– Revenue of $830.7 Million Grows 5.0%, 5.7% in Constant Currency –
– Company Posts GAAP Diluted EPS of $0.36, Non-GAAP Diluted EPS of $0.58
–
– Company Raises Full-Year Guidance for Constant Currency Revenue and
EPS –
MARLBOROUGH, Mass.--(BUSINESS WIRE)--
Hologic, Inc. (Nasdaq: HOLX) announced today the Company’s financial
results for the fiscal first quarter ended December 29, 2018.
“We posted strong results in our first fiscal quarter, with both
revenues and EPS exceeding our guidance ranges,” said Steve MacMillan,
Hologic’s Chairman, President and Chief Executive Officer. “Growth was
driven by acceleration in our largest businesses – U.S. Breast Health,
International, and global Molecular Diagnostics – all of which posted
double-digit constant currency growth to start our year.”
Recent Highlights
-
Revenue growth in the first quarter was driven by U.S. Breast Health,
International and Molecular Diagnostics.
-
U.S. Breast Health revenue of $252.6 million grew 12.6% compared
to the prior year period, representing its highest growth rate in
three years.
-
Global Molecular Diagnostics revenue increased 10.5%, or 11.2% in
constant currency, to $164.3 million.
-
International revenue of $208.9 increased 7.7%, or 10.7% in
constant currency.
-
Recent new product launches include the Omni™ hysteroscope and Panther
Fusion Open Access™ functionality in the United States, the Panther
Fusion® Bordetella assay in Europe, and the Surgical handpiece for the
TempSure™ radiofrequency system in North America.
-
Completed the acquisition of Focal Therapeutics on October 1, 2018,
strengthening the Company’s breast surgery franchise, for
approximately $120 million.
-
Repurchased 3.7 million shares of common stock for $150.1 million.
Key financial results for the fiscal first quarter are shown in the
table below.
|
|
|
|
|
|
|
|
GAAP
|
|
|
Non-GAAP
|
|
|
Q1’19
|
|
|
Q1’18
|
|
|
Change Increase (Decrease)
|
|
|
Q1’19
|
|
|
Q1’18
|
|
|
Change Increase (Decrease)
|
Revenues
|
|
$
|
830.7
|
|
|
|
$
|
791.1
|
|
|
|
5.0
|
%
|
|
|
$
|
830.7
|
|
|
|
$
|
791.1
|
|
|
|
5.0
|
%
|
Gross Margin
|
|
|
52.3
|
%
|
|
|
|
53.7
|
%
|
|
|
(140 bps)
|
|
|
|
62.2
|
%
|
|
|
|
63.8
|
%
|
|
|
(160 bps)
|
Operating Expenses
|
|
$
|
293.6
|
|
|
|
$
|
290.4
|
|
|
|
1.1
|
%
|
|
|
$
|
274.7
|
|
|
|
$
|
271.8
|
|
|
|
1.1
|
%
|
Operating Margin
|
|
|
16.9
|
%
|
|
|
|
17.0
|
%
|
|
|
(10 bps)
|
|
|
|
29.2
|
%
|
|
|
|
29.4
|
%
|
|
|
(20 bps)
|
Net Margin
|
|
|
11.9
|
%
|
|
|
|
51.4
|
%
|
|
|
(3,950 bps)
|
|
|
|
18.9
|
%
|
|
|
|
19.4
|
%
|
|
|
(50 bps)
|
Diluted EPS
|
|
$
|
0.36
|
|
|
|
$
|
1.45
|
|
|
|
(75.2
|
%)
|
|
|
$
|
0.58
|
|
|
|
$
|
0.55
|
|
|
|
5.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Throughout this press release, all dollar figures are in millions,
except EPS. Some totals may not foot due to rounding. Unless otherwise
noted, all results are compared to the corresponding prior year period.
Non-GAAP results exclude certain cash and non-cash items as discussed
under “Use of Non-GAAP Financial Measures.” Constant currency percentage
changes show current period revenue results as if the foreign exchange
rates were the same as those in the prior year period.
Revenue Detail
|
|
|
|
|
|
|
|
|
Increase (Decrease)
|
$ in millions
|
|
Q1’19
|
|
|
Q1’18
|
|
|
Global Reported Change
|
|
|
Global Constant Currency Change
|
|
|
US Reported Change
|
|
|
International Reported Change
|
|
|
International Constant Currency Change
|
Diagnostics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cytology & Perinatal
|
|
$118.1
|
|
|
$123.4
|
|
|
(4.3
|
%)
|
|
|
(3.2
|
%)
|
|
|
|
|
|
|
|
|
|
Molecular Diagnostics
|
|
$164.3
|
|
|
$148.6
|
|
|
10.6
|
%
|
|
|
11.2
|
%
|
|
|
|
|
|
|
|
|
|
Blood Screening
|
|
$14.2
|
|
|
$12.6
|
|
|
12.7
|
%
|
|
|
12.6
|
%
|
|
|
|
|
|
|
|
|
|
Total Diagnostics
|
|
$296.6
|
|
|
$284.6
|
|
|
4.2
|
%
|
|
|
5.0
|
%
|
|
|
2.8
|
%
|
|
|
8.9
|
%
|
|
|
12.7
|
%
|
Total Diagnostics ex. Blood
|
|
$282.4
|
|
|
$272.0
|
|
|
3.8
|
%
|
|
|
4.7
|
%
|
|
|
2.2
|
%
|
|
|
8.9
|
%
|
|
|
12.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Breast Health
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Breast Imaging
|
|
$269.7
|
|
|
$235.9
|
|
|
14.3
|
%
|
|
|
15.0
|
%
|
|
|
|
|
|
|
|
|
|
Interventional Breast Solutions
|
|
$55.0
|
|
|
$52.1
|
|
|
5.6
|
%
|
|
|
6.1
|
%
|
|
|
|
|
|
|
|
|
|
Total Breast Health
|
|
$324.7
|
|
|
$288.0
|
|
|
12.7
|
%
|
|
|
13.4
|
%
|
|
|
12.6
|
%
|
|
|
13.3
|
%
|
|
|
16.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical Aesthetics
|
|
$79.8
|
|
|
$91.3
|
|
|
(12.6
|
%)
|
|
|
(11.6
|
%)
|
|
|
(19.9
|
%)
|
|
|
(5.0
|
%)
|
|
|
(3.0
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GYN Surgical
|
|
$108.4
|
|
|
$107.5
|
|
|
0.8
|
%
|
|
|
1.4
|
%
|
|
|
(0.4
|
%)
|
|
|
7.7
|
%
|
|
|
11.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Skeletal Health
|
|
$21.2
|
|
|
$19.7
|
|
|
7.6
|
%
|
|
|
8.5
|
%
|
|
|
(2.4
|
%)
|
|
|
30.3
|
%
|
|
|
33.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$830.7
|
|
|
$791.1
|
|
|
5.0
|
%
|
|
|
5.7
|
%
|
|
|
4.1
|
%
|
|
|
7.7
|
%
|
|
|
10.7
|
%
|
Total Revenue ex. Blood
|
|
$816.5
|
|
|
$778.5
|
|
|
4.9
|
%
|
|
|
5.6
|
%
|
|
|
3.9
|
%
|
|
|
7.7
|
%
|
|
|
10.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial Highlights
-
U.S. revenue of $621.8 million increased 4.1%. International revenue
of $208.9 million increased 7.7%, or 10.7% in constant currency.
-
The recently acquired Faxitron businesses contributed $7.7 million to
Breast Imaging revenue, and the recently acquired Focal business
contributed $4.5 million to Interventional Breast revenue.
-
Gross margin was 52.3% on a GAAP basis, and 62.2% on a non-GAAP basis.
GAAP gross margin decreased 140 basis points, while non-GAAP gross
margin decreased 160 basis points, primarily due to geographic and
product sales mix.
-
GAAP net income was $98.6 million compared to $406.7 million in the
prior year period, which included a discrete net tax benefit of $329.2
million from U.S. tax reform. Adjusted non-GAAP earnings before
interest, taxes, depreciation and amortization (EBITDA) was $260.7
million, an increase of 1.0%.
-
Total debt outstanding at the end of the quarter was $3.1 billion. The
Company ended the quarter with cash and equivalents of $311.1 million,
and a net leverage ratio (net debt over adjusted EBITDA) of 2.8 times.
-
On a trailing 12 months basis, adjusted Return on Invested Capital
(ROIC) of 12.2% declined 20 basis points compared to the prior year
period.
Financial Guidance for Fiscal 2019
Hologic is raising its full-year, constant currency revenue guidance and
slightly increasing its full-year EPS guidance. Changes are driven by
the Company’s strong performance in the first quarter, partially offset
by greater foreign exchange headwinds compared to the Company’s initial
guidance.
Hologic’s financial guidance for the second quarter and fiscal year 2019
is shown in the table below. The guidance is based on a full year
non-GAAP tax rate of approximately 23%, and diluted shares outstanding
of approximately 272 million for the full year. Constant currency
guidance assumes that foreign exchange rates are the same in fiscal 2019
as in fiscal 2018. Current guidance assumes that recent foreign exchange
rates persist for all of fiscal 2019.
|
|
|
|
|
|
|
|
Current Guidance
|
|
|
Previous Guidance
|
|
|
Constant Currency % Increase (Decrease)
|
|
|
Reported % Increase (Decrease)
|
|
|
Guidance $
|
|
|
Constant Currency % Increase (Decrease)
|
|
|
Reported % Increase (Decrease)
|
|
|
Guidance $
|
Fiscal 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
3.8% to 4.7%
|
|
|
2.7% to 3.6%
|
|
|
$3,305 - $3,335
|
|
|
2.8% to 4.2%
|
|
|
2.2% to 3.6%
|
|
|
$3,290 - $3,335
|
GAAP EPS
|
|
|
|
|
N.M.
|
|
|
$1.39- $1.43
|
|
|
|
|
|
N.M.
|
|
|
$1.33 – $1.37
|
Non-GAAP EPS
|
|
|
|
|
7.2% to 9.0%
|
|
|
$2.39 - $2.43
|
|
|
|
|
|
6.7% to 8.5%
|
|
|
$2.38 - $2.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
2.5% to 4.4%
|
|
|
0.7% to 2.6%
|
|
|
$795 – $810
|
|
|
|
|
|
|
|
|
|
GAAP EPS
|
|
|
|
|
N.M.
|
|
|
$0.28 - $0.30
|
|
|
|
|
|
|
|
|
|
Non-GAAP EPS
|
|
|
|
|
3.8% to 7.5%
|
|
|
$0.55 - $0.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Use of Non-GAAP Financial Measures
The Company has presented the following non-GAAP financial measures in
this press release: constant currency revenues; non-GAAP gross margin;
non-GAAP operating expenses; non-GAAP operating margin; non-GAAP net
income; non-GAAP EPS; and adjusted EBITDA. The Company defines its
non-GAAP net income, EPS, and other non-GAAP financial measures to
exclude, as applicable: (i) the amortization of intangible assets and
impairment of goodwill and intangible assets; (ii) additional
depreciation expense from acquired fixed assets and accelerated
depreciation related to consolidation and closure of facilities ; (iii)
additional expenses resulting from the purchase accounting adjustment to
record inventory at fair value; (iv) non-cash interest expense related
to amortization of the debt discount from the equity conversion option
of the convertible notes; (v) restructuring and divestiture charges and
facility closure and consolidation charges and costs incurred to
integrate acquisitions (including retention, transaction bonuses, legal
and professional consulting services) and separate divested businesses
from existing operations; (vi) transaction related expenses for
divestitures and acquisitions; (vii) gains/losses on disposal of a
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 resulting from the
sale of investments; (xii) the one-time discrete impact of tax reform
primarily related to remeasuring net deferred tax liabilities; (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.
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. It is therefore not practicable to reconcile non-GAAP EPS
guidance to the most comparable GAAP measure.
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 2019.
Approximately 10 minutes before the call, dial 888-204-4368 (in the
U.S.) or +1 323-794-2423 (international) and enter access code 4938132.
A replay will be available approximately two hours after the call ends
through Friday, February 22, 2019. The replay numbers are 888-203-1112
(U.S.) or +1 719-457-0820 (international), access code 4938132, PIN
7304. The Company will also provide a live webcast of the call at http://investors.hologic.com.
About Hologic, Inc.
Hologic, Inc. is an innovative medical technology company primarily
focused on improving women's health and well-being through early
detection and treatment. For more information on Hologic, visit www.hologic.com.
Hologic, Aptima, MyoSure, NovaSure, Cynosure, 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, trade relations, and related uncertainties; the
Company’s reliance on third-party reimbursement policies to support the
sales and market acceptance of its products, including the possible
adverse impact of government regulation and changes in the availability
and amount of reimbursement and uncertainties for new products or
product enhancements; changes to applicable laws and regulations,
including tax laws, global health care reform, and import/export trade
laws; changes in guidelines, recommendations and studies published by
various organizations that could affect the use of the Company’s
products; uncertainties inherent in the development of new products and
the enhancement of existing products, including FDA approval and/or
clearance and other regulatory risks, technical risks, cost overruns and
delays; the risk that products may contain undetected errors or defects
or otherwise not perform as anticipated; risks associated with strategic
alliances and the ability of the Company to realize anticipated benefits
of those alliances; risks associated with acquisitions, including,
without limitation, the Company’s ability to successfully integrate
acquired businesses, the risks that the acquired businesses may not
operate as effectively and efficiently as expected even if otherwise
successfully integrated, and the risks that acquisitions may involve
unexpected costs or unexpected liabilities; the risks of conducting
business internationally; the risk of adverse exchange rate fluctuations
on the Company’s international activities and businesses; manufacturing
risks, including the Company’s reliance on a single or limited source of
supply for key components, the need to comply with especially high
standards for the manufacture of many of its products and risks
associated with utilizing third party manufacturers; the Company’s
ability to predict accurately the demand for its products, and products
under development, and to develop strategies to address its markets
successfully; the early stage of market development for certain of the
Company’s products; the Company’s leverage risks, including the
Company’s obligation to meet payment obligations and financial covenants
associated with its debt; cybersecurity risks; risks related to the use
and protection of intellectual property; expenses, uncertainties and
potential liabilities relating to litigation, including, without
limitation, commercial, intellectual property, employment and product
liability litigation; technical innovations that could render products
marketed or under development by the Company obsolete; and competition.
The risks included above are not exhaustive. Other factors that could
adversely affect the Company's business and prospects are described in
the filings made by the Company with the SEC. The Company expressly
disclaims any obligation or undertaking to release publicly any updates
or revisions to any such statements presented herein to reflect any
change in expectations or any change in events, conditions or
circumstances on which any such statements are based.
SOURCE: Hologic, Inc.
|
|
|
HOLOGIC, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
(Unaudited)
|
(In millions, except number of shares, which are reflected in
thousands, and per share data)
|
|
|
|
|
|
Three Months Ended
|
|
|
December 29, 2018
|
|
|
December 30, 2017
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
Product
|
|
$
|
683.1
|
|
|
|
$
|
650.7
|
|
Service and other
|
|
147.6
|
|
|
|
140.4
|
|
Total revenues
|
|
830.7
|
|
|
|
791.1
|
|
|
|
|
|
|
|
Cost of revenues:
|
|
|
|
|
|
Product
|
|
232.1
|
|
|
|
213.7
|
|
Amortization of acquired intangible assets
|
|
81.0
|
|
|
|
79.8
|
|
Service and other
|
|
83.5
|
|
|
|
73.1
|
|
|
|
|
|
|
|
Gross profit
|
|
434.1
|
|
|
|
424.5
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
Research and development
|
|
53.2
|
|
|
|
54.8
|
|
Selling and marketing
|
|
146.0
|
|
|
|
139.5
|
|
General and administrative
|
|
78.6
|
|
|
|
77.9
|
|
Amortization of acquired intangible assets
|
|
14.1
|
|
|
|
14.4
|
|
Restructuring charges
|
|
1.7
|
|
|
|
3.8
|
|
Total operating expenses
|
|
293.6
|
|
|
|
290.4
|
|
|
|
|
|
|
|
Income from operations
|
|
140.5
|
|
|
|
134.1
|
|
Interest income
|
|
1.3
|
|
|
|
0.8
|
|
Interest expense
|
|
(36.1
|
)
|
|
|
(41.0
|
)
|
Debt extinguishment losses
|
|
(0.8
|
)
|
|
|
(1.0
|
)
|
Other (expense) income, net
|
|
(0.6
|
)
|
|
|
2.9
|
|
|
|
|
|
|
|
Income before income taxes
|
|
104.3
|
|
|
|
95.8
|
|
Provision (benefit) for income taxes
|
|
5.7
|
|
|
|
(310.9
|
)
|
|
|
|
|
|
|
Net income
|
|
$
|
98.6
|
|
|
|
$
|
406.7
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
Basic
|
|
$
|
0.36
|
|
|
|
$
|
1.47
|
|
Diluted
|
|
$
|
0.36
|
|
|
|
$
|
1.45
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
Basic
|
|
270,590
|
|
|
|
276,856
|
|
Diluted
|
|
272,372
|
|
|
|
280,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HOLOGIC, INC.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
(In millions)
|
|
|
|
|
|
|
|
|
December 29, 2018
|
|
|
September 29, 2018
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
311.1
|
|
|
|
$
|
666.7
|
Accounts receivable, net
|
|
578.6
|
|
|
|
579.2
|
Inventories
|
|
418.6
|
|
|
|
384.1
|
Other current assets
|
|
93.6
|
|
|
|
93.2
|
Total current assets
|
|
1,401.9
|
|
|
|
1,723.2
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
472.6
|
|
|
|
478.2
|
Goodwill and intangible assets, net
|
|
4,965.1
|
|
|
|
4,931.8
|
Other assets
|
|
91.9
|
|
|
|
97.7
|
Total assets
|
|
$
|
6,931.5
|
|
|
|
$
|
7,230.9
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Current portion of long-term debt
|
|
$
|
319.4
|
|
|
|
$
|
599.7
|
Accounts payable and accrued liabilities
|
|
591.2
|
|
|
|
630.0
|
Deferred revenue
|
|
167.1
|
|
|
|
172.9
|
Total current liabilities
|
|
1,077.7
|
|
|
|
1,402.6
|
|
|
|
|
|
|
Long-term debt, net of current portion
|
|
2,807.9
|
|
|
|
2,704.6
|
Deferred income taxes
|
|
456.5
|
|
|
|
498.2
|
Other long-term liabilities
|
|
195.0
|
|
|
|
196.7
|
Total stockholders' equity
|
|
2,394.4
|
|
|
|
2,428.8
|
Total liabilities and stockholders’ equity
|
|
$
|
6,931.5
|
|
|
|
$
|
7,230.9
|
|
|
|
|
|
|
|
|
|
|
|
|
HOLOGIC, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(in millions)
|
|
|
|
|
|
Three Months Ended
|
|
|
December 29,
2018
|
|
|
December 30,
2017
|
OPERATING ACTIVITIES
|
|
|
|
|
|
Net income
|
|
$
|
98.6
|
|
|
|
$
|
406.7
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation
|
|
23.7
|
|
|
|
27.0
|
|
Amortization of acquired intangibles
|
|
95.1
|
|
|
|
94.2
|
|
Non-cash interest expense
|
|
2.2
|
|
|
|
8.7
|
|
Stock-based compensation expense
|
|
17.1
|
|
|
|
16.4
|
|
Deferred income taxes
|
|
(50.0
|
)
|
|
|
(390.7
|
)
|
Debt extinguishment loss
|
|
0.8
|
|
|
|
1.0
|
|
Fair value write-up of acquired inventory sold
|
|
1.8
|
|
|
|
—
|
|
Other adjustments and non-cash items
|
|
6.9
|
|
|
|
1.2
|
|
Changes in operating assets and liabilities, excluding the effect of
acquisitions:
|
|
|
|
|
|
Accounts receivable
|
|
0.4
|
|
|
|
(6.4
|
)
|
Inventories
|
|
(27.9
|
)
|
|
|
(23.3
|
)
|
Prepaid income taxes
|
|
2.0
|
|
|
|
8.1
|
|
Prepaid expenses and other assets
|
|
(1.8
|
)
|
|
|
(5.0
|
)
|
Accounts payable
|
|
(16.0
|
)
|
|
|
(7.1
|
)
|
Accrued expenses and other liabilities
|
|
(51.6
|
)
|
|
|
48.9
|
|
Deferred revenue
|
|
3.3
|
|
|
|
(10.6
|
)
|
Net cash provided by operating activities
|
|
104.6
|
|
|
|
169.1
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
Acquisition of businesses, net of cash acquired
|
|
(106.6
|
)
|
|
|
(4.1
|
)
|
Capital expenditures
|
|
(9.5
|
)
|
|
|
(10.2
|
)
|
Increase in equipment under customer usage agreements
|
|
(13.1
|
)
|
|
|
(11.6
|
)
|
Other activity
|
|
(1.5
|
)
|
|
|
(0.3
|
)
|
Net cash used in investing activities
|
|
(130.7
|
)
|
|
|
(26.2
|
)
|
FINANCING ACTIVITIES
|
|
|
|
|
|
Proceeds from long-term debt
|
|
1,500.0
|
|
|
|
1,500.0
|
|
Repayment of long-term debt
|
|
(1,462.5
|
)
|
|
|
(1,331.3
|
)
|
Proceeds from senior notes
|
|
—
|
|
|
|
350.0
|
|
Payments to extinguish convertible notes
|
|
—
|
|
|
|
(296.9
|
)
|
Payment of acquired long-term debt
|
|
(2.5
|
)
|
|
|
—
|
|
Proceeds from amounts borrowed under revolving credit line
|
|
480.0
|
|
|
|
495.0
|
|
Repayments of amounts borrowed under revolving credit line
|
|
(695.0
|
)
|
|
|
(720.0
|
)
|
Payment of debt issuance costs
|
|
(2.7
|
)
|
|
|
(11.9
|
)
|
Repurchase of common stock
|
|
(147.0
|
)
|
|
|
—
|
|
Proceeds from issuance of common stock pursuant to employee stock
plans
|
|
13.5
|
|
|
|
9.5
|
|
Payments under capital lease obligations
|
|
(0.4
|
)
|
|
|
(0.4
|
)
|
Payment of minimum tax withholdings on net share settlements of
equity awards
|
|
(11.6
|
)
|
|
|
(14.3
|
)
|
Net cash used in financing activities
|
|
(328.2
|
)
|
|
|
(20.3
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(1.3
|
)
|
|
|
1.2
|
|
Net (decrease) increase in cash and cash equivalents
|
|
(355.6
|
)
|
|
|
123.8
|
|
Cash and cash equivalents, beginning of period
|
|
666.7
|
|
|
|
540.6
|
|
Cash and cash equivalents, end of period
|
|
$
|
311.1
|
|
|
|
$
|
664.4
|
|
|
|
|
|
|
|
|
|
|
|
|
HOLOGIC, INC.
|
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
|
(Unaudited)
|
(In millions, except earnings per share and margin percentages)
|
|
|
|
Three Months Ended
|
|
|
December 29,
2018
|
|
|
December 30,
2017
|
|
|
|
|
|
|
Gross Profit:
|
|
|
|
|
|
GAAP gross profit
|
|
$
|
434.1
|
|
|
|
$
|
424.5
|
|
Adjustments:
|
|
|
|
|
|
Amortization of acquired intangible assets (1)
|
|
81.0
|
|
|
|
79.8
|
|
Incremental depreciation expense (2)
|
|
0.1
|
|
|
|
0.2
|
|
Fair value write-up of acquired inventory (12)
|
|
1.8
|
|
|
|
—
|
|
Non-GAAP gross profit
|
|
$
|
517.0
|
|
|
|
$
|
504.5
|
|
|
|
|
|
|
|
Gross Margin Percentage:
|
|
|
|
|
|
GAAP gross margin percentage
|
|
52.3
|
%
|
|
|
53.7
|
%
|
Impact of adjustments above
|
|
9.9
|
%
|
|
|
10.1
|
%
|
Non-GAAP gross margin percentage
|
|
62.2
|
%
|
|
|
63.8
|
%
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
GAAP operating expenses
|
|
$
|
293.6
|
|
|
|
$
|
290.4
|
|
Adjustments:
|
|
|
|
|
|
Amortization of acquired intangible assets (1)
|
|
(14.1
|
)
|
|
|
(14.4
|
)
|
Incremental depreciation expense (2)
|
|
(0.4
|
)
|
|
|
(3.5
|
)
|
Transaction expenses (4)
|
|
(0.4
|
)
|
|
|
(0.4
|
)
|
Non-income tax benefit (9)
|
|
—
|
|
|
|
4.0
|
|
Integration/consolidation costs (3)
|
|
(2.3
|
)
|
|
|
(0.5
|
)
|
Restructuring charges (3)
|
|
(1.7
|
)
|
|
|
(3.8
|
)
|
Non-GAAP operating expenses
|
|
$
|
274.7
|
|
|
|
$
|
271.8
|
|
|
|
|
|
|
|
Operating Margin:
|
|
|
|
|
|
GAAP income from operations
|
|
$
|
140.5
|
|
|
|
$
|
134.1
|
|
Adjustments to gross profit as detailed above
|
|
82.9
|
|
|
|
80.0
|
|
Adjustments to operating expenses as detailed above
|
|
18.9
|
|
|
|
18.6
|
|
Non-GAAP income from operations
|
|
$
|
242.3
|
|
|
|
$
|
232.7
|
|
|
|
|
|
|
|
Operating Margin Percentage:
|
|
|
|
|
|
GAAP income from operations margin percentage
|
|
16.9
|
%
|
|
|
17.0
|
%
|
Impact of adjustments above
|
|
12.3
|
%
|
|
|
12.4
|
%
|
Non-GAAP operating margin percentage
|
|
29.2
|
%
|
|
|
29.4
|
%
|
|
|
|
|
|
|
Interest Expense:
|
|
|
|
|
|
GAAP interest expense
|
|
$
|
36.1
|
|
|
|
$
|
41.0
|
|
Adjustments:
|
|
|
|
|
|
Non-cash interest expense relating to convertible notes (5)
|
|
—
|
|
|
|
(2.9
|
)
|
Debt transaction costs (10)
|
|
(0.8
|
)
|
|
|
(1.7
|
)
|
Non-GAAP interest expense
|
|
$
|
35.3
|
|
|
|
$
|
36.4
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Tax Income:
|
|
|
|
|
|
GAAP pre-tax earnings
|
|
$
|
104.3
|
|
|
|
$
|
95.8
|
|
Adjustments to pre-tax earnings as detailed above
|
|
102.6
|
|
|
|
103.2
|
|
Debt extinguishment losses (6)
|
|
0.8
|
|
|
|
1.0
|
|
(Gain) loss on sale of investment securities (7)
|
|
(0.8
|
)
|
|
|
0.6
|
|
Unrealized gains on forward foreign currency contracts (8)
|
|
(3.4
|
)
|
|
|
(1.5
|
)
|
Non-GAAP pre-tax income
|
|
$
|
203.5
|
|
|
|
$
|
199.1
|
|
|
|
|
|
|
|
Net income:
|
|
|
|
|
|
GAAP net income
|
|
$
|
98.6
|
|
|
|
406.7
|
|
Adjustments:
|
|
|
|
|
|
Amortization of acquired intangible assets (1)
|
|
95.1
|
|
|
|
94.2
|
|
Fair value write-up of acquired inventory sold (12)
|
|
1.8
|
|
|
|
—
|
|
Non-cash interest expense related to convertible notes (5)
|
|
—
|
|
|
|
2.9
|
|
Restructuring, integration/consolidation costs and transaction
expenses (3) (4)
|
|
4.4
|
|
|
|
4.7
|
|
Non-income tax expense (benefit) (9)
|
|
—
|
|
|
|
(4.0
|
)
|
Incremental depreciation expense (2)
|
|
0.5
|
|
|
|
3.7
|
|
Debt extinguishment losses and expenses (6) (10)
|
|
1.6
|
|
|
|
2.7
|
|
(Gain) loss on sale of investment securities (7)
|
|
(0.8
|
)
|
|
|
0.6
|
|
Unrealized gains on forward foreign currency contracts (8)
|
|
(3.4
|
)
|
|
|
(1.5
|
)
|
Discrete impact of tax reform (11)
|
|
5.0
|
|
|
|
(329.2
|
)
|
Discrete tax benefit of an internal restructuring (15)
|
|
(20.0
|
)
|
|
|
—
|
|
Income tax effect of reconciling items (13)
|
|
(26.1
|
)
|
|
|
(27.4
|
)
|
Non-GAAP net income
|
|
$
|
156.7
|
|
|
|
$
|
153.4
|
|
|
|
|
|
|
|
Net Income Percentage:
|
|
|
|
|
|
GAAP net income percentage
|
|
11.9
|
%
|
|
|
51.4
|
%
|
Impact of adjustments above
|
|
7.0
|
%
|
|
|
(32.0
|
)%
|
Non-GAAP net income percentage
|
|
18.9
|
%
|
|
|
19.4
|
%
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
GAAP earnings per share - Diluted
|
|
$
|
0.36
|
|
|
|
$
|
1.45
|
|
Adjustment to net earnings (as detailed above)
|
|
0.22
|
|
|
|
(0.90
|
)
|
Non-GAAP earnings per share – diluted (14)
|
|
$
|
0.58
|
|
|
|
$
|
0.55
|
|
|
|
|
|
|
|
Adjusted EBITDA:
|
|
|
|
|
|
Non-GAAP net income
|
|
$
|
156.7
|
|
|
|
$
|
153.4
|
|
Interest expense, net, not adjusted above
|
|
34.0
|
|
|
|
35.6
|
|
Provision for income taxes
|
|
46.8
|
|
|
|
45.8
|
|
Depreciation expense, not adjusted above
|
|
23.2
|
|
|
|
23.3
|
|
Adjusted EBITDA
|
|
$
|
260.7
|
|
|
|
$
|
258.1
|
|
|
|
|
|
|
|
|
|
|
|
|
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 and dispose businesses, including
consulting, legal, tax 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 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 and Senior Notes.
|
(7)
|
|
To reflect realized gains and losses on the sale of
available-for-sale marketable securities and a cost method
investment.
|
(8)
|
|
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.
|
(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 fiscal 2019 and 2018 refinancings
of the Company's Credit Agreement and the fiscal 2018 refinancing
of the Senior Notes in the first quarter of fiscal 2018.
|
(11)
|
|
To reflect the discrete impact of tax reform to the provision for
income taxes for the three months ended December 29, 2018. The
benefit reduction of $5.0 million recorded in the three months ended
December 29, 2018 was primarily related to credit utilization
limitations and executive compensation deduction disallowances
resulting from the completion of computations in the quarter. The
primary benefit recorded in the three months ended December 30, 2017
was due to the tax reform re-measurement of the Company’s domestic
net deferred tax liabilities at a significantly lower federal tax
rate.
|
(12)
|
|
To reflect the fair value step up of inventory sold during the
period related to the Focal acquisition.
|
(13)
|
|
To reflect an estimated annual effective tax rate of 23.0% for both
fiscal 2019 and 2018.
|
(14)
|
|
Non-GAAP earnings per share was calculated based on 272,372 and
280,802 weighted average diluted shares outstanding for the three
months ended December 29, 2018 and December 30, 2017, respectively.
|
(15)
|
|
To reflect a discrete tax benefit recorded in the three months ended
December 29, 2018 from the adjustment of the Company’s current and
deferred tax accounts related to an internal restructuring.
|
|
|
|
|
|
|
|
Reconciliation of GAAP to non-GAAP EPS Guidance:
|
|
|
|
|
|
|
|
|
|
Guidance Range
|
|
|
|
Guidance Range
|
|
|
Quarter Ending March 30, 2019
|
|
|
|
Year Ending September 28, 2019
|
|
|
Low
|
|
|
High
|
|
|
|
Low
|
|
|
High
|
GAAP Net Income Per Share
|
|
$
|
0.28
|
|
|
|
|
$
|
0.30
|
|
|
|
|
|
$
|
1.39
|
|
|
|
|
$
|
1.43
|
|
Amortization of acquired intangible assets
|
|
$
|
0.35
|
|
|
|
|
$
|
0.35
|
|
|
|
|
|
$
|
1.40
|
|
|
|
|
$
|
1.40
|
|
Restructuring, Integration and Other charges
|
|
$
|
0.02
|
|
|
|
|
$
|
0.02
|
|
|
|
|
|
$
|
0.06
|
|
|
|
|
$
|
0.06
|
|
Non-operating gains, net
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
$
|
(0.01
|
)
|
|
|
|
$
|
(0.01
|
)
|
Discrete tax benefit of an internal restructuring
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
$
|
(0.07
|
)
|
|
|
|
$
|
(0.07
|
)
|
Discrete impact of tax reform
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
$
|
0.02
|
|
|
|
|
$
|
0.02
|
|
Tax Impact of Exclusions
|
|
$
|
(0.10
|
)
|
|
|
|
$
|
(0.10
|
)
|
|
|
|
|
$
|
(0.40
|
)
|
|
|
|
$
|
(0.40
|
)
|
Non-GAAP Net Income Per Share
|
|
$
|
0.55
|
|
|
|
|
$
|
0.57
|
|
|
|
|
|
$
|
2.39
|
|
|
|
|
$
|
2.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trailing Twelve
Months ended
December
29, 2018
|
Return on Invested Capital:
|
|
|
|
|
|
Adjusted Net Operating Profit After Tax
|
|
|
Non-GAAP net income
|
|
$
|
621.7
|
|
Non-GAAP provision for income taxes
|
|
185.7
|
|
Non-GAAP interest expense
|
|
139.8
|
|
Non-GAAP other income
|
|
(2.7
|
)
|
Adjusted net operating profit before tax
|
|
$
|
944.5
|
|
Non-GAAP average effective tax rate (1)
|
|
23.2
|
%
|
Adjusted net operating profit after tax
|
|
$
|
725.8
|
|
|
|
|
Average Net Debt plus Average Stockholders’ Equity (2)
|
|
|
Average total debt
|
|
$
|
3,228.5
|
|
Less: Average cash and cash equivalents
|
|
(487.8
|
)
|
Average net debt
|
|
$
|
2,740.7
|
|
Average stockholders’ equity (3)
|
|
$
|
3,192.3
|
|
Average net debt plus average stockholders’ equity
|
|
$
|
5,933.0
|
|
|
|
|
Adjusted ROIC
|
|
|
Adjusted ROIC (adjusted net operating profit after tax
above divided by average net debt plus average stockholders’
equity)
|
|
12.2
|
%
|
|
|
|
|
(1)
|
|
ROIC is presented on a TTM basis; non-GAAP effective tax rate for
the three months ended March 31, 2018 was 23.0%, the three months
ended June 30, 2018 was 22.3%, the three months ended September 29,
2018 was 23.7% and the three months ended December 29, 2018 was
23.0%.
|
(2)
|
|
Calculated using the average of the balances as of December 29, 2018
and December 30, 2017.
|
(3)
|
|
Adjusted (increased) to eliminate the effect of the impairment of
intangible assets of $32.2 million in fiscal 2014, and the
impairment of goodwill of $685.7 million and an IPR&D asset of $46.0
million in fiscal 2018.
|
|
|
|
|
|
As of
|
|
|
December 29, 2018
|
Leverage Ratio:
|
|
|
|
|
|
Total principal debt
|
|
$
|
3,160.0
|
|
Total cash
|
|
(311.1
|
)
|
Net principal debt, as adjusted
|
|
$
|
2,848.9
|
|
EBITDA for the last four quarters
|
|
$
|
1,033.8
|
|
Leverage Ratio
|
|
2.8
|
|
|
|
|
|
|
Other Supplemental Information:
|
|
|
|
|
|
Three Months Ended
|
|
|
December 29,
2018
|
|
|
December 31,
2017
|
|
|
|
|
|
|
Geographic Revenues
|
|
|
|
|
|
U.S.
|
|
74.9
|
%
|
|
|
75.5
|
%
|
Europe
|
|
12.2
|
%
|
|
|
11.5
|
%
|
Asia-Pacific
|
|
8.4
|
%
|
|
|
8.7
|
%
|
Rest of World
|
|
4.5
|
%
|
|
|
4.3
|
%
|
Total Revenues
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20190130005739/en/
Michael Watts
Vice President, Investor Relations and Corporate
Communications
(858) 410-8588
Michael.watts@hologic.com
Source: Hologic, Inc.