Haemonetics Corporation Reports 10% Revenue Growth for Fourth Quarter of Fiscal 2012 and $0.80 Adjusted EPS; Also Establishes Fiscal 2013 Guidance

BRAINTREE, Mass., April 29, 2012 /PRNewswire/ -- Haemonetics Corporation (NYSE: HAE) today reported fourth quarter 2012 GAAP net revenue of $186.7 million, up 10%, net income of $17.8 million, down 15%, and diluted earnings per share of $0.69, down 14%. Excluding restructuring, transformation and transaction costs, adjusted fourth quarter net income was $20.6 million, down 6%, and adjusted earnings per share were $0.80, down 5%. Excluding currency impacts, net revenue was up 8% in the quarter.[1]

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For fiscal year 2012, Haemonetics reported GAAP net revenue of $727.8 million, up 8%, net income of $66.9 million, down 16%, and diluted earnings per share of $2.59, down 17%. Excluding restructuring, transformation and transaction costs, and contingent consideration income, adjusted net income was $78.4 million, down 6%, and adjusted earnings per share were $3.04, down 7%. Excluding currency impacts, year to date fiscal 2012 net revenue was up 6%.[1]

Brian Concannon, Haemonetics' President and CEO, commented: "The fourth quarter performance completes a fiscal year in which we realized revenue growth every quarter. Plasma disposables growth continued to be strong and our blood management solutions gained traction as the year progressed. This was evident in both Blood Center and Hospital disposables. Growth in Hospital disposables was fueled by demand for the Cell Saver® Elite®, our newest cell salvage device, and continued demand for TEG® disposables as hospital customers continue to seek ways to reduce costs and improve clinical outcomes under the mounting pressures of healthcare reform."

STRATEGIC AND PRODUCT GROWTH HIGHLIGHTS

Haemonetics continues to make progress expanding its business, reporting the following fourth quarter fiscal 2012 highlights:

• 13% revenue growth in plasma disposables, as collection volume remains robust.
• 9% revenue growth in Blood Center disposables, as platelet growth drives revenues.
• 27% revenue growth in diagnostic disposables products, with Blood Management Solutions driving growth at leading US hospitals.
• 17% growth in equipment sales, giving confidence that disposables revenue growth will continue.
• IMPACT® accounts increased by 21 in the quarter to 258 as more customers embrace the value of blood management.
• OrthoPAT® device recall, build and replacement substantially completed.
• HS Core Bowl reintroduced via limited market release, completion expected in Q1 of fiscal 2013.
• Extended another multi-year comprehensive equipment and disposables supply agreement with a commercial plasma customer.
• 75% of current commercial plasma business now under contract through Q3 of fiscal 2017 and over 98% through Q3 of fiscal 2015.

Mr. Concannon added: "As we close out fiscal 2012, we are in a very good position to succeed in all of our businesses. The Plasma contract extensions enable us and our customers to confidently plan for and accommodate the growth in demand that is expected in the plasma collection market. Growth in red cell and platelet disposables validates the value inherent in our Blood Management Solutions for our Blood Center customers. And the combination of new OrthoPAT devices, strong demand for TEG devices, our new Cell Saver Elite and an expanding IMPACT customer base bodes well for growth in our Hospital business."

Revenue was $186.7 million in the quarter, up 10% and $727.8 million in the full fiscal year, up 8%. A revenue breakdown follows:

Plasma

Plasma disposables revenue was $61.9 million for the quarter, up 13%, and $258.1 million for fiscal 2012, up 14%. In the quarter, momentum continued as expected in Haemonetics' North America plasma business and was unusually strong in Japan due to the Japanese Red Cross ("JRC") increasing inventories of our disposables in anticipation of a system conversion. The company expects its plasma business to have a mid-single digit percentage growth in fiscal 2013 consistent with end market growth rates for plasma derived biopharmaceuticals, despite the first quarter correction of the JRC inventory.

Blood Center

Platelet disposables revenue was $44.1 million for the quarter, up 13%, and $167.9 million in fiscal 2012, up 7%. Platelet revenue continues to benefit from strong sales in emerging markets and the impact of the JRC system conversion.

Red cell disposables revenue was $12.4 million for the quarter, down 1%, in comparison with a strong prior year quarter and $48.0 million in fiscal 2012, up 3%. Though the clinical demand for blood remains flat, red cell revenue grew in fiscal 2012 due to increased collections on the Company's devices as the Company leveraged its IMPACT selling approach to advance Blood Management Solutions.

Hospital

Surgical disposables revenue was $17.3 million for the quarter, up 2%, and $66.6 million in fiscal 2012, flat with the prior year. Notably this was the third consecutive increase after eight consecutive quarters of decline, as the product launch of the Cell Saver Elite device accelerated as expected. Strong Cell Saver Elite equipment sales in the quarter should provide strong near-term disposables growth. Disposables revenue from our OrthoPAT orthopedic perioperative autotransfusion system was $8.4 million in the quarter, down 8%, and $31.2 million in fiscal 2012, down 12%, as the impact of the voluntary recall of pre-2002 devices upon disposables usage began to diminish.

Diagnostics revenue was $6.1 million for the quarter, up 27%, and $23.1 million in the fiscal year, up 19%, as the company's IMPACT initiative continues to drive growth in disposables utilized in the TEG® Thrombelastograph® Hemostasis Analyzer business. TEG equipment sales were especially strong toward the end of the third quarter, a known key indicator for near-term future disposables revenue growth. TEGdisposables sales increased 127% in the quarter in China.

Software Solutions revenue was $19.3 million for the quarter, up 9% over a strong prior year quarter, and $70.6 million in fiscal 2012, up 6%. The enhanced offering of software products for Blood Center and Hospital customers continued to drive revenue growth in North America, where a major customer implemented Blood Track, and several installations were completed in the UK.

Equipment and other revenue was $17.2 million in the quarter, up 17%, and $62.4 million in the full fiscal year, up 8%. Equipment revenue is influenced by the timing of tenders and capital budgets. Sales of Cell Saver Elite devices in North America were particularly strong in the quarter.

Haemonetics reported fourth quarter fiscal 2012 revenue growth of 9% in North America, 24% in Japan, 11% in Asia and 2% in Europe. For fiscal 2012, North America revenue was up 11%, Japan revenue was up 13%, Asia revenue was up 9% and Europe revenue was down 2%.

In the quarter, Haemonetics reported adjusted gross margin of 50.8%, down 70 basis points, and adjusted operating margin of 14.5%, down 350 basis points. The Company's adjusted operating expenses were $67.7 million, up 19%. Gross and operating margins were significantly impacted by product recall and quality-related issues that normalized by the end of the quarter. The negative impact on operating results due to our product quality initiatives was approximately 150 basis points of gross margin and $3.5 million of operating earnings, which equates to $0.10 per share in the quarter; and 160 basis points of gross margin and $14.5 million of operating earnings, which equates to $0.41 per share in fiscal 2012.

Balance Sheet and Cash Flow

Cash on hand was $229 million, an increase of $24 million during the quarter. The Company reported continued strong cash flows, though at somewhat reduced levels from the prior year due to the impact of the product recall and other quality-related issues. The cash balance on hand is net of a $50 million share buyback completed in the second quarter of fiscal 2012.

Guidance

Fiscal 2013 organic revenue growth is expected to be approximately 4-6%, with Plasma expected to grow 4-6%, Blood Center 0-2%, Hospital products 12-15% and Software Solutions 5-7%. Full year adjusted gross margin is expected to be in a range of 52-53%, adjusted operating income between $117-$119 million, adjusted earnings per share between $3.30-$3.40, up 9%-12% over fiscal 2012, and free cash flow approximating $85 million, all on an organic basis exclusive of planned acquisitions. Excluding the expected one-time costs associated with two business acquisitions, which are the subject of separate press releases issued today, Haemonetics anticipates the impact to adjusted earnings per share to be at least neutral in fiscal 2013, and accretive in fiscal 2014 and beyond.

More information on the impact of the cost of quality on our adjusted operating results, both for the fourth quarter and the full year, can be found on our web site at http://www.haemonetics.com. [1]

CONFERENCE CALL

In consideration of the need to discuss the implications of the two acquisition announcements in addition to these quarterly and full year results, Haemonetics will host its webcast two hours earlier than previously communicated, on Monday, April 30, 2012 at 8:00 am Eastern time. Interested parties can participate at:

http://phoenix.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=72118&eventID=4702718.

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.