Haemonetics Corporation Reports Adjusted Earnings per Share of $0.74 for Q1 of Fiscal 11 Company Affirms Full Year Guidance

BRAINTREE, Mass., Aug. 2 /PRNewswire-FirstCall/ -- Haemonetics Corporation (NYSE: HAE) today reported GAAP net revenues of $163 million, up 6%, net income of $18 million, down 1%, and earnings per share of $0.70, up 1%. Excluding transformation costs in fiscal 11, adjusted first quarter net income was $19 million, up 5%, and adjusted earnings per share was $0.74, up 7%. In constant currency, revenue was up 8%, adjusted net income was up 30% and adjusted earnings per share were up 32%. (1)

As expected, the quarterly growth in both revenue and net income were adversely impacted by trends in both foreign currency hedge rates and Q1 plasma growth rates. The Company expects the currency headwinds to moderate and plasma growth to accelerate throughout the remainder of the year. The adverse impact of currency on net income growth in the first quarter was $2.9 million. Based on currency hedges in place for the remainder of the year, the full year adverse impact of currency on net income growth is currently expected to moderate to $1.3 million. Plasma, which is expected to grow 6-8% for the full year, declined 5% in the quarter when compared to particularly strong growth in Q1 of fiscal 10. (1)

In addition to revenue and earnings growth, Haemonetics reported adjusted gross margin of 53%, up 70 basis points, and adjusted operating margin of 15.9%, down 70 basis points from the fiscal 10 finish. Annual operating income guidance, which reflects full year hedged currency trends, calls for double digit operating income growth for the year. The Company managed adjusted operating expenses to $60.5 million, up $3.9 million from levels in Q1 of fiscal 10. Incremental spending is associated with the Companys recent acquisitions, ($3 million) and its automated whole blood and Arryx blood typing initiatives. (1)

Brian Concannon, Haemonetics President and CEO, said, We are off to a solid start in fiscal 11 posting top and bottom line growth while dealing with anticipated Q1 headwinds in plasma growth rates and currency. As currency headwinds moderate and Plasma accelerates we will see favorable trends in the last three quarters that give us confidence about achieving our commitments for the year.

The Company affirmed its full year guidance of 9-12% revenue growth, adjusted operating income growth of 11-14%, and adjusted earnings per share in a range of $3.15 to $3.25.(1)

STRATEGIC AND SEGMENT GROWTH HIGHLIGHTS

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

• A recently signed agreement with Consorta, a Group Purchasing Organization which represents 11 Integrated Delivery Network shareholders with 260 acute care hospitals and an additional 270 affiliated acute care facilities, to provide IMPACT Online, the Companys web based portal that enables blood management analysis and decision making. The agreement will allow Haemonetics to target specific members of Consortas network that will leverage the scalability and simplicity of IMPACT Online as a key component of the hospitals approach to blood management.
• Enabled by Haemonetics BloodTrack® HaemoSafe, the Puget Sound Blood Center and Overlake Hospital Medical Center announced their partnership to launch a new blood distribution system. This is a unique collaboration between a blood center and hospital, designed to improve the availability and access to blood components.
• 24 new IMPACT customers in Q1 fiscal 11 bringing the total number of IMPACT customers to 90, driving acceleration in key product lines evidenced by a 24% Q1 growth rate for TEG® disposables.
• The Global Med acquisition integration is proceeding well against the planned schedule and budget.
• During Q1, Haemonetics completed its planned $50 million share repurchase acquiring approximately 900,000 shares.

Mr. Concannon added We have also made excellent progress against our goals for blood management with 90 IMPACT accounts by the end of the first quarter and more recently the signing of a system wide agreement for blood management with Consorta. Our value proposition is taking hold in the markets we serve and represents a strong catalyst for growth this fiscal year. Combine continued growth from IMPACT selling, with currency moderation and Plasma acceleration, and you can see why I remain very confident about achieving our current guidance

As noted, Haemonetics first quarter fiscal 11 reported revenues were $163 million, up 6%. Excluding the effects of currency, revenues grew 8%. Reported revenues break down as follows:

Plasma disposables revenue was $55.9 million for the quarter, down 5%. Haemonetics plasma business declined in the first quarter when compared to a strong Q1 of fiscal 10 as anticipated. Haemonetics expects its plasma business to return to low single digit growth in Q2, ramping to low double digit growth in the second half of the year.

Platelet disposables revenue was $36.3 million for the quarter, up 6%. The platelet business benefited from strong sales in Asia and a recovery in our distribution markets in Europe and Latin America.

Red cell disposables revenue was $11.3 million for the quarter, down 4%. Revenue declined due to decreased demand for red cells as a result of declining demand for blood.

Surgical disposables revenue was $16.4 million for the quarter, down 6%. The surgical business was adversely impacted by trends in currency spot rates.

OrthoPAT® orthopedic perioperative autotransfusion system disposables revenue was $9 million for the quarter, up 4%. The Company continues to make progress advancing OrthoPAT system sales in IMPACT accounts.

Diagnostic disposables revenue was $4.7 million for the quarter, up 24%. Revenues related to the TEG Thrombelastograph® Hemostasis Analyzer business are accelerating driven by the Companys IMPACT accounts.

Software Solutions revenue was $16.5 million for the quarter, up 95%. Software Solutions growth was primarily impacted by our Global Med acquisition. Underlying organic growth of our core software business was 9% in the first quarter.

Equipment revenue was $13 million for the quarter, up 20%. Equipment growth was impacted by the SEBRA® acquisition. Organic equipment growth in the quarter was 5%.

Haemonetics reported growth in all geographies for the quarter, with North American sales up 6%, European sales up 2%, Japanese sales up 2%, and Asian sales up 30%.

CONFERENCE CALL

Haemonetics will host a webcast on Monday, August 2nd 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=3186588

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 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://www.haemonetics.com/site/content/investor/investor.asp. In the first quarter of fiscal 11, Haemonetics incurred $1.7 million in pre-tax restructuring costs. Haemonetics incurred no restructuring costs in the first quarter of fiscal 10.