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~~2, 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~~8, 2022: 51,316,543

HAEMONETICS CORPORATION

INDEX



			PAGE
PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Unaudited Condensed Consolidated Statements of ~~(Loss)~~ Income and Comprehensive ~~(Loss)~~ Income - Three Months Ended J uly 2 , 2022 and July 3 , 2021 ~~and June 27, 2020~~			3
Unaudited Condensed Consolidated Balance Sheet - J ~~July 3~~uly 2 , ~~202~~1 2022 and Consolidated Balance Sheet - April ~~April 3, 2021~~2 , 202 2			4
Unaudited Condensed Consolidated Statements of ~~Stockholders'~~Stockholders’ Equity - Three Months Ended J uly 2 , 2022 and July 3 ~~2021 and June 27, 2020~~, 202 1			5
Unaudited Condensed Consolidated Statements of Cash Flows - Three Months Ended J uly 2 , 2022 and July 3 ~~2021 and June 27, 2020~~, 202 1			6
Notes to Unaudited Condensed Consolidated Financial Statements			7

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2220

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk			3228

ITEM 4. Controls and Procedures			3229

PART II. OTHER INFORMATION			3330

ITEM 1. Legal Proceedings			3330

ITEM 1A. Risk Factors			3330

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			3330

ITEM 3. Defaults upon Senior Securities			3431

ITEM 4. Mine Safety Disclosures			3431

ITEM 5. Other Information			3431

ITEM 6. Exhibits			3532

SIGNATURES			3633

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
	July 2, 2022		July 3, 2021
Net revenues	$	261,458	$	228,528
Cost of goods sold	119,195		120,443
Gross profit	142,263		108,085
Operating expenses:
Research and development	10,902		12,701
Selling, general and administrative	92,227		91,218
Amortization of intangible assets	8,367		12,379
Gains on divestitures and sale of assets	—		(9,603)
Total operating expenses	111,496		106,695
Operating income	30,767		1,390
Interest and other expense, net	(5,273)		(4,398)
Income (loss) before provision for income taxes	25,494		(3,008)
Provision for income taxes	5,617		1,446
Net income (loss)	$	19,877	$	(4,454)

Net income (loss) per share - basic	$	0.39	$	(0.09)
Net income (loss) per share - diluted	$	0.38	$	(0.09)

Weighted average shares outstanding
Basic	51,224		50,939
Diluted	51,683		50,939

Comprehensive income (loss)	$	13,114	$	(4,007)

Three Months Ended
July 3,
2021 June 27,
2020
Net revenues $ 228,528 $ 195,577
Cost of goods sold 120,443 105,547
Gross profit 108,085 90,030
Operating expenses:
Research and development 12,701 7,750
Selling, general and administrative 91,218 62,302
Amortization of intangible assets 12,379 8,263
Gains on divestitures and sale of assets (9,603) 0
Total operating expenses 106,695 78,315
Operating income 1,390 11,715
Interest and other expense, net (4,398) (3,735)
(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
Net (loss) income per share - basic $ (0.09) $ 0.21
Net (loss) income per share - diluted $ (0.09) $ 0.21
Weighted average shares outstanding
Basic 50,939 50,418
Diluted 50,939 51,247
Comprehensive (loss) income $ (4,007) $ 11,956

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			July 2, 2022		April 2, 2022
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	$	214,948	$	259,496
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 $2,495 at July 2, 2022 and $2,475 at April 2, 2022						Accounts receivable, less allowance of $2,495 at July 2, 2022 and $2,475 at April 2, 2022	146,463		159,376
Inventories, net	Inventories, net	326,500		322,614		Inventories, net	277,887		293,027
Prepaid expenses and other current assets	Prepaid expenses and other current assets	51,498		51,072		Prepaid expenses and other current assets	48,485		44,132
Total current assets	Total current assets	684,368		693,546		Total current assets	687,783		756,031
Property, plant and equipment, net	Property, plant and equipment, net	214,782		217,559		Property, plant and equipment, net	288,321		258,482
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 $386,235 at July 2, 2022 and $376,552 at April 2, 2022						Intangible assets, less accumulated amortization of $386,235 at July 2, 2022 and $376,552 at April 2, 2022	302,710		310,261
Goodwill	Goodwill	466,314		466,444		Goodwill	466,115		467,287
Deferred tax asset	Deferred tax asset	6,197		6,009		Deferred tax asset	4,552		4,468
Other long-term assets	Other long-term assets	68,838		70,882		Other long-term assets	71,045		63,205
Total assets	Total assets	$	1,794,187	$	1,819,923	Total assets	$	1,820,526	$	1,859,734
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	$	6,853	$	214,148
Accounts payable	Accounts payable	49,131		50,293		Accounts payable	57,907		58,371
Accrued payroll and related costs	Accrued payroll and related costs	34,372		47,600		Accrued payroll and related costs	30,422		48,540
Other liabilities		127,811		138,586
Other current liabilities						Other current liabilities	85,305		121,207
Total current liabilities	Total current liabilities	228,339		253,495		Total current liabilities	180,487		442,266
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	763,141		559,441
Deferred tax liability	Deferred tax liability	24,278		43,825		Deferred tax liability	32,622		28,727
Other long-term liabilities	Other long-term liabilities	97,145		100,341		Other long-term liabilities	73,853		79,876
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 — 51,315,653 shares at July 2, 2022 and 51,124,240 shares at April 2, 2022						Common stock, $0.01 par value; Authorized — 150,000,000 shares; Issued and outstanding — 51,315,653 shares at July 2, 2022 and 51,124,240 shares at April 2, 2022	513		511
Additional paid-in capital	Additional paid-in capital	551,108		602,727		Additional paid-in capital	580,359		572,476
Retained earnings	Retained earnings	154,562		157,981		Retained earnings	222,268		202,391
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(29,100)		(29,547)		Accumulated other comprehensive loss	(32,717)		(25,954)
Total stockholders’ equity	Total stockholders’ equity	677,080		731,670		Total stockholders’ equity	770,423		749,424
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,794,187	$	1,819,923	Total liabilities and stockholders’ equity	$	1,820,526	$	1,859,734

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
Shares Par Value
Balance, April 3, 2021 50,869 $ 509 $ 602,727 $ 157,981 $ (29,547) $ 731,670
Employee stock purchase plan 39 — 2,210 — — 2,210
Exercise of stock options 14 0 500 — — 500
Issuance of restricted stock, net of cancellations 91 1 (1) — — 0
Cumulative effect of change in accounting standards — — (61,156) 1,035 — (60,121)
Share-based compensation expense — — 6,828 — — 6,828
Net loss — — — (4,454) — (4,454)
Other comprehensive income — — — — 447 447
Balance, July 3, 2021 51,013 $ 510 $ 551,108 $ 154,562 $ (29,100) $ 677,080


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Par Value
Balance, April 2, 2022	51,124	$	511	$	572,476	$	202,391	$	(25,954)	$	749,424
Employee stock purchase plan	57	—		2,459		—		—		2,459
Exercise of stock options	3	1		126		—		—		127
Issuance of restricted stock, net of cancellations	131	1		(1)		—		—		—

Share-based compensation expense	—	—		5,299		—		—		5,299
Net income	—	—		—		19,877		—		19,877
Other comprehensive loss	—	—		—		—		(6,763)		(6,763)
Balance, July 2, 2022	51,315	$	513	$	580,359	$	222,268	$	(32,717)	$	770,423


		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, March 28, 2020		50,323	$	503			$	553,229						$	78,512			$	(45,135)		$	587,109
Balance, April 3, 2021																			Balance, April 3, 2021	50,869			$	509		$	602,727		$	157,981		$	(29,547)		$	731,670
Employee stock purchase plan	Employee stock purchase plan	22	0		2,144				—			—				2,144			Employee stock purchase plan	39			—		2,210			—			—			2,210
Exercise of stock options	Exercise of stock options	28	1		1,192				—			—				1,193			Exercise of stock options	14			—		500			—			—			500

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

Share-based compensation expense	Share-based compensation expense	—	—		6,167				—			—				6,167			Share-based compensation expense	—			—		6,828			—			—			6,828

Net income		—	—		—				10,527			—				10,527
Net loss																			Net loss	—			—		—			(4,454)			—			(4,454)
Other comprehensive income	Other comprehensive income	—	—		—				—			1,429				1,429			Other comprehensive income	—			—		—			—			447			447
Balance, June 27, 2020		50,671	$	507	$	562,729			$	89,039		$	(43,706)			$	608,569
Balance, July 3, 2021																			Balance, July 3, 2021	51,013			$	510	$	551,108		$	154,562		$	(29,100)		$	677,080

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					Three Months Ended
		July 3, 2021		June 27, 2020			July 2, 2022		July 3, 2021
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net (loss) income		$	(4,454)	$	10,527
Net income (loss)						Net income (loss)	$	19,877	$	(4,454)
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	22,447		25,033
Amortization of fair value inventory step-up		5,295		0

Impairment of assets	Impairment of assets	5,144		1,028		Impairment of assets	94		5,144
Share-based compensation expense	Share-based compensation expense	6,828		6,167		Share-based compensation expense	5,299		6,828
Amortization of deferred finance costs	Amortization of deferred finance costs	1,019		147		Amortization of deferred finance costs	797		1,019
(Benefit) provision for losses on inventory		(544)		1,452
Benefit for losses on inventory						Benefit for losses on inventory	(2,075)		(544)
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)

Contingent consideration expense	Contingent consideration expense	9,774		0		Contingent consideration expense	(504)		9,774
Other non-cash operating activities	Other non-cash operating activities	(355)		(841)		Other non-cash operating activities	1,602		4,940
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	10,358		(5,342)
Change in inventories	Change in inventories	(8,553)		(24,557)		Change in inventories	15,240		(8,553)
Change in prepaid income taxes	Change in prepaid income taxes	2,121		(3,544)		Change in prepaid income taxes	2,118		2,121
Change in other assets and other liabilities	Change in other assets and other liabilities	1,256		865		Change in other assets and other liabilities	(6,079)		1,256
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	(27,181)		(29,299)
Net cash (used in) provided by operating activities		(1,680)		11,812
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	41,993		(1,680)
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	(45,467)		(13,919)
Acquisition	Acquisition	(2,500)		(16,606)		Acquisition	(2,850)		(2,500)
Proceeds from divestitures		0		0

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	498		568
Other investments						Other investments	(10,395)		—
Net cash used in investing activities	Net cash used in investing activities	(15,851)		(23,896)		Net cash used in investing activities	(58,214)		(15,851)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Net increase in short-term loans		0		150,000

Repayment of term loan borrowings	Repayment of term loan borrowings	(4,375)		(4,375)		Repayment of term loan borrowings	(4,375)		(4,375)
Contingent consideration payments						Contingent consideration payments	(21,593)		—
Proceeds from employee stock purchase plan	Proceeds from employee stock purchase plan	2,210		2,144		Proceeds from employee stock purchase plan	2,459		2,210
Proceeds from exercise of stock options	Proceeds from exercise of stock options	500		1,193		Proceeds from exercise of stock options	127		500
Other	Other	31		(11)		Other	(13)		31
Net cash (used in) provided by financing activities		(1,634)		148,951
Net cash used in financing activities						Net cash used in financing activities	(23,395)		(1,634)
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	(4,932)		322
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	(44,548)		(18,843)
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	259,496		192,305
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	$	214,948	$	173,462
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	$	38,022	$	3,203

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 months ended July ~~3, 2021~~2, 2022 are not necessarily indicative of the results that may be expected for the full fiscal year ending April ~~2, 2022~~1, 2023 or any other interim period. The Company has assessed its ability to continue as a going concern. As of July 3, 2021, 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.~~2, 2022.

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.~~required. There were no material recognized or unrecognized subsequent events as of or for the three months ended July ~~3, 2021.~~2, 2022, except for those discussed in Note 5, Earnings Per Share and Note 9, Notes Payable and Long-term Debt.

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.~~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~~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.

Standards to be Implemented

In March 2020, the FASB issued ASU 2020-04 — Reference Rate Reform (Topic 848). The new guidance allows companies to elect certain practical expedients to ease the financial reporting burden during the transition period of reference rate reform. The Company is evaluating the impact of this ASU and the related practical expedients allowed under ASU 848 on the Company's financial position and 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 months ended July 2, 2022 and July 3, 2021, ~~and June 27, 2020,~~ the Company incurred ~~$9.9~~$3.5 million and ~~$3.5~~$9.9 million, respectively, of restructuring and restructuring related costs under this program. Total cumulative charges under this program are ~~$36.9 million.~~$59.2 million.

The following table summarizes the activity for restructuring reserves related to the 2020 Program and prior programs for the three months ended July ~~3, 2021,~~2, 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		$	575	$	437	$	1,012
Balance at April 2, 2022								Balance at April 2, 2022	$	2,460	$	345	$	2,805
Costs incurred, net of reversals	Costs incurred, net of reversals	3,391		29		3,420		Costs incurred, net of reversals	(44)		—		(44)
Payments	Payments	(63)		0		(63)		Payments	(703)		(20)		(723)
Non-cash adjustments		0		11		11
Balance at July 3, 2021		$	3,903	$	477	$	4,380
Balance at July 2, 2022								Balance at July 2, 2022	$	1,713	$	325	$	2,038

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
(In thousands)	(In thousands)	July 3, 2021		June 27, 2020			(In thousands)	July 2, 2022		July 3, 2021
Cost of goods sold	Cost of goods sold	$	2,253	$	503		Cost of goods sold	$	(206)	$	2,253
Research and development	Research and development	105		319			Research and development	—		105
Selling, general and administrative expenses	Selling, general and administrative expenses	1,062		243			Selling, general and administrative expenses	162		1,062
		$	3,420	$	1,065			$	(44)	$	3,420

As of July ~~3, 2021,~~2, 2022, the Company had a ~~restructuring~~restructuring liability of ~~$4.4~~$2.0 million, of which ~~$3.9~~$1.7 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
(In thousands)	(In thousands)	July 3, 2021		June 27, 2020				(In thousands)	July 2, 2022		July 3, 2021
Plasma	Plasma	$	2,288	$	568			Plasma	$	(211)	$	2,288
Blood Center	Blood Center	3		154				Blood Center	—		3
Hospital	Hospital	(38)		129				Hospital	—		(38)
Corporate	Corporate	1,167		214				Corporate	167		1,167
Total	Total	$	3,420	$	1,065			Total	$	(44)	$	3,420

Restructuring related costs	Restructuring related costs	Three Months Ended				Restructuring related costs	Three Months Ended
(In thousands)	(In thousands)	July 3, 2021		June 27, 2020				(In thousands)	July 2, 2022		July 3, 2021
Plasma	Plasma	$	1,738	$	0			Plasma	$	640	$	1,738
Blood Center	Blood Center	490		16				Blood Center	2		490
Hospital	Hospital	133		9				Hospital	89		133
Corporate	Corporate	4,274		2,910				Corporate	2,791		4,274
Total	Total	$	6,635	$	2,935			Total	$	3,522	$	6,635

Total restructuring and restructuring related costs	Total restructuring and restructuring related costs	$	10,055	$	4,000			Total restructuring and restructuring related costs	$	3,478	$	10,055

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 existing credit facility.

Cardiva’s portfolio includes two catheter-based vascular access site closure devices. The 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® 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 as the Company is awaiting additional information to complete its assessment of these matters. 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 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, 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.

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~~
~~Goodwill~~	~~251,407~~
~~Other long-term assets~~	~~1,868~~
~~Total assets acquired~~	$	~~535,309~~
~~Accounts payable~~	~~3,292~~
~~Accrued payroll and related costs~~	~~58,211~~
~~Other liabilities~~	~~1,853~~
~~Deferred tax liability~~	~~27,912~~
~~Other long-term liabilities~~	~~1,772~~
~~Total liabilities assumed~~	$	~~93,040~~
~~Net assets acquired~~	$	~~442,269~~

The Company determined the identifiable intangible assets were completed technology, customer relationships and trademarks. The fair values of intangible assets were based on valuation techniques with estimates and assumptions developed by the Company. Completed technology was 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.

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 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”) 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) Amount Weighted-Average Amortization Period Risk-Adjusted Discount
Rates used in Purchase Price Allocation
Completed technology $ 230,326 13 years 13.5 %
Customer relationships 18,166 12 years 13.0 %
Trademarks 5,437 13 years 13.5 %
Total $ 253,929

The Company recorded a long-term deferred tax liability, net, of $27.9 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.

~~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. The Company incurred acquisition costs related 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 months ended July 3, 2021, 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 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~~

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 months ended June 27, 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, the Company recognized an additional gain of $9.6 million for contingent consideration earned.

~~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 months ended July 2, 2022, the Company reported income tax expense of $5.6 million representing an effective tax rate of 22.0%. The effective tax rate for the three months ended July 2, 2022 includes $0.6 million of discrete tax expense relating to stock compensation shortfalls.

For the three months ended July 3, 2021, the Company reported income tax expense of $1.4 million representing an effective tax rate of (48.1)%. The effective tax rate for the three months ended July 3, 2021 includes $0.8 million of discrete tax expense relating to stock compensation shortfalls.

For the three months ended June 27, 2020, the Company reported an income tax benefit of $2.5 million representing an effective tax rate benefit of 31.9%. The effective tax rate for the three months ended June 27, 2020 includes discrete tax benefits recognized from excess stock compensation deductions of $4.0 million. The effective tax rate was also impacted by the jurisdictional mix of earnings. During the three months ended June 27, 2020, the Company transferred certain intangible assets amongst its wholly-owned subsidiaries prior to the divestiture of its Fajardo, Puerto Rico manufacturing operations. The tax expense on the intercompany sale and establishment of deferred tax assets (including the associated valuation allowance impacts) was included in the computation of the annual effective tax rate.

7.5. 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
(In thousands, except per share amounts)	(In thousands, except per share amounts)	July 3, 2021		June 27, 2020			(In thousands, except per share amounts)	July 2, 2022		July 3, 2021
Basic EPS	Basic EPS						Basic EPS
Net (loss) income		$	(4,454)	$	10,527
Net income (loss)							Net income (loss)	$	19,877	$	(4,454)
Weighted average shares	Weighted average shares	50,939		50,418			Weighted average shares	51,224		50,939
Basic income per share		$	(0.09)	$	0.21
Basic income (loss) per share							Basic income (loss) per share	$	0.39	$	(0.09)
Diluted EPS	Diluted EPS						Diluted EPS
Net (loss) income		$	(4,454)	$	10,527
Net income (loss)							Net income (loss)	$	19,877	$	(4,454)
Basic weighted average shares	Basic weighted average shares	50,939		50,418			Basic weighted average shares	51,224		50,939
Net effect of common stock equivalents	Net effect of common stock equivalents	0		829			Net effect of common stock equivalents	459		—
Diluted weighted average shares	Diluted weighted average shares	50,939		51,247			Diluted weighted average shares	51,683		50,939
Diluted income per share		$	(0.09)	$	0.21
Diluted income (loss) per share							Diluted income (loss) per share	$	0.38	$	(0.09)

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 months ended July 2, 2022, weighted average shares outstanding, assuming dilution, excludes the impact of 0.9 million anti-dilutive shares. For the three months ended July 3, 2021, the Company recognized a net loss; therefore it excluded the impact of outstanding stock awards from the diluted loss per share calculation as its inclusion would have an anti-dilutive effect. ~~For the three months ended June 27, 2020, weighted average shares outstanding, assuming dilution, excludes the impact of 0.5 million anti-dilutive shares.~~

13In August 2022, the Company announced that its Board of Directors had authorized the repurchase of up to $300 million of Haemonetics common shares over the next three years. Under the share repurchase program, the Company is authorized to repurchase, from time to time, outstanding shares of common stock in accordance with applicable laws on the open market, including under trading plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, and in privately negotiated transactions. The actual timing, number and value of shares repurchased will be determined by the Company at its discretion, with the intent of beginning activity under the program during fiscal 2023, and will depend on a number of factors, including market conditions, applicable legal requirements and compliance with the terms of loan covenants. The share repurchase program may be suspended, modified or discontinued at any time, and the Company has no obligation to repurchase any amount of its common stock under the program.

8.6. 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,~~2, 2022, the Company had ~~$18.4~~$24.7 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%~~76% 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~~2, 2022 and April ~~3, 2021,~~2, 2022, the Company had contract assets of ~~$4.8~~$6.4 million and ~~$4.8~~$5.5 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~~2, 2022 and April ~~3, 2021,~~2, 2022, the Company had contract liabilities of ~~$24.2~~$25.4 million and ~~$20.9~~$26.8 million, respectively. During the three months ended July ~~3, 2021,~~2, 2022, the Company recognized ~~$8.6~~$11.7 million of revenue, respectively, that was included in the above April ~~3, 2021~~2, 2022 contract liability balance.

7. INVENTORIES

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


(In thousands)	(In thousands)	July 3, 2021		April 3, 2021		(In thousands)	July 2, 2022		April 2, 2022
Raw materials	Raw materials	$	75,278	$	74,910	Raw materials	$	92,416	$	88,886
Work-in-process	Work-in-process	26,562		23,111		Work-in-process	18,234		17,187
Finished goods	Finished goods	224,660		224,593		Finished goods	167,237		186,954
Total inventories	Total inventories	$	326,500	$	322,614	Total inventories	$	277,887	$	293,027

~~10.~~8. LEASES

~~Lessee Activity~~

During fiscal 2021, the Company entered into a lease for manufacturing space in Clinton, PA. The Company's current manufacturing operations in Leetsdale, PA will be relocated. 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.

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~~approximately 3 percent of the ~~Company's~~Company’s total net sales.

~~11.~~9. 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 quarter of fiscal ~~2022,~~2023, 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~~2, 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,~~2, 2022, the $500.0 million principal balance was netted down by ~~$12.5~~$9.9 million of ~~deferred financing~~remaining debt issuance costs, resulting in a net convertible note payable of $490.1 million. Interest expense related to the 2026 Notes was $0.7 million, which is entirely attributable to the amortization of the debt issuance costs. The debt issuance costs are amortized at an effective interest rate of 0.5%.

Credit Facilities

On June 15, 2018, the Company entered into a credit agreement with certain lenders ~~which~~that provided for a $350.0 million term loan ~~(the “Term Loan”)~~ and a $350.0 million revolving loan ~~(the “Revolving Credit Facility” and together~~(together with the ~~Term Loan,~~term loan, as amended from time to time, the ~~“Credit~~“2018 Credit Facilities”)~~. The Credit Facilities expire~~ that mature on June 15, 2023. Interest on the 2018 Credit Facilities is established using LIBOR plus 1.13% - 1.75%, depending on the ~~Company's~~Company’s leverage ratio. Under the 2018 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~~2, 2022, $280.0 million was outstanding under the ~~Term Loan~~term loan with an effective interest rate of ~~1.9%~~3.4%. There were no borrowings outstanding on the ~~Revolving Credit Facility.~~revolving loan. The Company also has ~~$25.5~~$20.9 million of uncommitted operating lines of credit to fund its global operations under which there were 0no outstanding borrowings as of July ~~3, 2021.~~

~~The Company has required scheduled principal payments of $13.1 million during the remainder of fiscal 2022, $214.4 million during fiscal 2023 and $70.0 million during fiscal 2024.~~2, 2022.

The Company was in compliance with the leverage and interest coverage ratios specified in the 2018 Credit Facilities as well as all other bank covenants as of July ~~3, 2021.~~2, 2022.

On July 26, 2022, the Company entered into an amended and restated credit agreement with certain lenders to refinance the 2018 Credit Facilities and extend their maturity date through June 2025. The amended and restated credit agreement provides for a $280 million senior unsecured term loan, the proceeds of which have been used to retire the balance of the term loan under the 2018 Credit Facilities, and a $420 million senior unsecured revolving credit facility (together, the “Revised Credit Facilities”). Loans under the Revised Credit Facilities will initially bear interest at an annual rate equal to the Adjusted Term SOFR Rate (as specified in the amended and restated credit agreement), which is subject to a floor of 0%, plus an applicable rate ranging from 1.125% to 1.750% based on the Company’s consolidated net leverage ratio (as specified in the amended and restated credit agreement) at the applicable measurement date. Adjusted Term SOFR Rate loans are also subject to a credit spread adjustment of 0.10% per annum. The revolving credit facility carries an unused fee that ranges from 0.125% to 0.250% annually based on the Company’s consolidated net leverage ratio at the applicable measurement date. Under the Revised Credit Facilities, the Company is required to maintain certain leverage and interest coverage ratios specified in the amended and restated credit agreement as well as other customary non-financial affirmative and negative covenants. The Revised Credit Facilities mature on June 15, 2025. The principal amount of the term loan under the Revised Credit Facilities is repayable quarterly through the maturity date at a rate of 2.5% for the first year and 5% thereafter, with the unpaid balance due at maturity.

As a result of the Company’s entry into the Revised Credit Facilities, the Company has reclassified short term debt to long term on the condensed consolidated balance sheet accordance with ASC 470.

~~12.~~

The Company has required scheduled principal payments of $5.3 million during the remainder of fiscal 2023.

10. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The Company manufactures, markets and sells its products globally. During the three months ended July ~~3, 2021, 38.3%~~2, 2022, 30.4% of the ~~Company's~~Company’s sales were generated outside the U.S.~~, generally~~ in ~~foreign~~local 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~~Chinese Yuan 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~~2, 2022 and April ~~3, 2021~~2, 2022 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~~will 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~~$49.8 million as of July ~~3, 2021~~2, 2022 and ~~$56.0~~$67.3 million as of April ~~3, 2021.~~2, 2022. At July ~~3, 2021,~~2, 2022, a ~~loss~~gain of $0.9 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~~2, 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~~$44.1 million as of July ~~3, 2021~~2, 2022 and ~~$95.6~~$39.5 million as of April ~~3, 2021.~~2, 2022.

Interest Rate Swaps

On June 15, 2018, the Company entered into the 2018 Credit Facilities, which provided for a $350.0 million ~~Term Loan~~term loan and a $350.0 million ~~Revolving Credit Facility.~~revolving credit facility. Under the terms of the 2018 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. As of July 2, 2022, the notional value was $196.0 million.The Company designated the Swaps as cash flow hedges of variable interest rate risk associated with $345.6 million of indebtedness. For the three months ended July ~~3, 2021,~~2, 2022, a gain of ~~$2.0~~$3.1 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.

On July 26, 2022, the Company entered into an amended and restated credit agreement to refinance the 2018 Credit Facilities and extend the maturity date to June 15, 2025.The Company is in the process of evaluating additional interest rate swap protection that would extend beyond June 2023.

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,~~ se~~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.rvices. To date, the Company has not experienced significant customer payment defaults, or identified other significant collectability ~~concerns as a result of the pandemic.~~concerns.

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


		Three Months Ended				Three Months Ended
(In thousands)	(In thousands)	July 3, 2021		June 27, 2020			(In thousands)	July 2, 2022		July 3, 2021
Beginning balance	Beginning balance	$	2,226	$	3,824		Beginning balance	$	2,475	$	2,226
Credit (gain) loss	Credit (gain) loss	27		(259)			Credit (gain) loss	146		27
Write-offs	Write-offs	(17)		(119)			Write-offs	(126)		(17)
Ending balance	Ending balance	$	2,236	$	3,446		Ending balance	$	2,495	$	2,236

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 months ended July ~~3, 2021:~~2, 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 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 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	$	900	$	1,242	Net revenues, COGS and SG&A	$	101	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	$	—	$	—		$	925	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	$	2,350	$	(799)	Interest and other expense, net	$	—

The Company did not have fair value hedges or net investment hedges outstanding as of July ~~3, 2021~~2, 2022 or April ~~3, 2021.~~2, 2022. As of July ~~3, 2021, 0~~2, 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,~~2, 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.

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~~2, 2022 and April ~~3, 2021:~~2, 2022:


(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				July 2, 2022			April 2, 2022
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		$	4,528	$	3,133
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		110		99

Designated interest rate swaps									Designated interest rate swaps		Other current assets		49		—
				$	1,862		$	2,165					$	4,687	$	3,232
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		$	282	$	56
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		196		25
Designated interest rate swaps	Designated interest rate swaps	Other current liabilities		5,540			5,550		Designated interest rate swaps		Other current liabilities		—		1,813
Designated interest rate swaps		Other long-term liabilities		3,031			4,301
				$	8,826		$	10,654
													$	478	$	1,894

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.

1815

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~~2, 2022 and April ~~3, 2021.~~2, 2022.


		As of July 3, 2021									As of July 2, 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	$	44,030	$	—	$	—	$	44,030
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	0		1,680		—		1,680		Designated foreign currency hedge contracts	—		4,528		—		4,528
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	0		182		—		182		Non-designated foreign currency hedge contracts	—		110		—		110

Designated interest rate swaps										Designated interest rate swaps	—		49		—		49
		$	20,677	$	1,862	$	—	$	22,539		$	44,030	$	4,687	$	—	$	48,717
Liabilities	Liabilities									Liabilities
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	$	0	$	186	$	—	$	186	Designated foreign currency hedge contracts	$	—	$	282	$	—	$	282
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	0		69		—		69		Non-designated foreign currency hedge contracts	—		196		—		196
Designated interest rate swaps		0		8,571		—		8,571

Contingent consideration	Contingent consideration	—		—		38,402		38,402		Contingent consideration	—		—		877		877
		$	0	$	8,826	$	38,402	$	47,228		$	—	$	478	$	877	$	1,355

		As of April 3, 2021									As of April 2, 2022
		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	$	97,425	$	—	$	—	$	97,425
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	0		2,061		—		2,061		Designated foreign currency hedge contracts	—		3,133		—		3,133
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	0		104		—		104		Non-designated foreign currency hedge contracts	—		99		—		99

		$	49,699	$	2,165	$	—	$	51,864		$	97,425	$	3,232	$	—	$	100,657
Liabilities	Liabilities									Liabilities
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	$	0	$	454	$	—	$	454	Designated foreign currency hedge contracts	$	—	$	56	$	—	$	56
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	0		349		—		349		Non-designated foreign currency hedge contracts	—		25		—		25
Designated interest rate swaps	Designated interest rate swaps	0		9,851		—		9,851		Designated interest rate swaps	—		1,813		—		1,813
Contingent Consideration		—		—		28,733		28,733
Contingent consideration										Contingent consideration	—		—		33,675		33,675
		$	0	$	10,654	$	28,733	$	39,387		$	—	$	1,894	$	33,675	$	35,569

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)

July 2, 2022

Technique

Input

Range

Revenue-based payments

34,073

Monte Carlo Simulation Model

Discount rate

2.2%

Revenue-based payments

877

Discounted cash flow

Discount rate

8.5%

Projected year of payment

2022 - 2023

Projected year of payment

2022 - 2023

Revenue-based payments

2,119

Discounted cash flow

Discount rate

8.5%

Projected year of payment

2021 - 2023

Regulatory-based payment

2,210

Discounted cash flow

Discount rate

4.9%

Probability of payment

0% - 100%

Projected year of payment

2021 - 2023

As of July 3, 2021, the maximum potential contingent consideration that the Company could be required to pay is $39.5 million. During three months ended July 3, 2021, the Company increased the fair value of the contingent consideration related to the acquisition of Cardiva by $9.8 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~~$0.9 million at July ~~3, 2021. As of July 3, 2021, $31.7 million~~2, 2022 and was included in other ~~liabilities and $6.7 million was included in other long-term liabilities on the condensed consolidated balance sheet.~~

liabilities.

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~~2, 2022	$	~~28,733~~33,675
Change in fair value	~~9,774~~ (504)
Payments	(32,293)
Currency translation	~~(105)~~(1)
Balance at July ~~3, 2021~~2, 2022	$	~~38,402~~877

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 July 2, 2022 was $396.1 million, which was determined by using the market price on the last trading day of the reporting period.

~~13.~~11. 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 that, except for those matters described below, there are no other proceedings or claims pending against it the ultimate resolution of which could have a material adverse effect on ~~the~~its financial condition or results of operations. At each reporting period, ~~the Company~~management 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.

In the fourth quarter of fiscal 2021, a putative class action complaint was filed against the Company in the Circuit Court of Cook County, Illinois by Mary Crumpton, on behalf of herself and similarly situated individuals. See Mary Crumpton v. Haemonetics Corporation, Case No. 1:21-cv-1402. In her complaint, the plaintiff asserts that between June 2017 and August 2018 she donated plasma at a center operated by one of the Company’s customers, that the center required her to scan her finger print in a scanner that stored her finger print to identify her prior to plasma donation, and that the Company’s eQue donor management software sent her biometric information to a Company-owned server to be collected and stored in a manner that violated her rights under the Illinois Biometric Information Privacy Act (“BIPA”). The plaintiff seeks statutory damages, attorneys’ fees, and injunctive and equitable relief. In March 2021, the Company moved to dismiss the complaint for lack of personal jurisdiction and concurrently filed a motion to dismiss for failure to state a claim and a motion to stay. In late March 2022, the court denied the Company’s motion to dismiss for lack of personal jurisdiction but did not address the merits of the Company’s other positions. The Company believes the allegations in this lawsuit are without merit and will defend vigorously against them. The case is still in an early stage and the Company cannot reasonably estimate a range of potential loss and expense at this time.

~~14.~~

12. 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~~3 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
(In thousands)	July 2, 2022		July 3, 2021
Net revenues
Plasma	$	103,042	$	71,803
Blood Center	66,573		71,736
Hospital	89,184		77,607
Net revenues by business unit	258,799		221,146
Service (1)	5,137		5,268
Effect of exchange rates	(2,478)		2,114
Net revenues	$	261,458	$	228,528
(1) Reflects revenue for service, maintenance and parts

2118


	Three Months Ended
(In thousands)	July 2, 2022		July 3, 2021
Segment operating income
Plasma	$	55,126	$	35,346
Blood Center	30,377		33,882
Hospital	34,722		31,597
Segment operating income	120,225		100,825
Corporate expenses (1)	(81,584)		(68,731)
Effect of exchange rates	6,245		5,812
Integration and transaction costs	758		(16,733)
Deal amortization	(8,367)		(12,379)
Restructuring and restructuring related costs	(3,478)		(10,055)
Impairment of assets and PCS2 related charges	350		(3,643)
MDR and IVDR costs	(3,186)		(2,371)
Litigation-related charges	(196)		(938)
Gains on divestitures and sale of assets	—		9,603
Operating income	$	30,767	$	1,390
(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
(In thousands)	(In thousands)	July 3, 2021		June 27, 2020			(In thousands)	July 2, 2022		July 3, 2021
Plasma products and services	Plasma products and services	$	90,509	$	88,713		Plasma products and services	$	118,352	$	90,509
Blood Center products and services	Blood Center products and services	57,747		60,667			Blood Center products and services	52,918		57,747
Hospital products and services	Hospital products and services	80,272		46,197			Hospital products and services	90,188		80,272
Net revenues	Net revenues	$	228,528	$	195,577		Net revenues	$	261,458	$	228,528

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
(In thousands)	(In thousands)	July 3, 2021		June 27, 2020			(In thousands)	July 2, 2022		July 3, 2021
United States	United States	$	141,028	$	111,009		United States	$	181,996	$	141,028
Japan	Japan	17,221		16,831			Japan	13,878		17,221
Europe	Europe	43,335		43,019			Europe	40,457		43,335
Asia	Asia	25,952		22,384			Asia	24,424		25,952
Other	Other	992		2,334			Other	703		992
Net revenues	Net revenues	$	228,528	$	195,577		Net revenues	$	261,458	$	228,528

~~15.~~

13. 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 2, 2022	$	(27,919)	$	1,619	$	346	$	(25,954)
Other comprehensive income (loss) before reclassifications(1)	(9,570)		—		3,250		(6,320)
Amounts reclassified from Accumulated Other Comprehensive Income(1)	—		—		(443)		(443)
Net current period other comprehensive income (loss)	(9,570)		—		2,807		(6,763)
Balance as of July 2, 2022	$	(37,489)	$	1,619	$	3,153	$	(32,717)
(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.~~2, 2022. 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

Share Repurchase Program

In August 2022, we announced that our Board of Directors had authorized the repurchase of up to $300 million of Haemonetics common shares over the next three years. This new share repurchase program will help to offset the dilutive impact of recent and future employee equity grants. The timing and amounts of activity under the repurchase program will be at the Company’s discretion with the intent of beginning activity under the program during fiscal 2023.

Debt Issuance and Repayment

On July 26, 2022, we entered into an amended and restated credit agreement with certain lenders to refinance the credit facilities under our 2018 credit agreement (as amended from time to time) and extend the applicable maturity date through June 2025. The amended and restated credit agreement provides for a $280 million senior unsecured term loan, the proceeds of

which have been used to retire the balance of the term loan under our 2018 credit agreement, and a $420 million senior unsecured revolving credit facility.

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 months ended July 2, 2022 and July 3, 2021, ~~and June 27, 2020,~~ the Company incurred ~~$9.9~~$3.5 million and ~~$3.5~~$9.9 million, respectively, of restructuring and restructuring related costs under this program. Total cumulative charges under this program are ~~$36.9~~$59.2 million as of July ~~3, 2021.~~

2, 2022.

~~CSL Contract Loss~~

In April 2021, CSL 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 (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.

~~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 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 without significant disruptions 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 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
(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)	July 2, 2022			July 3, 2021			% Increase/ (Decrease)
Net revenues	Net revenues	$	228,528		$	195,577		16.8	%		Net revenues	$	261,458		$	228,528		14.4	%
Gross profit	Gross profit	$	108,085		$	90,030		20.1	%		Gross profit	$	142,263		$	108,085		31.6	%
% of net revenues	% of net revenues	47.3		%	46.0		%				% of net revenues	54.4		%	47.3		%
Operating expenses	Operating expenses	$	106,695		$	78,315		36.2	%		Operating expenses	$	111,496		$	106,695		4.5	%
Operating income	Operating income	$	1,390		$	11,715		(88.1)	%		Operating income	$	30,767		$	1,390		2,113.5	%
% of net revenues	% of net revenues	0.6		%	6.0		%				% of net revenues	11.8		%	0.6		%
Interest and other expense, net	Interest and other expense, net	$	(4,398)		$	(3,735)		17.8	%		Interest and other expense, net	$	(5,273)		$	(4,398)		19.9	%
(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 (loss) before provision for income taxes											Income (loss) before provision for income taxes	$	25,494		$	(3,008)		n/m
Provision for income taxes											Provision for income taxes	$	5,617		$	1,446		288.5	%
% of pre-tax income	% of pre-tax income	(48.1)		%	(31.9)		%				% of pre-tax income	22.0		%	(48.1)		%
Net (loss) income		$	(4,454)		$	10,527		n/m
Net income (loss)											Net income (loss)	$	19,877		$	(4,454)		n/m
% of net revenues	% of net revenues	(1.9)		%	5.4		%				% of net revenues	7.6		%	(1.9)		%
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 (loss) per share - basic											Net income (loss) per share - basic	$	0.39		$	(0.09)		n/m
Net income (loss) per share - diluted											Net income (loss) per share - diluted	$	0.38		$	(0.09)		n/m

Net ~~revenues~~revenues increased ~~16.8%~~14.4% during the three months ended July ~~3, 2021~~2, 2022, respectively, as compared with the same periods of fiscal ~~2021.~~2022. Without the effect of foreign exchange, net revenues increased ~~14.0%~~16.6% during the three months ended July ~~3, 2021~~2, 2022, respectively, as compared with the same periods of fiscal ~~2021.~~2022. Revenue increases including both volume and price in our Plasma and Hospital ~~primarily~~businesses drove the overall increase in revenue during the three months ended July ~~3, 2021.~~2, 2022.

Operating income ~~decreased~~increased during the three months ended July ~~3, 2021,~~2, 2022 as compared with the same period of fiscal ~~2021,~~2022, primarily due to increased ~~spend related to the acquisition of Cardiva Medical, Inc. (“Cardiva”), including higher transaction~~revenues in Plasma and ~~integration costs driven by an increase in the fair value of contingent consideration~~Hospital and the amortization of the fair value inventory step-up, as well as asset impairments and increased intangible amortization expense. The decrease was partially offset by favorable volumes and product mix, gains on divestitures and productivity savings from the 2020 ~~Program.~~Program, as well as decreased spending on acquisition costs in the current year, partially offset by lower revenues in Blood Center, increased freight costs in our global supply chain and increased sales and marketing expense.

~~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)	July 2, 2022		July 3, 2021		Reported growth		Currency impact		Constant currency growth (1)
United States	United States	$	141,028	$	111,009	27.0	%	—	%	27.0	%	United States	$	181,996	$	141,028	29.0	%	—	%	29.0	%
International	International	87,500		84,568		3.5	%	6.1	%	(2.6)	%	International	79,462		87,500		(9.2)	%	(5.2)	%	(4.0)	%
Net revenues	Net revenues	$	228,528	$	195,577	16.8	%	2.8	%	14.0	%	Net revenues	$	261,458	$	228,528	14.4	%	(2.2)	%	16.6	%

(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~~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 months ended July 2, 2022 our revenue generated outside the ~~U.S.~~U.S. was ~~38.3%~~ 30.4% of total net revenues, as compared with 38.3% during the three months ended July 3, 2021, ~~as compared with 43.2% during the three months ended June 27, 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)	July 2, 2022		July 3, 2021		Reported growth		Currency impact		Constant currency growth (1)
Plasma	Plasma	$	71,844	$	68,211	5.3	%	0.8	%	4.5	%	Plasma	$	102,381	$	71,844	42.5	%	(1.0)	%	43.5	%
Blood Center	Blood Center	72,945		77,789		(6.2)	%	3.4	%	(9.6)	%	Blood Center	65,694		72,945		(9.9)	%	(2.7)	%	(7.2)	%
Hospital (2)	Hospital (2)	78,494		44,839		75.1	%	4.8	%	70.3	%	Hospital (2)	88,494		78,494		12.7	%	(2.2)	%	14.9	%
Service	Service	5,245		4,738		10.7	%	7.0	%	3.7	%	Service	4,889		5,245		(6.8)	%	(4.3)	%	(2.5)	%
Net revenues	Net revenues	$	228,528	$	195,577	16.8	%	2.8	%	14.0	%	Net revenues	$	261,458	$	228,528	14.4	%	(2.2)	%	16.6	%

(2) Hospital revenue includes Hemostasis Management revenue of $33.5 million and $32.2 million ~~and $24.0 million~~ during the three months ended July 2, 2022 and July 3, 2021, ~~and June 27, 2020,~~ respectively. Hemostasis Management revenue increased 4.1% in the first quarter of fiscal 2023, as compared with the same period of fiscal 2022. Without the effect of foreign exchange, Hemostasis Management revenue increased 5.8% in the first quarter of fiscal 2023, as compared with the same period of fiscal 2022. Vascular Closure revenue increased ~~34.3%~~35.9% in the first quarter of fiscal 2023 as compared with the same period of fiscal 2022.

Plasma

Plasma revenue increased 42.5% during the three months ended July 2, 2022 as compared with the same period of fiscal ~~2021.~~2022. Without the effect of foreign exchange, ~~Hemostasis Management~~Plasma revenue increased ~~31.1% in~~43.5% during the ~~first quarter of fiscal~~three months ended July 2, 2022 as compared with the same period of fiscal ~~2021.~~2022

~~Plasma~~

~~Plasma revenue increased 5.3%~~. The increase during the three months ended July ~~3, 2021~~2, 2022, as compared with the same period of fiscal ~~2021. Without the effect of foreign exchange, Plasma revenue increased 4.5% during the three months ended July 3,~~ 2021 ~~as compared with the same periods of fiscal 2021. These increases were primarily~~was 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.~~price.

We continue experiencing the negative impact of COVID-19 on our business. While the timing of plasma collection recovery remains uncertain, we believe the impacts of the pandemic on plasma collection are temporary and anticipate volumes to recover by 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. (“CSL”) 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~~that was initially set to expire in June 2022. In fiscal ~~2021,~~2022, revenue under this Supply Agreement was ~~$88.6~~$102.4 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 CSL has committed to a minimum of $88.0 million of disposable purchases in fiscal 2023.

2522

Blood Center

Blood Center revenue decreased ~~6.2%~~9.9% during the three months ended July ~~3, 2021~~2, 2022 as compared with the same period of fiscal ~~2021.~~2022. Without the effect of foreign exchange, Blood Center revenue decreased ~~9.6%~~ 7.2% during the three months ended July ~~3, 2021~~2, 2022 as compared with the same period of fiscal ~~2021. These decreases were~~2022. The decrease during the three months ended July 2, 2022 as compared with the same periods of fiscal 2022 was primarily driven by a decline in the ~~divestiture~~volume of ~~certain blood donor management software solution assets and continued declines in whole blood~~apheresis 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 2021 in response to the COVID-19 pandemic, but we may experience a reversal in future periods.

Hospital

Hospital revenue increased ~~75.1%~~12.7% during the three months ended July ~~3, 2021~~2, 2022 as compared with the same period of fiscal ~~2021.~~2022. Without the effect of foreign exchange, Hospital revenue increased ~~70.3%~~14.9% during the three months ended July ~~3, 2021~~2, 2022, as compared with the same ~~period~~periods of fiscal ~~2021. These increases were~~2022. The increase during the three months ended July 2, 2022 was primarily ~~attributable~~attributable to Vascular Closure revenue, ~~resulting from~~as well as increases in TEG disposables revenue in the ~~acquisition of Cardiva~~U.S. and the impact of the COVID-19 pandemic on the prior year period. The increases were partially offset by the divestiture of certain blood bank and hospital software solution assets. 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.Transfusion Management revenue.

Gross Profit


		Three Months Ended								Three Months Ended
(In thousands)	(In thousands)	July 3, 2021			June 27, 2020			% Increase/ (Decrease)			(In thousands)	July 2, 2022			July 3, 2021			% Increase
Gross profit	Gross profit	$	108,085		$	90,030		20.1	%		Gross profit	$	142,263		$	108,085		31.6	%
% of net revenues	% of net revenues	47.3		%	46.0		%				% of net revenues	54.4		%	47.3		%

Gross profit increased ~~20.1%~~31.6% during the three months ended July ~~3, 2021~~2, 2022 as compared with the same ~~period~~periods of fiscal ~~2021.~~2022. Without the effect of foreign exchange, gross profit increased ~~12.5%~~34.4% during the three months ended July ~~3, 2021~~2, 2022, as compared with the same period of fiscal ~~2021. These increases were~~2022. The increase during the three months ended July 2, 2022 was primarily driven by ~~the addition of Vascular Closure, favorable volumes~~volume and ~~product~~ mix, ~~lower expenses related to the COVID-19 pandemic~~price and productivity savings from the ~~2020 Program.~~

~~The increase was~~Operational Excellence Program, partially offset by ~~pricing adjustments, the amortization of the fair value inventory step-up related to the acquisition of Cardiva, asset impairments~~inflationary pressures in our global manufacturing and ~~recent divestitures.~~supply chain and increased depreciation expense.

Operating Expenses


		Three Months Ended								Three Months Ended
(In thousands)	(In thousands)	July 3, 2021			June 27, 2020			% Increase/ (Decrease)			(In thousands)	July 2, 2022			July 3, 2021			% Increase/ (Decrease)
Research and development	Research and development	$	12,701		$	7,750		63.9	%		Research and development	$	10,902		$	12,701		(14.2)	%
% of net revenues	% of net revenues	5.6		%	4.0		%				% of net revenues	4.2		%	5.6		%
Selling, general and administrative	Selling, general and administrative	$	91,218		$	62,302		46.4	%		Selling, general and administrative	$	92,227		$	91,218		1.1	%
% of net revenues	% of net revenues	39.9		%	31.9		%				% of net revenues	35.3		%	39.9		%
Amortization of intangible assets	Amortization of intangible assets	$	12,379		$	8,263		49.8	%		Amortization of intangible assets	$	8,367		$	12,379		(32.4)	%
% of net revenues	% of net revenues	5.4		%	4.2		%				% of net revenues	3.2		%	5.4		%

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	$	—		$	(9,603)		n/m
% of net revenues	% of net revenues	(4.2)		%	—		%				% of net revenues	—		%	(4.2)		%
Total operating expenses	Total operating expenses	$	106,695		$	78,315		36.2	%		Total operating expenses	$	111,496		$	106,695		4.5	%
% of net revenues	% of net revenues	46.7		%	40.0		%				% of net revenues	42.6		%	46.7		%

Research and Development

Research and development expenses ~~increased 63.9%~~decreased 14.2% during the three months ended July ~~3, 2021~~2, 2022 as compared with the same period of fiscal ~~2021.~~2022. Without the effect of foreign exchange, research and development expenses ~~increased 61.2%~~decreased 13.6% during the three months ended July ~~3, 2021~~2, 2022, as compared with the same period of fiscal ~~2021. These increases were~~2022. This decrease was primarily due to ~~increased spend related to~~the timing of investments ~~in our Hospital Business unit, primarily driven by Vascular Closure, as well as costs related to European Medical Device Regulation. These increases were partially offset by~~across quarters and 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%~~1.1% during the three months ended July ~~3, 2021~~2, 2022 as compared with the same period of fiscal ~~2021.~~2022. Without the effect of foreign exchange, selling, general, and administrative expenses increased ~~44.4%~~2.3% during the three months ended July ~~3, 2021~~2, 2022 as compared with the same period of fiscal ~~2021. These increases were~~2022. The increase during the three months ended July 2, 2022 was primarily ~~due to increased spend~~driven by inflationary pressures and higher freight costs in our global supply chain, and higher investments in sales and marketing, partially offset by cost savings related to the ~~acquisition of Cardiva, including higher transaction~~2020 Program and ~~integration costs driven by an increase~~decreased spend on acquisitions in the fair value of contingent consideration, and higher share-based and variable compensation expense, partially offset by asset impairments recognized in the prior year period and lower PCS2 related costs.current year.

Amortization of Intangible Assets

We recognized amortization expense of ~~$12.4~~$8.4 million during the three months ended July 2, 2022 and ~~$8.3~~$12.4 million during the three months ended July 3, ~~2021 and June 27, 2020, respectively.~~2021. The ~~increase was~~decrease is primarily ~~driven by an increase in~~the result of intangible assets ~~resulting from recent acquisitions.~~that became fully amortized during fiscal 2022.

Gains on Divestitures

We recognized gains on divestitures of $9.6 million during the three months ended July 3, ~~2021. 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~~2021, with no gains on divestitures during the three months ended ~~June 27, 2020.~~July 2, 2022.

Interest and Other Expense, Net

Interest and other expenses increased ~~17.8%~~19.9% during the three months ended July ~~3, 2021~~2, 2022 as compared with the same period of fiscal ~~2021.~~2022. Without the effects of foreign exchange, interest and other expenses increased ~~16.5%~~18.2% during the three months ended July ~~3, 2021~~2, 2022 as compared with the same period of fiscal ~~2021.~~2022. The increase iswas primarily driven by higher interest rates which impacted the ~~amortization of deferred financing fees associated with the 2026 Notes and realized losses~~interest incurred on ~~interest rate swaps, 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 as of July 3, 2021 was 1.9%.~~loan.

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 months ended July 2, 2022, we reported income tax expense of $5.6 million representing an effective tax rate of 22.0%. The effective tax rate for the three months ended July 2, 2022 includes $0.6 million discrete tax expense relating to stock compensation shortfalls.

For the three months ended July 3, 2021, we reported income tax expense of $1.4 million representing an effective tax rate of (48.1)%. The effective tax rate for the three months ended July 3, 2021 includes $0.8 million discrete tax expense relating to stock compensation shortfalls.

For the three months ended June 27, 2020, we reported an income tax benefit of $2.5 million representing an effective tax benefit of 31.9%. The effective tax rate for the three months ended June 27, 2020 includes discrete tax benefits recognized from excess stock compensation deductions of $4.0 million. The effective tax rate was also impacted by the jurisdictional mix of earnings.

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)	July 2, 2022		April 2, 2022
Cash & cash equivalents	Cash & cash equivalents	$	173,462	$	192,305	Cash & cash equivalents	$	214,948	$	259,496
Working capital	Working capital	$	456,029	$	440,051	Working capital	$	507,296	$	313,765
Current ratio	Current ratio	3.0		2.7		Current ratio	3.8		1.7
Net debt(1)	Net debt(1)	$	(610,908)	$	(515,303)	Net debt(1)	$	(555,046)	$	(514,093)
Days sales outstanding (DSO)	Days sales outstanding (DSO)	52		51		Days sales outstanding (DSO)	50		54
Inventory turnover	Inventory turnover	1.1		1.2		Inventory turnover	1.5		1.4

(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, our revolving credit line and proceeds from employee stock option 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 the build out of~~including enhancements to our ~~new~~North American manufacturing ~~facility in Clinton, PA,~~facilities, 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.~~2, 2022.

As of July ~~3, 2021,~~2, 2022, we had ~~$173.5~~$214.9 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~~with certain lenders that 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~~“2018 Credit Facilities”). that mature on June 15, 2023. Interest on the ~~term loan and revolving loan~~2018 Credit Facilities is established using LIBOR plus 1.13% - 1.75%, depending on our leverage ratio. Under the 2018 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~~2, 2022, $280.0 million was outstanding under the term loan with an effective interest rate of ~~1.9%~~3.4%. There were no borrowings outstanding on the revolving loan. We also had ~~$25.5~~$20.9 million of uncommitted operating lines of credit to fund our global operations under which there were no outstanding borrowings as of July ~~3, 2021.~~

~~We have scheduled principal payments of $13.1 million required during~~2, 2022. Additionally, the ~~remainder of fiscal 2022. We were~~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.~~

2, 2022.

~~In August 2021,~~On July 26, 2022, the Company entered into an amended and restated credit agreement with certain lenders to refinance the 2018 Credit Facilities and extend the maturity date through June 2025. The amended and restated credit agreement provides for a $280 million senior unsecured term loan, the proceeds of which have been used to retire the balance of the term loan under the 2018 Credit Facilities, and a $420 million senior unsecured revolving credit facility (together, the “Revised Credit Facilities”). Loans under the Revised Credit Facilities will initially bear interest at an annual rate equal to the Adjusted Term SOFR Rate (as specified in the amended and restated credit agreement), which is subject to a floor of 0%, plus an applicable rate ranging from 1.125% to 1.750% based on the Company’s consolidated net leverage ratio (as specified in the amended and restated credit agreement) at the applicable measurement date. Adjusted Term SOFR Rate loans are also subject to a credit spread adjustment of 0.10% per annum. The revolving credit facility carries an unused fee that ranges from 0.125% to 0.250% annually based on the Company’s consolidated net leverage ratio at the applicable measurement date. Under the Revised Credit Facilities, the Company is required to maintain certain leverage and interest coverage ratios specified in the amended and restated credit agreement as well as other customary non-financial affirmative and negative covenants. The Revised Credit Facilities mature on June 15, 2025. The principal amount of the term loan under the Revised Credit Facilities is repayable quarterly through the maturity date at a rate of 2.5% for the first year and 5% thereafter, with the unpaid balance due at maturity.

The Company has scheduled principal payments of $5.3 million and $12.3 million required during the remainder of fiscal 2023 and during fiscal 2024, respectively.

During 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 months ended July ~~3, 2021,~~2, 2022, we incurred ~~$9.9~~$3.5 million of restructuring and restructuring related costs under this program.

Cash Flows


		Three Months Ended				Three Months Ended
(In thousands)	(In thousands)	July 3, 2021		June 27, 2020			(In thousands)	July 2, 2022		July 3, 2021
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	$	41,993	$	(1,680)
Investing activities	Investing activities	(15,851)		(23,896)			Investing activities	(58,214)		(15,851)
Financing activities	Financing activities	(1,634)		148,951			Financing activities	(23,395)		(1,634)
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)	(4,932)		322
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	$	(44,548)	$	(18,843)

(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 by ~~$13.5~~$43.7 million during the three months ended July ~~3, 2021,~~2, 2022, as compared with the three months ended ~~June 27, 2020.~~July 3, 2021. The increase in cash ~~used~~provided by operating activities was primarily the result of an increase in ~~working capital due to lower~~net income, higher collections of accounts receivable and ~~higher inventory growth as well as~~ a ~~reduction~~decrease in ~~net income, as adjusted for depreciation, amortization and other non-cash charges compared with the prior year period.~~inventories driven by NexSys PCS device placements.

Net cash used in investing activities ~~decreased~~increased by ~~$8.0~~$42.4 million during the three months ended July ~~3, 2021,~~2, 2022, as compared with the three months ended ~~June 27, 2020.~~July 3, 2021. 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, driven by NexSys PCS device placements, and other investments in the current year.

Net cash used in financing activities increased by ~~$150.6~~$21.8 million during the three months ended July ~~3, 2021,~~2, 2022, as compared with the three months ended ~~June 27, 2020,~~July 3, 2021, primarily due to ~~a reduction~~acquisition-related contingent consideration payments made in ~~borrowings on our revolving credit facility, net of payments.~~the current year.

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.three months ended July 2, 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 throughout fiscal 2023. Historically, we have been able to limit the impact of the effects of inflation by improving our manufacturing and purchasing efficiencies, by increasing employee productivity and by adjusting the selling prices of products, but we may not be able to fully mitigate these increases in our operational costs in the future.

Foreign Exchange

During the three months ended July ~~3, 2021, 38.3%~~2, 2022, 30.4% 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~~ Chinese Yuan 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,~~administered worldwide, and the effectiveness of such vaccines in slowing or stopping the spread of COVID-19 and its variants and mitigating the economic effects of the ~~pandemic;~~pandemic, including inflationary pressures and higher freight costs in our global supply chain;

•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;

•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;

•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;

•Our ability to retain and attract key personnel;

•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' 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~~ 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~~completed or planned acquisitions, divestitures or other ~~planned or completed acquisition or divestiture~~strategic investments 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~~EU MDR/EU 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;

•Geopolitical and economic conditions in China, Russia and other foreign jurisdictions where we do business;

•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~~claims we may be subject to ~~retain and attract key personnel;~~now or in the future; and

•Market conditions impacting our stock price and/or our share repurchase ~~programs we may enter into from time to time,~~program, and the possibility that such share repurchase ~~programs~~program 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. In~~currencies. As of July 2, 2022, 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~~$4.1 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~~$4.7 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 debt under our Credit Facilities as of July ~~3, 2021~~2, 2022 was ~~$297.5~~$280.0 million with an interest rate of ~~1.9%~~3.4% based on prevailing LIBOR rates. An increase of 100 basis points in LIBOR rates would result in additional annual interest expense of ~~$0.7~~$0.9 million.

On ~~August 21, 2018,~~July 26, 2022, we entered into an amended and restated credit agreement to refinance the 2018 Credit Facilities and extend the applicable maturity date to June 15, 2025. As of July 26, 2022, total outstanding debt under our Revised Credit Facilities was $280.0 million with an interest rate of 4.2% based on prevailing Term SOFR rates and as otherwise specified under the terms of the amended and restated credit agreement. An increase of 100 basis points in Term SOFR rates would result in an additional annual interest expense of $1.6 million.

As of July 2, 2022, the notional amount on our two interest rate swap agreements to effectively convert ~~$241.9 million of~~ borrowings under our 2018 Credit Facilities from a variable rate to a fixed ~~rate.~~rate were $196.0 million. 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.~~hedges and expire in June 2023. In connection with the Company’s entry in the Revised Credit Facilities, the Company is in the process of evaluating additional interest rate swap protection that would extend beyond June 2023.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation, as of July ~~3, 2021,~~2, 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.~~2, 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~~2, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3229

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Information with respect to this Item may be found in Note ~~13,~~11, 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.~~2, 2022.

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.

3330

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

3431

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*			Second Amendment to Lease Agreement effective December 3, 2007, made as of June 17, 2022 between Mrs. Blanca Estela Colunga Santelices and Haemonetics Mexico Manufacturing, S. de R.L. de C.V. (1).

10.2*



			Retention and Transition Agreement, dated as of June 14, 2022, by and between the Company and Michelle L. Basil (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,~~James C. D'Arecca, 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,~~James C. D'Arecca, 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,~~2, 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 Statement of Stockholders' Equity, (iv) Condensed Consolidated Statements of Cash Flows, and ~~(iv)~~(v) 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.

3532

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~~10, 2022	By:	/s/ Christopher A. Simon
		Christopher A. Simon, President and Chief Executive Officer
		(Principal Executive Officer)

August ~~11, 2021~~10, 2022	By:	/s/ ~~William Burke~~James C. D'Arecca
		~~William Burke,~~James C. D'Arecca, Executive Vice President, Chief Financial Officer
		(Principal Financial Officer)

3633


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