– Revenue of $1,026.5 Million, GAAP Diluted EPS
of $0.87, and Non-GAAP Diluted EPS of $1.06 All Exceed Guidance
–
– Total Company Organic Revenue Growth
excluding COVID-19 Exceeds 20%; Each Business Delivers Strong
Performance –
– Company Raises Fiscal 2023 Revenue and EPS
Guidance –
Hologic, Inc. (Nasdaq: HOLX) announced today the Company’s
financial results for the fiscal second quarter ended April 1,
2023.
“Hologic posted robust financial results in our second fiscal
quarter, with both revenue and earnings exceeding our prior
guidance,” said Steve MacMillan, the Company’s chairman, president
and chief executive officer. “Each of our core franchises grew
double digits in the period, with consolidated organic growth of
more than 20%, excluding the impact of COVID. Our Breast Health and
Surgical businesses delivered exceptional performance, both growing
over 23% – or over 25% in constant currency, and our Diagnostics
business again delivered strong results. We are also pleased to
increase our full-year guidance once again.”
Recent Highlights
- Revenue of $1,026.5 million decreased (28.5%) for the quarter,
or (27.5%) in constant currency, primarily driven by significantly
lower sales of COVID-19 assays, which was expected, compared to the
prior year period. Revenue, however, was notably higher than the
Company’s guidance of $930 to $980 million provided last quarter.
- Excluding COVID-19 revenues, total organic revenue grew 20.2%,
or 21.9% on a constant currency basis.
- Diagnostics revenue decreased (52.9%), or (52.2%) in constant
currency, primarily driven by lower sales of COVID-19 assays
compared to the prior year period.
- Excluding COVID-19 revenues, Diagnostics revenue grew 14.9% on
an organic, constant currency basis.
- Molecular Diagnostics revenue declined (60.3%), or (59.8%) in
constant currency, primarily driven by lower sales of COVID-19
assays compared to the prior year period.
- Excluding COVID-19 revenues, Molecular Diagnostics revenue grew
23.9% on an organic, constant currency basis.
- Breast Health revenue increased 24.2%, or 25.7% in constant
currency, primarily due to improving semiconductor chip supply
enabling additional gantry deliveries within the quarter, resulting
in higher capital equipment revenue compared to the prior year
period.
- Surgical revenue grew 23.4%, or 25.2% in constant currency,
with strong results across an increasingly diverse business.
- Cash flow from operations remained very strong in the second
quarter at $206.3 million. In addition, the Company repurchased 0.6
million shares of its stock for $50 million in the quarter.
- The Company was named on the Forbes list of America’s Best
Midsize Employers 2023 and was ranked 14th among 500 midsize
companies included on the list.
- The Company published its latest annual sustainability report,
“Making a World of Difference.”
Key financial results for the fiscal second quarter are shown in
the table below.
GAAP
Non-GAAP
Q2’23
Q2’22
Change Increase (Decrease)
Q2’23
Q2’22
Change Increase (Decrease)
Revenues
$1,026.5
$1,435.7
(28.5%)
$1,026.5
$1,435.7
(28.5%)
Gross Margin
57.1%
65.9%
(880 bps)
62.1%
71.0%
(890 bps)
Operating Expenses
$313.7
$352.5
(11.0%)
$317.0
$338.2
(6.3%)
Operating Margin
26.5%
41.4%
(1,490 bps)
31.3%
47.4%
(1,610 bps)
Net Margin
21.3%
31.7%
(1,040 bps)
25.9%
36.5%
(1,060 bps)
Diluted EPS
$0.87
$1.80
(51.7%)
$1.06
$2.07
(48.8%)
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. Fiscal 2023 is a
53-week fiscal period and the additional week was included in our
fiscal first quarter results. 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 second quarter organic
revenue results exclude the divested Blood Screening business.
Revenue from acquired businesses is generally included in organic
revenue starting a year after the acquisition.
Revenue Detail
Increase (Decrease)
$ in millions
Q2’23
Q2’22
Global Reported Change
Global Constant Currency
Change
U.S. Reported Change
International Reported Change
International Constant Currency
Change
Diagnostics
Cytology and Perinatal
$111.9
$115.4
(3.0%)
(0.7%)
(4.3%)
(0.7%)
5.4%
Molecular Diagnostics
$342.2
$862.5
(60.3%)
(59.8%)
(53.3%)
(73.5%)
(71.9%)
Blood Screening
$10.6
$9.2
15.2%
15.2%
15.2%
N/A
N/A
Total Diagnostics
$464.7
$987.1
(52.9%)
(52.2%)
(46.9%)
(64.3%)
(62.1%)
Organic Diagnostics ex. COVID-19
$355.0
$314.2
13.0%
14.9%
14.2%
10.1%
16.6%
Breast Health
Breast Imaging
$311.5
$245.0
27.1%
28.8%
24.6%
35.4%
42.5%
Interventional Breast Solutions
$73.9
$65.4
13.0%
13.9%
14.6%
5.4%
11.0%
Total Breast Health
$385.4
$310.4
24.2%
25.7%
22.4%
29.7%
36.6%
GYN Surgical
$144.8
$117.3
23.4%
25.2%
20.9%
33.6%
42.5%
Skeletal Health
$31.6
$20.9
51.2%
53.4%
39.4%
74.5%
80.4%
Total
$1,026.5
$1,435.7
(28.5%)
(27.5%)
(22.5%)
(41.9%)
(38.5%)
Organic Revenue (definition above)
$1,015.9
$1,426.5
(28.8%)
(27.7%)
(22.9%)
(41.9%)
(38.5%)
Organic Revenue excluding COVID-19
$916.8
$762.8
20.2%
21.9%
19.4%
22.6%
29.5%
Other Financial
Highlights
- U.S. revenue of $768.7 million decreased (22.5%). International
revenue of $257.8 million decreased (41.9%), or (38.5%) in constant
currency.
- GAAP gross margin of 57.1% decreased (880) basis points.
Non-GAAP gross margin of 62.1% decreased (890) basis points. The
decrease in gross margin was primarily due to the decline in
COVID-19 assay sales compared to the prior year period.
- GAAP operating margin of 26.5% decreased (1,490) basis points.
Non-GAAP operating margin of 31.3% decreased (1,610) basis points.
The decrease in operating margin was primarily due to the decline
in COVID-19 assay sales compared to the prior year period.
- GAAP net income of $218.5 million decreased (52.1%). Non-GAAP
net income of $265.7 million decreased (49.3%). GAAP earnings
before interest, taxes, depreciation and amortization (EBITDA) was
$355.8 million. Adjusted EBITDA was $345.4 million, a decrease of
(50.9%).
- COVID-19 revenues, which consist of COVID-19 assay revenue of
$71.2 million, and other COVID-19 related revenue and revenue from
discontinued products of $27.9 million, decreased (85.1%), or
(84.8%) in constant currency.
- Total principal debt outstanding at the end of the second
quarter was $2.84 billion. The Company ended the quarter with cash
and equivalents of $2.58 billion, and a net leverage ratio (net
debt over EBITDA) of 0.2 times.
- On a trailing 12-month basis, GAAP Return on Invested Capital
(ROIC) was 14.0%. Adjusted ROIC was 14.4%, a decrease of (1,300)
basis points compared to the prior year period.
Financial Guidance for the Third
Quarter and Full-Year Fiscal 2023
“Our fiscal second quarter of 2023 once again made clear the
strength and durability in each one of our businesses,” said
Karleen Oberton, Hologic’s chief financial officer. “We are raising
our full-year guidance for both revenue and EPS, highlighting our
confidence in the remainder of our fiscal year despite an uncertain
macro environment.”
Hologic’s financial guidance for the third quarter and full year
2023 is shown in the table below. The guidance is based on a full
year non-GAAP tax rate of approximately 19.0%, and diluted shares
outstanding of 250 million for the full year. Constant currency
guidance assumes that foreign exchange rates are the same in fiscal
2023 as in fiscal 2022. Organic revenue guidance is in constant
currency and excludes the divested Blood Screening business.
Revenue from acquired businesses is generally included in organic
revenue guidance starting a year after the acquisition. In fiscal
2023, Bolder is part of organic revenue starting in the fiscal
second quarter.
Current Guidance
Previous Guidance
Guidance $
Reported % Increase
(Decrease)
Constant Currency % Increase
(Decrease)
Organic % Increase (Decrease)
Guidance $
Fiscal
2023
Revenue
$3,925 - $4,025
(19.3%) to (17.2%)
(18.5%) to (16.4%)
(18.7%) to (16.6%)
$3,850 - $4,000
GAAP EPS
$2.91 - $3.11
(43.3%) to (39.4%)
$2.69 - $2.99
Non-GAAP EPS
$3.75 - $3.95
(37.7%) to (34.4%)
$3.55 - $3.85
Q3 2023
Revenue
$930 - $980
(7.2%) to (2.3%)
(6.9%) to (1.9%)
(6.8%) to (1.8%)
GAAP EPS
$0.64 - $0.74
(28.9%) to (17.8%)
Non-GAAP EPS
$0.83 - $0.93
(12.6%) to (2.1%)
This guidance assumes low double-digit
constant currency organic revenue growth ex. COVID-19 for the total
Company for the full-year fiscal 2023.
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; and adjusted ROIC. Organic
revenue for the fiscal second quarter of 2023 excludes the divested
Blood Screening business. 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 assay revenue, COVID related sales of
instruments, collection kits and ancillaries, COVID related revenue
from Diagenode and Mobidiag, as well as COVID related license
revenue, and revenues from discontinued products. The Company
defines its non-GAAP net income, EPS, and other non-GAAP financial
measures to exclude, as applicable: (i) the amortization of
intangible assets and impairment of goodwill and intangible assets;
(ii) adjustments to record contingent consideration at fair value;
(iii) additional expenses resulting from the purchase accounting
adjustment to record inventory at fair value; (iv) restructuring
charges, facility closure and consolidation charges (including
accelerated depreciation), and costs incurred to integrate
acquisitions (including retention, transaction bonuses, legal and
professional consulting services); (v) expenses related to the
divested Cynosure business incurred subsequent to the disposition
date primarily related to indemnification provisions for legal and
tax matters; (vi) transaction related expenses for acquisitions;
(vii) third-party expenses incurred related to implementing the
European MDR/IVDR requirements and obtaining the appropriate
approvals for its existing products; (viii) debt extinguishment
losses and related transaction costs; (ix) the unrealized (gains)
losses on the mark-to-market of foreign currency contracts for
which the Company has not elected hedge accounting; (x) litigation
settlement charges (benefits) and non-income tax related charges
(benefits); (xi) other-than-temporary impairment losses on
investments and realized gains and losses resulting from the sale
of investments; (xii) the one-time discrete impacts related to
internal restructurings and non-operational items; (xiii) other
one-time, non-recurring, unusual or infrequent charges, expenses or
gains that may not be indicative of the Company's core business
results; and (xiv) income taxes related to such adjustments. The
Company defines adjusted EBITDA as its non-GAAP net income plus net
interest expense, income taxes, and depreciation and amortization
expense included in its non-GAAP net income. The Company defines
its adjusted ROIC as its non-GAAP operating income 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 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 that can be highly variable or difficult
to predict. The Company generally uses these non-GAAP financial
measures to facilitate management's financial and operational
decision-making, including evaluation of Hologic's historical
operating results, comparison to competitors' operating results and
determination of management incentive compensation. These non-GAAP
financial measures reflect an additional way of viewing aspects of
the Company's operations that, when viewed with GAAP results and
the reconciliations to corresponding GAAP financial measures, may
provide a more complete understanding of factors and trends
affecting Hologic's business.
Because non-GAAP financial measures exclude the effect of items
that will increase or decrease the Company's reported results of
operations, management strongly encourages investors to review the
Company's consolidated financial statements and publicly filed
reports in their entirety. A reconciliation of the non-GAAP
financial measures to the most directly comparable GAAP financial
measures is included in the tables accompanying this release.
Conference Call and
Webcast
Hologic’s management will host a conference call at 4:30 p.m. ET
today to discuss its financial results for the second quarter of
fiscal 2023. Interested participants may listen to the call by
dialing 888-600-4862 (in the U.S. and Canada) or +1 773-305-6865
(for international callers) and referencing access code 2312014.
Participants may also click to join. Participants should dial in
5-10 minutes before the call begins. The Company will also provide
a live webcast of the call at investors.hologic.com. A replay of
the call will be available at investors.hologic.com approximately
two hours after the call ends through Monday, May 29, 2023.
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, the war
in Ukraine, 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 ongoing and possible future effects of supply chain
constraints, including the availability of critical raw materials
and components, including semiconductor chips, 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 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; the timing, scope and effect of further U.S. and
international governmental, regulatory, fiscal, monetary and public
health responses to the COVID-19 pandemic and any future public
health crises; potential cybersecurity threats and targeted
computer crime; the ability to execute acquisitions and the impact
and anticipated benefits of completed acquisitions and acquisitions
the Company may complete in the future; 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
regulatory approvals and clearances for the Company’s products,
including the implementation of the European Union Medical Device
Regulations, and to maintain compliance with complex and evolving
regulations; 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; 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; 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
Six Months Ended
April 1, 2023
March 26, 2022
April 1, 2023
March 26, 2022
Revenues:
Product
$
837.4
$
1,268.2
$
1,723.8
$
2,571.6
Service and other
189.1
167.5
376.9
335.3
Total revenues
1,026.5
1,435.7
2,100.7
2,906.9
Cost of revenues:
Product
292.1
322.6
588.3
640.7
Amortization of acquired intangible
assets
52.1
72.3
107.7
147.2
Service and other
96.5
94.2
201.0
186.1
Gross profit
585.8
946.6
1,203.7
1,932.9
Operating expenses:
Research and development
74.0
69.5
148.8
142.3
Selling and marketing
142.4
171.4
305.9
318.7
General and administrative
100.8
100.5
209.3
218.5
Amortization of acquired intangible
assets
7.1
11.3
14.7
22.1
Contingent consideration fair value
adjustments
(12.4
)
—
(12.4
)
(4.1
)
Restructuring charges
1.8
(0.2
)
2.9
—
Total operating expenses
313.7
352.5
669.2
697.5
Income from operations
272.1
594.1
534.5
1,235.4
Interest income
31.5
0.8
52.1
1.2
Interest expense
(27.2
)
(22.6
)
(55.3
)
(48.3
)
Debt extinguishment loss
—
—
—
(0.7
)
Other income (expense), net
2.9
2.1
(12.9
)
8.7
Income before income taxes
279.3
574.4
518.4
1,196.3
Provision for income taxes
60.8
118.7
112.5
241.4
Net income
$
218.5
$
455.7
$
405.9
$
954.9
Net income per common share
attributable to Hologic:
Basic
$
0.88
$
1.81
$
1.64
$
3.78
Diluted
$
0.87
$
1.80
$
1.63
$
3.75
Weighted average number of shares
outstanding:
Basic
247,730
251,574
247,524
252,537
Diluted
249,793
253,658
249,537
254,864
HOLOGIC, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In millions)
April 1, 2023
September 24, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
2,582.2
$
2,339.5
Accounts receivable, net
714.0
617.6
Inventories
687.6
623.7
Other current assets
227.6
281.2
Total current assets
4,211.4
3,862.0
Property, plant and equipment, net
497.9
481.6
Goodwill and intangible assets
4,499.1
4,517.1
Other assets
240.3
210.5
Total assets
$
9,448.7
$
9,071.2
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term debt
$
26.2
$
15.0
Accounts payable and accrued
liabilities
698.3
736.2
Deferred revenue
230.5
186.5
Total current liabilities
955.0
937.7
Long-term debt, net of current portion
2,797.7
2,808.4
Deferred income taxes
33.4
90.8
Other long-term liabilities
361.8
358.1
Total stockholders' equity
5,300.8
4,876.2
Total liabilities and stockholders’
equity
$
9,448.7
$
9,071.2
HOLOGIC, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Unaudited)
(In millions)
Six Months Ended
April 1, 2023
March 26, 2022
OPERATING ACTIVITIES
Net income
$
405.9
$
954.9
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
44.3
44.9
Amortization of acquired intangibles
122.4
169.2
Stock-based compensation expense
43.7
36.5
Deferred income taxes
(61.6
)
(41.5
)
Contingent consideration fair value
adjustments
(12.4
)
(4.1
)
Other adjustments and non-cash items
29.6
23.5
Changes in operating assets and
liabilities, excluding the effect of acquisitions:
Accounts receivable
(81.8
)
101.6
Inventories
(56.1
)
(26.4
)
Prepaid income taxes
8.3
(6.4
)
Prepaid expenses and other assets
10.5
355.3
Accounts payable
(13.2
)
9.1
Accrued expenses and other liabilities
(22.4
)
2.9
Deferred revenue
42.5
6.9
Net cash provided by operating
activities
459.7
1,626.4
INVESTING ACTIVITIES
Acquisition of businesses, net of cash
acquired
—
(158.4
)
Capital expenditures
(34.5
)
(36.1
)
Proceeds from the Department of
Defense
20.5
58.7
Increase in equipment under customer usage
agreements
(26.7
)
(33.8
)
Purchase of equity investment
(10.0
)
—
Other activity
(6.7
)
5.2
Net cash used in investing activities
(57.4
)
(164.4
)
FINANCING ACTIVITIES
Proceeds from long-term debt, net of
issuance costs
—
1,491.2
Repayments of long-term debt
(7.5
)
(1,387.5
)
Payment of contingent consideration
(7.6
)
(12.2
)
Payment of deferred acquisition
consideration
(0.8
)
—
Repayment of acquired long-term debt
—
(63.6
)
Repurchases of common stock
(150.0
)
(367.0
)
Proceeds from issuance of common stock
pursuant to employee stock plans
28.4
17.3
Payment of minimum tax withholdings on net
share settlements of equity awards
(23.2
)
(22.5
)
Payments under finance lease
obligations
(2.3
)
(1.7
)
Net cash used in financing activities
(163.0
)
(346.0
)
Effect of exchange rate changes on cash
and cash equivalents
3.4
4.5
Net increase in cash and cash
equivalents
242.7
1,120.5
Cash and cash equivalents, beginning of
period
2,339.5
1,170.3
Cash and cash equivalents, end of
period
$
2,582.2
$
2,290.8
HOLOGIC, INC. RECONCILIATION OF GAAP TO
NON-GAAP RESULTS (Unaudited) (In millions, except earnings per
share and margin percentages)
Reconciliation of GAAP Revenue to
Organic Revenue
Three Months Ended
Six Months Ended
April 1, 2023
March 26, 2022
April 1, 2023
March 26, 2022
Consolidated GAAP Revenue
$
1,026.5
$
1,435.7
$
2,100.7
$
2,906.9
Less: Blood Screening revenue
(10.6
)
(9.2
)
(17.9
)
(15.6
)
Less: Revenue from Acquisitions*
—
—
(4.4
)
(0.7
)
Organic Revenue
$
1,015.9
$
1,426.5
$
2,078.4
$
2,890.6
Less: COVID-19 Assays
(71.2
)
(584.1
)
$
(198.1
)
$
(1,106.9
)
Less: COVID-19 Related Revenue **
(26.5
)
(77.4
)
(62.8
)
(150.8
)
Less: Discontinued Product Revenue
(1.4
)
(2.2
)
(2.5
)
(4.5
)
Organic Revenue excluding
COVID-19
$
916.8
$
762.8
$
1,815.0
$
1,628.4
*Represents revenue from acquisitions
until a transaction annualizes and becomes organic. In the year
following when a transaction annualizes, the acquisitions' revenue
is not excluded from the prior year revenue amount as the
acquisition's results are in both periods.
**Revenues estimated to be related to
COVID assay sales for instruments, collection kits and
ancillaries.
Three Months Ended
Six Months Ended
April 1, 2023
March 26, 2022
April 1, 2023
March 26, 2022
Gross Profit:
GAAP gross profit
$
585.8
$
946.6
$
1,203.7
$
1,932.9
Adjustments:
Amortization of acquired intangible assets
(1)
52.1
72.3
107.7
147.2
Non-GAAP gross profit
$
637.9
$
1,018.9
$
1,311.4
$
2,080.1
Gross Margin Percentage:
GAAP gross margin percentage
57.1
%
65.9
%
57.3
%
66.5
%
Impact of adjustments above
5.0
%
5.1
%
5.1
%
5.1
%
Non-GAAP gross margin percentage
62.1
%
71.0
%
62.4
%
71.6
%
Operating Expenses:
GAAP operating expenses
$
313.7
$
352.5
$
669.2
$
697.5
Adjustments:
Amortization of acquired intangible assets
(1)
(7.1
)
(11.3
)
(14.7
)
(22.1
)
Transaction expenses (2)
(0.3
)
(0.1
)
(0.3
)
(0.9
)
MDR expenses (8)
(0.3
)
(1.9
)
(1.1
)
(3.9
)
Legal related settlements (10)
(0.8
)
—
(2.3
)
—
Contingent consideration adjustments
(5)
12.4
—
12.4
4.1
Integration/consolidation costs (7)
(0.2
)
(2.3
)
(0.5
)
(3.2
)
Restructuring charges (7)
(1.8
)
0.2
(2.9
)
—
Non-income tax charges (benefit), net
(6)
1.4
1.1
(3.4
)
0.5
Non-GAAP operating expenses
$
317.0
$
338.2
$
656.4
$
672.0
Operating Margin:
GAAP income from operations
$
272.1
$
594.1
$
534.5
$
1,235.4
Adjustments to gross profit as detailed
above
52.1
72.3
107.7
147.2
Adjustments to operating expenses as
detailed above
(3.3
)
14.3
12.8
25.5
Non-GAAP income from operations
$
320.9
$
680.7
$
655.0
$
1,408.1
Operating Margin Percentage:
GAAP income from operations margin
percentage
26.5
%
41.4
%
25.4
%
42.5
%
Impact of adjustments above
4.8
%
6.0
%
5.8
%
5.9
%
Non-GAAP operating margin percentage
31.3
%
47.4
%
31.2
%
48.4
%
Pre-Tax Income:
GAAP pre-tax income
$
279.3
$
574.4
$
518.4
$
1,196.3
Adjustments to pre-tax earnings as
detailed above
48.8
86.6
120.5
172.7
Debt extinguishment loss (4)
—
—
—
0.7
Debt transaction costs (12)
—
—
—
1.8
Equity method investment write-off (3)
—
—
—
4.3
Gain on life insurance proceeds (13)
—
(2.3
)
—
(2.3
)
Unrealized losses (gains) on foreign
currency contracts (9)
—
0.4
20.0
(7.8
)
Non-GAAP pre-tax income
$
328.1
$
659.1
$
658.9
$
1,365.7
Net Income Attributable to
Hologic:
GAAP net income
$
218.5
$
455.7
$
405.9
$
954.9
Adjustments:
Amortization of acquired intangible assets
(1)
59.2
83.6
122.4
169.3
Restructuring and
integration/consolidation costs (7)
2.0
2.1
3.4
3.2
MDR expenses (8)
0.3
1.9
1.1
3.9
Legal related settlements (10)
0.8
—
2.3
—
Transaction expenses (2)
0.3
0.1
0.3
0.9
Contingent consideration adjustments
(5)
(12.4
)
—
(12.4
)
(4.1
)
Debt extinguishment loss and transaction
costs (4) (12)
—
—
—
2.5
Non-income tax charges (benefit), net
(6)
(1.4
)
(1.1
)
3.4
(0.5
)
Non-operating charges (benefit) (3) (9)
(13)
—
(1.9
)
20.0
(5.8
)
Income tax related items (14)
12.1
3.9
21.9
(5.0
)
Income tax effect of reconciling items
(11)
(13.7
)
(20.1
)
(34.6
)
(40.4
)
Non-GAAP net income
$
265.7
$
524.2
$
533.7
$
1,078.9
Net Income Percentage:
GAAP net income percentage
21.3
%
31.7
%
19.3
%
32.8
%
Impact of adjustments above
4.6
%
4.8
%
6.1
%
4.3
%
Non-GAAP net income attributable to
Hologic percentage
25.9
%
36.5
%
25.4
%
37.1
%
Earnings Per Share Attributable to
Hologic:
GAAP earnings per share - Diluted
$
0.87
$
1.80
$
1.63
$
3.75
Adjustment to net income (as detailed
above)
0.19
0.27
0.51
0.48
Non-GAAP earnings per share – diluted
$
1.06
$
2.07
$
2.14
$
4.23
EBITDA:
GAAP net income
$
218.5
$
455.7
$
405.9
$
954.9
Interest (income) expense, net
(4.3
)
21.8
3.2
47.1
Provision for income taxes
60.8
118.7
112.5
241.4
Depreciation expense
21.6
22.7
44.3
44.9
Amortization expense
$
59.2
$
83.6
$
122.4
$
169.3
GAAP EBITDA
$
355.8
$
702.5
$
688.3
$
1,457.6
Adjustments to net income, detailed above
except amortization expense
(10.4
)
1.1
18.1
(1.7
)
Adjusted EBITDA
$
345.4
$
703.6
$
706.4
$
1,455.9
Explanatory Notes to Reconciliations:
(1)
To reflect non-cash expenses
attributable to the amortization of acquired intangible assets.
(2)
To reflect expenses with third
parties related to acquisitions prior to when such transactions are
completed. These expenses primarily comprise broker fees, legal
fees, and consulting and due diligence fees.
(3)
To write off an equity method
investment acquired in the Mobidiag acquisition.
(4)
To reflect a debt extinguishment
loss from refinancing the Credit Agreement in first quarter of
fiscal 2022.
(5)
To reflect adjustments in fiscal
2023 and fiscal 2022 to the estimated contingent consideration
liability related to the Acessa Health acquisition, which is
payable upon meeting defined revenue growth metrics.
(6)
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.
(7)
To reflect restructuring charges,
and certain costs associated with the Company’s integration and
facility consolidation plans, which primarily include retention and
transfer costs, as well as costs incurred to integrate
acquisitions, including consulting, legal, tax and accounting fees.
In addition, this category includes additional expenses incurred in
fiscal 2022 related to the Cynosure disposition and settlements of
litigation and indemnification provisions for legal and tax matters
that existed as of the date of disposition.
(8)
To reflect the exclusion of third
party expenses incurred to obtain compliance with the European
Medical Device Regulation requirement for the Company's existing
products for which it already has FDA approval and/or CE mark.
(9)
To reflect non-cash unrealized
gains and losses on the mark-to market on outstanding forward
foreign currency contracts, which have not been designated for
hedge accounting.
(10)
To reflect net charges and
benefits from legal related settlements.
(11)
To reflect the tax effect of the
Non-GAAP reconciling items, which is based on the effective tax
rate in the jurisdiction to which the adjustment relates.
(12)
To reflect the amount of debt
issuance costs recorded directly to interest expense as a result of
refinancing the Credit Agreement in first quarter of fiscal
2022.
(13)
To reflect a gain on life
insurance proceeds received during the second quarter of fiscal
2022.
(14)
To reflect an estimated annual
effective tax rate of 19.0% for fiscal 2023 and 21.0% for fiscal
2022, including non-recurring income tax charges and benefits, and
interest related to prior years’ income tax reserves.
Reconciliation of GAAP to non-GAAP EPS
Guidance:
Guidance Range
Guidance Range
Quarter Ending July 1, 2023
Year Ending September 30,
2023
Low
High
Low
High
GAAP Net Income Per
Share
$0.64
$0.74
$2.91
$3.11
Amortization of acquired intangible
assets
0.23
0.23
0.96
0.96
Restructuring, Integration and Other
charges
0.01
0.01
0.05
0.05
Contingent Consideration Fair Value
Adjustment
-
-
(0.05
)
(0.05
)
Non-operating charges
-
-
0.08
0.08
Tax Impact of Exclusions
(0.05
)
(0.05
)
(0.20
)
(0.20
)
Non-GAAP Net Income Per Share
$0.83
$0.93
$3.75
$3.95
Trailing Twelve Months Ended
April 1, 2023
Return on Invested Capital:
GAAP ROIC
Adjustments
Adjusted ROIC
Adjusted Net Operating Profit After
Tax
Net Income
$
753.0
$
229.7
$
982.7
Plus:
Provision for income taxes
157.3
87.2
244.5
Interest expense
102.2
—
102.2
Other income
(73.1
)
(11.8
)
(84.9
)
Adjusted net operating profit before
tax
$
939.4
$
305.1
$
1,244.5
Effective tax rate (1)
17.2
%
20.0
%
Adjusted net operating profit after
tax
$
778.0
$
218.3
$
996.3
Average Net Debt plus Average
Stockholders' Equity (2)
Average total debt
$
2,946.8
$
—
$
2,946.8
Less: Average cash and cash
equivalents
(2,436.5
)
—
(2,436.5
)
Average net debt
$
510.3
$
—
$
510.3
Average stockholders' equity (3)
5,046.8
1,368.5
6,415.3
Average net debt plus average
stockholders' equity
$
5,557.1
$
1,368.5
$
6,925.6
Return on Invested Capital
14.0
%
14.4
%
(1)
ROIC is presented on a TTM basis
and the tax rate for the TTM period is based on the average of each
quarterly effective tax rate.
(2)
Calculated using the average of
the balances as of April 1, 2023 and March 26, 2022.
(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 and the
impairment of intangible assets and equipment of $30.2 million in
fiscal 2020 and the impairment of acquired intangible assets of
$45.1 million in fiscal 2022. The impact of the intangible asset
impairment charges is reflected net of tax.
As of April 1,
2023
GAAP Net Leverage Ratio
Adjusted Net Leverage Ratio
Net Leverage Ratio:
Total principal debt
$
2,842.5
$
2,842.5
Total cash
(2,582.2
)
(2,582.2
)
Net principal debt
$
260.3
$
260.3
EBITDA for the last four quarters
$
1,331.4
$
1,354.2
Net Leverage Ratio
0.2
0.2
Other Supplemental Information:
Three Months Ended
Six Months Ended
April 1, 2023
March 26, 2022
April 1, 2023
March 26, 2022
Geographic Revenues
U.S.
74.9
%
69.1
%
75.8
%
69.0
%
Europe
14.8
%
20.3
%
14.2
%
20.1
%
Asia-Pacific
6.4
%
7.6
%
6.1
%
7.9
%
Rest of World
3.9
%
3.0
%
3.9
%
3.0
%
Total Revenues
100.0
%
100.0
%
100.0
%
100.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230501005190/en/
Ryan Simon Vice President, Investor Relations
Ryan.Simon@hologic.com (858) 410-8514 Francis Pruell Senior
Director, Investor Relations Francis.Pruell@hologic.com (508)
263-8628
Hologic (NASDAQ:HOLX)
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