Haemonetics Corporation (NYSE: HAE) — FY2022 Form 10-K
Reporting period: Fiscal year ended April 2, 2022. This is an annual filing, not a standalone fourth-quarter report; the filing does not provide clear Q4-only financial results. FY2022 and FY2020 had 52 weeks; FY2021 had 53 weeks.
Business context
Haemonetics supplies blood and plasma collection products, hospital diagnostics and software, vascular closure devices, and surgical blood salvage systems. Its reporting segments are Plasma, Blood Center, and Hospital. Management views Plasma and Hospital as growth businesses; Blood Center faces declining demand and pricing pressure and is being managed for cost reduction and narrower product scope.
Financial results and liquidity
| Metric | FY2022 | FY2021 | Change |
|---|---|---|---|
| Revenue | $993.2 million | $870.5 million | +14.1% reported; +13.4% constant currency |
| Gross profit / margin | $505.5 million / 50.9% | $397.8 million / 45.7% | Margin +5.2 percentage points |
| Operating income / margin | $80.8 million / 8.1% | $89.7 million / 10.3% | Income −10.0% |
| Net income / diluted EPS | $43.4 million / $0.84 | $79.5 million / $1.55 | Net income −45.4%; EPS −45.8% |
| Cash from operations | $172.3 million | $108.8 million | +$63.5 million |
Revenue by business unit was Plasma $351.3 million (+5.8%), Blood Center $298.5 million (−2.9%), and Hospital $322.8 million (+53.3%). Hospital growth was primarily driven by acquired Vascular Closure revenue. Segment revenue mix reported in the business overview was 35.4% Plasma, 30.1% Blood Center, and 32.5% Hospital; service revenue accounts for the remainder.
At year-end, cash and equivalents were $259.5 million, working capital $313.8 million, and the current ratio 1.7. The filing reports a net debt position of $514.1 million (cash less total debt). Principal debt included $500 million of 0% convertible notes due 2026 and $284.4 million outstanding under the term loan; no revolving-credit borrowings were outstanding. The balance sheet classified $214.1 million of debt as current.
Material changes and unusual items
- FY2022 revenue rebounded from FY2021, when pandemic-related reductions in U.S. plasma collections contributed to a 27.6% Plasma revenue decline. FY2022 Plasma revenue increased, but remained below FY2020.
- Hospital revenue rose substantially after the March 2021 acquisition of Cardiva, which added VASCADE vascular closure products. Cardiva-related amortization, integration and transaction costs, inventory fair-value step-up, and higher contingent consideration weighed on operating income.
- Gross margin improved with Hospital mix, productivity savings and favorable volume/product mix, but operating expenses rose 37.9%. Higher freight, inflation, restructuring costs and acquisition-related expenses contributed to lower operating income despite higher revenue.
- The reported tax rate was 31.8%, compared with a tax benefit rate of 9.0% in FY2021. The comparison was affected by prior-year tax benefits and differences in earnings mix.
Outlook, risks and contingencies
- Management expressed confidence in long-term demand for plasma-derived medicines and the markets served, while describing pandemic effects on plasma collection as temporary. No specific FY2023 revenue or earnings guidance is provided in the filing.
- Management expected global supply-chain inflationary pressures to continue through FY2023 and stated that cost actions and selective price increases may not fully offset them. COVID-19, freight costs, raw-material availability and supply disruptions remain risks.
- The revised Operational Excellence Program is expected to incur $95–$105 million of aggregate charges through FY2025 and deliver $115–$125 million of annualized gross savings when complete. Cumulative program charges were $55.7 million as of year-end.
- CSL notified Haemonetics that it would not renew its U.S. PCS2 supply agreement after the amended term ends in December 2023. FY2022 revenue under the agreement was $102.4 million; CSL committed to at least $88 million of disposable purchases in FY2023 under a non-exclusive extension.
- The term loan facilities mature June 15, 2023. The company plans to refinance them; scheduled fiscal 2023 principal payments are $214.4 million. It reported covenant compliance at year-end and forecast compliance through April 1, 2023.
- Legal matters include a U.S. Attorney’s Office subpoena concerning apheresis and autotransfusion products and a putative Illinois biometric-privacy class action. The company is cooperating with the inquiry and disputes the class-action allegations; it could not reasonably estimate potential loss for the lawsuit.
- The independent auditor issued unqualified opinions on the financial statements and internal control. Goodwill valuation was identified as a critical audit matter; reported goodwill was approximately $467 million.
Investor verification priorities
- Track the CSL agreement’s December 2023 expiration, FY2023 minimum purchases, and the expected financial impact of the transition.
- Review refinancing plans and liquidity available for the $214.4 million of scheduled fiscal 2023 principal payments and the June 2023 credit-facility maturity.
- Assess whether Hospital growth and Operational Excellence savings can offset Blood Center declines, inflation, freight costs, and acquisition-related expenses.
- Monitor plasma collection recovery, COVID-19 effects, and customer concentration; CSL represented about 12% of FY2022 total revenue.
- Follow the legal matters, regulatory compliance costs, and any changes in the estimates or disclosures for contingent consideration and goodwill.