Q2 2027 Haemonetics Corporation Earnings Conference Call - HAEMONETICS CORP

Explicit Guidance:

• FY2027 Organic Revenue Growth: Raised to 6%–9% (previously 4%–7%).
• FY2027 Reported Revenue Growth: Raised to 8%–11% (previously 5%–8%).
• FY2027 MedSurg Organic Revenue: Reaffirmed mid-single-digit growth.
• FY2027 Apheresis Organic Revenue: Raised to high-single-digit growth (previously low to mid-single digits).
• FY2027 Adjusted EPS Growth: Expected to be in line with the new reported revenue guidance of 8%–11%.
• FY2027 Adjusted Operating Margin: Revised expansion to 0 to 50 basis points (previously 50–100 basis points).
• FY2027 Free Cash Flow Conversion: Expected to be excess of 80% of adjusted net income (inclusive of higher inventory, CapEx, and investments).
• FY2027 Tax Rate: No specific guidance provided; historical rate was 24.7% (Q2) and 25.2% (H1).

Business-Segment Outlook:

• Apheresis/Plasma:
  • Persona Plus: Rollout of Nexus PCS with Persona Plus to all CSL U.S. Plasma Centers expected to be completed before end of calendar 2027. Adoption is on schedule with "substantial" uptake.
  • CSL Relationship: Conversions from Q4 FY26 and Q1–Q3 FY27 included in guidance; additional Q4 FY27 conversions expected but not included. Full-scale conversions began October (post-Q2).
  • Long-term: Multi-year durable growth driven by recurring disposables and share gains; benefits extend beyond initial implementations.
  • Other Apheresis: Expected to remain flat or decline modestly due to portfolio rationalization and order timing.
  • Collections: U.S. collections trending mid-to-high single digits; OUS tracking into double digits. No collection volume growth factored into FY27 guidance due to lack of control; focus on share gains.
• MedSurg:
  • Blood Management: TAG 5000 capital upgrade cycle winding down; growth driven by mid-teens recurring TAG 6S disposables. Transfusion management now 20% of Blood Management Tech revenue and growing into double digits.
  • Interventional Technologies: Sustaining return to growth; Vascular closure (VASCASE MVP/MVP XL) growing in low double digits.
  • New Product Launches (FY27):
    • Percocel Elite: FDA-approved for large-bore structural heart; entering a ~$300M global opportunity. Early-stage launch with emphasis on physician education.
    • PACE Pro Guidewire: Broadening structural heart portfolio; highly complementary to SavvyWire.
    • Note: New product launches not expected to materially contribute to FY27 revenue but strengthen long-term runway.
• Global Expansion: VASCADE MVP XL extended globally with CE mark and Japanese approval for expanded indication.

Market and Competitive Outlook:

• Plasma Market: "Stabilizing" market conditions; strong underlying demand. Competitive advantage validated by expanded CSL relationship and Persona Plus yield/productivity benefits.
• Vascular Closure: Market stabilizing; PFA adoption expected to resume growth in access sites. Management "cautiously optimistic" on acceleration in H2 FY27.
• Structural Heart: Percocel Elite positioned to disrupt large-bore closure market; PacePro and SavvyWire targeting high relevance in TAVR/EVAR workflows.
• Share Gains: Expecting continued share gains with CSL and other customers; Persona Plus adoption driving recurring revenue base.

Macro / Industry Outlook:

• Inflation/Costs: Elevated inflationary pressures in freight, energy, and materials creating headwinds.
• Freight: Higher fuel prices and expedited shipments to meet supply readiness (CSL ramp) impacting costs.
• FX: Foreign exchange remained a headwind in Q2; impact expected to persist but not factored as a primary growth driver in guidance.
• Tariffs: Tariff refunds provided ~200 bps benefit in Q2; excluded from future guidance assumptions.
• Regulation/Safety: No impact from recent cyber attacks in Europe (Paris); safeguards in place.
• Capital Cycle: TAG 5000 conversion cycle winding down; new capital cycle initiated for CSL capacity expansion and device purchases.

Strategic Initiatives:

• CSL Capacity Expansion: Investing in manufacturing capacity (line extensions, packaging, warehousing) and device inventory.
• CapEx Outlook: "Elevated capital expenditures" expected over the next two years to fund device purchases and capacity expansions for the CSL rollout.
• Investment Timing: Manufacturing and distribution resources committed ahead of volume materialization to ensure supply reliability.
• M&A/External Growth: No serious M&A anticipated in the near/intermediate term; capital allocation priority remains organic growth (specifically CSL execution) and balance sheet strengthening.
• Cash Allocation: Maintaining existing $325M share repurchase authorization; opportunistic revolver repayments expected.

Risks and Headwinds to Outlook:

• Margin Pressure: FY27 operating margin expansion constrained by:
  • Transitory Ramp-up Costs: Capital investments, expedited freight, and higher manufacturing costs associated with the >40% volume increase for CSL.
  • Compensation: Higher performance-based compensation tied to current outperformance (transitory baseline reset expected FY28).
  • Inflation: Continued pressure on freight, energy, and materials.
• Collection Volume Uncertainty: U.S. plasma collection growth not factored into guidance as external factor; potential for collectors to utilize yield gains to reduce collection frequency temporarily.
• Launch Execution: New product launches (Percocel Elite) face potential execution risks due to historical failures in the segment; emphasis on education/training mitigation.
• Order Timing: Blood Management Tech experienced temporary order timing hangover in Q2.
• Caveat: FY27 revenue growth expected to be weighted toward Q4; margin expansion also expected to be weighted toward Q4.

Management Tone on the Future:

• Confidence Level: High on long-term growth trajectory and "significant long-term opportunity," particularly in plasma and interventional technologies.
• Hedges: Discussed "transitory" nature of current cost pressures and margin constraints; explicitly noted exclusion of collection volume growth from guidance.
• Progression: Shifted from "cautious" to "cautiously optimistic" on Interventional Technologies; confident in MedSurg's ability to "surprise positively."
• Long-View: Emphasis on building "durable growth" and "lasting shareholder value" with a runway extending well beyond FY27 (FY28+ target: high 20s operating margins).