MARLBOROUGH, Mass.,
Feb. 8, 2018 /PRNewswire/
-- Hologic, Inc. (Nasdaq: HOLX) announced today the Company's
financial results for the fiscal first quarter ended December 30, 2017.
Revenue of $791.1 million
increased 7.7%, or 6.7% in constant currency, compared to the prior
year period. Excluding the acquired medical aesthetics and
divested blood screening businesses, revenue increased 2.7%, or
1.5% in constant currency. Revenue growth rates in the first
quarter were negatively affected by four extra selling days in the
prior year period, which Hologic estimates added more than
$20 million to revenue a year
ago.
GAAP diluted earnings per share (EPS) of $1.45 increased 383.3% compared to the prior year
period. GAAP results include a one-time tax provision net
benefit of $329.2 million associated
with the recent enactment of tax reform legislation in the
U.S. Non-GAAP diluted EPS of $0.55 increased 5.8% compared to the prior year
period.
"We are pleased with our first quarter results," said
Steve MacMillan, Hologic's Chairman,
President and Chief Executive Officer. "We posted solid
revenue just above our guidance range, driven by strength in our
breast health, molecular diagnostics and international
businesses. In addition, U.S. tax reform is helping us
increase our earnings guidance for the year, while simultaneously
re-investing in the business to drive future growth."
Key financial results for the fiscal first quarter
were:
|
GAAP
|
Non-GAAP
|
|
Q1'18
|
Q1'17
|
Change
Increase
(Decrease)
|
Q1'18
|
Q1'17
|
Change
Increase
(Decrease)
|
Revenues
|
$791.1
|
$734.4
|
7.7%
|
$791.1
|
$734.4
|
7.7%
|
Gross
Margin
|
53.7%
|
55.1%
|
(140 bps)
|
63.8%
|
65.2%
|
(140 bps)
|
Operating
Expenses
|
$290.4
|
$258.8
|
12.2%
|
$271.8
|
$231.1
|
17.6%
|
Operating
Margin
|
17.0%
|
19.9%
|
(290 bps)
|
29.4%
|
33.7%
|
(430 bps)
|
Net Margin
|
51.4%
|
11.8%
|
3,960 bps
|
19.4%
|
20.2%
|
(80 bps)
|
Diluted
EPS
|
$1.45
|
$0.30
|
383.3%
|
$0.55
|
$0.52
|
5.8%
|
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."
Revenue Detail
As previously mentioned, revenue growth rates in the first
quarter were negatively affected by four extra selling days in the
prior year period, which Hologic estimates added more than
$20 million to revenue a year ago,
primarily in the U.S.
$s in
millions
|
Q1'18
|
Q1'17
|
Reported
Change
|
Constant Currency
Change
|
Cytology &
Perinatal
|
$123.4
|
$120.3
|
2.6%
|
0.9%
|
Molecular
Diagnostics
|
$148.6
|
$139.9
|
6.2%
|
5.3%
|
Blood
Screening
|
$12.6
|
$65.2
|
(80.7%)
|
(80.7%)
|
Total
Diagnostics
|
$284.6
|
$325.4
|
(12.5%)
|
(13.5%)
|
Total Diagnostics
ex. Blood
|
$272.0
|
$260.2
|
4.5%
|
3.3%
|
Breast Imaging
|
$233.6
|
$226.7
|
3.1%
|
1.9%
|
Interventional Breast
Solutions
|
$52.1
|
$44.6
|
16.9%
|
16.1%
|
Other
|
$2.3
|
$2.0
|
10.5%
|
1.7%
|
Total Breast
Health
|
$288.0
|
$273.3
|
5.4%
|
4.2%
|
Body
|
$21.9
|
-
|
-
|
-
|
Skin
|
$40.6
|
-
|
-
|
-
|
Women's
Health/Other
|
$28.8
|
-
|
-
|
-
|
Total Medical
Aesthetics
|
$91.3
|
-
|
-
|
-
|
GYN
Surgical
|
$107.5
|
$114.8
|
(6.4%)
|
(7.1%)
|
Skeletal
Health
|
$19.7
|
$20.9
|
(6.0%)
|
(7.3%)
|
Total
|
$791.1
|
$734.4
|
7.7%
|
6.7%
|
Quarterly revenue highlights:
- U.S. revenue of $597.2 million
increased 4.1%. Excluding the acquired medical aesthetics and
divested blood screening businesses, U.S. revenue decreased
(0.8%).
- International revenue of $193.9
million increased 20.6%, or 15.8% in constant currency.
Excluding the acquired medical aesthetics and divested blood
screening businesses, international revenue increased 17.6%, or
11.6% in constant currency.
- In Diagnostics:
-
- Molecular diagnostics sales of $148.6
million increased 6.2%, or 5.3% in constant currency, driven
primarily by continued strength across Aptima® women's health
products globally.
- Cytology and perinatal sales of $123.4
million increased 2.6%, or 0.9% in constant currency, due
primarily to an increase in perinatal sales.
- Blood screening sales of $12.6
million decreased (80.7%), as this business was divested in
the second quarter of fiscal 2017.
- Breast Health revenue totaled $288.0
million, an increase of 5.4%, or 4.2% in constant currency,
driven by strong international sales, new products, and service
revenue.
- Medical Aesthetics revenue was $91.3
million, a 12.2% sequential increase compared to the fourth
quarter of fiscal 2017. The Cynosure acquisition closed in the
second quarter of fiscal 2017.
- GYN Surgical revenue of $107.5
million decreased (6.4%), or (7.1%) in constant currency.
MyoSure® system revenue of $51.1
million increased 5.8%, or 5.2% in constant currency, while
NovaSure® revenue of $56.4 million
decreased (15.1%), or (16.0%) in constant currency.
- In Skeletal Health, revenue of $19.7
million decreased (6.0%), or (7.3%) in constant
currency.
Segment revenue highlights by geography are shown below:
|
U.S.
Change
|
International
Change
(Reported)
|
International
Change
(Constant
Currency)
|
Increase
(Decrease)
|
Diagnostics
|
(5.8%)
|
(30.0%)
|
(33.6%)
|
Diagnostics ex. Blood
|
2.4%
|
12.2%
|
6.5%
|
Breast
Health
|
(1.0%)
|
36.2%
|
29.2%
|
Medical
Aesthetics
|
-
|
-
|
-
|
GYN
Surgical
|
(8.4%)
|
7.2%
|
1.3%
|
Skeletal
Health
|
10.2%
|
(29.5%)
|
(32.6%)
|
Total
Revenues
|
4.1%
|
20.6%
|
15.8%
|
Total
Revenues ex. Blood and Medical Aesthetics
|
(0.8%)
|
17.6%
|
11.6%
|
Expense Detail
Gross margin was 53.7% on a GAAP basis, and 63.8% on a non-GAAP
basis. Both GAAP and non-GAAP gross margins declined by 140
basis points primarily due to sales mix associated with the
divestiture of the higher-margin blood screening business and sales
of lower-margin Cynosure products.
Operating expenses were $290.4
million on a GAAP basis, and $271.8
million on a non-GAAP basis. GAAP operating expenses
increased 12.2% and non-GAAP operating expenses increased 17.6%,
primarily due to the inclusion of Cynosure expenses.
On December 22, 2017, the
legislation commonly known as the Tax Cuts and Jobs Act ("U.S. tax
reform") was enacted into law. As a result of U.S. tax reform
and based on currently available information, the Company performed
preliminary calculations and recorded a discrete net tax benefit of
$329.2 million. This discrete
net tax benefit primarily results from the re-measurement of U.S.
net deferred tax liabilities at a lower corporate income tax rate,
partially offset by tax expense from deemed repatriated earnings of
foreign subsidiaries. The quarterly effective tax rate was a
benefit of (324.5%) on a GAAP basis, and a provision of 23.0% on a
non-GAAP basis. The difference in these rates was primarily
due to U.S. tax reform, as described above.
Other Key Financial Results
GAAP net income for the first quarter was $406.7 million, an increase of 370.2% due
primarily to the effects of U.S. tax reform. Adjusted
non-GAAP earnings before interest, taxes, depreciation and
amortization (EBITDA) for the first quarter was $258.1 million, a decrease of (4.1%).
Operating cash flow for the fourth quarter was $169.1 million. Free cash flow, defined as
operating cash flow less capital expenditures, was $147.3 million.
During the first quarter, Hologic repurchased or redeemed
$202 million in principal of its 2013
convertible notes for a total of $244
million. In addition, the Company repurchased
$39 million in principal of its 2012
convertible notes for a total of $53
million.
Total debt outstanding at the end of the quarter was
$3.3 billion. The company ended
the quarter with cash and equivalents of $0.7 billion, and a net leverage ratio (net debt
over adjusted EBITDA) of 2.6 times.
On a trailing 12 months basis, adjusted ROIC of 12.4% declined
70 basis points compared to the prior year period.
Financial Guidance for Fiscal 2018
"We are reiterating our full-year revenue guidance and
increasing our EPS forecast based mainly on our solid first-quarter
results and the beneficial effects of U.S. tax reform," said
Bob McMahon, the Company's chief
financial officer.
Hologic's financial guidance for fiscal 2018 is shown in the two
tables immediately below. The guidance is based on a full
year non-GAAP tax rate of approximately 23% and diluted shares
outstanding of approximately 283 million for the full year.
As a reminder, percentage changes versus the prior year are
affected by the blood screening divestiture and the Cynosure
acquisition, both of which closed in the second quarter of fiscal
2017. Constant currency guidance assumes that foreign
exchange rates are the same in fiscal 2018 as in fiscal 2017.
Current guidance assumes that recent foreign exchange rates persist
for all of fiscal 2018.
|
GAAP
|
Revenue
|
EPS
|
|
Reported %
Increase (Decrease)
|
Guidance $
|
Reported %
Increase
(Decrease)
|
Guidance $
|
Current Guidance
for
Fiscal 2018
|
4.6% to
7.2%
|
$3,200 to $3,280
million
|
(10.6%) to
(8.7%)
|
$2.36 to
$2.41
|
Previous Guidance
for
Fiscal 2018
|
4.6% to
7.2%
|
$3,200 to $3,280
million
|
(53.8%) to
(51.9%)
|
$1.22 to
$1.27
|
|
Non-GAAP
|
Revenue
|
EPS
|
|
Constant
Currency %
Increase
(Decrease)
|
Reported %
Increase
(Decrease)
|
Guidance $
|
Reported %
Increase
(Decrease)
|
Guidance $
|
Current Guidance
for Fiscal 2018
|
3.9% to
6.5%
|
4.6% to
7.2%
|
$3,200 to $3,280
million
|
9.4% to
11.8%
|
$2.22 to
$2.27
|
Previous Guidance
for Fiscal 2018
|
4.0% to
6.6%
|
4.6% to
7.2%
|
$3,200 to $3,280
million
|
3.4% to
5.9%
|
$2.10 to
$2.15
|
Hologic's financial guidance for the second quarter of fiscal
2018 is shown in the two tables immediately below. As a
reminder, percentage changes versus the prior year period are
affected by the blood screening divestiture and the Cynosure
acquisition, both of which closed in the second quarter of fiscal
2017.
|
GAAP
|
Revenue
|
EPS
|
|
Reported %
Increase
(Decrease)
|
Guidance $
|
Reported %
Increase
(Decrease)
|
Guidance $
|
Guidance for the
Second
Quarter of Fiscal 2018
|
7.6% to
9.7%
|
$770 to $785
million
|
(85.3%) to
(84.8%)
|
$0.27 to
$0.28
|
|
Non-GAAP
|
Revenue
|
EPS
|
|
Constant
Currency %
Increase
(Decrease)
|
Reported %
Increase
(Decrease)
|
Guidance $
|
Reported %
Increase
(Decrease)
|
Guidance $
|
Guidance for the
Second
Quarter of Fiscal 2018
|
6.5% to
8.6%
|
7.6% to
9.7%
|
$770 to $785
million
|
6.0% to
8.0%
|
$0.53 to
$0.54
|
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
|
|
2017
|
2018
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Total
|
Q1
|
Revenue
|
$65.2
|
$38.3
|
$19.0
|
$18.0
|
$140.5
|
$12.6
|
EPS
|
$0.06
|
$1.62
|
$0.01
|
$0.01
|
$1.70
|
$0.01
|
|
Non-GAAP
|
|
2017
|
2018
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Total
|
Q1
|
Revenue
|
$65.2
|
$38.3
|
$19.0
|
$18.0
|
$140.5
|
$12.6
|
EPS
|
$0.10
|
$0.04
|
$0.01
|
$0.01
|
$0.16
|
$0.01
|
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 revenue results as if the
foreign exchange rates were 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;
(ii) additional depreciation expense from acquired fixed assets and
accelerated depreciation related to business consolidation and
closure of facilities; (iii) additional expense 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 the convertible
notes; (v) restructuring and divestiture charges, 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) gain on disposal of business;
(viii) debt extinguishment losses and related transaction costs;
(ix) the unrealized (gains) losses on the mark-to-market of forward
foreign currency contracts for which the Company has not elected
hedge accounting; (x) litigation settlement charges (benefits) and
non-income tax related charges (benefits); (xi)
other-than-temporary impairment losses on investments and realized
(gains) losses resulting from the sale of investments; (xii) the
one-time discrete impact of tax reform primarily related to
remeasuring of net deferred tax liabilities and providing taxes for
the deemed repatriation of foreign earnings (xiii) 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 (xiv)
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 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 2018. Approximately
10 minutes before the call, dial 800-281-7973 (in the U.S.) or +1
323-794-2093 (international) and enter access code 4501215. A
replay will be available approximately two hours after the call
ends through Friday, March 2,
2018. The replay numbers are 888-203-1112 (U.S.) or +1
719-457-0820 (international), access code 4501215, 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, Genius 3D Mammography, Aptima, ThinPrep, MyoSure,
NovaSure, Panther, Tigris, Cynosure, SculpSure, PicoSure, 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 recently passed U.S. tax
reform legislation; 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 30,
2017
|
|
December 31,
2016
|
|
|
|
|
Revenues:
|
|
|
|
Product
|
$
|
650.7
|
|
|
$
|
613.4
|
|
Service and
other
|
140.4
|
|
|
121.0
|
|
Total
revenues
|
791.1
|
|
|
734.4
|
|
|
|
|
|
Cost of
revenues:
|
|
|
|
Product
|
213.7
|
|
|
198.3
|
|
Amortization of
acquired intangible assets
|
79.8
|
|
|
73.5
|
|
Service and
other
|
73.1
|
|
|
57.8
|
|
|
|
|
|
Gross
profit
|
424.5
|
|
|
404.8
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
Research and
development
|
54.8
|
|
|
54.4
|
|
Selling and
marketing
|
139.5
|
|
|
110.0
|
|
General and
administrative
|
77.9
|
|
|
69.8
|
|
Amortization of
acquired intangible assets
|
14.4
|
|
|
21.4
|
|
Restructuring
charges
|
3.8
|
|
|
3.2
|
|
Total operating
expenses
|
290.4
|
|
|
258.8
|
|
|
|
|
|
Income from
operations
|
134.1
|
|
|
146.0
|
|
Interest
income
|
0.8
|
|
|
0.3
|
|
Interest
expense
|
(41.0)
|
|
|
(40.4)
|
|
Debt extinguishment
loss
|
(1.0)
|
|
|
—
|
|
Other income,
net
|
2.9
|
|
|
10.2
|
|
|
|
|
|
Income before income
taxes
|
95.8
|
|
|
116.1
|
|
(Benefit) provision
for income taxes
|
(310.9)
|
|
|
29.6
|
|
|
|
|
|
Net
income
|
$
|
406.7
|
|
|
$
|
86.5
|
|
|
|
|
|
Net income per
common share:
|
|
|
|
Basic
|
$
|
1.47
|
|
|
$
|
0.31
|
|
Diluted
|
$
|
1.45
|
|
|
$
|
0.30
|
|
|
|
|
|
Weighted average
number of shares outstanding:
|
|
|
|
Basic
|
276,856
|
|
|
278,663
|
|
Diluted
|
280,802
|
|
|
284,224
|
|
HOLOGIC,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
(In
millions)
|
|
|
December 30,
2017
|
|
September 30,
2017
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
664.4
|
|
|
$
|
540.6
|
|
Accounts receivable,
net
|
548.0
|
|
|
533.5
|
|
Inventories
|
358.2
|
|
|
331.6
|
|
Other current
assets
|
67.8
|
|
|
72.9
|
|
Total current
assets
|
1,638.4
|
|
|
1,478.6
|
|
|
|
|
|
Property, plant and
equipment, net
|
467.1
|
|
|
472.8
|
|
Goodwill and
intangible assets
|
5,858.0
|
|
|
5,943.5
|
|
Other
assets
|
84.8
|
|
|
84.7
|
|
Total
assets
|
$
|
8,048.3
|
|
|
$
|
7,979.6
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term debt
|
$
|
572.1
|
|
|
$
|
1,150.8
|
|
Accounts payable and
accrued liabilities
|
574.6
|
|
|
543.5
|
|
Deferred
revenue
|
163.2
|
|
|
171.2
|
|
Total current
liabilities
|
1,309.9
|
|
|
1,865.5
|
|
|
|
|
|
Long-term debt, net
of current portion
|
2,757.7
|
|
|
2,172.1
|
|
Deferred income
taxes
|
586.4
|
|
|
973.6
|
|
Other long-term
liabilities
|
200.3
|
|
|
183.7
|
|
Total stockholders'
equity
|
3,194.0
|
|
|
2,784.7
|
|
Total liabilities
and stockholders' equity
|
$
|
8,048.3
|
|
|
$
|
7,979.6
|
|
HOLOGIC,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(in
millions)
|
|
|
Three Months
Ended
|
|
December 30,
2017
|
|
December 31,
2016
|
OPERATING
ACTIVITIES
|
|
|
|
Net income
|
$
|
406.7
|
|
|
$
|
86.5
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
|
27.0
|
|
|
20.4
|
|
Amortization of
acquired intangibles
|
94.2
|
|
|
94.9
|
|
Non-cash interest
expense
|
8.7
|
|
|
14.3
|
|
Stock-based
compensation expense
|
16.4
|
|
|
19.2
|
|
Deferred income
taxes
|
(390.7)
|
|
|
(24.6)
|
|
Debt extinguishment
loss
|
1.0
|
|
|
—
|
|
Other adjustments and
non-cash items
|
1.2
|
|
|
(6.0)
|
|
Changes in operating
assets and liabilities, excluding the effect of
acquisitions:
|
|
|
|
Accounts
receivable
|
(6.4)
|
|
|
21.5
|
|
Inventories
|
(23.3)
|
|
|
(20.7)
|
|
Prepaid income
taxes
|
8.1
|
|
|
(0.8)
|
|
Prepaid expenses and
other assets
|
(5.0)
|
|
|
(17.4)
|
|
Accounts
payable
|
(7.1)
|
|
|
(17.8)
|
|
Accrued expenses and
other liabilities
|
48.9
|
|
|
14.6
|
|
Deferred
revenue
|
(10.6)
|
|
|
(14.5)
|
|
Net cash provided by
operating activities
|
169.1
|
|
|
169.6
|
|
INVESTING
ACTIVITIES
|
|
|
|
Acquisition of
businesses, net of cash acquired
|
(4.1)
|
|
|
—
|
|
Capital
expenditures
|
(10.2)
|
|
|
(11.5)
|
|
Increase in equipment
under customer usage agreements
|
(11.6)
|
|
|
(13.2)
|
|
Proceeds from sale of
available-for-sale marketable securities
|
0.1
|
|
|
0.4
|
|
Other
activity
|
(0.4)
|
|
|
(0.9)
|
|
Net cash used in
investing activities
|
(26.2)
|
|
|
(25.2)
|
|
FINANCING
ACTIVITIES
|
|
|
|
Repayment of
long-term debt
|
(1,331.3)
|
|
|
(18.8)
|
|
Proceeds from
long-term debt
|
1,500.0
|
|
|
—
|
|
Repayment of amounts
borrowed under accounts receivable securitization
program
|
—
|
|
|
(12.0)
|
|
Proceeds from senior
notes
|
350.0
|
|
|
—
|
|
Payments to
extinguish convertible notes
|
(296.9)
|
|
|
(6.4)
|
|
Proceeds from amounts
borrowed under revolving credit line
|
495.0
|
|
|
—
|
|
Repayments of amounts
borrowed under revolving credit line
|
(720.0)
|
|
|
—
|
|
Payment of debt
issuance costs
|
(11.9)
|
|
|
—
|
|
Proceeds from
issuance of common stock pursuant to employee stock
plans
|
9.5
|
|
|
13.2
|
|
Payments under
capital lease obligations
|
(0.4)
|
|
|
—
|
|
Payment of minimum
tax withholdings on net share settlements of equity
awards
|
(14.3)
|
|
|
(16.4)
|
|
Net cash used in
financing activities
|
(20.3)
|
|
|
(40.4)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
1.2
|
|
|
(6.4)
|
|
Net increase in cash
and cash equivalents
|
123.8
|
|
|
97.6
|
|
Cash and cash
equivalents, beginning of period
|
540.6
|
|
|
548.4
|
|
Cash and cash
equivalents, end of period
|
$
|
664.4
|
|
|
$
|
646.0
|
|
HOLOGIC,
INC.
|
RECONCILIATION OF
GAAP TO NON-GAAP RESULTS
|
(Unaudited)
|
(In millions, except
earnings per share and margin percentages)
|
|
|
Three Months
Ended
|
|
December 30,
2017
|
|
December 31,
2016
|
|
|
|
|
Gross
Profit:
|
|
|
|
GAAP gross
profit
|
$
|
424.5
|
|
|
$
|
404.8
|
|
Adjustments:
|
|
|
|
Amortization of
acquired intangible assets (1)
|
79.8
|
|
|
73.5
|
|
Incremental
depreciation expense (2)
|
0.2
|
|
|
0.3
|
|
Integration/consolidation costs (3)
|
—
|
|
|
0.1
|
|
Non-GAAP gross
profit
|
$
|
504.5
|
|
|
$
|
478.7
|
|
|
|
|
|
Gross Margin
Percentage:
|
|
|
|
GAAP gross margin
percentage
|
53.7
|
%
|
|
55.1
|
%
|
Impact of adjustments
above
|
10.1
|
%
|
|
10.1
|
%
|
Non-GAAP gross margin
percentage
|
63.8
|
%
|
|
65.2
|
%
|
|
|
|
|
Operating
Expenses:
|
|
|
|
GAAP operating
expenses
|
$
|
290.4
|
|
|
$
|
258.8
|
|
Adjustments:
|
|
|
|
Amortization of
acquired intangible assets (1)
|
(14.4)
|
|
|
(21.4)
|
|
Incremental
depreciation expense (2)
|
(3.5)
|
|
|
(0.5)
|
|
Transaction expenses
(4)
|
(0.4)
|
|
|
(2.6)
|
|
Non-income tax
benefit (9)
|
4.0
|
|
|
—
|
|
Integration/consolidation costs (3)
|
(0.5)
|
|
|
—
|
|
Restructuring charges
(3)
|
(3.8)
|
|
|
(3.2)
|
|
Non-GAAP operating
expenses
|
$
|
271.8
|
|
|
$
|
231.1
|
|
|
|
|
|
Operating
Margin:
|
|
|
|
GAAP income from
operations
|
$
|
134.1
|
|
|
$
|
146.0
|
|
Adjustments to gross
profit as detailed above
|
80.0
|
|
|
73.9
|
|
Adjustments to
operating expenses as detailed above
|
18.6
|
|
|
27.7
|
|
Non-GAAP income from
operations
|
$
|
232.7
|
|
|
$
|
247.6
|
|
|
|
|
|
Operating Margin
Percentage:
|
|
|
|
GAAP income from
operations margin percentage
|
17.0
|
%
|
|
19.9
|
%
|
Impact of adjustments
above
|
12.4
|
%
|
|
13.8
|
%
|
Non-GAAP operating
margin percentage
|
29.4
|
%
|
|
33.7
|
%
|
|
|
|
|
Interest
Expense:
|
|
|
|
GAAP interest
expense
|
$
|
41.0
|
|
|
$
|
40.4
|
|
Adjustments:
|
|
|
|
Non-cash interest
expense relating to convertible notes (5)
|
(2.9)
|
|
|
(5.2)
|
|
Debt transaction costs
(10)
|
(1.7)
|
|
|
—
|
|
Non-GAAP interest
expense
|
$
|
36.4
|
|
|
$
|
35.2
|
|
|
|
|
|
Pre-Tax
Income:
|
|
|
|
GAAP pre-tax
earnings
|
$
|
95.8
|
|
|
$
|
116.1
|
|
Adjustments to pre-tax
earnings as detailed above
|
103.2
|
|
|
106.8
|
|
Debt extinguishment
loss (6)
|
1.0
|
|
|
—
|
|
Loss on sale of
available-for-sale marketable securities (7)
|
0.6
|
|
|
0.1
|
|
Unrealized gains on
forward foreign currency contracts (8)
|
(1.5)
|
|
|
(8.4)
|
|
Non-GAAP pre-tax
Income
|
$
|
199.1
|
|
|
$
|
214.6
|
|
|
|
|
|
Net
income:
|
|
|
|
GAAP net
income
|
$
|
406.7
|
|
|
$
|
86.5
|
|
Adjustments:
|
|
|
|
Amortization of
acquired intangible assets (1)
|
94.2
|
|
|
94.9
|
|
Non-cash interest
expense relating to convertible notes (5)
|
2.9
|
|
|
5.2
|
|
Restructuring,
integration/consolidation costs and transaction expenses (3)
(4)
|
4.7
|
|
|
5.9
|
|
Non-income tax
(benefit) (9)
|
(4.0)
|
|
|
—
|
|
Incremental
depreciation expense (2)
|
3.7
|
|
|
0.8
|
|
Debt extinguishment
loss and related expenses (6) (10)
|
2.7
|
|
|
—
|
|
Loss on sale of
available-for-sale marketable securities (7)
|
0.6
|
|
|
0.1
|
|
Unrealized gains on
forward foreign currency contracts (8)
|
(1.5)
|
|
|
(8.4)
|
|
Discrete impact of
tax reform (11)
|
(329.2)
|
|
|
—
|
|
Income tax effect of
reconciling items (12)
|
(27.4)
|
|
|
(36.9)
|
|
Non-GAAP net
income
|
$
|
153.4
|
|
|
$
|
148.1
|
|
|
|
|
|
Net Income
Percentage:
|
|
|
|
GAAP net income
percentage
|
51.4
|
%
|
|
11.8
|
%
|
Impact of adjustments
above
|
(32.0)
|
%
|
|
8.4
|
%
|
Non-GAAP net income
percentage
|
19.4
|
%
|
|
20.2
|
%
|
|
|
|
|
Earnings per
share:
|
|
|
|
GAAP earnings per
share - Diluted
|
$
|
1.45
|
|
|
$
|
0.30
|
|
Adjustment to net
earnings (as detailed above)
|
(0.90)
|
|
|
0.22
|
|
Non-GAAP earnings per
share – diluted (13)
|
$
|
0.55
|
|
|
$
|
0.52
|
|
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
Non-GAAP net
income
|
$
|
153.4
|
|
|
$
|
148.1
|
|
Interest expense,
net, not adjusted above
|
35.6
|
|
|
35.0
|
|
Provision for income
taxes
|
45.8
|
|
|
66.5
|
|
Depreciation expense,
not adjusted above
|
23.3
|
|
|
19.5
|
|
Adjusted
EBITDA
|
$
|
258.1
|
|
|
$
|
269.1
|
|
|
|
|
|
Explanatory Notes
to Reconciliations:
|
(1)
|
To reflect non-cash
expenses attributable to the amortization of acquired 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 business consolidation.
|
(3)
|
To reflect
restructuring charges, and certain costs associated with the
Company's integration and facility consolidation plans, which
primarily include retention and transfer costs, as well as costs
incurred to integrate acquisitions including consulting, legal and
accounting fees.
|
(4)
|
To reflect expenses
incurred with third parties related to acquisitions and
divestitures prior to when such transactions are completed. These
expenses primarily comprise broker fees, legal fees, and consulting
and due diligence fees.
|
(5)
|
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.
|
(6)
|
To reflect debt
extinguishment losses primarily from refinancing the Company's
Credit Agreement.
|
(7)
|
To reflect a realized
loss on the sale of available-for-sale marketable
securities.
|
(8)
|
To reflect non-cash
unrealized gains on the mark-to market on outstanding forward
foreign currency contracts, which do not qualify for hedge
accounting.
|
(9)
|
To reflect a
non-income tax benefit in the first quarter of fiscal 2018 of $4.0
million as the Company settled a non-income tax issue under
audit.
|
(10)
|
To reflect the amount
of debt issuance costs recorded directly to interest expense as a
result of refinancing the Company's Credit Agreement.
|
(11)
|
To reflect the
discrete impact of tax reform to the Company's income tax provision
primarily comprised of a tax benefit of $355.2 million to remeasure
the Company's net deferred tax liabilities at the lower federal
income tax rate, partially offset by the net tax charge of $26.0
million from deemed repatriated earnings of foreign
subsidiaries.
|
(12)
|
To reflect an
estimated annual effective tax rate of 23.0% and 31.0% for fiscal
2018 and 2017, respectively.
|
(13)
|
Non-GAAP earnings per
share was calculated based on 280,802 and 284,224 weighted average
diluted shares outstanding for the three months ended
December 30, 2017 and December 31, 2016,
respectively.
|
Reconciliation of
GAAP to non-GAAP EPS Guidance:
|
|
|
Guidance
Range
|
|
Guidance
Range
|
|
Quarter
Ending
March 31,
2018
|
|
Year Ending
September
29, 2018
|
|
Low
|
High
|
|
Low
|
High
|
GAAP Net Income Per
Share
|
$0.27
|
$0.28
|
|
$2.36
|
$2.41
|
Amortization of Intangible Assets
|
$0.33
|
$0.33
|
|
$1.33
|
$1.33
|
Amortization of Debt Discount
|
$0.00
|
$0.00
|
|
$0.01
|
$0.01
|
Accelerated depreciation and Other Charges
|
$0.02
|
$0.02
|
|
$0.06
|
$0.06
|
Discrete impact of tax reform
|
$0.00
|
$0.00
|
|
($1.16)
|
($1.16)
|
Tax
Impact of Exclusions
|
($0.09)
|
($0.09)
|
|
($0.38)
|
($0.38)
|
Non-GAAP Net Income
Per Share
|
$0.53
|
$0.54
|
|
$2.22
|
$2.27
|
Reconciliations of
Reported to Constant Currency Revenue:
|
|
$s in
millions
|
Q1'18
|
Q1'17
|
Reported
Change
|
Foreign Currency
Effect
$
%
|
Constant
Currency
Change
|
Cytology &
Perinatal
|
$123.4
|
$120.3
|
2.6%
|
$(1.9)
|
(1.7%)
|
0.9%
|
Molecular
Diagnostics
|
$148.6
|
$139.9
|
6.2%
|
$(1.3)
|
(0.9%)
|
5.3%
|
Blood
Screening
|
$12.6
|
$65.2
|
(80.7%)
|
-
|
-
|
(80.7%)
|
Total
Diagnostics
|
$284.6
|
$325.4
|
(12.5%)
|
$(3.3)
|
(1.0%)
|
(13.5%)
|
Total Diagnostics
ex. Blood
|
$272.0
|
$260.2
|
4.5%
|
$(3.3)
|
(1.2%)
|
3.3%
|
Breast
Imaging
|
$233.6
|
$226.7
|
3.1%
|
$(2.8)
|
(1.2%)
|
1.9%
|
Interventional Breast
Solutions
|
$52.1
|
$44.6
|
16.9%
|
$(0.4)
|
(0.8%)
|
16.1%
|
Other
|
$2.3
|
$2.0
|
10.5%
|
$(0.2)
|
(8.8%)
|
1.7%
|
Total Breast
Health
|
$288.0
|
$273.3
|
5.4%
|
$(3.3)
|
(1.2%)
|
4.2%
|
Body
|
$21.9
|
-
|
-
|
-
|
-
|
-
|
Skin
|
$40.6
|
-
|
-
|
-
|
-
|
-
|
Women's
Health/Other
|
$28.8
|
-
|
-
|
-
|
-
|
-
|
Total Medical
Aesthetics
|
$91.3
|
-
|
-
|
-
|
-
|
-
|
GYN
Surgical
|
$107.5
|
$114.8
|
(6.4%)
|
$(0.9)
|
(0.7%)
|
(7.1%)
|
Skeletal
Health
|
$19.7
|
$20.9
|
(6.0%)
|
$(0.3)
|
(1.3%)
|
(7.3%)
|
Total
|
$791.1
|
$734.4
|
7.7%
|
$(7.7)
|
(1.0%)
|
6.7%
|
|
U.S.
Change
|
International
Change
(Reported)
|
Foreign Currency
Effect
$
%
|
International
Change
(Constant
Currency)
|
|
Increase
(Decrease)
|
Diagnostics
|
(5.8%)
|
(30.0%)
|
$(3.3)
|
(3.6%)
|
(33.6%)
|
Diagnostics ex. Blood
|
2.4%
|
12.2%
|
$(3.3)
|
(5.7%)
|
6.5%
|
Breast
Health
|
(1.0%)
|
36.2%
|
$(3.3)
|
(7.0%)
|
29.2%
|
Medical
Aesthetics
|
-
|
-
|
-
|
-
|
-
|
GYN
Surgical
|
(8.4%)
|
7.2%
|
$(0.9)
|
(5.9%)
|
1.3%
|
Skeletal
Health
|
10.2%
|
(29.5%)
|
$(0.3)
|
(3.1%)
|
(32.6%)
|
Total
Revenues
|
4.1%
|
20.6%
|
$(7.7)
|
(4.8%)
|
15.8%
|
Total
Revenues ex. Blood and Medical Aesthetics
|
(0.8%)
|
17.6%
|
$(7.7)
|
(6.0%)
|
11.6%
|
|
Trailing Twelve
Months
ended
December 30,
2017
|
Return on Invested
Capital:
|
|
|
|
Adjusted Net
Operating Profit After Tax
|
|
Non-GAAP net
income
|
$
|
584.2
|
|
Non-GAAP provision
for income taxes
|
233.4
|
|
Non-GAAP interest
expense
|
136.4
|
|
Non-GAAP other
income
|
(14.3)
|
|
Adjusted net
operating profit before tax
|
$
|
939.7
|
|
Non-GAAP average
effective tax rate (1)
|
28.5
|
%
|
Adjusted net
operating profit after tax
|
$
|
671.8
|
|
|
|
Average Net Debt plus
Average Stockholders' Equity (2)
|
|
Average total
debt
|
$
|
3,326.3
|
|
Less: Average cash,
cash equivalents and restricted cash
|
(655.2)
|
|
Average net
debt
|
$
|
2,671.1
|
|
Average stockholders'
equity (3)
|
$
|
2,743.5
|
|
Average net debt plus
average stockholders' equity
|
$
|
5,414.6
|
|
|
|
Adjusted
ROIC
|
|
Adjusted ROIC
(adjusted net operating profit after tax above divided by average net debt plus stockholders'
equity above)
|
12.4
|
%
|
(1)
|
ROIC is presented on
a TTM basis; non-GAAP effective tax rate for the three months ended
April 1, 2017 was 31.0%, the three months ended July 1, 2017 was
29.5%, the three months ended September 30, 2017 was 30.5%.and the
three months ended December 30, 2017 was 23.0%.
|
(2)
|
Calculated using the
average of the balances as of December 30, 2017 and
December 31, 2016.
|
(3)
|
Adjusted (increased)
to eliminate the effect of the impairment of intangible assets of
$32.2 million in fiscal 2014.
|
|
As
of
|
|
December 30,
2017
|
Leverage
Ratio:
|
|
|
|
Total principal
debt
|
$
|
3,366.9
|
|
Total cash
|
(664.4)
|
|
Net principal debt,
as adjusted
|
$
|
2,702.5
|
|
EBITDA for the last
four quarters
|
$
|
1,037.5
|
|
Leverage
Ratio
|
2.6
|
|
|
|
Other Supplemental
Information:
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
December 30,
2017
|
|
December 31,
2016
|
|
|
|
|
|
Geographic
Revenues
|
|
|
|
|
U.S.
|
|
75.5
|
%
|
|
77.9
|
%
|
Europe
|
|
11.5
|
%
|
|
10.7
|
%
|
Asia-Pacific
|
|
8.7
|
%
|
|
8.4
|
%
|
Rest of
World
|
|
4.3
|
%
|
|
3.0
|
%
|
Total
Revenues
|
|
100.0
|
%
|
|
100.0
|
%
|
Revenue
Composition
|
|
|
|
|
Q1'18
|
|
|
|
Disposables
|
|
56.2
|
%
|
Capital
Equipment
|
|
26.1
|
%
|
Service &
Other
|
|
17.7
|
%
|
Total
Revenues
|
|
100.0
|
%
|
|
|
|
View original
content:http://www.prnewswire.com/news-releases/hologic-announces-financial-results-for-first-quarter-of-fiscal-2018-300595933.html
SOURCE Hologic, Inc.