Haemonetics ((HAE)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The latest earnings call from Haemonetics presented a mixed sentiment, highlighting significant growth in certain segments while acknowledging challenges in others. The company reported strong performances in its hospital and interventional technologies, setting a positive tone. However, declines in plasma revenue and difficulties in the Chinese market were areas of concern. Positively, Haemonetics managed to secure new long-term agreements and record operating margins, indicating potential for future improvement, though cash flow issues and specific product line setbacks were noted.
Hospital Segment Growth
The hospital segment showcased impressive growth, with revenue increasing by 24% on a reported basis in the third quarter and 28% year-to-date. Organic growth also remained robust at 12% for the quarter and 14% year-to-date. Blood Management Technologies contributed significantly, with a 10% rise in the quarter and 11% year-to-date, underscoring the segment’s vitality.
Interventional Technologies Performance
Interventional Technologies emerged as a standout performer, with reported growth of 47% in the third quarter and 58% year-to-date. Organic growth was also strong, hitting 16% for the quarter and 18% for the year-to-date, reflecting the segment’s expanding market presence and adoption.
Vascular Closure Growth
The Vascular Closure segment experienced robust growth, driven by leadership in electrophysiology. Revenue from VASCADE MVP and VASCADE MVP XL grew in the mid-20s, both in the quarter and year-to-date, highlighting the effectiveness of Haemonetics’ product offerings in this area.
Record Operating Margin
Haemonetics achieved a record operating margin, with adjusted operating income reaching $89.4 million, marking a $16.1 million increase. This translated to 25.7% of revenue, setting a new milestone for the company and demonstrating effective cost management and operational efficiency.
New Long-term Agreements
The company’s strategy to expand its market share through technology adoption was bolstered by new long-term agreements with BioLife and Grifols. These partnerships are expected to drive future growth and further cement Haemonetics’ position in the market.
Plasma Revenue Decline
The plasma segment faced a revenue decline of 9% in the quarter and 5% year-to-date, primarily due to the planned transition with CSL. This decline was particularly noticeable in North America, where disposables revenue fell by 11% in the quarter.
Weakness in China
Performance in China was impacted by challenging market conditions, especially in hemostasis management. Significant cutbacks in reimbursement led to weaker results, posing a hurdle for the company in this region.
Lower Free Cash Flow
Haemonetics reported a decrease in cash flow, with operating activities generating $65.2 million, down from $117.7 million in the same period last year. Free cash flow also dropped to $49.7 million compared with $62.3 million previously, indicating financial pressure in maintaining liquidity.
Sensor Guided Technologies and Esophageal Cooling Shortfall
The company acknowledged failing to meet ambitious targets for Sensor Guided Technologies and Esophageal Cooling. This shortfall was attributed to external market disruptions, necessitating a reassessment of their strategies in these areas.
Forward-looking Guidance
Haemonetics provided updated guidance for fiscal year 2025, reporting third-quarter revenue of $349 million, reflecting a 4% growth on a reported basis but flat growth organically. The company expects hospital revenue to grow between 24% to 26% on a reported basis, while plasma revenue may decline by 5% to 7% organically. Despite these challenges, Haemonetics remains optimistic about sustainable long-term growth and margin expansion, evidenced by a record adjusted operating income reaching 25.7% of revenue.
In conclusion, Haemonetics’ earnings call reflected a mixed outlook for the company. While certain segments like hospitals and interventional technologies showed strong growth, challenges remain in plasma revenue and the Chinese market. The company’s strategic initiatives, including new agreements and a focus on sustainable growth, position it for future success. Investors should watch for improvements in cash flow and product line performance as Haemonetics navigates these mixed results.
