– Revenue of $953 Million, GAAP Diluted EPS of
$0.47, and Non-GAAP Diluted EPS of $0.82 All Exceed Expectations
–
– Global Organic Molecular Diagnostics Revenue
Grows 17% in Constant Currency, ex-COVID-19 –
– Fiscal 2023 Financial Guidance Anticipates
Strong Growth in All Core Businesses –
Hologic, Inc. (Nasdaq: HOLX) announced today the Company’s
financial results for the fiscal fourth quarter ended September 24,
2022.
“In our fourth quarter of fiscal 2022, Hologic delivered
excellent results that significantly exceeded expectations, topping
off another tremendous year,” said Steve MacMillan, the Company’s
chairman, president and chief executive officer. “Fiscal 2022 was
outstanding for Hologic. We dramatically strengthened our base
businesses, responded with agility to the world’s COVID testing
needs, and most importantly, helped more and more women around the
world. Entering 2023, we see unprecedented strength across each of
our core businesses and all are uniquely poised to deliver low
double-digit constant currency organic revenue growth ex. COVID-19
for the year.”
Recent Highlights
- Revenue of $953.3 million decreased (27.6%) for the quarter, or
(25.6%) in constant currency, primarily driven by lower sales of
COVID-19 assays and supply chain challenges related to
semiconductor chips in our Breast Health business compared to the
prior year period. Revenue, however, was significantly higher than
the Company’s guidance of $840 to $870 million provided last
quarter.
- Diagnostics revenue decreased (37.8%), or (35.6%) 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 11.1% on
an organic, constant currency basis.
- Molecular Diagnostics revenue declined (43.2%), or (41.3%) 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
17.2% on an organic, constant currency basis.
- Breast Health revenue, as expected, declined (17.7%), or
(16.0%) in constant currency, primarily due to lower gantry revenue
resulting from semiconductor chip shortages. The Company believes
gantry demand remains strong and expects chip supply to improve
throughout fiscal 2023.
- Surgical revenue grew 9.3%, or 11.4% in constant currency,
primarily driven by improved procedure volume as COVID prevalence
declined.
- Cash flow from operations remained very strong in the fourth
quarter at $168.7 million.
- The Company repurchased 2.5 million shares of its stock for
$175.1 million in the quarter and 7.7 million shares for $542.1
million for the full year.
- On September 21, 2022, Hologic released findings from the
second annual Hologic Global Women’s Health Index, one of the
world’s largest studies of women’s well-being.
- On September 22, 2022, Hologic’s Board of Directors authorized
a new stock repurchase program, with a five-year term, to
repurchase up to $1.0 billion of the Company’s outstanding common
stock.
Key financial results for the fiscal fourth quarter are shown in
the table below.
GAAP
Non-GAAP
Q4’22
Q4’21
Change
Increase (Decrease)
Q4’22
Q4’21
Change
Increase (Decrease)
Revenues
$953.3
$1,316.6
(27.6%)
$953.3
$1,316.6
(27.6%)
Gross Margin
54.0%
62.9%
(890 bps)
62.5%
69.4%
(690 bps)
Operating Expenses
$373.7
$388.6
(3.8%)
$329.9
$353.2
(6.6%)
Operating Margin
14.8%
33.4%
(1,860 bps)
27.9%
42.5%
(1,460 bps)
Net Margin
12.5%
25.0%
(1,250 bps)
21.8%
31.6%
(980 bps)
Diluted EPS
$0.47
$1.28
(63.3%)
$0.82
$1.61
(49.1%)
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. Our fiscal
fourth quarter organic revenue results exclude the divested Blood
Screening business, as well as the acquired Bolder business.
Revenue from acquired businesses is generally included in organic
revenue starting a year after the acquisition.
Revenue Detail
Increase (Decrease)
$ in millions
Q4’22
Q4’21
Global Reported Change
Global
Constant Currency Change
U.S.
Reported Change
International
Reported
Change
International
Constant Currency Change
Diagnostics
Cytology and Perinatal
$112.8
$116.0
(2.8%)
1.5%
(1.0%)
(5.7%)
5.8%
Molecular Diagnostics
$400.2
$704.5
(43.2%)
(41.3%)
(37.4%)
(55.3%)
(49.6%)
Blood Screening
$7.9
$16.3
(51.5%)
(51.5%)
(51.5%)
N/A
N/A
Total Diagnostics
$520.9
$836.8
(37.8%)
(35.6%)
(33.1%)
(47.6%)
(40.9%)
Organic Diagnostics ex. COVID-19
$325.4
$301.8
7.8%
11.1%
7.8%
7.8%
20.6%
Breast Health
Breast Imaging
$212.0
$265.5
(20.2%)
(18.4%)
(17.8%)
(29.1%)
(20.5%)
Interventional Breast Solutions
$63.1
$68.7
(8.2%)
(6.7%)
(9.6%)
(1.9%)
6.5%
Total Breast Health
$275.1
$334.2
(17.7%)
(16.0%)
(16.1%)
(24.1%)
(15.6%)
GYN Surgical
$133.3
$122.0
9.3%
11.4%
8.7%
11.7%
23.8%
Skeletal Health
$24.0
$23.6
1.7%
3.7%
0.5%
4.5%
10.9%
Total
$953.3
$1,316.6
(27.6%)
(25.6%)
(23.4%)
(38.6%)
(31.3%)
Organic (definition above)
$942.1
$1,300.3
(27.5%)
(25.5%)
(23.1%)
(38.8%)
(31.5%)
Organic ex. COVID-19
$754.4
$781.6
(3.5%)
(1.1%)
(3.2%)
(4.4%)
6.4%
Other Financial
Highlights
- U.S. revenue of $728.6 million decreased (23.4%). International
revenue of $224.7 million decreased (38.6%), or (31.3%) in constant
currency.
- GAAP gross margin of 54.0% decreased (890) basis points.
Non-GAAP gross margin of 62.5% decreased (690) basis points. The
decrease in gross margin was primarily due to a decline in COVID-19
assay sales compared to the prior year period and lower capital
equipment sales due to supply chain challenges related to
semiconductor chip shortages impacting our Breast Health
business.
- GAAP operating margin of 14.8% decreased (1,860) basis points.
Non-GAAP operating margin of 27.9% decreased (1,460) basis points.
The decrease in operating margin was primarily due to a decline in
COVID-19 assay sales compared to the prior year period and lower
capital equipment sales due to supply chain challenges related to
semiconductor chip shortages impacting our Breast Health
business.
- GAAP net income of $118.7 million decreased (63.9%). Non-GAAP
net income of $207.5 million decreased (50.1%). Adjusted non-GAAP
earnings before interest, taxes, depreciation and amortization
(EBITDA) was $299.5 million, a decrease of (48.0%).
- COVID-19 revenues, which consist of COVID-19 assay revenue of
$150.7 million, and other COVID-19 related revenue and revenue from
discontinued products of $37.0 million, decreased (63.8%), or
(62.3%) in constant currency.
- Total principal debt outstanding at the end of the fourth
quarter was $2.85 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 0.2.
- On a trailing 12-month basis, adjusted Return on Invested
Capital (ROIC) was 22.3%, a decrease of (1,030) basis points
compared to the prior year period.
Financial Guidance for the First
Quarter and Full-Year Fiscal 2023
“Our fiscal fourth quarter 2022 caps off a year of exceptional
top-line and bottom-line financial performance,” said Karleen
Oberton, Hologic’s chief financial officer. “In our fiscal 2023, we
expect continued strength in our base Diagnostics and Surgical
businesses as well as a strong rebound in our Breast Health
business over the course of the year.”
Hologic’s financial guidance for the first 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 252 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. Therefore,
in fiscal 2023, Bolder is excluded from organic revenue in the
fiscal first quarter, while Biotheranostics, Diagenode, Mobidiag,
and Acessa are part of organic revenue for all of fiscal 2023.
Current Guidance
Guidance $
Reported % Increase
(Decrease)
Constant Currency % Increase
(Decrease)
Organic % Increase (Decrease)
Fiscal
2023
Revenue
$3,700 - $3,900
(23.9%) to (19.8%)
(22.1%) to (18.0%)
(22.0%) to (17.9%)
GAAP EPS
$2.51 - $2.81
(51.1%) to (45.2%)
Non-GAAP EPS
$3.30 - $3.60
(45.2%) to (40.2%)
Q1 2023
Revenue
$940 - $990
(36.1%) to (32.7%)
(33.9%) to (30.5%)
(34.2%) to (30.8%)
GAAP EPS
$0.60 - $0.70
(69.2%) to (64.1%)
Non-GAAP EPS
$0.80 - $0.90
(63.1%) to (58.5%)
This guidance assumes low double-digit
constant currency organic revenue growth ex. COVID-19 in each
division for 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; and adjusted EBITDA. Organic revenue for the
fiscal fourth quarter of 2022 excludes the divested Blood Screening
business, as well as the acquired Bolder 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, COVID related revenue from
Diagenode and Mobidiag, collection kits and ancillaries, as well as
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, 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 fourth quarter of
fiscal 2022. Interested participants may listen to the call by
dialing 800-263-0877 (in the U.S. and Canada) or +1 323-794-2094
(for international callers) and referencing access code 9021328.
Participants may also click here 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 Wednesday,
November 30, 2022.
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, including
recession concerns, 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
Years Ended
September 24, 2022
September 25, 2021
September 24, 2022
September 25, 2021
Revenues:
Product
$
782.6
$
1,137.9
$
4,191.2
$
4,967.3
Service and other
170.7
178.7
671.6
665.0
Total revenues
953.3
1,316.6
4,862.8
5,632.3
Cost of revenues:
Product
259.1
316.0
1,166.1
1,205.1
Amortization of acquired intangible
assets
72.6
82.5
295.7
276.7
Impairment of acquired intangible
assets
8.3
—
17.4
—
Service and other
98.7
90.0
386.2
354.7
Gross profit
514.6
828.1
2,997.4
3,795.8
Operating expenses:
Research and development
76.0
76.5
283.4
276.3
Selling and marketing
159.2
159.1
630.3
561.2
General and administrative
97.3
135.4
407.7
433.2
Amortization of acquired intangible
assets
12.0
11.5
45.2
42.2
Impairment of acquired intangible
asset
27.7
—
27.7
—
Contingent consideration fair value
adjustments
—
3.4
(39.5
)
(6.7
)
Restructuring and divestiture charges
1.5
2.7
2.4
9.3
Total operating expenses
373.7
388.6
1,357.2
1,315.5
Income from operations
140.9
439.5
1,640.2
2,480.3
Interest income
9.4
0.2
12.9
1.4
Interest expense
(24.1
)
(22.7
)
(95.1
)
(93.6
)
Debt extinguishment loss
—
—
(0.7
)
(21.6
)
Other income (expense), net
17.2
(6.4
)
30.9
(5.4
)
Income before income taxes
143.4
410.6
1,588.2
2,361.1
Provision for income taxes
24.7
81.8
286.2
491.4
Net income
$
118.7
$
328.8
$
1,302.0
$
1,869.7
Net loss attributable to noncontrolling
interest
—
—
—
(1.8
)
Net income attributable to
Hologic
$
118.7
$
328.8
$
1,302.0
$
1,871.5
Net income per common share
attributable to Hologic:
Basic
$
0.47
$
1.29
$
5.18
$
7.28
Diluted
$
0.47
$
1.28
$
5.13
$
7.21
Weighted average number of shares
outstanding:
Basic
250,278
254,876
251,527
257,046
Diluted
252,560
257,710
253,845
259,706
HOLOGIC, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In millions)
September 24, 2022
September 25, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
2,339.5
$
1,170.3
Accounts receivable, net
617.6
942.7
Inventory
623.7
501.2
Other current assets
281.2
554.5
Total current assets
3,862.0
3,168.7
Property, plant and equipment, net
481.6
564.7
Goodwill and intangible assets
4,517.1
4,940.8
Other assets
210.5
245.7
Total assets
$
9,071.2
$
8,919.9
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term debt
$
15.0
$
313.0
Accounts payable and accrued
liabilities
736.2
815.8
Deferred revenue
186.5
198.0
Total current liabilities
937.7
1,326.8
Long-term debt, net of current portion
2,808.4
2,712.2
Deferred income taxes
90.8
250.5
Other long-term liabilities
358.1
411.8
Total stockholders' equity
4,876.2
4,218.6
Total liabilities and stockholders’
equity
$
9,071.2
$
8,919.9
HOLOGIC, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Unaudited)
(In millions)
Years Ended
September 24, 2022
September 25, 2021
OPERATING ACTIVITIES
Net income
$
1,302.0
$
1,869.7
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
89.2
88.0
Amortization
340.9
318.9
Stock-based compensation expense
66.7
65.0
Deferred income taxes
(166.2
)
(70.1
)
Intangible asset impairment charges
45.1
—
Contingent consideration fair value
adjustments
(39.5
)
(6.7
)
Debt extinguishment loss
0.7
21.6
Other adjustments and non-cash items
32.6
31.0
Changes in operating assets and
liabilities, excluding the effect of acquisitions:
Accounts receivable
272.3
110.9
Inventory
(136.6
)
(84.1
)
Prepaid income taxes
(23.3
)
13.0
Prepaid expenses and other assets
384.3
(56.3
)
Accounts payable
(14.4
)
20.4
Accrued expenses and other liabilities
(15.8
)
(4.9
)
Deferred revenue
(12.3
)
14.0
Net cash provided by operating
activities
2,125.7
2,330.4
INVESTING ACTIVITIES
Acquisition of businesses, net of cash
acquired
(158.6
)
(1,164.7
)
Purchase of property and equipment
(70.6
)
(118.3
)
Proceeds from the Department of
Defense
75.0
21.5
Increase in equipment under customer usage
agreements
(56.6
)
(59.4
)
Purchase of intellectual property
—
(6.5
)
Other activity
4.5
(2.2
)
Net cash used in investing activities
(206.3
)
(1,329.6
)
FINANCING ACTIVITIES
Proceeds from long-term debt, net of
issuance costs
1,491.2
—
Repayment of long-term debt
(1,387.5
)
(75.0
)
Proceeds from senior notes, net of
issuance costs
—
936.3
Repayment of senior notes
—
(970.8
)
Proceeds from accounts receivable
securitization program
—
320.0
Repayments under accounts receivable
securitization program
(248.5
)
(71.5
)
Repayment under revolving credit line
—
(250.0
)
Repayment of acquired long term debt
(63.7
)
—
Purchase of non-controlling interest
—
(8.5
)
Payment of contingent consideration
(12.2
)
—
Payment of deferred acquisition
consideration
—
(1.9
)
Repurchases of common stock
(542.1
)
(409.8
)
Net proceeds from issuance of common stock
under employee stock plans
33.5
51.3
Payment of minimum tax withholdings on net
share settlements of equity awards
(22.9
)
(47.5
)
Payments under finance lease
obligations
(3.8
)
(2.4
)
Net cash used in financing activities
(756.0
)
(529.8
)
Effect of exchange rate changes on cash
and cash equivalents
5.8
(1.7
)
Net increase in cash and cash
equivalents
1,169.2
469.3
Cash and cash equivalents, beginning of
period
1,170.3
701.0
Cash and cash equivalents, end of
period
$
2,339.5
$
1,170.3
HOLOGIC, INC.
RECONCILIATION OF GAAP TO
NON-GAAP RESULTS
(Unaudited)
(In millions, except earnings per
share)
Reconciliation of GAAP Revenue to
Organic Revenue and Organic Revenue excluding COVID Revenue
Three Months Ended
Years Ended
September 24, 2022
September 25, 2021
September 24, 2022
September 25, 2021
Consolidated GAAP Revenue
953.3
1,316.6
4,862.8
5,632.3
Less: Blood Screening revenue
(7.9
)
(16.3
)
(32.4
)
(49.6
)
Less: Revenue from Acquisitions*
(3.3
)
—
(78.1
)
(8.7
)
Organic Revenue
$
942.1
$
1,300.3
$
4,752.3
$
5,574.0
Less: COVID-19 Assays
(150.7
)
(443.3
)
(1,430.5
)
(2,159.5
)
Less: COVID-19 Related Revenue**
(35.9
)
(70.8
)
(210.6
)
(287.1
)
Less: Discontinued Products Revenue
(1.1
)
(4.6
)
(6.7
)
(17.3
)
Organic Revenue excluding Covid
Revenue
$
754.4
$
781.6
$
3,104.5
$
3,110.1
*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 related to COVID assay sales
for instruments, collections kits and ancillaries, as well as
license revenue related to COVID assay sales and COVID related
revenue from Diagenode and Mobidiag.
Three Months Ended
Years Ended
September 24, 2022
September 25, 2021
September 24, 2022
September 25, 2021
Gross Profit:
GAAP gross profit
$
514.6
$
828.1
$
2,997.4
$
3,795.8
Adjustments:
Amortization of acquired intangible assets
(1)
72.6
82.5
295.7
276.7
Impairment of acquired intangible assets
(16)
8.3
—
17.4
—
Integration/consolidation costs (3)
0.1
—
0.2
1.0
Fair value write-up of acquired inventory
sold (13)
—
2.6
—
7.9
Non-GAAP gross profit
$
595.6
$
913.2
$
3,310.7
$
4,081.4
Gross Margin Percentage:
GAAP gross margin percentage
54.0
%
62.9
%
61.6
%
67.4
%
Impact of adjustments above
8.5
%
6.5
%
6.5
%
5.1
%
Non-GAAP gross margin percentage
62.5
%
69.4
%
68.1
%
72.5
%
Operating Expenses:
GAAP operating expenses
$
373.7
$
388.6
$
1,357.2
$
1,315.5
Adjustments:
Amortization of acquired intangible assets
(1)
(12.0
)
(11.5
)
(45.2
)
(42.2
)
Impairment of acquired intangible assets
(14)
(27.7
)
—
(27.7
)
—
Transaction expenses (4)
—
(1.9
)
(1.3
)
(21.0
)
Contingent consideration adjustments
(7)
—
(3.4
)
39.5
6.7
Integration/consolidation costs (3)
(0.8
)
(5.6
)
(5.2
)
(12.9
)
MDR expenses (2)
(1.3
)
(2.5
)
(7.0
)
(9.8
)
Purchased research and development asset
charge (17)
—
—
—
(7.0
)
Restructuring and divestiture charges
(3)
(1.5
)
(2.7
)
(2.4
)
(9.3
)
Non-income tax (benefits) charges, net
(5)
(0.5
)
(7.8
)
5.2
(4.5
)
Non-GAAP operating expenses
$
329.9
$
353.2
$
1,313.1
$
1,215.5
Operating Margin:
GAAP income from operations
$
140.9
$
439.5
$
1,640.2
$
2,480.3
Adjustments to gross profit as detailed
above
81.0
85.1
313.3
285.6
Adjustments to operating expenses as
detailed above
43.8
35.4
44.1
100.0
Non-GAAP income from operations
$
265.7
$
560.0
$
1,997.6
$
2,865.9
Operating Margin Percentage:
GAAP income from operations margin
percentage
14.8
%
33.4
%
33.7
%
44.0
%
Impact of adjustments above
13.1
%
9.1
%
7.4
%
6.9
%
Non-GAAP operating margin percentage
27.9
%
42.5
%
41.1
%
50.9
%
Pre-Tax Income:
GAAP pre-tax earnings
$
143.4
$
410.6
$
1,588.2
$
2,361.1
Adjustments to pre-tax earnings as
detailed above
124.8
120.5
357.4
385.6
Debt extinguishment losses (6)
—
—
0.7
21.6
Debt transaction costs (9)
—
—
1.8
5.8
Impairment of equity investments (10)
4.0
1.8
8.3
1.8
Gain on life insurance proceeds (18)
—
—
(2.3
)
—
Other charges (15)
—
—
(0.4
)
—
Unrealized (gains) losses on forward
foreign currency contracts (8)
(9.5
)
(3.4
)
(19.6
)
4.3
Non-GAAP pre-tax income
$
262.7
$
529.5
$
1,934.1
$
2,780.2
Net Income Attributable to
Hologic:
GAAP net income
$
118.7
$
328.8
$
1,302.0
$
1,869.7
Adjustments:
Amortization of acquired intangible assets
(1)
84.6
94.0
340.9
318.9
Impairment of acquired intangible assets
(14) (16)
36.0
—
45.1
—
Restructuring and
integration/consolidation costs (3)
2.4
8.3
7.8
23.2
Purchased research and development asset
charge (17)
—
—
—
7.0
MDR expenses (2)
1.3
2.5
7.0
9.8
Debt extinguishment losses and transaction
costs (6) (9)
—
—
2.5
27.4
Acquisition related expenses and
adjustments (4) (13)
—
4.5
1.3
28.9
Contingent consideration adjustments
(7)
—
3.4
(39.5
)
(6.7
)
Non-operating (benefit) charges (8) (10)
(15) (18)
(5.5
)
(1.6
)
(14.0
)
6.1
Non-income tax charges (benefits), net
(5)
0.5
7.8
(5.2
)
4.5
Income tax reversals (19)
(15.8
)
—
(31.8
)
—
Income tax effect of reconciling items
(11)
(14.7
)
(32.0
)
(88.2
)
(106.4
)
Non-GAAP net income
$
207.5
$
415.7
$
1,527.9
$
2,182.4
Net loss attributable to non-controlling
interest
—
—
—
(1.8
)
Net income attributable to Hologic
$
207.5
$
415.7
$
1,527.9
$
2,184.2
Net Income Percentage:
GAAP net income percentage
12.5
%
25.0
%
26.8
%
33.2
%
Impact of adjustments above
9.3
%
6.6
%
4.6
%
5.6
%
Non-GAAP net income attributable to
Hologic percentage
21.8
%
31.6
%
31.4
%
38.8
%
Earnings per Share Attributable to
Hologic:
GAAP income per share - Diluted
$
0.47
$
1.28
$
5.13
$
7.21
Adjustment to net income (as detailed
above)
0.35
0.33
0.89
1.20
Non-GAAP earnings per share – diluted
(12)
$
0.82
$
1.61
$
6.02
$
8.41
Adjusted EBITDA:
Non-GAAP net income
$
207.5
$
415.7
$
1,527.9
$
2,184.2
Interest expense, net
14.7
22.5
80.4
86.5
Provision for income taxes
55.3
113.8
406.1
597.7
Depreciation expense
22.0
23.8
89.2
88.0
Adjusted EBITDA
$
299.5
$
575.8
$
2,103.6
$
2,956.4
Explanatory Notes to
Reconciliations:
(1)
To reflect non-cash expenses attributable
to the amortization of acquired intangible assets.
(2)
To reflect the exclusion of third-party
expenses incurred to obtain compliance with the European Medical
Device Regulation requirement for the Company's existing products
for which it already has FDA approval and/or CE mark.
(3)
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, primarily settlements of litigation and
indemnification provisions for legal and tax matters that existed
as of the date of disposition.
(4)
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, and
a transfer tax related to the Mobidiag acquisition.
(5)
To reflect the net impact of non-income
tax matters primarily related to settling prior years' audit
matters and from a statute of limitations expiration.
(6)
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.
(7)
To reflect adjustments to the estimated
contingent consideration liabilities related to the Acessa Health
acquisition, which is payable upon meeting defined revenue growth
metrics.
(8)
To reflect non-cash unrealized gains and
losses on the mark-to market on outstanding forward foreign
currency contracts, which do not qualify for hedge accounting.
(9)
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.
(10)
To reflect an impairment of cost method
equity investments, and the write off of an equity method
investment acquired in the Mobidiag acquisition.
(11)
To reflect an estimated annual effective
tax rate of 21.0% and 21.5% for fiscal 2022 and 2021,
respectively.
(12)
Non-GAAP earnings per share was calculated
based on 252,560 and 253,845 weighted average diluted shares
outstanding for the three and twelve months ended September 24,
2022, respectively, and 257,710 and 259,706 for the three and
twelve months ended September 25, 2021, respectively.
(13)
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.
(14)
To reflect an impairment related to an
in-process research and development project acquired in the
Mobidiag acquisition.
(15)
To reflect non-operating gains in fiscal
2022.
(16)
To reflect impairment charges in fiscal
2022 for developed technology assets acquired in the Faxitron and
Focal acquisitions.
(17)
To reflect the purchase of intangible
assets used in a research and development project that have no
future alternative use.
(18)
To reflect a gain on life insurance
proceeds received during the second quarter of fiscal 2022.
(19)
To reflect the net impact of income tax
reserve releases from statute of limitation expirations and
favorable audit settlements.
Reconciliation of GAAP to non-GAAP EPS
Guidance:
Guidance Range
Guidance Range
Quarter Ending December 31,
2022
Year Ending September 30,
2023
Low
High
Low
High
GAAP Net Income Per
Share
$0.60
$0.70
$2.51
$2.81
Amortization of acquired intangible
assets
$0.23
$0.23
$0.93
$0.93
Other charges
$0.02
$0.02
$0.04
$0.04
Tax Impact of Exclusions
($0.05
)
($0.05
)
($0.18
)
($0.18
)
Non-GAAP Net Income Per Share
$0.80
$0.90
$3.30
$3.60
Trailing Twelve Months
ended
September 24, 2022
Return on Invested Capital:
Adjusted Net Operating Profit After
Tax
Non-GAAP net income
$
1,527.9
Non-GAAP provision for income taxes
406.1
Non-GAAP interest expense
93.3
Non-GAAP other income
(29.7
)
Adjusted net operating profit before
tax
$
1,997.6
Non-GAAP average effective tax rate
(1)
21.00
%
Adjusted net operating profit after
tax
$
1,578.1
Average Net Debt plus Average
Stockholders’ Equity (2)
Average total debt
$
2,924.3
Less: Average cash and cash
equivalents
(1,754.9
)
Average net debt
1,169.4
Average stockholders’ equity (3)
5,915.9
Average net debt plus average
stockholders’ equity
$
7,085.3
Adjusted ROIC
Adjusted ROIC (adjusted net operating
profit after tax
above divided by average net debt plus
stockholders’ equity above)
22.3
%
(1)
ROIC is presented on a TTM basis; non-GAAP
effective tax rate for the twelve months ended September 24, 2022
was 21.0%.
(2)
Calculated using the average of the
balances as of September 24, 2022 and September 25, 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,
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
September 24, 2022
Leverage Ratio:
Total principal debt
$
2,850.0
Total cash
(2,339.5
)
Net principal debt, as adjusted
$
510.5
EBITDA for the last four quarters
$
2,103.6
Leverage Ratio
0.2
Other Supplemental Information:
Three Months Ended
Twelve Months Ended
September 24, 2022
September 25, 2021
September 24, 2022
September 25, 2021
Geographic Revenues
U.S.
76.4
%
72.2
%
71.3
%
69.3
%
Europe
14.4
%
18.0
%
18.3
%
21.3
%
Asia-Pacific
6.2
%
7.4
%
7.4
%
6.5
%
All Others
3.0
%
2.4
%
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/20221031005210/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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