Haemonetics (HAE) announces CSL has informed it of its intent not to renew its Supply Agreement
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Haemonetics Corporation (NYSE: HAE) ("Haemonetics" or the "Company"), a global medical technology company focused on delivering innovative medical solutions to drive better patient outcomes, today announced that CSL Plasma, Ltd. ("CSL") has informed Haemonetics of its intent not to renew its Supply Agreement with Haemonetics for the use of PCS2® Plasma Collection System devices and the purchase of disposable plasmapheresis kits in the U.S. following the expiration of the current term in June 2022. Haemonetics was informed that the decision was based on changes in CSL's internal strategy and was not related to product or service quality.
This notice of intent not to renew is specific to Haemonetics' plasmapheresis equipment and disposables Supply Agreement for CSL's U.S. plasma collection centers. In fiscal year 2020, Haemonetics revenue under this Supply Agreement was $117 million, or 11.8% of total Company revenue, with a gross margin similar to total Company adjusted gross margin. The Company expects to incur an approximately $25 million one-time impairment relating to disposables manufacturing equipment and an estimated $7 million in additional expenses in the fourth quarter of fiscal 2021 in relation to this announcement. Haemonetics remains committed to supporting CSL in other geographies and capacities, representing approximately 1% of total Company revenue in fiscal year 2020, and will continue to support CSL's plans to roll out NexSys PCS® plasmapheresis devices in Europe under the recently executed agreement with CSL.
"We have a long-standing relationship with CSL and while we are disappointed by this decision we appreciate the advance notice," said Chris Simon, Haemonetics' President and CEO. "We have taken a series of actions over the past five years to strengthen Haemonetics' financial health and believe that our organization has the agility to navigate these changes. We are confident in our ability to continue to generate positive cash flow as we pursue our strategies to deliver shareholder value."
Haemonetics continues to believe in the value proposition of its NexSys PCS® and Persona® technologies, supported by real world data, and remains committed to delivering these technologies to its customers and pursuing additional innovation to further improve plasma collection. The Company also reaffirms its expectation of 8-10% average long term growth in the U.S. source plasma collections market.
As previously noted, the current term of the Supply Agreement expires on June 30, 2022. The Supply Agreement also provides CSL the right to extend the agreement until June 30, 2023 with notice of renewal to be given no later than December 31, 2021.
The Company intends to provide additional details about this announcement on its fourth quarter and fiscal year 2021 earnings call in May 2021.
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