Good day, and thank you for standing by. Welcome to the Q4 2024 Haemonetics Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Olga Guyette, Senior Director of Investor Relations and Treasury. Olga, please go ahead..

Good morning. Thank you for joining us for Haemonetics fourth quarter and fiscal year 2024 conference call and webcast.

I'm joined today by Chris Simon, our CEO; who will provide business update and discuss revenue results and guidance and James D'Arecca, our CFO who will provide further updates about our fiscal year 2024 financial performance and expectations for fiscal year 2025.

Before we begin, I'd like to address revenue reporting changes we're implementing, starting with our fiscal year 2025. These changes involve integrating service revenue within our commercial business unit. This adjustment is in line with our updated management structure and acknowledges the crucial role that services play in our customer offerings.

It underscores our commitment to improving service quality and driving growth within our service organization. As a result of this change, the fiscal year 2025 guidance we will discuss today is presented in our new revenue reporting format.

All revenue results for the fourth quarter in fiscal year 2024 are presented in the old format to facilitate appropriate year-over-year comparisons.

For a detailed reconciliation between the old and the new revenue reporting format, please refer to the supplemental analysis referenced in this morning's earnings release and also available on the IR section of our website.

I'd like to remind everyone that all revenue growth rates discussed today are organic unless specified otherwise and exclude the impact of foreign exchange fluctuations and acquisitions. Our organic revenue growth guidance for fiscal year 2025 incorporates 15 weeks of revenue from OpSens due to the acquisition closing date being in December 2023.

Throughout our call, we'll reference other non-GAAP financial measures to help investors understand Haemonetics ongoing business performance. These measures exclude certain charges and income items.

For a complete list of excluded items, reconciliations to our GAAP results in comparisons with the prior year period, please refer to our fourth quarter fiscal year 2024 earnings release. Our remarks today will also include forward-looking statements, and actual results may differ materially from anticipated results.

Factors that may cause the results to differ are referenced in our earnings release and other SEC filings. We do not undertake any obligation to update these forward looking statements. This completes my remarks, and I'm now turning the call over to Chris..

Thanks, Olga. Good morning and thank you all for joining. Today, we reported organic revenue growth of 10% in the fourth quarter and 12% in fiscal year 2024. Adjusted earnings per diluted share was $0.90 in the quarter and $3.96 in the year, increases of 17% and 31% respectively.

At the midpoint of Haemonetics long range plan, we've made tremendous progress towards our transformational growth goals. Our ability to consistently deliver strong financial performance underscores the accelerating momentum in our business and our commitment to creating value for customers and shareholders.

We strengthened our reputation by overcoming hurdles to support all of our plasma customers through consecutive years of unprecedented growth. We rolled out our Persona and NexLynk DMS software upgrades and introduced Express Plus.

Through strategic portfolio rationalization and a heightened focus on global apheresis, we are improving the margin profile and durable contribution of our blood center business.

We delivered three consecutive years of high teens organic revenue growth in hospital and took steps to accelerate inorganic growth with the acquisitions of OpSens and Attune.

And we continued our relentless pursuit of improved productivity, delivering additional savings through our OEP programs and embedding these skills in the fabric of our organization. As Olga mentioned, we repositioned customer and field services within our commercial business units.

Services are a source of distinctiveness for Haemonetics and assigning them to the BUs will create greater accountability and new opportunities to enhance our offerings and optimize returns.

As we transition to the second half of our plan, we are well positioned and fully committed to achieving our goal of sustainable top quartile MedTech revenue and margin growth. Let's turn now to our business unit results and revenue guidance. It was another strong year for Plasma after 43% growth in fiscal year '23.

Plasma revenue grew 6% in the fourth quarter and 14% in fiscal year 2024, driven by disposable volume and software. North America disposables represented 85% of plasma revenue and grew 4% in the quarter and 13% for the year.

We recently completed the successful limited market release of our new Express Plus technology with more than 60,000 real world collections. We are now initiating full market release in the U.S. This technology is making our customers meaningfully faster.

And when combined with our bidirectionally connected NexLynk DMS offers unmatched plasma center efficiencies. NexSys with Persona remains unrivaled in enabling collectors to safely meet end market demand and lower cost per liter.

We continue to enhance the NexSys platform, expanding its competitive advantage as the global industry standard for plasma collection. We are enthusiastic about the opportunity to transition our NexSys customers to our latest technology and to gain share.

The plasma collections market remains robust, supported by strong end market demand, frozen plasma inventory deficits and a favorable collections environment. Excluding the effects of the CSL U.S.

Transitional supply agreement, our core plasma business delivered an impressive 18% growth in fiscal year 2024, and we project additional growth of 8% to 12% in fiscal year 2025. We anticipate a 45% decline in CSL revenue from $155 million in fiscal 2024 to approximately $85 million this year.

Therefore, our total plasma revenue guidance for fiscal year 2025 is anticipated to be in the range of negative 3% to 6%. In blood center, we overcame significant geopolitical challenges to grow revenue 7% in the quarter and 1% for fiscal year 2024, driven by continued strength in our apheresis portfolio.

Apheresis revenue was up nearly 13% in the fourth quarter and 5% for the year. Both in the quarter and fiscal year 2024 growth was disproportionately driven by increasing disposable revenue across plasma collection centers in Egypt, continued strength in red cell collections in the U.S. and strong demand for platelets across our key markets.

Whole blood revenue declined 7% in the quarter and 9% in fiscal year '24, predominantly driven by lower volumes caused by our product rationalization efforts designed to preserve Blood Centers' ability to generate durable contribution margin dollars and participate in our company wide margin expansion.

Due to portfolio rationalization, our Blood Center fiscal year 2025 revenue growth guidance is a year-over-year decline of 5% to 7%. Our hospital business had strong results with revenue growth of 19% in the fourth quarter and 17% in fiscal year 2024, primarily driven by vascular closure and hemostasis management.

Hemostasis management revenue grew 19% in the fourth quarter and 15% for the year, driven by strong utilization of TEG 6s disposables, price increases and continued growth of the U.S. installed base. In the fourth quarter, we received FDA clearance for our global hemostasis heparin neutralization cartridge.

This extends the capabilities of the TEG 6s platform to serve fully heparinized patients in adult cardiovascular procedures and liver transplants in laboratory and point of care settings. This is an important addition to our portfolio to increase adoption by helping clinicians improve patient outcomes and standards of care.

The rest of the Blood Management Technologies franchise, which includes transfusion management and cell salvage grew 7% in the fourth quarter and 6% for the year. Transfusion management was up due to the completion of customer implementations for both SafeTrace Tx and BloodTrack as well as growth in recurring maintenance revenue for both products.

Growth in cell salvage was driven by strong utilization of disposable kit in the U.S. Led by vascular closure, interventional technologies grew 28% in the quarter and fiscal year 2024. We continue to make progress penetrating the top 600 U.S. accounts to finish the year at nearly 80% penetration.

We also benefit from improvements in utilization at existing IC and EP accounts. We are pleased to announce that we received U.S. FDA premarket approval for the upsized VASSCADE MVPXL mid-bore venous closure device.

Adding MVPXL to our products mix with 58% larger collagen plugs than MVP strengthens our unique proposition of reducing the time to ambulate, total post procedure time, time to hemostasis and time to discharge eligibility, broadening our reach in these high growth markets with a novel solution to support emerging catheter based ablation technologies.

We will be initiating a limited market release in the coming weeks and look forward to full market release later this year. The VASCADE International launch is progressing as expected, contributing approximately 300 basis points of revenue growth in the quarter. In Japan, we have expanded our presence to more than 90 accounts.

While European penetration has been more gradual, we are making meaningful progress and plan to expand into more countries in fiscal year 2025. Now let's move on to our newly acquired products. OpSens Pressure Sensing Guidewire Technology delivered nearly $10 million in revenue in the fourth quarter.

Over the past several months, we cross trained our expanded U.S. sales team. And in April, we launched both OptiWire and [indiscernible] throughout our U.S. commercial channels. These products provide meaningful benefits during PCI and TAVR procedures and we are excited to make them available to our interventional cardiology customers.

We are also enthusiastic about the addition of the ensoETM Esophageal Cooling Device acquired With Attune Medical.

enzoETM provides significant protection against esophageal injury and in combination with radiofrequency ablation provides a more cost effective solution to atrial fibrillation ablation procedures compared to other emerging ablation procedures.

With an addressable market approximately $300 million growing in the low teens, we anticipate esophageal protection to become the standard of care used in conjunction with radiofrequency ablation procedures. We look forward to continued revenue growth acceleration from our expanded U.S. Commercial launch in June.

Our development and commercialization strategies are working.

We continue to advance our leadership in blood management technologies by capitalizing on significantly expanded R&D and clinical capabilities to further develop new and existing products, while we expand commercially to cover the majority of the top accounts in the $700 million underpenetrated TAM.

In Interventional Technologies, we are committed to commercial execution, launching our recent portfolio additions and augmenting growth through R&D and M&A. With the OpSens and Attune acquisitions, we expect hospital will become our largest business unit this year, driving a disproportionate growth and margin expansion.

We expect hospital reported revenue growth of 27% to 32% in fiscal year 2025. Excluding revenue from recent acquisitions, we expect this business to deliver 13% to 16% organic revenue growth. Overall, we expect another strong year as we evolve our portfolio to accelerate revenue growth and margin expansion.

For the total company, we expect reported revenue growth to be in the range of 5% to 8%. Excluding recent acquisitions and FX, we expect total company organic growth to be flat to 3% in fiscal year 2025.

In closing, I want to express my gratitude to our customers and our shareholders for their continued support and the Haemonetics employees worldwide for their exemplary work to advance our mission and their dedication to our customers. Together, we continue to build our momentum towards a very bright future.

Now I'll pass it over to James to discuss the rest of our financial performance and fiscal year 2025 guidance..

Thank you, Chris, and good morning, everyone. As I reflect on my two year anniversary at Haemonetics, I'm excited about the opportunities ahead of us.

Over the past two years, we have navigated shifting dynamics and supported a delayed CSL transition, while continuing to grow our margins, invest in our business, enhance our solutions and acquire new high growth products.

While not all of our efforts are reflected in our results immediately, especially when combined with the extended dilutive impacts of the U.S. transitional agreement in plasma, I am highly optimistic about our ability to accelerate revenue growth and expand our gross and operating margins over the next several years.

We finished our fourth quarter with an adjusted gross margin of 54%, an increase of 220 basis points compared with the prior year. Adjusted gross margin for fiscal '24 was 54.4%, an increase of 120 basis points when compared with the same period of the prior year.

The continuous transformation of our portfolio played a disproportionate role in driving gross margin expansion in our results with both product mix and volume contributing meaningfully.

These benefits were partially offset by changes in FX both in the quarter and fiscal '24 and $6.8 million of cumulative charges related to a voluntary product recall in our whole blood business. Adjusted operating expenses in the fourth quarter were $120.9 million, an increase of $17 million or 17% compared with the fourth quarter of the prior year.

As a percentage of revenue, adjusted operating expenses increased by 120 basis points to 35.2%. The increase in adjusted operating expenses in the quarter was due to several factors.

First the integration of OpSens into our product portfolio, given that this was the first full quarter with OpSens, the anticipated benefits of synergies and scale have not yet been fully realized. We expect this to evolve as we advance our commercial initiatives across our key strategic U.S. accounts beginning in our fiscal 2025.

Another factor was elevated freight costs, primarily attributed to macroeconomic hurdles affecting logistics and constraints in our plasma inventory levels. We are in a much better inventory position today and do not anticipate similar levels of expedited freight going forward.

Finally, we also had higher performance based compensation expenses along with continuous growth investments into our business. Adjusted operating expenses for fiscal '24 were $435.7 million, an increase of $32.1 million or 8% compared with the prior year. As a percentage of revenue, adjusted operating expenses decreased by 120 basis points to 33.3%.

In fiscal 2024, a combination of operating leverage improvements and savings from our operational excellence program more than offset increases in adjusted operating expenses and growth investments.

These investments are primarily aimed at advancing innovation and expanding market share in our hospital business and are expected to further enhance our operating leverage in the coming years. Fourth quarter adjusted operating income was $64.6 million, an increase of $10.7 million or 20% and our adjusted operating margin was at 18.8%.

Our adjusted operating margin in the fourth quarter had approximately 200 basis points of impact from one-time items within our adjusted operating expenses. Adjusted operating income for fiscal 2024 was $276.5 million an increase of $58.1 million or 27% compared with the prior year at 21.1% of revenue.

The 240 basis points expansion in the adjusted operating margin in fiscal '24 was due to improving leverage of our business, coupled with approximately $5 million in net savings from OEP. The adjusted income tax rate was 21% for the fourth quarter and 23% for fiscal year '24 compared with 23% and 24% for the respective periods of the prior year.

Fourth quarter adjusted net income was $46 million up $6.8 million or 17% and adjusted earnings per diluted share was $0.90 up 17% when compared with the fourth quarter of fiscal year 2023.

Adjusted net income for fiscal year '24 was $203.6 million up $47.9 million or 31% and adjusted earnings per diluted share was $3.96 up 31% when compared with the prior year.

Changes in the adjusted income tax rate, interest expense, and FX had a $0.02 negative impact on the fourth quarter and a $0.05 negative impact on the full-year adjusted earnings per diluted share when compared with the prior year. Turning now to select balance sheet and cash flow highlights.

Cash on hand at the end of our fiscal 2024 was $179 million a decrease of $106 million, since the beginning of this fiscal year, primarily due to the OpSens acquisition, which was financed through a combination of cash on hand and a revolving credit facility.

In our fourth quarter, cash flow from operating activities was $64 million and free cash flow before restructuring and restructuring related costs was $59 million. Cash flow in the quarter was primarily driven by net income and benefits from working capital.

In fiscal year '24, cash flow from operations was $182 million primarily attributed to net income, partially offset by increased inventory. After taking into account $64 million in CapEx, net of proceeds from the sale of property, plant and equipment, we had $127 million of free cash flow before restructuring and restructuring related costs.

As you will recall, we anticipated our fiscal year 2024 free cash flow before restructuring and restructuring related costs to be in the range of $160 million to $180 million. The outlook we have provided overestimated the impact of certain add backs related to restructuring and restructuring related spend.

Going forward, we will provide guidance for free cash flow. We also have some important updates about our credit facility.

In April, we refinanced our existing credit facility with a new $1 billion five year facility comprised of a $250 million unsecured term loan A and a $750 million unsecured revolving credit facility with a current drawn balance of about $230 million used to help fund our recent acquisitions of OpSens and Attune Medical.

Our new credit facility includes a $330 million increase in our revolver capacity and provides enhanced covenant flexibility, a testament to the strength of our balance sheet and credit profile.

Haemonetics is currently utilizing two interest rate swaps with a blended fixed interest rate of 4.12% and a current notional value of $211 million to mitigate interest rate risk. These swaps will mature in June of 2025 and we have plans to evaluate and determine the appropriate risk management strategy thereafter.

Taking into account our $500 million unsecured convertible bonds due March 26, our net leverage ratio was at approximately 2.1x EBITDA at the end of our fourth quarter, increasing to approximately 2.4x EBITDA following the close of Attune Medical on April 1st.

With our new credit agreement and our ability to generate strong EBITDA and free cash flow, we estimate our available capital capacity to be in excess of $1 billion by the end of fiscal '25 and up to about $2 billion by the end of fiscal '26 after nearly $500 million of capital we have already allocated to M&A and share buybacks, since we issued our long range plan in June of 2022.

We plan to continue to leverage our access to capital to further expand our product portfolio and lay the foundation for additional growth, including additional strategic tuck in acquisitions for our Interventional Technologies portfolio in the near term.

Before I discuss the rest of our fiscal year 2025 guidance, I'd like to reflect on where we are in our transformational growth journey. In the first half of our long range plan, we delivered revenue and adjusted earnings per diluted share growth that exceeded our expectations. Our success can be attributed to several key factors.

First, unprecedented volume growth in plasma collections driven by a rebound from the COVID-19 pandemic. The volume growth we experienced in the first half of our plan was significantly higher than our original projections. Second, delayed transition of CSL's U.S. Disposable business, resulting in the retention of the majority of their U.S.

volume through the end of our fiscal year '24. This provided us with additional excess cash flow we used to fund recent acquisitions in hospital. Third, strong commercial execution in vascular closure, surpassing our original deal model and enabling deeper penetration into the top 600 strategic accounts in the U.S.

with the help of a series of additional strategic investments focused on broadening our commercial footprint.

And finally, overcoming substantial macroeconomic headwinds, including approximately 700 basis points of margin pressure stemming from inflationary headwinds, supply chain disruptions and volatility in foreign exchange rates among other challenges.

While revenue and adjusted EPS growth were robust and ahead of our plan, the combination of underlying drivers and actions we took to support this growth temporarily dampened our margin expansion plans, particularly in the adjusted gross margin. As we enter the second half of our LRP, we plan to accelerate our margin expansion.

Our LRP goal of the high 20s adjusted operating margin in fiscal '26 is intact and will be driven by approximately 400 to 600 basis points of projected expansion in our adjusted gross margins, coupled with improving operating leverage in our business. Our strategy is clear and includes benefits from volume, mix, price, and higher operating leverage.

In Hospital, we will leverage our commercial footprint to promote an expanded hospital portfolio requiring minimal additional investments. Recent acquisitions of OpSens and Attune Medical will further expedite our transition towards high growth, high margin products.

In Plasma, changes in customer mix and technology upgrades will continue to improve margins and drive growth on top of collections momentum. CSL's U.S. Supply Agreement has a dilutive impact on our corporate gross margins.

As such, continued transition away from our PCS2 devices to the latest NexSys with Persona Technology will drive meaningful improvements. In Blood Center, we continue to rationalize parts of the business, predominantly in whole blood with no impact on contribution margin dollars, while significantly improving its contribution margin percent.

And lastly, aligned with our commercial objectives, we are pursuing additional improvements within our operations, including additional OEP savings, the continued rationalization of the manufacturing footprint and addressing the remainder of stranded costs and inefficiencies from CSL's delayed transition, which will help generate additional cost savings and ensure increased productivity as we move forward with our plan.

In fiscal year 2025, we expect the adjusted operating margin to be in the range of 23% to 24%, representing a substantial installment towards our LRP goals. Our fiscal year 2025 guidance includes approximately $15 million of gross savings from our OEP program with about $10 million of that benefiting our adjusted operating margins.

Given the timing of specific cost savings initiatives and business opportunities outlined in our plan, we anticipate that the operating margin improvement outlined in our fiscal year 2025 guidance will be back end loaded with gradual improvements throughout the year.

Our adjusted earnings per diluted share guidance for fiscal year 2025 is a range of $4.45 to $4.75 or 12% to 20% growth when compared with fiscal year '24.

At the midpoint of our guidance range, we anticipate approximately $0.30 of headwind from interest expense, FX, income tax and share count with interest expense being responsible for more than half of that.

CSL's transitional agreement represents just under 10% of the midpoint of our adjusted earnings per diluted share guidance in fiscal year '25 compared with about 20% of our adjusted EPS in fiscal year '24.

Our ability to generate cash flow is strong and we expect our free cash flow in fiscal year '25 to be in the range of $130 million to $180 million.

Our fiscal year '24 performance underscores our resilience, agility, and commitment to our long range plan as we continue to execute our initiatives and drive sustainable growth both on the top and bottom line.

Our capital allocation priorities remain unchanged and we will continue to deploy cash to accelerate our growth momentum, particularly as we further expand our product portfolio and look for opportunities to increase our returns through opportunistic share buybacks and debt repayment.

With a clear vision, a well-defined plan and a dedicated team, I'm confident in our ability to deliver long-term value. We look forward to updating you on our progress in the quarters to come. This concludes our remarks for today. And now, I'll turn it back to the operator for Q&A..

Thank you. At this time, we will conduct the question-and-answer session. [Operator Instructions]. Our first question comes from Anthony Petrone at Mizuno Group. Your line is open..

Thank you and congratulations on the strong end for the year here and apologies for the noise. Chris, maybe I'll start with plasma, and then I'll have a couple of follow-ups to Jim on margins. Maybe just the confidence here in the CSL ramp down, how much communication between Haemonetics and CSL just to give you that confidence.

Is that it's down 45? And then should we expect a similar phase out in the following year? And then the second one on plasma is just the underlying market seems this will be in that low double-digit range.

Can you give us a little bit of the drivers that you're seeing there, it seems like they're still good healthy demand from the fractionators to continue to build inventory? Thanks..

Yes. Anthony, thanks for the questions. Regarding plasma, I'll kind of take them in reverse order. We're delighted to have served the industry through a period of unprecedented robust growth, 43% a year ago, 18% this past year, and we're still projecting high-single, low-double digit growth of the basic business. So there's a number of factors there.

Collectors are at different stages of replenishing their inventory. It's a very conducive environment to be collecting, particularly here in the States, although we're seeing equal growth now outside the U.S., which is fun. And our technology is proving itself in real time collections.

The combination of Persona and Express Plus is unrivaled, and it's driving a level of productivity from our NexSys customers that's really fun to watch and an exciting lift for us. With regards to the committed volumes from CSL, what we've put into our guidance that approximately $85 million is a commitment between the two companies.

Obviously, that will leave us with some other business at the end of our fiscal year. What happens in FY '26, I mean, we're -- we'll guide to that when we're ready. And obviously, if there's changes this year, we will update to be clear about that.

But one of the things we cared a lot about in taking the long view and being there for all of our customers that we wanted certainty and continuity. And what we have here is a gradual ramp down, which meets both companies' needs.

And it gives us the ability to do what we are doing across the Board, which is scale our business, address stranded cost, create capacity for additional product conversions and share gains elsewhere in the business. And what we have and what's reflected in this guidance allows us to do that and more..

That's very helpful. And just quickly for Jim on margin, nice step up 23% to 24% guidance. The LRP calls for high 20s. So maybe just a little bit of visibility on the drivers this year, how much is restructuring versus mix price? And what is the remainder to get you to that LRP target? Thanks again and congratulations..

Yes. Let me start Anthony, it's Chris. James is going to give you the breakdown and quantify this. But I think what you're observing here, both in our performance and our guidance is our LRP at work. And at the core of this is meaningful changes to the composition of our product portfolio.

So when we walk through this, we've got a hospital business with reported growth in our guidance 30%, right. It's going to be a $600 million business it is our anticipation this year and much higher gross margin. It's a function of volume and mix and price that all leads to operating leverage.

Given the investments we've already made in our development and commercial footprint. So hospital is the disproportionate contributor. It benefits that we've got Attune and OpSens coming into the mix. So that's all very exciting for us and leads us. With regards to plasma, it's also a mix story, right. As we transition off the U.S.

PCS2 supply agreement, converting other customers, upgrading kind of advancing our footprint with NexSys, with Persona, with Express Plus is high octane fuel and really powers us. We're delighted that the Blood Center business is joined in the mix here as well.

The portfolio rationalization and we'll cut back on the revenue dollars that's implied in our guidance. But the contribution dollars coming off of that business and the margin associated at the percentages much improved.

And then to your question directly around productivity, smaller total dollars, but a much greater pass through as we embed operational excellence into the fabric of the organization. So I'll let James quantify it a bit further. But you are observing our plans and the second half of this LRP is going to be defined by margin expansion and growth..

Yes. Thanks, Chris. And I think for fiscal year 2025, I'll really start more from a quantitative aspect. I said in the remarks, it's going to be 400 to 600 basis points of gross margin improvement that's going to get us to our LRP target, and we're going to see a nice piece of that come through in fiscal '25.

So that it'll be gradual throughout the year with a little bit more towards the end of the year. That sets the stage for what Chris talked about. It starts with gross margin driven by mix and certainly productivity.

But then it sets the stage for the gains that we will get from leveraging the hospital business and that will start to come through more towards the end of this year and into next year.

So you'll see then the incremental margin improvement, we've guided to about 23.5% this year and next year then you'll see a bit more on the gross margin line, but you'll really start to see it come through in terms of leverage and then the hospital business. And that's what's going to get us up into that 27% range or higher as we go forward..

Thank you so much..

One moment for the next question. Our next question comes from Larry Solow with CJS Securities. Your line is open..

Great. Thank you. I guess, first question, just a follow-up on the plasma, on the non-CSL portion, Chris. I guess, the 10% to 12% growth, is that could you just give us an idea, is the market still growing that sort of 10% to 12%. I imagine there's a little bit of price in there for you guys.

What about just share shifts, maybe not only this year, but going forward outside of the CSL piece? Do you see your opportunities for maybe some share gains? And is some of that baked into this year's outlook?.

Yes, Larry, thanks for the question. Look, it's all the above, right? We look at the underlying growth in demand both here in the States and now increasingly internationally. We're enthusiastic about that. Obviously, customers are at different stages of inventory replenishment.

They have different levels of focus on total volume versus driving productivity, which is universal across all of our customers now. So that's the biggest factor. We are in the process of meaningfully upgrading the existing base NexSys business to Persona and Express Plus that has further margin benefits for us.

And then, yes, we've done two things here over the first half of the LRP. I think we've built real trust and confidence by playing the long game being there. Haemonetics increasingly enjoys the reputation as the plasma supplier that they know and trust. And that's great at goodwill that will allow us to continue to build across the market.

And then in that process, we've established NexSys as the unrivaled industry standard for lowering cost per liter and improving donor satisfaction safely and reliably. So yes, we do expect share gains and we're kind of being in a position to be able to accommodate that. It comes together nicely.

Look, 8% to 12% for the non-PCS2 business, admittedly conservative, but there's a number of factors we don't control with regards to timing. So and we've been conservative the last two years. We've been wrong. Thankfully, the revisions have been all upward. But at this stage, we'd rather be conservative and thoughtful about it.

And if we have the opportunity to upgrade throughout the year, we will..

Got you. And then just switching gears on the hospital business, obviously, this quarter, looks like TEG had a nice acceleration in the half of the year. Strong growth, sure for your acquisitions, but just on the legacy piece there.

What are you more excited or is this kind of evenly excited between that mid-single-digit growth outlook? Is that on the core, is that on the legacy, is that more on the Cardiva side or is that the tag piece or both?.

Larry, it's really a tale of two impressive growth drivers, right? For vascular closure, we just completed another 28% growth for the year, right. We're in 80% of the top 600 accounts. We're looking at international expansion now. In fact, international contributed 300 basis points of growth again here in the quarter.

So we don't see any slowdown in the interventional technologies business propelled by certainly by VASCADE, getting the new MVP XL in premarket approval is powerful. It opens the aperture, no pun intended for broader application and we're in a really good place. So that's going to keep going. The new products drop in.

I'm sure we'll talk more about that on the call, but that just goes from strength to strength. What we're impressed by on the blood management side of hospital, yes, TEG leads the charge. Having the heparinase neutralization cartridge approval will take that to a next level.

They're keen to continue to drive and that's a big driver for us in that core business. We joke that TEG is the oldest launch medtech product in the industry, but it continues to along and we again are going to look for double-digit growth, mid-teens growth in that product portfolio.

So it's exciting, and we stand behind it and I look forward to taking it to the next level..

That is great. And just lastly question, James, on the operating margin. I appreciate that the color and the cadence certainly sounds like we improved through the year. Just in terms of the slope or can you give us just some idea you ended the year kind of like at 19% this quarter.

How should we view sort of the -- is it a big rebound as we go through the year, kind of where we end the year at? Obviously, we'll probably end the year higher than your averages. So can you give us any more color there on thoughts on that? Thanks..

Yes, sure, Larry. Thanks for the question. And yes, you're right. We will end the year higher. It will go up throughout the year. In terms of specific jumping off point, I think this could be very helpful. There were a couple of items about 200 basis points worth of items in our fourth quarter margin.

First, we had OpSens still being integrated, so they've not achieved their synergies and the benefits we get from the scale, that is not been realized. And then we continue to have freight and expediting costs. I would say the jumping half point wouldn't be the 18.8% for this year.

It would be closer to the overall 2024 margin of 21.1%, maybe even a bit better than that. So that's where you start and you would end at 23.8 and you'll see it go up throughout the year..

Got it. Okay. That's very helpful. Thank you, everybody..

One moment for our next question. The next question comes from Joanne Wuensch with Citi. Your line is open..

Good morning and thank you for taking the questions. I have a few. Just put them out upfront.

Can you remind us of what the accretion and or dilution may be from the Attune and OpSens acquisitions and how that folds into your 2025 guidance? And then, on the MedTech side, while a flutter with Therapulse and with PSA catheters and such like that, can you sort of give us your view of how the uptake of those types of products impact your EP portfolio? Thank you..

Yes. Hi, Joanne. It's James. I'll start with accretion for OpSens and Attune. For both of them, we said $0.10 to $0.15. So in total it would be $0.20 to $0.30 this year in fiscal '25..

Yes. Good morning, Joanne. It's Chris. Let me touch base on PFA and PFA adoption. Certainly, a ton of excitement. Some of the industry's most highly regarded companies and management team saying it's the most exciting product launch they've seen. That's great. I do think it will vary pretty meaningfully from one product to the next.

What we are observing is very consistent with what we modeled when we attempted to value Attune coming in. From our vantage point, the increased energy around ablation, rising tide, we think it will raise all boats.

But from what we've looked at, our ability to add enzoETM to RF ablation takes a procedure that is very well established, concurrent standard and makes it 100% safe. The combination of those products, RF ablation and our esophageal cooling is literally a third the cost of the PFA products that are being introduced to the market.

So we expect PFA to grow rapidly. We expect it to become a leading product in the market. We think there's a role for RF ablation, and we think with enzoETM, that role only gets better. And so we're very confident about it. And at one level, the dialog around the importance of making ablation safe and effective plays right into our value proposition.

So we're enthusiastic about what we're observing, and we intend to ride that wave..

And opportunity for your VASCADE portfolio also is sort of where I was heading towards this?.

Yes. We think it's roughly in the near-term, it will be neutral, right? Depending on which form of post field ablation is being used, they may need one less access point, right. So there's one less opportunity for closure. However, the aggregate growth of ablation that's being driven that we're observing is more than offsetting any diminishment there.

And as I said on the prepared remarks, the addition of MVPXL and what that enables is we now have applicability across the different technologies in Pulsefield. So we're able to close essentially anything they're doing. And that's a real positive and will further propel our growth for VASCADE. So all in, yes, a positive for sure..

Excellent. Thank you so much for taking the questions..

One moment for your next question. And our next question is from Andrew Cooper with Raymond James. Your line is open..

Hey everybody. Thanks for the time. Maybe just to start on with Plasma and sort of the eight to 12 and how we should think about it. Just would love an update with Express Plus nearing kind of full launch.

What the strategy is there in terms of how aggressively you try to roll that out to the broad customer base and whether you're going to use that as a tool to take price, we should view it as a retention tool or really just how we should think about that additional innovation that you're bringing to the market?.

Yes, Drew, thanks for the question. We're really excited about what Express Plus does to take that platform to the next level. The improvement in procedure speed of the base business, very powerful. We're seeing from what is now 60,000 collections, commercial collections in our limited market release, the product is absolutely performing as expected.

And so we're seeing reductions in up to 20% across the base procedure speed on the base NexSys device. So all good there. Plays into lower cost per liter, plays into improved center productivity. So we will move from limited market release to full market release later this quarter. And our anticipation is we roll from there upgrading the entire fleet.

I'm going to stay mute with regards to pricing just given the increased competitive sensitivity across the market. This is a meaningful upgrade. It also paves the way for anybody who is either using Persona or is intending to use Persona to get those procedure times back well within range of the base NexSys device.

So it's a powerful one, two combination. We think in aggregate, it's unrivaled and we do expect to command a premium for innovation. Given the improvements that we can point to with regards to lowering CPL and improving donor satisfaction, we feel really confident in our ability to command that premium..

Okay, helpful. Maybe just next, I think James and I think you maybe both mentioned kind of the appetite for M&A and you increased the revolver capacity here. So obviously a lot of ability to go out and do more deals.

Just maybe what are you seeing in the space? What's still exciting? And then how do we think about the comment on looking near-term in interventional cardiology while you're still sort of trying to digest two recent acquisitions that you're still bringing into the fold right now?.

You want me to take a cut of that first?.

Yes. Look, our near term focus is integration, right? We are highly enthusiastic about the guide wires from OpSens and Esophageal Cooling from Attune. We need to make good on that, right? So we're well down the path. Closing OpSens early and mid-December was helpful. We spent our fourth quarter cross training the field force.

Question was asked earlier about that. There's a direct overlap in this case with VASCADE in interventional cardiology. So we are going to expect meaningful call point synergy and we revamped our footprint. We updated our comp programs. We did the complete set of training. Some of that still undergoing just given the sophistication of the products.

But it's a combined force moving nicely against commercializing those guide wires. So we feel great about that. enzoETM, the esophageal cooling direct fit with MVP and MVP Excel now on EP. We'll get after that beginning in June. And that is our far and away our first and second priority.

We do see other opportunities for tuck-in acquisitions in the interventional technology franchise. And so we will action those as the market opportunity presents itself. We wanted to have that capacity on the balance sheet to be able to do that.

But we really see those as tuck ins and things that would be highly accretive to growth and profitability as we roll forward. We've disclosed previously our relationship with Vivasure. That's a great example of the type of things that perhaps in the second half of the fiscal year we could pursue. But for now, it's integration and growth.

And then we'll leave aside what happens at the back end of the LRP. But we think this model, enabling technology, really agnostic to the underlying therapeutic being used, so it has broad based applications and then superior results because of the capabilities we've built. We think that's a model that's replicable in other areas.

That's not something we're going to be talking about this fiscal year though..

Okay, perfect. That's super helpful. And then maybe just one last one on sort of the margin dynamics. I guess to ask what others have a little bit of a different way. When we think about the roughly 10% or a little bit less than 10% of earnings that you called out from CSL.

As we think about that volume kind of rolling off, should it be ratable? Are there sort of step function levels where we see the margins move a little bit quicker or a little bit slower? Just help us think about kind of the pacing there and whether it's linear or a little bit lumpier in terms of the margin impact of the CSL departure?.

Yes, Andrew, I think it's more towards the linear side of the equation there. As it rolls off, we've been preparing for this for quite a while, and we have our plans in place to address the associated stranded costs and overhead costs with it. So we think that it should be fairly smooth throughout the year..

Great. I'll stop there. Thanks, everybody..

One moment for the next question. The next question is from Mike Matson at Needham & Company. Your line is open..

Yes, thanks.

So I guess I just wanted to ask about how NexSys with Persona and Express Plus, are you comfortable that this is a superior offering to the Rika product in terms of the volume, time and cost of collections with your operator?.

Yes, Mike, good morning. Short answer is yes, right? There's not a whole lot of Rika out there to really be able to draw broad based conclusions. We're now north of 25 million collections with the Persona, NexSys system. It's performing exactly as advertised.

It is above all safe and reliable, which is the anti for this industry, right? So I think the demonstrated safety, the demonstrated reliability of the product and the company gets you halfway there. And then -- yes, the speed gains associated with the combination offering of Express Plus, the Persona uptick, really meaningful.

We're the only ones who offer DMS software. In fact, our DMS software today is roughly 80 share of the U.S. procedures. So the integrated offering, what we can bring together and how that can improve center operations, how that can improve donor satisfaction and processing, that's the piece that we are the only ones doing that.

And it's an important part of our value proposition and one of things that compels our customers. So broad-based experience, real world evidence and a combined offering, holistic offering that is unique in the marketplace. Yes, we're quite confident, Mike..

Okay. Thank you.

And then just on MVP XL, so where is that used versus the regular MVP? I guess, what types of procedures? And is there a price premium for XL over MVP?.

Yes. So MVP XL will expand the base vascular closure offering. It's pushing MVP to higher levels of French sizes. It should give us really across electrophysiology. It should give us a broad based offering all the way up to include, as I said earlier, all the ablation procedures.

There'll probably be some cannibalization between MVP and MVP XL because the indications are clear, but clinicians are free to use it in a broad-based fashion and MVP works really well. XL will be that much better for the larger French size openings that particularly are typical in PFA. So nice complement. It's part of our broader strategy.

We think about this kind of broadening the shoulders of closure. We want to be a one stop shop for closure, venous and arterial. This takes us one more important step along that way.

We've got a pipeline of additional things going on, it will take us down market as well in terms of smaller openings, but more about that as they get ready to come to market. In terms of pricing, in general, we like to think about value-based pricing for our technology. XL brings real value to the market. We expect to capitalize on that.

Volume is the biggest driver by far in interventional technologies, but we're also seeing further price and mix gains. So you should assume that's going to be factored in as part of the overall guidance..

Okay, great. Thank you..

Please standby for the next question. The next question comes from Michael Petusky with Barrington Research. Your line is now open..

Good morning. Chris, I just wanted to make sure I'm thinking about this correctly. The 155 to 85 in this year, that's just the U.S. CSL business.

Is that correct?.

Yes, Mike, that's exactly right. It's the U.S. PCS2 supply agreement. It does not cover software. It does not cover the international work that's all being done today on NexSys..

Okay. And I know we're not talking about '26, but I just want to make sure because when we talked about this, whatever it was a year ago and you talked about a minimum commitment.

There is no minimum commitment from CSL beyond '26, correct?.

Yes. Mike, you'll appreciate it. We just guided for '25. We kind of want to live into that and execute it. Give us a little time before we're ready to talk '26.

What I can tell you is in terms of the numerous amendments, what we cared about was being compensated for our staying power and a gradual transition that lets us, as James said, improve the margin, right, in terms of stranded costs.

But really, the most exciting part is freeing up capacity in an otherwise capacity constrained system to go serve our other customers, including the conversion and the share gains. So it'll be gradual. The math is as you laid it out, it won't be zero by the end of this fiscal year as we're projecting it. So stay tuned.

The $85 million is a minimum commitment. Just like when we talked a year ago, we were saying something slightly in excess of $100 million, right? And so this is the equivalent number for that. It represents a 45% downward revision from the $155 million that we just completed for the PCS2 agreement.

If it changes throughout the year upward, we'll call that out as we go..

And then I just want to, I guess, ask a little bit about vascular closure OUS, and I think you called out that Japan, some good traction with some 90 accounts, I believe I heard, and then Europe maybe a little bit slower.

I was just curious, how many countries in Europe are you now in? What do you see as the best targets there? And is there anything just clinically from how treatment is done there or regulatory from a regulatory standpoint that has made Europe a little slower than Japan? Thanks..

Yes. Mike, to confirm, Japan is as you described it. We are now in excess of 90 accounts. We're working with a third party distributor. They're skilled. They're executing. We have the benefit that we got very favorable reimbursement as part of the Japanese reimbursement system. So that's really aided with the initial uptake.

In Europe, it's a different starting point, right? They typically use suturing figure of eight. So it's less obvious need. There are vagaries from one country to the next around how reimbursement works and differences in terms of the benefit of same day discharge, which we have across the board. So that's what we are working through.

We expect to be successful there for sure. It's just a slower, more gradual build. I think this is a good example of going slow and being thoughtful to go faster further down the road. And so from our vantage point, we're delivering against that. We're primarily focused, as you would expect, in the big markets. We started in Germany.

We had a relationship or set relationships in Italy that we're capitalizing on. We will quickly proceed to the U.K., and then other major markets, mostly through distribution, where we think there's strong underlying demand just measuring ablation procedures. So stay tuned, more to come.

It will be a gradual build, but we think we've got real staying power and want to make sure that one of the important lessons learned from the top 600 in the U.S. is we land and we expand. The landing you have to nail the landing and you have to get it right. It doesn't do any good to churn through an account, because we have to go back and reignite.

That's that much harder. So we want to get it right. We want to build from a strong base. We're working with the best centers and making sure the value proposition is clear and appropriately sustainable..

Perfect. Can I just sneak a quick one -- a real quick one in on Express Plus? I mean, do you feel like the uptake there, I mean, is this obviously just a handful of customers, I mean, do you -- that you need to target? I mean, do you feel like fiscal '25, most of this will be essentially completed or might this take some time? Thanks..

Yes. As we've said with our other technology upgrades, we will go absolutely as fast as our customers are prepared to go, but no faster. I think it's an FY '25 event, Mike, because the value proposition of Express Plus is so clear, and the demand for productivity is so pressing.

So I don't want to get too far ahead of ourselves here, but our projections call for Express Plus to be implemented this fiscal..

All right. Great stuff. Thank you..

Please standby for the next question. The next question comes from David Turkaly with Citizens JMP. Your line is open..

Hey, good morning and congrats on getting to the halfway point of your LRP. Chris, I think you said in your commentary just answering a question venous and arterial closure.

Can you tell us today like how that breaks out? What does your mix look like right now with VASCADE in those two areas?.

Yes. So for VASCADE, it's roughly an 80-20 split, where 80% electrophysiology, really looking at AFib ablation closure. And that's the MVP product, 80% of the portfolio and growing nicely. And we'll add XL on top of that, that will some cannibalization, but for sure further accelerate the growth.

The base VASCADE product is predominantly PCI in interventional cardiology setting. And one of the things we surprised ourselves positively on, Dave, as we kind of ran this implementation is both the VASCADE product and MVP grew proportionately as we doubled and then doubled again our commercial footprint.

It's still an 80-20 split, but we are clearly moving things forward in PCI, because we've got a much more pronounced clinical presence. Now dropping in OpSens guidewires, which are predominantly focused in interventional as well, we'll just have that much more share of voice, share of mind. We're in on the procedures already.

So we're hoping it's going to be highly synergistic. For sure, VASCADE an 80-20 split. When we talk about guidewires, Opto is the larger of the two products, but we think SavvyWire has the MVP XL type of growth potential. So stay tuned for more on that. But that really builds our presence, the same way that Enzo builds our presence in ablation.

So we're starting to get pretty excited about the broader based opportunities for interventional, but it really is a tale of two closely adjacent, but distinct call points between electrophysiology and interventional cardiology..

Thank you for that. James, congrats on two years. I guess, and all the detail on new credit facility.

I was wondering if you might be able to frame out what interest expense is going to look like in fiscal '25 or at least maybe hit us with the average rate or what you anticipate you'll have out in the year?.

Yes. Thanks, Dave. Interest expense will be about a $0.16 headwind for us in fiscal year 2025 as compared to what we had in '24. That will be highly dependent that assumes that the debt structure that we have right now continues through the year. So we're certainly keeping our fingers crossed for a few rate cuts..

Great. Thanks a lot..

This concludes our question-and-answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect..