Haemonetics Corporation (NYSE:HAE) Q1 2025 Earnings Call Transcript

Haemonetics Corporation (NYSE:HAE) Q1 2025 Earnings Call Transcript August 8, 2024

Haemonetics Corporation misses on earnings expectations. Reported EPS is $0.744 EPS, expectations were $1.03.

Operator: Thank you for standing by, and welcome to Haemonetics Corporation’s First Quarter Fiscal Year 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the call over to Olga Guyette, Vice President, Investor Relations and Treasury. Please go ahead.

Olga Guyette: Good morning, everyone. Thank you for joining us for Haemonetics first quarter fiscal year 2025 conference call and webcast. I’m joined today by Chris Simon, our CEO; and James D’Arecca, our CFO. This morning, we posted our first quarter fiscal year 2025 results to our Investor Relations website along with our fiscal 2025 guidance. Before we begin, a quick reminder that all revenue growth rates discussed today are organic unless specified otherwise, and exclude the impact of currency fluctuation and acquisitions. Our organic revenue growth guidance for fiscal year 2025 incorporates 15 weeks of revenue from OpSens due to the acquisition closing date being in December 2023. We’ll also refer to other non-GAAP financial measures to help investors understand Haemonetics ongoing business performance.

Please note that these measures exclude certain charges and income items. For a full list of excluded items, reconciliations to our GAAP results and comparisons with the prior year periods, please refer to our first quarter fiscal year 2025 earnings release available on our website. Our remarks today include forward-looking statements and our actual results may differ materially from anticipated results. Factors that may cause our results to differ include those referenced in the safe harbor statement in today’s earnings release, and in our other SEC filings. We do not undertake any obligation to update these forward-looking statements. And now, I’d like to turn it over to Chris.

Chris Simon: Thanks, Olga. Good morning and thank you all for joining. Today, we reported first quarter revenue of $336 million, growth of 8% on a reported basis and 3% organically and adjusted earnings per diluted share of $1.02, a 3% decrease from a strong first quarter in the prior year. The start of our fiscal year reflects the strength in the breadth of our product portfolio, our capacity for continued innovation and growth, and the resilience of our business to succeed in dynamic markets as we navigate ongoing geopolitical challenges. We advanced the delivery of plasmapheresis technologies proven to safely lower the cost to collect, reinforcing our status as the leader in addressing the industry’s most critical needs.

Our Blood Center solutions are enabling self sufficient global plasma supply and helping meet increased demand for platelet therapies. In hospital, we are integrating recent acquisitions, launching new products and extending our reach and relevance in attractive markets, while delivering robust growth in the rest of the portfolio. Our results underscore Haemonetics ability to create significant value for our customers and our shareholders. We remain committed to accelerating revenue growth, expanding our margins and enhancing productivity, and we are confident in our strategy for sustained profitable growth. Turning now to our business unit results. Plasma revenue declined 3% in the first quarter after growing 35% last year. North America disposal revenue was down 5% driven by CSL’s planned transition.

Excluding the transition and an unforeseen temporary customer plasma center outage, U.S. collection volume growth was in the high single-digits. North America software and Europe disposable revenue each grew double-digits in the quarter. Strong end market demand for Ig replacement therapies and the planned expansion of fractionation capacity across the industry support long-term growth in the plasma collections market. Near-term customers have a heightened focus on lowering cost per liter. We have completed more than 30 million Persona collections and have compelling real-world evidence of safe and consistent yield enhancements. Full market release of our Express Plus technology is now underway, significantly improving collection time, door-to-door time and center throughput.

We plan to upgrade the remainder of our Nexus customers to Express Plus and Persona before the end of this fiscal year. Our advanced technology is an enabler of profitable growth for us and our customers. We expect to gain additional market share in the U.S. and globally to continue to deliver revenue growth that outpaces the plasma collections market. We reaffirm our plasma revenue growth guidance for FY2025 in the range of negative 3% to negative 6%, driven by the previously announced customer transition. Blood Center revenue decreased 2% in the quarter. Apheresis revenue grew 3%, driven by continued demand for plasma across several markets and red cell collection share gains in the U.S., partially offset by order timing among distributors.

Whole blood revenue declined 14% as we continue to rationalize the franchise to optimize durable contribution as part of our company-wide margin expansion. The increasing focus on plasma self-sufficiency continues to drive international demand for source plasma. We are strengthening our global customer relationships to expand Nexus’ reach. Our FY2025 guidance for Blood Center revenue growth is unchanged in the range of negative 5% to negative 7%. Moving to our Hospital business, first quarter revenue grew 31% on a reported basis, including our newly acquired Sensor Guided Technologies and Esophageal Protection device and 13% organically. Our interventional franchise has been busy. The commercial team completed comprehensive training across our expanded product portfolio, quickly adapted to evolving market trends and ensured sufficient commercial and clinical support throughout our U.S. account network.

We achieved 68% revenue growth on a reported basis and 19% organic growth with training and integration largely completed. The team is focused on hitting individual product targets and selling the entire interventional technologies portfolio across both electrophysiology and interventional cardiology. Growth in the quarter was driven by continued penetration of the top 600 U.S. accounts with our vascular closure devices and increased emphasis on utilization across addressable procedures. The limited market release of VASCADE MVP XL, which features a 58% larger collagen plug was a success with very positive results across procedures and highly encouraging responses from early adopters. This new device allows us to successfully participate in the rapidly growing market of pulsed field ablation and increase adoption in procedures like left atrial appendage closures where we’ve seen minimal usage with VASCADE MVP.

With full market release underway and an ongoing development program to expeditiously expand the label to larger access points, we are further strengthening our leadership in enabling treatment of atrial fibrillation, regardless of the ablation technology used. We are making significant progress internationally as well. Having established our presence in over 100 accounts in Japan with further plans to enter additional European markets this year, we are strengthening our field force support to convey our unique clinical and economic benefits over the competition and we expect to sustain 20% plus growth in the vascular closure business and further expand our leadership position in this $2.7 billion market. Our newly acquired products delivered a total of $18 million in revenue, further accelerating growth of this franchise.

It’s early days but we feel good about the progress we have made and the business case for these acquisitions is intact. We are excited to launch SavvyWire in Europe in the coming months and extend the unique benefits of this Guidewire to more patients by broadening our market access. We are also highly encouraged by the progress and positive feedback for ensoETM. With its considerable clinical benefits including reduced esophageal injury during radiofrequency cardiac ablation, it presents a compelling market opportunity as a reliable, safe and significantly more cost effective alternative to emerging catheter based technologies to safely and effectively treat atrial fibrillation. Our Blood Management Technologies franchise also had a strong first quarter with 10% revenue growth.

Hemostasis Management delivered double-digit growth in North America driven by strong capital sales and increased disposable utilization on the TEG 6s platform. Our new heparin neutralization cartridge is helping clinicians serve fully heparinized patients and enabling deeper penetration into accounts performing adult cardiovascular surgeries and liver transplantation. Success in the U.S. was partially offset by geopolitical market challenges in China. Transfusion Management benefited from new account openings for SafeTrace Tx and BloodTrack in North America and EMEA. We invested in additional channel expansion and further enhanced the platform, positioning us to win share. Cell Salvage also had an impressive quarter across all markets with additional upside from last time buy orders in our older generation device.

We are excited about the opportunities ahead of us and expect growth in our hospital business to accelerate in subsequent quarters driven by new product launches, sales synergies from newly acquired products and improving efficiency of scale. We reaffirm our previously issued guidance and expect hospital reported revenue growth of 27% to 32% and organic revenue growth of 13% to 16% in FY2025. We expect a strong year ahead as we continue to refine our portfolio to drive sustainable revenue growth at attractive margins. For the total company we continue to expect reported revenue growth to be in the range of 5% to 8% and organic growth to be flat to 3% for FY2025. Now I’ll pass it over to James to discuss the rest of our financial performance and fiscal year 2025 guidance.

James D’Arecca: Thank you, Chris and good morning everyone. As Chris mentioned, this quarter has been an exceptionally productive one across the organization. We successfully launched new products and continued to integrate acquisitions, all while maintaining a strong focus on our short and mid-term objectives. The effect of portfolio evolution is becoming more meaningful in driving higher margins and positioning us for sustained success. We ended the first quarter with an adjusted gross margin of 55.3%, up 110 basis points from last year, driven by volume and mix with a disproportionate contribution from the growing momentum in our hospital business unit. Adjusted operating expenses in the first quarter were $114.9 million, an increase of $16 million, or 17% compared with the first quarter of the prior year.

As a percentage of revenue, adjusted operating expenses increased by 250 basis points to 34.2%. The increase in adjusted operating expenses in the quarter was primarily due to the recent acquisitions of OpSens and Attune Medical, along with additional growth investments. First quarter adjusted operating income was $71 million, an increase of $0.8 million or 1%, and our adjusted operating margin was 21.1%, down 150 basis points compared with a very strong quarter last year. Nearly half of that decline was related to FX impacts, with the remainder due to increased adjusted operating expenses. Sequentially, our adjusted operating margin expanded by 230 basis points compared with the fourth quarter of fiscal 2024, primarily driven by improved adjusted gross margin, lower performance based compensation and higher plasma inventory, reducing the need for freight expediting.

This was our first full quarter with both OpSens and Attune. While there is more work to do to synergize these acquisitions fully, we already see benefits of these high margin products helping us offset increased costs. We expect these benefits to increase as we expand our commercial strategies in the top U.S. accounts in fiscal 2025 and beyond. We reaffirm our adjusted operating margin guidance for fiscal 2025 at 23% to 24%, anticipating steady improvements each subsequent quarter as we progress toward our long range plan of achieving operating margins in the high 20s. The adjusted income tax rate was 20% for the first quarter compared with 21% one year ago. We expect our fiscal 2025 adjusted income tax rate to be approximately 23%. First quarter adjusted net income was $52.4 million, down $1.3 million or 2%, and adjusted earnings per diluted share was $1.02, down 3% when compared with the strong first quarter of fiscal 2024.

Changes in the adjusted income tax rate, interest expense and foreign exchange had a $0.07 negative impact on the first quarter adjusted earnings per diluted share when compared with the prior year. We remain optimistic about our prospects as and our ability to capitalize on emerging market trends, optimize our portfolio mix and realize savings through operational excellence. We reaffirm our adjusted earnings per diluted share guidance of $4.45 to $4.75. At the midpoint of our guidance range we now anticipate approximately $0.34 of impacts from interest expense, FX, income tax and share count with interest expense being responsible for about half of that. Turning now to select cash flow and balance sheet highlights. In our first quarter, we had a cash outflow of $27 million, primarily related to lower net income and higher working capital due to increased inventory and the timing of certain payments.

Combined with additional CapEx spend net of proceeds from the sale of one of our manufacturing facilities, we had a free cash outflow of $17 million. Our expectation for free cash flow remains unchanged at $130 million to $180 million in fiscal 2025. Cash on hand at the end of the quarter was $344 million, up $166 million since the end of fiscal 2024, primarily due to our recently completed debt financings, net of the repurchase of a portion of our convertible notes due in 2026, new capped call transactions and transaction related fees and the pay down of borrowings on the revolving credit facility used to help fund the recent acquisitions of OpSens and Attune. Our updated debt capital structure includes a recently refinanced credit facility consisting of a $250 million unsecured term loan A and a $750 million unsecured revolving facility, as well as $1 billion in convertible notes, which puts our net leverage ratio at approximately 2.8x EBITDA at the end of our first quarter.

In addition to the credit facility refinancing discussed on our May earnings call, during the first quarter, we issued $700 million of convertible securities with a 2.5% coupon and a capped call ensuring the protection of the conversion price until the share price reaches $180 or 100% premium over the issue price of $90 a share. This transaction allowed us to mitigate risks associated with upcoming convertible note maturities and prefund a portion of our growth agenda at attractive interest rates, while helping to ensure we remain in a strong financial position when pursuing additional growth opportunities. Before we transition to Q&A, I would like to share some key takeaways as we reflect on the start of our fiscal year and our strategic direction moving forward.

Our first quarter performance demonstrated our strength and impact. We continued to expand our industry presence and leadership across our business units, while proving our resilience as we advanced our growth amidst changing market trends and geopolitical challenges. We are forwarding our innovation with new products both launched and in the pipeline. Our focus on innovation is paving the way for further expansion into high growth markets and enhancing our financial performance both in the near-term and in the long run. Our debt financing was an important step in strategically enhancing our access to capital and increasing flexibility in capital deployment. This will help us ensure we remain in a strong financial position when pursuing additional organic or inorganic growth opportunities.

And finally, we remain committed to achieving the objectives outlined in our long range plan. Through our long-term strategic focus, we are cultivating a powerful, sustainable growth engine poised to deliver value to our shareholders well into the future. Thank you and we can now proceed with Q&A.

Operator: [Operator Instructions] Our first question comes from the line of Anthony Petrone of Mizuho Americas.

Q&A Session

Anthony Petrone: Thank you and good morning everyone. Maybe to start with plasma and I have one on hospital. On the plasma end of the equation, maybe a little bit, Chris on where do you think we are in the cycle just coming out of COVID meaning inventory builds at the fractionators. Are we approaching some level of supply demand equilibrium? Are fractionators still building inventories? And a follow up on plasma would be, we’re seeing increasing reports of adverse events with REECA reported to the MAUDE database. Not sure if there’s any update on just where CSL is tracking in terms of their wind down. Is it in line with your expectations? Is it slower? Is it faster? And then I’ll have one follow up on hospital.

Chris Simon: Good morning, Anthony. With regards to plasma supply demand, demand remains really robust. We look at short-term and long-term. There’s, by our estimations, an additional increase in fractionation capacity over the next decade in excess of 6% that’s already been announced where there’s confirmed commitments, it’ll grow from there, we presume. So we feel quite good about the long-term demand for IG-based replacement therapies and our customers’ commitment therein. In the near-term, I think it really does vary significantly from one customer to the next. We called out a specific set of issues at one customers collection centers early in the quarter and I think some folks took advantage of that to trim back a bit on what has been collecting hand over fist to replenish their inventories.

We do see a shift and a rebalancing towards inventory rebuild combined with lower cost per liter. The benefit for that, both in the quarter and over the remainder of the year is a heightened demand for everything and anything we can do to improve productivity, increased demand for both upgrades and conversions. And you see that kind of our performance over the course of the year. So we still feel quite good about where we are in the cycle. There is a rebalancing and that will play forward as you would expect. With regards to our competitive competitor’s device, I’m going to leave that aside for now. What I would say is that in terms of the agreement with CSL, nothing has changed. They’re purchasing according to the forecast. We know there’s an $85 million floor on that based on the agreement that’s in place and really don’t have anything further to say about it at this point in the year.

Anthony Petrone: Very good. And then a follow-up on hospital will be on VASSCADE MVP. Maybe just a little bit on the attach rate to pulse field ablation, PFA volumes had another good quarter in the June period. And so maybe a little bit on the attach rate of MVP to PFA. And when you look at XL, what will be the benefit of introducing that into the market? Do you get an increased attach rate to PFA with that new solution? Thanks again.

Chris Simon: Thanks Anthony. Pulse field ablation is for sure a disruptive force in the market. We spent a lot of time modeling this, as you could imagine, both for vascular closure, but also for esophageal protection. What’s happening is very much consistent with what we forecast would happen. The advent of MVP XL is a game changer for us, and there’s a lot of speculation in the market is the TAM being reduced, et cetera. We don’t see any of that. Crystal clear, PFA is a net positive for Haemonetics interventional technologies portfolio. The new XL product has completed limited market release. Over 350 procedures across a wide range of different therapeutics products performed exceptionally well. Feedback has been truly outstanding.

So we’ll get that into the market. Now, we’re going to proceed ahead of schedule with full market release because we think it’s the right technology across a range of different applications. And so one of the things quite powerful for us is not only on ablation of all forms, but also left atrial appendage closure, which is an area where the base MVP product hasn’t enjoyed a lot of success because it’s really just not the right technology. We have a 58% larger collagen plug associated with XL, and we think that’s really well positioned for the market going forward.

Operator: Thank you. Our next question comes from the line of Mike Matson of Needham.

Mike Matson: Yes. Thanks. Just start with plasma. So I think you mentioned that you expect to upgrade the rest of your customer Express Plus and Persona by the end of a fiscal year. So is it safe to assume that there’s still kind of a pricing tailwind there in that part of the business, obviously excluding CSL?

Chris Simon: Yes, Mike. Well, we now anticipate that all of our North American customers on Nexus will have upgraded to both Express Plus and Persona on their existing centers. And yes, the product is priced to reflect the technological advantages that are gained from both pieces of that part of the equation.

Mike Matson: Okay, got it. And then just a couple on the interventional business. So with VASCADE MVP XL, are you getting a price premium for that? And then just in terms of the sales force, the cross training that occurred, is that completed? And to what degree do you think that was disruptive in the quarter that you just reported?

Chris Simon: Yes. So the XL product is a 58% larger plug, as I mentioned a moment ago. We do command a modest premium for that. We want to be cost effective, and it’s one of the things that we look at, same day discharge, time to ambulation, et cetera. It’s an incredibly cost effective therapy. There is price increase, but relative to the base ablation RF or especially now PFA, it’s a really economical form of closure. In terms of the training, Mike, you’re exactly right. This was a big lift, right? We went from a sales force that was exceptionally good at closure across a variety of procedures, and we’ve now introduced both guidewire technology – sensor-based guidewire technologies and Esophageal Protection. It is a classic portfolio sale.

And I think, if anything, in reflection, I’d say we took our time. We are going slow to go faster further over time, and we want to get this right. If you think about the nature of TAVR procedures, for example, where SavvyWire plays a critical role, it’s a much more involved procedure. The role of the representatives, both our territory managers and our clinicals is much more critical, and we want to make sure they are fully equipped and confident to be able to provide the support. We think we’re there now. It did probably take a little more time in the quarter than we had originally anticipated. But again, going slow to go fast further is the right answer for us here.

Mike Matson: Okay. Got it. Thanks.

Operator: Thank you. Our next question comes from the line of Andrew Cooper of Raymond James.

Andrew Cooper: Hi, everybody. Thanks for the questions. Maybe first, just on plasma. Thinking back to the commentary last quarter and into the year, you talked about the non-CSL business, I think, growing 8% to 12%. Now you’re talking about converting more of those customers to Express Plus and Persona. So just would love an update on that metric and how you think about the remaining customers and the growth, as well as maybe a little more color on some of the share gains you seem increasingly confident about.

Chris Simon: Yes. So look, we guided at the beginning of the year. We’re looking at a combination of underlying collection demand, our ability to command a price premium for the new superior technology and share gains. And I think all three of those forces are at work. There’s going to be puts and takes amongst them, Andrew on a quarter-to-quarter basis. We left the guidance unchanged because we are confident, particularly those latter two factors, upgrades and share gains are back end loaded and we knew that and we expect that to build over the course of the year. So we feel confident leaving the guidance as is. There’s probably a bit of – it’s our first quarter and as a general practice, I’d prefer we don’t change guidance after one quarter.

We just built the forecast 90 days ago and we want to live into it a bit. If there’s an opportunity to change it as the year progresses, we will. But for where we sit right now, we feel quite good about both CSL and the non-CSL forecast.

Andrew Cooper: Okay, helpful. And then maybe just on hospital. You called out a couple of items that really are going to help with the acceleration from sort of the – near the lower end of the guide to start the year. Can you maybe size for us new product contribution versus revenue synergies for some of the efficiencies of the sales force that you talked about to help us think about that, again, acceleration from the low teens, maybe closer towards the mid-teens in terms of the midpoint of guidance.

Chris Simon: Sure, Andrew. Vascular closure is the real engine within the portfolio, particularly in North America, and particularly in utilization, given that we are now well north of 80% of account penetration across the T600. So we’ll drive utilization. That’s critical. That is the biggest single driver. The additional product overlay we called out, there’s an additional $18 million of revenue in the quarter that’s included, and it will be meaningfully accretive to our gross margins as the year progresses. In the quarter, it was actually dilutive to our operating income margins. I can let James comment more on that, but we – again, just go slow to go faster further. We didn’t act more aggressively on the cost synergies because we’re in a process of listening and learning.

They’re both quite good companies. They were good at what they do. We wanted to make sure we understood at a more intimate level what they do, what’s their secret of success, and how do we make sure we incorporate and build upon that? So that’s what you see in the quarter. As the year progresses, both synergies – both cost synergies and sales synergies will really come into effect, and that’s what’s reflected in our guidance.

Andrew Cooper: Okay, I will stop there and jump back in the queue. Thank you.

Operator: Thank you. Our next question comes from the line of Larry Solow of CJS Securities.

Larry Solow: Good morning, everybody. I guess, just a couple of follow ups on the plasma side. Chris or James, just give us the volume price, the breakdown in the quarter. I don’t know if that’s available, just approximately. And then on the Persona, how much – approximately how many have already switched to or adopted Persona already of your customers?

Chris Simon: Let me start with that and I’ll let James answer the breakdown. In terms of Persona, it’s not a big secret. We’ve had more than 50% of the procedures heading into the year. We’re well north of that and moving quickly against the remainder. So we’ll provide updates at a more substantive basis when jointly with our customers. Everybody’s comfortable doing that, Larry, but it’s proceeding rapidly and we feel quite good about it. We want to be cautious because we don’t control. We said this from the outset with Nexus. We will move absolutely as fast as our customers are prepared to move, but no faster. And in this case, they now want to move quite quickly. And that’s what you see in our results going forward.

James D’Arecca: And Larry, on the volume price split out, now refer to the non-CSL customers, that’s predominantly volume, as you heard Chris talking about. We expect technology switches and share gains to be more backend loaded.

Larry Solow: Got you. So not much on the price side, mostly volume. Got you. Okay. And then just could you just speak real briefly just on the VASCADE, the MVP XL system, the larger bore, sort of the market opportunity there and your rollout plans? Thanks.

Chris Simon: Yes. So just to reiterate, we went into limited market release. We want to make sure that we had proper use case, really understood the device’s performance. We’ve obviously done extensive animal testing and have very good level of comfort, but we wanted to do the limited market release, make sure that it’s performing as expected. But as I said, feedback has been absolutely outstanding, now north of 350 procedures across a number of very high performing centers. Feedback’s been extraordinary, as good as anything we’ve seen or heard. So the device performs as advertised. It’ll get broad spectrum use as appropriate. And where we don’t yet have indications on our label for certain appendage size – whole sizes, we are actively pursuing that with the regulatory authorities and we expect that to be forthcoming.

But the device is intact. It’s performing well. We’re now compiling real-world evidence and we’ll do that even more extensively when we go into full release now to be able to get a broader label expansion.

Larry Solow: Got you. Great. Thanks, Chris. Appreciate it.

Operator: Thank you. [Operator Instructions] Our next question comes from the line of Joanne Wuensch of Citi.

Joanne Wuensch: Thank you very much. Can you hear me okay?

Chris Simon: Yes, Joanne.

Joanne Wuensch: Excellent. Good morning, everybody. I want to just spend a minute more on vascular closure, please. I’m under the impression that there’s still a large percentage of procedures that are manual compression procedures. Could you sort of quantify what’s using a closure device at this stage and what moves people towards manual compression? And then I also want to go back to the PFA opportunity. I think that a little bit of clarification of why you think VASCADE XL could be better for PFA would be really great. Thank you so much.

Chris Simon: Yes. Thanks for the questions, Joanne. Yes, our biggest competition in vascular closure worldwide is some combination of compression and suturing, figure of eight, typically. And so, we are looking – we penetrated, as I said, more than 80% of the T600 that does 90% of the procedures in the U.S. Within those, our utilization rates are still in the low to mid-40s. And that’s our biggest single opportunity is converting folks off of manual compression or suturing to our more sophisticated, clearly superior technology. And so that’s the process that’s underway. When we say we’ve penetrated an account, we may have one set of clinicians or one EP lab within that account using our closure device. We still have to work our way through the others.

In some cases, there are challenges with value-added committees. What’s their cycle for meeting? Do we have the approval? Are clinicians aware that they’re able to use the technology? And then what we do see with VASCADE in all forms is that once a clinician has adopted, it’s incredibly sticky. It’s just a better procedure. And you see that in all the use cases, in terms of the outcomes, in terms of patient satisfaction, we hear that, the nursing staff hears that. And then after the fact, when they start to accumulate some volume, they can see how beneficial it is to the economics of the hospital overall. So it really checks all boxes, Joanne. It’s better clinically, it’s better economically, and we have an increasing body of evidence, real-world evidence, to support that case.

So we feel quite good about it. With regard to PFA, we’ve done extensive animal testing before we brought MVP to the market for regulatory approval. We got the PMA, as I mentioned before, in our last call, and we wanted to proceed with a limited market release just to make sure we have firsthand experience on the use case before we do what we’re doing now, which is roll it broadly. Does that answer your question?

Joanne Wuensch: It’s close enough. Thank you very much.

Operator: Thank you. Our next question comes from the line of Michael Petusky of Barrington Research.

Michael Petusky: Good morning. Hey, Chris, I think last quarter you had talked about some progress for vascular closure in Japan in terms of active accounts, and also talked about, hey, Europe’s been a little bit slower in terms of penetrating, and you talked about vagaries around reimbursement from country to country and some differences in treatment methodologies. So I’m just wondering, any learnings in any of those markets that would be interesting to share? Thanks.

Chris Simon: Thanks for the question, Mike. So, VASCADE in Japan is an unmitigated success. We were able to secure not only the market release from the regulatory authorities, but very favorable reimbursement. And you see that, Japan has always been a safety-first medical device market, and VASCADE is an incredibly safe product. The data they have there in market has been really helpful. So we’re in excess of 100 accounts now. We work through a third-party distributor that just continues to go from strength to strength. We’re really delivering in the Japanese market and I think there’s additional upside for us as the year progresses there. Europe is a more mixed story. The reimbursement’s been a challenge. There’s some vagaries with the reimbursement profile that same-day discharge doesn’t have the same reimbursement benefits that it would have in the U.S. So we’re working our way through that, changing it where appropriate.

And there’s a hybrid model of organic sales team, but some joint work with distributors. So very confident in the profile, very confident in the long-term success. We are converting from a market that does primarily suturing as opposed to compression, and therefore some of the discussion around the economic benefits and time to discharge, et cetera, is more nuanced. We have a lot of confidence that we’ll be successful. It’s just going to be a slower build, which is what we’re experiencing.

Michael Petusky: Okay, terrific. And James, I may have missed this, or you may have not mentioned it. Did you talk about any impact from operational excellence in the quarter, by any chance?

James D’Arecca: In the quarter, I believe the amount – well, the amount for the full year was $9 million in total, with $5 million drop through. And we didn’t break out anything separate from the quarter.

Michael Petusky: Okay. All right, thanks guys. Appreciate it.

Operator: Thank you. I would now like to turn the conference back to Chris Simon for closing remarks. Sir?

Chris Simon: Again, thank you all for your time this morning. I hope what you take away from our results is the resilience and the diversification of our portfolio, particularly across our three value drivers. If I start with Nexus, there’s clearly a rebalancing amongst our customers in terms of cost per liter, in addition to having ample inventory supply. It really favors our value proposition and we’re seeing that in terms of accelerated upgrades, and we anticipate additional share gains as the year progresses. TEG, TEG continues to hum along. There are geopolitical challenges, particularly in China, and we saw some headwinds there that we are working our way through. They are unlikely to get resolved in the short-term.

We will continue to work at it. And fortunately, we have really outsized strength in both North America and EMEA, much larger markets, and a really highly energized team that’s fully committed to delivering against that. And then interventional technologies, as I called out earlier, PFA is a disruptive and very positive influence in the market but it is also a net positive for us, particularly now with the launch of MVP XL. And we’ve largely completed the integration and the training that was all part of the original plan. And I think you’ll see that team really find its footing and move forward with a much more sophisticated at portfolio sale that is part of the long-term plan that we had delivered. So across our three big value drivers, we’re coming into our own.

I’m excited about what we were able to do even when each of those faced external challenges in the quarter with the rest of the portfolio. And I think as those three come back online, as expected, we just go from strength to strength. So thanks for the time this morning. Appreciate the questions.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.