UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: ~~July 3, 2021~~January 1, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-14041

HAEMONETICS CORPORATION

(Exact name of registrant as specified in its charter)


Massachusetts		04-2882273
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

125 Summer Street
Boston,	Massachusetts	02110
(Address of principal executive offices)		(Zip Code)

(781) 848-7100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common stock, $.01 par value per share

HAE

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐No x

The number of shares of $0.01 par value common stock outstanding as of ~~August 9, 2021: 51,029,618~~February 4, 2022: 51,111,595

HAEMONETICS CORPORATION

INDEX



			PAGE
PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Unaudited Condensed Consolidated Statements of ~~(Loss)~~ Income and Comprehensive ~~(Loss)~~ Income - Three and Nine Months Ended January 1 , 202 2 and ~~July 3, 202~~Dec~~1 and June 27,~~ember 26, 2020			3
Unaudited Condensed Consolidated Balance Sheet - ~~July 3~~January 1 , 202 12 and Consolidated Balance Sheet - April 3, 2021			4
Unaudited Condensed Consolidated Statements of ~~Stockholders'~~Stockholders’ Equity - Three and Nine Months Ended ~~July 3, 2021~~January 1 , 202 2 and ~~June 27,~~Dec ember 26, 2020			5
Unaudited Condensed Consolidated Statements of Cash Flows - ~~Three~~Nine Months Ended ~~July 3, 2021~~ January 1 , 202 2 and ~~June 27,~~Dec ember 26, 2020			67
Notes to Unaudited Condensed Consolidated Financial Statements			78

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2224

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk			3234

ITEM 4. Controls and Procedures			3235

PART II. OTHER INFORMATION			3336

ITEM 1. Legal Proceedings			3336

ITEM 1A. Risk Factors			3336

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			3336

ITEM 3. Defaults upon Senior Securities			3437

ITEM 4. Mine Safety Disclosures			3437

ITEM 5. Other Information			3437

ITEM 6. Exhibits			3538

SIGNATURES			3639

ITEM 1. FINANCIAL STATEMENTS

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~(LOSS)~~ INCOME AND COMPREHENSIVE ~~(LOSS)~~ INCOME

(Unaudited in thousands, except per share data)


		Three Months Ended				Three Months Ended				Nine Months Ended
		July 3, 2021		June 27, 2020				January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Net revenues	Net revenues	$	228,528	$	195,577		Net revenues	$	259,769	$	240,371	$	728,194	$	645,434
Cost of goods sold	Cost of goods sold	120,443		105,547			Cost of goods sold	121,204		120,114		359,003		329,403
Gross profit	Gross profit	108,085		90,030			Gross profit	138,565		120,257		369,191		316,031
Operating expenses:	Operating expenses:						Operating expenses:
Research and development	Research and development	12,701		7,750			Research and development	10,037		7,501		33,591		22,014
Selling, general and administrative	Selling, general and administrative	91,218		62,302			Selling, general and administrative	80,726		65,641		247,722		191,504
Amortization of intangible assets	Amortization of intangible assets	12,379		8,263			Amortization of intangible assets	12,151		7,805		35,930		24,204
Gains on divestitures and sale of assets	Gains on divestitures and sale of assets	(9,603)		0			Gains on divestitures and sale of assets	—		(1,115)		(9,603)		(32,613)
Total operating expenses	Total operating expenses	106,695		78,315			Total operating expenses	102,914		79,832		307,640		205,109
Operating income	Operating income	1,390		11,715			Operating income	35,651		40,425		61,551		110,922
Interest and other expense, net	Interest and other expense, net	(4,398)		(3,735)			Interest and other expense, net	(4,263)		(3,051)		(13,249)		(10,612)
(Loss) income before provision (benefit) for income taxes		(3,008)		7,980
Provision (benefit) for income taxes		1,446		(2,547)
Net (loss) income		$	(4,454)	$	10,527
Income before provision for income taxes							Income before provision for income taxes	31,388		37,374		48,302		100,310
Provision for income taxes							Provision for income taxes	8,156		5,492		14,668		9,800
Net income							Net income	$	23,232	$	31,882	$	33,634	$	90,510

Net (loss) income per share - basic		$	(0.09)	$	0.21
Net (loss) income per share - diluted		$	(0.09)	$	0.21
Net income per share - basic							Net income per share - basic	$	0.45	$	0.63	$	0.66	$	1.79
Net income per share - diluted							Net income per share - diluted	$	0.45	$	0.62	$	0.65	$	1.77

Weighted average shares outstanding	Weighted average shares outstanding						Weighted average shares outstanding
Basic	Basic	50,939		50,418			Basic	51,094		50,789		51,024		50,634
Diluted	Diluted	50,939		51,247			Diluted	51,344		51,363		51,356		51,234

Comprehensive (loss) income		$	(4,007)	$	11,956
Comprehensive income							Comprehensive income	$	23,419	$	40,496	$	33,832	$	105,787

The accompanying notes are an integral part of these condensed consolidated financial statements.

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited in thousands, except share data)


		July 3, 2021		April 3, 2021			January 1, 2022		April 3, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	173,462	$	192,305	Cash and cash equivalents	$	236,877	$	192,305
Accounts receivable, less allowance of $2,236 at July 3, 2021 and $2,226 at April 3, 2021		132,908		127,555
Accounts receivable, less allowance of $2,382 at January 1, 2022 and $2,226 at April 3, 2021						Accounts receivable, less allowance of $2,382 at January 1, 2022 and $2,226 at April 3, 2021	154,980		127,555
Inventories, net	Inventories, net	326,500		322,614		Inventories, net	305,741		322,614
Prepaid expenses and other current assets	Prepaid expenses and other current assets	51,498		51,072		Prepaid expenses and other current assets	31,857		51,072
Total current assets	Total current assets	684,368		693,546		Total current assets	729,455		693,546
Property, plant and equipment, net	Property, plant and equipment, net	214,782		217,559		Property, plant and equipment, net	238,841		217,559
Intangible assets, less accumulated amortization of $335,060 at July 3, 2021 and $320,640 at April 3, 2021		353,688		365,483
Intangible assets, less accumulated amortization of $362,637 at January 1, 2022 and $320,640 at April 3, 2021						Intangible assets, less accumulated amortization of $362,637 at January 1, 2022 and $320,640 at April 3, 2021	323,951		365,483
Goodwill	Goodwill	466,314		466,444		Goodwill	468,199		466,444
Deferred tax asset	Deferred tax asset	6,197		6,009		Deferred tax asset	6,050		6,009
Other long-term assets	Other long-term assets	68,838		70,882		Other long-term assets	64,880		70,882
Total assets	Total assets	$	1,794,187	$	1,819,923	Total assets	$	1,831,376	$	1,819,923
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Notes payable and current maturities of long-term debt	Notes payable and current maturities of long-term debt	$	17,025	$	17,016	Notes payable and current maturities of long-term debt	$	144,064	$	17,016
Accounts payable	Accounts payable	49,131		50,293		Accounts payable	51,175		50,293
Accrued payroll and related costs	Accrued payroll and related costs	34,372		47,600		Accrued payroll and related costs	39,046		47,600
Other liabilities	Other liabilities	127,811		138,586		Other liabilities	121,126		138,586
Total current liabilities	Total current liabilities	228,339		253,495		Total current liabilities	355,411		253,495
Long-term debt, net of current maturities	Long-term debt, net of current maturities	767,345		690,592		Long-term debt, net of current maturities	633,118		690,592
Deferred tax liability	Deferred tax liability	24,278		43,825		Deferred tax liability	26,132		43,825
Other long-term liabilities	Other long-term liabilities	97,145		100,341		Other long-term liabilities	85,940		100,341
Total stockholders’ equity	Total stockholders’ equity					Total stockholders’ equity
Common stock, $0.01 par value; Authorized — 150,000,000 shares; Issued and outstanding — 51,012,969 shares at July 3, 2021 and 50,868,820 shares at April 3, 2021		510		509
Common stock, $0.01 par value; Authorized — 150,000,000 shares; Issued and outstanding — 51,111,046 shares at January 1, 2022 and 50,868,820 shares at April 3, 2021						Common stock, $0.01 par value; Authorized — 150,000,000 shares; Issued and outstanding — 51,111,046 shares at January 1, 2022 and 50,868,820 shares at April 3, 2021	511		509
Additional paid-in capital	Additional paid-in capital	551,108		602,727		Additional paid-in capital	566,963		602,727
Retained earnings	Retained earnings	154,562		157,981		Retained earnings	192,650		157,981
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(29,100)		(29,547)		Accumulated other comprehensive loss	(29,349)		(29,547)
Total stockholders’ equity	Total stockholders’ equity	677,080		731,670		Total stockholders’ equity	730,775		731,670
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,794,187	$	1,819,923	Total liabilities and stockholders’ equity	$	1,831,376	$	1,819,923

The accompanying notes are an integral part of these condensed consolidated financial statements.

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited in thousands)


		Common Stock			Additional Paid-in Capital				Retained Earnings			Accumulated Other Comprehensive Loss				Total Stockholders’ Equity				Common Stock						Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive Loss				Total Stockholders’ Equity
		Shares	Par Value								Shares								Par Value
Balance, April 3, 2021	Balance, April 3, 2021	50,869	$	509			$	602,727						$	157,981			$	(29,547)		$	731,670	Balance, April 3, 2021		50,869			$	509			$	602,727			$	157,981			$	(29,547)	$	731,670
Employee stock purchase plan	Employee stock purchase plan	39	—		2,210				—			—				2,210			Employee stock purchase plan	39			—				2,210				—				—				2,210
Exercise of stock options	Exercise of stock options	14	0		500				—			—				500			Exercise of stock options	14			—			500				—				—				500

Issuance of restricted stock, net of cancellations	Issuance of restricted stock, net of cancellations	91	1		(1)				—			—				0			Issuance of restricted stock, net of cancellations	91			1			(1)				—				—				—
Cumulative effect of change in accounting standards	Cumulative effect of change in accounting standards	—	—		(61,156)				1,035			—				(60,121)			Cumulative effect of change in accounting standards	—			—			(61,156)				1,035				—				(60,121)
Share-based compensation expense	Share-based compensation expense	—	—		6,828				—			—				6,828			Share-based compensation expense	—			—			6,828				—				—				6,828

Net loss	Net loss	—	—		—				(4,454)			—				(4,454)			Net loss	—			—			—				(4,454)				—				(4,454)
Other comprehensive income	Other comprehensive income	—	—		—				—			447				447			Other comprehensive income	—			—			—				—				447				447
Balance, July 3, 2021	Balance, July 3, 2021	51,013	$	510	$	551,108			$	154,562		$	(29,100)			$	677,080		Balance, July 3, 2021	51,013			$	510		$	551,108			$	154,562			$	(29,100)			$	677,080

Exercise of stock options																			Exercise of stock options	28			1			1,069				—				—				1,070
Issuance of restricted stock, net of cancellations																			Issuance of restricted stock, net of cancellations	19			—			—				—				—				—

Share-based compensation expense																			Share-based compensation expense	—			—			5,979				—				—				5,979
Net income																			Net income	—			—			—				14,856				—				14,856
Other comprehensive income																			Other comprehensive income	—			—			—				—				(436)				(436)
Balance, October 2, 2021																			Balance, October 2, 2021	51,060			$	511		$	558,156			$	169,418			$	(29,536)			$	698,549
Employee stock purchase plan																			Employee stock purchase plan	36			—			1,999				—				—				1,999
Exercise of stock options																			Exercise of stock options	12			—			353				—				—				353
Issuance of restricted stock, net of cancellations																			Issuance of restricted stock, net of cancellations	3			—			—				—				—				—

Share-based compensation expense																			Share-based compensation expense	—			—			6,455				—				—				6,455
Net income																			Net income	—			—			—				23,232				—				23,232
Other comprehensive income																			Other comprehensive income	—			—			—				—				187				187
Balance, January 1, 2022																			Balance, January 1, 2022	51,111			$	511		$	566,963			$	192,650			$	(29,349)			$	730,775

Common Stock Additional
Paid-in Capital Retained Earnings Accumulated
Other
Comprehensive Loss Total
Stockholders’ Equity
Shares Par Value
Balance, March 28, 2020 50,323 $ 503 $ 553,229 $ 78,512 $ (45,135) $ 587,109
Employee stock purchase plan 22 0 2,144 — — 2,144
Exercise of stock options 28 1 1,192 — — 1,193
Issuance of restricted stock, net of cancellations 298 3 (3) — — 0
Share-based compensation expense — — 6,167 — — 6,167
Net income — — — 10,527 — 10,527
Other comprehensive income — — — — 1,429 1,429
Balance, June 27, 2020 50,671 $ 507 $ 562,729 $ 89,039 $ (43,706) $ 608,569

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited in thousands)


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Par Value
Balance, March 28, 2020	50,323	$	503	$	553,229	$	78,512	$	(45,135)	$	587,109
Employee stock purchase plan	22	—		2,144		—		—		2,144
Exercise of stock options	28	1		1,192		—		—		1,193

Issuance of restricted stock, net of cancellations	298	3		(3)		—		—		—

Share-based compensation expense	—	—		6,167		—		—		6,167

Net income	—	—		—		10,527		—		10,527
Other comprehensive income	—	—		—		—		1,429		1,429
Balance, June 27, 2020	50,671	$	507	$	562,729	$	89,039	$	(43,706)	$	608,569
Exercise of stock options	2	—		67		—		—		67
Issuance of restricted stock, net of cancellations	30	—		—		—		—		—
Share-based compensation expense	—	—		5,952		—		—		5,952
Net income	—	—		—		48,101		—		48,101
Other comprehensive income	—	—		—		—		5,234		5,234
Balance, September 26, 2020	50,703	$	507	$	568,748	$	137,140	$	(38,472)	$	667,923
Employee stock purchase plan	22	—		1,868		—		—		1,868
Exercise of stock options	50	—		2,578		—		—		2,578
Issuance of restricted stock, net of cancellations	42	1		(1)		—		—		—
Share-based compensation expense	—	—		6,287		—		—		6,287
Net income	—	—		—		31,882		—		31,882
Other comprehensive income	—	—		—		—		8,614		8,614
Balance, December 26, 2020	50,817	$	508	$	579,480	$	169,022	$	(29,858)	$	719,152

The accompanying notes are an integral part of these condensed consolidated financial statements.

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited in thousands)


		Three Months Ended					Nine Months Ended
		July 3, 2021		June 27, 2020			January 1, 2022		December 26, 2020
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net (loss) income		$	(4,454)	$	10,527
Net income						Net income	$	33,634	$	90,510
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash items:	Non-cash items:					Non-cash items:
Depreciation and amortization	Depreciation and amortization	25,033		20,724		Depreciation and amortization	72,934		62,377
Amortization of fair value inventory step-up	Amortization of fair value inventory step-up	5,295		0		Amortization of fair value inventory step-up	5,295		—
Impairment of assets	Impairment of assets	5,144		1,028		Impairment of assets	5,144		1,028
Share-based compensation expense	Share-based compensation expense	6,828		6,167		Share-based compensation expense	19,262		18,406
Amortization of deferred finance costs	Amortization of deferred finance costs	1,019		147		Amortization of deferred finance costs	2,608		425
(Benefit) provision for losses on inventory	(Benefit) provision for losses on inventory	(544)		1,452		(Benefit) provision for losses on inventory	(280)		3,779
Gains on divestitures and sale of assets	Gains on divestitures and sale of assets	(9,603)		0		Gains on divestitures and sale of assets	(9,603)		(32,613)
Deferred tax benefit						Deferred tax benefit	1,999		(3,953)
Contingent consideration expense	Contingent consideration expense	9,774		0		Contingent consideration expense	10,272		—
Other non-cash operating activities	Other non-cash operating activities	(355)		(841)		Other non-cash operating activities	1,103		89
Change in operating assets and liabilities:	Change in operating assets and liabilities:					Change in operating assets and liabilities:
Change in accounts receivable	Change in accounts receivable	(5,342)		25,067		Change in accounts receivable	(28,736)		18,588
Change in inventories	Change in inventories	(8,553)		(24,557)		Change in inventories	11,589		(33,728)
Change in prepaid income taxes	Change in prepaid income taxes	2,121		(3,544)		Change in prepaid income taxes	4,400		1,181
Change in other assets and other liabilities	Change in other assets and other liabilities	1,256		865		Change in other assets and other liabilities	(6,010)		2,687
Change in accounts payable and accrued expenses	Change in accounts payable and accrued expenses	(29,299)		(25,223)		Change in accounts payable and accrued expenses	(19,398)		(21,518)
Net cash (used in) provided by operating activities		(1,680)		11,812
Net cash provided by operating activities						Net cash provided by operating activities	104,213		107,258
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Capital expenditures	Capital expenditures	(13,919)		(7,696)		Capital expenditures	(61,394)		(25,408)
Acquisition	Acquisition	(2,500)		(16,606)		Acquisition	(2,500)		(16,606)
Proceeds from divestitures	Proceeds from divestitures	0		0		Proceeds from divestitures	10,642		44,587
Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	568		406		Proceeds from sale of property, plant and equipment	1,419		1,085
Net cash used in investing activities		(15,851)		(23,896)
Net cash (used in) provided by investing activities						Net cash (used in) provided by investing activities	(51,833)		3,658
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Net increase in short-term loans		0		150,000
Net (decrease) in short-term loans						Net (decrease) in short-term loans	—		(60,000)
Repayment of term loan borrowings	Repayment of term loan borrowings	(4,375)		(4,375)		Repayment of term loan borrowings	(13,125)		(13,125)
Proceeds from employee stock purchase plan	Proceeds from employee stock purchase plan	2,210		2,144		Proceeds from employee stock purchase plan	4,210		4,012
Proceeds from exercise of stock options	Proceeds from exercise of stock options	500		1,193		Proceeds from exercise of stock options	1,923		3,838
Other	Other	31		(11)		Other	8		(32)
Net cash (used in) provided by financing activities		(1,634)		148,951
Net cash used in financing activities						Net cash used in financing activities	(6,984)		(65,307)
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	322		1,547		Effect of exchange rates on cash and cash equivalents	(824)		6,082
Net Change in Cash and Cash Equivalents	Net Change in Cash and Cash Equivalents	(18,843)		138,414		Net Change in Cash and Cash Equivalents	44,572		51,691
Cash and Cash Equivalents at Beginning of Period	Cash and Cash Equivalents at Beginning of Period	192,305		137,311		Cash and Cash Equivalents at Beginning of Period	192,305		137,311
Cash and Cash Equivalents at End of Period	Cash and Cash Equivalents at End of Period	$	173,462	$	275,725	Cash and Cash Equivalents at End of Period	$	236,877	$	189,002
Supplemental Disclosures of Cash Flow Information:	Supplemental Disclosures of Cash Flow Information:					Supplemental Disclosures of Cash Flow Information:
Interest paid		$	1,482	$	2,780
Income taxes paid		$	14,494	$	2,063

Non-Cash Investing and Financing Activities:	Non-Cash Investing and Financing Activities:					Non-Cash Investing and Financing Activities:
Transfers from inventory to fixed assets for placement of Haemonetics equipment	Transfers from inventory to fixed assets for placement of Haemonetics equipment	$	3,203	$	2,364	Transfers from inventory to fixed assets for placement of Haemonetics equipment	$	25,385	$	5,878

The accompanying notes are an integral part of these condensed consolidated financial statements.

HAEMONETICS CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Haemonetics Corporation (“Haemonetics” or the “Company”) presented herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the ~~Company's~~Company’s management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. All intercompany transactions have been eliminated. Operating results for the ~~three~~nine months ended ~~July 3, 2021~~January 1, 2022 are not necessarily indicative of the results that may be expected for the full fiscal year ending April 2, 2022 or any other interim period. The Company has assessed its ability to continue as a going concern. As of ~~July 3, 2021,~~January 1, 2022, the Company has concluded that substantial doubt about its ability to continue as a going concern does not exist. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Annual Report on Form 10-K for the fiscal year ended April 3, 2021.

The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. There were no material recognized or unrecognized subsequent events as of or for the three and nine months ended ~~July 3, 2021.~~January 1, 2022.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Standards Implemented

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) Update No. 2019-12 — Income Taxes (Topic 740). The new guidance improves consistent application of and simplifies the accounting for income taxes by removing certain exceptions to the general principals in Topic 740. The Company adopted ASC Update No. 2019-12 effective April 4, 2021. The adoption did not have a material impact on the Company’s financial position or results of operations.

In August 2020, the FASB issued ASC ~~ASU~~ Update No. 2020-06 — Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in ~~Entity's~~Entity’s Own Equity (Subtopic 815-40). The amendments simplify the complexity associated with applying U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. Update No. 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company early adopted ASC Update No. 2020-06 effective April 4, 2021 using the modified retrospective method, which resulted in a decrease of $61.2 million to additional paid-in capital, a decrease to non-current deferred tax liabilities of $20.0 million, and an increase of $80.3 million to non-current convertible notes, net, on the Condensed Consolidated Balance Sheets. Additionally, retained earnings was adjusted to remove amortization expense recognized in prior periods related to the debt discount and the convertible notes no longer have a debt discount that will be amortized, net of taxes. The impact to retained earnings on the Condensed Consolidated Balance Sheets as of April 4, 2021 is an increase of $1.0 million.

In July 2021, the FASB issued ASC Update No. 2021-05 — Leases (Topic 842). The new guidance requires a lessor to classify a lease with variable lease payments that do not depend on an index or rate as an operating lease at lease commencement if the lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria of ASC 842 and the lessor would have otherwise recognized a day-one loss. The Company prospectively adopted ASC Update No. 2021-05 effective in the second quarter of fiscal year 2022. The adoption did not have a material impact on the Company’s financial position or results of operations.

3. RESTRUCTURING

On an ongoing basis, the Company reviews the global economy, the healthcare industry, and the markets in which it competes to identify opportunities for efficiencies, enhance commercial capabilities, align its resources and offer its customers better solutions. In order to realize these opportunities, the Company undertakes restructuring-type activities to transform its business.

In July 2019, the Board of Directors of the Company approved the Operational Excellence Program (the “2020 Program”) and delegated authority to the ~~Company's~~Company’s management to determine the detail of the initiatives that will comprise the program. During the first quarter of fiscal 2022, the Company revised the program to improve product and service quality, reduce cost principally in its manufacturing and supply chain operations and ensure sustainability while helping to offset impacts from a previously announced customer loss, rising inflationary pressures and effects of the COVID-19 pandemic. The Company now expects to incur aggregate charges between $95 million and $105 million by the end of fiscal 2025. The majority of charges will result in cash outlays, including severance and other employee costs, and will be incurred as the specific actions required to execute these initiatives are identified and approved. During the three and nine months ended ~~July 3, 2021 and June 27, 2020,~~January 1, 2022, the Company incurred ~~$9.9~~$5.7 million and ~~$3.5~~$20.2 million, respectively, of restructuring and restructuring related costs under this program. During the three and nine months ended December 26, 2020, the Company incurred $3.1 million and $11.1 million, respectively, of restructuring and restructuring related costs under this program. Total cumulative charges under this program are ~~$36.9~~$47.2 million.

The following table summarizes the activity for restructuring reserves related to the 2020 Program and prior programs for the ~~three~~nine months ended ~~July 3, 2021,~~January 1, 2022, substantially all of which relates to employee severance and other employee costs:


(In thousands)	(In thousands)	2020 Program		Prior Programs		Total		(In thousands)	2020 Program		Prior Programs		Total
Balance at April 3, 2021	Balance at April 3, 2021	$	575	$	437	$	1,012	Balance at April 3, 2021	$	575	$	437	$	1,012
Costs incurred, net of reversals	Costs incurred, net of reversals	3,391		29		3,420		Costs incurred, net of reversals	4,008		28		4,036
Payments	Payments	(63)		0		(63)		Payments	(1,988)		(33)		(2,021)
Non-cash adjustments		0		11		11
Balance at July 3, 2021		$	3,903	$	477	$	4,380
Balance at January 1, 2022								Balance at January 1, 2022	$	2,595	$	432	$	3,027

The following presents the restructuring costs by line item within our accompanying unaudited Condensed Consolidated Statements of ~~(Loss)~~ Income and Comprehensive ~~(Loss)~~ Income:


		Three Months Ended				Three Months Ended				Nine Months Ended
(In thousands)	(In thousands)	July 3, 2021		June 27, 2020			(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Cost of goods sold	Cost of goods sold	$	2,253	$	503		Cost of goods sold	$	(187)	$	(49)	$	2,276	$	218
Research and development	Research and development	105		319			Research and development	—		(2)		108		108
Selling, general and administrative expenses	Selling, general and administrative expenses	1,062		243			Selling, general and administrative expenses	108		(41)		1,652		574
		$	3,420	$	1,065			$	(79)	$	(92)	$	4,036	$	900

As of ~~July 3, 2021,~~January 1, 2022, the Company had a ~~restructuring~~restructuring liability of ~~$4.4~~$3.0 million, of which ~~$3.9~~$2.6 million is ~~payable~~payable within the next twelve months.

In addition to the restructuring costs included in the table above, the Company also incurred costs that do not constitute restructuring under ASC 420, Exit and Disposal Cost Obligations, and which the Company instead refers to as restructuring related costs. These costs consist primarily of expenditures directly related to the restructuring actions and include program management costs associated with the implementation of outsourcing initiatives and recent accounting standards.

The tables below present restructuring and restructuring related costs by reportable segment:


Restructuring costs	Restructuring costs	Three Months Ended				Restructuring costs	Three Months Ended				Nine Months Ended
(In thousands)	(In thousands)	July 3, 2021		June 27, 2020				(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Plasma	Plasma	$	2,288	$	568			Plasma	$	(192)	$	(27)	$	2,507	$	454
Blood Center	Blood Center	3		154				Blood Center	—		66		3		240
Hospital	Hospital	(38)		129				Hospital	—		—		(91)		(18)
Corporate	Corporate	1,167		214				Corporate	113		(131)		1,617		224
Total	Total	$	3,420	$	1,065			Total	$	(79)	$	(92)	$	4,036	$	900

Restructuring related costs	Restructuring related costs	Three Months Ended				Restructuring related costs	Three Months Ended				Nine Months Ended
(In thousands)	(In thousands)	July 3, 2021		June 27, 2020				(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Plasma	Plasma	$	1,738	$	0			Plasma	$	1,400	$	431	$	4,541	$	1,235
Blood Center	Blood Center	490		16				Blood Center	24		518		554		1,024
Hospital	Hospital	133		9				Hospital	127		4		292		14
Corporate	Corporate	4,274		2,910				Corporate	4,210		2,282		10,827		8,410
Total	Total	$	6,635	$	2,935			Total	$	5,761	$	3,235	$	16,214	$	10,683

Total restructuring and restructuring related costs	Total restructuring and restructuring related costs	$	10,055	$	4,000			Total restructuring and restructuring related costs	$	5,682	$	3,143	$	20,250	$	11,583

4. ACQUISITIONS

On January 17, 2021, the Company entered into an Agreement and Plan of Merger with Cardiva Medical, Inc. (“Cardiva”), an industry-leading manufacturer of vascular closure systems based in Santa Clara, California. In connection with this acquisition, which closed on March 1, 2021, the Company acquired 100% of the issued and outstanding shares of capital stock of Cardiva for total consideration of $489.8 million, which consisted of upfront payments in the aggregate of $465.5 million ($418.2 million net of cash acquired) and the fair value of contingent consideration of $24.3 million. The contingent consideration, which could total a maximum of $35.0 million, is payable over the next two years based on sales growth. The Company financed the acquisition through a combination of cash, borrowings under its revolving credit facility and an additional $150.0 million term loan under ~~the~~its existing credit facility.

Cardiva’s portfolio includes two catheter-based vascular access site closure devices. The ~~VASCADE®~~VASCADE® vascular closure system is designed for “small-bore” femoral arterial and venous closure, generally used in interventional cardiology and peripheral vascular procedures. The VASCADE ~~MVP®~~MVP® vascular closure system is designed for “mid-bore” multi-access femoral venous closure, generally used in electrophysiology procedures, and is the only U.S. Food and Drug Administration (“FDA”) approved closure device for use following cardiac ablation procedures requiring two or more access sites within the same vessel. The addition of the VASCADE portfolio to the Hospital business unit includes products with demonstrated benefits and enhances penetration into the large and growing interventional cardiology and electrophysiology markets.

Purchase Price Allocation

The Company accounted for the acquisition as a business combination, and in accordance with FASB ASC Topic 805, Business Combinations (Topic 805), recorded the assets acquired and liabilities assumed at their fair values as of the acquisition date. The fair value of assets acquired and liabilities assumed have been recognized based on management’s estimates and assumptions using the information regarding facts and circumstances that existed at the closing date. The assessment of fair value is preliminary and is based on information that was available at the time the consolidated financial statements were prepared. The ~~most significant open items included the valuation of certain intangible assets and the~~ accounting for income taxes remains preliminary, as the Company is ~~awaiting~~finalizing additional information to complete its ~~assessment of these matters.~~assessment. Measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the acquisition date. The finalization of the Company’s purchase accounting ~~assessment~~assessment could result in changes in the valuation of assets acquired and liabilities assumed, which could be material. The final determination of the fair value of certain assets and liabilities will be completed within the measurement period as required by Topic 805. As of ~~July 3, 2021,~~January 1, 2022, the valuation studies necessary to determine the fair market value of the assets acquired and liabilities assumed are ~~preliminary, including the projection of the underlying cash flows used to determine the fair value of the identified tangible, intangible and financial assets and liabilities.~~completed.

910

The purchase price of $442.3 million, net of $47.3 million of cash acquired, consisted of the amounts presented below, which represent the preliminary determination of the fair value of the identifiable assets acquired and liabilities assumed:


(In thousands)	March 1, 2021
Accounts receivable	$	7,304
Inventories	18,765
Prepaid expenses and other current assets	850
Property, plant and equipment	1,186
Intangible assets	~~253,929~~250,560
Goodwill	~~251,407~~253,966
Other long-term assets	1,868
Total assets acquired	$	~~535,309~~534,499
Accounts payable	3,292
Accrued payroll and related costs	58,211
Other liabilities	1,853
Deferred tax liability	~~27,912~~27,102
Other long-term liabilities	1,772
Total liabilities assumed	$	~~93,040~~92,230
Net assets acquired	$	442,269

The Company determined the identifiable intangible assets were completed technology, customer relationships, trademarks and ~~trademarks.~~in-process research and development (“IPR&D”). The fair values of intangible assets were based on valuation techniques with estimates and assumptions developed by the Company. Completed technology ~~was~~and IPR&D were valued using the excess earnings method. Customer relationships were valued using the distributor method. Trademarks were valued using the relief from royalty method. The cash flows used in the valuation of the intangible assets were based on estimates used to price the transaction. In developing the discount rates applied to the cash flow projections, the discount rates were benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital and then adjusted to reflect the relative risk of the ~~asset. As of July 3, 2021, the valuation of the intangible assets is preliminary as the Company is still gathering information related to the assets’ cash flow projections.~~asset.

The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. As a result of the acquisition of Cardiva, the Company recognized goodwill of ~~$251.4~~$254.0 million, which is attributable to the revenue and cash flow projections associated with completed technologies and the development of future technology that does not exist in the current ~~in-process research and development (“~~IPR~~&D”)~~&D pipeline. The goodwill is not deductible for tax purposes and relates entirely to the Hospital reportable segment.

Intangible assets acquired consist of the following:


(In thousands)	(In thousands)	Amount		Weighted-Average Amortization Period	Risk-Adjusted Discount Rates used in Purchase Price Allocation		(In thousands)	Amount		Weighted-Average Amortization Period	Risk-Adjusted Discount Rates used in Purchase Price Allocation
Completed technology	Completed technology	$	230,326	13 years	13.5	%	Completed technology	$	213,290	13 years	13.5	%
Customer relationships	Customer relationships	18,166		12 years	13.0	%	Customer relationships	18,166		12 years	13.0	%
Trademarks	Trademarks	5,437		13 years	13.5	%	Trademarks	5,437		13 years	13.5	%
IPR&D							IPR&D	13,667		Indefinite	15.0	%
Total	Total	$	253,929				Total	$	250,560

The Company recorded a long-term deferred tax liability, net, of ~~$27.9~~$27.1 million primarily related to definite-lived intangible assets which cannot be deducted for tax purposes, partially offset by deferred tax assets primarily related to net operating losses acquired.

1011

Acquisition-Related Costs

The amount of acquisition-related costs incurred associated with the acquisition was $9.6 million for the fiscal year ending April 3, ~~2021.~~ 2021. The Company incurred acquisition costs related to legal and other professional fees in the amount of $6.6 million and an additional $3.0 million of debt financing costs and lender fees which were recognized in selling, general and administrative and as interest expense on the unaudited Condensed Consolidated Statements of ~~(Loss)~~ Income and Comprehensive ~~(Loss)~~ Income, respectively.

HAS Intellectual Property

In January 2021, the Company entered into an agreement to acquire certain intellectual property owned by HemoAssay Science and Technology (Suzhou) Co. Ltd., a China-incorporated company, and its affiliates (collectively, “HemoAssay”) underlying their HAS viscoelastic diagnostic devices, related assays and disposables. The Company previously entered into exclusive manufacturing and distribution agreements with HemoAssay pursuant to which it has exclusive rights to commercialize HemoAssay’s HAS devices in China. In connection with the transaction, the Company has agreed to pay up to $15.0 million to HemoAssay in contingent consideration based on certain developmental and manufacturing based milestones. During the ~~three~~nine months ended ~~July 3, 2021,~~January 1, 2022, the Company made $2.5 million of milestone payments which were recorded within intangible assets on the Condensed Consolidated Balance Sheets. These products augment the ~~Company's~~Company’s portfolio of hemostasis analyzers within the Hospital business unit.

enicor GmbH

On April 1, 2020, the Company acquired all of the outstanding equity of enicor GmbH (“enicor”), the manufacturer of ClotPro®, a new generation whole blood coagulation testing system that is currently available in select European and Asia Pacific markets, for total consideration of $20.5 million, which consisted of upfront payments of $16.6 million and the fair value of contingent consideration of $3.9 million. The contingent consideration, which could total a maximum of $4.5 million, consists of payments related to the achievement of certain revenue and regulatory milestones. The acquisition of this viscoelastic diagnostic device augments the Company's portfolio of hemostasis analyzers within the Hospital business unit.

Purchase Price Allocation

The Company accounted for the acquisition of enicor as a business combination, and in accordance with FASB ASC Topic 805, Business Combinations (Topic 805), recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition date.

The following amounts represent the determination of the fair value of the identifiable assets acquired and liabilities assumed for enicor completed during fiscal 2021:


(In thousands)	April 1, 2020

Inventory	$	634
Other current assets	685
Property, plant and equipment	289
Intangible assets	14,090
Goodwill	8,153
Total assets acquired	$	23,851
Other current liabilities	289
Deferred tax liability	3,036
Total liabilities assumed	$	3,325
Net assets acquired	$	20,526

1112

The Company determined the identifiable intangible assets were completed technology, customer relationships and a trademark. The fair value of the intangible assets was estimated using the income approach, and the cash flow projections were discounted using a rate of 20%. The cash flows were based on estimates used to price the transaction, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital. The benefits of adding a viscoelastic diagnostic device to the Company’s portfolio of hemostasis analyzers within the Hospital business unit contributed to an acquisition price in excess of the fair value of net assets acquired for enicor, which resulted in the establishment of goodwill. In addition, the benefits of lower cost manufacturing and complementary sales channels also contributed to the establishment of goodwill for this acquisition. None of the goodwill is expected to be deductible for income tax purposes.

Intangible assets acquired consist of the following:


(In thousands)	Amount		Weighted-Average Amortization Period	Risk-Adjusted Discount Rates used in Purchase Price Allocation
Completed technology	$	13,441	10 Years	20	%
Customer relationships	347		10 Years	20	%
Trademark	302		10 Years	20	%
Total	$	14,090

Acquisition-Related Costs

The amount of acquisition-related costs incurred associated with the acquisition was $0.2 million for the ~~three~~nine months ended ~~June 27,~~December 26, 2020.

5. DIVESTITURES

Fajardo, Puerto Rico Manufacturing Operations

On June 29, 2020, the Company sold its Fajardo, Puerto Rico, manufacturing operations to GVS, S.p.A (“GVS”), a leading provider of advanced filtration solutions for critical applications for $15.1 million ($7.8 million, net of cash transferred). Under the terms of the agreement, Haemonetics retained all intellectual property rights to its proprietary blood filters currently manufactured at its Fajardo facility and GVS acquired certain assets consisting primarily of property, plant and equipment, inventory and cash and has assumed certain related liabilities. In connection with this transaction, the Company and GVS also entered into a long-term supply and development agreement that, among other things, grants GVS exclusive rights to manufacture and supply the blood filters currently produced at the Fajardo facility for Haemonetics. The Company also agreed to provide certain transition services to GVS, generally for a period of up to three months depending on the nature of the service.

As a result of this transaction, Haemonetics recognized a pre-tax impairment charge in its Blood Center business unit of $1.0 million in the first quarter of fiscal 2021 and an incremental loss of $0.4 million based on closing adjustments during the third quarter of fiscal 2021, as the carrying value of the assets and liabilities in the asset transfer exceeded the net of the $15.1 million of cash proceeds and an additional contingent liability of $1.5 million. The disposal group consisted of $3.3 million of inventory, $7.2 million of fixed assets, $3.2 million of other liabilities, and $0.4 million of goodwill allocated based on fair value to the business.

U.S. Blood Donor Management Software

On July 1, 2020, the Company sold certain U.S. blood donor management software solution assets within its Blood Center business unit to the GPI Group (“GPI”) for an upfront cash payment of $14.0 million ($13.6 million, net of working capital adjustments) and up to $14.0 million in additional consideration contingent on the achievement of commercial milestones over the twelve month period immediately following the closing of the transaction. The disposal group consisted of $1.4 million of accounts receivable, $0.9 million of intangible assets, other liabilities of $1.8 million and $1.4 million of goodwill allocated based on fair value to the business. The Company recognized a gain of $13.2 million associated with the transaction in fiscal 2021. During the ~~three months ended July 3, 2021,~~first quarter of fiscal year 2022, the Company recognized an additional gain of $9.6 million for contingent consideration earned.

1213

Inlog Holdings France

On September 18, 2020, the Company sold its wholly-owned subsidiary Inlog Holdings France SAS to Abénex Capital (“Abénex”), a private equity firm based in France for $30.5 million ($24.5 million, net of cash transferred). Inlog Holdings France SAS, through its subsidiary In Log SAS, develops and sells blood bank and hospital software solutions used predominantly in France and in several other countries outside of the U.S. The disposal group included $2.2 million of intangible assets, $2.2 million of accounts receivable, $0.3 million of other assets, $3.3 million of liabilities and $3.3 million of goodwill allocated based on the fair value of the business which impacted both the Blood Center and Hospital business units. The Company recognized a gain of $20.0 million upon closing of the transaction in the second quarter of fiscal 2021.

6. INCOME TAXES

The Company conducts business globally and reports its results of operations in a number of foreign jurisdictions in addition to the United States. The ~~Company's~~Company’s reported tax rate is impacted by the jurisdictional mix of earnings in any given period as the foreign jurisdictions in which it operates have tax rates that differ from the U.S. statutory tax rate.

For the three and nine months ended ~~July 3, 2021,~~January 1, 2022, the Company reported income tax expense of ~~$1.4~~$8.2 million and $14.7 million, respectively, representing an effective tax ~~rate~~rates of ~~(48.1)%.~~26.0% and 30.4%, respectively. The effective tax rate for the ~~three~~nine months ended ~~July 3, 2021~~January 1, 2022 includes ~~$0.8 million of~~ discrete tax expense relating to stock compensation ~~shortfalls.~~shortfalls of $0.9 million, with no discrete tax expense relating to stock compensation shortfalls recorded in the three months ended January 1, 2022.

For the three and nine months ended ~~June 27,~~December 26, 2020, the Company reported an income tax ~~benefit~~expense of ~~$2.5~~$5.5 million and $9.8 million, respectively, representing an effective tax ~~rate benefit~~rates of ~~31.9%.~~14.7% and 9.8%, respectively. The effective tax ~~rate~~rates for the three and nine months ended ~~June 27,~~December 26, 2020 ~~includes~~included discrete tax benefits recognized from excess stock compensation deductions of ~~$4.0 million.~~$1.0 million and $5.1 million, respectively. The effective tax ~~rate was~~rates were also impacted by the jurisdictional mix of ~~earnings.~~earnings including divestiture transactions. During the ~~three~~nine months ended ~~June 27,~~December 26, 2020, the Company ~~transferred certain intangible assets amongst its wholly-owned subsidiaries prior to the divestiture of~~sold its Fajardo, Puerto Rico manufacturing ~~operations.~~operations, certain U.S. blood donor management software solution assets, and its wholly-owned subsidiary, Inlog Holdings France SAS. The tax expense on ~~the intercompany sale and establishment of deferred tax assets (including~~divestitures, including the associated valuation allowance ~~impacts) was~~impacts, were included in the computation of the annual effective tax rate.

7. EARNINGS PER SHARE

The following table provides a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations.


		Three Months Ended				Three Months Ended				Nine Months Ended
(In thousands, except per share amounts)	(In thousands, except per share amounts)	July 3, 2021		June 27, 2020			(In thousands, except per share amounts)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Basic EPS	Basic EPS						Basic EPS
Net (loss) income		$	(4,454)	$	10,527
Net income							Net income	$	23,232	$	31,882	$	33,634	$	90,510
Weighted average shares	Weighted average shares	50,939		50,418			Weighted average shares	51,094		50,789		51,024		50,634
Basic income per share	Basic income per share	$	(0.09)	$	0.21		Basic income per share	$	0.45	$	0.63	$	0.66	$	1.79
Diluted EPS	Diluted EPS						Diluted EPS
Net (loss) income		$	(4,454)	$	10,527
Net income							Net income	$	23,232	$	31,882	$	33,634	$	90,510
Basic weighted average shares	Basic weighted average shares	50,939		50,418			Basic weighted average shares	51,094		50,789		51,024		50,634
Net effect of common stock equivalents	Net effect of common stock equivalents	0		829			Net effect of common stock equivalents	250		574		332		600
Diluted weighted average shares	Diluted weighted average shares	50,939		51,247			Diluted weighted average shares	51,344		51,363		51,356		51,234
Diluted income per share	Diluted income per share	$	(0.09)	$	0.21		Diluted income per share	$	0.45	$	0.62	$	0.65	$	1.77

Basic earnings per share is calculated using the ~~Company's~~Company’s weighted-average outstanding common stock. Diluted earnings per share is calculated using its weighted-average outstanding common stock including the dilutive effect of stock awards as determined under the treasury stock method and the convertible senior notes as determined under the net share settlement method. From the time of the issuance of the convertible senior notes, the average market price of the Company's common shares has been less than the initial conversion price, and consequently no shares have been included in diluted earnings per share for the conversion value of the convertible senior notes. For the three and nine months ended ~~July 3, 2021, the Company recognized a net loss; therefore it excluded~~January 1, 2022, weighted average shares outstanding, assuming dilution, excludes the impact of ~~outstanding stock awards from the diluted loss per share calculation as its inclusion would have an~~0.9 million anti-dilutive ~~effect.~~shares. For the three and nine

months ended ~~June 27,~~December 26, 2020, weighted average shares outstanding, assuming dilution, excludes the impact of ~~0.5~~0.4 million and 0.6 million anti-dilutive ~~shares.~~shares, respectively.

8. REVENUE

The ~~Company's~~Company’s revenue recognition policy is to recognize revenues from product sales, software and services in accordance with ASC Topic 606, Revenue from Contracts with Customers. Revenue is recognized when obligations under the terms of a contract with a customer are satisfied; this occurs with the transfer of control of the Company’s goods or services. The Company considers revenue to be earned when all of the following criteria are met: it has a contract with a customer that creates enforceable rights and obligations; promised products or services are identified; the transaction price, or the consideration it expects to receive for transferring goods or providing services, is determinable and it has transferred control of the promised items to the customer. A promise in a contract to transfer a distinct good or service to the customer is identified as a performance obligation. A contract’s transaction price is allocated to each performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Some of the Company’s contracts have multiple performance obligations. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on the estimated standalone selling prices of the good or service in the contract. For goods or services for which observable standalone selling prices are not available, the Company uses an expected cost plus a margin approach to estimate the standalone selling price of each performance obligation.

As of ~~July 3, 2021,~~January 1, 2022, the Company had ~~$18.4~~$23.4 million of its transaction price allocated to remaining performance obligations related to executed contracts with an original duration of one year or more. The Company expects to recognize approximately ~~69%~~74% of this amount as revenue within the next twelve months and the remaining balance thereafter.

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the Condensed Consolidated Balance Sheets. The difference in timing between billing and revenue recognition primarily occurs in software licensing arrangements, resulting in contract assets and contract liabilities.

As of ~~July 3, 2021~~January 1, 2022 and April 3, 2021, the Company had contract assets of ~~$4.8~~$5.5 million and $4.8 million, respectively. Contract assets are classified as other current assets and other long-term assets on the Condensed Consolidated Balance Sheets.

As of ~~July 3, 2021~~January 1, 2022 and April 3, 2021, the Company had contract liabilities of ~~$24.2~~$24.4 million and $20.9 million, respectively. During the three and nine months ended ~~July 3, 2021,~~January 1, 2022, the Company recognized ~~$8.6~~$4.0 million and $17.2 million of revenue, respectively, that was included in the above April 3, 2021 contract liability balance.

9. INVENTORIES

Inventories are stated at the lower of cost or market and include the cost of material, labor and manufacturing overhead. Cost is determined using the first-in, first-out method.


(In thousands)	(In thousands)	July 3, 2021		April 3, 2021		(In thousands)	January 1, 2022		April 3, 2021
Raw materials	Raw materials	$	75,278	$	74,910	Raw materials	$	89,503	$	74,910
Work-in-process	Work-in-process	26,562		23,111		Work-in-process	18,281		23,111
Finished goods	Finished goods	224,660		224,593		Finished goods	197,957		224,593
Total inventories	Total inventories	$	326,500	$	322,614	Total inventories	$	305,741	$	322,614

10. LEASES

Lessee Activity

During fiscal 2021, the Company entered into a lease for manufacturing space in Clinton, PA. The ~~Company's~~Company’s current manufacturing operations in Leetsdale, PA will be ~~relocated.~~relocated to the Clinton, PA facility. The lease term associated with the new manufacturing facility is 15 years and 7 months and includes two five year renewal options followed by one four year renewal option. During fiscal 2021, the Company recorded a right-of-use asset of $11.3 million and corresponding liabilities of $15.4 million upon commencement of the lease term in May 2020. In addition, the Company recorded a $4.1 million lease incentive receivable associated with this lease agreement which was received during fiscal 2021.

1415

Lessor Activity

Assets on the ~~Company's~~Company’s balance sheet classified as Haemonetics equipment primarily ~~consists~~consist of medical devices installed at customer sites but owned by Haemonetics. These devices are leased to customers under contractual arrangements that typically include an operating or sales-type lease as well as the purchase and consumption of a certain level of disposable products. Sales-type leases are not significant. Contract terms vary by customer and may include options to terminate the contract or options to extend the contract. Where devices are provided under operating lease arrangements, a substantial majority of the entire lease revenue is variable and subject to subsequent non-lease component (disposable products) sales. The allocation of revenue between the lease and non-lease components is based on stand-alone selling prices. Operating lease revenue represents less than 3 percent of the ~~Company's~~Company’s total net sales.

11. NOTES PAYABLE AND LONG-TERM DEBT

Convertible Senior Notes

In March 2021, the Company issued $500.0 million aggregate principal amount of 0% convertible senior notes due 2026 (the “2026 Notes”). The 2026 Notes are governed by the terms of the Indenture between the Company and U.S. Bank National Association, as trustee (the “Indenture”). The total net proceeds from the sale of the 2026 Notes, after deducting the initial purchasers’ discounts and debt issuance costs, were approximately $486.7 million. The 2026 Notes will mature on March 1, 2026, unless earlier converted, redeemed or repurchased.

During the ~~first~~third quarter of fiscal 2022, the conditions allowing holders of the 2026 Notes to convert have not been met. The 2026 Notes were therefore not convertible as of ~~July 3, 2021~~January 1, 2022 and were classified as long-term debt on the Company’s Condensed Consolidated Balance Sheets.

In accounting for the issuance of the 2026 Notes, the 2026 Notes were separated into liability and equity components. The Company estimated the liability and equity components of the 2026 Notes to be $416.4 million and $83.6 million respectively, at the issuance date. On April 4, 2021, the Company adopted ASC Update No. 2020-06 using the modified retrospective method, which resulted in a decrease of $61.2 million to additional paid-in capital, a decrease to non-current deferred tax liabilities of $20.0 million, and an increase of $80.3 million to non-current convertible notes, net, on the Condensed Consolidated Balance Sheets. Additionally, retained earnings was adjusted to remove amortization expense recognized in prior periods related to the debt discount and the convertible notes no longer have a debt discount that will be amortized, net of taxes. The impact to retained earnings on the Condensed Consolidated Balance Sheets as of April 4, 2021 is an increase of $1.0 million.

As of ~~July 3, 2021,~~January 1, 2022, the $500.0 million principal balance was netted down by ~~$12.5~~$11.2 million of deferred financing costs.

Credit Facilities

On June 15, 2018, the Company entered into a credit agreement with certain lenders which provided for a $350.0 million term loan (the “Term Loan”) and a $350.0 million revolving loan (the “Revolving Credit Facility” and together with the Term Loan, as amended from time to time, the “Credit Facilities”). The Credit Facilities expire on June 15, 2023. Interest on the Credit Facilities is established using LIBOR plus 1.13% - 1.75%, depending on the ~~Company's~~Company’s leverage ratio. Under the Credit Facilities, the Company is required to maintain certain leverage and interest coverage ratios specified in the credit agreement as well as other customary non-financial affirmative and negative covenants. At ~~July 3, 2021, $297.5~~January 1, 2022, $288.8 million was outstanding under the Term Loan with an effective interest rate of 1.9%. There were no borrowings outstanding on the Revolving Credit Facility. The Company also has ~~$25.5~~$24.7 million of uncommitted operating lines of credit to fund its global operations under which there were 0no outstanding borrowings as of ~~July 3, 2021.~~January 1, 2022.

The Company has required scheduled principal payments of ~~$13.1~~$4.4 million during the remainder of fiscal 2022, $214.4 million during fiscal 2023 and $70.0 million during the first quarter of fiscal 2024.

The Company was in compliance with the leverage and interest coverage ratios specified in the Credit Facilities as well as all other bank covenants as of ~~July 3, 2021.~~January 1, 2022.

1516

12. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The Company manufactures, markets and sells its products globally. During the three and nine months ended ~~July 3, 2021, 38.3%~~January 1, 2022, 35.6% and 36.8%, respectively, of the ~~Company's~~Company’s sales were generated outside the U.S., generally in foreign currencies. The Company also incurs certain manufacturing, marketing and selling costs in international markets in local currency.

Accordingly, earnings and cash flows are exposed to market risk from changes in foreign currency exchange rates relative to the U.S. Dollar, the ~~Company's~~Company’s reporting currency. The Company has a program in place that is designed to mitigate the exposure to changes in foreign currency exchange rates. That program includes the use of derivative financial instruments to minimize, for a period of time, the impact on its financial results from changes in foreign exchange rates. The Company utilizes foreign currency forward contracts to hedge the anticipated cash flows from transactions denominated in foreign currencies, primarily the Japanese Yen and the Euro, and to a lesser extent the Swiss Franc, Australian Dollar, Canadian Dollar and the Mexican Peso. This does not eliminate the impact of the volatility of foreign exchange rates. However, because the Company generally enters into forward contracts one year out, rates are fixed for a one-year period, thereby facilitating financial planning and resource allocation.

Designated Foreign Currency Hedge Contracts

All of the ~~Company's~~Company’s designated foreign currency hedge contracts as of ~~July 3, 2021~~January 1, 2022 and April 3, 2021 were cash flow hedges under ASC 815, Derivatives and Hedging (“ASC 815”). The Company records the effective portion of any change in the fair value of designated foreign currency hedge contracts in other comprehensive income until the related third-party transaction occurs. Once the related third-party transaction occurs, the Company reclassifies the effective portion of any related gain or loss on the designated foreign currency hedge contracts to earnings. In the event the hedged forecasted transaction does not occur, or it becomes probable that it will not occur, the Company would reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. The Company had designated foreign currency hedge contracts outstanding in the contract amount of ~~$40.5~~$39.1 million as of ~~July 3, 2021~~January 1, 2022 and $56.0 million as of April 3, 2021. At ~~July 3, 2021,~~January 1, 2022, a ~~loss~~gain of ~~$0.9~~$0.4 million, net of tax, will be reclassified to earnings within the next twelve months. Substantially all currency cash flow hedges outstanding as of ~~July 3, 2021~~January 1, 2022 mature within twelve months.

Non-Designated Foreign Currency Contracts

The Company manages its exposure to changes in foreign currency on a consolidated basis to take advantage of offsetting transactions and balances. It uses foreign currency forward contracts as a part of its strategy to manage exposure related to foreign currency denominated monetary assets and liabilities. These foreign currency forward contracts are entered into for periods consistent with currency transaction exposures, generally one month. They are not designated as cash flow or fair value hedges under ASC 815. These forward contracts are marked-to-market with changes in fair value recorded to earnings. The Company had non-designated foreign currency hedge contracts under ASC 815 outstanding in the contract amount of ~~$82.4~~$47.6 million as of ~~July 3, 2021~~January 1, 2022 and $95.6 million as of April 3, 2021.

Interest Rate Swaps

On June 15, 2018, the Company entered into Credit Facilities which provided for a $350.0 million Term Loan and a $350.0 million Revolving Credit Facility. Under the terms of the Credit Facilities, interest is established using LIBOR plus 1.13% - 1.75%. As a result, the ~~Company's~~Company’s earnings and cash flows are exposed to interest rate risk from changes to LIBOR. Part of the ~~Company's~~Company’s interest rate risk management strategy includes the use of interest rate swaps to mitigate its exposure to changes in variable interest rates. The ~~Company's~~Company’s objective in using interest rate swaps is to add stability to interest expense and to manage and reduce the risk inherent in interest rate fluctuations.

In August 2018, the Company entered into 2 interest rate swap agreements (the “Swaps”) to pay an average fixed rate of 2.80% on a total notional value of $241.9 million of debt. As a result of the Swaps, 70% of the Term Loan previously exposed to interest rate risk from changes in LIBOR is now fixed at a rate of 4.05%. The Swaps mature on June 15, 2023. The Company designated the Swaps as cash flow hedges of variable interest rate risk associated with $345.6 million of indebtedness. For the ~~three~~nine months ended ~~July 3, 2021,~~January 1, 2022, a gain of ~~$2.0~~$4.9 million, net of tax, was recorded in accumulated other comprehensive loss to recognize the effective portion of the fair value of the Swaps that qualify as cash flow hedges.

1617

Trade Receivables

In the ordinary course of business, the Company grants trade credit to its customers on normal credit terms. In an effort to reduce its credit risk, the Company (i) establishes credit limits for all customers, (ii) performs ongoing credit evaluations of customers’ financial condition, (iii) monitors the payment history and aging of customers’ receivables, and (iv) monitors open orders against an individual customer’s outstanding receivable balance.

The ~~Company's~~Company’s allowance for credit losses is maintained for trade accounts receivable based on the expected collectability, the historical collection experience, the length of time an account is outstanding, the financial position of the customer and information provided by credit rating services. Effective March 29, 2020, the Company adopted Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326) which requires consideration of events or circumstances indicating historic collection rates may not be indicative of future collectability. For example, potential adverse changes to customer liquidity from new macroeconomic events such as the COVID-19 pandemic must be taken into consideration. To date, the Company has not experienced significant customer payment defaults, or identified other significant collectability concerns as a result of the pandemic.

The following is a rollforward of the allowance for credit losses:


		Three Months Ended				Three Months Ended				Nine Months Ended
(In thousands)	(In thousands)	July 3, 2021		June 27, 2020			(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Beginning balance	Beginning balance	$	2,226	$	3,824		Beginning balance	$	2,701	$	2,699	$	2,226	$	3,824
Credit (gain) loss	Credit (gain) loss	27		(259)			Credit (gain) loss	(305)		(95)		226		(838)
Write-offs	Write-offs	(17)		(119)			Write-offs	(14)		(79)		(70)		(461)
Ending balance	Ending balance	$	2,236	$	3,446		Ending balance	$	2,382	$	2,525	$	2,382	$	2,525

Fair Value of Derivative Instruments

The following table presents the effect of the ~~Company's~~Company’s derivative instruments designated as cash flow hedges and those not designated as hedging instruments under ASC 815 in its unaudited Condensed Consolidated Statements of ~~(Loss)~~ Income and Comprehensive ~~(Loss)~~ Income for the ~~three~~nine months ended ~~July 3, 2021:~~January 1, 2022:


(In thousands)	(In thousands)	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss		Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings		Location in Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income	Amount of Gain (Loss) Excluded from Effectiveness Testing		Location in Condensed Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income	(In thousands)	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss		Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings		Location in Condensed Consolidated Statements of Income and Comprehensive Income	Amount of Gain (Loss) Excluded from Effectiveness Testing		Location in Condensed Consolidated Statements of Income and Comprehensive Income
Designated foreign currency hedge contracts, net of tax	Designated foreign currency hedge contracts, net of tax	$	(897)	$	329	Net revenues, COGS and SG&A	$	371	Interest and other expense, net	Designated foreign currency hedge contracts, net of tax	$	351	$	1,520	Net revenues, COGS and SG&A	$	(931)	Interest and other expense, net
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	$	0	$	0		$	(489)	Interest and other expense, net	Non-designated foreign currency hedge contracts	$	—	$	—		$	1,004	Interest and other expense, net
Designated interest rate swaps, net of tax	Designated interest rate swaps, net of tax	$	973	$	(1,130)	Interest and other expense, net	$	0		Designated interest rate swaps, net of tax	$	1,488	$	(3,367)	Interest and other expense, net	$	—

The Company did not have fair value hedges or net investment hedges outstanding as of ~~July 3, 2021~~January 1, 2022 or April 3, 2021. As of ~~July 3, 2021, 0~~January 1, 2022, no material deferred ~~tax assets~~taxes were recognized for designated foreign currency hedges.

ASC 815 requires all derivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. The Company determines the fair value of its derivative instruments using the framework prescribed by ASC 820, Fair Value Measurements and Disclosures, by considering the estimated amount it would receive or pay to sell or transfer these instruments at the reporting date and by taking into account current interest rates, currency exchange rates, current interest rate curves, interest rate volatilities, the creditworthiness of the counterparty for assets, and its creditworthiness for liabilities. In certain instances, the Company may utilize financial models to measure fair value. Generally, it uses inputs that include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; other observable inputs for the asset or liability; and inputs derived principally from, or corroborated by, observable market data by correlation or other means. As of ~~July 3, 2021,~~January 1, 2022, the Company has classified its derivative assets and liabilities within Level 2 of the fair value hierarchy prescribed by ASC 815, as discussed below, because these observable inputs are available for substantially the full term of its derivative instruments.

1718

The following tables present the fair value of the ~~Company's~~Company’s derivative instruments as they appear in its Condensed Consolidated Balance Sheets as of ~~July 3, 2021~~January 1, 2022 and April 3, 2021:


(In thousands)	(In thousands)	Location in Condensed Consolidated Balance Sheets		As of			As of		(In thousands)		Location in Condensed Consolidated Balance Sheets		As of		As of
			July 3, 2021			April 3, 2021				January 1, 2022			April 3, 2021
Derivative Assets:	Derivative Assets:											Derivative Assets:
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	Other current assets		$	1,680		$	2,061	Designated foreign currency hedge contracts		Other current assets		$	1,597	$	2,061
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	Other current assets		182			104		Non-designated foreign currency hedge contracts		Other current assets		127		104

				$	1,862		$	2,165					$	1,724	$	2,165
Derivative Liabilities:	Derivative Liabilities:								Derivative Liabilities:
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	Other current liabilities		$	186		$	454	Designated foreign currency hedge contracts		Other current liabilities		$	84	$	454
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	Other current liabilities		69			349		Non-designated foreign currency hedge contracts		Other current liabilities		82		349
Designated interest rate swaps	Designated interest rate swaps	Other current liabilities		5,540			5,550		Designated interest rate swaps		Other current liabilities		4,466		5,550
Designated interest rate swaps	Designated interest rate swaps	Other long-term liabilities		3,031			4,301		Designated interest rate swaps		Other long-term liabilities		622		4,301
				$	8,826		$	10,654					$	5,254	$	10,654

Other Fair Value Measurements

Fair value is defined as the exit price that would be received from the sale of an asset or paid to transfer a liability, using assumptions that market participants would use in pricing an asset or liability. The fair value guidance establishes the following three-level hierarchy used for measuring fair value:

•Level 1 — Inputs to the valuation methodology are quoted market prices for identical assets or liabilities.

•Level 2 — Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.

•Level 3 — Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk.

The ~~Company's~~Company’s money market funds carried at fair value are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices.

1819

Fair Value Measured on a Recurring Basis

Financial assets and financial liabilities measured at fair value on a recurring basis consist of the following as of ~~July 3, 2021~~January 1, 2022 and April 3, 2021.


		As of July 3, 2021									As of January 1, 2022
(In thousands)	(In thousands)	Level 1		Level 2		Level 3		Total		(In thousands)	Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Money market funds	Money market funds	$	20,677	$	0	$	—	$	20,677	Money market funds	$	93,192	$	—	$	—	$	93,192
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	0		1,680		—		1,680		Designated foreign currency hedge contracts	—		1,597		—		1,597
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	0		182		—		182		Non-designated foreign currency hedge contracts	—		127		—		127

		$	20,677	$	1,862	$	—	$	22,539		$	93,192	$	1,724	$	—	$	94,916
Liabilities	Liabilities									Liabilities
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	$	0	$	186	$	—	$	186	Designated foreign currency hedge contracts	$	—	$	84	$	—	$	84
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	0		69		—		69		Non-designated foreign currency hedge contracts	—		82		—		82
Designated interest rate swaps	Designated interest rate swaps	0		8,571		—		8,571		Designated interest rate swaps	—		5,088		—		5,088
Contingent consideration	Contingent consideration	—		—		38,402		38,402		Contingent consideration	—		—		38,377		38,377
		$	0	$	8,826	$	38,402	$	47,228		$	—	$	5,254	$	38,377	$	43,631

		As of April 3, 2021									As of April 3, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Money market funds	Money market funds	$	49,699	$	0	$	—	$	49,699	Money market funds	$	49,699	$	—	$	—	$	49,699
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	0		2,061		—		2,061		Designated foreign currency hedge contracts	—		2,061		—		2,061
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	0		104		—		104		Non-designated foreign currency hedge contracts	—		104		—		104

		$	49,699	$	2,165	$	—	$	51,864		$	49,699	$	2,165	$	—	$	51,864
Liabilities	Liabilities									Liabilities
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	$	0	$	454	$	—	$	454	Designated foreign currency hedge contracts	$	—	$	454	$	—	$	454
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	0		349		—		349		Non-designated foreign currency hedge contracts	—		349		—		349
Designated interest rate swaps	Designated interest rate swaps	0		9,851		—		9,851		Designated interest rate swaps	—		9,851		—		9,851
Contingent Consideration	Contingent Consideration	—		—		28,733		28,733		Contingent Consideration	—		—		28,733		28,733
		$	0	$	10,654	$	28,733	$	39,387		$	—	$	10,654	$	28,733	$	39,387

Foreign currency hedge contracts - The fair value of foreign currency hedge contracts was measured using significant other observable inputs and valued by reference to over-the-counter quoted market prices for similar instruments. The Company does not believe that the fair value of these derivative instruments differs significantly from the amount that could be realized upon settlement or maturity, or that the changes in fair value will have a significant effect on its results of operations, financial condition or cash flows.

Interest rate swaps - The fair values of interest rate swaps are measured using the present value of expected future cash flows using market-based observable inputs, including credit risk and interest rate yield curves. The Company does not believe that the fair values of these derivative instruments differ significantly from the amounts that could be realized upon settlement or maturity, or that the changes in fair value will have a significant effect on its results of operations, financial condition or cash flows.

Contingent consideration - The fair value of contingent consideration liabilities is based on significant unobservable inputs, including management estimates and assumptions, and is measured based on the probability-weighted present value of the payments expected to be made. Accordingly, the fair value of contingent consideration has been classified as level 3 within the fair value hierarchy. The recurring level 3 fair value measurements of contingent consideration liabilities include the following significant unobservable inputs:

Fair Value at

Valuation

Unobservable

Fair Value at

Valuation

Unobservable

(In thousands)

July 3, 2021

Technique

Input

Range

(In thousands)

January 1, 2022

Technique

Input

Range

Revenue-based payments

34,073

Monte Carlo Simulation Model

Discount rate

2.2%

Revenue-based payments

35,000

Discounted cash flow

Discount rate

2.2%

Projected year of payment

2022 - 2023

Projected year of payment

2022

Revenue-based payments

2,119

Discounted cash flow

Discount rate

8.5%

Revenue-based payments

1,717

Discounted cash flow

Discount rate

8.5%

Projected year of payment

2021 - 2023

Projected year of payment

2022 - 2023

Regulatory-based payment

2,210

Discounted cash flow

Discount rate

4.9%

Regulatory-based payment

1,660

Discounted cash flow

Discount rate

4.9%

Probability of payment

0% - 100%

Probability of payment

0% - 100%

Projected year of payment

2021 - 2023

Projected year of payment

2022 - 2023

As of ~~July 3, 2021,~~January 1, 2022, the remaining maximum potential contingent consideration that the Company could be required to pay ~~is $39.5~~is $39.1 million. During ~~three~~the nine months ended ~~July 3, 2021,~~January 1, 2022, the Company increased the fair value of the contingent consideration related to the acquisition of Cardiva by ~~$9.8~~$10.7 million, which was recorded as selling, general and administrative expenses within the unaudited Condensed Consolidated Statements of ~~(Loss)~~ Income and Comprehensive ~~(Loss)~~ Income. The fair value of contingent consideration associated with acquisitions was $38.4 million at ~~July 3, 2021.~~January 1, 2022. As of ~~July 3, 2021, $31.7~~January 1, 2022, $36.2 million was included in other liabilities and ~~$6.7~~$2.2 million was ~~included~~included in other long-term liabilities on the condensed consolidated balance sheet.

A reconciliation of the change in the fair value of contingent consideration is included in the following table:


(In thousands)
Balance at April 3, 2021	$	28,733
Change in fair value	~~9,774~~ 10,272
Payments	(367)
Currency translation	~~(105)~~(261)
Balance at ~~July 3, 2021~~January 1, 2022	$	~~38,402~~38,377

Other Fair Value Disclosures

The Term Loan, which is carried at amortized cost, accounts receivable and accounts payable approximate fair value. The fair ~~value.~~value of the 2026 Notes as of January 1, 2022 was $421.4 million, which was determined by using the market price on the last trading day of the reporting period.

13. COMMITMENTS AND CONTINGENCIES

The Company is a party to various legal proceedings and claims arising out of the ordinary course of its business. The Company believes there are no proceedings or claims pending against it the ultimate resolution of which could have a material adverse effect on the financial condition or results of operations. At each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under ASC 450, Contingencies, for all matters. Legal costs are expensed as incurred.

During the third quarter of fiscal 2021, the Company received a subpoena from the U.S. Attorney’s Office for the District of Massachusetts. The subpoena requests certain documents regarding the Company’s apheresis and autotransfusion devices and disposables, including documents relating to product complaints and adverse event reporting, regulatory clearances and product design changes, among other matters. The Company is fully cooperating with this inquiry.

14. SEGMENT AND ENTERPRISE-WIDE INFORMATION

The Company determines its reportable segments by first identifying its operating segments, and then by assessing whether any components of these segments constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results of that component. The ~~Company's~~Company’s reporting structure aligns with its operating structure of three global business units and the information that is regularly reviewed by the ~~Company's~~Company’s chief operating decision maker.

The ~~Company's~~Company’s reportable segments are as follows:

•Plasma

•Blood Center

•Hospital

Management measures and evaluates the operating segments based on operating income. Management excludes certain corporate expenses from segment operating income. In addition, certain amounts that management considers to be non-recurring or non-operational are excluded from segment operating income because management evaluates the operating results of the segments excluding such items. These items include integration and transaction costs, deal amortization, restructuring and restructuring related costs, ~~deal amortization, gains and losses on dispositions and sale of assets, asset~~ impairments, accelerated device depreciation and related costs, costs related to compliance with the European Union Medical Device Regulation ~~transaction~~(“MDR”) and ~~integration costs and certain tax settlements and~~In Vitro Diagnostic Regulation (“IVDR”), unusual or infrequent and material litigation-related ~~charges.~~charges and gains and losses on dispositions and sale of assets. Although these amounts are excluded from segment operating income, as applicable, they are included in the reconciliations that follow. Management measures and evaluates the ~~Company's~~Company’s net revenues and operating income using internally derived standard currency exchange rates that remain constant from year to year; therefore, segment information is presented on this basis.

Selected information by reportable segment is presented below:

Three Months Ended
(In thousands) July 3,
2021 June 27,
2020
Net revenues
Plasma $ 71,803 $ 68,715
Blood Center 71,736 79,314
Hospital 77,607 45,571
Net revenues by business unit 221,146 193,600
Service (1)
5,268 5,082
Effect of exchange rates 2,114 (3,105)
Net revenues $ 228,528 $ 195,577
(1) Reflects revenue for service, maintenance and parts

Three Months Ended
(In thousands) July 3,
2021 June 27,
2020
Segment operating income
Plasma $ 35,346 $ 36,350
Blood Center 33,882 38,745
Hospital 31,597 17,783
Segment operating income 100,825 92,878
  Corporate expenses (1)
(68,731) (65,062)
  Effect of exchange rates 5,812 711
  Integration and transaction costs (16,733) (1,290)
  Deal amortization (12,379) (8,263)
  Restructuring and restructuring related costs (10,055) (4,000)
  Impairment of assets and PCS2 related charges (3,643) (2,506)
  European Medical Device Regulation costs and other (2,371) (753)
  Litigation-related charges (938) 0
  Gains on divestitures and sale of assets 9,603 0
Operating income $ 1,390 $ 11,715
(1) Reflects shared service expenses including quality and regulatory, customer and field service, research and development, manufacturing and supply chain, as well as other corporate support functions.


	Three Months Ended				Nine Months Ended
(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Net revenues
Plasma	$	96,692	$	102,154	$	250,499	$	249,587
Blood Center	74,527		80,417		221,522		234,446
Hospital	82,100		52,334		235,609		148,927
Net revenues by business unit	253,319		234,905		707,630		632,960
Service (1)	5,436		4,972		15,655		15,396
Effect of exchange rates	1,014		494		4,909		(2,922)
Net revenues	$	259,769	$	240,371	$	728,194	$	645,434
(1) Reflects revenue for service, maintenance and parts

2122


	Three Months Ended				Nine Months Ended
(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Segment operating income
Plasma	$	51,405	$	52,673	$	128,964	$	129,846
Blood Center	34,561		36,424		103,043		108,926
Hospital	35,072		22,430		97,898		61,672
Segment operating income	121,038		111,527		329,905		300,444
Corporate expenses (1)	(68,013)		(63,202)		(204,930)		(185,005)
Effect of exchange rates	5,807		4,286		15,553		8,644
Integration and transaction costs	(1,860)		—		(19,218)		(3,063)
Deal amortization	(12,151)		(7,805)		(35,930)		(24,204)
Restructuring and restructuring related costs	(5,682)		(3,143)		(20,250)		(11,583)
Impairment of assets and PCS2 related charges	(897)		(1,146)		(4,790)		(4,228)
MDR and IVDR costs	(2,453)		(1,207)		(7,171)		(2,696)
Litigation-related charges	(138)		—		(1,221)		—
Gains on divestitures and sale of assets	—		1,115		9,603		32,613
Operating income	$	35,651	$	40,425	$	61,551	$	110,922
(1) Reflects shared service expenses including quality and regulatory, customer and field service, research and development, manufacturing and supply chain, as well as other corporate support functions.

Management reviews revenue based on the reportable segments noted above. Although these reportable segments are primarily product-based, they differ from the Company’s product line revenues for Plasma products and services and Blood Center products and services. Specifically, the Blood Center reportable segment includes plasma products utilized for collection in blood centers primarily for transfusion purposes. Additionally, product line revenues also include service revenues which are excluded from the reportable segments.

Net revenues by product line are as follows:


		Three Months Ended				Three Months Ended				Nine Months Ended
(In thousands)	(In thousands)	July 3, 2021		June 27, 2020			(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
Plasma products and services	Plasma products and services	$	90,509	$	88,713		Plasma products and services	$	116,347	$	123,510	$	308,931	$	309,933
Blood Center products and services	Blood Center products and services	57,747		60,667			Blood Center products and services	59,440		62,787		177,118		182,687
Hospital products and services	Hospital products and services	80,272		46,197			Hospital products and services	83,982		54,074		242,145		152,814
Net revenues	Net revenues	$	228,528	$	195,577		Net revenues	$	259,769	$	240,371	$	728,194	$	645,434

Net revenues generated in the ~~Company's~~Company’s principle operating regions on a reported basis are as follows:


		Three Months Ended				Three Months Ended				Nine Months Ended
(In thousands)	(In thousands)	July 3, 2021		June 27, 2020			(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020
United States	United States	$	141,028	$	111,009		United States	$	167,270	$	147,607	$	460,404	$	382,600
Japan	Japan	17,221		16,831			Japan	19,916		20,854		55,949		57,330
Europe	Europe	43,335		43,019			Europe	41,540		41,874		126,055		123,541
Asia	Asia	25,952		22,384			Asia	30,434		29,050		83,157		77,602
Other	Other	992		2,334			Other	609		986		2,629		4,361
Net revenues	Net revenues	$	228,528	$	195,577		Net revenues	$	259,769	$	240,371	$	728,194	$	645,434

15. ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of Accumulated Other Comprehensive Loss are as follows:

(In thousands) Foreign Currency Defined Benefit Plans Net Unrealized Gain/(Loss) on Derivatives Total
Balance as of April 3, 2021 $ (21,528) $ (560) $ (7,459) $ (29,547)
Other comprehensive (loss) income before reclassifications(1)
(430) 0 76 (354)
Amounts reclassified from Accumulated Other Comprehensive Loss(1)
0 0 801 801
Net current period other comprehensive (loss) income (430) 0 877 447
Balance as of July 3, 2021 $ (21,958) $ (560) $ (6,582) $ (29,100)
(1) Presented net of income taxes, the amounts of which are insignificant.


(In thousands)	Foreign Currency		Defined Benefit Plans		Net Unrealized Gain/(Loss) on Derivatives		Total
Balance as of April 3, 2021	$	(21,528)	$	(560)	$	(7,459)	$	(29,547)
Other comprehensive income (loss) before reclassifications(1)	(3,488)		—		1,839		(1,649)
Amounts reclassified from Accumulated Other Comprehensive Income(1)	—		—		1,847		1,847
Net current period other comprehensive income (loss)	(3,488)		—		3,686		198
Balance as of January 1, 2022	$	(25,016)	$	(560)	$	(3,773)	$	(29,349)
(1) Presented net of income taxes, the amounts of which are insignificant.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with both our interim condensed consolidated financial statements and notes thereto which appear elsewhere in this Quarterly Report on Form 10-Q and our annual consolidated financial statements, notes thereto and the MD&A contained in our Annual Report on Form 10-K for the fiscal year ended April 3, 2021. The following discussion may contain forward-looking statements and should be read in conjunction with the “Cautionary Statement Regarding Forward-Looking Information” in this discussion.

Introduction

Haemonetics Corporation is a global healthcare company dedicated to providing a suite of innovative medical products and solutions for customers to help them improve patient care and reduce the cost of healthcare. Our technology addresses important medical markets: blood and plasma component collection, the surgical suite and hospital transfusion services. When used in this report, the terms “we,” “us,” “our”, “Haemonetics” and ~~“the Company”~~the “Company” mean ~~Haemonetics.~~Haemonetics Corporation.

We view our operations and manage our business in three principal reporting segments: Plasma, Blood Center and Hospital. For that purpose, “Plasma” includes plasma collection devices and disposables, plasma donor management software, and anticoagulant and saline sold to plasma customers. “Blood Center” includes blood collection and processing devices and disposables for red cells, platelets and whole blood. “Hospital”, which is comprised of Hemostasis Management, Cell Salvage, Transfusion Management and Vascular Closure products, includes devices and methodologies for measuring coagulation characteristics of blood, surgical blood salvage systems, specialized blood cell processing systems and disposables, blood transfusion management software and vascular closure devices.

We believe that Plasma and Hospital have growth potential, while Blood Center competes in challenging markets that require us to manage the business differently, including reducing costs, shrinking the scope of the current product line, and evaluating opportunities to exit unfavorable customer contracts.

Recent Developments

Operational Excellence Program

During the second quarter of fiscal 2022, our Board of Directors approved the revised Operational Excellence Program (the “2020 Program”). The revised program is designed to improve product and service quality, reduce cost principally in our manufacturing and supply chain operations and ensure sustainability while helping to offset impacts from a previously announced customer loss, rising inflationary pressures and effects of the COVID-19 pandemic. We now expect to incur aggregate charges between $95 million and $105 million by the end of fiscal 2025 and to achieve total gross savings of $115 million to $125 million on an annualized basis once the program is completed. The majority of charges will result in cash outlays, including severance and other employee costs, and will be incurred as the specific actions required to execute these initiatives are identified and approved. During the three and nine months ended ~~July 3, 2021 and June 27, 2020,~~January 1, 2022, the Company incurred ~~$9.9~~$5.7 million and ~~$3.5~~$20.2 million, respectively, of restructuring and restructuring related costs under this program. During the three and

nine months ended December 26, 2020, the Company incurred $3.1 million and $11.1 million, respectively, of restructuring and restructuring related costs under this program. Total cumulative charges under this program are ~~$36.9~~$47.2 million as of ~~July 3, 2021.~~January 1, 2022.

CSL Contract Loss

In April 2021, CSL Plasma, Ltd. informed usHaemonetics of its intent not to renew its supply agreement for the use of PCS2 plasma collection system devices and the purchase of disposable plasmapheresis kits (the “Supply Agreement”) following the expiration of the current term of the Supply Agreement in June 2022. In fiscal year 2021, revenue under this Supply Agreement was $88.6 million, or 10.2% of total revenue. As a result of this anticipated contract loss, we recorded a $20.9 million one-time asset impairment charge relating to disposables manufacturing equipment and $5.0 million of additional expenses in the fourth quarter of fiscal 2021. In the first quarter of fiscal 2022, we incurred an additional $2.8 million of accelerated depreciation expense relating to disposables manufacturing equipment that is no longer in ~~use.~~use. During the third quarter of fiscal 2022, we amended the Supply Agreement to allow CSL to continue to use our PCS2 devices and purchase disposables through December 2023. The extension provides CSL the ability to utilize our devices and disposables in their collection centers on a non-exclusive basis, and we are working with them to quantify their volume requirements over the life of the agreement.

COVID-19

We continue to closely manage the impacts of the COVID-19 pandemic on our business, results of operations and financial condition. The progression of the COVID-19 pandemic during fiscal 2022 has significantly impacted our financial results. While the duration and additional implications remain uncertain, the full extent of the impact will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets.

Our priorities continue to be the safety of our employees and business continuity while continuing to invest in growth opportunities. Our manufacturing and supply chain remain ~~operational~~operational without significant disruptions ~~and~~and we continue to operate in all of our markets.

Although the pace and timing of the recovery is uncertain, we remain confident in the long term strength of the end markets that we serve across our three business units. For additional information regarding the expected impacts to our business units and the various risks posed by the COVID-19 pandemic, refer to Results of Operations within ~~Management's Discussion and~~

~~Analysis~~the MD&A contained in this Quarterly Report on Form 10-Q and Risk Factors contained in Item 1A of the Annual Report on Form 10-K for the fiscal year ended April 3, 2021.

Financial Summary


		Three Months Ended								Three Months Ended					Nine Months Ended
(In thousands, except per share data)	(In thousands, except per share data)	July 3, 2021			June 27, 2020			% Increase/ (Decrease)			(In thousands, except per share data)	January 1, 2022			December 26, 2020			% Increase/ (Decrease)		January 1, 2022			December 26, 2020			% Increase/ (Decrease)
Net revenues	Net revenues	$	228,528		$	195,577		16.8	%		Net revenues	$	259,769		$	240,371		8.1	%	$	728,194		$	645,434		12.8	%
Gross profit	Gross profit	$	108,085		$	90,030		20.1	%		Gross profit	$	138,565		$	120,257		15.2	%	$	369,191		$	316,031		16.8	%
% of net revenues	% of net revenues	47.3		%	46.0		%				% of net revenues	53.3		%	50.0		%			50.7		%	49.0		%
Operating expenses	Operating expenses	$	106,695		$	78,315		36.2	%		Operating expenses	$	102,914		$	79,832		28.9	%	$	307,640		$	205,109		50.0	%
Operating income	Operating income	$	1,390		$	11,715		(88.1)	%		Operating income	$	35,651		$	40,425		(11.8)	%	$	61,551		$	110,922		(44.5)	%
% of net revenues	% of net revenues	0.6		%	6.0		%				% of net revenues	13.7		%	16.8		%			8.5		%	17.2		%
Interest and other expense, net	Interest and other expense, net	$	(4,398)		$	(3,735)		17.8	%		Interest and other expense, net	$	(4,263)		$	(3,051)		39.7	%	$	(13,249)		$	(10,612)		24.8	%
(Loss) income before provision (benefit) for income taxes		$	(3,008)		$	7,980		n/m
Provision (benefit) for income taxes		$	1,446		$	(2,547)		n/m
Income before provision for income taxes											Income before provision for income taxes	$	31,388		$	37,374		(16.0)	%	$	48,302		$	100,310		(51.8)	%
Provision for income taxes											Provision for income taxes	$	8,156		$	5,492		48.5	%	$	14,668		$	9,800		49.7	%
% of pre-tax income	% of pre-tax income	(48.1)		%	(31.9)		%				% of pre-tax income	26.0		%	14.7		%			30.4		%	9.8		%
Net (loss) income		$	(4,454)		$	10,527		n/m
Net income											Net income	$	23,232		$	31,882		(27.1)	%	$	33,634		$	90,510		(62.8)	%
% of net revenues	% of net revenues	(1.9)		%	5.4		%				% of net revenues	8.9		%	13.3		%			4.6		%	14.0		%
Net (loss) income per share - basic		$	(0.09)		$	0.21		n/m
Net (loss) income per share - diluted		$	(0.09)		$	0.21		n/m
Net income per share - basic											Net income per share - basic	$	0.45		$	0.63		(28.6)	%	$	0.66		$	1.79		(63.1)	%
Net income per share - diluted											Net income per share - diluted	$	0.45		$	0.62		(27.4)	%	$	0.65		$	1.77		(63.3)	%

Net revenues increased ~~16.8%~~8.1% and 12.8% during the three and nine months ended ~~July 3, 2021~~January 1, 2022, respectively, as compared with the same periods of fiscal 2021. Without the effect of foreign exchange, net revenues increased ~~14.0%~~7.9% and 11.6% during the three and nine months ended ~~July 3, 2021~~January 1, 2022, respectively, as compared with the same periods of fiscal ~~2021.~~2021. Revenue increases in Hospital, primarily Vascular Closure, drove the overall increase in revenue during the three and nine months ended ~~July 3, 2021.~~January 1, 2022.

Operating income decreased 11.8% and 44.5% during the three and nine months ended ~~July 3, 2021,~~January 1, 2022, respectively, as compared with the same period of fiscal 2021, primarily due to increased spend related to the acquisition of Cardiva Medical, Inc. (“Cardiva”), including higher transaction and integration costs ~~driven by~~ as well as increased intangible amortization expense, an increase in the fair value ofof contingent consideration and increased freight costs. During the nine months ended January 1, 2022, costs driven by the amortization of the fair value inventory step-up ~~as well as~~related to Cardiva, asset impairments and ~~increased intangible amortization expense.~~gains on divestitures during the prior period also contributed to the decrease. The decrease during the three and nine months ended January 1, 2022, was partially offset by favorable volumes and product mix ~~gains on divestitures~~ and productivity savings from the 2020 Program.

~~Management's~~Management’s Use of Non-GAAP Measures

Management uses non-GAAP financial measures, in addition to financial measures in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), to monitor the financial performance of the business, make informed business decisions, establish budgets and forecast future results. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with U.S. GAAP. Constant currency growth, a non-GAAP financial measure, measures the change in revenue between the current and prior year periods using a constant currency conversion rate. We have provided this non-GAAP financial measure because we believe it provides meaningful information regarding our results on a consistent and comparable basis for the periods presented.

RESULTS OF OPERATIONS

Net Revenues by Geography


		Three Months Ended											Three Months Ended
(In thousands)	(In thousands)	July 3, 2021		June 27, 2020		Reported growth		Currency impact		Constant currency growth (1)		(In thousands)	January 1, 2022		December 26, 2020		Reported growth		Currency impact		Constant currency growth (1)
United States	United States	$	141,028	$	111,009	27.0	%	—	%	27.0	%	United States	$	167,270	$	147,607	13.3	%	—	%	13.3	%
International	International	87,500		84,568		3.5	%	6.1	%	(2.6)	%	International	92,499		92,764		(0.3)	%	0.6	%	(0.9)	%
Net revenues	Net revenues	$	228,528	$	195,577	16.8	%	2.8	%	14.0	%	Net revenues	$	259,769	$	240,371	8.1	%	0.2	%	7.9	%

(1) Constant currency growth, a non-GAAP financial measure, measures the change in revenue between the current and prior year periods using a constant currency. See “~~Management's~~Management’s Use of Non-GAAP Measures.”


	Nine Months Ended
(In thousands)	January 1, 2022		December 26, 2020		Reported growth		Currency impact		Constant currency growth (1)
United States	$	460,404	$	382,600	20.3	%	—	%	20.3	%
International	267,790		262,834		1.9	%	3.0	%	(1.1)	%
Net revenues	$	728,194	$	645,434	12.8	%	1.2	%	11.6	%

(1) Constant currency growth, a non-GAAP financial measure, measures the change in revenue between the current and prior year periods using a constant currency. See “Management’s Use of Non-GAAP Measures.”

Our principal operations are in the U.S, Europe, Japan and other parts of Asia. Our products are marketed in approximately 90 countries around the world through a combination of our direct sales force, independent distributors and agents. ~~Our~~During the three and nine months ended January 1, 2022 our revenue generated outside the ~~U.S.~~U.S. was ~~38.3%~~35.6% and 36.8%, respectively, of total net revenues, as compared with 38.6% and 40.7% during the three and nine months ended ~~July 3, 2021, as compared with 43.2% during the three months ended June 27, 2020.~~December 26, 2020, respectively. International sales are generally conducted in local currencies, primarily Japanese Yen, Euro, Chinese Yuan and Australian Dollars. Our results of operations are impacted by changes in foreign exchange rates, particularly in the value of the Yen, Euro and Australian Dollar relative to the U.S. Dollar. We have placed foreign currency hedges to mitigate our exposure to foreign currency fluctuations.

Please see the section entitled “Foreign Exchange” in this discussion for a more complete explanation of how foreign currency affects our business and our strategy for managing this exposure.

Net Revenues by Business Unit


		Three Months Ended											Three Months Ended
(In thousands)	(In thousands)	July 3, 2021		June 27, 2020		Reported growth		Currency impact		Constant currency growth (1)		(In thousands)	January 1, 2022		December 26, 2020		Reported growth		Currency impact		Constant currency growth (1)
Plasma	Plasma	$	71,844	$	68,211	5.3	%	0.8	%	4.5	%	Plasma	$	96,460	$	101,934	(5.4)	%	(0.1)	%	(5.3)	%
Blood Center	Blood Center	72,945		77,789		(6.2)	%	3.4	%	(9.6)	%	Blood Center	75,692		80,920		(6.5)	%	0.8	%	(7.3)	%
Hospital (2)	Hospital (2)	78,494		44,839		75.1	%	4.8	%	70.3	%	Hospital (2)	82,273		52,651		56.3	%	(0.6)	%	56.9	%
Service	Service	5,245		4,738		10.7	%	7.0	%	3.7	%	Service	5,344		4,866		9.8	%	0.5	%	9.3	%
Net revenues	Net revenues	$	228,528	$	195,577	16.8	%	2.8	%	14.0	%	Net revenues	$	259,769	$	240,371	8.1	%	0.2	%	7.9	%

(2)Hospital revenue includes Hemostasis Management revenue of $33.5 million and $28.5 million during the three months ended January 1, 2022 and December 26, 2020, respectively. Hemostasis Management revenue increased 17.5% in the third quarter of fiscal 2022, as compared with the same period of fiscal 2021. Without the effect of foreign exchange, Hemostasis Management revenue increased 18.4% in the third quarter of fiscal 2022, as compared with the same period of fiscal 2021. Hospital revenue also includes Vascular Closure revenue of $24.3 million for the three months ended January 1, 2022.


	Nine Months Ended
(In thousands)	January 1, 2022		December 26, 2020		Reported growth		Currency impact		Constant currency growth (1)
Plasma	$	250,244	$	248,553	0.7	%	0.3	%	0.4	%
Blood Center	225,379		233,622		(3.5)	%	2.0	%	(5.5)	%
Hospital (2)	237,074		148,468		59.7	%	1.5	%	58.2	%
Service	15,497		14,791		4.8	%	3.1	%	1.7	%
Net revenues	$	728,194	$	645,434	12.8	%	1.2	%	11.6	%

(2) Hospital revenue includes Hemostasis Management revenue ~~of $32.2~~of $97.2 million and ~~$24.0~~$78.5 million during the ~~three~~nine months ended ~~July 3, 2021~~January 1, 2022 and ~~June 27,~~December 26, 2020, respectively. Hemostasis Management ~~revenue~~revenue increased ~~34.3% in~~23.8% in the first ~~quarter~~nine months of fiscal 2022, as compared with the same period of fiscal 2021. Without the effect of foreign exchange, Hemostasis Management ~~revenue~~revenue increased ~~31.1%~~23.2% in the first ~~quarter~~nine months of fiscal 2022, as compared with the same period of fiscal 2021. Hospital revenue also includes Vascular Closure revenue of $66.8 million for the nine months ended January 1, 2022.

Plasma

Plasma revenue decreased 5.4% and increased ~~5.3%~~0.7% during the three and nine months ended ~~July 3, 2021~~January 1, 2022, respectively, as compared with the same ~~period~~periods of fiscal 2021. Without the effect of foreign exchange, Plasma revenue decreased 5.3% and increased ~~4.5%~~0.4% during the three and nine months ended ~~July 3, 2021~~January 1, 2022, respectively, as compared with the same periods of fiscal 2021. ~~These increases were~~The decrease during the three months ended January 1, 2022, as compared with the same period of fiscal 2021 was primarily driven by a decline in plasma liquid solutions and a large stocking order in the prior period. The increase during the nine months ended January 1, 2022 was primarily driven by increase in volume of plasma disposables and increase in software revenue, partially offset by pricing adjustments and declines in plasma liquid solutions as a result of certain strategic exits within our liquid solutions business.

WeAlthough we continue ~~experiencing~~to experience the negative impact of COVID-19 on our ~~business. While the timing of plasma collection recovery remains uncertain,~~business, we believe the impacts ~~of the pandemic~~ on plasma collection are temporary and anticipate volumes to recover byto pre-pandemic levels. However, the exact timing of the recovery remains uncertain and is expected to occur after the end of fiscal 2022. We remain confident in the strength of the plasma end market growth as the long-term global demand for plasma-derived pharmaceuticals is expected to continue.

In early April 2021, CSL Plasma, Ltd. informed us of its intent not to renew its supply agreement for the use of PCS2 plasma collection system devices and the purchase of disposable plasmapheresis kits following the expiration of the current term of the Supply Agreement in June 2022. In fiscal 2021, revenue under this Supply Agreement was $88.6 million.

During the third quarter of fiscal 2022, we amended the Supply Agreement to allow CSL to continue to use our PCS2 devices and purchase disposables through December 2023. The extension provides CSL the ability to utilize our devices and disposables in their collection centers on a non-exclusive basis, and we are working with them to quantify their volume requirements over the life of the agreement.

2527

Blood Center

Blood Center revenue decreased ~~6.2%~~6.5% and 3.5% during the three and nine months ended ~~July 3, 2021~~January 1, 2022, respectively, as compared with the same ~~period~~periods of fiscal 2021. Without the effect of foreign exchange, Blood Center revenue decreased ~~9.6%~~7.3% and 5.5% during the three and nine months ended ~~July 3,~~January 1, 2022, respectively, as compared with the same periods of fiscal 2021. The decrease during the three and nine months ended January 1, 2022 as compared with the same periods of fiscal 2021 was primarily driven by continued declines in whole blood disposables and the impact of previously discontinued customer contracts in North America as well as an apheresis stocking order in the prior year period. The divestiture of certain blood donor management software solution assets in fiscal 2021 also contributed to the decline during the nine months ended January 1, 2022, as compared with the same period of fiscal 2021. ~~These decreases were primarily driven by the divestiture of certain blood donor management software solution assets and continued declines in whole blood disposables.~~

We have not yet experienced the reversal of the large stocking orders made by distributors and blood collectors during the first quarter of ~~fiscal~~fiscal 2021 in response to the COVID-19 ~~pandemic, but we may experience a reversal~~pandemic. The timing and magnitude of potential reversals in the future ~~periods.~~periods is likely to occur over an extended period of time as customers’ risk aversion returns to normal along with safety stock levels.

Hospital

Hospital revenue increased ~~75.1%~~56.3% and 59.7% during the three and nine months ended ~~July 3, 2021~~January 1, 2022, respectively, as compared with the same ~~period~~periods of fiscal 2021. Without the effect of foreign exchange, Hospital revenue increased ~~70.3%~~56.9% and 58.2% during the three and nine months ended ~~July 3, 2021~~January 1, 2022, respectively, as compared with the same ~~period~~periods of fiscal 2021. ~~These increases were~~The increase during the three and nine months ended January 1, 2022was primarily attributable to Vascular Closure revenue resulting from the acquisition of Cardiva and an increase in TEG disposables revenue in the U.S. The increase during the nine months ended January 1, 2022 also reflected the impact of the COVID-19 pandemic on the prior year ~~period. The increases were~~period, partially offset by the divestiture of certain blood bank and hospital software solution ~~assets. We~~assets during the same period of fiscal 2021. We believe that the demand for our hospital products is inherently strong and that procedure volumes will continue to improve with a return to normal ~~levels during fiscal 2022.~~levels.

Gross Profit


		Three Months Ended								Three Months Ended					Nine Months Ended
(In thousands)	(In thousands)	July 3, 2021			June 27, 2020			% Increase/ (Decrease)			(In thousands)	January 1, 2022			December 26, 2020			% Increase		January 1, 2022			December 26, 2020			% Increase
Gross profit	Gross profit	$	108,085		$	90,030		20.1	%		Gross profit	$	138,565		$	120,257		15.2	%	$	369,191		$	316,031		16.8	%
% of net revenues	% of net revenues	47.3		%	46.0		%				% of net revenues	53.3		%	50.0		%			50.7		%	49.0		%

Gross profit increased ~~20.1%~~15.2% and 16.8% during the three and nine months ended ~~July 3, 2021~~January 1, 2022, respectively, as compared with the same ~~period~~periods of fiscal 2021. Without the effect of foreign exchange, gross profit increased ~~12.5%~~14.4% and 14.3% during the three and nine months ended ~~July 3, 2021~~January 1, 2022, respectively, as compared with the same ~~period~~periods of fiscal ~~2021. These increases were~~2021. The increase during the three and nine months ended January 1, 2022 was primarily driven by the addition of Vascular Closure, favorable volumes and product mix, lower expenses related to the COVID-19 pandemic, currency translation, and productivity savings from the 2020 Program.

The increase was partially offset by recent divestitures in fiscal 2021 and inflationary pressures and higher freight costs in our global supply chain. The increase during the nine months ended January 1, 2022 was also partially offset by pricing adjustments, the amortization of the fair value inventory step-up related to the acquisition of Cardiva and asset ~~impairments and recent divestitures.~~impairments.

Operating Expenses


		Three Months Ended								Three Months Ended					Nine Months Ended
(In thousands)	(In thousands)	July 3, 2021			June 27, 2020			% Increase/ (Decrease)			(In thousands)	January 1, 2022			December 26, 2020			% Increase		January 1, 2022			December 26, 2020			% Increase/ (Decrease)
Research and development	Research and development	$	12,701		$	7,750		63.9	%		Research and development	$	10,037		$	7,501		33.8	%	$	33,591		$	22,014		52.6	%
% of net revenues	% of net revenues	5.6		%	4.0		%				% of net revenues	3.9		%	3.1		%			4.6		%	3.4		%
Selling, general and administrative	Selling, general and administrative	$	91,218		$	62,302		46.4	%		Selling, general and administrative	$	80,726		$	65,641		23.0	%	$	247,722		$	191,504		29.4	%
% of net revenues	% of net revenues	39.9		%	31.9		%				% of net revenues	31.1		%	27.3		%			34.0		%	29.7		%
Amortization of intangible assets	Amortization of intangible assets	$	12,379		$	8,263		49.8	%		Amortization of intangible assets	$	12,151		$	7,805		55.7	%	$	35,930		$	24,204		48.4	%
% of net revenues	% of net revenues	5.4		%	4.2		%				% of net revenues	4.7		%	3.2		%			4.9		%	3.8		%

Gains on divestitures and sale of assets	Gains on divestitures and sale of assets	$	(9,603)		$	—		n/m			Gains on divestitures and sale of assets	$	—		$	(1,115)		n/m		$	(9,603)		$	(32,613)		(70.6)	%
% of net revenues	% of net revenues	(4.2)		%	—		%				% of net revenues	—		%	(0.5)		%			(1.3)		%	(5.1)		%
Total operating expenses	Total operating expenses	$	106,695		$	78,315		36.2	%		Total operating expenses	$	102,914		$	79,832		28.9	%	$	307,640		$	205,109		50.0	%
% of net revenues	% of net revenues	46.7		%	40.0		%				% of net revenues	39.6		%	33.2		%			42.2		%	31.8		%

Research and Development

Research and development expenses increased ~~63.9%~~33.8% and 52.6% during the three and nine months ended ~~July 3, 2021~~January 1, 2022, respectively, as compared with the same ~~period~~periods of fiscal 2021. Without the effect of foreign exchange, research and development expenses increased ~~61.2%~~33.4% and 51.5% during the three and nine months ended ~~July 3, 2021~~January 1, 2022, respectively, as compared with the same ~~period~~periods of fiscal 2021. These increases were primarily due to increased spend related to investments in our Hospital Business unit, primarily driven by Vascular Closure, as well as costs related to compliance with the European Union Medical Device ~~Regulation. These increases were~~Regulation (“MDR”) and In Vitro Diagnostic Regulation (“IVDR”) requirements. The increase during the three and nine months ended January 1, 2022, was partially offset by cost savings related to the 2020 ~~Program and lower restructuring and restructuring related costs.~~Program.

Selling, General and Administrative

~~Selling,~~Selling, general and administrative expenses increased ~~46.4%~~23.0% and 29.4% during the three and nine months ended ~~July 3, 2021~~January 1, 2022, respectively, as compared with the same ~~period~~periods of fiscal 2021. Without the effect of foreign exchange, selling, general, and administrative expenses increased ~~44.4%~~23.1% and 27.9% during the three and nine months ended ~~July 3, 2021~~January 1, 2022, respectively, as compared with the same period of fiscal 2021. ~~These increases were~~The increase during three and nine months ended January 1, 2022 was primarily due to ~~increased~~ spend related to the acquisition of Cardiva, including ~~higher transaction and integration costs driven by an~~the increase in the fair value of contingent ~~consideration, and higher share-based and variable compensation expense,~~consideration. Higher freight costs also contributed to these increases, which were partially offset by ~~asset impairments recognized in~~cost savings related to the ~~prior year period and lower PCS2 related costs.~~2020 Program.

Amortization of Intangible Assets

We recognized amortization expense of ~~$12.4~~$12.2 million and ~~$8.3~~$35.9 million during the three and nine months ended ~~July 3, 2021~~January 1, 2022, respectively and ~~June 27,~~$7.8 million and $24.2 million during the three and nine months ended December 26, 2020, respectively. The increase was primarily driven by an increase in intangible assets resulting from recent acquisitions.

Gains on Divestitures

We recognized gains on divestitures of $9.6 million during the ~~three~~nine months ended ~~July 3, 2021.~~ January 1, 2022. We recognized gains on divestitures of $1.1 million and $32.6 million during the three and nine months ended December 26, 2020, respectively. Refer to Note 5, Divestitures, to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information pertaining to these divestitures. ~~There were no gains on divestitures during the three months ended June 27, 2020.~~

Interest and Other Expense, Net

Interest and other expenses increased ~~17.8%~~39.7% and 24.8% during the three and nine months ended ~~July 3, 2021~~January 1, 2022, respectively, as compared with the same ~~period~~periods of fiscal 2021. Without the effects of foreign exchange, interest and other expenses increased ~~16.5%~~40.6% and 24.0% during the three and nine months ended ~~July 3, 2021~~January 1, 2022, respectively, as compared with the same ~~period~~periods of fiscal 2021. The increase isduring the three and nine months ended January 1, 2022 was primarily driven by realized losses due to foreign currency and the amortization of deferred financing fees associated with ~~the 2026 Notes and realized losses on interest rate swaps,~~our March 2021 issuance of $500 million in aggregate principal amount of 0% convertible senior notes, partially offset by a reduction in interest expense from borrowings under our $350.0 million term loan and $350.0 million revolving loan due to lower borrowings. The effective interest rate on ~~total debt outstanding~~our term loan and revolving loan as of ~~July 3, 2021~~January 1, 2022 was 1.9%.

Income Taxes

We conduct business globally and report our results of operations in a number of foreign jurisdictions in addition to the United States. Our reported tax rate is impacted by the jurisdictional mix of earnings in any given period as the foreign jurisdictions in which we operate have tax rates that differ from the U.S. statutory tax rate.

For the three and nine months ended ~~July 3, 2021,~~January 1, 2022, we reported income tax expense of ~~$1.4~~$8.2 million and $14.7 million, respectively, representing an effective tax ~~rate~~rates of ~~(48.1)%.~~26.0% and 30.4%, respectively. The effective tax rate for the ~~three~~nine months ended ~~July 3, 2021~~January 1, 2022 includes ~~$0.8 million~~ discrete tax expense relating to stock compensation ~~shortfalls.~~shortfalls of $0.9 million, with no discrete tax expense relating to stock compensation shortfalls recorded in the three months ended January 1, 2022.

For the three and nine months ended ~~June 27,~~December 26, 2020, we reported an income tax ~~benefit~~expense of ~~$2.5~~$5.5 million and $9.8 million, respectively, representing an effective tax ~~benefit~~rates of ~~31.9%.~~14.7% and 9.8%, respectively. The effective tax ~~rate~~rates for the three and nine months ended ~~June 27,~~December 26, 2020 ~~includes~~include discrete tax benefits recognized from excess stock compensation deductions of ~~$4.0 million.~~$1.0 million and $5.1 million, respectively. The effective tax ~~rate was~~rates were also impacted by the jurisdictional mix of ~~earnings.~~earnings including divestiture transactions. During the three and nine months ended December 26, 2020, the Company sold its Fajardo, Puerto Rico manufacturing operations, certain U.S. blood donor management software solution assets, and its wholly-owned subsidiary Inlog Holdings France SAS. The tax expense on divestitures, including the associated valuation allowance impacts, were included in the computation of the annual effective tax rate.

Liquidity and Capital Resources

The following table contains certain key performance indicators we believe depict our liquidity and cash flow position:


(Dollars in thousands)	(Dollars in thousands)	July 3, 2021		April 3, 2021		(Dollars in thousands)	January 1, 2022		April 3, 2021
Cash & cash equivalents	Cash & cash equivalents	$	173,462	$	192,305	Cash & cash equivalents	$	236,877	$	192,305
Working capital	Working capital	$	456,029	$	440,051	Working capital	$	374,044	$	440,051
Current ratio	Current ratio	3.0		2.7		Current ratio	2.1		2.7
Net debt(1)	Net debt(1)	$	(610,908)	$	(515,303)	Net debt(1)	$	(540,305)	$	(515,303)
Days sales outstanding (DSO)	Days sales outstanding (DSO)	52		51		Days sales outstanding (DSO)	54		51
Inventory turnover	Inventory turnover	1.1		1.2		Inventory turnover	1.3		1.2

(1)Net debt position is the sum of cash and cash equivalents less total debt.

Our primary sources of liquidity are cash and cash equivalents, internally generated cash flow from ~~operations,~~operations, our revolving credit line that expires in the first quarter of fiscal 2024 and proceeds from employee stock option ~~exercises.~~exercises. We believe these sources are sufficient to fund our cash requirements over at least the next twelve months. Our expected cash outlays relate primarily to acquisitions, investments, capital expenditures, ~~and~~including the build out of our new manufacturing facility in Clinton, PA, cash payments under ~~the loan~~our credit agreement and restructuring initiatives.

In March 2021, wethe Company issued $500.0 million aggregate principal amount of 0% convertible senior notes due 2026, or the 2026 Notes. The 2026 Notes are governed by the terms of the Indenture between the Company and U.S. Bank National Association, as trustee. The total net proceeds from the sale of the 2026 Notes, after deducting the initial purchasers’ discounts and debt issuance costs, were approximately $486.7 million. The 2026 Notes will mature on March 1, 2026, unless earlier converted, redeemed or repurchased. The 2026 Notes have an effective interest rate of ~~2.72%~~0.5% as of ~~July 3, 2021.~~January 1, 2022.

As of ~~July 3, 2021,~~January 1, 2022, we had ~~$173.5~~$236.9 million in cash and cash equivalents, the majority of which is held in the U.S. or in countries from which it can be repatriated to the U.S. On June 15, 2018, we entered into a five-year credit agreement which provided for a $350.0 million term loan and a $350.0 million revolving loan (together with the term loan, as amended from time to time, the “Credit Facilities”). Interest on the term loan and revolving loan is established using LIBOR plus 1.13% - 1.75%, depending on our leverage ratio. Under the Credit Facilities, we are required to maintain certain leverage and interest coverage ratios specified in the credit agreement as well as other customary non-financial affirmative and negative covenants. The Company and its lenders agreed to increase the maximum consolidated leverage ratio the Company is required to maintain for the four consecutive quarters immediately following the closing of the Cardiva acquisition to 4.25:1.0, after which the maximum consolidated leverage ratio the Company is required to maintain will revert to 3.5:1.0.

As of ~~July 3, 2021, $297.5~~January 1, 2022, $288.8 million was outstanding under the term loan with an effective interest rate of 1.9%. There were no borrowings outstanding on the revolving loan. We also had ~~$25.5~~$24.7 million of uncommitted operating lines of credit to fund our global operations under which there were no outstanding borrowings as of ~~July 3, 2021.~~January 1, 2022.

~~We have~~The Company has scheduled principal payments of ~~$13.1~~$4.4 million and $214.4 million required during the remainder of fiscal ~~2022. We were~~2022 and during fiscal 2023, respectively. The Company was in compliance with the leverage and interest coverage ratios specified in the credit agreement as well as all other bank covenants as of ~~July 3, 2021.~~

January 1, 2022.

~~In August 2021,~~During the second quarter of fiscal 2022, our Board of Directors approved a revised 2020 Program. We now estimate that we will incur aggregate charges between $95 million and $105 million in connection with the 2020 Program. These charges, the majority of which will result in cash outlays, including severance and other employee costs, will be incurred as the specific actions required to execute these initiatives are identified and approved and are expected to be substantially completed by the end of fiscal 2025. During the three and nine months ended ~~July 3, 2021,~~January 1, 2022, we incurred ~~$9.9~~$5.7 million and $20.2 million, respectively, of restructuring and restructuring related costs under this program.

Cash Flows


		Three Months Ended				Nine Months Ended
(In thousands)	(In thousands)	July 3, 2021		June 27, 2020			(In thousands)	January 1, 2022		December 26, 2020
Net cash provided by (used in):	Net cash provided by (used in):						Net cash provided by (used in):
Operating activities	Operating activities	$	(1,680)	$	11,812		Operating activities	$	104,213	$	107,258
Investing activities	Investing activities	(15,851)		(23,896)			Investing activities	(51,833)		3,658
Financing activities	Financing activities	(1,634)		148,951			Financing activities	(6,984)		(65,307)
Effect of exchange rate changes on cash and cash equivalents(1)	Effect of exchange rate changes on cash and cash equivalents(1)	322		1,547			Effect of exchange rate changes on cash and cash equivalents(1)	(824)		6,082
Net change in cash and cash equivalents	Net change in cash and cash equivalents	$	(18,843)	$	138,414		Net change in cash and cash equivalents	$	44,572	$	51,691

(1)The balance sheet is affected by spot exchange rates used to translate local currency amounts into U.S. Dollars. In accordance with U.S. GAAP, we have removed the effect of foreign currency throughout our cash flow statement, except for its effect on our cash and cash equivalents.

Net cash ~~used in~~provided by operating activities ~~increased~~decreased by ~~$13.5~~$3.0 million during the ~~three~~nine months ended ~~July 3, 2021,~~January 1, 2022, as compared with the ~~three~~nine months ended ~~June 27, 2020.~~December 26, 2020. The ~~increase~~decrease in cash ~~used~~provided by operating activities was primarily the result of ~~an increase in~~higher working capital due to lower collections of accounts receivable, ~~and higher inventory growth as well as a reduction~~partially offset by an increase in net income, as adjusted for depreciation, amortization and other non-cash charges compared with the prior ~~year~~ period.

Net cash used in investing activities ~~decreased~~increased by ~~$8.0~~$55.5 million during the ~~three~~nine months ended ~~July 3, 2021,~~January 1, 2022, as compared with the ~~three~~nine months ended ~~June 27,~~December 26, 2020. The ~~decrease~~increase in cash used in investing activities was primarily the result of ~~higher cash paid for acquisitions during the prior year period, partially offset by~~ an increase in capital ~~expenditures.~~expenditures in the current year and lower proceeds received from various divestitures during fiscal 2021 as compared to fiscal 2022, partially offset by decreased acquisition spend.

Net cash used in financing activities increased by ~~$150.6~~$58.3 million during the ~~three~~nine months ended ~~July 3, 2021,~~January 1, 2022, as compared with the ~~three~~nine months ended ~~June 27,~~December 26, 2020, primarily due to a ~~reduction in borrowings on our~~repayment of the revolving credit facility ~~net of payments.~~in fiscal 2021.

Concentration of Credit Risk

Concentrations of credit risk with respect to trade accounts receivable are generally limited due to our large number of customers and their diversity across many geographic areas. Certain markets and industries, however, can expose us to concentrations of credit risk. For example, in the Plasma business unit, sales are concentrated with several large customers. As a result, accounts receivable extended to any one of these biopharmaceutical customers can be significant at any point in time. In addition, a portion of our trade accounts receivable outside the U.S. include sales to government-owned or supported healthcare systems in several countries, which are subject to payment delays and local economic conditions. Payment is dependent upon the financial stability and creditworthiness of those ~~countries'~~countries’ national economies.

We have not incurred significant losses on receivables. We continually evaluate all receivables for potential collection risks associated with the availability of government funding and reimbursement practices. If the financial condition of customers or the ~~countries'~~countries’ healthcare systems deteriorate such that their ability to make payments is uncertain, allowances may be required in future periods.

Inflation

We ~~do not believe~~experienced rising inflationary pressures in our global supply chain that ~~inflation~~ had ~~a significant~~an impact on our results of operations ~~for~~during the periods presented. Historically, we believe we have been able to mitigate the effects of inflation by improving our manufacturing and purchasing efficiencies, by increasing employee productivity and by adjusting the selling prices of products.nine months ended January 1, 2022. We continue to monitor ~~inflation~~inflationary pressures generally and raw materials indices that may affect our procurement and production costs. Increases in the price of petroleum derivatives could result in corresponding increases in our costs to procure plastic raw materials. We expect the inflationary pressures we have experienced in our global supply chain to continue into fiscal 2023. Historically, we have been able to mitigate the effects of inflation by improving our manufacturing and purchasing efficiencies, by increasing employee productivity and by adjusting the selling prices of products.

Foreign Exchange

During the three and nine months ended ~~July 3, 2021, 38.3%~~January 1, 2022, 35.6% and 36.8%, respectively, of our sales were generated outside the U.S., generally in foreign currencies, yet our reporting currency is the U.S. Dollar. We also incur certain manufacturing, marketing and selling costs in international markets in local currency. Our primary foreign currency exposures relate to sales denominated in Euro, Japanese Yen, Chinese Yuan and Australian Dollars. We also have foreign currency exposure related to manufacturing and other operational costs denominated in Swiss Francs, Canadian Dollars, Mexican Pesos and Malaysian Ringgit. The Yen, Euro, Yuan and Australian Dollar sales exposure is partially mitigated by costs and expenses for foreign operations and sourcing products denominated in foreign currencies.

Since our foreign currency denominated Yen, Euro, Yuan and Australian Dollar sales exceed the foreign currency denominated costs, whenever the U.S. Dollar strengthens relative to the Yen, Euro, Yuan or Australian Dollar, there is an adverse effect on our results of operations and, conversely, whenever the U.S. Dollar weakens relative to the Yen, Euro, Yuan or Australian Dollar, there is a positive effect on our results of operations. For Swiss Francs, Canadian Dollars Mexican Pesos and Malaysian Ringgit our primary cash flows relate to product costs or costs and expenses of local operations. Whenever the U.S. Dollar strengthens relative to these foreign currencies, there is a positive effect on our results of operations. Conversely, whenever the U.S. Dollar weakens relative to these currencies, there is an adverse effect on our results of operations.

We have a program in place that is designed to mitigate our exposure to changes in foreign currency exchange rates. That program includes the use of derivative financial instruments to minimize, for a period of time, the unforeseen impact on our financial results from changes in foreign exchange rates. We utilize forward foreign currency contracts to hedge the anticipated cash flows from transactions denominated in foreign currencies, primarily Japanese Yen and Euro, and to a lesser extent Swiss Francs, Australian Dollars, Canadian Dollars and Mexican Pesos. This does not eliminate the volatility of foreign exchange rates, but because we generally enter into forward contracts one year out, rates are fixed for a one-year period, thereby facilitating financial planning and resource allocation. These contracts are designated as cash flow hedges. The final impact of currency fluctuations on the results of operations is dependent on the local currency amounts hedged and the actual local currency results.

Recent Accounting Pronouncements

~~In July 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) Update No. 2021-05. Leases (Topic 842). The new guidance requires~~There are currently no recent accounting pronouncements that we expect to have a lessor to classify a lease with variable lease payments that do not depend on an index or rate as an operating lease at lease commencement if the lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria ASC 842 and the lessor would have otherwise recognized a day-one loss. ASC Update No. 2021-05 is effective for annual periods beginning after December 15, 2021, and is applicable to us in fiscal 2023. We are in the process of determining the effect that the adoption will havematerial impact on our financial position and results of operations.

Cautionary Statement Regarding Forward-Looking Information

Certain statements that we make from time to time, including statements contained in this ~~Annual~~Quarterly Report on Form ~~10-K~~10-Q and incorporated by reference into this report, constitute “forward looking-statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements do not relate strictly to historical or current facts and reflect management’s assumptions, views, plans, objectives and projections about the future. Forward-looking statements may be identified by the use of words such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “foresees,” “potential” and other words of similar meaning in conjunction with, among other things: discussions of future operations; expected operating results and financial performance; impacts of the COVID-19 pandemic; the Company’s strategy for growth; product development, commercialization and anticipated performance and benefits; regulatory approvals; impacts of acquisitions or dispositions; market position and expenditures.

Because forward-looking statements are based on current beliefs, expectations and assumptions regarding future events, they are subject to uncertainties, risks and changes that are difficult to predict and many of which are outside of the ~~Company's~~Company’s control. Investors should realize that if underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, the Company’s actual results and financial condition could vary materially from expectations and projections expressed or implied in its forward-looking statements. Investors are therefore cautioned not to rely on these forward-looking statements.

The following are some important factors that could cause our actual results to differ from our expectations in any forward-looking statements. For further discussion of these and other factors, see Item 1A. Risk Factors in ~~this report.~~our most recent Annual Report on Form 10-K.

•The effect of the ongoing COVID-19 pandemic, or outbreaks of communicable diseases, on our business, financial conditions and results of operations, including the time it will take for vaccines to be broadly distributed and accepted in the U.S. and the rest of the world, and the effectiveness of such vaccines in slowing or stopping the spread of COVID-19 and mitigating the economic effects of the pandemic;

•Failure to achieve our long-term strategic and financial-improvement goals;

•Demand for and market acceptance risks for new and existing products, including material reductions in purchasing from or loss of a significant customer;

•Product quality or safety concerns, leading to product recalls, withdrawals, regulatory action by the FDA (or similar non-U.S. regulatory agencies), reputational damage, declining sales or litigation;

•Security breaches of our information technology systems or our products, which could impair our ability to conduct business or compromise sensitive information of the Company or its customers, suppliers and other business partners, or of ~~customers'~~customers’ patients;

•Pricing pressures resulting from trends toward healthcare cost containment, including the continued consolidation among healthcare providers and other market participants;

•The continuity, availability and pricing of plastic and other raw materials, finished goods and components used in the manufacturing of our products (including those purchased from sole-source suppliers) and the related continuity of our manufacturing, sterilization, supply and distribution;

•Our ability to develop, manufacture and market new products and technologies successfully and in a timely manner and the ability of our competitors and other third parties to develop products or technologies that render our products or technologies noncompetitive or obsolete;

•Our ability to obtain the anticipated benefits of restructuring programs that we have or may undertake, including the Operational Excellence Program;

•The potential that the expected strategic benefits and opportunities from our acquisition of Cardiva and any other planned or completed acquisition or divestiture by the Company may not be realized or may take longer to realize than expected;

•The impact of enhanced requirements to obtain regulatory approval in the U.S. and around the world and the associated timing and cost of product approval;

•Our ability to comply with established and developing U.S. and foreign legal and regulatory requirements, including FCPA, ~~MDR~~MDR/IVDR and similar laws in other jurisdictions, as well as U.S. and foreign export and import restrictions and tariffs;

•Our ability to meet our debt obligations and raise additional capital when desired on terms reasonably acceptable to us;

•The potential impact of our convertible senior notes and related capped call transactions;

•Our ability to execute and realize anticipated benefits from our investments in emerging economies;

•The potential effect of foreign currency fluctuations and interest rate fluctuations on our net sales, expenses, and resulting margins;

•The impact of changes in U.S. and international tax laws;

•Our ability to protect intellectual property and the outcome of patent litigation;

•Costs and risks associated with product liability and other litigation claims;

•Our ability to retain and attract key personnel; and

•Market conditions impacting our stock price and/or share repurchase programs we may enter into from time to time, and the possibility that such share repurchase programs may be delayed, suspended or discontinued.

Investors should understand that it is not possible to predict or identify all such factors and should not consider the risks described above and in Item 1A. Risk Factors in our Annual Report on Form 10-K to be a complete statement of all potential risks and uncertainties. The Company does not undertake to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information or future events or developments.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure relative to market risk is due to foreign exchange risk and interest rate risk.

Foreign Exchange Risk

See the section above entitled Foreign Exchange for a discussion of how foreign currency affects our business. It is our policy to minimize, for a period of time, the unforeseen impact on our financial results of fluctuations in foreign exchange rates by using derivative financial instruments known as forward contracts to hedge anticipated cash flows from forecasted foreign currency denominated sales and costs. We do not use the financial instruments for speculative or trading activities.

We estimate the change in the fair value of all forward contracts assuming both a 10% strengthening and weakening of the U.S. Dollar relative to all other major ~~currencies.~~currencies. In the event of a 10% strengthening of the U.S. Dollar, the change in fair value of all forward contracts would result in a ~~$6.9~~$3.2 million increase in the fair value of the forward contracts; whereas a 10% weakening of the U.S. Dollar would result in a ~~$8.0~~$3.5 million ~~decrease~~decrease of the fair value of the forward contracts.

Interest Rate Risk

Our exposure to changes in interest rates is associated with borrowings under our Credit Facilities, all of which is variable rate debt. Total ~~outstanding~~outstanding debt under our Credit Facilities as of ~~July 3, 2021~~January 1, 2022 was ~~$297.5~~$288.8 million with an interest rate of 1.9% based on prevailing LIBOR rates. An increase of 100 basis points in LIBOR rates would result in additional annual interest expense of ~~$0.7 million.~~$0.9 million. On August 21, 2018, we entered into two interest rate swap agreements to effectively convert $241.9 million of borrowings under our Credit Facilities from a variable rate to a fixed rate. These interest rate swaps are intended to mitigate the exposure to fluctuations in interest rates and qualify for hedge accounting treatment as cash flow hedges.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation, as of ~~July 3, 2021,~~January 1, 2022, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively) regarding the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15 of the Exchange Act. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of ~~July 3, 2021.~~January 1, 2022.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended ~~July 3, 2021~~January 1, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3235

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Information with respect to this Item may be found in Note 13, Commitments and Contingencies to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

Item 1A. Risk Factors

There are no material changes from the Risk Factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended April 3, 2021.

Item 2. ~~Issuer Purchases~~Unregistered Sales of Equity Securities and Use of Proceeds

In May 2019, our Board of Directors authorized the repurchase of up to $500 million of Haemonetics common shares over the next two year period ending May 2021. During the three months ended July 3, 2021, we did not make any additional repurchases under this program which expired in May 2021.

None.

3336

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

3437

Item 6. Exhibits


3.1			Restated Articles of Organization of ~~Haemonetics Corporation,~~the Company, reflecting Articles of Amendment dated August 23, 1993, August 21, 2006, July 26, 2018 and July 25, 2019 (filed as Exhibit 3.1 to the Company’s Form 8-K dated July 29, 2019 and incorporated herein by reference).

3.2			By-Laws of the Company, as amended through June 29, 2020 (filed as Exhibit 3.1 to the Company’s Form 8-K dated June 30, 2020 and incorporated herein by reference).

10.1*			Fourteenth Amendment to lease dated July 17, 1990, made as of November 11, 2021 by and between Buncher Company and the Company for property located in Leetsdale, Pennsylvania (1).

10.2*			CFO Retention and Transition Agreement, dated as of November 8, 2021, by and between the Company and William P. Burke (2).





31.1*			Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002, of Christopher A. Simon, President and Chief Executive Officer of the Company.

31.2*			Certification pursuant to Section 302 of Sarbanes-Oxley of 2002, of William Burke, Executive Vice President, Chief Financial Officer of the Company.

32.1**			Certification Pursuant to 18 United States Code Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Christopher A. Simon, President and Chief Executive Officer of the Company.

32.2**			Certification Pursuant to 18 United States Code Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of William Burke, Executive Vice President, Chief Financial Officer of the Company.

101*			The following materials from Haemonetics Corporation on Form 10-Q for the quarter ended ~~July 3, 2021,~~January 1, 2022 formatted in inline Extensible Business Reporting Language (XBRL) includes: (i) Condensed Consolidated Statements of ~~(Loss)~~ Income and Comprehensive ~~(Loss)~~ Income, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Cash Flows, and (iv) Notes to Condensed Consolidated Financial Statements.

~~104~~104*			Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101).

~~_____________________________~~





*						~~In accordance~~Document filed with ~~Rule 406T~~this report.

**						Document furnished with this report.

(1)						Certain portions of ~~Regulation S-T,~~this exhibit are considered confidential and have been omitted as permitted under SEC rules and regulations.

(2)						Agreement, plan or arrangement related to the ~~XBRL-related information in Exhibit 101 to this Form 10-Q is deemed not filed~~compensation of officers or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act, is deemed not filed for the purposes of section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.directors.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	HAEMONETICS CORPORATION
~~August 11, 2021~~February 8, 2022	By:	/s/ Christopher A. Simon
	��	Christopher A. Simon, President and Chief Executive Officer
		(Principal Executive Officer)

~~August 11, 2021~~February 8, 2022	By:	/s/ William Burke
		William Burke, Executive Vice President, Chief Financial Officer
		(Principal Financial Officer)

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