March 16, 2009 - Haemonetics Corp. (HAE-NYSE) designs, manufactures, and markets automated blood processing systems and single use consumables for blood donors and surgical patients. Thecompany's donor products and services include plasma systems that automate collection of plasma from donors; blood bank systems comprising MCS brand system, which automates the collection of platelets and other blood components from volunteer donors, and ACP brand systems that automate the process used to freeze, thaw, and wash red blood cells, as well as manufacture sterile intravenous solutions; red cell systems, which automate the collection of red cells from volunteer donors; and services and programs related to blood supply chain, such as LEAN and Six Sigma consulting, as well as InSight, a program application supporting blood center resource allocation and utilization.

Haemonetics Corporationalso provides information technology platforms and technical support for donor recruitment and for operations of blood and plasma collection centers, and manages back office functions and distribution at plasma fractionation facilities; business solutions to support process excellence, donor recruitment, business design, and blood management efforts; and hospital blood management assessment tools to hospitals. The company markets its products through direct sales force, independent distributors, and agents in the United States, Europe, Japan, and Asia. Haemonetics Corporation was founded in 1971 and is based in Braintree, Massachusetts.

While it collects all that blood, it also gathers up a lot of money. Earnings grew annually, on average over the last 5 years, at a rate of 11.4%. In 2006, they were $1.83, then went to $2.10. This year (fiscal year ends in March), analysts see $2.43, then $2.79 next year. Over the next 5 years, the estimate for average annual earnings growth is 13.5%. Quarterly and annual earnings will be out in April. Look for 63 cents for the quarter, up from 58 cents in the same period last year. Next quarter, expect 65 cents, above the 59 cents from the same quarter of last year.

For the third quarter of the fiscal year (ended in December), sales were up 15%, helped by plasma performance where revenues were ahead by 30%. Demand for plasma services was strong all year with uses in plasma-derived drugs such as intravenous immunoglobulin and albunim. Other sectors also contributed to growth, but plasma was the star.

About 85% of sales come from disposable products that work in the company's devices. The devices are placed in hospitals at no cost. Profitablity is in the disposable products that are used by the devices. Well known in business as the razor blade model. The devices have become more welcome as the current economy demands better efficiencies from every business, including hospitals. Haemonetics products main purpose is to privde efficiency and cost reduction in blood management.

Revenue levels are pretty much assured as contracts with large fractionaters have increased overall plasma sales. The disposable plasma products require replacement through the life of the contracts, guaranteeing product and service sales. Having recently signed a large contract with Octapharma, there will be a good increase in earnings this year. But the company will have to sell other large contracts if year over year comparisons are to show increases. Furthermore, the reliance on plasma revenues may contribute to volatile earnings since plasma demand is not always constant. More diversified blood management sales, in products and services, are needed for the company to eliminate that risk.

The numbers: Market cap is $1.4 billion. Forward P/E is 19.4. Price to sales is 2.29. Price to book is 2.6. Operating margin for the last 12 months was 16% and Profit margin was 10.12%. There's $125 million in cash, for cash per share of $4.93. Total debt is $9.96 million, about 1% of capital. Current ratio is 4.14. Book value is $20.28. There are 25.43 million shares outstanding. Insiders own about .8%. Institutions own most of the float. There is no dividend.

Haemonetics' stock price has been steady as a rock over the last year, even in October and November when the rest of the market tanked. Beta was a quiet, defensive .3 for the last 12 months. This is a stock that is worth most investors' time and attention. It's already proven itself, and many investors bought the story and the stock. If it were to ever take a dip in price, HAE is certainly a stock that deserves inclusion in many portfolios.

Company Web site: www.haemonetics.com

- Ted Allrich