— Revenue of $1.168 Billion Increases 42.0%,
37.8% in Constant Currency —
— Organic Revenue Increases 38.4%, 34.2% in
Constant Currency —
— Company Posts GAAP Diluted EPS of $1.04,
Non-GAAP Diluted EPS of $1.33 —
Hologic, Inc. (Nasdaq: HOLX) announced today the Company’s
financial results for the fiscal third quarter ended June 26,
2021.
“Hologic posted very strong financial results in our third
fiscal quarter, with both revenue and EPS growth exceeding our
guidance,” said Steve MacMillan, the Company’s chairman, president
and chief executive officer. “Our base businesses showed strong
momentum and we continued to make a big difference against the
COVID pandemic. And we used our strong cash flows to strengthen the
Company for the future by finalizing the Mobidiag acquisition.”
Recent Highlights
- Revenue increased 42.0% for the quarter, or 37.8% in constant
currency. Excluding material acquisitions and divestitures, organic
revenue in the third quarter increased 38.4%, or 34.2% in constant
currency.
- Global revenue for the Company’s Breast and Skeletal Health and
GYN Surgical divisions grew significantly compared to the prior
year period, when sales were most negatively affected by the
COVID-19 pandemic. Notably, both divisions also grew compared to
the same period in 2019.
- Worldwide diagnostics revenue of $665.5 million increased
25.0%, or 20.3% in constant currency, despite lower demand for the
Company’s two COVID assays that run on the Panther® and Panther
Fusion® systems.
- Completed the acquisition of Finnish molecular diagnostics
company Mobidiag for an enterprise value of approximately $808
million.
- The American College of Obstetricians and Gynecologists updated
its guidance for the management of symptomatic uterine leiomyomas
to support the use of laparoscopic radiofrequency ablation. And
Cigna updated its medical policy to cover the Acessa laparoscopic
radiofrequency ablation procedure as medically necessary.
- Launched Project Health Equality, which strives to address the
structural and cultural barriers that prevent Black and Hispanic
women in the U.S. from receiving the same quality health care as
white women. Project Health Equality is a multiyear investment of
more than $20 million to drive research, education and access to
ensure women of color receive the care they want, need and
deserve.
- Cash flow from operations was a very strong $662.9 million in
the third quarter. In addition to closing the Mobidiag acquisition,
the Company repurchased approximately 3.0 million shares of its
common stock for $188 million in the quarter.
Key financial results for the fiscal third quarter are shown in
the table below.
GAAP
Non-GAAP
Q3’21
Q3’20
Change
Increase
(Decrease)
Q3’21
Q3’20
Change
Increase
(Decrease)
Revenues
$1,168.3
$822.9
42.0%
$1,168.3
$822.9
42.0%
Gross Margin
60.1%
56.6%
350 bps
66.1%
64.7%
140 bps
Operating Expenses
$343.0
$275.1
24.7%
$310.1
$261.1
18.8%
Operating Margin
30.7%
23.2%
750 bps
39.5%
33.0%
650 bps
Net Margin
22.9%
16.6%
630 bps
29.5%
23.7%
580 bps
Diluted EPS
$1.04
$0.53
96.2%
$1.33
$0.75
77.3%
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. Organic
revenue is on a constant currency basis and excludes the divested
Blood Screening business, as well as the acquired Acessa,
Biotheranostics, Diagenode, and Mobidiag businesses. Revenue from
acquired businesses is generally included in organic revenue
starting a year after the acquisition.
Revenue Detail
Increase (Decrease)
$ in millions
Q3’21
Q3’20
Global
Reported
Change
Global
Constant
Currency
Change
U.S.
Reported
Change
International
Reported
Change
International
Constant
Currency
Change
Diagnostics
Cytology & Perinatal
$115.9
$64.1
80.8%
75.0%
83.2%
76.3%
61.2%
Molecular Diagnostics
$536.4
$460.3
16.5%
11.9%
(30.9%)
284.4%
253.4%
Blood Screening
$13.2
$7.8
69.2%
69.2%
69.2%
N/A
N/A
Total Diagnostics
$665.5
$532.2
25.0%
20.3%
(18.7%)
231.1%
204.2%
Excluding Blood
$652.3
$524.4
24.4%
19.6%
(20.3%)
231.1%
204.2%
Breast Health
Breast Imaging
$280.3
$193.2
45.1%
42.6%
50.0%
30.0%
20.1%
Interventional Breast Solutions
$68.7
$30.8
123.1%
119.8%
119.4%
140.6%
122.2%
Total Breast Health
$349.0
$224.0
55.8%
53.2%
60.2%
41.9%
31.1%
GYN Surgical
$127.9
$51.5
148.4%
143.4%
146.8%
155.5%
128.0%
Skeletal Health
$25.9
$15.2
70.4%
66.3%
74.6%
65.5%
54.3%
Total
$1,168.3
$822.9
42.0%
37.8%
13.5%
158.1%
137.0%
Excluding divested Blood business and
Acessa, Biotheranostics, Diagenode, and Mobidiag acquisitions
(organic)
$1,128.3
$815.1
38.4%
34.2%
10.1%
152.5%
131.4%
Other Financial
Highlights
- U.S. revenue of $749.9 million increased 13.5%. International
revenue of $418.4 million increased 158.1%, or 137.0% in constant
currency. Organically, U.S. revenue of $719.0 million increased
10.1%, while international revenue of $409.3 million increased
152.5%, or 131.4% in constant currency.
- GAAP gross margin of 60.1% increased 350 basis points. Non-GAAP
gross margin of 66.1% increased 140 basis points. The increase in
gross margin was largely due to a recovery in our base
businesses.
- GAAP operating margin of 30.7% increased 750 basis points.
Non-GAAP operating margin of 39.5% increased 650 basis points. The
increase in operating margin was primarily due to the significant
increase in revenues.
- GAAP net income attributable to Hologic of $268.4 million
increased 94.6%. Non-GAAP net income attributable to Hologic of
$344.8 million increased 77.1%. Adjusted non-GAAP earnings before
interest, taxes, depreciation and amortization (EBITDA) was $483.1
million, an increase of 61.6%.
- Total principal debt outstanding at the end of the third
quarter was $3.14 billion. The Company ended the quarter with cash
and equivalents of $827.6 million, and a net leverage ratio (net
debt over adjusted EBITDA) of 0.7.
- On a trailing 12 months basis, adjusted Return on Invested
Capital (ROIC) of 34.7% increased 2,190 basis points compared to
the prior year period.
Financial Guidance for the Fourth
Quarter of Fiscal 2021
“As we wrap up Hologic’s best financial year in our fourth
fiscal quarter, we expect strong growth in our base businesses,
offset by declines in COVID testing revenue,” said Karleen Oberton,
Hologic’s chief financial officer.
Hologic’s financial guidance for the fourth quarter of fiscal
2021 is shown in the table below. The guidance is based on a
non-GAAP tax rate of approximately 21.5%, and 260 million diluted
shares outstanding for the quarter. Constant currency guidance
assumes that foreign exchange rates are the same in fiscal 2021 as
in fiscal 2020. Current guidance assumes that recent foreign
exchange rates persist for all of the fourth quarter of fiscal
2021. Organic revenue guidance is on a constant currency basis and
excludes the divested Blood Screening business and the acquired
Acessa, Biotheranostics, Diagenode, and Mobidiag businesses.
Revenue from acquired businesses is generally included in organic
revenue guidance starting a year after the acquisition.
Guidance for the Fourth Quarter
of Fiscal 2021
Guidance $
Reported % Increase
(Decrease)
Constant Currency
% Increase
(Decrease)
Organic % Increase
(Decrease)
Q4 2021
Revenue
$1,000 - $1,040
(25.8%) to (22.8%)
(26.7%) to (23.8%)
(29.6%) to (26.6%)
GAAP EPS
$0.63 - $0.71
(66.5%) to (62.2%)
Non-GAAP EPS
$0.92 - $1.00
(55.6%) to (51.7%)
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; non-GAAP gross margin; non-GAAP operating expenses;
non-GAAP operating margin; non-GAAP effective tax rate; non-GAAP
net income; non-GAAP net margin; non-GAAP EPS; and adjusted EBITDA.
The Company defines its non-GAAP net income, EPS, and other
non-GAAP financial measures to exclude, as applicable: (i) the
amortization of intangible assets and impairment of goodwill,
intangible assets and equipment; (ii) adjustments to record
contingent consideration at fair value; (iii) additional expenses
resulting from the purchase accounting adjustment to record
inventory at fair value; (iv) restructuring and divestiture charges
and facility closure and consolidation charges, including
accelerated depreciation, and costs incurred to integrate
acquisitions (including retention, transaction bonuses, legal and
professional consulting services) and separate divested businesses
from existing operations; (v) expenses related to the divested
Cynosure business incurred subsequent to the disposition date
primarily related to indemnification provisions for legal and tax
matters; (vi) transaction related expenses for divestitures and
acquisitions; (vii) third-party expenses incurred related to
implementing the European MDR/IVDR requirements and obtaining the
appropriate approvals for its existing products; (viii) debt
extinguishment losses and related transaction costs; (ix) the
unrealized (gains) losses on the mark-to-market of foreign currency
contracts for which the Company has not elected hedge accounting;
(x) litigation settlement charges (benefits) and non-income tax
related charges (benefits); (xi) other-than-temporary impairment
losses on investments and realized gains and losses resulting from
the sale of investments; (xii) the one-time discrete impacts
related to internal restructuring 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 organic revenue to exclude the divested
Blood Screening business, and the acquired Acessa, Biotheranostics,
Diagenode, and Mobidiag businesses.
These non-GAAP financial measures should be considered
supplemental to, and not a substitute for, financial information
prepared in accordance with GAAP. The Company's definition of these
non-GAAP measures may differ from similarly titled measures used by
others.
The non-GAAP financial measures used in this press release
adjust for specified items that can be highly variable or difficult
to predict. The Company generally uses these non-GAAP financial
measures to facilitate management's financial and operational
decision-making, including evaluation of Hologic's historical
operating results, comparison to competitors' operating results and
determination of management incentive compensation. These non-GAAP
financial measures reflect an additional way of viewing aspects of
the Company's operations that, when viewed with GAAP results and
the reconciliations to corresponding GAAP financial measures, may
provide a more complete understanding of factors and trends
affecting Hologic's business.
Because non-GAAP financial measures exclude the effect of items
that will increase or decrease the Company's reported results of
operations, management strongly encourages investors to review the
Company's consolidated financial statements and publicly filed
reports in their entirety. A reconciliation of the non-GAAP
financial measures to the most directly comparable GAAP financial
measures is included in the tables accompanying this release.
Conference Call and
Webcast
Hologic’s management will host a conference call at 4:30 p.m. ET
today to discuss its financial results for the third quarter of
fiscal 2021. Interested participants may listen to the call by
dialing 888-204-4368 (in the U.S. and Canada) or +1 323-994-2093
(for international callers) and referencing access code 5101679.
Participants may also click here to join. Participants should dial
in 5-10 minutes before the call begins. A replay will be available
approximately two hours after the call ends through Friday, August
27, 2021. The replay numbers are 888-203-1112 (U.S.) or +1
719-457-0820 (international), access code 5101679, PIN 3270. The
Company will also provide a live webcast of the call at
investors.hologic.com.
About Hologic, Inc.
Hologic, Inc. is an innovative medical technology company
primarily focused on improving women's health and well-being
through early detection and treatment. For more information on
Hologic, visit www.hologic.com.
Hologic and associated logos are trademarks and/or registered
trademarks of Hologic, Inc. and/or its subsidiaries in the United
States and/or other countries.
Forward-Looking
Statements
This news release contains forward-looking information that
involves risks and uncertainties, including statements about the
Company’s plans, objectives, expectations and intentions. Such
statements include, without limitation: financial or other
information based upon or otherwise incorporating judgments or
estimates relating to future performance, events or expectations;
the Company’s strategies, positioning, resources, capabilities, and
expectations for future performance; and the Company's outlook and
financial and other guidance. These forward-looking statements are
based upon assumptions made by the Company as of the date hereof
and are subject to known and unknown risks and uncertainties that
could cause actual results to differ materially from those
anticipated.
Risks and uncertainties that could adversely affect the
Company’s business and prospects, and otherwise cause actual
results to differ materially from those anticipated, include
without limitation: the severity and duration of the COVID-19
pandemic and its impact on the U.S. healthcare system, the U.S.
economy and worldwide economy; the timing, scope and effect of
further U.S. and international governmental, regulatory, fiscal,
monetary and public health responses to the COVID-19 pandemic;
continued demand for the Company’s COVID-19 TMA assay; the
Company’s ability to manufacture, on a scale necessary to meet
demand, its COVID-19 TMA assay as well as the Panther systems on
which the assay runs; U.S., European and general worldwide economic
conditions, trade relations, and related uncertainties;
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 ability
of the Company to successfully manage leadership and organizational
changes, including the ability of the Company to attract, motivate
and retain key employees and maintain engagement and efficiency in
remote work environments; the Company’s reliance on third-party
reimbursement policies to support the sales and market acceptance
of its products, including the possible adverse impact of
government regulation and changes in the availability and amount of
reimbursement and uncertainties for new products or product
enhancements; changes to applicable laws and regulations, including
tax laws, global health care reform, and import/export trade laws;
changes in guidelines, recommendations and studies published by
various organizations that could affect the use of the Company’s
products; uncertainties inherent in the development of new products
and the enhancement of existing products, including FDA approval
and/or clearance and other regulatory risks, technical risks, cost
overruns and delays; the risk that products may contain undetected
errors or defects or otherwise not perform as anticipated; risks
associated with strategic alliances and the ability of the Company
to realize anticipated benefits of those alliances; risks
associated with acquisitions, including, without limitation, the
Company’s ability to successfully integrate acquired businesses,
the risks that the acquired businesses may not operate as
effectively and efficiently as expected even if otherwise
successfully integrated, and the risks that acquisitions may
involve unexpected costs or unexpected liabilities; the risks of
conducting business internationally; the risk of adverse exchange
rate fluctuations on the Company’s international activities and
businesses; the early stage of market development for certain of
the Company’s products; the Company’s leverage risks, including the
Company’s obligation to meet payment obligations and financial
covenants associated with its debt; cybersecurity risks; risks
related to the use and protection of intellectual property;
expenses, uncertainties and potential liabilities relating to
litigation, including, without limitation, commercial, intellectual
property, employment and product liability litigation; technical
innovations that could render products marketed or under
development by the Company obsolete; and competition.
The risks included above are not exhaustive. Other factors that
could adversely affect the Company's business and prospects are
described in the filings made by the Company with the SEC,
including its most recent Annual Report on Form 10-K and Quarterly
Report on Form 10-Q. The Company expressly disclaims any obligation
or undertaking to release publicly any updates or revisions to any
such statements presented herein to reflect any change in
expectations or any change in events, conditions or circumstances
on which any such statements are based.
SOURCE: Hologic, Inc.
HOLOGIC, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF INCOME
(Unaudited)
(In millions, except number of
shares, which are reflected in thousands, and per share data)
Three Months Ended
Nine Months Ended
June 26, 2021
June 27, 2020
June 26, 2021
June 27, 2020
Revenues:
Product
$
995.2
$
701.6
$
3,829.4
$
2,024.5
Service and other
173.1
121.3
486.3
405.0
Total revenues
1,168.3
822.9
4,315.7
2,429.5
Cost of revenues:
Product
303.9
225.1
889.1
685.9
Amortization of acquired intangible
assets
68.1
62.9
194.2
189.4
Impairment of intangible assets and
equipment
—
—
—
25.8
Service and other
94.7
68.8
264.7
232.7
Gross profit
701.6
466.1
2,967.7
1,295.7
Operating expenses:
Research and development
69.0
55.1
199.8
165.5
Selling and marketing
142.7
103.5
402.2
359.0
General and administrative
117.3
105.3
297.7
259.9
Amortization of acquired intangible
assets
10.4
10.2
30.7
29.5
Impairment of intangible assets and
equipment
—
—
—
4.4
Contingent consideration fair value
adjustments
—
—
(10.1
)
0.4
Restructuring and divestiture charges
3.6
1.0
6.6
4.8
Total operating expenses
343.0
275.1
926.9
823.5
Income from operations
358.6
191.0
2,040.8
472.2
Interest income
0.4
0.5
1.1
4.0
Interest expense
(21.6
)
(27.4
)
(70.9
)
(91.5
)
Debt extinguishment loss
—
—
(21.6
)
—
Other income, net
0.1
4.3
1.1
0.1
Income before income taxes
337.5
168.4
1,950.5
384.8
Provision (benefit) for income taxes
69.4
32.0
409.6
(232.1
)
Net income
$
268.1
$
136.4
$
1,540.9
$
616.9
Net loss attributable to noncontrolling
interest
(0.3
)
(1.5
)
(1.8
)
(3.4
)
Net income attributable to
Hologic
$
268.4
$
137.9
$
1,542.7
$
620.3
Net income per common share
attributable to Hologic:
Basic
$
1.05
$
0.53
$
5.98
$
2.35
Diluted
$
1.04
$
0.53
$
5.93
$
2.34
Weighted average number of shares
outstanding:
Basic
256,230
259,870
257,769
263,667
Diluted
258,581
261,047
260,371
265,092
HOLOGIC, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In millions)
June 26, 2021
September 26, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
827.6
$
701.0
Accounts receivable, net
943.2
1,028.9
Inventories
502.9
395.1
Other current assets
144.5
97.3
Total current assets
2,418.2
2,222.3
Property, plant and equipment, net
551.1
491.5
Goodwill and intangible assets, net
5,065.0
3,965.4
Other assets
556.3
516.6
Total assets
$
8,590.6
$
7,195.8
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term debt
$
460.6
$
324.9
Accounts payable and accrued
liabilities
790.9
728.3
Deferred revenue
213.1
186.1
Total current liabilities
1,464.6
1,239.3
Long-term debt, net of current portion
2,654.7
2,713.9
Deferred income taxes
284.8
201.8
Other long-term liabilities
309.4
333.5
Total Hologic stockholders' equity
3,877.1
2,705.2
Noncontrolling interest
—
2.1
Total liabilities and stockholders’
equity
$
8,590.6
$
7,195.8
HOLOGIC, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Unaudited)
(In millions)
Nine Months Ended
June 26, 2021
June 27, 2020
OPERATING ACTIVITIES
Net income
$
1,540.9
$
616.9
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
64.2
62.8
Amortization of acquired intangibles
224.9
218.9
Stock-based compensation expense
51.0
53.7
Deferred income taxes
(44.3
)
(63.3
)
Intangible asset and equipment impairment
charges
—
30.2
Debt extinguishment loss
21.6
—
Other adjustments and non-cash items
19.8
23.6
Changes in operating assets and
liabilities, excluding the effect of acquisitions:
Accounts receivable
111.5
(130.5
)
Inventories
(82.4
)
(48.0
)
Prepaid income taxes
(24.3
)
(10.6
)
Prepaid expenses and other assets
(22.3
)
(290.0
)
Accounts payable
9.4
(55.1
)
Accrued expenses and other liabilities
(27.6
)
40.5
Deferred revenue
22.6
5.5
Net cash provided by operating
activities
1,865.0
454.6
INVESTING ACTIVITIES
Acquisition of businesses, net of cash
acquired
(1,163.3
)
(43.2
)
Net proceeds from sale of business
—
142.7
Capital expenditures
(71.2
)
(53.2
)
Increase in equipment under customer usage
agreements
(43.4
)
(44.9
)
Purchase of intellectual property
(6.5
)
—
Other activity
(2.1
)
(5.1
)
Net cash used by investing activities
(1,286.5
)
(3.7
)
FINANCING ACTIVITIES
Repayments of long-term debt
(56.3
)
(36.4
)
Proceeds from senior notes
950.0
—
Repayment of senior notes
(970.8
)
—
Proceeds from revolving credit line
—
750.0
Repayment under revolving credit line
(250.0
)
(250.0
)
Proceeds from accounts receivable
securitization agreement
320.0
16.0
Repayments under accounts receivable
securitization agreement
—
(250.0
)
Purchase of non-controlling interest
(8.5
)
(1.8
)
Payment of deferred acquisition
consideration
—
(24.3
)
Payment of debt issuance costs
(13.7
)
—
Repurchase of common stock
(409.7
)
(553.4
)
Proceeds from issuance of common stock
pursuant to employee stock plans
39.6
54.7
Payment of minimum tax withholdings on net
share settlements of equity awards
(46.9
)
(12.6
)
Payments under finance lease
obligations
(1.5
)
(1.2
)
Net cash used in financing activities
(447.8
)
(309.0
)
Effect of exchange rate changes on cash
and cash equivalents
(4.1
)
0.5
Net increase in cash and cash
equivalents
126.6
142.4
Cash and cash equivalents, beginning of
period
701.0
601.8
Cash and cash equivalents, end of
period
$
827.6
$
744.2
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
Nine Months Ended
June 26, 2021
June 27, 2020
June 26, 2021
June 27, 2020
Consolidated GAAP Revenue
$
1,168.3
$
822.9
$
4,315.7
$
2,429.5
Less: Medical Aesthetics revenue
—
—
—
(65.3
)
Less: Blood Screening revenue
(13.2
)
(7.8
)
(33.3
)
(35.0
)
Less: Revenue from Acessa,
Biotheranostics, Diagenode, and Mobidiag Oy
(26.8
)
—
(37.3
)
—
Adjusted Revenue
$
1,128.3
$
815.1
$
4,245.1
$
2,329.2
Gross Profit:
GAAP gross profit
$
701.6
$
466.1
$
2,967.7
$
1,295.7
Adjustments:
Amortization of acquired intangible assets
(1)
68.1
62.9
194.2
189.4
Impairment of intangible assets and
equipment (2)
—
—
—
25.8
Integration/consolidation costs (8)
—
0.2
1.0
0.7
Fair value write-up of acquired inventory
sold (11)
2.1
3.1
5.3
5.3
Non-GAAP gross profit
$
771.8
$
532.3
$
3,168.2
$
1,516.9
Gross Margin Percentage:
GAAP gross margin percentage
60.1
%
56.6
%
68.8
%
53.3
%
Impact of adjustments above
6.0
%
8.1
%
4.6
%
9.1
%
Non-GAAP gross margin percentage
66.1
%
64.7
%
73.4
%
62.4
%
Operating Expenses:
GAAP operating expenses
$
343.0
$
275.1
$
926.9
$
823.5
Adjustments:
Amortization of acquired intangible assets
(1)
(10.4
)
(10.2
)
(30.7
)
(29.5
)
Impairment of intangible assets and
equipment (2)
—
—
—
(4.4
)
Transaction expenses (3)
(14.0
)
(0.7
)
(19.0
)
(4.1
)
Acquisition related adjustment (4)
—
—
—
3.8
MDR expenses (9)
(2.9
)
(0.4
)
(7.3
)
(0.7
)
Contingent consideration adjustments
(6)
—
—
10.1
(0.4
)
Purchased research and development asset
charge (18)
—
—
(7.0
)
—
Integration/consolidation costs (8)
(2.0
)
(1.7
)
(7.3
)
(10.5
)
Restructuring and divestiture charges
(8)
(3.6
)
(1.0
)
(6.6
)
(4.8
)
Non-income tax benefit (7)
—
—
3.3
—
Non-GAAP operating expenses
$
310.1
$
261.1
$
862.4
$
772.9
Operating Margin:
GAAP income from operations
$
358.6
$
191.0
$
2,040.8
$
472.2
Adjustments to gross profit as detailed
above
70.2
66.2
200.5
221.2
Adjustments to operating expenses as
detailed above
32.9
14.0
64.5
50.6
Non-GAAP income from operations
$
461.7
$
271.2
$
2,305.8
$
744.0
Operating Margin Percentage:
GAAP income from operations margin
percentage
30.7
%
23.2
%
47.3
%
19.4
%
Impact of adjustments above
8.8
%
9.8
%
6.1
%
11.2
%
Non-GAAP operating margin percentage
39.5
%
33.0
%
53.4
%
30.6
%
Pre-Tax Income:
GAAP pre-tax income
$
337.5
$
168.4
$
1,950.5
$
384.8
Adjustments to pre-tax earnings as
detailed above
103.1
80.2
265.0
271.8
Debt extinguishment loss (5)
—
—
21.6
—
Debt transaction costs (15)
—
—
5.8
—
Unrealized (gains) losses on foreign
currency contracts (10)
(1.6
)
2.0
7.8
1.2
Other (14)
—
—
—
(1.0
)
Non-GAAP pre-tax income
$
439.0
$
250.6
$
2,250.7
$
656.8
Net Income Attributable to
Hologic:
GAAP net income
$
268.1
$
136.4
$
1,540.9
$
616.9
Adjustments:
Amortization of acquired intangible assets
(1)
78.5
73.1
224.9
218.9
Restructuring and
integration/consolidation costs (8)
5.6
2.9
14.9
16.0
MDR expenses (9)
2.9
0.4
7.3
0.7
Impairment of intangible assets and
equipment (2)
—
—
—
30.2
Acquisition related expenses and
adjustments (3) (4) (11)
16.1
3.8
24.3
5.6
Contingent consideration adjustments
(6)
—
(10.1
)
0.4
Debt extinguishment loss and transaction
costs (5) (15)
—
—
27.4
—
Purchased research and development asset
charge (17)
—
7.0
—
Non-income tax benefit (7)
—
(3.3
)
—
Non-operating (benefit) charges (10)
(14)
(1.6
)
2.0
7.8
0.3
Discrete tax benefit from the sale of
Cynosure (16)
—
(1.9
)
—
(312.8
)
Income tax effect of reconciling items
(12)
(25.0
)
(23.1
)
(74.3
)
(68.9
)
Non-GAAP net income
$
344.6
$
193.6
$
1,766.8
$
507.3
Net loss attributable to non-controlling
interest
(0.2
)
(1.1
)
(1.8
)
(2.2
)
Net income attributable to Hologic
$
344.8
$
194.7
$
1,768.6
$
509.5
Net Income Percentage:
GAAP net income percentage
22.9
%
16.6
%
35.7
%
25.4
%
Impact of adjustments above
6.6
%
7.1
%
5.3
%
(4.4
)
%
Non-GAAP net income attributable to
Hologic percentage
29.5
%
23.7
%
41.0
%
21.0
%
Earnings Per Share Attributable to
Hologic:
GAAP earnings per share - Diluted
$
1.04
$
0.53
$
5.93
$
2.34
Adjustment to net income (as detailed
above)
0.29
0.22
0.86
(0.42
)
Non-GAAP earnings per share – diluted
(13)
$
1.33
$
0.75
$
6.79
$
1.92
Adjusted EBITDA:
Non-GAAP net income
$
344.8
$
194.7
$
1,768.6
$
509.5
Interest expense, net, not adjusted
above
21.2
26.9
64.0
87.5
Provision for income taxes
94.4
57.0
483.9
149.4
Depreciation expense, not adjusted
above
22.7
20.4
64.1
62.8
Adjusted EBITDA
$
483.1
$
299.0
$
2,380.6
$
809.2
Explanatory Notes to Reconciliations:
(1)
To reflect non-cash expenses attributable
to the amortization of acquired intangible assets.
(2)
To reflect recording the Cynosure business
to fair value based upon meeting the assets-held-for-sale criteria
in the first quarter of fiscal 2020 due to executing an agreement
to sell the business.
(3)
To reflect expenses with third parties
related to acquisitions and divestitures prior to when such
transactions are completed. These expenses primarily comprise
broker fees, legal fees, a transfer tax related to the Mobidiag
acquisition, and consulting and due diligence fees.
(4)
To reflect an adjustment for the final
Faxitron hold-back payment and an adjustment to reduce certain
acquired accruals in fiscal 2020.
(5)
To reflect a debt extinguishment loss from
refinancing the 2025 Senior Notes.
(6)
To reflect adjustments to the estimated
contingent consideration liabilities related to the Acessa Health
and Faxitron acquisitions in fiscal 2021 and 2020, respectively,
which are payable upon meeting defined revenue growth metrics.
(7)
To reflect a $3.3 million non-income tax
benefit in the second quarter of fiscal 2021 resulting from a
statute of limitations expiration.
(8)
To reflect restructuring and divestiture
charges, and certain costs associated with the Company’s
integration and facility consolidation plans, which primarily
include retention and transfer costs, as well as costs incurred to
integrate acquisitions and dispose businesses, including
consulting, legal, tax and accounting fees. In addition, this
category includes additional expenses incurred related to the
Cynosure disposition, settlements of litigation and indemnification
provisions for legal and tax matters that existed as of the date of
disposition.
(9)
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.
(10)
To reflect non-cash unrealized gains and
losses on the mark-to market on outstanding forward foreign
currency and option contracts, which do not qualify for hedge
accounting.
(11)
To reflect the fair value step up of
inventory sold during the period related to the Somatex, Acessa
Health, Diagenode, and Mobidiag acquisitions in fiscal 2021 and the
SuperSonic Imagine and Health Beacons acquisitions in fiscal 2020,
respectively.
(12)
To reflect an estimated annual effective
tax rate of 21.50% for fiscal 2021 and 22.75% for fiscal 2020.
(13)
Non-GAAP earnings per share was calculated
based on 258,581 and 260,371 weighted average diluted shares
outstanding for the three and nine months ended June 26, 2021 and
261,047 and 265,092 weighted average diluted shares outstanding for
the three and nine months ended June 27, 2020, respectively.
(14)
To reflect a gain of $1.5 million to
remeasure the Company's initial investment in SuperSonic Imagine
pursuant to U.S. GAAP for purchase accounting, partially offset by
a charge of $0.5 million for the sale of an investment
security.
(15)
To reflect the amount of debt issuance
costs recorded directly to interest expense as a result of
refinancing the 2025 Senior Notes.
(16)
To reflect a discrete tax benefit for the
sale of Cynosure.
(17)
To reflect the purchase of intangible
assets to be used in a research and development project that have
no future alternative use.
Reconciliation of GAAP to non-GAAP EPS Guidance:
Guidance Range
Quarter Ending September 25,
2021
Low
High
GAAP Net Income Per
Share
$0.63
$0.71
Amortization of acquired intangible
assets
0.33
0.33
Restructuring, Integration and Other
charges
0.04
0.04
Tax Impact of Exclusions
(0.08)
(0.08)
Non-GAAP Net Income Per Share
$0.92
$1.00
Trailing Twelve
Months ended
June 26, 2021
Return on Invested Capital:
Adjusted Net Operating Profit After
Tax
Non-GAAP net income attributable to
Hologic
$
2,312.3
Non-GAAP provision for income taxes
643.7
Non-GAAP interest expense
90.1
Non-GAAP other income
(14.3
)
Adjusted net operating profit before
tax
$
3,031.8
Non-GAAP average effective tax rate
(1)
21.8
%
Adjusted net operating profit after
tax
$
2,370.9
Average Net Debt plus Average
Stockholders’ Equity (2)
Average total debt
$
3,206.0
Less: Average cash and cash
equivalents
(785.9
)
Average net debt
$
2,420.1
Average stockholders’ equity (3)
4,418.7
Average net debt plus average
stockholders’ equity
$
6,838.8
Adjusted ROIC
34.7
%
(1) ROIC is presented on a TTM basis; non-GAAP effective tax
rate for the three months ended September 26, 2020 was 22.75%, the
three months ended December 26, 2020 was 21.75%, the three months
ended March 27, 2021 was 21.22% and the three months ended June 26,
2021 was 21.50%. (2) Calculated using the average of the balances
as of June 26, 2021 and June 27, 2020. (3) Adjusted (increased) to
eliminate the effect of the impairment of intangible assets of
$32.2 million in fiscal 2014, the impairment of goodwill of $685.7
million and an IPR&D asset of $46.0 million in fiscal 2018, the
impairment of intangible assets and equipment of $685.4 million in
fiscal 2019 and the impairment of intangible assets and equipment
of $30.2 million in fiscal 2020. The impact of the intangible asset
impairment charges is reflected net of tax.
As of
June 26, 2021
Net Leverage Ratio:
Total principal debt
$
3,142.0
Total cash
(827.6
)
Net principal debt, as adjusted
$
2,314.4
EBITDA for the last four quarters
$
3,129.1
Net Leverage Ratio
0.7
Other Supplemental Information:
Three Months Ended
Nine Months Ended
June 26, 2021
June 27, 2020
June 26, 2021
June 27, 2020
Geographic Revenues
U.S.
64.2
%
80.3
%
68.4
%
76.9
%
Europe
24.7
%
12.4
%
22.3
%
13.3
%
Asia-Pacific
7.7
%
5.3
%
6.2
%
6.4
%
Rest of World
3.4
%
2.0
%
3.1
%
3.4
%
Total Revenues
100.0
%
100.0
%
100.0
%
100.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210728005880/en/
Michael Watts Vice President, Investor Relations and Corporate
Communications (858) 410-8588 Michael.watts@hologic.com
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