Haemonetics Corporation (HAE - Analyst Report) recently signed a multi-year deal with HemeXcel Purchasing Alliance LLC. Per the deal, Haemonetics will be the authorized supplier of certain whole blood components for HemeXcel exclusively over a period of two years starting 2014. Financial details of the agreement, however, remain undisclosed.
Haemonetics does not expect the deal to have a significant impact in fiscal 2014. Management is keen to expand the whole blood business and expects to receive a major whole blood tender in early 2014.
The whole blood collection market is highly competitive with low demand leading to aggressive competitive pricing. However, according to MarketResearchReports.Biz, over 2012-2016, the whole blood collection market is expected to expand at a CAGR of 10.11%.
Growth is expected to be driven by increased demand for products necessary to cater to an aging population. Therefore, Haemonetics management’s expectation to offset margin headwinds beyond 2015 by capitalizing on their initiatives to create value seems to be in line with the market forecasts.
Haemonetics entered the whole blood business by acquiring the blood collection, filtration and processing business lines of Pall Corp. for $551 million on Aug 1, 2012. The company then acquired Hemerus Medical, LLC on Apr 30, 2013 for a total of $41.1 million, of which $17 million is yet to be paid subject to certain conditions.
The company entered the $1.2 billion-strong whole blood collection market with the vision to launch the first whole blood automation package.
Currently, Haemonetics has a Zacks Rank #4 (Sell). Some better-ranked stocks in the medical products industry include Cardiovascular Systems Inc. (CSII - Analyst Report) and ZELTIQ Aesthetics, Inc. (ZLTQ - Snapshot Report) . Both these stocks sport a Zacks Rank #1 (Strong Buy).