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: ~~January 1,~~July 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 ~~February 4,~~August 8, 2022: ~~51,111,595~~51,316,543

HAEMONETICS CORPORATION

INDEX



			PAGE
PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Unaudited Condensed Consolidated Statements of Income and Comprehensive Income - Three ~~and~~ ~~Nine~~ Months Ended J ~~January 1~~uly 2 , 2022 and July 3 , 202 2 ~~and~~ ~~December 26, 2020~~1			3
Unaudited Condensed Consolidated Balance Sheet - J ~~January 1~~uly 2 , ~~202~~2 2022 and Consolidated Balance Sheet - April ~~3, 2021~~2 , 202 2			4
Unaudited Condensed Consolidated Statements of Stockholders’ Equity - Three ~~and~~ ~~Nine~~ Months Ended J ~~January~~uly 2 , 2022 and 1July 3 , 202 2 ~~and~~ ~~December 26, 2020~~1			5
Unaudited Condensed Consolidated Statements of Cash Flows -~~Nine~~ Three Months Ended J ~~January 1~~uly 2 , 2022 and July 3 , 202 2 ~~and~~ ~~December 26, 2020~~1			76
Notes to Unaudited Condensed Consolidated Financial Statements			87

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2420

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk			3428

ITEM 4. Controls and Procedures			3529

PART II. OTHER INFORMATION			3630

ITEM 1. Legal Proceedings			3630

ITEM 1A. Risk Factors			3630

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			3630

ITEM 3. Defaults upon Senior Securities			3731

ITEM 4. Mine Safety Disclosures			3731

ITEM 5. Other Information			3731

ITEM 6. Exhibits			3832

SIGNATURES			3933

ITEM 1. FINANCIAL STATEMENTS

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE 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 Nine Months Ended
January 1,
2022 December 26,
2020 January 1,
2022 December 26,
2020
Net revenues $ 259,769 $ 240,371 $ 728,194 $ 645,434
Cost of goods sold 121,204 120,114 359,003 329,403
Gross profit 138,565 120,257 369,191 316,031
Operating expenses:
Research and development 10,037 7,501 33,591 22,014
Selling, general and administrative 80,726 65,641 247,722 191,504
Amortization of intangible assets 12,151 7,805 35,930 24,204
Gains on divestitures and sale of assets — (1,115) (9,603) (32,613)
Total operating expenses 102,914 79,832 307,640 205,109
Operating income 35,651 40,425 61,551 110,922
Interest and other expense, net (4,263) (3,051) (13,249) (10,612)
Income before provision for income taxes 31,388 37,374 48,302 100,310
Provision for income taxes 8,156 5,492 14,668 9,800
Net income $ 23,232 $ 31,882 $ 33,634 $ 90,510
Net income per share - basic $ 0.45 $ 0.63 $ 0.66 $ 1.79
Net income per share - diluted $ 0.45 $ 0.62 $ 0.65 $ 1.77
Weighted average shares outstanding
Basic 51,094 50,789 51,024 50,634
Diluted 51,344 51,363 51,356 51,234
Comprehensive income $ 23,419 $ 40,496 $ 33,832 $ 105,787

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

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited in thousands, except share data)


		January 1, 2022		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	$	236,877	$	192,305	Cash and cash equivalents	$	214,948	$	259,496
Accounts receivable, less allowance of $2,382 at January 1, 2022 and $2,226 at April 3, 2021		154,980		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	305,741		322,614		Inventories, net	277,887		293,027
Prepaid expenses and other current assets	Prepaid expenses and other current assets	31,857		51,072		Prepaid expenses and other current assets	48,485		44,132
Total current assets	Total current assets	729,455		693,546		Total current assets	687,783		756,031
Property, plant and equipment, net	Property, plant and equipment, net	238,841		217,559		Property, plant and equipment, net	288,321		258,482
Intangible assets, less accumulated amortization of $362,637 at January 1, 2022 and $320,640 at April 3, 2021		323,951		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	468,199		466,444		Goodwill	466,115		467,287
Deferred tax asset	Deferred tax asset	6,050		6,009		Deferred tax asset	4,552		4,468
Other long-term assets	Other long-term assets	64,880		70,882		Other long-term assets	71,045		63,205
Total assets	Total assets	$	1,831,376	$	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	$	144,064	$	17,016	Notes payable and current maturities of long-term debt	$	6,853	$	214,148
Accounts payable	Accounts payable	51,175		50,293		Accounts payable	57,907		58,371
Accrued payroll and related costs	Accrued payroll and related costs	39,046		47,600		Accrued payroll and related costs	30,422		48,540
Other liabilities		121,126		138,586
Other current liabilities						Other current liabilities	85,305		121,207
Total current liabilities	Total current liabilities	355,411		253,495		Total current liabilities	180,487		442,266
Long-term debt, net of current maturities	Long-term debt, net of current maturities	633,118		690,592		Long-term debt, net of current maturities	763,141		559,441
Deferred tax liability	Deferred tax liability	26,132		43,825		Deferred tax liability	32,622		28,727
Other long-term liabilities	Other long-term liabilities	85,940		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 — 51,111,046 shares at January 1, 2022 and 50,868,820 shares at April 3, 2021		511		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	566,963		602,727		Additional paid-in capital	580,359		572,476
Retained earnings	Retained earnings	192,650		157,981		Retained earnings	222,268		202,391
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(29,349)		(29,547)		Accumulated other comprehensive loss	(32,717)		(25,954)
Total stockholders’ equity	Total stockholders’ equity	730,775		731,670		Total stockholders’ equity	770,423		749,424
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,831,376	$	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				Common Stock					Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
		Shares	Par Value								Shares								Par Value
Balance, April 3, 2021		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	—		500				—			—				500
Issuance of restricted stock, net of cancellations		91	1		(1)				—			—				—
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

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

Share-based compensation expense		—	—		5,979				—			—				5,979
Net income		—	—		—				14,856			—				14,856
Other comprehensive income		—	—		—				—			(436)				(436)
Balance, October 2, 2021		51,060	$	511	$	558,156			$	169,418		$	(29,536)			$	698,549
Balance, April 2, 2022																			Balance, April 2, 2022	51,124			$	511		$	572,476		$	202,391		$	(25,954)		$	749,424
Employee stock purchase plan	Employee stock purchase plan	36	—		1,999				—			—				1,999			Employee stock purchase plan	57			—		2,459			—			—			2,459
Exercise of stock options	Exercise of stock options	12	—		353				—			—				353			Exercise of stock options	3			1		126			—			—			127
Issuance of restricted stock, net of cancellations	Issuance of restricted stock, net of cancellations	3	—		—				—			—				—			Issuance of restricted stock, net of cancellations	131			1		(1)			—			—			—

Share-based compensation expense	Share-based compensation expense	—	—		6,455				—			—				6,455			Share-based compensation expense	—			—		5,299			—			—			5,299
Net income	Net income	—	—		—				23,232			—				23,232			Net income	—			—		—			19,877			—			19,877
Other comprehensive income		—	—		—				—			187				187
Balance, January 1, 2022		51,111	$	511	$	566,963			$	192,650		$	(29,349)			$	730,775
Other comprehensive loss																			Other comprehensive loss	—			—		—			—			(6,763)			(6,763)
Balance, July 2, 2022																			Balance, July 2, 2022	51,315			$	513	$	580,359		$	222,268		$	(32,717)		$	770,423

~~HAEMONETICS CORPORATION AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~

~~(Unaudited in thousands)~~


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

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

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

Net income		—	—		—				10,527			—				10,527
Other comprehensive income		—	—		—				—			1,429				1,429
Balance, June 27, 2020		50,671	$	507	$	562,729			$	89,039		$	(43,706)			$	608,569
Exercise of stock options		2	—		67				—			—				67
Issuance of restricted stock, net of cancellations		30	—		—				—			—				—
Share-based compensation expense		—	—		5,952				—			—				5,952
Net income		—	—		—				48,101			—				48,101
Other comprehensive income		—	—		—				—			5,234				5,234
Balance, September 26, 2020		50,703	$	507	$	568,748			$	137,140		$	(38,472)			$	667,923
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	—		1,868				—			—				1,868			Employee stock purchase plan	39			—		2,210			—			—			2,210
Exercise of stock options	Exercise of stock options	50	—		2,578				—			—				2,578			Exercise of stock options	14			—		500			—			—			500
Issuance of restricted stock, net of cancellations	Issuance of restricted stock, net of cancellations	42	1		(1)				—			—				—			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	—	—		6,287				—			—				6,287			Share-based compensation expense	—			—		6,828			—			—			6,828
Net income		—	—		—				31,882			—				31,882
Net loss																			Net loss	—			—		—			(4,454)			—			(4,454)
Other comprehensive income	Other comprehensive income	—	—		—				—			8,614				8,614			Other comprehensive income	—			—		—			—			447			447
Balance, December 26, 2020		50,817	$	508	$	579,480			$	169,022		$	(29,858)			$	719,152
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)


		Nine Months Ended					Three Months Ended
		January 1, 2022		December 26, 2020			July 2, 2022		July 3, 2021
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income		$	33,634	$	90,510
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	72,934		62,377		Depreciation and amortization	22,447		25,033
Amortization of fair value inventory step-up		5,295		—

Impairment of assets	Impairment of assets	5,144		1,028		Impairment of assets	94		5,144
Share-based compensation expense	Share-based compensation expense	19,262		18,406		Share-based compensation expense	5,299		6,828
Amortization of deferred finance costs	Amortization of deferred finance costs	2,608		425		Amortization of deferred finance costs	797		1,019
(Benefit) provision for losses on inventory		(280)		3,779
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)		(32,613)		Gains on divestitures and sale of assets	—		(9,603)
Deferred tax benefit		1,999		(3,953)

Contingent consideration expense	Contingent consideration expense	10,272		—		Contingent consideration expense	(504)		9,774
Other non-cash operating activities	Other non-cash operating activities	1,103		89		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	(28,736)		18,588		Change in accounts receivable	10,358		(5,342)
Change in inventories	Change in inventories	11,589		(33,728)		Change in inventories	15,240		(8,553)
Change in prepaid income taxes	Change in prepaid income taxes	4,400		1,181		Change in prepaid income taxes	2,118		2,121
Change in other assets and other liabilities	Change in other assets and other liabilities	(6,010)		2,687		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	(19,398)		(21,518)		Change in accounts payable and accrued expenses	(27,181)		(29,299)
Net cash provided by operating activities		104,213		107,258
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	(61,394)		(25,408)		Capital expenditures	(45,467)		(13,919)
Acquisition	Acquisition	(2,500)		(16,606)		Acquisition	(2,850)		(2,500)
Proceeds from divestitures		10,642		44,587

Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	1,419		1,085		Proceeds from sale of property, plant and equipment	498		568
Net cash (used in) provided by investing activities		(51,833)		3,658
Other investments						Other investments	(10,395)		—
Net cash used in investing activities						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 (decrease) in short-term loans		—		(60,000)

Repayment of term loan borrowings	Repayment of term loan borrowings	(13,125)		(13,125)		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	4,210		4,012		Proceeds from employee stock purchase plan	2,459		2,210
Proceeds from exercise of stock options	Proceeds from exercise of stock options	1,923		3,838		Proceeds from exercise of stock options	127		500
Other	Other	8		(32)		Other	(13)		31
Net cash used in financing activities	Net cash used in financing activities	(6,984)		(65,307)		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	(824)		6,082		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	44,572		51,691		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	$	236,877	$	189,002	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:

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	$	25,385	$	5,878	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 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 ~~nine~~three months ended ~~January 1,~~July 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 January 1, 2022, the Company has concluded that substantial doubt about its ability to continue as a going concern does not exist. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Annual Report on Form 10-K for the fiscal year ended April ~~3, 2021.~~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 ~~and nine~~ months ended ~~January 1, 2022.~~July 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 Update No. 2020-06 — Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in 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 management to determine the detail of the initiatives that will comprise the program. During ~~the first quarter of~~ fiscal 2022, the Company revised the program to improve product and service quality, reduce cost principally in its manufacturing and supply chain operations and ensure sustainability while helping to offset impacts from a previously announced customer loss, rising inflationary pressures and effects of the COVID-19 pandemic. The Company now expects to incur aggregate charges between $95 million and $105 million by the end of fiscal 2025. The majority of charges will result in cash outlays, including severance and other employee costs, and will be incurred as the specific actions required to execute these initiatives are identified and approved. During the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022 and July 3, 2021, the Company incurred ~~$5.7~~$3.5 million and ~~$20.2~~$9.9 million, respectively, of restructuring and restructuring related costs under this program. ~~During the~~ ~~three and nine months ended December 26, 2020, the Company incurred $3.1 million and $11.1 million, respectively, of restructuring and restructuring related costs under this program.~~ Total cumulative charges under this program are ~~$47.2 million.~~$59.2 million.

The following table summarizes the activity for restructuring reserves related to the 2020 Program and prior programs for the ~~nine~~three months ended ~~January 1,~~July 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	4,008		28		4,036		Costs incurred, net of reversals	(44)		—		(44)
Payments	Payments	(1,988)		(33)		(2,021)		Payments	(703)		(20)		(723)
Balance at January 1, 2022		$	2,595	$	432	$	3,027
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 Income and Comprehensive Income:


		Three Months Ended				Nine Months Ended					Three Months Ended
(In thousands)	(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020		(In thousands)	July 2, 2022		July 3, 2021
Cost of goods sold	Cost of goods sold	$	(187)	$	(49)	$	2,276	$	218	Cost of goods sold	$	(206)	$	2,253
Research and development	Research and development	—		(2)		108		108		Research and development	—		105
Selling, general and administrative expenses	Selling, general and administrative expenses	108		(41)		1,652		574		Selling, general and administrative expenses	162		1,062
		$	(79)	$	(92)	$	4,036	$	900		$	(44)	$	3,420

As of ~~January 1,~~July 2, 2022, the Company had a restructuring liability of ~~$3.0~~$2.0 million, of which ~~$2.6~~$1.7 million is 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				Nine Months Ended				Restructuring costs	Three Months Ended
(In thousands)	(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020		(In thousands)	July 2, 2022		July 3, 2021
Plasma	Plasma	$	(192)	$	(27)	$	2,507	$	454	Plasma	$	(211)	$	2,288
Blood Center	Blood Center	—		66		3		240		Blood Center	—		3
Hospital	Hospital	—		—		(91)		(18)		Hospital	—		(38)
Corporate	Corporate	113		(131)		1,617		224		Corporate	167		1,167
Total	Total	$	(79)	$	(92)	$	4,036	$	900	Total	$	(44)	$	3,420

Restructuring related costs	Restructuring related costs	Three Months Ended				Nine Months Ended				Restructuring related costs	Three Months Ended
(In thousands)	(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020		(In thousands)	July 2, 2022		July 3, 2021
Plasma	Plasma	$	1,400	$	431	$	4,541	$	1,235	Plasma	$	640	$	1,738
Blood Center	Blood Center	24		518		554		1,024		Blood Center	2		490
Hospital	Hospital	127		4		292		14		Hospital	89		133
Corporate	Corporate	4,210		2,282		10,827		8,410		Corporate	2,791		4,274
Total	Total	$	5,761	$	3,235	$	16,214	$	10,683	Total	$	3,522	$	6,635

Total restructuring and restructuring related costs	Total restructuring and restructuring related costs	$	5,682	$	3,143	$	20,250	$	11,583	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 its 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 accounting for income taxes remains preliminary, as the Company is finalizing additional information to complete its assessment. Measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the acquisition date. The finalization of the Company’s purchase accounting assessment 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 January 1, 2022, the valuation studies necessary to determine the fair market value of the assets acquired and liabilities assumed are completed.

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~~	~~250,560~~
~~Goodwill~~	~~253,966~~
~~Other long-term assets~~	~~1,868~~
~~Total assets acquired~~	$	~~534,499~~
~~Accounts payable~~	~~3,292~~
~~Accrued payroll and related costs~~	~~58,211~~
~~Other liabilities~~	~~1,853~~
~~Deferred tax liability~~	~~27,102~~
~~Other long-term liabilities~~	~~1,772~~
~~Total liabilities assumed~~	$	~~92,230~~
~~Net assets acquired~~	$	~~442,269~~

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

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 $254.0 million, which is attributable to the revenue and cash flow projections associated with completed technologies and the development of future technology that does not exist in the current 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 $ 213,290 13 years 13.5 %
Customer relationships 18,166 12 years 13.0 %
Trademarks 5,437 13 years 13.5 %
IPR&D 13,667 Indefinite 15.0 %
Total $ 250,560

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

~~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 to legal and other professional fees in the amount of $6.6 million and an additional $3.0 million of debt financing costs and lender fees which were recognized in selling, general and administrative and as interest expense on the unaudited Condensed Consolidated Statements of Income and Comprehensive 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 nine months ended January 1, 2022, the Company made $2.5 million of milestone payments which were recorded within intangible assets on the Condensed Consolidated Balance Sheets. These products augment the Company’s 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 nine months ended December 26, 2020.~~

~~5. DIVESTITURES~~

~~Fajardo, Puerto Rico Manufacturing Operations~~

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

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

~~U.S. Blood Donor Management Software~~

On July 1, 2020, the Company sold certain U.S. blood donor management software solution assets within its Blood Center business unit to the GPI Group (“GPI”) for an upfront cash payment of $14.0 million ($13.6 million, net of working capital adjustments) and up to $14.0 million in additional consideration contingent on the achievement of commercial milestones over the twelve month period immediately following the closing of the transaction. The disposal group consisted of $1.4 million of accounts receivable, $0.9 million of intangible assets, other liabilities of $1.8 million and $1.4 million of goodwill allocated based on fair value to the business. The Company recognized a gain of $13.2 million associated with the transaction in fiscal 2021. During the first quarter of fiscal year 2022, 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 reported tax rate is impacted by the jurisdictional mix of earnings in any given period as the foreign jurisdictions in which it operates have tax rates that differ from the U.S. statutory tax rate.

For the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022, the Company reported income tax expense of ~~$8.2~~$5.6 million ~~and $14.7 million, respectively,~~ representing an effective tax ~~rates~~rate of ~~26.0% and 30.4%, respectively.~~22.0%. The effective tax rate for the ~~nine~~three months ended ~~January 1,~~July 2, 2022 includes $0.6 million of discrete tax expense relating to stock compensation ~~shortfalls~~shortfalls.

For the three months ended July 3, 2021, the Company reported income tax expense of ~~$0.9~~$1.4 million ~~with no~~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 recorded in the three months ended January 1, 2022.~~

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

shortfalls.

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				Nine Months Ended					Three Months Ended
(In thousands, except per share amounts)	(In thousands, except per share amounts)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020		(In thousands, except per share amounts)	July 2, 2022		July 3, 2021
Basic EPS	Basic EPS									Basic EPS
Net income		$	23,232	$	31,882	$	33,634	$	90,510
Net income (loss)										Net income (loss)	$	19,877	$	(4,454)
Weighted average shares	Weighted average shares	51,094		50,789		51,024		50,634		Weighted average shares	51,224		50,939
Basic income per share		$	0.45	$	0.63	$	0.66	$	1.79
Basic income (loss) per share										Basic income (loss) per share	$	0.39	$	(0.09)
Diluted EPS	Diluted EPS									Diluted EPS
Net income		$	23,232	$	31,882	$	33,634	$	90,510
Net income (loss)										Net income (loss)	$	19,877	$	(4,454)
Basic weighted average shares	Basic weighted average shares	51,094		50,789		51,024		50,634		Basic weighted average shares	51,224		50,939
Net effect of common stock equivalents	Net effect of common stock equivalents	250		574		332		600		Net effect of common stock equivalents	459		—
Diluted weighted average shares	Diluted weighted average shares	51,344		51,363		51,356		51,234		Diluted weighted average shares	51,683		50,939
Diluted income per share		$	0.45	$	0.62	$	0.65	$	1.77
Diluted income (loss) per share										Diluted income (loss) per share	$	0.38	$	(0.09)

Basic earnings per share is calculated using the Company’s weighted-average outstanding common stock. Diluted earnings per share is calculated using its weighted-average outstanding common stock including the dilutive effect of stock awards as determined under the treasury stock method and the convertible senior notes as determined under the net share settlement method. From the time of the issuance of the convertible senior notes, the average market price of the Company's common shares has been less than the initial conversion price, and consequently no shares have been included in diluted earnings per share for the conversion value of the convertible senior notes. For the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022, weighted average shares outstanding, assuming dilution, excludes the impact of 0.9 million anti-dilutive shares. For the three ~~and nine~~

months ended ~~December 26, 2020, weighted average shares outstanding, assuming dilution, excludes~~July 3, 2021, the Company recognized a net loss; therefore it excluded the impact of ~~0.4~~outstanding stock awards from the diluted loss per share calculation as its inclusion would have an anti-dilutive effect.

In 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 ~~0.6 million anti-dilutive~~in privately negotiated transactions. The actual timing, number and value of shares ~~respectively.~~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 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 ~~January 1,~~July 2, 2022, the Company had ~~$23.4~~$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 ~~74%~~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 ~~January 1,~~July 2, 2022 and April ~~3, 2021,~~2, 2022, the Company had contract assets of ~~$5.5~~$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 ~~January 1,~~July 2, 2022 and April ~~3, 2021,~~2, 2022, the Company had contract liabilities of ~~$24.4~~$25.4 million and ~~$20.9~~$26.8 million, respectively. During the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022, the Company recognized ~~$4.0 million and $17.2~~$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)	January 1, 2022		April 3, 2021		(In thousands)	July 2, 2022		April 2, 2022
Raw materials	Raw materials	$	89,503	$	74,910	Raw materials	$	92,416	$	88,886
Work-in-process	Work-in-process	18,281		23,111		Work-in-process	18,234		17,187
Finished goods	Finished goods	197,957		224,593		Finished goods	167,237		186,954
Total inventories	Total inventories	$	305,741	$	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 to the Clinton, PA facility. The lease term associated with the new manufacturing facility is 15 years and 7 months and includes two ~~five~~ ~~year renewal options followed by one~~ ~~four~~ year renewal option. During fiscal 2021, the Company recorded a right-of-use asset of $11.3 million and corresponding liabilities of $15.4 million upon commencement of the lease term in May 2020. In addition, the Company recorded a $4.1 million lease incentive receivable associated with this lease agreement which was received during fiscal 2021.

Lessor Activity

Assets on the Company’s balance sheet classified as Haemonetics equipment primarily 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 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 ~~third~~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 ~~January 1,~~July 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 ~~January 1,~~July 2, 2022, the $500.0 million principal balance was netted down by ~~$11.2~~$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 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 ~~January 1,~~July 2, 2022, ~~$288.8~~$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 ~~$24.7~~$20.9 million of uncommitted operating lines of credit to fund its global operations under which there were no outstanding borrowings as of ~~January 1,~~July 2, 2022.

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

The Company was in compliance with the leverage and interest coverage ratios specified in the 2018 Credit Facilities as well as all other bank covenants as of ~~January 1,~~July 2, 2022.

16On 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 ~~and nine~~ months ended ~~January 1,~~July 2, 2022, ~~35.6% and 36.8%, respectively,~~30.4% of the 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 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 designated foreign currency hedge contracts as of ~~January 1,~~July 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 ~~$39.1~~$49.8 million as of ~~January 1,~~July 2, 2022 and ~~$56.0~~$67.3 million as of April ~~3, 2021.~~2, 2022. At ~~January 1,~~July 2, 2022, a gain of ~~$0.4~~$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 ~~January 1,~~July 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 ~~$47.6~~$44.1 million as of ~~January 1,~~July 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 earnings and cash flows are exposed to interest rate risk from changes to LIBOR. Part of the 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 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 ~~nine~~three months ended ~~January 1,~~July 2, 2022, a gain of ~~$4.9~~$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 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				Nine Months Ended					Three Months Ended
(In thousands)	(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020		(In thousands)	July 2, 2022		July 3, 2021
Beginning balance	Beginning balance	$	2,701	$	2,699	$	2,226	$	3,824	Beginning balance	$	2,475	$	2,226
Credit (gain) loss	Credit (gain) loss	(305)		(95)		226		(838)		Credit (gain) loss	146		27
Write-offs	Write-offs	(14)		(79)		(70)		(461)		Write-offs	(126)		(17)
Ending balance	Ending balance	$	2,382	$	2,525	$	2,382	$	2,525	Ending balance	$	2,495	$	2,236

Fair Value of Derivative Instruments

The following table presents the effect of the 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 Income and Comprehensive Income for the ~~nine~~three months ended ~~January 1,~~July 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 Income and Comprehensive Income	Amount of Gain (Loss) Excluded from Effectiveness Testing		Location in Condensed Consolidated Statements of Income and Comprehensive 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	$	351	$	1,520	Net revenues, COGS and SG&A	$	(931)	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	$	—	$	—		$	1,004	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	$	1,488	$	(3,367)	Interest and other expense, net	$	—		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 ~~January 1,~~July 2, 2022 or April ~~3, 2021.~~2, 2022. As of ~~January 1,~~July 2, 2022, no material deferred 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 ~~January 1,~~July 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 derivative instruments as they appear in its Condensed Consolidated Balance Sheets as of ~~January 1,~~July 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
			January 1, 2022			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		$	1,597		$	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		127			104		Non-designated foreign currency hedge contracts		Other current assets		110		99

Designated interest rate swaps									Designated interest rate swaps		Other current assets		49		—
				$	1,724		$	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		$	84		$	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		82			349		Non-designated foreign currency hedge contracts		Other current liabilities		196		25
Designated interest rate swaps	Designated interest rate swaps	Other current liabilities		4,466			5,550		Designated interest rate swaps		Other current liabilities		—		1,813
Designated interest rate swaps		Other long-term liabilities		622			4,301
				$	5,254		$	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 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.

1915

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 ~~January 1,~~July 2, 2022 and April ~~3, 2021.~~2, 2022.


		As of January 1, 2022									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	$	93,192	$	—	$	—	$	93,192	Money market funds	$	44,030	$	—	$	—	$	44,030
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	—		1,597		—		1,597		Designated foreign currency hedge contracts	—		4,528		—		4,528
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	—		127		—		127		Non-designated foreign currency hedge contracts	—		110		—		110

Designated interest rate swaps										Designated interest rate swaps	—		49		—		49
		$	93,192	$	1,724	$	—	$	94,916		$	44,030	$	4,687	$	—	$	48,717
Liabilities	Liabilities									Liabilities
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	$	—	$	84	$	—	$	84	Designated foreign currency hedge contracts	$	—	$	282	$	—	$	282
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	—		82		—		82		Non-designated foreign currency hedge contracts	—		196		—		196
Designated interest rate swaps		—		5,088		—		5,088

Contingent consideration	Contingent consideration	—		—		38,377		38,377		Contingent consideration	—		—		877		877
		$	—	$	5,254	$	38,377	$	43,631		$	—	$	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	$	—	$	—	$	49,699	Money market funds	$	97,425	$	—	$	—	$	97,425
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	—		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	—		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	$	—	$	454	$	—	$	454	Designated foreign currency hedge contracts	$	—	$	56	$	—	$	56
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	—		349		—		349		Non-designated foreign currency hedge contracts	—		25		—		25
Designated interest rate swaps	Designated interest rate swaps	—		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
		$	—	$	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.

2016

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)

January 1, 2022

Technique

Input

Range

(In thousands)

July 2, 2022

Technique

Input

Range

Revenue-based payments

35,000

Discounted cash flow

Discount rate

2.2%

Revenue-based payments

877

Discounted cash flow

Discount rate

8.5%

Projected year of payment

2022

Projected year of payment

2022 - 2023

Revenue-based payments

1,717

Discounted cash flow

Discount rate

8.5%

Projected year of payment

2022 - 2023

Regulatory-based payment

1,660

Discounted cash flow

Discount rate

4.9%

Probability of payment

0% - 100%

Projected year of payment

2022 - 2023

~~As of January 1, 2022, the remaining maximum potential contingent consideration that the Company could be required to pay i~~s $39.1 million. During the nine months ended January 1, 2022, the Company increased the fair value of the contingent consideration related to the acquisition of Cardiva by $10.7 million, which was recorded as selling, general and administrative expenses within the unaudited Condensed Consolidated Statements of Income and Comprehensive Income. The fair value of contingent consideration associated with acquisitions was ~~$38.4~~$0.9 million at ~~January 1, 2022. As of January 1,~~July 2, 2022 ~~$36.2 million~~and was included in other ~~liabilities and $2.2 million was in~~liabilities. ~~cluded in other long-term liabilities on the condensed consolidated balance sheet.~~

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


(In thousands)
Balance at April ~~3, 2021~~2, 2022	$	~~28,733~~33,675
Change in fair value	~~10,272~~ (504)
Payments	~~(367)~~(32,293)
Currency translation	~~(261)~~(1)
Balance at ~~January 1,~~July 2, 2022	$	~~38,377~~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 of the 2026 Notes as of ~~January 1,~~July 2, 2022 was ~~$421.4~~$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 reporting structure aligns with its operating structure of ~~three~~3 global business units and the information that is regularly reviewed by the Company’s chief operating decision maker.

The 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, impairments, accelerated device depreciation and related costs, costs related to compliance with the European Union Medical Device Regulation (“MDR”) and In Vitro Diagnostic Regulation (“IVDR”), unusual or infrequent and material litigation-related 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 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				Nine Months Ended					Three Months Ended
(In thousands)	(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020		(In thousands)	July 2, 2022		July 3, 2021
Net revenues	Net revenues									Net revenues
Plasma	Plasma	$	96,692	$	102,154	$	250,499	$	249,587	Plasma	$	103,042	$	71,803
Blood Center	Blood Center	74,527		80,417		221,522		234,446		Blood Center	66,573		71,736
Hospital	Hospital	82,100		52,334		235,609		148,927		Hospital	89,184		77,607
Net revenues by business unit	Net revenues by business unit	253,319		234,905		707,630		632,960		Net revenues by business unit	258,799		221,146
Service (1)	Service (1)	5,436		4,972		15,655		15,396		Service (1)	5,137		5,268
Effect of exchange rates	Effect of exchange rates	1,014		494		4,909		(2,922)		Effect of exchange rates	(2,478)		2,114
Net revenues	Net revenues	$	259,769	$	240,371	$	728,194	$	645,434	Net revenues	$	261,458	$	228,528
(1) Reflects revenue for service, maintenance and parts	(1) Reflects revenue for service, maintenance and parts									(1) Reflects revenue for service, maintenance and parts

2218


		Three Months Ended				Nine Months Ended					Three Months Ended
(In thousands)	(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020		(In thousands)	July 2, 2022		July 3, 2021
Segment operating income	Segment operating income									Segment operating income
Plasma	Plasma	$	51,405	$	52,673	$	128,964	$	129,846	Plasma	$	55,126	$	35,346
Blood Center	Blood Center	34,561		36,424		103,043		108,926		Blood Center	30,377		33,882
Hospital	Hospital	35,072		22,430		97,898		61,672		Hospital	34,722		31,597
Segment operating income	Segment operating income	121,038		111,527		329,905		300,444		Segment operating income	120,225		100,825
Corporate expenses (1)	Corporate expenses (1)	(68,013)		(63,202)		(204,930)		(185,005)		Corporate expenses (1)	(81,584)		(68,731)
Effect of exchange rates	Effect of exchange rates	5,807		4,286		15,553		8,644		Effect of exchange rates	6,245		5,812
Integration and transaction costs	Integration and transaction costs	(1,860)		—		(19,218)		(3,063)		Integration and transaction costs	758		(16,733)
Deal amortization	Deal amortization	(12,151)		(7,805)		(35,930)		(24,204)		Deal amortization	(8,367)		(12,379)
Restructuring and restructuring related costs	Restructuring and restructuring related costs	(5,682)		(3,143)		(20,250)		(11,583)		Restructuring and restructuring related costs	(3,478)		(10,055)
Impairment of assets and PCS2 related charges	Impairment of assets and PCS2 related charges	(897)		(1,146)		(4,790)		(4,228)		Impairment of assets and PCS2 related charges	350		(3,643)
MDR and IVDR costs	MDR and IVDR costs	(2,453)		(1,207)		(7,171)		(2,696)		MDR and IVDR costs	(3,186)		(2,371)
Litigation-related charges	Litigation-related charges	(138)		—		(1,221)		—		Litigation-related charges	(196)		(938)
Gains on divestitures and sale of assets	Gains on divestitures and sale of assets	—		1,115		9,603		32,613		Gains on divestitures and sale of assets	—		9,603
Operating income	Operating income	$	35,651	$	40,425	$	61,551	$	110,922	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.	(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.									(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				Nine Months Ended					Three Months Ended
(In thousands)	(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020		(In thousands)	July 2, 2022		July 3, 2021
Plasma products and services	Plasma products and services	$	116,347	$	123,510	$	308,931	$	309,933	Plasma products and services	$	118,352	$	90,509
Blood Center products and services	Blood Center products and services	59,440		62,787		177,118		182,687		Blood Center products and services	52,918		57,747
Hospital products and services	Hospital products and services	83,982		54,074		242,145		152,814		Hospital products and services	90,188		80,272
Net revenues	Net revenues	$	259,769	$	240,371	$	728,194	$	645,434	Net revenues	$	261,458	$	228,528

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


		Three Months Ended				Nine Months Ended					Three Months Ended
(In thousands)	(In thousands)	January 1, 2022		December 26, 2020		January 1, 2022		December 26, 2020		(In thousands)	July 2, 2022		July 3, 2021
United States	United States	$	167,270	$	147,607	$	460,404	$	382,600	United States	$	181,996	$	141,028
Japan	Japan	19,916		20,854		55,949		57,330		Japan	13,878		17,221
Europe	Europe	41,540		41,874		126,055		123,541		Europe	40,457		43,335
Asia	Asia	30,434		29,050		83,157		77,602		Asia	24,424		25,952
Other	Other	609		986		2,629		4,361		Other	703		992
Net revenues	Net revenues	$	259,769	$	240,371	$	728,194	$	645,434	Net revenues	$	261,458	$	228,528

2319

~~15.~~13. ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of Accumulated Other Comprehensive Loss are as follows:


(In thousands)	(In thousands)	Foreign Currency		Defined Benefit Plans		Net Unrealized Gain/(Loss) on Derivatives		Total		(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)
Balance as of April 2, 2022										Balance as of April 2, 2022	$	(27,919)	$	1,619	$	346	$	(25,954)
Other comprehensive income (loss) before reclassifications(1)	Other comprehensive income (loss) before reclassifications(1)	(3,488)		—		1,839		(1,649)		Other comprehensive income (loss) before reclassifications(1)	(9,570)		—		3,250		(6,320)
Amounts reclassified from Accumulated Other Comprehensive Income(1)	Amounts reclassified from Accumulated Other Comprehensive Income(1)	—		—		1,847		1,847		Amounts reclassified from Accumulated Other Comprehensive Income(1)	—		—		(443)		(443)
Net current period other comprehensive income (loss)	Net current period other comprehensive income (loss)	(3,488)		—		3,686		198		Net current period other comprehensive income (loss)	(9,570)		—		2,807		(6,763)
Balance as of January 1, 2022		$	(25,016)	$	(560)	$	(3,773)	$	(29,349)
Balance as of July 2, 2022										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.	(1) Presented net of income taxes, the amounts of which are insignificant.									(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” mean 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 ~~and nine~~ months ended ~~January 1,~~July 2, 2022 and July 3, 2021, the Company incurred ~~$5.7~~$3.5 million and ~~$20.2~~$9.9 million ~~respectively, of restructuring and restructuring related costs under this program. During the~~ ~~three and~~

~~nine months ended December 26, 2020~~, ~~the Company incurred $3.1 million and $11.1 million,~~ respectively, of restructuring and restructuring related costs under this program. Total cumulative charges under this program are ~~$47.2~~$59.2 million as of ~~January 1,~~July 2, 2022.

~~CSL Contract Loss~~

In April 2021, CSL Plasma, Ltd. informed Haemonetics 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~~. During the third quarter of fiscal 2022, we amended the Supply Agreement to allow CSL to continue to use our PCS2 devices and purchase disposables through December 2023. The extension provides CSL the ability to utilize our devices and disposables in their collection centers on a non-exclusive basis, and we are working with them to quantify their volume requirements over the life of the agreement.

~~COVID-19~~

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

~~Our priorities continue to be the safety of our employees and business continuity while continuing to invest in growth opportunities. Our manufacturing and supply chain remain operational 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 the MD&A contained in this Quarterly Report on Form 10-Q and Risk Factors contained in Item 1A of the Annual Report on Form 10-K for the fiscal year ended April 3, 2021.

Financial Summary


		Three Months Ended								Nine Months Ended									Three Months Ended
(In thousands, except per share data)	(In thousands, except per share data)	January 1, 2022			December 26, 2020			% Increase/ (Decrease)		January 1, 2022			December 26, 2020			% Increase/ (Decrease)		(In thousands, except per share data)	July 2, 2022			July 3, 2021			% Increase/ (Decrease)
Net revenues	Net revenues	$	259,769		$	240,371		8.1	%	$	728,194		$	645,434		12.8	%	Net revenues	$	261,458		$	228,528		14.4	%
Gross profit	Gross profit	$	138,565		$	120,257		15.2	%	$	369,191		$	316,031		16.8	%	Gross profit	$	142,263		$	108,085		31.6	%
% of net revenues	% of net revenues	53.3		%	50.0		%			50.7		%	49.0		%			% of net revenues	54.4		%	47.3		%
Operating expenses	Operating expenses	$	102,914		$	79,832		28.9	%	$	307,640		$	205,109		50.0	%	Operating expenses	$	111,496		$	106,695		4.5	%
Operating income	Operating income	$	35,651		$	40,425		(11.8)	%	$	61,551		$	110,922		(44.5)	%	Operating income	$	30,767		$	1,390		2,113.5	%
% of net revenues	% of net revenues	13.7		%	16.8		%			8.5		%	17.2		%			% of net revenues	11.8		%	0.6		%
Interest and other expense, net	Interest and other expense, net	$	(4,263)		$	(3,051)		39.7	%	$	(13,249)		$	(10,612)		24.8	%	Interest and other expense, net	$	(5,273)		$	(4,398)		19.9	%
Income before provision for income taxes		$	31,388		$	37,374		(16.0)	%	$	48,302		$	100,310		(51.8)	%
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	$	8,156		$	5,492		48.5	%	$	14,668		$	9,800		49.7	%	Provision for income taxes	$	5,617		$	1,446		288.5	%
% of pre-tax income	% of pre-tax income	26.0		%	14.7		%			30.4		%	9.8		%			% of pre-tax income	22.0		%	(48.1)		%
Net income		$	23,232		$	31,882		(27.1)	%	$	33,634		$	90,510		(62.8)	%
Net income (loss)																		Net income (loss)	$	19,877		$	(4,454)		n/m
% of net revenues	% of net revenues	8.9		%	13.3		%			4.6		%	14.0		%			% of net revenues	7.6		%	(1.9)		%
Net income per share - basic		$	0.45		$	0.63		(28.6)	%	$	0.66		$	1.79		(63.1)	%
Net income per share - diluted		$	0.45		$	0.62		(27.4)	%	$	0.65		$	1.77		(63.3)	%
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 ~~8.1% and 12.8%~~14.4% during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022, respectively, as compared with the same periods of fiscal ~~2021.~~2022. Without the effect of foreign exchange, net revenues increased ~~7.9% and 11.6%~~16.6% during the three ~~and nine~~ months ended ~~January 1,~~July 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 Vascular Closure,~~businesses drove the overall increase in revenue during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022.

Operating income ~~decreased 11.8% and 44.5%~~increased during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022 ~~respectively,~~ 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 as well as increased intangible amortization expense,~~ ~~an increase in the fair value of contingent consideration~~Hospital and ~~increased freight costs. During the~~ ~~nine months ended January 1, 2022, costs driven by~~ ~~the amortization of the fair value inventory step-up related to Cardiva, asset impairments and gains on divestitures during the prior period also contributed to the decrease. The decrease during the~~ ~~three and nine months ended January 1, 2022,~~ ~~was partially offset by favorable volumes and product mix 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 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
(In thousands) January 1,
2022 December 26,
2020 Reported growth Currency impact
Constant currency growth (1)
United States $ 167,270 $ 147,607 13.3 % — % 13.3 %
International 92,499 92,764 (0.3) % 0.6 % (0.9) %
Net revenues $ 259,769 $ 240,371 8.1 % 0.2 % 7.9 %

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


		Nine Months Ended											Three Months Ended
(In thousands)	(In thousands)	January 1, 2022		December 26, 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	$	460,404	$	382,600	20.3	%	—	%	20.3	%	United States	$	181,996	$	141,028	29.0	%	—	%	29.0	%
International	International	267,790		262,834		1.9	%	3.0	%	(1.1)	%	International	79,462		87,500		(9.2)	%	(5.2)	%	(4.0)	%
Net revenues	Net revenues	$	728,194	$	645,434	12.8	%	1.2	%	11.6	%	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 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. During the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022 our revenue generated outside the U.S. was ~~35.6%~~30.4% ~~and 36.8%, respectively,~~ of total net revenues, as compared with ~~38.6% and 40.7%~~38.3% during the three ~~and nine~~ months ended ~~December 26, 2020,~~July 3, 2021, 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)	January 1, 2022		December 26, 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	$	96,460	$	101,934	(5.4)	%	(0.1)	%	(5.3)	%	Plasma	$	102,381	$	71,844	42.5	%	(1.0)	%	43.5	%
Blood Center	Blood Center	75,692		80,920		(6.5)	%	0.8	%	(7.3)	%	Blood Center	65,694		72,945		(9.9)	%	(2.7)	%	(7.2)	%
Hospital (2)	Hospital (2)	82,273		52,651		56.3	%	(0.6)	%	56.9	%	Hospital (2)	88,494		78,494		12.7	%	(2.2)	%	14.9	%
Service	Service	5,344		4,866		9.8	%	0.5	%	9.3	%	Service	4,889		5,245		(6.8)	%	(4.3)	%	(2.5)	%
Net revenues	Net revenues	$	259,769	$	240,371	8.1	%	0.2	%	7.9	%	Net revenues	$	261,458	$	228,528	14.4	%	(2.2)	%	16.6	%

(2) Hospital revenue includes Hemostasis Management revenue of $33.5 million and ~~$28.5~~$32.2 million during the three months ended ~~January 1,~~July 2, 2022 and ~~December 26, 2020,~~July 3, 2021, respectively. Hemostasis Management revenue increased ~~17.5%~~4.1% in the ~~third~~first quarter of fiscal ~~2022,~~2023, as compared with the same period of fiscal ~~2021.~~2022. Without the effect of foreign exchange, Hemostasis Management revenue increased ~~18.4%~~5.8% in the ~~third~~first quarter of fiscal ~~2022,~~2023, as compared with the same period of fiscal ~~2021. Hospital revenue also includes~~ 2022. Vascular Closure revenue ~~of $24.3 million for the three months ended January 1, 2022.~~

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

~~(1)~~ ~~Constant currency growth, a non-GAAP financial measure, measures the change~~increased 35.9% in ~~revenue between the current and prior year periods using a constant currency. See “Management’s Use of Non-GAAP Measures.~~”

~~(2)Hospital revenue includes Hemostasis Management revenue of $97.2 million and $78.5 million~~ ~~during the nine months ended January 1, 2022 and December 26, 2020, respectively. Hemostasis Management revenue increased 23.8% i~~n the first ~~nine months~~quarter of fiscal ~~2022,~~2023 as compared with the same period of fiscal ~~2021. Without the effect of foreign exchange, Hemostasis Management revenue increased 23.2% in the first nine months of fiscal 2022, as compared with the same period of fiscal 2021. Hospital revenue also includes Vascular Closure revenue~~ ~~of $66.8 million~~ ~~for the nine months ended January 1,~~ 2022.

Plasma

Plasma revenue ~~decreased 5.4% and~~ increased ~~0.7%~~42.5% during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022 ~~respectively,~~ as compared with the same ~~periods~~period of fiscal ~~2021.~~2022. Without the effect of foreign exchange, Plasma revenue ~~decreased 5.3% and~~ increased ~~0.4%~~43.5% during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022 ~~respectively,~~ as compared with the same ~~periods~~period of fiscal ~~2021.~~2022. The ~~decrease~~increase during the three months ended ~~January 1,~~July 2, 2022, as compared with the same period of fiscal 2021 was ~~primarily~~ driven by ~~a decline in plasma liquid solutions~~volume and ~~a large stocking order in the prior period. The i~~ncrease during the nine months ended January 1, 2022 was primarily driven by increase in volume of plasma disposables and increase in software revenue, partially offset by pricing adjustments and declines in plasma liquid solutions as a result of certain strategic exits within our liquid solutions business.price.

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

In early April 2021, CSL Plasma, Ltd. (“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~~supply agreement to allow CSL to continue to use our PCS2 devices and purchase disposables through December 2023. The extension provides CSL the ability to utilize our devices and disposables in their collection centers on a non-exclusive basis, and ~~we are working with them~~CSL has committed to ~~quantify their volume requirements over the life~~a minimum of ~~the agreement.~~$88.0 million of disposable purchases in fiscal 2023.

2722

Blood Center

Blood Center revenue decreased ~~6.5% and 3.5%~~9.9% during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022 ~~respectively,~~ as compared with the same ~~periods~~period of fiscal ~~2021.~~2022. Without the effect of foreign exchange, Blood Center revenue decreased ~~7.3% and~~7.2% ~~5.5%~~ during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022 ~~respectively,~~ as compared with the same ~~periods~~period of fiscal ~~2021.~~2022. The decrease during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022 as compared with the same periods of fiscal ~~2021~~2022 was primarily driven by ~~continued declines in whole blood disposables and the impact of previously discontinued customer contracts in North America as well as an apheresis stocking order~~a decline in the ~~prior year period. The divestiture~~volume of ~~certain blood donor management software solution assets in fiscal 2021 also contributed to the decline during the nine months ended January 1, 2022, as compared with the same period of fiscal 2021.~~

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

Hospital

Hospital revenue increased ~~56.3% and 59.7%~~12.7% during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022 ~~respectively,~~ as compared with the same ~~periods~~period of fiscal ~~2021.~~2022. Without the effect of foreign exchange, Hospital revenue increased ~~56.9% and 58.2%~~14.9% during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022, ~~respectively,~~ as compared with the same periods of fiscal ~~2021.~~2022. The increase during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022was primarily ~~attributable~~attributable to Vascular Closure revenue, ~~resulting from the acquisition of Cardiva and an increase~~as well as increases in TEG disposables revenue in the U.S. ~~The increase during the nine months ended January 1, 2022 also reflected the impact of the COVID-19 pandemic on the prior year period, partially offset by~~ ~~the divestiture of certain blood bank~~ and ~~hospital software solution assets during the same period of fiscal 2021. W~~Transfusion Management revenue.

~~e 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.~~

Gross Profit


		Three Months Ended								Nine Months Ended									Three Months Ended
(In thousands)	(In thousands)	January 1, 2022			December 26, 2020			% Increase		January 1, 2022			December 26, 2020			% Increase		(In thousands)	July 2, 2022			July 3, 2021			% Increase
Gross profit	Gross profit	$	138,565		$	120,257		15.2	%	$	369,191		$	316,031		16.8	%	Gross profit	$	142,263		$	108,085		31.6	%
% of net revenues	% of net revenues	53.3		%	50.0		%			50.7		%	49.0		%			% of net revenues	54.4		%	47.3		%

Gross profit increased ~~15.2% and 16.8%~~31.6% during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022 ~~respectively,~~ as compared with the same periods of fiscal ~~2021.~~2022. Without the effect of foreign exchange, gross profit increased ~~14.4% and 14.3%~~34.4% during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022, ~~respectively,~~ as compared with the same ~~periods~~period of fiscal ~~2021~~2022. The increase during the three ~~and nine~~ months ended ~~January 1,~~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, currency translation,~~price and productivity savings from the ~~2020 Program. The increase was~~Operational Excellence Program, partially offset by ~~recent divestitures in fiscal 2021 and~~ inflationary pressures ~~and higher freight costs~~ in our global manufacturing and supply chain. The increase during the nine months ended January 1, 2022 was also partially offset by pricing adjustments, the amortization of the fair value inventory step-up related to the acquisition of Cardivachain and ~~asset impairments.~~increased depreciation expense.

Operating Expenses


		Three Months Ended								Nine Months Ended									Three Months Ended
(In thousands)	(In thousands)	January 1, 2022			December 26, 2020			% Increase		January 1, 2022			December 26, 2020			% Increase/ (Decrease)		(In thousands)	July 2, 2022			July 3, 2021			% Increase/ (Decrease)
Research and development	Research and development	$	10,037		$	7,501		33.8	%	$	33,591		$	22,014		52.6	%	Research and development	$	10,902		$	12,701		(14.2)	%
% of net revenues	% of net revenues	3.9		%	3.1		%			4.6		%	3.4		%			% of net revenues	4.2		%	5.6		%
Selling, general and administrative	Selling, general and administrative	$	80,726		$	65,641		23.0	%	$	247,722		$	191,504		29.4	%	Selling, general and administrative	$	92,227		$	91,218		1.1	%
% of net revenues	% of net revenues	31.1		%	27.3		%			34.0		%	29.7		%			% of net revenues	35.3		%	39.9		%
Amortization of intangible assets	Amortization of intangible assets	$	12,151		$	7,805		55.7	%	$	35,930		$	24,204		48.4	%	Amortization of intangible assets	$	8,367		$	12,379		(32.4)	%
% of net revenues	% of net revenues	4.7		%	3.2		%			4.9		%	3.8		%			% of net revenues	3.2		%	5.4		%

Gains on divestitures and sale of assets	Gains on divestitures and sale of assets	$	—		$	(1,115)		n/m		$	(9,603)		$	(32,613)		(70.6)	%	Gains on divestitures and sale of assets	$	—		$	(9,603)		n/m
% of net revenues	% of net revenues	—		%	(0.5)		%			(1.3)		%	(5.1)		%			% of net revenues	—		%	(4.2)		%
Total operating expenses	Total operating expenses	$	102,914		$	79,832		28.9	%	$	307,640		$	205,109		50.0	%	Total operating expenses	$	111,496		$	106,695		4.5	%
% of net revenues	% of net revenues	39.6		%	33.2		%			42.2		%	31.8		%			% of net revenues	42.6		%	46.7		%

Research and Development

Research and development expenses ~~increased 33.8% and 52.6%~~decreased 14.2% during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022 ~~respectively,~~ as compared with the same ~~periods~~period of fiscal ~~2021.~~2022. Without the effect of foreign exchange, research and development expenses ~~increased 33.4% and 51.5%~~decreased 13.6% during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022, ~~respectively,~~ as compared with the same ~~periods~~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 compliance with the European Union Medical Device Regulation (“MDR”)~~across quarters and ~~In Vitro Diagnostic Regulation (“IVDR”) requirements. The increase during the three and nine months ended January 1, 2022, was partially offset by~~ cost savings related to the 2020 Program.

Selling, General and Administrative

Selling, general and administrative expenses increased ~~23.0% and 29.4%~~1.1% during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022 ~~respectively,~~ as compared with the same ~~periods~~period of fiscal ~~2021.~~2022. Without the effect of foreign exchange, selling, general, and administrative expenses increased ~~23.1% and 27.9%~~2.3% during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022 ~~respectively,~~ as compared with the same period of fiscal ~~2021.~~2022. The increase during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022 was primarily ~~due to spend related to the acquisition of Cardiva, including the increase in the fair value of contingent consideration. Higher~~driven by inflationary pressures and higher freight costs ~~also contributed to these increases, which were~~in our global supply chain, and higher investments in sales and marketing, partially offset by cost savings related to the 2020 ~~Program.~~Program and decreased spend on acquisitions in the current year.

Amortization of Intangible Assets

We recognized amortization expense of ~~$12.2 million and $35.9~~$8.4 million during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022 ~~respectively~~ and ~~$7.8 million and $24.2~~$12.4 million during the three ~~and nine~~ months ended ~~December 26, 2020, respectively.~~July 3, 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 ~~nine~~three months ended ~~January 1, 2022. We recognized~~July 3, 2021, with no gains on divestitures ~~of $1.1 million and $32.6 million~~ during the three ~~and nine~~ months ended ~~December 26, 2020, respectively.~~ ~~Refer to Note 5,~~ ~~Divestitures, to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information pertaining to these divestitures.~~July 2, 2022.

Interest and Other Expense, Net

Interest and other expenses increased ~~39.7% and 24.8%~~19.9% during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022 ~~respectively,~~ as compared with the same ~~periods~~period of fiscal ~~2021.~~2022. Without the effects of foreign exchange, interest and other expenses increased ~~40.6% and 24.0%~~18.2% during the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022 ~~respectively,~~ as compared with the same ~~periods~~period of fiscal ~~2021.~~2022. The increase ~~during the three and nine months ended January 1, 2022 wa~~swas primarily driven by ~~realized losses due to foreign currency and~~higher interest rates which impacted the ~~amortization of deferred financing fees associated with our March 2021 issuance of $500 million in aggregate principal amount of 0% convertible senior notes, partially offset by a reduction in~~ interest ~~expense from borrowings under our $350.0 million term loan and $350.0 million revolving loan due to lower borrowings. The effective interest rate~~incurred on our term ~~loan and revolving loan as of January 1, 2022 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 ~~and nine~~ months ended ~~January 1,~~July 2, 2022, we reported income tax expense of ~~$8.2~~$5.6 million ~~and $14.7 million, respectively,~~ representing an effective tax ~~rates~~rate of ~~26.0% and 30.4%, respectively.~~22.0%. The effective tax rate for the ~~nine~~three months ended ~~January 1,~~July 2, 2022 includes $0.6 million discrete tax expense relating to stock compensation ~~shortfalls~~shortfalls.

For the three months ended July 3, 2021, we reported income tax expense of ~~$0.9~~$1.4 million ~~with no~~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 recorded in the three months ended January 1, 2022.~~shortfalls.

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

Liquidity and Capital Resources

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


(Dollars in thousands)	(Dollars in thousands)	January 1, 2022		April 3, 2021		(Dollars in thousands)	July 2, 2022		April 2, 2022
Cash & cash equivalents	Cash & cash equivalents	$	236,877	$	192,305	Cash & cash equivalents	$	214,948	$	259,496
Working capital	Working capital	$	374,044	$	440,051	Working capital	$	507,296	$	313,765
Current ratio	Current ratio	2.1		2.7		Current ratio	3.8		1.7
Net debt(1)	Net debt(1)	$	(540,305)	$	(515,303)	Net debt(1)	$	(555,046)	$	(514,093)
Days sales outstanding (DSO)	Days sales outstanding (DSO)	54		51		Days sales outstanding (DSO)	50		54
Inventory turnover	Inventory turnover	1.3		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,~~operations, our revolving credit line ~~that expires in the first quarter of fiscal 2024~~ and proceeds from employee stock option ~~exercises.~~exercises. We believe these sources are sufficient to fund our cash requirements over at least the next twelve months. Our expected cash outlays relate primarily to acquisitions, investments,

capital expenditures, including ~~the build out of~~enhancements to our ~~new~~North American manufacturing ~~facility in Clinton, PA,~~facilities, cash payments under our credit agreement and restructuring initiatives.

In March 2021, the 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 0.5% as of ~~January 1,~~July 2, 2022.

As of ~~January 1,~~July 2, 2022, we had ~~$236.9~~$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 ~~January 1,~~July 2, 2022, ~~$288.8~~$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 ~~$24.7~~$20.9 million of uncommitted operating lines of credit to fund our global operations under which there were no outstanding borrowings as of ~~January 1,~~July 2, 2022.

~~The Company has scheduled principal payments of $4.4 million and~~ ~~$214.4 million~~ ~~required during~~ Additionally, the ~~remainder of fiscal 2022 and~~ ~~during fiscal 2023, respectively.~~ ~~The~~ Company was in compliance with the leverage and interest coverage ratios specified in the credit agreement as well as all other bank covenants as of ~~January 1,~~July 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 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 ~~the second quarter of~~ fiscal 2022, our Board of Directors approved a revised 2020 Program. We now estimate that we will incur aggregate charges between $95 million and $105 million in connection with the 2020 Program. These charges, the majority of which will result in cash outlays, including severance and other employee costs, will be incurred as the specific actions required to execute these initiatives are identified and approved and are expected to be substantially completed by the end of fiscal 2025. During the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022, we incurred ~~$5.7~~$3.5 million ~~and $20.2 million, respectively,~~ of restructuring and restructuring related costs under this program.

Cash Flows


		Nine Months Ended				Three Months Ended
(In thousands)	(In thousands)	January 1, 2022		December 26, 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	$	104,213	$	107,258		Operating activities	$	41,993	$	(1,680)
Investing activities	Investing activities	(51,833)		3,658			Investing activities	(58,214)		(15,851)
Financing activities	Financing activities	(6,984)		(65,307)			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)	(824)		6,082			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	$	44,572	$	51,691		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 provided by operating activities ~~decreased~~increased by ~~$3.0~~$43.7 million during the ~~nine~~three months ended ~~January 1,~~July 2, 2022, as compared with the ~~nine~~three months ended ~~December 26, 2020~~.July 3, 2021. The ~~decrease~~increase in cash provided by operating activities was primarily the result of ~~higher working capital due to lower collections of accounts receivable, partially offset by~~ an increase in net income, ~~as adjusted for depreciation, amortization~~higher collections of accounts receivable and ~~other non-cash charges compared with the prior period.~~a decrease in inventories driven by NexSys PCS device placements.

Net cash used in investing activities increased by ~~$55.5~~$42.4 million during the ~~nine~~three months ended ~~January 1,~~July 2, 2022, as compared with the ~~nine~~three months ended ~~December 26, 2020.~~ July 3, 2021. The increase in cash used in investing activities was primarily the result of an increase in capital expenditures, driven by NexSys PCS device placements, and other investments in the current ~~year and lower proceeds received from various divestitures during fiscal 2021 as compared to fiscal 2022, partially offset by decreased acquisition spend.~~year.

Net cash used in financing activities increased by ~~$58.3~~$21.8 million during the ~~nine~~three months ended ~~January 1,~~July 2, 2022, as compared with the ~~nine~~three months ended ~~December 26, 2020~~,July 3, 2021, primarily due to ~~a repayment of~~acquisition-related contingent consideration payments made in the ~~revolving credit facility in fiscal 2021.~~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’ 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 experienced rising inflationary pressures in our global supply chain that had an impact on our results of operations during the ~~nine~~three months ended ~~January 1,~~July 2, 2022. We continue to monitor inflationary pressures generally and raw materials indices that may affect our procurement and production costs. Increases in the price of petroleum derivatives could result in corresponding increases in our costs to procure plastic raw materials. We expect the inflationary pressures we have experienced in our global supply chain to continue ~~into~~throughout fiscal 2023. Historically, we have been able to ~~mitigate~~limit the impact of the effects of inflation by improving our manufacturing and purchasing efficiencies, by ~~increasin~~gincreasing employee productivity and by adjusting the selling prices of ~~products.~~products, but we may not be able to fully mitigate these increases in our operational costs in the future.

Foreign Exchange

During the three ~~and nine~~ months ended ~~January 1,~~July 2, 2022, ~~35.6% and 36.8%, respectively,~~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

There are currently no recent accounting pronouncements that we expect to have a material 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 Quarterly Report on Form 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 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 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~~’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, 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. InAs 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 ~~$3.2~~$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 ~~$3.5~~$4.7 million decrease of the fair value of the forward contracts.

Interest Rate Risk

Our exposure to changes in interest rates is associated with borrowings under our Credit Facilities, all of which is variable rate debt. Total ~~outstanding~~outstanding debt under our Credit Facilities as of ~~January 1,~~July 2, 2022 was ~~$288.8~~$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 $0.9 million.

~~$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 ~~January 1,~~July 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 ~~January 1,~~July 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 ~~January 1,~~July 2, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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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. Unregistered Sales of Equity Securities and Use of Proceeds

None.

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Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

3731

Item 6. Exhibits


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

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

10.1*			~~Fourteenth~~Second Amendment to ~~lease dated July 17, 1990,~~Lease Agreement effective December 3, 2007, made as of ~~November 11, 2021 by~~June 17, 2022 between Mrs. Blanca Estela Colunga Santelices and ~~between Buncher Company and the Company for property located in Leetsdale, Pennsylvania~~Haemonetics Mexico Manufacturing, S. de R.L. de C.V. (1).

10.2*			~~CFO~~ Retention and Transition Agreement, dated as of ~~November 8, 2021,~~June 14, 2022, by and between the Company and ~~William P. Burke~~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 ~~January 1,~~July 2, 2022 formatted in inline Extensible Business Reporting Language (XBRL) includes: (i) Condensed Consolidated Statements of Income and Comprehensive 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*			Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101).





*						Document filed with this report.

**						Document furnished with this report.

(1)						Certain portions of this exhibit are considered confidential and have been omitted as permitted under SEC rules and regulations.

(2)						Agreement, plan or arrangement related to the compensation of officers or directors.

3832

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
~~February 8,~~August 10, 2022	By:	/s/ Christopher A. Simon
	��	Christopher A. Simon, President and Chief Executive Officer
		(Principal Executive Officer)

~~February 8,~~August 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)

3933


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