Haemonetics ($HAE) reported healthy gains in revenue and net income during its fiscal 2014 second quarter, but they come with a twist. The Massachusetts maker of blood management devices and related technology credited a big acquisition plus general reorganization and "expense management" with driving improvement, even as the overall market has suffered.
Net revenues hit $235.8 million during the quarter, up more than 8% over $218.2 million booked in the fiscal 2013 second quarter. Net income surpassed $16.5 million, up a whopping 152.8% over the $6.5 million in net income generated over the same period a year ago. M&A and manufacturing revamp costs that dogged the company earlier in the year were much less of an issue during the current quarter.
Brian Concannon, Haemonetics' president and CEO, said in a statement that the company's business areas generally saw better numbers. But they were offset, in part, "by continued evidence of a weak U.S. market being driven by improved blood management practices." In other words, surgical blood use kept going down, resulting in lower blood collections and reduced demand for blood management devices.
He said the company's continued reorganization, dubbed "Value Creation & Capture," is advancing and "providing us the necessary flexibility to compete in this new environment." That has included some streamlining of plant capacity, including the closure of a Braintree, MA, plant that will eliminate 320 jobs in the U.S. but expand operations into Mexico and Asia.
Some of Haemonetics' largest revenue gains included a 10% growth in plasma disposables revenue, a 15% jump in diagnostics disposables revenue and 28% and 18% gains respectively in China and Russia disposables revenue.
In 2012, Haemonetics snatched up Pall's transfusion medicine business for $551 million and bought Hemerus Medical in Minnesota in a deal worth $27 million to give it access to whole blood collection technology. Without that whole blood collection business in particular, Haemonetics said its base revenue would have declined 1% in the second quarter.
With that said, blood center revenue continued to decline during the quarter, and Haemonetics now predicts it will drop 5% to 8% over the 2014 fiscal year, pressured by a continued reduction in red cell demand. The company said transfusion reductions expected over the next 5 to 10 years will now take place over the next two years, as blood management improves and allogeneic transfusions become less frequent.
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