– Revenue of $1,011.4 Million, GAAP Diluted EPS
of $0.82, and Non-GAAP Diluted EPS of $1.06; All Met or Exceeded
Guidance –
– Total Company Revenue Growth of 2.7%, or 3.1%
in Constant Currency and 5.8% Organically excluding COVID-19;
Against Growth of 18.4% in the Prior Year Period –
Hologic, Inc. (Nasdaq: HOLX) announced today the Company’s
financial results for the fiscal third quarter ended June 29,
2024.
“In our third quarter of fiscal 2024, Hologic returns to
top-line reported growth and once again exceeded the high-end of
our guidance for both the top and bottom-line,” said Stephen P.
MacMillan, the Company’s Chairman, President and Chief Executive
Officer. “Our strong fiscal quarter and year-to-date results
continue to highlight the durable strength across our broad
portfolio, with our Diagnostics (ex-COVID), Breast Health, and
Surgical franchises delivering at or above our expectations. We are
excited to finish fiscal 2024 strong as we continue to build for
the long term.”
Recent Highlights
- Revenue of $1,011.4 million increased 2.7% for the quarter, or
3.1% in constant currency, primarily driven by higher sales in
Molecular Diagnostics, Breast Imaging, and Surgical.
- Excluding COVID-19 revenues, total organic revenue grew 5.5%,
or 5.8% on a constant currency basis.
- Diagnostics revenue increased 0.3%, or 0.7% in constant
currency, primarily driven by higher Molecular Diagnostics sales,
partially offset by lower sales of COVID-19 assays compared to the
prior year period.
- Excluding COVID-19 revenues, Diagnostics revenue grew 6.0% on
an organic, constant currency basis.
- Molecular Diagnostics revenue grew 2.8%, or 3.1% in constant
currency, primarily driven by higher sales of BV CV/TV and
non-COVID-19 respiratory assays compared to the prior year
period.
- Excluding COVID-19 revenues, Molecular Diagnostics revenue grew
10.5% on an organic, constant currency basis.
- Breast Health revenue increased 6.9%, or 7.1% in constant
currency, primarily driven by strong gantry sales and service.
- Excluding SSI, Breast Health revenue increased 7.9%, or 8.2% in
constant currency.
- Surgical revenue grew 5.9%, or 6.2% in constant currency,
primarily driven by solid sales of MyoSure and Fluent Fluid
Management products.
- Cash flow from operations remained strong in the third quarter
at $405.7 million.
- Repurchased 1.4 million shares for $100 million.
- Closed the acquisition of Endomagnetics on July 25, 2024, which
develops and sells breast surgery localization and lymphatic
tracing technologies.
Key financial results for the fiscal third quarter shown in the
table below:
GAAP
Non-GAAP
Q3’24
Q3’23
Change Increase (Decrease)
Q3’24
Q3’23
Change Increase (Decrease)
Revenues
1,011.4
984.4
2.7%
1,011.4
984.4
2.7%
Gross Margin
55.4%
37.3%
1,810 bps
61.1%
60.8%
30 bps
Operating Expenses
316.3
366.1
(13.6%)
302.8
313.9
(3.5%)
Operating Margin
24.1%
0.1%
2,400 bps
31.2%
28.9%
230 bps
Net Margin
19.2%
(4.1%)
2,330 bps
24.8%
23.5%
130 bps
Diluted EPS
$0.82
($0.16)
612.5%
$1.06
$0.93
14.0%
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 and SSI ultrasound imaging businesses. Revenue from
acquired businesses is generally included in organic revenue
starting a year after the acquisition.
Revenue Detail
Increase/(Decrease)
$ in millions
Q3’24
Q3’23
Global Reported Change
Global Constant Currency
Change
U.S. Reported Change
International Reported Change
International Constant Currency
Change
Diagnostics
Cytology and Perinatal
$122.2
$126.8
(3.6%)
(2.9%)
(8.0%)
4.1%
5.9%
Molecular Diagnostics
$310.7
$302.2
2.8%
3.1%
2.2%
5.2%
6.6%
Blood Screening
$7.9
$10.7
(26.2%)
(26.2%)
(26.2%)
N/A
N/A
Total Diagnostics
$440.8
$439.7
0.3%
0.7%
(1.2%)
4.7%
6.3%
Organic Diagnostics ex. COVID-19
$394.9
$374.2
5.5%
6.0%
4.0%
10.1%
11.7%
Breast Health
Breast Imaging
$309.2
$286.1
8.1%
8.3%
8.9%
5.3%
6.5%
Interventional Breast Solutions
$75.8
$74.2
2.2%
2.5%
1.5%
4.5%
6.2%
Total Breast Health
$385.0
$360.3
6.9%
7.1%
7.3%
5.1%
6.4%
GYN Surgical
$166.6
$157.3
5.9%
6.2%
2.4%
18.8%
19.8%
Skeletal Health
$19.0
$27.1
(29.9%)
(29.7%)
(25.6%)
(37.0%)
(36.2%)
Total
$1,011.4
$984.4
2.7%
3.1%
2.0%
5.1%
6.4%
Organic Revenue (definition above)
$1,003.0
$969.6
3.4%
3.8%
2.4%
6.9%
8.3%
Organic Revenue ex. COVID-19
$965.0
$914.8
5.5%
5.8%
4.3%
9.4%
10.8%
Other Financial
Highlights
- U.S. revenue of $765.3 million increased 2.0%. International
revenue of $246.1 million increased 5.1%, or 6.4% in constant
currency.
- GAAP gross margin of 55.4% increased 1,810 basis points
primarily due to lower impairment charges, driven by prior year
period charges for intangible assets and equipment from the
Mobidiag acquisition and SSI ultrasound imaging assets. Non-GAAP
gross margin of 61.1% increased 30 basis points primarily due to an
increase in sales compared to the prior year period.
- GAAP operating margin of 24.1% increased 2,400 basis points
primarily due to lower impairment charges, driven by prior year
period charges for intangible assets and equipment from the
Mobidiag acquisition and SSI ultrasound imaging assets, as well as
higher revenue and lower operating expenses. Non-GAAP operating
margin of 31.2% increased 230 basis points, primarily due to higher
revenue and lower operating expenses compared to the prior year
period.
- GAAP net income of $194.5 million increased 580.2% and non-GAAP
net income of $250.7 million increased 8.4%. Adjusted earnings
before interest, taxes, depreciation and amortization (EBITDA) was
$338.5 million, an increase of 8.5%.
- COVID-19 revenues, which consist of COVID-19 assay revenue of
$13.3 million, and other COVID-19 related revenue plus revenue from
discontinued products of $24.7 million, decreased (30.4%) in
constant currency.
- Total principal debt outstanding at the end of the third
quarter was $2.56 billion. The Company ended the quarter with cash
and equivalents of $2.4 billion, and an adjusted net leverage ratio
(net debt over EBITDA) of 0.1 times.
- On a trailing 12-month basis, adjusted Return on Invested
Capital (ROIC) was 14.1%, a decrease of (10) basis points compared
to the prior year period.
Financial Guidance for the Fourth
Quarter and Full-Year Fiscal 2024
“Hologic delivered another strong financial performance in our
fiscal third quarter of 2024, underscored by another quarter of
sequential improvement in our operating margin and strong cash
flow,” said Karleen Oberton, Hologic’s Chief Financial Officer. “As
expected, the quality of our earnings continues to improve as we
continue to capitalize on our large Diagnostics installed base and
our Breast Health business returns to strength. We are on track for
a strong finish to fiscal 2024.”
Hologic’s financial guidance for the fourth quarter and full
year 2024 is shown in the table below. The guidance is based on a
full year non-GAAP tax rate of approximately 19.75%, and diluted
shares outstanding of approximately 238 million for the full year.
Constant currency guidance assumes that foreign exchange rates are
the same in fiscal 2024 as in fiscal 2023. Organic revenue guidance
for fiscal 2024 is in constant currency and excludes the divested
Blood Screening, SSI ultrasound imaging, and Endomagnetics
businesses. Revenue from acquired businesses is generally included
in organic revenue guidance starting a year after the acquisition.
Organic revenue excluding COVID-19 is in constant currency and is
organic revenue excluding COVID-19 assay revenue, COVID-19 related
revenue, and discontinued product sales in Diagnostics.
Current Guidance*
Previous Guidance
Guidance $
Reported % Increase
(Decrease)
Constant Currency % Increase
(Decrease)
Organic excluding COVID-19 %
Increase
Guidance $
Fiscal
2024
Revenue
$4,012 - $4,027
(0.4%) to (0.1%)
(0.5%) to (0.1%)
5.2% to 5.6%
$4,000 - $4,050
GAAP EPS
$3.37 - $3.44
84.2% to 88.0%
$3.45 - $3.55
Non-GAAP EPS
$4.04 - $4.11
2.0% to 3.8%
$4.02 - $4.12
Q4 2024
Revenue
$970 - $985
2.6% to 4.2%
2.9% to 4.5%
5.0% to 6.6%
GAAP EPS
$0.80 - $0.87
116.2% to 135.1%
Non-GAAP EPS
$0.97 - $1.04
9.0% to 16.9%
*Fiscal 2024 has four fewer selling days
compared to fiscal 2023. Factored into our guidance, we estimate
the impact of the four fewer selling days to be a headwind of more
than 100 bps for the full year. Fiscal 2024 and Q4 guidance
incorporates Q3 performance, the addition of Endomagnetics, and
impact from the temporary stop-ship of Horizon DXA systems
(Skeletal) due to a non-conformance issue.
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; adjusted EBITDA; adjusted net leverage ratio
and adjusted ROIC. Organic revenue for the fiscal third quarter of
2024 excludes the divested Blood Screening and SSI ultrasound
imaging businesses. Revenue from acquired businesses is generally
included in organic revenue starting a year after the acquisition.
Organic revenue excluding COVID-19 revenues is organic revenue less
COVID-19 assay revenue, COVID-19 related sales of instruments,
collection kits and ancillaries, COVID-19 related revenue from
Diagenode and Mobidiag, as well as COVID-19 related license
revenue, and revenues from discontinued products in Diagnostics.
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) the impairment of goodwill
and intangible assets and equipment and the loss to record assets
held-for-sale to fair value less costs to sell; (iii) adjustments
to record contingent consideration at fair value; (iv) charges to
write-off inventory for a product line discontinuance; (v)
restructuring charges, facility closure and consolidation charges
(including accelerated depreciation), and costs incurred to
integrate acquisitions (including retention, transaction bonuses,
legal and professional consulting services); (vi) transaction
related expenses for acquisitions; (vii) third-party expenses
incurred related to the implementation of the European MDR/IVDR
requirements and obtaining the appropriate approvals for its
existing products; (viii) debt extinguishment losses and related
transaction costs; (ix) unrealized (gains) losses on the
mark-to-market of foreign currency contracts to hedge operating
results 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 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 income/expense, income taxes, and depreciation and
amortization expense included in its non-GAAP net income. The
Company defines its adjusted net leverage ratio as the principal
amount of its debt net of cash and cash equivalents, divided by its
adjusted EBITDA for the last four quarters. The Company defines its
adjusted ROIC as its non-GAAP operating income for a trailing
twelve months tax effected by its non-GAAP effective tax rate
divided by the sum of its average net debt and stockholders’
equity, which is adjusted to exclude the effects of goodwill and
intangible assets and equipment impairment charges.
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 many of which 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 2024. Interested participants may listen to the call by
dialing 888-394-8218 (in the U.S. and Canada) or +1 773-305-6853
(for international callers) and referencing access code 5372869.
Participants may also click to join. Participants should dial in
5-10 minutes before the call begins. The Company will also provide
a live and replay webcast of the call at hologic.com/investors. The
replay of the call will be available approximately two hours after
the call ends through Friday, August 23, 2024.
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 ongoing and possible future effects of
global challenges, including macroeconomic uncertainties, such as
inflation, bank failures, rising interest rates and availability of
capital markets, geopolitical conflicts, wars, other economic
disruptions and U.S. and global recession concerns, on the
Company’s customers and suppliers and on the Company’s business,
financial condition, results of operations and cash flows and the
Company’s ability to draw down its revolver; the effect of the
worldwide political and social uncertainty and divisions, including
the impact on trade regulation and tariffs, that may adversely
impact the cost and sale of the Company’s products in certain
countries, or increase the costs the Company may incur to purchase
materials, parts and equipment from its suppliers; the ability to
execute acquisitions and the impact and anticipated benefits of
completed acquisitions and acquisitions the Company may complete in
the future; the development of new competitive technologies and
products and competition; the Company’s ability to predict
accurately the demand for its products, and products under
development and to develop strategies to address markets
successfully; continued demand for the Company’s COVID-19 assays;
potential cybersecurity threats and targeted computer crime; the
ongoing and possible future effects of supply chain constraints,
including the availability of critical raw materials and
components, as well as cost inflation in materials, packaging and
transportation; the possibility of interruptions or delays at the
Company’s manufacturing facilities, or the failure to secure
alternative suppliers if any of the Company’s sole source
third-party manufacturers fail to supply the Company; the ability
to consolidate certain of the Company’s manufacturing and other
operations on a timely basis and within budget, without disrupting
its business and to achieve anticipated cost synergies related to
such actions; 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 ability
to obtain and maintain regulatory approvals and clearances for the
Company’s products, including the implementation of the European
Union Medical Device Regulations and In Vitro Diagnostic Regulation
requirements, and to maintain compliance with complex and evolving
regulations and quality standards, as well as the uncertainty of
costs required to obtain and maintain compliance with such
regulatory and quality matters; 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; 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; the effect of any future public
health crises, including the timing, scope and effect of U.S. and
international governmental, regulatory, fiscal, monetary and public
health responses to such crises; 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; cost and expenses of investigative
and legal proceedings and compliance risks; potential negative
impacts resulting from climate change or other environmental,
social and governance and sustainability related matters; and
technical innovations that could render products marketed or under
development by the Company obsolete.
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 29, 2024
July 1, 2023
June 29, 2024
July 1, 2023
Revenues:
Product
$
811.2
$
799.1
$
2,467.2
$
2,522.9
Service and other
200.2
185.3
575.1
562.2
Total revenues
1,011.4
984.4
3,042.3
3,085.1
Cost of revenues:
Product
298.2
291.0
913.9
879.3
Amortization of acquired intangible
assets
44.4
51.6
134.9
159.3
Impairment of intangible assets and
equipment
13.3
179.5
39.2
179.5
Service and other
95.2
94.8
284.2
295.8
Gross profit
560.3
367.5
1,670.1
1,571.2
Operating expenses:
Research and development
64.1
72.6
205.5
221.4
Selling and marketing
146.3
149.8
439.4
455.7
General and administrative
94.0
90.2
306.2
299.5
Amortization of acquired intangible
assets
5.3
7.1
24.3
21.9
Impairment of intangible assets and
equipment
0.4
44.3
5.6
44.3
Contingent consideration - fair value
adjustments
—
—
1.7
(12.4
)
Restructuring charges
6.2
2.1
34.8
4.9
Total operating expenses
316.3
366.1
1,017.5
1,035.3
Income from operations
244.0
1.4
652.6
535.9
Interest income
28.4
32.5
80.3
84.6
Interest expense
(31.9
)
(27.7
)
(90.2
)
(83.0
)
Other income (expense), net
0.2
5.9
0.8
(7.0
)
Income before income taxes
240.7
12.1
643.5
530.5
Provision for income taxes
46.2
52.6
32.6
165.1
Net income (loss)
$
194.5
$
(40.5
)
$
610.9
$
365.4
Net income (loss) per common
share:
Basic
$
0.83
$
(0.16
)
$
2.58
$
1.48
Diluted
$
0.82
$
(0.16
)
$
2.57
$
1.47
Weighted average number of shares
outstanding:
Basic
234,604
246,908
236,373
247,319
Diluted
236,466
246,908
238,081
249,393
HOLOGIC, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In millions)
June 29, 2024
September 30, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
2,439.1
$
2,722.5
Accounts receivable, net
628.5
625.6
Inventory
665.5
617.6
Other current assets
263.9
206.9
Assets held-for-sale - current assets
—
11.9
Total current assets
3,997.0
4,184.5
Property, plant and equipment, net
528.8
517.0
Goodwill and intangible assets
3,978.7
4,169.9
Other assets
385.6
267.9
Total assets
$
8,890.1
$
9,139.3
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term debt
$
37.5
$
287.0
Accounts payable and accrued
liabilities
745.9
712.9
Deferred revenue
219.0
199.2
Assets held-for-sale - current
liabilities
—
8.2
Total current liabilities
1,002.4
1,207.3
Long-term debt, net of current portion
2,505.6
2,531.2
Deferred income taxes
17.8
20.2
Other long-term liabilities
413.4
363.7
Total stockholders' equity
4,950.9
5,016.9
Total liabilities and stockholders’
equity
$
8,890.1
$
9,139.3
HOLOGIC, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Unaudited)
(In millions)
Nine Months Ended
June 29, 2024
July 1, 2023
OPERATING ACTIVITIES
Net income
$
610.9
$
365.4
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
75.2
66.7
Amortization of acquired intangible
assets
159.2
181.2
Stock-based compensation expense
69.1
60.6
Deferred income taxes
(52.3
)
(100.2
)
Intangible asset and equipment impairment
charges
44.8
223.8
Contingent consideration fair value
adjustments
1.7
(12.4
)
Other adjustments and non-cash items
32.4
30.6
Changes in operating assets and
liabilities, excluding the effect of acquisitions and
dispositions:
Accounts receivable
(2.5
)
(51.0
)
Inventories
(47.1
)
(48.5
)
Prepaid income taxes
(73.9
)
15.3
Prepaid expenses and other assets
(4.2
)
24.6
Accounts payable
26.5
(20.3
)
Accrued expenses and other liabilities
58.5
10.7
Deferred revenue
19.9
46.0
Net cash provided by operating
activities
918.2
792.5
INVESTING ACTIVITIES
Sale of business, net of cash disposed
(31.3
)
—
Capital expenditures
(56.0
)
(55.5
)
Proceeds from the Department of
Defense
—
20.5
Increase in equipment under customer usage
agreements
(43.9
)
(42.2
)
Strategic investments
(42.5
)
(10.0
)
Purchase of intellectual property
(10.0
)
—
Other activity
(1.6
)
(8.9
)
Net cash used in investing activities
(185.3
)
(96.1
)
FINANCING ACTIVITIES
Repayment of long-term debt
(278.1
)
(11.3
)
Payment of contingent consideration
(2.6
)
(7.6
)
Payment of deferred acquisition
consideration
—
(0.8
)
Repurchases of common stock
(776.8
)
(263.6
)
Proceeds from issuance of common stock
pursuant to employee stock plans
25.2
37.7
Payment of minimum tax withholdings on net
share settlements of equity awards
(16.6
)
(23.7
)
Payments under finance lease
obligations
(2.9
)
(3.3
)
Net cash used in financing activities
(1,051.8
)
(272.6
)
Effect of exchange rate changes on cash
and cash equivalents
2.3
1.7
Net (decrease) increase in cash and cash
equivalents
(316.6
)
425.5
Cash and cash equivalents, beginning of
period*
2,755.7
2,339.5
Cash and cash equivalents, end of
period
$
2,439.1
$
2,765.0
*Includes $33.2 million of cash recorded
in assets held-for-sale - current assets as of September 30,
2023.
HOLOGIC, INC.
RECONCILIATION OF GAAP TO
NON-GAAP RESULTS
(Unaudited)
(In millions, except earnings per
share)
Reconciliation of GAAP Revenue to
Organic Revenue
Three Months Ended
Nine Months Ended
June 29, 2024
July 1, 2023
June 29, 2024
July 1, 2023
Consolidated GAAP Revenue
$
1,011.4
$
984.4
$
3,042.3
$
3,085.1
Less: Blood Screening revenue
(7.9
)
(10.7
)
(22.8
)
(28.5
)
Less: SSI revenue
(0.5
)
(4.1
)
(2.3
)
(14.7
)
Organic Revenue
$
1,003.0
$
969.6
$
3,017.2
$
3,041.9
Less: COVID-19 Assays
(13.3
)
(28.7
)
(63.4
)
(226.8
)
Less: COVID-19 Related Revenue*
(24.7
)
(25.8
)
(79.1
)
(88.6
)
Less: Discontinued Product Revenue
—
(0.3
)
(0.4
)
(2.9
)
Organic Revenue excluding
COVID-19
$
965.0
$
914.8
$
2,874.3
$
2,723.6
*Revenues estimated to be related to COVID
assay sales for instruments, collection kits and ancillaries.
Three Months Ended
Nine Months Ended
June 29, 2024
July 1, 2023
June 29, 2024
July 1, 2023
Gross Profit:
GAAP gross profit
$
560.3
$
367.5
$
1,670.1
$
1,571.2
Adjustments:
Amortization of acquired intangible assets
(1)
44.4
51.6
134.9
159.3
Impairment of intangible assets and
equipment (14)
13.3
179.5
39.2
179.5
Product line discontinuance (13)
—
—
7.1
—
Integration/consolidation costs (3)
—
(0.2
)
—
(0.1
)
Non-GAAP gross profit
$
618.0
$
598.4
$
1,851.3
$
1,909.9
Gross Margin Percentage:
GAAP gross margin percentage
55.4
%
37.3
%
54.9
%
50.9
%
Impact of adjustments above
5.7
%
23.5
%
6.0
%
11.0
%
Non-GAAP gross margin percentage
61.1
%
60.8
%
60.9
%
61.9
%
Operating Expenses:
GAAP operating expenses
$
316.3
$
366.1
$
1,017.5
$
1,035.3
Adjustments:
Amortization of acquired intangible assets
(1)
(5.3
)
(7.1
)
(24.3
)
(21.9
)
Impairment of intangible assets and
equipment (14)
(0.4
)
(44.3
)
(5.6
)
(44.3
)
Transaction expenses (4)
(1.6
)
—
(3.4
)
(0.3
)
Contingent consideration adjustments
(7)
—
—
(1.7
)
12.4
Integration/consolidation costs (3)
—
—
—
(0.5
)
Purchased research and development asset
charge (16)
—
—
(10.0
)
—
MDR expenses (2)
—
(0.2
)
—
(1.3
)
Legal related settlements (11)
—
1.0
—
(1.3
)
Restructuring charges (3)
(6.2
)
(2.1
)
(34.8
)
(4.9
)
Non-income tax benefit/charge, net (5)
—
0.5
—
(2.9
)
Non-GAAP operating expenses
$
302.8
$
313.9
$
937.7
$
970.3
Operating Margin:
GAAP income from operations
$
244.0
$
1.4
$
652.6
$
535.9
Adjustments to gross profit as detailed
above
57.7
230.9
181.2
338.7
Adjustments to operating expenses as
detailed above
13.5
52.2
79.8
65.0
Non-GAAP income from operations
$
315.2
$
284.5
$
913.6
$
939.6
Operating Margin Percentage:
GAAP income from operations margin
percentage
24.1
%
0.1
%
21.5
%
17.4
%
Impact of adjustments above
7.1
%
28.8
%
8.5
%
13.1
%
Non-GAAP operating margin percentage
31.2
%
28.9
%
30.0
%
30.5
%
Pre-Tax Income:
GAAP pre-tax earnings
$
240.7
$
12.1
$
643.5
$
530.5
Adjustments to pre-tax earnings as
detailed above
71.2
283.1
261.0
403.7
Debt extinguishment loss (6)
—
—
0.4
—
Unrealized losses (gains) on forward
foreign currency contracts (8)
0.5
(0.9
)
6.2
19.0
Non-GAAP pre-tax income
$
312.4
$
294.3
$
911.1
$
953.2
Net Income (loss):
GAAP net income (loss)
$
194.5
$
(40.5
)
$
610.9
$
365.4
Adjustments:
Amortization of acquired intangible assets
(1)
49.7
58.7
159.2
181.2
Impairment of intangible assets and
equipment (14)
13.7
223.8
44.8
223.8
Restructuring and
integration/consolidation costs (3)
6.2
1.9
34.8
5.5
Purchased research and development asset
charge (16)
—
—
10.0
—
Product line discontinuance (13)
—
—
7.1
—
MDR expenses (2)
—
0.2
—
1.3
Debt extinguishment loss (6)
—
—
0.4
—
Legal related settlements (11)
—
(1.0
)
—
1.3
Transaction expenses (4)
1.6
—
3.4
0.3
Contingent consideration adjustments
(7)
—
—
1.7
(12.4
)
Unrealized losses (gains) on forward
foreign currency contracts (8)
0.5
(0.9
)
6.2
19.0
Non-income tax (benefit) charge, net
(5)
—
(0.5
)
—
2.9
Worthless stock deduction (15)
—
—
(107.2
)
—
Income tax related items (9)
3.7
42.7
15.6
62.3
Income tax effect of reconciling items
(12)
(19.2
)
(53.1
)
(55.7
)
(85.7
)
Non-GAAP net income
$
250.7
$
231.3
$
731.2
$
764.9
Net Income (Loss) Percentage:
GAAP net income (loss) percentage
19.2
%
(4.1
)%
20.1
%
11.8
%
Impact of adjustments above
5.6
%
27.6
%
3.9
%
13.0
%
Non-GAAP net income percentage
24.8
%
23.5
%
24.0
%
24.8
%
Earnings (Loss) per Share:
GAAP income (loss) per share - Diluted
$
0.82
$
(0.16
)
$
2.57
$
1.47
Adjustment to net income (loss) (as
detailed above)
0.24
1.09
0.50
1.60
Non-GAAP earnings per share – diluted
(10)
$
1.06
$
0.93
$
3.07
$
3.07
Adjusted EBITDA:
Non-GAAP net income
$
250.7
$
231.3
$
731.2
$
764.9
Interest expense (income), net
3.5
(4.8
)
9.9
(1.6
)
Provision for income taxes
61.7
63.1
179.9
188.3
Depreciation expense, not adjusted
above
22.6
22.3
68.0
66.7
Adjusted EBITDA
$
338.5
$
311.9
$
989.0
$
1,018.3
Explanatory Notes to
Reconciliations:
(1)
To reflect non-cash expenses attributable
to the amortization of acquired intangible assets.
(2)
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 had FDA approval and/or CE mark.
(3)
To reflect restructuring charges, and
certain costs associated with the Company’s integration and
facility consolidation plans, which primarily include severance,
retention and transfer costs, as well as costs incurred to
integrate acquisitions, including consulting, legal and tax fees.
In addition, this category includes additional expenses, primarily
accelerated depreciation and an impairment on a lease asset
incurred in fiscal 2024 related to closing Mobidiag’s Finland and
France Facilities.
(4)
To reflect expenses incurred with third
parties related to acquisitions prior to when such transactions are
completed. These expenses primarily comprise legal, consulting and
due diligence fees.
(5)
To reflect the net impact of establishing
a non-income tax loss contingency related to prior years and the
settlement of a prior year non-income tax audit.
(6)
To reflect a debt extinguishment loss for
the prepayment of debt under the Credit Agreement in first quarter
of fiscal 2024.
(7)
To reflect an adjustment to the contingent
consideration liability related to the Acessa Health acquisition,
which was payable upon meeting defined revenue growth metrics.
(8)
To reflect non-cash unrealized gains and
losses on the mark-to market on outstanding forward foreign
currency contracts, which have not been designated for hedge
accounting.
(9)
To reflect the net impact of income tax
reserves from the expiration of the statute of limitations, and
non-recurring income tax charges and benefits.
(10)
Non-GAAP earnings per share was calculated
based on 236,466 and 238,081 weighted average diluted shares
outstanding for the three and nine months ended June 29, 2024,
respectively, and 249,107 and 249,393 for the three and nine months
ended July 1, 2023, respectively.
(11)
To reflect net charges and benefits from
legal related settlements.
(12)
To reflect the tax effects of non-GAAP
reconciling items, excluding specific income tax related items
separately stated in Note 9 and the worthless stock deduction
referred to in Note 15. Amounts are calculated using the effective
tax rate in the jurisdiction to which the adjustment relates.
(13)
To reflect the write-off of inventory and
charges for non-cancellable purchase orders related to a product
line discontinuance in the Diagnostics division.
(14)
To reflect an impairment charge for an
in-process research and development intangible asset acquired in
the Mobidiag acquisition recorded in the first quarter of fiscal
2024 and an impairment charge related to intangible assets from the
Focal acquisition recorded in the second and third quarters of
fiscal 2024, respectively. To reflect impairment charges for
intangible assets and equipment acquired in the Mobidiag
acquisition and impairment of our SSI ultrasound imaging assets
during the third quarter of fiscal 2023.
(15)
To reflect the discrete tax benefit
related to a worthless stock deduction on the investment in one of
the Company's international subsidiaries.
(16)
To reflect the purchase of an intangible
asset to be used in a research and development project that has no
future alternative use.
Reconciliation of GAAP to non-GAAP EPS
Guidance:
Guidance Range
Guidance Range
Quarter Ending September 28,
2024
Year Ending September 28,
2024
Low
High
Low
High
GAAP Net Income Per
Share
$0.80
$0.87
$3.37
$3.44
Amortization of acquired intangible
assets
0.20
0.20
0.87
0.87
Impairment of Intangible asset
-
-
0.19
0.19
Restructuring, Integration and Other
charges
0.01
0.01
0.25
0.25
Non-operating charges
-
-
0.03
0.03
Worthless stock deduction
-
-
(0.45)
(0.45)
Tax Impact of Exclusions and related
items
(0.04)
(0.04)
(0.22)
(0.22)
Non-GAAP Net Income Per Share
$0.97
$1.04
$4.04
$4.11
Return on Invested Capital (ROIC)
Reconciliation of Net Income to ROIC:
Trailing Twelve Months Ended
June 29, 2024
Adjusted Net Operating Profit After
Tax
GAAP net income
$
701.5
Adjustments to GAAP net income
249.0
Non-GAAP net income
$
950.5
Non-GAAP provision for income taxes
233.9
Non-GAAP interest expense
118.2
Non-GAAP other income
(121.3
)
Adjusted net operating profit before
tax
$
1,181.3
Non-GAAP average effective tax rate
(1)
19.8
%
Adjusted net operating profit after
tax
$
948.0
Average Net Debt plus Average
Stockholders' Equity (2)
Average total debt
$
2,682.1
Less: Average cash and cash
equivalents
(2,602.0
)
Average net debt
$
80.1
Average stockholders' equity (3)
6,645.8
Average net debt plus average
stockholders' equity
$
6,725.9
Adjusted Return on Invested
Capital
14.1
%
Adjusted ROIC (adjusted net operating
profit after tax above divided by average net debt plus average
stockholders’ equity)
(1)
ROIC is presented on a TTM basis; non-GAAP
effective tax rate for the entire trailing twelve-month period was
19.75%.
(2)
Calculated using the average of the
balances as of June 29, 2024, and July 1, 2023.
(3)
For Adjusted ROIC, stockholder's equity is
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,
the impairment of intangible assets of $45.1 million in fiscal
2022, the impairment of intangible assets and equipment of $223.8
million in fiscal 2023 and the impairment of an intangible asset of
$4.3 million in the first quarter of fiscal 2024, $26.8 million in
the second quarter of fiscal 2024 and $13.7 million in the third
quarter of fiscal 2024. The impact of the intangible asset
impairment charges is reflected in net of tax.
As of June 29, 2024
Net Leverage Ratio:
Total principal debt
$
2,556.9
Total cash and cash equivalents
$
(2,439.1
)
Net principal debt
$
117.8
EBITDA for the last four quarters
$
1,277.3
Net Leverage Ratio
0.1
Other Supplemental Information:
Three Months Ended
Nine Months Ended
June 29, 2024
July 1, 2023
June 29, 2024
July 1, 2023
Geographic Revenues
United States
75.7
%
76.2
%
74.9
%
75.9
%
Europe
12.6
%
13.1
%
13.4
%
13.9
%
Asia-Pacific
6.4
%
6.4
%
6.4
%
6.2
%
Rest of World
5.3
%
4.3
%
5.3
%
4.0
%
Total Revenues
100.0
%
100.0
%
100.0
%
100.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240729445441/en/
Ryan Simon Vice President, Investor Relations
ryan.simon@hologic.com (858) 410-8514
Ryan McDowell Director, Investor Relations
ryan.mcDowell@hologic.com (508) 263-8891
Hologic (NASDAQ:HOLX)
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