MARLBOROUGH, Mass.,
Feb. 1, 2017 /PRNewswire/
-- Hologic, Inc. (Nasdaq: HOLX) announced today the Company's
financial results for the fiscal first quarter ended December 31, 2016. GAAP diluted
earnings per share (EPS) of $0.30
increased 3.4% compared to the prior year period, while non-GAAP
diluted EPS of $0.52 increased
13.0%. Revenue of $734.4
million increased 5.6%, or 6.3% in constant currency
terms.
"We are pleased with our first quarter financial results," said
Steve MacMillan, Hologic's Chairman,
President and Chief Executive Officer. "Revenue and earnings
per share exceeded our guidance. Our international businesses
continued to improve, while new products are in the early stages of
adding to growth. And we completed the divestiture of our
blood screening business, which we expect to accelerate top- and
bottom-line growth."
Key financial results for the fiscal first quarter are shown
below:
|
GAAP
|
Non-GAAP
|
|
Q1'17
|
Q1'16
|
Change
Increase
(Decrease)
|
Q1'17
|
Q1'16
|
Change
Increase
(Decrease)
|
Revenues
|
$734.4
|
$695.2
|
5.6%
|
$734.4
|
$695.2
|
5.6%
|
Gross
Margin
|
55.1%
|
54.5%
|
60 bps
|
65.2%
|
65.2%
|
0 bps
|
Operating
Expenses
|
$258.8
|
$253.0
|
2.3%
|
$231.1
|
$221.0
|
4.6%
|
Operating
Margin
|
19.9%
|
18.1%
|
180 bps
|
33.7%
|
33.4%
|
30 bps
|
Net Margin
|
11.8%
|
12.2%
|
(40 bps)
|
20.2%
|
19.4%
|
80 bps
|
Diluted
EPS
|
$0.30
|
$0.29
|
3.4%
|
$0.52
|
$0.46
|
13.0%
|
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 presentations
exclude a number of cash and non-cash items as discussed below
under "Use of Non-GAAP Financial Measures."
Revenue Detail
Revenue growth in the first quarter was led by the GYN Surgical
division, while the molecular diagnostics and Breast Health
franchises also performed well. As previously disclosed, and
compared to the prior year period, growth rates benefited from the
inclusion of extra selling days between the Christmas and
New Year's holidays.
$s in
millions
|
Q1'17
|
Q1'16
|
Reported
Change
|
Foreign Currency
Effect
$
%
|
Constant
Currency
Change
|
Cytology &
Perinatal
|
$120.3
|
$120.4
|
(0.1%)
|
$1.4
|
1.2%
|
1.1%
|
Molecular
Diagnostics
|
$139.9
|
$129.6
|
7.9%
|
$1.1
|
0.9%
|
8.8%
|
Blood
Screening
|
$65.2
|
$60.7
|
7.4%
|
-
|
-
|
7.4%
|
Total
Diagnostics
|
$325.4
|
$310.7
|
4.7%
|
$2.5
|
0.8%
|
5.5%
|
Breast Imaging
|
$226.7
|
$218.1
|
3.9%
|
$0.7
|
0.3%
|
4.2%
|
Interventional Breast
Solutions
|
$44.6
|
$42.1
|
6.1%
|
$0.1
|
0.3%
|
6.4%
|
Other
|
$2.0
|
$2.0
|
0.8%
|
$0.0
|
1.2%
|
2.0%
|
Total Breast
Health
|
$273.3
|
$262.2
|
4.2%
|
$0.8
|
0.4%
|
4.6%
|
GYN
Surgical
|
$114.8
|
$98.8
|
16.2%
|
$0.9
|
1.0%
|
17.2%
|
Skeletal
Health
|
$20.9
|
$23.5
|
(10.8%)
|
($0.0)
|
0.1%
|
(10.7%)
|
Total
|
$734.4
|
$695.2
|
5.6%
|
$4.2
|
0.7%
|
6.3%
|
Other quarterly revenue highlights:
- U.S. sales of $573.6 million
increased 5.2%, continuing strong recent trends.
- International sales of $160.8
million increased 7.2%, or 10.0% in constant currency, led
by strong growth in blood screening, molecular diagnostics and GYN
Surgical. Excluding blood screening, international sales increased
2.7%, or 6.1% in constant currency.
- GYN Surgical revenue of $114.8
million increased 16.2%, or 17.2% in constant currency.
MyoSure® system sales of $48.3
million increased 31.2%, or 32.1% in constant currency.
NovaSure® sales of $66.4 million
increased 7.7%, or 8.6% in constant currency.
- Breast Health revenue totaled $273.3
million, an increase of 4.2%, or 4.6% in constant currency.
Revenue in the United States
increased 5.5%, driven by increases in service revenue and new
product sales that supplemented continued adoption of Hologic's
Genius™ 3D Mammography™ systems.
- In Diagnostics:
- Molecular diagnostics sales of $139.9
million increased 7.9%, or 8.8% in constant currency. Growth
was driven primarily by continued strength across Aptima® women's
health products on the fully automated Panther® and Tigris®
platforms, both in the United
States and internationally.
- Cytology and perinatal sales of $120.3
million decreased (0.1%) on a reported basis, but increased
1.1% in constant currency.
- Blood screening revenue totaled $65.2
million, an increase of 7.4% on both a reported and constant
currency basis that was driven by Zika-related sales and strong
international ordering patterns.
- In Skeletal Health, revenue of $20.9
million decreased (10.8%), or (10.7%) in constant currency,
primarily due to lower volumes.
Segment revenue highlights by geography are shown below:
|
|
International
Change
|
Foreign Currency
Effect
|
International
Change
(Constant
Currency)
|
|
U.S.
Change
|
(Reported)
|
$
|
%
|
|
|
Increase
(Decrease)
|
Diagnostics
|
2.8%
|
10.0%
|
$2.5
|
3.0%
|
13.0%
|
Breast
Health
|
5.5%
|
(1.4%)
|
$0.8
|
1.7%
|
0.3%
|
GYN
Surgical
|
16.3%
|
15.8%
|
$0.9
|
7.0%
|
22.8%
|
Skeletal
Health
|
(23.2%)
|
16.1%
|
$0.0
|
0.3%
|
16.4%
|
Total
Revenues
|
5.2%
|
7.2%
|
$4.2
|
2.8%
|
10.0%
|
First Quarter Expense Detail
Gross margin was 55.1% on a GAAP basis, and 65.2% on a non-GAAP
basis. GAAP gross margin improved by 60 basis points, while
non-GAAP gross margin was flat, as a favorable product mix was
offset by increased international sales and unfavorable currency
fluctuations.
Operating expenses were $258.8
million on a GAAP basis, and $231.1
million on a non-GAAP basis. GAAP operating
expenses increased 2.3%, while non-GAAP operating expenses
increased 4.6%, mainly due to higher marketing spending, increased
compensation and an additional week of expenses.
Hologic's effective tax rate was 25.5% on a GAAP basis, and
31.0% on a non-GAAP basis.
Other Key Financial Results
GAAP net income was $86.5 million,
an increase of 1.8%. Adjusted non-GAAP earnings before
interest, taxes, depreciation and amortization (EBITDA) were
$269.1 million, an increase of
6.8%.
Operating cash flow was $169.6
million. Free cash flow, defined as operating cash
flow less capital expenditures, was $144.9
million.
Total debt outstanding at the end of the quarter was
$3.3 billion, a decrease of
($0.3) billion compared to the prior
year period.
The Company ended the quarter with cash and cash equivalents of
$646 million.
The combination of lower debt and EBITDA growth helped improve
Hologic's leverage ratio (net debt over adjusted EBITDA) to 2.6 in
the quarter.
Strong profit growth and lower debt have continued to improve
Hologic's adjusted return on invested capital (ROIC). On a
trailing 12 months basis, ROIC of 13.1% improved 180 basis points
compared to the prior year period.
Financial Guidance for Fiscal 2017
"We are updating our 2017 financial guidance based on our good
first-quarter results, the divestiture of our blood screening
business, and a revenue headwind of more than $20 million from a stronger U.S. dollar," said
Bob McMahon, the Company's chief
financial officer. "Underlying our forecast, our expectations
for our ongoing, base business are consistent with our initial
constant currency guidance."
Hologic's financial guidance is based on a full year non-GAAP
tax rate of approximately 31%, and diluted shares outstanding of
between 287 and 289 million for the full year. Constant
currency guidance assumes that foreign exchange rates are the same
in fiscal 2017 as in fiscal 2016. Current guidance assumes
that recent foreign exchange rates persist for all of fiscal
2017.
Hologic's financial guidance for fiscal 2017 is shown in the two
tables immediately below. In these tables, the "Current
Guidance" rows include revenues and EPS from the divested blood
screening business for part of the year, while the "Previous
Guidance" rows include these contributions for the full
year.
|
GAAP
|
|
|
Revenue
|
EPS
|
|
Reported %
Increase
(Decrease)
|
Guidance $
|
Reported %
Increase
(Decrease)
|
Guidance $
|
Current Guidance
for
Fiscal 2017
|
(1.7%) to
(0.3%)
|
$2.785 to $2.825
billion
|
135.3% to
138.8%
|
$2.73 to
$2.77
|
Previous Guidance
for
Fiscal 2017
|
3.8% to
5.2%
|
$2.94 to $2.98
billion
|
6.0% to
9.5%
|
$1.23 to
$1.27
|
|
|
Non-GAAP
|
Revenue
|
EPS
|
|
Constant
Currency %
Increase
(Decrease)
|
Reported %
Increase
(Decrease)
|
Guidance $
|
Constant
Currency %
Increase
(Decrease)
|
Reported %
Increase
(Decrease)
|
Guidance $
|
Current Guidance
for
Fiscal 2017
|
(0.7%) to
0.7%
|
(1.7%) to
(0.3%)
|
$2.785 to $2.825
billion
|
(1.5%) to
0.6%
|
(3.1%) to
(1.0%)
|
$1.90 to
$1.94
|
Previous Guidance
for
Fiscal 2017
|
4.0% to
5.5%
|
3.8% to
5.2%
|
$2.94 to $2.98
billion
|
8.5% to
10.6%
|
8.2% to
10.2%
|
$2.12 to
$2.16
|
Hologic's financial guidance for the second quarter of fiscal
2017 is shown in the two tables immediately below. In these
tables, revenues and EPS from the divested blood screening business
are included for part of the quarter, while the prior year period
included these contributions for the full
quarter.
|
GAAP
|
|
|
Revenue
|
EPS
|
|
Reported %
Increase
(Decrease)
|
Guidance $
|
Reported %
Increase
(Decrease)
|
Guidance $
|
Current Guidance for
the
Second Quarter of Fiscal 2017
|
(2.6%) to
(1.2%)
|
$675 to $685
million
|
670.8% to
675%
|
$1.85 to
$1.86
|
|
|
Non-GAAP
|
Revenue
|
EPS
|
|
Constant
Currency %
Increase
(Decrease)
|
Reported %
Increase
(Decrease)
|
Guidance $
|
Constant
Currency %
Increase
(Decrease)
|
Reported %
Increase
(Decrease)
|
Guidance $
|
Current Guidance for
the
Second Quarter of Fiscal 2017
|
(1.7%) to
(0.3%)
|
(2.6%) to
(1.2%)
|
$675 to $685
million
|
(2.7%) to
(0.5%)
|
(4.3%) to
(2.1%)
|
$0.45 to
$0.46
|
"Going forward, we forecast that the divestiture of the blood
screening business will accelerate both our top- and bottom-line
growth rates," Mr. McMahon said. To illustrate this point,
and to assist with "apples to apples" analyses of Hologic's
ongoing, base business, the historical contributions of blood
screening to Hologic's quarterly revenues and EPS are shown
below:
|
GAAP
|
|
2016
|
2017
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Total
|
Q1
|
Revenue
|
$60.7
|
$62.2
|
$55.9
|
$56.6
|
$235.4
|
$65.2
|
EPS
|
$0.06
|
$0.06
|
$0.05
|
$0.05
|
$0.22
|
$0.06
|
|
|
Non-GAAP
|
|
2016
|
2017
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Total
|
Q1
|
Revenue
|
$60.7
|
$62.2
|
$55.9
|
$56.6
|
$235.4
|
$65.2
|
EPS
|
$0.10
|
$0.10
|
$0.09
|
$0.09
|
$0.37
|
$0.10
|
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 profit; non-GAAP gross margin; non-GAAP operating
expenses; non-GAAP income from operations; non-GAAP operating
margin; non-GAAP interest expense;
non-GAAP pre-tax income; non-GAAP net margin; non-GAAP net
income; non-GAAP diluted EPS;
adjusted EBITDA and return on
invested capital. Constant currency presentations show
reported period operating results as if the foreign exchange rates
remain the same as those in effect in the comparable prior year
period. 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
and intangible assets; (ii) additional depreciation expense from
acquired fixed assets and accelerated depreciation related to
consolidation and closure of facilities ; (iii) non-cash interest
expense related to amortization of the debt discount from the
equity conversion option of the convertible notes; (iv)
restructuring and divestiture charges and facility closure and
consolidation charges; (v) transaction related expenses for
divestitures and acquisitions (vi) debt extinguishment losses
and related transaction costs; (vii) the unrealized (gains) losses
on the mark-to-market of forward foreign currency contracts for
which the Company has not elected hedge accounting; (viii)
litigation settlement charges (benefits); (ix) other-than-temporary
impairment losses on investments and realized gains and (losses)
resulting from the sale of investments; (x) other one-time,
non-recurring, unusual or infrequent charges, expenses or gains
that may not be indicative of the Company's core business results
as detailed in our reconciliations of such adjustments; and (xi)
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 first quarter of fiscal 2017. Approximately
10 minutes before the call, dial 877-741-4248 (U.S. and
Canada) or 719-325-4816
(international) and enter access code 9811570. A replay will
be available starting two hours after the call ends through
February 24, 2017 at 888-203-1112
(U.S. and Canada) or 719-457-0820
(international), access code 9811570, Pin 9876. The Company
will also provide a live webcast of the call at
http://investors.hologic.com.
About Hologic, Inc.
Hologic, Inc. is a leading developer, manufacturer and supplier
of premium diagnostic products, medical imaging systems and
surgical products. The Company's core business units focus on
diagnostics, breast health, GYN surgical, and skeletal
health. With a unified suite of technologies and a robust
research and development program, Hologic is dedicated to The
Science of Sure. For more information on Hologic, visit
www.hologic.com.
Hologic, Genius 3D Mammography, Aptima, ThinPrep, MyoSure,
NovaSure, Panther, Tigris, The Science of Sure, 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 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; uncertainties regarding healthcare reform
legislation, including associated tax provisions, or budget
reduction or other cost containment efforts; 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; 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.
Contact
Michael Watts
Vice President, Investor Relations and Corporate Communications
(858) 410-8588
HOLOGIC,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In millions, except number of shares, which are reflected in
thousands, and per share data)
|
|
|
Three Months
Ended
|
|
December 31,
2016
|
|
December 26,
2015
|
|
|
|
|
Revenues:
|
|
|
|
Product
|
$
|
613.4
|
|
|
$
|
587.2
|
|
Service and
other
|
121.0
|
|
|
108.0
|
|
Total
revenues
|
734.4
|
|
|
695.2
|
|
|
|
|
|
Cost of
revenues:
|
|
|
|
Product
|
198.3
|
|
|
188.2
|
|
Amortization of
intangible assets
|
73.5
|
|
|
73.4
|
|
Service and
other
|
57.8
|
|
|
54.5
|
|
|
|
|
|
Gross
profit
|
404.8
|
|
|
379.1
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
Research and
development
|
54.4
|
|
|
51.7
|
|
Selling and
marketing
|
110.0
|
|
|
99.4
|
|
General and
administrative
|
69.8
|
|
|
77.0
|
|
Amortization of
intangible assets
|
21.4
|
|
|
22.6
|
|
Restructuring and
divestiture charges
|
3.2
|
|
|
2.3
|
|
Total operating
expenses
|
258.8
|
|
|
253.0
|
|
|
|
|
|
Income from
operations
|
146.0
|
|
|
126.1
|
|
Interest
income
|
0.3
|
|
|
0.2
|
|
Interest
expense
|
(40.4)
|
|
|
(39.2)
|
|
Other income,
net
|
10.2
|
|
|
27.6
|
|
|
|
|
|
Income before income
taxes
|
116.1
|
|
|
114.7
|
|
Provision for income
taxes
|
29.6
|
|
|
29.8
|
|
|
|
|
|
Net
income
|
$
|
86.5
|
|
|
$
|
84.9
|
|
|
|
|
|
Net income per
common share:
|
|
|
|
Basic
|
$
|
0.31
|
|
|
$
|
0.30
|
|
Diluted
|
$
|
0.30
|
|
|
$
|
0.29
|
|
|
|
|
|
Weighted average
number of shares outstanding:
|
|
|
|
Basic
|
278,663
|
|
|
282,976
|
|
Diluted
|
284,224
|
|
|
291,971
|
|
HOLOGIC,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In
millions)
|
|
|
December 31,
2016
|
|
September 24,
2016
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
646.0
|
|
|
$
|
548.4
|
|
Accounts receivable,
net
|
419.9
|
|
|
447.0
|
|
Inventories
|
258.3
|
|
|
274.7
|
|
Other current
assets
|
85.4
|
|
|
56.5
|
|
Assets held for
sale
|
928.5
|
|
|
—
|
|
Total current
assets
|
2,338.1
|
|
|
1,326.6
|
|
|
|
|
|
Property, plant and
equipment, net
|
432.6
|
|
|
460.2
|
|
Goodwill and
intangible assets
|
4,480.2
|
|
|
5,446.5
|
|
Other
assets
|
86.9
|
|
|
83.7
|
|
Total
assets
|
$
|
7,337.8
|
|
|
$
|
7,317.0
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term debt
|
$
|
707.3
|
|
|
$
|
296.0
|
|
Accounts payable and
accrued liabilities
|
437.6
|
|
|
444.5
|
|
Deferred
revenue
|
145.8
|
|
|
161.4
|
|
Total current
liabilities
|
1,290.7
|
|
|
901.9
|
|
|
|
|
|
Long-term debt, net
of current portion
|
2,615.6
|
|
|
3,049.4
|
|
Deferred income
taxes
|
958.9
|
|
|
982.6
|
|
Other long-term
liabilities
|
244.0
|
|
|
240.4
|
|
Total stockholders'
equity
|
2,228.6
|
|
|
2,142.7
|
|
Total liabilities
and stockholders' equity
|
$
|
7,337.8
|
|
|
$
|
7,317.0
|
|
HOLOGIC,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in
millions)
|
|
|
Three Months
Ended
|
|
|
December 31,
2016
|
|
December 26,
2015(a)
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net income
|
$
|
86.5
|
|
|
$
|
84.9
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation
|
20.4
|
|
|
19.9
|
|
|
Amortization
|
94.9
|
|
|
96.0
|
|
|
Non-cash interest
expense
|
14.3
|
|
|
13.2
|
|
|
Stock-based
compensation expense
|
19.2
|
|
|
15.9
|
|
|
Deferred income
taxes
|
(24.6)
|
|
|
(28.0)
|
|
|
Gain on sale of
available-for-sale marketable security
|
—
|
|
|
(25.1)
|
|
|
Other adjustments and
non-cash items
|
(6.0)
|
|
|
(0.2)
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts
receivable
|
21.5
|
|
|
4.3
|
|
|
Inventories
|
(20.7)
|
|
|
(3.6)
|
|
|
Prepaid income
taxes
|
(0.8)
|
|
|
21.7
|
|
|
Prepaid expenses and
other assets
|
(17.4)
|
|
|
(7.7)
|
|
|
Accounts
payable
|
(17.8)
|
|
|
(4.9)
|
|
|
Accrued expenses and
other liabilities
|
14.6
|
|
|
(9.8)
|
|
|
Deferred
revenue
|
(14.5)
|
|
|
(5.2)
|
|
|
Net cash (used in)
provided by operating activities
|
169.6
|
|
|
171.4
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
Purchase of property
and equipment
|
(11.5)
|
|
|
(9.1)
|
|
|
Increase in equipment
under customer usage agreements
|
(13.2)
|
|
|
(10.6)
|
|
|
Proceeds from sale of
available-for-sale marketable security
|
0.4
|
|
|
31.1
|
|
|
Increase in other
assets
|
(0.9)
|
|
|
0.9
|
|
|
Net cash (used in) provided
by investing activities
|
(25.2)
|
|
|
12.3
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
Repayment of
long-term debt
|
(18.8)
|
|
|
(18.8)
|
|
|
Repayment of amounts
borrowed under accounts receivable securitization
program
|
(12.0)
|
|
|
—
|
|
|
Payments to
extinguish convertible notes
|
(6.4)
|
|
|
(0.1)
|
|
|
Net proceeds from
issuance of common stock pursuant to employee stock
plans
|
13.2
|
|
|
11.1
|
|
|
Payment of minimum
tax withholdings on net share settlements of equity
awards
|
(16.4)
|
|
|
(14.9)
|
|
|
Net cash used in
financing activities
|
(40.4)
|
|
|
(22.7)
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(6.4)
|
|
|
(2.0)
|
|
|
Net increase in cash
and cash equivalents
|
97.6
|
|
|
159.0
|
|
|
Cash and cash
equivalents, beginning of period
|
548.4
|
|
|
491.3
|
|
|
Cash and cash
equivalents, end of period
|
$
|
646.0
|
|
|
$
|
650.3
|
|
|
|
|
(a) The statement of
cash flows for the prior year period has been recasted to reflect
the adoption of ASU 2016-09 as the Company has retrospectively
adopted the presentation requirement of the excess tax benefit
related to equity awards. As a result, cash provided by
operating activities increased $7.1 million with a corresponding
increase in cash used in financing activities.
|
HOLOGIC,
INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(Unaudited)
(In millions, except
earnings per share and margin percentages)
|
|
|
Three Months
Ended
|
|
December 31,
2016
|
|
December 26,
2015
|
|
|
|
|
Gross
Profit:
|
|
|
|
GAAP gross
profit
|
$
|
404.8
|
|
|
$
|
379.1
|
|
Adjustments:
|
|
|
|
Amortization of
intangible assets (1)
|
73.5
|
|
|
73.4
|
|
Incremental
depreciation expense (2)
|
0.3
|
|
|
0.5
|
|
Integration/consolidation costs (3)
|
0.1
|
|
|
—
|
|
Non-GAAP gross
profit
|
$
|
478.7
|
|
|
$
|
453.0
|
|
|
|
|
|
Gross
Margin:
|
|
|
|
GAAP gross
margin
|
55.1
|
%
|
|
54.5
|
%
|
Impact of adjustments
above
|
10.1
|
%
|
|
10.7
|
%
|
Non-GAAP gross
margin
|
65.2
|
%
|
|
65.2
|
%
|
|
|
|
|
Operating
Expenses:
|
|
|
|
GAAP operating
expenses
|
$
|
258.8
|
|
|
$
|
253.0
|
|
Adjustments:
|
|
|
|
Amortization of
intangible assets (1)
|
(21.4)
|
|
|
(22.6)
|
|
Incremental
depreciation expense (2)
|
(0.5)
|
|
|
(0.9)
|
|
Transaction expenses
(4)
|
(2.6)
|
|
|
—
|
|
Integration/consolidation costs (3)
|
—
|
|
|
(0.2)
|
|
Restructuring and
divestiture charges (3)
|
(3.2)
|
|
|
(2.3)
|
|
Other (5)
|
—
|
|
|
(6.0)
|
|
Non-GAAP operating
expenses
|
$
|
231.1
|
|
|
$
|
221.0
|
|
|
|
|
|
Operating
Income:
|
|
|
|
GAAP income from
operations
|
146.0
|
|
|
126.1
|
|
Adjustments to gross
profit as detailed above
|
73.9
|
|
|
73.9
|
|
Adjustments to
operating expenses as detailed above
|
27.7
|
|
|
32.0
|
|
Non-GAAP income from
operations
|
$
|
247.6
|
|
|
$
|
232.0
|
|
|
|
|
|
Operating Income
Margin:
|
|
|
|
GAAP income from
operations margin
|
19.9
|
%
|
|
18.1
|
%
|
Impact of adjustments
above
|
13.8
|
%
|
|
15.3
|
%
|
Non-GAAP operating
income margin
|
33.7
|
%
|
|
33.4
|
%
|
|
|
|
|
Interest
Expense:
|
|
|
|
GAAP interest
expense
|
$
|
40.4
|
|
|
$
|
39.2
|
|
Adjustments:
|
|
|
|
Non-cash
interest expense relating to convertible notes (6)
|
(5.2)
|
|
|
(6.4)
|
|
Non-GAAP interest
expense
|
$
|
35.2
|
|
|
$
|
32.8
|
|
Pre-Tax
Income:
|
|
|
|
GAAP pre-tax
earnings
|
$
|
116.1
|
|
|
$
|
114.7
|
|
Adjustments to
pre-tax earnings as detailed above
|
106.8
|
|
|
112.3
|
|
Loss/(gain) on sale
of available-for-sale marketable security (7)
|
0.1
|
|
|
(25.1)
|
|
Unrealized gains on
forward foreign currency contracts (8)
|
(8.4)
|
|
|
(1.0)
|
|
Non-GAAP pre-tax
Income
|
$
|
214.6
|
|
|
$
|
200.9
|
|
|
|
|
|
Net
Income:
|
|
|
|
GAAP net
income
|
$
|
86.5
|
|
|
$
|
84.9
|
|
Adjustments:
|
|
|
|
Amortization of
intangible assets (1)
|
94.9
|
|
|
96.0
|
|
Non-cash interest
expense relating to convertible notes (6)
|
5.2
|
|
|
6.4
|
|
Restructuring,
divestiture and integration/consolidation costs (3)
|
3.3
|
|
|
2.5
|
|
Transaction
expenses
|
2.6
|
|
|
—
|
|
Incremental
depreciation expenses (2)
|
0.8
|
|
|
1.4
|
|
Loss/(gain) on sale
of available-for-sale marketable security (7)
|
0.1
|
|
|
(25.1)
|
|
Unrealized gains on
forward foreign currency contracts (8)
|
(8.4)
|
|
|
(1.0)
|
|
Other charges
(5)
|
—
|
|
|
6.0
|
|
Income tax effect of
reconciling items (9)
|
(36.9)
|
|
|
(36.0)
|
|
Non-GAAP net
income
|
$
|
148.1
|
|
|
$
|
135.1
|
|
|
|
|
|
Net Income
Margin:
|
|
|
|
GAAP net income
margin
|
11.8
|
%
|
|
12.2
|
%
|
Impact of adjustments
above
|
8.4
|
%
|
|
7.2
|
%
|
Non-GAAP net income
margin
|
20.2
|
%
|
|
19.4
|
%
|
|
|
|
|
Earnings per
share:
|
|
|
|
GAAP earnings per
share - Diluted
|
$
|
0.30
|
|
|
$
|
0.29
|
|
Adjustment to net
earnings (as detailed above)
|
0.22
|
|
|
0.17
|
|
Non-GAAP earnings per
share – diluted (10)
|
$
|
0.52
|
|
|
$
|
0.46
|
|
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
Non-GAAP net
income
|
$
|
148.1
|
|
|
$
|
135.1
|
|
Interest expense,
net, not adjusted above
|
35.0
|
|
|
32.6
|
|
Provision for income
taxes
|
66.5
|
|
|
65.8
|
|
Depreciation expense,
not adjusted above
|
19.5
|
|
|
18.5
|
|
Adjusted
EBITDA
|
$
|
269.1
|
|
|
$
|
252.0
|
|
Explanatory Notes
to Reconciliations:
|
|
(1)
|
To reflect non-cash
expenses attributable to the amortization of intangible
assets.
|
(2)
|
To reflect non-cash
fair value adjustments for additional depreciation expense related
to the fair value write-up of fixed assets acquired in the
Gen-Probe acquisition and accelerated depreciation expense related
to facility closure and consolidation.
|
(3)
|
To reflect
restructuring and divestiture charges and certain costs associated
with the Company's integration and facility consolidation plans,
which primarily include retention and transfer costs.
|
(4)
|
To reflect
transaction-related expenses, such as advisory and legal, incurred
with third parties related to business development activities, such
as divestitures and acquisitions.
|
(5)
|
To reflect the net
impact from miscellaneous transactions during the period, including
legal settlements.
|
(6)
|
To reflect certain
non-cash interest expense related to the amortization of the debt
discount from the equity conversion option of the Company's
convertible notes.
|
(7)
|
To reflect realized
losses and gains on the sale of available-for-sale marketable
securities.
|
(8)
|
To reflect non-cash
unrealized gains on the market-to market on outstanding forward
foreign currency contracts, which do not qualify for hedge
accounting.
|
(9)
|
To reflect an
estimated annual effective tax rate of 31.00% and 32.75% for fiscal
2017 and 2016, respectively.
|
(10)
|
Non-GAAP earnings per
share was calculated based on 284,224 and 291,971 weighted average
diluted shares outstanding for the three months ended
December 31, 2016 and December 26, 2015,
respectively.
|
Reconciliation of
GAAP to non-GAAP EPS Guidance:
|
|
|
Guidance
Range
|
|
Guidance
Range
|
|
Quarter
Ending
April 1,
2017
|
|
Year Ending
September 30,2017
|
|
Low
|
High
|
|
Low
|
High
|
GAAP Net Income Per
Share
|
$1.85
|
$1.86
|
|
$2.73
|
$2.77
|
Amortization of Intangible Assets
|
$0.24
|
$0.24
|
|
$1.06
|
$1.06
|
Amortization of Debt Discount
|
$0.02
|
$0.02
|
|
$0.07
|
$0.07
|
Restructuring and Other Charges
|
$0.03
|
$0.03
|
|
$0.06
|
$0.06
|
Gain
from Sale of Blood Screening
|
$(3.18)
|
$(3.18)
|
|
$(3.17)
|
$(3.17)
|
Tax
Impact of Exclusions
|
$1.49
|
$1.49
|
|
$1.15
|
$1.15
|
Non-GAAP Net Income
Per Share
|
$0.45
|
$0.46
|
|
$1.90
|
$1.94
|
|
Trailing Twelve
Months
ended December 31,
2016
|
Return on Invested
Capital:
|
|
|
|
|
|
|
|
Adjusted Net
Operating Profit After Tax
|
|
|
|
Non-GAAP net
income
|
|
|
574.6
|
|
Non-GAAP provision
for income taxes
|
|
|
262.0
|
|
Non-GAAP interest
expense
|
|
|
135.4
|
|
Non-GAAP other
income
|
|
|
(4.9)
|
|
Adjusted net
operating profit before tax
|
|
|
967.1
|
|
Non-GAAP average
effective tax rate (1)
|
|
|
31.32
|
%
|
Adjusted net
operating profit after tax
|
|
|
664.2
|
|
|
|
|
|
Average Net Debt plus
Average Stockholders' Equity (2)
|
|
|
|
Average total
debt
|
|
|
3,477.6
|
|
Less: Average cash,
cash equivalents and restricted cash
|
|
|
(648.1)
|
|
Average net
debt
|
|
|
2,829.5
|
|
Average stockholders'
equity (3)
|
|
|
2,229.7
|
|
Average net debt plus
average stockholders' equity
|
|
|
5,059.2
|
|
|
|
|
|
Adjusted
ROIC
|
|
|
|
Adjusted ROIC
(adjusted net operating profit after tax above divided by average net debt plus stockholders'
equity above)
|
|
|
13.1
|
%
|
(1)
|
ROIC is presented on
a TTM basis; non-GAAP effective tax rate for the three months ended
March 26, 2016 was 32.75%, the three months ended June 25,
2016 was 30.55%, the three months ended September 24, 2016 was
31.03% and the three months ended December 31, 2016 was
31.00%.
|
(2)
|
Calculated using the
average of the balances as of December 31, 2016 and
December 26, 2015.
|
(3)
|
Adjusted (increased)
to eliminate the effect of the impairment of intangible assets of
$32.2 million in fiscal 2014.
|
|
|
|
|
|
As
of
|
|
|
|
|
|
December 31,
2016
|
Leverage
Ratio:
|
|
|
|
|
|
|
|
|
|
|
|
Total principal
debt
|
|
|
|
|
3,378.9
|
Total cash
|
|
|
|
|
(646.0)
|
Net principal debt,
as adjusted
|
|
|
|
|
2,732.9
|
EBITDA for the last
four quarters
|
|
|
|
|
1,049.3
|
Leverage
Ratio
|
|
|
|
|
2.60
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Supplemental
Information:
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
December 31,
2016
|
|
December 26,
2015
|
|
|
|
|
|
Geographic
Revenues
|
|
|
|
|
U.S.
|
|
77.9
|
%
|
|
78.4
|
%
|
Europe
|
|
10.7
|
%
|
|
10.0
|
%
|
Asia-Pacific
|
|
8.4
|
%
|
|
7.9
|
%
|
All Others
|
|
3.0
|
%
|
|
3.7
|
%
|
Total
Revenues
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
Composition
|
|
|
|
|
|
|
|
|
|
|
Q1'17
|
|
|
|
|
|
|
Disposables
|
|
|
|
|
63.4
|
%
|
Capital
Equipment
|
|
|
|
|
20.1
|
%
|
Service &
Other
|
|
|
|
|
16.5
|
%
|
Total
Revenues
|
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/hologic-announces-financial-results-for-first-quarter-of-fiscal-2017-300400712.html
SOURCE Hologic, Inc.