Ladies and gentlemen, thank you for standing by. And welcome to the Haemonetics' First Quarter Fiscal '21 Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference may be recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Dan Goldstein, Vice President, Corporate Controller. Sir, you may begin.

Good morning, everyone. Thank you for joining us for Haemonetics' First Quarter Fiscal '21 Conference Call and Webcast. I'm joined today by Chris Simon, our CEO; Chad Nikel, our President of Blood Center; and Bill Burke, our CFO. This morning, we posted our first quarter results to our Investor Relations website, including analytical tables with the information that we will refer to you on this call. Additionally, we provided a complete P&L, balance sheet, summary statement of cash flows as well as reconciliations of our GAAP to non-GAAP financial results. Before we get started, unless otherwise noted, all revenue growth rates discussed today are on an organic basis and exclude impacts of currency, strategic exits of our plasma liquid solutions business, acquisitions and divestitures. As in the past, we will refer to non-GAAP financial measures throughout this call to help investors understand Haemonetics' ongoing business performance. Please note that these measures exclude certain charges and income items. Please refer to this morning's earnings release for details on excluded items, including comparisons with the same periods of fiscal '20 and a reconciliation to our GAAP results. Our remarks today may include forward-looking statements. And our actual results may differ materially from the anticipated results. Haemonetics cautions that these forward-looking statements are subject to risks and uncertainties, including the potential impacts from the COVID-19 pandemic on our results and other factors referenced in the safe harbor statement in our earnings release and in our filings with the SEC. We do not undertake any obligation to update these forward-looking statements. And now I'd like to turn it over to Chris.

Good morning, everyone, and thank you for joining. We continue to live in extraordinary times. And today, we will give perspective on the impact of the COVID-19 pandemic on our performance, and we will provide our view of the strength of our markets and the effectiveness of our strategy. Our response to crisis prioritized safety, business continuity and cash preservation allowing our manufacturing, supply chain and customer service to avoid disruptions. We remain fully operational in all of our markets across all of our product lines. We chose to build inventory to safeguard against pandemic-related stockouts and to prepare for recovery. Importantly, our through-cycle approach kept our turnaround on track. We are executing as planned and laying the foundation for continued growth. For example, we recently completed our third annual all employee survey, and the results showed exceptionally strong morale in spite of challenging circumstances. Our value drivers are intact and will propel us through recovery and the new normal. Let me provide a few highlights. Despite current marketplace challenges, plasma and hospital remain attractive markets with significant growth potential. I will talk about how we see them recovering in a few minutes. We are making meaningful progress on our innovation agenda with NexSys platform advancements, hemostasis management, clinical programs and software development and digitization. We are a year into our 4-year operational excellence program. We remain on schedule, pursuing strategic sourcing, lean and network optimization, including select investments like a new Pittsburgh site to support U.S. plasma and hospital disposables. Our recently announced transactions show our intent and ability to execute growth-oriented M&A. We are committed to pruning and augmenting our portfolio, and we continue to prioritize allocating capital to growth investments, leveraging our strong balance sheet and free cash flow. Haemonetics is well positioned to adapt and thrive,…

Good morning, everyone. Chris and Chad have already discussed revenue, so I'll start with adjusted gross margin, which was 47.2% in the first quarter, a decline of 400 basis points compared with the prior year. The primary drivers of this decline were related to impacts from lower revenue and higher operational costs related to COVID-19. There were also incremental costs to safeguard the health and welfare of our employees and our manufacturing and supply chain as well as customer facing employees. However, we were able to partially offset these downward effects with productivity savings from the operational excellence program, cost containment actions and the portfolio decisions to exit liquids. Adjusted operating expenses in the first quarter were $63.7 million, a decrease of $7.8 million or 11% compared with the prior year. As a percentage of revenue, adjusted operating expenses were 32.6%, an increase of 280 basis points compared with the prior year. Lower adjusted operating expenses were due to a combination of productivity savings and the cost containment measures implemented to partially offset the negative effects of COVID-19 on revenue and in our manufacturing and supply chain costs. These cost containment actions included restricting travel, reducing nonessential spending, delaying hiring and reducing some compensation related items. In addition, we also had lower research and development costs in the first quarter of fiscal '21 compared with the prior year, mainly due to savings related to our operational excellence program and slightly lower spending related to COVID-19. These reductions in costs were partially offset by modest investments. We will continue to invest in our business with a bias towards organic growth and innovation that will continue to expand our commercial capabilities. As a result of the performance of our adjusted gross margin and our adjusted operating expenses, the first quarter adjusted operating…

[Operator Instructions] Our first question comes from David Lewis of Morgan Stanley.

A few for me this morning. I guess the first thing either Chris or Bill is, you talked about plasma collections being down about 25% to 30% in April. The performance in the quarter sort of implies those trends worsened in June. Can you give us any sense of sort of where they ended June or where they're tracking in July or what, frankly, the fractionator customers are telling you what their baseline assumption is for collections? They've talked about that publicly. Just kind of curious what they're communicating to you in terms of what the baseline assumption is for the next 3 to 6 months for plasma collection demand? And then I have a couple of follow-ups here.

David, it's Chris. Thanks for the question. Let me start with a general statement. It certainly applies to plasma, but it's across all of our businesses, which is that we fully expect to recover the pre COVID-19 levels and growth trajectory. Question is timing, right? And it's important, I guess, as a second point that we don't want to come across as certain about things that are uncertain by definition, right? So we are working closely with all of our customers around this issue of donor traffic through the centers. And what we saw through the majority of the first quarter was real challenges, and we called out those challenges. I think they are both structural items like social distancing requirements and the lockdowns, the pursuit of them, coupled with restricted public transportation, border travel and just the need to -- the college campuses being closed, et cetera. There's also attitudinal factors, and we're working with our customers. One of those attitudinal factors to make sure that the donors feel safe and are encouraged to return to donations. So it's an ongoing process. And we're not prepared to give a lot more visibility into it than beyond what we have. We're obviously in active discussions with all of our customers. They all cite the same root issues and are optimistic, but cautiously so about how donation volume will pick up over the remainder of this year and into FY '22 for us.

Okay. Can you comment at all, Chris, on just any incremental recovery here you've seen in July relative to what would be implied by sort of down 40%, down 45% in June?

Well I'll go back to the structural factors, David, and I feel like we are making meaningful progress there. I think it's more, at this point, the attitudinal factors, how our donors feeling about the virus and the threat they're in, how are they feeling about the relative safety of the entire donation process, not just what they get greeted with at the door but the process getting to the collection center and beyond. We've done things in partnership with our customers. We've created a new COVID app, COVID 360, which basically allows centers to immediately go to a scheduling process, keep the donors at a social distance. They can either wait in their cars or outside the center for their appointed time. And I think those things are clearly helping, but it's early days. And I think there's a broader set of attitudinal factors that need to play out in August and September to give us a better read on the second half of the year.

Okay. And you kind of dealt with my second question, I'll ask both my second and third here for Bill's well, but it sounds like there are multiple factors Bill talked about here in terms of the market. There's been the impact of federal stimulus, donor willingness, center locations in specific areas and social distancing requirements. It sounds like you've been able to solve for maybe center location and social distancing, but the key issue is donor willingness. And I'm just sort of curious if that is going to be just time or that can be solved by fractionators providing, frankly, greater incentives to the donors. Just that's my question for you. And then for Bill, can you just help us quantify the bulk purchase orders in the non plasma business this particular quarter and sort of what that may imply for next quarter as a potential headwind?

Yes, David, it's Chris. So on the attitudinal factors, I don't disagree with your summation. Structurally, I think we've done as an industry, what can be done. I think as we look through the attitudinal piece, it's dynamic. And I think views around the threat from the pandemic are evolving. I think the perception of safety in the centers is evolving. There's never been more public discussion around plasma, driven by both convalescent plasma and hyperimmunoglobulins as potential therapeutics. They're positive effects, right? And we expect that will continue forward. I do feel like the end market demand remains every bit as robust. And so whatever isn't collected in the first half of our fiscal '21 just adds up to the deficit and the robust recovery that we anticipate going forward beyond that.

David, it's Bill. Just thought to clarify your question. Did you mean the bulk purchases in Blood Center and not plasma?

I'm sorry. The blood banking commentary that was referenced in the queue -- sorry, Bill.

Okay. That's okay. I just -- I thought you had said plasma is part of the question. So in Blood Center, yes, we did see some order timing in the business. And as those order stocking start to level off as you get back to normal supply chain type cadence, we should see less purchases. So we are expecting the growth that you saw in Blood Center in the first quarter, not to repeat in future quarters as those inventory stockings are drawn down by the Blood Center customers.

Our next question comes from Anthony Petrone of Jefferies.

I have 2 follow-ups to Dave's questions and a P&L question for Bill as well. And so maybe, Chris, as you sort of referenced here that the euro will remain pressured in plasma; however, we're coming off of a steep decline in fiscal 1Q. Is it fair to say that fiscal 1Q would be the trough, and we would still be pressured by marginal benefits as we move through the year? So that would be the first question. And then the follow-up would be, just how does this play in terms of immunoglobulin shortages? We had a shortage situation pre COVID. Donations are down. So I would imagine that, that situation is exacerbated. And how does that sort of play in your discussions with customers around an upgrade cycle? And then I'll have one P&L question.

Thanks, Anthony. So just to start on your first question, again, we don't have clairvoyance on this. I would expect the first quarter where we had this confluence of structural factors, including meaningful lockdowns, right? We feel like your society at large is better relative term, of course, at dealing with the pandemic. So we don't, we're not at this point anticipating widespread lockdowns. But we may see situational things geographically. But I think we're beyond that, and we kind of know what we have structurally. Big open question around college campuses. Many are intending to open, will they stay open? How will that attitudinal demographic differ than what we've seen through the main nucleus of collections. They are important factors, and we're, again, cautiously optimistic about that. But within limits, right? And I think that you underestimate this pandemic and the effect of this pandemic at your own peril. So we need to continue to be thoughtful about that. We do think that we, as an industry, collectively, have the ability to improve from the base that we've experienced so far, we are learning and our customers, and we are responding accordingly. So that gives us grounds for cautious optimism. In terms of the shortage question, it's obviously, quite important, the U.S. is now responsible for 90% of the world's sourced plasma supply. 85% to 90%. There is -- they collect their own plasma and they occasionally buy recovered plasma from Chad's, Blood Center customers. That was a much larger number, 3 or 4 years ago. It's dropped pretty meaningfully, and those collectors have their own challenges, meeting the demands for whole blood and red cells and platelets. So from our vantage point, getting these centers fully operational and back to their practice capacity is priority one. All of our customers are working on it. We're working with them. And I think that we will do everything within our power as an industry to avoid those stock outs, the best of the challenge that we face into right now.

That's helpful. Maybe just the follow-up would be, Bill, on the cost side, the $80 million to $90 million. Can you remind us of what amount is realized thus far? Will that be predominantly COGS-related, and then just an item from the press release this morning, it indicates that guidance potentially could be issued later this year. What are the triggers to issue guidance later in the year?

Thanks, Anthony. So on your -- on the operational excellence program question, yes, we're still looking at $80 million to $90 million of gross savings there. And we have said that the majority of those savings would drop-through to operating income over the life of the program. We have not said specifically what we have recognized to date. We want to withhold those comments until we're ready to issue guidance. And on the guidance question, we don't want to say whether we're going to or not going to and we always intend to issue guidance. But the trigger is to do it, it just an inflection in this curve of collections, specifically in plasma, right, like Chris mentioned, we need that foot traffic back into the centers. We haven't seen it yet. But once we do and we get comfortable with the forecasting that's being done and the level of volume coming back, then we'll issue the guidance. We feel pretty good in the P&L right now about our SG&A. We could forecast that properly. We did issue a little bit of guidance on our tax rate in the prepared remarks, but we definitely need to see the inflection back in plasma before we guide. That's the main trigger.

Our next question comes from Larry Keusch of Raymond James.

Just thinking about the plasma collection in the U.S. and Chris, I recognize all of the various dynamics that have been going on, both structural and attitudinal. But I guess the question is, do you think there is a potential risk here that just the collection volumes in the U.S. are more structurally impaired for a longer period of time. And that collectors may have to start looking elsewhere geographically? And how are you positioned to the extent that they do, for example, in a place such as Germany or other areas? That would be question one.

Yes, Larry, it's -- so we feel strongly that the underlying end market demand will continue, IgG 8% growth as a meaningful guide over an extended period of time is absolutely right. That's going to continue. The demand continues unabated. They will need the plasma. I think I don't believe -- we will see a new normal, and it will be different than what it was pre COVID, but I don't believe the relative dependence on the U.S. is at risk here. I think that if you look at prior periods, typically, a protracted recession tends to be relatively favorable period of time for our plasma collectors. They fill a need in the economy, and there's a strong bias to donate. So I think as we get on the other side of some of the attitudinal challenges, I think you'll see meaningful and robust recovery in collections foot traffic here in the U.S. And I think that's what most of our customers are betting on. In terms of performance outside the U.S., we absolutely participate throughout the 4 countries in Europe that collect and remunerate. And we're proud of the business that we're doing there. We'll continue to invest. We have seen slightly better recovery, although it's a smaller percentage of what we do. We've seen a better recovery there. But our share, OUS, is comparable to what we have here in the states, maybe it's just a tad lower. But I think we have the ability to respond regardless of where the demand comes from.

Okay. Terrific. And then one other question for you, Chris, and then a quick one for Bill. Obviously, you talked about some of the competitive therapeutics that are in development, including FcRnS. Maybe just talk a little bit about sort of what work you've done to come to the conclusion that you believe that there are some challenges, as you noted. And there is this ability to sort of coexist in a market that can still grow collection volumes, 8% to 10%. And then for Bill, inventory, obviously, has been up quite substantially over the last couple of years. Just help us think about, again, how we should be thinking about inventories, just longer-term trending would be helpful.

Sure, Larry. So look, on the FcRn, we have said, for as long as I've been at the company that you don't have a $18 billion or $20 billion end market, which is the IgG market without attracting a lot of competition. And certainly, FcRn -- anti-FcRn reflects an important first wave of that. When we think about it, essentially, the collection volume that we're looking at is driven by IgG. Autoimmune diseases are 40% of that. It breaks down, whether we're talking about MG at 4% or 5%; ITP is another 5% or 6%; then CIDP is a larger piece, around 20%. What we're looking at is where these drugs are, what they target, what their relative efficacy and established safety will be as they move through Phase II and Phase III trials. And we would say, you start with that 40% of the business that's autoimmune and you start carving back down against that. And then from where we are, we just basically look at the time and a risk adjustment. And that gives us good comfort that our core 8% to 10% growth in collection volume, which is driven off of the IgG growth of 8%, plus some other things that we see underneath the surface that benefit us in collection volume. From that perspective, we don't know that they will take out a role to play. But there are important questions. Approval probability, commercial scale up, pricing and reimbursement, how they will be viewed against the IgG, which is viewed as highly efficacious, particularly in a number of these categories where there's meaningful risk to a new therapeutic coming in. So we come back and we can take you through more detail as we go through it. We've tapped our scientific advisory community. We tapped key opinion leaders. And we just come back with conclusion that particularly when you look at relevant analogs, where new biologics have come into an established market like this, they typically grow the market rather than cannibalize it. And they typically take significantly longer than maybe the originators behind those drugs would otherwise aspire to.

All right. Larry, and your second question was for me on inventory. Yes, in the quarter, our inventory was up almost $25 million. The majority of that increase was in our plasma business and specifically related to bowls and bottles stocking. There was a lot of uncertainty in the quarter, if a plant could potentially shut down because of COVID-19 hitting the plant. So we intentionally built inventory, did not slow production down even with the decline in revenue. We -- our #1 objective was do not stock out the customers. So we feel comfortable building this level of inventory. And like Chris said before, we're comfortable that the collections will bounce back, and this is inventory that moves very quickly. We also felt like if you -- besides cash, this is probably the second best thing on the balance sheet to have is the inventory. So longer term, obviously, we have a lot of inventory right now. We do expect the inventory to decline over time.

Our next question comes from Larry Solow of CJS Securities.

Just a couple of follow-ups actually. One to Larry's question on the inventory build, and you said you kept production levels sustained. As we look out perhaps this quarter, do you expect some -- a little bit of a drop in production? Obviously, you increased inventory and demand still remains a little below normal. And that have a sort of a knock-on effect on gross margin in the short run?

Well yes, that's -- it's something we're looking at. We don't want to commit to anything right now because there are implications across the company. But yes, I mean, there's a certain level of that type of inventory that I mentioned with the bowls and bottles that we are comfortable getting to. And like I said, that production does turn. And we do expect that once we get through this collections downturn, and COVID-19 is -- dissipates, that not only will we get the collections for a normal year, but that our customers would want to rebuild their safety stock levels. So one way or another, we feel like inventory will come off the balance sheet. But yes, we -- Larry, we're looking at all different options right now.

And Larry, Chris here. It's another follow-up on that, right. As Bill said, we took actions we took, we feel quite good about that. Obviously, it has an effect, including on gross margin. It is -- inventory is the one thing that we value along with cash here, given the uncertainty. The other aspect of this is, we do have the operational excellence program, which includes network optimization. We are taking advantage as part of our through-cycle mindset, trying to accelerate certain aspects of that program where the opportunity presents itself. And having some inventory on hand gives us greater freedom to operate against some of those plant moves, for example. So we're trying to be thoughtful about it. I think the next quarter will be telltale for us around how do we feel about the inventory build. And we're having those conversations real-time with customers weekly to make sure that we are where we need them to be, but still being good stewards of the resources as we try to be.

Got it. And absolutely, you sort of took the words out of my mouth on the sort of next question. Bill mentioned operational excellence still sort of -- you're still targeting the $80 million to $90 million, and I was going to sort of ask -- the question I had was, it looked like your cost controls were better than I had thought would be this quarter. Obviously, revenue down a lot. And my question is, was it just an acceleration on the operational excellence program? Or are there other costs that you've taken out of the business and maybe some of those or majority of those are temporary, but maybe that actually will, over the long run, even drive better cost savings. Is that potentially -- is that a possibility?

Yes. So Larry, obviously, we do everything we can on operational excellence to bring as much savings forward as possible. But some of those programs are longer term. They're more gross margin oriented and -- yes. So it takes a little longer to get at. But what we do, we make -- we put out a call to action to the organization, and the organization responds when we when we ask for initiatives to be driven. In this case, it was cost reduction. So we're very happy with where we are. I mean there are just some things just naturally happened because of what was going on in the quarter, right? So like travel, for example, in most companies, we are already speaking about lower travel. I don't think anybody was getting on a plane. So we saw significant savings there, but there were other actions that I spoke about in the prepared remarks. But we want to be careful though. We're not doing anything from an expense perspective that is going to inhibit our growth going forward, right? We're very careful there because we honestly and truly believe that everything is going to bounce back here. We do not want to do anything that hurts the growth prospects of the company.

Okay. And then just one quickly on the -- just on the plasma collections. I know a lot of questions on this topic. I'm just trying to get a feel, and I know Larry asked the question just in terms of the geographical shift outside the U.S. How about within the U.S.? I mean -- and maybe it's too short-term of a question or maybe I should be asking the plasma operators themselves. But in other words, in areas where there is a lot less COVID temporarily at least can -- maybe this happens over time, inventory levels continue to get lower. But can plasma collectors give higher incentives in areas where there are less -- there's less COVID going on and then drive donors that way? I'm just trying to think of how they are trying to adapt to this environment.

Yes. I think there are interesting adoptions -- modifications going on as we speak. Even some of the segmentation that we had offered in our prior calls and some of the ongoing discussions, the separation out of college towns, versus border towns versus new centers and mature centers, obvious stuff. But as you think about it, it is possible that the pandemic affects those different subsegments differently. How are our customers responding? How can we help them with that response? I mentioned the COVID app, most centers don't work on an appointment basis, more due today because it helps with social distancing. And it's one of these ones we've been asked in prior discussions. Well if social distancing is 6 feet and not the associated health and hygiene measures, are we talking about taking out half the capacity? And I think that varies dramatically from one center to the next. And I think it is, candidly, one of various examples like we've seen in our own manufacturing footprint, where in Malaysia, where we were required to reduce our head count by 50%. We did not see a 50% drop-off in our production capacity. In fact, our production capacity was in excess of 70% because of measures we took. Our collectors have that ability within their footprints and we can work with them on how to do that. Some things enabled further by the NexSys system that allowed them to do that. So we're working in solving for a new normal day-to-day. I'm cautiously optimistic that will help. It will help with the attitudinal factors as well to make donors feel safe. There is a broader play. And to your point, if your state or your city is in lockdown, that's a structural challenge to overcome that has a tail effect on the attitudes of donors. But collectively, we're working on it. There's never been more headlines about the beneficial advantages of plasma. I think folks understand what plasma is today at a much greater level than they ever have before. Hopefully, that's a silver lining that as we phase into the new normal helps us get back to robust collections.

Right. And just speaking of silver linings, just last question. I think just from a high level, I know you can't talk specifics. But just in terms of conversion to NexSys platform, it seems like inevitably, this will hopefully happen, but perhaps COVID temporarily slows it, but over the middle term, maybe that helps conversion as it opens up more discussions to improve throughput capacity at these centers if they fall behind in supply. Any thoughts on that?

I think it puts an exclamation point on the value proposition of the NexSys platform. Clearly, yield, I think that's one that gets everybody's attention. But we're talking about the cycle time of a donation. We're talking about the relative compliance and the ability to document that electronically and then just this overall sense of satisfaction and the professionalism of the collection that is enabled by the NexSys platform. Of course, we have to demonstrate that we can do that in a way that's safe. And I think we now have done so, whether we're talking about new center openings or center conversions or software upgrades, which I think a number of our customers have been very thoughtful about using some of the downtime to upgrade their software, the latest versions of NexLynk. So again, our folks are trained on this. We've stayed fully operational. And I think we've demonstrated the ability to power through this even in the context of the pandemic. So I agree that the value proposition has never been more relevant or stronger. And I think our ability to act against it is equally robust.

Our next question comes from Mike Matson of Needham.

This is David Saxon on for Mike. Just one for me this morning. Just wondering if you can talk about the benefit of TEG testing for COVID patients and if this led to any new placements that could drive future TEG growth?

Yes. David, thanks for the question. We're very enthusiastic about TEG's role in this. What we discovered, and it was first identified in Northern Italy that a number of these COVID-19 patients were presenting with meaningful thromboelastic complications. Their blood was clotting at much faster rates and in parts of the body that you would not normally see this, particularly if a disease type is characterized as a respiratory disease. Obviously, these are very serious complications. They lead to pulmonary embolism or stroke or cardiovascular complications. So widespread interest in that, we spent a lot of time working with our opinion leaders and major treatment centers to get them devices for research purposes. I think that's helped advance the case. We certainly see that now in North America. We're starting to see that again as part of the recovery in China. So I think there's a strong interest in thromboelastic testing. TEG has 80% share of that market. And I think we've increasingly kind of advanced, and working with the scientific and medical communities to advance the understanding of what's really going on using viscoelastic testing as an important diagnostic to understand these risk factors. So the capital sales in first quarter were a new high for us despite the pandemic and despite the challenges that hospitals were spending a lot of money on ICU care, et cetera. So we'll see how that plays out over the remainder of the year, but we're enthusiastic about TEG's role in therapeutic diagnostics for COVID.

Our next question comes from Dave Turkaly of JMP Securities.

I'll just sneak one in here at the end. Chris, obviously, there's been -- you've been pretty active, particularly on the divestiture front. But I guess I'm just curious, should we expect that to continue? And why has like, I guess, sort of your thought process around selling some of these things and selling them now, and what we should expect sort of moving forward, if you have any thoughts on other things to either divest or acquire?

Yes, Dave, thanks for your patience. We have Chad on the call, I'm going to invite him to comment on the actions that have affected the Blood Center business. As we said at the outset and as Bill highlighted in his summary remarks, we're committed to a through-cycle mindset. We laid out a 5-year turnaround. This is year 5 of the turnaround. We're committed to power through that. Our portfolio moves, acquisitions and divestitures are absolutely part of that. We want to pivot our portfolio to growth. We want to play in sectors where we can make a meaningful and distinctive contribution and benefit by the growth and profitability that comes with that. So we put a bunch of things in motion, really over the last several years, some of which come to fruition in the quarter and a few more that we'll power through. But I give a lot of credit to Chad and his team for making that happen. So Chad, why don't you comment, please? Chad Nikel;President of Blood Center: Dave, I kind of look at it in 2 buckets: first was the North America software and the European based software. Both of those businesses were flat to declining in double digits. So exiting those definitely improves our growth rate in the business. Additionally, I think it positions us better just from a focus perspective. And since I've taken over the business, that's one thing that get a narrower focus on where our core competencies are. And that really is through the disposables and the equipment side of the business. So we have a lot of talent and we'll keep them focused in areas where they can drive value for the company and the customers. The second one is the Fajardo filter manufacturing plant that we divested to GVS. We had a long-term relationship with GVS. They produce filters exclusively, a lot of competency there. It was definitely a win-win situation for us. And I think what we got out of it beyond just kind of a long-term supply agreement is -- I'm really excited about just the access to the engineering talent. The depth they have is something that we can only dream of. So we expect a lot of value in the future coming out of that relationship. So thank you.

Our next question comes from Anthony Petrone of Jefferies.

Just a quick follow-up on the geographic footprint of the centers in the U.S. that are within your network. I mean, is there any way to sort of break out the percentage of centers at the moment that may be located in high-impact states, thinking of Florida, Texas, border states, et cetera?

Yes, Anthony, it's -- so there are over 800 source plasma collection centers in North America, predominantly U.S. As you know, we have in excess of 80% share of those centers. So we -- our footprint represents the industry's footprint in that regard. There is a concentration in both the Southern part of the U.S. and the Eastern -- Southeastern to be clear and mid Atlantic. So it's kind of L shaped curve, if you will, across the bottom and up the East Coast. We track the flare-ups and the outbreaks and paying close attention to that. There are a small number of states, Texas, Florida, some of the big Midwestern states like and Eastern states, Michigan and Ohio, for example that we're heavily dependent upon for this collection. So we pay close attention to it. There was a point in time in the first quarter where our footprint and the heat map, if you will, for COVID, were almost a direct overlap. Thankfully, through a various sets of actions, we're seeing some progress in places like Arizona and Texas and Florida in terms of flattening out the curve. And that gives us cautious optimism, but that's what we're managing to. And it's a broader societal issue that we and our customers are caught often.

There are no further questions. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.