Executive Summary / Key Takeaways

• Haemonetics is executing a strategic transformation, shifting its portfolio towards higher-growth, higher-margin opportunities in Hospital technologies and its Plasma business (excluding the CSL (CSLLY) transition), positioning it for accelerated profitable growth.
• The company's technological leadership, particularly in the NexSys Plasma platform (Persona, Express Plus) and Hospital products like TEG 6s and VASCADE MVP XL, provides quantifiable advantages in efficiency, yield, and clinical utility, driving market share gains and enabling premium pricing.
• Fiscal year 2025 results demonstrated strong progress, with significant reported and constant currency revenue growth in the Hospital segment and notable expansion in adjusted operating margin, reflecting the favorable impact of portfolio mix and operational efficiencies.
• Management's fiscal year 2026 guidance projects continued strong organic growth (6-9% ex-CSL) and substantial adjusted operating margin expansion (26-27%), signaling confidence in achieving long-range plan targets despite external headwinds and portfolio transitions.
• Key factors to watch include the continued adoption and utilization of new Hospital products (VASCADE MVP XL, TEG 6s HN cartridge), the pace of Plasma collection volume recovery, successful integration of recent acquisitions, mitigation of tariff impacts, and execution against competitive pressures in dynamic markets.

The Evolution of Haemonetics: Sharpening the Focus for Value Creation

Haemonetics Corporation, a medical technology company founded in 1971, has undergone a significant strategic evolution, transforming its portfolio to focus on areas with the greatest potential for profitable growth. Initially rooted in automated plasma collection, the company has expanded its reach into blood management and, more recently, high-growth hospital technologies. This journey has culminated in a clear strategic pivot, emphasizing the Hospital segment and its Plasma business (excluding a major customer transition) as the primary engines for future value creation, while rationalizing non-core assets like the Whole Blood product line.

The company operates within a dynamic healthcare landscape shaped by several key trends. Demand for plasma-derived biopharmaceuticals, particularly immunoglobulin (IG), remains robust, fueled by new indications, an aging population, and the growth of subcutaneous therapies, which require 20% to 25% more plasma per dose. This demand is supported by planned expansions in fractionation capacity, historically a reliable indicator of future collection growth. Concurrently, hospitals face pressure to enhance efficiency and patient safety, driving demand for advanced blood management and interventional technologies. In cardiac ablation, the emergence of Pulsed Field Ablation (PFA) technology is reshaping the market for traditional radiofrequency (RF) ablation and associated devices. These trends create both opportunities and challenges, requiring Haemonetics to leverage its technological strengths and adapt its strategy.

In this competitive environment, Haemonetics faces rivals across its segments. In automated plasma collection, key competitors include Fresenius Fenwal (FMS) and Terumo BCT (TRUMY). The Hospital segment sees competition from larger, diversified players like Baxter (BAX), Becton, Dickinson and Company (BDX), and Abbott Laboratories (ABT) in various product categories, as well as specialized competitors like Werfen in hemostasis management. Haemonetics positions itself by focusing on differentiated technology and specialized solutions that offer quantifiable benefits to customers, aiming for leadership in targeted niches rather than broad market dominance. While larger competitors may possess greater scale and R&D resources (BDX invests 10-12% of revenue in R&D compared to HAE's 4-5%), Haemonetics seeks to outperform through innovation speed and deep customer relationships, particularly with leading biopharmaceutical companies and hospital networks.

Technological Edge: The Foundation of Haemonetics' Strategy

At the heart of Haemonetics' investment thesis lies its portfolio of differentiated technologies, designed to address critical needs and provide tangible benefits over existing alternatives.

In the Plasma segment, the NexSys PCS platform is a cornerstone. Enhanced with Persona technology, it customizes plasma collection based on donor body composition, enabling a 9% to 12% average increase in plasma volume per donation compared to the baseline device. The addition of Express Plus technology, cleared by the FDA in FY24, is engineered to reduce procedure time, improving center throughput. These advancements, coupled with the NexLynk DMS software (which holds an 80% share of the U.S. market for independent donor management systems), offer customers a compelling value proposition: safely lowering the cost per liter to collect plasma by improving yield and operational efficiency. This technological lead is driving share gains and enabling premium pricing, contributing meaningfully to the Plasma segment's profitability. Future innovation in Plasma is focused on further yield enhancements, speed improvements, and leveraging software/AI for greater efficiency and donor satisfaction.

Within the Hospital segment, technological differentiation is also key. The TEG 6s hemostasis analyzer system provides clinicians with a more complete picture of a patient's coagulation status compared to routine lab tests. The recently cleared TEG 6s Global Hemostasis-HN assay cartridge extends its utility to fully heparinized patients, expanding its addressable market in critical procedures like adult cardiovascular surgeries and liver transplantation. This technology is driving increased device utilization (up 20% in Q1 FY25 in the U.S.) and accelerating the conversion from older TEG 5000 systems to the more user-friendly, site-of-care TEG 6s platform. Haemonetics holds a leading position in the global advanced viscoelastic testing market.

In Interventional Technologies, the VASCADE family of vascular closure devices stands out. VASCADE MVP is clinically proven to improve workflow in electrophysiology procedures. The new VASCADE MVP XL, launched in FY25, utilizes 58% more collagen and a larger disc, providing a robust closure solution for procedures requiring 10-12F sheaths, including those using PFA and left atrial appendage closure (LAAC). This positions Haemonetics to capitalize on the expanding EP market (estimated 8.6% growth in U.S. access sites in FY26) and gain share in LAAC, an area where it previously had minimal presence. While PFA may reduce the number of access sites per procedure, the overall growth in EP procedure volume (forecasted at 16% aggregate growth) is expected to make PFA a net positive for Haemonetics' IVT portfolio. The acquired SavvyWire is a sensor-guided 3-in-1 guidewire for TAVR procedures, offering unique capabilities not currently available from competitors.

These technological advantages are not merely product features; they are strategic assets that enhance Haemonetics' competitive moat, drive market share gains, support premium pricing, and contribute to the company's expanding gross and operating margins, particularly within the high-margin Hospital segment (gross margins expected in excess of 70%, operating margins in the high-20s).

Financial Performance Reflecting Transformation

Haemonetics' recent financial performance underscores the impact of its strategic transformation. In fiscal year 2025, net revenues increased 4.0% on a reported basis and 4.3% in constant currency to $1.36 billion, primarily propelled by robust growth in the Hospital segment. Excluding the effects of the CSL Plasma transition and the Whole Blood divestiture, organic growth for the transformed portfolio was a strong 8%.

The Hospital segment was a key driver, with revenues surging 23.7% reported and 24.0% constant currency in fiscal year 2025 to $564.3 million. This growth was significantly boosted by contributions from the recently acquired Sensor-Guided Technologies (OpSens) and Esophageal Protection (Attune Medical) product lines, alongside continued strength in Vascular Closure and Blood Management Technologies. In contrast, the Plasma segment saw revenues decline by 6.0% reported and 5.9% constant currency to $535.4 million, primarily due to the anticipated reduction in purchases from CSL Plasma in North America. However, excluding CSL, the Plasma business grew 5% in FY25, demonstrating underlying strength driven by technology adoption and share gains. The Blood Center segment's organic revenue is projected to decline by 4% to 6% as the portfolio is further streamlined.

Profitability metrics showed meaningful improvement. Gross profit increased 8.3% in fiscal year 2025 to $749.0 million, with the gross profit margin expanding to 55.0% from 52.8% in the prior year. This margin expansion was primarily driven by the favorable mix shift towards the higher-margin Hospital business and the increasing profitability of the Plasma segment (ex-CSL), along with volume, price, and operational efficiencies. Operating income saw a substantial 34.5% increase to $221.8 million, resulting in an operating margin of 16.3%, up from 12.6% in fiscal year 2024. This improvement was driven by operating leverage, the favorable gross margin trend, a benefit from the remeasurement of contingent consideration in Q4 FY25 ($20.3 million), and decreased performance-based compensation, partially offset by increased operating expenses related to integrating acquisitions and investing in growth initiatives.

Liquidity remains solid. As of March 29, 2025, Haemonetics held $306.8 million in cash and cash equivalents. Net cash provided by operating activities was $181.7 million in fiscal year 2025. Free cash flow grew 24% to $145 million, exceeding expectations and representing a conversion ratio of 63% of adjusted net income. The company's capital structure includes a recently refinanced credit facility and convertible senior notes. Net debt stood at $918.0 million at the end of FY25.

Haemonetics maintains financial flexibility, evidenced by its compliance with debt covenants and the approval of a new $500 million share repurchase authorization in April 2025, signaling a commitment to returning value to shareholders while prioritizing organic investments and strategic M&A.

Outlook and the Path Ahead

Management's guidance for fiscal year 2026 reflects confidence in the continued execution of its transformation strategy and the projected trajectory of its core businesses. The company anticipates reported revenue to decline by 3% to 6%, primarily due to the full-year impact of portfolio rationalization, including the Whole Blood divestiture and the CSL Plasma transition, which represent a combined headwind of approximately $153 million. However, excluding the CSL impact, organic growth is projected to be a robust 6% to 9%, demonstrating the underlying strength of the focused portfolio.

Segment-specific guidance highlights the expected drivers. The Plasma business (ex-CSL) is forecast to achieve organic growth of 11% to 14%, driven disproportionately by anticipated share gains in the U.S. and internationally and the full-year benefit of prior technology adoption (Persona, Express Plus). While collection volume growth is expected to be flat to low single-digit overall, with a modest rebound in the second half, the focus on efficiency and the superiority of the NexSys platform are expected to fuel market share shifts. The Hospital segment is projected to deliver strong reported and organic revenue growth of 8% to 11%, with similar contributions expected from both Interventional Technologies and Blood Management Technologies. This growth is underpinned by continued double-digit expansion in Vascular Closure (driven by procedures, share gains, and utilization, particularly in EP), double-digit growth in Hemostasis Management (TEG 6s adoption and utilization), and growth in Transfusion Management, offsetting challenges in Cell Salvage and the acquired Sensor Guided/Esophageal Protection businesses. The Blood Center segment's organic revenue is projected to decline by 4% to 6% as the portfolio is further streamlined.

A key highlight of the fiscal year 2026 outlook is the expected significant expansion in profitability. Adjusted operating margin is projected to improve by 200 to 300 basis points, reaching 26% to 27%. This is driven by continued gains in adjusted gross margin, reflecting the favorable portfolio mix shift towards higher-margin Hospital and Plasma (ex-CSL) products, coupled with operational efficiencies and savings from the new market and regional alignment initiative (expected to generate ~$30 million in annualized savings). Adjusted earnings per diluted share are guided in the range of $4.70 to $5.00. Free cash flow is expected to be strong, in the range of $160 million to $200 million, with a conversion ratio exceeding 70% of adjusted net income, reflecting improved operational efficiency and financial stewardship.

This guidance signals management's confidence in achieving the goals outlined in their four-year long-range plan, positioning Haemonetics for a significantly more profitable, diversified, and sustainable future.

Risks and Considerations

While Haemonetics' transformation presents a compelling investment thesis, several risks and challenges warrant consideration. The successful integration and commercialization of recent acquisitions (OpSens, Attune Medical) are critical; slower-than-anticipated adoption or market disruptions (like the impact of PFA on ensoETM) could temper growth expectations for the Hospital segment. The Plasma business remains subject to customer concentration risk, particularly as the CSL transition concludes, and the pace of collection volume recovery could be slower or more volatile than anticipated due to macroeconomic conditions or changes in customer inventory strategies.

Intense competition across all segments, including from larger, well-resourced players and disruptive technologies, could pressure pricing and market share. Regulatory compliance remains a constant challenge, with evolving requirements (e.g., EU MDR/IVDR, cybersecurity) potentially increasing costs or delaying product launches. Supply chain unpredictability and volatility in raw material costs, exacerbated by global macroeconomic conditions and geopolitical tensions, could impact manufacturing costs and product availability. Furthermore, the estimated impact of tariffs, while being actively mitigated, could still affect profitability. The ability to attract and retain key personnel is also crucial for executing the growth strategy.

Conclusion

Haemonetics is in the midst of a significant and deliberate transformation, strategically reshaping its portfolio to capitalize on higher-growth, higher-margin opportunities in Hospital technologies and its Plasma business (excluding the CSL transition). The company's investment thesis is underpinned by its differentiated technology, which provides quantifiable advantages in efficiency, yield, and clinical utility, driving market share gains and enabling margin expansion. Recent financial performance demonstrates tangible progress in this transformation, particularly the robust growth and expanding profitability within the Hospital segment.

Management's fiscal year 2026 guidance reinforces the expectation for continued strong organic growth and substantial margin expansion, signaling confidence in achieving long-range plan targets and positioning the company for a more profitable and sustainable future. While challenges such as market dynamics, competitive pressures, and integration risks persist, Haemonetics' focused strategy, technological leadership, and disciplined capital allocation position it to navigate these headwinds and deliver value to shareholders. The successful execution of the growth strategy in Hospital and the continued strength of the Plasma business (ex-CSL) will be critical indicators to monitor as the company progresses towards its long-term aspirations.