HAEMONETICS CORP

Previous wording

Haemonetics Corporation is a global healthcare company dedicated to providing a suite of innovative medical products and solutions for customers to help them improve patient care and reduce the cost of healthcare. Our technology addresses important medical markets: blood and plasma component collection, the surgical suite and hospital transfusion services. When used in this report, the terms “we,” “us,” “our,” “Haemonetics” and the “Company” mean Haemonetics Corporation.

Current wording

Haemonetics is a global healthcare company dedicated to providing a suite of innovative medical technology solutions that improve the quality, effectiveness and efficiency of care. We challenge ourselves to think big and make new possibilities a reality, so that our customers can make it matter for patients, every single day. Our technology addresses important medical markets: blood and plasma component collection, the surgical suite and hospital transfusion services.

Previous wording

We view our operations and manage our business in three principal reporting segments: Plasma, Blood Center and Hospital. For that purpose, “Plasma” includes plasma collection devices and disposables, plasma donor management software and anticoagulant and saline sold to plasma customers. “Blood Center” includes blood collection and processing devices and disposables for red cells, platelets and whole blood. “Hospital”, which is comprised of Hemostasis Management, Interventional Technologies, Cell Salvage and Transfusion Management products, includes devices and methodologies for measuring coagulation characteristics of blood, vascular closure devices, sensor guided technologies, specialized blood cell processing systems and disposables, surgical blood salvage systems and blood transfusion management software.

Current wording

We view our operations and manage our business in three principal reporting segments: Plasma, Blood Center and Hospital. For that purpose, “Plasma” includes plasma collection devices and disposables, donor management software and supporting software solutions sold to plasma customers. “Blood Center” includes blood collection and processing devices and disposables for red cells, platelets and whole blood. “Hospital” is comprised of Interventional Technologies, which includes Vascular Closure, Sensor Guided Technologies and Esophageal Protection products, and Blood Management Technologies, which includes Hemostasis Management, Cell Salvage and Transfusion Management products.

Previous wording

The Company has $500.0 million aggregate principal amount of 0% convertible senior notes due in 2026, or the 2026 Notes. The 2026 Notes are governed by the terms of the Indenture between the Company and U.S. Bank National Association, as trustee. The total net proceeds from the sale of the 2026 Notes, after deducting the initial purchasers’ discounts and debt issuance costs, were approximately $486.7 million. The 2026 Notes will mature on March 1, 2026, unless earlier converted, redeemed or repurchased. The 2026 Notes have an effective interest rate of 0.5% as of December 30, 2023.

Current wording

On May 28, 2024, we issued $700.0 million aggregate principal amount of 2.5% convertible senior notes due 2029 (the “2029 Notes”). The 2029 Notes are governed by the terms of the Indenture between the Company and U.S. Bank National Association, as trustee. The total net proceeds from the sale of the 2029 Notes, after deducting the initial purchasers’ discounts and debt issuance costs, were $682.8 million, of which $230.0 million was used to repay the entirety of the balance on the revolving credit facility under the Company’s current credit agreement, $185.5 million was used to repurchase a portion of our existing 0% convertible senior notes due 2026 and $88.2 million was used to complete capped call transactions, with the remaining proceeds available for working capital and other general purposes. The 2029 Notes will mature on June 1, 2029, unless earlier converted, redeemed or repurchased.

Previous wording

On October 10, 2023, the Company announced it had entered into an Arrangement Agreement with OpSens, Inc. (“OpSens”), a medical device cardiology-focused company delivering solutions based on its proprietary optical technology, pursuant to which, among other things, the Company agreed to acquire all of the issued and outstanding common shares of OpSens. On December 12, 2023, the Company completed its acquisition of OpSens for total consideration of approximately $254.5 million, or $243.9 million, net of cash acquired. The Company financed the acquisition through a combination of cash on hand and borrowings under the revolving credit facility.

Current wording

On October 10, 2023, the Company entered into an Arrangement Agreement with OpSens Inc. (“OpSens”), a medical device cardiology-focused company delivering solutions based on its proprietary optical technology, pursuant to which, among other things, the Company agreed to acquire all of the issued and outstanding common shares of OpSens. On December 12, 2023, the Company completed its acquisition of OpSens for total consideration of approximately $254.5 million, or $243.9 million, net of cash acquired. The Company financed the acquisition through a combination of cash on hand and borrowings under its senior unsecured revolving credit facility.

Previous wording

OpSens offers commercially and clinically validated optical technology for use primarily in interventional cardiology. OpSens’ core products include the SavvyWire®, a sensor-guided 3-in-1 guidewire for TAVR procedures, advancing the workflow of the procedure and enabling potentially shorter hospital stays for patients; and the OptoWire®, a pressure guidewire that aims to improve clinical outcomes by accurately and consistently measuring Fractional Flow Reserve (FFR) and diastolic pressure ratio (dPR) to aid clinicians in the diagnosis and treatment of patients with coronary artery disease. OpSens also manufactures a range of fiber optic sensor solutions used in medical devices and other critical industrial applications. The addition of OpSens expands the Hospital business unit portfolio in the interventional cardiology market and will be included in the Hospital reportable segment.

Current wording

OpSens offers commercially and clinically validated optical technology for use primarily in interventional cardiology. OpSens’ core products include the SavvyWire®, a sensor-guided 3-in-1 guidewire for TAVR procedures, advancing the workflow of the procedure and enabling potentially shorter hospital stays for patients; and the OptoWire®, a pressure guidewire that aims to improve clinical outcomes by accurately and consistently measuring Fractional Flow Reserve (FFR) and diastolic pressure ratio (dPR) to aid clinicians in the diagnosis and treatment of patients with coronary artery disease. OpSens also manufactures a range of fiber optic sensor solutions used in medical devices and other critical industrial applications. The addition of OpSens expands the Hospital business unit portfolio in the interventional cardiology market and is included in the Hospital reportable segment.

Previous wording

Net revenues increased 10.1% and 11.7% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023. Without the effects of foreign exchange, net revenues increased 10.3% and 12.4% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023. Revenue increases in our Plasma and Hospital businesses, primarily related to volume and price benefits, drove the overall increase in revenue during the three and nine months ended December 30, 2023.

Current wording

Net revenues increased 8.0% during the three months ended June 29, 2024 as compared with the same period of fiscal 2024. Without the effects of foreign exchange, net revenues increased 8.7% during the three months ended June 29, 2024, as compared with the same period of fiscal 2024. Revenue increases in our Hospital businesses, primarily related to recent acquisitions as well as volume and price benefits, drove the overall increase in revenue during the three months ended June 29, 2024.

Previous wording

Our principal operations are in the United States, Europe, Japan and other parts of Asia. Our products are marketed in approximately 90 countries around the world through a combination of our direct sales force and independent distributors and agents. During the three and nine months ended December 30, 2023 our revenue generated outside the U.S. was 25.4% and 25.0% of total net revenues, respectively, as compared with 26.6% and 28.5%, respectively, during the three and nine months ended December 31, 2022. International sales are generally conducted in local currencies, primarily Japanese Yen, Euro and Chinese Yuan. Our results of operations are impacted by changes in foreign exchange rates, particularly in the value of the Yen and Euro relative to the U.S. Dollar. We have placed foreign currency hedges on certain foreign currencies to mitigate our exposure to foreign currency fluctuations.

Current wording

Our principal operations are in the United States, Europe, Japan and other parts of Asia. Our products are marketed in approximately 90 countries around the world through a combination of our direct sales force and independent distributors and agents. During the three months ended June 29, 2024 our revenue generated outside the U.S. was 26.0% of total net revenues, as compared with 23.9% during the three months ended July 1, 2023. International sales are generally conducted in local currencies, primarily Japanese Yen, Euro and Chinese Yuan. Our results of operations are impacted by changes in foreign exchange rates, particularly in the value of the Yen and Euro relative to the U.S. Dollar. We have placed foreign currency hedges on certain foreign currencies to mitigate our exposure to foreign currency fluctuations.

Previous wording

During the third quarter of fiscal 2023, we amended our supply agreement with CSL, which was scheduled to expire in December 2023, to extend the term through December 2025. CSL has a minimum purchase commitment under the non-exclusive supply agreement that slightly exceeds $100.0 million in fiscal 2024, and we expect that CSL will continue to provide a meaningful contribution to our Plasma business revenue in fiscal 2025.

Current wording

During the third quarter of fiscal 2022, we amended our supply agreement with CSL, which CSL had previously notified us of its intent not to renew and was initially set to expire in June 2022, to allow CSL to continue to use our PCS2 plasma collection system devices and purchase disposable plasmapheresis kits on a non-exclusive basis through December 2023. During the third quarter of fiscal 2023, we further amended our supply agreement with CSL to extend the term through December 2025. CSL has a minimum purchase commitment under the non-exclusive supply agreement of approximately $85 million in fiscal 2025.

Previous wording

Blood Center revenue decreased 3.9% and 3.2% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023. Without the effects of foreign exchange, Blood Center revenue decreased 2.6% and 0.9% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023. The decreases during the three and nine months ended December 30, 2023 were primarily driven by declines in our Whole Blood business.

Current wording

Blood Center revenue decreased 4.3% during the three months ended June 29, 2024 as compared with the same period of fiscal 2024. Without the effects of foreign exchange, Blood Center revenue decreased 2.1% during the three months ended June 29, 2024 as compared with the same period of fiscal 2024. The decrease during the three months ended June 29, 2024 was primarily driven by declines in our Whole Blood business.

Previous wording

Research and development expenses increased 4.5% and 11.9% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023. Without the effects of foreign exchange, research and development expenses increased 4.1% and 11.4% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023. The increases during the three and nine months ended December 30, 2023 were due to increased investments into product innovation across our product portfolio.

Current wording

Research and development expenses increased 14.2% during the three months ended June 29, 2024, as compared with the same period of fiscal 2024. Without the effects of foreign exchange, research and development expenses increased 14.2% during thethree months ended June 29, 2024 as compared with the same period of fiscal 2024. The increase during the three months ended June 29, 2024 was due to increased headcount as a result of recent acquisitions.

Previous wording

Selling, general and administrative expenses increased 18.0% and 11.2% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023. Without the effects of foreign exchange, selling, general, and administrative expenses increased 17.6% and 11.1% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023. The increases during the three and nine months ended December 30, 2023 were primarily driven by higher investments in sales and marketing, transaction costs and costs associated with the upgrade of our enterprise resource planning system, partially offset by operating leverage.

Current wording

Selling, general and administrative expenses increased 15.8% during the three months ended June 29, 2024 as compared with the same period of fiscal 2024. Without the effects of foreign exchange, selling, general, and administrative expenses increased 15.2% during the three months ended June 29, 2024 as compared with the same period of fiscal 2024. The increase during the three months ended June 29, 2024 was primarily driven by transaction, integration and operating costs related to recent acquisitions, as well as increased headcount, partially offset by gains realized on the sale of a manufacturing facility.

Previous wording

For the three and nine months ended December 30, 2023, the Company reported income tax expense of $12.8 million and $31.3 million, respectively, representing effective tax rates of 29.0% and 24.3%, respectively. The effective tax rate for the nine months ended December 30, 2023 includes $1.1 million of discrete tax benefit, of which $2.6 million relates to stock compensation windfalls, partially offset by other discrete items.

Current wording

For the three months ended July 1, 2023, the Company reported income tax expense of $10.5 million, representing an effective tax rates of 20.4%. The effective tax rate for the three months ended July 1, 2023 includes $1.2 million of discrete tax benefit primarily related to stock compensation windfalls.

Previous wording

The increase in the reported tax rates for the three and nine months ended December 30, 2023, compared to the same periods in fiscal 2023, relates primarily to unfavorable changes in the jurisdictional mix of earnings, research tax credits generated and non-deductible acquisition-related expenses, partially offset by discrete tax benefits from stock compensation windfall deductions.

Current wording

The decrease in the reported tax rates for the three months ended June 29, 2024, compared to the same period in fiscal 2024, relates primarily to increased discrete tax benefits year-over-year, partially offset by unfavorable impact of jurisdictional mix of earnings and non-deductible acquisition-related expenses.

Previous wording

Our primary sources of liquidity are cash and cash equivalents, internally generated cash flow from operations and our revolving credit facility. We believe these sources are sufficient to fund our cash requirements over at least the next twelve months. Our expected cash outlays relate primarily to acquisitions, investments, capital expenditures, including enhancements to our North American manufacturing facilities, share repurchases, portfolio rationalization initiatives and cash principal and interest payments under our revised credit agreement.

Current wording

Our primary sources of liquidity are cash and cash equivalents, internally generated cash flow from operations and our senior unsecured revolving credit facility. We believe these sources are sufficient to fund our cash requirements over at least the next twelve months and to meet our known long-term cash requirements, including our convertible senior notes due March 1, 2026. Our expected cash outlays relate primarily to acquisitions, investments, capital expenditures, including enhancements to our North American manufacturing facilities, share repurchases, portfolio rationalization initiatives and cash principal and interest payments under our revised credit agreements. As of June 29, 2024, we had $344.4 million in cash and cash equivalents, the majority of which is held in the U.S. or in countries from which it can be repatriated to the U.S.

Previous wording

As of December 30, 2023, we had $194.0 million in cash and cash equivalents, the majority of which is held in the U.S. or in countries from which it can be repatriated to the U.S. On July 26, 2022, we entered into an amended and restated credit agreement with certain lenders to refinance our prior credit agreement entered into on June 15, 2018, which consisted of a $350.0 million term loan and a $350.0 million revolving credit facility (together, as amended from time to time, the “2018 Credit Facilities”), and extend the maturity date through June 2025. Our Revised Credit Facilities include a $280.0 million senior unsecured term loan, the proceeds of which have been used to retire the balance of the term loan under the 2018 Credit Facilities, and a $420.0 million senior unsecured revolving credit facility. Loans under the Revised Credit Facilities bear interest at an annual rate equal to the Adjusted Term SOFR Rate (as specified in the amended and restated credit agreement), which is subject to a floor of 0%, plus an applicable rate ranging from 1.125% to 1.750% based on the Company’s consolidated net leverage ratio (as specified in the amended and restated credit agreement) at the applicable measurement date. Adjusted Term SOFR Rate loans are also subject to a credit spread adjustment of 0.10% per annum. The revolving credit facility carries an unused fee that ranges from 0.125% to 0.250% annually based on the Company’s consolidated net leverage ratio at the applicable measurement date. Under the Revised Credit Facilities, the Company is required to maintain certain leverage and interest coverage ratios specified in the amended and restated credit agreement as well as other customary non-financial affirmative and negative covenants. The Revised Credit Facilities mature on June 15, 2025. The principal amount of the term loan under the Revised Credit Facilities is repayable quarterly through the maturity date at a rate of 2.5% for the first year and 5% thereafter, with the unpaid balance due at maturity.

Current wording

On April 30, 2024, the Company entered into a second amended and restated credit agreement with certain lenders to refinance the 2022 Revised Credit Facilities and extend their maturity date through April 2029. The second amended and restated credit agreement provides for a $250.0 million senior unsecured term loan, the proceeds of which, along with $12.5 million of cash on hand, were used to retire the balance of the term loan under the 2022 Revised Credit Facilities, and a $750.0 million senior unsecured revolving credit facility (together, the “2024 Revised Credit Facilities”). Loans under the 2024 Revised Credit Facilities will initially bear interest at an annual rate equal to the Adjusted Term SOFR Rate (as specified in the second amended and restated credit agreement), which is subject to a floor of 0.0%, plus an applicable rate ranging from 1.125% to 1.750% based on the Company’s consolidated net leverage ratio (as specified in the second amended and restated credit agreement) at the applicable measurement date. The revolving credit facility carries an unused fee that ranges from 0.125% to 0.250% annually based on the Company’s consolidated net leverage ratio at the applicable measurement date. The 2024 Revised Credit Facilities mature on April 30, 2029. The principal amount of the term loan under the 2024 Revised Credit Facilities amortizes quarterly through the maturity date at a rate of 2.5% for the first three years following the closing date, 5.0% for the fourth year following the closing date and 7.5% for the fifth year following the closing date, with the unpaid balance due at maturity.

Previous wording

As of December 30, 2023, $266.0 million was outstanding under the term loan with an effective interest rate of 6.8%. During the third quarter of fiscal 2024 in connection with the acquisition of OpSens, the Company borrowed $110.0 million under the revolving credit facility, with an effective interest rate of 6.7%, which remains outstanding as of December 30, 2023. We also had $20.1 million of uncommitted operating lines of credit to fund our global operations under which there wereno outstanding borrowings as of December 30, 2023. Additionally, the Company was in compliance with the leverage and interest coverage ratios specified in the credit agreement as well as all other bank covenants as of December 30, 2023.

Current wording

At June 29, 2024, $248.4 million was outstanding under the term loan with an effective interest rate of 6.8%. There were no outstanding borrowings under the revolving credit facilities at June 29, 2024, as the Company paid all outstanding borrowings during the first quarter of fiscal 2025. The Company also had $17.6 million of uncommitted operating lines of credit to fund its global operations under which there were no outstanding borrowings as of June 29, 2024.

Previous wording

The Company has scheduled principal payments of $3.5 million required during the remainder of fiscal 2024.

Current wording

The Company has scheduled principal payments of $3.1 million required during the remainder of fiscal 2025 related to its term loan.

Previous wording

During fiscal 2022, our Board of Directors approved a revised Operational Excellence Program. We estimate that we will incur aggregate charges between $95 million and $105 million in connection with the Operational Excellence Program. These charges, the majority of which will result in cash outlays, including severance and other employee costs, will be incurred as the specific actions required to execute these initiatives are identified and approved and are expected to be substantially completed by the end of fiscal 2025. During the three and nine months ended December 30, 2023, we incurred $2.6 million and $6.8 million, respectively, of restructuring and restructuring related costs under this program.

Current wording

During fiscal 2022, our Board of Directors approved a revised Operational Excellence Program. We estimate that we will incur aggregate charges between $85 million and $95 million in connection with the Operational Excellence Program. These charges, the majority of which will result in cash outlays, including severance and other employee costs, will be incurred as the specific actions required to execute these initiatives are identified and approved and are expected to be substantially completed by the end of fiscal 2025. During the three months ended June 29, 2024, we incurred $2.4 million of restructuring and restructuring related costs under this program.

Previous wording

Net cash used in investing activities increased by $183.6 million during the nine months ended December 30, 2023, as compared with the nine months ended December 31, 2022. The increase in cash used in investing activities was primarily the result of the acquisition of OpSens, partially offset by lower capital expenditures driven by NexSys PCS device placements that occurred during fiscal 2023 and decreased cash outflows for other investments compared to the nine months ended December 31, 2022.

Current wording

Net cash used in investing activities increased by $123.9 million during the three months ended June 29, 2024, as compared with the three months ended July 1, 2023. The increase in cash used in investing activities was primarily the result of the acquisition of Attune Medical, partially offset by the proceeds from the sales of property, plant and equipment.

Previous wording

Net cash provided by financing activities increased by $200.4 million during the nine months ended December 30, 2023, as compared with the nine months ended December 31, 2022, primarily due to the borrowing under the revolving credit facility during the third quarter of fiscal 2024 in connection with the OpSens acquisition, as well as the share repurchases and higher contingent consideration payments in fiscal 2023.

Current wording

Net cash provided by financing activities increased by $334.3 million during the three months ended June 29, 2024, as compared with the three months ended July 1, 2023, primarily due to the issuance the 2029 Notes, partially offset by the repurchase of a portion of the 2026 Notes, capped call transactions, payments on the revolving credit facility and debt issuance costs.

Previous wording

During the three and nine months ended December 30, 2023, 25.4% and 25.0%, respectively, of our sales were generated outside the U.S., generally in foreign currencies, yet our reporting currency is the U.S. Dollar. We also incur certain manufacturing, marketing and selling costs in international markets in local currency. Our primary foreign currency exposures relate to sales denominated in Japanese Yen, Euro and Chinese Yuan. We also have foreign currency exposure related to manufacturing and other operational costs denominated in Swiss Francs, Canadian Dollars, Mexican Pesos and Malaysian Ringgit. The Yen, Euro and Yuan sales exposure is partially mitigated by costs and expenses for foreign operations and sourcing products denominated in foreign currencies.

Current wording

During the three months ended June 29, 2024, 26.0% of our sales were generated outside the U.S., generally in foreign currencies, yet our reporting currency is the U.S. Dollar. We also incur certain manufacturing, marketing and selling costs in international markets in local currency. Our primary foreign currency exposures relate to sales denominated in Japanese Yen, Euro and Chinese Yuan. We also have foreign currency exposure related to manufacturing and other operational costs denominated in Swiss Francs, Canadian Dollars, Mexican Pesos and Malaysian Ringgit. The Yen, Euro and Yuan sales exposure is partially mitigated by costs and expenses for foreign operations and sourcing products denominated in foreign currencies.

Previous wording

The following are some important factors that could cause our actual results to differ from our expectations in any forward-looking statements. For further discussion of these and other factors, see Item 1A. Risk Factors in our most recent Annual Report on Form 10-K.

Current wording

The following are some important factors that could cause our actual results to differ from our expectations in any forward-looking statements. For further discussion of these and other factors, see Item 1A. Risk Factors in our most recent Annual Report on Form 10-K (as supplemented by Item 1A of Part II of this Quarterly Report on Form 10-Q).

Previous wording

•The potential that the expected strategic benefits and opportunities from the Company’s acquisition of OpSens and any other planned or completed acquisitions, divestitures or other strategic investments by the Company may not be realized or may take longer to realize than expected;

Current wording

•The potential that the expected strategic benefits and opportunities from completed or planned acquisitions, including the Company’s acquisitions of OpSens Inc. and Attune Medical, divestitures or other strategic investments by the Company may not be realized or may take longer to realize than expected;

Previous wording

•Our ability to obtain the anticipated benefits of restructuring programs that we have or may undertake, including the Operational Excellence Program;

Current wording

•Our ability to obtain the anticipated benefits of restructuring programs that we have or may undertake, including the Operational Excellence Program and portfolio rationalization initiatives;

Previous wording

•Geopolitical and economic conditions in China, Russia and other foreign jurisdictions where we do business;

Current wording

•Geopolitical and economic conditions in China, Taiwan, Russia, Ukraine, the Middle East and other foreign jurisdictions where we do business;

Previous wording

•Market conditions impacting our stock price and/or our share repurchase program, and the possibility that such share repurchase program may be delayed, suspended or discontinued; and

Current wording

•Market conditions impacting our stock price and/or our share repurchase program, and the possibility that such share repurchase program may be delayed, suspended or discontinued;

Previous wording

•Our ability to achieve against our corporate responsibility initiatives and meet evolving stakeholder expectations concerning corporate responsibility matters.

Current wording

•Our ability to achieve against our corporate responsibility initiatives and meet evolving stakeholder expectations concerning corporate responsibility matters; and

Previous wording

•The impact of actual or threatened public health emergencies;

Current wording

•The impact of actual or threatened public health crises.

Previous wording

Investors should understand that it is not possible to predict or identify all such factors and should not consider the risks described above and in Item 1A. Risk Factors in our Annual Report on Form 10-K to be a complete statement of all potential risks and uncertainties. The Company does not undertake to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information or future events or developments.

Current wording

Investors should understand that it is not possible to predict or identify all such factors and should not consider the risks described above and in Item 1A. Risk Factors in our Annual Report on Form 10-K (as supplemented by Item 1A of Part II of this Quarterly Report on Form 10-Q) to be a complete statement of all potential risks and uncertainties. The Company does not undertake to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information or future events or developments.