Hologic Announces Fourth Quarter Fiscal 2013 Operating Results
Results in Line with Guidance
Company Provides Update on Strategic Initiatives
BEDFORD, Mass., Nov. 11, 2013 /PRNewswire/ -- Hologic, Inc. (Hologic or the Company) (NASDAQ: HOLX), a leading developer, manufacturer and supplier of premium diagnostic products, medical imaging systems and surgical products, with an emphasis on serving the healthcare needs of women, today announced its results for the fourth fiscal quarter and fiscal year ended September 28, 2013.
Highlights of the Quarter Include:
Highlights Subsequent to the Quarter Include:
A reconciliation of historical GAAP to non‐GAAP results is included as an attachment to this press release.
Fourth Quarter Fiscal 2013 Operating Results Overview:
Fourth quarter fiscal 2013 revenues increased 5.7% to $622.1 million from $588.5 million in the prior year. During the same period, non-GAAP revenues increased 3.7% from $600.2 million. Non-GAAP revenues in the fourth quarter of fiscal 2012 reflect the addition of $11.6 million relating to contingent revenue earned and received under the Company's collaboration agreement with Novartis that was eliminated as a result of the effect of purchase accounting.
The increase in revenues compared to the same period in the prior year was driven primarily by:
The overall revenue increase was partially offset by lower year-over-year sales of:
Foreign currencies had a negligible impact on revenues compared with the fourth quarter of fiscal 2012.
Fourth quarter fiscal 2013 net loss was $1.1 billion, or $(4.11) per diluted share, compared with a net loss of $77.8 million, or $(0.29) per diluted share, in the fourth quarter of fiscal 2012. Fourth quarter fiscal 2013 non-GAAP net income was $107.6 million, or $0.39 per diluted share, an increase of 9.4% and 7.1%, respectively, compared to $98.3 million, or $0.37 per diluted share, for the same period in the prior year.
The Company has significant goodwill on its balance sheet as a result of its acquisitions. The Company's policy is to review its goodwill for impairment annually as of the first day of its fiscal fourth quarter. In the fourth quarter of fiscal 2013, the Company completed this goodwill impairment analysis and, based on a combination of factors including a full re-evaluation of the Company's existing product development efforts and cost structure, as well as a change in revenue forecasts, the Company determined that a portion of its goodwill within its Diagnostics business segment was impaired. As a result, the Company recorded a non-cash charge of $1.1 billion. This non-cash charge is included in the non-GAAP goodwill adjustment in the financial reconciliation attached to this press release.
For the twelve months ended September 28, 2013, revenues increased 24.4% to $2.49 billion from $2.00 billion in the prior year. During the same period, non-GAAP revenues increased 24.7% to $2.51 billion from $2.01 billion. Non-GAAP revenues reflect the addition of $19.7 million and $11.6 million in fiscal 2013 and 2012, respectively, primarily relating to the purchase accounting described above.
For the twelve months ended September 28, 2013, Hologic reported a net loss of $1.2 billion, or $(4.36) per diluted share, compared with a net loss of $73.6 million, or $(0.28) per diluted share, for the twelve months ended September 29, 2012. The Company's non-GAAP net income of $406.5 million, or $1.50 per diluted share, for the twelve months ended September 28, 2013, increased 10.5% and 8.5%, respectively, compared to $367.8 million, or $1.38 per diluted share, for the same period in the prior year.
The following non-GAAP financial measures are included in this press release: revenues, net income, earnings per diluted share (EPS), and adjusted EBITDA. The Company's definitions of these non‐GAAP financial measures, and the reconciliations of these historical measures to the Company's comparable GAAP financial measures for the periods presented, are set forth in the supplemental information attached to this press release. When analyzing the Company's operating performance, investors should not consider these non‐GAAP measures as a substitute for the comparable financial measures prepared in accordance with GAAP.
"We have made significant progress in recent months in reviewing the strategy, leadership and cost structure of each of our businesses, all with a focus on making changes to the organization that will enable us to leverage our strong product platforms going forward," said Jack Cumming, President and Chief Executive Officer. "We expect fiscal 2014 to be a transitional year for the Company and we remain confident the changes we are making to enhance the organization, combined with improving trends across our portfolio of market-leading products, will drive stronger financial performance in fiscal 2015 and beyond."
Fourth Quarter Fiscal 2013 Revenue Overview by Segment (As Compared to the Fourth Quarter Fiscal 2012):
On November 7, 2013, the Company announced FDA approval of its Aptima HPV 16 18/45 genotype assay on its fully-automated Panther system. The Aptima HPV 16 18/45 genotype assay is the first FDA-approved test for genotyping human papillomavirus (HPV) types 16, 18 and/or 45. The test is performed from a sample drawn from a ThinPrep liquid cytology specimen. The addition of the Aptima HPV 16 18/45 genotype assay to the Panther system's testing menu extends the capability of low-to-high-volume laboratories to run multiple tests from a single specimen, on a cost-effective, highly-flexible, and fully-automated molecular testing platform.
Improved Balance Sheet and Financial Flexibility with Refinancing and Partial Prepayments of Term B:
On October 31, 2013, the Company voluntarily prepaid $100 million on its Term B. In addition, on August 2, 2013, the Company entered into a debt refinancing that reduced the interest rate on its Term B by 75 basis points (from 3.50% plus LIBOR with a 1.00% floor to 2.75% plus LIBOR with a 1.00% floor). In conjunction with the refinancing, certain restrictive covenants were amended to increase the Company's capacity to repurchase shares and issue dividends. In addition, on August 2, 2013, the Company voluntarily prepaid $200 million of the Term B. Together, the prepayments and refinancing will result in annualized interest savings of approximately $22 million.
Board Approval of Stock Repurchase Program:
The Company announced today that its Board of Directors has authorized the repurchase of up to $250 million of Hologic's outstanding common stock over the next three years. Under the stock repurchase program, the Company is authorized to repurchase, from time-to-time, shares of its outstanding common stock on the open market or in privately negotiated transactions in the United States. The timing and amount of stock repurchases will be determined by the Company's management team based upon its evaluation of the market conditions and other factors. The stock repurchase program may be suspended, modified or discontinued at any time, and the Company has no obligation to repurchase any amount of its common stock under the program.
AuntMinnie names Digital Breast Tomosynthesis the "Hottest Clinical Procedure":
On October 30th, AuntMinnie.com named digital breast tomosynthesis the "Hottest Clinical Procedure" for the fourth consecutive year by its readers and editors. A second product from Hologic's tomosynthesis platform, the Affirm 3D guided biopsy option, was a finalist in the Best New Radiology Device category. The annual "Minnie" awards recognize excellence in radiology and are an annual ranking of the best and brightest technologies in medical imaging. Candidates are selected from nominations submitted by AuntMinnie.com members and winners are chosen through two rounds of voting by expert panelists. This year's campaign featured 205 candidates in 15 categories. The Company will also be presented with its 2013 Best in KLAS award at the annual meeting of the Radiological Society of North America in December. Announced in June, Hologic took the first, second and third place finishes in the digital mammography category for its 3D Dimensions, 2D Selenia and 2D Dimensions mammography systems, respectively.
The Company's guidance includes current operations, including revenues from its approved/cleared products and its recently acquired businesses. This guidance does not include any stock repurchases, acquisitions, divestitures or additional voluntary debt payments that may occur during fiscal 2014.
First Quarter Fiscal 2014 (Quarter Ending December 28, 2013):
Fiscal 2014 (Year Ending September 27, 2014):
Hologic may not generate expected revenues and may incur expenses or charges, realize income or gains, or execute transactions in fiscal 2014 that could cause actual results to vary from the guidance above. In addition, the Company is continuing to monitor the effects of the U.S., European and general worldwide economic and regulatory conditions and related uncertainties, including the implementation of healthcare cost containment measures and healthcare reform legislation, as well as foreign currency fluctuations, which, along with other uncertainties facing the Company's business including those referenced elsewhere herein and its filings with the Securities and Exchange Commission, could adversely affect anticipated results.
Conference Call and Webcast:
Hologic's management will host a conference call on Monday, November 11, 2013, at 5:00 p.m. (Eastern) to discuss fourth quarter fiscal year 2013 operating results. Interested participants may listen to the call by dialing 877-681-3377 or 719-325-4898 for international callers and referencing code 2897258 approximately 15 minutes prior to the call. For those unable to participate in the live broadcast, a replay will be available one hour after the call ends through Friday, November 29, 2013, at 888‐203‐1112 or 719‐457‐0820 for international callers, access code 2897258. The Company will also provide a live webcast of the call. Interested participants may access the webcast on the Company's website at www.hologic.com/investors‐overview. A PowerPoint presentation related to the conference call will be posted to the site.
About Hologic, Inc.:
Hologic, Inc. is a leading developer, manufacturer and supplier of premium diagnostic products, medical imaging systems, and surgical products, with an emphasis on serving the healthcare needs of women. The Company operates four core business units focused on breast health, diagnostics, GYN surgical and skeletal health. With a comprehensive suite of technologies and a robust research and development program, Hologic is committed to improving lives. The Company is headquartered in Massachusetts. For more information, visit www.hologic.com.
Hologic, Affirm, Aptima, Dimensions, Gen‐Probe, MyoSure, NovaSure, Panther, Selenia and ThinPrep and associated logos are trademarks and/or registered trademarks of Hologic, Inc. and/or its subsidiaries in the United States and/or other countries.
Forward‐Looking Statement Disclaimer:
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 recent and ongoing 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 the recently enacted or future 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, the risks that acquisitions may involve unexpected costs or unexpected liabilities, including the risks and challenges associated with the Company's recent acquisition of Gen‐Probe and operations in China; 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, and the need to comply with especially high standards for the manufacture of many of its products; 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.
Future Non-GAAP Adjustments:
Future GAAP EPS may be affected by changes in ongoing assumptions and judgments relating to the Company's acquired businesses, and may also be affected by nonrecurring, unusual or unanticipated charges, expenses or gains, all of which are excluded in the calculation of non-GAAP EPS as described in this press release. It is therefore not practicable to reconcile non-GAAP EPS guidance to the most comparable GAAP measure.
Use of Non-GAAP Financial Measures:
The Company has presented the following non-GAAP financial measures in this press release: revenues; net income; EPS; and adjusted EBITDA. The Company defines its non-GAAP revenues to primarily include contingent revenue earned under the Novartis collaboration post-acquisition which was eliminated under purchase accounting. 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. The Company defines its non-GAAP net income and EPS to exclude: (i) the amortization of intangible assets; (ii) acquisition-related charges and effects, such as charges for contingent consideration (comprised of (a) adjustments for changes in the fair value of the contingent consideration liabilities initially recorded as part of the purchase price of an acquisition as required by GAAP, and (b) contingent consideration that is tied to continuing employment of the former shareholders and employees which is recorded as compensation expense), transaction costs, integration costs including retention, and credits and/or charges associated with the write-up of acquired inventory and fixed assets to fair value, and the effect of a reduction in revenue primarily related to contingent revenue under the Novartis collaboration, described above; (iii) non-cash interest expense related to amortization of the debt discount for convertible debt securities; (iv) restructuring and divestiture charges; (v) non-cash extinguishment losses and debt transaction costs; (vi) litigation settlement charges (benefits); (vii) other-than-temporary impairment losses on investments; and (viii) other one-time, nonrecurring, unusual or infrequent charges, expenses or gains that may not be indicative of the Company's core business results; and include income taxes related to such adjustments.
The Company believes the use of non-GAAP revenues is useful to investors as it eliminates certain effects of purchase accounting on its recognition of revenue. The Company believes the use of non-GAAP net income is useful to investors by eliminating certain of the more significant effects of its acquisitions and related activities, non-cash charges resulting from the application of GAAP to convertible debt instruments with cash settlement features, charges related to debt extinguishment losses, investment impairments, litigation settlements, and restructuring and divestiture initiatives. These non-GAAP measures also reflect how Hologic manages its businesses internally. In addition to the adjustments set forth in the calculation of the Company's non-GAAP net income and EPS, its adjusted EBITDA eliminates the effects of financing, income taxes and the accounting effects of capital spending. As with the items eliminated in its calculation of non-GAAP net income, these items may vary for different companies for reasons unrelated to the overall operating performance of a company's business. When analyzing the Company's operating performance, investors should not consider these non-GAAP financial measures as a substitute for net income prepared in accordance with GAAP.
SOURCE Hologic, Inc.