BRAINTREE, Mass., Aug. 1, 2011 /PRNewswire/ -- Haemonetics Corporation (NYSE: HAE) today reported GAAP net revenues of $170.6 million, up 5%, net income of $16.9 million, down 5%, and earnings per share of $0.65, down 7%. Excluding transformation costs in fiscal 12 and 11, adjusted first quarter net income was $ 17.1 million, down 10%, and adjusted earnings per share was $0.65, down 12%. Excluding currency, revenue was up 2%.(1)
Brian Concannon, Haemonetics President and CEO, said, I am very pleased with the return to organic revenue growth, despite the challenges presented by the OrthoPAT voluntary recall. With the exception of Surgical Cell Salvage and Equipment, we saw growth in every product category, which speaks to the building momentum within the broader business.
STRATEGIC AND SEGMENT GROWTH HIGHLIGHTS
Haemonetics continues to make progress expanding its business. The Company reported the following highlights:
- 12% growth in plasma disposables as increasing collection volumes drives revenues.
- 10% organic growth from the integrated software business aimed at delivering the information highway focused on the compliance, productivity, availability and safety of blood products from the donor to the patient.
- 19% growth of our diagnostic disposables products, with rapid uptake by leading US hospitals.
- 5% growth in red cells after 8 quarters of decline.
- IMPACT® accounts increasing to 208 as more customers embrace blood management solutions.
- IMPACT Online expanding to 17 accounts, which has more than doubled in the past two quarters.
In addition to revenue growth and earnings, in the quarter Haemonetics reported adjusted gross margin of 52%, down 100 basis points, and adjusted operating margin of 14.2%, down 170 basis points. The Companys adjusted operating expenses were $64.5 million, up $4.0 million from levels in Q1 of fiscal 11. Gross and operating margins were significantly impacted by the recall of our OrthoPAT devices. The negative impact on operating earnings associated with the OrthoPAT recall and other product quality initiatives was approximately $3 million or $0.08 per share in the quarter. 1
Mr. Concannon added From an earnings perspective, we simply could not overcome the headwind that the OrthoPAT recall represented in the quarter despite the relative strength of our other businesses. In addition, we incurred costs associated with the substitution of our plasma HS core product, used to collect plasma for transfusion in certain European markets. While the impact of these challenges will continue to present a headwind for the remainder of the fiscal year, most of this impact will be non-recurring and our actions will serve to strengthen our quality and product portfolio going forward.
As noted, Haemonetics first quarter fiscal 2012 reported revenues were $171 million, up 5%. Reported revenues break down as follows:
Plasma disposables revenue was $63 million for the quarter, up 12%. Haemonetics plasma business growth accelerated significantly in the quarter following a cyclical adjustment in the commercial Plasma business last year. Plasma revenues are still being negatively impacted by a change in collection practices in Japan.
Blood bank
Platelet disposables revenue was $37 million for the quarter, up 3%. Platelet revenues continue to benefit from strong sales in emerging markets.
Red cell disposables revenue was $12 million for the quarter, up 5%. Red cell revenues grew due to increasing demand for red cells and market share gains as we leveraged our IMPACT selling approach in the market.
Hospital
Surgical disposables revenue was $16 million for the quarter, down 4%. We are in the early stages of our Elite® launch which we anticipate accelerating as the year progresses.
OrthoPAT orthopedic perioperative autotransfusion system disposables revenue was $8 million for the quarter, down 13%. OrthoPAT revenues were impacted by the voluntary recall of pre-2002 devices. The Company is making improvements to the reliability of our OrthoPAT system and will continue to advance Quick Connect to reinforce the value proposition of this important blood management device.
Diagnostics revenue was $6 million for the quarter, up 19%. Revenues related to the TEG® Thrombelastograph® Hemostasis Analyzer business were also driven by the Companys IMPACT initiative.
Software Solutions revenue was $18 million for the quarter, up 10%. Our enhanced offering of software products for our Blood Bank and Hospital customers is driving organic revenue growth.
Equipment and other revenue was $11 million for the quarter, down 13%. Equipment revenue was influenced by the timing of tenders and capital budgets.
Haemonetics reported revenue growth in North America with sales up 9%, Japan sales up 4%, and Asian sales up 6%. European sales were down 4% reflecting timing of equipment tenders.
Guidance
The company affirmed its full year revenue guidance of 4-6% revenue growth but now expects gross margin improvement of just over 100 basis points, operating income growth of 6-7% and earnings per share in the range of $3.35 to $3.45 for the full year. The current estimate of the annual impact of quality remediation is approximately $10 million or $0.25 per share of which $9 million is expected to be non-recurring.
CONFERENCE CALL
Haemonetics will host a webcast on Monday, August 1st at 10:00 am Eastern to discuss these results. Interested parties can participate at http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=72118&eventID=4152777
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, 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 financial results is included at the end of the financial sections of this press release as well as on the web at http://www.haemonetics.com. In the first quarter of fiscal 12, Haemonetics incurred $0.3 million of pre-tax restructuring costs, compared to $1.7 million in pre-tax restructuring and integration costs in FY11. Our FY12 guidance excludes $8 million of planned transformation and integration costs associated with the infrastructure supporting our research and supply chain organization and the integration of our software solutions business.
