Haemonetics Corporation (HAE) Q2 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The company's financial performance shows strong operating cash flow and free cash flow, with significant year-over-year growth. Despite some guidance reaffirmations indicating declines, organic growth in key segments like plasma and hospital business is strong. The Q&A highlights positive sentiment about sustainable growth in Blood Management Technologies and plasma collections, alongside strategic initiatives like share repurchases and the Vivasure acquisition. While some uncertainties remain, overall financial health and strategic direction are positive, suggesting a stock price increase in the coming weeks.
Key Financial Performance
Second quarter revenue $327 million, reflecting a 5% reported revenue decline year-over-year due to $48 million in last year's portfolio transitions. Excluding these transitions, organic growth ex CSL was 9%.
Year-to-date revenue $649 million, reflecting a 5% reported revenue decline year-over-year due to $101 million in last year's portfolio transitions. Excluding these transitions, organic growth ex CSL was 11%.
Adjusted EPS Increased 13% in the quarter to $1.27 and 11% year-to-date to $2.36, driven by disciplined execution, strong core product growth, and record margin expansion.
Hospital revenue $146 million in the second quarter and $285 million year-to-date, up 5% on a reported basis and 4% organic in both periods. Growth driven by strong Blood Management Technologies performance.
Blood Management Technologies revenue Up 12% in the quarter and 13% year-to-date, driven by higher TEG disposable utilization and adoption of the global heparinase neutralization cartridge.
Interventional Technologies revenue Declined 5% in the quarter and 6% year-to-date, due to softness in esophageal cooling against accelerating PFA adoption.
Vascular Closure revenue Grew 2% in the quarter and 3% year-to-date, led by MVP and MVP XL and electrophysiology growth, partially offset by softness in legacy VASCADE.
Plasma revenue $125 million in the quarter and $255 million year-to-date, down 10% and 7% on a reported basis, respectively, due to the CSL transition. Excluding CSL, organic revenue grew 19% in the quarter and 23% year-to-date.
Blood Center revenue Reported revenue declined 18% in the quarter and 21% year-to-date, reflecting the impact of the whole blood divestiture. Organic revenue grew 4% in the quarter and 5% year-to-date.
Adjusted gross margin Reached 60.5% in the second quarter and 60.6% year-to-date, up 380 and 460 basis points, respectively, driven by adoption of Persona technology, price initiatives, and favorable product mix.
Adjusted operating expenses $111 million in the second quarter, a decrease of $1.5 million or 1%, due to lower freight costs and disciplined expense management.
Adjusted operating income Increased 5% in the second quarter to $87 million, with adjusted operating margin expanding 250 basis points year-over-year to 26.7%.
Adjusted net income Rose 5% to $60 million in the second quarter and 4% year-to-date to $114 million.
Operating cash flow $111 million in the second quarter, up 128% year-over-year. Year-to-date operating cash flow was $129 million, a sixfold increase compared to the same period last year, driven by improved inventory management.
Free cash flow $89 million in the quarter and $91 million year-to-date, with a free cash flow to adjusted net income conversion ratio of 147% and 80%, respectively.
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Operating Highlights
NexSys, TEG, and VASCADE: Focus on these products continues to advance leadership and fuel growth. NexSys is gaining plasma share through best-in-class collection solutions, TEG is reinforcing leadership in viscoelastic testing, and targeted vascular closure initiatives are strengthening performance.
HN cartridge: Launched in EMEA and Japan, reinforcing global leadership in viscoelastic testing.
SavvyWire: Achieving consistent double-digit growth in the U.S., broadening relevance in structural heart.
Plasma business: Revenue grew 19% in the quarter and 23% year-to-date (excluding CSL), driven by share gains, robust U.S. collections, and innovation. European collections also grew double digits.
Blood Management Technologies: Achieved 12% growth in the quarter and 13% year-to-date, driven by hemostasis management and transfusion safety demand.
Adjusted gross margin: Reached 60.5% in Q2 and 60.6% year-to-date, driven by Persona technology adoption, price initiatives, and favorable product mix.
Operating cash flow: Increased 128% year-over-year in Q2, with year-to-date free cash flow reaching $91 million.
Portfolio transitions: Despite $153 million in last year's portfolio transitions, the company raised full-year revenue guidance and achieved strong organic growth in two of three growth franchises.
Debt and capital management: Maintained a net leverage ratio of 2.5, with $296 million in cash and no borrowings under the revolving credit facility.
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Risk or Challenges
Interventional Technologies underperformance: Interventional Technologies declined 5% in the quarter and 6% year-to-date, driven by softness in esophageal cooling and limited contribution to growth. This underperformance is a near-term challenge for the company.
Legacy VASCADE softness: Continued softness in legacy VASCADE products, particularly in lower growth coronary and peripheral procedures, is impacting vascular closure performance.
CSL transition impact: The transition of CSL's U.S. disposable business has led to a reported revenue decline of 10% in the quarter and 7% year-to-date in the Plasma segment.
Whole blood divestiture impact: The divestiture of the whole blood product line has resulted in an 18% revenue decline in the Blood Center segment for the quarter and 21% year-to-date.
Esophageal cooling revenue dependency: Esophageal cooling, while modest in size, remains a disproportionate driver of underperformance in Interventional Technologies, creating a dependency on a small revenue stream.
Economic uncertainties in plasma collections: Plasma revenue growth is heavily reliant on U.S. and European collections, which are subject to economic and market uncertainties.
Debt obligations: The company has $1.2 billion in total debt, which requires disciplined financial management to meet near-term obligations and maintain operational flexibility.
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Guidance & Outlook
Hospital Revenue Growth Guidance: Updated to 4% to 7%, both reported and organic, reflecting sustained double-digit growth in Blood Management Technologies and little to no contribution from Interventional Technologies. Interventional Technologies expected to play a larger role in accelerated growth and margin expansion beyond FY '26.
Plasma Revenue Guidance: Raised to a decline of 4% to 7% or 14% to 17% organic growth ex CSL, driven by stronger-than-anticipated first half performance and robust growth in U.S. and European collections.
Blood Center Revenue Guidance: Raised to a reported revenue decline of 17% to 19% and organic growth to be approximately flat, reflecting resilience in the core apheresis business.
Full Year Revenue Guidance: Raised from a reported decline of 3% to 6% to a decline of 1% to 4%, and organic growth ex CSL from an increase of 6% to 9% to an increase of 7% to 10%.
Adjusted Operating Margin Guidance: Reaffirmed at 26% to 27%, with continued margin expansion expected in the second half.
Adjusted EPS Guidance: Raised to $4.80 to $5 per share, with assumptions of $35 million in interest and other expenses and approximately 47.6 million diluted shares outstanding at year-end.
Free Cash Flow Guidance: Raised to $170 million to $210 million, with a free cash flow to adjusted net income ratio expected to exceed 70% for the full fiscal year.
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Shareholder Return Plan
Share Repurchase: $75 million in share repurchases were conducted during the quarter. The company remains committed to returning excess cash to shareholders via buybacks when appropriate, as part of its capital stewardship strategy.
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Key Q&A
Q:What are the revenue drivers for plasma in the second half, and how do they reconcile with the strong growth?
A:The second quarter was driven by share gains, innovation pricing, and collections volume growth. Volume growth was high single-digit in the U.S. and double-digit in Europe. The company remains optimistic about the continued success of plasma.
Q:What updates are there on the hospital business and its impact on operating margins?
A:The hospital business was the largest contributor to margin expansion, with operating income expanding 370 basis points. Blood Management Technologies excelled, allowing focus on IVT. The company is confident in regaining growth momentum for vascular closure products.
Q:What progress has been made in IVT commercial efforts?
A:The company has made significant changes, including new leadership, bifurcating the field force, upgrading training, and aligning quotas. They have also strengthened corporate accounts and completed the MVP-XL trial, with a timely FDA submission. Competitive responses have been targeted without significantly impacting gross margins.
Q:What is the sustainability of Blood Management Technologies' strong performance?
A:Blood Management Technologies grew 12% in the quarter and 13% year-to-date. The growth is driven by capital equipment, disposable utilization, and the adoption of the heparinase neutralization cartridge. The company expects double-digit growth to be sustainable.
Q:What drove the strong growth in the blood center segment?
A:The blood center segment grew 4% organically, benefiting from the divestiture of the whole blood franchise and focus on plasma apheresis. Operating income margin expanded by 320 basis points, and the company expects the business to remain flat for the year.
Q:How much did the share repurchase contribute to EPS, and what is the status of the Vivasure acquisition?
A:The share repurchase added a few cents to EPS. The company remains committed to the Vivasure acquisition, expecting it to be an FY '27 event, with the product being highly differentiated and synergistic with their portfolio.
Q:What is driving the step change in U.S. plasma collection volumes, and is it sustainable?
A:The step change is due to high single-digit volume growth, pricing benefits, and share gains. The company believes the growth is sustainable and reflects the cyclicality of the market. Guidance is based on controllable factors like share gains.
Q:What progress has been made in the VASCADE business, and how is the company addressing competition?
A:The company has stabilized performance and observed green shoots in new account openings and competitive win-backs. They are confident in regaining share and have made prudent guidance adjustments. The product is economically differentiated, offering workflow productivity and pain-free solutions.
Q:How is the launch of the heparinase neutralization cartridge progressing in EMEA and Japan?
A:The launch is progressing well but differs from the U.S. due to market differences. The product is expected to drive sustainable double-digit growth, with some lag time in distributor markets.
Q:What are the future innovation opportunities for Blood Management Technologies?
A:The company sees opportunities in expanding viscoelastic testing to untapped markets and additional indications. They plan to discuss their portfolio pipeline in more detail during their next Investor Day.
Q:What is the status of the vascular closure business turnaround?
A:The company has stabilized performance and observed green shoots in new account openings and competitive win-backs. They are confident in meaningful growth going forward but have provided conservative guidance.
Q:What is the company's approach to capital allocation and share repurchase?
A:The company focuses on debt paydown, opportunistic share buybacks, and targeted organic investments. They aim to keep the share count below 50 million and prioritize maximizing the current portfolio.
Q:Review of Unclear Management Responses
A:Management avoided providing specific timelines or quantitative details for certain initiatives, such as the exact timing of the Japan label expansion for VASCADE and the broader rollout of new Blood Management Technologies innovations. Additionally, while they expressed confidence in the vascular closure business turnaround, they provided limited concrete evidence or metrics to substantiate the progress.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Blood Center
CSL date
CSL increase
CSL investor
Center Blood
Closure date
Conference Instruction
EMEA Japan
FY Plasma
Form presentation
Hospital date
IVT portfolio
Instruction today
Interventional Technologies
Japan portfolio
PFA adoption
PPPA confidence
Plasma date
Relations Conference
Relations measure
SavvyWire digit
TEG testing
Technologies Hospital
Technologies contribution
Technologies date
VASCADE
class
collection digit
cooling
core
date basis
date result
decline ex
divestiture
ex CSL
focus
portfolio transition
resilience
softness
solution
transfusion
transition CSL
HAE Transcript
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Haemonetics Corporation (HAE) Q2 2026 Earnings Call Transcript
Positive11-7
The company's financial performance shows strong operating cash flow and free cash flow, with significant year-over-year growth. Despite some guidance reaffirmations indicating declines, organic growth in key segments like plasma and hospital business is strong. The Q&A highlights positive sentiment about sustainable growth in Blood Management Technologies and plasma collections, alongside strategic initiatives like share repurchases and the Vivasure acquisition. While some uncertainties remain, overall financial health and strategic direction are positive, suggesting a stock price increase in the coming weeks.
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HAE Slides
HAE Report
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