Q4 2025 Haemonetics Corp Earnings Call
Speaker Change: Good day, and thank you for standing by. Welcome to the Q4 2025 Humanotics Corporation
Speaker Change: At this time, all participants on a listen only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand to trace. [inaudible]
Speaker Change: To destroy a question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Olga Guyette.
Olga Guyette: Good morning and thank you all for joining us for Humanetics Fourth Quarters in fiscal year 2025 conference call and webcast. I'm joined today by Chris Simon for CEO and James Derricka for CFO .
Olga Guyette: This morning, we posted our fourth quarter and fiscal year 2025 results to our Investor Relations website, along with additional supplemental tables that support some of the assumptions within our fiscal year 2026 guidance included in our earnings release.
Olga Guyette: These supplemental tables help reconcile the projected fiscal year 2020-26 growth rates of electrophysiology, coronary, and pre-frope procedures in the U.S. with the corresponding exercise opportunities for a vascular closure business.
Olga Guyette: The access side opportunities represent the anticipated growth of the U.S. addressable market and national encloser as incorporated in our hospital and total company revenue guidance for fiscal year 2026.
Olga Guyette: Before we begin, just a quick reminder that all revenue growth rates discussed today are organic, unless specified otherwise, and exclude the impact of current deflacuation, acquisition, and impact of the whole blood divestiture.
Olga Guyette: We'll also refer to other non-GAAP financial measures to help investors understand human genetics on growing business performance.
Olga Guyette: Please know that these measures excrete certain charges and income items.
Olga Guyette: A full list of excluded items for consolation to our gap results in comparison to the prior year periods provided in our fourth quarter of fiscal year 2025 earnings release available in our website.
Olga Guyette: Our remarks today include forward-looking statements and our actual results may differ materially from anticipated results.
Olga Guyette: Factors that may cause the results to differ include those reference in the safe harbor statement in today's earnings release and in our other FAC filings.
Olga Guyette: but do not undertake any obligations to update this forward-looking statement.
And now, I'd like to turn it over to Chris.
Chris Simon: Thank you, Olga. Good morning everyone. We appreciate you joining today.
Chris Simon: We delivered solid earnings growth in our fourth quarter in fiscal 2025 with robust margin expansion and strong cash flow as evidence of the health and vitality of our businesses.
Chris Simon: We reported total revenue of 1.4 billion, reflecting 4% growth on a reported basis and 1% organic.
However,
Chris Simon: Organic Growth, excluding 148 million from CSL and the whole blood divestiture was 8%, a more accurate representation of our transform portfolio.
Chris Simon: Hospitals become our largest business with both blood management technologies and interventional technology franchises, building momentum and delivering double digit growth.
Chris Simon: Expanded Reach and Relevance are enabling us to capitalize on key trends and drive deeper penetration in critical areas of care.
Chris Simon: In plasma, we continue to expand margins and capture share as customers adopt our next generation technologies further reinforcing our position as the industry leader.
Chris Simon: Having divested whole blood, our attention is on the remaining high-value blood center plasma
Chris Simon: The operational agility of our global manufacturing and supply chain network enables us to successfully navigate ongoing macroeconomic headwinds.
Chris Simon: We strengthen our leadership team by promoting Roy Galvan to Chief Commercial Officer and hiring Frank Chan as Chief Operating Officer. These appointments underscore our commitment to excellence and building new organizational capabilities to support scalable long-term growth, especially in our hospital businesses.
Chris Simon: Additionally, we leveraged our strong balance sheet and cash flow to execute a $150 million share by-back, repurchasing approximately 2.4 million shares of Haemonetics' common stock.
Chris Simon: This buyback reflects our commitment to value creation and our strong conviction in Heemonetics long-term growth trajectory.
Turning now to our revenue results and fiscal 2026 guidance.
Chris Simon: Hospital revenue grew 12% in the quarter, and 24% in fiscal 2025 on a reported basis, with organic growth of 9% and 12% respectively.
Chris Simon: In blood management technologies, our largest hospital franchise, revenue grew 6% in the quarter, and 10% in fiscal 25 driven by strong utilization, share gains, and price benefits across the portfolio.
Chris Simon: Hemostasis Management, delivered an impressive quarter in fiscal 25 with U.S. revenue growth of 20% and 23% respectively.
Chris Simon: Performance was driven by the successful launch and rapid adoption of the HN cartridge, accelerating new account openings and fueling customers' transitions from the lab-based TIG 5000 to our advanced point of care TIG 6S.
Chris Simon: The MEA followed closely with strong growth across all key markets helping offset continued market challenges in China.
Chris Simon: Dispranchise also benefit it from continued growth in transfusion management, strong capital sales and competitive market share gains in sales salvage in the U.S.
Chris Simon: The interventional technologies franchise delivered 21% reported growth in the quarter and 46% in fiscal 25, with 12% and 16% organic growth perspective late.
Chris Simon: Growth in Vascular Closure was driven by our leadership in electrophysiology, where revenue from Vascade MVP, Vascade MVP XL grew 28% in the fourth quarter and 26% for the year.
Chris Simon: This performance was fueled by new account openings and increased utilization in the U.S. along with strong adoption of FKAD, MVP in Japan, which contributed approximately 900 and 700 basis points to quarterly and full-year EP revenue growth respectively.
Chris Simon: Strong E-T performance was partially offset by a decline in our legacy Vascade business.
Chris Simon: which is primarily used in coronary and peripheral procedures. Vascade represent at less than 15% of vascular closure revenue in fiscal 25. In a market we estimate is growing it approximately 2% annually. We must capitalize on those procedures in the coming year.
Chris Simon: We are making progress across our sensor guided technologies portfolio. We recently reorganized our U.S. sales force, Allegate, undivided attention to the structural part market.
Chris Simon: The dedicated team is driving meaningful performance improvements, including steady growth in the new Savioire account openings in the U.S. and nearly double the account penetration rate by year-end.
Chris Simon: While OptiWire growth remains stable, it was partially offset by OEM destocking. We also continue to face pressure from pulse field ablation in our soft agile protection business.
Chris Simon: Moving to hospital guidance, we remain confident in the strong growth trajectory of our hospital business, with projected, reported and organic revenue growth of 8-11% in fiscal 2026.
This outlook assumes
Similar growth contributions from interventional technologies and blood management technologies.
Chris Simon: Within intervention of technologies, we expect continued double-digit revenue growth and cardiovascular closure, driven by growth in procedures, share gains, and improved utilization.
Chris Simon: As outlined in the supplemental tables posted this morning, we estimate 8.6% growth in addressable access sites in EP in the US. We anticipate additional share gain and improved utilization of our devices across all addressable procedures.
Chris Simon: Because most key accounts are already penetrated in the US and Japan, growth will be increasingly driven by utilization, with a more modest growth contribution from Japan when compared with fiscal 25.
Chris Simon: We also expect additional improvements with sensor-guided technologies helping offset ongoing impacts from pulse field ablation on its top of geoprotection.
Chris Simon: In blood management technologies, we expect double-digit growth in hemostasis management, driven by the strong performance of TAG's success, including additional TAG 5000 device conversions, new account openings, and increased utilization.
Chris Simon: Transfusion Management is also expected to deliver double-digit growth, partially offset by tough comparison in cell saver following the capacity the capital replenishment cycle last year.
Moving to Plasma and Blood Center
Chris Simon: Due to the planned CSL transition, Plasma revenue declined 9% in the quarter, and 6% in fiscal 25, excluding CSL.
Chris Simon: Plasma revenue grew 11% in the fourth quarter and 5% for fiscal 25. Given primarily by continued strong US growth through technology adoption and share gains.
Chris Simon: In the US, plasma collections, ex-sharegings, decline 4% in the fourth quarter, and 7% sequentially in line with typical seasonal patterns.
Chris Simon: In a full fiscal 25, U.S. collections declined 1%, as collectors rebounded inventories and prioritized
Chris Simon: With a persona and express-plus upgrades substantially completed, we've equipped our customers with a significant competitive advantage, boosting donor engagement, enhancing center efficiency, and lowering cost per liter.
Chris Simon: Looking ahead to fiscal 26, with the CSL transition completed, we expect plasma revenue to decline 7-10% on a reported basis.
Chris Simon: Organic Growth, XCSL, is expected to be 11-14%, disproportionately driven by sharegames in the U.S. and internationally and prior technology adoption.
Chris Simon: Art Fiscal 26 Revenue Growth Guidance assumes flat to low single digit volume growth in the U.S. with a modest rebound in collections anticipated in the second half of the year as customer yield and productivity benefits annualize.
Chris Simon: We remain confident in the mid-to-high single-digit annual growth in demand for immunoglobulin.
Chris Simon: Driven by the long-term growth in plasma-derived therapies and supported by increasing global fractionation capacity, historically a reliable predictor of accelerating plasma collection growth.
Chris Simon: Blood center revenue declined 22% in the quarter and 8% in fiscal 25 on a reported basis due to the whole blood divestiture. Organic revenue was flat in the quarter and down 2% for the year.
Chris Simon: Hey, Ferrisis revenue grew 2 percent, both in the quarter and fiscal 25, driven by global class and share gains and strong U.S. Red Cell Collections.
Chris Simon: Plasma Collection Contract from the Japanese Red Cross, we expanded that agreement to also become exclusive provider for fresh frozen plasma.
Chris Simon: FFP is typically used in transfusions requiring the highest medical standards and this further demonstrates the competitive strength of our technology and our position as a trusted partner.
Chris Simon: Whole blood contributed just under 2 million in the quarter, and 48 million for the year. Reflecting an organic decline of 16% in fiscal 25 before its divestiture in January .
Chris Simon: This divesture represent an important milestone in our portfolio evolution, enabling us to reallocate resources towards higher growth opportunities.
Chris Simon: Due to the impacts of the whole blood divestiture and exits of the liquid business, we expect blood center revenue to decline 23-26% on a reported basis in fiscal 26.
Chris Simon: Organic Revenue is projected to decline 4 to 6 percent as we further streamline the portfolio and align investments to support growth elsewhere.
James Over You
Thank you, Chris and good morning everyone.
Chris Simon: As we approach the final year of our current long-range plan, I'm pleased to highlight the significant progress we've made in driving profitability across our portfolio.
Chris Simon: Our financial results reflect the continued evolution of our business, and we're seeing strong momentum in margin expansion fueled by strategic actions, improved operational efficiencies, and a well-executed ongoing portfolio transformation.
Chris Simon: Representing an increase of 620 basis points compared to the prior year driven by volume growth in hospital and improved and reshaped product mix across our portfolio as we continue to strategically emphasize higher margin products.
and Price Benefits, including those tied to technology adoption.
Chris Simon: Our quarterly results also reflect 150 basis points benefit from the divestiture of the whole blood business and a one-time 10.6 billion dollar shortfall payment from CSL representing approximately 100 basis points.
Chris Simon: The adjusted gross margin for fiscal 25 was 57.4%, an increase of 300 basis points compared to the prior year, largely driven by the same factors as in the fourth quarter.
Chris Simon: We expect these trends to continue into fiscal 26 further expanding our margins.
Chris Simon: Adjusted operating expenses in the fourth quarter were $116.7 million, a decrease of 4 million or 3% compared with the prior year's fourth quarter, mainly due to lower fray costs and performance
Chris Simon: Adjusted operating expenses for fiscal 25 were $455.5 million, an increase of 20 million
Chris Simon: For the full fiscal year, the dollar increase in adjusted operating expenses was primarily due to the acquisitions of off-sense and attuned medical, as well as additional investments to support growth, partially offset by lower performance-based compensation.
Chris Simon: As a percentage of revenue, adjusted operating expenses were 35.3% in the fourth quarter, and 33.5%
in the full fiscal year.
Chris Simon: Relatively flat when compared with the same periods of last year, reflecting our disciplined resource allocation while managing portfolio transitions and investing in innovation and other drivers of sustainable long term growth.
Chris Simon: 4th quarter adjusted operating income grew 27% to 82.3 million dollars for an adjusted operating margin of 24.9% up 610 basis points from last year.
Chris Simon: For the full fiscal year, adjusted operating income grew 18% to $326.3 million and adjusted operating margin was 24%.
up two hundred ninety basis points versus fiscal twenty-four [inaudible]
Chris Simon: Key drivers in the quarter and fiscal 25 included continued gross margin expansion, disciplined cost management and incremental OEP savings that helped offset additional growth investments.
Chris Simon: We are sharpening our focus on the geographies and markets that offer the greatest opportunities for profitable growth and advancing our innovation agenda. Our new regional and market alignment initiative is expected to further strengthen our core business.
Chris Simon: while generating approximately $30 million of net savings over the next two years, helping offset the financial impacts of CSL's transition.
Chris Simon: The Investiture of the Whole Blood Business and Additional Rationalization Efforts in the Aferesis Business
Chris Simon: We expect about two-thirds of de-savings will be realized in fiscal 26.
Chris Simon: The adjusted income tax rate was 22% for the fourth quarter and 23% for fiscal year 25 compared with 21% and 23% for the respective periods of the prior year.
Chris Simon: 4th quarter adjusted at income was $61.6 million, up 16 million or 34% and adjusted earnings for diluted share was $1.24, up 39% compared with the 4th quarter of fiscal 24.
Chris Simon: Adjusted net income for fiscal year 25 was $231.5 million, up 28 million or 14 percent.
Chris Simon: and adjusted earnings for diluted share was $4.57, up 15% compared to the prior year.
Although the line items, including interest expense,
Chris Simon: Foreign Exchange Adjustments, Taxes, and Lower Share Count added about 13 cents to the fourth quarter adjusted EPS, but created a 20 cent headwind for the year, mainly due to higher interest expense.
Moving to Select, Balance Sheet, and Cash Blow Highlights
Chris Simon: In fiscal 25, we generated $182 million in cash from operating activities.
Chris Simon: The same, as in the prior year, as higher dead income was offset by the timing of certain payments, which were heavily weighted towards the beginning of our fiscal 25, and continuous efforts to rebuild the safety stock of our critical inventories.
Chris Simon: Free cash flow grew 24% to $145 million, exceeding expectations with the free cash flow conversion ratio of 63% of adjusted income up from 57% last year.
Chris Simon: This increase reflects strong operating performance coupled with the additional proceeds from the sale of one of our manufacturing facilities at the start of fiscal 25 and lower catbacks.
Chris Simon: Strong, consistent cash flow generation remains a key strength at Humanetics and we continue to prioritize free cash flow as a strategic driver of growth and value creation.
Chris Simon: There were no changes to our debt structure during the quarter and we had no outstanding barwings on our revolving credit facility.
Chris Simon: Our net leverage ratio is fitted approximately 2.52 times EBITDA, as defined in our credit agreement, providing significant financial flexibility to support continued growth through a balanced mix of growth investments, share repurchases, and debt repayments.
Chris Simon: In alignment with our capital allocation priorities and following the successful completion of our $300 million share repurchase program.
Chris Simon: This morning, we announced that the Board of Directors has authorized a new program to repurchase up to $500 million of the company's common stock over the next three years.
Chris Simon: This new authorization reinforces our commitment to maximizing shareholder value and optimizing
Moving to fiscal 26 guidance.
Chris Simon: We're entering fiscal 26 with strong momentum and a clear line of sight to our long-range plan goals.
Chris Simon: While reported revenue is expected to decline 3-6% driven by the full-year impact of the whole blood of the vestiture.
Chris Simon: CSL's Transition and Exits of the Liquid Business, together representing a $153 million headwind, we remain firmly on track to deliver against every long-range plan commitment we've
Chris Simon: We expect Organic Growth, XCSL of 69% supported by balanced contributions from our plasma and hospital businesses.
Chris Simon: Our ongoing transformation is driving meaningful margin expansion as our portfolio shifts toward higher margin growth oriented products.
Chris Simon: We expect adjusted operating margin to improve by two to 300 basis points, reaching 26 to 27% in
Chris Simon: This improvement is supported by continued gains in adjusted gross margin.
Chris Simon: Keeping us on track to achieve our long-range planned targets in the high 50s to low 60s
Chris Simon: As in the prior year, margin expansion is expected to build throughout the year.
Chris Simon: We anticipate adjusted earnings for diluted share in the range of $4.70 to $5.00 at the midpoint of our outlook. Recent share repurchase activity is expected to offset the impact of increased interest expense.
Chris Simon: The anticipated increase in interest expense is primarily driven by lower interest income reflecting a lower interest rate environment.
and the assumed views.
Chris Simon: of cash to retire the remaining $300 million of our 2026 convertible securities at maturity.
Chris Simon: As we approach these majorities, we will continue to evaluate the most efficient and value-enhancing options for settlement.
Chris Simon: We anticipate the adjusted tax rate to increase to approximately 24.5% in fiscal 26 compared to 23% in fiscal 25
Chris Simon: The tariff environment remains highly dynamic. However, with the majority of our revenue concentrated in the US and coming from high-volume growth products like plasma, keg, and vascular closure, primarily manufactured in the US, or US MCA compliant regions.
Chris Simon: We believe we are in a strong position to manage the near-term risk while taking proactive steps to reduce long-term impacts.
Chris Simon: We estimate an annualized adjusted EPS impact of up to 20 cents, assuming the most recently announced tariff rates and exemptions that have been put in place for USMCA compliant products manufactured in Mexico or Canada.
Chris Simon: The midpoint of our fiscal 26 adjusted EPS guidance already reflects this impact, including the benefits from prior actions like inventory builds and supply chain diversifications.
I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Chris Simon: With our teams fully engaged, we are well positioned to further reduce tariff exposure beyond fiscal 26, through additional risk mitigation measures.
Chris Simon: And lastly, with heightened focus on cash flow generation throughout the organization, we expect our free cash flow in fiscal 26 to be in the range of $160 to $200 million.
Chris Simon: We expect our free cash flow to adjusted debt income conversion ratio to be an excess of 70 percent. A testament to our improved operational efficiency and strong financial stewardship across the organization.
Chris Simon: Thank you, and I'll now turn it back to Chris for some closing comments. Thanks James, I'd like to offer a few reflections if I might.
Speaker Change: In fiscal 2022, excluding CSL, we earned $1.83 in adjusted earnings per share.
Speaker Change: We issued a new four-year LRP with ambitious targets, including low double-digit compounded annual growth in revenue and mid-twenties adjusted ETS compound annual growth rate, excluding
Speaker Change: We target adjusted operating margin expansion into the high 20s in fiscal 26 and cumulative free cash flow generation of six to $700 million.
Speaker Change: The dialogue at the time was mostly about CSL's impending transition, the growth of our hospital franchises and our projected margin expansion.
Speaker Change: Despite the challenges the past year, we remain confident in our strategy and our ability to deliver these goals. Nearly 85% of our revenue is now generated by high growth, high margin products, driving accelerated growth and profitability.
Speaker Change: At the midpoint of our FY26 guidance range, we expect approximately 1.3 billion in revenue, representing a 10% compound annual growth rate.
Speaker Change: and about $4.85 in adjusted earnings per diluted share, more than $3.00 greater than our FY22 results.
Speaker Change: At the 28% compound annual growth rate in earnings from a significantly more profitable, diversified, and sustainable portfolio.
Speaker Change: We have a clear path forward with interventional technologies, having re-aligned our sales organization and invested in new clinical evidence to drive momentum.
Speaker Change: Tag 6S continues to propel growth, driving device conversions and increase utilization as we migrate customers to our point-of-care visoelastic testing system.
Speaker Change: Technology upgrades and competitive wins in plasma are fueling revenue growth and strengthening our leadership in the U.S. and internationally. Margin Expansion is progressing as planned and we are well positioned to sustain and build upon this momentum.
Speaker Change: We have a renewed emphasis on free cash flow generation, a strong capital position, and the capacity to fund additional growth.
Speaker Change: Our near term priorities are organic growth, debt repayments, and opportunistic buybacks.
Speaker Change: We are executing effectively, evolving strategically and creating significant value for customers and shareholders. We are confident that we are positioning the company for continued profitable growth and long-term value creation. Thank you again. Operator, please open the line for questions.
Speaker Change: Thank you, as a reminder, if you would like to ask a question, please press star one on your telephone.
You'll hear the automated message advised when your hand is raised.
Speaker Change: We also ask that you please wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster.
Speaker Change: Our first question is coming from the line of Rohin Patel of JP Morgan, your line is open.
Rohan Patel: Hi, thanks for taking the question and congrats on a good quarter.
Rohan Patel: I wanted to start with plasma. You had a nice beat in the quarter and the guide for Fiscal 26 came in.
Rohan Patel: at 11-14% excluding CSL, which was ahead of expectations and some of your prior commentary just a few months ago.
Rohan Patel: So maybe if you could just talk more about what you're seeing as far as the collections environment and what's assumed in guidance between
Rohan Patel: Pricing sharegames and volumes and how we should think about this contributing to plasma and total company margins in fiscal 26 and then I had to follow up.
Chris Simon: Morning, Rowan, it's Chris. Thanks for the question. Yeah, we remain very bullish on plasma near and longer term
Rohan Patel: You know, the underlying demand for IG remains really robust as evidenced by our customers and market growth.
Rohan Patel: in their therapies. So we look at what's going on for certainly our fiscal 25 and into our projected plans for fiscal 26.
Rohan Patel: as a temporary pullback, largely enabled by our technology where we've given them substantial improvements and through puts and yield from their centers. The 11 to 14 percent
He's almost entirely sharegames [inaudible]
Rohan Patel: and a premium associated with our upgraded technology adoption. We don't see meaningful growth in the first half of our fiscal 26 in terms of collection volume. We do believe based on in-depth discussion on planning with our customers that that will change in the second half of the year.
Rohan Patel: But even still, it's going to be relatively modest as they digest the improvements we've given them and get back on track to really drive and to meet further demand and talk more why we're bullish on the long term demand. But we remain confident in what we're doing in plasma and its contribution to the portfolio more broadly. Thank you very much.
Great, and then I guess my follow-up is on ETS.
You obviously guided to $4.7 to $5. [inaudible]
Rohan Patel: and Cisco 26, which also includes your 26th to 27% operating margin.
Speaker Change: which is on track for your LRP, so can you just elaborate more on the drivers here from a gross margin and OpEx standpoint?
You mentioned some expense management initiatives and also 20 cents.
Speaker Change: Assumed for tariff impact. So what does that include exactly? And do you see upside to this given some of the progress we're seeing on trade talks and potentially? No.
Exhaustions. Thanks.
Yeah, hi, Broin. Thanks James Durekka. Yeah, so I'll start with...
Speaker Change: You know, the operating margin of, you know, 26 to 27.
Percent, we see...
Speaker Change: continued improvement in gross margin mix, that's going to be driving that into our fiscal
as we rationalize the portfolio.
Speaker Change: and the gross margins have continued to improve. So you heard me on the call earlier talking about whole blood, for example, we'll have about 150 basis point impact on gross margin improvement, and some of that will fall to the bottom line. And we'll continue to see gross margins improving through fiscal 26, and that's going to drive.
most of our improvement as we as we head into
Speaker Change: With regard to tariffs, we have as our starting point, as you heard me say, the 20 cents is our annualized impact.
Speaker Change: and that's really, I guess, our starting point. Since we have sufficient inventory levels
Speaker Change: We do have the time and flexibility to address the impacts by diversifying our supply chain, in sourcing production and seeking other mitigation activities.
Speaker Change: and we'll continue to do that. So essentially we've built in about half of that at the midpoint of our range. We feel comfortable with that. We have a line of sight to that and we also now have the ability to continue to work on.
Speaker Change: You know, mitigating tariffs as we as we move forward really into fiscal
Speaker Change: 27. The good news for us really on tariffs is that the majority of our revenue is primarily concentrated in North America, in the U.S.
and our key drivers, Plasma, Bob,
Speaker Change: Tag and Vascular Closure. Those products are all either manufactured in the U.S.
Speaker Change: or our US-MCA-compliant countries like Mexico or Canada. So on the revenue side, we're in very good shape. So I'll pause there, hopefully, that gives you some additional color.
Yeah, thank you.
Thank you. One moment for the next question.
Speaker Change: and the next question is coming from the line of Marie Thalbert of BTRG. Your line is open.
Speaker Change: to try to improve the performance and sort of the legacy side of the business on the PCI side.
Thanks, Marie. It's Chris.
Speaker Change: So we've published some supplemental tables. We just want to try to be clear about what we believe to be the opportunity set, the total addressable market which is a function of the procedures we can participate in. And you ongoing change in the number of access sites per procedure given the focus on closure. So hopefully that is helpful. What it says is, you know, for in the US, for FY26, we're looking at something that's...
Welcome and thank
Speaker Change: We do need to factor in what's happening in coronary and peripheral which continues to be a drag on that growth rate We are addressing it and we think our heightened focus where we've really targeted it [inaudible]
Speaker Change: Our U.S. Field Force to go either directly and on bastard closure in all opportunities or structural heart where we've carved out a dedicated effort and we think that's...
Speaker Change: Producing some interesting new growth, green shoots that we're enthusiastic about going forward so from our vantage point yeah we're taking a step back we want to be balanced. Thanks.
Speaker Change: because we don't control a number of the things that are disrupting the market.
Speaker Change: But, you know, the attached rate on PFA, for example, if we estimate that the leading players there are improbably...
60% of what we...
Speaker Change: Target as the T-600 accounts, those accounts that represent 90 plus percent of the opportunity.
Speaker Change: with our structural heart play but there's there's more work to do and you know
Speaker Change: We think FY 26 will be a good opportunity for that leadership team to really address the market and get back to where we want them to be going forward.
Okay, perfect. Maybe I can…
Speaker Change: Ask a follow-up on that. I know there was a management change during the quarter of the former head of hospital transition out of the role and I think it's Mr. Galvan, I think that's added that role to those responsibilities. I wanted to understand any changes to strategy that came along with that. And as you've seen a nice ramp in hospital revenue over the past couple of years, is there a way to quantify or maybe qualitatively give us an idea of the margin expansion that this segment has seen? And I know it's expected to continue to be a big gap.
Contributor to Margin Expansion [inaudible]
Speaker Change: Yes, thanks, Marie. It is a big contributor to more expansion. It is a nutshell. You issued on us when you initiated coverage. It was a really thoughtful articulation of this. We're playing and winning in collections. It's an important source of…
Speaker Change: Faceline Growth, EBITDA, pre-gash flow, etc. But the real opportunity is to use the benefits there to invest profitably in building out a hospital portfolio which today consists of blood management technologies and interventional technologies. We see the gross margin of that business in excess of 70%.
Speaker Change: and with corresponding med surge operating income, which certainly puts it into the high 20s, which is what we're guiding towards now.
Speaker Change: very powerful contributions with regards to the leadership changes super grateful to Stu Strong and his team.
Speaker Change: I think they took that business understood 10 years from less than 200 million to 500 to 600 million that it is today and were excited about that with double-digit growth going forward.
Speaker Change: We expect and I realize the audacity of what I'm about to say, but it is our plan. We expect both blood management technologies and interventional technologies to be billion dollar franchises each. [inaudible]
and Roy brings a skill set.
Speaker Change: and a capability to help those franchise presidents take their business.
Speaker Change: to that level. And I think we're excited about the opportunity in front of us. We need to make sure we're organized appropriately. So both Roy and Frank Chan is their Chief Operating Officer.
Speaker Change: Bring a set of capabilities and a level of talent that is indicative of our growth aspiration, particularly in the hospital space.
Speaker Change: Thank you. One moment for the next question. And the next question will be coming from the line of Mike Matson of me to my company. Your line is open.
Mike Maxon: Yeah, thanks. You know, it's just looking at kind of, you know, where you've guided for, for 26 for, you know, from an organic perspective. And, you know, plasma is a little higher than kind of longer term growth, but, you know, if we assume plasma is kind of, you know, longer term 8 to 10.
Hospitals, maybe around head
Mike Maxon: and then, you know, kind of low single, we just climbed in the blood business. You know, does that sort of imply that you're going to, you know, longer term, you're not going to be at the lower end of that, you know, mid to high single digit?
Mike Maxon: you know, growth target. So in other words, more maybe more like six percent. Again, I'm talking, you know, post fiscal 26 time frame.
Mike Maxon: Yeah, Mike. Our plan is to issue a new LRP later this calendar year, that we're targeting December , which we think
Mike Maxon: kind of corresponds with the number of things we have underway internally. We've grown this business.
10% organically over the four-year period of this LRP.
Mike Maxon: We would expect to be able to replicate that performance going forward, knowing that we're doing it off of a much larger and significantly more profitable based business. From our vantage point, we play in winning markets with leading products, winning markets or defined as...
Mike Maxon: Top Quartile Medtech Categories. So the categories themselves are fully supportive of high single digit or better growth rates with the appropriate profitability. That's what we're targeting. And we have some work to do to get our interventional technologies.
Mike Maxon: Footprint and platform, you know, fully on track. That's what you see in our FY26 guidance.
Mike Maxon: We want to be balanced and we're controlling the things we can control and delivering the growth that we aspire to but what we're building here and what we'll talk more about in December at our investor day is something that should be better than the numbers you're quoting and significantly more profitable even in the business that we're guiding to today. Thank you very much.
Speaker Change: Okay, thank you. I look forward to hearing more at the investor day, then I guess.
Speaker Change: I just want to ask a question on, you know, M&A, I think you have an option to acquire the research medical. I know they've made some progress with their trial, and I think they've got to see you mark recently for Perky's seal. So can you just give us an update there on, you know, where things stand, what the timing would be of a potential decision, and whether or not, you know, your appetite for this business has changed, given kind of what you've seen with that scale.
[inaudible]
Speaker Change: Yeah, so the long-term appetite, the notion that you know, Haemonetics as a serial or choir, doing programmatic M&A to augment.
Speaker Change: Robust Organic Growth, that hasn't changed. It's absolutely part of our long-term plan. We think most of that activity will be concentrated in the hospital sectors, particularly IBT. As we step back, we have worked to do with our two most recent acquisitions, both op-sense and attune. And that is our focus, and that's why we believe organic growth is the single most powerful lever in our capital allocation today, and that's going to be our focus. Thank you very much.
through the duration of FY 26.
Speaker Change: The opportunity for a vivicure, the option we have there is the one exception and we have worked very closely with the company over the last several years. We were delighted to see the results from the patch trial, the read out at TCT, the physician response to that and their progress across all the main milestones that we have been working with them on. So,
We, you know, that is on track.
Speaker Change: We're optimistic about it. It will come out, you know, assuming success, you know, with our U.S. filings later this fiscal year, that's powerful and it would be in our sweet spot, which is the intersection between closure and structural heart, which are, you know, the two segments we play in on IBT. So we're enthusiastic.
Speaker Change: That will be a later fiscal 26 opportunity because it gives us the time needed to really get our feet under us in IBT more broadly and be ready for that product when it comes.
Okay, God, thanks [inaudible]
Thank you. One more for the next question.
Speaker Change: And the next question will be coming from the line of Andrew Cooper of Raymond James. Your line is open.
Andrew Cooper: Hey, everybody, thanks for the time. Maybe first, just to start on...
Andrew Cooper: Interventional, again, you know, it sounds like the smaller bore vacate product might have gotten a little bit worse not necessarily better in the quarter. So just maybe help us think about where you are and effectuating some of the changes that you started talking about last quarter and how we think about sort of the pacing of that improving through the course of fiscal 26.
Yes, thanks, Andrew. It's crisp.
Andrew Cooper: We like the opportunity in vascular closure, you know, writ large. It's a billion dollar plus play and it's, you know, as our table show we think it's, you know, one third EP and two thirds coronary and peripheral, predominantly in the intervention of cardiology suite.
Andrew Cooper: We're having a lot more success in electrophysiology and we need to replicate that as we've been to refocus and deliver as well on the much larger but smaller growing two thirds that is in IC. From our vantage point, what we've done is just take a step back with the field force. We experimented with this with our incentive comp and we've now put those changes in place structurally to have a team that is dedicated to vascular closure and covers it. We're having a lot more success in electrophysiology and we're having a lot more success in electrophysiology.
across the entire spectrum.
We think one of the primary benefactors of that focus [inaudible]
Andrew Cooper: Will Be Base Vascade. It's approximately 15-15% of the current revenues.
Andrew Cooper: But it is admittedly growing low single digits as a category, but the penetration is relatively modest and we think we have the best technology and time spent with that physician community, educating them on the benefits of what Vascade brings to them. We think we'll yield results and we actually have a forecast which thinks very balanced but a modest return to growth for Vascade in FY 26.
Speaker Change: Okay, that's helpful. And then maybe just on the P&L in the quarter, I think you were a little above at least where we were and I think where the rest of the street was [inaudible]
Speaker Change: on operating expenses. You were better on gross margins to offset that, but just want to drill in a little bit on the op-x. Was there anything kind of one-time-ish that jumps out there and how do we think about that trajectory knowing, you know, in the context of what you just said, you're building out this sort of separate team and in. Yeah, yeah, yeah, yeah.
Speaker Change: Yeah, I understand. No, there's nothing in particular, one time related.
Speaker Change: in OPEX, I think it's just more some timing of expenses in our fourth quarter.
Speaker Change: Well, we'll probably see some of that continue into first quarter. I think our first quarter is a little bit heavier. It's just the pattern of our expense spending, even maybe with some R&D. So you should expect our first quarter, 26 to be a notch down, take out the benefit from CSL, which is about a hundred basis points, and then...
Speaker Change: Take it down a little bit from there, but nothing remarkable in Q4.
Yes, if I can just add to it Andrew, we're
Speaker Change: We think we'll begin as the year progresses to see operating leverage through the PNL, however.
Speaker Change: We're not back and off of our investments in R&D. We want to, as I would say, different. We're going to, we want to drive reach and relevance. So the investments we've already made in sales and marketing, the investments we are continuing to make in R&D to strengthen the clinical evidence are absolutely part of what we're doing. We want to be cognizant of it. We have growth targets and margin expansion that we're going to deliver, but we're not going to do that at the expense of underclubbing it.
with regards to innovation or with our field presence.
Okay, I'll hop back in the shoe. Thank you
Speaker Change: Thank you, one more month for the next question, and the next question is coming from the line of Joanne Wuensch of City Your Line is open.
Joanne Wensch: Good morning, and thank you for taking the question. I have two orders for them up front.
Can you talk a little bit about how you see...
Joanne Wensch: The year sort of shaking out in terms of revenue and EPS progression. The language I heard on the call was that Plasma would likely be a little bit more back half-weighted, which what I assume would be would sort of shift everything into the back half, but I want to clarification on that. But I'm sorry, but I'm sorry, but
Joanne Wensch: and then your comments on plasma was that the growth that is coming this year is mostly from sharegains.
Joanne Wensch: Is there any way for youth to like flush that out for us a little bit more in terms of sugar gains? I'm giving examples here because we added sales force because of the competitors issue or I'm trying to get my head around where those gains are coming from and thank you.
Speaker Change: Thank you, Joanne. Let me start with the guidance and kind of how we're thinking about the quarterly progression. We think on balance, our guidance is balanced. There's things that are beyond our control. We want to be mindful that collection volumes is still a very large assumption in our overall forecast. And we're going to exercise conservativeism about what we believe with regard to customer demand. And we'll build from there the
Speaker Change: Even in our hospital-based business, there is a second-half load. Some of that is just reflective of the double-digit growth rate and how things progress quarter to quarter. Some of it's the ongoing work and the focus that we're applying to interventional technologies.
Speaker Change: So both our revenue and our margin expansion will progress over the course of the year, first half, first, second half, pretty much as you described it. With regards to plasma, we do have the annualizing of the benefits of the upgrades that have already happened. The entire U.S. collection volume is now being done with persona and increasingly with our express plus speed technology. So that benefit is there. It will annualize as the year progresses.
is asking.
Speaker Change: Competitor Centers to our technology, it comes with the full benefit of persona and express plus fully integrated, etc. And so that is both, you know, margin and volume, a creative to us in part of what's driving the mix that James described earlier.
Thank you.
Thank you, one moment for the next question.
Speaker Change: And the next questions coming from the law and advancing drone of Mrs. Hu, Financial Group. Please go ahead
Speaker Change: Thanks, maybe on Vascade, if we dig into the 28% XL.
Speaker Change: Top EP sites, and then if you could give any update on timing
Speaker Change: on the reconfigured French ice catheter on the XL side, you know, when, where that is in terms of regulatory and when that's going to be out there in the marketplace and all of the follow-up. Thanks.
Thank you Anthony. So...
Speaker Change: We look at where the leading PFA players are. We look at where the overall EP procedures are. Some of that's captured in the table. The market's roughly 60% penetrated as we estimate it with PFA for those T600. And we are in 85% of those, Anthony. And so the focus increasingly is on driving utilization within the converted accounts, both for PF and for RF, et cetera. So it's a utilization . . . .
Speaker Change: Game for us going forward. It's different. The opportunity set is different. The PAM is fantastic, right? The market is only half.
Speaker Change: and Advanced Closure Device. When they use Advanced Closure, 80% of the time they use us.
Speaker Change: We want to hang on to that, but obviously drive the utilization and further penetration. That's what's going to be the story for MVP and MVP XL for the year to come.
Speaker Change: And you know, again, we remain bullish on it. We think it's a really good opportunity. We just want to be calibrated.
Speaker Change: So we get asked a lot, well, you know, what does this mean in terms of?
Speaker Change: You are opportunity. That's what's captured in the tables. We take the growth rate and procedures and procedures.
Speaker Change: and we take whatever changes are factoring through by the change in treatment and modality to understand how many access sites that's creating and what that means for us and what you see here as an EP, that's roughly an 8.5% growth rate this year, which we intend the best pretty significantly. Thank you very much.
Speaker Change: Great, and then the French-sized catheter regulatory timing, you know, when that's going to be out there. And then on plasma, you look at the 11 to 14% underlying.
Speaker Change: and just the complexion of that, CSL rolling off new contracts coming in. Maybe just a little bit on how do we think about plasma divisional margins just given that shift. Thanks.
Sure, so on the front sizes.
Speaker Change: We have the XL product in the market, we took a close look at it, we did that on a PMA.
Speaker Change: We've gone back into the clinic. We are completing a fairly extensive trial that we think will not only expand the indication in all likelihood up to 16 and a half or 17 French O.D., but it will also strengthen the label. We have an excellent label, but there's an opportunity to make it better given how the markets evolved with PFA. So we want to do the clinical work. It's hard to comment on the timing, just given so much of that, depending upon regulatory review and approval, Anthony. But we're very bullish. Thank you very much.
Speaker Change: It'll be international, increasingly so. There's a really strong demand outside the U.S. There's actually been an inversion of cost per leader to collect. We're now seeing the European markets are favorable on a cost per leader basis to the U.S. and that's a big source of where we're seeing the share gains that we're...
Speaker Change: I'm experiencing and banking one again in FY26 so what that means because essentially all of it is nexus and most of that is nexus with persona is the the margin profile of the plasma
Speaker Change: is significantly better and more sustainable than it ever has been. We were targeting in the LRP that we would push into the low 50s. We are doing better than that and you see that in our gross margin line. You see it in our fourth quarter for example and you see it in our guide for fiscal 26. So...
Speaker Change: We expect the plasma business, source plasma to be kind of a mid 50s gross margin going forward. There's some moving parts there that have to happen depending on the mix, but we're really bullish. In fact, I just shout out to that team at this point three years into the LRP. Hey.
They have met or exceeded.
Speaker Change: Every long-range plan target we've given them including some pretty audacious ones and so Kudos to that team for delivering in the place we want to be in the market and we have potential if the market recovers faster and more robustly in terms of collection volume, we're in a great position to capitalize on that. We're in a great position to capitalize on the market and we're in a great position to capitalize on that.
Thank you.
Michael Piotrowski: Thank you, and our next question will be coming from the line of Michael Petusky of Barrington Research.
Michael Piotrowski: Good morning. Quick one for Jameson and probably one for Chris. James, I just sort of given some of the commentary around how the year may play out. I mean, would it be wise to model sort of a negative earnings comp in Q1 versus the comparable period of year ago?
Um...
Speaker Change: So, I'll just try to think that. I don't think it would be...
Negative. There's probably probably more.
Speaker Change: You know, flatish, this slightly positive, I don't think it would be negative [inaudible]
Speaker Change: Okay, all right, great, thanks, that's super helpful. And then Chris, forgive me if I miss a lot of reports this morning, but did you, did you, did you guys give a revenue figure for the Center of Guidewires and esophageal protection businesses? You've given that sort of in past calls and I may have missed it on this one. Did you guys give a revenue figure for Q4?
The retention rate
of those new account openings.
Speaker Change: is approaching 100%, which means that everybody that we opened in the quarter is open and using the product and obviously moving the needle on utilization. So I talked about green shoots. That's the evidence behind the green shoots. We really think with a dedicated effort.
Speaker Change: We've got Savvy Wire on its way. It's really important. Therapy for our participation in structural heart. Unfortunately, we've had headwinds from the OEM business that have largely offset that. But we're addressing it. We're cautiously optimistic trying to be balanced in what we forecast going forward. But there's a role for that product in the market, and we think we're the natural owners to help drive it.
Speaker Change: I heard sort of the bullish commentary around expectations for, you know, vascular closure, human-stasis management and transfusion. I mean, what would be your expectation? I mean, modest growth? Is modest growth possible there in 26?
Speaker Change: for which category in particular Mike? Either guide wires or esophageal protection or combined.
Speaker Change: We're basically calling that flat in an effort to be balanced about this. On a year-over-year basis that may look very different from one product range to the other.
Speaker Change: is an outstanding product for use in RF ablations. What we need to see is whether our original assumptions that RF is able to retain a sizable portion, call it 25 to 35% of the ablation market, if that's the case.
Speaker Change: is very demoralizing for a team to go out, do all the heavy lifting, get a new account, convert it, they're using it, you're having great experience, and then the account flips over to PFA and you lose all the opportunity. So we've largely pulled back from that.
Speaker Change: Conscious Decision and reprogram that team to drive Closure, which is our mainstay where we have to win.
Speaker Change: As you can watch and see how the RF market plays out, we remain cautiously optimistic about that but it's going to be a longer term play and it's not going to materialize meaningfully in FY26 given the PFA adoption curve.
Speaker Change: Thank you. And our next question will be coming from the line of Craig Bijou of Bank of America Securities. Your line is open.
Speaker Change: Good morning, thanks for taking the questions. Two for me, one, just to follow up on the share gains that you expect in plasma. And Chris, I guess the question is...
Craig Bazhou: You know, I heard your comments on the on the contracts. So how I guess your line of sight into those sharegains and would you characterize those as known sharegains because of the contracts or is there still some other work you need to do to win share during the year.
Craig Bazhou: Yeah, so it's known sharegames given the contract, the only question will be
Craig Bazhou: Relative Timing. We're cautiously optimistic about the timing. We don't control that. Our customers do clearly, but they want to collect on the best technology. That's Nexus with Persona. There's a strong incentive for them as they try to manage down their cost per liter, increase their donor.
Craig Bazhou: Attraction and Retention. Nexus is the answer for that, so we're very confident that we get the share. The exact timing of it, first half, second half is beyond our control Craig, so we're going to be balanced in how we think about that. The other thing is I would just call out, you know, the quality of the relationships with those leading collectors to clinical work that we have underway on our next generation technology. Thank you.
Craig Bazhou: is better than it ever has been and I think is building excitement to get centers that aren't yet on that technology on it so they have the opportunity to grow as we advance our innovation.
Speaker Change: Got it. That's helpful. Thanks Chris. And on just hospital, hospital growth expectations for 26 and the components there. I know you gave a lot of detail in the script and you've provided some other comments, but I guess just if it would be possible to kind of walk through some of the components, you know, Vascade [inaudible] I'm sorry, I'm sorry, I'm sorry
your MVP in Excel.
Speaker Change: and then maybe the international side, which obviously contributed to growth in Q4, but I think you said just given the tougher comp, it may be a little bit less of a contributor in 26.
Speaker Change: and then some of the blood management technologies to the growth there, if you can.
Speaker Change: Yeah, let me give it a shot. So we look at that hospital guidance, again, balanced, given dynamic market. We're currently expecting it's going to be roughly evenly split in terms of growth contribution between IVT and BMT.
Speaker Change: Within those, we're clearly a function of our key products, as I said in the prepare market, NIVT, it's about closure.
Speaker Change: You know, it's about closure and it's about closure here in the US which is by far our largest opportunity so that is the focus that's the you know the intent in terms of some of the restructuring we've done we do care about the international growth we called out the contribution that for example in Japan, Japan's getting you know ready to undergo change to PFA and we're going to be watching and hopefully participating in that as it progresses but it's difficult to call from where we are so we've we've exercised [inaudible]
and some caution there for sure on a year-over-year basis.
Speaker Change: within blood management technologies is about tech, right? We're going to see some good opportunities in transfusion management beyond this.
Speaker Change: They've contributed nicely and will continue to do so. May have some headwinds and sell salvage that will negate some of that, but it really comes down to tag and it comes down to tag both in the U.S. and in Europe . And one of the things we're really excited by is introducing the global pepperonace neutralization cartridge to Europe . It's with TUV for review and approval. We don't know the exact timing, so again we're going to exercise caution, but with that approval
Speaker Change: We would expect Europe to join the U.S. in terms of rapid conversion of the Teg 5,000 accounts driving greater utilization of a really, you know, market leading
Speaker Change: site of care device that makes the visoelastic testing much more convenient and much more front of mind for our practitioners, which is what's fuel in our growth in the states, and it'll fuel Europe as well.
Speaker Change: We need it because there's an offset in China where, you know, for all the reasons you're hearing from everybody else, it's just a disrupted market. So we're not anticipating much from China in fiscal 26, so we need to offset it with our performance here in the States and in Europe as well.
Thanks, guys.
Speaker Change: Thank you. That does conclude today's conference call. Thank you for participating. You may all disconnect.