Haemonetics. We welcome Chris Simon, CEO. Thanks for joining us today.
Travis, thanks for having us. Great conference. We're delighted to be a part of it.
Awesome. Maybe, I'll start out higher level. You know, just kind of finished your last LRP. You set a new guide. Just where do you kind of see yourself kind of at this stage in the life cycle of Haemonetics?
Yeah. It's been a journey over the past four years. I think, at the time, four years ago, when we issued that LRP, you know, we had just survived COVID, and we knew that CSL was transitioning, and I think we wanted to go out with a bold and audacious plan that gave investors confidence that there was life afterwards. We put forth a set of metrics, and I think at the time, the reaction we got from buy side and sell side alike was like, "You know, why did you lean that hard into it? Nobody does that," you know, period, let alone in an environment like this and transitioning what turned out to be $150 million of revenue. Sitting here today, I'm really proud of this team. You know, our goals were very clear.
We achieved double-digit revenue growth ex- CSL. We were high teens on our EPS and earnings growth. We added 660 basis points of margin to our operating income margin from the high teens into the mid-20s, and we generated nearly $700 million of free cash flow along the way. I think very clearly what we've built is a much more solid foundation of durable growth that we can build on from here. We're actually really excited about what comes next.
Great. Sounds good. How do you think about the longer term portfolio of the company? We saw the acquisition of Vivasure. Do you continue to add to the hospital? You know, one question I get a lot is, does it make sense to have the two businesses together and some of the synergies there?
Sure. We, you know, we like plasma. We are, you know, the only dedicated plasma play. We're the undisputed industry leader. We continue to invest aggressively behind that to deliver, you know, unrivaled growth and profitability. There are limitations to what that business can deliver. When we set that LRP, we made a conscious effort to diversify sustainably, and now Hospital is our largest business. I do get that, and I get the, "Well, you guys have become very, you know, complex." I don't think we're complex at all. We're about three products: NexSys, TEG, and VASCADE. Those three products are all made in North America. They're all sold primarily here in the U.S., which is 85% of our revenue. You know, we're about as straightforward as it gets.
If you want to know how Haemonetics is doing, check in on those three products and you'll see the durable growth.
Makes sense. Maybe, just on plasma, in particular, just think about the kind of the market dynamics in the plasma market. kind of Sometimes people think of it as a cyclical business, right? kind of where are we in that cyclical part of that market? you know, you've had a few good quarters in plasma, I just kinda hear how durable is that when you think about the overall market.
Over that LRP period, it's been anything but linear. We had this massive recovery, 40%+ growth the first year, 20% the second, then it stabilizes at some point. You know, last year we went out with guidance that said the collection volume would grow at 0%-2%. It wound up growing double digits for the year. It's difficult to predict. I do think people confuse that, though, with the end market demand for IG-based therapy, which remains unabated, right? We get into this whole debate about anti-FcRn and IG. I'm happy to go deeper on it, we see, you know, no obstacles to the ongoing growth in demand for IG, which is the absolute core of what drives collection volumes.
Okay. When there was some news recently on one of the CSL, which obviously is not your customer, but they were talking about inventory destocking. A question I've gotten is that, you know, a customer-specific thing, or is it a market thing that we should actually pay attention to?
We pay attention to what all of our customers. CSL is a customer, an important customer, and we value the relationship greatly. We have 100% of their volume in Europe, and we announced at this time last year that we entered into a new long-term, you know, read that as, you know, 7+ years agreement to support all their U.S. centers with our integrated software. No, they're an important customer. We listen to those announcements. I think what gets missed here is that, you know, there's a lot of competitive head-to-head across the industry. One customer is taking share, another is giving share. Some are more committed to the U.S. market, some are more committed to the international markets, and you see that up and down accordingly.
Our guidance of 0%-2% is just us being prudent 'cause we don't control it. In aggregate, I'd be surprised and disappointed if the trends that we experience this year don't continue at some level into FY 2027.
In Q4, plasma was 13%, you know, ex- CSL. You talk about kind of the components there between pricing, share gains, and kinda market collection growth and trying to think how much kinda potential upside there could be in 2027.
Yeah. Super proud of what the team accomplished in our FY 2026 that just wrapped up at the end of March. The drivers were threefold. We call it the, you know, the perfect trifecta here. We took share hand over fist. We took share in the marketplace in terms of collection volume growth, both here in the U.S., but also disproportionately internationally, where the growth was even higher. We had the benefit of innovation-based pricing from the final leg of our Persona rollout. That's a 10% yield enhancement we gave the industry. On top of that, you saw the collection volume growth, which was double-digit throughout the year in Europe, and then the second half of the year became double-digit here in the U.S. as well. That's a trifecta.
You can't reasonably expect that all three of those things are going to deliver at that level year in and year out. The things that we control within it, we'll lean into, and we expect continued success there.
You alluded to rolling out Persona PLUS could be a headwind to the collection volumes as centers collect 5% more with each visit. Is that big 10% to the 0%-2% collection volume expectation?
Yeah. The round numbers, right? When we rolled Persona, it was roughly a 10% improvement off of what we had already done with the industry's yield enhancement. Persona PLUS is half that again. I'm just rounding, right? Each experience will be different. We saw two very different waves. The initial wave of Persona, the collectors took the 10%, added it to their existing plans, which were roughly 10% and grew 20% in a year, we're delighted to be able to do so with our help. Later in the wave, second wave was really more of a modulate it, where the companies needed to tamp down their cost per liter. They pulled back on new center openings, took the 10% we gave them and met their plan that way.
You know, it remains to be seen what Persona PLUS looks like. You know, our guidance is de-risked with regards to the 0%-2%, and I think what gets lost in all of this is the extensive margin expansion. Again, bragging on that team, but when I joined the company, our gross margins were in the low 40%s, and plasma was right there in the thick of it, 43%. Today, that plasma business is operating in the mid-50%s or better, and Persona PLUS will be a further expansion on top of that. You know, we'd like to see volume and margin, but, you know, we win either way.
You talked about annualization of some share gains as the biggest driver of kind of the mid-single-digit growth in plasma in 2027. Can you help us contextualize some of the share gains a bit more? It sounds like some of the customers like Grifols are winning more businesses. Is that flowing into you?
Yeah. Clearly, when our customers do better, we do better. I don't want to talk about individual share because it's obviously, you know, tightly contested across, you know, the major players. What I think is interesting, if I go back again to the LRP, you know, historically, we had 70% share of the industry, and, you know, people referred to us as Plasmanetics, not Haemonetics. With the CSL announcement, folks thought we were going to drop, you know, into the low 40%s or something. That never happened. It was a much extended, you know, transition, and during that transition, we've meaningfully gained share from the other major players such that we never dropped below 50% of the market.
Our aspiration is to get back to that 70%+ based on the superiority of our technology and the service and offerings that we put out there.
Fair. You hinted at some plasma innovation in 2027 in addition to Persona PLUS. You know, what's the long-term vision, you know, for innovation there? You know, could there be a further upside to the pricing in this business as you bring in innovation?
Yes, and there will be. You know, the levers we pull are very obvious. We're better at it than others, but, you know, yield is first amongst them because it's an immediate drop through, you know, no pun intended, to the CPL bottom line. Speed is a close second in that regard, so stay tuned there. We're the only ones with an integrated offering. You know, obviously, the software that powers the device is very sophisticated, but there's also standalone software, what we refer to as NexLynk DMS, the Donor Management System that runs the centers. With our 80+ share of the U.S. collection center opportunity, we have really good insights to what's happening hour to hour, day to day.
We've packaged those insights via data analytics and some AI enablement back as a tool to help our customers run their operations more effectively. There's gonna be a steady stream. Think about this as the 1.1 version, 1.2 version, 1.3 version that we will continue to roll into the market so that anybody who's operating our integrated system is gonna see that steady stream of innovation on top of, you know, the big blockbusters like Persona PLUS.
Anything else that we should talk about in plasma before we move to vascular closure?
Yeah. I just think plasma's best days are ahead of it. I know there's a lot of consternation, as I said, about, you know, competitive alternatives. Fully half, probably closer to 55% of the IG demand is primary and secondary immune deficiency. With the incidence and prevalence of cancer therapy, that growth continues unabated. On the autoimmune side, you know, it's a, you know, dynamic market for sure, but we look at new patient starts. New patients start on IG across the entire suite of IG autoimmune therapies because it's a third the cost, and it works really well. The others are growing. They're growing as adjunctive therapy or where they're non-IG responsive. I don't think it's an either/or choice. I think there's plenty of opportunity. It's a great thing for patients, and candidly, it's a good thing for us.
Moving on to vascular closure, anything you'd kinda talk about, you know, where do you kinda see the state of affairs in vascular closure now, just to open it up?
Yeah. vascular closure declined 9% in fiscal 2026. That's disappointing in the extreme, and we did go backwards in fourth quarter. However, if you look at our third quarter to fourth quarter performance, it is the first time in fiscal 2026 where we grew. In fact, we grew 8% on the vascular closure business, and we also grew in the SavvyWire business. I think there's a number of factors coming together for us, Travis, that give us confidence that IVT will be a meaningful contributor to our growth in FY 2027. We've guided for mid-single digit across hospital.
We didn't break it out between the two franchises, but IVT can and will contribute to growth, and I'm very confident when we look back, folks will look at that January, February, March time period and say, "That's when Haemonetics turned the corner and got back on their front foot and delivered growth with that franchise.
What's given you confidence in this January, February, March kind of being the turning the corner? I guess Q4 did step up sequentially. I don't know.
Yeah.
Was that just typical seasonality or are things actually getting better sequentially in Q4?
The seasonality is tough to call. Actually what we read and see, 'cause there's a lag factor here, it'll be obvious pretty soon here. I think actually procedure volumes were down, not up, for a host of factors. We were able to grow because of, you know, a number of factors. For the first time, our commercial group is fully resourced, from corporate accounts down through all the frontline clinicals, et cetera. That team, and that is a more skilled, more capable, more driven team than we've ever had in place. That's the first one. You know, they've got a better product. Getting the MVP XL label expansion with the clinical data that came with the trial work that we did meaningfully positions us as a therapeutic choice within that category.
You know, candidly, I think, you know, use the sell side lingo, it's a soft comp. You know, 80% of that 9% decline in FY 2026 was attributable to two factors. One was the releveling of the guidewire business OEM, right? We have an existing contract that we bought into when we acquired OpSens. We make product for Abiomed. Abiomed was acquired by J&J that did two things. They rebalanced the supply from 70% down to 50%, and they cut back on their inventory levels dramatically. That hurt us a lot in FY 2026. That's now annualized. It will not hurt us in 2027. The second piece is ensoETM.
ensoETM esophageal cooling, it's on the wrong side of the PFA advancement. At this point, you know, it's less than $2 million in revenue for us on the fourth quarter. It really can't hurt us going forward. You know, we'll step off the curb and then we'll grow from there.
Okay. That's helpful. On the corporate accounts team and kind of the sales force, you talked about equipping the teams with better tools and, you know, it does take time for sales forces transitions to actually get back on track.
Yeah.
You know, we've had a couple quarters here where that's happening is. You know, where are we at from the kind of the sales force perspective at this point?
We're very confident in the win ratio, win-loss ratio of that corporate accounts team. We just didn't have a presence there. Actually, the acquisition of Vivasure and large-bore closure further strengthens that value prop. From where we are, I think the IDN and the ASC strategy will increasingly be a source of growth for us going forward. Our product and the data we now have in support of it is just a really clean profile. It's fully bioabsorbable, nothing's left behind, highly predictable workflow, you know, rapid time to ambulation, hemostasis, et cetera. For a, you know, an ASC where you have owner-operator physicians, they'll look at that value proposition.
They are looking at that value proposition and saying, "This is a winning tool in our armamentarium." I think you know, we have the wherewithal and the capability to contract with them in ways that make it win-win.
When you think about the competitive actions and I guess some of the actions of some of your competitors in that market, you know, that seemed to have caught you guys by surprise at one point. You know, how's that trending? Are you getting some of that share back and some of the trialing that was going on with competitive products?
Yeah. Our win-loss ratio, as I said, is really favorable. Those guys aren't going anywhere, right? They're two very, you know, aggressive competitors in their own right. They approach the market quite differently. I think what we'll rely on is better team, better product, and disproportionately well driven to deliver what we need to do here.
Like your better product or clinical data, does that tends to resonate with customers?
I think anytime we've had presence and had the discussions, whether it's at the corporate accounts IDN level or it's, you know, talking to the individual, you know, EPs and other operators. You know, the products, you know, predictability, the bioabsorbability, the broader use case now, particularly on some of these large access site, you know, technologies for EP and for left atrial appendage gives us a real play. The other thing that's happening in the backdrop there, you know, the onslaught of PFA, where a lot of folks kind of misinterpreted that somehow that displaced us. It did not. It changed the modality though. We went from having three or four access sites per procedure down to two or three, depending on whether it was concomitant therapy, right?
Left atrial and, you know, AFib together or just, you know, different approaches to mapping. What's interesting about that is now with, you know, the PFA mark at like 70%-80% of the market, that stabilizes. It's a net effect, it's not a $2.8 billion TAM anymore. It's, you know, it's a $2 billion TAM or something therein. The growth rate increasingly will mirror that of procedure volumes. We estimate the access site growth rate in FY 2026 was about 3.5%. We think that roughly doubles in FY 2027 for no other reason than the onslaught has now begun to plateau, and we sit from here. Once it's fully plateaued, we will grow at the rate of growth, and if that remains mid-teens, that's a really good base for us.
Okay. That's helpful. Yeah, my next question was gonna be on concomitant, I don't know if there anything else you wanted to say on that. Just to kinda think about, you know, that headwind kinda comping out and going away given how fast those procedures are growing.
Yeah. There are, I think, some very good companies are leaning in, making sure that that concomitant therapy, you know, gains steam. The good news is we have a product that's uniquely well-positioned to close those larger access sites, and we have the label and the clinical data to support it. You know, net that, it'll tamp down slightly the addressable market. The growth rate and our applicability within that should be, you know, it's never been stronger.
Okay. That's helpful. With the expanded indication for MVP XL recently, how important is that in the U.S. and then the kind of the latest on getting that in Japan?
Yeah. I think there's a reluctant, you know, call it 20% or 30% of the market that without the label would be hesitant to use the product broad-based. For sure, you can't contract for something that's not on label. I think again, the ASCs and the IDNs, it's a real plus. But equally so, I think it's the data that was in the trial work that we submitted for that release. I think as that data is now part of the clinical literature, it really bolsters our value prop.
On the ASC opportunity for VASCADE, you know, as EP procedures over time move to the ASC, how important is that market for you and opportunity to get those?
I think we're a really good fit for that. You know, it'll take time. The ASCs, that won't happen overnight. I think there are a half a dozen states across the country, mostly across the South and Southeast, that will lead this charge, and we like that concentration. That's one of the areas we've really muscle built our organization to have a much better presence clinically and commercially. Yeah, we think we're in the direction of travel there and will benefit by that momentum.
On, PerQseal, the previous acquisition, why was that the kind of the right deal?
Yeah. There really is no therapeutically equivalent product out there for large-bore closures. The PerQseal Elite submission that went to FDA is angling towards a 26 French OD. There's products that they can use for that today, but they're really suboptimal. When we look at that product, its clinical data, we look at the PRAGUE-17 trial that was the original support for it. We just got really enthusiastic when we went and talked to our advisory board. Those KOLs are just, you know, they want a tool that works. As you see TAVR and EVAR procedures now growing double digits, they need a closure methodology that is fit for task for these more complicated, more advanced procedures. PerQseal Elite is that product.
When you think about the kind of the call points with existing vascular closure businesses, how do you think about the synergy between the different call points and businesses?
Yeah. PerQseal Elite's designed to be a tuck-in product for our, you know, the investments we've already made in our U.S. sales force for vascular closure and for structural heart will support this existing product. It's a closure product, we intend to market it as closure. Yes, it's in the IC, it's, you know, structural heart play where we have the presence with SavvyWire, we're gonna be very thoughtful about not distracting our existing SavvyWire team. It's really gonna be predominantly driven by the vascular closure force, which is, you know, the bulk of our efforts. We have 180 ft on the street today doing that here in the U.S.
How does it compare with like MANTA and kind of gives you the confidence you can take share in that market?
It's sutureless, it's fully bioabsorbable. There's no permanent implant left behind. It's achieved in its trial work an immediate median hemostasis and, you know, the outcomes more broadly, think that we're gonna, you know, give us confidence we're gonna be able to access that $300 million addressable market, you know, safely and with meaningful workflow efficiencies. A much more predictable recovery and hopefully accelerated discharge pathway along the way. I think, you know, we like the profile a lot.
That's helpful. Blood management grew 21% this quarter. It's like 13 point acceleration in Q4. You called out transfusion management, how sustainable is the growth in that business?
First and foremost, Travis, thank you. Like the first time I've been asked in a public forum about blood management technologies, which at one level is kind of ridiculous. This is a $300 million hospital business operating at 70%+ gross margins. You know, I went back with the team and looked at the LRP. They've delivered mid-teens growth in each of the last five years powered by TEG. It is the definition in our portfolio of durable growth, and we think it's highly sustainable. When we look at the TEG market, that viscoelastic testing opportunity, whether it's here in the U.S., Japan, or in Europe, we're less than 60% penetrated in the total market. Now, in fairness, we have 70 share of the market, so we do the heavy lifting there.
We see, you know, unbridled opportunity to continue that double-digit growth. That's not what we guide it to because we wanna be, you know, measured about this, but there's no reason that TEG should slow or diminish. That team, when we asked them to, was able to lean in, and in a very thoughtful way, drive recurring revenue. To your point in the quarter, the way we achieved 21% growth was that we have the transfusion management business, which is our blood banking software for the major hospitals. That business also grew, contributed equally in the quarter, actually grew nearly 50%. That again, the team leaned in. We view that opportunity as Epic converts the landscape. We view that as a land grab. A land grab we intend to win. These are all long duration recurring contracts.
The lean in in fourth quarter bodes very well for momentum in FY 2027. Yeah, that's a really nice one too. We don't talk much about transfusion management, but as it approaches $100 million in revenue, you know, maybe that'll change. We'll see.
Starts to move the needle a little bit more.
A little bit more. Yeah. In a really good way, and it's one of our most profitable products.
Yeah. It's like vascular margins. It's kind of accretive to margins.
Yeah. Highly accretive. It's, as you said, there's a lot of upfront go live installation, et cetera, but there's an ongoing usage and maintenance revenue stream that makes the thing a nice annuity.
Okay. I think a third of the reason medtech stocks are not working year to date is worries on inflation and, you know, there's the war and chips and just oil prices, right? Just would love to kind of understand, like, your exposure there. I don't think you have a lot of exposure to the inflation and macro stuff, but just kind of curious, given that matters a lot for investors.
Yeah. Whether it's patients or donors, the underlying procedures continue unabated. I actually think it's a very good environment to collect, and you see the growth in our core hospital franchise. We have zero qualms about that. We are not immune to tariffs, to inflation, or to the geopolitical disruption. Resin's one of our largest raw materials. It's a petroleum-based, you know, product, so we've gotta be really mindful of that. Our guidance for the year, you know, on that, you know, mid-single-digit revenue growth on a reported basis, we said comparable with regards to what we're gonna achieve on the earnings side, and that includes 50 basis points- 100 basis points of ongoing margin expansion.
You know, we feel confident that we have line of sight to that, but if anything, we've tried to remain prudent to deal with whatever shocks and ebbs and flows occur that we have to deal with to, you know, continue this durable growth while we chase that second objective, which is margin expansion too.
Yeah. I was gonna ask on the 50 basis points- 100 basis points of margin expansion, just think about the visibility there. Like, kinda gives you the confidence that you can sustain that going forward?
Well, on the product side, you know, we see a return to growth unabated, so there's volume for sure. There's price. We talked about, you know, the new product launches, whether it's, you know, heparin neutralization going into Europe, whether it's, you know, Persona PLUS here in the U.S. on the plasma side, whether it's, you know, VASCADE, MVP XL and PerQseal Elite when it comes, will all contribute to a more favorable mix. That's a big part of it. I think what you'll see from us in FY 2027 and forward is core productivity and greater operating leverage. As we scale this business, we strongly believe we've already made the investments we need to make to be able to deliver the revenue growth that we view as quite prudent and conservative.
With that in hand, you'll see operating leverage now as that manifests, we'll call it, and, you know, we think that gives us room to run.
Great. In hospital margins, I think you talked about 30%+ at some point. I assume a lot of that has to do with the top line, but just curious if that's still a target to get there.
Yeah. If you go back to the start of our LRP, I think our hospital margins were mid-single digit, 6% is the number I have in my head for that. Today it's operating in the low 20s. That is very much a function of scale, to your point, and I think as we scale the business, the existing portfolio has the ability to drive towards that 70% gross margin. Again, as we create operating leverage, both with TEG and with VASCADE, you'll see a meaningful uptick in the operating income margin that comes with it.
Okay. I think that mostly covered my questions. I think you wanted a couple minutes to kinda close out, but I'll let you do that.
Yeah. Look, I appreciate it. I started, you know, by doubling down on what we've achieved the last four years. We have not issued a new LRP. I think we're gonna hold off on doing that. You know, what I hear from you and from your colleagues and from our investor base is we're very much a show me situation at this point. We have to demonstrate durable growth. I think that's at the absolute core of everything we do. The margin expansion will continue. What that's left with, and I think what's really becoming much more of the dialogue around Haemonetics is the free cash flow and the return on invested capital. We expect those numbers to continue to move decidedly northward, right? We like the portfolio we've got.
We're not out looking for new products. We're gonna double down. Our first priority is organic. You know, with the cash flow we're generating and the strengthening in our balance sheet, it gives us some optionality to de-lever or buy back shares as appropriate. We feel we've got all the elements in place here, Travis, to be able to drive durable growth going forward, and I think that, you know, the sector's got its challenges. We understand that, we think we can stand apart in terms of total shareholder returns in this environment.
Great. Well, thanks a lot for coming, and good luck with the meetings today.
Thanks. Thanks for having us.