Shares of blood management solutions company
) 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
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
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.
St. Jude Medical Inc.
) are expected to do well in the health care industry. All the
three stocks carry a Zacks Rank #2 (Buy).
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