31.3 million or 17% compared to the prior year, with adjusted operating income margin at 18.7% [35][66] - Adjusted gross margin was 51.8% in Q4 and 53.2% for fiscal 2023, reflecting a decrease of 180 basis points and 70 basis points respectively due to inflationary pressures [61][140] Business Line Data and Key Metrics Changes - Plasma revenue grew 31% in Q4 and 43% for fiscal 2023, driven by volume growth and price benefits, with North America disposables representing 85% of plasma revenue [53][24] - Hospital revenue increased by 19% in Q4 and 18% for fiscal 2023, primarily due to growth in Vascular Closure and Hemostasis Management [25][26] - Transfusion Management revenue grew 8% in Q4 and 19% for fiscal 2023, driven by sales force expansion and software implementations [27] Market Data and Key Metrics Changes - The company anticipates total organic revenue growth of 5% to 8% in fiscal 2024, with plasma revenue growth expected to be between 3% to 6% [58] - Blood Center revenue is projected to decline by 2% to flat for fiscal 2024, with unfavorable order timing impacting the first half of the year [60] - The company retained a majority of CSL U.S. disposables business, which grew at a rate comparable to the overall U.S. disposables business [24] Company Strategy and Development Direction - The company is focusing on strengthening competitiveness in plasma while pivoting to higher growth, higher margin hospital-based opportunities [31] - The operational excellence program is expected to deliver additional growth savings of approximately $20 million, contributing to margin expansion [67] - The company plans to allocate capital to high-impact, high-ROI projects that accelerate growth and value creation [41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for plasma and the ability to meet customer needs despite macroeconomic challenges [79][126] - The company expects operational inefficiencies to persist in the near term but anticipates improvements in the second half of fiscal 2024 [38][45] - Management highlighted the importance of the NexSys platform and its role in driving efficiency and reducing costs for customers [112][143] Other Important Information - The company achieved a milestone by surpassing $1 billion in annual revenue for the first time [22] - Adjusted net income for fiscal 2023 was $155.7 million, up 17% compared to the prior year [66] - Free cash flow before restructuring expenses is expected to be between $80 million to $100 million in fiscal 2024 [68] Q&A Session Summary Question: Can you clarify the CSL contribution and its impact on plasma revenue? - Management confirmed that CSL accounted for approximately 14% of reported revenue in fiscal 2023 and that they expect a minimum purchase commitment from CSL slightly in excess of $100 million for fiscal 2024 [59][92] Question: What are the expectations for gross margins in fiscal 2024? - Management indicated that gross margins would be impacted by inflationary pressures in the first half of fiscal 2024 but expected improvements in the second half as operational efficiencies are realized [45][72] Question: How is the company addressing the competitive landscape for Vascular Closure products? - Management noted that they are focused on penetrating top U.S. electrophysiology hospitals and expanding internationally, with plans to leverage existing infrastructure for commercialization [56][113]

Haemonetics Corporation (NYSE:HAE) Q3 2023 Earnings Conference Call February 7, 2023 8:00 AM ET Company Participants David Trenk - Manager, Investor Relations Chris Simon - Chief Executive Officer Roy Galvin – President, Global Plasma and Blood Center James D'Arecca - Chief Financial Officer Conference Call Participants Drew Ranieri - Morgan Stanley Mike Matson - Needham & Company Joanne Wuensch - Citi Anthony Petrone - Mizuho Andrew Cooper - Raymond James Dave Turkaly - JMP Operator Good day, and welcome t ...

PART I. FINANCIAL INFORMATION [ITEM 1. Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including the statements of income, balance sheets, stockholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, recent accounting pronouncements, restructuring activities, income taxes, earnings per share, revenue recognition, inventories, strategic investments, leases, debt, financial instruments, commitments, segment information, and accumulated other comprehensive loss [Unaudited Condensed Consolidated Statements of Income and Comprehensive Income](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Three Months Ended December 31, 2022 vs. January 1, 2022 (in thousands, except per share data) | Metric | Dec 31, 2022 | Jan 1, 2022 | Change (%) | | :-------------------------------- | :----------- | :---------- | :--------- | | Net revenues | $305,301 | $259,769 | 17.5% | | Gross profit | $158,707 | $138,565 | 14.5% | | Operating income | $43,279 | $35,651 | 21.4% | | Net income | $32,944 | $23,232 | 41.8% | | Net income per share - basic | $0.65 | $0.45 | 44.4% | | Net income per share - diluted | $0.64 | $0.45 | 42.2% | Nine Months Ended December 31, 2022 vs. January 1, 2022 (in thousands, except per share data) | Metric | Dec 31, 2022 | Jan 1, 2022 | Change (%) | | :-------------------------------- | :----------- | :---------- | :--------- | | Net revenues | $864,244 | $728,194 | 18.7% | | Gross profit | $458,848 | $369,191 | 24.3% | | Operating income | $120,778 | $61,551 | 96.2% | | Net income | $86,018 | $33,634 | 155.7% | | Net income per share - basic | $1.69 | $0.66 | 156.1% | | Net income per share - diluted | $1.67 | $0.65 | 156.9% | [Unaudited Condensed Consolidated Balance Sheet](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheet) As of December 31, 2022 vs. April 2, 2022 (in thousands) | Metric | Dec 31, 2022 | Apr 2, 2022 | | :-------------------------------- | :----------- | :---------- | | **ASSETS** | | | | Cash and cash equivalents | $224,002 | $259,496 | | Total current assets | $706,309 | $756,031 | | Property, plant and equipment, net | $313,138 | $258,482 | | Intangible assets, net | $284,383 | $310,261 | | Goodwill | $466,112 | $467,287 | | Total assets | $1,878,066 | $1,859,734 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | $226,889 | $442,266 | | Long-term debt, net | $756,826 | $559,441 | | Total stockholders' equity | $775,979 | $749,424 | | Total liabilities and stockholders' equity | $1,878,066 | $1,859,734 | [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Changes in Stockholders' Equity (in thousands) | Item | April 2, 2022 Balance | July 2, 2022 Balance | October 1, 2022 Balance | December 31, 2022 Balance | | :-------------------------------- | :-------------------- | :------------------- | :-------------------- | :---------------------- | | Total Stockholders' Equity | $749,424 | $770,423 | $729,009 | $775,979 | | Net income (Q2 FY23) | - | $19,877 | - | - | | Net income (Q3 FY23) | - | - | $33,197 | - | | Net income (Q4 FY23) | - | - | - | $32,944 | | Shares repurchased | - | - | $(75,000) | - | | Other comprehensive loss/income | $(6,763) (Q2 FY23) | $(7,538) (Q3 FY23) | $4,456 (Q4 FY23) | - | [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Nine Months Ended December 31, 2022 vs. January 1, 2022 (in thousands) | Cash Flow Activity | Dec 31, 2022 | Jan 1, 2022 | | :-------------------------------- | :----------- | :---------- | | Net cash provided by operating activities | $193,447 | $104,213 | | Net cash used in investing activities | $(125,782) | $(51,833) | | Net cash used in financing activities | $(98,761) | $(6,984) | | Effect of exchange rates on cash and cash equivalents | $(4,398) | $(824) | | Net Change in Cash and Cash Equivalents | $(35,494) | $44,572 | | Cash and Cash Equivalents at End of Period | $224,002 | $236,877 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [1. BASIS OF PRESENTATION](index=8&type=section&id=1.%20BASIS%20OF%20PRESENTATION) The financial statements are unaudited, prepared in accordance with U.S. GAAP for interim information, and include normal recurring adjustments; operating results for the nine months ended December 31, 2022, are not indicative of the full fiscal year, and no material recognized or unrecognized subsequent events occurred - Financial statements are unaudited and prepared in accordance with U.S. GAAP for interim financial information[19](index=19&type=chunk) - No material recognized or unrecognized subsequent events occurred as of or for the nine months ended December 31, 2022[20](index=20&type=chunk) [2. RECENT ACCOUNTING PRONOUNCEMENTS](index=8&type=section&id=2.%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) The Company adopted several ASC Updates, including ASC Update No. 2019-12 (Income Taxes) and ASC Update No. 2021-05 (Leases) with no material impact, while early adoption of ASC Update No. 2020-06 (Debt with Conversion and Other Options) decreased additional paid-in capital by **$61.2 million** and increased non-current convertible notes by **$80.3 million** - Adopted ASC Update No. 2019-12 (Income Taxes) effective April 4, 2021, with no material impact[21](index=21&type=chunk) - Early adopted ASC Update No. 2020-06 (Debt with Conversion and Other Options) effective April 4, 2021, resulting in a **$61.2 million** decrease to additional paid-in capital and an **$80.3 million** increase to non-current convertible notes, net[22](index=22&type=chunk) - Prospectively adopted ASC Update No. 2021-05 (Leases) effective in Q2 FY22, with no material impact[23](index=23&type=chunk) [3. RESTRUCTURING](index=8&type=section&id=3.%20RESTRUCTURING) The Company's Operational Excellence Program (2020 Program) aims to improve product quality, reduce costs, and ensure sustainability, with cumulative charges of **$66.4 million** as of December 31, 2022, and expected aggregate charges between **$95 million** and **$105 million** by fiscal 2025 - The Operational Excellence Program (2020 Program) aims to improve product and service quality, reduce costs in manufacturing and supply chain, and ensure sustainability[25](index=25&type=chunk) - Expected aggregate charges for the 2020 Program are between **$95 million** and **$105 million** by the end of fiscal 2025[25](index=25&type=chunk) Restructuring and Restructuring Related Costs (in thousands) | Period | Dec 31, 2022 | Jan 1, 2022 | | :-------------------------------- | :----------- | :---------- | | Three Months Ended | $4,125 | $5,682 | | Nine Months Ended | $10,797 | $20,250 | Cumulative Charges under 2020 Program | As of Dec 31, 2022 | $66.4 million | | :-------------------------------- | :------------ | [4. INCOME TAXES](index=10&type=section&id=4.%20INCOME%20TAXES) The Company's effective tax rates for the three and nine months ended December 31, 2022, were **22.0%** and **20.9%**, respectively, reflecting discrete tax expenses and benefits related to stock compensation shortfalls and tax rate changes Income Tax Expense and Effective Tax Rates (in thousands) | Period | Dec 31, 2022 (3 Months) | Jan 1, 2022 (3 Months) | Dec 31, 2022 (9 Months) | Jan 1, 2022 (9 Months) | | :-------------------------------- | :---------------------- | :--------------------- | :---------------------- | :--------------------- | | Income tax expense | $9,280 | $8,156 | $22,759 | $14,668 | | Effective tax rate | 22.0% | 26.0% | 20.9% | 30.4% | - The effective tax rate for the nine months ended December 31, 2022, includes a discrete tax benefit of **$0.5 million** related to tax rate changes and **$0.4 million** of discrete tax expense relating to stock compensation shortfalls[30](index=30&type=chunk) [5. EARNINGS PER SHARE](index=11&type=section&id=5.%20EARNINGS%20PER%20SHARE) Basic and diluted EPS significantly increased for both periods ended December 31, 2022, following the authorization of a **$300 million** share repurchase program and completion of a **$75 million** accelerated share repurchase Net Income Per Share (in thousands, except per share amounts) | Period | Dec 31, 2022 (3 Months) | Jan 1, 2022 (3 Months) | Dec 31, 2022 (9 Months) | Jan 1, 2022 (9 Months) | | :-------------------------------- | :---------------------- | :--------------------- | :---------------------- | :--------------------- | | Basic income per share | $0.65 | $0.45 | $1.69 | $0.66 | | Diluted income per share | $0.64 | $0.45 | $1.67 | $0.65 | | Basic weighted average shares | 50,509 | 51,094 | 50,896 | 51,024 | | Diluted weighted average shares | 51,219 | 51,344 | 51,487 | 51,356 | - In August 2022, the Board authorized a **$300 million** share repurchase program over three years[34](index=34&type=chunk) - Completed a **$75.0 million** accelerated share repurchase (ASR) in November 2022, repurchasing **1.0 million** shares at an average price of **$75.20**[35](index=35&type=chunk) [6. REVENUE](index=12&type=section&id=6.%20REVENUE) Revenue is recognized upon satisfaction of performance obligations, with **$23.3 million** allocated to remaining obligations as of December 31, 2022, of which **77%** is expected to be recognized within the next twelve months - Revenue is recognized when performance obligations are satisfied, with transaction prices allocated based on estimated standalone selling prices[36](index=36&type=chunk) - As of December 31, 2022, **$23.3 million** of transaction price was allocated to remaining performance obligations, with approximately **77%** expected to be recognized as revenue within the next twelve months[37](index=37&type=chunk) Contract Assets and Liabilities (in thousands) | Metric | Dec 31, 2022 | Apr 2, 2022 | | :-------------------------------- | :----------- | :---------- | | Contract assets | $6,600 | $5,500 | | Contract liabilities | $26,600 | $26,800 | [7. INVENTORIES](index=12&type=section&id=7.%20INVENTORIES) Inventories are valued at the lower of cost or net realizable value using FIFO, decreasing from **$293.0 million** at April 2, 2022, to **$255.8 million** at December 31, 2022 - Inventories are stated at the lower of cost or net realizable value, with cost determined by the first-in, first-out method[41](index=41&type=chunk) Inventories, Net (in thousands) | Category | Dec 31, 2022 | Apr 2, 2022 | | :-------------------------------- | :----------- | :---------- | | Raw materials | $118,836 | $88,886 | | Work-in-process | $14,484 | $17,187 | | Finished goods | $122,436 | $186,954 | | Total inventories | $255,756 | $293,027 | [8. STRATEGIC INVESTMENTS](index=12&type=section&id=8.%20STRATEGIC%20INVESTMENTS) During fiscal year 2023, the Company invested **€30 million** in Vivasure Medical LTD, acquiring both preferred stock and a special share for potential acquisition - Invested **€30 million** in Vivasure Medical LTD during fiscal year 2023, including preferred stock and a special share for potential acquisition[43](index=43&type=chunk) [9. LEASES](index=12&type=section&id=9.%20LEASES) The Company leases medical devices to customers primarily under operating lease arrangements, with a substantial majority of variable revenue linked to disposable product sales, representing approximately **3%** of total net sales - Haemonetics equipment, primarily medical devices, are leased to customers under contractual arrangements, mostly operating leases[45](index=45&type=chunk) - A substantial majority of operating lease revenue is variable and subject to subsequent non-lease component (disposable products) sales[45](index=45&type=chunk) - Operating lease revenue represents approximately **3%** of the Company's total net sales[45](index=45&type=chunk) [10. NOTES PAYABLE AND LONG-TERM DEBT](index=13&type=section&id=10.%20NOTES%20PAYABLE%20AND%20LONG-TERM%20DEBT) The Company holds **$500 million** in 0% convertible senior notes due 2026 and refinanced credit facilities in July 2022, establishing a **$280 million** term loan and **$420 million** revolving credit facility, with **$276.5 million** outstanding on the term loan at a **6.0%** effective interest rate as of December 31, 2022 - Issued **$500.0 million** aggregate principal amount of 0% convertible senior notes due 2026, classified as long-term debt[46](index=46&type=chunk)[47](index=47&type=chunk) - Refinanced credit facilities in July 2022, establishing a **$280.0 million** senior unsecured term loan and a **$420.0 million** senior unsecured revolving credit facility, maturing June 2025[51](index=51&type=chunk) - As of December 31, 2022, **$276.5 million** was outstanding under the term loan with an effective interest rate of **6.0%**, and no borrowings were outstanding under the revolving credit facility[53](index=53&type=chunk) [11. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS](index=14&type=section&id=11.%20FINANCIAL%20INSTRUMENTS%20AND%20FAIR%20VALUE%20MEASUREMENTS) The Company uses derivative financial instruments, including foreign currency forward contracts and interest rate swaps, primarily designated as cash flow hedges, to mitigate foreign currency and interest rate fluctuations, with most derivatives classified as Level 2 in the fair value hierarchy - Utilizes foreign currency forward contracts to hedge anticipated cash flows from foreign currency transactions, primarily Japanese Yen and Euro[56](index=56&type=chunk) - Uses interest rate swaps to mitigate exposure to changes in variable interest rates, with an average blended fixed interest rate on **70-80%** of the term loan[59](index=59&type=chunk)[61](index=61&type=chunk) Fair Value of Derivative Instruments (in thousands) as of December 31, 2022 | Category | Assets | Liabilities | | :-------------------------------- | :------- | :---------- | | Designated foreign currency hedge contracts | $1,055 | $45 | | Non-designated foreign currency hedge contracts | $49 | $246 | | Designated interest rate swaps | $1,687 | $1,108 | | Total | $2,791 | $1,399 | Fair Value Measured on a Recurring Basis (in thousands) as of December 31, 2022 | Category | Level 1 | Level 2 | Level 3 | Total | | :-------------------------------- | :------ | :------ | :------ | :------ | | Money market funds | $89,114 | — | — | $89,114 | | Designated foreign currency hedge contracts | — | $1,055 | — | $1,055 | | Non-designated foreign currency hedge contracts | — | $49 | — | $49 | | Designated interest rate swaps | — | $1,687 | — | $1,687 | | Contingent consideration (Liabilities) | — | — | $848 | $848 | [12. COMMITMENTS AND CONTINGENCIES](index=19&type=section&id=12.%20COMMITMENTS%20AND%20CONTINGENCIES) The Company is involved in various legal proceedings, including a subpoena from the U.S. Attorney's Office regarding apheresis and autotransfusion devices (DOJ decided not to intervene) and a putative class action lawsuit under the Illinois Biometric Information Privacy Act (BIPA), which the Company intends to vigorously defend - Received a subpoena from the U.S. Attorney's Office regarding apheresis and autotransfusion devices; the DOJ decided not to intervene in the related qui tam action[80](index=80&type=chunk) - Facing a putative class action lawsuit under the Illinois Biometric Information Privacy Act (BIPA) regarding fingerprint scanning, which the Company believes is without merit and will defend vigorously[81](index=81&type=chunk) [13. SEGMENT AND ENTERPRISE-WIDE INFORMATION](index=19&type=section&id=13.%20SEGMENT%20AND%20ENTERPRISE-WIDE%20INFORMATION) The Company operates in Plasma, Blood Center, and Hospital segments, with net revenues increasing in Plasma and Hospital, decreasing in Blood Center, and U.S. revenues rising while international revenues declined due to foreign exchange - Reportable segments are Plasma, Blood Center, and Hospital, with management evaluating performance based on operating income, excluding certain corporate and non-recurring expenses[83](index=83&type=chunk)[84](index=84&type=chunk)[86](index=86&type=chunk) Net Revenues by Business Unit (in thousands) | Segment | Dec 31, 2022 (3 Months) | Jan 1, 2022 (3 Months) | Dec 31, 2022 (9 Months) | Jan 1, 2022 (9 Months) | | :-------------------------------- | :---------------------- | :--------------------- | :---------------------- | :--------------------- | | Plasma | $136,574 | $96,692 | $368,504 | $250,499 | | Blood Center | $76,827 | $74,527 | $219,052 | $221,522 | | Hospital | $93,889 | $82,100 | $275,635 | $235,609 | Net Revenues by Principal Operating Regions (in thousands) | Region | Dec 31, 2022 (3 Months) | Jan 1, 2022 (3 Months) | Dec 31, 2022 (9 Months) | Jan 1, 2022 (9 Months) | | :-------------------------------- | :---------------------- | :--------------------- | :---------------------- | :--------------------- | | United States | $224,104 | $167,270 | $617,824 | $460,404 | | Japan | $15,552 | $19,916 | $44,559 | $55,949 | | Europe | $39,105 | $41,540 | $121,412 | $126,055 | | Asia | $25,454 | $30,434 | $77,739 | $83,157 | [14. ACCUMULATED OTHER COMPREHENSIVE LOSS](index=22&type=section&id=14.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) Accumulated Other Comprehensive Loss (AOCL) increased from **$(25.954) million** at April 2, 2022, to **$(35.799) million** at December 31, 2022, primarily due to foreign currency translation adjustments Components of Accumulated Other Comprehensive Loss (in thousands) | Component | April 2, 2022 Balance | December 31, 2022 Balance | | :-------------------------------- | :-------------------- | :------------------------ | | Foreign Currency | $(27,919) | $(37,958) | | Defined Benefit Plans | $1,619 | $1,619 | | Net Unrealized Gain/(Loss) on Derivatives | $346 | $540 | | Total | $(25,954) | $(35,799) | - Other comprehensive loss before reclassifications was **$(5,977) million** for the period, with **$(10,039) million** from foreign currency and **$4,062 million** from derivatives[89](index=89&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=ITEM%202.%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, highlighting recent developments, revenue performance by geography and business unit, gross profit and operating expense analysis, and discussions on liquidity, cash flows, credit risk, inflation, and foreign exchange impacts [Introduction](index=22&type=section&id=Introduction) - Haemonetics Corporation is a global healthcare company providing medical products and solutions for blood and plasma component collection, surgical suites, and hospital transfusion services[91](index=91&type=chunk) - Operations are managed in three principal reporting segments: Plasma (growth potential), Blood Center (challenging markets requiring cost reduction and scope shrinking), and Hospital (growth potential)[92](index=92&type=chunk)[93](index=93&type=chunk) [Recent Developments](index=22&type=section&id=Recent%20Developments) - Board authorized a **$300 million** share repurchase program in August 2022; completed a **$75.0 million** accelerated share repurchase (ASR) in November 2022, repurchasing **1.0 million** shares[94](index=94&type=chunk) - Refinanced credit facilities in July 2022, extending maturity to June 2025, with a **$280.0 million** term loan and a **$420.0 million** revolving credit facility; amended interest rate swaps to convert **70-80%** of borrowings to a fixed rate[97](index=97&type=chunk) - Revised Operational Excellence Program (2020 Program) expects **$95 million** to **$105 million** in aggregate charges by fiscal 2025, aiming for **$115 million** to **$125 million** in annualized gross savings[98](index=98&type=chunk) [Financial Summary](index=23&type=section&id=Financial%20Summary) Financial Performance Summary (in thousands, except per share data) | Metric | Dec 31, 2022 (3 Months) | Jan 1, 2022 (3 Months) | % Change | Dec 31, 2022 (9 Months) | Jan 1, 2022 (9 Months) | % Change | | :-------------------------------- | :---------------------- | :--------------------- | :------- | :---------------------- | :--------------------- | :------- | | Net revenues | $305,301 | $259,769 | 17.5% | $864,244 | $728,194 | 18.7% | | Gross profit | $158,707 | $138,565 | 14.5% | $458,848 | $369,191 | 24.3% | | Operating income | $43,279 | $35,651 | 21.4% | $120,778 | $61,551 | 96.2% | | Net income | $32,944 | $23,232 | 41.8% | $86,018 | $33,634 | 155.7% | | Diluted EPS | $0.64 | $0.45 | 42.2% | $1.67 | $0.65 | 156.9% | - Net revenues increased **17.5%** (**20.8%** constant currency) for the three months and **18.7%** (**21.5%** constant currency) for the nine months, driven by Plasma and Hospital volume and price[99](index=99&type=chunk) - Operating income increased due to higher revenues in Plasma and Hospital, savings from the 2020 Program, and decreased acquisition spending, partially offset by lower Blood Center revenues, increased freight costs, and higher sales and marketing/performance-based compensation[100](index=100&type=chunk) [Management's Use of Non-GAAP Measures](index=24&type=section&id=Management%27s%20Use%20of%20Non-GAAP%20Measures) - Management uses non-GAAP financial measures, such as constant currency growth, to monitor financial performance and make business decisions, considering them supplemental to U.S. GAAP results[101](index=101&type=chunk) [RESULTS OF OPERATIONS](index=24&type=section&id=RESULTS%20OF%20OPERATIONS) [Net Revenues by Geography](index=24&type=section&id=Net%20Revenues%20by%20Geography) Net Revenues by Geography (in thousands) | Region | Dec 31, 2022 (3 Months) | Jan 1, 2022 (3 Months) | Reported Growth | Currency Impact | Constant Currency Growth | | :-------------------------------- | :---------------------- | :--------------------- | :-------------- | :-------------- | :----------------------- | | United States | $224,104 | $167,270 | 34.0% | —% | 34.0% | | International | $81,197 | $92,499 | (12.2)% | (9.0)% | (3.2)% | | Total Net Revenues | $305,301 | $259,769 | 17.5% | (3.3)% | 20.8% | | Region | Dec 31, 2022 (9 Months) | Jan 1, 2022 (9 Months) | Reported Growth | Currency Impact | Constant Currency Growth | | :-------------------------------- | :---------------------- | :--------------------- | :-------------- | :-------------- | :----------------------- | | United States | $617,824 | $460,404 | 34.2% | —% | 34.2% | | International | $246,420 | $267,790 | (8.0)% | (7.4)% | (0.6)% | | Total Net Revenues | $864,244 | $728,194 | 18.7% | (2.8)% | 21.5% | - International sales accounted for **26.6%** and **28.5%** of total net revenues for the three and nine months ended December 31, 2022, respectively, down from **35.6%** and **36.8%** in the prior year[102](index=102&type=chunk) [Net Revenues by Business Unit](index=25&type=section&id=Net%20Revenues%20by%20Business%20Unit) Net Revenues by Business Unit (in thousands) | Business Unit | Dec 31, 2022 (3 Months) | Jan 1, 2022 (3 Months) | Reported Growth | Currency Impact | Constant Currency Growth | | :-------------------------------- | :---------------------- | :--------------------- | :-------------- | :-------------- | :----------------------- | | Plasma | $135,461 | $96,460 | 40.4% | (0.8)% | 41.2% | | Blood Center | $73,362 | $75,692 | (3.1)% | (6.2)% | 3.1% | | Hospital | $91,560 | $82,273 | 11.3% | (3.1)% | 14.4% | | Service | $4,918 | $5,344 | (8.0)% | (6.8)% | (1.2)% | | Total Net Revenues | $305,301 | $259,769 | 17.5% | (3.3)% | 20.8% | | Business Unit | Dec 31, 2022 (9 Months) | Jan 1, 2022 (9 Months) | Reported Growth | Currency Impact | Constant Currency Growth | | :-------------------------------- | :---------------------- | :--------------------- | :-------------- | :-------------- | :----------------------- | | Plasma | $365,735 | $250,244 | 46.2% | (0.9)% | 47.1% | | Blood Center | $212,739 | $225,379 | (5.6)% | (4.5)% | (1.1)% | | Hospital | $270,909 | $237,074 | 14.3% | (2.7)% | 17.0% | | Service | $14,861 | $15,497 | (4.1)% | (5.8)% | 1.7% | | Total Net Revenues | $864,244 | $728,194 | 18.7% | (2.8)% | 21.5% | [Plasma](index=25&type=section&id=Plasma) - Plasma revenue increased **40.4%** (**41.2%** constant currency) for the three months and **46.2%** (**47.1%** constant currency) for the nine months, driven by volume and price[106](index=106&type=chunk) - Amended supply agreement with CSL Plasma Inc. to extend the term through December 2025, allowing continued use of PCS2 plasma collection system devices[107](index=107&type=chunk) [Blood Center](index=25&type=section&id=Blood%20Center) - Blood Center revenue decreased **3.1%** (increased **3.1%** constant currency) for the three months, primarily due to an increase in the whole blood business[107](index=107&type=chunk) - Blood Center revenue decreased **5.6%** (decreased **1.1%** constant currency) for the nine months, primarily driven by a decline in apheresis disposables volume[107](index=107&type=chunk) [Hospital](index=26&type=section&id=Hospital) - Hospital revenue increased **11.3%** (**14.4%** constant currency) for the three months and **14.3%** (**17.0%** constant currency) for the nine months[108](index=108&type=chunk) - Growth was primarily attributable to Vascular Closure revenue (up **32.6%** for 3 months, **36.6%** for 9 months) and increases in Hemostasis Management disposables and Transfusion Management revenue[105](index=105&type=chunk)[108](index=108&type=chunk) [Gross Profit](index=26&type=section&id=Gross%20Profit) Gross Profit (in thousands) | Period | Dec 31, 2022 (3 Months) | Jan 1, 2022 (3 Months) | % Increase | Dec 31, 2022 (9 Months) | Jan 1, 2022 (9 Months) | % Increase | | :-------------------------------- | :---------------------- | :--------------------- | :--------- | :---------------------- | :--------------------- | :--------- | | Gross profit | $158,707 | $138,565 | 14.5% | $458,848 | $369,191 | 24.3% | | % of net revenues | 52.0% | 53.3% | | 53.1% | 50.7% | | - Gross profit increase was driven by volume, price, and productivity savings from the 2020 Program, partially offset by inflationary pressures and increased depreciation expense[109](index=109&type=chunk) [Operating Expenses](index=26&type=section&id=Operating%20Expenses) Operating Expenses (in thousands) | Expense Category | Dec 31, 2022 (3 Months) | Jan 1, 2022 (3 Months) | % Change | Dec 31, 2022 (9 Months) | Jan 1, 2022 (9 Months) | % Change | | :-------------------------------- | :---------------------- | :--------------------- | :------- | :---------------------- | :--------------------- | :------- | | Research and development | $12,689 | $10,037 | 26.4% | $34,487 | $33,591 | 2.7% | | Selling, general and administrative | $94,661 | $80,726 | 17.3% | $279,299 | $247,722 | 12.7% | | Amortization of intangible assets | $8,078 | $12,151 | (33.5)% | $24,666 | $35,930 | (31.3)% | | Gains on divestiture | — | — | —% | $(382) | $(9,603) | (96.0)% | | Total operating expenses | $115,428 | $102,914 | 12.2% | $338,070 | $307,640 | 9.9% | - R&D expenses increased due to increased investments in product innovation[111](index=111&type=chunk) - SG&A expenses increased due to inflationary pressures, higher freight costs, increased sales and marketing investments, and higher performance-based compensation, partially offset by 2020 Program savings and decreased acquisition-related costs[113](index=113&type=chunk) - Amortization of intangible assets decreased due to intangible assets becoming fully amortized during fiscal 2022[114](index=114&type=chunk) [Interest and Other Expense, Net](index=27&type=section&id=Interest%20and%20Other%20Expense%2C%20Net) - Interest and other expenses, net, decreased **75.3%** for the three months and **9.4%** for the nine months, primarily driven by foreign currency impact due to market and rate volatility, partially offset by higher interest rates on the term loan[116](index=116&type=chunk) [Income Taxes](index=27&type=section&id=Income%20Taxes) Income Tax Expense and Effective Tax Rates (in thousands) | Period | Dec 31, 2022 (3 Months) | Jan 1, 2022 (3 Months) | Dec 31, 2022 (9 Months) | Jan 1, 2022 (9 Months) | | :-------------------------------- | :---------------------- | :--------------------- | :---------------------- | :--------------------- | | Income tax expense | $9,280 | $8,156 | $22,759 | $14,668 | | Effective tax rate | 22.0% | 26.0% | 20.9% | 30.4% | - Effective tax rates are impacted by the jurisdictional mix of earnings and include discrete tax expenses/benefits related to stock compensation shortfalls and tax rate changes[117](index=117&type=chunk)[118](index=118&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) Key Liquidity and Cash Flow Indicators (in thousands) | Metric | Dec 31, 2022 | Apr 2, 2022 | | :-------------------------------- | :----------- | :---------- | | Cash & cash equivalents | $224,002 | $259,496 | | Working capital | $479,420 | $313,765 | | Current ratio | 3.1 | 1.7 | | Net debt | $(542,773) | $(514,093) | | Days sales outstanding (DSO) | 53 | 54 | | Inventory turnover | 1.8 | 1.4 | - Primary liquidity sources are cash and cash equivalents, internally generated cash flow, and the revolving credit facility, deemed sufficient for the next twelve months[121](index=121&type=chunk) - As of December 31, 2022, **$276.5 million** was outstanding under the term loan (**6.0%** effective interest rate), with no borrowings on the **$420 million** revolving credit facility[123](index=123&type=chunk) - Expected cash outlays include acquisitions, investments, capital expenditures, share repurchases, and cash payments for the revised credit agreement and the 2020 Program[121](index=121&type=chunk)[125](index=125&type=chunk) [Cash Flows](index=28&type=section&id=Cash%20Flows) Net Cash Provided by (Used in) Activities (in thousands) for Nine Months Ended | Activity | Dec 31, 2022 | Jan 1, 2022 | | :-------------------------------- | :----------- | :---------- | | Operating activities | $193,447 | $104,213 | | Investing activities | $(125,782) | $(51,833) | | Financing activities | $(98,761) | $(6,984) | | Net change in cash and cash equivalents | $(35,494) | $44,572 | - Net cash from operating activities increased by **$89.2 million**, driven by higher net income, decreased inventories (due to NexSys PCS device placements), and higher other net working capital[127](index=127&type=chunk) - Net cash used in investing activities increased by **$73.9 million**, primarily due to increased capital expenditures (NexSys PCS device placements) and other investments, partially offset by lower divestiture proceeds[128](index=128&type=chunk) - Net cash used in financing activities increased by **$91.8 million**, mainly due to share repurchases and acquisition-related contingent consideration payments[129](index=129&type=chunk) [Concentration of Credit Risk](index=29&type=section&id=Concentration%20of%20Credit%20Risk) - Credit risk is generally limited due to a large, diverse customer base, but concentrations exist in the Plasma business (several large biopharmaceutical customers) and sales to government-owned healthcare systems internationally[130](index=130&type=chunk) - The Company has not incurred significant losses on receivables and continually evaluates collection risks[131](index=131&type=chunk) [Inflation](index=29&type=section&id=Inflation) - Experienced rising inflationary pressures in the global supply chain impacting results, with expectations for these pressures to continue through fiscal 2023[132](index=132&type=chunk) - Mitigation strategies include improving manufacturing/purchasing efficiencies, increasing employee productivity, and adjusting selling prices, though full mitigation may not always be possible[132](index=132&type=chunk) [Foreign Exchange](index=29&type=section&id=Foreign%20Exchange) - Significant foreign currency exposures primarily relate to sales denominated in Euro, Japanese Yen, Chinese Yuan, and Australian Dollars, and operational costs in Swiss Francs, Canadian Dollars, Mexican Pesos, and Malaysian Ringgit[133](index=133&type=chunk) - A strengthening U.S. Dollar adversely affects results for sales-heavy currencies (Yen, Euro, Yuan, AUD) but positively affects results for cost-heavy currencies (CHF, CAD, MXN, MYR)[134](index=134&type=chunk) - A hedging program using forward foreign currency contracts, generally one year out, is in place to mitigate exposure and facilitate financial planning[135](index=135&type=chunk) [Recent Accounting Pronouncements](index=30&type=section&id=Recent%20Accounting%20Pronouncements) - No recent accounting pronouncements are expected to have a material impact on the Company's financial position and results of operations[136](index=136&type=chunk) [Cautionary Statement Regarding Forward-Looking Information](index=30&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Information) - The report contains forward-looking statements subject to uncertainties, risks, and changes that are difficult to predict and outside the Company's control[137](index=137&type=chunk)[138](index=138&type=chunk) - Investors are cautioned not to rely on these statements, and key factors that could cause actual results to differ are referenced in Item 1A. Risk Factors of the Annual Report on Form 10-K[138](index=138&type=chunk)[139](index=139&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=32&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the Company's exposure to market risks, specifically foreign exchange risk and interest rate risk, and the strategies employed to mitigate them, including the use of derivative financial instruments [Foreign Exchange Risk](index=32&type=section&id=Foreign%20Exchange%20Risk) - The Company uses forward contracts to hedge anticipated cash flows from foreign currency denominated sales and costs, not for speculative purposes[143](index=143&type=chunk) - A **10%** strengthening of the U.S. Dollar would result in a **$2.0 million** increase in the fair value of forward contracts, while a **10%** weakening would result in a **$2.1 million** decrease, as of December 31, 2022[144](index=144&type=chunk) [Interest Rate Risk](index=32&type=section&id=Interest%20Rate%20Risk) - Exposure to interest rate changes is associated with variable rate debt under credit facilities, totaling **$276.5 million** at a **6.0%** interest rate as of December 31, 2022[145](index=145&type=chunk) - A **100 basis point** increase in Term SOFR rates would result in an additional annual interest expense of **$0.8 million**[145](index=145&type=chunk) - Interest rate swaps are used to convert **$194.8 million** of borrowings from variable to fixed rates, mitigating interest rate fluctuations and qualifying for hedge accounting[145](index=145&type=chunk) [ITEM 4. Controls and Procedures](index=32&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=32&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of December 31, 2022[146](index=146&type=chunk) [Changes in Internal Control Over Financial Reporting](index=32&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - There were no changes in internal control over financial reporting during the three months ended December 31, 2022, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[147](index=147&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 12 to the Unaudited Condensed Consolidated Financial Statements - Legal proceedings information is incorporated by reference from Note 12, Commitments and Contingencies[148](index=148&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) There are no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended April 2, 2022 - No material changes from the Risk Factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended April 2, 2022[149](index=149&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's share repurchase activities during the third quarter of fiscal 2023, including the completion of an accelerated share repurchase agreement Issuer Purchases of Equity Securities (Third Quarter Fiscal 2023) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions) | | :-------------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------- | :--------------------------------------------------------------------------------------- | | October 2, 2022 – October 29, 2022 | — | — | — | — | | October 30, 2022 – November 26, 2022 | 211,242 | (Not provided) | 211,242 | — | | November 27, 2022 – December 31, 2022 | — | — | — | — | | Total | 211,242 | (Not provided) | (Not provided) | $225.0 | - In November 2022, the Company completed a **$75.0 million** accelerated share repurchase (ASR) with Citibank, repurchasing **1.0 million** shares at an average price of **$75.20**[150](index=150&type=chunk) [Item 3. Defaults upon Senior Securities](index=34&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) This item is not applicable to the Company for the reporting period - Not applicable[151](index=151&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the reporting period - Not applicable[152](index=152&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the Company for the reporting period - Not applicable[153](index=153&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, certifications, and XBRL data - Includes Restated Articles of Organization, By-Laws, Certifications pursuant to Sections 302 and 906 of Sarbanes-Oxley Act, and XBRL financial data[156](index=156&type=chunk) [SIGNATURES](index=36&type=section&id=SIGNATURES) The report is duly signed on behalf of Haemonetics Corporation by its President and Chief Executive Officer and its Executive Vice President, Chief Financial Officer - The report is signed by Christopher A. Simon, President and Chief Executive Officer, and James C. D'Arecca, Executive Vice President, Chief Financial Officer[160](index=160&type=chunk)

4 | --- | --- | --- | --- | |------------------------------------------------|---------------------------------------------------|---------------------------------|-------------------------------------------| | | | | | | Compete in winning segments and geographies | | Revenue Profitability Cash Flow | GROWTH | | Achieve leading positions | DIVERSIFICATION • Business Segments | | SUSTAINABILITY • Economic | | Deliver superior operating performance | • Customers • Geographies • Business Models | | • People • ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [ITEM 1. Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including statements of income and comprehensive income, balance sheets, statements of stockholders' equity, and statements of cash flows, along with their accompanying notes for the periods ended October 1, 2022 [Unaudited Condensed Consolidated Statements of Income and Comprehensive Income](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) For the three and six months ended October 1, 2022, Haemonetics Corporation reported significant increases in net revenues, gross profit, operating income, and net income compared to the prior year, with diluted EPS rising to $0.64 and $1.03, respectively Unaudited Condensed Consolidated Statements of Income and Comprehensive Income (in thousands, except per share data) | Metric (in thousands, except per share data) | Three Months Ended Oct 1, 2022 | Three Months Ended Oct 2, 2021 | Six Months Ended Oct 1, 2022 | Six Months Ended Oct 2, 2021 | | :----------------------------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Net revenues | $297,485 | $239,897 | $558,943 | $468,425 | | Gross profit | $157,878 | $122,541 | $300,141 | $230,626 | | Operating income | $46,732 | $24,510 | $77,499 | $25,900 | | Net income | $33,197 | $14,856 | $53,074 | $10,402 | | Net income per share - diluted | $0.64 | $0.29 | $1.03 | $0.20 | [Unaudited Condensed Consolidated Balance Sheet](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheet) As of October 1, 2022, the company's total assets slightly increased to $1,865,112 thousand from April 2, 2022, primarily driven by an increase in property, plant and equipment, net, while total current liabilities decreased significantly due to a reduction in notes payable and current maturities of long-term debt Unaudited Condensed Consolidated Balance Sheet (in thousands) | Metric (in thousands) | October 1, 2022 | April 2, 2022 | | :-------------------- | :-------------- | :------------ | | Total current assets | $715,789 | $756,031 | | Total assets | $1,865,112 | $1,859,734 | | Total current liabilities | $262,175 | $442,266 | | Long-term debt, net of current maturities | $759,552 | $559,441 | | Total stockholders' equity | $729,009 | $749,424 | [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased from $749,424 thousand at April 2, 2022, to $729,009 thousand at October 1, 2022, primarily due to share repurchases totaling $75,000 thousand, partially offset by net income of $33,197 thousand and share-based compensation Unaudited Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric (in thousands) | April 2, 2022 | October 1, 2022 | | :-------------------- | :------------ | :-------------- | | Total Stockholders' Equity | $749,424 | $729,009 | | Shares Repurchased | — | $(75,000) | | Net Income | — | $33,197 | | Share-based compensation expense | — | $5,735 | | Accumulated Other Comprehensive Loss | $(25,954) | $(40,255) | [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended October 1, 2022, net cash provided by operating activities significantly increased to $129,032 thousand, while net cash used in investing activities and financing activities also increased, resulting in a net decrease in cash and cash equivalents of $18,296 thousand Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended Oct 1, 2022 | Six Months Ended Oct 2, 2021 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $129,032 | $41,780 | | Net cash used in investing activities | $(89,282) | $(36,371) | | Net cash used in financing activities | $(49,081) | $(4,949) | | Net Change in Cash and Cash Equivalents | $(18,296) | $115 | | Cash and Cash Equivalents at End of Period | $241,200 | $192,420 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the unaudited condensed consolidated financial statements, covering basis of presentation, recent accounting pronouncements, restructuring activities, income taxes, earnings per share, revenue recognition, inventories, leases, debt, financial instruments, commitments, contingencies, segment information, and accumulated other comprehensive loss [1. BASIS OF PRESENTATION](index=7&type=section&id=1.%20BASIS%20OF%20PRESENTATION) The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information, with all necessary adjustments included. The Company made a €20 million investment in Vivasure Medical LTD in November 2022, increasing its total investment to €30 million - In November 2022, the Company made a **€20 million** investment in Vivasure Medical LTD, bringing the total investment to **€30 million**, classified as other long-term assets[19](index=19&type=chunk) [2. RECENT ACCOUNTING PRONOUNCEMENTS](index=7&type=section&id=2.%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) The Company adopted ASC Update No. 2019-12 (Income Taxes) and ASC Update No. 2021-05 (Leases) with no material impact. Early adoption of ASC Update No. 2020-06 (Debt with Conversion and Other Options) effective April 4, 2021, resulted in a $61.2 million decrease to additional paid-in capital and an $80.3 million increase to non-current convertible notes, net - Early adoption of ASC Update No. 2020-06 (Debt with Conversion and Other Options) effective April 4, 2021, resulted in a **$61.2 million** decrease to additional paid-in capital, a **$20.0 million** decrease to non-current deferred tax liabilities, and an **$80.3 million** increase to non-current convertible notes, net[21](index=21&type=chunk) [3. RESTRUCTURING](index=7&type=section&id=3.%20RESTRUCTURING) The Company's Operational Excellence Program (2020 Program) aims to improve product quality, reduce costs, and ensure sustainability, with expected aggregate charges between $95 million and $105 million by fiscal 2025. During the three and six months ended October 1, 2022, $3.1 million and $6.6 million, respectively, were incurred in restructuring and related costs - The Operational Excellence Program (2020 Program) is expected to incur aggregate charges between **$95 million** and **$105 million** by the end of fiscal 2025[24](index=24&type=chunk) Restructuring Costs (in thousands) | Restructuring Costs (in thousands) | Three Months Ended Oct 1, 2022 | Six Months Ended Oct 1, 2022 | | :--------------------------------- | :----------------------------- | :--------------------------- | | Restructuring costs | $165 | $121 | | Restructuring related costs | $3,029 | $6,551 | | Total | $3,194 | $6,672 | - Total cumulative charges under the 2020 Program reached **$62.3 million** as of October 1, 2022[24](index=24&type=chunk) [4. INCOME TAXES](index=9&type=section&id=4.%20INCOME%20TAXES) The Company reported income tax expense of $7.9 million and $13.5 million for the three and six months ended October 1, 2022, respectively, with effective tax rates of 19.1% and 20.3%. These rates include discrete tax benefits and expenses related to tax rate changes and stock compensation Income Tax Metrics (in thousands) | Metric (in thousands) | Three Months Ended Oct 1, 2022 | Six Months Ended Oct 1, 2022 | Three Months Ended Oct 2, 2021 | Six Months Ended Oct 2, 2021 | | :-------------------- | :----------------------------- | :--------------------------- | :----------------------------- | :--------------------------- | | Income tax expense | $7,862 | $13,479 | $5,066 | $6,512 | | Effective tax rate | 19.1% | 20.3% | 25.4% | 38.5% | [5. EARNINGS PER SHARE](index=10&type=section&id=5.%20EARNINGS%20PER%20SHARE) Basic and diluted earnings per share significantly increased for both the three and six months ended October 1, 2022. The Company also initiated a $300 million share repurchase program in August 2022, completing a $75 million accelerated share repurchase (ASR) by November 2022 Earnings Per Share (in thousands, except per share amounts) | Metric (in thousands, except per share amounts) | Three Months Ended Oct 1, 2022 | Three Months Ended Oct 2, 2021 | Six Months Ended Oct 1, 2022 | Six Months Ended Oct 2, 2021 | | :---------------------------------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Basic income per share | $0.65 | $0.29 | $1.04 | $0.20 | | Diluted income per share | $0.64 | $0.29 | $1.03 | $0.20 | - In August 2022, the Board authorized a **$300 million** share repurchase program over three years. A **$75 million** Accelerated Share Repurchase (ASR) was initiated, with **0.8 million** shares initially delivered and approximately **0.2 million** additional shares delivered upon settlement in November 2022[34](index=34&type=chunk)[35](index=35&type=chunk) [6. REVENUE](index=11&type=section&id=6.%20REVENUE) Revenue is recognized when performance obligations are satisfied, with transaction prices allocated based on standalone selling prices. As of October 1, 2022, the Company had $23.0 million in remaining performance obligations, with 74% expected to be recognized within the next twelve months - As of October 1, 2022, the Company had **$23.0 million** of its transaction price allocated to remaining performance obligations, with approximately **74%** expected to be recognized as revenue within the next twelve months[39](index=39&type=chunk) Contract Balances (in thousands) | Metric (in thousands) | October 1, 2022 | April 2, 2022 | | :-------------------- | :-------------- | :------------ | | Contract assets | $7,600 | $5,500 | | Contract liabilities | $24,400 | $26,800 | [7. INVENTORIES](index=11&type=section&id=7.%20INVENTORIES) Inventories are valued at the lower of cost or net realizable value using the first-in, first-out method. Total inventories decreased from $293,027 thousand at April 2, 2022, to $254,680 thousand at October 1, 2022, primarily due to a reduction in finished goods Inventory Breakdown (in thousands) | Inventory Category (in thousands) | October 1, 2022 | April 2, 2022 | | :-------------------------------- | :-------------- | :------------ | | Raw materials | $83,602 | $88,886 | | Work-in-process | $21,853 | $17,187 | | Finished goods | $149,225 | $186,954 | | Total inventories | $254,680 | $293,027 | [8. LEASES](index=11&type=section&id=8.%20LEASES) The Company leases medical devices to customers, primarily under operating lease arrangements where a substantial majority of revenue is variable and tied to disposable product sales. Operating lease revenue constitutes approximately 3% of total net sales - Operating lease revenue, primarily from medical devices installed at customer sites, represents approximately **3%** of the Company's total net sales[45](index=45&type=chunk) [9. NOTES PAYABLE AND LONG-TERM DEBT](index=12&type=section&id=9.%20NOTES%20PAYABLE%20AND%20LONG-TERM%20DEBT) The Company has $500.0 million in 0% convertible senior notes due 2026, classified as long-term debt. In July 2022, it refinanced its credit facilities, establishing a $280.0 million senior unsecured term loan and a $420.0 million revolving credit facility, maturing in June 2025. As of October 1, 2022, $278.3 million was outstanding on the term loan at a 4.2% effective interest rate, and $50.0 million on the revolving credit facility - The Company has **$500.0 million** aggregate principal amount of **0%** convertible senior notes due 2026, with a net convertible note payable of **$490.8 million** as of October 1, 2022[46](index=46&type=chunk)[49](index=49&type=chunk) - In July 2022, the Company refinanced its credit facilities, establishing a **$280.0 million** senior unsecured term loan and a **$420.0 million** senior unsecured revolving credit facility, both maturing in June 2025[51](index=51&type=chunk) - As of October 1, 2022, **$278.3 million** was outstanding under the term loan with an effective interest rate of **4.2%**, and **$50.0 million** was outstanding under the revolving credit facility[53](index=53&type=chunk) [10. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS](index=13&type=section&id=10.%20FINANCIAL%20INSTRUMENTS%20AND%20FAIR%20VALUE%20MEASUREMENTS) The Company uses derivative financial instruments, including foreign currency forward contracts and interest rate swaps, to mitigate exposure to foreign currency exchange rates and variable interest rates. These derivatives are primarily classified as Level 2 in the fair value hierarchy. Contingent consideration liabilities are classified as Level 3, valued at $0.8 million as of October 1, 2022 - The Company uses foreign currency forward contracts to hedge anticipated cash flows from foreign currency transactions, primarily Japanese Yen and Euro, with **$30.9 million** in designated hedge contracts outstanding as of October 1, 2022[56](index=56&type=chunk)[57](index=57&type=chunk) - Interest rate swaps are used to convert variable interest rates on credit facilities to fixed rates, with **$194.8 million** notional value effectively converted as of October 1, 2022[62](index=62&type=chunk)[63](index=63&type=chunk) Fair Value Measurements (in thousands) | Fair Value Category (in thousands) | October 1, 2022 | April 2, 2022 | | :--------------------------------- | :-------------- | :------------ | | Derivative Assets | $5,427 | $3,232 | | Derivative Liabilities | $1,542 | $1,894 | | Contingent consideration (Level 3) | $779 | $33,675 | [11. COMMITMENTS AND CONTINGENCIES](index=18&type=section&id=11.%20COMMITMENTS%20AND%20CONTINGENCIES) The Company is involved in various legal proceedings, including a subpoena from the U.S. Attorney's Office regarding apheresis and autotransfusion devices (DOJ decided not to intervene) and a putative class action lawsuit under the Illinois Biometric Information Privacy Act (BIPA), which the Company is vigorously defending - The U.S. Department of Justice decided not to intervene in the qui tam action related to a subpoena regarding the Company's apheresis and autotransfusion devices[79](index=79&type=chunk) - A putative class action lawsuit (Mary Crumpton v. Haemonetics Corporation) alleges violation of the Illinois Biometric Information Privacy Act (BIPA) regarding fingerprint scanning for plasma donation, which the Company believes is without merit[80](index=80&type=chunk) [12. SEGMENT AND ENTERPRISE-WIDE INFORMATION](index=18&type=section&id=12.%20SEGMENT%20AND%20ENTERPRISE-WIDE%20INFORMATION) The Company operates in three reportable segments: Plasma, Blood Center, and Hospital. Net revenues increased significantly in Plasma and Hospital for the three and six months ended October 1, 2022, while Blood Center revenues decreased. The U.S. remains the largest revenue-generating region - The Company's reportable segments are Plasma, Blood Center, and Hospital[85](index=85&type=chunk) Net Revenues by Business Unit (in thousands) | Net Revenues by Business Unit (in thousands) | Three Months Ended Oct 1, 2022 | Six Months Ended Oct 1, 2022 | | :------------------------------------------- | :----------------------------- | :--------------------------- | | Plasma | $128,888 | $231,930 | | Blood Center | $75,652 | $142,225 | | Hospital | $92,562 | $181,746 | Net Revenues by Region (in thousands) | Net Revenues by Region (in thousands) | Three Months Ended Oct 1, 2022 | Six Months Ended Oct 1, 2022 | | :------------------------------------ | :----------------------------- | :--------------------------- | | United States | $211,724 | $393,720 | | Japan | $15,129 | $29,007 | | Europe | $41,850 | $82,307 | | Asia | $27,861 | $52,285 | [13. ACCUMULATED OTHER COMPREHENSIVE LOSS](index=21&type=section&id=13.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) Accumulated Other Comprehensive Loss increased from $(25,954) thousand at April 2, 2022, to $(40,255) thousand at October 1, 2022, primarily due to a significant increase in foreign currency translation losses Accumulated Other Comprehensive Loss Components (in thousands) | Component (in thousands) | Balance as of April 2, 2022 | Balance as of October 1, 2022 | | :----------------------- | :-------------------------- | :---------------------------- | | Foreign Currency | $(27,919) | $(44,905) | | Defined Benefit Plans | $1,619 | $1,619 | | Net Unrealized Gain/(Loss) on Derivatives | $346 | $3,031 | | Total | $(25,954) | $(40,255) | [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, highlighting significant revenue growth driven by Plasma and Hospital segments, improved profitability, and strategic initiatives like the share repurchase program and debt refinancing. It also discusses operational challenges such as inflation and foreign exchange impacts [Introduction](index=21&type=section&id=Introduction) Haemonetics Corporation is a global healthcare company providing medical products and solutions across three principal reporting segments: Plasma, Blood Center, and Hospital. Plasma and Hospital segments are identified as having growth potential, while Blood Center faces challenging markets requiring cost reduction and strategic management - Haemonetics operates in three principal reporting segments: Plasma (plasma collection devices, disposables, software), Blood Center (blood collection and processing devices), and Hospital (Hemostasis Management, Cell Salvage, Transfusion Management, Vascular Closure products)[91](index=91&type=chunk) - Plasma and Hospital segments are viewed as having growth potential, while Blood Center requires different management strategies, including cost reduction and evaluating unfavorable customer contracts[92](index=92&type=chunk) [Recent Developments](index=21&type=section&id=Recent%20Developments) Recent developments include the Board's authorization of a $300 million share repurchase program, with a $75 million accelerated share repurchase (ASR) completed in November 2022. The Company also refinanced its credit facilities in July 2022, extending maturity to June 2025, and continues its Operational Excellence Program, expecting $95-$105 million in charges by fiscal 2025 for $115-$125 million in annualized gross savings - In August 2022, the Board authorized a **$300 million** share repurchase program over three years, and a **$75 million** Accelerated Share Repurchase (ASR) was completed in November 2022[93](index=93&type=chunk)[94](index=94&type=chunk) - The Company refinanced its credit facilities in July 2022, establishing a **$280 million** term loan and a **$420 million** revolving credit facility, extending maturity to June 2025[95](index=95&type=chunk) - The revised Operational Excellence Program expects aggregate charges of **$95 million** to **$105 million** by fiscal 2025, aiming for **$115 million** to **$125 million** in annualized gross savings[96](index=96&type=chunk) [Financial Summary](index=22&type=section&id=Financial%20Summary) Haemonetics reported strong financial performance for the three and six months ended October 1, 2022, with net revenues increasing by 24.0% and 19.3% (27.0% and 21.9% at constant currency), respectively. Operating income saw substantial growth of 90.7% and 199.2%, driven by Plasma and Hospital revenue increases and savings from the 2020 Program Financial Performance Summary (in thousands, except per share data) | Metric (in thousands, except per share data) | Three Months Ended Oct 1, 2022 | % Increase | Six Months Ended Oct 1, 2022 | % Increase | | :----------------------------------------- | :----------------------------- | :--------- | :--------------------------- | :--------- | | Net revenues | $297,485 | 24.0 % | $558,943 | 19.3 % | | Gross profit | $157,878 | 28.8 % | $300,141 | 30.1 % | | Operating income | $46,732 | 90.7 % | $77,499 | 199.2 % | | Net income | $33,197 | 123.5 % | $53,074 | 410.2 % | | Net income per share - diluted | $0.64 | 120.7 % | $1.03 | 415.0 % | - Net revenues increased **24.0%** (**27.0%** at constant currency) for the three months and **19.3%** (**21.9%** at constant currency) for the six months ended October 1, 2022, primarily due to volume and price increases in Plasma and Hospital businesses[99](index=99&type=chunk) - Operating income increased significantly due to higher revenues in Plasma and Hospital, savings from the 2020 Program, and decreased acquisition spending, partially offset by lower Blood Center revenues, increased freight costs, and higher sales and marketing expenses[100](index=100&type=chunk) [Management's Use of Non-GAAP Measures](index=23&type=section&id=Management's%20Use%20of%20Non-GAAP%20Measures) Management utilizes non-GAAP financial measures, such as constant currency growth, to monitor financial performance, make business decisions, and forecast results. Constant currency growth measures revenue change using a consistent currency conversion rate to provide comparable insights - Constant currency growth, a non-GAAP financial measure, is used to measure the change in revenue between periods using a constant currency conversion rate, providing meaningful information on a consistent and comparable basis[101](index=101&type=chunk) [RESULTS OF OPERATIONS](index=23&type=section&id=RESULTS%20OF%20OPERATIONS) This section details the Company's operational performance, including net revenues by geography and business unit, gross profit, and operating expenses, highlighting key drivers of change and segment-specific results [Net Revenues by Geography](index=23&type=section&id=Net%20Revenues%20by%20Geography) U.S. net revenues showed strong growth, increasing 39.2% and 34.3% for the three and six months ended October 1, 2022, respectively. International revenues, however, decreased on a reported basis due to foreign exchange impacts, despite a slight constant currency growth for the six-month period Net Revenues by Geography (Three Months, in thousands) | Net Revenues by Geography (in thousands) | Three Months Ended Oct 1, 2022 | Reported Growth | Constant Currency Growth | | :--------------------------------------- | :----------------------------- | :-------------- | :----------------------- | | United States | $211,724 | 39.2 % | 39.2 % | | International | $85,761 | (2.3)% | 5.6 % | | Total Net Revenues | $297,485 | 24.0 % | 27.0 % | Net Revenues by Geography (Six Months, in thousands) | Net Revenues by Geography (in thousands) | Six Months Ended Oct 1, 2022 | Reported Growth | Constant Currency Growth | | :--------------------------------------- | :--------------------------- | :-------------- | :----------------------- | | United States | $393,720 | 34.3 % | 34.3 % | | International | $165,223 | (5.7)% | 0.8 % | | Total Net Revenues | $558,943 | 19.3 % | 21.9 % | - Revenue generated outside the U.S. was **28.8%** and **29.6%** of total net revenues for the three and six months ended October 1, 2022, respectively, down from **36.6%** and **37.4%** in the prior year, impacted by foreign exchange rates[102](index=102&type=chunk) [Net Revenues by Business Unit](index=24&type=section&id=Net%20Revenues%20by%20Business%20Unit) Plasma revenue surged by 56.1% (57.2% at constant currency) for the three months and 49.7% (50.8% at constant currency) for the six months ended October 1, 2022. Hospital revenue also grew significantly, while Blood Center revenue decreased on a reported basis but showed slight constant currency growth for the three-month period Net Revenues by Business Unit (Three Months, in thousands) | Net Revenues by Business Unit (in thousands) | Three Months Ended Oct 1, 2022 | Reported Growth | Constant Currency Growth | | :------------------------------------------- | :----------------------------- | :-------------- | :----------------------- | | Plasma | $127,893 | 56.1 % | 57.2 % | | Blood Center | $73,683 | (4.0)% | 0.5 % | | Hospital | $90,856 | 19.1 % | 21.9 % | | Service | $5,053 | 3.0 % | 9.3 % | Net Revenues by Business Unit (Six Months, in thousands) | Net Revenues by Business Unit (in thousands) | Six Months Ended Oct 1, 2022 | Reported Growth | Constant Currency Growth | | :------------------------------------------- | :--------------------------- | :-------------- | :----------------------- | | Plasma | $230,274 | 49.7 % | 50.8 % | | Blood Center | $139,377 | (6.9)% | (3.2)% | | Hospital | $179,349 | 15.9 % | 18.4 % | | Service | $9,943 | (2.1)% | 3.2 % | [Plasma](index=24&type=section&id=Plasma) Plasma revenue increased significantly by 56.1% (57.2% at constant currency) and 49.7% (50.8% at constant currency) for the three and six months ended October 1, 2022, respectively, driven by volume and price. The supply agreement with CSL Plasma was amended to extend the use of PCS2 plasma collection systems through December 2023, including an $88.0 million minimum purchase commitment for fiscal 2023 - Plasma revenue increased **56.1%** (**57.2%** at constant currency) for the three months and **49.7%** (**50.8%** at constant currency) for the six months ended October 1, 2022, driven by volume and price[105](index=105&type=chunk) - The supply agreement with CSL Plasma was amended to extend the use of PCS2 plasma collection systems and purchase of disposable kits through December 2023, including an **$88.0 million** minimum purchase commitment in fiscal 2023[106](index=106&type=chunk) [Blood Center](index=24&type=section&id=Blood%20Center) Blood Center revenue decreased by 4.0% (increased 0.5% at constant currency) for the three months and 6.9% (decreased 3.2% at constant currency) for the six months ended October 1, 2022, primarily due to a decline in the volume of apheresis disposables - Blood Center revenue decreased **4.0%** (**0.5%** increase at constant currency) for the three months and **6.9%** (**3.2%** decrease at constant currency) for the six months ended October 1, 2022[107](index=107&type=chunk) - The decrease in Blood Center revenue was primarily driven by a decline in the volume of apheresis disposables[107](index=107&type=chunk) [Hospital](index=25&type=section&id=Hospital) Hospital revenue increased by 19.1% (21.9% at constant currency) and 15.9% (18.4% at constant currency) for the three and six months ended October 1, 2022, respectively. This growth was primarily driven by Vascular Closure revenue, as well as increases in Transfusion Management and TEG disposables revenue - Hospital revenue increased **19.1%** (**21.9%** at constant currency) for the three months and **15.9%** (**18.4%** at constant currency) for the six months ended October 1, 2022[108](index=108&type=chunk) - The increase in Hospital revenue was primarily attributable to Vascular Closure revenue (**42.1%** increase for three months, **38.9%** for six months), Transfusion Management revenue, and TEG disposables revenue[104](index=104&type=chunk)[108](index=108&type=chunk) [Gross Profit](index=25&type=section&id=Gross%20Profit) Gross profit increased by 28.8% and 30.1% for the three and six months ended October 1, 2022, respectively, with gross profit as a percentage of net revenues rising to 53.1% and 53.7%. This improvement was driven by volume, mix, and productivity savings from the 2020 Program, partially offset by inflationary pressures and increased depreciation Gross Profit Performance (in thousands) | Metric (in thousands) | Three Months Ended Oct 1, 2022 | % of Net Revenues | Six Months Ended Oct 1, 2022 | % of Net Revenues | | :-------------------- | :----------------------------- | :---------------- | :--------------------------- | :---------------- | | Gross profit | $157,878 | 53.1 % | $300,141 | 53.7 % | - Gross profit increased **28.8%** (**34.7%** at constant currency) for the three months and **30.1%** (**34.6%** at constant currency) for the six months ended October 1, 2022[109](index=109&type=chunk) - The increase was primarily driven by volume and mix, and productivity savings from the 2020 Program, partially offset by inflationary pressures and increased depreciation expense[109](index=109&type=chunk) [Operating Expenses](index=25&type=section&id=Operating%20Expenses) Total operating expenses increased by 13.4% and 8.8% for the three and six months ended October 1, 2022, respectively. This was influenced by increased selling, general and administrative expenses, partially offset by decreased amortization of intangible assets and gains on divestiture Operating Expenses Breakdown (in thousands) | Operating Expense (in thousands) | Three Months Ended Oct 1, 2022 | % of Net Revenues | Six Months Ended Oct 1, 2022 | % of Net Revenues | | :------------------------------- | :----------------------------- | :---------------- | :--------------------------- | :---------------- | | Research and development | $10,896 | 3.7 % | $21,798 | 3.9 % | | Selling, general and administrative | $92,411 | 31.1 % | $184,638 | 33.0 % | | Amortization of intangible assets | $8,221 | 2.8 % | $16,588 | 3.0 % | | Gains on divestiture | $(382) | (0.1)% | $(382) | (0.1)% | | Total operating expenses | $111,146 | 37.4 % | $222,642 | 39.8 % | [Research and Development](index=25&type=section&id=Research%20and%20Development) Research and development expenses slightly increased by 0.4% for the three months ended October 1, 2022, due to continued growth investments, but decreased by 7.5% for the six-month period, primarily due to the timing of investments and cost savings from the 2020 Program - Research and development expenses increased **0.4%** for the three months ended October 1, 2022, due to continued growth investments[111](index=111&type=chunk) - R&D expenses decreased **7.5%** for the six months ended October 1, 2022, primarily due to the timing of investments across quarters and cost savings related to the 2020 Program[111](index=111&type=chunk) [Selling, General and Administrative](index=26&type=section&id=Selling,%20General%20and%20Administrative) Selling, general and administrative expenses increased by 21.9% and 10.6% for the three and six months ended October 1, 2022, respectively. This rise was driven by inflationary pressures, higher freight costs, increased sales and marketing investments, and higher performance-based compensation, partially offset by 2020 Program savings and decreased acquisition-related costs - Selling, general and administrative expenses increased **21.9%** for the three months and **10.6%** for the six months ended October 1, 2022[113](index=113&type=chunk) - The increase was primarily driven by inflationary pressures, higher freight costs, increased sales and marketing investments, and higher performance-based compensation, partially offset by cost savings from the 2020 Program and decreased acquisition-related costs[113](index=113&type=chunk) [Amortization of Intangible Assets](index=26&type=section&id=Amortization%20of%20Intangible%20Assets) Amortization expense decreased by 27.9% and 30.2% for the three and six months ended October 1, 2022, respectively, primarily because certain intangible assets became fully amortized during fiscal 2022 - Amortization expense decreased to **$8.2 million** (three months) and **$16.6 million** (six months) for the period ended October 1, 2022, primarily due to intangible assets becoming fully amortized during fiscal 2022[114](index=114&type=chunk) [Gains on Divestiture](index=26&type=section&id=Gains%20on%20Divestiture) The Company recognized gains on divestiture of $0.4 million for both the three and six months ended October 1, 2022 - Gains on divestiture were **$0.4 million** for both the three and six months ended October 1, 2022[115](index=115&type=chunk) [Interest and Other Expense, Net](index=26&type=section&id=Interest%20and%20Other%20Expense,%20Net) Interest and other expenses, net, increased by 23.6% and 21.8% for the three and six months ended October 1, 2022, respectively, primarily due to higher foreign currency impact from market and rate volatility and increased interest rates on the term loan - Interest and other expenses, net, increased **23.6%** for the three months and **21.8%** for the six months ended October 1, 2022[116](index=116&type=chunk) - The increase was primarily driven by higher foreign currency impact due to market and rate volatility and higher interest rates on the term loan[116](index=116&type=chunk) [Income Taxes](index=26&type=section&id=Income%20Taxes) Income tax expense for the three and six months ended October 1, 2022, was $7.9 million and $13.5 million, respectively, with effective tax rates of 19.1% and 20.3%. These rates reflect the jurisdictional mix of earnings and discrete tax adjustments Income Tax Expense and Effective Rate (in thousands) | Metric (in thousands) | Three Months Ended Oct 1, 2022 | Six Months Ended Oct 1, 2022 | | :-------------------- | :----------------------------- | :--------------------------- | | Income tax expense | $7,862 | $13,479 | | Effective tax rate | 19.1% | 20.3% | [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The Company's liquidity is supported by cash and cash equivalents ($241.2 million), internally generated cash flow, and a $420 million revolving credit facility. Working capital increased to $453.6 million, and net debt was $(576.5) million as of October 1, 2022. Expected cash outlays include acquisitions, capital expenditures, share repurchases, and debt payments Liquidity and Capital Resources Summary (in thousands) | Metric (in thousands) | October 1, 2022 | April 2, 2022 | | :-------------------- | :-------------- | :------------ | | Cash & cash equivalents | $241,200 | $259,496 | | Working capital | $453,614 | $313,765 | | Current ratio | 2.7 | 1.7 | | Net debt | $(576,546) | $(514,093) | - The Company's primary liquidity sources are cash and cash equivalents, internally generated cash flow from operations, and its **$420 million** revolving credit facility[121](index=121&type=chunk)[123](index=123&type=chunk) - Expected cash outlays relate primarily to acquisitions, investments, capital expenditures (including North American manufacturing facilities enhancements), share repurchases, cash payments under the revised credit agreement, and restructuring initiatives[121](index=121&type=chunk) [Cash Flows](index=28&type=section&id=Cash%20Flows) For the six months ended October 1, 2022, net cash provided by operating activities increased by $87.3 million to $129.0 million, driven by higher net income and decreased inventories. Net cash used in investing activities increased by $52.9 million to $89.3 million due to higher capital expenditures and other investments. Net cash used in financing activities increased by $44.1 million to $49.1 million, mainly due to share repurchases and contingent consideration payments Cash Flow Activities (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended Oct 1, 2022 | Six Months Ended Oct 2, 2021 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $129,032 | $41,780 | | Net cash used in investing activities | $(89,282) | $(36,371) | | Net cash used in financing activities | $(49,081) | $(4,949) | - The increase in cash provided by operating activities was primarily the result of an increase in net income, a decrease in inventories driven by NexSys PCS device placements, and higher other net working capital[126](index=126&type=chunk) - The increase in cash used in investing activities was primarily due to increased capital expenditures (driven by NexSys PCS device placements) and other investments[127](index=127&type=chunk) [Concentration of Credit Risk](index=28&type=section&id=Concentration%20of%20Credit%20Risk) The Company's credit risk is generally diversified across a large customer base, but concentrations exist in the Plasma business unit with several large biopharmaceutical customers and in international sales to government-owned healthcare systems, which are subject to payment delays and economic conditions - Concentrations of credit risk exist in the Plasma business unit with several large biopharmaceutical customers and in international sales to government-owned or supported healthcare systems, which are subject to payment delays and local economic conditions[129](index=129&type=chunk) [Inflation](index=28&type=section&id=Inflation) The Company experienced rising inflationary pressures in its global supply chain during the three and six months ended October 1, 2022, impacting procurement and production costs. While historical mitigation strategies include efficiency improvements and price adjustments, full mitigation of future cost increases may not be possible - Rising inflationary pressures in the global supply chain impacted results during the three and six months ended October 1, 2022, and are expected to continue throughout fiscal 2023[131](index=131&type=chunk) - Historically, the Company has limited inflation impact through manufacturing/purchasing efficiencies, employee productivity, and product price adjustments, but future full mitigation is not guaranteed[131](index=131&type=chunk) [Foreign Exchange](index=29&type=section&id=Foreign%20Exchange) The Company has significant foreign currency exposure, particularly to the Japanese Yen, Euro, Chinese Yuan, and Australian Dollar, as 28.8% and 29.6% of sales were generated outside the U.S. for the three and six months ended October 1, 2022. A hedging program using derivative financial instruments, primarily forward contracts, is in place to mitigate the impact of exchange rate fluctuations - Foreign currency exposures primarily relate to sales denominated in Euro, Japanese Yen, Chinese Yuan, and Australian Dollars, and costs in Swiss Francs, Canadian Dollars, Mexican Pesos, and Malaysian Ringgit[132](index=132&type=chunk)[133](index=133&type=chunk) - A program using derivative financial instruments, specifically forward foreign currency contracts, is in place to hedge anticipated cash flows from foreign currency transactions, primarily Japanese Yen and Euro, typically for one-year periods[134](index=134&type=chunk) [Recent Accounting Pronouncements](index=29&type=section&id=Recent%20Accounting%20Pronouncements) The Company does not expect any recent accounting pronouncements to have a material impact on its financial position and results of operations - No recent accounting pronouncements are expected to have a material impact on the Company's financial position and results of operations[135](index=135&type=chunk) [Cautionary Statement Regarding Forward-Looking Information](index=29&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Information) This section serves as a cautionary statement regarding forward-looking statements, emphasizing that actual results may differ materially due to various uncertainties and risks. Key factors include the impact of the COVID-19 pandemic, failure to achieve strategic goals, demand risks for products, product quality concerns, ability to retain key personnel, security breaches, pricing pressures, supply chain continuity, and geopolitical/economic conditions - Forward-looking statements are subject to uncertainties, risks, and changes that are difficult to predict, and actual results could vary materially from expectations[137](index=137&type=chunk) - Key risk factors include the ongoing COVID-19 pandemic, failure to achieve strategic goals, demand and market acceptance risks for products, product quality/safety concerns, ability to retain key personnel, security breaches, pricing pressures, supply chain continuity, and geopolitical/economic conditions[138](index=138&type=chunk)[139](index=139&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=32&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the Company's exposure to market risks, specifically foreign exchange risk and interest rate risk, and the strategies employed to mitigate them through derivative financial instruments [Foreign Exchange Risk](index=32&type=section&id=Foreign%20Exchange%20Risk) The Company minimizes foreign exchange risk through forward contracts to hedge anticipated cash flows. A hypothetical 10% strengthening of the U.S. Dollar would increase the fair value of forward contracts by $3.1 million, while a 10% weakening would decrease it by $3.4 million as of October 1, 2022 - A **10%** strengthening of the U.S. Dollar would result in a **$3.1 million** increase in the fair value of all forward contracts, while a **10%** weakening would result in a **$3.4 million** decrease, as of October 1, 2022[143](index=143&type=chunk) [Interest Rate Risk](index=32&type=section&id=Interest%20Rate%20Risk) The Company's interest rate risk is associated with variable-rate debt under its credit facilities. Interest rate swaps are used to convert a portion of these borrowings to a fixed rate, mitigating exposure to fluctuations. A 100 basis point increase in Term SOFR rates would result in an additional $0.8 million in annual interest expense - An increase of **100 basis points** in Term SOFR rates would result in additional annual interest expense of **$0.8 million**[144](index=144&type=chunk) - The Company modified existing interest rate swaps and entered into four additional swaps in September 2022 to effectively convert **$194.8 million** of borrowings from a variable to a fixed rate, qualifying for hedge accounting[144](index=144&type=chunk) [ITEM 4. Controls and Procedures](index=32&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of October 1, 2022. There were no material changes in internal control over financial reporting during the three months ended October 1, 2022 - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective as of October 1, 2022[145](index=145&type=chunk) - There were no material changes in internal control over financial reporting during the three months ended October 1, 2022[146](index=146&type=chunk) [PART II. OTHER INFORMATION](index=32&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, and other required disclosures [ITEM 1. Legal Proceedings](index=33&type=section&id=ITEM%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 11, Commitments and Contingencies, to the Unaudited Condensed Consolidated Financial Statements - Legal proceedings information is incorporated by reference from Note 11, Commitments and Contingencies[147](index=147&type=chunk) [ITEM 1A. Risk Factors](index=33&type=section&id=ITEM%201A.%20Risk%20Factors) There are no material changes to the Risk Factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended April 2, 2022 - No material changes from the Risk Factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended April 2, 2022[148](index=148&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's share repurchase activities during the second quarter of fiscal 2023, including an Accelerated Share Repurchase (ASR) agreement [Issuer Purchases of Equity Securities](index=33&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) During the second quarter of fiscal 2023, the Company repurchased 786,164 shares of common stock as part of its publicly announced program. This included an Accelerated Share Repurchase (ASR) agreement for $75.0 million, with an initial delivery of 0.8 million shares in August 2022 and approximately 0.2 million additional shares delivered upon settlement in November 2022. $225.0 million remained authorized for repurchases Issuer Purchases of Equity Securities | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--------------------------- | :------------------------------- | :--------------------------- | | July 3, 2022 – July 30, 2022 | — | — | | July 31, 2022 - August 27, 2022 | 786,164 | (2) | | August 28, 2022 – October 1, 2022 | — | — | | Total | 786,164 | | - In August 2022, the Company entered into an ASR with Citibank to repurchase **$75.0 million** of common stock, receiving an initial delivery of **0.8 million** shares. The ASR was completed in November 2022 with approximately **0.2 million** additional shares delivered[149](index=149&type=chunk) - As of October 1, 2022, **$225.0 million** remained authorized for repurchases under the share repurchase program[149](index=149&type=chunk) [ITEM 3. Defaults upon Senior Securities](index=34&type=section&id=ITEM%203.%20Defaults%20upon%20Senior%20Securities) This item is not applicable to the Company for the reporting period - Not applicable[151](index=151&type=chunk) [ITEM 4. Mine Safety Disclosures](index=34&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the reporting period - Not applicable[152](index=152&type=chunk) [ITEM 5. Other Information](index=34&type=section&id=ITEM%205.%20Other%20Information) This item is not applicable to the Company for the reporting period - Not applicable[153](index=153&type=chunk) [ITEM 6. Exhibits](index=35&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including organizational documents, credit agreements, certifications, and XBRL financial data - Key exhibits include Restated Articles of Organization, By-Laws, Amended and Restated Credit Agreement, and Certifications pursuant to Sections 302 and 906 of Sarbanes-Oxley Act[156](index=156&type=chunk) [SIGNATURES](index=36&type=section&id=SIGNATURES) The report is duly signed on November 8, 2022, by Christopher A. Simon, President and Chief Executive Officer, and James C. D'Arecca, Executive Vice President, Chief Financial Officer - The report was signed by Christopher A. Simon, President and Chief Executive Officer, and James C. D'Arecca, Executive Vice President, Chief Financial Officer, on November 8, 2022[160](index=160&type=chunk)

Haemonetics Corporation (NYSE:HAE) Q2 2023 Earnings Conference Call November 7, 2022 8:00 AM ET Company Participants Olga Guyette - Director, Investor Relations and Treasury Chris Simon - Chief Executive Officer Stewart Strong - President of Global Hospital Business James D'Arecca - Chief Financial Officer Conference Call Participants Anthony Petrone - Mizuho Drew Ranieri - Morgan Stanley Andrew Cooper - Raymond James David Turkaly - JMP Securities Mike Matson - Needham & Company Operator Good day, and welc ...