Haemonetics Reports 4th Quarter Fiscal 2016 Revenue Of $243 Million, Constant Currency Revenue Growth Of 10% And 7% As Reported; Fiscal 2016 Revenue Of $910 Million, Constant Currency Revenue Growth Of 3% And Flat As Reported
BRAINTREE, Mass., May 2, 2016 /PRNewswire/ -- Haemonetics Corporation (NYSE: HAE) reported fourth quarter fiscal 2016 revenue of $243.2 million, up 7%. Revenue was up 10% over the fourth quarter of fiscal 2015 in constant currency, benefiting by 6.8% from the inclusion of a 53rd week.
The Company reported a GAAP net loss of $8.8 million or $0.17 per share in the fourth quarter of fiscal 2016. Exclusive of non-cash asset impairments, transformation, restructuring and deal amortization expenses detailed below, adjusted net income was $18.8 million, down 23%, and adjusted earnings per share were $0.37, down 21% compared with the fourth quarter of the prior fiscal year.1
For the fiscal year ended April 2, 2016, revenue was $909.7 million, flat with the prior year, and up 3% in constant currency, benefiting by 1.7% from the inclusion of a 53rd week. The Company reported a GAAP net loss of $55.6 million or $1.09 per share. Exclusive of non-cash write-downs of goodwill and other assets, transformation, restructuring and deal amortization expenses detailed below, fiscal 2016 adjusted net income was $83.9 million, down 13%, and adjusted earnings per share were $1.63, down 12% compared with the prior fiscal year.1
Ronald Gelbman, Haemonetics' Interim CEO, stated: "With continued growth in our Plasma and Hemostasis Management franchises, we delivered $910 million of revenue, within our expected range, albeit at the low end."
Mr. Gelbman continued: "In the fourth quarter, we also made significant progress with our portfolio review and, in connection with this, we recorded related inventory write offs in our Donor franchise. Together with the impact of currency, these write offs pressured our profitability in the quarter."
REPORTING PERIODS
The Company follows a fiscal year reporting convention, ending on the Saturday closest to March 31. Under this reporting convention, fiscal 2016 consisted of 53 weeks, with the fourth quarter consisting of 14 weeks. Fiscal 2015 consisted of 52 weeks, with the fourth quarter consisting of 13 weeks. The extra week provided incremental revenue estimated at $15 million, accounting for incremental growth of 6.8% in the fourth quarter and 1.7% in fiscal year 2016.
REVENUE HIGHLIGHTS
Fiscal Year
- 12% growth in Plasma disposables revenue, including 4% from saline and sodium citrate solutions shipments
- 21% growth in Hemostasis Management (TEG®) disposables revenue
Fourth Quarter
- 23% growth in Plasma disposables revenue, including 8% from saline and sodium citrate solutions shipments
- 22% growth in Hemostasis Management (TEG®) disposables revenue
FOURTH QUARTER AND FISCAL YEAR 2016 REVENUE ELEMENTS
Plasma
Plasma disposables revenue was $91.5 million in the fourth quarter, up $15.0 million, or 20% on a reported basis and up 23% in constant currency. North America Plasma disposables revenue was up 25% versus the prior year's fourth quarter, with strong collection volumes and the impact of saline and sodium citrate solutions shipments to CSL. The plasma disposables business outside the U.S. also delivered strong revenue growth. For the full fiscal year 2016, Plasma disposables revenue was $348.8 million, up $29.6 million or 9% as reported and up 12% in constant currency.
Plasma collection volume strength continued, reflecting robust end user markets for plasma-derived biopharmaceuticals.
Hemostasis Management
TEG disposables revenue was $14.0 million for the quarter, up $2.3 million or 20% on a reported basis and up 22% in constant currency over the prior year's fourth quarter, with continued growth in China and the U.S. Full year TEG disposables revenue was $50.9 million, up $8.7 million or 21% as reported and in constant currency.
The TEG installed base continued to increase in the fourth quarter, benefiting from expanded adoption of new and existing accounts. The TEG family of products TEG 5000, TEG 6s and TEG Manager software remains well positioned for continued revenue growth, consistent with the Company's multi-year growth outlook.
Cell Processing
Cell Processing ("surgical") disposables revenue was $15.1 million in the fourth quarter, down 4% as reported and up 2% on a constant currency basis over the prior year's fourth quarter. Full year cell processing disposables revenue was $59.9 million, down $2.6 million or 4% as reported and up 1% in constant currency. Fourth quarter growth was driven by strong performance in the emerging markets.
Donor
Platelet disposables revenue was $39.8 million in the fourth quarter, up $3.1 million or 9% over the prior year quarter on a reported basis and up $4.7 million or 13% on a constant currency basis. Constant currency revenue growth benefited from order timing in the Asia Pacific region and strong year-end order fulfillment of single dose collection disposables in Japan, where the benefits of the Company's single dose market share gain were offset by a continued market shift toward double dose collection techniques. Full year platelet disposables revenue was $143.3 million, down $9.3 million, or 6% on a reported basis and down 1% on a constant currency basis. The impact of currency on reported growth rates reflects the concentration of the Company's platelet business outside the U.S.
Red cell disposables revenue was $10.1 million in the fourth quarter, down $1.3 million or 11% as reported and 10% on a constant currency basis. Full year red cell disposables revenue was $39.3 million, down $3.4 million or 8% as reported and down 7% in constant currency. Lower volume, as well as pricing and volume changes associated with previously announced U.S. customer contracts, accounted for the declines.
Whole blood disposables revenue was $36.4 million in the fourth quarter, down $1.7 million or 4% as reported and down 2% on a constant currency basis. Full year whole blood disposables revenue was $129.4 million, down $14.5 million or 10% as reported and down 8% in constant currency. These declines reflected continued softness in the U.S. whole blood collection market, which declined 7% in fiscal 2016 and ongoing global price erosion.
Software and Equipment
Software revenue was $19.7 million in the fourth quarter, up 9% on a reported basis and up 10% in constant currency. Full year software revenue was $72.4 million, flat as reported and up 3% in constant currency.
Equipment and other revenue was $13.8 million, up $0.2 million or 2% as reported and up 2% on a constant currency basis. Full year equipment and other revenue was $51.9 million, down $2.8 million or 5% as reported and down $1.0 million or 2% in constant currency.
Equipment revenue is influenced by timing of tenders and capital budgets. The installed base of equipment, including devices sold and placed for use with customers, increased 7% in fiscal 2016.
Geographic
Fourth quarter fiscal 2016 revenue growth was 12% in the Americas, 20% in Japan and 12% in Asia Pacific, with a decline of 12% in Europe. On a constant currency basis, the Company had revenue growth of 11% in the Americas, 26% in Japan and 18% in Asia Pacific, with a decline of 3% in Europe. Constant currency disposables revenue growth was 16% in China.
For the full fiscal year 2016, revenue growth was 4% in the Americas and 5% in Asia Pacific, with declines of 7% in Japan and 11% in Europe. On a constant currency basis, the Company had fiscal 2016 revenue growth of 4% in the Americas, 10% in Asia Pacific and 2% in Japan, with a decline of 4% in Europe. Constant currency disposables revenue growth was 12% in China.
OPERATING RESULTS
Adjusted gross profit was $99.9 million, down $10.4 million or 9% from the prior year fourth quarter and included $5.3 million of unfavorable currency impact. Also included in adjusted gross profit was $9.4 million of inventory-related charges and reserves, of which $5.3 million resulted from revised expectations for whole blood and apheresis (red cell and platelet) revenue, collectively the "Donor" business. Fourth quarter and fiscal year 2016 adjusted gross profits were reduced by a $1.4 million rebate assessed by the Italian government upon the recent passage of new, retroactive law.
Fiscal 2016 adjusted gross profit was $419.9 million, down $24.2 million or 5.5% from the prior year and included $20.3 million of unfavorable currency impact and $9.4 million of inventory related charges and reserves recorded in the fourth quarter. Full year adjusted gross margin was 46.2%.
Adjusted operating expenses were $74.1 million, down $1.0 million or 1.4% from the prior year fourth quarter. R&D expense was 4.6% of revenue, compared with 4.7% in the fourth quarter of the prior year. Fiscal 2016 operating expenses were $300.3 million, down $6.4 million or 2.1% from the prior fiscal year. R&D expense was 4.9% of revenue, as compared with 4.7% in fiscal 2015. The extra week in the fourth quarter and fiscal year 2016 accounted for $5.0 million of operating expenses.
Fourth quarter adjusted operating income was $25.8 million, down $9.4 million, or 26.7% including $3.8 million of currency headwinds and the impact of the aforementioned Italian rebate and inventory-related charges and reserves.
Fiscal 2016 adjusted operating income was $119.7 million, down $17.8 million, or 13%. Currency headwind contributed $10.4 million of this decline which also included the impact of the aforementioned Italian rebate and inventory-related charges and reserves. Including the headwinds noted full year adjusted operating margin was 13.2%.
Adjusted interest expense on loans was $2.4 million. The adjusted income tax rate was 18.5% in the fourth quarter of fiscal 2016, compared with 25.0% in the same quarter of the prior fiscal year. Income tax estimates within each fiscal year, when finalized at year-end, are recorded in the fourth quarter. Fiscal year 2016 adjusted income tax rate was 23.9% in fiscal 2016, compared with 24.9% in the prior fiscal year.
GOODWILL AND OTHER NON-CASH ASSET WRITE-DOWNS
The Company recorded $12.2 million of non-cash impairment charges in the fourth quarter of 2016, resulting from decisions made during its ongoing strategic business review. These impairment charges related to intangible assets, capitalized software and other assets.
Earlier in fiscal 2016, the Company had recorded a non-cash goodwill impairment charge of $66.3 million, primarily related to goodwill arising from the whole blood collection business acquired in fiscal 2013, and a $13.8 million non-cash charge, net of related contingent consideration, to write off intangible assets resulting from the fiscal 2013 Hemerus Corp. acquisition.
These non-cash impairment charges, which totaled $92.3 million pre-tax or $85.2 million after-tax, $1.66 per share in fiscal 2016, will not impact the Company's liquidity, cash flows from operations, future operations or compliance with its debt covenants.
BALANCE SHEET AND CASH FLOW
Cash on hand was $115 million, a decrease of $46 million during fiscal 2016, as the Company utilized $38 million of cash, net of $13 million of cash tax benefits, to fund VCC and other restructuring initiatives and $61 million to repurchase shares in the open market. The Company reported free cash flow, before transformation and restructuring costs, of $58 million in fiscal 2016.
VALUE CREATION & CAPTURE ACTIVITIES
The Company's VCC program spending was completed with approximately $28 million of cash outflow in fiscal 2016 and cumulative VCC program spending of roughly $175 million.
ADJUSTMENTS TO REPORTED EARNINGS
Non-cash accounting charges for the write-down of goodwill, intangible and other assets, net of the reversal of contingent consideration, totaling $12.2 million pre-tax and $92.3 million pre-tax, respectively, were excluded from fourth quarter and fiscal year 2016 adjusted earnings.
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