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Shares of blood management solutions company Haemonetics Corporation (HAE - Analyst Report) slumped a huge 9.6% hitting a new one-year low of $33.61 on yesterday’s close. This came close on the heels of the company’s declaration that it has not been considered by the American Red Cross for the supply of certain whole blood collection kits.

The company disclosed that the American Red Cross has instead chosen a certain unnamed peer of Haemonetics under this new supply contract.

According to Haemonetics, this unexpected loss of orders will act as a big blow for the company gravely affecting its financial performance. At present, Haemonetics supplies a total of 1.8 million in-line whole blood collection kits to the American Red Cross per annum.

Post enactment of the new deal (from beginning of fiscal 2015), Haemonetics will continue to provide only a small portion amounting to 0.4 million of such kits to the American Red Cross. The remaining 1.4 million kits will be provided by the selected competitor. According to the company, this will negatively impact its annual revenues by $25 million and will also slash its earnings per share by approximately 15 cents, starting from the next fiscal.

The loss of the supply deal with the country’s largest blood collector – the American Red Cross, is expected to be a major dampener for Haemonetics’ growth in the whole blood collection business. Although the company is working hard to compensate this loss by launching differentiating technologies like SOLX red cell storage solution and continued automation of the whole blood collection process, near-term visibility does not seem to be much in its favor.

Haemonetics currently bears a Zacks Rank #3 (Hold). However, some better-ranked companies like Baxter International Inc. (BAX - Analyst Report), Covidien plc (COV - Analyst Report) and St. Jude Medical Inc. (STJ - Analyst Report) are expected to do well in the health care industry. All the three stocks carry a Zacks Rank #2 (Buy).

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