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What changed in HAEMONETICS CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of HAEMONETICS CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+315 added−379 removedSource: 10-K (2022-05-25) vs 10-K (2021-05-26)

Top changes in HAEMONETICS CORP's 2023 10-K

315 paragraphs added · 379 removed · 256 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

64 edited+9 added−10 removed131 unchanged
Biggest changeRisk Factors in this report. • The effect of the ongoing COVID-19 pandemic, or outbreaks of communicable diseases, on our business, financial conditions and results of operations, including the time it will take for vaccines to be broadly distributed and accepted in the U.S. and the rest of the world, and the effectiveness of such vaccines in slowing or stopping the spread of COVID-19 and mitigating the economic effects of the pandemic; • Failure to achieve our long-term strategic and financial-improvement goals; 14 Table of Contents • Demand for and market acceptance risks for new and existing products, including material reductions in purchasing from or loss of a significant customer; • Product quality or safety concerns, leading to product recalls, withdrawals, regulatory action by the FDA (or similar non-U.S. regulatory agencies), reputational damage, declining sales or litigation; • Security breaches of our information technology systems or our products, which could impair our ability to conduct business or compromise sensitive information of the Company or its customers, suppliers and other business partners, or of customers' patients; • Pricing pressures resulting from trends toward healthcare cost containment, including the continued consolidation among healthcare providers and other market participants; • The continuity, availability and pricing of plastic and other raw materials, finished goods and components used in the manufacturing of our products (including those purchased from sole-source suppliers) and the related continuity of our manufacturing, sterilization, supply and distribution; • Our ability to develop, manufacture and market new products and technologies successfully and in a timely manner and the ability of our competitors and other third parties to develop products or technologies that render our products or technologies noncompetitive or obsolete; • Our ability to obtain the anticipated benefits of restructuring programs that we have or may undertake, including the Operational Excellence Program; • The potential that the expected strategic benefits and opportunities from our acquisition of Cardiva and any other planned or completed acquisition or divestiture by the Company may not be realized or may take longer to realize than expected; • The impact of enhanced requirements to obtain regulatory approval in the U.S. and around the world and the associated timing and cost of product approval; • Our ability to comply with established and developing U.S. and foreign legal and regulatory requirements, including FCPA, MDR and similar laws in other jurisdictions, as well as U.S. and foreign export and import restrictions and tariffs; • Our ability to meet our debt obligations and raise additional capital when desired on terms reasonably acceptable to us; • The potential impact of our convertible senior notes and related capped call transactions; • Our ability to execute and realize anticipated benefits from our investments in emerging economies; • The potential effect of foreign currency fluctuations and interest rate fluctuations on our net sales, expenses, and resulting margins; • The impact of changes in U.S. and international tax laws; • Our ability to protect intellectual property and the outcome of patent litigation; • Costs and risks associated with product liability and other litigation claims; • Our ability to retain and attract key personnel; and • Market conditions impacting our stock price and/or share repurchase programs we may enter into from time to time, and the possibility that such share repurchase programs may be delayed, suspended or discontinued. 15 Table of Contents Investors should understand that it is not possible to predict or identify all such factors and should not consider the risks described above and in Item 1A.
Biggest changeRisk Factors in this report. • The effect o f the ongoing COVID-19 pandemic, or outbreaks of communicable diseases, on our business, financial conditions and results of operations, including the time it will take for vaccines to be broadly distributed and a dministered worldwide, and the effectiveness of such vaccines in slowing or stopping the spread of COVID-19 and its variants and mitigating the economic effects of the pandemic, including inflationary pressures and higher freight costs in our global supply chain; • Failure to achieve our long-term strategic and financial-improvement goals; • Demand for and market acceptance risks for new and existing products, including material reductions in purchasing from or loss of a significant customer; • Our ability to develop, manufacture and market new products and technologies successfully and in a timely manner and the ability of our competitors and other third parties to develop products or technologies that render our products or technologies noncompetitive or obsolete; • Product quality or safety concerns, leading to product recalls, withdrawals, regulatory action by the FDA (or similar non-U.S. regulatory agencies), reputational damage, declining sales or litigation; • Our ability to retain and attract key personnel; • Security breaches of our information technology systems or our products, which could impair our ability to conduct business or compromise sensitive information of the Company or its customers, suppliers and other business partners, or of customers' patients; 14 Table of Contents • Pricing pressures resulting from trends toward healthcare cost containment, including the continued consolidation among healthcare providers and other market participants; • The continuity, availability and pricing of plastic and other raw materials, finished goods and components used in the manufacturing of our products (including those purchased from sole-source suppliers) and the related continuity of our manufacturing, sterilization, supply and distribution; • Our ability to obtain the anticipated benefits of restructuring programs that we have or may undertake, including the Operational Excellence Program; • The potential that the expected strategic benefits and opportunities from completed or planned acquisitions, divestitures or other strategic investments by the Company may not be realized or may take longer to realize than expected; • The impact of enhanced requirements to obtain regulatory approval in the U.S. and around the world and the associated timing and cost of product approval; • Our ability to comply with established and developing U.S. and foreign legal and regulatory requirements, including FCPA, EU MDR/EU IVDR and similar laws in other jurisdictions, as well as U.S. and foreign export and import restrictions and tariffs; • Our ability to meet our debt obligations and raise additional capital when desired on terms reasonably acceptable to us; • The potential impact of our convertible senior notes and related capped call transactions; • Geopolitical and economic conditions in China, Russia and other foreign jurisdictions where we do business; • Our ability to execute and realize anticipated benefits from our investments in emerging economies; • The potential effect of foreign currency fluctuations and interest rate fluctuations on our net sales, expenses, and resulting margins; • The impact of changes in U.S. and international tax laws; • Our ability to protect intellectual property and the outcome of patent litigation; • Costs and risks associated with product liability and other litigation claims we may be subject to now or in the future; and • Market conditions impacting our stock price and/or share repurchase programs we may enter into from time to time, and the possibility that such share repurchase programs may be delayed, suspended or discontinued.
“Hospital”, which is comprised of Hemostasis Management, Cell Salvage, Transfusion Management and Vascular Closure products, includes devices and methodologies for measuring coagulation characteristics of blood, surgical blood salvage systems, specialized blood cell processing systems and disposables, blood transfusion management software and vascular closure devices.
“Hospital”, which is comprised of Hemostasis Management, Vascular Closure, Transfusion Management and Cell Salvage products, includes devices and methodologies for measuring coagulation characteristics of blood, surgical blood salvage systems, specialized blood cell processing systems and disposables, blood transfusion management software and vascular closure devices.
Certain patents may also be defensive in that they are directed to technologies not currently embodied in our current products. We also license patent rights from third parties that cover technologies that we use or plan to use in our business. We own various trademarks that have been registered in the United States and certain other countries.
Certain patents may also be defensive in that they are directed to technologies not currently embodied in our current products. We also may license patent rights from third parties that cover technologies that we use or plan to use in our business. We own various trademarks that have been registered in the United States and certain other countries.
For example, the EU has adopted the EU Medical Device Regulation (the "EU MDR") and the EU In Vitro Diagnostic Regulation (the "EU IVDR"), each of which impose stricter requirements for the marketing and sale of medical devices, including in the area of clinical evaluation requirements, quality systems and postmarket surveillance, than the current medical device directives they replace.
For example, the EU has adopted the EU Medical Device Regulation (the "EU MDR") and the EU In Vitro Diagnostic Regulation (the "EU IVDR"), each of which impose stricter requirements for the marketing and sale of medical devices, including in the area of clinical evaluation requirements, quality systems and postmarket surveillance, than the medical device directives they replace.
The EU MDR is fully applicable as of May 26, 2021, and the EU IVDR as of May 26, 2022. There is a transition period for devices with a notified body certificate with an expiry date after the date of full application.
The EU MDR became fully applicable as of May 26, 2021, and the EU IVDR is fully applicable as of May 26, 2022. There is a transition period for devices with a notified body certificate with an expiry date after the date of full application.
We continue to look for solutions to improve donor safety and control costs through the existing product portfolio. Our products and technologies help donor collection centers optimize blood collection capabilities and donor processing management.
We continue to look for solutions to help our customers improve donor safety and control costs through the existing product portfolio. Our products and technologies help donor collection centers optimize blood collection capabilities and donor processing management.
Government Regulation Due to the variety of products that we manufacture, we and our products are subject to a wide variety of regulations from numerous government agencies, including the FDA, and similar agencies outside the U.S.
Government Regulation Due to the variety of products that we manufacture, we and our products are subject to a wide range of regulations from numerous government agencies, including the FDA, and similar agencies outside the U.S.
Contract manufacturers also supply component sets and liquid solutions according to our specifications and manufacture in Mexico, Japan, Singapore, Thailand and the Philippines. Our capital equipment is principally manufactured in Malaysia, Australia and the U.S. Plastics and other petroleum-based products are the principal component of our disposable products and can be affected by oil and gas prices.
Contract manufacturers also supply component sets and liquid solutions according to our specifications and manufacture in Japan, Singapore, Thailand and the Philippines. Our capital equipment is principally manufactured in Malaysia, Australia and the U.S. Plastics and other petroleum-based products are the principal components of our disposable products and can be affected by oil and gas prices.
This clearance builds on the current indication for the TEG 6s system in cardiovascular surgery and cardiology procedures, making it the first cartridge-based system available in the U.S. to evaluate the hemostasis condition in adult trauma patients. The ClotPro system received CE mark clearance in March 2019 and is currently available in select European and Asia Pacific markets.
This clearance builds on the current indication for the TEG 6s system in cardiovascular surgery and cardiology procedures, making it the first cartridge-based system available in the U.S. to evaluate the hemostasis condition in adult trauma patients. The ClotPro system received CE mark clearance and is currently available in select European and Asia Pacific markets.
In fiscal 2021, research and development resources were allocated to support innovation across our product portfolio. In October 2020, we announced FDA clearance for our NexSys PCS ® with Persona ® technology. In April 2020, we also announced the commercial availability of the next generation of SafeTrace Tx Transfusion Management Software in the United Kingdom.
In fiscal 2022, research and development resources were allocated to support innovation across our product portfolio. In October 2020, we announced FDA clearance for our NexSys PCS ® with Persona ® technology. In April 2020, we also announced the commercial availability of the next generation of SafeTrace Tx Transfusion Management Software in the United Kingdom.
Among other requirements, manufacturers of medical devices must establish a quality system appropriate for the devices they manufacture. • Labeling regulations, including unique device identification; • Medical device reporting, or MDR, regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; and • Medical device correction and removal (recall) regulations with their associated reporting obligations.
Among other requirements, manufacturers of medical devices must establish a quality system appropriate for the devices they manufacture. • Labeling regulations, including unique device identification; 9 Table of Contents • Medical device reporting, or MDR, regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; and • Medical device correction and removal (recall) regulations with their associated reporting obligations.
If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, warning letters or untitled letters, injunctions, civil, administrative, or criminal penalties, monetary fines or imprisonment, suspension or withdrawal of regulatory approvals, suspension of ongoing clinical studies, refusal to approve pending applications or 11 Table of Contents supplements to applications filed by us, suspension or the imposition of restrictions on operations, product recalls, the refusal to permit the import or export of our products or the seizure or detention of products.
If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, warning letters or untitled letters, injunctions, civil, administrative, or criminal penalties, monetary fines or imprisonment, suspension or withdrawal of regulatory approvals, suspension of ongoing clinical studies, refusal to approve pending applications or supplements to applications filed by us, suspension or the imposition of restrictions on operations, product recalls, the refusal to permit the import or export of our products or the seizure or detention of products.
In addition, the Physician Payment Sunshine Act, implemented as the Open Payments program, requires manufacturers of certain products reimbursed by Medicare, Medicaid, or the Children’s Health Insurance Program to track and report information 12 Table of Contents to the federal government on certain payments or transfers of value that they make to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.
In addition, the Physician Payment Sunshine Act, implemented as the Open Payments program, requires manufacturers of certain products reimbursed by Medicare, Medicaid, or the Children’s Health Insurance Program to track and report information to the federal government on certain payments or transfers of value that they make to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.
Our software products, including our latest NexLynk DMS ® donor management system, automate the donor interview and qualification process, streamline the workflow process in the plasma center, provide the controls necessary to evaluate donor suitability, determine the ability to release units collected and manage unit distribution.
Our software products, including our latest NexLynk DMS ® donor management system and Donor360 ® app, automate the donor interview and qualification process, streamline the workflow process in the plasma center, provide the controls necessary to evaluate donor suitability, determine the ability to release units collected and manage unit distribution.
Haemonetics' Hospital business has four product lines which include Hemostasis Management, Cell Salvage, Transfusion Management and Vascular Closure. Vascular Closure became a product line during fiscal 2021 as a result of the March 2021 acquisition of Cardiva Medical, Inc. (“Cardiva”), a market leader in vascular closure devices.
Haemonetics' Hospital business has four product lines: Hemostasis Management, Vascular Closure, Transfusion Management and Cell Salvage. Vascular Closure became a product line during fiscal 2021 as a result of the March 2021 acquisition of Cardiva Medical, Inc. (“Cardiva”), a market leader in vascular closure devices.
The frequency with which a donor may donate, the volume of plasma that may be donated each time and the ability to remunerate donors are all optimal in the U.S., leading to over 70% of worldwide source plasma collections occurring in the U.S.
The frequency with which a donor may donate, the volume of plasma that may be donated each time and the ability to remunerate donors are all optimal in the U.S., leading to approximately 70% of worldwide source plasma collections occurring in the U.S.
The diversity of our teams and their ideas helps build our collaborative, performance driven culture. We understand the value that each individual brings to our workplace, and we are committed to providing an inclusive environment where every individual has the opportunity to thrive. Additionally, we encourage colleagues with shared interests and affinities to connect and learn from one another.
The diversity of our teams and their ideas helps build our collaborative, performance driven culture. We understand the value that each individual brings to our workplace, and we are committed to providing an inclusive e nvironment where every individual has the opportunity to thrive. Additionally, we encourage colleagues with shared interests and affinities to connect and learn from one another.
In the United States, allegations of such wrongful conduct could also result in a corporate integrity agreement with the U.S. government that imposes significant administrative obligations and costs. 10 Table of Contents Requirements Outside the U.S. The regulatory review process varies from country to country and may in some cases require the submission of clinical data.
In the United States, allegations of such wrongful conduct could also result in a corporate integrity agreement with the U.S. government that imposes significant administrative obligations and costs. Requirements Outside the U.S. The regulatory review process varies from country to country and may in some cases require the submission of clinical data.
This software version features significant improvements to the user experience and workflow efficiency. Additionally, we have continued to make investments related to our next generation plasma collection and software systems, the European Medical Device Regulation, our Hemostasis Management produce line, and our recent product acquisitions in Hospital.
This software version features significant improvements to the user experience and workflow efficiency. Additionally, we have continued to make investments related to our next generation plasma collection and software systems, the European Medical Device Regulation and In Vitro Diagnostic Regulation, our Hemostasis Management product line, and our recent product acquisitions in Hospital.
When used in this report, the terms “we,” “us,” “our” and “the Company” mean Haemonetics. Blood is essential to a modern healthcare system. Blood and its components (plasma, red cells and platelets) have many vital and frequently life-saving clinical applications.
When used in this report, the terms “we,” “us,” “our” and the “Company” mean Haemonetics. Blood is essential to a modern healthcare system. Blood and its components (plasma, red cells and platelets) have many vital and frequently life-saving clinical applications.
Our Blood Center business supports the collection of plasma for blood collectors, such as the American Red Cross, using both whole blood and multi-component apheresis collection devices. Over the last 20 years, the collection of source plasma has increasingly been done by vertically integrated biopharmaceutical companies such as CSL Limited (together with its affiliates, “CSL”), Grifols S.A.
Our Blood Center business supports the collection of plasma for blood collectors, such as the American Red Cross, using both whole blood collections sets and multi-component apheresis collection devices. Over the last 20 years, the collection of source plasma has increasingly been performed by vertically integrated biopharmaceutical companies such as CSL Limited (together with its affiliates, “CSL”), Grifols S.A.
Our MCS automated component blood collections, which represents approximately 60% of the Blood Center portfolio, not only compete against the traditional manual whole blood collection market (particularly in red cells) but also compete with products from Terumo BCT and Fresenius.
Our MCS automated component blood collections, which represents approx imately 60% of the Blood Center portfolio, not only compete against the traditional manual whole blood collection market (particularly in red cells) but also compete with products from Terumo BCT and Fresenius.
Plasma collectors have long sought changes to plasma collection regulations outside of the U.S. to allow for greater frequency, volume per donation, and remuneration but achievements have been limited and no changes are foreseen in the prevalence of U.S. collections.
Plasma collectors have long sought changes to plasma collection regulations outside of the U.S. to allow for greater frequency, volume per donation, and remuneration but achievements have been limited and no significant short-term changes are foreseen in the prevalence of U.S. collections.
The TEG 6s system is approved for the same set of indications as the TEG 5000 in Europe, Australia and Japan. We continue to pursue a broader set of indications for TEG 6s in the U.S. During fiscal 2020, we received FDA clearance for the use of TEG 6s in adult trauma settings.
The TEG 6s system is approved for the same set of indications as the TEG 5000 in Europe, Australia and Japan. We continue to pursue a broader set of indications for TEG 6s in the U.S. We received FDA clearance for the use of TEG 6s in adult trauma settings.
There are nevertheless a number of provisions that need to be complied with from the date of application, including updating the postmarket surveillance process, appointing an importer for the EU, appointing a person responsible for regulatory compliance, and updating economic operator agreements. Complying with the requirements of these regulations may require us to incur significant expenditures.
There are nevertheless a number of provisions that need to be complied with from the date of application, including updating the postmarket surveillance process, appointing an importer for the EU, appointing a person responsible for regulatory compliance, and updating economic operator agreements. Complying with the requirements of these regulations has and will continue to require us to incur significant expenditures.
A generic version of an approved drug is approved by means of an abbreviated new drug application, or ANDA, by which the sponsor demonstrates that the proposed product is the same as the approved, brand-name drug, which is referred to as the “reference listed drug,” or RLD.
A generic version of an approved drug is approved by means of an abbreviated new drug application, or ANDA, by which the sponsor demonstrates that the proposed product is the same as the approved, brand-name drug, which is referred to as the 10 Table of Contents “reference listed drug,” or RLD.
This statute has been interpreted to apply to arrangements between manufacturers of federally reimbursed products on one hand and prescribers, purchasers and others in a position to recommend, refer, or order federally reimbursed products on the other.
This statute has been interpreted to apply 11 Table of Contents to arrangements between manufacturers of federally reimbursed products on one hand and prescribers, purchasers and others in a position to recommend, refer, or order federally reimbursed products on the other.
The following provides an overview of the key competitors in each of our three global product enterprises. • Plasma In the automated plasma collection market, we principally compete with Fresenius' Fenwal Aurora and Aurora Xi product lines on the basis of speed, plasma yield per donation, quality, reliability, ease of use, services and technical features of the collection systems and on the long-term cost-effectiveness of equipment and disposables.
The following provides an overview of the key competitors in each of our three global product enterprises. • Plasma In the automated plasma collection market, we principally compete with Fresenius' Fenwal Aurora and Aurora Xi product lines a nd Terumo BCT's Rika device on the basis of speed, plasma yield per donation, quality, reliability, ease of use, services and technical features of the collection systems and on the long-term cost-effectiveness of equipment and disposables.
We offer a variety of programs and resources designed to facilitate our employees’ career development, training and networking, including: ◦ Manager development sessions focused on leadership skills, such as performance management training, coaching and feedback; ◦ Continuous improvement training for colleagues in functions that can best leverage and utilize process improvement practices; ◦ Best-in-class learning management system and dynamic content libraries aimed to meet the individual needs of colleagues’ current and future goals and aspirations; and ◦ Tuition reimbursement to support degree programs and certifications. 13 Table of Contents • Competitive Pay and Benefits .
We offer a variety of programs and resources designed to facilitate our employees’ career development, training and networking, including: ◦ Manager development sessions focused on leadership skills, such as performance management training, coaching and feedback; ◦ Continuous improvement training for employees in functions that can best leverage and utilize process improvement practices; ◦ Best-in-class learning management system and dynamic content libraries aimed to meet the individual needs of employees’ current roles as well as future goals and aspirations; and ◦ Tuition reimbursement to support degree programs and certifications. • Competitive Pay and Benefits .
With our software solutions, plasma collectors can manage processes across the plasma supply chain, ensure quality and compliance business process support, react quickly to business changes and implement opportunities to reduce costs. With our PCS brand, we have provided an automated platform dedicated to the collection of plasma for over 20 years. In fiscal 2018, we received U.S.
With our software solutions, plasma collectors can manage processes across the plasma supply chain, ensure quality and compliance business process support, react quickly to business changes and implement opportunities to reduce costs. With our PCS brand, we have provided an automated platform dedicated to the collection of plasma for over 20 years.
Vascular Closure Vascular Closure Market — Catheter-based, minimally invasive alternatives to open surgery have transformed cardiovascular medicine. The majority of these procedures gain access to the vascular system through the femoral artery or vein. These access sites in the vessel require closure post procedure.
The HAS-100 device is currently commercialized in China. Vascular Closure Vascular Closure Market — Catheter-based, minimally invasive alternatives to open surgery have transformed cardiovascular medicine. The majority of these procedures gain access to the vascular system through the femoral artery or vein. These access sites in the vessel require closure post procedure.
Beginning calendar year 2021, manufacturers must collect information regarding payments and other transfers of value to physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, and certified nurse-midwives for reporting in 2022. The reported data is made available in searchable form on a public website on an annual basis.
Manufacturers are also required to collect information regarding payments and other transfers of value to physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, and certified nurse-midwives for reporting. The reported data is made available in searchable form on a public website on an annual basis.
We continue to monitor changes in U.S. and international environmental regulations that may present a significant risk to the business, including laws or regulations relating to the manufacture or sale of products using plastics. Human Capital Our employees are the foundation of our organization, each with their own talents, backgrounds and abilities.
We continue to monitor changes in U.S. and international environmental regulations and emerging industry expectations that may present a significant risk to the business, including laws or regulations relating to the manufacture or sale of products using plastics and evolving customer expectations with respect to environmental stewardship. 12 Table of Contents Human Capital Our employees are the foundation of our organization, each with their own talents, backgrounds and abilities.
Our Blood Center business unit represented 35.3%, 32.1% and 34.1% of our total revenue in fiscal 2021, 2020 and 2019, respectively. • Hospital Hospitals are called upon to provide the highest standard of patient care while at the same time reduce operating costs.
Our Blood Center business unit represen ted 30.1%, 35.3% and 32.1% of ou r total revenue in fiscal 2022, 2021 and 2020, respectively. • Hospital Hospitals are called upon to provide the highest standard of patient care while at the same time reduce operating costs.
NexSys PCS is designed to enable higher plasma yield collections, improve productivity in our customers’ centers, enhance the overall donor experience and provide safe and reliable collections that will become life-changing medicines for patients.
In fiscal 2018, we began transitioning customers from our PCS2 equipment to NexSys PCS. NexSys PCS is designed to enable higher plasma yield collections, improve productivity in our customers’ centers, enhance the overall donor experience and provide safe and reliable collections that will become life-changing medicines for patients.
These two methods are mainly used by blood centers to collect plasma for transfusions. The third method is a dedicated apheresis procedure that only collects plasma and returns the other blood components to the donor.
These two methods are mainly used by blood centers to collect plasma for transfusions. The third method is a dedicated apheresis procedure that only collects plasma and 1 Table of Contents returns the other blood components to the donor. This third method is almost exclusively used for source plasma collection.
Risk Factors to be a complete statement of all potential risks and uncertainties. The Company does not undertake to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information or future events or developments. 16 Table of Contents
The Company does not undertake to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information or future events or developments. 15 Table of Contents
The HAS-100 device is currently commercialized in China. Cell Salvage Cell Salvage Market — The Cell Salvage market is mainly comprised of devices designed to transfuse back a patient’s own blood during or after surgery.
Cell Salvage Cell Salvage Market — The Cell Salvage market is mainly comprised of devices designed to transfuse back a patient’s own blood during or after surgery.
Frequently when blood products leave the blood bank, the transfusion management staff loses control and visibility of the blood components. They often do not know if the blood was handled, stored or transfused properly, which may lead to negative effects on patient safety, product quality, inventory availability and staff efficiency as well as increased waste.
They often do not know if the blood was handled, stored or transfused properly, which may lead to negative effects on patient safety, product quality, inventory availability and staff efficiency as well as increased waste.
This third method is mainly used for source plasma collection. 1 Table of Contents Our Plasma business unit focuses on the collection of source plasma by pharmaceutical manufacturers using apheresis devices that only collect plasma and software solutions that support the efficient operation of dedicated source plasma collection centers.
Our Plasma business unit focuses on the collection of source plasma by pharmaceutical manufacturers using apheresis devices that only collect plasma and software solutions that support the efficient operation of dedicated source plasma collection centers.
Our Plasma business unit represented 38.2%, 46.4% and 44.1% of our total revenue in fiscal 2021, 2020 and 2019, respectively. • Blood Center Our Blood Center business offers a range of solutions that improve donor collection centers' ability to acquire blood, filter blood and separate blood components.
Our Plasma business unit represen ted 35.4%, 38.2% and 46.4% of our to tal revenue in fiscal 2022, 2021 and 2020, respectively. • Blood Center Our Blood Center business offers a range of solutions that improve donor collection centers' ability to collect and filter blood and separate blood components.
As of April 3, 2021, we employed the full-time equivalent of 2,708 persons. Approximately 79% of our employees are located in the U.S. and the remaining 21% are located across 19 other countries. In our industry, there is substantial competition for key personnel in the regions in which we operate.
As of April 2, 2022, we employed the full-time equivalent of 2,821 persons. Approximately 78% of our employees are located in North America and the remaining 22% are located across 19 other countries. In our industry, there is substantial competition for key personnel in the regions in which we operate.
Prior to the acquisition of Cardiva in March 2021, we had not been required to obtain a PMA for any of our products and did not have any Class III products in our product pipeline.
Prior to the acquisition of Cardiva in March 2021, we had not been required to obtain a PMA for any of our products and did not have any Class III products in our product pipeline. With the acquisition of Cardiva, we have acquired VASCADE and VASCADE MVP, which are both Class III products for which PMAs were previously obtained.
NexSys PCS with Persona technology uses a percent plasma nomogram that customizes plasma collection based on an individual donor's body composition. The new, proprietary Persona technology strengthens the NexSys PCS value 2 Table of Contents proposition and reinforces our commitment to supporting the plasma industry. We expect to pursue further regulatory clearances for additional enhancements to the overall product offering.
NexSys PCS with Persona technology uses a percent plasma nomogram that customizes plasma collection based on an individual donor's body composition, including an additional 9-12% plasma yield. The new, proprietary Persona technology strengthens the NexSys PCS value proposition and reinforces our commitment to supporting the plasma 2 Table of Contents industry.
We have entered into long-term commercial contracts and are continuing the rollout and support of NexSys PCS devices and NexLynk DMS donor management software for these Plasma customers.
We expect to pursue further regulatory clearances for additional enhancements to the overall product offering. We have entered into long-term commercial contracts and are continuing the rollout and support of NexSys PCS devices and NexLynk DMS donor management software for these Plasma customers.
There are not currently any competing vascular access site closure devices that are labeled for electrophysiology procedures that require multiple access sites. We compete primarily on the basis that our products are optimized for the requirements of coronary, peripheral and electrophysiology procedures, including procedures that require multiple access sites.
We compete primarily on the basis that our products are optimized for the requirements of coronary, peripheral and electrophysiology procedures, including procedures that require multiple access sites.
In China, the market is populated by local producers of a product that is intended to be similar to ours. Recently, those competitors have expanded to markets beyond China, including European and South American countries. In the field of plasma related software, MAK Systems is the primary competitor along with applications developed internally by our customers.
In China, the market is populated by local producers of a product that is intended to be similar to ours. Recently, those competitors have expanded to markets beyond China, including European and South American countries.
The TEG analyzer competes with these routine laboratory tests based on its ability to provide a more complete picture of a patient's hemostasis at a single point in time and to measure the clinically relevant platelet function for an individual patient.
The TEG analyzer competes with these routine laboratory tests based on its ability to provide a more complete picture of a patient's hemostasis at a single point in time and to measure the clinically relevant platelet function for an individual patient. 7 Table of Contents In addition, TEG and ClotPro systems compete more directly with other viscoelastic testing systems, including ROTEM ® analyzers, the VerifyNow ® System and HemoSonics Quantra™.
In addition, a third customer accounted for greater than 10% of the Plasma segment's net revenues, but did not exceed 10% of total net revenues in fiscal 2021, 2020 and 2019. One customer accounted for greater than 10% of our Blood Center segment’s net revenues, but did not exceed 10% of total net revenues in fiscal 2021, 2020 and 2019.
In addition to CSL, two customers also accounted for greater than 10% of the Plasma segment's net revenues and one customer accounted for greater than 10% of the Blood Center segment's net revenue, but did not exceed 10% of total net revenues, in fiscal 2022.
Similarly, our VASCADE MVP device is the only marketed vascular closure device clinically proven and labeled to improve workflow relative to manual compression for electrophysiology procedures. Importantly, these improvements drive meaningful cost savings for hospitals, ambulatory surgery centers, and other treatment facilities.
Similarly, our VASCADE MVP device is the only marketed vascular closure device clinically proven and labeled to improve workflow relative to manual compression for electrophysiology procedures.
Other postmarket requirements include compliance with: • The Quality System Regulation, or QSR, which sets forth current good manufacturing practice, or CGMP, requirements for medical devices. The QSR applies to manufacturers, including contract manufacturers, of finished medical devices, and governs methods, facilities, and controls used in designing, manufacturing, packaging, labeling, storing, installing and servicing such devices.
The QSR applies to manufacturers, including contract manufacturers, of finished medical devices, and governs methods, facilities, and controls used in designing, manufacturing, packaging, labeling, storing, installing and servicing such devices.
In the United States, medical devices, drugs, and biological products are subject to extensive regulation by FDA under the Federal Food, Drug, and Cosmetic Act, or FDCA, and other federal and state statutes and regulations.
To varying degrees, each of these agencies requires us to comply with laws and regulations governing the development, testing, manufacturing, labeling, marketing and distribution of our products. 8 Table of Contents In the United States, medical devices, drugs, and biological products are subject to extensive regulation by FDA under the Federal Food, Drug, and Cosmetic Act, or FDCA, and other federal and state statutes and regulations.
Availability of Reports and Other Information All of our corporate governance materials, including the Principles of Corporate Governance, Code of Conduct and the charters of the Audit, Compensation, Governance and Compliance and Technology Committees are published on the Investor Relations section of our website at www.haemonetics.com .
For example, in 2020 we formed the Women’s Initiative Network under the sponsorship of executive leaders that meets regularly, provides development opportunities and participates in external networking events. 13 Table of Contents Availability of Reports and Other Information All of our corporate governance materials, including the Principles of Corporate Governance, Code of Conduct and the charters of the Audit, Compensation, Governance and Compliance and Technology Committees are published on the Investor Relations section of our website at www.haemonetics.com .
There are also additional technologies being explored to assess viscoelasticity and other characteristics that can provide insights into the coagulation status of a patient. In the advanced viscoelastic testing segment, Haemonetics is the global market leader. Cell Salvage In the intraoperative autotransfusion market, competition is based on reliability, ease of use, service, support and price.
ROTEM and VerifyNow instruments are marketed by Instrumentation Laboratory, a subsidiary of Werfen. HemoSonics is owned and offered by Diagnostica Stago. There are also additional technologies being explored to assess viscoelasticity and other characteristics that can provide insights into the coagulation status of a patient. In the advanced viscoelastic testing segment, Haemonetics is the global market leader.
Therefore, both Haemonetics and our competitors continue to experience downward pressure on collection through single platelet collection procedures. 7 Table of Contents • Hospital Hemostasis Management Our hemostasis analyzer systems are used primarily in surgical applications.
Therefore, both Haemonetics and our competitors continue to experience downward pressure on collection through single platelet collection procedures. • Hospital Hemostasis Management Our hemostasis analyzer systems are used primarily in surgical applications. Competition includes routine coagulation tests, such as prothrombin time, partial thromboplastin time and platelet count marketed by various manufacturers, such as Instrumentation Laboratory, Diagnostica Stago SAS and Sysmex.
Two of our Plasma customers, CSL and Grifols, each were greater than 10% of total net revenues and in total accounted for approximately 23%, 27% and 27% of our net revenues in fiscal 2021, 2020 and 2019, respectively.
Significant Customers In fiscal 2022, 2021 and 2020, our ten largest customers accounted for approximately 45%, 49% and 54% of our net revenues, respectively. In fiscal 2022, one Plasma customer, CSL, was greater than 10% of total net revenue and in total accounted for approximately 12% of net revenues.
Managing the safety and traceability of the blood supply chain and comprehensive management of patients, orders, specimens, blood products, derivatives and accessories across the hospital network is challenging. In addition, providing clinicians with the vital access to blood when needed most while maintaining traceability is a key priority.
In addition, providing clinicians with the vital access to blood when needed most while maintaining traceability is a key priority. Frequently when blood products leave the blood bank, the transfusion management staff loses control and visibility of the blood components.
In addition, our value proposition is supported by robust clinical trial evidence and study data, which demonstrate reduced access site complication rates as well as workflow improvements compared to manual compression that lead to cost savings. 8 Table of Contents Significant Customers In fiscal 2021, 2020 and 2019, our ten largest customers accounted for approximately 49%, 54% and 52% of our net revenues, respectively.
In addition, our value proposition is supported by robust clinical trial evidence and study data, which demonstrate reduced access site complication rates as well as workflow improvements compared to manual compression that lead to cost savings. Transfusion Management SafeTrace Tx and BloodTrack compete in the transfusion management software market within the broader category of hospital information systems.
After the FDA permits a device to enter commercial distribution, numerous regulatory requirements continue to apply. Generally, establishments that design and/or manufacture devices are required to register with the FDA. They also must provide the FDA with a list of the devices that they design and/or manufacture at their facilities.
The 510(k) clearance, de novo classification, and PMA processes can be resource intensive, expensive, lengthy and require payment of significant user fees. Postmarket Requirements - U.S. After the FDA permits a device to enter commercial distribution, numerous regulatory requirements continue to apply. Generally, establishments that design and/or manufacture devices are required to register with the FDA.
Our VASCADE family of products serves as an alternative to existing methods of femoral vascular access site closure in interventional procedures, including manual compression and other femoral access closure devices. Our main competitors in femoral access closure for coronary and peripheral procedures include Terumo BCT, Abbott Laboratories and Cardinal Health.
Vascular Closure The vascular closure industry is highly competitive and has been evolving rapidly with the introduction of new products, technologies, regulations and activities of industry participants. Our VASCADE family of products serves as an alternative to existing methods of femoral vascular access site closure in interventional procedures, including manual compression and other femoral access closure devices.
Failure to meet these requirements could adversely impact our business in the EU and other regions that tie their product registrations to the EU requirements. Drug Regulation Development and Approval Under the FDCA, FDA approval of a new drug application, or NDA, is generally required before any new drug can be marketed in the U.S.
Drug Regulation Development and Approval Under the FDCA, FDA approval of a new drug application, or NDA, is generally required before any new drug can be marketed in the U.S. NDAs require extensive studies and submission of a large amount of data by the applicant.
The Cell Saver Elite + is designed to minimize allogeneic blood use and reliably recover and transfuse a patient’s own high-quality blood. 4 Table of Contents Transfusion Management Transfusion Management Market — Hospital transfusion services professionals and clinicians are facing cost restraints in addition to the pressure to enhance patient safety, compliance and operational efficiency.
Transfusion Management Transfusion Management Market — Hospital transfusion services professionals and clinicians are facing cost restraints in addition to the pressure to enhance patient safety, compliance and operational efficiency. Managing the safety and traceability of the blood supply chain and comprehensive management of patients, orders, specimens, blood products, derivatives and accessories across the hospital network is challenging.
For high-volume platforms, each manufacturer's technology is similar and our Cell Saver technology competes principally with products offered by LivaNova PLC, Medtronic and Fresenius. Transfusion Management SafeTrace Tx and BloodTrack compete in the transfusion management software market within the broader category of hospital information systems.
BloodTrack integrates with the hospital’s existing lab or blood bank system allowing for greater market acceptance. Cell Salvage In the intraoperative autotransfusion market, competition is based on reliability, ease of use, service, support and price. For high-volume platforms, each manufacturer's technology is similar and our Cell Saver technology competes principally with products offered by LivaNova PLC, Medtronic and Fresenius.
Our response to the COVID-19 pandemic has focused on business continuity and the safety of our employees. This includes prioritizing employee safety with remote work and travel restrictions, and limiting exposure for our manufacturing and customer facing employees, including field service and sales teams, to ensure supplies and support for our customers. • Diversity, Equity and Inclusion .
This includes prioritizing employee safety with remote work for employees in our administrative functions, implementing extensive cleaning and sanitation processes for all Haemonetics facilities, and instituting various safety protocols to limit exposur e for our manufacturing and customer facing employees, including field service and sales teams, to ensure supplies and support for our customers.
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Food and Drug Administration (“FDA”) 510(k) clearance for our next generation device, the NexSys PCS and CE mark clearance of the NexSys PCS device in the European Union, or EU, and Australia, subject to additional local requirements.
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Importantly, these improvements drive meaningful cost savings for hospitals, ambulatory surgery centers, and other treatment facilities. 4 Table of Contents During fiscal 2022, the VASCADE MVP Venous Vascular Closure System became the first and only vascular closure device to receive FDA indication for same-day discharge following atrial fibrillation ablation.
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Our Hospital business unit represented 24.2%, 19.6% and 19.9% of our total revenue in fiscal 2021, 2020 and 2019, respectively.
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The Cell Saver Elite + is designed to minimize allogeneic blood use and reliably recover and transfuse a patient’s own high-quality blood. Our Hospital business unit repr esented 32.5%, 24.2% and 19.6% of our t otal revenue in fiscal 2022, 2021 and 2020, respectively.
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In April 2021, Terumo BCT and CSL announced a collaboration to deliver a new plasma collection platform for CSL's U.S. collection centers.
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In the field of plasma related software, MAK Systems is the primary competitor along with applications developed internally by our customers. • Blood Center Most donations worldwide are traditional manual whole blood collections and approximate ly 30% of th e Blood Center portfolio competes in this space.
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This potential new entrant to the market is undergoing a clinical trial and will require FDA device clearance prior to use in the U.S. • Blood Center Most donations worldwide are traditional manual whole blood collections and approximately 30% of the Blood Center portfolio competes in this space.
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Our main competitors in femoral access closure for coronary and peripheral procedures include Terumo BCT, Abbott Laboratories and Cardinal Health. There are not currently any competing vascular access site closure devices that are labeled for electrophysiology procedures that require multiple access sites.
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Competition includes routine coagulation tests, such as prothrombin time, partial thromboplastin time and platelet count marketed by various manufacturers, such as Instrumentation Laboratory, Diagnostica Stago SAS and Sysmex.
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They also must provide the FDA with a list of the devices that they design and/or manufacture at their facilities. Other postmarket requirements include compliance with: • The Quality System Regulation, or QSR, which sets forth current good manufacturing practice, or cGMP, requirements for medical devices.
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In addition, TEG and ClotPro systems compete more directly with other viscoelastic testing systems, including ROTEM ® analyzers, the VerifyNow ® System and HemoSonics Quantra™. ROTEM and VerifyNow instruments are marketed by Instrumentation Laboratory, a subsidiary of Werfen. HemoSonics is owned and offered by Diagnostica Stago.
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Failure to meet these requirements could adversely impact our business in the EU and other regions that tie their product registrations to the EU requirements. Regulatory requirements in other jurisdictions also continue to become more stringent, increasing regulatory requirements to register and maintain products in these markets.
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BloodTrack integrates with the hospital’s existing lab or blood bank system allowing for greater market acceptance. Vascular Closure The vascular closure industry is highly competitive and has been evolving rapidly with the introduction of new products, technologies, regulations and activities of industry participants.
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Our response to the COVID-19 pandemic has focused on business continuity and the safety of our employees.
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To varying degrees, each of these agencies requires us to comply with laws and regulations governing the development, testing, manufacturing, labeling, marketing and distribution of our products.
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We have also instituted protocols to ensure compliance with vaccine mandates applicable to our employees. Beginning in March 2022, we executed plans to return employees to offices in jurisdictions where safe and feasible and introduced a new hybrid work model for administrative functions in the U.S. and certain other jurisdictions. • Diversity, Equity and Inclusion .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe believe the magnitude of the adverse impact of these factors on our business, financial condition, cash flows and results of operations will be primarily driven by: the severity and duration of the COVID-19 pandemic, including the time it will take for vaccines to be broadly distributed and accepted in the U.S. and the rest of the world; the timing, scope and effectiveness of governmental responses to the COVID-19 pandemic and associated economic disruptions; general confidence about personal health and safety; and the COVID-19 pandemic’s impact on U.S. and international healthcare systems, the U.S. economy and the worldwide economy. 17 Table of Contents Risks Related to our Business and Industry If our business strategy does not yield the expected results or we fail to implement the necessary changes to our operations, we could see material adverse effects on our business, financial condition or results of operations.
Biggest changeAs these and other impacts of COVID-19 continue to adversely affect our Company, they may also have the effect of heightening many of the ot her risks described in the Risk Factors section of this Annual Report on Form 10-K. 16 Table of Contents We believe the magnitude of the adverse impact of these factors on our business, financial condition, cash flows and results of operations in the future will be primarily driven by: the severity and duration of the COVID-19 pandemic (including the extent of future surges, variants and the efficacy of vaccinations); global vaccine distribution and acceptance; the timing, scope and effectiveness of governmental responses to the COVID-19 pandemic and associated economic disruptions; general confidence about personal health a nd safety; and the COVID-19 pandemic’s impact on U.S. and international healthcare systems, the U.S. economy and the worldwide economy.
In addition, applicable law, regulatory authorities and the agreements governing our other indebtedness may restrict our ability to repurchase the 2026 Notes or pay the cash amounts due upon conversion. Our failure to repurchase 2026 Notes or to pay the cash amounts due upon conversion when required will constitute a default under the Indenture.
In addition, applicable law, regulatory authorities and the agreements governing our other indebtedness may restrict our ability to repurchase the 2026 Notes or pay the cash amounts due upon conversion. Our failure to repurchase the 2026 Notes or to pay the cash amounts due upon conversion when required will constitute a default under the Indenture.
Such changes could impact our ability to meet demand on a timely basis or could result in potential reductions in demand in future periods if safety stock levels in certain markets return to pre-COVID-19 levels or the supply of blood held by our customers significantly exceeds the demand for blood from hospitals due to declines of elective surgeries and trauma cases. • Manufacturing, Supply Chain and Distribution System Disruption .
Such changes could impact our ability to meet demand on a timely basis or could result in potential reductions in demand in future periods, including if safety stock levels in certain markets return to pre-COVID-19 levels or the supply of blood held by our customers significantly exceeds the demand for blood from hospitals due to declines of elective surgeries and trauma cases. • Manufacturing, Supply Chain and Distribution System Disruption .
Certain countries, particularly China, do not enforce compliance with laws that protect intellectual property rights with the same degree of vigor as is available under the U.S. and European systems of justice. Further, certain of our intellectual property rights are not registered in China, or if they were, have since expired.
Certain countries, particularly China and Russia, do not enforce compliance with laws that protect intellectual property rights with the same degree of vigor as is available under the U.S. and European systems of justice. Further, certain of our intellectual property rights are not registered in China, or if they were, have since expired.
The EU MDR is fully applicable as of May 26, 2021 and the EU IVDR is fully applicable as of May 26, 2022. There is a transition period for devices with a notified body certificate with an expiry date after the date of full application, provided that there are no significant changes to the design or intended use.
The EU MDR became fully applicable as of May 26, 2021 and the EU IVDR is fully applicable as of May 26, 2022. There is a transition period for devices with a notified body certificate with an expiry date after the date of full application, provided that there are no significant changes to the design or intended use.
If we are unable to retain qualified representatives or maintain the necessary regulatory approvals, we will not be able to continue to sell products in these markets. We are exposed to a higher degree of financial risk if we extend credit to customers in these economies.
If we are unable to retain qualified representatives or maintain the necessary regulatory approvals, we will not be able to continue to sell products in these markets. We are also exposed to a higher degree of financial risk if we extend credit to customers in these economies.
Lower collection volumes at source plasma collection centers due to COVID-19 factors, including stay-at-home and other government orders designed to slow the spread of COVID-19, donor safety concerns, reduced donor collection capacity due to shutdowns and social distancing requirements, and government economic relief programs that may reduce the propensity of people to be donors, have adversely affected and likely will continue to adversely affect demand for our Plasma disposable products.
Lower collection volumes at source plasma collection centers due to COVID-19 factors, including stay-at-home and other government orders designed to slow the spread of COVID-19, donor safety concerns, reduced donor collec tion capacity due to shutdowns and social distancing requirements, and government economic relief programs that may reduce the propensity of people to be donors, have adversely affected and will likely continue to adversely affect demand for our Plasma disposable products.
While we have significant sources of cash and liquidity and access to committed credit lines, we may be adversely impacted by delays in payments of outstanding receivables if our customers experience financial difficulties or are unable to borrow money to fund their operations, which may adversely impact their ability to pay for our products on a timely basis, if at all, which in turn would adversely affect our financial condition.
While we have significant sources of cash and liquidity and access to committed credit lines, w e may be adversely impacted by delays in payments of outstanding receivables if our customers experience financial difficulties or are unable to borrow money to fund their operations, which may adversely impact their ability to pay for our products on a timely basis, if at all, which in turn would adversely affect our financial condition.
Any of these events, in turn, may cause us to lose existing customers, have difficulty preventing, detecting and controlling fraud, have disputes with customers, physicians and other healthcare professionals, be subject to legal claims and liability, have regulatory sanctions or penalties imposed, have increases in operating expenses, incur expenses or lose revenues as a result of a data privacy breach or theft of intellectual property, or suffer other adverse consequences, any of which could have a material adverse effect on our business, financial condition or results of operations.
Any of these events, in turn, may cause us to lose existing customers, have difficulty preventing, detecting and controlling fraud, have disputes with customers, physicians and other healthcare professionals, be subject to legal claims and liability, have regulatory sanctions or penalties imposed, have increases in operating expenses, incur expenses or lose revenues as a result of a data privacy breach or theft of intellectual property, or 18 Table of Contents suffer other adverse consequences, any of which could have a material adverse effect on our business, financial condition or results of operations.
The results of our product development efforts may be affected by a number of factors, including our ability to anticipate customer needs, innovate and develop new products and technologies, successfully complete clinical trials, obtain regulatory approvals in the United States and abroad, manufacture products in a cost-effective manner, obtain appropriate intellectual 21 Table of Contents property protection for our products, and gain and maintain market acceptance of our products.
The results of our product development efforts may be affected by a number of factors, including our ability to anticipate customer needs, innovate and develop new products and technologies, successfully complete clinical trials, obtain regulatory approvals in the United States and abroad, manufacture products in a cost-effective manner, obtain appropriate intellectual property protection for our products, and gain and maintain market acceptance of our products.
If one or more noteholders elect to convert their 2026 Notes, we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
If one or more noteholders elect to convert their 2026 Notes, we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect ou r liquidity.
Any of these factors could cause us to experience an effective tax rate significantly different from previous periods or our current expectations, which could adversely affect our business, results of operations and cash flows. 27 Table of Contents Risks Related to Intellectual Property and Litigation There is a risk that our intellectual property may be subject to misappropriation in some countries.
Any of these factors could cause us to experience an effective tax rate significantly different from previous periods or our current expectations, which could adversely affect our business, results of operations and cash flows. Risks Related to Intellectual Property and Litigation There is a risk that our intellectual property may be subject to misappropriation in some countries.
If they misrepresent our products, do not provide appropriate service and delivery, or commit a violation of local or U.S. law, our reputation could be harmed and we could be subject to fines, sanctions or both. We are exposed to fluctuations in currency exchange rates, which could adversely affect our cash flows and results of operations.
If they misrepresent our products, do not provide appropriate service and delivery, or commit a violation of local or U.S. law, our reputation could be harmed and we could be subject to fines, sanctions or both. 26 Table of Contents We are exposed to fluctuations in currency exchange rates, which could adversely affect our cash flows and results of operations.
The demand for whole blood disposable products in the U.S. continued to decrease in fiscal 2021 due to sustained declines in transfusion rates caused by hospitals' improved blood management techniques and protocols.
The demand for whole blood disposable products in the U.S. continued to decrease in fiscal 2022 due to sustained declines in transfusion rates caused by hospitals' improved blood management techniques and protocols.
We are reliant on Tetakawi to provide these services and any disruption in these services or our failure to maintain our contractual relationship with Tetakawi could significantly harm our 20 Table of Contents ability to manufacture our vascular closure devices and maintain sufficient quality standards, which would negatively impact our business and results of operations.
We are reliant on Tetakawi to provide these services and any disruption in these services or our failure to maintain our contractual relationship with Tetakawi could significantly harm our ability to manufacture our vascular closure devices and maintain sufficient quality standards, which would negatively impact our business and results of operations.
In addition, the government controlled healthcare system's ability to invest in our products and systems may abruptly shift due to changing government priorities or funding capacity.
In addition, the government controlled healthcare system's ability to invest in our products and systems may abruptly shift due to changing government priorities, geopolitical events or funding capacity.
In response to this trend, U.S. 19 Table of Contents blood center collection groups prefer single source vendors for their whole blood collection products and are primarily focused on obtaining the lowest average selling prices. We expect to see continued declines in transfusion rates and the market to remain price-focused and highly competitive for the foreseeable future.
In response to this trend, U.S. blood center collection groups prefer single source vendors for their whole blood collection products and are primarily focused on obtaining the lowest average selling prices. We expect to see continued declines in transfusion rates and the market to remain price-focused and highly competitive for the foreseeable future.
The success of any acquisition, investment or alliance, including our recent acquisition of Cardiva may be affected by a number of factors, including our ability to properly assess and value the potential business opportunity or to successfully integrate any business we may acquire into our existing business.
The success of any acquisition, investment or alliance, or of any divesture, may be affected by a number of factors, including our ability to properly assess and value the potential business opportunity or to successfully integrate any business we may acquire into our existing business.
This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the 2026 Notes. 25 Table of Contents We are subject to counterparty risk with respect to the Capped Call Transactions.
This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the 2026 Notes. We are subject to counterparty risk with respect to the Capped Call Transactions.
As of April 3, 2021, we had $500 million aggregate principal amount of indebtedness under our convertible senior notes due 2026 (the “2026 Notes”) as well as $350.0 million term loan (the “Term Loan”) and access to a $350.0 million revolving loan (the “Revolving Credit Facility” and together with the Term Loan, the “Credit Facilities”).
As of April 2, 2022, we had $500 million aggregate principal amount of indebtedness under our convertible senior notes due 2026 (the “2026 Notes”) as well as a $350.0 million term loan (the “Term Loan”) and access to a $350.0 million revolving loan (the “Revolving Credit Facility” and together with the Term Loan, the “Credit Facilities”).
Our ability to sell products in these economies is dependent upon our ability to hire qualified employees or agents to represent our products locally and our ability to obtain and maintain the necessary regulatory approvals in a less mature regulatory environment.
Our ability to sell products in these economies is dependent upon, among other factors, our ability to hire qualified employees or agents to represent our products locally and our ability to obtain and maintain the necessary regulatory approvals in a less mature regulatory environment.
We are required to comply with increasingly complex and changing legal and regulatory requirements that govern the collection, use, storage, security, transfer, disclosure and other processing of personal data in the United States and in other countries, including, but not limited to, HIPAA, HITECH, the California Consumer Privacy Act, or CCPA, and the EU’s General Data Protection Regulation, or GDPR.
We are required to comply with increasingly complex and changing legal and regulatory requirements that govern the collection, use, storage, security, transfer, disclosure and other processing of personal data in the United States and in other countries, including, but not limited to, HIPAA, HITECH, the California Consumer Privacy Act, or CCPA, the California Privacy Rights Act, effective January 1, 2023, and the EU’s General Data Protection Regulation, or GDPR.
Additionally, certain of our products collect data regarding patients and donors and connect to our systems for maintenance and other purposes or are actively managed by Haemonetics on behalf of specific 18 Table of Contents customers.
Additionally, certain of our products collect data regarding patients and donors and connect to our systems for maintenance and other purposes or are actively managed by Haemonetics on behalf of specific customers.
There can be no assurance that any share repurchases would enhance shareholder value because the market price of our common stock may decline below the levels at which we repurchased our common stock. Although our share repurchase programs are intended to enhance long-term shareholder value, short-term stock price fluctuations could reduce a program’s effectiveness.
There can be no assurance that any share repurchases would enhance shareholder value because the market price of our common stock may decline below the levels at 28 Table of Contents which we repurchased our common stock. Although our share repurchase programs are intended to enhance long-term shareholder value, short-term stock price fluctuations could reduce a program’s effectiveness. ITEM 1B.
However, the calculation of such tax exposures involves the application of complex tax laws and regulations in many jurisdictions, as well as interpretations as to the legality under various rules in certain jurisdictions.
However, the calculation of such tax exposures involves the application of complex 23 Table of Contents tax laws and regulations in many jurisdictions, as well as interpretations as to the legality under various rules in certain jurisdictions.
Due to regulatory changes, we may be required to remove materials such as phthalates from our devices, find alternative materials which then need to be validated or obtain regulatory approvals from the regulatory authorities for a number of products.
Due to regulatory changes and evolving customer expectations, we may be required to remove materials such as phthalates from our devices, find alternative materials which then need to be validated or obtain regulatory approvals from the regulatory authorities for a number of products.
Due to the high standards and stringent requirements of the FDA and other similar non-U.S. regulatory agencies applicable to manufacturing our products, such as the FDA's Quality System Regulation, or QSR, and current Good Manufacturing Practice, or cGMP, regulations, we may not be able to quickly establish additional or replacement sources for certain raw materials, components or finished goods.
Due to the high standards and stringent requirements of the FDA and other similar non-U.S. regulatory agencies applicable to manufacturing our products, such as the FDA's QSR and cGMP regulations, we also may not be able to quickly establish additional or replacement sources for certain raw materials, components or finished goods.
We source all of our apheresis equipment from Asia and regularly ship finished goods from the U.S. and Mexico to the rest of the world. Some of our products require sterilization prior to sale or distribution, and we utilize third-party facilities for this process.
For example, we purchase components in Asia for use in manufacturing in the U.S. and Mexico. We source all of our apheresis equipment from Asia and regularly ship finished goods from the U.S. and Mexico to the rest of the world. Some of our products require sterilization prior to sale or distribution, and we utilize third-party facilities for this process.
Failure to meet these requirements could adversely impact our business in the EU and other regions that tie their product registrations to the EU requirements. If we or our suppliers fail to comply with laws and regulations governing the manufacture and production of our products, our products could be subject to restrictions or withdrawal from the market.
Failure to meet these requirements could adversely impact our business in the EU and other applicable regions. If we or our suppliers fail to comply with laws and regulations governing the manufacture and production of our products, our products could be subject to restrictions or withdrawal from the market.
We are unable to predict the extent to which COVID-19 and its related impacts will continue to negatively affect our Company, including the time it will take for vaccines to be broadly distributed and accepted in the U.S. and the rest of the world, and the effectiveness of such vaccines in slowing or stopping the spread of COVID-19 and mitigating the economic effects of the pandemic: • Product Demand .
We are unable to predict the extent to which COVID-19 and its related impacts will continue to negatively affect our Company, including the time it will take for vaccines to be broadly distributed and administered worldwide, and the effectiveness of such vaccines in slowing or stopping the spread of COVID-19 and its variants and mitigating the economic effects of the pandemic: • Product Demand .
As of April 3, 2021, we had $301.9 million of debt outstanding under the Term Loan and no borrowings were outstanding under the Revolving Credit Facility. Our Credit Facilities contain financial covenants that require us to maintain specified financial ratios that may limit our ability to borrow additional funds and that require us to make interest and principal payments.
As of April 2, 2022, we had $284.4 million of debt outstanding under the Term Loan and no borrowings were outstanding under the Revolving Credit Facility. Our Credit Facilities contain financial covenants that require us to maintain specified financial ratios that may limit our ability to borrow additional funds and that require us to make interest and principal payments.
As of April 3, 2021, we were in compliance with the covenants pursuant to our Credit Facilities, and we currently forecast that we will be in compliance with our Credit Facility covenants through the period ending April 2, 2022.
As of April 2, 2022, we were in compliance with the covenants pursuant to our Cr edit Facilities, and we currently forecast that we will be in compliance with our Credit Facility covenants through the period ending April 1, 2023.
In particular, we and our third-party suppliers must comply with the FDA's Quality System Regulation, or QSR, or current good manufacturing process, or cGMP, requirements (depending on the products at issue), which address, among other things, the methods of documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our products.
In particular, we and our third-party suppliers m ust comply with the FDA's QSR or cGMP requirements (depending on the products at issue), which address, among other things, the methods of documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our products.
International revenues and expenses account for a substantial portion of our operations. In fiscal 2021, our international revenues accounted for 40.0% of our total revenues. The exposure to fluctuations in currency exchange rates takes different forms.
International revenues and expenses account for a substantial portion of our operations. In fiscal 2022, our international revenues accounted for 35.6% of our total revenues. The exposure to fluctuations in currency exchange rates takes different forms.
In addition to the anticipated financial impact of the non-renewal of the CSL supply agreement in June 2022, we could experience an adverse effect on our results of operations or financial condition if any of our other largest customers materially reduce their purchases from us or terminate their relationship with us for any reason, including material decreases in demand for plasma or development of alternative processes.
In addition to the anticipated financial impact of the expiration of the CSL supply agreement in Decembe r 2023, we could experience an adverse effect on our results of operations or financial condition if any of our other largest customers materially re duce their purchases from us or terminate their relationship with us for any reason, including material decreases in demand for plasma or development of alternative processes.
Even if holders do not elect to convert their 2026 Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2026 Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
Even if holders do not elect to convert their 2026 Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2026 Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital. 24 Table of Contents The Capped Call Transactions may affect the value of the 2026 Notes and our common stock.
If we have not correctly identified the product categories with greatest growth potential, we will not allocate our resources appropriately which could have a material adverse effect on our business, financial condition or results of operations.
If we have not correctly identified the product categories with greatest growth potential, we will not allocate our resources appropriately which could have a material adverse effect on our business, financial condition or results of operations. Material reductions in purchasing from or loss of a significant customer could adversely affect our business.
Our ability to recruit and retain key talent will depend on a number of factors, including hiring practices of our competitors, compensation and benefits, work location, work environment and industry economic conditions.
Our ability to recruit and retain key talent will depend on a number of factors, including hiring practices of our competitors, compensation and benefits, work location, work environment, COVID-19 related health and safety protocols (including vaccine mandates) and industry economic conditions.
In addition, a delay in the timing of the launch of next-generation products and the overall performance of, and continued customer confidence in, those products may result in declines in our market share and have an adverse impact on our business, financial condition or results of operations.
In addition, a delay in the timing of the launch of next-generation products and the overall performance of, and continued customer confidence in, those products may result in declines in our market share and have an adverse impact on our business, financial condition or results of operations. 17 Table of Contents Defects or quality issues associated with our products could adversely affect the results of operations.
Share repurchase programs could affect the price of our common stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our common stock.
Share repurchase programs could affect the price of our common stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our common stock. We may in the future request that the Board of Directors authorize one or more share repurchase programs.
If our products were determined to have design or manufacturing flaws, this could also result in their recall or seizure. Either of these situations could also result in the imposition of fines, administrative actions like untitled or warning letters, and other penalties or sanctions. Our products are also subject to approval and regulation by foreign regulatory and safety agencies.
Either of these situations could also result in the imposition of fines, administrative actions like untitled or warning letters, and other penalties or sanctions. Our products are also subject to approval and regulation by foreign regulatory and safety agencies.
We also have experienced, and may continue to experience, in certain markets rapid and unpredictable changes in demand for some of our Blood Center disposable products as blood collectors seek to replenish their blood product inventories and safety stocks.
We also have experienced, and may continue to experience, in certain markets rapid and unpredictable changes in demand for some of our Blood Center disposable products both from reductions in donation volumes relating to resurgences in COVID-19 and its variants and as blood collectors seek to replenish their blood product inventories and safety stocks.
Our inability to realize all of the anticipated benefits from the 2020 Program could have a material adverse effect on our business, results of operations, cash flows and financial condition.
Our inability to realize all of the anticipated benefits from the 2020 Program could have a material adverse effect on our business, results of operations, cash flows and financial condition. If our business development activities are unsuccessful, we may not realize the intended benefits.
Our operations are also subject to review and monitoring by the FDA and other regulatory authorities. Government regulation of medical devices is meant to assure their safety and effectiveness, and includes regulation of, among other things, the product’s development, testing, premarket clearance and approval, manufacture, marketing, labeling, post-market surveillance, reporting, and imports and exports.
Government regulation of medical devices is meant to assure their safety and effectiveness, and includes regulation of, among other things, the product’s development, testing, premarket clearance and approval, manufacture, marketing, labeling, post-market surveillance, reporting, and imports and exports.
While cost savings from the 2020 Program to date have been consistent with our expectations, it is possible that events and circumstances, such as CSL's non-renewal of its U.S. supply agreement in June 2022, other financial or strategic difficulties, delays and unexpected costs, including as a direct or indirect result of the COVID-19 pandemic, could result in our not realizing all of the anticipated benefits or our not realizing the anticipated benefits on our expected timetable.
While cost savings from the 2020 Program to date have been consistent with our expectations, it is possible that events and circumstances, such as the aforementioned customer loss, labor shortages, sustained inflationary pressures and other financial or strategic difficulties, delays and unexpected costs, including as a direct or indirect result of the COVID-19 pandemic, could result in our not realizing all of the anticipated benefits or our not realizing the anticipated benefits on our expected timetable.
In July 2019, our Board of Directors approved a new Operational Excellence Program, also referred to in this report as the 2020 Program, and delegated authority to management to determine the detail of the initiatives that will comprise the program. The 2020 Program is designed to improve operational performance and reduce cost principally in our manufacturing and supply chain operations.
In July 2019, our Board of Directors approved a new Operational Excellence Program, also referred to in this report as the 2020 Program, and delegated authority to management to determine the detail of the initiatives that will comprise the program.
The Capped Call Transactions may affect the value of the 2026 Notes and our common stock. In connection with the 2026 Notes issuance, we entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain financial institutions (the “Option Counterparties”).
In connection with the 2026 Notes issuance, we entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain financial institutions (the “Option Counterparties”).
We manufacture certain key disposables and devices at single locations with limited alternate facilities. If an event occurs that results in the closure of or damage to one or more of these facilities, we may be unable to supply the relevant products at previous levels or at all for some period.
We manufacture certain key disposables and devices at single locations with limited alternate facilities. If natural disasters, strikes, terrorism attacks or other adverse events occur that result in the closure of or damage to one or more of these facilities, we may be unable to supply the relevant products at previous levels or at all for some period.
Our ability to compete effectively depends on our ability to attract and retain key employees, including people in senior management, sales, marketing and R&D positions, and to facilitate seamless leadership transitions for key positions.
Our success depends on our ability to attract and retain key personnel needed to successfully operate the business and to plan for future executive transitions. Our ability to compete effectively depends on our ability to attract and retain key employees, including people in senior management, sales, marketing and R&D positions, and to facilitate seamless leadership transitions for key positions.
Stock markets in general and our common stock in particular have experienced significant price and trading volume volatility over recent years. The market price and trading volume of our common stock may continue to be subject to significant fluctuations due to factors described under this Item 1A.
The market price and trading volume of our common stock may continue to be subject to significant fluctuations due to factors described under this Item 1A.
Our Blood Center customers have responded to this pressure by creating their own group purchasing organizations and resorting to single source tenders to create incentives for suppliers, including us, to significantly reduce prices.
It also puts price pressure on our U.S. Blood Center customers who are also facing reduced demand for red cells. Our Blood Center customers have responded to this pressure by creating their own group purchasing organizations and resorting to single source tenders to create incentives for suppliers, including us, to significantly reduce prices.
Also as a result of the Cardiva acquisition, we have entered into a new line of business. Unlike our existing products, the VASCADE and VASCADE MVP vascular closure devices are designated as Class III medical devices, which are subject to additional and complex regulatory requirements. Complying with these regulations will be costly, time-consuming and complex.
Unlike our other products, the VASCADE and VASCADE MVP vascular closure devices are designated as Class III medical devices, which are subject to additional and complex regulatory requirements. Complying with these regulations will be costly, time-consuming and complex.
In April 2021, one of these customers, CSL, informed us of its intent not to renew its supply agreement for the use of PCS2 plasma collection system devices and the purchase of disposable plasmapheresis kits in the U.S. following the expiration of the current term in June 2022.
In April 2021, CSL informed us of its intent not to renew its supply agreement for the use of PCS2 plasma collection system devices and the purchase of disposable plasmapheresis kits in the U.S. following the expiration of the current term, which was amended in fiscal 2022 to extend on a non-exclusive basis through December 2023.
If a hospital value analysis committee does not approve or revokes prior approval for any of the reasons set forth above, the demand for our vascular closure devices may decrease and we could experience an adverse effect on our results of operations or financial condition.
If a hospital value analysis committee does not approve or revokes prior approval for any of the reasons set forth above, the demand for our vascular closure devices may decrease and we could experience an adverse effect on our results of operations or financial condition. 19 Table of Contents The influence of integrated delivery networks, group purchasing organizations and large single accounts has the potential to put price pressure on our Hospital business.
While we believe that our current product liability insurance coverage is sufficient, there is no assurance that such coverage will be adequate to cover incurred liabilities or that we will be able to obtain acceptable product and professional liability coverage in the future. 28 Table of Contents General Risk Factors Our success depends on our ability to attract and retain key personnel needed to successfully operate the business.
While we believe that our current product liability insurance coverage is sufficient, there is no assurance that such coverage will be adequate to cover incurred liabilities or that we will be able to obtain acceptable product and professional liability coverage in the future.
We do business in over 90 countries and have distributors in approximately 80 of these countries. This exposes us to currency fluctuation, geopolitical risk, economic volatility (such as the United Kingdom's exit from the EU, commonly referred to as "Brexit"), anti-corruption laws, export and import restrictions, local regulatory authorities and the laws and medical practices in foreign jurisdictions.
We do business in over 90 countries and have distributors in approximately 80 of these countries. This exposes us to currency fluctuation, geopolitical risk, economic volatility, anti-corruption laws, export and import restrictions, local regulatory authorities and the laws and medical practices in foreign jurisdictions. U.S. legislation aimed at boosting competitiveness of U.S. businesses may have unintended effects on our business.
Additionally, for reasons of quality assurance or cost effectiveness, we purchase certain finished goods, components and raw materials from sole suppliers who have their own complex supply chains.
Additionally, for reasons of quality assurance or cost effectiveness, we purchase certain finished goods, components and raw materials from sole suppliers who have their own complex supply chains. We also use certain components in our products, including semiconductor chips, that have been the subject of recent global supply chain shortages and disruptions.
As a result, the tax laws in the U.S. and other countries in which we and our affiliates do business could change on a prospective or retroactive basis and any such changes could materially adversely affect our business. 24 Table of Contents Risks Related to our Financial Obligations and Indebtedness We have a significant amount of debt that may decrease our business flexibility, access to capital, and/or increase our borrowing costs, and we may still incur additional debt in the future, which may adversely affect our operations and financial results.
Risks Related to our Financial Obligations and Indebtedness We have a significant amount of debt that may decrease our business flexibility, access to capital, and/or increase our borrowing costs, and we may still incur additional debt in the future, which may adversely affect our operations and financial results.
Furthermore, our key component suppliers may not currently be or may not continue to be in compliance with all applicable regulatory requirements, which could result in our failure to produce our products on a timely basis and in the required quantities, if at all.
Any future failure by us or one of our suppliers to comply with applicable statutes and regulations administered by the FDA or other regulatory authority could result in administrative actions, field actions, or civil or criminal enforcement actions. 22 Table of Contents Furthermore, our key component suppliers may not currently be or may not continue to be in compliance with all applicable regulatory requirements, which could result in our failure to produce our products on a timely basis and in the required quantities, if at all.
Risks Related to Operating Internationally As a substantial amount of our revenue comes from outside the U.S., we are subject to geopolitical events, economic volatility, violations of anti-corruption laws, export and import restrictions and tariffs, decisions by local regulatory authorities and the laws and medical practices in foreign jurisdictions.
In addition, the existence of the 2026 Notes may encourage short selling by market participants because the conversion of the 2026 Notes could be used to satisfy short positions, or anticipated conversion of the 2026 Notes into shares of our common stock could depress the price of our common stock. 25 Table of Contents Risks Related to Operating Internationally As a substantial amount of our revenue comes from outside the U.S., we are subject to geopolitical events, economic volatility, violations of anti-corruption laws, export and import restrictions and tariffs, decisions by local regulatory authorities and the laws and medical practices in foreign jurisdictions.
If our business development activities are unsuccessful, we may not realize the intended benefits. We have sought and in the future may seek to supplement our organic growth through strategic acquisitions, investments and alliances. Such transactions are inherently risky and require significant effort and management attention.
We have sought and in the future may seek to supplement our organic growth through strategic acquisitions, investments and alliances. We have also sought and in the future may seek to divest certain assets deemed non-core to our long-term strategic objectives. Such transactions are inherently risky and require significant effort and management attention.
COVID-19 and its associated economic disruptions could have an adverse impact on our manufacturing capacity, supply chains and distribution systems, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments are taking and financial difficulties experienced by our third-party manufacturers and suppliers.
COVID-19 and its associated economic disruptions could have an adverse impact on our manufacturing capacity, supply chains and distribution systems, including impacts associated with preventive and precautionary measures that we, other businesses and governments are taking, such as the recent area-wide lockdowns implemented in China; labor shortages and other financial difficulties experienced by our third-party manufacturers and suppliers; and challenges to our global transportation channels and other aspects of our global supply chain network, including the cost and availability of raw materials and components due to shortages and resulting cost inflation.
We anticipate that a significant amount of management’s attention will be required in the integration of Cardiva, and that a material factor in achieving the anticipated benefits of the Cardiva acquisition will be our ability to effectively and profitably market and sell the vascular closure devices acquired from Cardiva.
For example, we anticipate that a material factor in achieving the anticipated benefits of our March 2021 acquisition of Cardiva will be our ability to effectively integrate and profitably market and sell the vascular closure devices acquired from Cardiva. Also as a result of the Cardiva acquisition, we have entered into a new line of business.
In addition, product liability claims may be asserted against us in the future based on events we are not aware of at the present time. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit or halt commercialization of our products.
In addition, product liability claims may be asserted against us in the future based on events we are not aware of at the present time.
In addition, even if we do obtain clearance or approval, the FDA may not approve or clear these products for the indications that we requested.
In addition, even if we do obtain clearance or approval, the FDA may not approve or clear these products for the indications that we requested. Any delay in, or failure to receive or maintain, clearances or approvals for our products under development could prevent us from generating revenue from these products.
Generally, these laws prohibit companies and their business partners or other intermediaries from making improper payments to foreign governments and government officials in order to obtain or retain business. Global enforcement of such anti-corruption laws has increased in recent years, including aggressive investigations and enforcement proceedings.
Foreign Corrupt Practices Act, or FCPA, and other similar anti-corruption laws in other countries. Generally, these laws prohibit companies and their business partners or other intermediaries from making improper payments to foreign governments and gov ernment officials in order to obtain or retain business.
Additionally, reductions in elective surgeries and trauma cases, restrictions on vendor access at customer sites and the reallocation of hospital resources to address critical intensive care needs during the COVID-19 pandemic have reduced and will likely continue to reduce demand for our Hospital products.
While elective procedures and hospital capital purchases have increased from initially depressed levels earlier in the pandemic, demand for our Hospital products has been, and in the future may continue to be, negatively impacted by resurgences in COVID-19 and its variants that result in reductions in elective surgeries and trauma cases, restrictions on vendor access at customer sites and the reallocation of hospital resources to address critical intensive care needs.
Congress, government agencies in non-U.S. jurisdictions where we and our affiliates do business and the Organization for Economic Co-operation and Development, or OECD, have recently focused on issues related to the taxation of multinational corporations. The OECD has released its comprehensive plan to create an agreed set of international rules for fighting base erosion and profit shifting.
If ultimately enacted, these changes could have a material impact on our future effective tax rate. Additionally, the U.S. Congress, government agencies in non-U.S. jurisdictions where we and our affiliates do business and the Organization for Economic Co-operation and Development, or OECD, have recently focused on issues related to the taxation of multinational corporations.
In addition, the OECD, the European Commission and individual countries are examining changes to how taxing rights should be allocated among countries in light of the digital economy.
The OECD has released its comprehensive plan to create an agreed set of international rules for fighting base erosion and profit shifting. In addition, the OECD, the European Commission and individual countries are examining changes to how t axing rights should be allocated among countries in light of the digital economy.
Plastics are the principal component of our disposables, which are the main source of our revenues. Any change in the price, composition or availability of the plastics or resins we purchase could adversely affect our business. We face risks related to price, composition and availability of the plastic raw materials used in our business.
Plastics and other petroleum-based products are the principal components of our disposables, which are the main source of our revenues. Changes in the cost, composition or availability of the plastics and resins we purchase, or cost volatility associated with other raw materials and components used in our products, could adversely affect our business, financial condition and results of operations.
Climate change (including laws or regulations passed in response thereto) could increase our costs, in particular our costs of supply, energy and transportation/freight. Material or sustained increases in the price of petroleum or petroleum derivatives could have an adverse impact on the costs to procure plastic raw materials and the costs of our transportation/freight.
We face risks related to price, composition and availability of the plastic raw materials used in our business. Material or sustained increases in the price of petroleum or petroleum derivatives could have an adverse impact on the costs to procure plastic raw materials.
As a result of the acquisition of our Vascular Closure products from Cardiva in March 2021, we may receive a greater number of complaints requiring investigation and potentially need to file a greater number of medical device reports with FDA, which may require additional time and resources. 23 Table of Contents Our relationships with customers and third-party payers are subject to applicable anti-kickback, fraud and abuse, transparency and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, exclusion, contractual damages, reputational harm and diminished profits and future earnings.
As a result of the acquisition of our Vascular Closure products from Cardiva in March 2021, we may receive a greater number of complaints requiring investigation and potentially need to file a greater number of medical device reports with FDA, which may require additional time and resources.
Any disruption to one or more of our suppliers’ production or delivery of sufficient volumes of components conforming to our specifications, could disrupt or delay our ability to deliver finished products to our customers. For example, we purchase components in Asia for use in manufacturing in the U.S. and Mexico.
Any disruption to one or more of our suppliers’ production or delivery of sufficient volumes of components conforming to our specifications, including as a result of disruptions ca used by the COVID-19 pandemic (as described above) or otherwise, could disrupt or delay our ability to deliver finished products to our customers.
Material reductions in purchasing from or loss of a significant customer could adversely affect our business. In fiscal 2021, our two largest Plasma customers each accounted for more than 10% of our net revenues and our ten largest customers accounted for approximately 49% of our net revenues.
In fiscal 2022, our largest Plasma customer, CSL, accounted for more than 10% of our net revenues and our ten largest customers accounted for approximately 45% of our net revenues.
While we have an active compliance program and various other safeguards to discourage impermissible practices, we have distributors in approximately 80 countries, several of which are considered high risk for corruption. As a result, our global operations carry some risk of unauthorized impermissible activity on the part of one of our distributors, employees, 26 Table of Contents agents or consultants.
Global enforcement of such anti-corruption laws has increased in recent years, including aggressive investigations and enforcement proceedings. While we have an active compliance program and various other safeguards to discourage impermissible practices, we have distributors in approximately 80 countries, several of which are considered high risk for corruption.
Any delay in, or failure to receive or maintain, clearances or approvals for our products under development could prevent us from generating revenue from these products. 22 Table of Contents Failure to substantially comply with applicable regulations could subject our products to recall or seizure of our products by government authorities, or an order to suspend manufacturing and distribution activities.
Failure to substantially comply with applicable regulations could subject our products to recall or seizure of our products by government authorities, or an order to suspend manufacturing and distribution activities. If our products were determined to have design or manufacturing flaws, this could also result in their recall or seizure.
If our business development activities are unsuccessful, we may not realize the intended benefits of such activities, including that acquisition and integration costs may be greater than expected or the possibility that expected return on investment synergies and accretion will not be realized or will not be realized within the expected timeframe.
If our business development activities are unsuccessful, we may not realize the intended benefits of such activities, including that acquisition and integration costs may be greater than expected or the possibility that expected return on investment synergies and accretion, or on new growth opportunities funded in whole or part by divestitures, will not be realized or will not be realized within the expected timeframe. 21 Table of Contents Risks Related to Government Regulation As a medical device and drug manufacturer, we operate in a highly regulated industry, and non-compliance with applicable laws or regulations could adversely affect our financial condition and results of operations.
Changes in tax laws and regulations, or their interpretation and application, in the jurisdictions where we are subject to tax could materially impact our effective tax rate. For example, in 2017, the U.S. enacted the Tax Cuts and Jobs Act, or the Act, and we expect the U.S. Treasury to issue future notices and regulations under the Act.
Chang es in tax laws and regulations, or their interpretation and application, in the jurisdictions where we are subject to tax could materially impact our effective tax rate. For example, the U.S. Congress has recently been debating changes to U.S. corporate income tax laws, including provisions that may alter the U.S. taxation of the profits of foreign subsidiary corporations.
Increases in the costs of other commodities also may affect our procurement costs to a lesser degree. The composition of the plastic we purchase is also important. Today, we purchase plastics that contain phthalates, which are used to make plastic malleable.
Additionally, climate change (including laws or regulations passed in response thereto) could increase our costs, in particular our costs of supply, energy and transportation/freight. The composition of the plastic we purchase is also important. Today, we purchase plastics that contain phthalates, which are used to make plastic malleable.
Although we have not experienced significant manufacturing or supply chain difficulties to date as a result of COVID-19, we may in the future. A reduction or interruption in any of our manufacturing processes could have a material adverse effect on our business. • Potential Liquidity and Credit Impacts .
Additionally, China implemented area-wide lockdowns in early 2022 to control the spread of COVID-19, which have disrupted and may continue to disrupt our ability to distribute certain products in China. A protracted reduction or interruption in any of our manufacturing and distribution processes could have a material adverse effect on our business. • Potential Liquidity and Credit Impacts .

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThese facilities produce and manufacture products for more than one of our business segments. 29 Table of Contents The following is a summary of our facilities as of April 3, 2021 (in approximate square feet): Owned Leased Total U.S. 165,385 725,666 891,051 International 135,000 768,532 903,532 Total 300,385 1,494,198 1,794,583
Biggest changeThe following is a summary of our facilities as of April 2, 2022 (in approximate square feet): Owned Leased Total U.S. 165,385 725,666 891,051 International 135,000 768,749 903,749 Total 300,385 1,494,415 1,794,800
As of April 3, 2021, our principal manufacturing centers were located in Pennsylvania, Utah and California within the U.S., as well as internationally in Mexico and Malaysia. Our products are distributed worldwide from primary distributor centers in Tennessee and Switzerland. We believe all of these facilities are well-maintained and suitable for the operations conducted in them.
As of April 2, 2022, our principal manufacturing centers were located in Pennsylvania and California within the U.S., as well as internationally in Mexico and Malaysia. Our products are distributed worldwide from primary distributor centers in Tennessee, Utah and Switzerland, as well as smaller locations globally.
Added
We believe all of these facilities are well-maintained and suitable for the operations conducted in them. These facilities produce and manufacture products for more than one of our business segments.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Issuer Purchases of Equity Securities In May 2019, our Board of Directors authorized the repurchase of up to $500 million of Haemonetics common shares over the two year period ending May 2021. We had no share repurchases during fiscal 2021.
Biggest changeIssuer Purchases of Equity Securities In May 2019, our Board of Directors authorized the repurchase of up to $500 million of Haemonetics common shares over the two year period ending May 2021. During fiscal 2022, we did not make any additional repurchases under this program, which expired in May 2021. ITEM 6. RESERVED 29 Table of Contents
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The total remaining authorization for repurchases of our common stock under the share repurchase program was $325 million as of April 3, 2021. We did not make any additional share repurchases under this program which expired in May 2021. 30 Table of Contents
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ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is quoted on the New York Stock Exchange under the symbol “HAE”. As of April 2, 2022, we had 108 stockholders of record. We have not historically paid cash dividends.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe increase in the gross profit margin during fiscal 2020 was primarily due to favorable pricing driven by the annualization of NexSys PCS device conversions, incremental savings from both the 2020 Program and the complexity reduction initiative, product mix, and the absence of impairment charges that were incurred in the prior year. 39 Table of Contents Operating Expenses Fiscal Year (In thousands) 2021 2020 2019 % Increase/(Decrease) 21 vs. 20 % Increase/(Decrease) 20 vs. 19 Research and development $ 32,857 $ 30,883 $ 35,714 6.4 % (13.5) % % of net revenues 3.8 % 3.1 % 3.7 % Selling, general and administrative $ 274,188 $ 282,017 $ 273,474 (2.8) % 3.1 % % of net revenues 31.5 % 28.5 % 28.3 % Amortization of intangible assets $ 32,830 $ 25,746 $ 24,803 27.5 % 3.8 % % of net revenues 3.8 % 2.6 % 2.6 % Impairment of assets $ 1,028 $ 50,599 $ — (98.0) % n/m % of net revenues 0.1 % 5.1 % — % Gains on divestitures and sale of assets $ (32,812) $ (8,083) $ — n/m n/m % of net revenues (3.8) % (0.8) % — % Total operating expenses $ 308,091 $ 381,162 $ 333,991 (19.2) % 14.1 % % of net revenues 35.4 % 38.6 % 34.5 % Research and Development Research and development expenses increased 6.4% during fiscal 2021 as compared with fiscal 2020.
Biggest changeOperating Expenses Fiscal Year (In thousands) 2022 2021 2020 % Increase/(Decrease) 22 vs. 21 % Increase/(Decrease) 21 vs. 20 Research and development $ 46,801 $ 32,857 $ 30,883 42.4 % 6.4 % % of net revenues 4.7 % 3.8 % 3.1 % Selling, general and administrative $ 339,563 $ 274,188 $ 282,017 23.8 % (2.8) % % of net revenues 34.2 % 31.5 % 28.5 % Amortization of intangible assets $ 47,414 $ 32,830 $ 25,746 44.4 % 27.5 % % of net revenues 4.8 % 3.8 % 2.6 % Impairment of assets $ 577 $ 1,028 $ 50,599 (43.9) % (98.0) % % of net revenues 0.1 % 0.1 % 5.1 % Gains on divestitures and sale of assets $ (9,603) $ (32,812) $ (8,083) (70.7) % n/m % of net revenues (1.0) % (3.8) % (0.8) % Total operating expenses $ 424,752 $ 308,091 $ 381,162 37.9 % (19.2) % % of net revenues 42.8 % 35.4 % 38.6 % Research and Development Research and development expenses increased 42.4% during fiscal 2022 as compared with fiscal 2021.
“Hospital”, which is comprised of Hemostasis Management, Cell Salvage, Transfusion Management and Vascular Closure products, includes devices and methodologies for measuring coagulation characteristics of blood, surgical blood salvage systems, specialized blood cell processing systems and disposables, blood transfusion management software and vascular closure devices.
“Hospital”, which is comprised of Hemostasis Management, Vascular Closure, Transfusion Management and Cell Salvage products, includes devices and methodologies for measuring coagulation characteristics of blood, surgical blood salvage systems, specialized blood cell processing systems and disposables, blood transfusion management software and vascular closure devices.
Hospital Hospital revenue increased 8.9% during fiscal 2021 as compared with fiscal 2020 despite the negative impact of COVID-19, primarily in China and the U.S, early in the fiscal year. Without the effect of foreign exchange, Hospital revenue increased 8.2% during fiscal 2021.
Hospital revenue increased 8.9% during fiscal 2021 as compared with fiscal 2020 despite the negative impact of COVID-19, primarily in China and the U.S, early in the fiscal year. Without the effect of foreign exchange, Hospital revenue increased 8.2% during fiscal 2021.
The decrease in cash provided by operating activities was primarily the result of a reduction in net income, as adjusted for depreciation, amortization and other non-cash charges compared with the prior year period, partially offset by a decrease in working capital outflow as compared with the prior year period due to lower inventory growth, primarily related to NexSys PCS devices, a decline in the build of accounts receivable due to lower sales and improved collection timing and a payment for a compensation-related liability paid at the closing of the Cardiva acquisition.
The decrease in cash provided by operating activities was primarily the result of a reduction in net income, as adjusted for depreciation, amortization and other non-cash charges compared with the prior year period, partially offset by a decrease in working capital outflow as compared with the prior year period due to lower inventory growth, primarily related to NexSys PCS devices, a decline in the build of accounts receivable due to lower sales and improved collection timing, partially offset by a payment for a compensation-related liability paid at the closing of the Cardiva acquisition.
Financing Activities Net cash provided by financing activities was $367.5 million during fiscal 2021, an increase of $498.7 million as compared with fiscal 2020.
Net cash provided by financing activities was $367.5 million during fiscal 2021, an increase of $498.7 million as compared with fiscal 2020.
Refer Note 2, Summary of Significant Accounting Policies and Note 11, Goodwill & Intangible Assets, to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K for additional information. 47 Table of Contents Inventory Provisions We base our provisions for excess, expired and obsolete inventory primarily on our estimates of forecasted net sales.
Refer Note 2, Summary of Significant Accounting Policies and Note 11, Goodwill & Intangible Assets, to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K for additional information. 42 Table of Contents Inventory Provisions We base our provisions for excess, expired and obsolete inventory primarily on our estimates of forecasted net sales.
We consider an estimate to be a “critical 46 Table of Contents accounting estimate” when (i) the nature of the estimate is material due to the level of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and (ii) the impact of the estimate on financial condition or operating performance is material.
We consider an estimate to be a “critical 41 Table of Contents accounting estimate” when (i) the nature of the estimate is material due to the level of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and (ii) the impact of the estimate on financial condition or operating performance is material.
Our estimates of forecasted revenues in the earn out period include a consideration of current industry information, market and economic trends, historical results of the acquired business, and other relevant factors. These cash flow 48 Table of Contents projections are discounted with a risk adjusted rate.
Our estimates of forecasted revenues in the earn out period include a consideration of current industry information, market and economic trends, historical results of the acquired business and other relevant factors. These cash flow 43 Table of Contents projections are discounted with a risk adjusted rate.
Various factors related to the supply of plasma and the production of plasma-derived biopharmaceuticals also affect collection volume, including the following: 34 Table of Contents • Biopharmaceutical companies are seeking more yield from the collected plasma to meet growing demand for biopharmaceuticals without requiring an equivalent increase in plasma supply. • Newly approved indications for auto-immune diseases treated with plasma-derived therapies, the growing understanding and diagnosis of these diseases, longer lifespans and a growing aging patient population increase the demand for plasma. • Geographical expansion of biopharmaceuticals also increases demand for plasma.
Various factors related to the supply of plasma and the production of plasma-derived biopharmaceuticals also affect collection volume, including the following: • Biopharmaceutical companies are seeking more yield from the collected plasma to meet growing demand for biopharmaceuticals without requiring an equivalent increase in plasma supply. • Newly approved indications for auto-immune diseases treated with plasma-derived therapies, the growing understanding and diagnosis of these diseases, longer lifespans and a growing aging patient population increase the demand for plasma. • Geographical expansion of biopharmaceuticals also increases demand for plasma.
Operating income decreased during fiscal 2021 as compared with fiscal 2020, primarily due to the impact of the COVID-19 pandemic on revenue and gross margin, offset by gain on divestitures, incremental savings from the 2020 Program and lower asset impairment charges and depreciation expense.
Operating income decreased during fiscal 2021 as compared with fiscal 2020, primarily due to the impact of the COVID-19 pandemic on revenue and gross margin, offset by gains on divestitures, incremental savings from the 2020 Program and lower asset impairment charges and depreciation expense.
These charges, the majority of which will result in cash outlays, including severance and other employee costs, will be incurred as the specific actions required to execute these initiatives are identified and approved and are expected to be substantially completed by the end of fiscal 2023.
These charges, the majority of which will result in cash outlays, including severance and other employee costs, will be incurred as the specific actions required to execute these initiatives are identified and approved and are expected to be substantially completed by the end of fiscal 2025.
We continually evaluate all receivables for potential collection risks associated with the availability of government funding and reimbursement practices. If the financial condition of customers or the countries' healthcare systems deteriorate such that their ability to make payments is uncertain, allowances may be required in future periods. Legal Proceedings In accordance with U.S.
We continually evaluate all receivables for potential collection risks associated with the availability of government funding and reimbursement practices. If the financial condition of customers or the countries' healthcare systems deteriorate such that their ability to make payments is uncertain, allowances may be required in future periods. 40 Table of Contents Legal Proceedings In accordance with U.S.
For example, TEG analyzers have been used to support clinical decision making in open cardiovascular surgery and organ transplantation, becoming the standard of care in 35 Table of Contents liver transplants. In more recent years, interest has grown into the utilization of TEG in trauma and other procedures in which the risk of hemorrhage and thrombosis are high.
For example, TEG analyzers have been used to support clinical decision making in open cardiovascular surgery and organ transplantation, becoming the standard of care in liver transplants. In more recent years, interest has grown into the utilization of TEG in trauma and other procedures in which the risk of hemorrhage and thrombosis are high.
As a result, there are relatively few customers for our Plasma products, especially in the U.S. where over 70% of the world's source plasma is collected and only a few customers provide the majority of our Plasma revenue. Blood Center Market In the Blood Center market, we sell automated blood component and manual whole blood collection systems.
As a result, there are relatively few customers for our Plasma products, especially in the U.S. where ov er 70% of the world's source plasma is collected and only a few customers provide the majority of our Plasma revenue. Blood Center Market In the Blood Center market, we sell automated blood component and manual whole blood collection systems.
Our technology addresses important medical markets: blood and plasma component collection, the surgical suite and hospital transfusion services. When used in this report, the terms “we,” “us,” “our” and “the Company” mean Haemonetics. We view our operations and manage our business in three principal reporting segments: Plasma, Blood Center and Hospital.
Our technology addresses important medical markets: blood and plasma component collection, the surgical suite and hospital transfusion services. When used in this report, the terms “we,” “us,” “our” and the “Company” mean Haemonetics. We view our operations and manage our business in three principal reporting segments: Plasma, Blood Center and Hospital.
Because plasma collected in the U.S. supplies the vast majority of plasma volume demand worldwide, we anticipate continued growth in North America in future periods as collection volumes benefit from an expanding end user market for plasma-derived biopharmaceuticals.
B ecause plasma collected in the U.S. supplies the vast majority of plasma volume demand worldwide, we anticipate continued growth in North America in future periods as collection volumes benefit from an expanding end user market for plasma-derived biopharmaceuticals.
The estimates used to determine the fair value of the contingent consideration liability are subject to significant judgment and given the inherent uncertainties in making these estimates, actual results are likely to differ from the amounts originally recorded and could be materially different.
The estimates used to determine the fair value of the contingent consideration liability are subject to significant judgment and given the inherent uncertainties in making these estimates, actual results are likely to differ from the amounts originally recorded and could be materially different. 44 Table of Contents
Concentration of Credit Risk While approximately 49% of our revenue during fiscal 2021 was generated by our ten largest customers, concentrations of credit risk with respect to trade accounts receivable are generally limited due to our large number of customers and their diversity across many geographic areas. Certain markets and industries, however, can expose us to concentrations of credit risk.
Concentration of Credit Risk While approximately 45% of our revenue during fiscal 2022 was generated by our ten largest customers, concentrations of credit risk with respect to trade accounts receivable are generally limited due to our large number of customers and their diversity across many geographic areas. Certain markets and industries, however, can expose us to concentrations of credit risk.
During fiscal 2021 the COVID-19 pandemic significantly reduced the number of source plasma collections in the U.S., which materially reduced the demand for plasma products.
During fiscal 2022 the COVID-19 pandemic significantly reduced the number of source plasma collections in the U.S., which materially reduced the demand for plasma products .
These declines were partially offset by increases in apheresis revenue, despite certain customers' conversions to alternative sources of supply, due to the impact distributor stocking orders in the first quarter and the 53 rd week in fiscal 2021.
These declines were partially offset by increases in apheresis revenue, despite certain customers' conversions to alternative sources of supply, due to the impact distributor stocking orders in the first quarter and the 53rd week in fiscal 2021.
While standard tests like prothrombin time, partial thromboplastin time and platelet count have limited ability to reveal a patient’s risk for bleeding, they do not provide information on the patient’s risk for thrombosis. In addition, these routine tests do not provide specific data about clot quality or stability.
While standard tests like prothrombin time, partial thromboplastin time and platelet count have limited 31 Table of Contents ability to reveal a patient’s risk for bleeding, they do not provide information on the patient’s risk for thrombosis. In addition, these routine tests do not provide specific data about clot quality or stability.
In early April 2021, CSL informed us of its intent not to renew its supply agreement for the use of PCS2 plasma collection system devices and the purchase of disposable plasmapheresis kits following the expiration of the current term of the Supply Agreement in June 2022. In fiscal 2021, revenue under this Supply Agreement was $88.6 million.
In early April 2021, CSL Plasma, Ltd. informed us of its intent not to renew its supply agreement for the use of PCS2 plasma collection system devices and the purchase of disposable plasmapheresis kits following the expiration of the current term of the Supply Agreement in June 2022. In fiscal 2022, revenue under this Supply Agreement was $102.4 million.
As of April 3, 2021, we maintain a valuation allowance against certain U.S. state deferred tax assets that are not more-likely-than-not realizable and have a full valuation allowance against the net deferred tax assets of certain foreign subsidiaries.
As of April 2, 2022, we maintain a valuation allowance against certain U.S. state deferred tax assets that are not more-likely-than-not realizable and have a full valuation allowance against the net deferred tax assets of certain foreign subsidiaries.
Our expected cash outlays relate primarily to acquisitions, investments, capital expenditures and the build out of our new manufacturing facility in Clinton, PA, cash payments under the loan agreement and restructuring and turnaround initiatives. In March 2021, we issued $500.0 million aggregate principal amount of 0% convertible senior notes due 2026, or the 2026 Notes.
Our expected cash outlays relate primarily to acquisitions, investments, capital expenditures, including the build out of our new manufacturing facility in Clinton, PA, cash payments under our credit agreement and restructuring initiatives. In March 2021, the Company issued $500.0 million aggregate principal amount of 0% convertible senior notes due 2026, or the 2026 Notes.
The decrease in the gross profit margin during fiscal 2021 was primarily due to unfavorable volumes and product mix, asset impairments, higher operational costs from the impact of the COVID-19 pandemic, recent divestitures and the amortization of the fair value inventory step-up related to the acquisition of Cardiva.
Without the effects of foreign exchange, gross profit decreased 19.6% during fiscal 2021. The decrease in gross profit during fiscal 2021 was primarily due to unfavorable volumes and product mix, asset impairments, higher operational costs from the impact of the COVID-19 pandemic, recent divestitures and the amortization of the fair value inventory step-up related to the acquisition of Cardiva.
The above table does not reflect our long-term liabilities associated with unrecognized tax benefits of $3.6 million recorded in accordance with ASC Topic 740, Income Taxes. We cannot reasonably make a reliable estimate of the period in which we expect to settle these long-term liabilities due to factors outside of our control, such as tax examinations.
The above table does not reflect our long-term liabilities associated with unrecognized tax bene fits of $2.6 million re corded in accordance with ASC Topic 740, Income Taxes. We cannot reasonably make a reliable estimate of the period in which we expect to settle these long-term liabilities due to factors outside of our control, such as tax examinations.
Interest payments are projected using interest rates in effect as of April 3, 2021. Certain of these projected interest payments may differ in the future based on changes in market interest rates.
Interest payments are projected using interest rates in effect as of April 2, 2022. Certain of these projected interest payments may differ in the future based on changes in market interest rates.
The percentage of revenue generated in our principle operating regions is summarized below: Fiscal Year 2021 2020 2019 United States 60.0 % 65.4 % 62.7 % Japan 8.9 % 7.2 % 7.2 % Europe 18.3 % 15.5 % 17.0 % Asia 12.2 % 11.1 % 12.3 % Other 0.6 % 0.8 % 0.8 % Total 100.0 % 100.0 % 100.0 % 37 Table of Contents International sales are generally conducted in local currencies, primarily Japanese Yen, Euro, Chinese Yuan and Australian Dollar.
The percentage of revenue generated in our principal operating regions is summarized below: Fiscal Year 2022 2021 2020 United States 64.4 % 60.0 % 65.4 % Japan 7.6 % 8.9 % 7.2 % Europe 16.5 % 18.3 % 15.5 % Asia 11.2 % 12.2 % 11.1 % Other 0.3 % 0.6 % 0.8 % Total 100.0 % 100.0 % 100.0 % International sales are generally conducted in local currencies, primarily Japanese Yen, Euro, Chinese Yuan and Australian Dollar.
Cell Salvage Market - In recent years, more efficient blood use and less invasive surgeries have reduced demand for autotransfusion in these procedures and contributed to intense competition in mature markets, while increased access to healthcare in emerging economies has provided new markets and sources of growth.
We continue to explore opportunities to expand the portfolio internationally. Cell Salvage Market - In recent years, more efficient blood use and less invasive surgeries have reduced demand for autotransfusion in these procedures and contributed to intense competition in mature markets, while increased access to healthcare in emerging economies has provided new markets and sources of growth.
COVID-19 We continue to closely manage the impacts of the COVID-19 pandemic on our business results of operations and financial condition. The progression of the COVID-19 pandemic during fiscal 2021 significantly impacted our financial results.
COVID-19 We continue to closely manage the impacts of the COVID-19 pandemic on our business, results of operations and financial condition. The continuation of the COVID-19 pandemic during fiscal 2022 has significantly impacted our financial results.
Dollar weakens relative to these currencies, there is an adverse effect on our results of operations. We have a program in place that is designed to mitigate our exposure to changes in foreign currency exchange rates.
Dollar strengthens relative to these foreign currencies, there is a positive effect on our results of operations. Conversely, whenever the U.S. Dollar weakens relative to these currencies, there is an adverse effect on our results of operations. We have a program in place that is designed to mitigate our exposure to changes in foreign currency exchange rates.
On June 15, 2018, we entered into a five-year credit agreement which provided for a $350.0 million Term Loan and a $350.0 million Revolving Credit Facility, which we refer to together as the Credit Facilities. Interest on the Term Loan and Revolving Credit Facility is established using LIBOR plus 1.13% - 1.75%, depending on our leverage ratio.
On June 15, 2018, we entered into a five-year credit agreement which provided for a $350.0 million term loan and a $350.0 million revolving loan (together with the term loan, as amended from time to time, the “Credit Facilities”). Interest on the term loan and revolving loan is established using LIBOR plus 1.13% - 1.75%, depending on our leverage ratio.
Our primary sources of liquidity are cash and cash equivalents, internally generated cash flow from operations, our Revolving Credit Facility and proceeds from employee stock option exercises. We believe these sources are sufficient to fund our cash requirements over at least the next twelve months.
Our primary sources of liquidity are cash and cash equivalents, internally generated cash flow from operations, our revolving credit line that expires in the first quarter of fiscal 2024 and proceeds from employee stock option exercises. We believe these sources are sufficient to fund our cash requirements over at least the next twelve months.
For Swiss Francs, Canadian Dollars Mexican Pesos and Malaysian Ringgit our primary cash flows relate to product costs or costs and expenses of local operations. Whenever the U.S. Dollar strengthens relative to these foreign currencies, there is a positive effect on our results of operations. Conversely, whenever the U.S.
Dollar weakens relative to the Yen, Euro, Yuan or Australian Dollar, there is a positive effect on our results of operations. For Swiss Francs, Canadian Dollars Mexican Pesos and Malaysian Ringgit our primary cash flows relate to product costs or costs and expenses of local operations. Whenever the U.S.
Income Taxes Fiscal Year 2021 2020 2019 % Increase/(Decrease) 21 vs. 20 % Increase/(Decrease) 20 vs. 19 Reported income tax rate (9.0) % 12.2 % 25.3 % (21.2) % (13.1) % Reported Tax Rate We conduct business globally and report our results of operations in a number of foreign jurisdictions in addition to the U.S.
Income Taxes Fiscal Year 2022 2021 2020 % Increase/(Decrease) 22 vs. 21 % Increase/(Decrease) 21 vs. 20 Reported income tax rate 31.8 % (9.0) % 12.2 % 40.8 % (21.2) % Reported Tax Rate We conduct business globally and report our results of operations in a number of foreign jurisdictions in addition to the U.S.
Without the effect of foreign exchange, Hemostasis Management revenue increased 12.8% during fiscal 2021 as compared with fiscal 2020. Hemostasis Management revenue increased 11.7% during fiscal 2020 as compared with fiscal 2019. Without the effect of foreign exchange, Hemostasis Management revenue increased 13.5% during fiscal 2020 as compared with fiscal 2019.
Hemostasis Management revenue increased 12.2% during fiscal 2021 as compared with fiscal 2020. Without the effect of foreign exchange, Hemostasis Management revenue increased 12.8% during fiscal 2021 as compared with fiscal 2020.
We utilize forward foreign currency contracts to hedge the anticipated cash flows from transactions denominated in foreign currencies, primarily Japanese Yen and Euro, and to a lesser extent Swiss Francs, Australian Dollars, Canadian Dollars and Mexican Pesos.
We utilize forward foreign currency contracts to hedge the anticipated cash flows from transactions denominated in foreign currencies, primarily Japanese Yen and Euro, and to a lesser extent Swiss Franc, Australian Dollar, Chinese Yuan and the Mexican Peso.
In connection with the additional $150 million term loan borrowing, the Company and its lenders also agreed to increase the maximum consolidated leverage ratio the Company is required to maintain for the four consecutive quarters immediately following the closing of the Cardiva acquisition to 4.25:1.0, after which the maximum consolidated leverage ratio the Company is required to maintain will revert to 3.5:1.0.
In connection with the additional $150 million term loan borrowing, the Company and its lenders also agreed to increase the maximum consolidated leverage ratio the Company is required to maintain for the four consecutive quarters immediately following the closing of the Cardiva acquisition to 4.25:1.0, after which the maximum consolidated leverage ratio the Company is required to maintain will revert to 3.5:1.0. 38 Table of Contents As of April 2, 2022, $284.4 million was outstanding under the term loan with an effective interest rate of 2.3%.
Net Revenues by Business Unit Fiscal Year Fiscal 2021 versus 2020 Fiscal 2020 versus 2019 (In thousands) 2021 2020 2019 Reported Growth Currency impact Constant currency growth (1) Reported Growth Currency impact Constant currency growth (1) Plasma $ 332,236 $ 458,681 $ 426,650 (27.6)% —% (27.6)% 7.5% (0.4)% 7.9% Blood Center 307,452 317,761 329,727 (3.2)% 2.4% (5.6)% (3.6)% (0.7)% (2.9)% Hospital (2) 210,632 193,437 192,270 8.9% 0.7% 8.2% 0.6% (1.4)% 2.0% Service 20,143 18,600 18,932 8.3% 3.6% 4.7% (1.8)% (1.4)% (0.4)% Net revenues $ 870,463 $ 988,479 $ 967,579 (11.9)% 1.0% (12.9)% 2.2% (0.6)% 2.8% (1) Constant currency growth, a non-GAAP financial measure, measures the change in revenue between the current and prior year periods using a constant currency.
Net Revenues by Business Unit Fiscal Year Fiscal 2022 versus 2021 Fiscal 2021 versus 2020 (In thousands) 2022 2021 2020 Reported Growth Currency impact Constant currency growth (1) Reported Growth Currency impact Constant currency growth (1) Plasma $ 351,347 $ 332,236 $ 458,681 5.8% 0.2% 5.6% (27.6)% —% (27.6)% Blood Center 298,512 307,452 317,761 (2.9)% 1.3% (4.2)% (3.2)% 2.4% (5.6)% Hospital (2) 322,804 210,632 193,437 53.3% 0.6% 52.7% 8.9% 0.7% 8.2% Service 20,533 20,143 18,600 1.9% 1.6% 0.3% 8.3% 3.6% 4.7% Net revenues $ 993,196 $ 870,463 $ 988,479 14.1% 0.7% 13.4% (11.9)% 1.0% (12.9)% (1) Constant currency growth, a non-GAAP financial measure, measures the change in revenue between the current and prior year periods using a constant currency.
Our effective tax rate for the year ended April 3, 2021 is lower than our effective tax rates of 12.2% and 25.3% for the years ended March 28, 2020 and March 30, 2019, respectively.
Our effective tax rate for the year ended April 2, 2022 is higher than our effective tax rates of (9.0)% and 12.2% for the years ended April 3, 2021 and March 28, 2020, respectively.
The decrease in our tax rate for fiscal 2021, as compared with fiscal 2020, is primarily the result of a deferred tax asset recorded related to the U.S. purchase of intellectual property, a non-recurring tax benefit from the release of a portion of the valuation allowance due to 41 Table of Contents taxable temporary differences acquired with the acquisition of Cardiva being available as a source of income to realize certain pre-existing deferred tax assets, favorable changes in the jurisdictional mix of earnings, and a decrease in the global intangible low taxed income inclusion due to legislation enacted during the year, offset by lower tax benefits associated with windfall stock compensation deductions as compared to fiscal 2020.
The increase in our tax rate for fiscal 2022, as compared with fiscal 2021, is primarily the result of a deferred tax asset recorded in the prior year related to the U.S. purchase of intellectual property, a non-recurring tax benefit in the prior year from the release of a portion of the valuation allowance due to taxable temporary differences acquired with the acquisition of Cardiva being available as a source of income to realize certain pre-existing deferred tax assets, greater tax benefits associated with windfall stock compensation deductions in the prior year, and jurisdictional mix of earnings.
Liquidity and Capital Resources The following table contains certain key performance indicators we believe depict our liquidity and cash flow position: (In thousands) April 3, 2021 March 28, 2020 Cash and cash equivalents $ 192,305 $ 137,311 Working capital $ 440,051 $ 328,817 Current ratio 2.7 2.2 Net debt position (1) $ (515,303) $ (245,182) Days sales outstanding (DSO) 51 62 Inventory turnover 1.2 1.7 (1) Net debt position is the sum of cash and cash equivalents less total debt.
Liquidity and Capital Resources The following table contains certain key performance indicators we believe depict our liquidity and cash flow position: (In thousands) April 2, 2022 April 3, 2021 Cash and cash equivalents $ 259,496 $ 192,305 Working capital $ 313,765 $ 440,051 Current ratio 1.7 2.7 Net debt position (1) $ (514,093) $ (515,303) Days sales outstanding (DSO) 54 51 Inventory turnover 1.4 1.2 (1) Net debt position is the sum of cash and cash equivalents less total debt.
See “Management's Use of Non-GAAP Measures.” (2) Hospital revenue includes Hemostasis Management revenue of $107.4 million, $95.7 million and $85.7 million for fiscal years 2021, 2020 and 2019, respectively. Hemostasis Management revenue increased 12.2% during fiscal 2021 as compared with fiscal 2020.
See “Management's Use of Non-GAAP Measures.” (2) Hospital revenue includes Hemostasis Management revenue of $127.4 million, $107.4 million, and $95.7 million for fiscal years 2022, 2021 and 2020, respectively. Hemostasis Management revenue increased 18.6% during fiscal 2022 as compared with fiscal 2021. Without the effect of foreign exchange, Hemostasis Management revenue increased 18.4% as compared with fiscal 2021.
Dollar strengthens relative to the Yen, Euro, Yuan or Australian Dollar, there is an adverse effect on our results of operations and, conversely, whenever the U.S. Dollar weakens relative to the Yen, Euro, Yuan or Australian Dollar, there is a positive effect on our results of operations.
Since our foreign currency denominated Yen, Euro, Yuan and Australian Dollar sales exceed the foreign currency denominated costs, whenever the U.S. Dollar strengthens relative to the Yen, Euro, Yuan or Australian Dollar, there is an adverse effect on our results of operations and, conversely, whenever the U.S.
Fiscal year 2021 included 53 weeks with each of the first three quarters having 13 weeks and the fourth quarter having 14 weeks. Fiscal year 2020 and 2019 included 52 weeks with each quarter having 13 weeks. Net revenues for fiscal 2021 de creased 11.9% compared with fiscal 2020.
Fiscal years 2022 and 2020 included 52 weeks with each quarter having 13 weeks. Fiscal 2021 included 53 weeks with each of the first three quarters having 13 weeks and the fourth quarter having 14 weeks. Net revenues for fiscal 2022 increased 14.1% compared with fiscal 2021.
Our ClotPro system is currently available in select European and Asian markets and is not available for use or sale in the U.S. The HAS-100 is currently commercialized in China.
Our ClotPro system is currently available in select European and Asian markets and is not available for use or sale in the U.S. The HAS-100 is currently commercialized in China. Vascular Closure Market - Our target markets, coronary and peripheral procedures and electrophysiology procedures, are highly concentrated in the U.S.
In accordance with U.S. GAAP, we have eliminated the effect of foreign currency throughout our cash flow statement, except for its effect on our cash and cash equivalents. 43 Table of Contents Operating Activities Net cash provided by operating activities was $108.8 million during fiscal 2021, a decrease of $49.4 million as compared with fiscal 2020.
In accordance with U.S. GAAP, we have eliminated the effect of foreign currency throughout our cash flow statement, except for its effect on our cash and cash equivalents. Operating Activities Net cash provided by operating activities was $172.3 million during fiscal 2022, an increase of $63.5 million as compared with fiscal 2021.
For a discussion of our material legal proceedings refer to Note 16, Commitments & Contingencies, to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K. Inflation We do not believe that inflation had a significant impact on our results of operations for the periods presented.
For a discussion of our material legal proceedings refer to Note 16, Commitments & Contingencies, to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K. Inflation We experienced rising inflationary pressures in our global supply chain that had an impact on our results of operations during fiscal 2022.
Net cash provided by operating activities was $158.2 million during fiscal 2020, a decrease of $1.1 million as compared with fiscal 2019.
Net cash provided by operating activities was $108.8 million during fiscal 2021, a decrease of $49.4 million as compared with fiscal 2020.
Without the effects of foreign exchange, research and development expenses increased 6.1% during fiscal 2021. The increase in fiscal 2021 was primarily due to increased spend related to European Medical Device Regulation costs, recent acquisitions and continued investments in our Plasma and Hospital Business units. The increases were partially offset by cost savings primarily related to the 2020 Program.
Research and development expenses increased 6.4% during fiscal 2021 as compared with fiscal 2020. Without the effects of foreign exchange, research and development expenses increased 6.1% during fiscal 2021. The increase in fiscal 2021 was primarily due to increased spend related to EU MDR and EU IVDR costs, recent acquisitions and continued investments in our Plasma and Hospital Business units.
The majority of charges will result in cash outlays, including severance and other employee costs, and will be incurred as the specific actions required to execute these initiatives are identified and approved. During the fiscal year ended April 3, 2021, we incurred $15.1 million of restructuring and turnaround costs under this program.
The majority of charges will result in cash outlays, including severance and other employee costs, and will be incurred as the specific actions required to execute these initiatives are identified and approved.
For the year ended April 3, 2021, we recorded an income tax benefit of $6.6 million on our worldwide pre-tax income of $72.9 million, resulting in a reported tax rate of (9.0)%.
For the year ended April 2, 2022, we recorded income tax expense of $20.3 million on our worldwide pre-tax income of $63.6 million, resulting in a reported tax rate of 31.8%.
Financial Summary Fiscal Year (In thousands, except per share data) 2021 2020 2019 % Increase/(Decrease) 21 vs. 20 % Increase/(Decrease) 20 vs. 19 Net revenues $ 870,463 $ 988,479 $ 967,579 (11.9) % 2.2 % Gross profit $ 397,838 $ 484,513 $ 417,536 (17.9) % 16.0 % % of net revenues 45.7 % 49.0 % 43.2 % Operating expenses $ 308,091 $ 381,162 $ 333,991 (19.2) % 14.1 % Operating income $ 89,747 $ 103,351 $ 83,545 (13.2) % 23.7 % % of net revenues 10.3 % 10.5 % 8.6 % Interest and other expense, net $ (16,834) $ (16,199) $ (9,912) 3.9 % 63.4 % Income before (benefit) provision for income taxes $ 72,913 $ 87,152 $ 73,633 (16.3) % 18.4 % (Benefit) provision for income taxes $ (6,556) $ 10,626 $ 18,614 n/m (42.9) % % of pre-tax income (9.0) % 12.2 % 25.3 % Net income $ 79,469 $ 76,526 $ 55,019 3.8 % 39.1 % % of net revenues 9.1 % 7.7 % 5.7 % Net income per share - basic $ 1.57 $ 1.51 $ 1.07 4.0 % 41.1 % Net income per share - diluted $ 1.55 $ 1.48 $ 1.04 4.7 % 42.3 % Our fiscal year ends on the Saturday closest to the last day of March.
However, there are considerable growth opportunities in certain Asia Pacific and other emerging markets as addressable procedure volumes grow and the use of autotransfusion is becoming accepted as a standard of care. 32 Table of Contents Financial Summary Fiscal Year (In thousands, except per share data) 2022 2021 2020 % Increase/(Decrease) 22 vs. 21 % Increase/(Decrease) 21 vs. 20 Net revenues $ 993,196 $ 870,463 $ 988,479 14.1 % (11.9) % Gross profit $ 505,502 $ 397,838 $ 484,513 27.1 % (17.9) % % of net revenues 50.9 % 45.7 % 49.0 % Operating expenses $ 424,752 $ 308,091 $ 381,162 37.9 % (19.2) % Operating income $ 80,750 $ 89,747 $ 103,351 (10.0) % (13.2) % % of net revenues 8.1 % 10.3 % 10.5 % Interest and other expense, net $ (17,121) $ (16,834) $ (16,199) 1.7 % 3.9 % Income before (benefit) provision for income taxes $ 63,629 $ 72,913 $ 87,152 (12.7) % (16.3) % Provision (benefit) for income taxes $ 20,254 $ (6,556) $ 10,626 n/m n/m % of pre-tax income 31.8 % (9.0) % 12.2 % Net income $ 43,375 $ 79,469 $ 76,526 (45.4) % 3.8 % % of net revenues 4.4 % 9.1 % 7.7 % Net income per share - basic $ 0.85 $ 1.57 $ 1.51 (45.9) % 4.0 % Net income per share - diluted $ 0.84 $ 1.55 $ 1.48 (45.8) % 4.7 % Our fiscal year ends on the Saturday closest to the last day of March.
This procedure category is expected to grow based on the increasing incidence and prevalence of cardiac arrhythmias, mainly in the U.S.
The mature market of coronary and peripheral procedures consists of interventions to diagnose and treat vascular diseases. Electrophysiology procedures consist of catheter-based interventions to diagnose and treat cardiac arrhythmias. This procedure category is expected to grow based on the increasing incidence and prevalence of cardiac arrhythmias, mainly in the U.S.
Gains on Divestitures We recognized gains on divestitures of $32.8 million during fiscal 2021. Refer to Note 5, Divestitures , to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K for information pertaining to these divestitures.
Refer to Note 5, Divestitures , to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K for information pertaining to these divestitures. Interest and Other Expense, Net Interest and other expenses increased 1.7% during fiscal 2022 as compared with fiscal 2021.
The increase in cash used in investing activities was primarily the result of cash paid for acquisitions. The increase was partially offset by an increase in proceeds received relating to divestitures and a decrease in capital expenditures. Net cash used in investing activities was $57.2 million during fiscal 2020, a decrease of $59.0 million as compared with fiscal 2019.
The increase was partially offset by an increase in proceeds received relating to divestitures and a decrease in capital expenditures. 39 Table of Contents Financing Activities Net cash used in financing activities was $15.7 million during fiscal 2022, an increase of $383.2 million as compared with fiscal 2021.
Cash Flows Fiscal Year (In thousands) 2021 2020 2019 Increase/(Decrease) 21 vs. 20 Increase/(Decrease) 20 vs. 19 Net cash provided by (used in): Operating activities $ 108,805 $ 158,217 $ 159,281 $ (49,412) $ (1,064) Investing activities (425,442) (57,176) (116,148) 368,266 (58,972) Financing activities 367,452 (131,208) (50,628) (498,660) 80,580 Effect of exchange rate changes on cash and cash equivalents (1) 4,179 (1,873) (3,323) 6,052 1,450 Net change in cash and cash equivalents $ 54,994 $ (32,040) $ (10,818) (1) The balance sheet is affected by spot exchange rates used to translate local currency amounts into U.S. dollars.
Cash Flows Fiscal Year (In thousands) 2022 2021 2020 Net cash provided by (used in): Operating activities $ 172,263 $ 108,805 $ 158,217 Investing activities (86,345) (425,442) (57,176) Financing activities (15,749) 367,452 (131,208) Effect of exchange rate changes on cash and cash equivalents (1) (2,978) 4,179 (1,873) Net change in cash and cash equivalents $ 67,191 $ 54,994 $ (32,040) (1) The balance sheet is affected by spot exchange rates used to translate local currency amounts into U.S. dollars.
RESULTS OF OPERATIONS Net Revenues by Geography Fiscal Year Fiscal 2021 versus 2020 Fiscal 2020 versus 2019 (In thousands) 2021 2020 2019 Reported Growth Currency impact Constant currency growth (1) Reported Growth Currency impact Constant currency growth (1) United States $ 522,607 $ 646,204 $ 606,845 (19.1) % — % (19.1) % 6.5 % — % 6.5 % International 347,856 342,275 360,734 1.6 % 3.0 % (1.4) % (5.1) % (1.9) % (3.2) % Net revenues $ 870,463 $ 988,479 $ 967,579 (11.9) % 1.0 % (12.9) % 2.2 % (0.6) % 2.8 % (1) Constant currency growth, a non-GAAP financial measure, measures the change in revenue between the current and prior year periods using a constant currency.
We have provided this non-GAAP financial measure because we believe it provides meaningful information regarding our results on a consistent and comparable basis for the periods presented. 33 Table of Contents RESULTS OF OPERATIONS Net Revenues by Geography Fiscal Year Fiscal 2022 versus 2021 Fiscal 2021 versus 2020 (In thousands) 2022 2021 2020 Reported Growth Currency impact Constant currency growth (1) Reported Growth Currency impact Constant currency growth (1) United States $ 639,322 $ 522,607 $ 646,204 22.3 % — % 22.3 % (19.1) % — % (19.1) % International 353,874 347,856 342,275 1.7 % 1.7 % — % 1.6 % 3.0 % (1.4) % Net revenues $ 993,196 $ 870,463 $ 988,479 14.1 % 0.7 % 13.4 % (11.9) % 1.0 % (12.9) % (1) Constant currency growth, a non-GAAP financial measure, measures the change in revenue between the current and prior year periods using a constant currency.
While the timing of plasma collection recovery remains uncertain, we believe the impacts of the pandemic on plasma collection are temporary and anticipate volumes to recover by the end of fiscal 2022. We remain confident in the strength of the plasma end market growth as the long-term global demand for plasma-derived pharmaceuticals is expected to continue.
We remain confident in the strength of the plasma end market growth as the long-term global demand for plasma-derived pharmaceuticals is expected to continue. Although we continue to experience the negative impact of COVID-19 on our business, we believe the impacts on plasma collection are temporary.
Without the effects of foreign exchange, selling, general and administrative expenses decreased 3.5% during fiscal 2021. The decrease in fiscal 2021 was primarily due to cost containment actions taken to offset the negative effects related to the COVID-19 pandemic, incremental productivity savings from the 2020 Program and a reduction in restructuring and turnaround costs.
The decrease in fiscal 2021 was primarily due to cost containment actions taken to offset the negative effects related to the COVID-19 pandemic, incremental productivity savings from the 2020 Program and a reduction in restructuring and restructuring related costs. The decrease was partially offset by higher transaction and integration costs and higher share-based and variable compensation expense.
In July 2019, our Board of Directors approved the 2020 Program. We estimate that we will incur aggregate charges between $60 million and $70 million in connection with the 2020 Program.
We now estimate that we will incur aggregate charges between $95 million and $105 million in connection with the 2020 Program.
We have assessed, on a jurisdictional basis, the available means of recovering deferred tax assets, including the ability to carry-back net operating losses, the existence of reversing temporary differences, the availability of tax planning strategies and available sources of future taxable income.
Our reported tax rate is impacted by the jurisdictional mix of earnings in any given period as the foreign jurisdictions in which we operate have tax rates that differ from the U.S. statutory tax rate. 37 Table of Contents We have assessed, on a jurisdictional basis, the available means of recovering deferred tax assets, including the ability to carry-back net operating losses, the existence of reversing temporary differences, the availability of tax planning strategies and available sources of future taxable income.
The decline was partially offset by lower depreciation expense and productivity savings from the 2020 Program, the 53rd week in fiscal 2021 and recent acquisitions. Gross profit increased 16.0% during fiscal 2020 as compared with fiscal 2019. Without the effects of foreign exchange, gross profit increased 17.1% during fiscal 2020.
The decline was partially offset by lower depreciation expense and productivity savings from the 2020 Program, the 53rd week in fiscal 2021 and recent acquisitions.
Without the effects of foreign exchange, net revenues decreased 12.9% compared with fiscal 2020. Revenue decreases in Plasma due to the COVID-19 pandemic primarily drove the overall decrease in revenue during the fiscal year ended April 3, 2021. 36 Table of Contents Net revenues for fiscal 2020 increased 2.2% compared with fiscal 2019.
Without the effects of foreign exchange, net revenues increased 13.4% compared with fiscal 2021. Revenue increases in Hospital, primarily Vascular Closure, drove the overall increase in revenue during the fiscal year ended April 2, 2022. Net revenues for fiscal 2021 decreased 11.9% compared with fiscal 2020. Without the effects of foreign exchange, net revenues decreased 12.9% compared with fiscal 2020.
The increase was partially offset by the repayment of borrowings on our revolving credit facility, the purchase of the Capped Call on the 2026 Notes and higher payments on our term loan. Net cash used in financing activities was $131.2 million during fiscal 2020, an increase of $80.6 million as compared with fiscal 2019.
The increase was partially offset by the repayment of borrowings on our revolving credit facility, the purchase of the Capped Call on the 2026 Notes and higher payments on our term loan.
The 2026 Notes have an effective interest rate of 4.21% as of April 3, 2021. 42 Table of Contents As of April 3, 2021, we had $192.3 million in cash and cash equivalents, the majority of which is held in the U.S. or in countries from which it can be freely repatriated to the U.S.
As of April 2, 2022, we had $259.5 million in cash and cash equivalents, the majority of which is held in the U.S. or in countries from which it can be repatriated to the U.S.
This increase was primarily attributable to a recent acquisition, TEG ® disposable revenue in the U.S. and equipment sales in Europe. The increases were partially offset by declines in Cell Salvage revenue and the divestiture of certain blood bank and hospital software solution assets.
This increase was primarily attributable to a recent acquisition, TEG® disposable revenue in the U.S. and equipment sales in Europe.
Historically, we believe we have been able to mitigate the effects of inflation by improving our manufacturing and purchasing efficiencies, by increasing employee productivity and by adjusting the selling prices of products. We continue to monitor inflation pressures generally and raw materials indices that may affect our procurement and production costs.
Historically, we have been able to limit the impact of the effects of inflation by improving our manufacturing and purchasing efficiencies, by increasing employee productivity and by adjusting the selling prices of products, but we may not be able to fully mitigate these increases in our operational costs in the future.
The 2026 Notes will mature on March 1, 2026, unless earlier converted, redeemed or repurchased.
The 2026 Notes will mature on March 1, 2026, unless earlier converted, redeemed or repurchased. The 2026 Notes have an effective interest rate of 0.5% as of April 2, 2022.
We also incur certain manufacturing, marketing and selling costs in international markets in local currency. Our primary foreign currency exposures relate to sales denominated in Euro, Japanese Yen, Chinese Yuan and Australian Dollars. We also have foreign currency exposure related to manufacturing and other operational costs denominated in Swiss Francs, Canadian Dollars, Mexican Pesos and Malaysian Ringgit.
We also have foreign currency exposure related to manufacturing and other operational costs denominated in Swiss Francs, Canadian Dollars, Mexican Pesos and Malaysian Ringgit. The Yen, Euro, Yuan and Australian Dollar sales exposure is partially mitigated by costs and expenses for foreign operations and sourcing products denominated in foreign currencies.
The effective interest rate on total debt outstanding for the fiscal year ended April 3, 2021 was 1.4%. Interest and other expenses increased 63.4% during fiscal 2020 as compared with fiscal 2019. Without the effects of foreign exchange, interest and other expenses increased 68.3% during fiscal 2020.
The effective interest rate on total debt outstanding for the fiscal year ended April 3, 2021 was 1.4%.
Net income, as adjusted for depreciation, amortization and other non-cash charges and a decrease in accounts receivable due to the timing of collections partially offset the decrease in operating activities. Investing Activities Net cash used in investing activities was $425.4 million during fiscal 2021, an increase of $368.3 million as compared with fiscal 2020.
Net cash used in investing activities was $425.4 million during fiscal 2021, an increase of $368.3 million as compared with fiscal 2020. The increase in cash used in investing activities was primarily the result of cash paid for acquisitions.
Research and development expenses decreased 13.5% during fiscal 2020 as compared with fiscal 2019. Without the effects of foreign exchange, research and development expenses decreased 13.4% during fiscal 2020.
Selling, general and administrative expenses decreased 2.8% during fiscal 2021 as compared with fiscal 2020. Without the effects of foreign exchange, selling, general and administrative expenses decre ased 3.5% durin g fiscal 2021.
GAAP”), to monitor the financial performance of the business, make informed business decisions, establish budgets and forecast future results. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with U.S. GAAP.
These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with U.S. GAAP. Constant currency growth, a non-GAAP financial measure, measures the change in revenue between the current and prior year periods using a constant currency conversion rate.
The increase in fiscal 2021 was primarily driven by an increase in intangible assets resulting from recent acquisitions. Impairment of Assets We recognized impairment charges of $1.0 million during fiscal 2021 in connection with the sale of our Fajardo, Puerto Rico, manufacturing operations.
Amortization of Intangible Assets We recognized amortization expense of $47.4 million and $32.8 million during fiscal 2022 and fiscal 2021, respectively. The increase in fiscal 2022 was primarily driven by an increase in intangible assets resulting from recent acquisitions.
We recognized gains of $8.1 million due to the sale of assets associated with our Braintree corporate headquarters during fiscal 2020. Interest and Other Expense, Net Interest and other expenses increased 3.9% during fiscal 2021 as compared with fiscal 2020. Without the effects of foreign exchange, interest and other expenses increased 4.8% during fiscal 2021.
Without the effects of foreign exchange, interest and other expenses increased 1.3% during fiscal 2022. The increase was primarily driven by realized losses due to foreign currency, partially offset by a reduction in interest expense. Interest and other expenses increased 3.9% during fiscal 2021 as compared with fiscal 2020.
For additional information regarding the expected impacts to our business units and the various risks posed by the COVID-19 pandemic, refer to Results of Operations within Management's Discussion and Analysis and Risk Factors contained in Item 1A of this Annual Report on Form 10-K. 33 Table of Contents Divestitures Fajardo, Puerto Rico Manufacturing Operations On June 29, 2020, we sold our Fajardo, Puerto Rico, manufacturing operations to GVS, S.p.A (“GVS”), a leading provider of advanced filtration solutions for critical applications for $15.1 million ($7.8 million, net of cash transferred).
For additional information regarding the expected impacts to our business units and the various risks posed by the COVID-19 pandemic, refer to Results of Operations within Management's Discussion and Analysis and Risk Factors contained in Item 1A of this Annual Report on Form 10-K. 30 Table of Contents Market Trends Plasma Market There are two key aspects to the market for our plasma products - the growth in demand for plasma-derived biopharmaceuticals and the limited number of significant biopharmaceutical companies in this market.
Impairment charges associated with the divestiture of our plasma liquid solutions operations to CSL partially offset these increases during fiscal 2020. Management's Use of Non-GAAP Measures Management uses non-GAAP financial measures, in addition to financial measures in accordance with accounting principles generally accepted in the United States of America (“U.S.
Management's Use of Non-GAAP Measures Management uses non-GAAP financial measures, in addition to financial measures in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), to monitor the financial performance of the business, make informed business decisions, establish budgets and forecast future results.
Gross Profit Fiscal Year (In thousands) 2021 2020 2019 % Increase/(Decrease) 21 vs. 20 % Increase/(Decrease) 20 vs. 19 Gross profit $ 397,838 $ 484,513 $ 417,536 (17.9) % 16.0 % % of net revenues 45.7 % 49.0 % 43.2 % Gross profit decreased 17.9% during fiscal 2021 as compared with fiscal 2020.
The increases were partially offset by declines in Cell Salvage revenue and the divestiture of certain blood bank and hospital software solution assets. 35 Table of Contents Gross Profit Fiscal Year (In thousands) 2022 2021 2020 % Increase/(Decrease) 22 vs. 21 % Increase/(Decrease) 21 vs. 20 Gross profit $ 505,502 $ 397,838 $ 484,513 27.1 % (17.9) % % of net revenues 50.9 % 45.7 % 49.0 % Gross profit increased 27.1% during fiscal 2022 as compared with fiscal 2021.
The final impact of currency fluctuations on the results of operations is dependent on the local currency amounts hedged and the actual local currency results. Recent Accounting Pronouncements Standards to be Implemented In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) Update No. 2019-12, Income Taxes (Topic 740).
The final impact of currency fluctuations on the results of operations is dependent on the local currency amounts hedged and the actual local currency results. Recent Accounting Pronouncements There are currently no recent accounting pronouncements that we expect to have a material impact on our financial position and results of operations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

14 edited+2 added−31 removed8 unchanged
Biggest changeWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Biggest changeThose standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of April 3, 2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May 26, 2021 expressed an unqualified opinion thereon.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of April 2, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated May 25, 2022 expressed an unqualified opinion thereon.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at April 3, 2021 and March 28, 2020, and the results of its operations and its cash flows for each of the three years in the period ended April 3, 2021, in conformity with U.S. generally accepted accounting principles.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at April 2, 2022 and April 3, 2021, and the results of its operations and its cash flows for each of the three years in the period ended April 2, 2022, in conformity with U.S. generally accepted accounting principles.
These interest rate swaps are intended to mitigate the exposure to fluctuations in interest rates and qualify for hedge accounting treatment as cash flow hedges. 50 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors of Haemonetics Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Haemonetics Corporation and subsidiaries (the Company) as of April 3, 2021 and March 28, 2020, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended April 3, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).
The se interest rate swaps are intended to mitigate the exposure to fluctuations in interest rates and qualify for hedge accounting treatment as cash flow hedges. 45 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors of Haemonetics Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Haemonetics Corporation and subsidiaries (the Company) as of April 2, 2022 and April 3, 2021, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended April 2, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).
We estimate the change in the fair value of all forward contracts assuming both a 10% strengthening and weakening of the U.S. dollar relative to all other major currencies.
We estimate the change in the fair value of all forward contracts assuming both a 10% strengthening and weakening of the U.S. Dollar relative to all other major currencies. As of April 2, 2022, in the event of a 10% strengthening of the U.S.
Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.
Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 51 Table of Contents Valuation of goodwill Description of the Matter As discussed in Note 11 to the consolidated financial statements, the Company had approximately $466 million of goodwill allocated among its three reporting units as of April 3, 2021.
The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 46 Table of Contents Valuation of goodwill Description of the Matter As discussed in Note 11 to the consolidated financial statements, the Company had approximately $467 million of goodwill allocated among its reporting units as of April 2, 2022.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB.
In addition, we involved our valuation professionals to assist in our evaluation of the significant assumptions used to develop the fair value estimates. We also evaluated the reconciliation of the estimated aggregate fair value of the reporting units to the market capitalization of the Company.
In addition, we involved our valuation professionals to assist in our evaluation of the significant assumptions used to develop the fair value estimates. We also evaluated the reconciliation of the estimated aggregate fair value of the reporting units to the market capitalization of the Company. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2002.
Interest Rate Risk Our exposure to changes in interest rates is associated with borrowings under our Credit Facilities, all of which is variable rate debt. Total outstanding debt under our Credit Facilities for the fiscal year ended April 3, 2021 was $301.9 million with an interest rate of 1.4% based on prevailing LIBOR rates.
Interest Rate Risk Our exposure to changes in interest rates is associated with borrowings under our Credit Facilities, all of which is variable rate debt. Total outstanding debt under our Credit Facilities as of April 2, 2022 was $284.4 million with an interest rate of 2.3% based on prevailing LIBOR rates.
As of April 3, 2021, in the event of a 10% strengthening of the U.S. dollar, the change in fair value of all forward contracts would result in a $7.2 million increase in the fair value of the forward contracts, whereas a 10% weakening of the U.S. dollar would result in a $8.2 million decrease in the fair value of the forward contracts.
Dollar, the change in fair value of all forward contracts would result in a $3.9 million increase in the fair value of the forward contracts, whereas a 10% weakening of the U.S. Dollar would result in a $4.4 million decrease in the fair value of the forward contracts.
An increase of 100 basis points in LIBOR rates would result in additional annual interest expense of $0.8 million. On August 21, 2018, we entered into two interest rate swap agreements to effectively convert $241.9 million of borrowings under our Credit Facilities from a variable rate to a fixed rate.
An increase of 100 basis points in LIBOR rates would result in additional annual interest expense of $0.9 million . As of April 2, 2022, the notional amount on our two interest rate swap agreements to effectively convert borrowings under our Credit Facilities from a variable rate to a fixed rate were $199.1 million.
Adoption of New Accounting Standards As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases effective March 31, 2019 due to adoption of Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), and the related amendments. Basis for Opinion These financial statements are the responsibility of the Company's management.
Adoption of New Accounting Standards As discussed in Note 13 to the consolidated financial statements, the Company changed its method of accounting for its convertible notes effective April 4, 2021 due to adoption of Accounting Standards Update (ASU) No. 2020-06 Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40), and the related amendments.
Removed
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Added
Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
Removed
Income taxes - valuation allowance Description of the Matter As described in Note 6 to the consolidated financial statements, the Company had gross deferred tax assets on temporary differences of approximately $94 million offset by an approximately $11 million valuation allowance as of April 3, 2021.
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Boston, Massachusetts May 25, 2022 47 Table of Contents
Removed
Deferred tax assets are reduced by a valuation allowance if, based upon the weight of all available evidence, both positive and negative, in management’s judgment it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.
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Auditing management’s analysis of the realizability of its deferred tax assets was especially challenging and complex in relation to estimating projections of future taxable income that involved significant judgment and assumptions that may be affected by future market or economic conditions.
Removed
How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s analysis of the realizability of deferred tax assets. This included controls over management’s projections of future taxable income.
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To test the Company’s analysis of the realizability of deferred tax assets and the resultant valuation allowance, we performed audit procedures with the assistance of tax professionals that included, among others, evaluating the analyses used by management to consider the four sources of taxable income.
Removed
We evaluated the assumptions used by the Company to develop projections of future taxable income by jurisdiction and tested the completeness and accuracy of the underlying data used in its projections. For example, we compared the projections of future taxable income with the actual results of prior periods, as well as management’s consideration of current industry and economic trends.
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We also considered the historical accuracy of management’s projections and compared the projections of future taxable income with other forecasted financial information prepared by the Company. 52 Table of Contents Accounting for Convertible Senior Notes Description of the Matter As discussed in Note 13 to the consolidated financial statements, in March 2021 the Company issued $500 million of 0% convertible senior notes due March 2026 (the “2026 Notes”), which requires the Company to settle the principle in cash and any conversion premium in cash or stock at its option.
Removed
Concurrent with the offering of the 2026 Notes, the Company entered into separate capped call transactions to reduce potential dilution upon conversion of the 2026 Notes. These transactions are collectively referred to as the Convertible Notes Transactions. The financial statement accounts primarily affected by these transactions were debt and equity.
Removed
Auditing the Company’s accounting for the 2026 Notes was complex due to the significant judgment required in determining the liability component of the related convertible senior notes as well as the balance sheet classification of the elements of the Convertible Notes Transactions.
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The Company accounted for the 2026 Notes as separate liability and equity components, determining the fair value of the respective liability component based on an estimate of the fair value of a similar liability without a conversion option and assigning the residual value to the equity component.
Removed
The Company estimated the fair value of the liability component of the 2026 Notes using a discounted cash flow model with a risk adjusted yield for similar debt instruments, absent any embedded conversion feature. In estimating the risk adjusted yield, the Company utilized both an income and market approach.
Removed
For the income approach, the Company used a convertible bond pricing model, which included several assumptions including volatility and the risk-free rate. For the market approach, the Company performed an evaluation of issuances of debt securities issued by other comparable companies and broader market indices.
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Additionally, a detailed analysis of the terms of the Convertible Notes Transactions was required to determine existence of any derivatives that may require separate mark-to-market accounting under applicable accounting guidance. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s Convertible Notes Transactions.
Removed
For example, we tested the Company’s controls over the initial recognition and measurement of the Convertible Notes Transactions, including the recording of the associated liability and equity components.
Removed
Our testing of the Company’s initial accounting for the Convertible Notes Transactions, among other procedures, included reading the underlying agreements and evaluating the Company’s accounting analysis of the initial accounting of the Convertible Notes Transactions, including the determination of the balance sheet classification of each transaction and identification of any derivatives included in the arrangements.
Removed
Our testing of the fair value of the liability component of the 2026 Notes, included, among other procedures, evaluating the Company's selection of the valuation methodology and significant assumptions used by the Company and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates.
Removed
Specifically, when assessing the key assumptions, we focused on the Company’s assumptions used to determine the risk adjusted yield, which was based on a calibration to the convertible senior notes’ issuance price and corroborated by an analysis of comparable issuances of debt securities by other companies.
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In addition, we involved valuation professionals to assist in our evaluation of the methodology used by the Company and significant assumptions. 53 Table of Contents Accounting for Acquisitions Description of the Matter As described in Note 4 to the consolidated financial statements, the Company completed two acquisitions in fiscal year 2021 for total purchase consideration of $510.3 million consisting of a combination of cash and future contingent earnout payments.
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The acquisitions were accounted for as business combinations. The most significant was the acquisition of all the outstanding equity of Cardiva Medical, Inc. for purchase consideration of $489.8 million.
Removed
The recognition, measurement and disclosure of the Company’s business combinations in the 2021 consolidated financial statements was considered especially challenging and required significant auditor judgment due to the complex nature in the determination by management of the appropriate assumptions and related valuation models for the valuation of acquired assets and assumed liabilities related to the Cardiva Medical, Inc. acquisition, including, but not limited to, the developed technology intangible asset and contingent consideration liability.
Removed
The financial statement accounts primarily affected by these transactions were intangible assets, goodwill, and contingent consideration liabilities. Auditing the Company's accounting for the Cardiva Medical, Inc. acquisition was especially challenging due to the significant estimation required by management in determining the fair value of the developed technology intangible asset and contingent consideration liability of $230 million and $24 million, respectively.
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The significant estimation was primarily due to the judgmental nature of the inputs to the valuation models used to measure the fair value of the intangible asset and contingent consideration liability, as well as the sensitivity of the respective fair values to the underlying significant assumptions.
Removed
The Company used the income approach to measure the fair value of the intangible asset and a Monte Carlo simulation model to measure the fair value of the contingent consideration liability.
Removed
The significant assumptions used to estimate the fair value of the intangible asset and contingent consideration liability included forecasted revenues attributable to existing technology, forecasted revenues for the contingent consideration earnout period and the discount rates.
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When estimating the significant assumptions to be used in the valuation the Company included a consideration of current industry information, market and economic trends, historical results of the acquired business, and other relevant factors. These significant assumptions are forward-looking and could be affected by future economic and market conditions.
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How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the Company’s accounting for acquisitions. We tested controls over the valuation of intangible assets and contingent consideration liabilities, including the valuation models and underlying assumptions used to develop such estimates.
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To test the fair value of the acquired intangible assets and contingent consideration liability, our audit procedures included, among others, evaluating the significant assumptions used, and the testing of the completeness and accuracy of underlying data.
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We tested the valuation models used to value the acquired intangible assets and contingent consideration liability including consideration of the nature and classification of such contingent liability. Our testing procedures over the significant assumptions included, among others, comparing them to current industry, market and economic trends, historical results of the acquired business and to other relevant factors.
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We also performed sensitivity analyses of the significant assumptions to evaluate the change in the fair value resulting from changes in the assumptions.
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In addition, we involved valuation professionals to assist in our evaluation of the methodology, computations, and significant assumptions used by the Company within the valuation. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2002. Boston, Massachusetts May 26, 2021 54 Table of Contents

Other HAE 10-K year-over-year comparisons