Haemonetics Corporation Reports Third Quarter of Fiscal 11

BRAINTREE, Mass., Jan. 31, 2011 /PRNewswire/ -- Haemonetics Corporation (NYSE: HAE) today reported GAAP net revenues of $176.8 million, up 7%, net income of $19.7 million, up 8%, and earnings per share of $0.77, up 10%. Excluding transformation costs in fiscal 11, adjusted third quarter net income was $ 22.6 million, up 21%, and adjusted earnings per share was $0.89, up 23%. In constant currency, revenue was up 6%, adjusted net income was up 21%, and adjusted earnings per share were up 23%. (1)

Year to date, Haemonetics reported GAAP net revenues of $506.7 million, up 6%, net income of $59.0 million, up 8%, and earnings per share of $2.32, up 11%. Excluding transformation costs and contingent consideration income in fiscal 11, adjusted year to date net income was $61.8 million, up 13%, and adjusted earnings per share was $2.42, up 16%. In constant currency, revenue was up 7%, adjusted net income was up 20% and adjusted earnings per share were up 23%. (1)

Revenue growth from acquisitions was 4% in Q3 and 5% year to date.

In addition to revenue and earnings growth, in the quarter Haemonetics reported adjusted gross margin of 52.9%, up 120 basis points, and adjusted operating margin of 18.3%, up 240 basis points. The Company's adjusted operating expenses were $61.2 million, up $2.0 million from levels in Q3 of fiscal 10. Adjusted operating expenses, which include $5 million in the quarter related to recent acquisitions, were lower than expected due to delays in hiring and initiating certain third party programs. (1)

The Company narrowed its full year guidance for revenue growth from 6-9% to 6-7% and for adjusted earnings per share from a range of $3.18 to $3.28 to a range of $3.20 to $3.28. (1) In addition, the Company raised its guidance for annual free cash flow before cash transformation costs, from $85 million to greater than $90 million.

Brian Concannon, Haemonetics' President and CEO, said, "I continue to be encouraged by the positive momentum in our business and the excellent operating discipline which has driven strong earnings performance, both in the quarter and year to date. The return to growth in our commercial plasma business is also very encouraging and the sequential growth rates tell the story of a real recovery in demand for our plasma products, which we expect to continue in fiscal 12."

STRATEGIC AND SEGMENT GROWTH HIGHLIGHTS

Haemonetics continues to make progress expanding its business. The Company reported the following highlights:

• In the quarter, average weekly plasma shipments were up 17% from the low point in the recent plasma downturn which occurred in Q4 of fiscal 10.
• 47 additional IMPACT customers in Q3 fiscal 11 bringing the total number of IMPACT customers to 165, driving accelerated revenue growth in key product lines evidenced by a 21% Q3 growth rate for TEG® Thrombelastograph® Hemostasis Analyzer disposables.
• Platelets grew 3% in the quarter and 5% year to date, reflecting strong double digit growth in the Company's emerging markets business units.
• In the quarter, equipment revenue grew 16% year over year. Equipment sales are a leading indicator of disposables revenue.
• The Global Med acquisition integration is proceeding well against its planned schedule and operating income targets.

Mr. Concannon added, "We've made great progress in adding IMPACT accounts and these accounts are generating significantly higher growth rates as they implement a differentiated approach to blood management. I remain confident in our ability to achieve our full year target of 175 IMPACT accounts by fiscal year end."

As noted, Haemonetics' third quarter fiscal 11 reported revenues were $176.8 million, up 7%. Reported revenues break down as follows:

Plasma disposables revenue was $59.8 million for the quarter, up 1%, and $172.2 million year to date, down 3%. Average weekly shipments of plasma disposables in the quarter were up 17% from the level of average daily shipments in Q4 of fiscal 10, which was the low point of the recent plasma downturn. Haemonetics expects its plasma business to return to high single digit growth in Q4 as we compare to a 14 week fiscal period in Q4 of fiscal 10, with full year Plasma revenue growth expected in a range of 0-2%.

Platelet disposables revenue was $41.1 million for the quarter, up 3%, and $ 117.1 million year to date, up 5%. The platelet business benefited from strong sales in our emerging markets. Haemonetics expects full year Platelet revenue growth of 1-3%.

Red cell disposables revenue was $11.7 million for the quarter, down 3%, and $34.3 million year to date, also down 3%. Revenue declined due to decreased demand for red cells as a result of declining surgical volumes. Haemonetics expects full year Red Cell disposable revenues within a range of a 3- 5% decrease.

Surgical disposables revenue was $17.1 million for the quarter, down 4%, and $49.5 million year to date, down 5%. The surgical business was also adversely impacted by trends in surgical volumes. Haemonetics expects full year surgical disposables revenues to decline approximately 5%.

OrthoPAT® orthopedic perioperative autotransfusion system disposables revenue was $9.2 million for the quarter, down 6%, and $26.5 million year to date down 2%. OrthoPAT sales to IMPACT accounts grew by 19% in the quarter and 30% year to date. Haemonetics expects full year OrthoPAT disposables revenues within a range of a 1- 5% decrease.

Diagnostic disposables revenue was $5.2 million for the quarter, up 21%, and $14.6 million year to date, up 23%. Revenues related to the TEG Thrombelastograph Hemostasis Analyzer business are accelerating driven by the Company's IMPACT accounts. Haemonetics expects full year revenue growth of approximately 25%.

Software Solutions revenue was $16.6 million for the quarter, up 101%, and $49.2 million year to date, up 90%. Software Solutions growth was primarily impacted by our Global Med acquisition. Organic software growth was 14% in the quarter and 6% year to date. Haemonetics expects full year revenue growth of approximately 95%.

Equipment and Other revenue was $16.1 million for the quarter, up 16%, and $43.3 million year to date, up 22%. Year to date equipment growth was impacted by the SEBRA® acquisition. Organic equipment growth year to date was 14%. Haemonetics expects full year revenue growth of 5-8% as we compare to Q4 fiscal 10 Equipment and Other sales of $18.8 million which included $2.5 million of one-time royalty revenue.

In the quarter, North American sales were up 6%, European sales were up 10%, Japanese sales were down 3%, and Asian sales were up 22%. Year to date, North American sales were up 6%, European sales were up 6%, Japanese sales were up 1% and Asian sales were up 26%.

CONFERENCE CALL

Haemonetics will host a webcast on Monday, January 31st at 10:00am Eastern to discuss these results. Interested parties can participate at http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=72118&eventID=3643178

Haemonetics (NYSE: HAE) is a global healthcare company dedicated to providing innovative blood management solutions for our customers. Together, our devices and consumables, information technology platforms, and consulting services deliver a suite of business solutions to help our customers improve clinical outcomes and reduce the cost of healthcare for blood collectors, hospitals, and patients around the world. Our technologies address important medical markets: blood and plasma component collection, the surgical suite, and hospital transfusion services. To learn more about Haemonetics, visit our web site at http://www.haemonetics.com.

This release contains forward-looking statements that involve risks and uncertainties, including technological advances in the medical field and standards for transfusion medicine and our ability to successfully implement products that incorporate such advances and standards, product demand, market acceptance, regulatory uncertainties, that affect Haemonetics or our customers, the effect of economic and political conditions, the impact of competitive products and pricing, blood product reimbursement policies and practices, foreign currency exchange rates, changes in customers' ordering patterns, the effect of industry consolidation as seen in the plasma market, the effect of communicable diseases and the effect of uncertainties in markets outside the U.S. (including Europe and Asia) in which we operate and other risks detailed in the Company's filings with the Securities and Exchange Commission. The foregoing list should not be construed as exhaustive. The forward-looking statements are based on estimates and assumptions made by management of the Company and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results and experience could differ materially from the forward-looking statements.

(1) A reconciliation of GAAP to adjusted and constant currency financial results is included at the end of the financial sections of this press release as well as on the web http://phx.corporate-ir.net/phoenix.zhtml?c=72118&p=irol-guidance. During the third quarter of fiscal 11 Haemonetics incurred $3.7 million in pre-tax transformation and integration costs. Year to date Haemonetics incurred $6.6 million in pre-tax transformation and integration costs and realized $1.9 million in contingent consideration income. Haemonetics incurred $0.5 million of costs to consummate the acquisition of Global Med in the third quarter of fiscal 10. Haemonetics incurred no transformation and integration costs nor did the Company realize any contingent consideration income through the third quarter of fiscal 10.