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Haemonetics: Gerry Gould, Vp-Investor Relations

The following excerpt is from the company's SEC filing.

Tel. (781) 356-9402

gerry.gould@haemonetics.com

Alt. (781) 356-9613

Haemonetics Reports 2

Quarter Fiscal 2016 Revenue of $220 Million and Adjusted EPS of $0.44, Affirms Recent Full Fiscal Year Guidance

Product Growth Highlights

8% constant currency revenue increases in growth drivers in the second quarter, including:

11% growth in North America plasma disposables revenue

25% growth in TEG

diagnostics disposables revenue

6% growth in Emerging Markets disposables revenue, ex-Russia

Braintree, MA, November 4, 2015
- Haemonetics Corporation (NYSE: HAE) reported second quarter fiscal 2016 revenue of $219.7 million, down 3%. Revenue was flat with the second quarter of fiscal 2015 in constant currency.

The Company reported GAAP net income of $12.9 million and GAAP net earnings per share of $0.25 in the second quarter of fiscal 2016. Exclusive of transformation, restructuring and deal amortization expenses detailed below, adjusted net income was $22.5 million, down 7%, and adjusted earnings per share were $0.44, down 6%.

First half fiscal 2016 revenue was $433.1 million, down 4%, and down 1% in constant currency. The Company reported first half GAAP net income of $12.6 million and GAAP net income per share of $0.24. Exclusive of transformation, first half fiscal 2016 restructuring and deal amortization expenses detailed below, adjusted net income was $40.5 million, down 8%, and adjusted earnings per share were $0.78, down 7%.

GROWTH DRIVERS UPDATE

The Company’s growth drivers of Plasma, TEG and Emerging Markets represented 63% of disposables revenue in both the second quarter and first half of fiscal 2016. In the quarter, growth driver revenue was up 8% on a constant currency basis.

Plasma disposables revenue grew 11% in North America, as strong demand for collection volumes continued. Softness in Russia negatively impacted global plasma disposables revenue which was up 7% in constant currency.

Following receipt of regulatory clearances of its next generation diagnostics device, the TEG 6s, and disposable cartridges for use in cardiovascular and cardiology procedures, the Company continued its limited market release. Together, the TEG family of hemostasis management products - TEG 5000, TEG 6s and TEG Manager™ software - is well positioned for continued strong revenue growth.

Ronald Gelbman, Haemonetics’ Interim CEO, stated: “Our team delivered first half revenue and earnings performance that was in line with our expectations. It is encouraging that our Plasma and TEG hemostasis management businesses continued to have solid revenue growth in the first half of fiscal 2016.

“Sustaining profitable growth is a key enabler of solid overall financial performance and there are ample opportunities for Haemonetics to continue to realize differentiated growth in its growth drivers over the medium and long terms. By channeling the necessary resources and investments into our Plasma and TEG hemostasis management franchises, as well as the key China market, we are creating the necessary focus to deliver and sustain real organic growth.”

SECOND QUARTER 2016 REVENUE ELEMENTS

Plasma disposables revenue was $83.9 million in the second quarter, up $3.6 million, or 4% on a reported basis and up 7% in constant currency. Revenue was impacted in part by economic conditions in Russia. North America Plasma disposables revenue was up 11% versus the prior year’s second quarter. Collection volumes continued to reflect a robust end user market for plasma-derived biopharmaceuticals.

Blood Center

Platelet disposables revenue was $34.1 million in the second quarter, down 13% on a reported basis and down 7% on a constant currency basis. The impact of currency on reported growth rates reflects the concentration of the Company’s platelet business outside of the United States. The constant currency revenue decline was attributable principally to a market shift in Japan toward double dose collection techniques, not yet offset by the expected market share gains and accelerated use of Haemonetics’ technology.

Red cell disposables revenue was $9.3 million in the second quarter, down $0.9 million or 9% as reported and 8% on a constant currency basis in part due to lower pricing associated with a recently signed U.S. contract.

The Company announced that it has completed a long-term agreement with the America Red Cross to achieve 100% share of its double red cell apheresis collection business. The resulting volume gain is expected to be offset by pricing concessions in that contract and, over time, by volume losses with two U.S. purchasing groups that have recommended competitive products to their members.

Whole blood disposables revenue was $30.4 million in the second quarter, down $3.3 million or 10% as reported and down 7% on a constant currency basis. This change was attributable principally to the U.S. whole blood collection market which continued to decline but at a moderated rate compared with the two immediately previous fiscal years.

Hospital

Diagnostics disposables revenue was $12.5 million for the quarter, up $2.4 million or 24% on a reported basis and up 25% in constant currency, with particular strength in China and in the U.S.

The TEG

Thromboelastograph

Hemostasis Analyzer installed base continued to increase in the second quarter, as TEG 5000 growth continued. The TEG family of devices, disposables and software is well positioned for acceleration of its revenue growth trend, consistent with the Company’s multi-year growth outlook.

Surgical disposables revenue was $14.7 million in the second quarter, down 6% as reported and flat on a constant currency basis. Strength in the emerging markets was offset by declines in developed markets.

Software and Equipment

Software Solutions revenue was $17.7 million in the second quarter, down $0.4 million or 2% on a reported basis and flat in constant currency. BloodTrack® HaemoBank™, a key enabler of CBMS™, the Company’s Comprehensive Blood Management Solutions growth strategy, was recently launched in numerous global markets, together with transfusion service software, and is expected to play an important role in growing and developing the Company’s software business.

Equipment and other revenue was $13.4 million, down $1.8 million or 12% as reported and down 7% on a constant currency basis, with weakness in Russia. Equipment revenue is influenced by timing of tenders and capital budgets. The installed base of equipment, including devices sold and placed for use with customers, increased 4% in the first half of fiscal 2016.

Geographic

Haemonetics reported second quarter fiscal 2016 revenue growth of 3% in the Americas and 1% in Asia Pacific, with declines of 17% in Europe and 18% in Japan. On a constant currency basis, the Company had revenue growth of 7% in Asia Pacific and 3% in the Americas, with declines of 9% in Europe and 6% in Japan. Constant currency disposables revenue growth was 11% in China in the first half of fiscal 2016.

In the Americas, strength in Plasma and TEG hemostasis management businesses was offset by declines in the Blood Center business. Weakness in Russia contributed to declines in Europe. Japan revenue was impacted by the Yen exchange rate and a shift in the platelet market toward alternative collection techniques.

OPERATING RESULTS

Adjusted gross profit was $106.5 million, down $4.6 million from the prior year second quarter and included a $3.8 million unfavorable currency impact. Adjusted gross margin was 48.5%, down 30 basis points. Adjusted gross margin improvement, driven by...


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