Haemonetics Corporation — FY2023 Form 10-K
Reporting period: Fiscal year ended April 1, 2023 (52 weeks), compared with the 52-week fiscal year ended April 2, 2022. Haemonetics supplies products and software for plasma and blood collection, hospital procedures and transfusion management.
Financial performance
| Metric | FY2023 | FY2022 | Change |
|---|---|---|---|
| Net revenue | $1,168.7 million | $993.2 million | +17.7%; +20.3% at constant currency |
| Gross profit / margin | $615.1 million / 52.6% | $505.5 million / 50.9% | Margin +1.7 percentage points |
| Operating income / margin | $156.0 million / 13.4% | $80.8 million / 8.1% | Income +93.2% |
| Net income / diluted EPS | $115.4 million / $2.24 | $43.4 million / $0.84 | Income +166.1% |
| Cash from operations | $273.1 million | $172.3 million | +$100.8 million |
Net revenue growth was driven by Plasma and Hospital, primarily from volume and price. Gross margin benefited from volume, pricing, lower restructuring and integration costs, and Operational Excellence Program savings; inflation and higher depreciation partly offset these gains. Operating income also benefited from lower acquired-intangible amortization and lower acquisition spending. The effective tax rate fell to 18.4% from 31.8%, mainly reflecting releases of valuation allowances and other tax items.
Segments and notable comparisons
- Plasma: Revenue was $496.9 million, up 41.4% reported and 42.2% at constant currency. It represented 42.5% of total revenue, versus 35.4% in FY2022.
- Blood Center: Revenue was $280.0 million, down 6.2% reported and 1.8% at constant currency, primarily due to lower apheresis disposable volumes. Management describes the market as challenging and expects flat to low-single-digit decline in this business.
- Hospital: Revenue was $371.7 million, up 15.2% reported and 17.6% at constant currency, led by Vascular Closure and also supported by Hemostasis Management disposables and Transfusion Management.
International revenue declined 7.9% reported (0.8% at constant currency), while U.S. revenue increased 31.8%. The FY2022 comparison included $9.6 million of divestiture gains, compared with $0.4 million in FY2023. FY2023 acquired-intangible amortization also declined to $32.6 million from $47.4 million.
Cash, liquidity and debt
- Cash and cash equivalents were $284.5 million at year-end; working capital was $517.9 million and the current ratio was 3.1.
- Operating cash flow was $273.1 million; investing cash outflow was $143.8 million, including $110.2 million of capital expenditures; financing cash outflow was $100.4 million. Cash increased $25.0 million during the year.
- Carrying-value debt was approximately $765.9 million, comprising $273.7 million on the term loan and $492.1 million on the 2026 convertible notes. The filing reports net debt of $481.4 million after cash. The $420 million revolving facility had no year-end borrowings.
- The term loan carried an effective 6.3% rate. Interest-rate swaps fixed 70%–80% of credit-facility borrowings through June 2025. The company was compliant with debt covenants at year-end and said it expected to remain compliant through March 30, 2024.
Outlook, risks and unusual items
- The filing provides no specific FY2024 revenue, earnings or cash-flow guidance. Management believes available cash, operating cash flow and revolving-credit access are sufficient for cash requirements over at least the next 12 months.
- CSL, the largest Plasma customer, accounted for about 14% of FY2023 revenue. Its non-exclusive supply agreement was extended through December 2025 and includes a minimum purchase commitment slightly exceeding $100 million for FY2024. Customer concentration remains material: the ten largest customers generated approximately 48% of revenue.
- The Operational Excellence Program is expected to generate aggregate charges of $95 million–$105 million and be substantially completed by the end of FY2025. Cumulative charges were $67.2 million through FY2023; FY2023 restructuring and related costs were $11.5 million.
- In November 2022, the company completed $75 million of share repurchases under a $300 million authorization; $225 million remained authorized at year-end.
- Key disclosed risks include Blood Center market contraction and pricing pressure; dependence on large Plasma customers; supply-chain disruptions and inflation; regulatory approval and compliance costs, including EU MDR/IVDR; competition, product quality and liability exposure; cyber and privacy risks; foreign-exchange exposure; and debt, interest-rate and convertible-note obligations.
- The company recorded loss contingencies in FY2023 relating to a federal/state qui tam matter and an Illinois biometric-privacy class action; neither had a material impact on the FY2023 financial statements. The filing says possible losses for the matters generally are not reasonably estimable. Goodwill impairment testing found no reporting units at risk; goodwill valuation was the auditor’s critical audit matter.
Important facts for investors to verify
- Whether CSL meets its FY2024 minimum purchase commitment and how the relationship evolves through the December 2025 contract term.
- Whether Plasma and Hospital growth and margin gains continue, and whether Blood Center declines match management’s stated outlook.
- Execution, remaining cash costs and realized savings from the Operational Excellence Program through FY2025.
- Debt repayment, interest expense, covenant headroom and the potential cash or dilution effects of the 2026 convertible notes.
- Developments in the qui tam and biometric-privacy cases, as well as supply, regulatory, cyber and customer-concentration risks.