Haemonetics Corporation Aktie

Good afternoon, everyone. Pleased to welcome you to our last session of day 1 of the conference. Very pleased to welcome Chris Simon, President and CEO of Haemonetics. Thank you again for making the trip to Miami. We were catching up before this. It's been a long time. Since I started, you were here last year, but obviously, we go back much further than that in terms of the evolution of the company.

So maybe just you're kind of -- you've completed an LRP. You just set out fiscal year guidance. Just like where are you in kind of this transformation of Haemonetics?

Thanks, and thanks for having us at the conference. Delighted to be here. And another chance to tell our story. So yes, you talked about the LRP. That was a 4-year plan that wrapped up about 3 months ago. And if I reflect on that, we were coming out of COVID, we were managing the transition of a large customer. It was a challenging environment to say the least.

We went out with what we thought was bold aspirational goals, and I'm pleased to say for the team that we achieved almost all of them. We thought we would grow high single digits. We actually grew 10%. We said we would grow mid-teens on our earnings. We actually grew mid-20s and felt good about that. We had this very powerful combination of free cash flow in excess of $650 million and then the margin expansion where we fell a notch short.

We were at 18% operating income margin when we started. We said we'd get to the high 20%. We actually got to 25% and change. So 700 basis points, 770 to be exact, but not quite where we had thought to go. We would argue and the guidance is something I'm sure we're going to talk a bunch about. But the vast majority of the things we did over that 4-year period, portfolio evolution, capability building within the organization, streamlining our operations, investing in a major ERP program. The vast majority of those are sustainable and bode well for where we go from here.

Excellent. Well, you're right. I do want to dive into the guidance here for '27, the 3% to 6% organic growth that you set forth, obviously, coming in below where you were over the LRP time frame, understanding that there are some specific factors specific to 2027. Maybe just talk to us a little bit about the guidance framing and the considerations that went into setting the outlook?

Yes. Again, delivery against bold aspirational goals, unfortunately, due to a series of idiosyncrasies, most of which were actually beyond our control, institutional investors have abandoned the position and the sector, and our multiple has compressed now to historic lows. And so I don't want to be ignorant of that reality. We trade like a low to mid-single-digit grower. And under the circumstances, thought it was best to be highly prudent and keep our guidance conservative and things we directly control.

We're driving share gains across our businesses. We'll factor those in. We're executing on innovation that we know is valued as such in the market where we have a price premium. So when it's already contracted and we have hard deadlines, we're going to account for that. And a very modest level of growth in collection and procedure rates, but all that's against a backdrop that I think more so than any time in my 10-year time with the company, we're a show-me story, and it's about execution and rebuilding momentum with a goal of returning to a pattern of underpromising and overdelivering, and that's what you see in our guide.

Looks good. Let's talk about that a little more. I mean I think the -- one of the things that as we look at company guidance, we started using kind of as like a benchmark is like what do you have to believe takes place operationally to hit these numbers. So if you did that exercise for Haemonetics, like what are the things in your markets that have to be true? Or what are some of the operating considerations that need to play out to hit the 3% to 6%?

Yes. Well, we break down our businesses. This is an interesting one, right, because I've heard from investors, you guys have become very complex. That's not true. We're very straightforward. We are 3 products, NexSys, TEG and VASCADE. They make up more than 80% of our total revenue, the vast majority of which comes from here in the U.S. products all manufactured here in North America. I think it's a pretty straightforward story.

Now when I decompose those to get to your question, for NexSys, it's always been about 3 things. There's the market share gain or loss. There's what we command a price premium or contraction for competitive pressures and then ultimately, collection volumes. We have line of sight to ongoing share capture. What we've put into the plan is the annualization of what we already did last year that's yet to annualize where we go with pricing, we had a lot of pricing benefit last year from Persona.

This year, it's going to be about the rollout of Persona Plus, our latest technology. What's in the plan is where we have a contract and an agreed time line. There'll be further upside to that. That would be upside to the plan. And on collection volumes, we're doing exactly what we did last year, we're saying essentially, it's 0% to 2%. And that's not a number we'll talk about. But from our vantage point, we feel quite good about the underlying health and vitality of that business.

But those are the 3 things that drive plasma. There's a separate set of things that drive Interventional Technologies and the broader blood management TEG business. Again, no procedure volume, share gain, price is the basic story. And then we're putting in a modest degree, 50 to 100 basis points of margin expansion, operating income margin expansion. There will be some gross margin, but probably more so than you've seen in the past that will be operating leverage as we scale those MedSurg businesses.

And as you think -- and I want to talk a little bit about the sector because you brought it up, but maybe just sticking on the guidance for a second here. Within that range of 3% to 6% or even thinking outside of those bands, what are the factors that would need to materialize to see the number be 6 or better? Or what are the things that would need to take place to be 3 or lower?

Yes. So I think -- again, if I'm breaking down plasma, I'd say a more rapid uptick in Persona Plus, we know it's superior technology. The other companies can't match us. Our customers are very excited about the prospects. It will add roughly another 5% yield on top of the Persona adoption. And that will be a more balanced yield just given the way the algorithms work for a number of our customers who have a different mix of demographics in their donor base. They'll all see that meaningful mid-single-digit growth. That's positive. If that happens faster in this environment, that will be upside to us.

Ongoing share gains, I think that defines us in plasma. So -- but we've been conservative, and we want to make sure there's hard and fast commitments. And then on the collection volume, we grew -- collection volumes grew 9% last year. We don't see that falling off a cliff. We think the end market demand for plasma is as robust as it's ever been and our position within that is better than it's ever been. But we don't control it. And because we don't control it, it's candidly, it's a non-guide guide. It would be wrong if we said it was 0, so you get 0 to 2%, pick your number.

What I can tell you is what we've done as a company over the last decade, we're going to grow 200 to 300 basis points above market growth on the things that we control. If plasma collection volumes look like they did last year, then that would be significant outperformance. On blood management technologies, it's the ongoing conversions, it's the share capture, and it's just driving utilization. It doesn't get talked about enough. Hopefully, we'll spend time on it today. TEG has grown 15% per annum for the last 5 years. It's not always linear, but it's always been double digit and sometimes go up into the high teens.

So we think TEG in its own right in MedSurg defines durable growth, and we're looking forward to surprising positively on Interventional Technologies given the investments we've already made to get that business back on its foot.

Unfortunately, I think you announced a re-segmentation in the past after I prepared my question. So -- but we can -- I want to talk about that a little bit. But before we dive into that, maybe just zoom back out to the sector. And one of the things I think that's also a conversation around MedTech is just the overall health of volume. And you listen to managed care companies and you think like no one is going to the doctor. Then you listen to hospitals and Q1 was a little wobbly, but it's just the fault of weather and seasonality.

Then we get Medtronic last week, and they sounded pretty good. And you had the benefit of you reported, obviously, your quarter ends in March, but you had seen some additional data points in April and a lot of May when you reported. Maybe like what are you seeing? Like how are you kind of putting all this feedback together? What's your perspective on the latest kind of volume outlook?

Yes. We want to pay really close attention to this. There's obviously large macro forces that can disrupt things. Candidly, we don't see any of it. We see very healthy volumes. If you look at TEG as an example, TEG is general cardiology, it's cardiac surgery. It can be used in interventional cardiology as well. It's big in transplant and it's big in trauma. And they're all categories where the growth remains really robust. And so we overlay driving greater utilization and a meaningful uptick outside the U.S. and Europe and Japan, where we've been running hard at those targets.

Yes, we don't -- we're not handwringing about the underlying procedure volumes derailing our growth opportunity. When we look at interventional technology, both electrophysiology, structural heart, again, healthy markets. I think it gets obscured because there's meaningful share shift going on. So depending on who you talk to, if they're on the receiving end of that, perhaps they look and feel a bit different. From us, the underlying strategy of enabling technologies, we're agnostic as to who's therapeutic you're using. What we care about is the access site holes that need to be closed and can you use the best available.

Now there is real science behind what's the total available access sites. So people get confused because they see mid-teens growth in AFib. The reality is, last year, we think the access site growth for AFib was in the low single digits, probably 3.5% overall. That same number this year should be between 6% and 7%. I'm happy to walk through that. But basically, as they adopt the more advanced PFA technology, we're losing typically one access site per procedure. Same is true for concomitant therapy if they're doing AFib and left atrial appendage simultaneously.

But the good news, the silver lining here is that adoption rate has progressed so far so fast that the market is stabilizing. And that stability is a great backdrop for us to resume above-market growth. The base market, like I said, 6% to 7%. Eventually, we get on the other side of this, and that could be as early as the latter part of this year, our growth rate and number of access sites will return to whatever the procedural growth rate is.

So we're looking forward to that return to double-digit growth. In the meantime, we're going to get it done with share capture.

Great. I do want to talk about TEG and go into some of the specific products. But maybe you just talk about the reporting changes that you announced and what was sort of the genesis behind it and what you're sort of intending to communicate to investors with the new view of the company?

The change is largely aimed to align our external reporting with how we're already managing the business internally. When we look at plasma and blood center, plasma sourced plasma, that's a key opportunity. It's globalized quite dramatically. The outside the U.S. growth is now outpacing the U.S. growth. And a lot of that is coming from what traditionally were blood center customers aligning with our sourced plasma customers. It's all being done on a NexSys device.

So by reconfiguring and retitling to apheresis, you're going to see 80%, 90%, et cetera, concentration on the plasma apheresis. And then we have the other, which is not an area that's getting a lot of capital or we'll continue to break it out. We're not looking to take away any information. But -- and then the hospital side, we're just trying to align with the terminology that more accurately defines our products and the segments they compete in.

Importantly, I think we tried to be really clear about this on Friday with the announcement. This is a reporting change. It's not a change in strategy or outlook. We have not updated our guidance. The guidance we issued back in May is the guidance for the year until we have an opportunity to upgrade it as the year progresses. But for now, everything stays intact. I guess there's probably one more possible rationale that is further down the road. But if you think about -- we think there's an opportunity to further clarify the intrinsic value of each part of the business.

And today, we know we trade at a significant read that as massive discount to the current sum of the parts. If by being clearer about the individual parts helps to begin to help investors quantify that discount so much better.

And I appreciate that there's always 2 pieces to getting value, quantifying the discount and all of us can do that spreadsheet math. Then there's realizing that gap is something strategic and operational. So are you actively having those conversations at the Board level about breaking up the company? Or is that more of a valuation point that you're trying to make?

Our first, second and third point is we're focused on execution to drive valuation, long-term shareholder returns period full stop. I think there's been enough noise in the system. As I said, the idiosyncrasies, I think about us and the overhang that really dominated, unfortunately, diminished really strong performance in FY '26. The first was $153 million of nonrecurring plasma blood center revenue, which we've talked extensively about. But there was also the IVT disruption, which was in one part, PFA. It was one part, the OEM sensor-guided business that we acquired that had a disruption from J&J and Abiomed.

There's obviously the dislocation of the cooling market. And candidly, on the cash flow side, we had real things we needed to do to build devices to get the share gains we've now gotten in plasma, we built a new manufacturing facility, state-of-the-art operations in Pittsburgh, Pennsylvania to deliver against all this opportunity. And we rebuilt our inventories after a massive depletion. All those things diminished.

But if I look at that, whether it's plasma blood, whether it's the recovery in Interventional Technologies or a return to really robust cash flow, that overhang is behind us now. And so we've got to execute, and we got to execute across 100% of the business, not 85%. We know that. Sitting here this time next year when we sit down, if we're still trading at 10x to 12x forward PE, then we'll have a different conversation because the company is just worth significantly more than that period full stop.

Maybe just -- now you've sort of opened the -- so keep going. Look, PE has been increasingly active in MedTech. We started to say we've been hearing about it for better part of 1.5 years. And I think in one of the public sessions here last year, our bankers talked about private equity interest in MedTech. Are you seeing inbound interest for the company? Or are you still talking more of the theoretical valuation level?

I think the practical reality is anybody that lives at the intersection of MedTech and small, mid, if you're not having these conversations, there's probably something wrong, right, just in terms of valuation. And our obligation as fiduciaries to deliver value. From our vantage point, we think the most important thing to drive value is the execution against the existing business, right? Get back on the path of exceeding expectations, delivering consistency, making sure the durable growth of this business and the outstanding free cash flow generation and conversion ratio becomes apparent. We do that, I think intelligent investors, public or private will find their way to our doorstep. And at the end of the day, that's our obligation.

And are you guys buying back stock?

We bought back stock meaningfully over the course of the past year. It's a second capital allocation priority behind the organic investment that we're making clinically and commercially in the business. We think the ROIC on that first year investments have been really attractive. A second priority is the buyback, right? We feel quite good about our balance sheet and where we are. We'll pay down debt opportunistically. But for now, yes, the buybacks, and we have just over $300 million, about $325 million remaining on a prior authorization. Opportunities present themselves, we'll buy back. We understand the cost of our equity and the cost of our debt.

Excellent. That's a good segue as you kind of continue to reframe execution to dive into the businesses. So maybe why don't we start you pick. Where do you want to start from a business perspective? What do you want to highlight to people and then we'll go through the key franchises?

Let's touch on plasma, but make sure we spend enough time to go through MedSurg both parts of it.

Okay. Great. So plasma, I mean, I had always thought about this market is like high single-digit growth in terms of end-user demand. I mean collections should follow that in volumes probably lead that a little bit if companies want to build inventory. Is that -- and you have -- how do we square that with the 0% to 2% number?

Yes. So again, 0% to 2% is as close as we can get to a non-guide guide without pulling back on any transparency at all, right? So when we look at the underlying demand for this market, it all traces back to what is the underlying demand for IG, right? And so we look carefully at the end markets. There's lots of folks more learned and more knowledgeable about this than us, but we look at the 55% of the IG pharmaceutical market that's primary and secondary immune deficiency. That growth rate continues unabated tragically in part because of cancer therapy and reactions there.

On the autoimmune side, obviously, there's been new entrants. That's a good thing. It's a good thing for the category. It's a good thing for patients. There's very little to no evidence that the alternative therapies are picking up significant volume of new patient starts outside of the ultra-rare orphan diseases like myasthenia gravis. In the big categories, ITP, CIDP, IG remains first-line therapy. When someone's non-IG responsive or not responsive enough, you see the adjunct therapy. It's a good thing for patients, but it's not coming at the expense of demand.

Now there's different numbers out there. Pick your favorite number. We tend from a long-term planning perspective, we tend to look at 5% to 7% growth in demand for IG. Then we overlay what should we reasonably deliver? And that's my point earlier, about 200 to 300 basis points on top of that, either through share gains or incremental pricing against superior technology.

There will be some uptick with regards to a move to subcutaneous, which requires more plasma, but there's also yield enhancements, ours and others that is coming from the fractionation side. So that largely nets out. But take that 5% to 7% as we see it, add a couple of hundred basis points. That's how we've delivered what we've delivered essentially for the last decade.

Okay. That's helpful perspective. And I want to go on to MedSurg, but maybe just last one. Does plasma collection service sort of a hedge in a scenario where there is macroeconomic weakness? I always thought about collections countercyclical, unemployment goes up, collections go up. Is that a reasonable consideration?

I think it's very reasonable. I'll just answer it in the here and the now. This is as good a collections environment as I've seen over the last decade, right? I think it's a very different economy for your typical donor than it is maybe for some other folks gathered here today. And so in that regard, our collectors are able to collect all the plasma they want at very favorable prices. Obviously, our yield enhancement, our speed enhancement, our software support and what we can do to really drive donor loyalty helps the cause a great deal. But I think this is as good an environment as we've seen.

Excellent. Maybe not, but helpful perspective. Why don't we switch over to MedSurg? Feel free to -- why don't you take us through kind of what you're excited about? You talked a little bit about the dynamics with VASCADE and this WATCHMAN interplay. That sounds like that will cycle through pretty clearly. But maybe you want to start with TEG maybe and then go from there.

Yes. So TEG is on the run. As I said, it's grown 15% on average over the last 5 years. That's a variety of factors. We've added new indications, the most recent of which was heparinase neutralization, global neutralization cartridge. And that's really opened up the aperture for us to be able to move our existing TEG 5000 business, which is a lab-directed product that has a much broader swath of indications because we can now match it and the 6s capability, functionality is comparable.

We're moving it more into a site of care. And it's a new device. We get the device sales. We like that profile a lot. These are devices that we sell that are attractive returns. We have a whole package of software around TEG Manager that's helping drive heuristics and treatment protocols. But the other thing that's coming out of this and the ultimate metric that we run to is we're seeing literally 2x the revenue per device on the 6s than we were even 3 years ago, which tells me we're making meaningful inroads in utilization.

And I get asked all the time, is this thing sustainable? This was a $100 million product 5 years ago at $200 million plus, it is absolutely sustainable. We think it defines durable growth in MedSurg. And the big part of that is nearly half the market still doesn't use viscoelastic testing or use it at scale. And so that's the opportunity in Europe, which tend to be do viscoelastic testing readout helps avoid harm in terms of the underlying treatments. So yes, we think TEG's best days are ahead of it.

Excellent. Maybe we go on to the interventional business in the interest of time. And we've talked a little bit about the EP side. Maybe talk through structural heart and how you -- as EP goes through this transition and that negatively impacts a number of access sites. Help us understand the other growth drivers in the business that can supplement that share gains?

It's a critical question, right? When we look at IVT, we went in the wrong direction. We contracted 9% last year. An important distinction is 80% of that contraction was a combination of EnsoETM, the cooling device, radio frequency ablations and the OEM portion of our sensor-guided technology. So for Enso, we thought we were entering a category that would hold 25% to 35%. We got that wrong, and that's a mistake. And if I could take it back, it's $160 million that we put out there for that asset and the market is just really challenged. We're doing what we can do, but it's a challenged market to be sure. That was -- of the $16 million contraction, that was 2/3 of it right there. The good news, to the extent there's good news here is it's currently -- we exited the year, we did like roughly $2 million in the fourth quarter on Enso on a print of $346 million. It's at a point where it just can't right?

The other part of it was the OEM sensor guided business. We acquired that business shortly thereafter J&J acquired Abiomed, and they did 2 things. They leveled up the production. We have a contract that requires them to buy at least 50% that leveling, coupled with they had over a year's inventory on hand, they wanted to take it down to a much smaller level. Fortunately, both of those effects have now annualized.

So at this point, we should grow certainly with the category or above. There's obviously questions around that, but we feel quite good about our ability to bring that business back to above-market growth.

And how about Vivasure?

So Vivasure, we had taken an option in that company several years back. What we think is really critical is the landscape for large bore closure is just really underdeveloped. We look at that as roughly a $300 million addressable market, predominantly for TAVR and EVAR. And what we have is a product that's just meaningfully differentiated. It's sutureless. It's fully bio-absorbable and it can handle up to that 26 French OD and nothing is left behind in the vessel.

So when you look at it clinically, leveraging the patch trial data, for example, immediate median hemostasis an ability to very strong safety outcomes, clearly superior to anything on the market. And it's a straightforward, easy procedure to use, the patch with the clip technology. And unfortunately, if you need to go back in 30 days later on a redo, you can go anywhere along the vessel because the patch is fully bioabsorbable and the patient is fully recovered. So we think it's a market that we should do well. It is closure. And it's one of the 3 things you should expect from us in FY '27 to demonstrate we're back on our front foot.

Okay. Excellent. Maybe I want to make sure we can talk about margins a little bit and cash flow. But before we go, try to wrap this all together, as we think about the 3% to 6% guidance that you're laying out and kind of start on the MedSurg side, within the EP exposed segment, there are some market dynamics that you're managing through that I think everyone is very well aware of now with the impact concomitant is having on stand-alone WATCHMAN procedures, the impact that PFA is having in advanced PFA technologies that are all in one mapping and ablation that are having on access sites.

That's going to cycle through, but that you don't have a ton of control over how the market evolves or you can control your market share, but how quickly we move to stability and concomitant procedures or how market share plays out in EP is still -- they're fighting that out. There is the TEG side, continue to see great upgrade momentum with TEG 6s and really strong growth there, opportunity to do well with the TAVR and EVAR opportunity on Vivasure.

And then we go over to the plasma side, it's like, okay, the market is good, but we're just going to take a super conservative approach and the levers to the upside in the guidance really sit with plasma, maybe in a scenario where the PFA dynamics play out faster or stabilize at a lower rate than people expect, that could be upside as well. Is that a fair way to characterize it?

There's clearly upside in the apheresis business along the lines you described. I think even with the historical blood center business, we're not giving up on that business by any stretch. That's been a consistent outperformer. We've guided to negative mid-single digits there. We obviously did better than that last year. We would aspire to do better than that this year.

So the apheresis piece, I think, exactly as you described it and then some. We're equally bullish on MedSurg. And we guided to mid-single-digit growth. We would -- I just kept on saying vascular closure is the biggest opportunity within IVT. We think the market growth rate is going to be roughly 6.5%. If we don't return to above-market growth, we would be pretty -- we would be concerned about that. So we see upside in Vascular Closure. I talked about the Guidewire business we're dependent upon FDA. We put cost in for the Vivasure product launch PerQseal Elite and don't have any revenue. That's just our convention and a way to be prudent.

But we get that approval in FY '27, we're going to come out of the gates in a really purposeful stepwise function. We want to play for the long term, but make no mistakes, we're going to have guns blazing, and we're going to be successful with that product. So there's upside there for sure. And then just delivered what they delivered for the year and for the last 5 years. We don't see them slowing down anytime soon, but we don't control all the vagaries of the markets and the type of things that you and I are talking about here. So let's be conservative and give ourselves room to outperform.

Excellent. And maybe sort of toggling over to the margin side. I mean you just went through a period of pretty significant margin expansion, as you laid out, 700 basis points over roughly, I think, a 4-year period. As you talked about 50 to 100 basis points this year, how much of that influenced just by the level of top line growth? Is it some level of minimum top line growth you need to achieve operating leverage? And how much of this is just kind of maybe a hangover from the sort of significant amount of margin expansion you realized in the trailing period?

Yes. So by far, the last 4 years have been driven by gross margin expansion. We've held it together and beat back tariffs and inflation and geopolitical disruption and cost to make sure that, that drops through proportionately. We have not achieved the operating leverage that we had aimed for initially. I'll come back to that because I do think that's going to begin to manifest pretty materially this year. When we look at it, though, gross margin is not done. Sure, volumes matter, mix matters. Both of them are trending favorably for us and should continue to do so.

We put high marks on ourselves to continue to push price on value innovation. And then core productivity, which a lot of our productivity has gone to offsetting these headwinds, but we come out the other side of that, and we've been very conservative in terms of how we thought about the cost of tariffs and inflation in our current plan. We catch a break there or we get further ahead of our own cycle, we'll be back on the train to drive productivity in ways that it covers not just inflation and merit, but the broader cost.

So there's more to do on the gross margin. I think what's going to be new to the story, as you heard James talk about it, is our operating leverage, and that's just a scale play within hospital because we've already made the investments, both for blood management technologies and interventional technologies. We have what we need to succeed. We now need to leverage it.

Excellent. Well, we have just about a minute left here. Maybe I'll turn it back to you just to -- as you kind of think about just an earnings call, you're meeting with investors today, this obviously had our discussion here. What do you want people to walk out of the room with as like the key take-home message?

Yes. I hope they -- I use the phrase at the risk of being philosophical about it, but the fog is clearing and it's going to reveal forest for the trees. And the fog is that overhang that I kicked off earlier, the 153 and the IVT. What it's going to reveal is durable growth where you have this apheresis business that's just an engine of mid-single-digit growth or better and the associated EBITDA and free cash flow, which strengthens the balance sheet and gives us real optionality.

Flip over on the other side, and I think we'll replicate the playbook that we've gotten very right in BMT as we execute in IVT and now you start seeing operating leverage and a much higher potential, not just for durable growth, but outsized growth. And so that's what we're playing for. We understand where we sit in the market. We're a show-me story. We're going to underpromise and overdeliver and continue to do so until we're on the other side of this.

Excellent. That's a great place to wrap up, Chris, and really appreciate you coming to the conference again this year and giving us this update. We look forward to the next update in August, if not something transpiring before then.

Great. Thanks for your time.

Thanks, Chris.

[indiscernible] Haemonetics. So we welcome Chris Simon, CEO. Thanks for joining us today.

Travis, thanks for having us. Great conference. We're delighted to be a part of it.

Awesome. Maybe I'll start out higher level. Just kind of finished your last LRP. You set a new guide. Just where do you kind of see yourself kind of at this stage in the life cycle of Haemonetics?

Yes, it's been a journey over the past 4 years. I think at the time, 4 years ago, when we issued that LRP, we had just survived COVID, and we knew that CSL was transitioning. And I think we wanted to go out with a bold and audacious plan that gave investors confidence that there was life afterwards. And so we put forth a set of metrics. And I think at the time, the reaction we got from buy side and sell side alike was like why could you lean that hard into it? Nobody does that period, let alone in an environment like this and transitioning what turned out to be $150 million of revenue.

But sitting here today, I'm really proud of this team. Our goals were very clear. We achieved double-digit revenue growth ex CSL. We were high teens on our EPS and earnings growth. We added 660 basis points of margin to our operating income margin from the high teens into the mid-20s, and we generated nearly $700 million of free cash flow along the way. So I think very clearly, what we've built is a much more solid foundation of durable growth that we can build on from here. So we're actually really excited about what comes next.

Great. Sounds good. And how do you think about the longer-term portfolio of the company? We saw the acquisition of Vivasure. Do you continue to add to the hospital? And one question I get a lot is, does it make sense to have the 2 businesses together and some of the synergies there?

Sure, we like plasma. We are the only dedicated plasma play. We're the undisputed industry leader. We continue to invest aggressively behind that to deliver unrivaled growth and profitability. But there are limitations to what that business can deliver. So when we set that LRP, we made a conscious effort to diversify sustainably, and now hospital is our largest business.

I do get that, and I get the -- well, you guys have become very complex. I don't think we're complex at all. We're about 3 products: NexSys, TEG and VASCADE. Those 3 products are all made in North America. They're all sold primarily here in the U.S., which is 85% of our revenue. We're about as straightforward as it gets. If you want to know how Haemonetics is doing, check in on those 3 products, and you'll see the durable growth.

Makes sense. Maybe just on plasma, in particular, just think about the market dynamics in the plasma market, you got -- sometimes people think of it as a cyclical business, right? And kind of where are we in that cyclical part of that market? And you've had a few good quarters in plasma. And so I just kind of how durable is that when you think about the overall market?

Yes, over that LRP period, it's been anything but linear. We had this massive recovery, 40-plus percent growth the first year, 20% the second. And then it stabilizes at some point. Last year, we went out with guidance that said the collection volume would grow at 0% to 2% and wound up growing double digits for the year. So it's difficult to predict.

I do think people confuse that, though, with the end market demand for IG-based therapy, which remains unabated, right? And we get into this whole debate about anti-FcRn and Ig. I'm happy to go deeper on it, but we see no obstacles to the ongoing growth in demand for IG, which is the absolute core of what drives collection volumes.

Okay. When there was some news recently on one of the CSL, which obviously is not your customer, but they were talking about inventory destocking. And so the question I've gotten is, is that a customer-specific thing? Or is it a market thing that we should actually pay attention to?

Yes. So we pay attention to what all of our customers. CSL is a customer, an important customer, and we value the relationship greatly. We have 100% of their volume in Europe. And we announced at this time last year that we entered into a new long term, read that as 7 years-plus agreement to support all their U.S. centers with our integrated software. So they're an important customer. We listen to those announcements.

I think what gets missed here is that there's a lot of competitive head-to-head across the industry. One customer is taking share and others giving share. Some are more committed to the U.S. market, some are more committed to the international markets, and you see that up and down accordingly. Our guidance of 0% to 2% is just us being prudent because we don't control it. But in aggregate, I'd be surprised and disappointed if the trends that we experienced this year don't continue at some level into FY '27.

In Q4, Plasma was 13% ex CSL. You talk about kind of the components there between pricing, share gains and kind of market collections growth and trying to think how much kind of potential upside there could be in '27?

Yes, super proud of what the team accomplished in our FY '26, which just wrapped up at the end of March. The drivers were threefold. We call it the perfect trifecta here. We took share, hand over fist. We took share in the marketplace in terms of collection volume growth, both here in the U.S. but also disproportionately internationally, where the growth was even higher.

We had the benefit of innovation-based pricing from the final leg of our Persona rollout. That's a 10% yield enhancement we gave the industry. And then on top of that, you saw the collection volume growth, which was double digit throughout the year in Europe and then in the second half of the year became double digit here in the U.S. as well. So that's a trifecta. You can't reasonably expect that all 3 of those things are going to deliver at that level year in and year out. But the things that we control within it will lean into, and we expect continued success there.

You alluded to rolling out Persona Plus could be a headwind to the collection volumes as centers collect 5% more with each visit. Is that baked into the 0% to 2% collection volume expectation?

Yes, the round numbers, right? When we rolled Persona, it was roughly a 10% improvement off of what we had already done with the industry's yield enhancement. Persona Plus is half that again. These are -- I'm just rounding, right? And each experience will be different.

We saw 2 very different waves. The initial wave of Persona, the collectors took the 10%, added it to their existing plans, which were roughly 10% and grew 20% in the year, and we're delighted to be able to do so with our help. Later in the wave -- second wave was really more of a modulated where the companies needed to tamp down their cost per liter. So they pulled back on new center openings, took the 10% we gave them and met their plan that way. It remains to be seen what Persona Plus looks like.

Our guidance is derisked with regards to the 0% to 2%. And I think what gets lost in all of this is the extensive margin expansion. And again, bragging on that team, but when I joined the company, our gross margins were in the low 40s, and plasma was right there in the thick of it, 43%. Today, that plasma business is operating in the mid-50s or better, and Persona Plus will be a further expansion on top of that. So we'd like to see volume and margin, but we win either way.

You talked about annualization of some share gains as the biggest driver of kind of the mid-single-digit growth in plasma in '27. Can you help us contextualize some of the share gains a bit more? It sounds like some of the customers like Grifols are winning more business. Is that flowing into you?

Yes. Clearly, when our customers do better, we do better. I want to talk about individual share because it's obviously tightly contested across the major players. What I think is interesting, if I go back again to the LRP, historically, we had 70% share of the industry, and people refer to us as [ Plasmanetics ], not Haemonetics.

But with the CSL announcement, folks thought we were going to drop into the low 40s or something. That never happened. It was a much extended transition. And during that transition, we've meaningfully gained share from the other major players such that we never dropped below 50% of the market. And our aspiration is to get back to that 70% plus based on the superiority of our technology and the service and offerings that we put out there.

Fair. You hinted some plasma innovation in '27 in addition to Persona Plus. What's the long-term vision for innovation there? Could there be other further upside to the pricing in this business as you bring in innovation?

Yes, and there will be. The levers we pull are very obvious. We're better at it than others, but yield is first amongst them because it's an immediate drop-through, no pun intended to the CPL bottom line. Speed is a close second in that regard. So stay tuned there. But then we're the only ones with an integrated offering. So obviously, the software that powers the device is very sophisticated. But there's also stand-alone software, what we refer to as NexLynk DMS, the donor management system that runs the centers.

And with our 80%-plus share of the U.S. collection center opportunity, we have really good insights to what's happening hour-to-hour, day-to-day. We've packaged those insights via data analytics and some AI enablement back as a tool to help our customers run their operations more effectively. There's going to be a steady stream. Think about this as the 1.1, 1.2, 1.3 version that we will continue to roll into the market so that anybody who's operating our integrated system is going to see that steady stream of innovation on top of the big blockbusters like Persona Plus.

Anything else that we should talk about in plasma before we move to vascular closure?

Yes. I just think plasma's best days are ahead of it. I know there's a lot of consternation, as I said, about competitive alternatives. Fully half, probably closer to 55% of the Ig demand is primary and secondary immune deficiency. With the incidence and prevalence of cancer therapy, that growth continues unabated.

On the autoimmune side, I just it's a dynamic market for sure. But we look at new patient starts. New patients start on IG across the entire suite of IG of autoimmune therapies because it's 1/3 of the cost and it works really well. The others are growing. They're growing as adjunctive therapy or where they're non-Ig responsive. So I don't think it's an either/or choice. I think there's plenty of opportunity. It's a great thing for patients. And candidly, it's a good thing for us.

Moving on to vascular closure. Anything you could kind of talk about where do you kind of see the state of affairs in vascular closure now, just to open it up.

Yes. Vascular Closure declined 9% in fiscal '26. That's disappointing in the extreme, and we did go backwards in fourth quarter. However, if you look at our third quarter to fourth quarter performance, it is the first time in fiscal '26 where we grew. In fact, we grew 8% on the Vascular Closure business, and we also grew in the SavvyWire business.

So I think there's a number of factors coming together for us, Travis, that give us confidence that IVT will be a meaningful contributor to our growth in FY '27. We've guided for mid-single digit across hospital. We didn't break it out between the 2 franchises, but IVT can and will contribute to growth. And I'm very confident when we look back, folks will look at that January, February, March time period and say, that's when Haemonetics turned the corner and got back on their front foot and delivered growth with that franchise.

What's giving you confidence in this January, February, March kind of being the turning the corner? I guess Q4 did step up sequentially. I don't know, was that just typical seasonality or are things actually getting better sequentially in Q4?

The seasonality is tough to call. Actually, what we read and see because there's a lag factor here, it will be obvious pretty soon here. But I think actually, procedure volumes were down, not up for a host of factors. We were able to grow because of a number of factors.

For the first time, our commercial group is fully resourced from corporate accounts down through all the frontline clinicals, et cetera. So that team, and that is a more skilled, more capable, more driven team than we've ever had in place. That's the first one. They've got a better product, getting the MVP XL label expansion with the clinical data that came with the trial work that we did meaningfully positions us as a therapeutic choice within that category.

And then candidly, I think you use the sell-side lingo, it's a soft comp. 80% of that 9% decline in fiscal '26 was attributable to 2 factors. One was the releveling of the Guidewire business OEM, right? So we have an existing contract that we bought into when we acquired OpSens. We make product for Abiomed. Abiomed was acquired by J&J. They did 2 things. They rebalanced the supply from 70% down to 50%, and they cut back on their inventory levels dramatically. That hurt us a lot in fiscal '26. That's now annualized. It will not hurt us in '27.

The second piece is EnsoETM. Enso's esophageal cooling. It's on the wrong side of the PFA advancement. And at this point, it's less than $2 million in revenue for us in the fourth quarter. It really can't hurt us going forward. So we'll step off the curve, and then we'll grow from there.

Okay. That's helpful. And on the corporate accounts team and kind of the sales force, you talked about equipping the teams with better tools, and it does take time for sales force transitions to actually get back on track. And we've had a couple of quarters here where that's happening. Is -- where are we at from the kind of the sales force perspective at this point?

Yes. We're very confident in the win ratio, win-loss ratio of that corporate accounts team. We just didn't have a presence there. Actually, the acquisition of Vivasure and large-bore closure even help further strengthens that value prop. But from where we are, I think the IDN and the ASC strategy will increasingly be a source of growth for us going forward.

Our product and the data we now have in support of it, is just a really clean profile. It's fully bioabsorbable, nothing is left behind, highly predictable workflow, rapid time to ambulation, hemostasis, et cetera. So for an ASC where you have owner-operator physicians, they'll look at that value proposition. They are looking at that value proposition and saying this is a winning tool in our armamentarium. And I think we have the wherewithal and the capability to contract with them in ways that make it win-win.

And when you think about the competitive actions and I guess, some actions of some of your competitors in that market, that seemed to have caught you guys by surprise at one point. Is that -- how is that trending? Are you getting some of that share back and some of the trialing that was going on with competitive products?

Yes. Our win-loss ratio, as I said, is really favorable. Those guys aren't going anywhere, right? It's -- they are 2 very aggressive competitors in their own right. They approach the market quite differently. I think what we'll rely on is better team, better product and disproportionately well driven to deliver what we need to do here.

Does -- your better product and clinical data, does that tends to resonate with customers?

Yes. I think any time we've had presence and had the discussions, whether it's at the corporate accounts, IDN level or it's talking to the individual EPs and other operators, the product's predictability, the bioabsorbability, the broader use case now, particularly on some of these large access site technologies for EP and for left atrial appendage gives us a real play.

The other thing that's happening in the backdrop there, the onset of PFA, a lot of folks kind of misinterpreted that, that somehow that displaced us. It did not. It changed the modality though. And we went from having 3 or 4 access sites per procedure down to 2 or 3, depending on whether it was concomitant therapy, right? So left atrial and Afib together or just different approaches to mapping.

What's interesting about that is now with the PFA mark at like 70% to 80% of the market, that stabilizes. It's a net effect. So it's not a $2.8 billion TAM anymore. It's a $2 billion TAM or something therein. But the growth rate increasingly will mirror that of procedure volumes. We estimate the access site growth rate in FY '26 was about 3.5%. We think that roughly doubles in FY '27 for no other reason than the onslaught has now begun to plateau and we sit from here. Once it's fully plateaued, we will grow at the rate of growth. And if that remains mid-teens, that's a really good base for us.

Okay. That's helpful. Yes, the next question was going to be on concomitant. So I don't know if there's anything else you wanted to say on that just to kind of think about that headwind kind of comping out and going away given how fast those procedures are growing?

Yes. There are -- I think some very good companies are leaning in, making sure that, that concomitant therapy gains steam. The good news is we have a product that's uniquely well positioned to close those larger access sites, and we have the label and the clinical data to support it. So net-net, it will tamp down slightly the addressable market, but the growth rate and our applicability within that should be -- it's never been stronger.

Okay. That's helpful. And then with the expanded indication for MVP XL recently, how important is that in the U.S. and then kind of the latest on getting that in Japan?

Yes. I think there's a reluctant, call it, 20% or 30% of the market that without the label would be hesitant to use the product broad-based. For sure, you can't contract for something that's not on label. So I think, again, the ASCs and the IDNs, it's a real plus. But equally so, I think it's the data that was in the trial work that we submitted for that release. And I think as that data is now part of the clinical literature, it really bolsters our value prop.

And then on the ASC opportunity for VASCADE as EP procedures over time move to ASC, how important is that market for you and opportunity to get those?

I think we're a really good fit for that. It will take time. The ASCs, that won't happen overnight. But I think there are half a dozen states across the country, mostly across the South and Southeast that will lead this charge. And we like that concentration. That's one of the areas we've really muscle built our organization to have a much better presence clinically and commercially. And so yes, we think we're in the direction of travel there and will benefit by that momentum.

On PerQseal, the Vivasure acquisition, why was that kind of the right deal?

Yes, there really is no therapeutically equivalent product out there for large-bore closure. So the PerQseal Elite submission that went to FDA is angling towards a 26 French OD. There's products that they can use for that today, but they're really suboptimal.

And so when we look at that product, it's clinical data, we look at the patch study that was the original support for it. We just got really enthusiastic. When we went and talked to our advisory board, those KOLs are just -- they want a tool that works. As you see TAVR and EVAR procedures now growing double digits, they need a closure methodology that is fit for task for these more complicated, more advanced procedures. PerQseal Elite is that product.

When you think about the kind of the call points with existing vascular closure businesses, how do you think about the synergy between the different call points and businesses?

Yes. So PerQseal Elite is designed to be a tuck-in product for. We -- the investments we've already made in our U.S. sales force for vascular closure and for structural heart will support this existing product. It's a closure product, and we intend to market it as closure.

Yes, it's in the IC, it's structural heart play where we have the presence with SavvyWire, but we're going to be very thoughtful about not distracting our existing SavvyWire team. So it's really going to be predominantly driven by the vascular closure force, which is the bulk of our efforts. We have 180 feet on the street today doing that here in the U.S.

How does it compare with like MANTA and kind of gives you the confidence you can take share in that market?

It's sutureless. It's fully bioabsorbable. There's no permanent implant left behind. It's achieved in its trial work an immediate median hemostasis. And the outcomes more broadly, I think that we're going to give us confidence we're going to be able to access that $300 million addressable market safely and with meaningful workflow efficiencies, a much more predictable recovery and hopefully accelerated discharge pathway along the way. So I think we like the profile a lot.

That's helpful. And Blood Management grew 21% this quarter. It's like 13-point acceleration in Q4. You called out transfusion management, but how sustainable is the growth in that business?

Yes. First and foremost, Travis, thank you. Like the first time I've been asked in a public forum about blood management technologies, which at one level is kind of ridiculous. This is a $300 million hospital business, operating at 70% plus gross margins. I went back with the team and looked at the LRP. They delivered mid-teens growth in each of the last 5 years, powered by TEG. It is the definition in our portfolio of durable growth, and we think it's highly sustainable.

When we look at the TEG market, that viscoelastic testing opportunity, whether it's here in the U.S., Japan or in Europe, we're less than 60% penetrated in the total market. Now in fairness, we have 70% share of the market. So we do the heavy lifting there. But we see unbridled opportunity to continue that double-digit growth. That's not what we guided to because we want to be measured about this. But there's no reason that TEG should slow or diminish. And that team, when we asked them to, was able to lean in and in a very thoughtful way, drive recurring revenue.

To your point, in the quarter, the way we achieved 21% growth was that we have the transfusion management business, which is our blood banking software for the major hospitals. That business also grew, contributed equally in the quarter, actually grew nearly 50%. And that, again, the team leaned in. We view that opportunity as Epic converts the landscape. We view that as a land grab. A land grab, we intend to win. These are all long-duration recurring contracts. So the lean in fourth quarter bodes very well for momentum in FY '27. And yes, that's a really nice one, too. We don't talk much about transfusion management, but as it approaches $100 million in revenue, maybe that will change. We'll see.

It starts to move the needle a little bit more.

A little bit more. It's a really good way, and it's one of our most profitable products.

I was asking the margins. It's accretive to margins.

Yes, highly accretive. It's -- as you said, there's a lot of upfront go-live installation, et cetera, but there's an ongoing usage and maintenance revenue stream that makes the thing a nice annuity.

Okay. I think 1/3 of the reason MedTech stocks are not working year-to-date is worries on inflation and there's the war and chips and just oil prices. I just would love to kind of understand like your exposure there. I don't think you have a lot of exposure to the inflation and macro stuff, but just kind of curious given that matters a lot for investors?

Yes, whether it's patients or donors, the underlying procedures continue unabated. I, actually, think it's a very good environment to collect, and you see the growth in our core hospital franchise. So we have 0 qualms about that. We are not immune to tariffs, to inflation or to the geopolitical disruption. Resin is one of our largest raw materials. It's a petroleum-based product. So we've got to be really mindful of that.

Our guidance for the year on that mid-single-digit revenue growth on a reported basis, we said comparable with regards to what we're going to achieve on the earnings side, and that includes 50 to 100 basis points of ongoing margin expansion. We feel confident that we have line of sight to that, but there's a lot of moving parts. And if anything, we've tried to remain prudent to deal with whatever shocks and ebbs and flows occur that we have to deal with to continue this durable growth while we chase that second objective, which is margin expansion.

Yes, I was going to ask on the 50 to 100 basis points of margin expansion. Just think about the visibility there, that kind of gives you the confidence that you can sustain that going forward?

Yes. Well, on the product side, we see a return to growth unabated. So there's volume for sure. There's price. We talked about the new product launches, whether it's heparinase neutralization going into Europe, whether it's Persona Plus here in the U.S. on the plasma side, whether it's VASCADE, MVP XL and PerQseal Elite when it comes, will all contribute to a more favorable mix. So that's a big part of it.

But I think what you'll see from us in fiscal '27 and forward is core productivity and greater operating leverage. As we scale this business, we strongly believe we've already made the investments we need to make to be able to deliver the revenue growth that we view as quite prudent and conservative. So with that in hand, you'll see operating leverage now as that manifests, we'll call it, and we think that gives us room to run.

In hospital margins, I think you talked about 30% plus at some point. I assume a lot of that has to do with the top line. But -- just curious if that's still a target to get there.

Yes. If you go back to the start of our LRP, I think our hospital margins were mid-single digits, 6% is the number I have in my head for that. Today, it's operating in the low 20s. That is very much a function of scale, to your point. And I think as we scale the business, the existing portfolio has the ability to drive towards that 70% gross margin. And again, as we create operating leverage, both with TEG and with VASCADE, you'll see a meaningful uptick in the operating income margin that comes with it.

Okay. I think that mostly covered my questions. I think you wanted a couple of minutes to kind of close out, but we'll let you do that.

Yes. Look, I appreciate it. I started by doubling down on what we've achieved the last 4 years. We have not issued a new LRP, and I think we're going to hold off on doing that. What I hear from you and from your colleagues and from our investor base is we're very much a show-me situation at this point. We have to demonstrate durable growth. I think that's at the absolute core of everything we do. The margin expansion will continue.

What that's left with, and I think what's really becoming much more of the dialogue around Haemonetics is the free cash flow and the return on invested capital. We expect those numbers to continue to move decidedly northward, right? We like the portfolio we've got. We're not out looking for new products. We're going to double down. Our first priority is organic.

With the cash flow we're generating and the strengthening our balance sheet, it gives us some optionality to delever or buy back shares as appropriate. But we feel we've got all the elements in place here, Travis, to be able to drive durable growth going forward. And I think that the sector has got its challenges. We understand that, but we think we can stand apart in terms of total shareholder returns in this environment.

Great. Well, thanks a lot for coming, and good luck with the meetings today.

Thanks. Thanks for having us.

Hello, and welcome to the Q4 2026 Haemonetics Corporation's earnings conference call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to Olga Guyette, Vice President of Investor Relations and Treasury. Please go ahead.

Good morning, and thank you for joining us for Haemonetics' Fourth Quarter Fiscal Year 2026 Conference Call and Webcast. I'm joined today by Chris Simon, our CEO; and James D'Arecca, our CFO.

This morning, we released our fourth quarter and full fiscal 2026 results and issued fiscal year 2027 guidance. The materials, including our earnings release and supplemental earnings presentation, are available on our Investor Relations website and also in this morning's press release.

Before we begin, I'd like to remind everyone that we will use both reported and organic revenue growth rates that exclude the impact of FX, the divestiture of the whole blood product line, and the exit of certain liquid solutions products. Organic growth ex-CSL also excludes the impact of the previously disclosed transition of CSL's U.S. disposable business. Our fiscal year 2027 organic revenue guidance is also adjusted for the impact of the 53rd week.

We'll refer to other non-GAAP financial measures to help investors understand Haemonetics' ongoing business performance. Please note that these measures exclude certain charges and income items. A full list of excluded items, reconciliations to our GAAP results and comparisons with the prior year periods are provided in our earnings release.

Our remarks today include forward-looking statements, and our actual results may differ materially from the anticipated results. Factors that may cause our results to differ include those referenced in the safe harbor statement in today's earnings release and in other SEC filings. We do not undertake any obligation to update these forward-looking statements.

And now, I'd like to turn it over to Chris.

Thanks, Olga, and good morning, everyone. We delivered fourth quarter revenue of $346 million, up 5% reported and 9% organic ex-CSL, with adjusted EPS of $1.29, up 4% year-over-year. For the full fiscal year, revenue was $1.3 billion, and adjusted EPS was $4.96 per share with improved adjusted earnings, higher adjusted margins, and stronger free cash flow than in the prior year despite $153 million of nonrecurring revenue from portfolio transitions.

Our performance reflects the strength of our core platforms with plasma and TEG driving momentum, margin expansion, and reinforcing our leadership in attractive end markets. This foundation enabled targeted investments to position interventional technologies to contribute to growth in fiscal '27 and beyond.

At the same time, we advanced our innovation agenda with U.S. FDA clearance of Persona PLUS, the expanded indication for VASCADE MVP XL, a submission to expand the VASCADE label in Japan and the acquisition of Vivasure.

Moving on to our business unit results. Hospital revenue was $160 million in the fourth quarter and $588 million for the full year, growing 8% in the quarter and 4% for the year, or 7% and 4% on an organic basis, respectively.

Results were supported by strong performance in blood management technologies, partially offset by interventional technologies, consistent with trends we've discussed throughout the year. Blood management technologies delivered a record quarter with broad-based performance driving revenue growth of 21% in the quarter and 14% for the year.

Hemostasis management grew in the high teens, fueled by sustained strength in TEG 6s, higher disposable utilization, continued capital placements and strong European momentum following the HN cartridge launch.

Transfusion management delivered outsized growth in the quarter, contributing nearly half of the franchise growth as we continue to gain share through the adoption of our integrated solutions that enhance hospital safety and efficiency.

In interventional technologies, revenue declined 10% in the quarter and 9% for the full year. Vascular closure was down 8% in the quarter, reflecting 6% decline in MVP and MVP XL in electrophysiology and continued softness in lower growth coronary and peripheral procedures.

Performance in EP was affected by share loss in the first quarter of fiscal 2026 and evolving procedure dynamics. Sequentially, EP grew 8% and sensor-guided technologies returned to growth, partially offsetting the continued impact of PFA on esophageal cooling.

Over the past year, we strengthened our commercial organization, equipped our teams with better tools and advanced our product portfolio. Q4 was our strongest quarter of fiscal '26, and we have renewed confidence in the trajectory of IVT. Importantly, the headwinds that drove approximately 80% of the decline in fiscal '26.

First, OEM-related softness in sensor-guided technologies. And second, PFA impacts on esophageal cooling have now been lapped or reduced to a nonmaterial base. With the expanded MVP XL label and the anticipated release of PerQseal Elite, we are strengthening our competitive position and reenergizing the business as we enter fiscal '27.

Turning to plasma and blood center. Plasma momentum continued with another quarter of growth driven by category leadership, differentiated innovation, and strong market fundamentals. The franchise delivered $130 million in revenue in Q4, up 3% reported and 13% organic ex-CSL as we annualized the last of the discontinued CSL U.S. disposable supply agreement. Full year revenue was $524 million, down 2% reported, but up 20% organic ex-CL (sic) [ ex-CSL ] above our revised guidance range of 17% to 19%.

Market fundamentals remain highly attractive, supported by resilient immunoglobulin demand and continued global expansion in plasma collections. Our share of U.S. plasma collections grew in the high single digits in both the quarter and full year with double-digit growth in Europe as customers increasingly rely on our platform to drive efficiencies.

Persona PLUS is the next step in our innovation cycle, further strengthening our competitive position by enhancing percent yield by mid-single digits on average, supported by a large randomized clinical trial of over 30,000 donations and underpinned by our proprietary patent-protected technology. It has been met with strong customer enthusiasm with multiple adoptions underway.

Blood center also contributed positively to the fourth quarter, generating $56 million in revenue, up 1% reported and up 6% organic. For the full year, revenue was $221 million, down 15%, reflecting the whole blood divestiture, but up 5% on an organic basis.

Performance was driven by continued strength in global plasma demand and stable and growing U.S. red cell collections despite our ongoing portfolio rationalization efforts.

For the full year, total company revenue declined 2% reported due to portfolio transitions, but grew 10% organically ex-CSL, at the upper end of our guidance. We expect growth to continue in fiscal '27 with projected revenue growth of 4% to 7% reported and 3% to 6% organic adjusted for the extra week in FX.

In hospital, we expect mid-single-digit growth with both franchises contributing. We anticipate continued expansion of the TEG 6s installed base and increased HN cartridge utilization in blood management technologies.

In IVT, we are ending the year with a stronger commercial organization, improving market dynamics, and a more competitive portfolio, supported by the MVP XL label expansion. With most headwinds now behind us, we are focused on translating these improvements into consistent growth. Our guidance excludes any contribution from PerQseal Elite, which is currently undergoing FDA review.

In plasma, consistent with our FY '26 approach, our mid-single-digit growth outlook is grounded in controllable drivers, share gains, the rollout of Persona PLUS and modest collection volume growth while retaining upside if collection trends remain strong and/or adoption accelerates. We remain confident in the durability of growth and our ability to further extend our leadership in this attractive market.

In blood center, strong plasma-driven demand and customer relationships will continue to support performance. However, ongoing portfolio rationalization remains a near-term headwind, and we expect revenue to decline in the mid-single digits.

We're encouraged by our progress, and we remain focused on consistent execution to deliver growth and sustainable value for our customers and our shareholders.

James, over to you.

Thank you, Chris, and good morning, everyone. We closed the year with strong execution and meaningful progress in strengthening the quality of our earnings, expanding margins, improving cash flow, and further aligning our portfolio with higher growth, higher-margin markets that will continue to support our growth aspirations in the long run.

Adjusted gross margin in the fourth quarter was 59.7%, down 50 basis points year-over-year, primarily reflecting the absence of the prior year CSL shortfall payment and the impact from tariffs enacted earlier in the year, partially offset by a structurally higher margin portfolio.

For the full year, adjusted gross margin expanded 280 basis points to 60.3%, driven by portfolio transformation, strong volume growth in plasma and blood management technologies, and continued strong demand for our market-leading innovation.

Adjusted operating expenses in the fourth quarter were $122 million, up 5% year-over-year, largely driven by the addition of Vivasure and the impact from tariffs, coupled with higher-than-expected costs from the self-insured portion of our benefits plan, higher performance-based compensation, and a deliberate step-up in targeted investments to strengthen our commercial capabilities.

Together with the adjusted gross margin dynamics in the quarter, this resulted in adjusted operating income of $85 million and adjusted operating margin of 24.4%, down 50 basis points year-over-year.

Adjusted operating expenses for the full year were $465 million, up 2%, driven by continued investment in R&D and selling and marketing, the acquisition of Vivasure, and higher performance-based compensation.

Adjusted operating margin for the year expanded 140 basis points to 25.4%, reflecting structural improvement from portfolio transformation even as we continue to invest for future growth and absorb macro cost headwinds.

The adjusted tax rate was 24.8% in the fourth quarter and fiscal year '26 compared to 22.2% and 23.2% in the prior year, respectively.

Adjusted EPS increased 4% to $1.29 in the fourth quarter, inclusive of a modest benefit from share count, which was more than offset by higher interest, tax, and FX. For the full year, adjusted EPS was $4.96, up 9%, demonstrating the strength of the underlying business and disciplined capital allocation that helped offset the impact of portfolio transitions, which are now fully behind us, partially offset by higher interest and tax.

Now turning to the balance sheet and cash flow. Cash generation continues to be a defining strength of the business and a key source of strategic flexibility. With our major device investments and productivity initiatives largely behind us, the business has returned to a strong and sustainable cash flow profile.

In the fourth quarter, we generated $45 million of free cash flow, bringing the full year free cash flow to $210 million with the free cash flow to adjusted net income conversion ratio of 89%. While free cash flow in the quarter was down versus last year, mainly due to the timing of income taxes paid and accounts receivable, full year free cash flow increased by $65 million, largely driven by better working capital management and less CapEx.

We ended the year with $245 million in cash after deploying $175 million to repurchase over 3 million shares, investing $61 million in the Vivasure acquisition and continuing to fund organic growth, reflecting a balanced capital allocation approach that supports both organic growth and shareholder returns.

We enhanced capital structure flexibility and positioned the business for continued deleveraging that can be supported by strong cash flow. While total debt remained unchanged at $1.2 billion, we refinanced $300 million of convertible notes with the revolving credit facility, ending the year with $700 million of convertible notes due in 2029, $239 million of term loan A debt and a revolver balance of $300 million with a net leverage ratio as defined in our credit agreement at 2.73x EBITDA.

On that note, let's move on to discuss the rest of our fiscal year '27 guidance. Consistent with the strong foundation and momentum Chris outlined, we expect fiscal 2027 revenue growth of 4% to 7% reported and 3% to 6% organic. We expect continued margin expansion with adjusted operating margin improving 50 to 100 basis points year-over-year, driven by continued strong momentum across our growth franchises, innovation, and operating leverage as we begin to scale IVT.

Also included in that expectation is a full year of dilution from the Vivasure acquisition with no associated revenue in our fiscal year '27 guidance, additional impact from tariffs, ERP-related costs, and continued investment in targeted high-return growth initiatives.

At the earnings level, we expect adjusted EPS to grow broadly in line with revenue as improvements in operating leverage and mix benefits are assumed to be largely offset by higher interest and tax, which is expected to be higher by about 100 basis points than in fiscal '26. Importantly, the business is expected to continue to demonstrate strong earnings quality, supported by a highly recurring revenue model and disciplined capital deployment.

We expect free cash flow conversion of approximately 80%, reflecting a disciplined approach to working capital that preserves flexibility to manage inflationary and tariff pressures and invest in growth while enabling organic investment, deleveraging, and opportunistic share buybacks.

With that, I'll turn it back to Chris for closing remarks.

Thanks, James. I want to share a few closing thoughts about our journey over the last 4 years. Fiscal '26 marked the culmination of our long-range plan for transformational growth, whereby we fundamentally repositioned Haemonetics into a more focused, higher quality, and more resilient company with significantly stronger growth, margins, and cash flow. We evolved and rebalanced our portfolio.

In plasma, we drove broad adoption of NexSys and Persona while advancing the next wave of innovation with Express Plus to reduce procedure times, Persona PLUS to further improve yield and Device360 to digitize and streamline center operations.

We rationalized our blood center portfolio, including the divestiture of whole blood to drive margin expansion. We broadened the clinical utility of TEG 6s with the HN cartridge, extending into high acuity settings such as cardiovascular surgery and liver transplantation and advanced international expansion with CE Mark certification.

We strengthened the VASCADE platform with MVP XL for larger sheath procedures, enhanced our clinical evidence, scaled commercially, and expanded into large bore closure with PerQseal Elite.

We also revamped the operating model of the company, advancing operational excellence, scaling and automating our manufacturing and supply chain capabilities, progressing our ERP digital transformation, and building the commercial and clinical infrastructure required to sustain growth, including a robust NexSys capital cycle to support ongoing global share gains. The results, low teens compounded average organic revenue growth ex-CSL, high teens adjusted EPS CAGR, low 60s adjusted gross margins, 660 basis points of adjusted operating margin expansion, and $636 million of cumulative free cash flow, results achieved while investing for growth, navigating dynamic markets and macro environments, and overcoming $153 million of nonrecurring revenue from portfolio transitions.

With the transitions behind us, we expect growth to reaccelerate and become more consistent, supported by a structurally more attractive mix of recurring revenue from high-growth, high-margin platforms.

Our priorities for fiscal '27 are clear: Continue to win in plasma, extend our leadership in TEG and reinvigorate growth in vascular closure while driving greater operating efficiency.

Quality earnings growth will further strengthen our balance sheet and create opportunities for value creation through disciplined capital allocation, including organic growth, delevering and opportunistic returns of capital to shareholders via buybacks when appropriate.

Thank you, operator. Please open the line for questions.

[Operator Instructions] Our first question comes from the line of Andrew Cooper from Raymond James.

Maybe first on plasma. I don't think you shared, and apologies if I missed it, but U.S. collection volume trends you saw in the quarter at kind of the market level. And then as you think about the end market views for '27, given discussions with fractionators, would love just kind of the latest and greatest thinking that's included in the guide.

And then secondly, if you could give a little bit more on the Persona PLUS rollout in terms of how the base has adopted it, how much has adopted it thus far? And then are you able to take some price with that? Or is this more of a tool to extend contracts, ensure stickiness, et cetera? So just would love kind of how that rollout is shaping up.

Andrew, thanks for the question. Look, FY '26 was a record year for plasma. We overcame that hangover that's been out there for a bit now and had what we describe internally as the trifecta of growth, where we had price from the remaining Persona rollout. We had a meaningful uptick in share gains, which is something we're obviously quite proud of and a return to double-digit growth on collection volume in the latter part of the year. So real strength there.

In the fourth quarter, in addition to the normal seasonality, we lapped our price gains on Persona. So that was not a meaningful contributor in the quarter. We do have some ongoing share gains from earlier transformation, earlier transitions, modest tick down in collection volume. But again, quite consistent with what we see as kind of the long-term trend for growth.

FY '27 guide, we took a page out of our playbook for FY '26, and we're really only talking about the things that we directly control, the annualization of share gains and the committed upgrade to Persona PLUS. We didn't really include any collection volume, I think 0% to 2% again this year. We don't control that.

Obviously, as I said in the prepared remarks, if collection volumes remain hot and/or the pace of adoption of Persona accelerates, then we have meaningful upside from what we otherwise view as very prudent guidance with mid-single-digit growth for the year.

In terms of PLUS, it's the next stage of our advancements. Nobody can match it. It's another -- Persona on average gave 10% benefit. This is another 5% on average above that. Tremendous acceptance into the market. We've already begun the upgrade cycle. And while we don't talk about price explicitly, the value of dropping that additional 5% yield to our customers creates a lot of room for mutual benefit, right? So you should absolutely expect price to be part of the equation as we roll forward this year. But as our convention, we won't put it into the guide until it's fully contracted and we have a committed timeline for implementation. So more to come there. We think it gives us some breathing room as the year progresses, some potential upside, but really excited about it, puts just another step forward for the platform to advance and really be unrivaled in the market.

And if I can just ask one more, maybe on margins. I think you sort of forecasted the 50 to 100 basis points as a reasonable starting point, but you're coming off a little bit lower of an exit rate here. So when we look at 4Q for you, James, maybe you called out increased investments, some of which I assume will persist versus things that are maybe a little bit more onetime in terms of benefit costs. I think you called out performance comp and tariffs. So just if you could break that down for us a little bit more and lay out how those things flow into the '27 guide as well.

Yes, sure. Thanks, Andrew. On Q4 operating margins, the results certainly were lower than we initially expected, and it really comes down to the 3 items, which I think you mentioned. First, tariffs were higher than anticipated. We saw roughly 60% of the annual impact in Q4 as our plasma inventories were depleted. Second, as you mentioned, we had the higher claims expense for our self-insured medical plans. And third, we stepped up sales and marketing investment ahead of our FY '27 launches, including MVP XL and PerQseal Elite.

When I look to FY '27, we expect the operating margin expansion to be driven primarily by gross margin improvement, but also by greater operating leverage. So on gross margin, we expect the benefits from our plasma innovation cycle, which Chris just talked about, including Persona PLUS, along with volume-driven leverage. And we also expect a favorable mix shift as hospital, which runs close to 70% gross margins contributes more of the growth. Offsetting some of that, we did incorporate higher tariff costs into our standard costs and we're assuming a 15% tariff level versus the current 10% that we're paying. So that differential is already built in.

Overall, on operating expenses, I'd say we're investing. So expenses are going to be up, including with Vivasure, but we're expecting operating leverage as revenue growth and gross margin expansion outpace expense growth. We're staying disciplined, and we're looking to protect our profitability while funding the launches.

So overall, we do think some of those items will recur like the tariffs we're building in, higher costs for medical, and we do have those bigger investments in there for S&M. But that's all built in to the guide. And we look forward to improved operating margins next year.

Our next question comes from the line of Marie Thibault from BTIG.

Maybe I'll pick up where Andrew left off and ask about hospital. I thought it was really encouraging to hear. You're feeling reenergized about the interventional tech trajectory. So just want to get a little bit more detail on the dynamics you're seeing stabilization, signs of improvement. Certainly, you've got the expanded label for MVP XL. So I would love more details on that and the cadence for how you think fiscal '27 could unfold for this part of the business?

Yes. Thanks, Marie. We -- I think quite clearly, whether it's 6 or 9 or 12 months from now, we will look back at this point and say that was the inflection point. Fourth quarter of fiscal '26 is when Haemonetics IVT turned the corner. And we understand we were down 9% for the year. When you step back from that number, and there's no apologies here, but the reality is fully 80% of that 9% decline was attributable to 2 factors: the releveling of the guidewire OEM business with J&J's acquisition of Abiomed, they took the inventory down, rebalanced their sourcing a bit, and that was a big chunk of the hit.

The other hit, of course, was ensoETM, which is on the wrong side of the PFA adoption curve. The good news is we've lapped the first, and the second is now at a level where roughly $2 million per quarter, it can't hurt us. So what you will see from us going forward is threefold. You will see a return to growth at or above market rates for vascular closure led by electrophysiology. You'll see SavvyWire, the direct retail business that we control, growing disproportionately. And with any luck, we'll launch the PerQseal Elite product later this year, and we think that's a novel offering for large-bore closure, which gives us a lot of encouragement.

In short, the enthusiasm you're hearing from us is a better team, better tools, a better product and a more accommodating market overall. So we understand our win-loss ratio. We understand what this team is capable of. We've equipped them. You heard from James, the investments we've made throughout the year, but especially in the fourth quarter, to position them for stellar performance in FY '27, and that's exactly what we expect.

A quick one maybe for James here. Free cash flow conversion, I think you cited 89% this fiscal year, which is tremendous. You're pointing to 80% conversion next fiscal year. Obviously, nothing to sneeze at. It's still very impressive. But what's behind that trajectory, the 80% versus the nearly 90% this year?

Yes. For the most part, Marie, that's just a bit of conservatism being built in. We know that we have to increase our inventory levels. So it's working capital related really driving most of that, but also a healthy dose of conservatism in there.

Our next question comes from the line of Anthony Petrone from Mizuho.

Maybe one on plasma, one on IVT. On plasma, maybe just a recap on the landscape there. Some chatter that there's some discounting going on by some of the fractionators in that space. And then in addition to that, there's a shift as it relates to CIDP prescriptions. In other words, the FcRn competition question. So maybe what's the latest in terms of what you're hearing just on just finished good IG inventory as well as FcRn competition in CIDP? And I'll have a quick follow-up on VASCADE MVP.

Hello, Anthony, it's Chris. Thanks for the question. We remain really bullish on plasma. It defines durable growth in our portfolio and is a major source, not only of earnings, but free cash flow and return on invested capital. So we look at this. There are certainly others that are more expert beginning with our customers. But our understanding is quite positive with regards to the long-term demand of IG-derived pharmaceutical therapies.

What gets lost in the chatter, I think, is that fully half the market -- more than half the market and a disproportionate source of growth of the category is primary and secondary immune deficiencies, which tragically are being driven incidence and prevalence by cancer therapy. And so there is no alternative to IG in that space, and we see that growth unabated.

On the other side, autoimmune, what we look to primarily is new patient starts. And what we see is IG remains the standard of care. Now I think folks misinterpret that when they see growth in VYVGART that, that must come at the expense of IG. And the reality is that's just a misinterpretation of the facts. The reality is both can grow because the primary use for VYVGART in those autoimmune categories is as secondary therapy for when their patient is nonresponsive to IG or that they want to overlay anti-FcRn in addition to IG to get an optimal result. There's very few examples of naive IG patients being started on the alternative therapy. And there's none that I'm aware of where someone is being switched off of IG who was otherwise well tolerated and well treated. Some of that's economics, some of that's just the base underlying efficacy of IG therapy. So there will always be noise in the system. There will always be a degree of cyclicality. Inventory levels are more art than science as we understand it. But we remain very bullish on the near, the intermediate, and the long-term demand for IG therapy and the need to collect accordingly.

And then just quick on MVP, VASCADE. All of the PFA companies reported here, it looks like the market for cardiac ablation slowed a little bit in 1Q. Just from the vantage point of Haemonetics, where does it see just the underlying market for EP volumes?

Yes. Thanks, Anthony. I think one of the positive silver lining, if you will, of the pace of PFA adoption and the changing modalities associated with it is that it is very quickly settling in, which is helpful for us because we have a dual effect. Higher procedure volumes is obviously a good thing, but the reduction in access sites works against demand for our product. Because this is now leveling, you will increasingly see demand for closure track with the underlying demand for procedures, which is meaningfully ahead. When we go back and estimate FY '26, the underlying growth in access sites was probably mid-single digits, perhaps as low as 3.5% or 4%. What we expect for this year is certainly higher than that, probably in the mid- to high-single digits, which bodes well for us given our aspiration to grow at or above the market fairly quickly here.

So from our vantage point, we're ubiquitous, particularly with the label expansion and the added clinical evidence, which is really outstanding. We are indifferent between which therapy is used. We have the best access closure for small and mid bore, soon to be large bore as well. And so from our vantage point, we think we can grow at or above market. If the market modulates down a tad, that probably just gives us a chance to catch our breath and get back on our front foot.

Our next question comes from the line of Allen Gong from JPMorgan.

I guess like one that I have is on PerQseal. I know you're not including any contribution in your current guidance, but just remind us on the pathway to market there and potential upside to the guide from that.

Yes. Hello, Gong. As is our convention, we've included all of the launch expense, which actually began last quarter to prepare the team, the product and the market for a truly outstanding launch whenever that comes this year. The product has been submitted to FDA. It's under review. We'll have the normal ongoing process. I don't want to comment about the timeline. It's just unpredictable in that regard, particularly in this current environment. But we really like the data submission. It's based on a set of trials that have been well vetted by the academic community. And so we feel quite confident in the product's profile and its eventual approval. We didn't include any of the revenue because we don't control it. And so whenever it comes, we will be ready to go. And we think this will really be a meaningful novel offering for large-bore closure up to 26 French outer diameter. And so we think it will strengthen our play, not only in vascular closure more broadly, but in structural heart as well. So it's a nice complement. It's a true tuck-in. We don't need to add additional resources beyond what we already have in place. We just need to make sure those resources have the tools and are properly trained and equipped to be able to create launch intensity, which we expect later this year.

And then just as a quick follow-up to an earlier question just on plasma supply. I just wanted to confirm when we think about some call-outs of maybe abnormal stocking and potential destocking dynamics in the quarter, that's not something that you're seeing. That's not something that you're necessarily concerned about for the rest of the fiscal year. I just want to make sure that's the right way to think about it.

Yes, Allen, I'd just go back to our guidance at mid-single digit. We have included 0% to 2% collection volume growth for the year. So if what you are describing is right, we're indemnified from it, right? We didn't anticipate collection volume growth. Anything that is above that 0% to 2% is going to be upside for us as the year progresses.

What we'll lean into is an expedited rollout of Persona PLUS, where we have meaningful innovation-based pricing that will really help the market. There have been -- in prior yield rollouts, there have been trade-offs made where folks collect less because -- less total collections because they're getting more per collection from us. That's part of our value proposition. It drives margin expansion, and it helps with the overall profitability and the durability of what we're doing. But the actual inventory levels, I think the numbers get confusing because you've got individual customers at very different stages in the life cycle. So for us, with north of 50 share of the total collection market between the U.S. and Europe, we have more ability to kind of balance that out perhaps than some.

Our next question comes from the line of Larry Solow from CJS Securities.

It's [ Pete Lucas ] for Larry. Just following up on PerQseal. Should we expect incremental sales and marketing investment in fiscal year '27 ahead of when approved? And how should we kind of think about that?

Yes. I'll let James walk through the details of it, Pete. But we -- our guidance of mid-single-digit growth for hospital and 100 basis points of margin expansion fully anticipates the resourcing of that launch for success. And good news is we were able to do a bunch of that work in the fourth quarter. Some of it will continue into the year, but it's fully reflected in our guidance. What's not reflected from my answer to the prior question is any revenue attainment. We'll -- if and when, we'll adjust accordingly.

Yes. When you look at the numbers, it was -- Vivasure was roughly $0.05 or so dilutive in Q4. If you take that and multiply it by 4, that would give you about $0.20 dilution for Vivasure for the full year.

Our next question comes from the line of David Rescott from Baird.

Two quick clarification questions and then I had a follow-up. And it sounds like you kind of just answered part of the first one as it relates to the contribution from these launch investments for Vivasure. But maybe can you think about or help us think about when we look at the margins in the quarter, I think operating margins in plasma was down 650 basis points year-over-year. If you know, what maybe that baseline operating margin, overall was in -- in your mind, maybe taking out that $0.05 kind of gets you to what that adjusted ex-Vivasure number is. And then as it relates to the guide for 2027, you called out EPS growth comparable to that of revenue. Just curious if that's specific to the reported revenue growth or the organic revenue growth guidance for the year? And then I had a follow-up.

Yes. On the second one, the EPS is commensurate with the reported revenue growth because that includes all 53 weeks. On the operating margin question on plasma, there's a couple of things that drove the decline versus Q4 in the previous year. One, I would say, as I mentioned, was we had some tariff expense that came in, in the quarter that was higher than what we anticipated. That pushed it down.

The other thing that pushed it down was as we got into the fourth quarter, we hit some of the higher tiers on our volume-based pricing, and that also pushed it down a bit as well. But the baseline plasma operating margin, if you took the average of the year, excluding the $16 million that was in the first quarter for software, that should get you something close to a baseline amount there for plasma.

David, it's Chris. If I could just jump in on that, if I may, because I think one thing that may get lost in the shuffle is we fully expect FY '27 to be a robust year of product launches. It will include the heparinase neutralization cartridge, which is now in Europe, but we will take more broadly, the MVP label expansion, which gives us tremendous cache at IDNs and ASCs and just a broader opportunity to promote the product directly in the market.

We talked about Persona PLUS and what we think that will mean. We expect everyone to adopt that over the course of time here. And then PerQseal Elite when it comes. And so we factored in what we believe are the costs associated with making sure this goes. That's part of the guide. If we surprise ourselves positively, then the revenue forecast and the associated margins with that will look prudent in hindsight.

And then maybe on the assumptions for the plasma guide in the year. I appreciate the color you provided on that already. But when we look back to the NexSys Persona Express Plus launch a couple of years ago, you had the improved yield benefits coming out of that in the period exiting that, the underlying plasma market growth declined or was slower than expected. And I know we don't definitively know what the reason was, but perhaps you could assume that better yield was a factor there. As you think about launching the new Persona PLUS system with a better yield enhancement coming with it, how, I guess, do you potentially expect that to impact the overall plasma collections if, again, perhaps the reason why you had slower growth in the prior couple of year period may have been related to the initial new product launch? And feel free to tell me if you think that's wrong as well.

David, I don't think we have clairvoyance on this, right? We continue to believe plasma will play an outsized role in terms of durable growth, free cash flow and return on invested capital. The guidance of mid-single-digit growth for FY '27 includes the annualization of share gains, which have already been implemented, right? So share gains, we grew 20% in fiscal '26, as you know, fully half of that growth or share gains. And so that is still annualizing as we speak and will continue certainly through the first part of the year.

Innovation-based pricing, important lever for us. We've annualized all the Persona gains previously built in. What we will have is potential upside associated with the Persona PLUS and accelerated adoption there, given what that means to the market.

In terms of volume, again, 0% to 2% because we don't control it. The dynamic you described is very much what took place for the second wave of Persona rollout where some of the largest collectors took the 10% yield and met their annual objectives, and we're able to meaningfully lower cost per liter as a result.

The first wave of Persona rollout was the opposite effect, which is folks that were intended to grow 10% for the year grew 20% to meet their individual demand at the time. So it will vary by individual customer. It's really difficult to call. We feel like we're well insulated at that mid-single-digit overall guide given that 0% to 2% is what's attributable to volume at this point.

Our next question comes from the line of Mike Matson from Needham.

This is [ Joseph ] on for Mike. Maybe just one on plasma and then a quick follow-up on Vivasure. So 4Q looks like plasma growth ex-CSL maybe slow compared to the last 3 quarters. But I'm just wondering, was there any weather disruptions early in the quarter that affected plasma there? And how should we be thinking about Q1? I believe it's usually the seasonally weakest. So should we expect sequential decline from here?

And then just with fiscal '27 being, I guess, the first clean year without the impact from CSL. Can you maybe tell us if there's any residual impact on the business that maybe investors aren't considering? Or is it completely headwind free from here?

Yes. Hello, Joe, thanks for the questions. Let me answer them in reverse order. I used the phrase in a public setting recently that the fog is clearing and it's going to reveal the forest for the trees. I think the $153 million of overhang or hangover depending on who you're talking to, does clear entirely. And it will be nice to be able to talk with you guys without the asterisks and the but fors and what sounds like a list of apologies, just durable growth, cash flow and return on capital, which that business is known for. So yes, we are very much looking forward to a clean print in FY '27 and beyond.

In terms of the fourth quarter, first quarter dynamic, you are right in the seasonality. Actually, our fiscal fourth quarter, which is the first calendar year that we just concluded, typically is the weakest collection period of the year. There's lots of things that get attributed this year to your point. Yes, we had some heavy storms that prevented donors from getting into the centers back at the very beginning of the quarter, that seemed to normalize and correct out. There are a lot of speculation about tax refunds and given the changes in the tax laws that refunds were larger, but then some were delayed. And so I don't really know how to handicap the ups and downs on that. We had a good quarter. Plasma did what we needed it to do to round out the year.

In terms of first quarter softness, it's not what we're experiencing, but again, we don't control it. So we're going to remain prudent and conservative around that. But typically, first quarter begins to build, and it gains real momentum in second and third quarter, and we would expect this year to look similar.

And then yes, just a quick one. Are you guys seeing any early commercial signals? Obviously, not launched, but any early signals with your customers for interest in the Vivasure platform, PerQseal? And maybe how large could that opportunity be in fiscal '27? I know it's more of a second half later in the year launch, but any help -- any color there would be helpful.

Sure. The early signals are overwhelmingly positive. I think the readout of the various DCT and HRS and elsewhere have been uniformly positively met that there's a novel new therapy coming for large-bore closure where there's just tremendous unmet need in the market today given the existing therapies.

The product is approved for sale in Europe. We've intentionally not leaned in because as part of our integration planning, we have work to do in terms of manufacturing scale-up, reduction in cost of goods sold, make the product accretive, not just on a top line basis, but also to our margin expansion. So we are working diligently on that.

What we see in Europe, though, because we've done a very controlled process where we're working with major academic centers around Europe is really meaningful interest and excitement about what the product means for the marketplace. When we step back on a global basis, we estimate the TAM for that opportunity at roughly $300 million. And we know where we sit vis-a-vis the competition. We know what we need to do to be successful on the launch. Let's wait for the release from FDA and the ultimate label that we receive, and then we'll be more than happy to drill down on exactly what this means. And when I use the term launch velocity, we'll put numbers behind it, that will be easily quantified.

There are no questions at this time. I would like to thank you for your participation in today's conference. This does conclude our program. You may now disconnect.

Ladies and gentlemen, thank you for standing by, and welcome to the Third Quarter 2026 Haemonetics Corporation Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Olga Guyette, Vice President, Investor Relations and Treasury. Please go ahead.

Good morning, and thank you for joining us for Haemonetics' Third Quarter Fiscal Year 2026 Conference Call and Webcast. I'm joined today by Chris Simon, our CEO; and James D'Arecca, our CFO.

This morning, we released our third quarter and year-to-date fiscal 2026 results and updated full year fiscal 2026 guidance. The materials, including our earnings release, Form 10-Q and the supplemental earnings presentation are available on our Investor Relations website and in this morning's press release. Before we begin, I'd like to remind everyone that we will use both reported and organic revenue growth rates that exclude the impact of FX, the divestiture of the whole blood product line and the exit of certain liquid solution products.

Argenx growth at CSL also excludes the impact of the previously disclosed transition of CSL's U.S. disposable business. We'll also refer to other non-GAAP financial measures to help investors understand Haemonetics' ongoing business performance. Please note that these measures exclude certain charges and income items. A full list of excluded items reconciliations to our GAAP results and comparisons with the prior year periods are provided in our earnings release.

Our remarks today include forward-looking statements, and our actual results may differ materially from the anticipated results. Factors that might cause the results to differ include those referenced in the safe harbor statement in today's release and in our other SEC filings. We do not undertake any obligation to update these forward-looking statements.

And now I'd like to turn it over to Chris.

Thanks, Olga. Good morning, and thank you for joining us today. We delivered a strong quarter, and we are raising our full year revenue earnings and free cash flow guidance. NexSys and TEG delivered outsized growth driven by sustained share gains, innovation-based pricing and durable end market demand, demonstrating the strength and resilience of these core products and our increasingly productive operating model.

Third quarter revenue was $339 million bringing year-to-date revenue to $988 million. Reported revenue reflects the $153 million impact of last year's portfolio transitions, allowing for these nonrecurring items, underlying performance remained strong, with organic growth ex-CSL of 8% in the quarter and 10% year-to-date. Adjusted earnings per share increased 10% in the quarter and 11% year-to-date to $1.31 and $3.67 per share, respectively, underscoring both the quality and the durability of our earnings.

With that context, let's review our businesses in more detail. Hospital revenue was $144 million in the third quarter and $429 million year-to-date, down 1% in the quarter and up 2% year-to-date organically as strong performance in Blood Management Technologies offset softness in interventional technologies. Blood Management Technologies delivered solid growth, up 8% in the quarter and 11% year-to-date, driven by sustained double-digit growth in hemostasis management.

Momentum was fueled by TEG 6s disposable sales and rapid adoption of the global Heparanase neutralization cartridge, which continues to accelerate account conversions and penetration. We have significant runway to upgrade legacy TEG 5000 systems, increase TEG 6s device sales and utilization and expand share within current indications. The launch of the HN cartridge in EMEA and Japan further strengthens our global leadership and adds international growth factors to the $400 million-plus serviceable market.

Growth elsewhere in BMT was modest with transfusion management gains largely offset by a decline in cell salvage driven by a tough comp following last year's customer migration to higher-margin technology offerings. Interventional Technology revenue declined 12% in the quarter and 8% year-to-date driven primarily by softness in esophageal calling amid accelerating PFA adoption and OEM-related headwinds in sensor guided technologies, which together accounted for most of the year-over-year quarterly decline.

Vascular closure revenue declined 4% in the quarter reflecting a 3% decline in MVP and MVP XL and electrophysiology, and softness in VASCADE in lower-growth coronary and peripheral procedures. Performance in electrophysiology was influenced by prior share loss, order timing in several of our largest accounts in December and ongoing shifts in the procedural dynamics that temporarily impact the growth of our addressable market.

Our confidence in IVT franchise is unchanged. We believe in the clinical and the economic differentiation of our product portfolio and we are enthusiastic about the anticipated MVP XL label expansion and the U.S. launch of PerQseal Elite. The vascular closure sales force is asserting itself and taking targeted actions to strengthen execution. These commercial initiatives are gaining traction, and we expect Interventional Technologies will return to growth in FY '27.

Accordingly, we now expect the hospital business to deliver reported and organic growth of approximately 4% at the low end of our prior 4% to 7% range. Moving to Plasma and Blood Center. Plasma performance continues to accelerate with another quarter of growth, driven by our category leadership and superior innovation. Notably, the franchise has returned to growth with revenue of $139 million, up 3% on a reported basis despite the last remnants of customer transition headwinds.

Organic growth, excluding CSL was 20% in the quarter and 22% year-to-date with approximately half of quarterly growth driven by share gains and the remainder from collection volume and the full annualization of innovation benefits. Plasma fundamentals remain attractive, underpinned by durable immunoglobulin demand across a broad spectrum of indications. That strength is evident in the market as U.S. plasma collections grew in the low double digits in the third quarter with approximately 50% global market share and a differentiated integrated platform, we operate from a position of strength and expect upcoming innovation in FY '27 to further advance our competitive advantage.

Given the year-to-date performance, we are raising our full year reported revenue guidance to a decline of 2% to 4% from a decline of 4% to 7% previously. And organic revenue guidance ex CSL to growth of 17% to 19% from 14% to 17% previously. Blood Center revenue was $57 million in the quarter and $165 million year-to-date growing 3% in the quarter and 4% year-to-date organically, driven primarily by international plasma demand and market leadership, partially offset by order timing and continued portfolio rationalization.

We are raising full year Blood Center reported revenue guidance to a decline of 16% to 18% from 17% to 19%, inclusive of the whole blood divestiture and increasing organic growth to 1% to 3% from flat as international plasma demand is expected to more than offset ongoing portfolio rationalization. Sustained strength across plasma, Blood Center and Blood Management technologies has improved our total company outlook.

Accordingly, we are increasing our full year reported revenue guidance to a decline of 1% to 3% from 1% to 4% previously. Reflecting the impact of last year's portfolio transitions, the majority of which are now behind us and fully reflected in our year-to-date results. This translates to raising our organic revenue guidance ex CSL by 50 basis points at the midpoint to a range of 8% to 10%, up from 7% to 10% previously. Over to you, James.

Thank you, Chris, and good morning, everyone. We delivered another quarter of strong financial performance marked by sustained margin expansion and improving cash flow. While we continue to take steps to recapture growth momentum in interventional technologies, our results highlight the benefits of our portfolio transformation, structural improvements supporting profitability and the multiple performance levers supporting continued progress toward our long-range plan objectives.

Adjusted gross margin was 60.2% in the third quarter and 60.5% year-to-date, representing increases of 250 and 390 basis points, respectively. Similar to the prior quarters, margin expansion was driven by the adoption of NexSys with Persona Technology divestiture of the whole blood business in blood center and our expanding share in both plasma and blood management technologies. These same drivers are expected to support similar gross margins for the remainder of the year.

Adjusted operating expenses in the third quarter were $115 million up $3 million or 3%, primarily reflecting adjustments in performance-based compensation due to continued outperformance across the consolidated results. We have also remained deliberate in prioritizing targeted investments in R&D and innovation to support long-term growth. Year-to-date, adjusted operating expenses were $343 million, modestly above $339 million last year, largely due to the same factors impacting the third quarter. Adjusted operating income was flat versus the prior year in the third quarter at $89 million, and adjusted operating margin expanded 60 basis points year-over-year to 26.3%.

In the third quarter, operating margin expansion was driven primarily by the improved margin profile of our plasma and blood center businesses supported by share gains on NexSys PCS with Persona and the divestiture of the whole blood business. This was partially offset by modest margin pressure in hospital reflecting continued softness in interventional technologies and the resulting impact on operating leverage. On a year-to-date basis, all segments contributed to adjusted operating margin expansion despite some volatility in the quarterly segment performance. For the total company, adjusted operating income increased 4% year-to-date to $254 million with adjusted operating margin expanding 200 basis points to 25.7%.

Based on performance to date and continued margin tailwinds across the portfolio, we continue to expect approximately 26% to 27% in adjusted operating margin for the full year. Updated guidance also includes modest near-term dilution from the Vivasure acquisition as we invest ahead of a planned commercial launch in fiscal '27. The adjusted tax rate was 24.9% for the quarter and 24.8% year-to-date. We anticipate a slight step-up in the adjusted income tax rate in the fourth quarter and expect to finish the year with an adjusted tax rate of approximately 25%.

Adjusted net income increased 2% to $61 million in the third quarter and 3% year-to-date to $175 million. Adjusted EPS rose 10% to $1.31 in the quarter and 11% year-to-date to $3.67, which includes included benefits from recent share buybacks and FX. In the fourth quarter, we expect interest and tax to be a headwind, reflecting a lower tax rate in the prior year and incremental interest expense related to the repayment of $300 million of 0 coupon convertible notes. We now expect our adjusted EPS for fiscal '26 to be in the range of $4.90 to $5 a share, which reflects our strong performance to date, coupled with the acquisition of Vivasure.

Turning to cash flow and the balance sheet. Cash generation has reemerged as a defining strength of Haemonetics and a core source of strategic flexibility. With our major device build-out complete and a series of company-wide productivity initiatives now largely behind us, the business has returned to the robust cash flow profile has historically been known for. In the third quarter, we generated $74 million of free cash flow, bringing year-to-date free cash flow to $165 million, driven by $94 million of operating cash flow in the quarter and $222 million year-to-date. This represents more than a threefold increase versus the prior year period, reflecting both the normalization of capital intensity and continued discipline in working capital management.

Free cash flow conversion reached 121% of adjusted net income in the third quarter and 95% year-to-date, reinforcing our ability to convert earnings into cash. As a result, we are raising our fiscal year 2016 free cash flow guidance to $200 million to $220 million from $170 million to $210 million previously and now expect full year free cash flow conversion to exceed 80% and positioning us with significant flexibility to deploy capital in a balanced fashion. Cash on hand at the end of the third quarter was up 18%, and to $363 million since the start of this fiscal year despite deploying $75 million towards share repurchases earlier in the year and making additional strategic investments.

Subsequent to quarter end, we also invested $61 million to acquire Vivasure, further strengthening our interventional technologies portfolio and repurchased approximately 360,000 shares of Haemonetics stock for $25 million. Our capital structure remained unchanged at the end of the third quarter with total debt of approximately $1.2 billion and no borrowings under our $750 million revolving credit facility with a net leverage ratio as defined in our credit agreement at 2.37x EBITDA.

Back to you, Chris, for closing comments.

Thanks, James. Before we open the line for questions, I want to share a few summary thoughts. We are executing with discipline, delivering solid revenue performance, expanding margins, growing earnings and generating strong cash flow while advancing our strategic priorities and transforming our operating model. Year-to-date, our results are anchored by strong execution across two of our three growth engines, plasma and our hospital-based blood management technologies. These businesses are delivering consistent sales growth, continued share gains and increasing profitability.

That strength provides both stability and flexibility as we take targeted actions to strengthen the Interventional Technologies franchise. We remain firmly committed to returning this franchise to sustainable growth in fiscal 2027. The actions required to restore growth momentum are fully funded and largely within our control. As comparisons improve and our commercial organization rallies, the targeted actions underway will translate into stronger results, supported by the anticipated MVP XL label expansion and the U.S. launch of PerQseal Elite. We expect this business to drive growth and operating leverage while strengthening its competitive advantage.

Looking beyond revenue, our portfolio transformation continues to deliver meaningful results across the P&L. Since the start of this transformation nearly 4 years ago now, we have expanded adjusted operating margins by 770 basis points, including 200 basis points year-to-date, enabling earnings growth despite the nonrecurring plasma and divested blood center revenue. This earnings leverage reflects a structurally improved business model, and it is both durable and scalable positioning us to continue generating earnings growth ahead of revenue well into the future.

Lastly, our strong and consistent free cash flow conversion supports a resilient balance sheet and long-term value creation. Our capital allocation priorities remain unchanged. And investing in organic growth, meeting upcoming debt obligations and opportunistically returning cash to shareholders while preserving balance sheet flexibility. Thank you. Operator, please open the line for questions.

[Operator Instructions]. And our first question is going to come from Rohin Patel with JPMorgan.

Good morning, everyone. I just wanted to start off with plasma, and you had a nice quarter here. And maybe if you could just help parse out kind of the delta between collections, recovery and what the market growth looked like underlying as well as your share gains. And looking forward, I guess, I think we're turning -- as we turn our attention to fiscal year '27, obviously, you've had a big benefit from share gains this year. So how are you thinking about that next year? And kind of coupled with the collections growth, what can we expect to see on a more sustainable basis for plasma looking forward? And then I have a follow-up.

Good morning, Rohin, it's Chris. Thanks for the question. Yes, plasma, and I don't mean to sound boastful on this, but I don't think we've ever been in a better position on the plasma business than we are today. We talk about the trifecta which is a combination of share gains. And to your question specifically, for third quarter, and most of this year, share gains have carried us and that comes in two flavors. It's both us picking up share from our direct competitor, but it's also our customers enabled with the best technology, gaining share from their competitors.

And I think the dual benefit there is fully half of the growth you see here from us in the quarter. We still have, and this will really be the final quarter of annualizing the price benefits associated with rolling out that new technology. And then the third piece is collection volume. And what we saw on collection volume in the quarter is a further uptick above seasonality of demand there. We're now growing double digits, both in the U.S. and internationally in terms of collection volume. So the trifecta is, you will, of price share and volume.

As we turn to FY '27, this is a point in time. I'll just remind our listeners that this is our third quarter earnings call, we've got -- we'll talk more in May when we issued guidance for the broader business for FY '27. This is a point in time where we have the detailed sit down discussions with our customers and get a clear picture for their demand. What I can tell you at the early stages of those discussions, they're enthusiastic about the environment. They -- both their end market demand as well as the collections environment here in the U.S. and internationally, where they continue to outpace. So we're confident in Plasma's ability to play its role as part of our overall growth engine going forward.

And maybe the next one, question for James. I think as we look at margins in the quarter, you saw a sequential kind of step down in adjusted operating margin this quarter. I know you kind of mentioned some incremental expenses biomass hospital margins were about 200 basis points lower versus last quarter and about 100 basis points lower year-over-year. So that could have also contributed a bit. So I guess, as you look ahead, and specifically, I guess, longer term, where do you expect the leverage to come from with kind of a more challenged hospital business? And are you expecting kind of the same level of margin expansion that you saw in fiscal next year and beyond? And maybe it would be helpful if you could help frame kind of the puts and takes.

Yes, sure, Rohin. So overall, we are pleased with our margin expansion this year as it really underscores the quality of our portfolio. As you mentioned, we're up 60 basis points in the quarter. It's up 200 basis points year-to-date. And all businesses contributed to that expansion. I would just caution you on the quarterly performance by segment, that could be uneven just due to product mix and revenue timing, expense cadence and so forth. So we like to look at that more on a year-to-date or a trailing 9-month to 12-month basis. But overall, we're pleased with the way this has played out. Now as we move into the future, we'll look to see smaller increments in margin improvement.

So like the 200 basis points improvement that we saw this year that is going to begin to slow down as we get into the future. The increments in operating margin improvement will be less. There'll be 50 basis points or 100 basis points, something more in that range. But overall, there's still room to grow here operating margin. And I'll just touch on the point that you brought up on leverage. So yes, I would be if the hospital business as having a slower quarter, you're going to see a leverage impact on us. And we saw a bit of that in the quarter, but plasma was so strong, it was able to overcome that.

We also were able to overcome. We had a performance-based compensation increment in this quarter. due to the performance of the company overall for the year. And that also was a dynamic versus the quarter in the previous year as well. So that added to it as well. Just to close out, as we finish the year, we held our operating margin guidance at 26% to 27% range that we came out with at the beginning of the year. We may be towards the lower end of that range, and that's all pretty much related to Vivasure and the timing of expenses around the launch of PerQseal.

And the next question will come from Marie Thibault with BTIG.

Nice job on the quarter. Just wanted to ask one here, and it's really on the IVP business. I know that we're expecting to see a return to growth in fiscal year '27. Maybe you could just give us kind of more of a peak into what's actually happening on the ground? Is the competitor who was rather aggressive with pricing and free product. Is that sort of out of the market at this point? How has your sales team sort of found its footing? Any more details on all of that? And then any timing, I guess, on the MVP label expansion that you referenced?

Great. It's Chris, thank you. Yes, in the quarter, if I step back and look at IBT holistically, it's important to understand, and we we're focused on this as much as anything in the company right now in terms of returning that franchise to growth and a positive contribution. The negative in the quarter was fully of the 12% decline that we experienced was a function of esophageal pooling and the disruption from coupled with a leveling out of the OEM agreement that we think largely annualizes at this point.

So it's just important to keep that in mind, 8.5% of the 12% decline is attributable to those two factors. For vascular closure, it's our #1 focus. I've said this recently, that I want to make sure I just reiterate, we are confident we've got the right team. the strategy and the tactics they've put forth are the right ones to return to growth. That effort is fully funded, and you see that kind of in our current P&L. And at this point, we're just putting steps together to do the things that we need to do to be able to return and see that in our operating results as we get into FY '27 is that we're confident that we have the right things in place to do that. We definitely woke up the competition, and that comes in different flavors. But from where we sit, and I happen to be sitting with a group of our advisers, last night in electrophysiology, there's no question that the product is highly competitive.

It's a superior product to what's out there. And we've got the clinical support to back that up. One of the things that we're looking forward to is that MVP XL label expansion. It's with FDA. The dialogue has been very constructive. Not going to try to handicap exactly when the release might come. But it opens up a number of things for us when it does. And I think it will allow us to more broadly promote the product. It lets us work with a number of the and increasingly with the ASCs to be able to get the product on contract. And we think that top down as well as the bottom-up grassroots work that we're already doing, bodes well for to be an important part of the recovery to come.

And the next question will come from Joanne Wuensch with Citi.

Could you give us a little bit of color on the Vivasure acquisition. You talked about bringing the product to market in 2027. Anything that you learned from your initial investment that helps you position for that product launch? Or is there anything on the financial aspect of it that you can share at this stage?

Thanks, Joanne. I appreciate the question. We're excited about VASCADE and the PerQseal Elite product coming to market here shortly. We consummated and acted on our option because we really believe that this will meaningfully extend our leadership in vascular closure. It gives us a credible path to category leadership across small medium and now large bore procedures as well. It puts us squarely in structural heart with both TAVR and EVAR procedures, French openings that push into the mid-20s and products going to be indicated for that.

It's a really meaningful advance versus what's in the market today. So we're excited. We sized that at roughly a $300 million addressable market. 2/3 of it's here in the U.S. It sits, as I said, at the intersection of vascular closure and structural heart, which should be a true tuck-in opportunity for us. So we're gearing up for the launch, we are learning from things that went well and less well in our prior launches. And so we're taking a very measured approach. And it will be a stepwise progress as we go. Once we have the official approval from FDA, we'll be very clear about our plans, but it's going to be step-wise. We're excited about the longer-term potential but we're going to take the steps that we need early to position this product for long-term success.

As my follow-up question, there's a phrase you used during your opening remarks to deploy capital in a balanced fashion. And I was hoping you could provide some color on how you think about the planning capital at this stage.

Joanne, it's James a to take a pass it back. So when I think about capital deployment, we strive to be disciplined balanced and returns focused. That's how we think about it. It all starts with strong and growing free cash flow. That provides us the flexibility. We had 95% free cash flow conversion to date, over $200 million in free cash flow this year. So we're well positioned.

And for the future, that should continue. The most capital-intensive phase of our transformation is largely behind us. So our priorities remain clear. And really, they're unchanged. In the near term, we prioritize organic growth, we have some debt reduction coming up here with the convertible notes that are due here in March. And we also prioritize share buybacks. You saw us do some of that just here at the end of the quarter. So longer term, once IBT execution is restored, we then will look more towards the opportunity for additional M&A like Vivasure. But that's the overall framework about how we're thinking about capital deployment.

And the next question will come from David Rescott with Baird.

Great. I wanted to follow up on some of the comments around the plasma collection in a broader market growth. And curious to understand maybe the metrics or visibility you have into the forward-looking outlook for that segment. I think in the past, you've talked about how there can be ebbs and flows to the business or to the collections market. And I think prior to the past 2 quarters, you were maybe in that period of low to no growth. And now you've got 2 quarters of high single and now low double-digit seemingly market collection growth.

So I'm curious, one, and again, how you're gauging the sustainability of this accelerated period? And I guess if the ebb period was 6 or so quarters, if that's right, why would it be unreasonable to think that this elevated collection market growth you've seen now for 2 quarters should not sustain in the flow period, you will say, for a few more quarters?

Yes. Thanks for the question. I think you're right. And I think that's not dissimilar to how we are thinking about it. The -- we work backwards from the end market. When we look at the demand for immunoglobulin-based therapy, both primary and secondary immune deficiency as well as autoimmune diseases, there is meaningful unmet need where IG is unequivocally still the first-line therapy for a whole host of reasons. It works very well. It's cost-effective, et cetera. So we look at the end market demand, we listen carefully to what our customers are saying to their shareholders and work backwards from that.

That bodes very well, near, intermediate and longer term for this industry. When we step in and now look at what that will translate to in the inevitable cyclicality of collections and inventory levels, we -- our view is that this meaningful uptick in demand actually began 6 quarters ago. And we met the early stages of that when we rolled out Persona and a 10% yield enhancement across the industry. So that gives us confidence that where are we in the cycle. We're in a building phase, and we're absolutely enabling that for our customers with our technology.

In terms of where we go from here, we'll have those discussions. We'll get very clear, how many new centers, what's the volume demand, what are they looking at, and we'll back that into our forecast for FY '27. And at this stage, and I think we established this earlier in the year, we're going to guide to the things that we can control, and that's the share uptick in terms of new centers coming over, and it's a function of the price annualization. So that's what you see reflected in our guidance.

We're very happy that we've been able to guide upward with each successive quarter here. But in terms of the volume, I don't disagree with anything you've asserted, but we're not going to put that into our guidance at this stage because we don't control it directly.

Okay. That's helpful. And on VASCADE, I'm curious more on the vascular closure market I think you again called out the increasing PFA as part of a headwind in the basket business. if I heard that correctly. I think the latest updates we have at this point maybe is PSA and AF is 70% or so of the market in the U.S. And so therefore, the increasing utilization of PFA is now in theory, should have less of a magnitude of an impact on the broader electrophysiology market growth that's eligible for a vascular closure device. So interested to hear what your views are on maybe some of those PFA headwinds beginning to lap and whether the vascular closure market or the interest investment-case devices, is continuing to step higher into that as you lap the PSA conversion, maybe the VCD kind of market growth on a blended basis should begin to step back up to higher levels.

Dave, the effect you're calling out is really important. I think the PFA launch has been defining event and electrophysiology for [indiscernible] for sure. And some of it is just we talked about earlier, kind of sucking out all the oxygen from the room and being all consuming in terms of getting clinician mind share A lot of that has played through, as you highlight. There is an effect on going with the number of access sites, exactly where that will land.

We're still understanding because we're in new therapeutic adoption. We know that in some cases, it's a reduction in the number of access sites. It's certainly a change in the sizing, which is why the MVP XL product and the upcoming anticipated FDA release is so critical to be able to compete in that space. We are seeing an uptick in concomitant therapy between Afib and left atrial appendage, that's a net negative in terms of the access site. I say all that because it will affect the overall size affects the overall growth rate in the category in the near term. But as you highlight, as that levels out, and I'll leave it to you and others to kind of forecast exactly when that plays out.

But as that levels out, what you will see in terms of access site availability for us, which really determines the TAM is it will regress to the category's growth rate? And as near as we can tell, that category growth rate is at least mid-teens at this point, which is an uptick for us going forward and gives us optimism about our ability to return to growth in '27 and beyond. So we'll see. We'll work our way through it. We think we've got a really good product. And the main thing we need to do is execute in particular, head-to-head against our competition where we have lost share, it's driven the underperformance we've experienced year-to-date. We think it's entirely addressable. We think we have a better product and we need to make sure our execution matches that.

And our next question comes from Anthony Petrone with Mizuho.

Making sure you guys can hear me. Am I coming in okay?

Yes, we do.

Okay, great. Two questions. One, plasma, one, Chris, on plasma, we're hearing the competitor in the U.S., there have been issues. You mentioned in your prepared remarks that one of the flavors of share gains here is actually at the center level. and presumably donors moving away from the competitor wanting to donate on NexSys. So when you think about that, that's a risk for what's the latest thinking on the potential that PSL comes back to NexSys in some way? Is that a potential? If so, what do you think that can look like? And then I'll have a follow-up on IBT.

Yes. Anthony, thanks for the question. Yes, I made the assertion upfront that I don't think plasma has ever been stronger across multiple dimensions. And that starts with the quality of our relationships. And I think a number of things that the team did really well through the pandemic and the recovery is they were there for folks. No stock outs, no back orders. We never fail to make a delivery on the devices or the capital, the disposables. That continues.

We value our relationship with CSL as we do with all of our customers. We're delighted to have 100% of their international business to have their U.S. software on a long-term agreement. And so we'll continue to earn all of our customers' trust day in, day out. And I think that bodes really well for our trajectory going forward. Let me just leave it there.

Very helpful. And then on IBT, one of the drivers going forward here is side of service and ASCs are sort of a new channel here for electrophysiology pulmonary vein isolation specifically, it feels like that's where those surgeries are headed. But that seems like it's greenfield for vascular closure as well. So maybe just a little bit on ASC, like -- how penetrated are you there at the moment? And are those like new sites where really you can kind of gain new ground here going forward? And how does that play in the growth trajectory for VASCADE?

Yes. I mentioned that we had our electrophysiology advisory board here with us in Boston yesterday. And several of those clinicians are running some of the largest ASCs in the country. There are customers. We've done a bunch of things with them that I think bode well for our presence in the ASCs. When I take a step back, just to put a little flesh around the efforts we have underway one of the critical gaps that we identified earlier in the year is corporate accounts presence, both for ASCs as well as for IDMs.

And we've meaningfully strengthened that capability over the course of the year. We think what we offer in vascular closure particularly now that we have this full spectrum from 6 branch to 25 French is the opportunity to be their partner on vascular closure and increasingly push venous and arterial across the board. So the conversation is how does this fit in their operations, the speed of ambulation, the absence of narcotics the significant reduction in releases is all very powerful value prop for the ASCs. We think that establishes a new growth vector for us heading into FY '27. And we're going to be excited to capitalize on it.

And the next question will come from Mike Matson with Needham & Company.

So I wanted to ask one on interventional technologies, the savvy wire product. I didn't really hear any commentary on that. Can you talk about maybe what the growth was with that? And what the what you need to do to kind of make that the combo growth driver because it seems like a pretty unique and interesting product within that portfolio?

Yes, Mike, thanks for the question. Savvy wire is a mixed story for us at the moment. I called out this 70%, fully 8.5 points of the 12 points of decline in interventional was attributed to esophageal cooling and the OEM portion of Savvy wire. And so we have a very good relationship that we inherited with the OpSens acquisition, where we're providing the product for the Impella pump. There's been some releveling of that. There's a dual manufacturing site and kind of rebalancing. That's largely played through. We may have one more quarter of that, that we have to work through. But that will ultimately regress to the growth of the underlying pump market, which we think is mid-teens or better, and we're excited about that. In the near term and in the quarter, it was absolutely a headwind for us.

If I flip over to the other side of the Guidewire business, the actual structural heart play very powerful, and we see good uptake there. The bifurcation of our efforts between closure and structural heart Guidewire has helped, although it's still in fairness, early innings from -- into that focus. We're cautiously optimistic. We think that will be a big part of what drives us in '27, but we need to see that come through. Interestingly, we don't talk much about Opto wire, which is the other part of the Guidewire business. But one of the things we're hearing back to the prior question about the ASCs, Opto wire is very attractively priced for what it delivers. It has a really clean value proposition. And seems to be gaining early traction with the ASCs. We hope to be able to build upon that going forward.

Okay. And then Blood center was positive this quarter, and I think you said it was positive year-to-date. So are we now at a point where that business can stay in the green in terms of growth from here, especially given the plasma part of the business seems like it's seeing stronger growth?

Yes, it's a tale of two halves as we go through that. I think as it pertains to plasma apheresis. This is done by the blood center customers. So as an example, it's Egypt, but I could say the same thing about France or Canada or Turkey. We are working with local blood center customers that have partnered with one of the larger cell sourcing fractionators help them get collected and kind of drive forward. And so we offer them a turnkey proposition.

That's what's going to drive the continued performance in blood center globally. The other half of the business is the remaining apheresis on platelets and red cells. And invariably, that toggle is up or down, it's very subject to order timing. And in general, it's a stagnant market. We do well in that market. They're making a really -- through the rationalization their contribution, you'll see that in some of our breakout tables has meaningfully improved. So they're playing their role in our corporate strategy for margin expansion, but they just don't have a long-term growth potential because the market doesn't have the long-term growth. potential. So we'll take a hard look at that before we guide for '27, but we will see a relative difference between capacity of that business going forward.

And the next question will come from Michael Petusky with Barrington Research.

Hey, Chris. So the guide for hospitals for fiscal '26 seems to imply that you guys deliver the best quarter in hospital on a reported basis. of the year. And I'm just curious, is that mostly a function of sort of the order timing issue reversing? Or are you seeing meaningful sort of clawbacks on some of the business that you may have lost in Invesco closure. I'm just curious, it's a fairly bullish forecast relative to what you guys just reported. I'm just curious what's driving that?

Yes, Mike, thanks for the question. You're exactly right. It is a bullish forecast for the fourth quarter. We felt comfortable guiding to the low end of the existing range because predominantly of the strength that we're seeing in blood management technologies this quarter, right? TEG continues to push forward. We're midstream here in this take 5,000 system upgrade. We have line of sight to the capital there that has us enthusiastic. And then we're seeing this really meaningful uptake on a tag disposable basis, we're generating roughly twice the usage from the existing TEG successes that we did even just 2 years ago.

So BMT is going to have to carry the water for us for sure in the fourth quarter well into the double digits. But to your question, we also need to see a beginning of the stabilization in IBT. And I think some of that is order timing. Some of that is head-to-head competition where RECONNECT we're clawing back things we lost or stabilizing. And we talk a lot about the investments we need to make in interventional technologies. I've called those out repeatedly. I feel like we've made the further dilution or outflows there. You'll see certain things. We've guaranteed some of these highly competitive territories on a quota basis to get the right people in the seat and get them motivated. So there's some expense associated with that. That's already reflected in our P&L.

We're also being purposeful about things that would encourage new usage without wrecking our margins. So we're going to continue to make those investments. We think we'll begin to see the stabilization of that in the fourth quarter. So we pair the losses, not entirely, but partially. And the combination of those 2 things, really strong, continued strong performance in BMT with a beginnings of stabilization in IBT should get us to land where we want to land for the year. But also set us up nicely for growth in FY '27 across the hospital franchise.

Okay. Great. And if I could follow up, and you may have partially answered this question in your response just now. But you guys a couple of quarters ago when you sort of went into meaningful issues in mast closure sort of called out 50 accounts where you felt like, hey, we sort of got our lunch in some of these accounts. And obviously, you put in a lot of changes very quickly, it has a response. And I'm just curious, I assume that you're probably tracking data from those 50 accounts that you guys identified 6 months ago. And I'm just curious, are you at this point, sort of trading punches -- or are you still losing a little there, but do you feel like you're sort of seeing some anecdotal evidence of the turnaround? Or what are you seeing in those accounts that you identified a couple of quarters ago?

Yes. Mike, the tagline, I assure you we are giving at least as good as we get these days. One of the things we've done is really strengthen our commercial operations, and we have a much better handle through some of the obvious tools, sales force, et cetera, that track that performance. So we are paying very close attention to the individual account wins and losses and win backs are super critical for our longer-term success. We have two very different competitors.

One is the established industry standard. And they've meaningfully beefed up their commercial presence. They're working through their corporate accounts team with their new product launch in AFib. So that's formidable, and we want to be mindful of that. We think there's a role for us as a more innovative highly legitimate #2 in the category. On the other hand, yes, we talk about the mix product and some of the things they did early on to secure a foothold. We made it easy on them. I can assure you, there's nothing easy about it in that category today. We have a team that's that fit for task that's out there fighting for what's rightfully theirs.

We value the win backs highly, and I can tell you the balance has shifted and that's what gives us optimism on a go-forward basis that it was never the product. and it was never the market. And therefore, we control this outcome if we're committed to it. And I assure you, we have no higher priority as a company right now than to return IBT to growth, and that starts with vascular closure, especially in AFib.

And the next question will come from Andrew Cooper with Raymond James.

Maybe first, I want to follow up on something you just said there, Chris, when you said the balance has shifted. Can you give us a little bit of a sense for -- what is it that you're seeing that is telling you that, that balance has shifted because I think we've all sort of known for some time that the VASCADE product, MVP and XL are well thought of by clinicians. And so when we look at the data, when we look at the performance, I don't think that piece is what's changed. So what informs that view that the balance has shifted kind of ahead of seeing the volume and the revenues showing that shift?

Yes. I think the bifurcation that we put in place earlier in the year is really starting to yield the results we anticipated. We have 200 field-based representatives who get out of bed every day and think first, second and third about closure. And we know that more than 2/3 of that opportunity today is in electrophysiology in -- for MVP and for MVP XL. So we're tracking how those folks are spending their time and their win rates, and we're increasingly confident about that. we still have gaps in our own field force, open territories where we had faced the most stiff competition, and our folks weren't able to respond for whatever set of reasons. So as we close those vacancies, as we watch these new reps come up the learning curve, it's really powerful.

And I don't think we've said this publicly before. But at this point, fully 60% of our field team has been in their territory in their current role less than 6 months. That's an important number to keep in mind as you gauge our competitive response, there is a learning curve. These are very talented individuals when they were hired because they were fit for purpose for the task we need from them. and they have a faster uptick than you would otherwise expect. But there's still an uptick.

And we've got to give this team an opportunity to really get traction. I think as I called out earlier, some of the key account work we're doing with the IDMs is providing them the air cover to be able to go in and pull through the business. And I think that's another place where we were getting out-executed by the competition. We've turned the tide on that. And I'm pleased to say we've turned the tide on that without meaningfully compromising our gross margin, our price points. We have a great product when it's properly presented and has the appropriate air cover, we win. And that's what you should expect from us going forward.

Okay. That's super helpful and look forward to sort of seeing the fruits of all that come together. Shifting a little bit to plasma. I did just want to ask, and I think maybe you touched on it a little, but when we look at the fiscal 3Q going into the fiscal 4Q in 5 numbers, it looks like a little bit bigger than the typical seasonal step down in fiscal 4Q. So I just want to get a sense for, is that conservatism? Was there any stocking around some of these share gains or anything to think about on. I know you had that chunky software renewal earlier in the year. Just trying to get a sense for anything that would explain maybe that step down or is it really just trying to take a prudent approach to close out the year?

Yes. The prudence is the exact right work, Andrew. We had a really good third quarter, obviously, above historic seasonality, #1 driver in the quarter and now year-to-date were the share gains. So there was nothing around order timing or one-offs that you need to factor in there. It's just us guiding on the things we can directly control, further share uptick in the final stages of annualization from last year's technology rollout collection volume we'll leave it to you guys to figure out what you think is the right number to plug in there. Our guidance reflects what we can control.

Thank you. I am showing no further questions in the queue. This will conclude today's conference call. Thank you for participating, and you may now disconnect.

Hi, everyone. My name is Rohin Patel. I'm a med tech analyst at JPMorgan. It's my pleasure to have Haemonetics here with us. And I'd like to introduce CEO, Chris Simon, for a presentation.

Thanks, Rohin, and thank you to JPMorgan for hosting the conference and giving us an opportunity to discuss our strategy and plans for long-term shareholder value creation. Thank you all for joining, both here in the room and on the WebEx.

First point, just a necessary disclosure. Remarks will include some forward-looking statements and some non-GAAP numbers. So the usual safe harbor and risk factors apply. Please see our SEC filings for additional details.

If I step back and try to share with you Haemonetics at a glance, the way I would articulate it is that we're the global leader in plasma apheresis. We see that as a $1 billion addressable market growing at least in the mid-single digits. It provides a highly durable source of EBITDA, very attractive return on invested capital and robust free cash flow. We value our leadership position globally in that franchise.

Unfortunately, that business is also characterized by systemic risk and cyclicality. So to further accelerate our growth and reduce the volatility, we made a decision to diversify into attractive med-surg markets. We want to do so while avoiding competition with the therapeutic category leaders in those markets. We do this by acquiring and growing a portfolio of scalable, therapeutically agnostic enabling technologies in areas like in vitro diagnostics and vascular closure.

As a result of that effort, today, we have leadership positions not only in Plasma, but in Blood Management Technologies and Interventional Technologies, which are really our 3 core product platforms. Additionally, as the slide highlights, fully 3/4 of our revenue is generated right here in the U.S. from products that are manufactured here in the U.S. or elsewhere in North America, which provides a natural buffer both for geopolitical and for macroeconomic uncertainty.

In terms of our transformational growth, we think about this as a 4-year LRP that ran from the beginning of FY '22, our fiscal year back -- and then completes in one additional quarter here in fiscal '26. The focus on that LRP has been about building high-quality, sustainable growth engines driving revenue, margin and cash flow expansion. And they are the 3 goals and the 3 metrics that define us, again, revenue, margin expansion and free cash flow.

Over the LRP, we've made meaningful structural changes in the portfolio and to the business. We think this has created a durable recurring revenue base with clinically differentiated technology. It's a significantly higher-margin business, higher-margin revenue base from attractive supportive markets. And we're now beginning to create meaningfully greater operating leverage as we continue to improve our scale and efficiency. We have significant momentum and there is an opportunity for real long-term value creation yet to be unlocked.

In 2022, we committed to an ambitious set of goals against these priorities, revenue, operating margin, income and cumulative free cash flow, all while transitioning from what was then our largest customer worldwide, which represented over $100 million in revenue and roughly 1/3 of our adjusted earnings at the time. Here we are 15 of the 16 quarters through that LRP, and we believe the performance speaks for itself.

We expected now at this point, in the midpoint of our current guidance, 8% total revenue compound annual growth rate or 13% organic revenue when you separate out that one customer transition and some other noncore divestitures. We have improved our operating income margin by 770 basis points of adjusted operating margin expansion at the midpoint of our current guidance. In fact, through the first half of the year and our most recent quarter, we were already at 26.3% operating income margin with additional expansion anticipated in the second half of the year.

Adjusted EPS is expected to compound at roughly 17%. That's been supported by pricing discipline and productivity as well as important mix change in revenue and volume. We've also, on a trailing 12-month basis, we have a 92% cash to adjusted earnings conversion ratio, which we think speaks to the vitality and the optionality of our balance sheet now and going forward.

We believe this portfolio transformation is laying the foundation for sustainable growth going forward. In FY '22, when we issued the plan, 30% of our revenue came from lower-growth, lower-margin businesses. In FY '26, our core high-growth, high-margin businesses now represent fully 85% of our revenue stream. This ongoing shift has been both deliberate and disciplined. And we exited or deemphasized noncore assets and relocated capital and talent to platforms with the largest addressable markets, faster innovation cycles and structurally higher margins.

The impact is increasingly clear in both mix and momentum. With the portfolio transitions largely behind us and the mix structurally aligned to this higher growth portfolio, we expect the next phase of value creation will continue to drive sustained earnings power, robust cash and improving returns on invested capital. Through the process of diversification, we've changed, and then I've heard from some we're that become complex. From where we sit, we don't see it as very complex.

In fact, we run a simple and highly focused growth model. Most revenue and all of our growth comes from 3 core product platforms. Each of these platforms holds a clear leadership position in their market: NexSys PCS for plasma, TEG 6s in viscoelastic testing and VASCADE product family, MVP in particular, in electrophysiology. All 3 compete in large and growing markets and are supported by a high-velocity innovation pipeline that we are absolutely committed to investing in, enabling sustainable above-market growth.

I'll start with Plasma. It's the foundational earnings and free cash flow engine for our corporation. It's a durable business that performs well in pretty much any economic cycle where we are the undisputed market leader. Global plasma collections addressable market which excludes China is approximately $1 billion today, and we lead with something now exceeding 50% market share, supported by deep customer engagement and technological differentiation in our core platform.

And demand remains strong and durable in support of a $30 billion global bio-pharmaceutical industry. Despite progress at the end market with products like the recombinant, IG remains irreplaceable for many patients, especially those suffering from primary and secondary immune deficiency, which is growing in the double digits. We have the technology leadership position. We are, in fact, and continue to be the industry standard.

We're the most trusted partner and the only provider of a fully bidirectionally integrated plasma collection platform. Our technology is purpose-built and designed around customer key performance indicators, yield, efficiency, donor safety and the donor experience, ultimately leading to a lower cost to collect and an improved cost per gram collected. And of course, the most important metric perhaps is favorable donor retention.

Our NexLynk DMS is a strategic differentiator and essentially the secret sauce of that platform. We have the best DMS software here in the U.S. market. It is bidirectionally integrated with NexSys and it materially improves workflows, throughput, real-time operational decision-making and center level productivity. Recent NexLynk competitive wins have solidified 80% share here in the U.S. DMS market and it extends and expands our plasma margins, providing operational visibility into over 1,000 customer centers, a great source of renewed innovation for the company.

Our late-stage pipeline that we'll talk about more later this coming year is, as I said, purpose-built to extend this leadership. We are at a point in the market where collection growth is normalizing, it's reaccelerating. And we're benefiting from strong end market demand. We're benefiting from share gains. And we're benefiting from premium pricing for what is widely viewed by our customers as superior technology. In the long run, we expect this franchise to continue to deliver above-market revenue growth to expand margins and to provide a durable source of free cash flow to fund our ongoing growth.

If I shift gears now and talk a little bit about our hospital-based med-surg businesses. First up is TEG. TEG is the standard for viscoelastic testing worldwide. It is our second largest growth driver and it is our largest and fastest-growing med-surg hospital product. It again is a durable, high-performing business in our portfolio, consistently delivering double-digit annual growth. And despite our success, the opportunity ahead is equally substantial. This is a large, underpenetrated and growing market. Additional indications, additional regulatory and clinical support will continue to advance our viscoelastic footprint.

So TEG, as I said, largest, fastest-growing hospital product. Viscoelastic testing is a structurally attractive $400 million-plus addressable market. The market itself is growing in the mid-single digits and we've only really penetrated what we believe to be approximately 60% of the eligible procedures. So there's meaningful room to go. The recent global launch of our heparinase neutralization cartridge has created an inflection point, solidifying and reinforcing this potential to continue to grow at double digits as we expand adoption and push further into international opportunities.

Why we win with TEG? Category leadership and clinical differentiation. It's the industry standard. Of the used viscoelastic testing, we have roughly 45% share. Of the head-to-head competition in viscoelastic testing, that share is closer to 75%. It delivers real-time actionable coagulation insights that improve clinical outcomes and reduce the cost to treat because when they make a transfusion, they make it with exactly the right product and often they don't need to make the transfusion to get a better clinical outcome with patients. It's an exciting product. It's at the sweet spot of growth in health care.

TEG is also very capital efficient for hospitals. It meets a high clinical unmet need with relatively low system cost and it enables consistent capital placement even in tight CapEx cycles. As we grow and expand, we'll continue to leverage the TEG Manager software platform. It's a platform that has the potential to meaningfully drive physician heuristics. As we continue to advance the digitization of that platform with AI and other applications, it just gets smarter and more relevant. Our market leadership position helps reinforce that. We think it goes from strength to strength as we advance the platform.

The third pillar of our 3 core platforms is vascular closure, particularly in electrophysiology. It represents our largest total market opportunity globally at roughly $2.5 billion. And our initial focus, our primary place to compete and win is in electrophysiology, which we estimate to be approximately a $600 million serviceable market, including the U.S., Japan and select European countries. We focus on the top 600 accounts in here in the U.S. They represent 90% of the procedures. It's very concentrated. If you add an additional 200 hospital accounts in Japan, we've really covered the nucleus of the market.

So it tends to be a very efficient opportunity for us to grow and expand our presence. We have advanced vascular closure as an opportunity set is meaningfully underpenetrated even within our largest accounts and creating a clear multiyear opportunity for us to continue growth and expansion.

Why we believe we win in vascular closure? Again, it's clinical and, in this case, economic differentiation. VASCADE, VASCADE MVP and VASCADE MVP XL deliver clear clinical advantage and economic benefit to the clinicians and the hospitals that they operate in, and it is now supported by a large body of data with growing and further adoption.

We help in a meaningful way reduce the need for medication, particularly opioids for the fully resorbable closure. Ambulation has been reduced from 6 hours to 2 hours. 90-plus percent of the patients go home the same day. And the hospital is benefiting from those economics in that workflow.

The introduction of MVP XL expands our relevance across emerging EP technologies and large-bore access, including both PFA and left atrial appendage closure. Expanded label which is underway will further strengthen our clinical evidence base. It will reinforce our leadership position and widen our competitive opportunity.

We will focus continually on those top 600 accounts. As I said, they're 90% of the opportunity, and there's a meaningful additional growth play for us. We are looking to expand geographically, particularly in markets like Japan where our safety-first profile is exceptionally well adopted. We also continue to expand the addressable market through additional clinical applications that we'll talk more about later this year.

We recently, last week, announced the acquisition of Vivasure, which unlocks an additional attractive TAM for the corporation. We exercised an option that was 2 years in the process, outlaid an additional approximately $60 million with a series of potential earn-outs that get us what we believe is a differentiated large-bore closure platform with minimal dilution. Vivasure should extend our leadership across a full spectrum of advanced closure from small-bore ranging up now through large-bore and, ultimately, for the 26 French OD, outer diameter, opportunity.

As I said, we think it's a $300 million addressable market in large-bore primarily for TAVR and for EVAR procedures, adjacencies where we can leverage our existing vascular closure and structural heart efforts to meaningfully improve our relevance. It also should help strengthen our IDN and ASC enterprise value proposition and the contracting work we have underway there. The company itself is based in Ireland. It provides perhaps future flexibility as we continue to expand the IVT franchise.

And the product that we're most excited about is PerQseal Elite. It's currently under FDA review for U.S. release with launch timing aligned to our FY '27 growth aspirations.

If I just talk about that clinical profile for a second. Based on the most recent trial data, we think this is going to be a simple one-step deployment for what is a fully absorbable product with no need to pre-close. There are 0% major complications throughout a 30-day follow-up period and near instantaneous hemostasis with a median time to hemostasis of 0.0 minutes. It's tuck-in innovation, as I said, that will leverage our existing footprint and we hope will extend both our vascular closure and structural heart leadership.

If I now step back at the total company level and look at the financials that we've consistently delivered here across this most recent LRP, at a company level, the growth has been consistently compelling. Transformational growth strategy, as we've outlined it, is portfolio evolution, investments in category leadership and execution across our 3 growth drivers. All 3 of our businesses are contributing to margin expansion, and there's room to further evolve our portfolio and improve operating leverage in the years to come.

We believe the trajectory of earnings and free cash flow that we are generating is an example and a testimony of the compounding impacts of this high-margin portfolio, operating leverage and managerial discipline. We've more than doubled our free cash flow over this period, which we believe is now more normalized and reflects the strength and the optionality for this business going forward.

As we think about capital allocation, that free cash flow has given us an opportunity to really invest heavily in this business. Over the course of our transformation these past 4 years, we've deployed $1.3 billion of capital across 4 clear priorities: organic growth, particularly R&D and commercial expansion, M&A and then shareholder returns, both in the form of debt repayment and getting capital back to our shareholders through buybacks.

We are now studying carefully the returns, and we believe those returns on invested capital are catching up to our long-term growth goals, originally probably hovering in the mid-single digits at 6% to 7%, now up double digit, 11% or better, as we continue to move forward.

So we know we have work to do there, but we do so from a position of strength. The newly acquired products are getting back on track for the course of the next LRP. And we believe all of our investments will deliver certainly double-digit return on invested capital. So we're excited about where we are. We're excited about where we're going, and look forward to answering any and all of your questions.

Thank you.

Thanks, Chris, for the presentation. I guess I wanted to start off with a bit of a broader question. You're currently in the last year of your LRP, as you had mentioned. And I know you plan on hosting an Analyst Day later this year, so I don't want to front run that. But are you able to talk a little bit more about your growth outlook for the business over the next, call it, 5 years?

I guess you obviously are kind of making acquisitions with the Vivasure deal in Hospital. Plasma is performing quite well. But fiscal '27 is probably going to be the first year of normalized kind of ex-CSL growth, you could call it, in a while. And so I think it would be helpful just to get a sense for how you're thinking about some of the puts and takes on revenue and margin in fiscal '27 and beyond.

Yes. For us, we run on a fiscal year that wraps up March 31. So the immediate focus is finishing this year strong and delivering fully. We'll obviously talk more about FY '27 and the new long-range plan when we come out with guidance in May. What I can say is this focus that we have, operating discipline execution around the 3 core platforms, really defines us.

And we were excited -- are excited to do the Vivasure deal that we think will be a meaningful benefit to the vascular closure and intervention cardiology franchise. But our primary focus will continue to be organic investments against those 3 core platforms and really delivering what we think is now exciting growth platform.

As I said, we like what we're doing in Plasma. The Plasma franchise has never been stronger. That provides a durable nucleus for us. And then we'll continue to build and expand and improve the execution of our hospital-based med-surg businesses as part of that growth.

Got it. Is there any kind of color maybe that you can provide on margins as we look -- and earnings, I guess, as we look beyond this fiscal year? I know just with some of the puts and takes around the cash balance and interest expense as well as you're making some good progress on gross and operating margins. So maybe just qualitatively, how are you thinking about operational improvements as well as some of the below-the-line considerations?

Yes. Thanks for that, Rohin. I'm joined by James and Olga, our CFO and Head of Investor Relations. Maybe I'll let James answer the margin question.

Yes, sure. So we're real pleased with our operating margin expansion over the past several years. You saw the statistics that Chris just put up there, getting almost 800 basis points of margin expansion over the past 4 years, which was mostly driven by gross margin expansion. It was -- you saw the 3 growth engines that Chris put up there. And basically, we had portfolio evolution here to really focus on those 3 main platforms. And once we did that, our gross margins accelerated pretty dramatically and that drove the operating margin improvement over this past horizon that we've just been through.

Now in the future, I think what we could look forward to is now that we've been through what I would call an era of gross margin expansion, I think the focus now changes to operating leverage. Gross margin will continue to expand, although it will be, I think, smaller in size. And the real future is looking at how our revenues grow quicker than expenses. What we think we've done here is built out a cost base and a foundation that's the right amount of investment for future growth. And if that's the case, then our operating expenses don't need to grow as -- should not grow as nearly as quickly as our revenue.

So as that plays out in the future, whether it's fiscal '27 or beyond, you should see some continued margin expansion. It may not be in these chunk-sized increments that we've seen previously, think more in the 50 to 100 basis points margin improvement. But there's still a ways to go in this business, and we're looking forward to continuing to generate that improvement into next year and beyond.

Yes. Just to put an exclamation point on it, Rohin. As you well know, through the first half of this current fiscal year, we are north of 26% on operating income margin. And that expansion, that improvement is great.

Keep in mind, we did that while transitioning more than $150 million of revenue from that customer transition and $53 million of additional divestitures. So we've trimmed the top line necessarily by over $150 million, more than 10% of our revenue, and we've been able to drive the margin expansion and meaningful double-digit growth in earnings per share in that same period.

Got it. No, that was very helpful color. I do want to move on to Vivasure. I think it's top of mind, obviously, given your recent announcement. And congratulations on the deal.

Maybe just to start, can you just help us frame this opportunity in the context of your IVT franchise strategically, but also kind of what's the incremental revenue opportunity look like for you? From a competitive standpoint, why do you feel as though this product is differentiated? And what is your strategy, I guess, for launch in fiscal '27, I believe, is what you kind of mentioned?

Yes. So our med-surg growth strategy is to bring differentiated, meaningful innovation in enabling technology. So we're not in the heart valve business. We're in the access or closure to heart valve opportunities with something like Vivasure. When we look at that, we think this is a really good example of where we can expand our leadership in closure, in this case, in the large-bore segment. We think this is roughly a $300 million market growing certainly in the mid- to high single digits with TAVR and EVAR.

What we have here is a fully absorbable, sutureless, implant-free design with no need to pre-close. As we go out and look at the market and the unmet need, we think this checks many, if not all of those boxes. And so the trial data that was submitted to FDA back in the fall had 0 major complications through 30-day follow-up and immediate median time to hemostasis. That should severely advance the opportunity set.

We think it's kind of a classic tuck-in opportunity that will fit very neatly at the intersection of vascular closure and structural heart. And we were able to do this through what we internally describe as outsourced R&D. We exercised the option because to Vivasure's credit, they had met all of their major milestones. We're at a point now where we believe we'll get the release from FDA in FY '27 at a point in time where we expect our sales force to be ready and committed to driving that growth.

I guess how are you positioning the sales force for the upcoming -- I mean, I guess you have some time, but for the launch in fiscal '27 just given the priorities across IVT today? Obviously, you guys, you have kind of a diverse business with an array of products. And so I just want to get a sense for how you're prioritizing all the products now that you've kind of made the decision to acquire Vivasure.

Yes, thanks for that. Look, it's no secret. We've struggled through the first half of this fiscal year with our Interventional Technologies performance. If I could take a step back and address that because it's important context to answer your question directly.

I think three things happened to us that we now understand a lot more fully. One is that as amazing and powerful as the PFA adoption cycle has been, it has been a disruptive influence. I've seen a lot that somehow we're on the wrong side of that technological advancement. That's not true. There will be a change in access sites, I'm sure we'll talk about that perhaps here today.

But the reality is the disruption is PFA taking all the oxygen out of the room such that other technologies were put on the back burner, including our vascular closure opportunity set. So the power of the adoption and the speed of which is such that we expect that to begin to normalize next year. And as it does, we think that kind of settles the landscape for us to get back on our front foot and compete.

I think the second thing that's been brought to the surface is while we had great speed with adoption through the first 70%, 75% of the T600 accounts, the remainder are all affiliated mostly with IDNs, GPOs, et cetera. And the absence within Haemonetics of a fit-for-task corporate account capability really came back to hurt us, particularly in this environment where PFA was so disruptive and value access committees were busy focusing on the great new technology. We just didn't have presence or relevance with them.

And then the third thing is just very straightforward. We woke up 2 very aggressive competitors. And the team that was purpose-built for medical education and adoption, they found themselves in hand-to-hand combat here that perhaps not fully prepared for. We are addressing all 3 of those. That is our first priority. We have no higher priority as a corporation. We've talked about half a dozen levers we are pulling to address it. I'm happy to go through any and all of them.

We talked about green shoots last quarter. I want to be clear about that. The green shoots are operational. The quality of the team we've put forth, the revamp and focused effort, to your question, we've bifurcated our efforts so that it's 80% focused on closure, over 200 feet on the street driving forward with our closure portfolio. They will pick up responsibility when it comes for the Vivasure product. We have the other 20%, which is roughly 45 people, focused on structural heart and driving our presence there. We think Vivasure helps make us more relevant in that space.

But the bifurcation, still relatively new, taking hold. It's reflected in comp plans, et cetera. And we'll use compensation to make sure we have the appropriate focus and mind share. As I said, operationally, we like what we're observing. From a results perspective, it's going to be entirely an FY '27 event, right? It's just these -- changing your corporate accounts program is great. There's a cycle, in some cases, a multiyear cycle for contracting. We're in that cycle, but it will take time.

As I said, we don't have any concern about the long-term opportunity set, the underlying growth. The beauty of a category like this with the benefits that PFA has brought to it is we've taken what was a high-single, low double-digit grower to something that's closer to the mid-teens. As the dust settles, the growth rate will regress to the mean. It's a very attractive mean for us. And so stay tuned. We'll have more to say when we guide for FY '27. But I think this team and the work we've already done prepares us well for PerQseal Elite when it comes.

Got it. No, that's really helpful. And maybe if we have time at the end, we can circle back to Hospital and IVT. But I do want to spend some time on Plasma. This has been quite strong for you over the course of fiscal '26. You're taking a fair amount of share from competitors. You managed to get some price last year, and that's continuing to some extent as well this year. And then you also have collections starting to normalize potentially.

So maybe if you could just talk a little bit about what you're seeing in Plasma, what you saw over the first half of fiscal '26 and how that's trending as of December, January into the second half. Can you talk about kind of the relative growth contribution between share gains, pricing and collections as we look further out into fiscal '27?

I know there's a bit of a wide variance in consensus Plasma forecast for fiscal '27 and beyond. So maybe it would be helpful if you could help frame that in the context of these factors.

Yes. Thanks, Rohin. Look, our Plasma franchise, I think, back over the last decade has never been stronger. Based on the midpoint of our current guidance, it will be larger. It is faster growing. It is more profitable. And it is more diverse than it has been at any point in time in history. In fact, no individual customer is more than 10% of our total revenue. And the top 3 customers are now less than 25%, which we think is a testament to the diversification.

We are well positioned for continued growth. This year has been really the first time I've observed what we describe internally as the trifecta, which is share gains based on superior technology. It's a price premium for that technology that our customers are glad to pay because of the benefits it drives within their operations. And as you highlight, we are now seeing a normalization and a return to growth. In the second quarter of this year, the U.S. market grew high single digits. The international market continues to grow double digits.

So we're firing on all 3 dimensions right now, and that's really powerful. You can't always expect that to be the case as we go forward. So when we get ready to guide for FY '27, we'll drill down into each of those 3 dimensions and talk about what we see going forward. It's premature to comment on it now simply because this is the time of year where we roll up our sleeves and sit down and have candid discussion with customers about how many new centers, what level of incentives, what's realistic in terms of additional share capture, et cetera.

And so we'll put flesh around that in the next 90 days. But I don't want to miss the forest for the trees here. Plasma has never been better, and we expect to continue that trajectory.

Got it. And just to kind of talk about the competitive advantage in Plasma a little bit more. You talked a bit about the DMS and the 80% share that you have with customers for DMS specifically in the U.S. So maybe if you could just discuss like what's the source of your moat in Plasma?

How are you investing in kind of ensuring that integration is as smooth as possible and kind of customers and retention, customers are sticking with your platform over the long term and retention looks good? And just like what is the source of that innovation and how are you thinking about maintaining that?

Yes. I'd highlight 3 things. I think the company's performance long term, right, multi-decade, but certainly through the pandemic and importantly the recovery from the pandemic, where we grew 40% and 20% in those 2 years, the fact that we were there for all of our customers established the company as the supply partner the industry knows and trusts.

And it really, because we completed the upgrade cycle to NexSys, helped these customers get first-hand experience with what is, and this is my second point, superior technology. We talk about yield. We talk speed. We talk about safety. And we talk about the aggregate donor experience, We have a very strong body of evidence to suggest that we're unrivaled on those dimensions. And I think that's what you see with our share gains that we've picked up here, particularly in the last 2 years. And I'm highlighting our major plasma customers but also some of our major blood center customers as well.

And then I think the third piece that I would highlight is the NexLynk DMS. It's the only stand-alone 510(k) approved plasma software. And we have 80% share of the market at this point. And when it's bidirectionally connected with the device itself, the platform is just truly exceptional on those key dimensions. And I think as the industry becomes more and more sophisticated about donor recruitment, donor retention, AI applications for how to think through what the optimal offering is, we're talking increasingly about cost per gram, beyond cost per liter but cost per gram, and working jointly with our customers on a portfolio of innovation initiatives that will take that leadership to another level over the next decade.

Got it. And then with a minute or so left, I do want to touch on capital allocation. I think the cash outflow for Vivasure was roughly $60 million. I believe you've also started to kind of pursue more share buybacks. Obviously, there's reinvestment opportunity as well and potentially future M&A.

So maybe if you could just talk about your priorities for capital allocation from here on out just in the context of both what you've done over the past year as well as your priorities moving forward.

Sure. I'll let James take the first cut at that.

Yes, absolutely. So the #1 priority for us always has been and the first call on capital for us is organic, right? You heard Chris allude to some of these things, right, whether it was innovation in Plasma, it's improving and sustaining those 3 growth engines that we talked about. So that's always #1.

I would say M&A has been #2 here historically, and you saw that with Vivasure this past quarter. Apart from that, though, I think M&A will be paused while we continue to work on the improvements in IVT that Chris just referenced.

And #3 is share buyback and return of capital to shareholders. That's something we've been very active with, $225 million in the past year. And we'll continue to be opportunistic about that, even at these levels where we are today.

However, I think the other key point that we have to address is that there's a $300 million maturity in our convertible debt, which was 0% that's coming due here in at the end of March. So we're going to be smart and disciplined about paying down our debt, and that represents another capital deployment opportunity that we'll focus on.

And then we spoke a bit earlier about earnings trajectory for next year. That will -- while we'll probably not be able to pay all of it down with our existing cash balance, that will leave likely some tail of that on our revolver. So that might bump up some interest expense going to the next year. So we need to be cognizant about that. But that's the big picture. That's the way we'll continue to pursue capital deployment here.

Great. Well, thank you. It seems like we're out of time. But I appreciate everyone for joining, and thanks to the team for taking the time as well.

Thanks, Rohin.

Good day, and thank you for standing by. Welcome to the Second Quarter 2026 Haemonetics Corporation Earnings Conference Call. [Operator Instruction].

Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Olga Guyette, Vice President, Investor Relations and Treasurer. Please go ahead.

Good morning, and thank you all for joining us for Haemonetics Second Quarter Fiscal Year 2026 Conference Call and Webcast.

I'm joined today by Chris Simon, our CEO; and James D'Arecca, our CFO.

This morning, we released our second quarter and year-to-date fiscal 2026 results and updated full year fiscal '26 guidance. The materials, including our earnings release, Form 10-Q and supplemental earnings presentation are available on our Investor Relations website and through this morning's press release.

Before we begin, I'd like to remind everyone that we will use both organic and reported revenue growth rates. In case of organic growth rates, those exclude the impact of FX, the divestiture of the whole blood product line and the exit of certain liquid solution products. Organic growth ex CSL also excludes the impact of the previously disclosed transition of CSL's U.S. disposable business.

We'll also refer to other non-GAAP financial measures to help investors understand Haemonetics' ongoing business performance. Please note that these measures exclude certain charges and income items. A full list of excluded items, reconciliations to our GAAP results and comparisons with the prior year periods are provided in our earnings release.

Our remarks today include forward-looking statements, and our actual results may differ materially from anticipated results. Factors that may cause our results to differ include those referenced in the safe harbor statement in today's earnings release and in our SEC filings. We do not undertake any obligation to update these forward-looking statements.

And now I'd like to turn it over to Chris.

Thanks, Olga. Good morning, everyone, and thank you all for joining us.

Second quarter revenue was $327 million and $649 million year-to-date, each reflecting a 5% reported revenue decline driven by $48 million and $101 million in last year's portfolio transitions, respectively. Excluding these transitions, organic growth ex CSL was 9% in the quarter and 11% year-to-date.

Adjusted EPS increased 13% in the quarter and 11% year-to-date to $1.27 and $2.36, respectively.

Our results reflect disciplined execution, delivering strong core product growth, record margin expansion and solid earnings that convert to cash, while advancing our portfolio and company transformation to sustain this momentum well beyond our long-range plan. The focus on NexSys, TEG and VASCADE continues to advance our leadership and fuel growth. We are gaining plasma share through best-in-class collection solutions. We are reinforcing TEG leadership in viscoelastic testing, and we are executing targeted vascular closure initiatives to strengthen performance and return Interventional Technologies to growth.

Turning now to our individual business performance. Hospital revenue was $146 million in the second quarter and $285 million year-to-date, up 5% on a reported basis and 4% organic in both periods. Strong Blood Management Technologies performance offset softness in Interventional Technologies, underscoring the resilience and diversified of our diversified portfolio and multiple drivers of performance.

Blood Management Technologies delivered strong growth, up 12% in the quarter and 13% year-to-date, driven by sustained strength in hemostasis management.

Growth was fueled by higher TEG disposable utilization and the ongoing rapid adoption of the global heparinase neutralization cartridge.

In October, we reinforced our global leadership in viscoelastic testing by launching the HN cartridge in EMEA and Japan. The broader portfolio also contributed to growth with transfusion management achieving double-digit growth, supported by heightened demand for transfusion safety and efficiency.

Interventional Technologies declined 5% in the quarter and 6% year-to-date, reflecting softness in the esophageal cooling against accelerating PFA adoption. While modest in size at approximately $3 million in revenue in the second quarter, esophageal cooling remains a disproportionate driver of near-term underperformance.

Vascular Closure grew 2% in the quarter and 3% year-to-date, led by MVP and MVP XL and electrophysiology growing 4% and 5%, respectively. These gains were partially offset by continued softness in legacy VASCADE concentrated in lower growth coronary and peripheral procedures. We remain confident in the strong clinical and economic differentiation of our vascular closure portfolio, and we are taking decisive actions to strengthen execution to accelerate growth.

We are also making solid progress with SavvyWire in the U.S., delivering consistent double-digit growth as we build its foundation and broaden our relevance in structural heart. We are updating our hospital revenue growth guidance to 4% to 7%, both reported and organic, reflecting sustained double-digit growth in Blood Management Technologies and little to no contribution from Interventional Technologies. This outlook reflects our focus on taking the steps necessary to drive long-term value creation with Interventional Technologies expected to play a larger role in accelerated growth and margin expansion beyond FY '26.

Moving to Plasma. Revenue was $125 million in the quarter and $255 million year-to-date, down 10% and 7% on a reported basis, respectively, reflecting the CSL transition. Excluding CSL, organic revenue grew 19% in the quarter and 23% year-to-date. Second quarter results were driven by share gains, robust growth in U.S. collections and ongoing benefits from innovation.

Our plasma business is stronger than ever, delivering revenue growth and margin expansion, enabled by best-in-class solutions that help improve customer performance to drive our share gains. Based on customer forecast and strong sentiment from PPPA, we have renewed confidence in the sustained robust growth of the plasma therapeutics market, particularly immunoglobulins.

Our second quarter results reinforce that view with U.S. collections growing in the high single digits and European collections continuing to grow double digits. Given stronger-than-anticipated first half performance, we are raising our full year reported plasma revenue guidance to a decline of 4% to 7% or 14% to 17% organic growth ex CSL. Second quarter collections growth was very encouraging. However, our guidance remains grounded in the factors we can control, primarily share gains.

Blood Center reported revenue decline of 18% in the quarter and 21% year-to-date, reflecting the impact of the whole blood divestiture.

Organic revenue grew 4% in the quarter and 5% year-to-date, driven by resilience in our core apheresis business. We are raising our full year Blood Center guidance to reflect this performance, now expecting reported revenue to decline 17% to 19% as we fully anniversary the Whole Blood divestiture and organic growth to be approximately flat.

Overall, revenue momentum remains strong, underpinned by growth and expanding profitability across our businesses. Despite $153 million in last year's portfolio transitions, 2 of our 3 growth franchises continue to deliver outsized organic growth while we strengthen our commercial execution for renewed sustained success in IVT. Reflecting better-than-expected first half performance across more than 80% of our portfolio, we are raising full year revenue guidance from a reported decline of 3% to 6% to a decline of 1% to 4% and organic growth ex CSL from an increase of 6% to 9% to an increase of 7% to 10%.

Over to you, James.

Thank you, Chris, and good morning, everyone. We delivered another strong quarter of profitable growth. Our results highlight the benefits of our strategic portfolio transformation, ongoing productivity initiatives and disciplined approach to cost management, contributing to continued improvement in margins and earnings growth.

Adjusted gross margin reached 60.5% in the second quarter and 60.6% year-to-date, up 380 and 460 basis points, respectively. The expansion was driven by the continued adoption of our Persona technology, price initiatives across the portfolio and favorable product mix, all of which are expected to continue to support margins in the second half.

Software license fees in the first quarter contributed roughly 100 basis points of gross margin benefit year-to-date. Adjusted operating expenses in the second quarter were $111 million, a decrease of $1.5 million or 1% -- the decline reflects lower freight costs, coupled with disciplined expense management and continued focus on efficiency across G&A while prioritizing targeted investments to support innovation and long-term growth.

Adjusted operating expenses year-to-date were $229 million, slightly up from $227 million last year, predominantly due to the timing of certain R&D investments.

The strength of our core portfolio and our ability to drive margin expansion is evident in our results. Year-to-date, we've absorbed $101 million of revenue impact from last year's portfolio transitions, all while growing our adjusted operating income. This performance reflects the strength and higher profitability of our base business and disciplined cost management, holding G&A flat and delivering additional productivity savings that help offset continued strategic investments in growth initiatives that strengthen our long-term trajectory.

Adjusted operating income increased 5% in the second quarter to $87 million, with adjusted operating margin expanding 250 basis points year-over-year to a new record of 26.7%.

Turning to the segment level performance in the second quarter. In hospital, adjusted operating margins expanded by 370 basis points, predominantly on continued strong momentum in Blood Management technologies, and higher operating leverage.

In Plasma, adjusted operating margin expanded by 190 basis points, driven by prior technology upgrades, share gains and the full transition of our legacy U.S. PCS2 business, partially offset by additional investments into innovation.

Blood Center adjusted operating margin expanded 320 basis points, driven by the whole blood divestiture, a stronger core apheresis mix and continued productivity gains from the ongoing portfolio rationalization.

Adjusted operating income for the total company year-to-date was up 7% to $165 million, with adjusted operating margin of 25.4%, an improvement of 270 basis points versus the prior year. We expect continued margin expansion in the second half and reaffirm our total company full year adjusted operating margin guidance of 26% to 27%.

The adjusted tax rate was 24.7% for the quarter compared with 25.1% in the prior year. Year-to-date, the adjusted tax rate was 24.8%, and we expect it to remain consistent for the remainder of the fiscal year.

Adjusted net income rose 5% to $60 million in the second quarter and 4% year-to-date to $114 million. Adjusted EPS increased 13% to $1.27 in the quarter and 11% year-to-date to $2.36.

The combined impact of share repurchases, tax, interest and FX provided a $0.06 benefit to quarterly adjusted EPS and a $0.05 benefit year-to-date.

We are raising our full year adjusted EPS guidance to $4.80 to $5 a share. At the midpoint of our revised fiscal year guidance, we assume approximately $35 million in interest and other expenses, generally comprised of net interest expense and foreign exchange hedge contracts and approximately 47.6 million in diluted shares outstanding at year-end.

Turning to cash flow and the balance sheet. We continue to enhance working capital management to optimize value creation, generating $111 million in operating cash flow in the second quarter, up 128% year-over-year.

Year-to-date operating cash flow was $129 million, a sixfold increase when compared with the same period last year, primarily due to improved inventory management, including the build-out of NexSys devices, which impacted our cash flow in the prior year. Free cash flow was $89 million in the quarter and $91 million year-to-date, with the free cash flow to adjusted net income conversion ratio of 147% and 80% in the quarter and year-to-date, respectively.

Our ability to generate cash remains strong, supported by disciplined execution and renewed focus on cash efficiency. We are raising our full year free cash flow guidance to $170 million to $210 million and reaffirming our expectation for the free cash flow to adjusted net income ratio to be in excess of 70% for the full fiscal year, underscoring our commitment to performance, cash discipline and capital stewardship.

Turning to the balance sheet. We ended the quarter with $296 million in cash, down $10 million from the beginning of this fiscal year, primarily reflecting $75 million in share repurchases and additional strategic investments, partially offset by higher net income, translating into an even stronger cash flow.

Our capital structure remains unchanged with total debt of $1.2 billion, no borrowings under our revolving credit facility and a net leverage ratio of 2.5 as defined by our credit agreement. This positions us well to meet near-term debt obligations, fund operations and pursue value-creating opportunities, including additional share repurchases when appropriate.

Before we begin Q&A, I'd like to close with a few thoughts. We continue to execute our plan with strength and discipline, delivering profitable growth, expanding margins across all segments and translating our adjusted earnings to cash.

Despite $153 million in last year's portfolio transitions impacting this fiscal year, most of which are now behind us, we remain on track to achieve our updated guidance for the year and meet all our long-range plan targets.

Our growth and profitability are anchored in the success of our 3 core products: NexSys, TEG and Vascular Closure, supported by company-wide initiatives that continue to drive productivity and operational excellence.

Margin expansion remains a hallmark of Haemonetics. And with plasma and blood management outperforming and progress underway in Interventional Technologies, we are building a strong foundation for continued margin expansion beyond fiscal '26.

Across the company, our results reflected disciplined execution and a high-performance culture. And when combined with strong cash generation and a solid balance sheet, this positions us to further enhance long-term value creation. For fiscal '26, our priorities remain focused on meeting debt obligations, returning excess cash to shareholders via buybacks when appropriate and advancing targeted investments in our growth products.

Thank you. Operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Rohin Patel of JPMorgan.

I just wanted to start off with some of the revenue drivers. You had a nice quarter in plasma and are raising the guidance, and you mentioned high single-digit collections growth in the U.S. So I just want to ask what you're assuming in the second half for collections versus share gains versus pricing?

And are you seeing any meaningful kind of recovery in collections intra-quarter? And how should we reconcile that with the strong ex CSL growth maybe with your longer-term sustainable outlook in plasma?

Rohin, it's Chris. Thank you for the question. We had a really stellar quarter with Plasma, a stellar first half. And I think you see that in the organic results. The second quarter was propelled by 3 things in order of priority, share gains as we continue to pick up additional centers on our devices, the benefits of innovation pricing, premium pricing for us, what is a superior product. And now collections volume growth. We had always predicted volume growth in the back half of the year. It started early in the second quarter. And that's a powerful trifecta.

To be specific about the volume growth we experienced high single digit in the U.S., double-digit growth in Europe. And we see that as a return from the normal cyclicality that has defined this industry for a very long period of time. So we remain really bullish on the end market demand for Ig-derived therapies, and you see that in our customers' earnings discussions as well. So plasma goes from strength to strength. We're very optimistic about its continued success.

Great. And then also just turning to hospital. Maybe if you can provide an update on some of the commercial work to get IVT back on track. I appreciate the additional color and disclosure you provided in that business. And also just it seems from your disclosures that the hospital business actually drove a lot of the incremental margin benefits in the quarter. So maybe if you could just talk about some of the levers you're pulling to drive operating margin and how you're balancing that with any of this additional commercial spend to get those products back on track.

Sure. Again, thank you. Yes, hospital was the single largest contributor to what continues to be really robust margin expansion. We're trying to provide more detail to be as transparent as possible. As we calculate the segment P&Ls, the hospital operating income expanded 370 basis points in the quarter. And to your point, that's mix, that's volume. And increasingly now, that's operating leverage, which we're really keen to see.

Obviously, there's 2 parts to hospital. Blood Management Technologies continues to excel, which is allowing us to put the appropriate focus and resources on driving IVT. And so IVT is defined by vascular closure. You saw the numbers in the quarter. Happy to go through as much detail as you want on that. But we remain confident in both the clinical and the economic differentiation of our vascular closure portfolio. And we're taking the right actions. We're being decisive to regain growth momentum in the latter part of this year and into FY '27.

Our next question comes from the line of Marie Thibault of BTIG.

Congrats on a nice quarter. I wanted to follow up there on Rohin's question about the IVT commercial efforts. You've mentioned some of the progress underway. Can you give us a little more detail on what exactly is happening, some of the green shoots that you're starting to see? Just any more detail on that turnaround?

Yes. Thanks, Marie. Good to hear from you. So I'd summarize it this way. I am highly confident in our team. They're taking the right actions in the right way, and they're fully resourced. And so the things we are highlighting, that commercial leadership group from first-level sales supervisors on up to the business president, many of them are new. They come with the exact right background experience and relationships to excel, particularly in electrophysiology, but also interventional cardiology.

You know that at the beginning of the year, we bifurcated our field force. It's an 80-20 split with 80%, of course, going to vascular closure. That gives us over 200 personnel in the field driving the product. We feel that's quite appropriate for the opportunity set. We've put a number of tools in place to drive sales force excellence, and I won't drag you through the details, but we're closing vacancies. We've upgraded our training. We have a new set of tools to track and monitor. The quotas have been aligned. The incentive comp is state-of-the-art. So we feel quite good about sales force excellence.

The other part of this is we've meaningfully strengthened our corporate accounts group that will help us with IDNs and increasingly with the ASCs as those become an important driver for the market where we think our value proposition is even more distinct.

We have successfully completed the MVP-XL trial, and we're able to make a timely submission to FDA prior to the shutdown. So that should bode well as we get here later in this fiscal year and next in terms of stronger clinical evidence and opportunity to leverage that trial outside the U.S., particularly in Japan.

And then we've gotten very targeted in our competitive response. And I know there's concern about is this going to meaningfully diminish your gross margins. It will not. We think we can actually maintain excellent margin and execute well to hold, to regain and to expand share across the board.

Yes. Very helpful, Chris, and thanks for all that detail. It sounds like things are improving for sure.

And then I wanted to follow up here and talk about Blood Management Technologies. Again, very, very strong performance. Help us think about the sustainability of that over the next few quarters. How should we think about the cadence of launches that you've recently put out, the length of kind of the rollouts and some of the benefits that you tend to see, again, sort of growing above historicals?

Yes. Thanks for the question. I think Blood Management Technologies continues to be on or undersung hero in the portfolio, grew 12% in the quarter and 13% year-to-date. That's, I don't know how many quarters now in a row of double-digit growth. We feel from the launch of the global heparinase neutralization cartridge that, that franchise has hit a new inflection point. And we think that double-digit growth is absolutely sustainable for about as far as we can see. It's driven by a combination of capital equipment, disposable utilization and, of course, the adoption of that heparinase neutralization cartridge.

I called out in the prepared remarks that we were pleased to launch the cartridge, both in Europe and Japan here in October. And we think that helps us, again, go from strength to strength for a business that's -- it's a market that the team helped create -- and we have the leadership share, 70% plus, and we intend to build and expand upon that. Fortunately, for us in the quarter, Blood Management Technologies was also benefited from transfusion management growing double digit, which is -- it's a smaller line of business, but one that is really attractive on many dimensions and continues to contribute positively. So we're excited about the prospects for Blood Management Technologies going forward.

Our next question comes from the line of Mike Matson of Needham & Company.

It's [ Joseph ] on for Mike. Could you just touch on blood center growth a little bit? Just, I guess, why was it so strong? I think 4% organic. Can you just talk about some of the growth drivers there, what you benefited from in the quarter?

Yes. Happy to talk about it, Joseph. Yes, Blood Center, again, that's the real unsung success story here, I guess, and it's meaningfully benefiting from focus. As you know, at the end of last calendar year, we divested the whole blood franchise and some of the supporting products, liquids, et cetera, that were really a drag on our margin and the distraction from a focus area. So with those behind us, we've really been able to focus on what is increasingly plasma apheresis done in blood centers often with our NexSys device. And you see that growth, 15%, 15% of the corporate revenue, but it's a solid source of EBITDA and return on invested capital and free cash flow, as you see from our numbers in the quarter.

The operating income in that business on a stand-alone segment basis, we estimate expanded its operating margin by 320 basis points, again, benefiting from the divestiture and an ongoing effort to rationalize that portfolio. We talk about the regional market alignment program. That's the focus there. So that gave us a lot of confidence to raise the guidance.

And now on an organic basis, we expect that business to hold serve and finish flat for the year.

Okay. Great. Yes, it's very clear you guys are benefiting from the rationalization. And then I guess 2 more unrelated, but they're quick. I'll just ask them together. How much did the share repurchase add to the EPS in the quarter -- or sorry, the EPS raise for fiscal '26?

And then I guess just on VASCADE and Vivasure, are you still committed to the large bore market? And are you still planning on proceeding with that acquisition of Vivasure?

Yes. It's James here. I thought I'd jump in on the first question on the share buyback in the quarter. It was a few cents, and it's included in the $0.06 below the line item that I gave earlier.

Yes. And just jumping over to Vivasure large bore closure. We are very committed to consummating that acquisition. That's -- I would describe that as near final successful submission to the FDA. If anyone has an opportunity to attend the most recent TCT, you would have heard about some really impressive results coming out of the patch trial, just in terms of reduction in vascular complications, medium time to hemostasis near instantaneous, really, really exciting. We think that it will be an FY '27 event just given the timing of FDA release, but that's a $300 million high-growth market for large bore arterial access in TAVR and EVAR -- the product is meaningfully differentiated. It's fully absorbable, sutureless implant-free.

Really, as we look at it from the submission to FDA, it was a best-in-class safety and ease of use. And for us, it's highly synergistic. It is a closure product, which is our primary focus in IVT, and it goes against structural heart, which will have call point synergy with our SavvyWire business.

So yes, we're excited. There's more work to be done, but we'll have more to say about that, I think, later this year.

Our next question comes from the line of David Rescott of Baird.

Congrats on the progress here. Two questions from us, and I'll ask them both upfront. First, on the plasma side, it seems like a pretty substantial step change in the U.S. collection volumes that are going out. I know you've talked in the past and have remain committed to the fact that there's ebbs and flows in the market and had expected it to get better in the second half of the year. It's clearly coming sooner than expected. So I'm curious on what you're seeing on the ground level as to why, again, a multi-quarter kind of low single flat growth number has now stepped up to this high single-digit level in the U.S. And just interested to hear on your confidence that maybe this isn't just a onetime thing. Should we expect the cyclicality on a quarterly basis, maybe to even step back down and step back up as this multiyear return to high single digit plays through? That's the first question.

And then second, on the VASCADE business, I know there were some comments around some of the competitive nature in that market. Last quarter, you're focusing on getting the sales force initiatives realigned here. So just curious to hear if you could parse out maybe the benefits you've seen from the work that you've done versus the overall market acceptance versus some of the things on the competitive side that again give you the confidence that you can continue to progress here through the year.

Yes. Thank you, David. So first on U.S. plasma collections, again, high single-digit volume growth on top of the pricing benefit from the technology advancements and ongoing share gain. We're very bullish that the cyclicality of this market. When we talk to our customers, when we walk the floor at PPTA and see the association's forecast, we think what we observed in the quarter is absolutely sustainable through the second half of the year and beyond. And we're benefiting because our customers are taking share in the end market, enabled by NexSys and the outperformance there.

The guidance that we put forth, right, because we grew 23% through the first half. The guidance we put forth is more modest, and we don't control collection volume. While we have every confidence that they continue and grow from here. Our guidance reflects what we can control, which is share gains and the annualization of those prior technology rollouts, which are happening this quarter, third quarter. So from our vantage point, we'll guide to what we control. We have continued share gains at hand, and we feel great about that. And so that's what you see in our forecast.

With regards to VASCADE and the competition, it is a competitive market. We clearly woke up both of the direct competitors we face there. But when we look at the trial data coming off of Excel, when we look at the actual head-to-head in accounts, we are very confident that we can regain share. We have green shoot examples of that as we speak. And we think that we go from strength to strength there. You'll know and you'll see our progress in the upcoming results. It will be first and foremost with VASCADE in electrophysiology.

SavvyWire is an important contributor, much smaller, but SavvyWire will be -- is the second priority for that team, and we expect continued double-digit growth ex OEM. And then when I spoke a minute ago about PercuSeal Elite coming in from Vivasure, that will be a third priority when we get into FY '27. So the guidance there is more modest. We felt like the right path was just to be prudent. And so we've narrowed and lowered that range. We don't expect a meaningful contribution this year, but the green shoots we are observing tell us that, again, right team, right actions being done in the right way to reestablish growth in that category going forward.

Our next question comes from the line of Travis Steed of BofA Securities.

This is [ Anja ] on for Travis. I wanted to ask on VASCADE. I understand the competitive discounting environment and lapping the Japan launch. Do you think the sales force changes really get you back to market -- above-market growth? And when should we expect the Japan label expansion? How significant would that be?

Yes. We absolutely have confidence that the changes we've made will return us to above-market growth rates and beyond. And so it's a really good product, clinically economically differentiated in the right hands. There's a lot of upside potential, particularly with MVP and MVP XL in electrophysiology.

With regards to Japan, yes, historically, Japan this fiscal year was an important growth contributor for us -- the launch of PFA changes the dynamics. But PFA looks meaningfully different in Japan, as you would hear from some of the folks behind that, right? It's a much more modest uptake in part because I think the Japanese market prioritizes safety first. So we see a slower adoption curve and then the mix within that adoption is much more evenly split between the lead players, which is important for us because they've accepted MVP-XL into the market, and we have reimbursement on the base label. And that's important because we're now indicated for so many more of those procedures, in fact, all but one modality at this point. That gives us confidence that the second part of this year and beyond, Japan becomes an important contributor.

They've also agreed to accept the U.S. data as part of our submission for regulatory approval and release for the larger access site indications. So there's more to be done. I don't want to call the timing on that because we don't control it. But as we get both the approval for the expanded label and that reimbursement, which has been very favorable for MVP and MVP XL and their base indications, we have a lot of confidence, particularly in the distributor we're using there. There'll be some movement quarter-to-quarter order timing, et cetera, but Japan will be a source of growth for us going forward.

Our next question comes from the line of Joanne Wuensch of Citi.

This is [ Anthony ] on for Joanne. Could you maybe characterize a bit more? I know it's early, but just how the launch of the HN cartridge is going in EMEA and Japan and if it's tracking similarly to how the U.S. launch was in the first few months?

Yes. So it will look different in those markets because the markets -- the viscoelastic testing is really different. We -- the product gives us broad-based application. And if what we see in the U.S. holds true, we're just seeing a far higher number. The dollar revenue per device is meaningfully increased with the heparinase neutralization cartridges here in the States. We expect that part of the launch will be very similar. But it is a different starting point. We don't have nearly as many TEG 5000, the predicate product in the market in either of those places. So less opportunity for that conversion.

They are smaller markets. But again, we have the ability to lead and our teams are excited. They are -- those markets reflect more of a hybrid approach. Some of them are direct, for instance, the U.K., Germany and parts of Japan. Others are through distributors. So there'll be a lag time as those distributors come up to speed on the new product, new cartridge and get established in the market. But long term, it's an important source of sustainable double-digit growth for that business and that franchise.

Our next question comes from the line of Andrew Cooper of Raymond James.

Maybe starting, I think, Chris, you said a couple of times VASCADE was economically differentiated. Can you just give a little bit more color on sort of what you mean by that versus the competition? And then talk a little bit about how pricing and your approach to the market there has evolved competitively. Have you made changes to price? And do you feel like from here, we're in the right spot where it's going to be a little bit steadier. I know you said margins would hold in there, but just would love any thoughts on the top line and the price component.

Sure. Thank you, Andrew. Yes, the product, when you look at the metrics in terms of time to ambulation, time to discharge, it is at or above anything else in the marketplace. The real benefit, and I think you're seeing this with a heightened focus even in the post-PFA environment, is the improvement in workflow productivity. As a center adopts MVP and MVP XL, their ability to really move quickly with these patients, get them closed, get them ambulated and in almost all cases, send them home the same night, really powerful.

The other factor, and you hear this in the verbatim from the clinicians repeatedly is it's a pain-free solution. Suturing works and suturing has a reasonable profile, but it hurts a lot and often comes with the use of narcotics, which have their own complications. We eliminate all of that. And so the speed in the workflow, the absence of pain medication and just a much better patient verbatim helps a lot. As I said earlier, as this market increasingly moves to the ASCs, that difference will be all the more powerful. And so we're enthusiastic about it.

And with regards to pricing, as we've dug into this, we look very carefully now with the account level detail that we have at where we're gaining, where we're losing. It's almost never about the actual price of the product. We may have needed to be more flexible with regards to initiation trials or other work done jointly with VAC to get those remaining accounts converted. But in the head-to-heads that we're observing, very modest degree of flexibility on price tends to be driving the desired outcomes.

And you see that, again, I just go back to we're -- the hospital operating income margin was the primary driver of our overall margin growth at 370 basis points of OI. So from our vantage point, -- and to be clear, both BMT with TEG and IVT with VASCADE were equal contributors to that gross margin expansion. So what you'll see going forward is as we layer on the volume is increasing operating leverage. So we don't have any worries. The investments have already been made in OpEx and the price concessions are modest at best. And so from our vantage point, our margin expansion and the growth that we're anticipating top and bottom line are absolutely achievable.

That's great. And then I wanted to ask one more on Blood Management as well, just given the traction there, not to jump too far ahead of ourselves, but it's clear that the HN cartridge has done a lot for driving that growth. When you look into the future from an innovation perspective, are there other menu items to add that could be similar in magnitude? And if so, can you give any color on what they might be or maybe when we could think about more of that menu expansion to continue driving penetration with TEG?

Yes, Andrew, we absolutely see additional opportunity for the growth of visoelastic testing. We target, for example, in the U.S., a T700. Nearly half of them have not adopted visoelastic testing. We have 70 share of the market. Obviously, we intend to retain and grow that. But our biggest opportunity is taking visoelastic testing to the other sector of the market that doesn't have it. Hp neutralization helps do that because it gives you a broader spectrum of testing. But we also have additional indications that we are pursuing and additional applications of the product that -- we'll talk about more probably in the spring when we do our next Investor Day.

We'll pull back to Vail a bit and talk more about the really exciting portfolio pipeline that we've got going behind TEG.

Our next question comes from the line of Michael Petusky of Barrington Research.

So Chris, and I will admit, I missed it. There's a ton of companies reporting this morning and I missed part of your prepared remarks. So I'm just curious on Vascular Closure, if you're looking at over the last 12, 13, 14 weeks since we last talked on a conference call and you put in all these initiatives to try to sort of turn the business, and I'm sure you're looking at this, if not day by day, certainly week by week. I mean, are you -- I certainly heard the green shoots commentary, but are you seeing progress week by week, even through the end of the quarter into where we are now? Like are you seeing enough evidence to say, yes, we've bottomed, we've turned this. It's not an overnight back to where we were, but we've turned this or at least now we're trading punches as opposed to just taking punches. Like where what are you seeing? And where are you sort of in -- if you're calling us a sort of a comeback story, hopefully, where are you in that?

Yes. Thanks, Mike. I appreciate the question. And I appreciate the interest on this.

We are absolutely anticipating a comeback story, right? And I think this one is going to be exciting and interesting to watch as it develops. We are confident that the actions that we have taken year-to-date have stabilized this performance. And so we don't expect any further deterioration in performance. we see green shoots with new account openings.

We see green shoots with greater utilization. We see green shoots with competitive win backs or just healthy head-to-head that we've come out on top on. So we do expect meaningful growth going forward. However, we're going to be prudent in our guidance. And at this point, the guidance for IBT writ large, and it's important. We didn't talk about this probably enough, but that franchise is unfortunately dragged down by esophageal cooling, and I'm happy to come back and give some more specifics there because I'm not including cooling as part of my commentary. I'm talking specifically about closure.

In closure, we put very little in for the second half, but that's us being prudent because it's a tough market, and I'd rather be on the conservative side of that. We've heard that loud and clear from the market to call it when you see it, but not before. Our results from here will speak for themselves, okay?

Okay. All right. Great. And just a quick one for James. James, as you -- obviously, you guys have been aggressive here recently with share repurchase. As you just sort of think, I guess, longer term, not looking for specific guidance for next year or longer term, but just generally speaking, I mean, would you expect the share count to sort of remain sub $50 million over the next few years? Like are you guys going to continue to be pretty active in share repurchase as you think about capital allocation beyond fiscal '26?

Yes. Thanks, Mike. So there's roughly 47 million-ish shares outstanding now. So I think a lot would have to happen to get above that $50 million mark. So the thought process here is that certainly, we would aim to keep dilution in check for sure.

And then I mean, let's face it, one of the benefits of having a strong balance sheet is that we do have some optionality on capital deployment. So yes, that includes buying back shares, also debt pay down and so forth. But yes, for the foreseeable future, lower than $50 million, pretty good bet.

Yes, Mike, it's Chris. If I could just pile on there. From a capital allocation perspective, exactly as James just highlighted, we're going to focus on paying down our debt, being opportunistic with the share buybacks. We'll make targeted organic investments as we have to advance new technology into the market. But again, we feel we've fully resourced from an OpEx perspective. You see that. You see that in our leverage. And obviously, you see that in our robust cash flow and a really healthy free cash flow to net income conversion ratio.

But we're focused on what we have. We're focused on making the most of the portfolio. As I've said repeatedly, we'll do Vivasure when the final set of milestones are hit, and we're ready to go there. Beyond that, M&A is off the table until we have IBT exactly where we need it to go.

I am showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Haemonetics Corporation First Quarter 2026 Earnings Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Olga Guyette, Vice President, Investor Relations and Treasury. Olga, you have the floor.

Good morning, and thank you for joining us for Haemonetics' First Quarter Fiscal Year 2020 conference call and webcast. I'm joined today by Chris Simon, our CEO; and James D'Arecca, our CFO. This morning, we posted our first quarter fiscal year 2026 results and full year fiscal 2026 guidance to our Investor Relations website. The same information was made available via the press release issued this morning. As we provide our business and financial update this morning, I would like to remind everyone that we will use both reported and organic revenue growth numbers that exclude the impact of FX, the divestiture of the whole blood business and the exit of Liquid Solution products.

Organic revenue growth ex CSL also excludes the impact of the previously discussed transition of CSL's U.S. disposables business. We'll also refer to other non-GAAP financial measures to help investors understand Haemonetics' ongoing business performance. Please note that these measures exclude certain charges and income items. A full list of excluded items reconciliations to our GAAP results and comparisons with the prior year period as provided in our first quarter fiscal year 2026 earnings release available on our website. Our remarks today include forward-looking statements, and our actual results may differ materially from the anticipated results. Factors that might cause our results to differ include those referenced in the safe harbor statement in today's earnings release and in other SEC filings. We do not undertake any obligation to update these forward-looking statements. And now I'd like to turn it over to Chris.

Thanks, Olga. Good morning, everyone, and thank you for joining. We started our first quarter fiscal 2026, the fourth and final year of our long-range plan by delivering solid results and advancing toward our ambitious growth targets for revenue, earnings margin and free cash flow. We reported revenue of $321 million, down 4% due to the anticipated $52 million impact from portfolio transitions but up 13% organically ex CSL. Strong growth in our base business, margin expansion and the most recent share buybacks drove 8% adjusted EPS growth to $1.10.

Our business is straightforward with nearly 85% of total revenue driven by 3 core products: NexSys, TEG and VASCADE all of which are concentrated here in the U.S. This evolving portfolio provides the right balance of focus and resilience enabling revenue growth and continued margin expansion despite macro and market challenges. In plasma, we're reinforcing our global leadership through NexSys technology upgrades and share gains. In hospital, strong adoption of TEG 6S continues to fuel growth in blood management technologies while we take decisive actions to strengthen execution in interventional technologies through key leadership additions organizational realignment and targeted commercial initiatives.

Moving to our businesses. Our hospital business, the largest in our portfolio with 2 core growth drivers delivered $140 million in revenue in the first quarter, up 4% reported and organic. Strength in Blood Management Technologies more than offset temporary softness in interventional technologies reflecting the resilience of our diversified portfolio and multiple drivers of performance. Blood Management Technologies grew 14% and led by another standout quarter in hemostasis management, which delivered 22% growth overall and 27% growth in the U.S. Performance was fueled by strong TEG disposable utilization, continued rapid adoption of the global hemostasis HN cartridge, accelerated new account openings and customer conversions from the lab-based TEG 5000 to our advanced point-of-care TEG 6s system.

The BMT franchise also benefited from continued growth in transfusion management partially offset by distributor order timing in sellage. Interventional Technologies declined 7% in the quarter primarily due to tough comparisons from prior year OEM destocking in sensor guided technologies and PSA-related pressures in esophageal cooling, which were anticipated in our fiscal 2016 guidance. Vascular closure grew 3%, led by 6% growth in MVP and MVP XL. This was partially offset by continued softness in our legacy VASCADE concentrated in lower growth coronary and peripheral procedures, representing about 15% of vascular closure revenue. Despite increased competition, we remain confident in the clinical and economic advantages of our vascular closure portfolio. We view recent softness as executional, not structural and we have taken decisive steps to strengthen our performance.

With new franchise leadership, including several key hires, a more clinically focused sales force and targeted commercial initiatives underway, we expect to regain momentum in the second half of FY '26 so that vascular closure can contribute to revenue growth and margin expansion. We are reaffirming our full year hospital guidance of 8% to 11% reported and organic growth, reflecting strong momentum in Blood Management technologies, which enables us to drive meaningful revenue growth and margin expansion as we work to strengthen our interventional technologies franchise. Moving to plasma, where Nexus, our third and largest driver delivered $130 million in revenue in the quarter, down 4% on a reported basis and up 29% organic ex CSL driven by favorable impact from our prior Persona and Express upgrades in the U.S. and a onetime revenue benefit from the renegotiation of a long-term software agreement, which accounted for roughly half of the organic growth in the quarter.

This agreement reinforces our 80% market share in plasma DMS software and underscores the strength of NexSys, which, when integrated with our broader NEXT platform delivers unmatched value to customers. Consistent with our expectations, growth in the U.S. plasma collection volume was in the low single digits. We are reaffirming our full year fiscal 2026 plasma guidance, including a reported revenue decline of 7% to 10%, but organic growth ex CSL of 11% to 14%. Growth is expected to be supported by price benefits from prior technology upgrades, continued share gains and the possibility of a modest recovery in U.S. plasma collections in the back half of this fiscal year as customer yield and productivity gains annualized. Blood Center revenue declined 22% on a reported base to $52 million, reflecting the divestiture of the whole blood business. Organic revenue grew 4%, driven by continued strength and favorable order timing in the core papers portfolio.

We are reaffirming our full year guidance of 23% to 26% decline on a reported basis as we fully anniversary the whole blood divestiture and a 4% to 6% organic decline as we continue to streamline the apheresis portfolio and reallocate resources to higher growth areas. Our revenue outlook for the corporation is firmly on track, driven by strong performance in our growing and increasingly profitable base businesses. Even as we navigate $153 million in planned portfolio transitions, our 3 core products position us to deliver robust organic growth ex CSL and expand margins and strengthen our leadership in the markets we serve. We are reaffirming full year revenue guidance of 3% to 6% reported revenue decline, but 6% to 9% organic growth ex CSL. Over to you, James.

Thank you, Chris, and good morning, everyone. As you heard from Chris this morning, we're off to a strong start to fiscal '26 delivering solid financial results and meaningful margin expansion in the first quarter. Our financial performance reflects disciplined execution across the organization and benefits from our strategic portfolio transformation, including the divestiture of the low-margin whole blood business our leading innovation in plasma and sustained growth momentum in Tech. Productivity initiatives across the enterprise are helping us better align our resources and those efforts are beginning to show up in our results. In the first quarter of fiscal '26, the adjusted gross margin reached 60.8% and up 550 basis points year-over-year, driven by the benefits of our Persona technology and price initiatives across the portfolio, favorable product mix and a onetime 210 basis point benefit from license fees associated with the renegotiated plasma software agreement Chris referenced earlier.

Adjusted operating expenses in the first quarter were $118 million, an increase of $3 million or 2% compared with the first quarter of the prior year. The modest increase in adjusted operating expenses reflects targeted R&D investments to support innovation and long-term growth while effectively managing G&A and other overhead costs. Despite a $52 million revenue headwind in the first quarter, adjusted operating income increased 9% to $78 million or 24.1% of revenue, up 300 basis points year-over-year. We expect these gains to build throughout the year, supported by continued share gains in plasma strong momentum in TEG, improving contributions from interventional technologies in the second half of this fiscal and additional savings as we scale our operations to support our transformed portfolio.

We are reaffirming our fiscal '26 adjusted operating margin guidance of '26 to '27, with stronger margins anticipated in the second half as product mix, stronger commercial execution and continued cost discipline, increased operating leverage. The adjusted income tax rate was 24.9% in the quarter, up from 19.9% last year, reflecting lower benefits from performance share vestings. For the full year of fiscal 2016, we expect the adjusted tax rate to be approximately 24.5%. Adjusted net income was $53 million, up 2% year-over-year, and adjusted diluted EPS was $1.10 and up 8% from Q1 of fiscal '25. The higher tax rate was a headwind in the quarter, largely offset by the recent $150 million share buyback. We are reaffirming our full year adjusted EPS guidance of $4.70 to $5, which reflects the benefit of disciplined capital deployment.

This includes the offset of a higher expected income tax rate and interest expense with a lower diluted share count as a result of the most recent share buyback as well as the assumed use of cash on hand to retire the remaining $300 million of 2026 convertible securities at maturity. Turning to cash flow and the balance sheet. We generated $17 million in operating cash flow in the first quarter, driven by improved working capital management, particularly in inventory. Capital expenditures were $3.8 million and replaced $11.5 million worth of devices at customer sites, reflected as an increase in CapEx and a reduction in inventory but with no impact on cash outflow for the period. Free cash flow was $2.5 million a significant improvement from the $17 million cash outflow in the same quarter last year, predominantly as a result of favorable working capital. As a reminder, First quarter free cash flow tends to be lower due to typical seasonality and the payout of prior year accruals, including performance-based compensation.

We expect stronger cash generation over the remainder of fiscal '26 and are reaffirming our full year free cash flow guidance of $160 million to $200 million with a free cash flow conversion rate above 70% of adjusted net income, reflecting our renewed emphasis on cash discipline and capital stewardship. Let me also add a few comments on the balance sheet, which remains a key enabler of our operational resilience and strategic optionality. We ended the quarter with $293 million in cash, down $14 million from fiscal year-end, reflecting additional strategic investments. Net leverage, as defined in our credit agreement was 2.53x EBITDA at quarter end with no material changes to our debt structure. We maintained strong liquidity and financial flexibility supported by up to $1 billion in additional available capacity by the end of this fiscal year, including full access to our $750 million revolving credit facility.

This positions us well to meet our obligations, fund operations and pursue other value-creating opportunities, including share buybacks when the opportunity arises. In closing, I'd like to reinforce some of the key messages from our call. Fiscal '26 is off to a strong start, and we remain on track to meet our full year guidance and long-range plan targets, including low double-digit compounded annual growth rate in revenue and mid-20s adjusted EPS CAGR, excluding CSL adjusted operating margin expansion in the high 20s in fiscal '26 and cumulative free cash flow of $600 million to $700 million. Revenue growth and margin expansion are largely driven by 3 key products: plasma, hemostasis management and vascular closure with 2 outperforming highlighting the resilience of our diversified portfolio we are confident in our ability to meet financial objectives.

Our Plasma business continues to outperform and is expected to be larger and more profitable than originally assumed in our long-range plan by the end of this fiscal. IG demand remains strong, and we continue to grow our share, both in the U.S. and Europe and establish our portfolio as the leading solution for driving efficiency and reducing cost per liter for our customers. Strong momentum in TEG is giving us confidence in our ability to deliver on all financial commitments while we work to position our interventional technologies franchise for long-term sustained success supported by new franchise leadership, a bifurcated commercial structure and a renewed commercial strategy. With renewed focus on free cash flow, strong balance sheet flexibility and ongoing margin expansion, we have the tools to invest in organic growth, meet debt maturities and build a foundation for sustained long-term value creation for our customers and shareholders. Thank you. Operator, please open the line for questions.

[Operator Instructions]. Our first question comes from Robin Patel with JPM.

It's Rohin. I want to start with plasma. You had a really strong performance in the quarter. Is there any detail that you can provide on the drivers of this? You'd initially communicated limited collections recovery until the second half. So is it fair to assume this is primarily share gains. You also called out a onetime revenue benefit from software, I believe. What was the contribution from that in the quarter? And how should we think about the new growth trend settling out over the course of the year, given the guidance staying put?

Rohin, it's Chris. Thanks for the question. we're really enthusiastic about what the plasma team is delivering driven by our innovation, both for pricing and share gains. Our plasma franchise is stronger than it has ever been. It is larger. It is faster growing. It's increasingly more profitable and more diversified, and what you see in our first quarter results is the benefits of that. We had some ongoing price benefit from technology, innovative technology that was rolled out last year all of which is contracted for and the beginnings of this more rapid share conversion, which will gain momentum over the course of this year, again, already contracted for.

So we feel good, short and long term. As you point out, the software agreement was an important contributor. Roughly half of the growth, that 29% growth quarter-over-quarter was driven by the software agreement. But the remainder, 14% or 15% is at or slightly above the high end of our guidance range. We anticipated the software agreement this year. We were uncertain in terms of the exact timing. And the real benefit of that software agreement, obviously, it's contributing to the quarter and it's very profitable. But what that does for us is essentially solidify our position with roughly 80 share of the U.S. VMS market. And so that's really powerful for us. We've talked about this before, but the software is our secret sauce, the stand-alone software. It makes the bidirectional connectivity possible. It helps roughly 1,000 centers that we support in the U.S. gives us deep insight and a level of connectivity that we are the only 510(k) approved DMS software available for commercial sale in the U.S. And we just advance that leadership. So we're quite proud of it.

And I also wanted to ask on the hospital business. and specifically, interventional technologies. You talked to roughly 3% vascular closure growth in the quarter. And I may have missed this, but what was the MVP, MVP XL growth rate, and is there anything that you can speak to just with regards to the recovery in the legacy VASCADE product or anything else you're seeing on the demand front worth calling out and how you see that playing out over the course of the year?

Yes. Thanks, Rohin. Vascular closure VASCADE specifically, one of our three core growth drivers. It's the one that is performing less well, and we certainly struggled with that in the quarter. To your question specifically, for MVP and MVP XL, we saw roughly 6% growth, there's a number of factors there. Some of it is our international business in Japan, in particular, which was like 700 basis points of our growth last year. has come back down. That's anticipated was part of our guidance. It's the change over to PFA. And some work we're doing to regain our positioning there. But more broadly, you're right, it is some executional challenges. It's things that really across all 3 products, but particularly base facade roughly 15% of the total closure opportunity for us. But in those PCI procedures, we have more to do to regain our competitiveness.

Our next question comes from Anthony Petrone with Mizuho Americas.

Congrats on clean quarter here, particularly in plasma and at the margin. Maybe one on plasma, one on hospital. On plasma, you spoke quite a bit past few quarters. about the share gain tailwinds here. So maybe just given that the installation cycles take a little bit of time. There's multiple contracts that have reset what do you think the timing is to have those share gains fully deployed at the center level? And can you quantify actually what that can mean just in terms of kind of a growth tailwind to the business? And then I'll have a follow-up on hospital.

Yes. Thanks, Anthony. So the price increases propelled us through most of last year and through most of this quarter as well. The share gains come in on top of that. They are fully on track, actually that ahead of schedule, which is great. we're finding tremendous demand for those customers who want to get more of their network on the best available technology. So that will continue to gain momentum. In fact, that's going to be the primary driver of what we estimate will be that 11% to 14% organic growth for the year. And we definitely want to push into that. Some of that will carry over into FY '27. It's an ongoing cycle, as you pointed out. But we also -- I mean this is -- when I step back, it, our competitive differentiation. As I said, we significantly strengthened the business. We've now -- last year was a major milestone.

We transitioned all of our U.S. customers to Nexus with Persona and Express Plus. This year, we'll be about expanding on the agreements we've reached with 2 of the large collectors to get more of their network converted over, and that's an exciting opportunity as well as what we're doing in Japan with the red cost. It's -- I pointed out that the health of the business, and one of the things I think that gets lost, we're working very closely with these customers to keep an ongoing innovation pipeline. We'll have more to say about that as the year progresses. But the interesting thing for us, while we value all of our customers today, no one customer represents more than 9% or 10% of our total volume for the corporation.

In fact, the top 3 plasma customers now are less than 25%. So it's a significantly more diverse business and one that we think has real potential and real growth. And we're going to continue to do what we need to do from an R&D perspective to build on that. And we're aggressively defending our yes and Persona patents to make sure we expand that exclusivity.

No, very helpful. And then switching gears over to hospital and digging in a little bit more to electrophysiology, post-field ablation volumes by the companies that have reported, it's still in a high-growth part of their product cycle. MVP had a good attach rate there, obviously, decelerates Q-over-Q. Just wondering from a competitive dynamic -- how significant was that on the U.S. side? Were there centers that were lost? And if so, what is the path to sort of getting Basket MVP back into those centers and attached to PFA volumes?

Yes. Thanks, Anthony. There's a lot there. Let me try to break it up in 3 ways, if I could. The first is the market. And we remain bullish on the market for vascular closure. We see it worldwide is $2.5 billion, $2.7 billion TAM. That's roughly $1 billion plus or minus in EP and the remainder in coronary and peripheral for EP, we've done a breakdown of that, those tables on our investor site. We think that market is growing in the high single digits, 8.5% this year, and that's a good play for us with MVP and with XL, which make up 85% of volume there. We called it out, I mentioned this in the prepared remarks. We're experiencing temporary softness. It's not structural. As I said, it's not the market for the reasons I just outlined.

We don't believe it's the product item. VASCADE has a clear and differentiated value proposition, the clinical performance, the workflow efficiencies are they lead the category. We offer a pain-free, narcotic free, leak-free alternative that reduces ambulation on average from 6 hours down to 2 hours and ensures that essentially everybody goes home the same day. That's a really powerful overall proposition. We've got the clinical and the other support to back it up. We need to execute against that. And we need to continue to do our work to expand the label and strengthen the product development. All of that is underway. So it's executional and we need to own that. We do. a couple of things that lie behind that. This is worth kind of grounding on. We always knew the game was going to shift from new account openings when we got above 500 of the 600.

Remaining accounts are smaller. They're more difficult. They're largely affiliated with IDNs, et cetera. So the game is predominantly about driving utilization. It's a different mindset. It's a different capability set Along the way, we work the competition. And we definitely, as you highlight, are facing into some of that. One of our competitors was the prior industry standard. The other is a low-cost alternative that's competing solely on price. So we've got to respond to that. We are -- and like I said, we've taken the actions. There's some international play with Japan as well. But there's a series of actions. I'm happy to walk through those if it's relevant. But -- we view it as temporary. We view it as executional, and we intend to solve and we intend to solve it this year.

Our next question comes from David Rescott with Baird.

Great. I wanted to follow up on the interventional tech and BMT bucket in VASCADE. I think originally, you had talked about this kind of similar split of contribution for hospital and interventional tech versus blood management. And it looks like just to start the year off, you've got obviously outperformance in the Blood Management business, a little bit of underperformance in interventional tech as it relates to the 8% to 11% hospital guide. So when I think about the different moving pieces specifically in Interventional Technologies versus the outperformance in BMT. I guess, what's given you the confidence that ultimately, you should have a bit of reversion in the interventional tech bucket as it relates to the full year guide. And I guess, is it still fair to assume that there should be a relative level of kind of even growth contribution from both of those broader buckets?

David, thanks for the question, and welcome to the call. Hospital grew 12% organic last year. We're expecting based on the current guidance for us to grow double digits again this year. It's now our largest segment, approaching 50% of corporate revenues, and it's a major driver not only of growth in revenue and earnings growth but margin expansion, particularly from higher gross margins. And ultimately, as we improve performance, improved operating leverage. We -- when we looked at this at the outset of the year, we assumed roughly comparable contributions from DMT and from IT Clearly, the success we're having with TEG in IBT is driving us at this point.

We think that will certainly be the story through the second quarter, given the nature of what we're working through with but we do expect IVT to recover. And so is it going to be 50-50? No, that's unlikely. Are we going to deliver Yes. And we get there because of the strength that we have with the tag business. Hopefully, we'll get to talk a bit about that this morning. But what that team is delivering is more than covering as we put the energy and the investments and the focus on getting vascular closure back where it's capable of going.

Okay. Then on gross margins, you touched on it a little bit. in the response there. Gross margins were pretty healthy, pretty significantly above kind of our, I think Street expectations as well. I know you called out the some product mix, better price across the portfolio. And I'm wondering if you could unpack that a little bit. I know in the IBT the hospital segment, you've got a bit of a benefit there from a contribution perspective, same thing on plasma, which again was ahead of our expectations. I know within plasma, you have a little bit better of an argument to make for pricing in the non DSL accounts. So can you help us think about maybe what all went right in the quarter to deliver the gross margin guide that result that you had? And then as you think about that in the back half of the year, where some of those moving pieces are kind of shaking out as it relates to the full year guide.

Yes. Thank you, David. Let me start, and then I'll ask James to weigh in and fill in the details. we're off to a good start with 2 of our 3 primary growth drivers, really delivering we feel quite good, and we're more than confident to reaffirm our 26% to 27% operating income margin, which from where we sit, reflects roughly a 300 basis points improvement. That's a similar trend to what we had last year. We started the year at 21%, which looked a lot like the year before. and then built accordingly. And that's a story that will play out again for us this year based on our forecast volume, major driver of gross margin expansion. You saw that 60-plus that was the target for the LRP.

We expect to hold that throughout the year at this point delighted to get it this early. Shifting portfolio mix is the single largest contributor to gross margin expansion. It includes not only some outstanding performance in the hospital segment, but also reducing contribution from both CSL and from the whole blood divestiture, which were gross margin dilutive to us. And so having them pass through is you're seeing the benefit quarter-over-quarter. I think the outperformance we're having in plasma is outstanding. And because of the way it's coming, it's relatively neutral in terms of the impact on our gross margins at the corporate level. But as you can imagine, highly accretive to our operating margin expansion, especially with all the U.S. business now with NexSys with Persona. We do have productivity initiatives underway. We can talk more about them. The largest amongst them is the regional and market alignment program that we've called out.

Team is working hard to hold G&A flat in dollar terms while we continue to invest in the areas we need to sales and marketing, R&D, et cetera. So as the year progresses, we'll get all those things and then you'll see increasing operating leverage, which is the dynamic you would expect in a high-performing Med-Surg business. So we can walk through any and all of that, but that's the story.

Yes. And I'll just add to Chris' explanation there. Just on the IV BMT dynamic, we have similar gross margins among those 2 businesses. So if BMT is doing a little better than that really has no effect. If anything, it might be slightly positive to our gross margin.

Our next question comes from Mike Matson with Needham & Company.

Yes, thanks. So -- just a couple more on Interventional Technologies. So are you -- I want to clarify, are you seeing increased competition in the mid-bore category, MVP, MVP XL? Or is it really just concentrated in the 15% that smaller bore products.

Mike, we're seeing it across the board. We see it certainly in electrophysiology, more pronouncement in interventional cardiology. Our value prop in electrophysiology is just stronger. It's the things I highlighted earlier, where we did have meaningful clinical differentiation and benefit there that carries. I think what we're doing in response is that we own the issue. And we believe it's entirely addressable in the current period. So we've hired new sales and marketing leaders from academy companies, companies with real deep expertise in electrophysiology and interventional cardiology, so we can strengthen our play there.

As we called out last quarter, we've reorganized into 2 dedicated teams, one for vascular closure, and really vascular closure is everything here for IBT. We also have the structural heart team to enable deeper clinical engagement and better resource alignment. We're definitely investing in our tool kit, more sales enablement, getting deeper at an account level so we can compete proactively rather than responsibly. With overall performance management, quotas, comp plans, training for reps and for supervisors alike. We are building a strategic account management team, which is one of the bigger gaps that we have identified. And collectively, we're putting together account-specific competitive responses. The answer is different in PCI than it is for AFib, for example. But we need to action both. And so we'll have more to say as the year progresses, but that's the playbook, and we're on it.

Okay. Got it. And then -- just wanted to ask about your appetite for further M&A. I know it's mostly been in hospital interventional technologies. But given the challenges there, are you going to try to fix that business before you go out and do any more M&A there?

Sure answer, Mike, is yes. I'll let James weigh in on if he wants. But we did $225 million in share buybacks last year and our Board authorized a new $500 million program for the next 3 years. We bought back shares because we believe deeply in our plan, and we think our stock is significantly historically undervalued. So I think from our vantage point, as we deliver on FY '26 guidance and annualize the impact of that $153 million we called out earlier, both our customer and our shareholder value creation is going to become a lot more clear.

That's good. It gives us the ability to invest and to drive the performance improvements that we're making in the near to intermediate term, M&A is off the table. The only thing we're going to consider, I'm happy to give the background on it is to action our option with BetaShares, so we can get the Percy CL Elite product, which we think is a potential game changer and closure for procedures like TAVR and EVAR. But other than that, we're hedged down. We've got our ear spin back. And are driving execution.

Our next question comes from Joanne Wuensch with Citi.

This is Anthony on for Joanne. Just going back to plasma, and please correct me if I'm wrong, but did your outlook for U.S. collections change this year in the back half. I think the language last quarter was you were expecting a modest rebound in volumes. And then the language this quarter was a possibility of recoveries. Just want to see if anything changed in your near-term outlook.

Yes, Anthony, thanks for the question. You heard that exactly right. Let me comment on the existing guidance, but also the long-term outlook because I think there's a lot of speculation out there around both. So the plan this year, price gains tied to the innovation that's already been rolled out, the share gains that are well underway. That's what propels us. That's what we control. and that's how we'll make plan. We do see the pullback in collections somewhat enabled by our productivity gains for the customers is being short term and temporary in nature. There's a cycle we've lived through this multiple times over multiple decades.

So I think our long-term models understand this quite well. We expect there could be low single-digit growth above historical seasonality in the back half of the year, as some of this NexSys technology-enabled gains annualize, but that remains to be seen. And we don't control that, and I know there's very different views out there in the market. When we step back from this, plasma collections have always been cyclical. As I said, we've probably exacerbated the cycle because of the productivity bump we've given the industry. But there's a lot of speculation about long-term retrenchment, et cetera. From our vantage point, we support a $30 billion biopharmaceutical market we don't see the demand for immunoglobulins going away anytime soon.

And in fact, we look at our leading customers, right? If they're all public [indiscernible] and they're reporting double-digit or high single-digit growth, and they're reaffirming that guidance in their IG franchises. So we look at that. We look at the long-term potential. We know -- we think at this point where their inventories are, and that bodes very well. It's an outstanding environment for collections right now. So I think the forces are lining up in ways that we would hope and anticipate there's recombinant therapy out there. That's a good thing for patients, but IG remains irreplaceable for the vast majority, certainly primary and secondary immune deficiency. And then I think even on the autoimmune side, just what we're seeing new patient starts versus concomitant therapy kind of tells the story. So we like plasma, near, intermediate and longer term.

Okay. And then in hemostasis management as you continue to roll out the new happens cartridge, how long do you think this benefit from that last -- or I guess in other words, like how far into this rollout in the U.S.?

Yes, early innings, for sure. And what's pretty clear to us now in hindsight is the introduction of our [indiscernible] neutralization cartridge last year has proven to be a watershed moment in the space. If you go back we helped drive the creation of viscoelastic testing as a marketplace. We are the market leader something around 70% share and the broadest body of clinical evidence and a track record of usability supported by a really outstanding team that's just firing on all cylinders. The category itself, the underlying treatment area is probably mid-single-digit growth on an ongoing basis.

But to your question about the sustainability, we're in half of what we believe are the T700 accounts, the largest procedure-based hospitals. We're less than half when I think about Europe and Japan, where we don't yet have the heparanase neutralization cartridge. More on that as the year progresses. We think about the TEG 5000 conversions that are underway, driven by the adding of this additional assay. We've converted roughly half of our current G5000 users to take success. So there'll be capital. They'll be the initial buy-ins and then, of course, there's the utilization. So we like what we see here, and I think we have renewed enthusiasm about the long-term value that this franchise can bring is 1 of our top 3 value drivers and currently our fastest-growing and largest hospital products.

Our next question comes from Larry Solow with CJS Securities.

Chris, I just want to just follow up on the question on TEG. You mentioned the 70% share. The [indiscernible] clearly driving a lot faster. Are you -- and it's as you go through your existing share base, are you actually taking share to -- is this a share driver? I mean do you take share back? Do you see that actually changing with this Mark, is there anything else on the -- does your competitor have a similar thing or maybe in their pipeline? Or any color on that?

Yes. Let me step back from the story. It's less about competitive share capture. We certainly are dialed in on that. But we view this as roughly an $800 million addressable market, and as I said, growing in the mid-single digits. We're indicated and see the biggest growth in cardiac and in trauma and transplant where heparins neutralization has proven to be the game changer. So for us, the biggest opportunity is actually the adoption of viscoelastic testing, right, moving folks off of current standard of care to understand what TEG does for them clinically and from a health economic perspective, we have strong data to suggest how much it informs better interventions and in some cases, the lack of interventions.

And so, we see that in terms of clinical outcomes, but the other part of this is almost without exception when a hospital or a hospital group adopts TEG, we watch their blood usage contract because they're just -- they're not making unnecessary interventions. And when they intervene and being with exactly the right combination of blood products. So that's really powerful. That's our biggest opportunity is driving that utilization. We think the U.S. is probably close to 50% of that today, 50% utilization is probably closer to 30% outside the U.S. So more to come.

Okay. And switching gears just to plasma. Just on the global on the macro. So it sounds like you're still building in outside of your market share gains, generally flat market collections. Maybe I'm just reading around, but on the ripples on their last call that they look to double-digit volume gains. Now obviously, there's -- and they also spoke to a lot of productivity efficiencies, which is clearly being driven, it sounds like by Persona, particularly actually called out. But I'm just curious, when they talk about double-digit volume gains, that's not collections specifically, but is that difference -- and they're just one collector obviously, but they're, I think, second largest, right? So is that difference mostly just productivity? Or are they just one customer or one view of the market? Any color on that?

Yes. Again, we read the same releases. We have lots of conversations. I won't comment on kind of the inside baseball, if you will. But from our vantage point, when we look at their -- all of our customers' readouts, we know there's base volume demand. There's clearly, price, et cetera. There's always a lag because of what they collect. What they're talking about with those double-digit growth is plasma that was collected last year or previously. And so we have to be mindful of that. The performance in the quarter is flat. On a historical seasonal basis, we didn't see any meaningful uptick in collection volumes. Our outperformance is NexSys and NexSys adoption, et cetera. So we think based on our reading of this, that in the back half of the year, we have the opportunity to get above historical seasonal averages, but we don't control that.

And we want to be conservative about that because it's been difficult to forecast with precision in a given period, in a given quarter. Long term, we're enthusiastic. We don't imagine this goes much beyond this year without a sizable uptick. We'll have more to say about that later as things become more clear. But right now, given our guide, given the performance we just delivered, we're confident for the year that controlling what we can control, we're going to have a really good year in Plasma.

I appreciate that color. And if I can just squeeze 1 more for James. Just obviously, operating margin, you're building in an acceleration as the year progresses. Any more color just on cadence should it be kind of a linear step up through the next 2, 3 quarters? Or should we really be focused more in the back half? Anything in particular there?

Yes, it's really more towards the back half. I would say the Q2 to Q3 jump in operating margin is probably most significant and then a little bit more from there. Q1 to Q2, we should see a nice bump up as well to get to our guidance point. So overall, on I would say it's probably 45% front half of the year and 55% back half of the year in terms of cadence down there to the bottom line.

Our next question comes from Marie Thibault with BTIG.

I wanted to ask here about another product in Interventional Technologies. I haven't heard mentioned yet. The open -- can you tell us a little bit about any progress your sales force is making with that? I know there was some handholding and dock learning involved with that product.

Yes. Thanks, Marie. I appreciate the question. Yes, we're working hard. I mentioned that we've bifurcated our efforts. We have a dedicated field team both sales reps and clinicals with a separate chain of command that are really leaning in to expand our presence in structural heart. And we continue to see green shoots, particularly on the Savvy wire it gets masked by the OEM situation that we called out on our prepared remarks. But the underlying demand for the product is quite good, and we need to lean in and continue to cultivate and develop and build the market. What that product offers is meaningfully differentiated in terms of kind of a 3-in-1 option, where we do hemodynamic monitoring on a real-time basis with essentially no drift.

So it's a step change improvement in Guidewire technology. We are learning how to commercialize it. We are long term, optimistic on the presence in that space and what we can deliver it will take time. And so I don't want to kind of confuse anybody on it. Our success in interventional technologies is predicated upon winning in vascular closure. It is by far the largest. It's the biggest opportunity. And they called out in my prepared remarks, it's 1 of 3 things that drive us along with TEG and NexSys.

Okay. That's helpful, Chris. And then maybe I could get a little more detail. You told us about the growth in basket MBP and XL, I think that was on a global basis. And you mentioned some weakness in international. Could you break out for us what the growth was like here in the U.S.? I know we're a few quarters into the launch there of -- and any details on the magnitude of the decline this quarter in legacy asking?

Yes. Thanks, Marie. Disproportionately by far, the growth was here in the U.S. And as you point out, on the XL product, the attach rate for XL on PFA is outstanding, right? It's one of the things that continues to be a core strength of opportunity. Interestingly, I've made mention of the fact that as the gain shifted from new account openings, which our team was excellent at is excellent at to driving utilization it got masked a bit this time last year when we introduced MVP XL to the market because the uptake has been so strong that for a period of time. And it's -- again, it's a similar skill set you're launching a new product as opposed to launching a new category for us, but we're launching XL vis-a-vis PFA and that propels the team, and that's a good base of strength that we can build on to correct what we need to correct elsewhere.

Our next question comes from Andrew Cooper with Raymond James.

Maybe one more on the EP business. If we think about the 6% growth relative to what you did last year, last quarter. Fiscal 1Q was kind of the last 1 where you didn't have full market release of [indiscernible] probably the easiest comp of the year. Maybe just help us think about some of those moving parts on the execution side that you called out? And then I think, Chris, you mentioned there's a series of actions that you could walk through, if relevant. I think it might be relevant and would love to hear the details on some of the things beyond what you've already discussed.

Sure, Andrew. Thanks. Yes. Look, it's 3 products to find the corporation within Interventional is Fast gate. Within VASCADE, it's the U.S. EP market, right? Let's just be very specific about it. We need to win there. We look at the underlying market, there's puts and takes. There's lots published about this, much of it wrong. But the underlying growth in EP as we measure it for access sites, is high single digits, roughly 8.5%, 8.6% to be precise this year. That's what we're running to. So that there's obviously comps involved, as you point out, but that's below market. And that tells you that we need to up our game competitively as we've woken competition and now need to respond quite decisively to it. I walked through a set of things, and none of these are silver bullets.

There's important levers that we pull. And I'm sure when we sit back in this year from now and celebrate the success we're going to have probably 1 or 2 of these is going to matter a lot more than the others, but it's difficult to predict from where we are. We've hired new sales and marketing leaders. When you see the pedigree of these individuals, they come from companies and they personally have experience and expertise in electrophysiology and interventional cardiology. In some cases, closure, in some cases, the underlying procedures of AFib and TAVR, but they bring real expertise to our team the bifurcation, which happened through sales comp in the fourth quarter, but really organizationally in this first quarter, is going to be powerful in the early stages, it's disruptive, and we're working our way through that. So I wouldn't extrapolate a lot from the first quarter in terms of what that will ultimately mean for us.

It does allow us to up our game clinically in terms of our clinical support, in terms of our ongoing trial work and how we communicate that message to our customers. We've done some basics, and I said this on a prior call, getting a product from $25 million or $50 million to $200 million is 1 thing. Taking it from $200 million plus is a different game, and it requires sales enablement tools that help you focus at an account level where necessary. It involves building a strategic account capability. We didn't have that historically. We're leaning into that. That will meaningfully strengthen our relationships with the IDNs, which are a big part, not only of that last or 80 accounts to be opened, but driving utilization across all of them. So it's an increasingly managed market and we need to approach it as such.

I think as we lean into that, there's obviously developments on the horizon. We think some of the interesting changes that are underway with regards to -- from CMS going into ASCs. We think that could be a real tailwind for us because of the value proposition that VASCADE represents. But we need to face into it, and we need to manage it at a corporate strategic accounts level. We are putting in place the capabilities to do that. It won't happen overnight. I want to be crystal clear about that. We do believe it's all executional. We do believe we can do this year, but it's going to be a build from where we sit.

Okay. That's super helpful. Maybe just one on margins as well. I know you talked a little bit, James, about some of the trends throughout the year. I just want to make sure with this software piece that you did see in -- how much of that drops to the bottom line? And how much of that was maybe in the annual plan and just movement from quarter-to-quarter versus potentially a little bit bigger change or something we need to think about from a jumping off point from 1Q into 2Q and the rest of the year?

Yes. Sure, Andrew. So that it was 210 basis points on gross margin, and it all drops. There's no real other expenses associated with it. So it was contemplated in our plan for the year. It was just -- I think as Chris referenced earlier, it was really just a matter of timing, and it just happened to be in the first quarter and Chris pointed out all the benefits in terms of how it solidifies our position. But the other thing, it's also an annuity, right, and it will continue to drive our software revenue in the years to come. So in the full -- it was always contemplated. It was in our full year guidance. It helped the quarter by about 210 basis points that will fall off, obviously, next quarter. So our gross margin won't benefit from that. But we will continue to have even more benefits from the mix and price that Chris alluded to earlier when he was discussing gross margin. So we expect our gross margins to pretty much hold right around this level for the remainder of the year.

Okay. Helpful. And then I'm going to sneak one more in just on plasma quickly. Can you give a little bit more flavor. I think the comment was share gains were kind of on track or a little ahead. When you think about what was already assumed in the guide, what inning are we in, whether it's as of end of 1Q or kind of at present in terms of those incremental centers that you were hoping to have your footprint in that you weren't in prior.

Andrew, the ongoing competitive center conversion will be a FY '26 and probably first half FY '27 story. Of course, we'll move just as fast and are prepared to move as fast as our customers are ready to go. They're certainly taking advantage of this short-term pullback in total collection volume to get the conversions done that's great. And if they want to speed up, we'll be there with them. We've laid out based on what we've discussed and what we're experiencing, and that's heavily influenced in that 11% to 14% guide for the year. So in terms of innings, we're midway through. We haven't hit the seventh inning stretch at this point. We have more ahead of us than behind us for sure. But it's on track and it's moving.

And if I could -- and I'm going to take a half a step back and talk about guidance at the corporate level because our strategy is working. And we view in aggregate, the first quarter results is very solid. But we're going to remain conservative. And as a matter of practice, we don't -- we kind of want to refrain from changing guidance after only 1 quarter. It's just not, right? And so -- and if you look at the guidance, right, it delivers fully against what most thought were highly ambitious, maybe even beyond that long-range plan goals. I won't reiterate them all here, but within the year that has a growing plasma 11 to 14 and has a growing hospital A to 11 with we have mid-20s growth on EPS.

And the way my math behind that, if you will, is backing out CSL, backing out whole blood somewhere between $0.70 and $0.90 of EPS last year that won't repeat this year. So we deliver at the midpoint of our guidance, we're already talking about something that is mid-20s growth. And we have the same mid-20s growth projection for cash flow, which is what we delivered last year as well. So we're going to guide for what we can control. There's obviously a whole lot going on out there geopolitically, macroeconomically, cyclically that we don't control. So we're focused on what we can control and delivering against that, and that's what's reflected in our guidance.

Our next question comes from David Turkaly with Citizens. David.

Well, I really need to dial in earlier. I think you guys said -- Jim, I think you said you did $150 million in buyback in the quarter. I just wanted to confirm that and if you have the price that, that was at.

No, no, we didn't buy it back this quarter. That was last quarter.

So did you do this quarter?

Yes, we did not buy back. We repurchased any shares. We had a new authorization as well that Chris spoke about, but we haven't acted against it.

Okay. And the $52 million impact that you called -- I think that was a quarterly headwind from all the -- was it from the transition? Is that something that is usually broken into buckets or no?

Dave, we'll break that out for folk.It's pretty straightforward. Yes, it's what we're referring to, so I quoted $153 million for the year. That -- there are two factors. One is the transition from CSL. So there was no U.S. PCS2 disposable revenue in the quarter. So that's out. That was $35 million, $37 million, I think, was this time last year. The remainder is whole blood, which we divested, right? And so the combination of those 2 are the $52 million that we see. It will be comparable numbers for the next quarter and then drop off pretty significantly in the third and fourth quarter, which is I think it's going to be pretty interesting to speak because it's -- our expectation is that's when the fog begins to clear and the underlying health and performance of this business starts to stand alone without the need to say, ex this or post that or anything else. It's just straight up high single-digit revenue growth, mid-20s earnings growth on our way.

It's 35% in '17 is the breakout between CSL and Pueblo this quarter.

Thanks a lot for that. And last one is when could we expect the next LRP, Chris?

When ready. We want to deliver this one because -- and you and I talked about this after our last one, I got -- the first slide is going to be and accounting on our say-do ratio, right? We put high single-digit revenue growth by our accounting when we deliver this year, it will be 10%, right? We talked about mid-20s adjusted EPS growth is going to be 28%, right? We talked about 26%, 27% adjusted margin of just 800 to 900 basis points improvement versus where we were back then. I'm not going to -- we have guidance out there, that's our guidance, right? We'll lean into that and deliver.

And then last is the cash flow, $600 million to $700 million. And I'll add one, which we didn't say back then, but as James has communicated as part of our overall guidance, a cash net income conversion ratio that should be defined as top quartile for us, certainly north of 70%. And when we start -- when that slide is printed and in fact, then we'll talk about where we go from there okay? Think spring or summer.

Our final question comes from Michael Petusky from Barrington Research.

I guess I really need to dial in faster. So Chris, I didn't catch us if you talked about this, but the sort of the geographic performance of TEG, can you just speak to how [indiscernible] region, China and anywhere else you might want to talk about.

Yes. TEG is really concentrated. The outperformance in particular, is concentrated for us in the U.S. We were high 20s growth for TEG in the U.S. We were low to mid-20s kind of in aggregate, but it's -- for now, it's a 70-30 play where 70% of that is coming through in the U.S. It's actually interesting if you step back from our portfolio, right, 75%, probably closer to 80% now of our revenue comes from TEG, VASCADE and NexSys here in the U.S., right? People talk about how complicated we may become we're not complicated with 3 products in the U.S. market. That defines us. We do want to grow meaningfully outside the U.S. We think the value proposition for Viscoelastic testing in Europe and in Japan is largely untapped. We like the changes we've made there with our team. We are awaiting regulatory release for the hepanase neutralization cartridge in EMEA. We expect that release to have the same catalytic effect that it has had in the last 6 quarters for the U.S. So stay tuned with more to say there. But for now, Mike, it's U.S.

You can just push a little bit. Anything on China. I think you had talked about market challenges in China, which doesn't seem super surprising in the current environment, but I'm just curious if there's any comment there.

Yes. We've taken our lumps in China over the prior 1 or 2 years. That's largely normalized. Now China is less than 4% of our corporate revenue. across the entire portfolio. TEG in particular, it's the older product, [indiscernible] success is not released there, but the has local competition. We took a beating on some of the local efforts that the government had put in place. That's all stabilized. We actually grew tag in the quarter pretty nicely, but off of a really modest base. But there's more we can do there, for sure, we'll have it. We seem to be kind of navigating the tariff structure in a way that our products we can supply out of Asia, et cetera. So we've kind of largely not sidestepped that, and we're there to support the market, but it's a really modest contributor, less than 5% overall.

Okay. Great. And just the last one, going back, I guess, to the U.S. market. you've gone out of your way to say, hey, look, some of these changes are going to take time, but we've made changes. We're making changes brought in sales marketing leadership and are essentially calling us within your control, you guys got to execute. It's not structural. But I'm just curious, as you sort of look at the first quarter performance and then measure that up against what you sort of consider market growth, 8.6% access sites growth. I guess I'm asking you looking at a crystal ball here. But I guess what I'm wondering is, over the next quarter -- is it likely that the, let's say, mid-single digits sort of sticks or possibly even takes a minor step back before you guys sort of get the momentum that you hope to get towards the high single digits. I'm just curious on sort of the cadence of how you see changes you've made and how they flow through, say, over the next 4, 6, 8 quarters?

Yes. I think it's going to be a gradual build, and I don't want to sugarcoat that, right? It's -- we can't accept below market growth, right? That's just not okay, particularly in a category that's roughly 50% penetrate it from a utilization perspective. And that's just here in the U.S., it looks even more opportunistic in Europe and in Japan. So but I want to make sure that the leadership that's in place with all the aligned incentives makes the right investments. We're not, there's no shortcuts here. We're not doing this we'll deliver FY '26. We'll deliver the 4-year LRP. This is about the next LRP. This is about the long-term growth. We believe we're building something that has real scale potential in interventional technologies and blood management technologies alike and we're going to make the investments and give the team the necessary time. sooner is better, of course. But we need to gain back what we've lost we need to build upon that and widen and deepen the moat that we believe is capable for vacate. So more to come. Success begets success, sometimes you win by not losing. That team's got a playbook. And cautiously optimistic, but it will be a build. It won't happen overnight, and I think you'll see that in our quarterly results in FY '26. SP-5 Okay.

Chris, can I just sneak one more quick one and I just thought of just in terms of the sales and marketing leadership you've brought in, I mean, how many -- are we talking just a couple, 2, 3 folks? Or is it a number? And do you care to call out any of the degree company some of these folks may have come from?

No, I'm not going to go into details of it, but I will tell you this, right? And now I'm going back to my prior life as a consultant through more than a few turnarounds and launches, et cetera. We're talking change management at a very fundamental level. Yes, we've changed at the top but we're also changing throughout the ranks. And I mean individual reps and clinicals that have the right experience in pedigree, first-level sales supervisors, every sales force I've ever been around succeeds or fails on the caliber and the commitment of that first level supervisor, we're making the investments there and then up through the rest of the chain, we're building out the key account capabilities I referenced.

Obviously, there's marketing work behind the scenes. Up and downstream. So there's a lot, as we prepare this business to go to a fundamentally different level, right? Like we're investing heavily because we think the demand in IVT and BMT across the MedSurg opportunities is much more addressable, much more controllable by us. We love plasma. But plasma has inherent cyclicality and some systemic risk associated with it. We've called that out. What we like about what we're building in hospital is we have more of an ability to control and particularly as we scale and we scale these investments, you're going to start to see the operating leverage come through. That's what takes this to another level, and that's the investments we're making.

This ends the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

This morning, it's been -- we were just chatting that it's been a while since we last had an opportunity to connect when I think it was right when you took over the first analyst meeting that you hosted at Haemonetics, and it's certainly been a journey since your period as the CEO. And now you're coming up on the milestone at the end of your kind of 4-year LRP and you laid out some of the dynamics of where you thought you were going to land on your FY '26 guidance call and presented some of that information.

But maybe give us some reflection on as you come to the end of that period of time, how you -- what the look back is going to be?

Great. Great. Thanks, David. Just it's been more than a decade since Haemonetics has attended this conference. So thank you. We're delighted to be here and have a chance to tell our story. And I'm excited to reconnect with you given how you spent a good bit of your time and off as an operator at Baxter and Acutus Medical, and I'm sure that helps add perspective to the work you're doing at the bank today. So that's all great.

Before I begin, a quick reminder. My remarks will include forward-looking statements, non-GAAP financial measures, usual safe harbor supply. I'm excited to answer your question about the LRP and our performance because we're delivering fully. But I'm going to maybe take half a step back because I think our story can be complicated, particularly for folks that are new to it. And the way I would summarize it is as follows, which is Haemonetics is the undisputed global leader in plasma apheresis, which we view as a durable source of EBITDA, and we think that there's tremendous potential for that business going forward.

But there's also systemic risk that's difficult to mitigate. So we've attempted now to diversify in the Blood Management Technologies and Interventional Technologies, which are attractive MedSurg markets where world-class companies are advancing the treatment of chronic disease with favorable reimbursement. We're able to thrive in those markets by concentrating on what we describe as therapeutically agnostic enabling tech that's not being pursued by the companies that are driving the growth in procedures. And that's really the story behind our portfolio evolution and how we're transforming our company, and our operating model around operational excellence and superior results.

In short, we've built a $600 million MedSurg business growing well into the double digits while we grow our corporate earnings, meaningful, double digits as well. That's a pretty rare entity. And I think our success in Plasma has helped enable it. With regard to the specifics on the LRP, yes, we sent a bold and audacious set of goals. We said we're going to grow 10% over that 4-year period.

We're going to have mid-20s adjusted EPS CAGR, excluding CSL, that we're going to grow our operating income margin 800 or 900 basis points over a 4-year period to the high 20s. We got it at 26% to 27% a month ago and a cumulative free cash flow in excess of $600 million with a return to our historically high conversion ratio. And our CFO commented on the last call in May that we expect that conversion ratio of free cash flow to net income to be in excess of 70%. We're on track to deliver all of that today.

So now because you've added some things I have to go off script here a little bit. But when you talk about systemic risk in the blood apheresis business, is that has to do with sort of the volatility in contracts like the CSL dynamic? Is that -- I know the Whole Blood business you've exited. But on the core Plasma collection business, that's the dynamic that you're highlighting?

For core plasma apheresis, the real exposure is customer concentration. There are 14 customers worldwide, 4 of whom really drive volumes. The business has an added systemic risk, which is concentrated 90%, at least for source plasma here in the U.S. It's a great market. The remuneration is outstanding, but it's a geographic concentration. It's also a unique business model where the capital sits on our balance sheet. We found ways to drive superior return on invested capital in that model. But the combination of those things, and there's really nothing you can do to mitigate that.

Right. And as you fast forward to the end of this year, do you have a sense of like what the business will look like from a mix perspective between Hospital, Interventional, Blood when you kind of get to the end of the LRP and when CSL is out of the numbers?

Yes. We're going to do an Investor Day later this year, where we'll break this all down. But we're living with what is now a transformed portfolio fully 85% of our revenues and at least 100% of our growth come from a small group of core products in Plasma and those Hospital platforms. When you last covered the stock, that number was -- part of that didn't even exist. The Blood Center business alone was approaching 50%. Today, it is 15, so 50 to 15. That's a conscious decision. The hyper focus on these attractive, fast-growing markets.

And are you going to issue a new LRP at the time of that investor meeting?

Yes, we expect to. And there'll be some very familiar themes and there'll be some new themes and things that aren't going to change is the leadership in plasma and the commitment to profitable growth in the Hospital segment. We'll continue to focus on innovation, organic investments, in particular, but some disciplined M&A as well that we can further expand our presence in those attractive markets I mentioned earlier. We see meaningful opportunity to continue and accelerate both top and bottom line growth even off of where we expect to finish this year.

So I don't want to give away all of our dry powder for that meeting. But if I were to paint a broad picture, aspirationally, we expect to deliver fully into the top quartile of med tech performance. So high single-digit or better growth in revenue, double-digit or better EPS growth. And typically, the 2:1 ratio is something we aspire to. Our hospital gross margins will be north of 70%. Corporate gross margins will be north of 60% and our combined operating income margin should be north of 30% with robust free cash flow and a healthy conversion. But we'll put the flesh around that later this year and try to make that clear for folks.

I'm trying to get a little more out of you. And that type of high single-digit revenue growth. How do you think that will compare to where the markets you serve are growing?

Yes, I think we can outperform the underlying market growth rates, right, the weighted average growth rates because so much of what we do is underpenetrated. So Plasma is probably the most closely watched and close match. We expect to see mid- to high single-digit growth there. We can do better than that because we're advancing new technology that has clear value to our customers. So there's a price premium. But the near to intermediate term, the share gains we're experiencing will really propel us.

If I think about Interventional Technologies, particularly in EP with AFib, you're going to see continued double-digit growth. And we still are only penetrated half of the accessible market. So we'll have utilization on top of that. And then TEG, we joke is the oldest launch product in med tech. But here in its -- approaching its third decade, we are still less than 25% or 30% penetrated in its use cases with a robust R&D pipeline to broaden the shoulders of that. So we expect to grow, for sure, high single digits across them because of opportunities that are in front of us, and that's probably 200 to 300 basis points above market growth.

And I want to go into the segments in a second. But as you think about that ability to sustain above market growth, you are going into categories that require more sales and marketing that I think the legacy plasma business, more R&D intensity, more feet on the street. How do you think about continuing to grow earnings at the rate that you just referenced while making the necessary investments to support that growth?

Our story, the 800 to 900 basis points of margin expansion, which at the risk of belaboring it, when you last covered the stock in FY '16, the gross margin was in the low 40s, 43%, if memory serves correct. We're now into the high 50s and pushing beyond. Our operating income was 13%. Today, if we get -- we double that, we'd view that as performance. So from our vantage point, we do think there's an opportunity to continue to invest purposely. Organic growth is our biggest priority. We like the R&D pipeline that we've put forth. We're probably going to lean into that a bit given the opportunities that are within reach for us now.

Our second vector has been M&A with tuck-in acquisitions. We're digesting the most recent acquisitions. I'm sure we'll talk about those in a moment. But from our vantage point, we're going to dial that back and really concentrate on delivering value in those assets. Our story to date has largely been mix driving gross margins. There's been meaningful productivity. There's been a meaningful price, but it's largely a mix story. What you'll see in the second half of this year for us and beyond is an increasing return on operating leverage, where the sales force and the clinical investments we've made will begin to scale and give real outsized returns there as well.

And just last the one 1 on the impending LRP. Sometimes these LRPs, they're laid out for us and then you get some caveat like oh, it's going to be lower in the first year, and it's going to scale throughout the forecast period or the first year, we won't show this margin expansion, but don't worry it's coming in the future. How should we -- are there any sort of considerations you want to make sure you get in front of people before you lay it out formally?

Yes. I think for this LRP that we're completing now the fourth year of it, there was definitely -- it did not come linear, right? We had just at the time, -- we expected a rapid transition of CSL. It took 3 years. That was fantastic. We had the windfall of that in terms of our cash flow, but it really hampered margin expansion. As things evolve, it gets cleaner from this point forward. I think we have much more line of sight and control over the growth that comes. Our expectation is that we'll guide for a 3-year LRP rather than a 4. We'll talk about the beginning and the end.

But the reality is we expect it to be PAUSE much more controlled and purposeful given where we are. The way we talk about it internally, we have a base case. This is hand on heart what to deliver, and there'll be a range, call it, 6% to 8%. On top of that, we'll do risk-adjusted opportunities. So we fund them and it's reflected in our margin but we don't put the revenue in necessarily because they're higher risk bets where we're buying on third parties, regulatory, whatever but that ought to add a couple of hundred basis points on top. And then for us, it will be the tuck-in M&A on top of that, which should be another 100 to 200 basis points of growth. Again, we'll try to be very transparent about that. It won't be linear, but it's not going to be a hockey stick where you have to wait for year 3 to see the results.

Got it. Okay. Well, we look forward to tuning into that when the event is announced. Maybe we'll jump into some of the businesses here for a second. You talked a little bit about the hospital segment that grew 12% last year. Maybe help us unpack some of the underlying drivers there and how we should think about sustainability.

I think, again, it's driven in equal parts by Blood Management Technologies and Interventional Technologies. IVT gets all the headline because it's such a robust market and there's lots of really interesting things like the adoption of PFA that are creating kind of positive and negative flows that people want to get under, but I'll start with BMT. And for BMT, it's really a focus on hemostasis management. And while it's a global product, and we're doing quite well outside the U.S., we expect to do increasingly better there, it's a story of U.S. execution on utilization.

And we -- that product grew mid-20s last year on the back of the heparanase neutralization cartridge introduction. It's helping us convert existing TEG 5000, the legacy product, it's helping convert those accounts. It's helping drive additional penetration to new accounts and then just utilization, which, again, still hovers well below 50%. So it's a trifecta on BMT. We like Transfusion Management. We'll do well with Cell Saver, but it's really first and foremost about our Hemostasis management, viscoelastic testing here in the U.S.

On the other side, with IVT, it's predominantly a story of closure, VASCADE, VASCADE MVP, and VASCADE MVP XL, where we continue to have real success. The latter 2 grew 26% last year and 28% last quarter as we continue to ride the wave created by PFA. That will continue, albeit more moderately as we round out the adoption curve. But again -- and we added probably 600 or 700 basis points of growth from Japan alone last year, but it will continue to be a story of U.S. penetration, U.S. utilization in particular. So those 2 products in the U.S. are the main stay of the growth there.

Over on the collection side, it's really share gains and annualization of those price increases that we took last year as we completed what was a long-awaited technology cycle upgrade.

And I want to go in a little bit more on VASCADE because I think there's a ton of interest in that segment, especially given the enthusiasm around PFA. Maybe just to unpack a little bit more the VASCADE strategy and what's contributing to that 26% and 28% growth that you referenced?

Yes. Half a step back, David, we expect hospital will approach 50% of our corporate revenues this year, it guides into the mid- to high 40s. And so we expect to do at least that and is disproportionately driven by those 2 products. When we look at vascular closure, we measure a TAM of roughly $2.7 billion fully $1.1 billion of which is here in the U.S. alone. EP is by far the highest growth vector. It's roughly 1/3 of the total closure with coronary and peripheral, PCI being the other 2/3. But the rapid growth in EP procedures is really exciting.

Folks get a bit confused because some of the newer technologies are reducing the number of access sites. We've done a full breakdown of that. In fact, there's 2 pages on our investor website that we published with our last earnings call that breaks this down. We see the aggregate growth in the addressable market in FY '26 for closure at 8.6% on the EP side, 1% to 2% on the coronary side. Today, that's 15%, 15% of what we do. We can do better than that, but the growth is disproportionately going to be on EP.

Okay. And how -- maybe just as you think about other players here like Abbott entering [indiscernible] have a strong closure business. How do you stay competitive as companies like them try to come in as a -- they're going to be the fourth player in the U.S.? That franchise has a history of being not shy to use price as a lever and they certainly have a very broad portfolio. So how do you think about staying relevant as full service line players come into that market?

I think this is where we are benefiting from the investments we've already made. First and foremost, it's to build out the indications and the clinical evidence in support of those indications. So we don't take Abbott or Cordis or Terumo for that matter, lightly in this space. And I think the competitive dynamics are very different if we're talking about AFib versus some of the other procedures. Our value proposition established back during COVID was that MVP, when used for AFib, reduces the time of ambulation from 6 hours to 2 hours. It gets patients out of the hospital, 99 something percent of the time same day.

When you're looking at the cost of an AFib procedure and candidly, the benefit to the hospital to be able to do those procedures without needing the overnight stay is incredibly powerful. And so I think that was the value proposition that catapulted us into market leadership. Like I said, we don't take the competition lightly, but our biggest opportunity on closure is the half of all procedures today that are done without an advanced closures, it's either compression or suturing. And I think driving utilization in those at one level, having competition helps because it's more word of mouth and more voice in the market, making it clear, there's a better alternative and then we go head-to-head. And we like our chances competing head-to-head with the available technologies.

Does anyone still suture? Like what's the penetration of closure versus suture use?

Yes. I think suturing is probably the dominant play for the half of the market that doesn't use an advanced closure device. There is some compression. But yes, I think for folks that were trained on suturing that have that as their backdrop, they continue to defer accordingly. We've got a better answer, and we need to do our part to drive the utilization there.

And how about moving procedures into the ASC. This is a topic that also came up when I was with Abbott last week, and they were highlighting the potential for EP procedures to move into the ASC, the need to do more of this under conscious sedation versus general anesthesia, but it would also seem like in that environment, speed to get the patient in and get the patient out would also be a priority. Are you seeing opportunities emerge there for you guys?

Yes. No, absolutely. I think that's -- we're not individually, we don't have the scale or the resources to drive that. This is where I think the metaphor that somebody offered when we first did the Cardiva acquisition is you guys are basically water skiing behind boats that are driven by the likes of Medtronic and Boston Sci and Biosense and Abbott to some extent. And so as they drive into ASCs, there's a different profit imperative, which makes the value prop -- we don't give this product away. It's amongst our highest gross margin, but it's a fraction of the cost of the actual procedure or the reimbursement they've secured against it. So if we can enable it, we have good play in an ASC as well as in the hospital itself.

So obviously, parts of the pipeline you're going to disclose and not disclose for all the reasons, I think that people understand and then your M&A strategy similarly. But if we were to look at some of these procedures, is the right way to kind of assess where you might go next is exactly what's hanging around the hoop? It's in the procedure, but sort of on the side of the playing field, maybe not fully in the case, I guess, is that the best way to assess where you might go next? Is that how your marketing team spend their time thinking about where the other sort of hang around the hoop opportunities are?

Yes, right? We need an attractive TAM that is defined by our therapy. We need a SAM within that, that we believe we can capitalize on. We -- as I said a moment ago, right, we're looking at these attractive areas, but we're therapeutically agnostic. When we pursued OpSens, we knew that the SavvyWire was an outstanding tool to enable better valve placement. We went and talked to the leading valve companies and said, is this your interest because we don't want to waste time. And for our scale of a company, it just doesn't make good sense to pursue something that's ultimately not going to materialize.

And we heard back a couple of things. We heard back. It's a great guidewire. We hope you guys get it because in your hands, it will be successful. We're not interested in it because if we have this $800 or $900 Guidewire on a $35,000 valve procedure, we're going to be asked -- to your earlier point, we're going to be asked to bundle it and just give it away for free. So there's no value prop there. And then I think a more nuanced answer, which probably is also true, was we don't want our very well compensated, highly trained clinical reps scrubbing in to use that Guidewire on our competitors' valve. It just doesn't make sense.

So this notion of therapeutically agnostic enabling tech lets us -- we're on the dance floor, but we're not getting trampled because we're not in the way of those procedures. In fact, we're enabling them, and we tend to get the access and the support from those other companies as well as the labs themselves accordingly.

I think in this sort of same context we do need -- I do want to touch on Attune. Obviously, temperature monitoring under pressure as RF becomes a smaller percentage of total. I mean that seems to be one of the common themes here is if there is any cost savings in a PFA procedure, it is the elimination of esophageal temperature probe, which isn't that expensive of product. But where -- is that a business that you decide to wind down? Do you focus -- where does this fall in kind of the priority scheme for you?

Look, I think it's important to learn both from your successes and your mistakes. I would characterize the Attune acquisition last year as potentially the right deal at absolutely the wrong time. It wasn't like we didn't know about PFA. We took all the available information including from the leading PFA therapeutic companies that we're forecasting 40% to 60% growth. At the time, Attune had 9% share of all procedures. We knew that if we could essentially double that, this would be a home run in terms of the return on invested capital.

What we need for that to be true is for RF to retain at least a 30% stake in the market. And until we have clarity around that, we're not going to double down on that investment. We're going to be thoughtful about it. When you're using RF, adding Enzo ETM is a game changer for a relatively modest price, it makes it completely safe. You avoid the risk of lesions. You don't have to do temperature monitoring. There's no probes and you can move fast, which is what those EPs want.

So we'll see where the dust settles later this year on PFA adoption. In the meantime, we're just being very surgical about kind of what we euphemistically call where is Waldo? Where Waldo is the one, a clinician who wants to use RF either in conjunction with or stand-alone, where there's a risk of burning because they're on the back wall. In that case, they need to be using Enzo, it's the right technology. If we can scale that business to something north of 15% market share, we'll still pull it out. But here and now, best I can say is right deal, wrong time. We need to learn from that and move forward.

And is it the same sales force carrying VASCADE and Attune products?

Yes. So I think for Attune, in particular, it's all EP-based. So the folks who are detailing MVP and MVP XL are well positioned to have the Enzo ETM conversation.

And how do you think about that from a quota-setting perspective, to try to keep your reps focused on the right growth drivers but also not letting Attune sort of die on the vine?

Again, what I said earlier has to be true, which is we win or lose on vascular closure in the U.S. The mistake we made with the acquisitions back to back was we distracted our existing team from closure. And that's where we seeded some market share. We had a delay on the product release for XL. It didn't help with PFA. So the combination of those 2 things put us back. We've bifurcated the teams. We are hyper focused. Enzo is an add-on when we know that the doctor has a tendency to use RF, but it doesn't get in the way of the base plan. These -- our teams, like a company succeed or fail on vascular closure.

And I know you made the comment earlier as you think about your LRP and risk adjusting different opportunities. But one of the challenges of a -- of the strategy of watching yourself to other categories that those categories might not grow linearly either, right? PFA adoption is probably the fastest adopted medical device I've ever seen technology. Now -- the other one that took this didn't end well. If you look at coronary stents, for example.

Yes. Drug- stents.

Right from 0 to 90% penetration overnight back to 60%. I don't know if that's going to happen with PFA. It just doesn't seem that way because there's no safety signal, which I think was the issue there. But it also seems like it puts you in a position where you're not totally in control of your own destiny?

Admittedly, that's true. So we're not trying to influence a choice between cryo or RF or PFA. But from our vantage point, what we're observing more broadly in AFib is tremendous earlier diagnosis, more thoughtful diagnosis, just a massive expansion in the treatable population. So from our vantage point, again, we care, but we don't really need to discriminate between whether it's RF or PFA, whether they're doing concomitant therapy or they're doing stand-alone therapy, the issue is, are they -- do they need access? And if they do, there's a play for closure.

Okay. I want to open up to the audience if there are any questions before you kind of go to plasma and then talk a little bit about financials. That's okay. It's a fireside chat. So it's open it. I've know everyone has any question.

It's 9:00 in the morning.

Yes, I know. I know. So I just want to close on plasma on the top line here. Obviously, once CSL is out of the picture, you've reduced -- you are losing, I think, what has historically been your largest customer, one of your largest customers. But should we think about that rebasing to like a 7% growth rate on a go-forward basis on a reported?

We'll provide more color around what we think is the underlying base when we do our Investor Day. But we look at is just a $30 billion with a million kind of therapeutic market. So there's tremendous growth opportunity. If you look at the forecast that the leading players, CSL, Grifols, BioLife, Takeda put forward. They're all talking about double-digit growth of IG-based therapies. So we like the long-term prospects. If you go back and study this over a multi-decade period, there are always ebbs and flows. The current ebb is really a function of increased productivity, much of which we've brought to the market. Now we've done so at a very handsome premium on innovation. So you see that benefit in price. And this year and next, you'll see that benefit in terms of share gains.

But we look at a number of factors. We look at the clinical trial work they're doing. We look at the actual use case for alternate therapies like anti-FcRn, which absolutely have a role. But today and probably for the foreseeable future, there -- they tend to be adjunctive therapy given the price differential, which is 50% to 70% higher. So it's pretty clear the way the market is shaping out.

We just look -- there's a whole bunch of factors around rates of reimbursement, around a number of new center openings, the number that seems to be a very accurate long-term predictor. As you said, that 7%, 8% is fractionation expansion. And that's what we ultimately track to.

That said, we got ahead of this last year and had to be more cautious. We were able to deliver our plan because of our share gains. But this year, we're assuming very modest growth. In fact, really 0% to 2%, mostly backloaded. We will grow meaningfully in excess of that ex CSL. We've guided to 11% to 14% growth and the reason is that is share gains and the continued annualization of our price increases from last year. So we're using what we view as a very temporary pullback in collection demand to accelerate the technology adoption and share conversion. So it's a team that's firing on all cylinders. If I look back 3 years, that plasma apheresis team has met every single objective or exceeded them over the planned period. We have no doubt they'll continue to do so.

And would you say as you get ready to issue the new LRP that this business represents the potential driver of what could be variability across the forecast period?

There's going to be ebbs and flows, but I think we increasingly have line of sight to be able to normalize that. When we started this discussion, plasma was the real workhorse. It was a large -- more than half of our revenue and well more than half of our EBITDA. Today, our guidance for this year, plasma will be 38% of what we do. No one customer will be more than 9% or 10% of our corporate revenues. So we've succeeded in the process of diversifying the business. There will be ebbs and flows. But what we really look for, for this is that EBITDA, that free cash flow that we're using to fund the more stable, more predictable growth in Med-Surg.

And I'll close on a P&L question and then turn it back to you for any closing remarks. But the -- you've seen a huge amount of margin expansion. I mean step function type of improvement in your gross and operating margin. But as you look at exiting this year at a high 50s gross margin and 26% to 27% operating margin, that profile does stand out versus the rest of the space. Most companies at 26% to 27% operating margins have gross margins that are well into the 60s, if not higher. Can you continue to see steady margin expansion without a big step-up in your gross margin?

Yes, absolutely. And I think part of it is understanding the dynamics really of our entire collections business, which, of course, is mostly plasma apheresis. But it's also plasma and platelets on the Blood Center side where our Blood Center customers are looking to replicate the success the source plasma guys have. That -- so we're now operating well north of 50% gross margin in that business. In fact, in our 10-K filings, we tried to break this out more fully to provide additional transparency. And I think what you can see when you look at the plasma business, it's now mid-50s gross margin, but the pass-through is tremendous, and it's just the nature of it. And so that is sustainable and scalable.

On the Hospital side, it's been, as I said, mostly a mix story. That's going to transition over. There will still be meaningful benefit from mix, but we're also going to see an uptick in productivity and operating leverage where the investments we've already made in sales force, in clinical development and R&D more broadly are now scaling in ways that will make us much more consistent with the MedSurg group which in combination is what drives what you described. That's how we have a $600 million Hospital business growing double digits as part of a corporation that has delivered double-digit earnings growth year in and year out.

Okay. Excellent. Well, we have a couple of minutes remaining here. So I just wanted to turn it back to you to see any wrap-up or closing remarks. And again, very much appreciate you making the trip and great to have the opportunity to reconnect here.

Yes, David, thank you for that. I think the timing is pretty critical as well. We believe Haemonetics is at an inflection point. And we think this year, fiscal '26 will be defining for us. Three years ago, as we talked in FY '22, excluding CSL, we earned $1.83 a share. We were very public about that. Our actual earnings were $2.58. We said we had $0.75 of CSL. So that June, we issued this current LRP and the targets we've talked about double-digit revenue growth, mid-20s earnings growth, high 20s operating margin. We're in the final year of the plan. We guided last month for this year's results. We obviously don't intend to miss our own guidance.

Now that will imply revenue of $1.3 billion, which is a 10% CAGR over the 4-year period. It implies at the midpoint, $4.85 of EPS, which is a 28% CAGR over that period. Said differently, $1.83 to $4.85. It is a $3 increase in EPS over the 4-year period. And that earnings is coming from a portfolio that is more profitable, higher growing, more diversified and better margins than anything that existed previously. We have our challenges.

But we've got a clear path forward on Interventional, realigned our sales force and invested in clinical. We are excited about the continued momentum in -- with TEG's success driving Blood Management We look at the technology upgrades and our leadership for U.S. sourced plasma, and we think we've got more room to run there. And margin expansion is on track with meaningful more room to go. So we think we're executing. The strategy is sound. The portfolio and the transforming effects are there. And we've just -- we've got heads down delivering.

Excellent. Well, with that, we're just the time and again, I appreciate you're making the trip and look forward to watching the story from here.

Yes. Thanks, David. Appreciate.