– Revenue of $945.3 Million, GAAP Diluted EPS
of $0.37, and Non-GAAP Diluted EPS of $0.89 –
– Total Company Organic Revenue Growth
excluding COVID-19 of 16.7% in constant currency –
– Expect Broad Based Strong Performance in
Fiscal 2024 –
Hologic, Inc. (Nasdaq: HOLX) announced today the Company’s
financial results for the fiscal fourth quarter ended September 30,
2023.
“Hologic delivered remarkable fiscal 2023 results extending our
track record of strong performance with another solid quarter of
growth in our fourth quarter,” said Steve MacMillan, the Company’s
chairman, president and chief executive officer. “Each one of our
divisions grew double digits organically in the quarter and for the
full year excluding the impact of COVID. We are a new Hologic, with
more growth drivers, a durable and industry leading margin profile,
and an exceptional balance sheet. For fiscal 2024, we are excited
to continue to showcase our standout performance, even against
strong 2023 comps.”
Recent Highlights
- Revenue of $945.3 million decreased (0.8%) for the quarter, or
(1.5%) in constant currency, primarily driven by lower sales of
COVID-19 assays compared to the prior year period, as expected.
- Excluding COVID-19 revenues, total organic revenue grew 17.5%,
or 16.7% on a constant currency basis.
- Diagnostics revenue decreased (20.1%), or (20.6%) 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 10.2% on
an organic, constant currency basis.
- Molecular Diagnostics revenue declined (27.1%), or (27.5%) 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
15.0% on an organic, constant currency basis.
- Breast Health revenue increased 28.2%, or 27.4% in constant
currency, primarily due to higher capital equipment revenue
compared to the prior year period as supply chain headwinds
impacted fiscal Q4 2022.
- Surgical revenue grew 11.0%, or 10.6% in constant currency,
primarily driven by strong results from MyoSure and Fluent Fluid
Management.
- Cash flow from operations remained strong in the fourth quarter
at $258.7 million.
- The Company intends to enter into an accelerated share
repurchase (ASR) agreement for $500 million of the Company’s common
stock. The Company expects the ASR will become effective later in
the month and the final settlement of the ASR is expected to be
completed in the second quarter of fiscal 2024. The ASR will be
completed pursuant to a new $500 million share repurchase
authorization recently approved by Hologic’s board of directors.
The new authorization is in addition to the Company’s prior share
repurchase authorization, of which $499 million remained as of
September 30, 2023.
- The Company repurchased 3.2 million shares of its stock for
$238 million in the fourth quarter of fiscal 2023.
- On October 27, 2023, the Company paid down $250 million of
outstanding floating rate debt under its Credit Agreement.
Key financial results for the fiscal fourth quarter are shown in
the table below.
GAAP
Non-GAAP
Q4’23
Q4’22
Change Increase (Decrease)
Q4’23
Q4’22
Change Increase (Decrease)
Revenues
$945.3
$953.3
(0.8%)
$945.3
$953.3
(0.8%)
Gross Margin
52.9%
54.0%
(110 bps)
60.4%
62.5%
(210 bps)
Operating Expenses
$367.8
$373.7
(1.6%)
$303.7
$329.9
(7.9%)
Operating Margin
14.0%
14.8%
(80 bps)
28.3%
27.9%
40 bps
Net Margin
9.6%
12.5%
(290 bps)
23.2%
21.8%
140 bps
Diluted EPS
$0.37
$0.47
(21.3%)
$0.89
$0.82
8.5%
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 was a
53-week fiscal period and the additional week was included in our
fiscal first quarter results. Non-GAAP results exclude certain cash
and non-cash items as discussed under “Use of Non-GAAP Financial
Measures.” Constant currency percentage changes show current period
revenue results as if the foreign exchange rates were the same as
those in the prior year period. Our fiscal fourth quarter organic
revenue results exclude the divested Blood Screening business.
Revenue from acquired businesses is generally included in organic
revenue starting a year after the acquisition.
Revenue Detail
Increase (Decrease)
$ in millions
Q4’23
Q4’22
Global Reported Change
Global
Constant Currency Change
U.S.
Reported Change
International
Reported
Change
International
Constant Currency Change
Diagnostics
Cytology and Perinatal
$115.2
$112.8
2.1%
1.3%
(3.5%)
12.6%
10.1%
Molecular Diagnostics
$291.9
$400.2
(27.1%)
(27.5%)
(23.2%)
(38.5%)
(40.3%)
Blood Screening
$9.3
$7.9
17.7%
17.7%
17.7%
N/A
N/A
Total Diagnostics
$416.4
$520.9
(20.1%)
(20.6%)
(18.5%)
(24.2%)
(26.1%)
Organic Diagnostics ex. COVID-19
$361.4
$325.4
11.1%
10.2%
9.1%
16.5%
13.2%
Breast Health
Breast Imaging
$282.2
$212.0
33.1%
32.2%
25.6%
66.8%
61.9%
Interventional Breast Solutions
$70.6
$63.1
11.9%
11.2%
9.4%
22.8%
18.8%
Total Breast Health
$352.8
$275.1
28.2%
27.4%
21.9%
56.4%
51.7%
GYN Surgical
$148.0
$133.3
11.0%
10.6%
6.8%
29.7%
27.1%
Skeletal Health
$28.0
$24.0
16.7%
15.9%
4.7%
43.0%
39.8%
Total
$945.3
$953.3
(0.8%)
(1.5%)
(1.8%)
2.3%
(0.4%)
Organic Revenue (definition above)
$936.0
$945.4
(1.0%)
(1.6%)
(2.0%)
2.3%
(0.4%)
Organic Revenue excluding COVID-19
$890.3
$757.7
17.5%
16.7%
13.4%
31.8%
28.2%
Other Financial
Highlights
- U.S. revenue of $715.5 million decreased (1.8%). International
revenue of $229.8 million increased 2.3% and decreased (0.4%) in
constant currency.
- GAAP gross margin of 52.9% decreased (110) basis points
primarily due to the decline in COVID-19 assay sales compared to
the prior year period. Non-GAAP gross margin of 60.4% decreased
(210) basis points primarily due to the decline in COVID-19 assay
sales compared to the prior year period.
- GAAP operating margin of 14.0% decreased (80) basis points
primarily due to the decline in COVID-19 assay sales compared to
the prior year period, as well as a loss of $51.7 million on assets
held-for-sale as a result of the Company’s agreement to sell its
SSI ultrasound imaging business. Non-GAAP operating margin of 28.3%
increased 40 basis points, primarily due to improved non-COVID base
business performance and lower marketing expense, partially offset
by lower COVID-19 assay sales compared to the prior year
period.
- GAAP net income of $90.6 million decreased (23.7%) and Non-GAAP
net income of $219.3 million increased 5.7%. GAAP earnings before
interest, taxes, depreciation and amortization (EBITDA) was $213.3
million, a decrease of (19.4%). Adjusted EBITDA was $288.3 million,
a decrease of (3.7%).
- COVID-19 revenues, which consist of COVID-19 assay revenue of
$21.4 million, and other COVID-19 related revenue plus revenue from
discontinued products of $24.3 million, decreased (75.6%) on both a
reported and constant currency basis.
- Total principal debt outstanding at the end of the fourth
quarter was $2.84 billion. The Company ended the quarter with cash
and equivalents of $2.72 billion, and a net leverage ratio (net
debt over EBITDA) of 0.1 times.
- On a trailing 12-month basis, GAAP Return on Invested Capital
(ROIC) was 8.6%. Adjusted ROIC was 14.4%, a decrease of (790) basis
points compared to the prior year period.
Financial Guidance for the First
Quarter and Full-Year Fiscal 2024
“Hologic delivered strong financial performance in our fiscal
fourth quarter of 2023, growing Non-GAAP earnings despite
significantly lower COVID testing revenue compared to the prior
year,” said Karleen Oberton, Hologic’s chief financial officer. “We
are operating from a position of strength as we enter our next
fiscal year and expect total organic constant currency revenue
excluding COVID to be within our long-term 5% to 7% growth
framework at the mid-point for the full year 2024.”
Hologic’s financial guidance for the first quarter and full year
2024 is shown in the table below. The guidance is based on a full
year non-GAAP tax rate of approximately 19.75%, and diluted shares
outstanding of approximately 239 million for the full year.
Constant currency guidance assumes that foreign exchange rates are
the same in fiscal 2024 as in fiscal 2023. Organic revenue guidance
for fiscal 2024 is in constant currency and excludes the divested
Blood Screening and SSI ultrasound imaging businesses. Revenue from
acquired businesses is generally included in organic revenue
guidance starting a year after the acquisition. In fiscal 2024, all
recent transactions are part of Hologic’s organic revenue base.
Organic revenue excluding COVID-19 is in constant currency and is
organic revenue excluding COVID-19 assay revenue, COVID-19 related
revenue, and discontinued product sales in Diagnostics.
Current Guidance*
Guidance $
Reported % Increase
(Decrease)
Constant Currency % Increase
(Decrease)
Organic % Increase (Decrease)
Organic excluding COVID-19 %
Increase (Decrease)
Fiscal
2024
Revenue
$3,920 - $4,020
(2.7%) to (0.3%)
(2.3%) to 0.2%
(1.7%) to 0.8%
4.2% to 6.9%
GAAP EPS
$3.19 - $3.39
74.3% to 85.2%
Non-GAAP EPS
$3.90 - $4.10
(1.5%) to 3.5%
Q1 2024
Revenue
$960 - $985
(10.6%) to (8.3%)
(10.9%) to (8.5%)
(10.7%) to (8.3%)
1.0% to 3.7%
GAAP EPS
$0.74 - $0.79
(1.3%) to 5.3%
Non-GAAP EPS
$0.92 - $0.97
(14.0%) to (9.3%)
*
Fiscal 2024 has four less selling
days compared to fiscal 2023. Factored into our guidance, we
estimate the impact of the four extra selling days to be a headwind
of about 400 bps to our Q1 results and more than 100 bps for the
full year.
Use of Non-GAAP Financial
Measures
The Company has presented the following non-GAAP financial
measures in this press release: constant currency revenues; organic
revenues; organic revenues excluding COVID-19, non-GAAP gross
margin; non-GAAP operating expenses; non-GAAP operating margin;
non-GAAP effective tax rate; non-GAAP net income; non-GAAP net
margin; non-GAAP EPS; adjusted EBITDA; and adjusted ROIC. Organic
revenue for the fiscal fourth quarter of 2023 excludes the divested
Blood Screening business. Revenue from acquired businesses is
generally included in organic revenue starting a year after the
acquisition. Organic revenue excluding COVID-19 revenues is organic
revenue less COVID-19 assay revenue, COVID-19 related sales of
instruments, collection kits and ancillaries, COVID-19 related
revenue from Diagenode and Mobidiag, as well as COVID-19 related
license revenue, and revenues from discontinued products. The
Company defines its non-GAAP net income, EPS, and other non-GAAP
financial measures to exclude, as applicable: (i) the amortization
of intangible assets; (ii) the impairment of goodwill and
intangible assets and equipment and the loss to record assets
held-for-sale to fair value less costs to sell; (iii) adjustments
to record contingent consideration at fair value; (iv) charges to
write-off inventory for a product line discontinuance; (v)
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); (vi) expenses related
to the divested Cynosure business incurred subsequent to the
disposition date primarily related to indemnification provisions
for legal and tax matters; (vii) transaction related expenses for
acquisitions; (viii) third-party expenses incurred related to
implementing the European MDR/IVDR requirements and obtaining the
appropriate approvals for its existing products; (ix) debt
extinguishment losses and related transaction costs; (x) the
unrealized (gains) losses on the mark-to-market of foreign currency
contracts to hedge revenue and operating results for which the
Company has not elected hedge accounting; (xi) litigation
settlement charges (benefits) and non-income tax related charges
(benefits); (xii) other-than-temporary impairment losses on
investments and realized gains and losses resulting from the sale
of investments; (xiii) the one-time discrete impacts related to
internal restructurings and non-operational items; (xiv) 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 (xv) income taxes related to such adjustments. The
Company defines adjusted EBITDA as its non-GAAP net income plus net
interest income/expense, income taxes, and depreciation and
amortization expense included in its non-GAAP net income. The
Company defines its adjusted ROIC as its non-GAAP operating income
tax effected by its non-GAAP effective tax rate divided by the sum
of its average net debt and stockholders’ equity, which is adjusted
to exclude the effects of goodwill and intangible assets and
equipment impairment charges.
These non-GAAP financial measures should be considered
supplemental to, and not a substitute for, financial information
prepared in accordance with GAAP. The Company's definition of these
non-GAAP measures may differ from similarly titled measures used by
others.
The non-GAAP financial measures used in this press release
adjust for specified items that can be highly variable or difficult
to predict. The Company generally uses these non-GAAP financial
measures to facilitate management's financial and operational
decision-making, including evaluation of Hologic's historical
operating results, comparison to competitors' operating results and
determination of management incentive compensation. These non-GAAP
financial measures reflect an additional way of viewing aspects of
the Company's operations that, when viewed with GAAP results and
the reconciliations to corresponding GAAP financial measures, may
provide a more complete understanding of factors and trends
affecting Hologic's business.
Because non-GAAP financial measures exclude the effect of items
that will increase or decrease the Company's reported results of
operations, management strongly encourages investors to review the
Company's consolidated financial statements and publicly filed
reports in their entirety. A reconciliation of the non-GAAP
financial measures to the most directly comparable GAAP financial
measures is included in the tables accompanying this release.
Conference Call and
Webcast
Hologic’s management will host a conference call at 4:30 p.m. ET
today to discuss its financial results for the fourth quarter of
fiscal 2023. Interested participants may listen to the call by
dialing 866-400-0049 (in the U.S. and Canada) or +1 773-305-6867
(for international callers) and referencing access code 1937661.
Participants may also click to join. Participants should dial in
5-10 minutes before the call begins. The Company will also provide
a live and replay webcast of the call at hologic.com/investors. The
replay of the call will be available approximately two hours after
the call ends through Friday, December 8, 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; the ASR program, which is
subject to the finalization and execution of a definitive agreement
on terms and conditions satisfactory to Hologic; 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,
geopolitical conflicts, 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
Years Ended
September 30, 2023
September 24, 2022
September 30, 2023
September 24, 2022
Revenues:
Product
$
757.0
$
782.6
$
3,279.9
$
4,191.2
Service and other
188.3
170.7
750.5
671.6
Total revenues
945.3
953.3
4,030.4
4,862.8
Cost of revenues:
Product
305.0
259.1
1,184.3
1,166.1
Amortization of acquired intangible
assets
46.4
72.6
205.7
295.7
Impairment of intangible assets and
equipment
—
8.3
179.5
17.4
Service and other
93.6
98.7
389.4
386.2
Gross profit
500.3
514.6
2,071.5
2,997.4
Operating expenses:
Research and development
72.9
76.0
294.3
283.4
Selling and marketing
139.5
159.2
595.2
630.3
General and administrative
92.9
97.3
392.4
407.7
Amortization of acquired intangible
assets
6.2
12.0
28.1
45.2
Impairment of intangible assets and
equipment
—
27.7
44.3
27.7
Contingent consideration fair value
adjustments
(2.5
)
—
(14.9
)
(39.5
)
Loss on assets held-for-sale
51.7
—
51.7
—
Restructuring charges
7.1
1.5
12.0
2.4
Total operating expenses
367.8
373.7
1,403.1
1,357.2
Income from operations
132.5
140.9
668.4
1,640.2
Interest income
35.9
9.4
120.5
12.9
Interest expense
(28.1
)
(24.1
)
(111.1
)
(95.1
)
Debt extinguishment loss
—
—
—
(0.7
)
Other income (expense), net
5.3
17.2
(1.7
)
30.9
Income before income taxes
145.6
143.4
676.1
1,588.2
Provision for income taxes
55.0
24.7
220.1
286.2
Net income
$
90.6
$
118.7
$
456.0
$
1,302.0
Net income per common share:
Basic
$
0.37
$
0.47
$
1.85
$
5.18
Diluted
$
0.37
$
0.47
$
1.83
$
5.13
Weighted average number of shares
outstanding:
Basic
245,130
250,278
246,772
251,527
Diluted
247,142
252,560
248,831
253,845
HOLOGIC, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In millions)
September 30, 2023
September 24, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
2,722.5
$
2,339.5
Accounts receivable, net
625.6
617.6
Inventory
617.6
623.7
Other current assets
206.9
281.2
Assets held-for-sale - current assets
11.9
—
Total current assets
4,184.5
3,862.0
Property, plant and equipment, net
517.0
481.6
Goodwill and intangible assets
4,169.9
4,517.1
Other assets
267.9
210.5
Total assets
$
9,139.3
$
9,071.2
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term debt
$
287.0
$
15.0
Accounts payable and accrued
liabilities
712.9
736.2
Deferred revenue
199.2
186.5
Assets held-for-sale - current
liabilities
8.2
—
Total current liabilities
1,207.3
937.7
Long-term debt, net of current portion
2,531.2
2,808.4
Deferred income taxes
20.2
90.8
Other long-term liabilities
363.7
358.1
Total stockholders' equity
5,016.9
4,876.2
Total liabilities and stockholders’
equity
$
9,139.3
$
9,071.2
HOLOGIC, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Unaudited)
(In millions)
Years Ended
September 30, 2023
September 24, 2022
OPERATING ACTIVITIES
Net income
$
456.0
$
1,302.0
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
89.6
89.2
Amortization
233.8
340.9
Stock-based compensation expense
79.6
66.7
Deferred income taxes
(109.1
)
(166.2
)
Intangible asset and equipment impairment
charges
223.8
45.1
Loss on assets held-for-sale
51.7
—
Contingent consideration fair value
adjustments
(14.9
)
(39.5
)
Debt extinguishment loss
—
0.7
Other adjustments and non-cash items
28.9
32.6
Changes in operating assets and
liabilities, excluding the effect of acquisitions:
Accounts receivable
(1.5
)
272.3
Inventory
(4.9
)
(136.6
)
Prepaid income taxes
17.4
(23.3
)
Prepaid expenses and other assets
23.6
384.3
Accounts payable
(23.0
)
(14.4
)
Accrued expenses and other liabilities
(14.2
)
(15.8
)
Deferred revenue
14.4
(12.3
)
Net cash provided by operating
activities
1,051.2
2,125.7
INVESTING ACTIVITIES
Acquisition of businesses, net of cash
acquired
(5.0
)
(158.6
)
Purchase of property and equipment
(91.8
)
(70.6
)
Proceeds from the Department of
Defense
20.5
75.0
Increase in equipment under customer usage
agreements
(58.4
)
(56.6
)
Purchase of equity investment
(10.0
)
—
Other activity
(7.4
)
4.5
Net cash used in investing activities
(152.1
)
(206.3
)
FINANCING ACTIVITIES
Proceeds from long-term debt, net of
issuance costs
—
1,491.2
Repayment of long-term debt
(15.0
)
(1,387.5
)
Repayments under accounts receivable
securitization program
—
(248.5
)
Repayment of acquired long term debt
—
(63.7
)
Payment of contingent consideration
(7.6
)
(12.2
)
Payment of deferred acquisition
consideration
(0.8
)
—
Repurchases of common stock
(474.8
)
(542.1
)
Net proceeds from issuance of common stock
under employee stock plans
43.0
33.5
Payment of minimum tax withholdings on net
share settlements of equity awards
(24.0
)
(22.9
)
Payments under finance lease
obligations
(4.0
)
(3.8
)
Net cash used in financing activities
(483.2
)
(756.0
)
Effect of exchange rate changes on cash
and cash equivalents
0.3
5.8
Net increase in cash and cash
equivalents
416.2
1,169.2
Cash and cash equivalents, beginning of
period
2,339.5
1,170.3
Cash and cash equivalents, end of
period*
$
2,755.7
$
2,339.5
*
Includes $33.2 million of cash
recorded within assets held-for-sale - current assets.
HOLOGIC, INC. RECONCILIATION OF GAAP TO
NON-GAAP RESULTS (Unaudited) (In millions, except earnings per
share)
Reconciliation of GAAP Revenue to
Organic Revenue
Three Months Ended
Years Ended
September 30, 2023
September 24, 2022
September 30, 2023
September 24, 2022
Consolidated GAAP Revenue
$
945.3
$
953.3
$
4,030.4
$
4,862.8
Less: Blood Screening revenue
(9.3
)
(7.9
)
(37.8
)
(32.4
)
Less: Revenue from Acquisitions*
—
—
(4.4
)
(0.7
)
Organic Revenue
$
936.0
$
945.4
$
3,988.2
$
4,829.7
Less: COVID-19 Assays
(21.4
)
(150.7
)
(248.2
)
(1,430.5
)
Less: COVID-19 Related Revenue**
(24.2
)
(35.9
)
(112.8
)
(228.2
)
Less: Discontinued Product Revenue
(0.1
)
(1.1
)
(3.0
)
(6.7
)
Organic Revenue excluding
COVID-19
$
890.3
$
757.7
$
3,624.2
$
3,164.3
*
Represents revenue from
acquisitions until a transaction annualizes and becomes organic. In
the year following when a transaction annualizes, the acquisition’s
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-19 assay sales for instruments, collection kits and
ancillaries.
Three Months Ended
Years Ended
September 30, 2023
September 24, 2022
September 30, 2023
September 24, 2022
Gross Profit:
GAAP gross profit
$
500.3
$
514.6
$
2,071.5
$
2,997.4
Adjustments:
Amortization of acquired intangible assets
(1)
46.4
72.6
205.7
295.7
Product line discontinuance (17)
24.7
—
24.7
—
Impairment of intangible assets and
equipment (16)
—
8.3
179.5
17.4
Integration/consolidation costs (3)
—
0.1
(0.1
)
0.2
Non-GAAP gross profit
$
571.4
$
595.6
$
2,481.3
$
3,310.7
Gross Margin Percentage:
GAAP gross margin percentage
52.9
%
54.0
%
51.4
%
61.6
%
Impact of adjustments above
7.5
%
8.5
%
10.2
%
6.5
%
Non-GAAP gross margin percentage
60.4
%
62.5
%
61.6
%
68.1
%
Operating Expenses:
GAAP operating expenses
$
367.8
$
373.7
$
1,403.1
$
1,357.2
Adjustments:
Amortization of acquired intangible assets
(1)
(6.2
)
(12.0
)
(28.1
)
(45.2
)
Impairment of intangible assets and
equipment (16) (19)
—
(27.7
)
(44.3
)
(27.7
)
Transaction expenses (4)
(1.1
)
—
(1.4
)
(1.3
)
Contingent consideration adjustments
(7)
2.5
—
14.9
39.5
Integration/consolidation costs (3)
(0.3
)
(0.8
)
(0.8
)
(5.2
)
MDR expenses (2)
(0.2
)
(1.3
)
(1.5
)
(7.0
)
Legal related settlements (13)
—
—
(1.3
)
—
Loss on assets held-for-sale (20)
(51.7
)
—
(51.7
)
—
Restructuring charges (3)
(7.1
)
(1.5
)
(12.0
)
(2.4
)
Non-income tax (benefits) charges, net
(5)
—
(0.5
)
(2.9
)
5.2
Non-GAAP operating expenses
$
303.7
$
329.9
$
1,274.0
$
1,313.1
Operating Margins
GAAP income from operations
$
132.5
$
140.9
$
668.4
$
1,640.2
Adjustments to gross profit as detailed
above
71.1
81.0
409.8
313.3
Adjustments to operating expenses as
detailed above
64.1
43.8
129.1
44.1
Non-GAAP income from operations
$
267.7
$
265.7
$
1,207.3
$
1,997.6
Operating Margin Percentage:
GAAP income from operations margin
percentage
14.0
%
14.8
%
16.6
%
33.7
%
Impact of adjustments above
14.3
%
13.1
%
13.4
%
7.4
%
Non-GAAP operating margin percentage
28.3
%
27.9
%
30.0
%
41.1
%
Pre-Tax Income:
GAAP pre-tax earnings
$
145.6
$
143.4
$
676.1
$
1,588.2
Adjustments to pre-tax earnings as
detailed above
135.2
124.8
538.9
357.4
Debt extinguishment loss (6)
—
—
—
0.7
Debt transaction costs (9)
—
—
—
1.8
Impairment of equity investments (10)
—
4.0
—
8.3
Gain on life insurance proceeds (18)
—
—
—
(2.3
)
Other charges (15)
—
—
—
(0.4
)
Unrealized (gains) losses on forward
foreign currency contracts (8)
(7.5
)
(9.5
)
11.4
(19.6
)
Non-GAAP pre-tax income
$
273.3
$
262.7
$
1,226.4
$
1,934.1
Net Income:
GAAP net income
$
90.6
$
118.7
$
456.0
$
1,302.0
Adjustments:
Amortization of acquired intangible assets
(1)
52.6
84.6
233.8
340.9
Impairment of intangible assets and
equipment (16) (19)
—
36.0
223.8
45.1
Restructuring and
integration/consolidation costs (3)
7.4
2.4
12.7
7.8
Product line discontinuance (17)
24.7
—
24.7
—
MDR expenses (2)
0.2
1.3
1.5
7.0
Debt extinguishment loss and transaction
costs (6) (9)
—
—
—
2.5
Legal related settlements (13)
—
—
1.3
—
Acquisition related expenses and
adjustments (4) (13)
1.1
—
1.4
1.3
Contingent consideration adjustments
(7)
(2.5
)
—
(14.9
)
(39.5
)
Loss on assets held-for-sale (20)
51.7
—
51.7
—
Non-operating charges (benefits) (8) (10)
(15) (18)
(7.5
)
(5.5
)
11.4
(14.0
)
Non-income tax charges (benefits), net
(5)
—
0.5
2.9
(5.2
)
Income tax related items (11)
19.5
(4.8
)
82.1
(48.1
)
Income tax effect of reconciling items
(14)
(18.5
)
(25.7
)
(104.2
)
(71.9
)
Non-GAAP net income
$
219.3
$
207.5
$
984.2
$
1,527.9
Net Income Percentage:
GAAP net income percentage
9.6
%
12.5
%
11.3
%
26.8
%
Impact of adjustments above
13.6
%
9.3
%
13.1
%
4.6
%
Non-GAAP net income percentage
23.2
%
21.8
%
24.4
%
31.4
%
Earnings per Share:
GAAP income per share - Diluted
$
0.37
$
0.47
$
1.83
$
5.13
Adjustment to net income (as detailed
above)
0.52
0.35
2.13
0.89
Non-GAAP earnings per share – diluted
(12)
$
0.89
$
0.82
$
3.96
$
6.02
EBITDA:
GAAP net income
$
90.6
$
118.7
$
456.0
$
1,302.0
Interest (income) expense, net
(7.8
)
14.7
(9.4
)
82.2
Provision for income taxes
55.0
24.7
220.1
286.2
Depreciation expense
22.9
22.0
89.6
89.2
Amortization expense
52.6
84.6
233.8
340.9
GAAP EBITDA
$
213.3
$
264.7
$
990.1
$
2,100.5
Adjustments to net income, detailed above
except amortization expense
75.0
34.8
316.5
3.1
Adjusted EBITDA
$
288.3
$
299.5
$
1,306.6
$
2,103.6
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 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 and tax 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.
(4)
To reflect expenses with third
parties related to acquisitions prior to when such transactions are
completed. These expenses primarily comprise of legal, consulting
and due diligence fees.
(5)
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.
(6)
To reflect a debt extinguishment
loss from refinancing the Credit Agreement in the first quarter of
fiscal 2022.
(7)
To reflect adjustments to the
estimated contingent consideration liability 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 have not been designated 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 the first quarter of fiscal
2022.
(10)
To reflect an impairment of cost
method investments, and the write off of an equity method
investment acquired in the Mobidiag acquisition.
(11)
To reflect the net impact of
income tax reserves from the statute of limitations expiration,
non-recurring income tax charges and benefits, and interest related
to prior years' income tax reserves.
(12)
Non-GAAP earnings per share was
calculated based on 247,142 and 248,831 weighted average diluted
shares outstanding for the three and twelve months ended September
30, 2023, respectively, and 252,560 and 253,845 for the three and
twelve months ended September 24, 2022, respectively.
(13)
To reflect net charges and
benefits from legal related settlements.
(14)
To reflect an annual effective
tax rate of 19.75% and 21.0% for fiscal 2023 and 2022,
respectively, to tax effect Non-GAAP reconciling items, which is
based on the effective tax rate in the jurisdiction to which the
adjustment relates.
(15)
To reflect non-operating gains in
fiscal 2022.
(16)
To reflect impairment charges for
intangible assets and equipment acquired in the Mobidiag
acquisition and impairment of our ultrasound imaging assets during
the third quarter of fiscal 2023, and charges related to the
Faxitron and Focal acquisitions recorded in fiscal 2022.
(17)
To reflect the write-off of
inventory related to a product line discontinuance in the
Diagnostics division.
(18)
To reflect a gain on life
insurance proceeds received during the second quarter of fiscal
2022.
(19)
To reflect an impairment of $27.7
million related to an in-process research and development project
acquired in the Mobidiag acquisition recorded in fiscal 2022.
(20)
To reflect the loss to record the
SSI ultrasound imaging business to fair value as the business was
designated as assets held-for-sale during the fourth quarter of
fiscal 2023.
Reconciliation of GAAP to non-GAAP EPS
Guidance:
Guidance Range
Guidance Range
Quarter Ending December 30, 2023
Year Ending September 28, 2024
Low
High
Low
High
GAAP Net Income Per
Share
$0.74
$0.79
$3.19
$3.39
Amortization of acquired intangible
assets
0.21
0.21
0.85
0.85
Restructuring, Integration and Other
charges
0.01
0.01
0.03
0.03
Tax Impact of Exclusions
(0.04
)
(0.04
)
(0.17
)
(0.17
)
Non-GAAP Net Income Per Share
$0.92
$0.97
$3.90
$4.10
Trailing Twelve Months Ended
September 30, 2023
Return on Invested Capital:
GAAP ROIC
Adjustments
Adjusted ROIC
Adjusted Net Operating Profit After
Tax
Net Income
$
456.0
$
528.2
$
984.2
Plus:
Provision for income taxes
220.1
22.1
242.2
Interest expense
111.1
—
111.1
Other income
(118.8
)
(11.5
)
(130.3
)
Adjusted net operating profit before
tax
$
668.4
$
538.8
$
1,207.2
Effective tax rate (1)
32.6
%
(12.9
)%
19.7
%
Adjusted net operating profit after
tax
$
450.5
$
518.4
$
968.9
Average Net Debt plus Average
Stockholders' Equity (2)
Average total debt
$
2,820.8
$
—
$
2,820.8
Less: Average cash and cash
equivalents
(2,531.0
)
—
(2,531.0
)
Average net debt
$
289.8
$
—
$
289.8
Average stockholders' equity (3)
4,945.8
1,475.9
6,421.7
Average net debt plus average
stockholders' equity
$
5,235.6
$
1,475.9
$
6,711.5
Return on Invested Capital
8.6
%
14.4
%
(1)
ROIC is presented on a TTM basis;
non-GAAP effective tax rate for the twelve months ended September
30, 2023 was 19.75%.
(2)
Calculated using the average of
the balances as of September 30, 2023 and September 24, 2022.
(3)
For Adjusted ROIC, stockholder's
equity is adjusted (increased) to eliminate the effect of the
impairment of intangible assets of $32.2 million in fiscal 2014,
the impairment of goodwill of $685.7 million and an IPR&D asset
of $46.0 million in fiscal 2018, the impairment of intangible
assets and equipment of $685.4 million in fiscal 2019, the
impairment of intangible assets and equipment of $30.2 million in
fiscal 2020, the impairment of acquired intangible assets of $45.1
million in fiscal 2022 and the impairment of intangible assets and
equipment of $223.8 million in fiscal 2023. The impact of the
intangible asset impairment charges is reflected net of tax.
As of September 30,
2023
GAAP Net Leverage
Ratio:
Adjusted Net Leverage
Ratio:
Total principal debt
$
2,835.0
$
2,835.0
Total cash
(2,722.5
)
(2,722.5
)
Net principal debt
$
112.5
$
112.5
EBITDA for the last four quarters
$
988.3
$
1,306.6
Net Leverage Ratio
0.11
0.09
Other Supplemental Information:
Three Months Ended
Twelve Months Ended
September 30, 2023
September 24, 2022
September 30, 2023
September 24, 2022
Geographic Revenues
U.S.
75.8
%
76.4
%
75.9
%
71.3
%
Europe
12.6
%
14.4
%
12.9
%
18.3
%
Asia-Pacific
6.7
%
6.2
%
6.3
%
7.4
%
All Others
4.9
%
3.0
%
4.9
%
3.0
%
Total Revenues
100.0
%
100.0
%
100.0
%
100.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109874490/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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