– Revenue of $1,074 Million, GAAP Diluted EPS
of $0.75, and Non-GAAP Diluted EPS of $1.07 All Exceed Guidance
–
– Broad-Based Organic Revenue Growth ex.
COVID-19; Diagnostics and Surgical Grow Double-Digits in Constant
Currency –
– Company Increases Full-Year Revenue and EPS
Guidance –
Hologic, Inc. (Nasdaq: HOLX) announced today the Company’s
financial results for the fiscal first quarter ended December 31,
2022.
“In our first quarter of fiscal 2023, each of our base
franchises exceeded revenue expectations, while also delivering
robust profitability,” said Steve MacMillan, the Company’s
chairman, president and chief executive officer. “We had a strong
start to our fiscal year with double-digit organic revenue growth
ex. COVID-19 in our Diagnostics and Surgical businesses, as well as
encouraging signs of recovery in our Breast Health business. In
addition, we are increasing our full-year fiscal 2023 guidance for
both revenue and EPS, highlighting the confidence we have in our
businesses despite an uncertain macro environment.”
Recent Highlights
- Revenue of $1,074.2 million decreased (27.0%) for the quarter,
or (25.1%) 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 $940 to $990 million provided last
quarter.
- Diagnostics revenue decreased (41.2%), or (39.4%) 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 15.8% on
an organic, constant currency basis.
- Molecular Diagnostics revenue declined (47.7%), or (46.4%) 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
24.5% on an organic, constant currency basis.
- Breast Health revenue declined (7.0%), or (5.2%) in constant
currency, primarily due to lower capital equipment revenue
resulting from semiconductor chip shortages. However, performance
exceeded expectations, and the Company continues to expect
semiconductor chip supply to improve throughout fiscal 2023.
- Surgical revenue grew 14.7%, or 17.4% in constant currency,
with well-rounded performance across the business. Surgical revenue
grew 14.7% on an organic constant currency basis.
- Cash flow from operations remained very strong in the first
quarter at $253.4 million. In addition, the Company repurchased 1.5
million shares of its stock for $100 million in the quarter.
- The Company was named to the annual lists of Top Workplaces in
both The Boston Globe and The San Diego Union-Tribune, ranking
fifth on the list for largest companies in Massachusetts and fourth
for large companies in San Diego County.
- For the 10th consecutive year, the Company was ranked first for
Mammography System Performance and Customer Satisfaction by IMV
ServiceTrak™ Awards.
Key financial results for the fiscal first quarter are shown in
the table below.
GAAP
Non-GAAP
Q1’23
Q1’22
Change Increase (Decrease)
Q1’23
Q1’22
Change Increase (Decrease)
Revenues
$1,074.2
$1,471.1
(27.0%)
$1,074.2
$1,471.1
(27.0%)
Gross Margin
57.5%
67.0%
(950 bps)
62.7%
72.1%
(940 bps)
Operating Expenses
$355.5
$345.0
3.0%
$339.4
$333.9
1.6%
Operating Margin
24.4%
43.6%
(1,920 bps)
31.1%
49.4%
(1,830 bps)
Net Margin
17.4%
33.9%
(1,650 bps)
24.9%
37.7%
(1,280 bps)
Diluted EPS
$0.75
$1.95
(61.5%)
$1.07
$2.17
(50.7%)
Throughout this press release, all dollar figures are in
millions, except EPS, unless otherwise noted. Some totals may not
foot due to rounding. Unless otherwise noted, all results are
compared to the corresponding prior year period. Fiscal 2023 is a
53-week fiscal period and this additional week is included in the
results for the three months ended December 31, 2022. 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 first 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
Q1’23
Q1’22
Global Reported Change
Global Constant Currency
Change
U.S. Reported Change
International Reported Change
International Constant Currency
Change
Diagnostics
Cytology and Perinatal
$126.8
$130.7
(3.0%)
1.6%
(3.4%)
(2.3%)
9.8%
Molecular Diagnostics
$425.2
$813.3
(47.7%)
(46.4%)
(37.8%)
(66.0%)
(62.2%)
Blood Screening
$7.3
$6.4
14.1%
14.1%
14.1%
N/A
N/A
Total Diagnostics
$559.3
$950.4
(41.2%)
(39.4%)
(32.8%)
(56.6%)
(51.5%)
Organic Diagnostics ex. COVID-19
$387.7
$345.5
12.2%
15.8%
14.0%
7.8%
20.3%
Breast Health
Breast Imaging
$264.4
$282.3
(6.3%)
(4.5%)
1.6%
(29.0%)
(21.8%)
Interventional Breast Solutions
$69.8
$77.0
(9.4%)
(8.0%)
(7.1%)
(19.4%)
(11.9%)
Total Breast Health
$334.2
$359.3
(7.0%)
(5.2%)
(0.4%)
(27.3%)
(20.2%)
GYN Surgical
$154.1
$134.3
14.7%
17.4%
12.6%
24.2%
38.5%
Skeletal Health
$26.6
$27.1
(1.8%)
0.7%
0.6%
(5.2%)
0.9%
Total
$1,074.2
$1,471.1
(27.0%)
(25.1%)
(18.6%)
(45.4%)
(39.4%)
Organic Revenue (definition above)
$1,062.5
$1,464.1
(27.4%)
(25.5%)
(19.2%)
(45.5%)
(39.5%)
Organic Revenue excluding COVID
$898.2
$865.5
3.8%
6.4%
6.9%
(5.1%)
5.2%
Other Financial
Highlights
- U.S. revenue of $823.6 million decreased (18.6%). International
revenue of $250.6 million decreased (45.4%), or (39.4%) in constant
currency.
- GAAP gross margin of 57.5% decreased (950) basis points.
Non-GAAP gross margin of 62.7% decreased (940) 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 continued supply chain challenges related to
semiconductor chip shortages impacting our Breast Health
business.
- GAAP operating margin of 24.4% decreased (1,920) basis points.
Non-GAAP operating margin of 31.1% decreased (1,830) 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 continued supply chain challenges
related to semiconductor chip shortages impacting our Breast Health
business.
- GAAP net income of $187.4 million decreased (62.5%). Non-GAAP
net income of $267.9 million decreased (51.7%). Adjusted non-GAAP
earnings before interest, taxes, depreciation and amortization
(EBITDA) was $361.0 million, a decrease of (52.0%).
- COVID-19 revenues, which consist of COVID-19 assay revenue of
$126.9 million, and other COVID-19 related revenue and revenue from
discontinued products of $37.4 million, decreased (72.6%), or
(71.8%) in constant currency.
- Total principal debt outstanding at the end of the first
quarter was $2.85 billion. The Company ended the quarter with cash
and equivalents of $2.44 billion, and a net leverage ratio (net
debt over adjusted EBITDA) of 0.2 times.
- On a trailing 12-month basis, adjusted Return on Invested
Capital (ROIC) was 17.8%, a decrease of (1,160) basis points
compared to the prior year period.
Financial Guidance for the Second
Quarter and Full-Year Fiscal 2023
“Our fiscal first quarter of 2023 showcased strong revenue
performance and profitability to start the year,” said Karleen
Oberton, Hologic’s chief financial officer. “For the second quarter
and the full-year 2023, we continue to expect low double-digit
constant currency organic revenue growth ex. COVID-19 in each
division.”
Hologic’s financial guidance for the second 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 251 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 becomes part of organic revenue
in the fiscal second quarter, while Biotheranostics, Diagenode,
Mobidiag, and Acessa are part of organic revenue for all of fiscal
2023.
Current Guidance
Previous Guidance
Guidance $
Reported % Increase
(Decrease)
Constant Currency % Increase
(Decrease)
Organic % Increase (Decrease)
Guidance $
Fiscal
2023
Revenue
$3,850 - $4,000
(20.8%) to (17.7%)
(19.8%) to (16.7%)
(19.8%) to (16.7%)
$3,700 - $3,900
GAAP EPS
$2.69 - $2.99
(47.6%) to (41.7%)
$2.51 - $2.81
Non-GAAP EPS
$3.55 - $3.85
(41.0%) to (36.0%)
$3.30 - $3.60
Q2 2023
Revenue
$930 - $980
(35.2%) to (31.7%)
(34.0%) to (30.5%)
(34.0%) to (30.5%)
GAAP EPS
$0.60 - $0.70
(66.7%) to (61.1%)
Non-GAAP EPS
$0.80 - $0.90
(61.4%) to (56.5%)
This guidance assumes low double-digit
constant currency organic revenue growth ex. COVID-19 in each
division for the full-year fiscal 2023.
Use of Non-GAAP Financial
Measures
The Company has presented the following non-GAAP financial
measures in this press release: constant currency revenues; organic
revenues; organic revenues excluding COVID-19, non-GAAP gross
margin; non-GAAP operating expenses; non-GAAP operating margin;
non-GAAP effective tax rate; non-GAAP net income; non-GAAP net
margin; non-GAAP EPS; and adjusted EBITDA. Organic revenue for the
fiscal first quarter of 2023 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 and intangible
assets; (ii) adjustments to record contingent consideration at fair
value; (iii) additional expenses resulting from the purchase
accounting adjustment to record inventory at fair value; (iv)
restructuring charges, facility closure and consolidation charges
(including accelerated depreciation), and costs incurred to
integrate acquisitions (including retention, transaction bonuses,
legal and professional consulting services); (v) expenses related
to the divested Cynosure business incurred subsequent to the
disposition date primarily related to indemnification provisions
for legal and tax matters; (vi) transaction related expenses for
acquisitions; (vii) third-party expenses incurred related to
implementing the European MDR/IVDR requirements and obtaining the
appropriate approvals for its existing products; (viii) debt
extinguishment losses and related transaction costs; (ix) the
unrealized (gains) losses on the mark-to-market of foreign currency
contracts for which the Company has not elected hedge accounting;
(x) litigation settlement charges (benefits) and non-income tax
related charges (benefits); (xi) other-than-temporary impairment
losses on investments and realized gains and losses resulting from
the sale of investments; (xii) the one-time discrete impacts
related to internal restructurings and non-operational items;
(xiii) other one-time, non-recurring, unusual or infrequent
charges, expenses or gains that may not be indicative of the
Company's core business results; and (xiv) income taxes related to
such adjustments. The Company defines adjusted EBITDA as its
non-GAAP net income plus net interest expense, income taxes, and
depreciation and amortization expense included in its non-GAAP net
income.
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 first quarter of
fiscal 2023. Interested participants may listen to the call by
dialing 877-502-9276 (in the U.S. and Canada) or +1 773-305-6867
(for international callers) and referencing access code 3278967.
Participants may also click to join. Participants should dial in
5-10 minutes before the call begins. The Company will also provide
a live webcast of the call at investors.hologic.com. A replay of
the call will be available at investors.hologic.com approximately
two hours after the call ends through Wednesday, March 1, 2023.
About Hologic, Inc.
Hologic, Inc. is an innovative medical technology company
primarily focused on improving women's health and well-being
through early detection and treatment. For more information on
Hologic, visit www.hologic.com.
Hologic and associated logos are trademarks and/or registered
trademarks of Hologic, Inc. and/or its subsidiaries in the United
States and/or other countries.
Forward-Looking
Statements
This news release contains forward-looking information that
involves risks and uncertainties, including statements about the
Company’s plans, objectives, expectations and intentions. Such
statements include, without limitation: financial or other
information based upon or otherwise incorporating judgments or
estimates relating to future performance, events or expectations;
the Company’s strategies, positioning, resources, capabilities, and
expectations for future performance; and the Company's outlook and
financial and other guidance. These forward-looking statements are
based upon assumptions made by the Company as of the date hereof
and are subject to known and unknown risks and uncertainties that
could cause actual results to differ materially from those
anticipated.
Risks and uncertainties that could adversely affect the
Company’s business and prospects, and otherwise cause actual
results to differ materially from those anticipated, include
without limitation: the ongoing and possible future effects of
global challenges, including macroeconomic uncertainties, the war
in Ukraine, other economic disruptions and U.S. and global
recession concerns, on the Company’s customers and suppliers and on
the Company’s business, financial condition, results of operations
and cash flows and the Company’s ability to draw down its revolver;
the effect of the worldwide political and social uncertainty and
divisions, including the impact on trade regulation and tariffs,
that may adversely impact the cost and sale of the Company’s
products in certain countries, or increase the costs the Company
may incur to purchase materials, parts and equipment from its
suppliers; the ongoing and possible future effects of supply chain
constraints, including the availability of critical raw materials
and components, including semiconductor chips, as well as cost
inflation in materials, packaging and transportation; the
possibility of interruptions or delays at the Company’s
manufacturing facilities, or the failure to secure alternative
suppliers if any of the Company’s sole source third-party
manufacturers fail to supply the Company; the development of new
competitive technologies and products and competition; the
Company’s ability to predict accurately the demand for its
products, and products under development and to develop strategies
to address markets successfully; continued demand for the Company’s
COVID-19 assays; the timing, scope and effect of further U.S. and
international governmental, regulatory, fiscal, monetary and public
health responses to the COVID-19 pandemic and any future public
health crises; potential cybersecurity threats and targeted
computer crime; the ability to execute acquisitions and the impact
and anticipated benefits of completed acquisitions and acquisitions
the Company may complete in the future; the ability to consolidate
certain of the Company’s manufacturing and other operations on a
timely basis and within budget, without disrupting its business and
to achieve anticipated cost synergies related to such actions; the
ability of the Company to successfully manage leadership and
organizational changes, including the ability of the Company to
attract, motivate and retain key employees and maintain engagement
and efficiency in remote work environments; the ability to obtain
regulatory approvals and clearances for the Company’s products,
including the implementation of the European Union Medical Device
Regulations, and to maintain compliance with complex and evolving
regulations; the Company’s reliance on third-party reimbursement
policies to support the sales and market acceptance of its
products, including the possible adverse impact of government
regulation and changes in the availability and amount of
reimbursement and uncertainties for new products or product
enhancements; changes to applicable laws and regulations, including
tax laws, global health care reform, and import/export trade laws;
changes in guidelines, recommendations and studies published by
various organizations that could affect the use of the Company’s
products; uncertainties inherent in the development of new products
and the enhancement of existing products, including FDA approval
and/or clearance and other regulatory risks, technical risks, cost
overruns and delays; the risk that products may contain undetected
errors or defects or otherwise not perform as anticipated; risks
associated with strategic alliances and the ability of the Company
to realize anticipated benefits of those alliances; the risks of
conducting business internationally; the risk of adverse exchange
rate fluctuations on the Company’s international activities and
businesses; the early stage of market development for certain of
the Company’s products; the Company’s leverage risks, including the
Company’s obligation to meet payment obligations and financial
covenants associated with its debt; risks related to the use and
protection of intellectual property; expenses, uncertainties and
potential liabilities relating to litigation, including, without
limitation, commercial, intellectual property, employment and
product liability litigation; and technical innovations that could
render products marketed or under development by the Company
obsolete.
The risks included above are not exhaustive. Other factors that
could adversely affect the Company's business and prospects are
described in the filings made by the Company with the SEC,
including its most recent Annual Report on Form 10-K and Quarterly
Report on Form 10-Q. The Company expressly disclaims any obligation
or undertaking to release publicly any updates or revisions to any
such statements presented herein to reflect any change in
expectations or any change in events, conditions or circumstances
on which any such statements are based.
SOURCE: Hologic, Inc.
HOLOGIC, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF INCOME
(Unaudited)
(In millions, except number of
shares, which are reflected in thousands, and per share data)
Three Months Ended
December 31, 2022
December 25, 2021
Revenues:
Product
$
886.3
$
1,303.3
Service and other
187.9
167.8
Total revenues
1,074.2
1,471.1
Cost of revenues:
Product
296.2
318.1
Amortization of acquired intangible
assets
55.6
74.9
Service and other
104.5
91.8
Gross profit
617.9
986.3
Operating expenses:
Research and development
74.8
72.8
Selling and marketing
163.5
147.4
General and administrative
108.5
117.9
Amortization of acquired intangible
assets
7.6
10.8
Contingent consideration fair value
adjustment
—
(4.1
)
Restructuring charges
1.1
0.2
Total operating expenses
355.5
345.0
Income from operations
262.4
641.3
Interest income
20.6
0.5
Interest expense
(28.1
)
(25.7
)
Debt extinguishment loss
—
(0.7
)
Other income (expense), net
(15.8
)
6.5
Income before income taxes
239.1
621.9
Provision for income taxes
51.7
122.7
Net income
$
187.4
$
499.2
Net income per common share
attributable to Hologic:
Basic
$
0.76
$
1.97
Diluted
$
0.75
$
1.95
Weighted average number of shares
outstanding:
Basic
247,319
253,499
Diluted
249,281
256,070
HOLOGIC, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In millions)
December 31, 2022
September 24, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
2,441.3
$
2,339.5
Accounts receivable, net
673.8
617.6
Inventories
677.7
623.7
Other current assets
228.4
281.2
Total current assets
4,021.2
3,862.0
Property, plant and equipment, net
494.3
481.6
Goodwill and intangible assets
4,545.0
4,517.1
Other assets
229.8
210.5
Total assets
$
9,290.3
$
9,071.2
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term debt
$
20.6
$
15.0
Accounts payable and accrued
liabilities
744.0
736.2
Deferred revenue
191.6
186.5
Total current liabilities
956.2
937.7
Long-term debt, net of current portion
2,806.2
2,808.4
Deferred income taxes
71.7
90.8
Other long-term liabilities
363.7
358.1
Total stockholders' equity
5,092.5
4,876.2
Total liabilities and stockholders’
equity
$
9,290.3
$
9,071.2
HOLOGIC, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Unaudited)
(in millions)
Three Months Ended
December 31, 2022
December 25, 2021
OPERATING ACTIVITIES
Net income
$
187.4
$
499.2
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
22.7
22.3
Amortization of acquired intangibles
63.2
85.7
Stock-based compensation expense
20.5
18.7
Deferred income taxes
(26.2
)
(21.9
)
Debt extinguishment loss
—
0.7
Other adjustments and non-cash items
29.1
5.7
Changes in operating assets and
liabilities, excluding the effect of acquisitions:
Accounts receivable
(45.0
)
(48.1
)
Inventories
(47.0
)
(17.4
)
Prepaid income taxes
17.9
(4.6
)
Prepaid expenses and other assets
26.2
0.3
Accounts payable
1.5
(13.8
)
Accrued expenses and other liabilities
0.8
42.4
Deferred revenue
2.3
(5.0
)
Net cash provided by operating
activities
253.4
564.2
INVESTING ACTIVITIES
Acquisition of businesses, net of cash
acquired
—
(157.3
)
Capital expenditures
(15.8
)
(20.5
)
Proceeds from the Department of
Defense
—
21.3
Increase in equipment under customer usage
agreements
(13.3
)
(17.0
)
Purchase of equity investment
(10.0
)
—
Other activity
(1.9
)
—
Net cash used in investing activities
(41.0
)
(173.5
)
FINANCING ACTIVITIES
Proceeds from long-term debt, net of
issuance costs
—
1,491.2
Repayments of long-term debt
(3.8
)
(1,387.5
)
Payment of deferred acquisition
consideration
(0.8
)
—
Repayment of acquired long-term debt
—
(63.6
)
Repurchases of common stock
(100.0
)
(167.0
)
Proceeds from issuance of common stock
pursuant to employee stock plans
15.1
6.4
Payment of minimum tax withholdings on net
share settlements of equity awards
(23.0
)
(22.4
)
Payments under finance lease
obligations
(1.0
)
(0.6
)
Net cash used in financing activities
(113.5
)
(143.5
)
Effect of exchange rate changes on cash
and cash equivalents
2.9
3.3
Net increase in cash and cash
equivalents
101.8
250.5
Cash and cash equivalents, beginning of
period
2,339.5
1,170.3
Cash and cash equivalents, end of
period
$
2,441.3
$
1,420.8
HOLOGIC, INC.
RECONCILIATION OF GAAP TO
NON-GAAP RESULTS
(Unaudited)
(In millions, except earnings per
share and margin percentages)
Reconciliation of GAAP Revenue to
Organic Revenue and Organic Revenue excluding COVID
Three Months Ended
December 31, 2022
December 25, 2021
Consolidated GAAP Revenue
$
1,074.2
$
1,471.1
Less: Blood Screening revenue
(7.3
)
(6.4
)
Less: Revenue from Acquisitions*
(4.4
)
(0.6
)
Organic Revenue
$
1,062.5
$
1,464.1
Less: COVID19 Assays
(126.9
)
(522.8
)
Less: COVID19 Related Revenue **
(36.3
)
(73.4
)
Less: Discontinued Product Revenue
(1.1
)
(2.4
)
Organic Revenue excluding COVID
$
898.2
$
865.5
*Represents revenue from acquisitions
until a transaction annualizes and becomes organic. In the year
following when a transaction annualizes, the acquisitions' revenue
is not excluded from the prior year revenue amount as the
acquisition's results are in both periods.
**Revenues estimated to be related to
COVID assay sales for instruments, collection kits and
ancillaries.
Three Months Ended
December 31, 2022
December 25, 2021
Gross Profit:
GAAP gross profit
$
617.9
$
986.3
Adjustments:
Amortization of acquired intangible assets
(1)
55.6
74.9
Non-GAAP gross profit
$
673.5
$
1,061.2
Gross Margin Percentage:
GAAP gross margin percentage
57.5
%
67.0
%
Impact of adjustments above
5.2
%
5.1
%
Non-GAAP gross margin percentage
62.7
%
72.1
%
Operating Expenses:
GAAP operating expenses
$
355.5
$
345.0
Adjustments:
Amortization of acquired intangible assets
(1)
(7.6
)
(10.8
)
Transaction expenses (2)
—
(0.7
)
MDR expenses (8)
(0.8
)
(2.0
)
Legal related settlements (10)
(1.5
)
—
Contingent consideration adjustment
(5)
—
4.1
Integration/consolidation costs (7)
(0.3
)
(0.9
)
Restructuring charges (7)
(1.1
)
(0.2
)
Non-income tax charges, net (6)
(4.8
)
(0.6
)
Non-GAAP operating expenses
$
339.4
$
333.9
Operating Margin:
GAAP income from operations
$
262.4
$
641.3
Adjustments to gross profit as detailed
above
55.6
74.9
Adjustments to operating expenses as
detailed above
16.1
11.1
Non-GAAP income from operations
$
334.1
$
727.3
Operating Margin Percentage:
GAAP income from operations margin
percentage
24.4
%
43.6
%
Impact of adjustments above
6.7
%
5.8
%
Non-GAAP operating margin percentage
31.1
%
49.4
%
Pre-Tax Income:
GAAP pre-tax income
$
239.1
$
621.9
Adjustments to pre-tax earnings as
detailed above
71.7
86.0
Debt extinguishment loss (4)
—
0.7
Debt transaction costs (13)
—
1.8
Equity method investment write-off (3)
—
4.3
Unrealized losses (gains) on foreign
currency contracts (9)
20.0
(8.1
)
Non-GAAP pre-tax income
$
330.8
$
706.6
Net Income:
GAAP net income
$
187.4
$
499.2
Adjustments:
Amortization of acquired intangible assets
(1)
63.2
85.7
Restructuring and
integration/consolidation costs (7)
1.4
1.1
MDR expenses (8)
0.8
2.0
Legal related settlements (10)
1.5
—
Acquisition related expenses and
adjustments (2)
—
0.7
Contingent consideration adjustment
(5)
—
(4.1
)
Debt extinguishment loss and transaction
costs (4) (13)
—
2.5
Non-income tax charges, net (6)
4.8
0.6
Non-operating charges (benefit) (3)
(9)
20.0
(3.8
)
Income tax effect of reconciling items
(11)
(11.2
)
(29.2
)
Non-GAAP net income
$
267.9
$
554.7
Net Income Percentage:
GAAP net income percentage
17.4
%
33.9
%
Impact of adjustments above
7.5
%
3.8
%
Non-GAAP net income percentage
24.9
%
37.7
%
Earnings Per Share:
GAAP earnings per share - Diluted
$
0.75
$
1.95
Adjustment to net income (as detailed
above)
0.32
0.22
Non-GAAP earnings per share – diluted
(12)
$
1.07
$
2.17
Adjusted EBITDA:
Non-GAAP net income
$
267.9
$
554.7
Interest expense, net, not adjusted
above
7.5
23.4
Provision for income taxes
62.9
151.9
Depreciation expense, not adjusted
above
22.7
22.3
Adjusted EBITDA
$
361.0
$
752.3
Explanatory Notes to
Reconciliations:
(1)
To reflect non-cash expenses
attributable to the amortization of acquired intangible assets.
(2)
To reflect expenses with third
parties related to acquisitions prior to when such transactions are
completed. These expenses primarily comprise broker fees, legal
fees, and consulting and due diligence fees.
(3)
To write off an equity method
investment acquired in the Mobidiag acquisition.
(4)
To reflect a debt extinguishment
loss from refinancing the Credit Agreement in the first quarter of
fiscal 2022.
(5)
To reflect an adjustment in
fiscal 2022 to the estimated contingent consideration liability
related to the Acessa Health acquisition, which is payable upon
meeting defined revenue growth metrics.
(6)
To reflect the net impact of
establishing a non-income tax loss contingency related to prior
years and the settlement of a prior year non-income tax audit.
(7)
To reflect restructuring charges,
and certain costs associated with the Company’s integration and
facility consolidation plans, which primarily include retention and
transfer costs, as well as costs incurred to integrate
acquisitions, including consulting, legal, tax and accounting fees.
In addition, this category includes additional expenses incurred in
fiscal 2022 related to the Cynosure disposition and settlements of
litigation and indemnification provisions for legal and tax matters
that existed as of the date of disposition.
(8)
To reflect the exclusion of
third-party expenses incurred to obtain compliance with the
European Medical Device Regulation requirement for the Company's
existing products for which it already has FDA approval and/or CE
mark.
(9)
To reflect non-cash unrealized
gains and losses on the mark-to-market on outstanding foreign
currency contracts, which do not qualify for hedge accounting.
(10)
To reflect net charges and
benefits from legal related settlements.
(11)
To reflect an estimated annual
effective tax rates of 19.0% and 21.5% for the first quarter of
fiscal 2023 and fiscal 2022, respectively.
(12)
Non-GAAP earnings per share was
calculated based on 249,281 and 256,070 weighted average diluted
shares outstanding for the three months ended December 31, 2022 and
December 25, 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 the first quarter of fiscal
2022.
Reconciliation of GAAP to non-GAAP EPS
Guidance:
Guidance Range
Guidance Range
Quarter Ending April 1, 2023
Quarter Ending September 30,
2023
Low
High
Low
High
GAAP Net Income Per
Share
$0.60
$0.70
$2.69
$2.99
Amortization of acquired intangible
assets
$0.23
$0.23
$0.94
$0.94
Restructuring, Integration and Other
charges
$0.02
$0.02
$0.12
$0.12
Tax Impact of Exclusions
($0.05)
($0.05)
($0.20)
($0.20)
Non-GAAP Net Income Per Share
$0.80
$0.90
$3.55
$3.85
Trailing Twelve Months
ended December 31, 2022
Return on Invested Capital:
Adjusted Net Operating Profit After
Tax
Non-GAAP net income
$
1,241.1
Non-GAAP provision for income taxes
317.1
Non-GAAP interest expense
97.5
Non-GAAP other income
(51.3
)
Adjusted net operating profit before
tax
$
1,604.4
Non-GAAP average effective tax rate
(1)
20.4
%
Adjusted net operating profit after
tax
$
1,277.8
Average Net Debt plus Average
Stockholders’ Equity (2)
Average total debt
$
2,947.5
Less: Average cash and cash
equivalents
(1,931.0
)
Average net debt
$
1,016.5
Average stockholders’ equity (3)
6,174.3
Average net debt plus average
stockholders’ equity
$
7,190.8
Adjusted ROIC
Adjusted ROIC (adjusted net operating
profit after tax above divided by average net debt plus average
stockholders’ equity)
17.8
%
(1)
ROIC is presented on a TTM basis;
non-GAAP effective tax rate for the three months ended March 26,
2022 was 20.5%, the three months ended June 25, 2022 was 21.0%, the
three months ended September 24, 2022 was 21.0%, and the three
months ended December 31, 2022 was 19.0%.
(2)
Calculated using the average of
the balances as of December 31, 2022 and December 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
and the impairment of intangible assets and equipment of $30.2
million in fiscal 2020 and the impairment of acquired intangible
assets of $45.1 million in fiscal 2022. The impact of the
intangible asset impairment charges is reflected net of tax.
As of
December 31, 2022
Net Leverage Ratio:
Total principal debt
$
2,846.3
Total cash
(2,441.3
)
Net principal debt, as adjusted
$
405.0
EBITDA for the last four quarters
$
1,712.3
Net Leverage Ratio
0.2
Other Supplemental Information:
Three Months Ended
December 31, 2022
December 25, 2021
Geographic Revenues
U.S.
76.7
%
68.8
%
Europe
13.7
%
20.1
%
Asia-Pacific
5.9
%
8.1
%
Rest of World
3.7
%
3.0
%
Total Revenues
100.0
%
100.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230201005330/en/
Ryan Simon Vice President, Investor Relations
Ryan.Simon@hologic.com (858) 410-8514 Francis Pruell Senior
Director, Investor Relations Francis.Pruell@hologic.com (508)
263-8628
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