Hologic Announces Financial Results for Third Quarter of Fiscal 2019

– Revenue of $852.4 Million Grows 3.4%, 4.7% in Constant Currency –

– Company Posts GAAP Diluted EPS of $0.35, Non-GAAP Diluted EPS of $0.63 –

MARLBOROUGH, Mass.–(BUSINESS WIRE)–#earnings–Hologic, Inc. (Nasdaq: HOLX) announced today the Company’s financial results for the fiscal third quarter ended June 29, 2019.

“We posted strong financial results in our third fiscal quarter, with both revenue and EPS exceeding our guidance, as our pipeline of new products continues to grow,” said Steve MacMillan, Hologic’s Chairman, President and Chief Executive Officer. “Growth was driven by our Molecular Diagnostics and Breast Health businesses, which continued their strong recent trends. In addition, the performance of our Surgical business continues to improve.”

Recent Highlights

  • Excluding the divested Blood Screening business, revenue of $838.2 million increased 4.1%, or 5.3% in constant currency.
  • Global Molecular Diagnostics revenue of $170.9 million increased 10.6%, or 11.7% in constant currency, representing the third consecutive quarter of double-digit constant currency growth.
  • U.S. Breast Health revenue of $261.5 million increased 8.9%, continuing the group’s strong recent performance. The recently acquired Faxitron and Focal businesses contributed $12.8 million to global Breast Health revenue.
  • Global GYN Surgical revenue of $112.2 million increased 4.2%, or 5.2% in constant currency, the division’s highest growth rate in eight quarters.
  • Hologic’s innovation pipeline continues to be productive. Recent product launches include the Aptima® BV and Aptima® CV/TV assays in the United States; the Trident® HD specimen radiography system in the United States, Europe and Canada; and the ThinPrep® Genesis processor for cytology slide and molecular test preparation in Europe.
  • Entered into exclusive negotiations to acquire SuperSonic Imagine, a French innovator in cart-based ultrasound products, for a maximum enterprise value of $85 million in cash. This transaction has not been finalized and is therefore not included in the Company’s third quarter financial results or updated financial guidance.
  • Repurchased 1.1 million shares of common stock for $50.0 million

Key financial results for the fiscal third quarter are shown in the table below.

 

GAAP

 

Non-GAAP

 

Q3’19

Q3’18

Change

Increase

(Decrease)

 

Q3’19

Q3’18

Change

Increase

(Decrease)

Revenues

$852.4

$824.0

3.4%

 

$852.4

$824.0

3.4%

Gross Margin

52.2%

52.9%

(70 bps)

 

61.6%

62.6%

(100 bps)

Operating Expenses

$299.5

$302.9

(1.1%)

 

$276.4

$279.0

(0.9%)

Operating Margin

17.0%

16.2%

80 bps

 

29.2%

28.8%

40 bps

Net Margin

11.0%

13.7%

(270 bps)

 

20.1%

19.3%

80 bps

Diluted EPS

$0.35

$0.41

(14.6%)

 

$0.63

$0.58

8.6%

Throughout this press release, all dollar figures are in millions, except EPS. Some totals may not foot due to rounding. Unless otherwise noted, all results are compared to the corresponding prior year period. Non-GAAP results exclude certain cash and non-cash items as discussed under “Use of Non-GAAP Financial Measures.” Constant currency percentage changes show current period revenue results as if the foreign exchange rates were the same as those in the prior year period.

Revenue Detail

 

 

 

Increase (Decrease)

$ in millions

Q3’19

Q3’18

Global

Reported

Change

Global

Constant

Currency

Change

US

Reported

Change

International

Reported

Change

International

Constant

Currency

Change

Diagnostics

 

 

 

 

 

 

 

Cytology & Perinatal

$120.3

$121.1

(0.7%)

1.3%

(1.4%)

0.7%

6.3%

Molecular Diagnostics

$170.9

$154.5

10.6%

11.7%

9.4%

16.0%

22.1%

Blood Screening

$14.2

$18.6

(23.7%)

(23.7%)

(23.7%)

__-__

__-__

Total Diagnostics

$305.4

$294.2

3.8%

5.1%

2.8%

6.9%

12.7%

Total Diagnostics ex. Blood

$291.2

$275.6

5.7%

7.1%

5.2%

6.9%

12.7%

 

 

 

 

 

 

 

 

Breast Health

 

 

 

 

 

 

 

Breast Imaging

$270.0

$256.9

5.1%

6.1%

8.8%

(7.2%)

(3.0%)

Interventional Breast Solutions

$55.4

$51.0

8.7%

9.5%

9.5%

4.6%

9.8%

Total Breast Health

$325.4

$307.9

5.7%

6.7%

8.9%

(5.8%)

(1.5%)

 

 

 

 

 

 

 

 

Medical Aesthetics

$85.0

$91.7

(7.3%)

(5.5%)

(13.7%)

(0.2%)

3.6%

 

 

 

 

 

 

 

 

GYN Surgical

$112.2

$107.7

4.2%

5.2%

4.3%

3.8%

10.0%

 

 

 

 

 

 

 

 

Skeletal Health

$24.4

$22.5

8.2%

9.8%

4.5%

15.0%

19.6%

 

 

 

 

 

 

 

 

Total

$852.4

$824.0

3.4%

4.7%

4.2%

1.3%

6.2%

Total Revenue ex. Blood

$838.2

$805.4

4.1%

5.3%

5.0%

1.3%

6.2%

Other Financial Highlights

  • U.S. revenue of $642.5 million increased 4.2%. International revenue of $209.9 million increased 1.3%, or 6.2% in constant currency.
  • Gross margin was 52.2% on a GAAP basis, and 61.6% on a non-GAAP basis. Non-GAAP gross margin decreased 100 basis points, primarily due to unfavorable product sales mix, increased service costs, tariffs in China, and the stronger U.S. dollar.
  • Operating margin was 17.0% on a GAAP basis, and 29.2% on a non-GAAP basis. Non-GAAP operating margin increased 40 basis points, driven by higher gross profit dollars and lower operating expenses.
  • GAAP net income of $93.9 million decreased 16.8%. Non-GAAP net income of $171.6 million increased 7.9%.
  • Adjusted non-GAAP earnings before interest, taxes, depreciation and amortization (EBITDA) was $276.4 million, an increase of 5.6%.
  • Total debt outstanding at the end of the quarter was $3.1 billion. The Company ended the quarter with cash and equivalents of $427.9 million, and a net leverage ratio (net debt over adjusted EBITDA) of 2.5 times.
  • On a trailing 12 months basis, adjusted Return on Invested Capital (ROIC) of 12.5% increased 10 basis points compared to the prior year period.

Financial Guidance for Fiscal 2019

Based on its strong performance in the fiscal third quarter, Hologic is raising its full-year guidance for revenue and non-GAAP EPS slightly.

Hologic’s financial guidance for the fourth quarter and fiscal year 2019 is shown in the table below. The guidance is based on a full year non-GAAP tax rate of approximately 22%, and diluted shares outstanding of approximately 272 million for the full year. Constant currency guidance assumes that foreign exchange rates are the same in fiscal 2019 as in fiscal 2018. Current guidance assumes that recent foreign exchange rates persist for all of fiscal 2019. The Company’s pending acquisition of SuperSonic Imagine has not been finalized and is therefore not included in the guidance below.

 

Current Guidance

Previous Guidance

 

Constant

Currency %

Increase

(Decrease)

Reported %

Increase

(Decrease)

Guidance $

Constant

Currency %

Increase

(Decrease)

Reported %

Increase

(Decrease)

 

 

 

Guidance $

Fiscal 2019

 

 

 

 

 

 

Revenue

4.7% – 5.2%

3.6% – 4.1%

$3,335 – $3,350

4.3% – 4.9%

3.3% – 3.9%

$3,325 – $3,345

GAAP EPS

 

N.M.

$0.09 – $0.11

 

N.M.

$0.06 – $0.09

Non-GAAP EPS

 

8.5% to 9.4%

$2.42 – $2.44

 

8.1% – 9.4%

$2.41 – $2.44

 

 

 

 

 

 

 

Q4 2019

 

 

 

 

 

 

Revenue

3.5% – 5.3%

2.5% to 4.4%

$834 – $849

 

 

 

GAAP EPS

 

116.7% to 127.8%

$0.39 – $0.41

 

 

 

Non-GAAP EPS

 

10.3% to 13.8%

$0.64 – $0.66

 

 

 

Use of Non-GAAP Financial Measures

The Company has presented the following non-GAAP financial measures in this press release: constant currency revenues; non-GAAP gross margin; non-GAAP operating expenses; non-GAAP operating margin; non-GAAP net income; non-GAAP EPS; and adjusted EBITDA. The Company defines its non-GAAP net income, EPS, and other non-GAAP financial measures to exclude, as applicable: (i) the amortization of intangible assets and impairment of goodwill, intangible assets and equipment; (ii) additional depreciation expense from acquired fixed assets and accelerated depreciation related to consolidation and closure of facilities; (iii) additional expenses resulting from the purchase accounting adjustment to record inventory at fair value; (iv) non-cash interest expense related to amortization of the debt discount from the equity conversion option of convertible notes; (v) restructuring and divestiture charges and facility closure and consolidation charges and costs incurred to integrate acquisitions (including retention, transaction bonuses, legal and professional consulting services) and separate divested businesses from existing operations; (vi) transaction related expenses for divestitures and acquisitions; (vii) debt extinguishment losses and related transaction costs; (viii) the unrealized (gains) losses on the mark-to-market of forward foreign currency contracts for which the Company has not elected hedge accounting; (ix) litigation settlement charges (benefits) and non-income tax related charges (benefits); (x) other-than-temporary impairment losses on investments and realized gains resulting from the sale of investments; (xi) the one-time discrete impact of tax reform primarily related to remeasuring net deferred tax liabilities; (xii) other one-time, non-recurring, unusual or infrequent charges, expenses or gains that may not be indicative of the Company’s core business results; and (xiii) income taxes related to such adjustments. The Company defines adjusted EBITDA as its non-GAAP net income plus net interest expense, income taxes, and depreciation and amortization expense included in its non-GAAP net income.

These non-GAAP financial measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP. The company’s definition of these non-GAAP measures may differ from similarly titled measures used by others.

The non-GAAP financial measures used in this press release adjust for specified items that can be highly variable or difficult to predict. The company generally uses these non-GAAP financial measures to facilitate management’s financial and operational decision-making, including evaluation of Hologic’s historical operating results, comparison to competitors’ operating results and determination of management incentive compensation. These non-GAAP financial measures reflect an additional way of viewing aspects of the company’s operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures, may provide a more complete understanding of factors and trends affecting Hologic’s business.

Because non-GAAP financial measures exclude the effect of items that will increase or decrease the company’s reported results of operations, management strongly encourages investors to review the company’s consolidated financial statements and publicly filed reports in their entirety. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the tables accompanying this release.

Future Non-GAAP Adjustments:

Future GAAP EPS may be affected by changes in ongoing assumptions and judgments, and may also be affected by non-recurring, unusual or unanticipated charges, expenses or gains, which are excluded in the calculation of the Company’s non-GAAP EPS guidance as described in this press release.

Conference Call and Webcast

Hologic’s management will host a conference call at 4:30 p.m. ET today to discuss its financial results for the third quarter of fiscal 2019. Approximately 10 minutes before the call, dial 888-394-8218 (in the U.S.) or +1 323-794-2590 (international) and enter access code 3780734. A replay will be available approximately two hours after the call ends through Friday, August 23, 2019. The replay numbers are 888-203-1112 (U.S.) or +1 719-457-0820 (international), access code 3780734, PIN 2953. The Company will also provide a live webcast of the call at http://investors.hologic.com.

About Hologic, Inc.

Hologic, Inc. is an innovative medical technology company primarily focused on improving women’s health and well-being through early detection and treatment. For more information on Hologic, visit www.hologic.com.

Hologic, Aptima, Trident, ThinPrep, and associated logos are trademarks and/or registered trademarks of Hologic, Inc. and/or its subsidiaries in the United States and/or other countries.

Forward-Looking Statements

This news release contains forward-looking information that involves risks and uncertainties, including statements about the Company’s plans, objectives, expectations and intentions. Such statements include, without limitation: financial or other information included herein based upon or otherwise incorporating judgments or estimates relating to future performance, events or expectations; the Company’s strategies, positioning, resources, capabilities, and expectations for future performance; and the Company’s outlook and financial and other guidance. These forward-looking statements are based upon assumptions made by the Company as of the date hereof and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those anticipated.

Risks and uncertainties that could adversely affect the Company’s business and prospects, and otherwise cause actual results to differ materially from those anticipated, include without limitation: the ability of the Company to successfully manage leadership and organizational changes, including the ability of the Company to attract, motivate and retain key employees; U.S., European and general worldwide economic conditions, trade relations, and related uncertainties; the Company’s reliance on third-party reimbursement policies to support the sales and market acceptance of its products, including the possible adverse impact of government regulation and changes in the availability and amount of reimbursement and uncertainties for new products or product enhancements; changes to applicable laws and regulations, including tax laws, global health care reform, and import/export trade laws; changes in guidelines, recommendations and studies published by various organizations that could affect the use of the Company’s products; uncertainties inherent in the development of new products and the enhancement of existing products, including FDA approval and/or clearance and other regulatory risks, technical risks, cost overruns and delays; the risk that products may contain undetected errors or defects or otherwise not perform as anticipated; risks associated with strategic alliances and the ability of the Company to realize anticipated benefits of those alliances; risks associated with acquisitions, including, without limitation, the Company’s ability to successfully integrate acquired businesses, the risks that the acquired businesses may not operate as effectively and efficiently as expected even if otherwise successfully integrated, and the risks that acquisitions may involve unexpected costs or unexpected liabilities; the risks of conducting business internationally; the risk of adverse exchange rate fluctuations on the Company’s international activities and businesses; manufacturing risks, including the Company’s reliance on a single or limited source of supply for key components, the need to comply with especially high standards for the manufacture of many of its products and risks associated with utilizing third party manufacturers; the Company’s ability to predict accurately the demand for its products, and products under development, and to develop strategies to address its markets successfully; the early stage of market development for certain of the Company’s products; the Company’s leverage risks, including the Company’s obligation to meet payment obligations and financial covenants associated with its debt; cybersecurity risks; risks related to the use and protection of intellectual property; expenses, uncertainties and potential liabilities relating to litigation, including, without limitation, commercial, intellectual property, employment and product liability litigation; technical innovations that could render products marketed or under development by the Company obsolete; and competition.

The risks included above are not exhaustive. Other factors that could adversely affect the Company’s business and prospects are described in the filings made by the Company with the SEC. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements presented herein to reflect any change in expectations or any change in events, conditions or circumstances on which any such statements are based.

SOURCE: Hologic, Inc.

HOLOGIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In millions, except number of shares, which are reflected in thousands, and per share data)

 

 

Three Months Ended

 

Nine Months Ended

 

June 29, 2019

 

June 30, 2018

 

June 29, 2019

 

June 30, 2018

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Product

$

 

704.0

 

 

$

 

677.9

 

 

$

 

2,054.8

 

 

$

 

1,973.7

 

Service and other

 

148.4

 

 

 

146.1

 

 

 

446.6

 

 

 

430.8

 

Total revenues

 

852.4

 

 

 

824.0

 

 

 

2,501.4

 

 

 

2,404.5

 

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

Product

 

235.8

 

 

 

226.1

 

 

 

700.8

 

 

 

656.9

 

Amortization of acquired intangible assets

 

78.6

 

 

 

79.4

 

 

 

239.9

 

 

 

239.0

 

Impairment of intangible assets and equipment

 

 

 

 

 

374.6

 

 

 

Service and other

 

93.2

 

 

 

82.5

 

 

 

264.7

 

 

 

232.9

 

 

 

 

 

 

 

 

 

Gross profit

 

444.8

 

 

 

436.0

 

 

 

921.4

 

 

 

1,275.7

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

61.4

 

 

 

54.4

 

 

 

171.8

 

 

 

166.0

 

Selling and marketing

 

143.6

 

 

 

141.1

 

 

 

423.1

 

 

 

411.1

 

General and administrative

 

79.9

 

 

 

86.3

 

 

 

248.5

 

 

 

248.0

 

Amortization of acquired intangible assets

 

11.9

 

 

 

15.3

 

 

 

40.1

 

 

 

44.4

 

Impairment of intangible assets and equipment

 

 

 

 

 

69.2

 

 

 

46.0

 

Impairment of goodwill

 

 

 

 

 

 

 

685.7

 

Restructuring charges

 

2.7

 

 

 

5.8

 

 

 

6.0

 

 

 

11.4

 

Total operating expenses

 

299.5

 

 

 

302.9

 

 

 

958.7

 

 

 

1,612.6

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

145.3

 

 

 

133.1

 

 

 

(37.3

)

 

 

(336.9

)

Interest income

 

1.2

 

 

 

1.5

 

 

 

3.3

 

 

 

4.4

 

Interest expense

 

(35.1

)

 

 

(34.5

)

 

 

(106.0

)

 

 

(114.4

)

Debt extinguishment losses

 

 

 

 

 

(0.8

)

 

 

(45.9

)

Other income, net

 

2.9

 

 

 

5.2

 

 

 

5.8

 

 

 

2.9

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

114.3

 

 

 

105.3

 

 

 

(135.0

)

 

 

(489.9

)

Provision (benefit) for income taxes

 

20.4

 

 

 

(7.6

)

 

 

(54.9

)

 

 

(328.1

)

 

 

 

 

 

 

 

 

Net income (loss)

$

 

93.9

 

 

$

 

112.9

 

 

$

 

(80.1

)

 

$

 

(161.8

)

 

 

 

 

 

 

 

 

Net income (loss) per common share:

 

 

 

 

 

 

 

Basic

$

 

0.35

 

 

$

 

0.41

 

 

$

 

(0.30

)

 

$

 

(0.59

)

Diluted

$

 

0.35

 

 

$

 

0.41

 

 

$

 

(0.30

)

 

$

 

(0.59

)

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

Basic

 

268,932

 

 

 

273,729

 

 

 

269,586

 

 

 

275,900

 

Diluted

 

270,789

 

 

 

275,569

 

 

 

269,586

 

 

 

275,900

 

HOLOGIC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)

 

 

June 29, 2019

 

September 29, 2018

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

 

427.9

 

 

$

 

666.7

 

Accounts receivable, net

 

586.8

 

 

 

579.2

 

Inventories

 

467.9

 

 

 

384.1

 

Other current assets

 

109.2

 

 

 

93.2

 

Total current assets

 

1,591.8

 

 

 

1,723.2

 

 

 

 

 

Property, plant and equipment, net

 

469.8

 

 

 

478.2

 

Goodwill and intangible assets, net

 

4,354.3

 

 

 

4,931.8

 

Other assets

 

106.5

 

 

 

97.7

 

Total assets

$

 

6,522.4

 

 

$

 

7,230.9

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

 

262.0

 

 

$

 

599.7

 

Accounts payable and accrued liabilities

 

582.6

 

 

 

630.0

 

Deferred revenue

 

170.6

 

 

 

172.9

 

Total current liabilities

 

1,015.2

 

 

 

1,402.6

 

 

 

 

 

Long-term debt, net of current portion

 

2,791.6

 

 

 

2,704.6

 

Deferred income taxes

 

312.7

 

 

 

498.2

 

Other long-term liabilities

 

186.4

 

 

 

196.7

 

Total stockholders’ equity

 

2,216.5

 

 

 

2,428.8

 

Total liabilities and stockholders’ equity

$

 

6,522.4

 

 

$

 

7,230.9

 

HOLOGIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in millions)

 

 

Nine Months Ended

 

June 29, 2019

 

June 30, 2018

OPERATING ACTIVITIES

 

 

 

Net loss

$

 

(80.1

)

 

$

 

(161.8

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation

 

69.7

 

 

 

77.8

 

Amortization of acquired intangibles

 

280.0

 

 

 

283.4

 

Non-cash interest expense

 

6.2

 

 

 

13.1

 

Stock-based compensation expense

 

48.5

 

 

 

53.1

 

Deferred income taxes

 

(194.8

)

 

 

(470.3

)

Goodwill impairment charge

 

 

 

685.7

 

Intangible asset and equipment impairment charges

 

443.8

 

 

 

46.0

 

Debt extinguishment loss

 

0.8

 

 

 

45.9

 

Fair value write-up of acquired inventory sold

 

5.4

 

 

 

Other adjustments and non-cash items

 

11.9

 

 

 

6.8

 

Changes in operating assets and liabilities, excluding the effect of acquisitions:

 

 

 

Accounts receivable

 

(9.7

)

 

 

(13.8

)

Inventories

 

(81.7

)

 

 

(39.3

)

Prepaid income taxes

 

(11.5

)

 

 

(21.9

)

Prepaid expenses and other assets

 

(11.8

)

 

 

0.3

 

Accounts payable

 

(30.9

)

 

 

0.4

 

Accrued expenses and other liabilities

 

(47.9

)

 

 

(8.6

)

Deferred revenue

 

3.9

 

 

 

3.7

 

Net cash provided by operating activities

 

401.8

 

 

 

500.5

 

INVESTING ACTIVITIES

 

 

 

Acquisition of businesses, net of cash acquired

 

(109.4

)

 

 

(4.4

)

Capital expenditures

 

(37.8

)

 

 

(37.9

)

Increase in equipment under customer usage agreements

 

(39.9

)

 

 

(35.6

)

Purchase of cost-method investment

 

(3.0

)

 

 

(6.0

)

Purchase of intellectual property

 

(4.5

)

 

 

Other activity

 

(5.3

)

 

 

(3.8

)

Net cash used in investing activities

 

(199.9

)

 

 

(87.7

)

FINANCING ACTIVITIES

 

 

 

Proceeds from long-term debt

 

1,500.0

 

 

 

1,500.0

 

Repayment of long-term debt

 

(1,462.5

)

 

 

(1,350.0

)

Proceeds from senior notes

 

 

 

1,350.0

 

Repayment of senior notes

 

 

 

(1,037.7

)

Payments to extinguish convertible notes

 

 

 

(546.2

)

Proceeds from amounts borrowed under revolving credit line

 

480.0

 

 

 

960.0

 

Repayments of amounts borrowed under revolving credit line

 

(780.0

)

 

 

(1,065.0

)

Proceeds from accounts receivable securitization agreement

 

43.0

 

 

 

28.8

 

Repayment of amounts borrowed under accounts receivable securitization agreement

 

(34.0

)

 

 

(9.0

)

Payment of debt issuance costs

 

(2.7

)

 

 

(23.5

)

Purchase of interest rate caps

 

(1.5

)

 

 

(3.7

)

Payment of acquired long-term debt

 

(2.5

)

 

 

Payment of deferred acquisition consideration

 

(2.6

)

 

 

Repurchase of common stock

 

(200.1

)

 

 

(187.3

)

Proceeds from issuance of common stock pursuant to employee stock plans

 

35.9

 

 

 

24.1

 

Payment of minimum tax withholdings on net share settlements of equity awards

 

(12.4

)

 

 

(16.1

)

Payments under capital lease obligations

 

(1.3

)

 

 

(1.3

)

Net cash used in financing activities

 

(440.7

)

 

 

(376.9

)

Effect of exchange rate changes on cash and cash equivalents

 

 

 

(1.1

)

Net (decrease) increase in cash and cash equivalents

 

(238.8

)

 

 

34.8

 

Cash and cash equivalents, beginning of period

 

666.7

 

 

 

540.6

 

Cash and cash equivalents, end of period

$

 

427.9

 

 

$

 

575.4

 

HOLOGIC, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(Unaudited)

(In millions, except earnings per share and margin percentages)

 

 

Three Months Ended

Nine Months Ended

 

June 29, 2019

 

June 30, 2018

 

June 29, 2019

 

June 30, 2018

 

 

 

 

 

 

 

 

Gross Profit:

 

 

 

 

 

 

 

GAAP gross profit

$

444.8

 

 

$

436.0

 

 

$

921.4

 

 

$

1,275.7

 

Adjustments:

 

 

 

 

 

 

 

Amortization of acquired intangible assets (1)

78.6

 

 

79.4

 

 

239.9

 

 

239.0

 

Incremental depreciation expense (2)

0.1

 

 

0.2

 

 

0.3

 

 

0.5

 

Integration/consolidation costs (3)

 

 

0.5

 

 

 

 

0.5

 

Impairment of intangible assets and equipment (17)

 

 

 

 

374.6

 

 

 

Fair value write-up of acquired inventory (12)

1.8

 

 

 

 

5.4

 

 

 

Non-GAAP gross profit

$

525.3

 

 

$

516.1

 

 

$

1,541.6

 

 

$

1,515.7

 

 

 

 

 

 

 

 

 

Gross Margin Percentage:

 

 

 

 

 

 

 

GAAP gross margin percentage

52.2

%

 

52.9

%

 

36.8

%

 

53.1

%

Impact of adjustments above

9.4

%

 

9.7

%

 

24.8

%

 

9.9

%

Non-GAAP gross margin percentage

61.6

%

 

62.6

%

 

61.6

%

 

63.0

%

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

GAAP operating expenses

$

299.5

 

 

$

302.9

 

 

$

958.7

 

 

$

1,612.6

 

Adjustments:

 

 

 

 

 

 

 

Amortization of acquired intangible assets (1)

(11.9

)

 

(15.3

)

 

(40.1

)

 

(44.4

)

Incremental depreciation expense (2)

(0.3

)

 

(1.6

)

 

(1.0

)

 

(6.7

)

Transaction expenses (4)

(1.9

)

 

(0.6

)

 

(3.2

)

 

(1.4

)

Non-income tax benefit (9)

 

 

 

 

 

 

4.0

 

Litigation settlements (19)

 

 

 

 

(4.5

)

 

 

Integration/consolidation costs (3)

(1.8

)

 

(0.6

)

 

(6.3

)

 

(1.7

)

Restructuring charges (3)

(2.7

)

 

(5.8

)

 

(6.0

)

 

(11.4

)

Purchased research and development asset charges (16)

(4.5

)

 

 

 

(4.5

)

 

(1.7

)

Impairment of intangible assets and equipment (17)

 

 

 

 

(69.2

)

 

(46.0

)

Impairment of goodwill (18)

 

 

 

 

 

 

(685.7

)

Non-GAAP operating expenses

$

276.4

 

 

$

279.0

 

 

$

823.9

 

 

$

817.6

 

 

 

 

 

 

 

 

 

Operating Margin:

 

 

 

 

 

 

 

GAAP income (loss) from operations

$

145.3

 

 

$

133.1

 

 

$

(37.3

)

 

$

(336.9

)

Adjustments to gross profit as detailed above

80.5

 

 

80.1

 

 

620.2

 

 

240.0

 

Adjustments to operating expenses as detailed above

23.1

 

 

23.9

 

 

134.8

 

 

795.0

 

Non-GAAP income from operations

$

248.9

 

 

$

237.1

 

 

$

717.7

 

 

$

698.1

 

 

 

 

 

 

 

 

 

Operating Margin Percentage:

 

 

 

 

 

 

 

GAAP income (loss) from operations margin percentage

17.0

%

 

16.2

%

 

(1.5)

%

 

(14.0)

%

Impact of adjustments above

12.2

%

 

12.6

%

 

30.2

%

 

43.0

%

Non-GAAP operating margin percentage

29.2

%

 

28.8

%

 

28.7

%

 

29.0

%

 

 

 

 

 

 

 

 

Interest Expense:

 

 

 

 

 

 

 

GAAP interest expense

$

35.1

 

 

$

34.5

 

 

$

106.0

 

 

$

114.4

 

Adjustments:

 

 

 

 

 

 

 

Non-cash interest expense relating to convertible notes (5)

 

 

 

 

 

 

(3.5

)

Debt transaction costs (10)

 

 

 

 

(0.8

)

 

(4.3

)

Non-GAAP interest expense

$

35.1

 

 

$

34.5

 

 

$

105.2

 

 

$

106.6

 

Pre-Tax Income (Loss):

 

 

 

 

 

 

 

GAAP pre-tax income (loss)

$

114.3

 

 

$

105.3

 

 

$

(135.0

)

 

$

(489.9

)

Adjustments to pre-tax earnings as detailed above

103.6

 

 

104.0

 

 

755.8

 

 

1,042.8

 

Debt extinguishment losses (6)

 

 

 

 

0.8

 

 

45.9

 

(Gain) loss on sale of investment securities (7)

 

 

 

 

(0.8

)

 

0.6

 

Unrealized losses (gains) on forward foreign currency contracts (8)

2.1

 

 

(4.7

)

 

0.1

 

 

(4.4

)

Non-GAAP pre-tax income

$

220.0

 

 

$

204.6

 

 

$

620.9

 

 

$

595.0

 

 

 

 

 

 

 

 

 

Net Income (Loss):

 

 

 

 

 

 

 

GAAP net income (loss)

$

93.9

 

 

$

112.9

 

 

$

(80.1

)

 

$

(161.8

)

Adjustments:

 

 

 

 

 

 

 

Amortization of acquired intangible assets (1)

90.5

 

 

94.7

 

 

280.0

 

 

283.4

 

Fair value write-up of acquired inventory sold (12)

1.8

 

 

 

 

5.4

 

 

 

Non-cash interest expense related to convertible notes (5)

 

 

 

 

 

 

3.5

 

Restructuring, integration/consolidation costs and transaction expenses (3) (4)

6.4

 

 

7.5

 

 

15.5

 

 

15.0

 

Non-income tax expense (benefit) (9)

 

 

 

 

 

 

(4.0

)

Incremental depreciation expense (2)

0.4

 

 

1.8

 

 

1.3

 

 

7.2

 

Impairment of intangible assets and equipment (17)

 

 

 

 

443.8

 

 

46.0

 

Impairment of goodwill (18)

 

 

 

 

 

 

685.7

 

Purchased research and development asset charges (16)

4.5

 

 

 

 

4.5

 

 

1.7

 

Debt related expenses (5) (6) (10)

 

 

 

 

1.6

 

 

50.2

 

Litigation settlements (19)

 

 

 

 

4.5

 

 

 

Non-operating losses (gains) (7) (8)

2.1

 

 

(4.7

)

 

(0.7

)

 

(3.8

)

Discrete impact of tax reform (11)

 

 

(27.4

)

 

5.0

 

 

(354.5

)

Tax benefit of internal reorganization (15)

 

 

 

 

(19.2

)

 

 

Income tax effect of reconciling items (13)

(28.0

)

 

(25.7

)

 

(177.3

)

 

(108.9

)

Non-GAAP net income

$

171.6

 

 

$

159.1

 

 

$

484.3

 

 

$

459.7

 

 

 

 

 

 

 

 

 

Net Income (Loss) Percentage:

 

 

 

 

 

 

 

GAAP net income (loss) percentage

11.0

%

 

13.7

%

 

(3.2)

%

 

(6.7)

%

Impact of adjustments above

9.1

%

 

5.6

%

 

22.6

%

 

25.8

%

Non-GAAP net income percentage

20.1

%

 

19.3

%

 

19.4

%

 

19.1

%

 

 

 

 

 

 

 

 

Earnings (Loss) Per Share:

 

 

 

 

 

 

 

GAAP loss per share – Diluted

$

0.35

 

 

$

0.41

 

 

$

(0.30

)

 

$

(0.59

)

Adjustment to net loss (as detailed above)

0.28

 

 

0.17

 

 

2.08

 

 

2.24

 

Non-GAAP earnings per share – diluted (14)

$

0.63

 

 

$

0.58

 

 

$

1.78

 

 

$

1.65

 

 

 

 

 

 

 

 

 

Adjusted EBITDA:

 

 

 

 

 

 

 

Non-GAAP net income

$

171.6

 

 

$

159.1

 

 

$

484.3

 

 

$

459.7

 

Interest expense, net, not adjusted above

33.9

 

 

33.0

 

 

101.9

 

 

102.2

 

Provision for income taxes

48.4

 

 

45.6

 

 

136.6

 

 

135.4

 

Depreciation expense, not adjusted above

22.5

 

 

24.0

 

 

68.5

 

 

70.6

 

Adjusted EBITDA

$

276.4

 

 

$

261.7

 

 

$

791.3

 

 

$

767.9

 

Contacts

Michael Watts

Vice President, Investor Relations and Corporate Communications

(858) 410-8588

[email protected]

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