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: ~~December 31, 2022~~July 1, 2023


☐			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 3,~~August 4, 2023: ~~50,447,522~~50,712,010

HAEMONETICS CORPORATION

INDEX



			PAGE
PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Unaudited Condensed Consolidated Statements of Income and Comprehensive Income - Three Months Ende d July 1, 202 3 and ~~Nine~~ ~~Months Ended~~ ~~December 31~~,July 2, 2022 ~~and~~ ~~January~~1 ~~, 20~~2 2			3
Unaudited Condensed Consolidated Balance Sheet - ~~Dec~~July 1, 2023 ~~ember 31, 2022~~ and Consolidated Balance Sheet - April ~~2, 2022~~1 , 202 3			4
Unaudited Condensed Consolidated Statements of Stockholders’ Equity - Three ~~and~~ ~~Nine~~Months Ended DeJuly 1 ~~cember~~, 202 3 and J uly 3 ~~1, 2022 and~~ ~~January 1~~2 , 20 2 22022			5
Unaudited Condensed Consolidated Statements of Cash Flows - ~~Nine~~Three Months Ended ~~December~~July 1, 2023 and J 3 ~~1, 2022 and~~ ~~January~~1uly 2 , 20 2 22022			76
Notes to Unaudited Condensed Consolidated Financial Statements			87

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

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk			3228

ITEM 4. Controls and Procedures			3228

PART II. OTHER INFORMATION			3329

ITEM 1. Legal Proceedings			3329

ITEM 1A. Risk Factors			3329

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			3329

ITEM 3. Defaults upon Senior Securities			3429

ITEM 4. Mine Safety Disclosures			3429

ITEM 5. Other Information			3429

ITEM 6. Exhibits			3530

SIGNATURES			3631

Table of Contents

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				Nine Months Ended					Three Months Ended
		December 31, 2022		January 1, 2022		December 31, 2022		January 1, 2022			July 1, 2023		July 2, 2022
Net revenues	Net revenues	$	305,301	$	259,769	$	864,244	$	728,194	Net revenues	$	311,332	$	261,458
Cost of goods sold	Cost of goods sold	146,594		121,204		405,396		359,003		Cost of goods sold	144,067		119,195
Gross profit	Gross profit	158,707		138,565		458,848		369,191		Gross profit	167,265		142,263
Operating expenses:	Operating expenses:									Operating expenses:
Research and development	Research and development	12,689		10,037		34,487		33,591		Research and development	12,648		10,902
Selling, general and administrative	Selling, general and administrative	94,661		80,726		279,299		247,722		Selling, general and administrative	93,485		92,227
Amortization of intangible assets		8,078		12,151		24,666		35,930
Gains on divestiture		—		—		(382)		(9,603)
Amortization of acquired intangible assets										Amortization of acquired intangible assets	7,473		8,367

Total operating expenses	Total operating expenses	115,428		102,914		338,070		307,640		Total operating expenses	113,606		111,496
Operating income	Operating income	43,279		35,651		120,778		61,551		Operating income	53,659		30,767
Interest and other expense, net	Interest and other expense, net	(1,055)		(4,263)		(12,001)		(13,249)		Interest and other expense, net	(2,069)		(5,273)
Income before provision for income taxes	Income before provision for income taxes	42,224		31,388		108,777		48,302		Income before provision for income taxes	51,590		25,494
Provision for income taxes	Provision for income taxes	9,280		8,156		22,759		14,668		Provision for income taxes	10,548		5,617
Net income	Net income	$	32,944	$	23,232	$	86,018	$	33,634	Net income	$	41,042	$	19,877

Net income per share - basic	Net income per share - basic	$	0.65	$	0.45	$	1.69	$	0.66	Net income per share - basic	$	0.81	$	0.39
Net income per share - diluted	Net income per share - diluted	$	0.64	$	0.45	$	1.67	$	0.65	Net income per share - diluted	$	0.80	$	0.38

Weighted average shares outstanding	Weighted average shares outstanding									Weighted average shares outstanding
Basic	Basic	50,509		51,094		50,896		51,024		Basic	50,542		51,224
Diluted	Diluted	51,219		51,344		51,487		51,356		Diluted	51,340		51,683

Comprehensive income	Comprehensive income	$	37,400	$	23,419	$	76,173	$	33,832	Comprehensive income	$	41,905	$	13,114

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

Table of Contents

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited in thousands, except share data)


		December 31, 2022		April 2, 2022			July 1, 2023		April 1, 2023
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	224,002	$	259,496	Cash and cash equivalents	$	285,719	$	284,466
Accounts receivable, less allowance for credit losses of $2,738 at December 31, 2022 and $2,475 at April 2, 2022		181,100		159,376
Accounts receivable, less allowance for credit losses of $5,047 at July 1, 2023 and $4,932 at April 1, 2023						Accounts receivable, less allowance for credit losses of $5,047 at July 1, 2023 and $4,932 at April 1, 2023	177,117		179,142
Inventories, net	Inventories, net	255,756		293,027		Inventories, net	289,207		259,379
Prepaid expenses and other current assets	Prepaid expenses and other current assets	45,451		44,132		Prepaid expenses and other current assets	49,564		46,735
Total current assets	Total current assets	706,309		756,031		Total current assets	801,607		769,722
Property, plant and equipment, net	Property, plant and equipment, net	313,138		258,482		Property, plant and equipment, net	304,467		310,885
Intangible assets, less accumulated amortization of $407,039 at December 31, 2022 and $376,552 at April 2, 2022		284,383		310,261
Intangible assets, less accumulated amortization of $427,521 at July 1, 2023 and $417,422 at April 1, 2023						Intangible assets, less accumulated amortization of $427,521 at July 1, 2023 and $417,422 at April 1, 2023	268,146		275,771
Goodwill	Goodwill	466,112		467,287		Goodwill	465,910		466,231
Deferred tax asset	Deferred tax asset	4,842		4,468		Deferred tax asset	4,875		5,241
Other long-term assets	Other long-term assets	103,282		63,205		Other long-term assets	117,253		106,975
Total assets	Total assets	$	1,878,066	$	1,859,734	Total assets	$	1,962,258	$	1,934,825
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	$	9,949	$	214,148	Notes payable and current maturities of long-term debt	$	13,572	$	11,784
Accounts payable	Accounts payable	63,769		58,371		Accounts payable	78,134		63,929
Accrued payroll and related costs	Accrued payroll and related costs	52,182		48,540		Accrued payroll and related costs	32,970		64,475
Other current liabilities	Other current liabilities	100,989		121,207		Other current liabilities	112,263		111,628
Total current liabilities	Total current liabilities	226,889		442,266		Total current liabilities	236,939		251,816
Long-term debt, net of current maturities	Long-term debt, net of current maturities	756,826		559,441		Long-term debt, net of current maturities	751,381		754,102
Deferred tax liability	Deferred tax liability	40,152		28,727		Deferred tax liability	37,342		36,195
Other long-term liabilities	Other long-term liabilities	78,220		79,876		Other long-term liabilities	71,980		74,715
Total stockholders’ equity
Common stock, $0.01 par value; Authorized — 150,000,000 shares; Issued and outstanding — 50,444,470 shares at December 31, 2022 and 51,124,240 shares at April 2, 2022		504		511
Stockholders’ equity:						Stockholders’ equity:
Common stock, $0.01 par value; Authorized — 150,000,000 shares; Issued and outstanding — 50,705,779 shares at July 1, 2023 and 50,448,519 shares at April 1, 2023						Common stock, $0.01 par value; Authorized — 150,000,000 shares; Issued and outstanding — 50,705,779 shares at July 1, 2023 and 50,448,519 shares at April 1, 2023	507		504
Additional paid-in capital	Additional paid-in capital	587,489		572,476		Additional paid-in capital	609,610		594,706
Retained earnings	Retained earnings	223,785		202,391		Retained earnings	284,017		253,168
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(35,799)		(25,954)		Accumulated other comprehensive loss	(29,518)		(30,381)
Total stockholders’ equity	Total stockholders’ equity	775,979		749,424		Total stockholders’ equity	864,616		817,997
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,878,066	$	1,859,734	Total liabilities and stockholders’ equity	$	1,962,258	$	1,934,825

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

Table of Contents

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)/Income			Total Stockholders’ Equity
		Shares	Par Value								Shares								Par Value
Balance, April 2, 2022		51,124	$	511			$	572,476						$	202,391			$	(25,954)		$	749,424
Balance, April 1, 2023																			Balance, April 1, 2023	50,449			$	504		$	594,706		$	253,168		$	(30,381)		$	817,997
Employee stock purchase plan	Employee stock purchase plan	57	—		2,459				—			—				2,459			Employee stock purchase plan	40			—		2,871			—			—			2,871
Exercise of stock options	Exercise of stock options	3	1		126				—			—				127			Exercise of stock options	145			2		5,858			(5,233)			—			627
Issuance of restricted stock, net of cancellations	Issuance of restricted stock, net of cancellations	131	1		(1)				—			—				—			Issuance of restricted stock, net of cancellations	140			2		(2)			—			—			—

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

Exercise of stock options		50	1		2,191				—			—				2,192
Shares repurchased		(786)	(8)		(23,891)				(51,101)			—				(75,000)
Issuance of restricted stock, net of cancellations		26	—		—				—			—				—

Share-based compensation expense		—	—		5,735				—			—				5,735
Net income		—	—		—				33,197			—				33,197
Other comprehensive loss		—	—		—				—			(7,538)				(7,538)
Balance, October 1, 2022		50,605	$	506	$	564,394			$	204,364		$	(40,255)			$	729,009
Employee stock purchase plan		45	—		1,919				—			—				1,919
Shares repurchased		(211)	(2)		13,525				(13,523)			—				—
Exercise of stock options		3	—		160				—			—				160
Issuance of restricted stock, net of cancellations		2	—		—				—			—				—

Tax withholding on employee equity awards																			Tax withholding on employee equity awards	(68)			(1)		(812)			(4,960)						(5,773)
Share-based compensation expense	Share-based compensation expense	—	—		7,491				—			—				7,491			Share-based compensation expense	—			—		6,989			—			—			6,989
Net income	Net income	—	—		—				32,944			—				32,944			Net income	—			—		—			41,042			—			41,042
Other comprehensive income	Other comprehensive income	—	—		—				—			4,456				4,456			Other comprehensive income	—			—		—			—			863			863
Balance, December 31, 2022		50,444	$	504	$	587,489			$	223,785		$	(35,799)			$	775,979
Balance, July 1, 2023																			Balance, July 1, 2023	50,706			$	507	$	609,610		$	284,017		$	(29,518)		$	864,616


		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)/Income			Total Stockholders’ Equity
		Shares	Par Value								Shares								Par Value
Balance, April 3, 2021		50,869	$	509			$	602,727						$	157,981			$	(29,547)		$	731,670
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	39	—		2,210				—			—				2,210			Employee stock purchase plan	57			—		2,459			—			—			2,459
Exercise of stock options	Exercise of stock options	14	—		500				—			—				500			Exercise of stock options	3			1		126			—			—			127
Issuance of restricted stock, net of cancellations	Issuance of restricted stock, net of cancellations	91	1		(1)				—			—				—			Issuance of restricted stock, net of cancellations	131			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	Share-based compensation expense	—	—		5,979				—			—				5,979			Share-based compensation expense	—			—		5,299			—			—			5,299
Net income	Net income	—	—		—				14,856			—				14,856			Net income	—			—		—			19,877			—			19,877
Other comprehensive loss	Other comprehensive loss	—	—		—				—			(436)				(436)			Other comprehensive loss	—			—		—			—			(6,763)			(6,763)
Balance, October 2, 2021		51,060	$	511	$	558,156			$	169,418		$	(29,536)			$	698,549
Employee stock purchase plan		36	—		1,999				—			—				1,999
Exercise of stock options		12	—		353				—			—				353
Issuance of restricted stock, net of cancellations		3	—		—				—			—				—
Share-based compensation expense		—	—		6,455				—			—				6,455
Net income		—	—		—				23,232			—				23,232
Other comprehensive income		—	—		—				—			187				187
Balance, January 1, 2022		51,111	$	511	$	566,963			$	192,650		$	(29,349)			$	730,775
Balance, July 2, 2022																			Balance, July 2, 2022	51,315			$	513	$	580,359		$	222,268		$	(32,717)		$	770,423

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

Table of Contents

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited in thousands)


		Nine Months Ended					Three Months Ended
		December 31, 2022		January 1, 2022			July 1, 2023		July 2, 2022
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income	Net income	$	86,018	$	33,634	Net income	$	41,042	$	19,877
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	69,453		72,934		Depreciation and amortization	23,032		22,447

Impairment of assets		94		5,144

Share-based compensation expense	Share-based compensation expense	18,525		19,262		Share-based compensation expense	6,989		5,299
Amortization of deferred financing costs	Amortization of deferred financing costs	1,098		2,608		Amortization of deferred financing costs	830		797
Provision (benefit ) for losses on inventory		483		(280)
Gains on divestiture		(382)		(9,603)
Inventory reserve adjustment						Inventory reserve adjustment	(1,785)		(2,075)

Contingent consideration		(504)		10,272

Other non-cash operating activities	Other non-cash operating activities	1,046		8,397		Other non-cash operating activities	682		1,192
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	(24,370)		(28,736)		Change in accounts receivable	1,010		10,358
Change in inventories	Change in inventories	34,506		11,589		Change in inventories	(29,396)		15,240
Change in prepaid income taxes	Change in prepaid income taxes	1,970		4,400		Change in prepaid income taxes	1,595		2,118
Change in other assets and other liabilities	Change in other assets and other liabilities	(10,664)		(6,010)		Change in other assets and other liabilities	(9,986)		(6,079)
Change in accounts payable and accrued expenses	Change in accounts payable and accrued expenses	16,174		(19,398)		Change in accounts payable and accrued expenses	(14,927)		(27,181)
Net cash provided by operating activities	Net cash provided by operating activities	193,447		104,213		Net cash provided by operating activities	19,086		41,993
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Capital expenditures	Capital expenditures	(98,272)		(61,394)		Capital expenditures	(9,663)		(45,467)
Acquisition	Acquisition	(2,850)		(2,500)		Acquisition	—		(2,850)
Proceeds from divestiture		850		10,642

Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	7,695		1,419		Proceeds from sale of property, plant and equipment	402		498
Other investments	Other investments	(33,205)		—		Other investments	(6,000)		(10,395)
Net cash used in investing activities	Net cash used in investing activities	(125,782)		(51,833)		Net cash used in investing activities	(15,261)		(58,214)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:

Term loan borrowings		280,000		—
Term loan redemption		(280,000)		—
Proceeds from revolving facility		50,000		—
Payments on revolving facility		(50,000)		—

Repayment of term loan borrowings	Repayment of term loan borrowings	(7,875)		(13,125)		Repayment of term loan borrowings	(1,750)		(4,375)
Debt issuance costs		(1,118)		—
Share repurchases		(75,000)		—

Contingent consideration payments	Contingent consideration payments	(21,593)		—		Contingent consideration payments	(849)		(21,593)
Proceeds from employee stock purchase plan	Proceeds from employee stock purchase plan	4,378		4,210		Proceeds from employee stock purchase plan	2,871		2,459
Proceeds from exercise of stock options	Proceeds from exercise of stock options	2,479		1,923		Proceeds from exercise of stock options	627		127
Other		(32)		8
Cash used to net share settle employee equity awards						Cash used to net share settle employee equity awards	(1,483)		—
Other financing activities						Other financing activities	(14)		(13)
Net cash used in financing activities	Net cash used in financing activities	(98,761)		(6,984)		Net cash used in financing activities	(598)		(23,395)
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	(4,398)		(824)		Effect of exchange rates on cash and cash equivalents	(1,974)		(4,932)
Net Change in Cash and Cash Equivalents	Net Change in Cash and Cash Equivalents	(35,494)		44,572		Net Change in Cash and Cash Equivalents	1,253		(44,548)
Cash and Cash Equivalents at Beginning of Period	Cash and Cash Equivalents at Beginning of Period	259,496		192,305		Cash and Cash Equivalents at Beginning of Period	284,466		259,496
Cash and Cash Equivalents at End of Period	Cash and Cash Equivalents at End of Period	$	224,002	$	236,877	Cash and Cash Equivalents at End of Period	$	285,719	$	214,948
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	$	77,946	$	25,385	Transfers from inventory to fixed assets for placement of Haemonetics equipment	$	1,982	$	38,022

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

Table of Contents

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 ~~December 31, 2022~~July 1, 2023 are not necessarily indicative of the results that may be expected for the full fiscal year ending ~~April 1, 2023~~March 30, 2024 or any other interim period. 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 ~~2, 2022.~~1, 2023.

The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. There were no material recognized or unrecognized subsequent events as of or for the ~~nine~~three months ended ~~December 31, 2022.~~ July 1, 2023, except for those discussed in Note 8, Inventories.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Standards Implemented

~~In December 2019,~~There are currently no recent accounting pronouncements that 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 exceptionsCompany expects 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~~its 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. Additionally, retained earnings was adjusted to remove amortization expense recognized in prior periods related to the debt discount and the convertible notes no longer have a debt discount that will be amortized, net of taxes. The impact to retained earnings on the condensed consolidated balance sheets as of April 4, 2021 is an increase of $1.0 million.

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

3. ~~RESTRUCTURING~~STRATEGIC INVESTMENTS

~~On an ongoing basis,~~As part of the Company’s business development activities, it holds strategic investments in certain entities. During fiscal year 2023, the Company ~~reviews~~made investments in Vivasure Medical LTD (“Vivasure”), totaling €30 million. The investments in Vivasure include both preferred stock and a special share that allows the ~~global economy,~~Company to acquire Vivasure in accordance with an agreement between the ~~healthcare industry,~~parties. The Company made certain other strategic investments totaling $6.0 million during the first quarter of fiscal 2024. The Company’s strategic investments are classified as other long-term assets on the Company’s Condensed Consolidated Balance Sheets and the ~~markets in which it competes~~Company has not recorded any adjustments 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~~carrying value 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 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 under the program. The majority of charges will result in cashstrategic investments during ~~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 ~~December 31, 2022, the Company incurred $4.1 million and $10.7 million, respectively, of restructuring and restructuring related costs under this program.During the three and nine months ended January~~July 1, ~~2022, the Company incurred $5.7 million and $20.2 million, respectively, of restructuring and restructuring related costs under this program.~~ ~~Total cumulative charges under this program are~~ ~~$66.4 million~~2023.

The following table summarizes the activity for restructuring reserves related to the 2020 Program and prior programs for the nine months ended December 31, 2022, substantially all of which relates to employee severance and other employee costs:

(In thousands) 2020 Program Prior Programs Total
Balance at April 2, 2022 $ 2,460 $ 345 $ 2,805
Costs incurred, net of reversals 103 62 165
Payments (1,082) (73) (1,155)
Balance at December 31, 2022 $ 1,481 $ 334 $ 1,815

~~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
(In thousands) December 31,
2022 January 1,
2022 December 31,
2022 January 1,
2022
Cost of goods sold $ (49) $ (187) $ (226) $ 2,276
Research and development — — — 108
Selling, general and administrative expenses 93 108 391 1,652
$ 44 $ (79) $ 165 $ 4,036

~~As of December 31, 2022, the Company had a restructuring liability of~~ ~~$1.8 million, of which~~ ~~$1.5 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 Three Months Ended Nine Months Ended
(In thousands) December 31, 2022 January 1, 2022 December 31, 2022 January 1, 2022
Plasma $ (50) $ (192) $ (261) $ 2,507
Blood Center — — — 3
Hospital — — — (91)
Corporate 94 113 426 1,617
Total $ 44 $ (79) $ 165 $ 4,036
Restructuring related costs Three Months Ended Nine Months Ended
(In thousands) December 31, 2022 January 1, 2022 December 31, 2022 January 1, 2022
Plasma $ 241 $ 1,400 $ 989 $ 4,541
Blood Center 21 24 39 554
Hospital 224 127 424 292
Corporate 3,595 4,210 9,180 10,827
Total $ 4,081 $ 5,761 $ 10,632 $ 16,214
Total restructuring and restructuring related costs $ 4,125 $ 5,682 $ 10,797 $ 20,250

4. ~~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 December 31, 2022, the Company reported income tax expense of $9.3 million and $22.8 million, respectively, representing effective tax rates of 22.0% and 20.9%, respectively. The effective tax rate for the three months ended December 31, 2022 includes $0.1 million of discrete tax expense relating to stock compensation shortfalls. The effective tax rate for the nine months ended December 31, 2022 includes a discrete tax benefit of $0.5 million related to tax rate changes enacted in the period and $0.4 million of discrete tax expense relating to stock compensation shortfalls.

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

~~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
(In thousands, except per share amounts) December 31,
2022 January 1,
2022 December 31,
2022 January 1,
2022
Basic EPS
Net income $ 32,944 $ 23,232 $ 86,018 $ 33,634
Weighted average shares 50,509 51,094 50,896 51,024
Basic income per share $ 0.65 $ 0.45 $ 1.69 $ 0.66
Diluted EPS
Net income $ 32,944 $ 23,232 $ 86,018 $ 33,634
Basic weighted average shares 50,509 51,094 50,896 51,024
Net effect of common stock equivalents 710 250 591 332
Diluted weighted average shares 51,219 51,344 51,487 51,356
Diluted income per share $ 0.64 $ 0.45 $ 1.67 $ 0.65

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 December 31, 2022, weighted average shares outstanding, assuming dilution, excludes the impact of 0.4 million and 0.7 million anti-dilutive shares, respectively. For the three and nine months ended January 1, 2022, weighted average shares outstanding, assuming dilution, excludes the impact of 0.9 million anti-dilutive shares.

~~Share Repurchase Program~~

In August 2022, the Company's Board of Directors authorized the repurchase of up to $300 million of Haemonetics common stock over the next three years. Under the share repurchase program, the Company is authorized to repurchase, from time to time, outstanding shares of common stock in accordance with applicable laws on the open market, including under trading plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, and in privately negotiated transactions. The actual timing, number and value of shares repurchased will be determined by the Company at its discretion 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.

In November 2022, the Company completed a $75.0 million repurchase of its common stock pursuant to an accelerated share repurchase agreement (“ASR”) entered into with Citibank N.A. (“Citibank”) in August 2022. The total number of shares repurchased under the ASR was 1.0 million at an average price per share upon final settlement of $75.20.

~~As of December 31, 2022, the total remaining authorization for repurchases of the Company's common stock under the share repurchase program was $225 million.~~

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 ~~December 31, 2022,~~July 1, 2023, the Company had ~~$23.3~~$24.6 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 ~~77%~~80% of this amount as revenue within the next twelve months and the remaining balance thereafter.

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Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables ~~(contract assets),~~ and contract assets, as well as customer advances, customer deposits and ~~deposits~~deferred revenue (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 ~~December 31, 2022~~July 1, 2023 and April 2, 2022, the Company had contract assets of $6.6 million and $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 December 31, 2022 and April 2, 2022,~~1, 2023, the Company had contract liabilities of ~~$26.6~~$32.9 million and ~~$26.8~~$30.2 million, respectively. During the three ~~and nine~~ months ended ~~December 31, 2022,~~July 1, 2023, the Company recognized ~~$3.9 million and $22.4~~$13.5 million of revenue ~~respectively,~~ that was included in the above April ~~2, 2022~~1, 2023 contract liability balance. Contract liabilities are classified as other current liabilities on the condensed consolidated balance sheet. As of July 1, 2023 and April 1, 2023, the Company’s contract assets were immaterial.

5. 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 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 expects to incur aggregate charges between $95 million and $105 million by the end of fiscal 2025 under the program. The majority of charges will result in cash outlays, including severance and other employee costs, and will be incurred as the specific actions required to execute these initiatives are identified and approved. During the three months ended July 1, 2023 and July 2, 2022, the Company incurred $2.2 million and $3.5 million, respectively, of restructuring and restructuring related costs under this program. Total cumulative charges under this program are $69.4 million.

The following table summarizes the activity for restructuring reserves related to the 2020 Program and prior programs for the three months ended July 1, 2023, substantially all of which relates to employee severance and other employee costs:


(In thousands)	2020 Program		Prior Programs		Total
Balance at April 1, 2023	$	1,810	$	340	$	2,150
Costs incurred, net of reversals	(11)		—		(11)
Payments	(589)		—		(589)
Balance at July 1, 2023	$	1,210	$	340	$	1,550

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


	Three Months Ended
(In thousands)	July 1, 2023		July 2, 2022
Cost of goods sold	$	206	$	(206)

Selling, general and administrative expenses	(217)		162
	$	(11)	$	(44)

As of July 1, 2023, the Company had a restructuring liability of $1.6 million, of which approximately $1.2 million is payable within the next twelve months.

In addition to the restructuring expenses included in the table above, the Company also incurred costs that do not constitute restructuring costs 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.

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


Restructuring costs	Three Months Ended
(In thousands)	July 1, 2023		July 2, 2022
Plasma	$	(256)	$	(211)

Hospital	242		—
Corporate	3		167
Total	$	(11)	$	(44)

Restructuring related costs	Three Months Ended
(In thousands)	July 1, 2023		July 2, 2022
Plasma	$	169	$	640
Blood Center	45		2
Hospital	49		89
Corporate	1,941		2,791
Total	$	2,204	$	3,522

Total restructuring and restructuring related costs	$	2,193	$	3,478

6. INCOME TAXES

For the three months ended July 1, 2023, the Company reported income tax expense of $10.5 million, representing an effective tax rate of 20.4%. The effective tax rate for the three months ended July 1, 2023 includes $1.2 million of discrete tax benefit primarily related to stock compensation windfalls.

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

7. EARNINGS PER SHARE

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


	Three Months Ended
(In thousands, except per share amounts)	July 1, 2023		July 2, 2022
Basic EPS
Net income	$	41,042	$	19,877
Weighted average shares	50,542		51,224
Basic income per share	$	0.81	$	0.39
Diluted EPS
Net income	$	41,042	$	19,877
Basic weighted average shares	50,542		51,224
Net effect of common stock equivalents	798		459
Diluted weighted average shares	51,340		51,683
Diluted income per share	$	0.80	$	0.38

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Basic earnings per share is calculated using the Company’s weighted-average outstanding common shares. Diluted earnings per share is calculated using its weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method and the convertible senior notes as determined under the net share settlement method. From the time of the issuance of the convertible senior notes, the average market price of the Company's common shares has been less than the initial conversion price, and consequently no shares have been included in diluted earnings per share for the conversion value of the convertible senior notes. For the three months ended July 1, 2023 and July 2, 2022, weighted average shares outstanding, assuming dilution, excludes the impact of 0.6 million and 0.9 million anti-dilutive shares, respectively.

Share Repurchase Program

In August 2022, the Company announced that its Board of Directors had approved a three-year share repurchase program authorizing the repurchase of up to $300.0 million of Haemonetics common stock, based on market conditions, through August 2025. Under the share repurchase program, the Company is authorized to repurchase, from time to time, outstanding shares of common stock in accordance with applicable laws on the open market, including under trading plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, and in privately negotiated transactions. The actual timing, number and value of shares repurchased will be determined by the Company at its discretion 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. As of July 1, 2023, the total remaining authorization for repurchases of the Company's common stock under the share repurchase program was $225.0 million.

8. INVENTORIES

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


(In thousands)	(In thousands)	December 31, 2022		April 2, 2022		(In thousands)	July 1, 2023		April 1, 2023
Raw materials	Raw materials	$	118,836	$	88,886	Raw materials	$	129,419	$	115,016
Work-in-process	Work-in-process	14,484		17,187		Work-in-process	16,314		12,572
Finished goods	Finished goods	122,436		186,954		Finished goods	143,474		131,791
Total inventories	Total inventories	$	255,756	$	293,027	Total inventories	$	289,207	$	259,379

~~8. STRATEGIC INVESTMENTS~~

~~During fiscal year~~In August 2023, the Company ~~made investments~~issued a voluntary recall of certain products within its Whole Blood business sold to customers in ~~Vivasure Medical LTD (“Vivasure”), totaling €30 million.~~the U.S. and certain foreign jurisdictions. The ~~investments include both preferred stock~~Company recorded a charge of $3.4 million related to inventory with respect to this recall in the first quarter of fiscal 2024. The Company continues to evaluate the impact of this recall and ~~a special share that allows the Company to acquire Vivasure~~may record additional incremental charges in ~~accordance with an agreement between the parties. The investments are classified as other long-term assets on the Company’s Condensed Consolidated Balance Sheets.~~future periods.

9. PROPERTY, PLANT AND EQUIPMENT


(In thousands)	July 1, 2023		April 1, 2023
Land	$	5,474	$	5,358
Building and building improvements	126,960		127,634
Plant equipment and machinery	196,398		194,539
Office equipment and information technology	124,340		123,611
Haemonetics equipment	457,297		463,706
Construction in progress	32,189		29,367
Total	942,658		944,215
Less: accumulated depreciation	(638,191)		(633,330)
Property, plant and equipment, net	$	304,467	$	310,885

Depreciation expense was $13.3 million and $11.7 million for the three months ended July 1, 2023 and July 2, 2022, respectively.

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10. LEASES

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

~~10.~~11. NOTES PAYABLE AND LONG-TERM DEBT

Convertible Senior Notes

~~In March 2021, the~~The Company ~~issued~~has $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”).~~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.

During ~~the third~~first quarter of fiscal ~~2023,~~2024, the conditions allowing holders of the 2026 Notes to convert have not been met. The 2026 Notes were therefore not convertible as of ~~December 31, 2022~~July 1, 2023 and were classified as long-term debt on the Company’s Condensed Consolidated Balance Sheets.

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 ~~December 31, 2022,~~July 1, 2023, the $500.0 million principal balance was netted down by ~~$8.5~~the $7.2 million of remaining debt issuance costs, resulting in a net convertible note payable of ~~$491.5~~$492.8 million. Interest expense related to the 2026 Notes was $0.7 million ~~and $2.0 million,~~ for the three ~~and nine~~ months ended ~~December 31, 2022, respectively,~~July 1, 2023, 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 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 “2018 Credit Facilities”) that were each scheduled to mature on June 15, ~~2023 with applicable interest rates during the period established using LIBOR plus 1.13% - 1.75%, depending on the Company’s leverage ratio.~~2023.

On July 26, 2022, the Company entered into an amended and restated credit agreement with certain lenders to refinance the 2018 Credit Facilities and extend their maturity date through June 2025. The amended and restated credit agreement provides for a $280.0 million senior unsecured term loan, the proceeds of which have been used to settle the balance of the term loan under the 2018 Credit Facilities, and a $420.0 million senior unsecured revolving credit facility (together, the “Revised Credit Facilities”). Loans under the Revised Credit Facilities 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 applied modification accounting for the credit facility refinancing. For the term loan under the Revised Credit ~~facilities,~~Facilities, for ~~the nine months ended December 31, 2022,~~fiscal 2023, the Company recognized interest expense of $0.5 million for third party fees incurred and capitalized $0.2 million of lender fees related to the term loan. For ~~the nine months ended December 31, 2022,~~fiscal 2023, the Company capitalized ~~$1.1~~$1.1 million of lender fees and third-party costs incurred in the refinancing related to the revolving credit facility under the Revised Credit Facilities.

At ~~December 31, 2022, $276.5~~July 1, 2023, $273.0 million was outstanding under the term loan with an effective ~~interest~~interest rate of ~~6.0%~~6.6%. The Company has scheduled principal payments of ~~$10.5~~$14.0 million required during the 12 months following ~~December 31, 2022.~~July 1, 2023. There were no

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outstanding borrowings ~~outstanding~~ under the revolving credit facility at ~~December 31, 2022.~~July 1, 2023. The Company also ~~has $21.4~~had $19.6 million of uncommitted operating lines of credit to fund its global operations under which there were no outstanding borrowings as of ~~December 31, 2022.~~July 1, 2023.

The Company was in compliance with the leverage and interest coverage ratios specified in the Revised Credit Facilities as well as all other bank covenants as of ~~December 31, 2022.~~July 1, 2023.

~~11.~~12. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The Company manufactures, markets and sells its products globally. During the three ~~and nine~~ months ended ~~December 31, 2022, 26.6% and 28.5%, respectively,~~July 1, 2023, 23.9% of the Company’s sales were generated outside the U.S. in 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 ~~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 ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022~~1, 2023 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 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 ~~$12.5~~$32.3 million as of ~~December 31, 2022~~July 1, 2023 and ~~$67.3~~$51.8 million as of April ~~2, 2022.~~1, 2023. At ~~December 31, 2022,~~July 1, 2023, a gain of ~~$1.6~~$1.4 million, net of tax, will be reclassified to earnings within the next twelve months. Substantially all currency cash flow hedges outstanding as of ~~December 31, 2022~~July 1, 2023 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 ~~$44.6~~$31.2 million as of ~~December 31, 2022~~July 1, 2023 and ~~$39.5~~$44.7 million as of April ~~2, 2022.~~1, 2023.

Interest Rate Swaps

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.

On June 15, 2018, the Company entered into the 2018 Credit Facilities, which provided for a $350.0 million term loan and a $350.0 million revolving credit facility. ~~Under the terms of the 2018 Credit Facilities, interest was established using LIBOR plus the applicable rate ranging from 1.13% to 1.75% based on the Company's leverage ratio.~~ In August 2018, the Company entered into two interest rate swap agreements to pay an average fixed rate of 2.80% plus the applicable rate on a total notional value of $241.9 million of debt, or 70% of the notional value of the unsecured term loan. ~~The 2018 interest rate swaps mature on June 15, 2023.~~ As a result of the Company’s refinancing of the 2018 Credit Facilities in ~~August~~July 2022, as discussed below, the 2018 interest rate swaps were amended in September 2022 to align with the Term Secured Overnight Financing Rate (“SOFR”) rate rather than LIBOR (the “Amended Swaps”).~~The~~ In order to avoid dedesignation, the Company ~~concluded that~~elected certain practical expedients under ASC 848. As a result, the Company’s earnings and cash flows are exposed to interest rate risk from changes to SOFR. The Amended Swaps ~~were still effective such that hedge accounting was continued~~matured on ~~these swaps.~~June 15, 2023.

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On July 26, 2022, the Company entered into an amended and restated credit agreement to refinance the 2018 Credit Facilities and extend their maturity date through June 2025. The Revised Credit Facilities include a $280.0 million senior unsecured term loan and a $420.0 million senior unsecured revolving credit facility. Loans under the Revised Credit Facilities bear interest at an annual rate equal to the 1-month USD Term SOFR plus 0.10% and an applicable rate ranging from 1.125% to 1.750% based on the Company’s consolidated net leverage ratio. In September 2022, the Company entered into four additional interest rate swaps, which when combined with the Amended Swaps, ~~result~~resulted in an average blended fixed interest rate of 3.57% plus the applicable rate on 70% of the notional value of the unsecured term loan until mid-June 2023 and 4.12% plus the applicable rate thereafter on 80% of the notional value until the maturity date in June 2025. On June 15, 2023, two of the Company’s interest rate swaps entered into during September 2022 matured concurrently with the Amended Swaps. The Company has concluded that ~~each of these four additional~~the two remaining interest rate swaps entered into during September 2022, which cover 80% of the notional value of the unsecured term loan through maturity in June 2025, are effective and qualify for hedge accounting treatment.

The Company held the following interest rate swaps as of ~~December 31, 2022:~~July 1, 2023:


Hedged Item	Hedged Item	Original Notional Amount		Notional Amount as of December 31, 2022		Designation Date	Effective Date	Termination Date	Fixed Interest Rate	Estimated Fair Value Assets (Liabilities)		Hedged Item	Original Notional Amount		Notional Amount as of July 1, 2023		Designation Date	Effective Date	Termination Date	Fixed Interest Rate	Estimated Fair Value Assets (Liabilities)
(In thousands)	(In thousands)											(In thousands)
1-month USD Term SOFR		$	140,719	$	57,000	9/23/2022	9/30/2022	6/15/2023	2.67%	$	399
1-month USD Term SOFR		101,219		41,000		9/23/2022	9/30/2022	6/15/2023	2.76%	277
1-month USD Term SOFR		23,888		47,775		9/23/2022	9/30/2022	6/15/2023	4.44%	81
1-month USD Term SOFR		23,888		47,775		9/23/2022	9/30/2022	6/15/2023	4.46%	79

1-month USD Term SOFR	1-month USD Term SOFR	109,900		109,900		9/23/2022	6/15/2023	6/15/2025	4.08%	(68)		1-month USD Term SOFR	109,900		109,900		9/23/2022	6/15/2023	6/15/2025	4.08%	1,326
1-month USD Term SOFR	1-month USD Term SOFR	109,900		109,900		9/23/2022	6/15/2023	6/15/2025	4.15%	(189)		1-month USD Term SOFR	109,900		109,200		9/23/2022	6/15/2023	6/15/2025	4.15%	1,217
Total	Total	$	509,514	$	413,350					$	579	Total	$	219,800	$	219,100					$	2,543

For the ~~nine~~three months ended ~~December 31, 2022,~~July 1, 2023, the Company recorded a gain of ~~$3.6~~$2.8 million, net of tax, ~~was recorded~~ in accumulated other comprehensive loss to recognize the effective portion of the fair value of the ~~Swaps~~swaps that qualify as cash flow hedges.

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. To date, the Company has not experienced significant customer payment defaults, or identified other significant collectability concerns.

The following is a roll forward of the allowance for credit losses:


		Three Months Ended				Nine Months Ended					Three Months Ended
(In thousands)	(In thousands)	December 31, 2022		January 1, 2022		December 31, 2022		January 1, 2022		(In thousands)	July 1, 2023		July 2, 2022
Beginning balance	Beginning balance	$	2,495	$	2,701	$	2,475	$	2,226	Beginning balance	$	4,932	$	2,475
Credit loss	Credit loss	224		(305)		429		226		Credit loss	151		146
Recoveries (Write-offs)		19		(14)		(166)		(70)
Write-offs										Write-offs	(36)		(126)
Ending balance	Ending balance	$	2,738	$	2,382	$	2,738	$	2,382	Ending balance	$	5,047	$	2,495

~~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 months ended December 31, 2022:

(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 $ 1,604 $ 4,978 Net revenues, COGS and SG&A $ 642 Interest and other expense, net
Non-designated foreign currency hedge contracts $ — $ — $ 1,265 Interest and other expense, net
Designated interest rate swaps, net of tax $ 2,458 $ (1,110) Interest and other expense, net $ —

The Company did not have fair value hedges or net investment hedges outstanding as of December 31, 2022 or April 2, 2022. As of December 31, 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 December 31, 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.

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~~The following tables present the fair value of the Company’s derivative instruments as they appear in its Condensed Consolidated Balance Sheets as of December 31, 2022 and April 2, 2022:~~

(In thousands) Location in Condensed Consolidated
Balance Sheets As of As of
December 31, 2022 April 2, 2022
Derivative Assets:
Designated foreign currency hedge contracts Other current assets $ 1,055 $ 3,133
Non-designated foreign currency hedge contracts Other current assets 49 99
Designated interest rate swaps Other current assets 1,687 —
$ 2,791 $ 3,232
Derivative Liabilities:
Designated foreign currency hedge contracts Other current liabilities $ 45 $ 56
Non-designated foreign currency hedge contracts Other current liabilities 246 25
Designated interest rate swaps Other current liabilities — 1,813
Designated interest rate swaps Other long-term liabilities 1,108 —
$ 1,399 $ 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.

Fair Value of Derivative Instruments


Derivative Instruments	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
(In thousands)
Designated foreign currency hedge contracts, net of tax	$	1,434	$	(560)	Net revenues, COGS and SG&A	$	282	Interest and other expense, net
Non-designated foreign currency hedge contracts	$	—	$	—		$	1,308	Interest and other expense, net
Designated interest rate swaps, net of tax	$	2,789	$	1	Interest and other expense, net	$	—

The Company did not have fair value hedges or net investment hedges outstanding as of July 1, 2023 or April 1, 2023. As of July 1, 2023, 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, the Company uses inputs that include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; other observable inputs for the asset or liability; and inputs derived principally from, or corroborated by, observable market data by correlation or other means. As of July 1, 2023, 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.

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The following tables present the fair value of the Company’s derivative instruments as they appear in its Condensed Consolidated Balance Sheets as of July 1, 2023 and April 1, 2023:


(In thousands)	Location in Condensed Consolidated Balance Sheets	As of		As of
		July 1, 2023		April 1, 2023
Derivative Assets:
Designated foreign currency hedge contracts	Other current assets	$	2,508	$	1,401
Non-designated foreign currency hedge contracts	Other current assets	110		302
Designated interest rate swaps	Other current assets	2,442		1,110
Designated interest rate swaps	Other long-term assets	101		—
		$	5,161	$	2,813
Derivative Liabilities:
Designated foreign currency hedge contracts	Other current liabilities	$	17	$	24
Non-designated foreign currency hedge contracts	Other current liabilities	12		58

Designated interest rate swaps	Other long-term liabilities	—		1,807
		$	29	$	1,889

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 ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022.~~1, 2023.


		As of December 31, 2022									As of July 1, 2023
(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	$	89,114	$	—	$	—	$	89,114	Money market funds	$	119,912	$	—	$	—	$	119,912
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	—		1,055		—		1,055		Designated foreign currency hedge contracts	—		2,508		—		2,508
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	—		49		—		49		Non-designated foreign currency hedge contracts	—		110		—		110
Designated interest rate swaps	Designated interest rate swaps	—		1,687		—		1,687		Designated interest rate swaps	—		2,543		—		2,543
		$	89,114	$	2,791	$	—	$	91,905		$	119,912	$	5,161	$	—	$	125,073
Liabilities	Liabilities									Liabilities
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	$	—	$	45	$	—	$	45	Designated foreign currency hedge contracts	$	—	$	17	$	—	$	17
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	—		246		—		246		Non-designated foreign currency hedge contracts	—		12		—		12
Designated interest rate swaps		—		1,108		—		1,108
Contingent consideration		—		—		848		848

		$	—	$	1,399	$	848	$	2,247		$	—	$	29	$	—	$	29

		As of April 2, 2022									As of April 1, 2023
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Money market funds	Money market funds	$	97,425	$	—	$	—	$	97,425	Money market funds	$	132,341	$	—	$	—	$	132,341
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	—		3,133		—		3,133		Designated foreign currency hedge contracts	—		1,401		—		1,401
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	—		99		—		99		Non-designated foreign currency hedge contracts	—		302		—		302

Designated interest rate swaps										Designated interest rate swaps	—		1,110				1,110
		$	97,425	$	3,232	$	—	$	100,657		$	132,341	$	2,813	$	—	$	135,154
Liabilities	Liabilities									Liabilities
Designated foreign currency hedge contracts	Designated foreign currency hedge contracts	$	—	$	56	$	—	$	56	Designated foreign currency hedge contracts	$	—	$	24	$	—	$	24
Non-designated foreign currency hedge contracts	Non-designated foreign currency hedge contracts	—		25		—		25		Non-designated foreign currency hedge contracts	—		58		—		58
Designated interest rate swaps	Designated interest rate swaps	—		1,813		—		1,813		Designated interest rate swaps	—		1,807		—		1,807
Contingent consideration	Contingent consideration	—		—		33,675		33,675		Contingent consideration	—		—		863		863
		$	—	$	1,894	$	33,675	$	35,569		$	—	$	1,889	$	863	$	2,752

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

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

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

Fair Value at Valuation Unobservable
(In thousands) December 31, 2022 Technique Input Range
Revenue-based payments $ 848 Discounted cash flow Discount rate 8.5%
Projected year of payment 2023

~~The fair value of contingent consideration associated with acquisitions was $0.8 million at December 31, 2022 and was included in other liabilities.~~ ~~A reconciliation of the change in the fair value of contingent consideration is included in the following table:~~


~~(In thousands)~~
~~Balance at April 2, 2022~~	$	~~33,675~~
~~Change in fair value~~	~~(504)~~
~~Payments~~	~~(32,293)~~
~~Currency translation~~	~~(30)~~
~~Balance at December 31, 2022~~	$	~~848~~

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 ~~December 31, 2022~~July 1, 2023 was ~~$416.5~~$428.4 million, which was determined by using the market price on the last trading day of the reporting period.

~~12.~~13. COMMITMENTS AND CONTINGENCIES

The Company is a party to various legal proceedings and claims arising out of the ordinary course of its business. The Company believes 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 its financial condition or results of operations. At each reporting period, 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 requested 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 has fully cooperated with this inquiry. On August 16, 2022, the U.S. Department of Justice (“DOJ”) filed a motion on behalf of the United States and 31 states reflecting their decision to not ~~intervene~~intervene in the underlying qui tam action captioned United States ex rel. Berthelot et al. v. Haemonetics Corp., 1:20-cv-11062-ADB, pending in the U.S. District Court for the District of Massachusetts, indicating that the DOJ had completed its investigative activity based on then available information. The qui tam case was unsealed by order dated August 18, 2022. During the first quarter of fiscal 2024, the Company recorded an additional loss contingency related to this matter, which did not have a material impact on its condensed consolidated financial statements.

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. In March 2023, the Company filed a second motion to dismiss the complaint, which is pending before the court. The Company believes it has valid and meritorious defenses to the ~~allegations in this lawsuit are without merit and will defend vigorously against them. The case is still in an early stage and~~complaint. During the first quarter of fiscal 2024, the Company ~~cannot reasonably estimate~~recorded an additional loss contingency related to this matter, which did not have a ~~range~~material impact on its condensed consolidated financial statements.

Table of ~~potential loss and expense at this time.~~Contents

14. ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of Accumulated Other Comprehensive Loss are as follows:


(In thousands)	Foreign Currency		Defined Benefit Plans		Net Unrealized Gain/(Loss) on Derivatives		Total
Balance as of April 1, 2023	$	(33,935)	$	4,075	$	(521)	$	(30,381)
Other comprehensive income (loss) before reclassifications(1)	(2,801)		—		4,223		1,422
Amounts reclassified from accumulated other comprehensive income(1)	—		—		(559)		(559)
Net current period other comprehensive income (loss)	(2,801)		—		3,664		863
Balance as of July 1, 2023	$	(36,736)	$	4,075	$	3,143	$	(29,518)
(1) Presented net of income taxes, the amounts of which are insignificant.

~~13.~~15. 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 global business units and the information that is regularly reviewed by the Company’s chief operating decision maker.

The Company’s reportable and operating 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 of acquired intangible assets, restructuring ~~and~~costs, restructuring related costs, digital transformation costs related to the upgrade of our enterprise resource planning system, 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”), and unusual or infrequent and material litigation-related ~~charges and gains and losses on dispositions and sale of assets.~~charges. 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)	December 31, 2022		January 1, 2022		December 31, 2022		January 1, 2022		(In thousands)	July 1, 2023		July 2, 2022
Net revenues	Net revenues									Net revenues
Plasma	Plasma	$	136,574	$	96,692	$	368,504	$	250,499	Plasma	$	138,482	$	103,042
Blood Center	Blood Center	76,827		74,527		219,052		221,522		Blood Center	67,306		66,573
Hospital	Hospital	93,889		82,100		275,635		235,609		Hospital	99,536		89,184
Net revenues by business unit	Net revenues by business unit	307,290		253,319		863,191		707,630		Net revenues by business unit	305,324		258,799
Service (1)	Service (1)	5,372		5,436		15,918		15,655		Service (1)	5,764		5,137
Effect of exchange rates	Effect of exchange rates	(7,361)		1,014		(14,865)		4,909		Effect of exchange rates	244		(2,478)
Net revenues	Net revenues	$	305,301	$	259,769	$	864,244	$	728,194	Net revenues	$	311,332	$	261,458
(1) Reflects revenue for service, maintenance and parts	(1) Reflects revenue for service, maintenance and parts									(1) Reflects revenue for service, maintenance and parts

2017

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		Three Months Ended				Nine Months Ended					Three Months Ended
(In thousands)	(In thousands)	December 31, 2022		January 1, 2022		December 31, 2022		January 1, 2022		(In thousands)	July 1, 2023		July 2, 2022
Segment operating income	Segment operating income									Segment operating income
Plasma	Plasma	$	76,365	$	51,405	$	203,098	$	128,964	Plasma	$	75,698	$	55,126
Blood Center	Blood Center	35,005		34,561		102,710		103,043		Blood Center	26,283		30,377
Hospital	Hospital	37,557		35,072		110,762		97,898		Hospital	40,943		34,722
Segment operating income	Segment operating income	148,927		121,038		416,570		329,905		Segment operating income	142,924		120,225
Corporate expenses (1)	Corporate expenses (1)	(93,502)		(68,013)		(261,855)		(204,930)		Corporate expenses (1)	(75,309)		(81,584)
Effect of exchange rates	Effect of exchange rates	3,581		5,807		9,775		15,553		Effect of exchange rates	2,613		6,245
Integration and transaction costs	Integration and transaction costs	(287)		(1,860)		425		(19,218)		Integration and transaction costs	(1,115)		758
Deal amortization		(8,078)		(12,151)		(24,666)		(35,930)
Restructuring and restructuring related costs		(4,123)		(5,682)		(10,795)		(20,250)
Amortization of acquired intangible assets										Amortization of acquired intangible assets	(7,473)		(8,367)
Restructuring costs										Restructuring costs	11		44
Restructuring related costs										Restructuring related costs	(2,204)		(3,522)
Digital transformation costs										Digital transformation costs	(3,705)		—
Impairment of assets and PCS2 related charges	Impairment of assets and PCS2 related charges	1		(897)		268		(4,790)		Impairment of assets and PCS2 related charges	141		350
MDR and IVDR costs	MDR and IVDR costs	(2,483)		(2,453)		(8,175)		(7,171)		MDR and IVDR costs	(1,166)		(3,186)
Litigation-related charges	Litigation-related charges	(757)		(138)		(1,151)		(1,221)		Litigation-related charges	(1,058)		(196)
Gains on divestiture		—		—		382		9,603

Operating income	Operating income	$	43,279	$	35,651	$	120,778	$	61,551	Operating income	$	53,659	$	30,767
(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~~business unit are as follows:

Three Months Ended Nine Months Ended
(In thousands) December 31,
2022 January 1,
2022 December 31,
2022 January 1,
2022
Plasma products and services $ 153,899 $ 116,347 $ 415,412 $ 308,931
Blood Center products and services 58,273 59,440 173,086 177,118
Hospital products and services 93,129 83,982 275,746 242,145
Net revenues $ 305,301 $ 259,769 $ 864,244 $ 728,194


		Three Months Ended
(In thousands)		July 1, 2023		July 2, 2022
	Plasma	$	138,610	$	102,381

	Whole Blood	20,040		19,595
	Apheresis	47,300		46,099
	Blood Center	67,340		65,694

	Hemostasis Management	37,820		33,497
	Vascular Closure	37,620		29,568
	Other(1)	24,168		25,429
	Hospital	99,608		88,494

Net business unit revenues		305,558		256,569
	Service	5,774		4,889
Net revenues		$	311,332	$	261,458
(1) Other includes the Cell Salvage and Transfusion Management product lines of the Hospital business unit.

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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)	December 31, 2022		January 1, 2022		December 31, 2022		January 1, 2022		(In thousands)	July 1, 2023		July 2, 2022
United States	United States	$	224,104	$	167,270	$	617,824	$	460,404	United States	$	237,073	$	181,996
Japan	Japan	15,552		19,916		44,559		55,949		Japan	11,773		13,878
Europe	Europe	39,105		41,540		121,412		126,055		Europe	39,387		40,457
Asia		25,454		30,434		77,739		83,157
Rest of Asia										Rest of Asia	22,040		24,424
Other	Other	1,086		609		2,710		2,629		Other	1,059		703
Net revenues	Net revenues	$	305,301	$	259,769	$	864,244	$	728,194	Net revenues	$	311,332	$	261,458

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~~14. ACCUMULATED OTHER COMPREHENSIVE LOSS~~

~~The components of Accumulated Other Comprehensive Loss are as follows:~~

(In thousands) Foreign Currency Defined Benefit Plans Net Unrealized Gain/(Loss) on Derivatives Total
Balance as of April 2, 2022 $ (27,919) $ 1,619 $ 346 $ (25,954)
Other comprehensive income (loss) before reclassifications(1)
(10,039) — 4,062 (5,977)
Amounts reclassified from accumulated other comprehensive income(1)
— — (3,868) (3,868)
Net current period other comprehensive income (loss) (10,039) — 194 (9,845)
Balance as of December 31, 2022 $ (37,958) $ 1,619 $ 540 $ (35,799)
(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 ~~2, 2022.~~1, 2023. 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, Vascular Closure, Cell Salvage and Transfusion Management ~~and Vascular Closure~~ products, ~~includes~~includes devices and methodologies for measuring coagulation characteristics of blood, ~~surgical blood salvage systems,~~vascular closure devices, specialized blood cell processing systems and disposables, surgical blood salvage systems and blood transfusion management ~~software and vascular closure devices.~~software.

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~~Financial Summary

~~Share Repurchase Program~~

In August 2022, our Board of Directors authorized the repurchase of up to $300 million of Haemonetics common stock from time to time, based on market conditions, over the next three years. In November 2022, the Company completed a $75.0 million repurchase of its common stock pursuant to an accelerated share repurchase agreement (“ASR”) entered into with Citibank N.A. (“Citibank”) in August 2022. The total number of shares repurchased under the ASR was 1.0 million at an average price per share upon final settlement of $75.20.

~~As of December 31, 2022, the total remaining authorization for repurchase of the Company’s common stock was $225 million.~~

~~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 $280.0 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 $420.0 million senior unsecured revolving credit facility. In September 2022, we amended two prior interest rate swap agreements and entered into certain supplemental interest rate swap agreements to effectively convert between 70% to 80% of borrowings under our Revised Credit Facilities from a variable Term Secured Overnight Financing Rate (“SOFR”) rate to a fixed rate of interest through June 2025. In September 2022, we amended two prior interest rate swap agreements and entered into certain supplemental interest rate swap agreements to effectively convert between 70% to 80% of borrowings under our Revised Credit Facilities from a variable Term SOFR rate to a fixed rate of interest through June 2025.

~~Operational Excellence Program~~


	Three Months Ended
(In thousands, except per share data)	July 1, 2023			July 2, 2022			% Increase/ (Decrease)
Net revenues	$	311,332		$	261,458		19.1	%
Gross profit	$	167,265		$	142,263		17.6	%
% of net revenues	53.7		%	54.4		%
Operating expenses	$	113,606		$	111,496		1.9	%
Operating income	$	53,659		$	30,767		74.4	%
% of net revenues	17.2		%	11.8		%
Interest and other expense, net	$	(2,069)		$	(5,273)		(60.8)	%
Income before provision for income taxes	$	51,590		$	25,494		102.4	%
Provision for income taxes	$	10,548		$	5,617		87.8	%
% of pre-tax income	20.4		%	22.0		%
Net income	$	41,042		$	19,877		106.5	%
% of net revenues	13.2		%	7.6		%
Net income per share - basic	$	0.81		$	0.39		107.7	%
Net income per share - diluted	$	0.80		$	0.38		110.5	%

During 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, Net revenueand will be incurred as the specific actions required to execute these initiatives are identified and approved. During the three and nine months ended December 31, 2022, the Company incurred $4.1 million and $10.7 million, respectively, of restructuring and restructuring related costs under this program. Total cumulative charges under this program are $66.4 million as of December 31, 2022.

~~Financial Summary~~

Three Months Ended Nine Months Ended
(In thousands, except per share data) December 31,
2022 January 1,
2022 % Increase/ (Decrease) December 31,
2022 January 1,
2022 % Increase/ (Decrease)
Net revenues $ 305,301 $ 259,769 17.5 % $ 864,244 $ 728,194 18.7 %
Gross profit $ 158,707 $ 138,565 14.5 % $ 458,848 $ 369,191 24.3 %
% of net revenues 52.0 % 53.3 % 53.1 % 50.7 %
Operating expenses $ 115,428 $ 102,914 12.2 % $ 338,070 $ 307,640 9.9 %
Operating income $ 43,279 $ 35,651 21.4 % $ 120,778 $ 61,551 96.2 %
% of net revenues 14.2 % 13.7 % 14.0 % 8.5 %
Interest and other expense, net $ (1,055) $ (4,263) (75.3) % $ (12,001) $ (13,249) (9.4) %
Income before provision for income taxes $ 42,224 $ 31,388 34.5 % $ 108,777 $ 48,302 125.2 %
Provision for income taxes $ 9,280 $ 8,156 13.8 % $ 22,759 $ 14,668 55.2 %
% of pre-tax income 22.0 % 26.0 % 20.9 % 30.4 %
Net income $ 32,944 $ 23,232 41.8 % $ 86,018 $ 33,634 155.7 %
% of net revenues 10.8 % 8.9 % 10.0 % 4.6 %
Net income per share - basic $ 0.65 $ 0.45 44.4 % $ 1.69 $ 0.66 156.1 %
Net income per share - diluted $ 0.64 $ 0.45 42.2 % $ 1.67 $ 0.65 156.9 %

~~Net revenues~~s increased ~~17.5% and 18.7%~~19.1% during the three ~~and nine~~ months ended ~~December 31, 2022, respectively,~~July 1, 2023 as compared with the same ~~periods~~period of fiscal ~~2022.~~2023. Without the ~~effect~~effects of foreign exchange, net revenues increased ~~20.8% and 21.5%~~20.5% during the three ~~and nine~~ months ended ~~December 31, 2022, respectively,~~July 1, 2023 as compared with the same ~~periods~~period of fiscal ~~2022.~~2023. Revenue increases in our Plasma and Hospital businesses, primarily related to volume and price benefits, drove the overall increase in revenue during the three ~~and nine~~ months ended ~~December 31, 2022.~~July 1, 2023.

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Operating income increased74.4% during the three ~~and nine~~ months ended ~~December 31, 2022~~July 1, 2023 as compared with the same period of fiscal ~~2022,~~2023, primarily due to increased revenues in Plasma and Hospital, ~~savings from the 2020 Program and decreased spending on acquisitions in the current year periods,~~ partially offset by ~~lower revenues in Blood Center,~~continuous growth investments, the impact of foreign exchange, digital transformation costs related to the upgrade of our enterprise resource planning system and increased ~~freight costs in our global supply chain, increased sales and marketing expense and higher performance-based compensation.~~depreciation 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) December 31,
2022 January 1,
2022 Reported growth Currency impact
Constant currency growth (1)
United States $ 224,104 $ 167,270 34.0 % — % 34.0 %
International 81,197 92,499 (12.2) % (9.0) % (3.2) %
Net revenues $ 305,301 $ 259,769 17.5 % (3.3) % 20.8 %

~~(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
(In thousands) December 31,
2022 January 1,
2022 Reported growth Currency impact
Constant currency growth (1)
United States $ 617,824 $ 460,404 34.2 % — % 34.2 %
International 246,420 267,790 (8.0) % (7.4) % (0.6) %
Net revenues $ 864,244 $ 728,194 18.7 % (2.8) % 21.5 %


	Three Months Ended
(In thousands)	July 1, 2023		July 2, 2022		Reported growth		Currency impact		Constant currency growth (1)
United States	$	237,073	$	181,996	30.3	%	—	%	30.3	%
International	74,259		79,462		(6.5)	%	(3.8)	%	(2.7)	%
Net revenues	$	311,332	$	261,458	19.1	%	(1.4)	%	20.5	%
(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,~~United States, 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 and independent distributors and agents. During the three ~~and nine~~ months ended ~~December 31, 2022~~July 1, 2023 our revenue generated outside the U.S. was ~~26.6% and 28.5%~~23.9% of total net revenues ~~respectively,~~ as compared with ~~35.6% and 36.8%~~30.4% during the three ~~and nine~~ months ended ~~January 1, 2022, respectively.~~July 2, 2022. International sales are generally conducted in local currencies, primarily Japanese Yen, Euro and Chinese ~~Yuan and Australian Dollars.~~Yuan. Our results of operations are impacted by changes in foreign exchange rates, particularly in the value of the Yen ~~Euro~~ and ~~Australian Dollar~~Euro relative to the U.S. Dollar. We have placed foreign currency hedges on certain foreign currencies 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.

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Net Revenues by Business Unit


		Three Months Ended											Three Months Ended
(In thousands)	(In thousands)	December 31, 2022		January 1, 2022		Reported growth		Currency impact		Constant currency growth (1)		(In thousands)	July 1, 2023		July 2, 2022		Reported growth		Currency impact		Constant currency growth(1)
Plasma	Plasma	$	135,461	$	96,460	40.4	%	(0.8)	%	41.2	%	Plasma	$	138,610	$	102,381	35.4	%	(0.1)	%	35.5	%

Whole Blood												Whole Blood	20,040		19,595		2.3	%	(1.6)	%	3.9	%
Apheresis												Apheresis	47,300		46,099		2.6	%	(4.1)	%	6.7	%
Blood Center	Blood Center	73,362		75,692		(3.1)	%	(6.2)	%	3.1	%	Blood Center	67,340		65,694		2.5	%	(3.3)	%	5.8	%
Hospital (2)		91,560		82,273		11.3	%	(3.1)	%	14.4	%

Hemostasis Management												Hemostasis Management	37,820		33,497		12.9	%	(1.6)	%	14.5	%
Vascular Closure												Vascular Closure	37,620		29,568		27.2	%	—	%	27.2	%
Other(2)												Other(2)	24,168		25,429		(5.0)	%	(2.0)	%	(3.0)	%
Hospital												Hospital	99,608		88,494		12.6	%	(1.2)	%	13.8	%

Net business unit revenues												Net business unit revenues	305,558		256,569		19.1	%	(1.5)	%	20.6	%
Service	Service	4,918		5,344		(8.0)	%	(6.8)	%	(1.2)	%	Service	5,774		4,889		18.1	%	(1.2)	%	19.3	%
Net revenues	Net revenues	$	305,301	$	259,769	17.5	%	(3.3)	%	20.8	%	Net revenues	$	311,332	$	261,458	19.1	%	(1.4)	%	20.5	%
(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.”												(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.”
(2) Other includes the Cell Salvage and Transfusion Management product lines of the Hospital business unit.												(2) Other includes the Cell Salvage and Transfusion Management product lines of the Hospital business unit.

~~(1)~~

Plasma

~~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.~~”

~~(2)~~Plasma revenue increased ~~Hospital revenue includes Hemostasis Management revenue of $34.9 million and $33.5 million~~35.4% during the three months ended ~~December 31, 2022 and January~~July 1, ~~2022, respectively. Hemostasis Management revenue increased 4.2% in the third quarter of fiscal~~ 2023 as compared with the same period of fiscal ~~2022.~~2023. Without the ~~effect~~effects of foreign exchange, ~~Hemostasis Management~~Plasma revenue increased ~~7.3% in~~35.5% during the ~~third quarter of fiscal~~three months ended July 1, 2023 as compared with the same period of fiscal ~~2022. Vascular Closure revenue increased 32.6% in~~2023. The increase during the three months ended July 1, 2023 was primarily driven by volume and price.

During the third quarter of fiscal 2023, we amended our supply agreement with CSL, which was scheduled to expire in December 2023, to extend the term through December 2025. CSL has a minimum purchase commitment under the non-exclusive supply agreement that slightly exceeds $100.0 million in fiscal 2024, and we expect that CSL will continue to provide a meaningful contribution to our Plasma business revenue in fiscal 2025.

Blood Center

Blood Center revenue increased 2.5% during the three months ended July 1, 2023 as compared with the same period of fiscal ~~2022.~~2023. Without the effects of foreign exchange, Blood Center revenue increased 5.8% during the three months ended July 1, 2023 as compared with the same periods of fiscal 2023. The increase was primarily due to an increase in our apheresis business.

Nine Months Ended
(In thousands) December 31,
2022 January 1,
2022 Reported growth Currency impact
Constant currency growth (1)
Plasma $ 365,735 $ 250,244 46.2 % (0.9) % 47.1 %
Blood Center 212,739 225,379 (5.6) % (4.5) % (1.1) %
Hospital (2)
270,909 237,074 14.3 % (2.7) % 17.0 %
Service 14,861 15,497 (4.1) % (5.8) % 1.7 %
Net revenues $ 864,244 $ 728,194 18.7 % (2.8) % 21.5 %
Hospital

~~(2)~~Hospital revenue increased ~~Hospital revenue includes Hemostasis Management revenue of $102.7 million and $97.2 million~~12.6% during the ~~nine~~three months ended ~~December 31, 2022 and January~~July 1, ~~2022, respectively. Hemostasis Management revenue increased 5.7% in the first nine months of fiscal~~ 2023 as compared with the same period of fiscal ~~2022.~~2023. Without the ~~effect~~effects of foreign exchange, ~~Hemostasis Management~~Hospital revenue increased ~~8.1% in~~13.8% during the ~~first nine~~three months ~~of fiscal~~ended July 1, 2023 as compared with the same period of fiscal ~~2022.~~2023. The increase during the three months ended July 1, 2023 was primarily attributable to increased Vascular Closure ~~revenue~~ and Hemostasis Management revenue.

Gross Profit


	Three Months Ended
(In thousands)	July 1, 2023			July 2, 2022			% Increase
Gross profit	$	167,265		$	142,263		17.6	%
% of net revenues	53.7		%	54.4		%

Gross profit increased ~~36.6% in~~17.6% for the ~~first nine~~three months ~~of fiscal~~ended July 1, 2023 as compared with the same period of fiscal ~~2022.~~

~~Plasma~~

~~Plasma revenue increased 40.4% and 46.2% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022.~~2023. Without the ~~effect~~effects of foreign exchange, ~~Plasma revenue~~gross profit increased 41.2% and 47.1% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022. The increases during the three and nine months ended December 31, 2022, as compared with the same period of fiscal 2022 were driven by volume and price.

During the third quarter of fiscal 2022, we amended our supply agreement with CSL Plasma Inc. (“CSL”), which CSL had previously notified us of its intent not to renew and was initially set to expire in June 2022, to allow CSL to continue to use our PCS2 plasma collection system devices and purchase disposable plasmapheresis kits on a non-exclusive basis through December 2023. During the third quarter of fiscal 2023, we further amended our supply agreement with CSL to extend the term through December 2025.

~~Blood Center~~

Blood Center revenue decreased 3.1% and 5.6% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022. Without the effect of foreign exchange, Blood Center revenue increased 3.1% and decreased 1.1% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022. The increase 21.8% during the three months ended ~~December 31, 2022,~~July 1, 2023 as compared towith the

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same period of fiscal ~~2022 was primarily due to an~~ 2023. The increase ~~in our whole blood business. The decrease~~ during the ~~nine~~three months ended ~~December 31, 2022, as compared with the same period of fiscal 2022~~July 1, 2023 was primarily driven by ~~a decline in the~~geographic and product mix, volume ~~of apheresis disposables.~~

~~Hospital~~

~~Hospital revenue increased 11.3%~~ and 14.3% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022. Without the effect of foreign exchange, Hospital revenue increased 14.4% and 17.0% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022. The increase during the three and nine months ended December 31, 2022 was primarily attributable to ~~Vascular Closure revenue, as well as increases in Hemostasis Management disposables revenue and Transfusion Management revenue.~~

~~Gross Profit~~

Three Months Ended Nine Months Ended
(In thousands) December 31,
2022 January 1,
2022 % Increase December 31,
2022 January 1,
2022 % Increase
Gross profit $ 158,707 $ 138,565 14.5 % $ 458,848 $ 369,191 24.3 %
% of net revenues 52.0 % 53.3 % 53.1 % 50.7 %

Gross profit increased 14.5% and 24.3% for the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022. Without the effect of foreign exchange, gross profit increased 18.4% and 28.5% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022. The increase during the three and nine months ended December 31, 2022 was primarily driven by volume, price, ~~and productivity savings from the 2020 Program,~~ partially offset by ~~inflationary pressures~~inventory reserves, investments in ~~our global manufacturing and supply chain~~operations and increased depreciation expense.

Operating Expenses


		Three Months Ended								Nine Months Ended									Three Months Ended
(In thousands)	(In thousands)	December 31, 2022			January 1, 2022			% Increase/ (Decrease)		December 31, 2022			January 1, 2022			% Increase/ (Decrease)		(In thousands)	July 1, 2023			July 2, 2022			% Increase/ (Decrease)
Research and development	Research and development	$	12,689		$	10,037		26.4	%	$	34,487		$	33,591		2.7	%	Research and development	$	12,648		$	10,902		16.0	%
% of net revenues	% of net revenues	4.2		%	3.9		%			4.0		%	4.6		%			% of net revenues	4.1		%	4.2		%
Selling, general and administrative	Selling, general and administrative	$	94,661		$	80,726		17.3	%	$	279,299		$	247,722		12.7	%	Selling, general and administrative	$	93,485		$	92,227		1.4	%
% of net revenues	% of net revenues	31.0		%	31.1		%			32.3		%	34.0		%			% of net revenues	30.0		%	35.3		%
Amortization of intangible assets		$	8,078		$	12,151		(33.5)	%	$	24,666		$	35,930		(31.3)	%
Amortization of acquired intangible assets																		Amortization of acquired intangible assets	$	7,473		$	8,367		(10.7)	%
% of net revenues	% of net revenues	2.6		%	4.7		%			2.9		%	4.9		%			% of net revenues	2.4		%	3.2		%

Gains on divestiture		$	—		$	—		—	%	$	(382)		$	(9,603)		(96.0)	%
% of net revenues		—		%	—		%			—		%	(1.3)		%

Total operating expenses	Total operating expenses	$	115,428		$	102,914		12.2	%	$	338,070		$	307,640		9.9	%	Total operating expenses	$	113,606		$	111,496		1.9	%
% of net revenues	% of net revenues	37.8		%	39.6		%			39.1		%	42.2		%			% of net revenues	36.5		%	42.6		%

Research and Development

Research and development expenses increased ~~26.4% and 2.7%~~16.0% during the three ~~and nine~~ months ended ~~December 31, 2022, respectively,~~July 1, 2023 as compared with the same ~~periods~~period of fiscal ~~2022.~~2023. Without the ~~effect~~effects of foreign exchange, research and development expenses increased ~~26.9% and 3.2%~~ 15.7% during the three ~~and nine~~ months ended ~~December 31, 2022, respectively,~~July 1, 2023 as compared with the same ~~periods~~period of fiscal ~~2022.~~ 2023. This increase was due to increased investments into product ~~innovation.~~innovation across our product portfolio.

Selling, General and Administrative

Selling, general and ~~administrative~~administrative expenses increased ~~17.3% and 12.7%~~1.4% during the three ~~and nine~~ months ended ~~December 31, 2022, respectively,~~July 1, 2023 as compared with the same ~~periods~~period of fiscal ~~2022.~~2023. Without the ~~effect~~effects of foreign exchange, selling, general, and administrative expenses increased ~~19.7% and 14.7%~~1.8% during ~~the~~the three ~~and nine~~ months ended ~~December 31, 2022, respectively,~~July 1, 2023 as compared with the same ~~periods~~period of fiscal ~~2022. The~~2023. The increase during the three ~~and nine~~ months ended ~~December 31, 2022~~July 1, 2023 was primarily driven by ~~inflationary pressures and higher freight costs in our global supply chain,~~ higher investments in sales and marketing and ~~higher performance-based compensation, partially offset by cost savings related to~~costs associated with the ~~2020 Program and decreased acquisition related costs in the current year.~~upgrade of our enterprise resource planning system.

Amortization of Acquired Intangible Assets

We recognized amortization expense related to our acquired intangible assets of ~~$8.1~~$7.5 million and ~~$24.7~~$8.4 million during the three ~~and nine~~ months ended ~~December 31, 2022, respectively,~~July 1, 2023 and ~~$12.2 million and $35.9 million during the three and nine months ended January 1,~~July 2, 2022, respectively. The decrease is primarily the result of intangible assets that became fully amortized during fiscal ~~2022.~~

2023.

~~Gains on Divestiture~~

~~We recognized gains on divestiture of $0.4 million during the nine months ended December 31, 2022 and $9.6 million during the nine months ended January 1, 2022.~~

Interest and Other Expense, Net

Interest and other expenses decreased ~~75.3% and 9.4%~~ 60.8% during the three ~~and nine~~ months ended ~~December 31, 2022, respectively,~~July 1, 2023 as compared with the same period of fiscal 2022. Without the effects of foreign exchange, interest and other expenses decreased 73.1% and 10.5% during the three and nine months ended December 31, 2022, respectively, as compared with the same periods of fiscal 2022. 2023. The decrease was primarily driven by increased interest income on investments due to higher interest rates and foreign currency impact due to market and rate volatility, partially offset by higher interest ~~rates which impacted the interest~~ incurred on our term 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 ~~December 31, 2022,~~July 1, 2023, we ~~reported~~recorded income tax expense of ~~$9.3~~$10.5 million, ~~and $22.8 million, respectively,~~ representing an effective tax ~~rates~~rate of ~~22.0% and 20.9%, respectively.~~20.4%. The effective tax rate for the three months ended ~~December 31, 2022~~ July 1, 2023 includes ~~$0.1~~$1.2 million of discrete tax benefit primarily related to stock compensation windfalls.

For the three months ended July 2, 2022, we recorded income tax expense of $5.6 million, representing an effective tax rate of 22.0%. The effective tax rate for the three months ended July 2, 2022 includes $0.6 million discrete tax expense relating to stock compensation shortfalls. ~~The effective tax rate for the nine months ended December 31, 2022 includes a discrete tax benefit~~

Table of ~~$0.5 million related to tax rate changes enacted in the period and $0.4 million of discrete tax expense relating to stock compensation shortfalls.~~

Contents

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

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)	December 31, 2022		April 2, 2022		(Dollars in thousands)	July 1, 2023		April 1, 2023
Cash & cash equivalents		$	224,002	$	259,496
Cash and cash equivalents						Cash and cash equivalents	$	285,719	$	284,466
Working capital	Working capital	$	479,420	$	313,765	Working capital	$	564,668	$	517,906
Current ratio	Current ratio	3.1		1.7		Current ratio	3.4		3.1
Net debt(1)		$	(542,773)	$	(514,093)
Net debt position(1)						Net debt position(1)	$	(479,234)	$	(481,420)
Days sales outstanding (DSO)	Days sales outstanding (DSO)	53		54		Days sales outstanding (DSO)	51		53
Inventory turnover	Inventory turnover	1.8		1.4		Inventory turnover	1.8		1.8

(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 and our revolving credit facility. 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 enhancements to our North American manufacturing facilities, share repurchases and cash principal and interest payments under our revised credit agreement.

~~In March 2021, the~~The Company ~~issued~~has $500.0 million aggregate principal amount of 0% convertible senior notes due in 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 ~~December 31, 2022.~~July 1, 2023.

As of ~~December 31, 2022,~~July 1, 2023, we had ~~$224.0~~$285.7 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 July 26, 2022, we entered into an amended and restated credit agreement with certain lenders to refinance our prior credit agreement entered into on June 15, 2018, which consisted of a $350.0 million term loan and a $350.0 million revolving loan (together, as amended from time to time, the “2018 Credit Facilities”), and extend the maturity date through June 2025. ~~The amended and restated credit agreement provides for~~Our Revised Credit Facilities include a ~~$280~~$280.0 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~~$420.0 million senior unsecured revolving credit ~~facility (together, the “Revised Credit Facilities”).~~facility. Loans under the Revised Credit Facilities 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 of ~~December 31, 2022, $276.5~~July 1, 2023, $273.0 million was outstanding under the term loan with an effective interest rate of ~~6.0%~~6.6%. There were no borrowings outstanding ~~under~~on the revolving ~~credit facility at December 31, 2022.~~loan. We also had ~~$21.4~~$19.6 million of uncommitted operating lines of credit to fund our global operations under which there were no outstanding borrowings as of ~~December 31, 2022.~~July 1, 2023. Additionally, the Company was in compliance with the leverage and interest coverage ratios specified in the ~~amended and restated~~ credit agreement as well as all other bank covenants as of ~~December 31, 2022.~~July 1, 2023.

The Company has scheduled principal payments of ~~$1.8~~$10.5 million required during the remainder of fiscal ~~2023.~~2024.

During fiscal 2022, our Board of Directors approved a revised ~~2020~~Operational Excellence Program. We ~~now~~ estimate that we will incur aggregate charges between $95 million and $105 million in connection with the ~~2020~~Operational Excellence 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 ~~December 31, 2022,~~July 1, 2023, we incurred ~~$4.1~~$2.2 million ~~and $10.7 million, respectively,~~ of restructuring and restructuring related costs under this program.

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Cash Flows


		Nine Months Ended				Three Months Ended
(In thousands)	(In thousands)	December 31, 2022		January 1, 2022			(In thousands)	July 1, 2023		July 2, 2022
Net cash provided by (used in):	Net cash provided by (used in):						Net cash provided by (used in):
Operating activities	Operating activities	$	193,447	$	104,213		Operating activities	$	19,086	$	41,993
Investing activities	Investing activities	(125,782)		(51,833)			Investing activities	(15,261)		(58,214)
Financing activities	Financing activities	(98,761)		(6,984)			Financing activities	(598)		(23,395)
Effect of exchange rate changes on cash and cash equivalents(1)	Effect of exchange rate changes on cash and cash equivalents(1)	(4,398)		(824)			Effect of exchange rate changes on cash and cash equivalents(1)	(1,974)		(4,932)
Net change in cash and cash equivalents	Net change in cash and cash equivalents	$	(35,494)	$	44,572		Net change in cash and cash equivalents	$	1,253	$	(44,548)

(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~~eliminated 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 ~~increased~~ decreased by ~~$89.2~~$22.9 million during the ~~nine~~three months ended ~~December 31, 2022,~~July 1, 2023, as compared with the ~~nine~~three months ended ~~January 1,~~July 2, 2022. The ~~increase~~decrease in cash provided by operating ~~activities~~activities was primarily the result of an increase in inventory, partially offset by an increase in net ~~income, a decrease in inventories driven by NexSys PCS device placements and higher other net working capital, including higher performance-based compensation.~~income.

Net cash used in investing activities ~~increased~~ decreased by ~~$73.9~~$43.0 million during the ~~nine~~three months ended ~~December 31, 2022,~~July 1, 2023, as compared with the ~~nine~~three months ended ~~January 1,~~July 2, 2022. The ~~increase~~decrease in cash used in investing activities was primarily the result of ~~an increase in~~lower capital expenditures driven by NexSys PCS device placements ~~and other investments made in the current year period, which was partially offset by lower proceeds received from divestitures~~that occurred during fiscal 2023 and decreased other investments compared to the first quarter of fiscal ~~2022 and increased sales of property, plant and equipment.~~2023.

Net cash used in financing activities ~~increased~~ decreased by ~~$91.8~~$22.8 million during the ~~nine~~three months ended ~~December 31, 2022,~~July 1, 2023, as compared with the ~~nine~~three months ended ~~January 1,~~July 2, 2022, primarily due to ~~share repurchases and acquisition-related~~lower contingent consideration payments ~~made~~ in the ~~current year.~~first quarter of fiscal 2024.

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 trade accounts or other 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’ 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 three and nine months ended December 31, 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 throughout fiscal 2023.~~ Historically, we have been able to limit the impact of the effects of inflation by improving our manufacturing and purchasing efficiencies, by increasing employee productivity and by adjusting the selling prices of products, but we may not be able to fully mitigate these increases in our operational costs in the future.

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Foreign Exchange

During the three ~~and nine~~ months ended ~~December 31, 2022, 26.6% and 28.5%, respectively,~~July 1, 2023, 23.9% 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, Euro and Chinese ~~Yuan and Australian Dollars.~~Yuan. 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~~Yuan 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~~Yuan sales exceed the foreign currency denominated costs, whenever the U.S. Dollar strengthens relative to the Yen, Euro ~~Yuan~~ or ~~Australian Dollar,~~Yuan, 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,~~Yuan, 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, Chinese Yuan~~Franc and Mexican ~~Pesos.~~Peso. 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; and 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 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, including inflationary pressures and higher freight costs in our global supply chain;

•~~Failure~~Our ability 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;

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•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 completed or planned acquisitions, divestitures or other 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~~the U.S. Foreign Corrupt Practices Act, European Union Medical Device Regulation and In Vitro Diagnostic Regulation 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 we may be subject to now or in the future;

•The impact of actual or threatened public health emergencies;

•Our ability to retain and attract key personnel;

•Market conditions impacting our stock price and/or our share repurchase program, and the possibility that such share repurchase program may be delayed, suspended or ~~discontinued.~~discontinued; and

•Our ability to achieve against our corporate responsibility initiatives and meet evolving stakeholder expectations concerning corporate responsibility matters.

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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~~exposures relative to market risk isare 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. As of ~~December 31, 2022,~~July 1, 2023, 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 ~~$2.0~~$3.4 million increase in the fair value of the forward ~~contracts;~~contracts, whereas a 10% weakening of the U.S. Dollar would result in a ~~$2.1~~$3.7 million decrease ofin the fair value of the forward contracts.

Interest Rate Risk

Our exposure to changes in interest rates is associated with borrowings under our credit facilities, all of which is variable rate debt. Total outstanding debt under our Revised Credit Facilities as of ~~December 31, 2022~~July 1, 2023 was ~~$276.5~~$273.0 million with an effective interest rate of ~~6.0%~~6.6% based on prevailing Term SOFR rates. An increase of 100 basis points in Term SOFR rates would result in additional annual interest expense of ~~$0.8 million. In September 2022, we modified~~$0.5 million. As of July 1, 2023, the notional amount on our two ~~existing interest~~active interest rate ~~swaps to align to Term SOFR rather than LIBOR and entered into four additional interest rate swaps~~swap agreements to effectively convert ~~$194.8 million of~~ borrowings under our ~~Revised~~ Credit Facilities from a variable rate to a fixed ~~rate.~~ rate were $219.1 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.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation, as of ~~December 31, 2022,~~July 1, 2023, 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 under the Securities Exchange Act of ~~the Exchange Act.~~1934. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures ~~are~~were effective as of ~~December 31, 2022.~~July 1, 2023.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended ~~December 31, 2022~~July 1, 2023 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 ~~12,~~13, Commitments and Contingencies to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

Item 1A. Risk Factors

There are no material changes from the Risk Factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended April ~~2, 2022.~~1, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~Issuer Purchases of Equity Securities~~None.

~~The following table provides information on the Company’s share repurchases during the third quarter of fiscal 2023:~~

Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
(in millions)($)(1)
October 2, 2022 – October 29, 2022 — — — —
October 30, 2022 – November 26, 2022 211,242 (2) 211,242 —
November 27, 2022 – December 31, 2022 — — — —
Total 211,242 $225.0
(1) In August 2022, the Company’s Board of Directors authorized the repurchase of up to $300.0 million of the Company’s common stock from time to time, based on market conditions, over the next three years. Under the Company’s share repurchase program, shares may be repurchased in accordance with applicable laws both on the open market, including under trading plans established pursuant to Rule 10b5-1 under the Exchange Act, and in privately negotiated transactions.
(2) In November 2022, the Company completed a $75.0 million repurchase of its common stock pursuant to an ASR entered into with Citibank in August 2022. The total number of shares repurchased under the ASR was 1.0 million at an average price per share upon final settlement of $75.20.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~Not applicable.~~During the three months ended July 1, 2023, certain of our directors and officers (as defined under Rule 16a-1(f) under the Securities Exchange Act of 1934) adopted or terminated trading arrangements for the sale of shares of our common stock as follows:

Trading Arrangement

Name and Title

Action

Date

Rule 10b5-1*

Non-Rule 10b5-1**

Number of Shares to be Sold(1)

Expiration Date(2)

Charles Dockendorff, Director

Adoption

5/30/2023

10,215

5/31/2024

Anila Lingamneni, EVP, Chief Technology Officer

Adoption

6/5/2023

13,984(3)

5/31/2024

Stewart Strong, President, Global Hospital

Adoption

6/12/2023

15,547(4)

7/30/2024

* Intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Securities Exchange Act of 1934.

** Not intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Securities Exchange Act of 1934.

(1) The number of shares of common stock sold under each trading arrangement, if any, will be net of shares withheld for applicable tax obligations upon the vesting and/or exercise of covered securities as well as payment of the exercise price upon the exercise of stock options, which amounts are not yet determinable.

(2) Except as otherwise indicated by footnote, each trading arrangement expires upon the earlier of (a) completion of all authorized transactions thereunder and (b) the expiration date listed above.

(3) Includes 7,070 target shares subject to a performance share unit (“PSU”) award previously granted to Ms. Lingamneni on May 18, 2021. The actual number of shares to be earned under the PSU award, and subject to sale under this trading arrangement, may range from 0% to a maximum of 200% of the target award depending upon the Company’s total shareholder return relative to the components of the S&P MidCap 400 index during a three-year performance period from May 18, 2021 to May 17, 2024.

(4) Includes 6,628 and 4,040 target shares subject to PSU awards previously granted to Mr. Strong on May 18, 2021 and July 13, 2021, respectively. The actual number of shares to be earned under each PSU award, and subject to sale under this trading arrangement, may range from 0% to a maximum of 200% of the target award depending upon the Company’s total shareholder return relative to the components of the S&P MidCap 400 index during three-year performance periods from May 18, 2021 to May 17, 2024 and from July 13, 2021 to July 12, 2024, respectively.

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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*			Haemonetics Corporation Worldwide Employee Bonus Plan (as amended and restated effective May 13, 2023) (1)

10.2*			Form of Restricted Stock Unit Award Agreement with Employees under 2019 Long-Term Incentive Compensation Plan (adopted fiscal 2024) (1)

10.3*			Form of Nonqualified Stock Option Award Agreement under 2019 Long-Term Incentive Compensation Plan (adopted fiscal 2024). (1)

10.4*			Form of Performance Share Unit Award Agreement under 2019 Long-Term Incentive Compensation Plan (adopted fiscal 2024). (1)

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 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 James C. D'Arecca, Executive Vice President, Chief Financial Officer of the Company.

101*			The following materials from Haemonetics Corporation on Form 10-Q for the quarter ended July 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 (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)						Agreement, plan, or arrangement related to the compensation of officers or directors.

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SIGNATURES

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


	HAEMONETICS CORPORATION

~~February 7,~~August 8, 2023	By:	/s/ Christopher A. Simon
		Christopher A. Simon, President and Chief Executive Officer
		(Principal Executive Officer)

~~February 7,~~August 8, 2023	By:	/s/ James C. ~~D'Arecca~~D’Arecca
		James C. ~~D'Arecca,~~D’Arecca, Executive Vice President, Chief Financial Officer
		(Principal Financial Officer)

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	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions)($)(1)
October 2, 2022 – October 29, 2022	—	—	—	—
October 30, 2022 – November 26, 2022	211,242	(2)	211,242	—
November 27, 2022 – December 31, 2022	—	—	—	—
Total	211,242			$225.0
(1) In August 2022, the Company’s Board of Directors authorized the repurchase of up to $300.0 million of the Company’s common stock from time to time, based on market conditions, over the next three years. Under the Company’s share repurchase program, shares may be repurchased in accordance with applicable laws both on the open market, including under trading plans established pursuant to Rule 10b5-1 under the Exchange Act, and in privately negotiated transactions.
(2) In November 2022, the Company completed a $75.0 million repurchase of its common stock pursuant to an ASR entered into with Citibank in August 2022. The total number of shares repurchased under the ASR was 1.0 million at an average price per share upon final settlement of $75.20.