Haemonetics Reports Adjusted Earnings per Share of $0.80 for Q2 of Fiscal 11

BRAINTREE, Mass., Nov. 1, 2010 /PRNewswire-FirstCall/ -- Haemonetics Corporation (NYSE: HAE) today reported GAAP net revenues of $166.8 million, up 6%, net income of $21.3 million, up 18%, and earnings per share of $0.85, up 23%.  Excluding transformation costs and contingent consideration income in fiscal 11, adjusted second quarter net income was $20.1 million, up 11%, and adjusted earnings per share was $0.80, up 16%. In constant currency, revenue was up 7%, adjusted net income was up 12% and adjusted earnings per share were up 16%. (1)

Year to date, Haemonetics reported GAAP net revenues of $330 million, up 6%, net income of $39.3 million, up 9%, and earnings per share of $1.54, up 12%.  Excluding transformation costs and contingent consideration income in fiscal 11, adjusted year to date net income was $39.1 million, up 8%, and adjusted earnings per share was $1.54, up 12%. In constant currency, revenue was up 7%, adjusted net income was up 20% and adjusted earnings per share were up 23%.  As expected first quarter currency headwinds moderated in the second quarter. (1)

In addition to revenue and earnings growth, in the quarter Haemonetics reported adjusted gross margin of 52.6%, up 110 basis points, and adjusted operating margin of 16.9%, down 30 basis points but in line with full year targets. The Company managed adjusted operating expenses to $59.6 million, up $5.7 million from levels in Q2 of fiscal 10. Incremental spending of more than $4 million is associated with the Company's recent acquisitions. (1)

The Company revised its full year guidance for revenue growth from 9-12% to 6-9%, and its full year guidance for adjusted operating income growth from 11-14% to 10-12%.  

The Company increased its full year guidance for adjusted earnings per share from a range of $3.15 to $3.25 to a range of $3.18 to $3.28. (1)

Brian Concannon, Haemonetics' President and CEO, said "We continue to make great progress with IMPACT™ selling, our branded approach to bringing blood management solutions to our customers.  However, slower than expected recovery in Plasma collections and lower surgical procedure volumes which continue to affect our hospital and blood center customers, are causing us to reevaluate our near term expectations for revenue growth."

STRATEGIC AND SEGMENT GROWTH HIGHLIGHTS

Haemonetics continues to make progress expanding its business.  The Company reported the following highlights:

• 28 additional IMPACT customers in Q2 fiscal 11 bringing the total number of IMPACT customers to 118, driving acceleration in key product lines evidenced by a 24% Q2 growth rate for TEG^®  Thrombelastograph^® Hemostasis Analyzer disposables.
• Platelets grew more than 6%, both in the quarter and year to date, reflecting strong double digit growth in the Company's emerging markets business units.
• In the quarter equipment revenue grew 32% year over year.  Equipment sales are a leading indicator of disposables revenue.
• The Global Med acquisition integration is proceeding well against its planned schedule and operating income targets.

Mr. Concannon added "We've made excellent progress against our goals for blood management with 118 IMPACT accounts by the end of the second quarter. In these challenging economic times, we are implementing blood management solutions that reduce costs and improve clinical outcomes for our customers. Year to date revenue from our North American hospital IMPACT accounts was up 64% led by double digit growth in TEG and OrthoPAT^®."

As noted, Haemonetics' second quarter fiscal 11 reported revenues were $166.8 million, up 6%.  Reported revenues break down as follows:

Plasma disposables revenue was $56.5 million for the quarter, down 5%, and $112.4 million year to date, down 5%. Haemonetics expects its plasma business to return to mid single digit growth in Q3, ramping to low double digit growth in Q4, with full year Plasma revenue growth in a range of 0-3%.

Platelet disposables revenue was $39.7 million for the quarter, up 7%, and $ 76 million year to date, up 6%.  The platelet business benefited from strong sales in our emerging markets.  Haemonetics continues to expect full year Platelet revenue growth of 0-2%.

Red cell disposables revenue was $11.3 million for the quarter, down 2%, and $22.6 million year to date, down 3%.  Revenue declined due to decreased demand for red cells as a result of declining surgical volumes.  Haemonetics continues to expect full year Red Cell disposable revenue growth within a range of negative 2% to a 1% increase.  

Surgical disposables revenue was $16 million for the quarter, down 4%, and $32.4 million year to date, down 5%.  The surgical business was adversely impacted by trends in surgical volumes.  Haemonetics now expects full year revenue growth within a range of negative 2% to a 1% increase.

OrthoPAT orthopedic perioperative autotransfusion system disposables revenue was $8.3 million for the quarter, down 4%, and flat at $17.2 million year to date.  OrthoPAT sales to IMPACT accounts grew by 10% in the quarter and 36% year to date.  Haemonetics now expects full year revenue growth within a range of 1-3%.  

Diagnostic disposables revenue was $4.6 million for the quarter, up 24%, and $ 9.4 million year to date, also up 24%. Revenues related to the TEG Thrombelastograph Hemostasis Analyzer business are accelerating driven by the Company's IMPACT accounts.  Haemonetics expects full year revenue growth of approximately 25%.  

Software Solutions revenue was $16.1 million for the quarter, up 77%, and $32.6 million year to date, up 86%.  Software Solutions growth was primarily impacted by our Global Med acquisition. Organic software growth year to date was 2%.  Haemonetics expects full year revenue growth of approximately 95%.

Equipment revenue was $14.2 million for the quarter, up 32%, and $27.2 million year to date, up 26%.  Equipment growth was impacted by the SEBRA^® acquisition. Organic equipment growth year to date was 12%.  Haemonetics expects full year revenue growth of 6-11%.

Haemonetics reported growth in all geographies for the quarter and year to date. In the quarter, North American sales were up 5%, European sales were up 4%, Japanese sales were up 3%, and Asian sales were up 27%. Year to date, North American sales were up 5%, European sales were up 4%, Japanese sales were up 3% and Asian sales were up 28%.

CONFERENCE CALL

Haemonetics will host a webcast on Monday, November 1^st at 10:00am Eastern to discuss these results.  Interested parties can participate at http://phx.corporate-ir.net/playerlink.zhtml?c=72118&s=wm&e=3403020

Haemonetics (NYSE: HAE) is a global healthcare company dedicated to providing innovative blood management solutions for our customers.  Together, our devices and consumables, information technology platforms, and consulting services deliver a suite of business solutions to help our customers improve clinical outcomes and reduce the cost of healthcare for blood collectors, hospitals, and patients around the world.  Our technologies address important medical markets: blood and plasma component collection, the surgical suite, and hospital transfusion services.  To learn more about Haemonetics, visit our web site at http://www.haemonetics.com.

This release contains forward-looking statements that involve risks and uncertainties, including technological advances in the medical field and standards for transfusion medicine and our ability to successfully implement products that incorporate such advances and standards, product demand, market acceptance, regulatory uncertainties, that affect Haemonetics or our customers, the effect of economic and political conditions, the impact of competitive products and pricing, blood product reimbursement policies and practices, foreign currency exchange rates, changes in customers' ordering patterns, the effect of industry consolidation as seen in the plasma market, the effect of communicable diseases and the effect of uncertainties in markets outside the U.S. (including Europe and Asia) in which we operate and other risks detailed in the Company's filings with the Securities and Exchange Commission.  The foregoing list should not be construed as exhaustive.  The forward-looking statements are based on estimates and assumptions made by management of the Company and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results and experience could differ materially from the forward-looking statements. 

⁽¹⁾ A reconciliation of GAAP to adjusted and constant currency financial results is included at the end of the financial sections of this press release as well as on the web at http://phx.corporate-ir.net/phoenix.zhtml?c=72118&p=irol-news&nyo=0  In the second quarter of fiscal 11, Haemonetics incurred $1.1 million in pre-tax transformation and integration costs and realized $1.9 million in contingent consideration income.  Haemonetics incurred no restructuring costs in the second quarter of fiscal 10.

Haemonetics Corporation Financial Summary

Reconciliation of Non-GAAP Measures

Haemonetics has presented supplemental non-GAAP financial measures as part of this earnings release.  A reconciliation is provided below that reconciles each non-GAAP financial measure with the most comparable GAAP measure.  The presentation of non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the most directly comparable GAAP measures.  There are material limitations to the usefulness of non-GAAP measures on a standalone basis, including the lack of comparability to the GAAP financial results of other companies.

These measures are used by management to monitor the financial performance of the business, inform business decision making, and forecast future results.  Performance targets for management are established based upon these non-GAAP measures.  In the reconciliations below, we have removed restructuring and deal integration costs from our GAAP expenses.  Our restructuring is related to the integration of Global Med Technologies and the repositioning of our sales force.  We believe this information is useful for investors because it allows for an evaluation of the Company with a focus on the performance of our core operations.

Non-GAAP Gross Profit

The use of these non-GAAP measures allows management to monitor the level of total gross profits without the costs of our business transformation.  We establish our budgets, forecasts, and performance targets on this basis.

Non-GAAP S,G&A and Non-GAAP Operating Expenses

The use of this non-GAAP measure allows management to monitor the ongoing level of spend that is necessary to support the business in a period when we are not transforming our business or completing an acquisition of in-process research and development.  We establish our budgets, forecasts, and performance targets excluding these costs.

Non-GAAP Operating Income and Non-GAAP Income before Income Taxes

The use of these non-GAAP measures allows management to monitor the level of operating and total pre-tax profits without the costs of our business transformation.  We establish our budgets, forecasts, and performance targets on this basis.

Non-GAAP Net Income and Earnings per Share

The use of these non-GAAP measures allows management to monitor the level of net income and earnings per share excluding both the costs of our business transformation, as well as any related tax effects. We establish our budgets, forecasts, and performance targets on this basis.

SOURCE Haemonetics Corporation