HAEMONETICS CORPHAE
HAEMONETICS CORP Income Taxes Disclosure
INCOME TAXES
Domestic and foreign income before provision for income tax is as follows:
| Year Ended | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||
| Domestic | $ | 87,236 | $ | 161,800 | $ | 112,563 | |||||||||||
| Foreign | 40,794 | 50,271 | 39,302 | ||||||||||||||
| Total | $ | 128,030 | $ | 212,071 | $ | 151,865 | |||||||||||
The income tax provision (benefit) from continuing operations contains the following components:
| Year Ended | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||
| Current | |||||||||||||||||
| Federal | $ | 35,794 | $ | 29,818 | $ | 29,113 | |||||||||||
| State | 9,078 | 8,112 | 6,539 | ||||||||||||||
| Foreign | 12,251 | 12,085 | 9,532 | ||||||||||||||
| Total current | $ | 57,123 | $ | 50,015 | $ | 45,184 | |||||||||||
| Deferred | |||||||||||||||||
| Federal | (17,960) | (6,555) | (6,165) | ||||||||||||||
| State | (3,175) | 1,774 | 2,132 | ||||||||||||||
| Foreign | (5,266) | (842) | (6,844) | ||||||||||||||
| Total deferred | $ | (26,401) | $ | (5,623) | $ | (10,877) | |||||||||||
| Total | $ | 30,722 | $ | 44,392 | $ | 34,307 | |||||||||||
The Company conducts business globally and reports its results of operations in a number of foreign jurisdictions in addition to the United States. The Company’s reported tax rate differs from the statutory tax rate due to the jurisdictional mix of earnings in any given period as the foreign jurisdictions in which it operates have tax rates that differ from the U.S. statutory tax rate. The Company’s effective tax rate is adversely impacted by non-deductible expenses including executive compensation and transaction costs, and is favorably impacted by changes in contingent consideration revaluation, the expiration of the statute of limitations with respect to certain uncertain tax position reserves, jurisdictional mix of earnings, impact of foreign tax law changes and research credits generated.
Tax effected, significant temporary differences comprising the net deferred tax liability are as follows:
| March 28, 2026 | March 29, 2025 | ||||||||||
| (Dollars in Thousands) | |||||||||||
| Deferred tax assets: | |||||||||||
| Depreciation | $ | 304 | $ | 97 | |||||||
| Amortization of intangibles | 4,286 | 4,796 | |||||||||
| Inventory | 5,357 | 2,846 | |||||||||
| Accruals, reserves and other deferred tax assets | 14,941 | 14,801 | |||||||||
| Net operating loss carry-forward | 29,453 | 8,842 | |||||||||
| Stock based compensation | 5,116 | 4,897 | |||||||||
| Operating lease liabilities | 12,614 | 14,906 | |||||||||
| Tax credit carry-forward, net | 7,734 | 6,713 | |||||||||
| Capitalized research expenses | 39,958 | 39,219 | |||||||||
| Gross deferred tax assets | 119,763 | 97,117 | |||||||||
| Less valuation allowance | (14,238) | (11,930) | |||||||||
| Total deferred tax assets (after valuation allowance) | 105,525 | 85,187 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Depreciation | (37,368) | (35,006) | |||||||||
| Amortization of goodwill and intangibles | (79,850) | (87,905) | |||||||||
| Unremitted earnings | (2,726) | (1,497) | |||||||||
| Operating lease assets | (9,823) | (12,033) | |||||||||
| Other deferred tax liabilities | (4,285) | (3,518) | |||||||||
| Total deferred tax liabilities | (134,052) | (139,959) | |||||||||
| Net deferred tax liabilities | $ | (28,527) | $ | (54,772) | |||||||
The valuation allowance increase of $2.3 million during fiscal 2026 is primarily due to an increase in valuation allowances established against acquired attributes offset by a decrease in the valuation allowance against foreign deferred tax assets and other income tax attributes utilized during the fiscal year. The Company has assessed, on a jurisdictional basis, the available means of recovering deferred tax assets, including the ability to carry-back net operating losses, the existence of reversing temporary differences, the availability of tax planning strategies and available sources of future taxable income. It has also considered the ability to implement certain strategies that would, if necessary, be implemented to accelerate taxable income and use expiring deferred tax assets. The Company has concluded that future taxable income can be considered a source of income to realize a benefit for deferred tax assets in certain jurisdictions. The Company believes it is able to support the deferred tax assets recognized as of the end of the year based on all of the available evidence. The worldwide net deferred tax liability as of March 28, 2026 includes deferred tax liabilities related to amortizable tax basis in goodwill and other indefinite lived assets, which can only be used as a source of income to benefit other indefinite lived deferred tax assets.
As of March 28, 2026, the Company maintains a valuation allowance against certain U.S. foreign tax credit carryforwards and U.S. state net operating loss and tax credit carryforwards that are not more-likely-than-not realizable, as well as a valuation allowance against the deferred tax assets of certain foreign subsidiaries.
In connection with certain acquisitions, the Company has acquired net operating loss and tax credit carryforwards, which may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 percent as defined under Section 382 and 383 of the U.S. Internal Revenue Code of 1986, respectively, as well as similar state provisions. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. The Company conducted Section 382 studies covering the periods of inception through the respective acquisition dates. The studies concluded that ownership changes occurred during those periods which limit the amount of the Company’s net operating losses and tax credit carryforwards that can be utilized before expiring. The remaining carryforwards disclosed in the deferred tax table above represent the amount of attributes that can be utilized based on the results of the studies. The Company does not believe it has had any additional ownership change that would result in additional limitations. Subsequent ownership changes may further affect the limitation in future years. In fiscal 2026, the Company acquired approximately $135.5 million of net operating losses in Ireland as a result of the acquisition of Vivasure. The Company has preliminarily concluded that the transaction does not result in the net operating losses being subject to any utilization limitations associated with the acquisition itself.
As of March 28, 2026, the Company has U.S. federal net operating loss carryforwards of $6.6 million, all of which will begin to expire in fiscal 2027. The Company has U.S. state net operating losses of $51.5 million of which $51.0 million will expire at various times between fiscal 2027 and fiscal 2044 and $0.5 million can be carried forward indefinitely. The Company has federal tax credits of $0.6 million that will begin to expire in fiscal 2030 and state tax credits of $6.6 million that began to expire in fiscal 2029.
As of March 28, 2026, the Company has Canadian federal and provincial net operating loss carryforwards of $21.5 million and $18.2 million, respectively, which will expire from fiscal 2036 through fiscal 2045. Additionally, the Company has Irish net operating loss carryforwards of $140.0 million that can be carried forward indefinitely. The Company has other foreign net operating losses of approximately $6.8 million that are available to reduce future income which can be carried forward indefinitely. The Company has foreign research tax credits of $2.0 million which will begin to expire in fiscal 2035.
As of March 28, 2026, substantially all of the unremitted earnings of the Company have been taxed in the U.S. The accumulated earnings in the foreign subsidiaries are primarily utilized to fund working capital requirements as its subsidiaries continue to expand their operations and to fund future foreign acquisitions. The Company does not believe it is practicable to estimate the amount of income taxes payable on the earnings that are indefinitely reinvested in foreign operations, however a significant portion of the unremitted earnings could be remitted without a future tax cost.
In accordance with the adoption of ASC Update No. 2023-09, income tax provision differs from the tax provision computed at the U.S. federal statutory income tax rate due to the following:
| Year Ended March 28, 2026 | |||||||||||
| (Dollars in Thousands) | |||||||||||
| Tax at federal statutory rate | $ | 26,886 | 21.0 | % | |||||||
State income taxes net of federal benefit(1) | 4,610 | 3.6 | % | ||||||||
| Foreign tax effects | |||||||||||
| Switzerland | |||||||||||
| Statutory tax rate difference | (5,051) | (3.9) | % | ||||||||
| Local income tax | 2,246 | 1.8 | % | ||||||||
| Other items | 21 | — | % | ||||||||
| Canada | |||||||||||
| Local income tax | (1,838) | (1.5) | % | ||||||||
| Other items | (1,071) | (0.8) | % | ||||||||
| Ireland | 1,341 | 1.0 | % | ||||||||
| Other foreign jurisdictions | 3,267 | 2.6 | % | ||||||||
| Effect of cross-border tax laws | (770) | (0.6) | % | ||||||||
| Nontaxable or nondeductible items | |||||||||||
| Other nontaxable or nondeductible items | 1,496 | 1.2 | % | ||||||||
| Limitation on executive compensation | 3,434 | 2.7 | % | ||||||||
| Tax credits | |||||||||||
| Federal research credits | (3,089) | (2.4) | % | ||||||||
| Other tax credits | (852) | (0.7) | % | ||||||||
| Changes in valuation allowances | 37 | — | % | ||||||||
| Changes in unrecognized tax benefits | 54 | — | % | ||||||||
| Other, net | 1 | — | % | ||||||||
| Income tax provision | $ | 30,722 | 24.0 | % | |||||||
_________
(1) The jurisdictions which account for the majority of the tax effect in this category include California, Texas, Florida, New York, Pennsylvania, Illinois and Georgia.
Prior to the adoption of ASC Update No. 2023-09, income tax provision differed from the tax provision computed at the U.S. federal statutory income tax rate due to the following:
| Year Ended | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||||||||
| Tax at federal statutory rate | $ | 44,535 | 21.0 | % | $ | 31,892 | 21.0 | % | |||||||||||||||
| Impact of foreign operations | (732) | (0.3) | % | (3,631) | (2.4) | % | |||||||||||||||||
| State income taxes net of federal benefit | 7,505 | 3.5 | % | 7,037 | 4.6 | % | |||||||||||||||||
| Change in uncertain tax positions | (1,227) | (0.6) | % | (107) | (0.1) | % | |||||||||||||||||
| Global intangible low taxed income | (1,380) | (0.7) | % | (555) | (0.4) | % | |||||||||||||||||
| Unremitted earnings | 163 | 0.1 | % | 171 | 0.1 | % | |||||||||||||||||
| Deferred statutory rate changes | 543 | 0.3 | % | (159) | (0.1) | % | |||||||||||||||||
| Non-deductible executive compensation | 5,130 | 2.4 | % | 3,256 | 2.1 | % | |||||||||||||||||
| Non-deductible expenses | 2,845 | 1.3 | % | 2,355 | 1.6 | % | |||||||||||||||||
| Stock compensation benefits | (4,469) | (2.1) | % | (1,841) | (1.2) | % | |||||||||||||||||
| Research credits | (2,411) | (1.1) | % | (1,378) | (0.9) | % | |||||||||||||||||
| Contingent consideration | (4,774) | (2.3) | % | — | — | % | |||||||||||||||||
| Impact of foreign tax law changes | (2,707) | (1.3) | % | (2,739) | (1.8) | % | |||||||||||||||||
| Valuation allowance | 1,744 | 0.9 | % | (393) | (0.2) | % | |||||||||||||||||
| Other, net | (373) | (0.2) | % | 399 | 0.3 | % | |||||||||||||||||
| Income tax provision | $ | 44,392 | 20.9 | % | $ | 34,307 | 22.6 | % | |||||||||||||||
The Company recorded an income tax expense in fiscal 2026 of $30.7 million, representing an effective tax rate of 24.0%. The effective tax rate is unfavorably impacted by state taxes and non-deductible executive compensation, offset by the favorable impact of changes in jurisdictional mix of earnings and research credits generated.
The 15% global minimum tax under the Organization for Economic Cooperation and Development’s (“OECD”) Pillar Two Global Anti-Base Erosion Rule is currently effective in certain jurisdictions in which the Company operates. The OECD continues to issue guidance on the Pillar Two framework and various countries continue to enact legislation with respect to their application of the framework. The Company has considered the Pillar Two rules in effect in the countries in which it operates and have reflected the effect of the rules in the foreign tax effects. The impact is not material in fiscal 2026.
Unrecognized Tax Benefits
Unrecognized tax benefits represent uncertain tax positions for which reserves have been established. As of March 28, 2026, the Company had $1.6 million of unrecognized tax benefits, of which $0.7 million would impact the effective tax rate, if recognized. As of March 29, 2025, the Company had $2.8 million of unrecognized tax benefits, of which $1.8 million would impact the effective tax rate, if recognized. As of March 30, 2024, the Company had $3.7 million of unrecognized tax benefits, of which $3.1 million would impact the effective tax rate, if recognized.
The following table summarizes the activity related to its gross unrecognized tax benefits for the fiscal years ended March 28, 2026, March 29, 2025 and March 30, 2024:
| March 28, 2026 | March 29, 2025 | March 30, 2024 | |||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||
| Beginning Balance | $ | 2,822 | $ | 3,743 | $ | 3,941 | |||||||||||
| Additions for tax positions of fiscal 2026 | 140 | 315 | 234 | ||||||||||||||
| Additions for tax positions of a prior fiscal year | 9 | 1,242 | — | ||||||||||||||
| Additions for tax positions related to acquired businesses | — | 91 | — | ||||||||||||||
| Reductions of tax positions | (111) | (64) | (198) | ||||||||||||||
| Settlements of tax positions | (1,242) | — | — | ||||||||||||||
| Expiration of statute of limitations | (24) | (2,505) | (234) | ||||||||||||||
| Ending Balance | $ | 1,594 | $ | 2,822 | $ | 3,743 | |||||||||||
The Company’s historical practice has been and continues to be to recognize interest and penalties related to federal, state and foreign income tax matters in income tax expense. Approximately $0.1 million of gross interest and penalties was accrued as of March 28, 2026 and March 29, 2025, respectively, and are not included in the amounts above. Additionally, an expense of $0.1 million, a benefit of $0.3 million, and an expense of $0.1 million of accrued interest and penalties were included in the income tax provision for each of the years ended March 28, 2026, March 29, 2025 and March 30, 2024, respectively.
The Company conducts business globally and, as a result, files federal, state and foreign income tax returns in multiple jurisdictions. In the normal course of business, it is subject to examination by taxing authorities throughout the world. With a few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations for years before fiscal 2023 and foreign income tax examinations for years before fiscal 2021. To the extent that the Company has tax attribute carry-forwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, state, or foreign tax authorities to the extent utilized in a future period.
The following is a summary of cash income taxes paid, net of refunds:
| Year Ended | |||||
| 2026 | |||||
| (Dollars in Thousands) | |||||
| Federal | $ | 41,750 | |||
| State | 10,082 | ||||
| Foreign | 8,833 | ||||
| Total | $ | 60,665 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 20, 2026 | Showing above |
| 2025 | May 21, 2025 | |
| 2024 | May 20, 2024 | |
| 2023 | May 22, 2023 | |
| 2022 | May 25, 2022 | |
| 2021 | May 26, 2021 | |
| 2020 | May 20, 2020 | |
| 2019 | May 22, 2019 | |
| 2018 | May 23, 2018 | |
| 2017 | May 24, 2017 | |
| 2016 | Jun 1, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.