What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-02-08 compared with 2023-11-02 · 117 added, 98 removed, 229 unchanged (48% of the section changed)

10 unchanged sentences

“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 products, inclu des devices and methodologies for measuring coagulation characteristics of blood, vascular closure devices, specialized blood cell processing systems and disposables, surgical blood salvage systems and blood transfusion management 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 opport unities to exit unfavorable customer contracts.

“Hospital”, which is comprised of Hemostasis Management, Interventional Technologies, Cell Salvage and Transfusion Management products, includes devices and methodologies for measuring coagulation characteristics of blood, vascular closure devices, sensor guided technologies, specialized blood cell processing systems and disposables, surgical blood salvage systems and blood transfusion management software.

Recent Developments

Agreement to Acquire OpSens, Inc.

On October 10, 2023, the Company announced it has entered into a definitive agreement to acquire all of the issued and outstanding common shares of OpSens, Inc.

(“OpSens”) for CAD $2.90 per share in an all-cash transaction, representing a fully diluted equity value of approximately USD $253.0 million at the exchange rate on the date of announcement.

Completion of the acquisition is subject to the approval of OpSens shareholders, receipt of court and regulatory approval, as well as certain other closing conditions customary for transactions of this nature.

The transaction is expected to close by the end of January 2024.

Acquisition of OpSens, Inc.

On October 10, 2023, the Company announced it had entered into an Arrangement Agreement with OpSens, Inc.

(“OpSens”), a medical device cardiology-focused company delivering solutions based on its proprietary optical technology, pursuant to which, among other things, the Company agreed to acquire all of the issued and outstanding common shares of OpSens.

On December 12, 2023, the Company completed its acquisition of OpSens for total consideration of approximately $254.5 million, or $243.9 million, net of cash acquired.

The Company financed the acquisition through a combination of cash on hand and borrowings under the revolving credit facility.

OpSens offers commercially and clinically validated optical technology for use primarily in interventional cardiology.

OpSens’ core products include the SavvyWire® that acts as pacing and pressure monitoring wire advancing the workflow of the procedure and enabling potentially shorter hospital stays for patients, and the OptoWire®, a pressure guidewire that aims to improve clinical outcomes by accurately and consistently measuring Fractional Flow Reserve (FFR) and diastolic pressure ratio (dPR) to aid clinicians in the diagnosis and treatment of patients with coronary artery disease.

OpSens’ core products include the SavvyWire ® , a sensor-guided 3-in-1 guidewire for TAVR procedures, advancing the workflow of the procedure and enabling potentially shorter hospital stays for patients;

and the OptoWire ® , a pressure guidewire that aims to improve clinical outcomes by accurately and consistently measuring Fractional Flow Reserve (FFR) and diastolic pressure ratio (dPR) to aid clinicians in the diagnosis and treatment of patients with coronary artery disease.

OpSens also manufactures a range of fiber optic sensor solutions used in medical devices and other critical industrial applications.

The addition of OpSens will expand the Hospital business unit portfolio in the interventional cardiology market.

The addition of OpSens expands the Hospital business unit portfolio in the interventional cardiology market and will be included in the Hospital reportable segment.

Portfolio Rationalization Initiatives

In November 2023, the Company announced its plans to end of life the ClotPro system within the Hospital business unit and whole blood inline collection products within the Blood Center business unit, and the associated manufacturing operations.

We do not envision these product rationalization initiatives to materially impact our fiscal 2024 results.

In November 2023, the Company announced its plans to end of life the ClotPro analyzer system within the Hospital business unit and whole blood inline collection products within the Blood Center business unit, including the associated manufacturing operations and closure of certain other facilities.

These product rationalization initiatives have not materially impacted the third quarter of fiscal 2024 results and we do not expect a material impact for the remainder of fiscal 2024.

Financial Summary

Three Months Ended Six Months Ended

(In thousands, except per share data) September 30,

2023 October 1,

2022 % Increase/ (Decrease) September 30,

2023 October 1,

Three Months Ended Nine Months Ended

(In thousands, except per share data) December 30,

2023 December 31,

2022 % Increase/ (Decrease) December 30,

2023 December 31,

2022 % Increase/ (Decrease)

13 unchanged sentences

Net income per share - diluted $ 0.61 $ 0.64 (4.7) % $ 1.89 $ 1.67 13.2 %

Net revenue s increased 7.0% and 12.6% during the three and six months ended September 30, 2023, respectively, as compared with the same periods of fiscal 2023.

Without the effects of foreign exchange, net revenues increased 7.6% and 13.6% during the three and six months ended September 30, 2023, respectively, as compared with the same periods of fiscal 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 six months ended September 30, 2023.

Operating income de creased 24.5% and during the three months ended September 30, 2023 and increased 14.8% during the six months ended September 30, 2023 as compared with the same periods of fiscal 2023.

The decrease during the three months ended September 30, 2023 was primarily due to continuous growth investme nts, impairments of intangible assets and digital transformation costs related to the upgrade of our enterprise resource planning system, partially offset by increased revenues in Plasma and Hospital.

The increase during the six months ended September 30, 2023 was due to increa sed revenues in Plasma and Hospital and operating leverage, partially offset by continuous growth investments, impairments of intangible assets and digital transformation costs.

Net revenue s increased 10.1% and 11.7% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023.

Without the effects of foreign exchange, net revenues increased 10.3% and 12.4% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 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 30, 2023.

Operating income in creased 6.2% and 11.7% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023.

The increases during the three and nine months ended December 30, 2023 were primarily due to increased revenues in Plasma and Hospital as well as operating leverage, partially offset by continuous growth investments, portfolio rationalization initiatives, transaction costs in connection with the OpSens acquisition and digital transformation costs related to the upgrade of our enterprise resource planning system.

Management’s Use of Non-GAAP Measures

7 unchanged sentences

Three Months Ended

(In thousands) September 30,

2023 October 1,

(In thousands) December 30,

2023 December 31,

2022 Reported growth Currency impact Constant currency growth (1)

2 unchanged sentences

Net revenues $ 336,250 $ 305,301 10.1 % (0.2) % 10.3 %

Six Months Ended

(In thousands) September 30,

2023 October 1,

Nine Months Ended

(In thousands) December 30,

2023 December 31,

2022 Reported growth Currency impact Constant currency growth (1)

6 unchanged sentences

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 six months ended September 30, 2023 our revenue generated outside the U.S.

was 25.7% and 24.8% of total net revenues, respectively, as compared with 28.8% and 29.6%, respectively, during the three and six months ended October 1, 2022.

During the three and nine months ended December 30, 2023 our revenue generated outside the U.S.

was 25.4% and 25.0% of total net revenues, respectively, as compared with 26.6% and 28.5%, respectively, during the three and nine months ended December 31, 2022.

International sales are generally conducted in local currencies, primarily Japanese Yen, Euro and Chinese Yuan.

4 unchanged sentences

Three Months Ended

(In thousands) September 30,

2023 October 1,

(In thousands) December 30,

2023 December 31,

2022 Reported growth Currency impact Constant currency growth (1)

Plasma $ 146,805 $ 135,461 8.4 % 0.3 % 8.1 %

Whole Blood 14,683 19,893 (26.2) % (0.7) % (25.5) %

Apheresis 50,666 52,398 (3.3) % (1.9) % (1.4) %

Whole Blood 19,814 20,964 (5.5) % 0.1 % (5.6) %

Blood Center 70,480 73,362 (3.9) % (1.3) % (2.6) %

Interventional Technologies (2)

43,007 32,154 33.8 % (0.2) % 34.0 %

Hemostasis Management 41,423 34,921 18.6 % 0.1 % 18.5 %

Vascular Closure 38,541 29,575 30.3 % (0.2) % 30.5 %

28,989 24,485 18.4 % 0.4 % 18.0 %

3 unchanged sentences

Net revenues $ 336,250 $ 305,301 10.1 % (0.2) % 10.3 %

Six Months Ended

(In thousands) September 30,

2023 October 1,

Nine Months Ended

(In thousands) December 30,

2023 December 31,

2022 Reported growth Currency impact Constant currency growth (1)

Plasma $ 427,315 $ 365,735 16.8 % 0.1 % 16.7 %

Whole Blood 34,724 39,488 (12.1) % (1.1) % (11.0) %

Apheresis 151,380 152,287 (0.6) % (3.0) % 2.4 %

Whole Blood 54,538 60,452 (9.8) % (0.7) % (9.1) %

Blood Center 205,918 212,739 (3.2) % (2.3) % (0.9) %

Interventional Technologies (2)

119,169 91,297 30.5 % (0.2) % 30.7 %

Hemostasis Management 116,241 102,737 13.1 % (0.7) % 13.8 %

Vascular Closure 76,162 59,143 28.8 % (0.1) % 28.9 %

80,760 76,875 5.1 % (0.7) % 5.8 %

5 unchanged sentences

See “ Management’s Use of Non-GAAP Measures.

(2) Interventional Cardiology includes Vascular Closure and Sensor Guided Technologies product lines of the Hospital business unit.

(3) Other includes the Cell Salvage and Transfusion Management product lines of the Hospital business unit.

Plasma revenue increased 11.0% and 21.8% during the three and six months ended September 30, 2023, respectively, as compared with the same periods of fiscal 2023.

Without the effects of foreign exchange, Plasma revenue increased 10.7% and 21.7% during the three and six months ended September 30, 2023, respectively, as compared with the same periods of fiscal 2023.

The increases during the three and six months ended September 30, 2023 were primarily driven by volume and price.

Plasma revenue increased 8.4% and 16.8% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023.

Without the effects of foreign exchange, Plasma revenue increased 8.1% and 16.7% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023.

The increases during the three and nine months ended December 30, 2023 were 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 revenu e decreased 7.6% and 2.8% during the three and six months ended September 30, 2023, respectively, as compared with the same periods of fiscal 2023.

Without the effects of foreign exchange, Blood Center revenue decreased 5.1% during the three months ended September 30, 2023 as compared with the same period of fiscal 2023 and was flat for the six months ended September 30, 2023 as compared with the same period of fiscal 2023 .

The decreases during the three and six months ended September 30, 2023 were primarily driven by declines in our Whole Blood business.

Hospital revenue increased 13.5% and 13.0% during the three and six months ended September 30, 2023, respectively, as compared with the same periods of fiscal 2023.

Without the effects of foreign exchange, Hospital revenue increased 14.0% and 13.9% during the three and six months ended September 30, 2023, respectively, as compared with the same periods of fiscal 2023.

The increases during the three and six months ended September 30, 2023 were primarily attributable to increased Vascular Closure and Hemostasis Management revenue.

Three Months Ended Six Months Ended

(In thousands) September 30,

2023 October 1,

2022 % Increase September 30,

2023 October 1,

Blood Center revenu e decreased 3.9% and 3.2% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023.

Without the effects of foreign exchange, Blood Center revenue decreased 2.6% and 0.9% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023.

The decreases during the three and nine months ended December 30, 2023 were primarily driven by declines in our Whole Blood business.

Hospital revenue increased 23.9% and 16.7% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023.

Without the effects of foreign exchange, Hospital revenue increased 23.8% and 17.3% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023.

The increases during the three and nine months ended December 30, 2023 were primarily attributable to increased Interventional Technologies and Hemostasis Management revenue, as well as moderate increases in revenue in our Transfusion Management business.

Three Months Ended Nine Months Ended

(In thousands) December 30,

2023 December 31,

2022 % Increase December 30,

2023 December 31,

2022 % Increase

1 unchanged sentence

% of net revenues 52.9 % 52.0 % 53.4 % 53.1 %

Gross profit increased 8.0% and 12.5% for the three and six months ended September 30, 2023, respectively, as compared with the same periods of fiscal 2023.

Without the effects of foreign exchange, gross profit increased 10.2% and 14.5% d uring the three and six months ended September 30, 2023, respectively, as compared with the same periods of fiscal 2023.

The increases during the three and six months ended September 30, 2023 were primarily driven by price, volume and geographic and product mix, partially offset by increases in inventory reserves, investments in operations and increased depreciation expense.

Gross profit increased 12.1% and 12.4% for the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023.

Without the effects of foreign exchange, gross profit increased 15.3% and 14.8% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023.

The increases during the three and nine months ended December 30, 2023 were primarily driven by volume, mix and price, partially offset by portfolio rationalization initiatives, continuous growth investments and higher depreciation expense.

Operating Expenses

Three Months Ended Six Months Ended

(In thousands) September 30,

2023 October 1,

Three Months Ended Nine Months Ended

(In thousands) December 30,

2023 December 31,

2022 % Increase/

(Decrease) September 30,

2023 October 1,

(Decrease) December 30,

2023 December 31,

2022 % Increase/

10 unchanged sentences

Research and Development

Research and development expenses increased 16.2% and 16.1% during the three and six months ended September 30, 2023, respectively, as compared with the same periods of fiscal 2023.

Without the effects of foreign exchange, research and development expenses increased 15.5% and 15.6% during the three and six months ended September 30, 2023, respectively, as compared with the same periods of fiscal 2023.

The increases during the three and six months ended September 30, 2023 were due to increased investments into product innovation across our product portfolio.

Research and development expenses increased 4.5% and 11.9% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023.

Without the effects of foreign exchange, research and development expenses increased 4.1% and 11.4% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023.

The increases during the three and nine months ended December 30, 2023 were due to increased investments into product innovation across our product portfolio.

Selling, General and Administrative

Selling, general and administrativ e expenses increased 14.0% and 7.7% during the three and six months ended September 30, 2023, respectively, as compared with the same periods of fiscal 2023.

Without the effects of foreign exchange, selling, general, and administrative expenses increased 13.9% and 7.7% during th e three and six months ended September 30, 2023, respectively, as compared with the same periods of fiscal 2023.

T he increases during the three and six months ended September 30, 2023 were primarily driven by higher investments in sales and marketing, costs associated with the upgrade of our enterprise resource planning system and litigation-related charges, partially offset by operating leverage.

Selling, general and administrativ e expenses increased 18.0% and 11.2% during the three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023.

Without the effects of foreign exchange, selling, general, and administrative expenses increased 17.6% and 11.1% during th e three and nine months ended December 30, 2023, respectively, as compared with the same periods of fiscal 2023 .

The increases during the three and nine months ended December 30, 2023 were primarily driven by higher investments in sales and marketing, transaction costs and costs associated with the upgrade of our enterprise resource planning system, partially offset by operating leverage.

Amortization of Acquired Intangible Assets

We recognized amortization expense related to our acquired intangible assets of $7.2 million and $14.7 million during the three and six months ended September 30, 2023, respectively, and $8.2 million and $16.6 million during the three and six months ended October 1, 2022 , respectively.

We recognized amortization expense related to our acquired intangible assets of $6.9 million and $21.6 million during the three and nine months ended December 30, 2023, respectively, and $8.1 million and $24.7 million during the three and nine months ended December 31, 2022 , respectively.

The decreases were primarily the result of intangible assets that became fully amortized during fiscal 2023.

2 unchanged sentences

Interest and Other Expense, Net

Interest and other expenses decreased 56.4% and 58.5% during the three and six months ended September 30, 2023, respectively, as compared with the same periods of fiscal 2023.

The decreases were 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 incurred on our term loan.

Interest and other expenses in creased 84.7% during the three months ended December 30, 2023 and decreased 45.9% during the nine months ended December 30, 2023, as compared with the same periods of fiscal 2023.

The increases during three months ended December 30, 2023 were driven by foreign currency impact due to market and rate volatility and higher interest incurred on our term loan, partially offset by interest income on investments due to higher interest rates.

The decreases during the nine months ended December 30, 2023 were 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 incurred on our term loan.

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.

Our reported tax rate differs from the statutory tax rate due to 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 six months ended September 30, 2023 , the Company reported income tax expense of $7.9 million and $18.5 million, respectively, representing effective tax rates of 24.1% and 21.9%, respectively.

The effective tax rate for the three months ended September 30, 2023, includes $0.1 million of discrete tax benefit primarily related to stock compensation windfalls.

The effective tax rate for the six months ended September 30, 2023 includes $1.3 million of discrete tax benefit primarily related to stock compensation windfalls.

For the three and six months ended October 1, 2022, the Company reported income tax expense of $7.9 million and $13.5 million, respectively, representing effective tax rates of 19.1% and 20.3%, respectively.

The effective tax rate for the three months ended October 1, 2022, include a discrete tax benefit of $0.5 million related to tax rate changes enacted in the quarter and $0.3 million of discrete tax benefit relating to stock compensation windfalls.

The effective tax rate for the six months ended October 1, 2022 includes a discrete tax benefit of $0.5 million related to tax rate changes enacted in the period and $0.3 million of discrete tax expense relating to stock compensation shortfalls.

Our effective tax rate is adversely impacted by non-deductible expenses including executive compensation and transaction costs.

For the three and nine months ended December 30, 2023, the Company reported income tax expense of $12.8 million and $31.3 million, respectively, representing effective tax rates of 29.0% and 24.3%, respectively.

The effective tax rate for the nine months ended December 30, 2023 includes $1.1 million of discrete tax benefit, of which $2.6 million relates to stock compensation windfalls, partially offset by other discrete items.

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.

The increase in the reported tax rates for the three and nine months ended December 30, 2023, compared to the same periods in fiscal 2023, relates primarily to unfavorable changes in the jurisdictional mix of earnings, research tax credits generated and non-deductible acquisition-related expenses, partially offset by discrete tax benefits from stock compensation windfall deductions.

Liquidity and Capital Resources

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

(Dollars in thousands) September 30,

(Dollars in thousands) December 30,

2023 April 1,

9 unchanged sentences

We believe these sources are sufficient to fund our cash requirements over at least the next twelve months.

In addition to the approximately $253.0 million acquisition of OpSens expected to close by January 2024, our expected cash outlays relate primarily to additional 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.

Our expected cash outlays relate primarily to acquisitions, investments, capital expenditures, including enhancements to our North American manufacturing facilities, share repurchases, portfolio rationalization initiatives and cash principal and interest payments under our revised credit agreement.

The Company has $500.0 million aggregate principal amount of 0% convertible senior notes due in 2026, or the 2026 Notes.

3 unchanged sentences

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 September 30, 2023.

As of September 30, 2023, we had $351.0 million in cash and cash equivalents, the majority of which is held in the U.S.

The 2026 Notes have an effective interest rate of 0.5% as of December 30, 2023.

As of December 30, 2023, we had $194.0 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.

7 unchanged sentences

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 September 30, 2023, $269.5 million was outstanding under the term loan with an effective interest rate of 6.7%.

There were no borrowings outstanding on the revolving credit facility.

We also had $19.0 million of uncommitted operating lines of credit to fund our global operations under which there were no outstanding borrowings as of September 30, 2023.

Additionally, the Company was in compliance with the leverage and interest coverage ratios specified in the credit agreement as well as all other bank covenants as of September 30, 2023.

As of December 30, 2023, $266.0 million was outstanding under the term loan with an effective interest rate of 6.8%.

During the third quarter of fiscal 2024 in connection with the acquisition of OpSens, the Company borrowed $110.0 million under the revolving credit facility, with an effective interest rate of 6.7% , which remains outstanding as of December 30, 2023.

We also had $20.1 million of uncommitted operating lines of credit to fund our global operations under which there were no outstanding borrowings as of December 30, 2023.

Additionally, the Company was in compliance with the leverage and interest coverage ratios specified in the credit agreement as well as all other bank covenants as of December 30, 2023.

The Company has scheduled principal payments of $3.5 million required during the remainder of fiscal 2024.

2 unchanged sentences

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 six months ended September 30, 2023, we incurred $2.0 million and $4.2 million, respectively, of restructuring and restructuring related costs under this program.

Six Months Ended

(In thousands) September 30,

2023 October 1,

During the three and nine months ended December 30, 2023, we incurred $2.6 million and $6.8 million, respectively, of restructuring and restructuring related costs under this program.

Nine Months Ended

(In thousands) December 30,

2023 December 31,

Net cash provided by (used in):

8 unchanged sentences

GAAP, we have 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 decreased by $10.8 million during the six months ended September 30, 2023, as compared with the six months ended October 1, 2022.

The decrease in cash provided by operating activities was primarily the result of an increase in inventory, partially offset by a decrease in accounts receivable and an increase in net income.

Net cash used in investing activities decreased by $48.9 million during the six months ended September 30, 2023, as compared with the six months ended October 1, 2022.

The decrease in cash used in investing activities was primarily the result of lower capital expenditures driven by NexSys PCS device placements that occurred during fiscal 2023 and decreased other investments compared to the six months ended October 1, 2022.

Net cash used in financing activities decreased by $41.3 million during the six months ended September 30, 2023, as compared with the six months ended October 1, 2022, primarily due to share repurchases and higher contingent consideration payments in fiscal 2023, which were partially offset by the draw down on the revolving credit facility during the six months ended October 1, 2022.

Net cash provided by operating activities decreased by $75.8 million during the nine months ended December 30, 2023, as compared with the nine months ended December 31, 2022.

The decrease in cash provided by operating activities was primarily the result of an increase in inventory due to replenishment of NexSys devices and decreases in accounts payable and accrued expenses, partially offset by an increase in net income.

Net cash used in investing activities increased by $183.6 million during the nine months ended December 30, 2023, as compared with the nine months ended December 31, 2022.

The increase in cash used in investing activities was primarily the result of the acquisition of OpSens, partially offset by lower capital expenditures driven by NexSys PCS device placements that occurred during fiscal 2023 and decreased cash outflows for other investments compared to the nine months ended December 31, 2022.

Net cash provided by financing activities increased by $200.4 million during the nine months ended December 30, 2023, as compared with the nine months ended December 31, 2022, primarily due to the borrowing under the revolving credit facility during the third quarter of fiscal 2024 in connection with the OpSens acquisition, as well as the share repurchases and higher contingent consideration payments in fiscal 2023.

Concentration of Credit Risk

13 unchanged sentences

Foreign Exchange

During the three and six months ended September 30, 2023, 25.7% and 24.8%, respectively, of our sales were generated outside the U.S., generally in foreign currencies, yet our reporting currency is the U.S.

During the three and nine months ended December 30, 2023, 25.4% and 25.0%, respectively, of our sales were generated outside the U.S., generally in foreign currencies, yet our reporting currency is the U.S.

We also incur certain manufacturing, marketing and selling costs in international markets in local currency.

17 unchanged sentences

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.

Standards to be Implemented

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) Update No.

2023-07, Segment Reporting (Topic 280).

The new guidance requires public entities to provide expanded disclosures over significant segment expenses and additional disclosures related to the chief operating decision maker.

ASC Update No.

2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The new guidance is applicable to Haemonetics beginning with the fiscal 2025 Annual Report on Form 10-K.

The Company is currently evaluating the impact to its interim and annual report disclosures.

In December 2023, the FASB issued ASC Update No.

2023-09, Income Taxes (Topic 740).

ASC Update No.

2023-09 requires public entities to provide detailed income tax disclosures, including rate reconciliations and disaggregated income tax payment information, on an annual basis.

The updated guidance is effective for fiscal years beginning after December 15, 2024 and early adoption is permitted.

ASC Update No.

2023-09 is applicable to Haemonetics beginning with the fiscal 2026 Annual Report on Form 10-K and the Company is currently evaluating the impact to its annual report disclosures.

Cautionary Statement Regarding Forward-Looking Information

9 unchanged sentences

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.

10 unchanged sentences

• 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;

• Disruptions to 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 chain and distribution operations, including disruptions caused by natural disasters, extreme weather and other conditions caused by or related to climate change, labor strikes, terrorism acts, cyber incidents or other adverse events;

• 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 the Company’s pending acquisition of OpSens and any other planned or completed acquisitions, divestitures or other strategic investments by the Company may not be realized or may take longer to realize than expected;

• The potential that the expected strategic benefits and opportunities from the Company’s acquisition of OpSens and any other planned or completed 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.

21 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis