– Revenue of $1.436 Billion, GAAP Diluted EPS
of $1.80, and Non-GAAP Diluted EPS of $2.07 All Significantly Ahead
of Expectations –
– Company Again Increases Full-Year Revenue and
EPS Guidance –
Hologic, Inc. (Nasdaq: HOLX) announced today the Company’s
financial results for the fiscal second quarter ended March 26,
2022.
“In our second quarter of fiscal 2022, Hologic posted strong
financial results that significantly exceeded our guidance on both
the top and bottom lines,” said Steve MacMillan, the Company’s
chairman, president and chief executive officer. “We continued to
generate robust profitability and cash flows in the quarter and our
balance sheet is stronger than ever. In this challenging macro
environment, the health and diversity of our base businesses, plus
our diagnostic testing for COVID-19, give us incredible confidence
and excitement that we are building a stronger company for the
long-term.”
Recent Highlights
- Revenue of $1.436 billion decreased (6.6%) for the quarter, or
(5.2%) in constant currency, primarily driven by lower sales of
COVID-19 assays compared to the prior year period. Revenue,
however, was significantly higher than the Company’s guidance of
$1.25 to $1.3 billion provided last quarter.
- Excluding revenue from COVID-19, organic revenue declined
(1.6%) on a constant currency basis primarily due to the previously
discussed impact of semiconductor chip shortages in the Breast
Health division and the negative impact of the COVID-19 Omicron
variant on healthcare utilization early in the quarter.
- Global diagnostics revenue decreased (7.3%), or (5.6%) in
constant currency, primarily driven by lower sales of COVID-19
assays compared to the prior year period and reduced healthcare
utilization resulting from the COVID-19 Omicron variant. Excluding
COVID-19 revenues, global diagnostics revenue grew 4.0% on an
organic, constant currency basis. Similarly, global molecular
diagnostics revenue declined (7.8%), or (6.1%) in constant
currency, yet grew 6.9% on an organic, constant currency basis
excluding COVID-19 revenues.
- Global revenue for the Company’s Breast Health division
declined (7.7%), or (6.8%) in constant currency, as expected,
primarily due to semiconductor chip shortages.
- Global revenue for the Company’s GYN Surgical division grew
2.7%, or 3.5% in constant currency, less than forecasted, as the
COVID-19 Omicron variant reduced procedure volumes in the first two
months of the period.
- Cash flow from operations was exceptionally strong in the
second quarter at $1,062.2 million, including tax refunds of $418
million. The Company repurchased 2.9 million shares of its stock
for $200 million in the period.
- Launched national advertising campaign, which ran during the
Super Bowl and Winter Olympics, and highlighted the need for women
to make their health a priority.
- Partnered with the Women’s Tennis Association (WTA) as the
global title sponsor of the WTA Tour. The multi-year alliance aims
to achieve significant progress through a shared vision of greater
wellness and equality for women.
- Bolder Surgical, a recently acquired business providing
advanced energy vessel sealing surgical devices, was recognized on
Fast Company’s annual list of the World’s Most Innovative
Companies.
- Biotheranostics’ Breast Cancer Index, a proprietary molecular
test to help guide extended endocrine therapy decisions, now
included in American Society of Clinical Oncology (ASCO) Clinical
Practice Guideline.
Key financial results for the fiscal second quarter are shown in
the table below.
GAAP
Non-GAAP
Q2’22
Q2’21
Change Increase (Decrease)
Q2’22
Q2’21
Change Increase (Decrease)
Revenues
$1,435.7
$1,537.6
(6.6%)
$1,435.7
$1,537.6
(6.6%)
Gross Margin
65.9%
70.6%
(470 bps)
71.0%
75.0%
(400 bps)
Operating Expenses
$352.5
$289.0
22.0%
$338.2
$277.7
21.8%
Operating Margin
41.4%
51.8%
(1,040 bps)
47.4%
56.9%
(950 bps)
Net Margin
31.7%
40.3%
(860 bps)
36.5%
43.8%
(730 bps)
Diluted EPS
$1.80
$2.38
(24.4%)
$2.07
$2.59
(20.1%)
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 excludes the divested Blood Screening business, as well as
the acquired Biotheranostics, Diagenode, Mobidiag and Bolder
businesses. Revenue from acquired businesses is generally included
in organic revenue starting a year after the acquisition.
Revenue
Detail
Increase (Decrease)
$ in millions
Q2’22
Q2’21
Global Reported Change
Global Constant Currency
Change
U.S. Reported Change
International Reported Change
International Constant Currency
Change
Diagnostics
Cytology and Perinatal
$115.4
$117.2
(1.5%)
(0.1%)
(6.1%)
7.1%
11.5%
Molecular Diagnostics
$862.5
$935.3
(7.8%)
(6.1%)
(8.5%)
(6.3%)
(1.4%)
Blood Screening
$9.2
$12.0
(23.3%)
(23.3%)
(23.3%)
N/A
N/A
Total Diagnostics
$987.1
$1,064.5
(7.3%)
(5.6%)
(8.5%)
(4.8%)
0.1%
Organic Diagnostics ex. COVID-19
$290.4
$282.5
2.8%
4.0%
(0.8%)
12.9%
17.4%
Breast Health
Breast Imaging
$245.0
$269.9
(9.2%)
(8.2%)
(5.4%)
(19.8%)
(16.1%)
Interventional Breast Solutions
$65.4
$66.4
(1.5%)
(0.7%)
(5.0%)
15.5%
19.5%
Total Breast Health
$310.4
$336.3
(7.7%)
(6.8%)
(5.3%)
(14.9%)
(11.2%)
GYN Surgical
$117.3
$114.2
2.7%
3.5%
2.4%
3.9%
8.1%
Skeletal Health
$20.9
$22.6
(7.5%)
(6.2%)
(2.0%)
(16.5%)
(13.2%)
Total
$1,435.7
$1,537.6
(6.6%)
(5.2%)
(6.7%)
(6.4%)
(1.8%)
Organic (definition above)
$1,393.8
$1,518.2
(8.2%)
(6.8%)
(8.0%)
(8.6%)
(3.9%)
Organic ex. COVID-19
$736.2
$755.6
(2.6%)
(1.6%)
(2.7%)
(2.2%)
1.9%
Other Financial
Highlights
- U.S. revenue of $992.4 million decreased (6.7%). International
revenue of $443.3 million decreased (6.4%), or (1.8%) in constant
currency. Organically, U.S. revenue of $963.2 million decreased
(8.0%), while international revenue of $430.6 million decreased
(8.6%), or (3.9%) in constant currency.
- GAAP gross margin of 65.9% decreased (470) basis points.
Non-GAAP gross margin of 71.0% decreased (400) basis points. The
decrease in gross margin was primarily due to a decline in COVID-19
assay sales compared to the prior year period.
- GAAP operating margin of 41.4% decreased (1,040) basis points.
Non-GAAP operating margin of 47.4% decreased (950) basis points.
The decrease in operating margin was primarily due to a decline in
COVID-19 assay sales compared to the prior year period.
- GAAP net income attributable to Hologic of $455.7 million
decreased (26.5%). Non-GAAP net income attributable to Hologic of
$524.2 million decreased (22.2%). Adjusted non-GAAP earnings before
interest, taxes, depreciation and amortization (EBITDA) was $703.6
million, a decrease of (21.5%).
- COVID-19 revenues, which consist of COVID-19 assay revenue of
$584.1 million and other COVID-19 related revenue and revenue from
discontinued products of $73.5 million, decreased (13.8%), or
(11.9%) in constant currency.
- Total principal debt outstanding at the end of the second
quarter was $3.1 billion. The Company ended the quarter with cash
and equivalents of $2.3 billion, and a net leverage ratio (net debt
over adjusted EBITDA) of 0.3.
- On a trailing 12 months basis, adjusted Return on Invested
Capital (ROIC) of 27.4% decreased (600) basis points compared to
the prior year period.
Financial Guidance for the Third
Quarter and Full-Year Fiscal 2022
“We are again raising our full-year revenue and EPS guidance,”
said Karleen Oberton, Hologic’s chief financial officer. “Further,
our pristine balance sheet provides us tremendous strength in these
still uncertain times.”
Hologic’s financial guidance for the third quarter and full year
2022 is shown in the table below. The guidance is based on a full
year non-GAAP tax rate of approximately 21.0%, and diluted shares
outstanding of 255 million for the full year. Constant currency
guidance assumes that foreign exchange rates are the same in fiscal
2022 as in fiscal 2021. 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. Therefore,
in fiscal 2022, Biotheranostics and Diagenode will become part of
organic revenue in the fiscal third quarter, Mobidiag will become
part of organic revenue in the fiscal fourth quarter, and Bolder is
excluded from organic revenue for the full year.
Current Guidance
Previous Guidance
Guidance $
Reported % Increase
(Decrease)
Constant Currency % Increase
(Decrease)
Organic % Increase (Decrease)
Guidance $
Fiscal
2022
Revenue
$4,600 - $4,700
(18.3%) to (16.6%)
(17.2%) to (15.4%)
(18.3%) to (16.5%)
$4,400 - $4,550
GAAP EPS
$4.36 - $4.56
(39.5%) to (36.8%)
$3.80 - $4.10
Non-GAAP EPS
$5.45 - $5.65
(35.2%) to (32.8%)
$4.90 - $5.20
Q3 2022
Revenue
$875 - $915
(25.1%) to (21.7%)
(23.4%) to (19.9%)
(23.6%) to (20.1%)
GAAP EPS
$0.39 - $0.44
(62.5%) to (57.7%)
Non-GAAP EPS
$0.67 - $0.72
(49.6%) to (45.9%)
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 related 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. Organic
revenue excludes the divested Blood Screening business, as well as
the acquired Biotheranostics, Diagenode, Mobidiag, and Bolder
businesses. Revenue from acquired businesses is generally included
in organic revenue starting a year after the acquisition. Organic
revenue excluding COVID-19 is organic revenue less COVID assay
revenue, COVID-related sales of instruments, collection kits and
ancillaries, as well as license revenue, and 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,
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 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.
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 2022. Interested participants may listen to the call by
dialing 800-289-0720 (in the U.S. and Canada) or +1 323-701-0160
(for international callers) and referencing access code 1667821.
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, May 27,
2022. The replay numbers are 888-203-1112 (U.S.) or +1 719-457-0820
(international), access code 1667821, 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;
disruption of supply chains, including the availability of critical
raw materials and components, including semiconductor chips, or
more commonly referred to as chips, as well as cost inflation in
materials, packaging and transportation; 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; 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; 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
Six Months Ended
March 26, 2022
March 27, 2021
March 26, 2022
March 27, 2021
Revenues:
Product
$
1,268.2
$
1,378.8
$
2,571.6
$
2,834.2
Service and other
167.5
158.8
335.3
313.2
Total revenues
1,435.7
1,537.6
2,906.9
3,147.4
Cost of revenues:
Product
322.6
300.7
640.7
585.2
Amortization of acquired
intangible assets
72.3
64.5
147.2
126.1
Service and other
94.2
86.6
186.1
170.0
Gross profit
946.6
1,085.8
1,932.9
2,266.1
Operating expenses:
Research and development
69.5
71.5
142.3
130.7
Selling and marketing
171.4
131.5
318.7
259.5
General and administrative
100.5
88.9
218.5
180.4
Amortization of acquired
intangible assets
11.3
10.2
22.1
20.4
Contingent consideration fair
value adjustments
—
(14.7
)
(4.1
)
(10.1
)
Restructuring and divestiture
charges
(0.2
)
1.6
—
3.0
Total operating expenses
352.5
289.0
697.5
583.9
Income from operations
594.1
796.8
1,235.4
1,682.2
Interest income
0.8
0.3
1.2
0.7
Interest expense
(22.6
)
(21.3
)
(48.3
)
(49.3
)
Debt extinguishment loss
—
—
(0.7
)
(21.6
)
Other income, net
2.1
4.7
8.7
0.9
Income before income
taxes
574.4
780.5
1,196.3
1,612.9
Provision for income taxes
118.7
161.1
241.4
340.1
Net income
$
455.7
$
619.4
$
954.9
$
1,272.8
Net loss attributable to noncontrolling
interest
—
(0.5
)
—
(1.5
)
Net income attributable to
Hologic
$
455.7
$
619.9
$
954.9
$
1,274.3
Net income per common share
attributable to Hologic:
Basic
$
1.81
$
2.40
$
3.78
$
4.93
Diluted
$
1.80
$
2.38
$
3.75
$
4.88
Weighted average number of shares
outstanding:
Basic
251,574
258,473
252,537
258,539
Diluted
253,658
260,749
254,864
261,267
HOLOGIC, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited) (In millions)
March 26, 2022
September 25, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
2,290.8
$
1,170.3
Accounts receivable, net
813.0
942.7
Inventories
526.1
501.2
Other current assets
251.5
554.5
Total current assets
3,881.4
3,168.7
Property, plant and equipment, net
506.9
564.7
Goodwill and intangible assets, net
4,869.2
4,940.8
Other assets
257.0
245.7
Total assets
$
9,514.5
$
8,919.9
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term
debt
$
256.2
$
313.0
Accounts payable and accrued
liabilities
843.9
815.8
Deferred revenue
205.0
198.0
Total current liabilities
1,305.1
1,326.8
Long-term debt, net of current portion
2,813.4
2,712.2
Deferred income taxes
232.1
250.5
Other long-term liabilities
371.2
411.8
Total stockholders' equity
4,792.7
4,218.6
Total liabilities and stockholders’
equity
$
9,514.5
$
8,919.9
HOLOGIC, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In millions)
Six Months Ended
March 26, 2022
March 27, 2021
OPERATING ACTIVITIES
Net income
$
954.9
$
1,272.8
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
44.9
41.5
Amortization of acquired
intangibles
169.2
146.5
Stock-based compensation
expense
36.5
35.6
Deferred income taxes
(41.5
)
(23.5
)
Debt extinguishment loss
0.7
21.6
Other adjustments and non-cash
items
18.7
18.9
Changes in operating assets and
liabilities, excluding the effect of acquisitions:
Accounts receivable
101.6
(171.4
)
Inventories
(26.4
)
(46.0
)
Prepaid income taxes
(6.4
)
(46.6
)
Prepaid expenses and other
assets
355.3
(36.7
)
Accounts payable
9.1
32.8
Accrued expenses and other
liabilities
2.9
(50.1
)
Deferred revenue
6.9
6.8
Net cash provided by operating
activities
1,626.4
1,202.2
INVESTING ACTIVITIES
Acquisition of businesses, net
of cash acquired
(158.4
)
(440.0
)
Capital expenditures
(36.1
)
(62.8
)
Proceeds from the Department of
Defense
58.7
11.1
Increase in equipment under
customer usage agreements
(33.8
)
(27.8
)
Purchase of intellectual
property
—
(6.5
)
Other activity
5.2
(2.1
)
Net cash used in investing
activities
(164.4
)
(528.1
)
FINANCING ACTIVITIES
Proceeds from long-term debt,
net of issuance costs
1,491.2
—
Repayment of long-term debt
(1,387.5
)
(37.5
)
Proceeds from senior notes, net
of issuance costs
—
936.3
Repayment of senior notes
—
(970.8
)
Repayments under revolving
credit line
—
(250.0
)
Payment of contingent
consideration
(12.2
)
—
Payment of acquired long-term
debt
(63.6
)
—
Repurchases of common stock
(367.0
)
(221.4
)
Proceeds from issuance of
common stock pursuant to employee stock plans
17.3
33.6
Payment of minimum tax
withholdings on net share settlements of equity awards
(22.5
)
(46.7
)
Payments under finance lease
obligations
(1.7
)
(0.9
)
Net cash used in financing
activities
(346.0
)
(557.4
)
Effect of exchange rate changes on cash
and cash equivalents
4.5
(1.3
)
Net increase in cash and cash
equivalents
1,120.5
115.4
Cash and cash equivalents, beginning of
period
1,170.3
701.0
Cash and cash equivalents, end of
period
$
2,290.8
$
816.4
HOLOGIC, INC. RECONCILIATION OF
GAAP TO NON-GAAP RESULTS (Unaudited) (In millions, except earnings
per share and margin percentages)
Three Months Ended
Six Months Ended
March 26, 2022
March 27, 2021
March 26, 2022
March 27, 2021
Consolidated GAAP Revenue
$
1,435.7
$
1,537.6
$
2,906.9
$
3,147.4
Less: Blood Screening
revenue
(9.2
)
(12.0
)
(15.6
)
(20.1
)
Less: Revenue from
Biotheranostics, Diagenode, Mobidiag and Bolder
(32.7
)
(7.4
)
(66.8
)
(7.5
)
Organic Revenue
$
1,393.8
$
1,518.2
$
2,824.5
$
3,119.8
Less: COVID19 Assays
(584.1
)
(679.7
)
$
(1,106.9
)
$
(1,425.1
)
Less: COVID19 Related revenue
*
(71.2
)
(78.7
)
$
(136.0
)
$
(156.2
)
Less: Discontinued Product
revenue
(2.3
)
(4.2
)
(4.5
)
(9.4
)
Organic Revenue excluding Covid benefit
revenues
$
736.2
$
755.6
$
1,577.1
$
1,529.1
*
Revenues related to COVID assay sales for
instruments, collection kits and ancillaries, as well as license
revenue related to COVID assay sales
Gross Profit:
GAAP gross profit
$
946.6
$
1,085.8
$
1,932.9
$
2,266.1
Adjustments:
Amortization of acquired
intangible assets (1)
72.3
64.5
147.2
126.1
Integration/consolidation costs
(7)
—
0.6
—
1.0
Fair value write-up of acquired
inventory sold (10)
—
2.3
—
3.2
Non-GAAP gross profit
$
1,018.9
$
1,153.2
$
2,080.1
$
2,396.4
Gross Margin Percentage:
GAAP gross margin percentage
65.9
%
70.6
%
66.5
%
72.0
%
Impact of adjustments above
5.1
%
4.4
%
5.1
%
4.1
%
Non-GAAP gross margin percentage
71.0
%
75.0
%
71.6
%
76.1
%
Operating Expenses:
GAAP operating expenses
$
352.5
$
289.0
$
697.5
$
583.9
Adjustments:
Amortization of acquired
intangible assets (1)
(11.3
)
(10.2
)
(22.1
)
(20.4
)
Transaction expenses (2)
(0.1
)
(4.5
)
(0.9
)
(5.0
)
MDR expenses (8)
(1.9
)
(2.4
)
(3.9
)
(4.4
)
Contingent consideration
adjustments (5)
—
14.7
4.1
10.1
Purchased research and
development asset charge (14)
—
(7.0
)
—
(7.0
)
Integration/consolidation costs
(7)
(2.3
)
(3.6
)
(3.2
)
(5.3
)
Restructuring and divestiture
charges (7)
0.2
(1.6
)
—
(3.0
)
Non-income tax benefit, net
(6)
1.1
3.3
0.5
3.3
Non-GAAP operating expenses
$
338.2
$
277.7
$
672.0
$
552.2
Operating Margin:
GAAP income from operations
$
594.1
$
796.8
$
1,235.4
$
1,682.2
Adjustments to gross profit as
detailed above
72.3
67.4
147.2
130.3
Adjustments to operating
expenses as detailed above
14.3
11.3
25.5
31.7
Non-GAAP income from operations
$
680.7
$
875.5
$
1,408.1
$
1,844.2
Operating Margin Percentage:
GAAP income from operations margin
percentage
41.4
%
51.8
%
42.5
%
53.4
%
Impact of adjustments above
6.0
%
5.1
%
5.9
%
5.2
%
Non-GAAP operating margin percentage
47.4
%
56.9
%
48.4
%
58.6
%
Pre-Tax Income:
GAAP pre-tax income
$
574.4
$
780.5
$
1,196.3
$
1,612.9
Adjustments to pre-tax earnings
as detailed above
86.6
78.7
172.7
162.0
Debt extinguishment losses
(4)
—
—
0.7
21.6
Debt transaction costs (13)
—
—
1.8
5.8
Equity method investment
write-off (3)
—
—
4.3
—
Gain on life insurance proceeds
(15)
(2.3
)
—
(2.3
)
—
Unrealized losses (gains) on
foreign currency contracts (9)
0.4
(4.6
)
(7.8
)
9.4
Non-GAAP pre-tax income
$
659.1
$
854.6
$
1,365.7
$
1,811.7
Net Income Attributable to
Hologic:
GAAP net income
$
455.7
$
619.4
$
954.9
$
1,272.8
Adjustments:
Amortization of acquired
intangible assets (1)
83.6
74.7
169.3
146.5
Restructuring and
integration/consolidation costs (7)
2.1
5.8
3.2
9.3
MDR expenses (8)
1.9
2.4
3.9
4.4
Purchased research and
development asset charge (14)
—
7.0
—
7.0
Acquisition related expenses
and adjustments (2) (10)
0.1
6.8
0.9
8.2
Contingent consideration
adjustments (5)
—
(14.7
)
(4.1
)
(10.1
)
Debt extinguishment losses and
transaction costs (4) (13)
—
—
2.5
27.4
Non-income tax benefit, net
(6)
(1.1
)
(3.3
)
(0.5
)
(3.3
)
Non-operating charges (benefit)
(3) (9) (15)
(1.9
)
(4.6
)
(5.8
)
9.4
Income tax effect of
reconciling items (11)
(16.2
)
(20.3
)
(45.4
)
(49.5
)
Non-GAAP net income
$
524.2
$
673.2
$
1,078.9
$
1,422.1
Net loss attributable to non-controlling
interest
—
(0.9
)
—
(1.6
)
Net income attributable to Hologic
$
524.2
$
674.1
$
1,078.9
$
1,423.7
Net Income Percentage:
GAAP net income percentage
31.7
%
40.3
%
32.8
%
40.4
%
Impact of adjustments above
4.8
%
3.5
%
4.3
%
4.8
%
Non-GAAP net income
attributable to Hologic percentage
36.5
%
43.8
%
37.1
%
45.2
%
Earnings Per Share Attributable to
Hologic:
GAAP earnings per share - Diluted
$
1.80
$
2.38
$
3.75
$
4.88
Adjustment to net income (as
detailed above)
0.27
0.21
0.48
0.57
Non-GAAP earnings per share – diluted
(12)
$
2.07
$
2.59
$
4.23
$
5.45
Adjusted EBITDA:
Non-GAAP net income
$
524.2
$
674.1
$
1,078.9
$
1,423.7
Interest expense, net, not
adjusted above
21.8
21.0
45.3
42.8
Provision for income taxes
134.9
181.3
286.8
389.5
Depreciation expense, not
adjusted above
22.7
20.3
44.9
41.4
Adjusted EBITDA
$
703.6
$
896.7
$
1,455.9
$
1,897.4
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 and divestitures 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
and the refinancing of the 2025 Senior Notes during fiscal
2021.
(5)
To reflect adjustments 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 impact of non-income tax
matters primarily related to settling prior years' audit matters
and from a statute of limitations expiration.
(7)
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.
(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 do not qualify for hedge accounting.
(10)
To reflect the fair value step up of
inventory sold during the period related to the Acessa Health and
Somatex acquisitions in fiscal 2021.
(11)
To reflect an estimated annual effective
tax rate of 21.0% for fiscal 2022 and 21.5% for fiscal 2021.
(12)
Non-GAAP earnings per share was calculated
based on 253,658 and 254,864 weighted average diluted shares
outstanding for the three and six months ended March 26, 2022 and
260,749 and 261,267 weighted average diluted shares outstanding for
the three and six months ended March 27, 2021, respectively.
(13)
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
and the refinancing of the 2025 Senior Notes during fiscal
2021.
(14)
To reflect the purchase of intangible
assets used in a research and development project that has no
future alternative use.
(15)
To reflect a gain on life insurance
proceeds received during the second quarter of fiscal 2022.
Reconciliation of GAAP to non-GAAP EPS
Guidance:
Guidance Range
Guidance Range
Quarter Ending June 25, 2022
Year Ending September 24,
2022
Low
High
Low
High
GAAP Net Income Per
Share
$0.39
$0.44
$4.36
$4.56
Amortization of acquired
intangible assets
0.33
0.33
1.33
1.33
Restructuring, Integration and
Other charges
0.02
0.02
0.05
0.05
Tax Impact of Exclusions
(0.07)
(0.07)
(0.29)
(0.29)
Non-GAAP Net Income Per Share
$0.67
$0.72
$5.45
$5.65
Trailing Twelve Months ended
March 26, 2022
Return on Invested Capital:
Adjusted Net Operating Profit After
Tax
Non-GAAP net income
attributable to Hologic
$
1,839.4
Non-GAAP provision for income
taxes
495.0
Non-GAAP interest expense
90.7
Non-GAAP other income
4.9
Adjusted net operating profit
before tax
$
2,430.0
Non-GAAP average effective tax
rate (1)
21.2
%
Adjusted net operating profit
after tax
$
1,914.6
Average Net Debt plus Average
Stockholders’ Equity (2)
Average total debt
$
2,908.3
Less: Average cash and cash
equivalents
(1,553.6
)
Average net debt
$
1,354.7
Average stockholders’ equity
(3)
5,644.7
Average net debt plus average
stockholders’ equity
$
6,999.4
Adjusted ROIC
Adjusted ROIC (adjusted net
operating profit after tax above divided by average net debt plus
average stockholders’ equity)
27.4
%
(1)
ROIC is presented on a TTM basis; non-GAAP
effective tax rate for the three months ended June 26, 2021 was
21.5%, the three months ended September 25, 2021 was 21.5%, the
three months ended December 25, 2021 was 21.5% and the three months
ended March 26, 2022 was 20.46%.
(2)
Calculated using the average of the
balances as of March 26, 2022 and March 27, 2021.
(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
March 26, 2022
Net Leverage Ratio:
Total principal debt
$
3,098.7
Total cash
(2,290.8
)
Net principal debt, as adjusted
$
807.9
EBITDA for the last four quarters
$
2,514.8
Net Leverage Ratio
0.3
Other Supplemental Information:
Three Months Ended
Six Months Ended
March 26, 2022
March 27, 2021
March 26, 2022
March 27, 2021
Geographic Revenues
U.S.
69.1
%
69.2
%
69.0
%
70.0
%
Europe
20.3
%
21.9
%
20.1
%
21.4
%
Asia-Pacific
7.6
%
5.9
%
7.9
%
5.7
%
Rest of World
3.0
%
3.0
%
3.0
%
2.9
%
Total Revenues
100.0
%
100.0
%
100.0
%
100.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220427005356/en/
Ryan Simon Vice President, Investor Relations
Ryan.Simon@hologic.com (858) 410-8514
Francis Pruell Director, Investor Relations
Francis.Pruell@hologic.com (508) 263-8628
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