– Revenue of $1.003 Billion, GAAP Diluted EPS
of $0.90, and Non-GAAP Diluted EPS of $0.95 All Significantly Ahead
of Expectations –
– Global Organic Molecular Diagnostics
ex-COVID-19 Revenue Grows Over 20% in Constant Currency –
– Company Again Increases Full-Year Revenue and
EPS Guidance –
Hologic, Inc. (Nasdaq: HOLX) announced today the Company’s
financial results for the fiscal third quarter ended June 25,
2022.
“In our third quarter of fiscal 2022, Hologic delivered
exceptionally strong growth in our base Diagnostics and Surgical
franchises, powering financial results that meaningfully exceeded
our guidance for both revenue and profitability,” said Steve
MacMillan, the Company’s chairman, president and chief executive
officer. “With strength in our base business, a natural hedge to
COVID outbreaks, plus a fortified balance sheet and robust cash
flow, we have high confidence in our business. In addition, with a
presence advocating for women’s health at this year’s World
Economic Forum Annual Meeting, Hologic continues to drive our
message on the global stage to impact more women around the
world.”
Recent Highlights
- Revenue of $1.003 billion decreased (14.2%) for the quarter, or
(12.2%) in constant currency, primarily driven by lower
international sales of COVID-19 assays and supply chain challenges
related to semiconductor chips in our Breast Health business
compared to the prior year period. Revenue, however, was
significantly higher than the Company’s guidance of $875 to $915
million provided last quarter.
- Excluding revenue from COVID-19, organic revenue declined
(1.4%) on a constant currency basis primarily due to persistent
semiconductor chip shortages impacting the Breast Health
business.
- Global diagnostics revenue decreased (15.8%), or (13.6%) in
constant currency, primarily driven by lower international sales of
COVID-19 assays compared to the prior year period. Excluding
COVID-19 revenues, global diagnostics revenue grew 15.0% on an
organic, constant currency basis. Similarly, global molecular
diagnostics revenue declined (18.9%), or (16.8%) in constant
currency, yet grew 22.4% on an organic, constant currency basis
excluding COVID-19 revenues.
- Global revenue for the Company’s Breast Health business
declined (19.0%), or (17.5%) in constant currency, as expected,
primarily due to semiconductor chip shortages. However, gantry
demand remains strong.
- Global revenue for the Company’s Surgical business grew 8.0%,
or 9.7% in constant currency, primarily driven by MyoSure, Fluent
Fluid Management System sales, and Bolder.
- Cash flow from operations remained very strong in the third
quarter at $330.6 million.
- Assay approvals in molecular diagnostics:
- Received FDA approval for our Aptima CMV Quant assay to
quantify the viral load of cytomegalovirus (CMV) in patients who
have had solid organ or stem cell transplants.
- Received European CE mark for our Panther Fusion EBV Quant
assay and Panther Fusion BKV Quant assay, to further expand
pathogen monitoring menu on the Panther Fusion system.
- Received European CE mark for our Panther Fusion SARS-CoV-2/Flu
A/B/RSV assay and Novodiag RESP-4 molecular diagnostic test. Both
assays detect and differentiate four of the most prevalent
respiratory viruses that can present with similar clinical
symptoms: severe acute respiratory syndrome coronavirus 2
(SARS-CoV-2), influenza A (Flu A), influenza B (Flu B) and
respiratory syncytial virus (RSV).
Key financial results for the fiscal third quarter are shown in
the table below.
GAAP
Non-GAAP
Q3’22
Q3’21
Change
Increase
(Decrease)
Q3’22
Q3’21
Change
Increase
(Decrease)
Revenues
$1,002.7
$1,168.3
(14.2%)
$1,002.7
$1,168.3
(14.2%)
Gross Margin
54.8%
60.1%
(530 bps)
63.3%
66.1%
(280 bps)
Operating Expenses
$285.9
$343.0
(16.6%)
$311.2
$310.1
0.4%
Operating Margin
26.3%
30.7%
(440 bps)
32.3%
39.5%
(720 bps)
Net Margin
22.8%
22.9%
(10 bps)
24.1%
29.5%
(540 bps)
Diluted EPS
$0.90
$1.04
(13.5%)
$0.95
$1.33
(28.6%)
Throughout this press release, all dollar figures are in
millions, except EPS, unless otherwise noted. 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. Our fiscal
third quarter organic revenue results exclude the divested Blood
Screening business, as well as the acquired Mobidiag and Bolder
businesses. Revenue from acquired businesses is generally included
in organic revenue starting a year after the acquisition.
Revenue Detail
Increase (Decrease)
$ in millions
Q3’22
Q3’21
Global
Reported
Change
Global
Constant
Currency
Change
U.S.
Reported
Change
International
Reported
Change
International
Constant
Currency
Change
Diagnostics
Cytology and Perinatal
$115.9
$115.9
0.0%
3.5%
0.6%
(1.0%)
8.5%
Molecular Diagnostics
$435.3
$536.4
(18.9%)
(16.8%)
12.6%
(50.7%)
(46.7%)
Blood Screening
$8.9
$13.2
(32.6%)
(32.6%)
(32.6%)
N/A
N/A
Total Diagnostics
$560.1
$665.5
(15.8%)
(13.6%)
8.4%
(44.0%)
(39.2%)
Organic Diagnostics ex. COVID-19
$333.5
$296.6
12.4%
15.0%
14.5%
7.0%
16.5%
Breast Health
Breast Imaging
$212.2
$280.3
(24.3%)
(22.9%)
(24.2%)
(24.5%)
(18.1%)
Interventional Breast Solutions
$70.6
$68.7
2.8%
4.2%
3.6%
(0.4%)
6.6%
Total Breast Health
$282.8
$349.0
(19.0%)
(17.5%)
(18.6%)
(20.1%)
(13.5%)
GYN Surgical
$138.1
$127.9
8.0%
9.7%
8.0%
7.8%
16.9%
Skeletal Health
$21.7
$25.9
(16.1%)
(13.6%)
(18.2%)
(12.8%)
(6.6%)
Total
$1,002.7
$1,168.3
(14.2%)
(12.2%)
(2.0%)
(35.9%)
(30.5%)
Organic (definition above)
$985.8
$1,153.9
(14.6%)
(12.6%)
(1.8%)
(37.1%)
(31.6%)
Organic ex. COVID-19
$773.0
$799.4
(3.3%)
(1.4%)
(2.8%)
(5.0%)
3.1%
Other Financial
Highlights
- U.S. revenue of $734.6 million decreased (2.0%). International
revenue of $268.1 million decreased (35.9%), or (30.5%) in constant
currency.
- GAAP gross margin of 54.8% decreased (530) basis points.
Non-GAAP gross margin of 63.3% decreased (280) basis points. The
decrease in gross margin was primarily due to a decline in
international COVID-19 assay sales compared to the prior year
period and supply chain challenges related to semiconductor chips
in our Breast Health business.
- GAAP operating margin of 26.3% decreased (440) basis points.
Non-GAAP operating margin of 32.3% decreased (720) basis points.
The decrease in operating margin was primarily due to a decline in
international COVID-19 assay sales compared to the prior year
period and supply chain challenges related to semiconductor chips
in our Breast Health business.
- GAAP net income attributable to Hologic of $228.4 million
decreased (14.9%). Non-GAAP net income attributable to Hologic of
$241.5 million decreased (30.0%). Adjusted non-GAAP earnings before
interest, taxes, depreciation and amortization (EBITDA) was $348.3
million, a decrease of (27.9%).
- COVID-19 revenues, which consist of COVID-19 assay revenue of
$172.9 million, and other COVID-19 related revenue and revenue from
discontinued products of $39.9 million, decreased (40.0%), or
(38.0%) in constant currency.
- Total principal debt outstanding at the end of the third
quarter was $2.85 billion. The Company ended the quarter with cash
and equivalents of $2.4 billion, and a net leverage ratio (net debt
over adjusted EBITDA) of 0.2.
- On a trailing 12 months basis, adjusted Return on Invested
Capital (ROIC) of 25.3% decreased (940) basis points compared to
the prior year period.
Financial Guidance for the Fourth
Quarter and Full-Year Fiscal 2022
“Our fiscal third quarter 2022 was financially very strong, with
performance exceeding revenue and EPS expectations,” said Karleen
Oberton, Hologic’s chief financial officer. “In our fiscal fourth
quarter, we expect continued strength in our base Diagnostics and
Surgical businesses to counterbalance supply chain headwinds in our
Breast Health business.”
Hologic’s financial guidance for the fourth quarter and full
year 2022 is shown in the table below. The guidance is based on a
full year non-GAAP tax rate of approximately 21.0%, and diluted
shares outstanding of 254 million for the full year. Constant
currency guidance assumes that foreign exchange rates are the same
in fiscal 2022 as in fiscal 2021. Organic revenue guidance is in
constant currency and excludes the divested Blood Screening
business. Revenue from acquired businesses is generally included in
organic revenue guidance starting a year after the acquisition.
Therefore, in fiscal 2022, Biotheranostics and Diagenode are part
of organic revenue in the fiscal third quarter, Mobidiag is part of
organic revenue in the fiscal fourth quarter, and Bolder is
excluded from organic revenue for the full year.
Current Guidance
Previous Guidance
Guidance $
Reported %
Increase
(Decrease)
Constant Currency
% Increase
(Decrease)
Organic % Increase
(Decrease)
Guidance $
Fiscal
2022
Revenue
$4,750 - $4,780
(15.7%) to (15.1%)
(14.4%) to (13.8%)
(15.4%) to (14.9%)
$4,600 - $4,700
GAAP EPS
$4.98 - $5.03
(30.9%) to (30.2%)
$4.36 - $4.56
Non-GAAP EPS
$5.79 - $5.84
(31.2%) to (30.6%)
$5.45 - $5.65
Q4 2022
Revenue
$840 - $870
(36.2%) to (33.9%)
(34.5%) to (32.2%)
(34.4%) to (32.1%)
GAAP EPS
$0.33 - $0.38
(74.2%) to (70.3%)
Non-GAAP EPS
$0.60 - $0.65
(62.7%) to (59.6%)
Use of Non-GAAP Financial
Measures
The Company has presented the following non-GAAP financial
measures in this press release: constant currency revenues; organic
revenues; organic revenues excluding COVID-19, non-GAAP gross
margin; non-GAAP operating expenses; non-GAAP operating margin;
non-GAAP effective tax rate; non-GAAP net income; non-GAAP net
margin; non-GAAP EPS; and adjusted EBITDA. Organic revenue excludes
the divested Blood Screening business, as well as the acquired
Mobidiag, and Bolder businesses as noted above. Revenue from
acquired businesses is generally included in organic revenue
starting a year after the acquisition. Organic revenue excluding
COVID-19 is organic revenue less COVID assay revenue, COVID related
sales of instruments, collection kits and ancillaries, as well as
license revenue, and revenues from discontinued products. 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) adjustments to record contingent consideration
at fair value; (iii) additional expenses resulting from the
purchase accounting adjustment to record inventory at fair value;
(iv) restructuring and divestiture charges and facility closure and
consolidation charges, including accelerated depreciation, and
costs incurred to integrate acquisitions (including retention,
transaction bonuses, legal and professional consulting services)
and separate divested businesses from existing operations; (v)
expenses related to the divested Cynosure business incurred
subsequent to the disposition date primarily related to
indemnification provisions for legal and tax matters; (vi)
transaction related expenses for divestitures and acquisitions;
(vii) third-party expenses incurred related to implementing the
European MDR/IVDR requirements and obtaining the appropriate
approvals for its existing products; (viii) debt extinguishment
losses and related transaction costs; (ix) the unrealized (gains)
losses on the mark-to-market of 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 and losses resulting from the sale
of investments; (xii) the one-time discrete impacts related to
internal restructurings and non-operational items; (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; 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 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.
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 2022. Interested participants may listen to the call by
dialing 800-289-0720 (in the U.S. and Canada) or +1 323-701-0160
(for international callers) and referencing access code 6025981.
Participants may also click here to join. Participants should dial
in 5-10 minutes before the call begins. A replay will be available
approximately two hours after the call ends through Friday, August
26, 2022. The replay numbers are 888-203-1112 (U.S.) or +1
719-457-0820 (international), access code 6025981, PIN 3270. The
Company will also provide a live webcast of the call at
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 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 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 severity and duration of the COVID-19
pandemic and its impact on the U.S. healthcare system, the U.S.
economy and worldwide economy; the timing, scope and effect of
further U.S. and international governmental, regulatory, fiscal,
monetary and public health responses to the COVID-19 pandemic;
disruption of supply chains, including the availability of critical
raw materials and components, including semiconductor chips, or
more commonly referred to as chips, as well as cost inflation in
materials, packaging and transportation; 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; continued
demand for the Company’s COVID-19 TMA assay; the Company’s ability
to manufacture, on a scale necessary to meet demand, its COVID-19
TMA assay as well as the Panther systems on which the assay runs;
U.S., European and general worldwide economic conditions, including
recession concerns, trade relations, and related uncertainties; 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 ability of the Company to
successfully manage leadership and organizational changes,
including the ability of the Company to attract, motivate and
retain key employees and maintain engagement and efficiency in
remote work environments; 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; 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,
including its most recent Annual Report on Form 10-K and Quarterly
Report on Form 10-Q. 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 INCOME
(Unaudited)
(In millions, except number of
shares, which are reflected in thousands, and per share data)
Three Months Ended
Nine Months Ended
June 25, 2022
June 26, 2021
June 25, 2022
June 26, 2021
Revenues:
Product
$
837.1
$
995.2
$
3,408.7
$
3,829.4
Service and other
165.6
173.1
500.9
486.3
Total revenues
1,002.7
1,168.3
3,909.6
4,315.7
Cost of revenues:
Product
266.3
303.9
907.0
889.1
Amortization of acquired intangible
assets
75.9
68.1
223.1
194.2
Impairment of intangible assets
9.2
—
9.2
—
Service and other
101.5
94.7
287.6
264.7
Gross profit
549.8
701.6
2,482.7
2,967.7
Operating expenses:
Research and development
65.1
69.0
207.4
199.8
Selling and marketing
152.3
142.7
471.0
402.2
General and administrative
91.9
117.3
310.5
297.7
Amortization of acquired intangible
assets
11.2
10.4
33.2
30.7
Contingent consideration fair value
adjustments
(35.4
)
—
(39.5
)
(10.1
)
Restructuring and divestiture charges
0.8
3.6
0.8
6.6
Total operating expenses
285.9
343.0
983.4
926.9
Income from operations
263.9
358.6
1,499.3
2,040.8
Interest income
2.4
0.4
3.6
1.1
Interest expense
(22.7
)
(21.6
)
(71.0
)
(70.9
)
Debt extinguishment loss
—
—
(0.7
)
(21.6
)
Other income, net
4.8
0.1
13.6
1.1
Income before income taxes
248.4
337.5
1,444.8
1,950.5
Provision for income taxes
20.0
69.4
261.5
409.6
Net income
$
228.4
$
268.1
$
1,183.3
$
1,540.9
Net loss attributable to noncontrolling
interest
—
(0.3
)
—
(1.8
)
Net income attributable to
Hologic
$
228.4
$
268.4
$
1,183.3
$
1,542.7
Net income per common share
attributable to Hologic:
Basic
$
0.91
$
1.05
$
4.70
$
5.98
Diluted
$
0.90
$
1.04
$
4.65
$
5.93
Weighted average number of shares
outstanding:
Basic
250,756
256,230
251,943
257,769
Diluted
253,093
258,581
254,273
260,371
HOLOGIC, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In millions)
June 25, 2022
September 25, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
2,375.3
$
1,170.3
Accounts receivable, net
702.9
942.7
Inventories
581.2
501.2
Other current assets
249.6
554.5
Total current assets
3,909.0
3,168.7
Property, plant and equipment, net
490.1
564.7
Goodwill and intangible assets, net
4,722.4
4,940.8
Other assets
235.9
245.7
Total assets
$
9,357.4
$
8,919.9
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term debt
$
7.5
$
313.0
Accounts payable and accrued
liabilities
793.8
815.8
Deferred revenue
199.6
198.0
Total current liabilities
1,000.9
1,326.8
Long-term debt, net of current portion
2,814.6
2,712.2
Deferred income taxes
208.3
250.5
Other long-term liabilities
335.7
411.8
Total stockholders' equity
4,997.9
4,218.6
Total liabilities and stockholders’
equity
$
9,357.4
$
8,919.9
HOLOGIC, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Unaudited)
(In millions)
Nine Months Ended
June 25, 2022
June 26, 2021
OPERATING ACTIVITIES
Net income
$
1,183.3
$
1,540.9
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
67.2
64.2
Amortization of acquired intangibles
256.3
224.9
Stock-based compensation expense
51.8
51.0
Deferred income taxes
(60.2
)
(44.3
)
Intangible asset impairment charge
9.2
—
Debt extinguishment loss
0.7
21.6
Contingent consideration fair value
adjustments
(39.5
)
(10.1
)
Other adjustments and non-cash items
36.3
29.9
Changes in operating assets and
liabilities, excluding the effect of acquisitions:
Accounts receivable
193.9
111.5
Inventories
(86.8
)
(82.4
)
Prepaid income taxes
(10.5
)
(24.3
)
Prepaid expenses and other assets
378.3
(22.3
)
Accounts payable
2.5
9.4
Accrued expenses and other liabilities
(23.0
)
(27.6
)
Deferred revenue
(2.4
)
22.6
Net cash provided by operating
activities
1,957.1
1,865.0
INVESTING ACTIVITIES
Acquisition of businesses, net of cash
acquired
(158.6
)
(1,163.3
)
Capital expenditures
(50.8
)
(90.6
)
Proceeds from the Department of
Defense
75.0
19.4
Increase in equipment under customer usage
agreements
(44.8
)
(43.4
)
Purchase of intellectual property
—
(6.5
)
Other activity
5.0
(2.1
)
Net cash used in investing activities
(174.2
)
(1,286.5
)
FINANCING ACTIVITIES
Proceeds from long-term debt, net of
issuance costs
1,491.2
—
Repayments of long-term debt
(1,387.5
)
(56.3
)
Proceeds from senior notes, net of
issuance costs
—
936.3
Repayment of senior notes
—
(970.8
)
Proceeds from accounts receivable
securitization agreement
—
320.0
Repayment under accounts receivable
securitization agreement
(248.5
)
—
Repayments under revolving credit line
—
(250.0
)
Payment of contingent consideration
(12.2
)
—
Purchase of non-controlling interest
—
(8.5
)
Payment of acquired long-term debt
(63.7
)
—
Repurchases of common stock
(367.0
)
(409.7
)
Proceeds from issuance of common stock
pursuant to employee stock plans
26.9
39.6
Payment of minimum tax withholdings on net
share settlements of equity awards
(22.6
)
(46.9
)
Payments under finance lease
obligations
(2.8
)
(1.5
)
Net cash used in financing activities
(586.2
)
(447.8
)
Effect of exchange rate changes on cash
and cash equivalents
8.3
(4.1
)
Net increase in cash and cash
equivalents
1,205.0
126.6
Cash and cash equivalents, beginning of
period
1,170.3
701.0
Cash and cash equivalents, end of
period
$
2,375.3
$
827.6
HOLOGIC, INC.
RECONCILIATION OF GAAP TO
NON-GAAP RESULTS
(Unaudited)
(In millions, except earnings per
share and margin percentages)
Reconciliation of GAAP Revenue to
Organic Revenue and Organic Revenue excluding COVID Revenue
Three Months Ended
June 25, 2022
June 26, 2021
Consolidated GAAP Revenue
$
1,002.7
$
1,168.3
Less: Blood Screening revenue
(8.9
)
(13.2
)
Less: Revenue from Mobidiag and Bolder
(8.0
)
(1.2
)
Organic Revenue
$
985.8
$
1,153.9
Less: COVID-19 Assays
(172.9
)
(291.2
)
Less: COVID-19 Related Revenue *
(38.8
)
(59.9
)
Less: Discontinued Product Revenue
(1.1
)
(3.4
)
Organic Revenue excluding COVID
Revenue
$
773.0
$
799.4
*Revenues related to COVID assay sales for
instruments, collection kits and ancillaries, as well as license
revenue related to COVID assay sales.
Three Months Ended
Nine Months Ended
June 25, 2022
June 26, 2021
June 25, 2022
June 26, 2021
Gross Profit:
GAAP gross profit
$
549.8
$
701.6
$
2,482.7
$
2,967.7
Adjustments:
Amortization of acquired intangible assets
(1)
75.9
68.1
223.1
194.2
Impairment of intangible assets (18)
9.2
—
9.2
—
Integration/consolidation costs (7)
0.1
—
0.1
1.0
Fair value write-up of acquired inventory
sold (10)
—
2.1
—
5.3
Non-GAAP gross profit
$
635.0
$
771.8
$
2,715.1
$
3,168.2
Gross Margin Percentage:
GAAP gross margin percentage
54.8
%
60.1
%
63.5
%
68.8
%
Impact of adjustments above
8.5
%
6.0
%
5.9
%
4.6
%
Non-GAAP gross margin percentage
63.3
%
66.1
%
69.4
%
73.4
%
Operating Expenses:
GAAP operating expenses
$
285.9
$
343.0
$
983.4
$
926.9
Adjustments:
Amortization of acquired intangible assets
(1)
(11.2
)
(10.4
)
(33.2
)
(30.7
)
Transaction expenses (2)
(0.4
)
(14.0
)
(1.3
)
(19.0
)
MDR expenses (8)
(1.8
)
(2.9
)
(5.6
)
(7.3
)
Contingent consideration adjustments
(5)
35.4
—
39.5
10.1
Purchased research and development asset
charge (14)
—
—
—
(7.0
)
Integration/consolidation costs (7)
(1.1
)
(2.0
)
(4.4
)
(7.3
)
Restructuring and divestiture charges
(7)
(0.8
)
(3.6
)
(0.8
)
(6.6
)
Non-income tax benefits, net (6)
5.2
—
5.7
3.3
Non-GAAP operating expenses
$
311.2
$
310.1
$
983.3
$
862.4
Operating Margin:
GAAP income from operations
$
263.9
$
358.6
$
1,499.3
$
2,040.8
Adjustments to gross profit as detailed
above
85.2
70.2
232.4
200.5
Adjustments to operating expenses as
detailed above
(25.3
)
32.9
0.1
64.5
Non-GAAP income from operations
$
323.8
$
461.7
$
1,731.8
$
2,305.8
Operating Margin Percentage:
GAAP income from operations margin
percentage
26.3
%
30.7
%
38.3
%
47.3
%
Impact of adjustments above
6.0
%
8.8
%
6.0
%
6.1
%
Non-GAAP operating margin percentage
32.3
%
39.5
%
44.3
%
53.4
%
Pre-Tax Income:
GAAP pre-tax income
$
248.4
$
337.5
$
1,444.8
$
1,950.5
Adjustments to pre-tax earnings as
detailed above
59.9
103.1
232.5
265.0
Debt extinguishment losses (4)
—
—
0.7
21.6
Debt transaction costs (13)
—
—
1.8
5.8
Equity method investment write-off (3)
—
—
4.3
—
Gain on life insurance proceeds (15)
—
—
(2.3
)
—
Other (16)
(0.4
)
—
(0.4
)
—
Unrealized (gains) losses on foreign
currency contracts (9)
(2.2
)
(1.6
)
(10.0
)
7.8
Non-GAAP pre-tax income
$
305.7
$
439.0
$
1,671.4
$
2,250.7
Net Income Attributable to
Hologic:
GAAP net income
$
228.4
$
268.1
$
1,183.3
$
1,540.9
Adjustments:
Amortization of acquired intangible assets
(1)
87.1
78.5
256.3
224.9
Restructuring and
integration/consolidation costs (7)
2.0
5.6
5.3
14.9
MDR expenses (8)
1.8
2.9
5.6
7.3
Impairment of acquired intangible assets
(18)
9.2
—
9.2
—
Purchased research and development asset
charge (14)
—
—
—
7.0
Acquisition related expenses and
adjustments (2) (10)
0.4
16.1
1.3
24.3
Contingent consideration adjustments
(5)
(35.4
)
—
(39.5
)
(10.1
)
Debt extinguishment losses and transaction
costs (4) (13)
—
—
2.5
27.4
Non-income tax benefits, net (6)
(5.2
)
—
(5.7
)
(3.3
)
Non-operating charges (benefit) (3) (9)
(15) (16)
(2.6
)
(1.6
)
(8.4
)
7.8
Income tax reserve reversals* (17)
(15.8
)
—
(16.0
)
—
Income tax effect of reconciling items
(11)
(28.4
)
(25.0
)
(73.5
)
(74.3
)
Non-GAAP net income
$
241.5
$
344.6
$
1,320.4
$
1,766.8
Net loss attributable to non-controlling
interest
—
(0.2
)
—
(1.8
)
Net income attributable to Hologic
$
241.5
$
344.8
$
1,320.4
$
1,768.6
*Net of Federal benefit of state and
interest
Net Income Percentage:
GAAP net income percentage
22.8
%
22.9
%
30.3
%
35.7
%
Impact of adjustments above
1.3
%
6.6
%
3.5
%
5.3
%
Non-GAAP net income attributable to
Hologic percentage
24.1
%
29.5
%
33.8
%
41.0
%
Earnings Per Share Attributable to
Hologic:
GAAP earnings per share - Diluted
$
0.90
$
1.04
$
4.65
$
5.93
Adjustment to net income (as detailed
above)
0.05
0.29
0.54
0.86
Non-GAAP earnings per share – diluted
(12)
$
0.95
$
1.33
$
5.19
$
6.79
Adjusted EBITDA:
Non-GAAP net income
$
241.5
$
344.8
$
1,320.4
$
1,768.6
Interest expense, net, not adjusted
above
20.3
21.2
65.6
64.0
Provision for income taxes
64.2
94.4
351.0
483.9
Depreciation expense, not adjusted
above
22.3
22.7
67.2
64.1
Adjusted EBITDA
$
348.3
$
483.1
$
1,804.2
$
2,380.6
Explanatory Notes to Reconciliations:
(1)
To reflect non-cash expenses attributable
to the amortization of acquired intangible assets.
(2)
To reflect expenses 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.
(3)
To write off an equity method investment
acquired in the Mobidiag acquisition.
(4)
To reflect a debt extinguishment loss from
refinancing the Credit Agreement in first quarter of fiscal 2022
and the refinancing of the 2025 Senior Notes during fiscal
2021.
(5)
To reflect adjustments to the estimated
contingent consideration liabilities related to the Acessa Health
acquisition, which is payable upon meeting defined revenue growth
metrics.
(6)
To reflect the net impact of non-income
tax matters primarily related to settling prior years' audit
matters and from a statute of limitations expiration.
(7)
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, as well as costs incurred to
integrate acquisitions and dispose businesses, including
consulting, legal, tax and accounting fees. In addition, this
category includes additional expenses incurred related to the
Cynosure disposition, settlements of litigation and indemnification
provisions for legal and tax matters that existed as of the date of
disposition.
(8)
To reflect the exclusion of third-party
expenses incurred to obtain compliance with the European Medical
Device Regulation requirement for the Company's existing products
for which it already has FDA approval and/or CE mark.
(9)
To reflect non-cash unrealized gains and
losses on the mark-to market on outstanding forward foreign
currency contracts, which do not qualify for hedge accounting.
(10)
To reflect the fair value step up of
inventory sold during the period related to the Somatex, Acessa
Health, Diagenode, and Mobidiag acquisitions in fiscal 2021.
(11)
To reflect an estimated annual effective
tax rate of 21.0% for fiscal 2022 and 21.5% for fiscal 2021.
(12)
Non-GAAP earnings per share was calculated
based on 253,093 and 254,273 weighted average diluted shares
outstanding for the three and nine months ended June 25, 2022, and
258,581 and 260,371 weighted average diluted shares outstanding for
the three and nine months ended June 26, 2021, respectively.
(13)
To reflect the amount of debt issuance
costs recorded directly to interest expense as a result of
refinancing the Credit Agreement in first quarter of fiscal 2022
and the refinancing of the 2025 Senior Notes during fiscal
2021.
(14)
To reflect the purchase of intangible
assets used in a research and development project that has no
future alternative use.
(15)
To reflect a gain on life insurance
proceeds received during the second quarter of fiscal 2022.
(16)
To reflect other non-operating gains in
fiscal 2022.
(17)
To reflect the net impact of income tax
reserve releases from statute of limitations expiration.
(18)
To reflect an impairment charge for
developed technology assets acquired in the Faxitron
acquisition.
Reconciliation of GAAP to non-GAAP EPS
Guidance:
Guidance Range
Guidance Range
Quarter Ending September 24,
2022
Quarter Ending September 24,
2022
Low
High
Low
High
GAAP Net Income Per Share
$
0.33
$
0.38
$
4.98
$
5.03
Amortization of acquired intangible
assets
0.33
0.33
1.34
1.34
Contingent Consideration Fair Value
Adjustment
–
–
(0.16
)
(0.16
)
Intangible asset impairment charges
–
–
0.04
0.04
Restructuring, Integration and Other
charges
0.02
0.02
0.02
0.02
Income tax reserve reversals
–
–
(0.06
)
(0.06
)
Tax Impact of Exclusions
(0.08
)
(0.08
)
(0.37
)
(0.37
)
Non-GAAP Net Income Per Share
$
0.60
$
0.65
$
5.79
$
5.84
Trailing Twelve
Months ended
June 25, 2022
Return on Invested Capital:
Adjusted Net Operating Profit After
Tax
Non-GAAP net income attributable to
Hologic
$
1,736.0
Non-GAAP provision for income taxes
464.8
Non-GAAP interest expense
91.9
Non-GAAP other income
(0.9
)
Adjusted net operating profit before
tax
$
2,291.8
Non-GAAP average effective tax rate
(1)
21.1
%
Adjusted net operating profit after
tax
$
1,807.8
Average Net Debt plus Average
Stockholders’ Equity (2)
Average total debt
$
2,968.7
Less: Average cash and cash
equivalents
(1,601.4
)
Average net debt
$
1,367.3
Average stockholders’ equity (3)
5,791.7
Average net debt plus average
stockholders’ equity
$
7,159.0
Adjusted ROIC
Adjusted ROIC (adjusted net operating
profit after tax above divided by average net debt plus average
stockholders’ equity)
25.3
%
(1)
ROIC is presented on a TTM basis; non-GAAP
effective tax rate for the three months ended September 25, 2021,
was 21.5%, the three months ended December 25, 2021 was 21.5%, the
three months ended March 26, 2022 was 20.46% and the three months
ended June 25, 2022 was 21.0%.
(2)
Calculated using the average of the
balances as of June 25, 2022, and June 26, 2021.
(3)
Adjusted (increased) to eliminate the
effect of the impairment of intangible assets of $32.2 million in
fiscal 2014, the impairment of goodwill of $685.7 million and an
IPR&D asset of $46.0 million in fiscal 2018, the impairment of
intangible assets and equipment of $685.4 million in fiscal 2019,
the impairment of intangible assets and equipment of $30.2 million
in fiscal 2020, and the impairment of intangible assets of $9.2
million in fiscal 2022. The impact of the intangible asset
impairment charges is reflected net of tax.
As of
June 25, 2022
Net Leverage Ratio:
Total principal debt
$
2,850.0
Total cash
(2,375.3
)
Net principal debt, as adjusted
$
474.7
EBITDA for the last four quarters
$
2,380.0
Net Leverage Ratio
0.2
Other Supplemental Information:
Three Months Ended
Nine Months Ended
June 25, 2022
June 26, 2021
June 25, 2022
June 26, 2021
Geographic Revenues
U.S.
73.3
%
64.2
%
70.1
%
68.4
%
Europe
16.4
%
24.7
%
19.2
%
22.3
%
Asia-Pacific
7.1
%
7.7
%
7.7
%
6.2
%
Rest of World
3.2
%
3.4
%
3.0
%
3.1
%
Total Revenues
100.0
%
100.0
%
100.0
%
100.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220727005326/en/
Ryan Simon Vice President, Investor Relations
Ryan.Simon@hologic.com (858) 410-8514
Francis Pruell Director, Investor Relations
Francis.Pruell@hologic.com (508) 263-8628
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