Haemonetics Corporation (HAE) Earnings Call Transcript & Summary

Well, good morning, everyone, and thank you for joining us today in person and virtually. I'm Olga Guyette, Senior Director of Investor Relations and Treasury, and it's my pleasure to welcome you to Haemonetics 2022 Investor Day. Before we begin the presentation, I would like to remind you that statements made today may contain forward-looking information, so typical safe harbor and risk factors apply. The slide you see now provides details about risks to those forward-looking statements and where to obtain additional information about risk factors and are in our latest SEC filings. Consistent with our past practices, we may refer to non-GAAP financial measures. Please note that these measures exclude certain charges and income items. Please refer to Appendix A in this presentation for a full list of excluded items and reconciliations to our GAAP results. Additionally, in order to protect customer confidentiality, -- we will not be able to discuss any customer-specific detail except as disclosed previously. We have a full agenda for today. In a moment, you'll hear from Chris Simon, President and Chief Executive Officer, about key pillars that underpin our growth strategy, including key updates about our portfolio, drivers of our past and future success and our commitment to corporate responsibility. Next, you'll hear about our business units, commercial strategy and how we plan to maintain our leadership position in the attractive markets we serve. Jake Bonner, Vice President of Plasma and Blood Center North America, will discuss how the strength of our plasma technology and the robust underlying growth of the plasma collections market will fuel the growth of our plasma business. Thomas Lenzen, Vice President, Plasma, Blood Center OUS, will discuss how we plan to utilize our global footprint to capitalize on the emerging opportunities in blood center. Then we'll take a short break. Our second session will begin with Stewart Strong, President of our Global Hospital Business, who will discuss significant market opportunities and reinforce the role of this business as a growth engine for Haemonetics. Following Stewart's presentation, Anila Lingamneni, our Chief Technology Officer, will discuss what makes us stand out with our technology and how our innovation road maps will continue to drive sustainable revenue growth and market leadership. And lastly, James D'Arecca, our Chief Financial Officer, will discuss our recent financial performance, capital allocation strategy and how it all comes together in our long-range plan. At the end of our speaker presentations and closing remarks, we will have a live question-and-answer session. All of the materials we'll present today, including speaker video presentations and the accompanying slides, will be available on our website shortly after the event. And now let's get started. It's my pleasure to introduce you to Haemonetics. [Presentation]

Now please welcome to the stage, Chris Simon, President and Chief Executive Officer.

Thank you, Olga, and good morning, everyone. I am delighted to talk with you about Haemonetics strategy and goals, our value drivers and our long-range plan to maximize value for our customers, employees and shareholders. I want to walk you through a 3-phase journey that began when I joined Haemonetics 6 years ago to help initiate a bold company turnaround followed by a period where we successfully navigated disruptive forces from the global pandemic to our current transition to transformational growth. I am more enthusiastic about Haemonetics prospects today than I have ever been. We've taken important steps to strengthen our portfolio and our organization. We've demonstrated tremendous agility and resiliency. We have the financial health and resources to deliver powerful innovations, to expand our market leadership, to serve our customers well and achieve long-term profitable growth. We are taking evolutionary steps to deliver revolutionary results; evolutionary steps, revolutionary results. Before unfolding our transformational growth road map, I'd like to set the stage. I'd like to set the stage by taking you back 6 years when we launched an ambitious turnaround program focused on products, processes and people. Let's start with products and achieving leading market share in attractive high-growth segments. We invested in meaningful innovation to redesign and reengineer our leading product platforms to best meet customers' evolving needs. This included the introduction of our NexSys PCS plasma collection system with our yield-enhancing solution and upgrades of U.S. customers to the NexLynk DMS. In hemostasis management, we strengthened our clinical expertise and expanded indications for TEG 6s in trauma and cardiovascular surgery. We put increased emphasis on software and launched value-adding software applications. Through targeted investments, we allocated a disproportionate share of our resources to support growth. We focused and evolved our portfolio by divesting underperforming nonstrategic assets. We reorganized and improved processes across the company. We created customer-centered business units enabling us to be more flexible and responsive to customer needs. Through the complexity reduction initiative we delivered more than $80 million in gross savings as we redeployed resources for a leaner and more agile organization. We redesigned core processes with a focus on quality and customer centricity. On the heels of the successful complexity reduction initiative, we launched our operational excellence program, targeting $80 million to $90 million in gross savings, mostly in COGS. We invested heavily to improve our global manufacturing and supply capabilities. The revamped OEP continues to play a critical role in improving quality and freeing resources to invest in growth. In parallel, we focused on our people. We refreshed our executive leadership team and our Board of Directors. We invested in recruiting and developing talent, and we fostered a performance-based culture built on engagement, collaboration and commitment to results. A key milestone was relocating our corporate headquarters to state-of-the-art office and labs in downtown Boston, putting Haemonetics in a hub of technology and innovation. Our results through this initial phases were evidence of the turnaround success and our improved strategic decision-making and capital allocations. From fiscal 2016 through fiscal 2020, we meaningfully strengthened our operating and financial leverage. We increased adjusted operating margins nearly 900 basis points. We improved free cash flow before restructuring and VCC initiatives from $58 million to $139 million, and we grew adjusted diluted EPS 19%, all this despite modest 2% revenue growth. The timely completion of our turnaround was disrupted in early 2020 by the COVID-19 global pandemic and the related challenges that confronted us and our customers over the next 2 years: lockdowns, safety and public health concerns, government subsidies and customer staffing shortages contributed to a dramatic decline in sourced plasma collections. Additionally, we encountered unprecedented blood shortages, decreased hospital procedures and supply disruptions, inflationary pressures and more. In early fiscal 2022, we were informed by CSL, our largest customer representing approximately 12% of total revenue, that they would not be renewing their U.S. disposables agreement when it expires in June of 2022. The end date for the supply agreement has subsequently been extended to December of 2023 on a nonexclusive basis. Our team's response to these challenges was nothing short of exemplary. We kept our employees safe and our plants operational, ensuring business continuity and maintaining the level of support our customers require. We preserved cash and delivered solid earnings, despite drastically reduced collections and procedure volumes. We expanded our operational excellence program, identifying $35 million in additional gross savings for a total projected gross savings of $115 million to $125 million. Perhaps most importantly, we embraced a through-cycle mindset, staying resolute to advance our innovation agenda, evolve our portfolio and invest in growth. We achieved breakthrough milestones during this period, highlighted by the launch of Haemonetics' game-changing Persona technology. The acquisitions of Anacor and Cardiva and soon thereafter earning the distinction of the first and only closure device to receive FDA indication for same-day discharge following atrial fibrillation ablation. These actions help more than double our addressable market. We more than doubled our addressable market from $2.7 billion to $6.2 billion during this period. Big part of our success can be attributed to our work in building a hardy manufacturing and supply chain network so that we could consistently serve all those depending on our products and services. Even before the pandemic, we focused on resiliency through lean daily management with cross-functional data-driven planning for demand, supply and inventory. A flexible network of world-class manufacturing sites and regionally focused and optimized distribution network, ensuring inventories closer to customers with 2 new locations added since 2021. We focused continuous [indiscernible] efforts on quality, strategic sourcing, network optimization, regionalization and business continuity. We persevered, and we use this time to fortify our operating performance and our financial health to build an even stronger company. With hospital procedures now growing rapidly, plasma collection volumes recovering and our resilient supply chain enabling us to deliver for customers regardless of circumstances, we have reached an inflection point. The conditions are right for us to deliver breakout results, [ breakout ] results. Our long-range plan is rooted in the strategy upon which our industry leadership has been built. We will continue to focus on winning markets, investing in areas that can support outsized growth and profitability. We will also leverage our deep industry knowledge and commitment to customer-centered innovation to achieve leading positions, advanced positions in the markets that we serve. Lastly, we remain committed to delivering superior short- and long-term results. We have 3 overarching goals for our transformation. The first goal is growth in all forms, but especially revenue growth. We anticipate high single-digit revenue CAGR and high-teens and adjusted operating CAGR, and we anticipate revenue and earnings growth each year of our long-range plan. Our second goal is diversification to make our business even more robust and resilient and to provide more stability moving forward. Through purpose-driven portfolio evolution, we will continue to diversify our customers, our markets, our geographic footprint and our business models. We will continue to scale and rebalance our portfolio by investing in attractive markets. Finally, for sustainability, taking the necessary steps across all parts of our business to ensure the long-term health and success of our company, our colleagues and the communities that we serve. From an economic standpoint, we will continue to prioritize resilient and flexible supply, proactively managing risk to ensure our ability to serve our customers without interruption. Our global workforce participates in an annual employee engagement survey, and we take great pride in the sentiment expressed by our colleagues for being a part of this company. We will continue to invest in our people to sustain our leadership in the markets we serve and distinguish Haemonetics as a company that attracts and retains the very best talent. We will maintain our commitment to a diverse workforce and an inclusive culture in which all employees are empowered to bring their best ideas to help solve problems and fuel innovation. Guided by our purpose and mission, we are proactively identifying and managing the environmental, social and governance risks and opportunities most relevant to our business. We look forward to sharing details in the corporate responsibility report that we will publish later this fiscal year. We will achieve our transformational growth goals through our 6 value drivers. The first 2, plasma and hospital, are our largest and most powerful contributing disproportionately to revenue growth and margin expansion. In plasma, NexSys PCS is the industry's most advanced collection system and the only solution meeting all of customers' most pressing needs: yield, safety, door-to-door time and donor satisfaction. Plasma collections represent an $800 million total addressable market, growing 8% to 10% long-term and even faster over our planning horizon as collectors replenish their depleted inventories. Haemonetics is enabling and disproportionately benefiting from heightened collections demand. Our dual value proposition of increased donor satisfaction and lower cost to collect is distinctive and will fuel our growth in market share and gross margin expansion. Hospital is now 1/3 of our revenue. And with its soon-to-be $500 billion TAM will play an outsized role in our growth and diversification. It is our fastest growing and will become our largest business, driven by Hemostasis Management and Vascular Closure, 2 leading platforms poised to increase market share through accelerated adoption and greater utilization due to improved standards of care and lower health economic cost. Haemonetics innovation agenda will continue to play a vital role in our growth. Our R&D spending is highly focused on our market-leading platforms with the greatest opportunity for continued growth and differentiation: plasma apheresis, hemostasis management and vascular closure. Our innovation is guided by a deep understanding of how to bring meaningful value to our customers. We are committed to further differentiating our products through clinical, regulatory and software development. We expect newly developed products will contribute approximately 25% of our revenue by the completion of our long-range plan. In parallel, we will continue to pursue inorganic growth by building our capabilities for programmatic M&A. Over the last 2 years, we have completed 4 acquisitions, each exceeding their expected impact in terms of additional growth and return on investment. We are committed to continued portfolio evolution, and we will seek additional opportunities to align our portfolio to the strategy of winning markets, leading positions and superior returns. We will remain disciplined with our M&A approach, and we'll look for the confluence of adjacent markets, unique value-adding products and superior return on investment. Operational excellence is a critical component of our transformational growth, improving product quality, service and the way we source, make and deliver products. The results of this program have been impressive, enabling us to be a more agile and productive company that can respond quickly to market disruptions and changing operating environments, while freeing up resources to fund additional growth. Finally, we will remain purposeful and disciplined in our resource allocation, prioritizing organic and inorganic growth investments. As our EBITDA and free cash flow growth, our capital capacity grows with it, providing additional flexibility for high-return growth opportunities. Achieving our transformational growth goals over our long-range plan will lead to the following: revenue growth each year and a high single-digit CAGR over the next 4 years; expanded leadership and a mid-teens CAGR in CSL, excluding CSL; adjusted therapeutic -- accelerated therapeutic uptake and a mid-teens CAGR for hospital; and adjusted gross margins will improve from mid-50s to the high 50s to low 60s; and adjusted operating income margins will expand into the high 20s. Further augmenting and sustaining growth through meaningful innovation, portfolio evolution and operational excellence. And lastly, a fivefold increase in capacity from $400 million at the end of fiscal 2022 to more than $2 billion in fiscal 2026, enabling us to fund additional organic and inorganic growth and return cash to stakeholders via share buybacks as appropriate. As I said, our plan entails taking evolutionary steps to drive revolutionary results. It advances our customer value propositions and provides strong reason to believe that we will deliver the revenue growth, profitability and expansion opportunities to which we aspire. Haemonetics has the right team, the right technology and the right plan to ensure we build on our successful turnaround, realize transformational growth and advance our industry leadership. At this point, it is my distinct pleasure to turn things over to Jake Bonner for a look at how our Plasma business plays a key role in our long-term success. Jake?

Thank you, Chris. Good morning, everyone. I'm excited to be here with you today. Haemonetics is the established leader in the solutions for plasma collection and donor management. With more than 40 years of experience specifically focused on plasma collection and real-world at-scale data from over 400 million sourced plasma collections, we're a trusted partner to our customers, with a unique understanding of what drives value in the industry that we serve. Through our cutting-edge products, we are improving center of efficiency and reducing cost per liter, as we support volume resurgence in the industry and ensure plasma-derived therapy providers have a safe and reliable supply of plasma to produce patient treatments. Today, we offer the only single-source fully integrated hardware, software and services plasma collection solution, specifically designed to streamline plasma collection and maximize collection center output. Our innovative technologies deliver on collectors most critical needs, including improved yield, door-to-door time for donors, donor satisfaction and safety. Our plasma business is focused on delivering comprehensive solutions to source plasma collectors, usually biopharmaceutical companies, to support the growing global demand for plasma-derived therapies. We have an attractive razor, razor blade business model with more than 90% of our revenue coming from disposables. Additionally, we support our customers with best-in-class global supply chain scale, reliability, quality while providing the vital assurance of business continuity. We participate in an $800 million total addressable market for source plasma collections that is growing 8% to 10% on average. This market supports the approximately $27 billion market of plasma-derived therapies. Proteins found in human plasma are used in the manufacturing of plasma-derived therapies critical to treating numerous life-threatening diseases or conditions. However, most therapies require a significant amount of human plasma, sometimes requiring several source plasma donations for a single treatment. While there are several proteins that help many serious conditions, the biggest driver of the plasma therapies market are immunoglobulins or IG, used to treat a variety of autoimmune and immunodeficiency disorders. Once patients are diagnosed with any of these disease states, they frequently require IG infusions for the rest of their lives, creating a sustainable growth in the demand for these therapies. Historically, growth in the IG market has been in the mid- to high-single digits. And we believe this growth rate will continue in the near to mid-future, continuing to fuel demand for sourced plasma collections. Today, about 73% of the source plasma is collected in the United States, highlighting the important role this market plays in the supply of plasma products. Compared to other countries that currently participate in commercial source plasma, the U.S. has a more favorable regulatory environment, enabling more frequent and higher volume plasma collections. The COVID-19 pandemic affected the supply of plasma-derived therapies, and we're seeing emerging international efforts to establish self-sufficiency of this critical resource. In the near-term, however, we expect the U.S. will remain the primary market for source plasma collection, so I will focus on the underlying dynamics in the U.S. source plasma market and how we will continue to strengthen our leadership and our market share. We see 3 key drivers of success in the U.S. market, all of which offer opportunities for Haemonetics to drive growth as a company and to provide value for our customers. First, we see robust growth in the underlying demand for IG therapies, which will continue to fuel growth of the source collections market. Second, collectors will seek to replenish depleted plasma inventories, creating a temporary spike in plasma collections, resulting in total volume growth and above-market growth in the short-term. And third, as our customers strive to fulfill the unmet needs of critical drugs, they will continue to seek technologies that can maximize efficiency and productivity and partners who can provide the required manufacturing capabilities and supply chain reliability, which Haemonetics is known for. Let's take a closer look at these opportunities and how and why Haemonetics is poised to drive growth and margin expansion, while delivering meaningful disproportionate value for our customers. During the 6 years prior to the pandemic, the U.S. source market experienced robust growth, driven by increasing demand for immunoglobulins, particularly for patients with primary immunodeficiency and autoimmune conditions. This growth was further enhanced with the continuous clinical work around the benefits of IG. With more than 8,000 ongoing clinical trials further expanding the innovation pipeline for IG-based therapies, growth in volume was also supported by significant capital investments among our customers and a 12% average growth rate in new plasma center openings, as they look to expand plasma manufacturing capabilities and collection volume on the market. This strong underlying demand for IG increased the base of plasma centers and continued reliance on the United States for plasma creates strong fundamentals for collections. Both the plasma collection and plasma therapy markets have been affected dramatically by the pandemic. We saw a 20% year-over-year decline in source plasma collections in the U.S. as a result of economic circumstances, staffing shortages affecting the entire health care system and other pandemic and macroeconomic-related factors. Because of the reduction in collection volumes, fractionators turned to their raw plasma inventory safety stocks, significantly depleting those reserves. In the plasma therapies market, the reduction in plasma collections resulted in the rationing of IG supply, leaving many patients untreated and an increase in the time between treatments and reducing overall treatment effectiveness. We are analyzing emerging trends among alternative therapies, including FcRn inhibitors. And while we do believe that some of these treatment therapies are promising, most are early stage or address a very small share of the overall IG market, resulting in minimal impact to the source plasma collection market over our long-range plan. Our customers have been doing everything they can to recover plasma collections, including investing in aggressive marketing strategies and increased donor fees. And as society has reopened, we have seen consistent confirmation of volume resurgence in the market. While the collections market works towards the necessary recovery and collectors are faced with an increase of 27% in the cost to collect 1 liter of plasma, the need has never been greater for solutions that can maximize collection output, attract and retain donors and lower cost per liter. This is where Haemonetics stands apart with a clear, unique value proposition of raising donor satisfaction while lowering the cost to collect. Our advanced technology was designed in partnership with our customers to streamline the entire donation process and provide an optimal experience for collectors and the donors that they serve. Through our completely integrated end-to-end system, we can offer the total solution that effectively and consistently meets our collectors needs to maximize productivity. Increased yield remains a key value driver in the plasma collection process. And Haemonetics is the leader in plasma yield optimization, beginning with a 3% increase with YES technology the introduction of Persona technology now enables an additional 9% yield improvement for a unique solution that delivers a 12% on average more plasma per collection. The cost per liter improvement available through Haemonetics integrated platform is unrivaled within the industry. The value creation delivered from our Persona yield alone exceeds a collector's total cost of goods supplied by Haemonetics. I'd like to repeat that: the value creation delivered by our Persona yield alone more than exceeds a collector's total cost of goods supplied by Haemonetics. Based on some of the feedback we have received, our customers that are collecting with Persona on an integrated NexLynk DMS platform are collecting more volume than they have ever collected even prior to the pandemic. Through a bidirectionally connected system, including the NexSys PCS device and NexLynk DMS software, we are now delivering a 16-minute reduction in door-to-door time on average, improving plasma center efficiency and providing the opportunity for additional throughput. Safety and compliance is of critical importance to plasma collectors. And our integrated platform with simple step-by-step workflow support is enabling our customers to experience a 91% reduction in key quality events and the 98% elimination of documentation errors. This allows their staff to focus on what's important to them, their donors. And finally, shorter donation times and remote donor check-ins are contributing toward improved owner satisfaction. Our in-market surveys are showing a 93% affinity for the NexSys PCS system compared with our prior PCS2 device. So let's now take a look at how the breadth of our technology touches every step of the plasma collection process for more personalized, efficient, safe and effective donor experience. [Presentation]

With over 30 million collections on the NexSys PCS and already with over 5 million collections on Persona, our customers are confirming the value of our newest technology. And we have heard direct feedback that they are achieving a nearly 10% reduction in cost per liter attributable to the throughput and yield benefits of the Haemonetics NexSys with Persona and NexLynk DMS platform. With highly attractive end market demand driving growth in collections, we expect continued adoption of our solutions to sustain our market leadership and expand our margins over the long-range plan. Through our commitment to innovation, we see substantial opportunities to further leverage our solutions to grow our market share and deliver even greater value for our customers. In just a few months, all of our customers in the United States will be on our NexSys PCS platform, enabled by bidirectional work streams and paperless environment, helping our customers win their donors and support their patients. As the industry continues to resurge from the pandemic, we estimate average volume growth to be in the low-teens, including a temporary spike in volume as our customers strive to replenish depleted plasma inventories. Our industry knowledge, experience and customer focus will continue to inform our innovation agenda. As part of our long-range plan, we will continue to create winning solutions focused on advancing plasma yield, improving the donor experience and lowering the cost to collect plasma. We are confident in our ability to continue to deliver robust growth in this business in the mid-single digits and growth in the mid-teens when excluding CSL. Our plan assumes we will retain our global market share with additional opportunity to grow our share both in the U.S. and internationally as we advance our technology and capitalize on the opportunities ahead. Our value proposition is clear. We raise donor satisfaction, while decreasing cost per liter. Our team looks forward to continuing to deliver best-in-class solutions that set the standard for plasma collection to support our customers and the donors that they serve. Thank you for your time, and I will now turn it over to Thomas Lenzen to discuss our Global Blood Center Business.

Thank you, Jake, and good morning, everyone. Haemonetics' foundation was built upon a commitment to meet blood collectors needs with innovative breakthrough products. Today, that commitment continues to drive our Blood Center business as our solutions help blood centers across the globe to manage collections safely, to collect the blood components in the greatest demand and to attract and retain the right donors. Blood Center is Haemonetics' legacy business and its geographic span provides a significant portion of our international footprint. Blood Center [indiscernible] plasma business is a collections-based business distinguished for providing the right technology for meeting customers' most important needs. We offer a broad selection of products for safe reliable and efficient blood collection, featuring kids for manual whole blood collection as well as apheresis solutions for automated collections, including our state-of-the-art devices and disposable kits. We have an attractive business model with approximately 95% of revenue derived from disposables. Our comprehensive portfolio of apheresis devices includes the proven multi-component system, MCS+ that lives up to its name by supporting all types of apheresis collections, including platelets, plasma and red cells. For the collection of plasma, we offer Haemonetics' groundbreaking NexSys PCS, which Jake reviewed earlier. Approximately 73% of Blood Center revenue is concentrated in high-margin apheresis business with plasma and platelet collections representing the vast majority of revenue. Over the last few years, we have fully stabilized this business and refocused our portfolio on the most attractive markets and enabling technologies. About 74% of our business is located outside of North America with direct footprint across most of our key markets and strong distributor footprint in others. The geographical span of blood center plays an important role in supporting growth in other parts of our company, including emerging opportunities in plasma and international expansion in hospital. Today, the total addressable market for Blood Center is about $1.4 billion, split between apheresis and manual home blood collection. While there's significant need for blood products across the globe, manual blood collections market, remains challenging. Advancements in pharmaceutical products, a shift towards minimally invasive surgery and overall improvements in hospital blood management are reducing the need for home blood-derived red cell products. Additionally, given the commoditized and tender-driven nature of this business, there is continued pricing pressure. The apheresis market, however, is attractive, and we see significant opportunities for market development and growth. For example, we see a growing need for platelet transfusion that is driven by the improving access to diagnosis and treatment of oncology patients in emerging markets. As blood centers seek to increase and optimize their platelet collections, Haemonetics solutions play a critical role in enabling more efficient collections. Another example is plasma, which represents the largest commercial opportunity for us within our apheresis portfolio. Anyone attending industry conferences in recent years has likely heard over and over again that the world needs more plasma. High dependence on commercial plasma and the U.S. donor pool has put significant pressure on health care systems globally. Growing demand for IG and increasing dependency on commercial source plasma poses a high risk to IG access. The pandemic's impact on collection volumes has had a considerable effect on the availability and cost of plasma-derived therapies, in some cases, leaving patients untreated and with limited access to these life-saving therapies. Yet the changes are often born from challenges, and we now see a strong emerging trend towards increasing self-sufficiency in plasma. Countries around the world and their blood organizations have realized the need for greater contributions to the collection of plasma in order to secure an adequate and affordable supply of IG for their patients. Established blood centers are ramping up and enhancing their already existing programs by upgrading plasma collection technology to improve efficiency and by increasing collection capacity and opening new centers. Other countries are initiating new government-funded programs and building the infrastructure for plasma collection and, in some cases, plasma fractionation. Interestingly, we are observing the emergence of new models of public-private partnership where the experience and process knowledge of commercial collectors is combined with the access to donors and local relationships of blood organizations. Examples of such models are the plasma programs in Egypt and in Turkey. Our apheresis strategy is based on bespoke approaches for platelets and for plasma. This will allow us to capitalize on this -- the emerging market trends and to protect our market share while preserving the attractive margin profile of this business. The flexibility of the MCS+ provides our customers with the ability to respond to volatility in market requirements. We will continue to selectively improve our portfolio in alignment with our customers' priorities. Over the last few years, we have enhanced our product offerings through a combination of software and device upgrades, making collections more efficient. For example, we have recently completed the vast majority of customer conversions to our price premium universal platelet protocol which provides greater efficiency and improved yield in platelet collections. We are in a strong position to seize the market opportunity that emerges in noncommercial plasma collections across the globe. Our NexSys PCS technology is the gold standard in plasma collection and will play a critical role driving our success in this market. The improved efficiency, unsurpassed safety profile and ease of use and the bidirectional connectivity make our plasma collection system the platform of choice in blood center settings around the world. We will leverage our global expertise and experience that includes over 30 million collections on our NexSys PCS device to best serve this customer base. Blood centers today are looking for further optimization opportunities through device connectivity and digitalization. The goal is a paperless donor floor and seamless integration between devices and blood center software. This improves donor safety, donor satisfaction, center compliance and it reduces the door-to-door time. Our product portfolio includes all of the necessary connectivity tools and software applications to make this possible. Finally, I would like to stress the unique benefits of the shared foundation that makes our business units value proposition even more powerful. With the combined expertise and experience in plasma and blood center, we can best support our customers no matter where they operate. Our regional technical teams and our distributors work how to ensure we deliver superior service to all of our customers worldwide. I would like to conclude with a few key takeaways that support our long-range plan for blood center. We feel confident in our ability to further stabilize this business. We expect to deliver a compounded average organic revenue decline in the low-single digits through fiscal year 2026. We will capitalize on the opportunities in plasma and platelets and we will seek additional opportunities to optimize this business through portfolio rationalization. Growing demand for plasma creates new business opportunities and is an important driver of our strategy. We plan to use the experience we have built with our commercial plasma customers in the U.S. and our state-of-the-art NexSys PCS technology to increase our share in the global noncommercial source plasma market. We remain committed to our customers around the globe, and we will continue to make targeted high-impact investments to ensure efficient blood center operations. And lastly, we remain laser-focused on the most attractive markets, and we will ensure that our portfolio mix is aligned with higher-margin categories, enabling our blood center business to remain a significant source of cash flow. Thank you for your time.

All right. Ladies and gentlemen, we're going to take a very short break here. Once the countdown is over, we'll proceed with presentations with Stewart Strong being the first presenter in the second session, who will talk about our Global Hospital business. [Operator Instructions] We'll be back shortly. [Break]

Good morning, everyone. Welcome back from the break. I hope everybody got their coffee and is ready to go for the second half of our meeting. I'm really excited to talk to you about the significant growth opportunities we have in the hospital business unit and the role that this business plays in the accelerated growth for Haemonetics with our focus on market-leading positions and in growing in underdeveloped areas. When I joined Haemonetics 3 years ago, our business was about $190 million in revenue and growing in the mid-single digits. At the end of our fiscal 2022, we'd expanded the business to $323 million and more than doubled our revenue growth rate, through our laser focus on providing winning technologies and improving patient care through hospital economics. Today, I'll cover the 4 product platforms that make up our hospital business each with leading positions across the markets that we serve. We have an attractive business model with 90% of our revenue concentrated in high-margin products such as disposables and software. Growth in Haemonetics is anchored in large, growing and significantly underpenetrated areas, enabling us to expand the market and our market share. We invest heavily in education, driving increased clinical awareness to fuel the continued adoption of our devices and disposables across the world. We've built a strong global commercial infrastructure to implement our go-to-market strategies and to drive robust growth. And as our product portfolio evolves, we're going to strengthen it through both organic innovation as well as inorganic opportunities. With the combined global market of over $4 billion in our unique customer-focused value proposition, we're confident in our ability to strengthen our leadership and improve scale in markets that grow to a size of almost $5 billion by the end of 2026. All of our products are focused on addressing critical customer needs and important value drivers such as reducing complications, improving workflow efficiencies, eliminating manual processes and improving hospital economics. Our commercial team is scaled to support the continued robust growth of our business and additional international expansion as well. We have an outstanding supply chain capability that enables us to withstand near-term macroeconomic challenges and offers us the flexibility as we continue to grow and reach scale over time. And lastly, we've got a dedicated clinical and R&D team focused on continuously driving awareness, building clinical evidence and filling our innovation pipeline. First, let's turn to our hemostasis management portfolio. Led by the TEG system, our flagship product, our mission is to make viscoelastic diagnostic testing the standard of care across the globe. Our diagnostic platforms provide quicker, more detailed and actionable information to physicians compared to conventional coagulation tests. This information empowers the clinician with complete picture about the patient's ability to coagulate and their associated risk of either bleeding or thrombosis. This enables the clinician to make better decisions regarding treatment and therapy. Let me show you a quick video on how the TEG system works. [Presentation]

So the introduction of the TEG success has been a real game changer for us in this space. And as you saw in the video, this portable, cartridge-based technology has fueled increased adoption of our diagnostic platform through better access, better utility as well as better ease of use. TEG 6S has accelerated our penetration into areas like trauma, into cardiac surgery and also unlocked for us additional opportunities in interventional cardiology as well as electrophysiology. Anila, during her presentation, will provide more detail about the clinical value TEG brings to us in these areas. We've also enhanced our hemostasis management portfolio to address regional nuances and other customer needs. Our acquisition of ClotPro, a testing system that provides higher throughput, ease of use and more assay choices than our competition, has helped us to secure a key leadership position in the category and take significant share from competitors in key markets in Europe. In China, which is our second largest market for viscoelastic testing, we've launched our in-country manufactured and developed viscoelastic testing system to enable us to compete for national and for regional tenders. We'll continue to leverage our clinical expertise in China and our commercial footprint there to drive adoption of our technologies in that key market. Overall, our commercial teams play a critical role in driving the growth of this technology. To support our growth and our innovation agenda, in the last 2 years alone, we've doubled our clinical support and sales teams in North America and in markets that are key to us across the globe. Now let's dig a little deeper into the market opportunity. We calculate the total addressable market for global viscoelastic testing to be approximately $700 million today, and it's growing in the mid-single digits. This market is made up of clinical segments such as cardiology, cardiac surgery, trauma, liver transplant and other areas that we're beginning to explore like stand-alone laboratory services. Viscoelastic testing is rapidly gaining momentum across the globe. However, the market remains significantly underpenetrated at the moment with only about 25% of all addressable procedures actually using viscoelastic testing, of which we have about 70% market share. With a lot of room for expansion and the potential to accelerate our growth with additional investments that are not included in our long-range plan, we plan to remain confident in the ability to deliver robust results in this business. Our continuous penetration into core clinical segments and the increased use of our tests will be fueled by our commitment to clinical education and by the ongoing expansion of our sales and clinical teams. We'll continue to invest in and strengthen our platforms and develop our product portfolio to unlock additional opportunities for growth and for value creation. As a result, we will continue to increase penetration of viscoelastic testing and by extension, our market share from approximately 18% to over 30% by the end of our fiscal 2026 and potentially more as we allocate additional resources to capitalize on the support and growth of this product line. Now moving over to vascular closure, our newest product addition. We're delighted with the acquisition of Cardiva and the integration of their team. We're delighted with the VASCADE family of vascular closure devices. This was an important milestone for us in the hospital business and for Haemonetics, in general, as it presented an opportunity to expand our total addressable market, while strengthening our position in the portfolio with attractive and growing interventional cardiology and electrophysiology markets. There are 2 products in the portfolio: VASCADE and VASCADE MVP. Our VASCADE device is the only marketed device foreclosure proven to significantly reduce access site complications compared with manual compression. The key advantage of our VASCADE MVP device is that it's the only closure device FDA approved for use following cardiac ablation procedures requiring 2 or more access sites within the same vessel, and it's the only device with the FDA indication for same-day discharge following an atrial fibrillation ablation procedure. One year since acquiring this asset, we've significantly exceeded all of our deal model milestones. This business has delivered an impressive $94 million in revenue compared with our original expectations of $65 million to $75 million in our deal model. And it was accretive in year 1 compared with the estimated $0.15 to $0.20 of dilution that we originally projected for this business. We also expect that this business will deliver a 10% return on invested capital in 4 years or less. Moving to the market. Vascular closure represents the -- actually the largest market opportunity that we have in our hospital business portfolio, equaling about $2.8 billion. About $1.5 billion of this market is in the U.S. This will remain our primary strategic market in the midterm, but we'll have additional expansion opportunities internationally that we plan to pursue in the coming years. In the U.S., the market is divided into electrophysiology, which represents about $400 million in total addressable market, and it's growing in the high single digits. This is comprised of procedures that address arrhythmias, such as atrial fibrillation, ventricular tachycardia, flutter ablation as well as left atrial appendage exclusion. The coronary and peripheral market represents about $1.1 billion in total addressable market and that's growing in the low-to-single digits. This market is comprised of procedures like coronary diagnostic procedures, PCI or percutaneous coronary interventions as well as angioplasty and stenting. And it also represents an opportunity in peripheral vascular. Despite the technological advances for catheter-based technologies, manual compression is still the primary procedure used for closure in these procedures. In the U.S. alone, 67% of coronary peripheral procedures require femoral access. And only about 54% of those actually use vascular closure devices. The use of vascular closure devices in electrophysiology is also minimal. It's only about 10%. And this represents a real first-mover advantage for us and for VASCADE, as we continue to develop this market. We also see significant market opportunity internationally. We've initiated clearances for Japan and for Europe, with plans to commercialize both VASCADE and VASCADE MVP in those markets in the coming years. Furthermore, we're collaborating with our R&D teams to ensure that we meet the ongoing closure needs of physicians across different procedures and for new and emerging technologies that we know are on the horizon. Our focus in the United States, which is going to remain the largest revenue growth area for vascular closure for us, is on the top 600 centers for electrophysiology procedures. This makes up about 90% of the total EP procedure volume across the country. It also makes up about 57% of the total addressable U.S. market for coronary and peripheral vascular procedures. We plan to penetrate the majority of these accounts by the end of fiscal 2026, strengthening our presence both in EP and in interventional cardiology and providing sustainable revenue growth as we work to increase utilization of these products in these procedures. As we leverage the significant value proposition that we deliver in the EP lab and gain entry into those top 600 accounts, we are then able to expand into other areas, driving utilization in other departments across the hospital. Now let's take a quick look at a VASCADE video that talks about the procedure as well as some information about patients that use the products. [Presentation]

Okay. As you heard in the video, the VASCADE system is great for all stakeholders. It's great for the patient, it's great for the staff, it's great for the physician and for the hospital. I think you can see now why we're so excited about the opportunity that we have in that space. So turning to the other products in the Hospital portfolio. We also have products in transfusion management as well as the cell salvage markets. Let's talk about those. In transfusion management, we provide software solutions to hospital blood banks that enable hospitals to manage their blood supply to more effectively with less risk of human error through our 2 core products, SafeTrace and BloodTrack. The BloodTrack blood bank and blood management information systems market is largely underdeveloped, with an estimated near-term addressable market of about $300 million and relatively few competitors in the space. Over the last few years, we've seen double-digit growth in this market. By leveraging our investments that we've already made in our commercial channel in the U.S. as well as in Europe, we'll be able to maintain a similar growth trajectory going forward. Moving to our Cell Saver technology. This technology provides physicians with an easy-to-use, reliable way to recover a patient's own blood from the surgical field during surgical procedures, wash it and then deliver it back to the patient therefore, reducing the need for donor blood transfusion while improving tissue conditions and preventing transmission transmitted, transfusion transmitted or related diseases. Cell Saver is used primarily in medium-to-high blood loss surgical procedures, such as cardiac, orthopedic, trauma, transplant, vascular and OB/GYN surgery. Our Cell Saver technology today competes in a $200 million market, where we have about 30% market share. This market is relatively mature with an average growth rate that's in the low-single digits and it's driven by an increase in patient population and by expanding adoption to underutilized procedures. Our focus for Cell Saver is on upgrading our existing customer base to our newest platform, to ensure that customer retention exists while taking market share by investing in additional products. Now let's talk about M&A. In Hospital, we view M&A as an important lever for our growth strategy. And although our long-range plan does not include any additional mergers and acquisitions, we believe there is ample room to accelerate growth through additional organic opportunities. Our selection criteria are focused on products that strengthen our technology and our leadership role in our core clinical segments or enable us to establish a strategic position in adjacent areas. Over the past few years, we've executed on several acquisitions. We secured the intellectual property for TEG 6s, which has expanded our market opportunity in this area. We acquired Anacor, the German company -- the German-based company that developed ClotPro, which significantly strengthened our technology and our leadership role in Europe. And in 2021, we made the acquisition of Cardiva Medical. This has established our presence in the attractive clinical areas of electrophysiology and interventional cardiology and will enable us to leverage our commercial footprint, the clinical knowledge and technical expertise of the cardiac -- Cardiva team and to introduce other procedure-enabled technologies through this group in these attractive areas. As I mentioned at the start of my presentation, we're excited about what we've done to expand the Hospital business and to accelerate its growth into the future. Looking ahead, we project this business to deliver a compounded annual growth rate in the mid-teens through fiscal 2026, reinforcing our role as the growth engine for Haemonetics and significantly outpacing the average growth rate of our core hospital markets. Our tailored go-to-market strategies are working and will continue to strengthen our leadership role and increase our market share across all of our product portfolio with a specific focus on the 2 key growth areas of hemostasis management and vascular closure. We've established a strong global commercial organization focused on driving revenue and market expansion. Our commercial organization plays a critical role in the growth of this business, and we'll continue to invest in strengthening our infrastructure as appropriate. Finally, our new product road map is robust, and we're well-positioned to drive growth in the areas of current segments and in other areas of adjacencies. Thank you for your time and for allowing me to share this exciting plan for the opportunities for the Hospital business. Now I'd like to turn it over to Anila to talk about how we plan to create value through innovation. Anila?

Good morning. Thank you, Stewart. Innovation and finding exciting new ways to meet the needs of our customers are at the very core of Haemonetics mission. I'm delighted to share how we plan to maintain our market leadership and help achieve our growth aspirations through customer-centered innovation. Our company's rich history began more than 50 years ago with the revolutionary Latham bowl that established the fields of automated apheresis and autologous transfusion. Since then, our track record of successful in-house innovation has included industry-leading solutions across all our businesses. It has been complemented with a series of strategic acquisitions that have allowed us to expand our markets and clinical areas and further strengthen our portfolio. These acquisitions have included our TEG portfolio which has become the market-leading viscoelastic testing platform for hemostasis management and more recently, Cardiva Medical and its winning VASCADE vascular closure platform. Over the past 5 years, we've accelerated our technology agenda with a focus on meaningful innovation, grounded and deep understanding of our customers' day-to-day operations, health economics and unmet patient needs. We've collaborated with our customers to design and develop new and better products with robust clinical evidence to support their safety and effectiveness. Our innovation is made possible by the breadth of capabilities we have in R&D in core areas of value creation, including hardware, disposables, software and digital, all playing a critical role in addressing our customer needs and providing integrated holistic solutions. These capabilities are supported by a strong clinical, medical and regulatory teams, driving new indication and market development initiatives across our growth platforms. Today, our innovation road maps are focused on the highest impact opportunities. These include plasma, hemostasis management and vascular closure. These markets represent the majority of our total addressable market and our experience and domain expertise provides -- continues to provide us with a competitive edge. Our R&D spend is significantly weighted towards these platforms, enabling our expectation of doubling our vitality index by the end of fiscal 2026. Let's take a closer look at how we are driving value with each of these platforms. Starting with plasma. What matters most to our plasma customers? Maximizing yield and quality of plasma collected, improving center productivity, ensuring donor safety and enhancing the donor experience. As the industry leader with decades of experience with plasma and blood collection, we have leveraged our expertise to build a full suite of unique fully integrated solutions. We are best-in-class in yield innovation, offering safe yield enhancement solutions for more than a decade and most recently, with our Persona technology, this proprietary integrated plasma collection protocol creates the first and only donor-tailored solution, clinically shown to yield an additional 9% of plasma on average over our YES technology. We reimagined and reengineered our plasmapheresis device to create our flagship NexSys platform featuring a highly intuitive user interface and real-time user feedback that has really set the industry standard in workflow efficiency. This device is directly connected to our NexLynk donor management software designed in collaboration with our customers to improve plasma center operations efficiency. Our device is also equipped with our proprietary plasma separation bowl that's designed to ensure donor safety by optimizing the efficiency of plasma collection while preventing red blood cell damage during the plasmapheresis process. We're proud of our long history of processing donors' blood in a system that has been time tested to provide an industry best donation experience, keeping donor safety at the forefront of our engineering design. Our newly released donor mobile application expands our value proposition beyond the walls of the plasma center directly into the hands of our donor. We are providing customers with mobile applications that support donor recruitment and retention. We have rapidly deployed this solution by leveraging cloud-based technologies and SaaS delivery model to accelerate value for our customers, especially during this critical time of plasma shortage in the industry. Given the increased importance of plasma volume output to collectors, the high cost of donor recruitment and retention and the need to meet the growing demand for plasma, we're actively pursuing additional innovations to further increase plasma yield while maintaining donor safety. We are also advancing our innovative plasma separation bowl technology. We're redesigning the bowl to further optimize whole blood separation and fluid management to make the process even more efficient. When paired with our enhanced device software, we are targeting a significantly shortened procedure time by 20% on average, which will further increase collection efficiency. We will leverage our SaaS technology platform to drive additional innovations for donor engagement and retention with an increased focus on donor-specific targeting. We realize that plasma collectors compete for donors, and we are committed to providing our customers with the tools necessary to win in this competitive market. Next, let's talk about our impact in hemostasis management with viscoelastic testing. Hemostasis management is about confidently diagnosing a patient's coagulation status, resulting in better and more timely therapeutic decisions and clinical and health economic outcomes. Conventional coagulation tests are slow and run in platelet poor plasma. And as a result, they're missing critical physiological components. Viscoelastic testing is a methodology of whole blood testing that provides faster and more comprehensive insights of the coagulation process. This enables timely clinical decisions about surgical interventions and the targeted use of drugs such as blood thinners and clotting factors and blood products such as blood and plasma transfusions in the emergency room or the operating room. TEG is the market-leading brand and trusted technology for viscoelastic testing. Our latest platform, TEG 6s, is a revolutionary step in making this test more accessible in the hospital. It offers greater speed and precision with a simple, easy-to-use multi-assay cartridge system. The global hemostasis cartridge has 4 channels that combined provide a comprehensive, timely and specific assessment of the patient's coagulation status. The platelet mapping assay analyzes the impact of platelet-inhibiting drugs, and can also help inform when to schedule surgery for patients previously on blood thinners. Our devices are also supported by TEG Manager software that allows remote viewing of results in real time throughout the hospital. TEG Manager is supported also by the interpretation guidance module that enables the institution to standardize their treatment algorithms. Let me give you a few specific examples of how TEG adds value in different clinical areas today. In liver surgery, TEG has dramatically improved bleeding and transfusion management by providing surgeons and anesthesiologist with meaningful, real-time, actionable information about the complex coagulation status of their patients, where standard coagulation tests often fail them. In trauma, randomized controlled trials have shown that TEG guided resuscitation, improved survival when compared with protocols that rely on standard coagulation assays. In 2019, we gained FDA clearance for the use of the TEG 6s diagnostic cartridge in trauma settings. To this date, we are the only cartridge-based viscoelastic testing platform, FDA cleared for this indication. TEG has also been gaining adoption in cardiac surgery, where clinical evidence has demonstrated the reduction in blood product utilization and the ability to optimize timing of cardiac surgeries, particularly for patients on blood thinners associated with higher bleeding risk. To date, TEG analysis has been described in over 10,000 publications. Clinically, it has been widely adopted in liver surgery, cardiac surgery, trauma care and has been included in key clinical practice guidelines by many organizations. Finding the right balance between anticoagulation of platelet inhibition and the associated bleeding risk is a crucial clinical question, not just in critical care medicine, but in other medical and interventional fields as well. Interventional Cardiology is an emerging area of focus for us where we feel that TEG and especially platelet mapping can really play a critical role. The COVID pandemic has also highlighted importance of coagulation and hemostasis management in the critically ill. In 2021, FDA allowed the use of TEG and other cleared viscoelastic tests as agent testing in COVID patients. This has opened up a whole new field in critical care around thrombosis prevention and management that we are actively exploring. We continue to expand our portfolio with new assays to assess the effects of established and new anticoagulants. And we continue to innovate on our TEG Manager platform to further enable ease of clinical interpretation and standardization in the hospital. We have a rich pipeline in hemostasis management with significant opportunity to build upon our technology and indications and expand into other critical areas of care. Moving to Vascular Closure. As Stu discussed, we are excited about our newly acquired Vascular Closure technology. It is centered in cardiac, peripheral and electrophysiology procedures that require percutaneous access and specifically targeted at addressing the high complication rates associated with the access sites post-procedure. Both VASCADE and VASCADE MVP platforms derive their safety and effectiveness from a completely extravascular design. It leaves nothing behind in the lumen of the vessel and delivers a bioabsorbable thrombogenic collagen plug to the procedural access site that facilitates rapid hemostasis. The device in all use cases is delivered via the existing procedural-ship and has a best-in-class ease of use. VASCADE is the only closure device proven to be statistically safer than manual compression in an FDA-approved pivotal randomized controlled trial that demonstrated 0 major complications after use. VASCADE MVP is the only FDA approved and marketed closure device, specifically designed, targeted and indicated for electrophysiology procedures, including cardiac ablations. The device is approved for closure of multiple access sites within the same vessel. Strong market growth, combined with the advancement in cardiac ablation technologies and evolving new venous and arterial catheter-based procedures provides us with a significant opportunity to fill our R&D pipeline. With advancements in our technology, clinical data and additional M&A, we plan to expand our line of vascular closure products to address new technologies and new procedures as well as strengthen our portfolio with larger fringe closure devices. We're very excited about the long-term potential of this innovative technology and our ability to have a meaningful impact by reducing complications, increasing ease of use for our clinicians, increasing patient satisfaction and generating economic benefit for the entire health care system. In closing, I would like to reiterate that we are hyper-focused on our 3 leading growth platforms: plasma, hemostasis management and vascular closure. Innovation is a critical driver of our growth and we expect contributions from newly-developed products to double our vitality index for Plasma and Hospital by fiscal 2026. We have a motivated and energized team to drive meaningful innovation across our growth platforms through product, software and market development. We will continue to explore inorganic opportunities to strengthen our core technology and augment our portfolio and growth objectives. Thank you for your time today. And now James will provide more details about our long-term financials. James?

Thanks, Anila, and hello, everyone. It's a real pleasure to be with you this morning. Before I take you through the financials of our long-range plan, I would like to take a moment to share with you why I joined Haemonetics nearly 3 months ago as the newest member of the company's executive leadership team. Having spent 30 years in finance and strategy with [indiscernible] and life sciences, I know well how Haemonetics is recognized and respected for its long history of innovation and industry leadership. I was attracted to the company's clear mission to improve standards of care and its strong intrinsic value to deliver on that goal. Today, our team has highlighted the significant work accomplished over the last 6 years and the exciting opportunities we see in our businesses over the next several years. I would like to reinforce and expand upon the key messages that our leadership has discussed and help translate those messages into our expected financial performance. I will focus on the financials covering periods from fiscal 2022 through fiscal 2026 with our year-end results for fiscal 2022, serving as the base year for our long-range plan. Haemonetics is not the same company it was 6 years ago. We have methodically transformed Haemonetics, rationalizing our portfolio to focus on growing attractive markets. Adding additional growth drivers through organic and inorganic investments, expanding our geographic footprint and building our commercial and clinical capabilities. We accelerated the organic growth of our business from what used to be low single digits, up to mid- to high single digits in just 4 years through portfolio rationalization. We refocused our portfolio on high-margin products and strengthen our technological capabilities, enabling us to improve leverage from our business. This, combined with certain business optimization initiatives, such as the complexity reduction initiative and the operational excellence program contributed to a 550 basis points expansion of adjusted gross margin and a nearly 900 basis points expansion of adjusted operating income margin. Our revenue growth and operating margin expansion led to a 19% compounded annual growth rate for adjusted earnings per diluted share as we grew from $1.63 in fiscal 2016 to $3.31 in fiscal '20. Our capital allocation priorities have remained squarely focused on delivering high ROI investments, improving our return on invested capital by approximately 5x when compared with fiscal '16. Clearly, the COVID-19 pandemic has been a challenge over the last 2 years, with global disruptions to patient care and supply chains. Our business was affected. But what matters most is that the core building blocks for Haemonetics remain in place, providing a strong foundation for all financial objectives included within our long-range plan. Our plasma collections are recovering, creating momentum for robust growth enabled by the strong underlying demand for plasma-derived therapies. Our U.S. customers are recognizing the significant value of our technology, and we expect to have all of them on our fully integrated NexSys platform this fall. Our hospital business is fully back on track as it continues to establish its role as a growth engine for Haemonetics, and our Blood Center business has shown a lot of resilience. And when help from our supply chain teams has created opportunities to step up and help our customers when other suppliers couldn't. And lastly, changes in portfolio mix and our operational excellence program help us offset macroeconomic headwinds while making us more agile and efficient. Before I discuss our long-range plan, I would like to remind everyone about our fiscal 2023 guidance and affirm our confidence to achieve it. Looking to our financial outlook from fiscal 2022 through fiscal '26, we have our sights set on 4 key financial objectives that we believe are capable of driving attractive financial returns and value creation for our shareholders. The first objective is to drive sustainable organic revenue growth. From our presentations this morning, you have a clear picture of how our plasma and hospital businesses are expected to generate sustainable, above-market revenue growth rates. Our second objective is continued market expansion. In fact, we expect growth in our adjusted operating income and adjusted EPS to be more than double the organic compounded average growth rate for revenue. And our third objective is growth in free cash flow. As our businesses continue to gain strength we expect to generate significant operating cash flow, strengthening our balance sheet and fueling our fourth objective, which is a robust capital allocation plan enabled by up to $2.1 billion in capital capacity. As shown on this slide, there are a number of key assumptions included in our long-range plan. Among them are foreign currency exchange rates, the trajectory of the U.S. economy, stability in the regulatory and macroeconomic environment, new product launches and the success of our commercial initiatives. We understand that in the face of continued macroeconomic uncertainty being transparent with our assumptions will enable you to understand our long-range plan and evaluate additional risks and opportunities. We believe that focus on high-growth, market-leading products is the right strategy, and we'll continue to guide our investments in new product development as well as our commercial strategies and inform our M&A agenda. Looking at revenue in our long-range plan, we project a healthy high single-digit organic revenue CAGR. Underpinning our growth outlook is continued strength in our high-growth portfolio, which includes our plasma and hospital businesses. This product portfolio will continue to drive growth through market leadership and innovation, and we expect it to contribute about 77% of total revenue in fiscal '26. Our blood center products are utilized every day across the world, serving the needs of patients and care providers. Given this strong market position and geographic footprint, we expect this business to continue to stabilize as we capitalize on emerging international opportunities in plasma. We expect additional improvements in our margins fueled by high teens growth in adjusted operating income. This expansion in adjusted operating income margins will be driven by highly leveraged plasma revenue growth. The improving leverage of our high-growth hospital business and our operational excellence program, net of continued investments into enablers of sustaining organic growth such as sales force expansion and innovation. The expansion in adjusted operating income margin will be disproportionately driven by the improvement in adjusted gross margin. Building on past successes, we're confident in our ability to drive this margin expansion through continued portfolio evolution, where with each year, a greater proportion of revenue will be coming from high-growth and high-margin products. We also expect additional contribution from our operational excellence program and modest pricing benefits. Considering the combined financial outlook that we have provided today, we expect to deliver mid-teens adjusted EPS CAGR over the long-range plan. Our adjusted EPS growth target assumes no changes to the existing U.S. or global income tax environment, no significant changes in interest expense and normal share dilution driven by our performance-based culture. The operational excellence program is a product of our collaborative performance-driven culture and is critical to value creation over the long-range plan. The program focuses on improving quality and productivity, revamping our supply chain and strategic sourcing and streamlining our SG&A. This program was initiated in fiscal 2020, and is anticipated to be completed by the end of fiscal 2025. Over the course of this program, we expect to generate $115 million to $125 million in gross savings with about 30% of these savings benefiting our bottom line. The 30% net savings rate includes additional investments and macroeconomic headwinds. By the end of fiscal '22, we delivered $71 million of gross savings under the program, with the remaining targeted savings in the $44 million to $54 million range before fiscal '25, including $22 million of expected savings in fiscal '23. In our fiscal '23 guidance, we assume that the net savings from this program will be largely offset by inflation similar to fiscal '22. However, as macroeconomic headwinds stabilize, we will continue to see additional financial benefits from this program reflected in our margins. Before we move on to discuss our capital allocation, I'd like to address the transition of CSL and provide you with an estimated impact on our financials before additional cost savings included within our long-range plan. As you can see, we feel very confident in our ability to grow our business without CSL, including our ability to deliver a low double-digit average compounded revenue growth rate and a mid-20s growth rate in adjusted earnings per diluted share. It's premature to talk about our fiscal '24 guidance in detail today. However, we know enough to feel very confident in our ability to grow revenue, adjusted operating income and adjusted EPS in every year included within our long-range plan. We believe we have enough leverage in our base business to more than offset the impact of the CSL transition in fiscal '24 and deliver robust transformational growth across our adjusted P&L thereafter. Moving on to free cash flow and capital allocation. Over the last 6 years, we've significantly strengthened our balance sheet, supporting our ability to purchase Cardiva Medical at the end of fiscal '21. We have a history of continuously generating strong cash flow through the implementation of a number of initiatives focused on driving financial performance, efficiently using working capital and effectively deploying capital. In fiscal '22, despite the macroeconomic and geopolitical headwinds, we generated $172 million in operating cash flow and $78 million of free cash flow. We expect to generate at least $600 million to $700 million in cumulative free cash flow through fiscal '26. The key drivers of cash flow generation are growth in adjusted operating income and operating cash flow, net of organic investments included within our long-range plan, capital investments to support the execution of our operational excellence program and other organic business needs and restructuring costs. We expect our capital expenditures to be in the range of $250 million to $300 million. As we approach the completion of our capital replacement cycle in plasma and finalize the operational excellence program we accept -- we expect a step up in free cash flow. We anticipate that we'll increase our available capital capacity from about $400 million at the end of fiscal '22 to a range of $1.7 billion to $2.1 billion by the end of fiscal '26 through a combination of strong cash generation, adjusted operating income growth and the additional opportunity to increase our leverage ratio. Our gross leverage ratio at the end of fiscal '22 was 3.15% and is expected to decline to 1.6% by the end of fiscal '26. Our debt covenants allow us to generally maintain a gross leverage ratio of up to 3.5x EBITDA and permit us to exceed 3.5x EBITDA for the right opportunity. Improvements in free cash flow and flexibility within our credit facility will provide ample room to fund additional growth investments. Let's move on to our capital allocation priorities, which remain unchanged and have served us well. We are focused on 3 key priorities for capital allocation all of which are centered around enhancing returns and retaining flexibility. We will continue to invest in the business. These investments have proven to generate attractive returns and propel our growth. We're -- we've invested hundreds of millions of dollars over the last 6 years in manufacturing capacity, capital equipment for our customers, research and development and expansion of our sales and marketing organizations. Our long-range plan includes hundreds of millions of dollars to fund organic growth of our business, and we will look for additional opportunities to accelerate some of these investments to further strengthen our leadership. As portfolio evolution remains a priority in the midterm, we will increase our focus on M&A. We have a strong balance sheet, and we've demonstrated patience and financial discipline to acquire the best assets to help us expand into areas that we believe have strong growth potential and deliver appropriate returns on invested capital. We will continue to be opportunistic with returning cash flow to stakeholders including share repurchases and paying down debt. In closing, I believe there is a bright future ahead of us. We feel confident in our ability to win in the markets we serve, deliver attractive financial returns and generate robust cumulative free cash flow, enabling us to execute on our capital allocation priorities beyond what's included in our long-range plan. I thank you for listening. And now I'll turn it back over to Chris for some closing remarks.

Thank you, James, and thank you to Jake and Thomas and Stu and Anila for sharing the information you shared and your own personal perspectives on our prospects. Before we turn to your questions, I'd like to offer a few personal reflections and a couple of closing thoughts. James spoke about why he wanted to become part of our team. I have been thinking a lot about that lately for myself as well, and why I was so excited to join Haemonetics 6 years ago. The history and the heritage of innovation in this company whether it's blood collection, plasma apheresis or patient blood management, the mission and the noble purpose to help customers in advance standards of care. And the company's commitment and potential for making an even bigger impact for collectors and caregivers throughout the world. 6 years ago -- 6 years later, my enthusiasm for Haemonetics has only increased. Our foundation is incredibly solid. We turned around the company and empowered a purpose-driven organization. That purpose guides everything that we do from designing and making products that better serve our customer needs to being socially responsible and driving strong, sustainable financial results. We've overcome daunting challenges, staying steadfast in our mission, we are listening to customers and other key stakeholders and taking action to meet their changing needs. We are advancing our product value propositions and providing a compelling reason to believe through our evolving portfolio of market-leading solutions. Our team has the expertise and the resources and is committed to sustainable growth. We see tremendous opportunities in our core markets, and we have created unprecedented momentum. I am more convinced than ever that the best is yet to come for our company. To put it all together, as we were completing the turnaround, just prior to the pandemic, our management team and our Board began discussing a bold aspirational goal of sustainable high single-digit revenue growth, double that growth on the bottom line. We now expect to deliver at least that going forward over our long-range plan with the potential to further improve financial performance through portfolio evolution and additional investments as appropriate. Our strategy and our value drivers are enduring. They position us for sustained growth and success. We remain focused on defending and advancing our leadership in plasma and in hospital through meaningful innovation and continuous portfolio evolution. Both businesses will deliver breakout growth. We're also committed to additional margin expansion. With the benefit of our operational excellence program and growth in our high-margin products we expect to deliver high teens CAGR and adjusted operating income and a mid-teens CAGR in adjusted earnings per share. Success with our long-range plan creates over $2 billion in capacity for additional growth and investment not included in our long-range plan today. I'm excited to lead us into our next chapter with a focus and holistic plan to achieve our aspirations. And lastly, on behalf of our leadership team, I want to offer our heartfelt gratitude and appreciation to our employees. World-class teams throughout the globe are helping our customers make it matter every day. Their hard work and dedication to our company and to our customers is what truly distinguishes Haemonetics. Thank you for listening today. I'll now turn things back over to Olga to begin our Q&A session.

All right. Just a quick update here as we're getting ready for the Q&A. I would like to ask our audience to please remain seated. And I'd like to ask our speakers to please start making their way back on the stage. It should take less in a minute, we'll be right back with you. All right. Thanks, everybody, for waiting. We're now beginning our live Q&A session. For everyone in the audience, please raise your hand if you'd like to ask a question. Please state your name, your company and please limit questions only to 1 question to begin with. And then if you have additional questions, please raise your hand again. [Operator Instructions] I'll be alternating asking questions from our audience and virtual audiences to make sure that we get to as many questions as possible. And just as a reminder, we do plan to end our Q&A session 1 p.m. Eastern Time. All right. Let's get started. Anyone like to go first? Microphones?

Mike Matson, Needham & Company. I guess I wanted to start with the plasma business. I don't know if you're willing to comment at all about the kind of current conditions you're seeing in that market, but it does seem like there's potentially some macro tailwinds there with the inflation rates we're seeing and the economy potentially slowing down? And then it's sort of as a follow-up, maybe if you could just comment, it seems to be sort of a countercyclical business, but can you maybe speak to the performance you've seen in prior recessions in plasma?

Maybe Chris or Jake.

Why don't you start and I'll wait.

Yes, I'm happy to start. Thanks for the question. So my team and I work with our customers every day, and we're absolutely seeing a resurgence in donors coming back to the centers. We're seeing it. It's too early to speak about specifically to Q1 results. But I can tell you that we're seeing resurgence across all market types with centers and specifically seeing improvement around mature centers where over the last 8 quarters, we really hadn't seen that recovery from the pandemic. So to speak to your other points around inflation or potential around even recession, there's no doubt about it with -- if anybody here has filled up a gas tank recently or purchased groceries, cost of everything have gone up and donors that come into the centers are often impacted by that significantly. And the form of compensation received from those donations is often necessary income. So I think in working with the customers that we're working with, we're seeing this happen in real time. We anticipate that there are some continued challenges ahead. So we would expect that to continue. And I'll let Chris kind of jump in on prior impact or I should say, performance for the business as a result of recession. But the -- our customers are certainly starting to see it. And I would say from that perspective, right now, we're in the midst of continued improvement in resurgence in collections. So we're pretty bullish about what that means to our business right now.

Yes. Mike, thanks for the question. I fully concur and emphasize what Jake has described in terms of the momentum in the business. If you look at prior recessions, the reality is all 3 of our businesses, blood center, hospital and plasma do well in recessionary periods. There's a strong resiliency there. For plasma, in particular, this is an opportunity for donors to augment their disposable income. So whether it's hyperinflation as we're seeing right now or unfortunately, if we wind up going into full recession, we feel quite good about the prospects to enable our customers to continue to grow their collections. And that's certainly what we've seen throughout the pandemic, it caused us to really focus on household disposable income levels, real income and savings rates as well. And if you track those heading into this period, we've approached the levels that existed pre-pandemic. And if there's further inflation or broader recessionary pressures, that will only tilt more favorably towards collection volume.

Thank you. Let's take another question from the audience.

Hi, good morning. Thank you for hosting this Joanne Wuensch from Citibank. Actually I've 2 questions. One has to do with the pricing in the plasma market. What are you seeing there? And how should we think about it in a recessionary market or just in general, post-pandemic? And then the second question I have has to do with operating margins. Your guidance for fiscal year '23 is for margins to be 18% to 19% and then to get into the high 20s by fiscal year '26. Could you help us build a bridge because that's a significant move over the next 3 years?

Yes. Maybe James and Chris.

Just specifically to the question around pricing you're asking about, are you talking about compensation related to the donors or I just want to make sure I understand that aspect of your question.

[indiscernible].

Why don't you talk about remuneration, I'll talk about [indiscernible].

Yes, sure. Sure. So ultimately, we're seeing a significant increase in what donors are being compensated and that was something that started during the pandemic. And those prices or the compensation for donation have certainly increased in that period of time and impacted the overall cost to collect. In talking with our customers, I don't think there's any expectation that, that is going down anytime soon either. They're very focused on making sure that the continued effort around collection in the centers continues to be strong. So the compensation that donors are seeing is anticipated that it would stay strong for the future.

Yes. If I think about how that affects our relationship with our customers, right? What we've guided to overall in this plan, we anticipate taking -- when I joined the company 6 years ago, our gross margins were in the low 40s, 42% or 43%. Today, they are in the mid-50s. As you heard from James and I, we expect to achieve high 50s to low 60s over the next 4-year period. Certainly, plasma will participate in that, and it's driven by the NexSys technology. You heard Jake walked through what this means, whether it's the 9% to 12% yield enhancement or the increased door-to-door speed or the connectivity or the donor sat, they all contribute. If you look at what was pre-pandemic, $125 to $150 to collect a liter of plasma is now well north of $200. So if we're able to drive 10%, 12%, 15% improvements in productivity, the pass-through in terms of our ability to reduce cost per liter is quite profound. And again, as Jake said, we don't charge anything near that in terms of the actual disposable kits that we sell to our customers. We're very confident in our ability to continue to drive gross margins and price and mix are important components of that, Joanne. James, maybe just talk about the operating margin bridge.

Yes, sure. So maybe I can get you round that out and get you to the -- how do you improve the operating margins by so much over the projection period. But the first part was said here, improving gross margins going to trickle down. It's really -- I would say that the secret is really the operating leverage that we're getting. We're increasing revenues far quickly than we're increasing some of the other costs, and that's really what drives it. And it's both in hospital and in plasma. That probably drives it the most. And then what I mentioned in my remarks too actually helps as well is the operational excellence program. We're not quite done there yet, but to a lesser extent, that also propels it. And so by the time you get all the way out to '26, it really does make a significant impact with the years of improving margins, combined with taking the cost out of the business.

[Operator Instructions] And our first question is -- actually the first 2, and it's about investments in hospital. The question reads, can you give us a sense of investments needed to set up your Vascular Closure business internationally? And more generally, how to think about overall investments into this business to support the LRP growth?

Okay. Yes. So internationally, one thing that's great about our business is we're already set up globally. We're direct in most of the major markets that you would think of in Asia Pacific as well as in Europe. We've got distribution. We've got a commercial team. We've got a full-scale marketing team in the major countries that we go after. So as far as what it would take to set up internationally, we're already quite far along there, and we're ready to go there. You heard in my prepared remarks me talk about us going after approvals in Japan as well as in Europe. So we're moving forward on that pathway. What was the second part of the question, Anila?

And generally, how to think about investments in your business to support the LRP growth?

Yes. So the expansion that we've executed on in the business is really going to fuel that growth. I also mentioned earlier today that we almost doubled our sales force, both for the TEG business as well as the VASCADE business, both in the U.S. and internationally. So what we have in the budget moving forward in the LRP is leveraging what we've already done from a commercial expansion perspective to grow that. And by the way, what we're seeing is a lot of headroom for growth in both of those markets. You heard me talk about the fact that we're only about 25% penetrated in viscoelastic testing across the globe versus what could be done. We own 70% of that market, but it's still underpenetrated. So a big part of what we're doing is leveraging the investments we've already made to grow the business and grow into that expanded TAM that we have. And it's a similar approach for us with regard to the VASCADE business, where you heard me talk about the 10% penetration in electrophysiology. So a lot of headroom for growth there for us in executing on what we've already invested in from a commercial perspective to drive into that market that we see as a growth opportunity for us.

Thank you, Stu. I'm going to take another question from our virtual audience before returning back to your in-person audience. The next question is for Anila, and it's about innovation in plasma. How should we think about additional yield improvements in plasma? How much additional yield are you targeting? And what would be the process and time line to get it approved?

Thank you for the question. So we have the best-in-class in the industry with regards to yield with our Persona technology. It's a time-tested alternative to the 30-year old standard nomogram we've hired in the industry. It's donor tailored and calculates a personalized plasma collection target based on the donor's hematocrit and BMI. We ran a clinical trial with about 23,000 collections, over 3,400 donors, and showed a pretty healthy safety profile, and an increase of 9% in yield on top of the 3% we get with Persona today. We know yield enhancements are very important for our customers. And we continue with enhancements with our personalized nomogram approach to drive further yield enhancement. I cannot share actual values today, but we feel very confident in our ability to provide more yield per plasma donation for our customers with our continued innovation.

Thank you, Anila. Let's come back to the audience. Can we have a microphone, please for Drew.

Drew Ranieri, Morgan Stanley. Just a question on the LRP and kind of the progression. And I know you don't necessarily want to get into fiscal 2024, but can you at least give us a sense of how we should be thinking about the progression? Is it linear? Or are you comfortable with low single-digit top line growth and the ability to drive to X on your EPS growth for next fiscal year? And just on plasma, the mid-teens plasma growth that you're talking about ex-ESL. Can you give us a little bit more detail on what you're thinking about in terms of market share gains and really some of the new center expansion that's kind of coming online as your customers are replenishing the inventory?

I'm going to split it between James and I. Drew, thanks for the question. When we think about top line growth, it will progress as the market opportunities present themselves. I think there are certain aspects of it, particularly perhaps in Stu's hospital business that will be linear in as much as we've got the 2 big workhorse products in that hospital business that are tearing it up and will continue to do so. With plasma, we currently don't forecast any revenue from CSL in FY '24. So that will be a step back off the $88 million that we communicated previously. However, the remainder, the other $300 million of that is going to grow meaningfully. And if the trends that we're observing and that we forecast continue, that's a pretty healthy offset. A lot of questions have come back in previously when we talked about growth each year. If you think about that just as forecast and obviously, a lot can change between now and FY '24, for example. But if you look at that, offset on plasma, we got our $300 million plasma business that is going to be growing in the mid-teens post-CSL. So simple math, we're talking about something between $40 million and $50 million a year of incremental revenue there. Stu's business is going to be closer to $400 million revenue next year. That business also growing mid-teens or better is just that much robust. So the combination there, it won't be linear, but it's not one of these situations where you're going to have to wait around for FY '26 for things to contribute, and we're pretty excited about what we can do organically, and we haven't even talked about the additional inorganic overlays. But maybe you should talk about the EPS.

Yes. So I think with regard to that, I agree, it's going to follow in the nonlinear fashion. I would say it's more back-end weighted, just rough rule of thumb, more, I would say, 60 -- well, 40, 60 towards the back end, the business becomes more profitable as we move on through the projection period, and you'll see that happening as we build upon the leverage that I was speaking about earlier. And then when it drops down to the EPS line, the one thing that we don't assume is that we don't have any buybacks in there. So that's what kind of makes the EPS trail a little bit with regard to that level of dilution.

And I just have a quick clarification question from our virtual audience that I think would work with particular answer. Does your LRP assume any CSL revenue contribution in fiscal '24?

So the short answer is no. But I want to be crystal clear because I think Jake touched upon this. Last year, we converted CSL's European centers in their entirety to NexSys, and that's an existing long-term contract. We obviously will honor that contract as we will with all of our customers. Based on what was communicated previously, we assume no additional volume from CSL in FY '24, which is why the $88 million, we assume goes to 0. Obviously, we stand ready to serve CSL and all of our customers as they need and they see fit. We look forward to the opportunity to do that, should it present itself.

Thank you. Let's go back to our audience. Can we have a microphone there, please.

Mike Petusky, Barrington. Earlier, you all said that M&A would be important in hospital. And obviously, you guys took a big swing with the Cardiva assets. And I guess I'm just wondering in terms of pipeline, are there assets you're looking at? And then in terms of the backdrop of interest rates, inflation and all the rest of it, how deep -- I know you said for the right opportunity beyond 3.5x, but how deep are you willing to go if you see another Cardiva type deal out there?

Yes. It's probably good for James to...

Do you want to take the hospital piece first and then turn it over to Chris for the second part?

That's great.

Yes, we're excited about the Cardiva acquisition, of course. It's performed well for us. It's also importantly open the aperture for us of what we can do with looking at other procedure-enabling technologies, particularly in the EP and interventional cardiology spaces. So now we have a footprint there. We've got a great sales team here in the U.S., and we're going to start building out over time our international force. So we're set up well to bring in other assets into those areas. And that was one of the big reasons that we actually acquired Cardiva in the first place was the commercial footprint that it gave us but also the ability to open that aperture up to other adjacencies that we could step into that, quite frankly, we couldn't have done 2 years ago. We couldn't have done something like that 2 years ago. Now we have a presence in that space. and we have a leadership presence in that space that's going to allow us to do more. I'll let James or Chris talk about what that means from a financial perspective and how we fund that. But that's really what we're looking at is procedure-enabling technologies in those 2 spaces in particular.

Yes. Maybe I can jump in on the leverage ratio. I mean, look, we're not going to be -- or we don't intend on being a highly leveraged company. Just like with Cardiva, I think we're comfortable taking it up past 4, 4.25 in that area, depending on the opportunity that we're looking at. But just like what we've done in terms of our behavior afterward, we're going to take that back down we're certainly comfortable where we are today; and 3, and maybe you've even taken it down a little bit beyond that more long term, but no devices on -- no site set anyway on being a highly leveraged company at all.

Thank you. Any more questions from the audience? Can we have the microphone?

Andrew Cooper from Raymond James. Thanks for the question. Maybe just on the hospital segment and viscoelastic testing penetration. You mentioned a bunch of different clinical segments. Can you just sort of lay out when you think about that growth, where is the lower-hanging fruit nearer term? Where is new market generation longer term and how that glide path shapes up?

Yes. So I'll take that, and maybe Anila can talk about the pipeline for us. But we've done a really nice job historically of driving into particularly the spaces of cardiac surgery as well as trauma, right? We're doing a great job there. Still overall underpenetrated. We think there's more headroom for growth there. Our focus in viscoelastic testing to really succeed in this LRP is, #1, expanding the number of accounts that are actually using the product. 85% of our revenue comes from disposables in that product category. But we need to have the capital in the hospital present in order to get the disposables. So we've built out the clinical team to drive adoption in these hospitals. And we've also added sites that are actually using them. So that space is very -- a great opportunity for us. Now what we think about is in that market, that $700 million TAM that I talked about today that's going to $800 million. Interventional Cardiology is a big part of that. We've started to shift the conversation to historically what has been a lot about using TEG and viscoelastic testing for bleeding risk to more of a conversation around thrombosis, right? We're looking at that balance between bleeding and thrombosis for a patient. Now we're seeing more and more of the dialogue about that thrombosis risk. And that actually lends well to moving into the interventional cardiology space and by extension in other spaces like electrophysiology or structural heart. Anila, you want to talk a little bit about what we're doing from an innovation perspective?

Yes. As Stu said, our -- TEG is our market-leading viscoelastic platform. And we have shown application in liver surgery, in cardiac surgery and in trauma care where we have demonstrated actually a reduction in mortality, a better utilization of blood products as well as better root causing of bleeding complications. As we think about our pipeline, interventional cardiology, as Stu said is really an area of interest for us. Finding the right balance between anticoagulation or platelet inhibition and the associated bleeding risk with that, right, is a pretty critical question to answer for interventional cardiology. And we feel that TEG and especially platelet mapping assay that we have can really play a critical role. The other clinical areas that we're interested in is COVID pandemic with thrombosis management, as Stu said, right, is an area of interest. Managing postpartum bleeding in obstetrics is another area. And then in stroke, specifically with ischemic stroke, understanding the impact of TPA therapy. So a lot of opportunities in terms of clinical area expansion and application of viscoelastic testing.

Thank you. And just coming back to our virtual audience, we actually have a question for blood center at this time. So the question is for Thomas, and it's about, you mentioned the emergence of new partnership models and blood center as a result of IG supply rationing. Can you give us a little more color? Is the regulatory environment changing?

Yes. So thanks for the question. We -- as we go to this industry conferences, we not only hear that IG demand and plasma demand is increasing, but all the countries out there in the blood centers understand that they need to do more to collect plasma. But at the same time, they also realize that they don't have the knowledge and the experience them to today to do that. And so they reach out to commercial collectors to form partnerships. And it depends really country by country. We've seen a couple of those partnerships. But normally, the commercial collector will provide process knowledge, SOP, quality procedures, technology, and the local partner will provide workforce, access to donors but also access to the regulatory bodies in the country. And that was part of -- the second part of the question about that regulatory environment, that is really different from country to country as soon as you go outside of the U.S. But -- so we've seen those partnerships. And Egypt is a great example of that. They presented at the last IPPC, and that could be a blueprint for other companies and countries how to go forward and really increase and ramp up fast.

Thank you, Thomas. Do you have any more questions in the audience? Can we have the microphone, please?

A couple for Anila on the pipeline, some of the stuff you talked about. So large bore opportunity for VASCADE. I mean is that -- do you have a feel right now as to whether or not that's something you can do with the existing platform or something you'd have to look outside for? And then just the timing on this 20% reduction in terms of the plasma collection times that you're working on, will that be -- I assume that's an upgrade to NexSys and -- just if you can give us any kind of timing on when you'd expect to launch that?

So I'll start with Vascular Closure. So our base technology today, where it's applied our basket is in small bore arterial, our VASCADE MVP platform is in venous mid-bore. We think that the current technology can expand to really address larger bore requirements in that mid-bore category. So for example, when we think of venous procedures and pulse field ablation coming up, right, which requires about 14 French. We think our technology can expand to support that. When we think of larger French closure devices, it's definitely of interest. When you look at the emerging procedures we have today with the transcatheter mitral valve repair, with aortic valve replacement, with leadless pacemakers, with ventricular sense devices, all of these require closure of around 18 to 24, 27 French sizes. And there's not really a great option in the industry today. We are very interested in pursuing that both from an organic and inorganic perspective. We don't believe our base technology platform as is can support that, right? So we'll need to develop new platform based on the technology we have, but we are also actively pursuing inorganic opportunities. When I -- coming back to the question on plasma. So from a procedure time perspective, right? So what matters to the donor? The door-to-door time for a donor is really critical as when they come into the plasma center, right? They get registration -- they go through registration, they go through screening, the actual plasma collection process and then donor payment before they leave. Our solution is really optimizing every step of that plasma collection process to reduce door-to-door time for the donor. The latest enhancement that we are working on is really innovation with our plasma bowl technology, which when combined with our device software enhancements, we are exploring a 20% reduction in our procedure time on an average per collection. We are in active development, and we are expecting our FDA submission in this fiscal year.

All right. And we have another question over there.

Joanne Wuensch. You mentioned getting some of the Cardiva products into Japan and in Europe. And you also mentioned that a lot of the infrastructure is already in place for those. Do you have a timing when we can expect that? And when we can expect that revenue contribution?

I'll take that one. So we're pursuing both regulatory approvals right now. Just to be clear, in our LRP, we don't have anything in FY '24 for international sales of VASCADE we have it over the LRP horizon, but it's very small. So most of the growth that we'll see for VASCADE will be in the U.S. However, we can layer on additional revenue from international sales as we get those approvals and launch commercially. We expect that sometime in late FY '24, we get approval in Japan. And sometime in late FY '23, we would get CE mark, and that's fiscal '23, we would get CE mark for Europe, and then begin to commercialize after that.

All right. Do we have any more questions in the audience? Can we have a microphone, please?

Drew Ranieri, Morgan Stanley again. Just in terms of thinking about the M&A strategy. I mean, you have VASCADE MVP, which is a great EP product. You highlighted some other areas, line extensions that you're moving into. I mean should we be thinking that your M&A strategy is building closure around VASCADE MVP? Or do you see VASCADE MVP as being kind of a beachhead foothold in getting out and broadening your EP portfolio over time?

I'll take that. Anila, if you want to jump in at the end. I would say it's really twofold. It's number one, building out our closure portfolio, okay? So she talked about us already having small bore, both venous and arterial covered. In our organic pipeline, mid-bore venous and arterial we feel very confident that we'll be able to cover. Large bore is going to be more difficult from the existing product portfolio. So we've got to look at that either through redesign or through M&A. But we want to round that out and make sure that we can provide products to serve all those needs. But beyond that, we look at this as a beachhead for us to enter into those spaces that we're already in, particularly electrophysiology. We see that as a great growth market for us. We see that it's growing at around 10% right now in that market. So we feel like there's an opportunity for us to do more in that space. What I'll caveat that by saying is, we don't necessarily think that we're going to try to get into the therapeutic areas of electrophysiology. And I mentioned earlier, what we're really focused on is procedure-enabling technologies. So other adjacent products that will allow the procedure to go well, but isn't necessarily the therapy for that particular procedure.

Okay. Let's take a few questions from our virtual audience. And the next question is actually for Anila and James, and it's about R&D spend. How should we think about the R&D spend over the course of the LRP to support the doubling of the Vitality index?

So our R&D spend is really focused on the growth platforms that we talked about today. Plasma, Hemostasis Management and Vascular Closure, these markets are a major part of our total addressable market, right? And we have market-leading products here and experience and domain expertise that really provides us, as we talked about, a competitive edge. Our R&D spend is significantly weighted towards these platforms. And the commitments that the business leaders have talked about in the LRP today are really all funded projects in the R&D plan. As Chris mentioned, right, we have not included M&A in our LRP, but given the dollars that James said are available, we have significant opportunity from an M&A perspective and the opportunity to drive inorganic growth.

And maybe I could just follow up with some of the quantitatives on that. So we spend roughly 5% a year on R&D, 5% of revenue. I think that number is a bit understated, because of -- that could be accounting for software development. So software development has to be capitalized and amortized. So it doesn't really fall into the 5% metric. If you were to adjust for that and -- we'd be close to about 7% of revenue on a cash flow basis. So a fairly significant investment by us to work on the technologies and the platforms that Anila spoke about.

Let's do another question from the virtual audience. The next question is for Stu. What can be done to accelerate growth in hospital?

What can be done to accelerate growth in hospital? Well, we're already growing in mid-teens, which is actually pretty good, I think. So we're really excited about that growth and about what we've done to build out the force. Our 2 growth pillars, as you heard from me, are really Hemostasis Management and Vascular Closure. Those 2, the growth in our LRP, 70% of our growth is coming from those 2 categories alone, okay? 70% of our growth is also coming from North America and the fact that we've built out our commercial force for those 2 categories in North America, means it's more weighted toward our growth in North America by about 70%. If we look beyond that, if we look at other things that we could do to accelerate growth over and above the 14% to 16% or so growth that we're going to be getting, it's really all about 2 things. It would be expanding internationally more as the question you asked, and starting to pull some of that forward internationally with Vascade, building out our commercial force there. Number 2 would be accelerating our R&D pipeline and starting to bring forward some of the projects that we've discussed, that would help us. And we've seen a real, strong correlation, of course, between our expansion of our commercial force with our improved revenue trajectory. So we would want to -- we would potentially pull forward our investments in the commercial force, both in the U.S. as well as internationally to drive accelerated growth in both of those areas. Those would be the things I'd probably look at, probably those 3 Olga, to drive more growth than what we've already projected.

Thank you, Stewart. And let's take another question for Jake. And this question is about Plasma Collection volumes. How are plasma collection volumes tracking so far? And what gives you confidence in the low teens volume growth in the U.S.?

Yes. As I mentioned before, we're seeing a significant resurgence as a result of some of the challenges that are occurring in the economic environment and a result of coming out of COVID. The fact that inflation is challenging and surpassing the real wage growth benefits that have occurred for folks during this COVID period is significantly a part of it. The nice part about it for the customers that have already moved to NexSys and are taking advantage of it as they're collecting 12% more plasma than they were collecting when they were collected on the PCS2. So we're seeing continued growth with the centers, the customers that we work with, or continuing to build in fractionation capacity 3, 4, 5 years out. We've had 250 new centers that have opened up during the pandemic. So there's no doubt that the focus around sustained collection ability and commitment to continuing to grow the market, lines up strongly with what we're doing to serve our customers.

Thank you, Jake. Let's come back to our audience.

Mike Petusky, Barrington again. For Chris, I guess, sort of 2 parts. In terms of forecasting, you guys outside of global pandemics have been very good historically since you've been in the chair. And I'm just wondering, has there been any change, with James coming in, in terms of methodology you guys use in terms of coming up with your forecast? And then I have a second part.

Yes, Mike. I think we get a benefit of having the business unit structure and some really smart folks looking carefully at their markets in constant dialogue with their customers. So we feel quite good on a bottom-up basis. Obviously, the last 8 quarters through plasma volumes, in particular, have been difficult. And we -- it's good to be humble about these things, right? We've learned some lessons. I do believe we're in -- the nature of the dialogue that whether it's the collection side of the operations or the procedure side of the operation, I think we feel quite good about what we've put into this LRP. And it's risk-adjusted. There's meaningful upside, there's exposure as well. We don't control for the macroeconomic factors. But when I think about demand and what we're doing, whether it's in those core Hospital franchises or Plasma and Apheresis more broadly, I think we feel quite good about what we've put out there in this plan, and I think it will be more of what you experienced from the company over the first 4 years.

And then second part, you sort of made a big statement. I feel like a big statement early when you said I'm more excited today than I've ever been, because when you came into the company, with all due respect, you had an easy comp relative to your predecessor. There was a lot of inefficiencies in the business. There were a lot of opportunities. I think you probably saw fairly early that, hey, I can do a lot of things with the pieces that I have in place here. But earlier, you said you're more excited today. And I'm just wondering, what are the 2 or 3 big reasons that you made that statement?

Yes. Thanks. I try to frame this upfront as 3 distinct errors, right? There was that first 4 years where we were running hard against a 5-year plan. We saw meaningful margin expansion, 900-plus basis points. We saw operating income growth and a lot of flow through on that. We didn't achieve a lot of top line revenue growth, right? We focused on evolving the portfolio, better resource allocation, better decision-making, and that drove everything. The pandemic was clearly a setback to us and to our customers. But from where we sit now, I think it will be everything that had us excited during the first 4 years. Admittedly, we've taken care of a lot of that basic hygiene, et cetera. But now we're going to see top line growth, right? So the first point I'd make to your question, we're talking about high single-digit growth or better as we put our capital to work. And that creates leverage to the point James made earlier. So whether it's mid-teens, net CSL, in Plasma collections or mid-teens straight up on the Hospital business, that's a rising tide that we have not benefited from historically. It's going to be very exciting. And candidly, it's already underway across all businesses. We're not backing away from margin expansion. So whether it's the operational excellence program or just being really thoughtful about how we manage these external challenges, we see great opportunity, both gross and operating margin for further expansion by just being intelligent and good stewards about how we manage it day to day. The combination of those 2 things, $2 billion plus in capacity will go only further to making those investments. So yes, that's what has me excited. There's perspective that I'm happy to share further about that. But to your question, it's really the trifecta of top line, bottom line and the capacity that we can get after some of these programmatic opportunities that we see.

Okay. Is there another question?

I know I'm going to get this question. So let's just get it out there. You talked about taking share in Plasma and there's a new competitor in the market with Terumo and the new contract it has with CSL. How do you think of that positioning it on the landscape? Do you think other contracts are at risk? And do you have an opinion on their product?

You want to divvy this 1 up or you're -- somebody just jump in.

Let me see what I could add. When we build the plasma forecast, there are 3 assumptions that drive it. First and foremost is volume, right? So we are very confident in long term, almost as a perpetuity growth rate, 8% to 10% for all the reasons that Jake highlighted in his presentation. And that is the single biggest variable, not just in Plasma, but in our plan overall. But we're very confident that what we are experiencing will only accelerate and with a good baseline forecast. The second 2 parts of that are share and our gross margins, because I don't really want to talk about pricing given the close oligopoly and new entrant and all that. We're going to assume shares hold constant post the loss of CSL. Now we're going to work very hard to do better than that. But our base assumption and everything we've communicated today in this LRP assumes constant share post the loss of CSL's U.S. disposables business. So there will, of course, be puts and takes. And I think these guys are going to work pretty hard to make sure we do better than that. But that's the baseline assumption. And then the gross margin expansion is mix and some pricing for the new technology where we've already largely secured it. And then we obviously have things in the pipeline. So if we miss on something, there's other things we can bring forward. But from that Plasma forecast, feel quite good about it. I'll let Jake provide commentary. In terms of the competitor, for those of us who've been in the industry a bit, it was a question of when not if Terumo would enter the market, right? To source plasma is the single largest Apheresis market. The fact that they weren't in. We compete with Terumo in every other market around the world. They're not a foreign entity to us. So we're more than happy with our ability to be able to compete. In terms of the RECA device, I haven't seen one. And I would venture to say none of you in the room have either. The data they've posted, but required to post to the dot gov website described a trial of 124 completed donations. To be clear, Joanne, we've done more than 124 donations in the time it takes me to answer your question. We do about 100 donations a minute on the average collection day. So I don't know where they are. We have not had a single center convert yet. We'll see them when they're in the market. You heard the team, we think about the 4 dimensions of our value proposition. We believe we're superior on all 4. And we're going to work hard to make sure we advance that superiority. It's very hard to hit a moving target. As Anila described, we intend to be a fast-moving target and continue to advance that portfolio, that pipeline, that product.

Yes. I guess all that I would add to that is we're the market leader in global plasma today, and when the last truck rolls out to CSL and delivers product, whatever day that is, we will still be the global market leader and we're committed to innovation. And we feel very strongly that the platform that we have today is a fully integrated solution, is the best on the market, bar none. And when the new competitor comes to market, we understand that's new competition, but we still feel very strongly that the value creation that we have with our system, with the additional yield that we're providing, beyond the entire platform and what it does from a door-to-door perspective, and how it helps our customers, we're going to keep pushing on innovation, as you heard from Anila, and we're committed to remaining as the market leader.

And I'll add to that, right? When we -- we have talked about this a lot today. What matters to our Plasma customers, right? And we talked about the 4 value propositions, which is maximizing yield and quality of plasma collected, center productivity, improving that, ensuring donor safety and enhancing the donor experience. We really have the only integrated -- fully integrated solution that addresses all of those value drivers, right? When you think about our NexSys PCS system integrated with our NexLynk Donor Management Software, right, which is bidirectionally integrated, really drives center productivity. And you think of Persona technology really drives that yield enhancement, 12% with, yes, included. When you think about the donor mobile applications that we talked about really enhances donor experience. And our continued innovations are really focused on addressing every value driver that matters to the customers. We talked about taking our Persona technology in the personalized nomogram to that next step. We talked about procedure enhancements with our next-generation to further reduce door-to-door time and procedure time. And we continue to leverage our SaaS technology to work on our donor software applications to really drive that donor enhanced experience. So we feel very good about the integrated offering we have that we are uniquely positioned in terms of how we compete.

Thank you. So let's go back to our virtual audience just for a few questions here. We're getting a lot of questions. The next question is probably for James and Chris, and is about geopolitical risk and macroeconomic factors. So the question reads, how should we think about your political risk included with your guidance and the macroeconomic headwinds?

So as you heard us in our earnings call, we risk-adjusted our '23 guidance for the, what I'll call the geopolitical risk over the projection period. If we just look at geopolitical risk, we are assuming that at some point the war ends, and hopefully, we get back to more of a normal set of operating -- or set of operations to -- in Eastern Europe. On the inflation side of it, we had 250 basis points impact in '22. We have 300 basis points impact in '23. Most of it comes from, I would say, labor and freight. Now we don't assume though that -- that happened -- that keeps going forever. We kind of have that plateau and then towards the end of the projection period, we have it come down by about 10% a year. So we never end up on the cost side to anything that was what I'll call just pre-pandemic. But by the same token, we're not -- we're also not assuming that the highest peak where a plateau here exists into the future as well. So I hope that's clarifying.

Yes. When I talk to other med tech CEOs and their teams about this, they are highlighting 4 things. So they talk a lot about foreign exchange risk. James has highlighted that a bit in the presentation. And I think we feel quite good about relatively modest exposure and the ability to hedge against that exposure. So I'll take that out to the extent you can. The other 3, global supply disruptions, hyperinflation, where it exists, and then the geopolitical point that was highlighted. Again, we don't -- we're not immune to any of that, but this team's response, particularly on global supply, has been nothing short of extraordinary, right? We've kept our plants fully operational. And there's been challenges. We live in the real world, like everybody else. There's been disruption. There's been things that we've had to do that are quite costly, but ultimately, we haven't disappointed even a single customer through the process. And I'm confident that with this team, we'll continue to do so in terms of our ability to serve. Inflation, inflation is a real challenge. But as I described earlier, there's also positives ironically enough in our business. So we're managing. And then the geopolitical for us, as James said, really it's China and Russia, and we're observing both of them closely. We're seeing some positive trends now in China later in the quarter. So that's a good thing. We'll have to watch carefully going forward. It's a large market for us, particularly in Hospital and in Blood Center. And so we obviously need that to contribute. Russia and Ukraine and the broader market there, we've taken a hedged approach, and we kind of factored that into our long-range plan going forward, but we certainly want to see a resolution of the hostilities. Our ability to continue to serve those markets exquisitely well.

Thank you, Chris. And let's take another question for Anila here from our virtual audience. The next question is about procedure time in Plasma. Anila, you mentioned additional reduction in procedure time by 20%. How should we think about these improvements? And what is your target collection speed and door-to-door time savings?

Yes, I think I'll answer again. Since I had the question before. Well, I think when we think about what matters in a plasma center for the donor, it's really all of the time we talked about for the entire plasma collection process. We are focused on not just procedure time, right, I'll talk about door-to-door time, because that really matters to the donor and eventually matters from a center productivity to our customer as well. So our current enhancements are -- actually, before I talk about our current enhancements, with our NexSys PCS platform and our NexLynk Donor Management Software and the bidirectional integration, we have demonstrated, and I think Jake talked about this, a 16-minute reduction in door-to-door time with our latest platform in comparison to PCS2. And our next innovation focused on the ball enhancements that I talked about, combined with our device software enhancements, we are targeting a 20% reduction in procedure time, right, which has -- per collection, which will have a significant impact also from reducing the door-to-door time.

Thank you for reiterating that, Anila. Yes, let's go back to our audience, if we have any more questions here.

Maybe just 1 on the Plasma market, in terms of you don't want to get into price specifically, but we heard from you what the adoption pace is for NexSys. Maybe a little bit of flavor for what's baked into the plan for Persona. Obviously, on the back end for the fractionator, there's a little bit of work they have to do. So just curious sort of the pace and timing you're assuming in the LRP to the degree you're willing to share?

Probably Chris and Jake.

You want to take that?

Sure. Sure. So Persona adoption is -- NexSys is the ticket to entry, right? And we will have all of our customers in North America on NexSys here by mid-fiscal year. So that gives us the ability for other upgrades and innovation, and Persona, obviously, being 1 of the most impactful available today given the yield improvement. And what that means with an already significantly increased total cost to collect. Each customer goes at this at a different rate. We have some customers that have not put the same amount of analysis around all of the things that we did in our clinical study to prove the plasma and yield benefits are really there. So they're going at their own pace on that. And ultimately, we've got things that we're working on. We can't speak to those specifics, but we're very optimistic that all of our customers will be on Persona in the future, in part -- during the long-range plan. So I can't really speak to any other specifics on that. But the platform is delivering value to the customers that have already gone early on it that is absolutely significant, especially in the time where plasma collections have been down. They're seeing huge improvements in being able to pick up that extra yield while they have had the challenge getting donors into the centers over the last 2 years. So they're ahead of the game compared to the folks that haven't yet put it in place.

Okay. Do we have any more questions from the audience? You have a microphone for Mike, please.

Last 1 for me, I promise. On the -- on Plasma, obviously, the productivity the donor throughput and all the rest is great. And I may have missed this, but are you guys doing anything in terms of -- and I'm not discounting the 9% to 12% incremental yield. But -- is there a way to move the needle on that, say, over the period of time that we're talking about fiscal '26?

Why don't I address it? Because I think you guys have touched a lot of -- we started down the path of Persona based on some really good data and analytics that our R&D and our clinical teams put together. And we were just looking at a nomogram that was instituted in the early '90s, candidly, based on data from a clinical trial that was done out in the late '60s. A lot of things are quite different than 1968 today, including the demographics and the biologics of our donor population. So some smart folks in our clinical and medical teams got together and started thinking about, is there a safer and better way to apply personalized medicine to the donor population. Why can't we get at a true percentage of plasma available? And is there a tighter range of what is medically appropriate and safe? And then when we look at the existing nomogram that has these rather arbitrary cutoffs of weight and a stair-step program, we said, yes, we can smooth that curve. We actually take less plasma from certain donors in the population, which we believe over time will be proved to be safer, right? And then where there is more plasma available, collect more, equally safely, that's the whole premise. And so we ran with an algorithm and a fairly sophisticated means that has now been well patented, of being able to do so. Of course, as the team is describing, we think there are ways to go further. I'm going to be a bit guarded about that for obvious reasons. But no, we're not done. And we think there's whole mindset shift that will take place in the industry, like you've seen in other therapeutic areas where personalized medicine drives a different level of engagement with the donor and a different nature of the relationship. And the centers that have adopted the integrated NexSys platform with Persona, plus whatever we bring forward from here, will be on the front edge of driving that personalization. It's an exciting time to be in that space. And I think there's a lot more room to run with the science that we're working on.

Okay. At this point, we have about 5 minutes left in the Q&A. Do you have any more questions in the audience? Okay. So we do have quite a few questions from our virtual audience. So I'll try to go through them there as many as we can within the 5 minutes that we have left. So the next question is actually for James. James, you mentioned $600 million to $700 million in free cash flow. Can you help us understand how to think about the pacing of free cash flow accumulation over the LRP and how to think about CapEx?

Sure. So I'll start with the second part first. So CapEx, I mentioned during my prepared remarks, $250 million to $300 million over the projection period. We -- with regard -- it's roughly about $40 million to $50 million per year is what our maintenance capital is. So that's a good way to think about CapEx. With regard to the phasing of the $600 million to $700 million in free cash flow, I kind of touched on that earlier. I would say that it follows along with the improvement in operating income, so that was probably more back-end weighted. So I would go more with about a 40, 60, so 40% in the first part of it, 60% in the second part, it really does start to accelerate more towards the back half in terms of phasing of cash flow.

And there's another question here from a virtual audience. You mentioned adjusted operating income LRP CAGR is high teens, but adjusted EPS is only mid-teens. Is there a difference between EBIT and EPS growth? Are taxes a headwind of LRP, any additional headwinds you can highlight?

No, I think the main difference there, I alluded to earlier as well as the dilution on our shares. So we don't have an authorization right now, so we couldn't factor in buying back any shares and I think that's what drives most of that difference between the growth numbers that you see.

Thank you, James. The next question we have is for Jake. Jake, what gives you confidence that the rest of your customers will convert to Persona?

Yes. As I spoke about in the earlier question, I believe we have the best platform and best solution for our customers available with integrated NexSys and NexLynk in Persona. And with the challenges going on in the economy today, the impact that has on donors and the overall benefit that our solution provides with the additional 12% yield versus what was just available a few years ago and what other customers might be using today, I just fully believe it's the best solution for collection.

Thank you, Jake. And the next follow-up question is for Thomas. Thomas, you talked about Plasma opportunities in blood center. How significant are these opportunities?

Well, thank you very much. And in the prepared remarks, I said that the plasma collection in noncommercial markets is the biggest opportunity, and we're really excited about that. And there's 2 reasons for that: the technology platform that we've now talked about a lot. But the second reason is that we have a really great footprint around the world in Blood Center, just to give you an example. Through the course of the pandemic, we delivered Comverse and Plasma sets to more than 26 countries. So we have a really deep customer relationship and a broad customer base. And bringing that together, I think it's going to be very strong. Now in FY '22, Plasma was approximately 1/4 of the Blood Center revenues, and we expect that over the long-range plan to go to approximately 1/3. So it's a significant opportunity.

Thank you. And unfortunately, we are right out of time, and this concludes our Q&A session and our virtual event. We truly appreciate the opportunity to share strategy and our growth plans with you today. If you had a question or you submitted a question, and we didn't get to during the Q&A, please send a follow-up note, and we'll be happy to answer it for you. For our in-person audience, just a quick reminder. We still have product demonstrations available for you in the other room. Product demonstrations are there until 2:00 p.m. Eastern Time. We also have lunch options for you to grab right outside of this door, and all of our speakers will start making their way into the product demonstration room as well. So in case you have additional questions, feel free to ask them. Thank you for your time today.