Haemonetics Corporation (HAE): Delivering Consistent Growth and Margin Expansion

Published on September 24, 2024 | Ticker: HAE

Haemonetics Corporation, a global healthcare technology leader, has demonstrated its resilience and commitment to sustainable growth in the face of industry challenges. With a diverse portfolio spanning the Plasma, Blood Center, and Hospital segments, the company has navigated the complexities of the market to deliver impressive financial results.

Financials

In the fiscal year 2024, Haemonetics reported annual net income of $117,558,000 and annual revenue of $1,309,055,000, showcasing its ability to drive consistent profitability. The company's annual operating cash flow reached $181,751,000, while its annual free cash flow stood at $115,455,000, underscoring its strong liquidity position.

The company's performance in the fourth quarter of fiscal year 2024 was equally impressive, with net revenues of $336,250,000 and net income of $31,241,000. Haemonetics' ability to generate robust cash flows, with $64,000,000 in operating cash flow and $59,000,000 in free cash flow before restructuring and restructuring-related costs in the fourth quarter, further strengthens its financial position.

Business Overview

Plasma Segment

Haemonetics' Plasma segment has been a standout performer, delivering 6% revenue growth in the fourth quarter and 14% growth for the full fiscal year 2024. This growth was driven by strong disposable volume and software sales, with North America disposables representing 85% of plasma revenue and growing 4% in the quarter and 13% for the year. The company's innovative technologies, including the successful limited market release of Express Plus and the continued adoption of NexSys with Persona, have been instrumental in driving this performance.

Blood Center Segment

In the Blood Center segment, Haemonetics overcame significant geopolitical challenges to grow revenue by 7% in the fourth quarter and 1% for the full fiscal year 2024. This growth was primarily driven by continued strength in the apheresis portfolio, with apheresis revenue up nearly 13% in the fourth quarter and 5% for the year. The company's strategic portfolio rationalization efforts, aimed at preserving Blood Centers' ability to generate durable contribution margin dollars and participate in the company's margin expansion, have been a key focus.

Hospital Segment

The Hospital segment has been a standout performer, with revenue growth of 19% in the fourth quarter and 17% for the full fiscal year 2024. This growth was primarily driven by strong performance in the Vascular Closure and Hemostasis Management product lines. The company's recent acquisitions of OpSens and Attune Medical have further strengthened its hospital portfolio, positioning it as the largest business unit and a key driver of the company's disproportionate growth and margin expansion.

Outlook

Haemonetics' commitment to operational excellence and margin expansion is evident in its guidance for fiscal year 2025. The company expects reported revenue growth to be in the range of 5% to 8%, with total company organic growth projected to be flat to 3%. Importantly, the company's adjusted operating margin guidance for fiscal year 2025 is in the range of 23% to 24%, representing a substantial step towards its long-range plan goal of high 20s adjusted operating margin in fiscal year 2026.

Recent Developments

The company's capital allocation priorities remain unchanged, with a focus on deploying cash to accelerate growth momentum, particularly through strategic acquisitions and opportunistic share buybacks. Haemonetics' recently enhanced credit facility, which includes a $1 billion five-year facility with a $750 million unsecured revolving credit facility, provides the company with ample financial flexibility to pursue these initiatives.

Geographically, Haemonetics has a diverse footprint, with 25.4% of its sales generated outside the U.S. in the fourth quarter and 25.0% for the full fiscal year 2024. The company's international presence spans key markets such as Japan, Europe, and the rest of Asia, providing it with a well-rounded global reach.

Haemonetics' commitment to innovation and product development is evident in its pipeline, which includes the recent FDA clearance for its global hemostasis heparin neutralization cartridge, expanding the capabilities of the TEG 6s platform. Additionally, the company's acquisition of OpSens and Attune Medical has strengthened its interventional cardiology and esophageal cooling device offerings, further diversifying its hospital portfolio.

Conclusion

The company's strong financial performance, coupled with its strategic initiatives and disciplined capital allocation, position Haemonetics for continued success. As the company navigates the second half of its long-range plan, investors can expect to see sustained top-quartile MedTech revenue and margin growth, driven by the company's focus on innovation, operational excellence, and strategic acquisitions.

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