Haemonetics(HAE) - 2026 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Third quarter revenue was $339 million, bringing year-to-date revenue to $988 million, with reported revenue reflecting a $153 million impact from last year's portfolio transitions [5][6] - Adjusted earnings per share increased 10% in the quarter to $1.31 and 11% year-to-date to $3.67, indicating strong earnings quality and durability [6][16] - Adjusted gross margin was 60.2% in the third quarter, up 250 basis points year-over-year, and 60.5% year-to-date, up 390 basis points [13][14] - Free cash flow for the third quarter was $74 million, bringing year-to-date free cash flow to $165 million, representing a more than threefold increase compared to the prior year [18][19] Business Line Data and Key Metrics Changes - Hospital revenue was $144 million in the third quarter, down 1% but up 2% year-to-date organically, with blood management technologies growing 8% in the quarter [6][9] - Plasma revenue was $139 million, up 3% on a reported basis, with organic growth excluding CSL at 20% in the quarter [9][10] - Blood Center revenue was $57 million in the quarter, growing 3% and 4% year-to-date organically, driven by international plasma demand [10][11] Market Data and Key Metrics Changes - U.S. plasma collections grew in the low double digits in the third quarter, with the company holding approximately 50% global market share [10] - The vascular closure market is experiencing headwinds from increasing PFA adoption, which is affecting growth rates in the electrophysiology market [58][60] Company Strategy and Development Direction - The company is focused on returning the interventional technologies franchise to sustainable growth in fiscal 2027, with targeted actions underway to strengthen execution [20][21] - The acquisition of Vivisure is expected to enhance the company's position in vascular closure, with a market potential of approximately $300 million [44][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the plasma business, citing strong share gains and favorable market conditions [25][27] - The company anticipates continued margin expansion, although future increments may be smaller than those seen in fiscal 2026 [30][32] Other Important Information - The company raised its full-year revenue guidance, expecting a decline of 1%-3% from a previous range of 1%-4% [11] - Cash on hand at the end of the third quarter was $363 million, up 18% since the start of the fiscal year [19] Q&A Session Summary Question: Insights on plasma growth and sustainability - Management highlighted strong share gains and collection volume growth, indicating a favorable outlook for plasma in fiscal 2027 [25][27] Question: Margin outlook and hospital business challenges - Management acknowledged a sequential decline in adjusted operating margin but expressed optimism about stabilization in the hospital business [28][30] Question: IVT business recovery and competition - Management noted that a significant portion of the decline in IVT was due to specific product disruptions, but they are confident in returning to growth [36][38] Question: Vivisure acquisition details - Management emphasized the strategic importance of Vivisure and its potential to enhance the vascular closure portfolio [44][48] Question: Capital deployment strategy - Management outlined a disciplined approach to capital deployment, prioritizing organic growth and debt reduction while maintaining flexibility for future investments [47][48]