Q2 2027 Haemonetics Corporation Earnings Conference Call - GLOBAL MED TECHNOLOGIES INC

Explicit Guidance:

• FY2027 Revenue: Organic growth raised to 6–9% (previously 4–7%); Reported growth raised to 8–11% (previously 5–8%).
• FY2027 Earnings: Adjusted EPS growth expected to be in line with revised reported revenue growth (8–11%).
• FY2027 Margins: Adjusted operating margin expansion guidance revised to 0–50 basis points (previously 50–100 basis points); Adjusted gross margin expected to follow second-half phasing.
• FY2027 Operating Expense: Expenses driven by investments in capacity, performance-based compensation, and freight; margin pressure expected to moderate as volume scales.
• FY2027 Cash Flow: Free cash flow conversion expected to exceed 80% of adjusted net income (inclusive of elevated inventory, CapEx, and growth investments).
• Segment Guidance (FY2027): MedSurg organic growth reaffirmed at mid-single digits; Apheresis organic growth raised to high single digits (previously low to mid single digits).

Business-Segment Outlook:

• Plasma/Apheresis: Full-scale CSL center conversions (Persona Plus rollout) scheduled for completion across all U.S. CSL centers before end of calendar 2027; anticipated to drive multi-year durable growth and recurring revenue benefits extending beyond FY27.
• MedSurg (Blood Management): Growth driven by mid-teens recurring TAG 6S disposables as TAG 5000 capital upgrade cycle winds down; Transfusion management (now 20% of segment revenue) expected to sustain high single-digit to double-digit growth.
• Interventional Technologies (Vascular Closure): Sustaining return to growth with MVP and MVP XL growing in low double digits; "cautiously optimistic" for meaningful growth acceleration in H2 FY27.
• New Product Launches: Percocel Elite (large-bore vascular closure) and PacePro Guidewire are in early launch stages; Percocel Elite targets a $300M global TAM (high single-digit growth); expected to contribute meaningfully to long-term growth but not materially to FY27 revenue.
• Geographic Expansion: VASCADE MVP XL expanded globally with CE Mark and Japanese regulatory approvals; international growth expected to drive utilization in Europe and Japan for TAG platform.

Market and Competitive Outlook:

• Plasma Market: Global plasma collections grew in high single digits; U.S. collections trending in mid-to-high single digits, OUS in double digits. Management expects collection volume growth to be variable and has excluded it from FY27 guidance to avoid accountability for uncontrollable factors.
• Competitive Positioning: CSL partnership validates technology leadership; expects to capture additional share in Q4 FY27 as specific rollout plans confirm.
• Industry Trends: Vascular closure market stabilizing with resumption of growth in access sites post-PFA; expected to support high single-digit baseline growth.
• Pricing/Supply: Expecting tariff refunds (approx. 200 bps benefit in Q2) to be transitory; supply chain costs (freight, fuel) expected to moderate as logistics efficiency improves.

Macro / Industry Outlook:

• Cybersecurity: No operational impact from cyber attack targeting EFS (France); safeguards deemed effective.
• Inflation/Costs: Continued inflationary pressure on freight, energy, and materials noted as a headwind, though elevated production costs are expected to be transitory and capitalize into inventory before flowing through COGS.
• FX: Foreign exchange headwinds (60 bps impact in Q2) and favorable portfolio mix are key margin variables.

Strategic Initiatives:

• CSL Rollout: Scaling manufacturing capacity and supply chain readiness ahead of volume realization; investing in line extensions, packaging, and warehousing to support ~40% volume increase; device purchases will trigger a new 2-year elevated CapEx cycle.
• Product Innovation: Continued investment in R&D and commercial readiness for new launches (VivaShore, Percocel Elite, PacePro); focus on physician education for Percocel Elite to ensure successful market entry.
• Capacity Addition: Committing manufacturing and distribution resources now to ensure supply reliability for CSL and customer base; costs will be front-loaded but expected to yield operating leverage in FY28.
• Capital Allocation: Priorities include funding organic growth (CSL rollout), strengthening balance sheet (potential opportunistic revolver repayment), and preserving buyback flexibility ($325M remaining authorization).

Risks and Headwinds to Outlook:

• Transitory Cost Pressure: Elevated production costs, expedited freight, and performance-based compensation (tied to CSL outperformance) are expected to suppress FY27 margins but should normalize in FY28.
• Collection Volatility: Potential for customers to utilize increased yield (Persona Plus) to reduce collection frequency in the near term, potentially dampening volume growth.
• Regulatory/Launch Risk: New product launches (Percocel Elite) face execution risks; learning from prior failed launches in large-bore closure segment.
• Macro Sensitivity: Exposure to fuel prices, inflation, and FX fluctuations; potential upside/downside variance from collection volume not included in guidance.

Management Tone on the Future:

• Confidence: High confidence in long-term opportunity and ability to achieve "high 20s operating margins or better" as the business scales; view FY27 as a year of meaningful progress and investment.
• Hedges: Explicitly excludes collection volume growth from guidance; cites confidentiality for not disclosing customer-specific economics; notes that Q2 results include "de minimis" CSL contribution.
• Phasing: Margin expansion and revenue growth expected to be heavily weighted toward Q4 FY27.
• Strategic Shift: Transitioning from "strong results" to "turning durable growth into lasting value" with a focus on recurring revenue and operating leverage.

Miscellaneous:

• FY27 CapEx: Elevated capital expenditures expected over the next two years due to new device production lines and capacity expansion for CSL.
• Tax Rate: Adjusted effective tax rate expected to remain consistent with FY27 first half (~24.7–25.2%).
• Balance Sheet: Net leverage approximately 2.5x EBITDA; revolver balance at $200M; $100M revolver repayment made YTD.
• FY28 Outlook: Management anticipates significant margin expansion in FY28 as transitory ramp-up costs disappear and fixed cost absorption improves with higher volumes.