HOLX
$78.39
Hologic
($.42)
(.53%)
Earnings Details
2nd Quarter March 2022
Wednesday, April 27, 2022 4:01:00 PM
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Summary

Hologic Raises Guidance

Hologic (HOLX) reported 2nd Quarter March 2022 earnings of $2.07 per share on revenue of $1.4 billion. The consensus earnings estimate was $1.55 per share on revenue of $1.3 billion. Revenue fell 6.6% compared to the same quarter a year ago.

The company said it expects third quarter earnings of $0.67 to $0.72 per share on revenue of $875.0 million to $915.0 million. The current consensus earnings estimate is $0.72 per share on revenue of $904.67 million for the quarter ending June 30, 2022. The company also said it expects fiscal 2022 earnings of $5.45 to $5.65 per share on revenue of $4.60 billion to $4.70 billion. The company's previous guidance was earnings of $4.90 to $5.20 per share on revenue of $4.40 billion to $4.55 billion and the current consensus earnings estimate is $5.10 per share on revenue of $4.53 billion for the year ending September 30, 2022.

Hologic Inc is a developer, manufacturer and supplier of medical imaging systems and diagnostic and surgical products serving the healthcare needs of women.

Results
Reported Earnings
$2.07
Earnings Whisper
-
Consensus Estimate
$1.55
Reported Revenue
$1.44 Bil
Revenue Estimate
$1.26 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Hologic Announces Financial Results for Second Quarter of Fiscal 2022

– Revenue of $1.436 Billion, GAAP Diluted EPS of $1.80, and Non-GAAP Diluted EPS of $2.07 All Significantly Ahead of Expectations –

– Company Again Increases Full-Year Revenue and EPS Guidance –

MARLBOROUGH, Mass.--(BUSINESS WIRE)--Hologic, Inc. (Nasdaq: HOLX) announced today the Company’s financial results for the fiscal second quarter ended March 26, 2022.

“In our second quarter of fiscal 2022, Hologic posted strong financial results that significantly exceeded our guidance on both the top and bottom lines,” said Steve MacMillan, the Company’s chairman, president and chief executive officer. “We continued to generate robust profitability and cash flows in the quarter and our balance sheet is stronger than ever. In this challenging macro environment, the health and diversity of our base businesses, plus our diagnostic testing for COVID-19, give us incredible confidence and excitement that we are building a stronger company for the long-term.”

Recent Highlights

  • Revenue of $1.436 billion decreased (6.6%) for the quarter, or (5.2%) in constant currency, primarily driven by lower sales of COVID-19 assays compared to the prior year period. Revenue, however, was significantly higher than the Company’s guidance of $1.25 to $1.3 billion provided last quarter.
  • Excluding revenue from COVID-19, organic revenue declined (1.6%) on a constant currency basis primarily due to the previously discussed impact of semiconductor chip shortages in the Breast Health division and the negative impact of the COVID-19 Omicron variant on healthcare utilization early in the quarter.
  • Global diagnostics revenue decreased (7.3%), or (5.6%) in constant currency, primarily driven by lower sales of COVID-19 assays compared to the prior year period and reduced healthcare utilization resulting from the COVID-19 Omicron variant. Excluding COVID-19 revenues, global diagnostics revenue grew 4.0% on an organic, constant currency basis. Similarly, global molecular diagnostics revenue declined (7.8%), or (6.1%) in constant currency, yet grew 6.9% on an organic, constant currency basis excluding COVID-19 revenues.
  • Global revenue for the Company’s Breast Health division declined (7.7%), or (6.8%) in constant currency, as expected, primarily due to semiconductor chip shortages.
  • Global revenue for the Company’s GYN Surgical division grew 2.7%, or 3.5% in constant currency, less than forecasted, as the COVID-19 Omicron variant reduced procedure volumes in the first two months of the period.
  • Cash flow from operations was exceptionally strong in the second quarter at $1,062.2 million, including tax refunds of $418 million. The Company repurchased 2.9 million shares of its stock for $200 million in the period.
  • Launched national advertising campaign, which ran during the Super Bowl and Winter Olympics, and highlighted the need for women to make their health a priority.
  • Partnered with the Women’s Tennis Association (WTA) as the global title sponsor of the WTA Tour. The multi-year alliance aims to achieve significant progress through a shared vision of greater wellness and equality for women.
  • Bolder Surgical, a recently acquired business providing advanced energy vessel sealing surgical devices, was recognized on Fast Company’s annual list of the World’s Most Innovative Companies.
  • Biotheranostics’ Breast Cancer Index, a proprietary molecular test to help guide extended endocrine therapy decisions, now included in American Society of Clinical Oncology (ASCO) Clinical Practice Guideline.

Key financial results for the fiscal second quarter are shown in the table below.

 

GAAP

 

Non-GAAP

 

Q2’22

Q2’21

Change
Increase
(Decrease)

Q2’22

Q2’21

Change
Increase
(Decrease)

Revenues

$1,435.7

$1,537.6

(6.6%)

 

$1,435.7

$1,537.6

(6.6%)

Gross Margin

65.9%

70.6%

(470 bps)

 

71.0%

75.0%

(400 bps)

Operating Expenses

$352.5

$289.0

22.0%

 

$338.2

$277.7

21.8%

Operating Margin

41.4%

51.8%

(1,040 bps)

 

47.4%

56.9%

(950 bps)

Net Margin

31.7%

40.3%

(860 bps)

 

36.5%

43.8%

(730 bps)

Diluted EPS

$1.80

$2.38

(24.4%)

 

$2.07

$2.59

(20.1%)

Throughout this press release, all dollar figures are in millions, except EPS, unless otherwise noted. Some totals may not foot due to rounding. Unless otherwise noted, all results are compared to the corresponding prior year period. Non-GAAP results exclude certain cash and non-cash items as discussed under “Use of Non-GAAP Financial Measures.” Constant currency percentage changes show current period revenue results as if the foreign exchange rates were the same as those in the prior year period. Organic revenue excludes the divested Blood Screening business, as well as the acquired Biotheranostics, Diagenode, Mobidiag and Bolder businesses. Revenue from acquired businesses is generally included in organic revenue starting a year after the acquisition.

Revenue Detail

 

 

 

 

 

 

Increase (Decrease)

$ in millions

Q2’22

Q2’21

Global
Reported
Change

Global
Constant
Currency
Change

U.S.
Reported
Change

International
Reported
Change

International
Constant
Currency
Change

Diagnostics

 

 

 

 

 

 

 

Cytology and Perinatal

$115.4

$117.2

(1.5%)

(0.1%)

(6.1%)

7.1%

11.5%

Molecular Diagnostics

$862.5

$935.3

(7.8%)

(6.1%)

(8.5%)

(6.3%)

(1.4%)

Blood Screening

$9.2

$12.0

(23.3%)

(23.3%)

(23.3%)

N/A

N/A

Total Diagnostics

$987.1

$1,064.5

(7.3%)

(5.6%)

(8.5%)

(4.8%)

0.1%

Organic Diagnostics ex. COVID-19

$290.4

$282.5

2.8%

4.0%

(0.8%)

12.9%

17.4%

 

 

 

 

 

 

 

 

Breast Health

 

 

 

 

 

 

 

Breast Imaging

$245.0

$269.9

(9.2%)

(8.2%)

(5.4%)

(19.8%)

(16.1%)

Interventional Breast Solutions

$65.4

$66.4

(1.5%)

(0.7%)

(5.0%)

15.5%

19.5%

Total Breast Health

$310.4

$336.3

(7.7%)

(6.8%)

(5.3%)

(14.9%)

(11.2%)

 

 

 

 

 

 

 

 

GYN Surgical

$117.3

$114.2

2.7%

3.5%

2.4%

3.9%

8.1%

 

 

 

 

 

 

 

 

Skeletal Health

$20.9

$22.6

(7.5%)

(6.2%)

(2.0%)

(16.5%)

(13.2%)

 

 

 

 

 

 

 

 

Total

$1,435.7

$1,537.6

(6.6%)

(5.2%)

(6.7%)

(6.4%)

(1.8%)

Organic (definition above)

$1,393.8

$1,518.2

(8.2%)

(6.8%)

(8.0%)

(8.6%)

(3.9%)

Organic ex. COVID-19

$736.2

$755.6

(2.6%)

(1.6%)

(2.7%)

(2.2%)

1.9%

Other Financial Highlights

  • U.S. revenue of $992.4 million decreased (6.7%). International revenue of $443.3 million decreased (6.4%), or (1.8%) in constant currency. Organically, U.S. revenue of $963.2 million decreased (8.0%), while international revenue of $430.6 million decreased (8.6%), or (3.9%) in constant currency.
  • GAAP gross margin of 65.9% decreased (470) basis points. Non-GAAP gross margin of 71.0% decreased (400) basis points. The decrease in gross margin was primarily due to a decline in COVID-19 assay sales compared to the prior year period.
  • GAAP operating margin of 41.4% decreased (1,040) basis points. Non-GAAP operating margin of 47.4% decreased (950) basis points. The decrease in operating margin was primarily due to a decline in COVID-19 assay sales compared to the prior year period.
  • GAAP net income attributable to Hologic of $455.7 million decreased (26.5%). Non-GAAP net income attributable to Hologic of $524.2 million decreased (22.2%). Adjusted non-GAAP earnings before interest, taxes, depreciation and amortization (EBITDA) was $703.6 million, a decrease of (21.5%).
  • COVID-19 revenues, which consist of COVID-19 assay revenue of $584.1 million and other COVID-19 related revenue and revenue from discontinued products of $73.5 million, decreased (13.8%), or (11.9%) in constant currency.
  • Total principal debt outstanding at the end of the second quarter was $3.1 billion. The Company ended the quarter with cash and equivalents of $2.3 billion, and a net leverage ratio (net debt over adjusted EBITDA) of 0.3.
  • On a trailing 12 months basis, adjusted Return on Invested Capital (ROIC) of 27.4% decreased (600) basis points compared to the prior year period.

Financial Guidance for the Third Quarter and Full-Year Fiscal 2022

“We are again raising our full-year revenue and EPS guidance,” said Karleen Oberton, Hologic’s chief financial officer. “Further, our pristine balance sheet provides us tremendous strength in these still uncertain times.”

Hologic’s financial guidance for the third quarter and full year 2022 is shown in the table below. The guidance is based on a full year non-GAAP tax rate of approximately 21.0%, and diluted shares outstanding of 255 million for the full year. Constant currency guidance assumes that foreign exchange rates are the same in fiscal 2022 as in fiscal 2021. Organic revenue guidance is in constant currency and excludes the divested Blood Screening business. Revenue from acquired businesses is generally included in organic revenue guidance starting a year after the acquisition. Therefore, in fiscal 2022, Biotheranostics and Diagenode will become part of organic revenue in the fiscal third quarter, Mobidiag will become part of organic revenue in the fiscal fourth quarter, and Bolder is excluded from organic revenue for the full year.

 

Current Guidance

Previous Guidance

 

Guidance $

Reported %
Increase
(Decrease)

Constant Currency
% Increase
(Decrease)

Organic % Increase
(Decrease)

Guidance $

Fiscal 2022

 

 

 

 

 

Revenue

$4,600 - $4,700

(18.3%) to (16.6%)

(17.2%) to (15.4%)

(18.3%) to (16.5%)

$4,400 - $4,550

GAAP EPS

$4.36 - $4.56

(39.5%) to (36.8%)

 

 

$3.80 - $4.10

Non-GAAP EPS

$5.45 - $5.65

(35.2%) to (32.8%)

 

 

$4.90 - $5.20

 

 

 

 

 

 

Q3 2022

 

 

 

 

Revenue

$875 - $915

(25.1%) to (21.7%)

(23.4%) to (19.9%)

(23.6%) to (20.1%)

 

GAAP EPS

$0.39 - $0.44

(62.5%) to (57.7%)

 

 

 

Non-GAAP EPS

$0.67 - $0.72

(49.6%) to (45.9%)

 

 

 

Use of Non-GAAP Financial Measures

The Company has presented the following non-GAAP financial measures in this press release: constant currency revenues; organic revenues; organic revenues excluding COVID related revenues, non-GAAP gross margin; non-GAAP operating expenses; non-GAAP operating margin; non-GAAP effective tax rate; non-GAAP net income; non-GAAP net margin; non-GAAP EPS; and adjusted EBITDA. Organic revenue excludes the divested Blood Screening business, as well as the acquired Biotheranostics, Diagenode, Mobidiag, and Bolder businesses. Revenue from acquired businesses is generally included in organic revenue starting a year after the acquisition. Organic revenue excluding COVID-19 is organic revenue less COVID assay revenue, COVID-related sales of instruments, collection kits and ancillaries, as well as license revenue, and discontinued products. The Company defines its non-GAAP net income, EPS, and other non-GAAP financial measures to exclude, as applicable: (i) the amortization of intangible assets and impairment of goodwill, intangible assets and equipment; (ii) adjustments to record contingent consideration at fair value; (iii) additional expenses resulting from the purchase accounting adjustment to record inventory at fair value; (iv) restructuring and divestiture charges and facility closure and consolidation charges, including accelerated depreciation, and costs incurred to integrate acquisitions (including retention, transaction bonuses, legal and professional consulting services) and separate divested businesses from existing operations; (v) expenses related to the divested Cynosure business incurred subsequent to the disposition date primarily related to indemnification provisions for legal and tax matters; (vi) transaction related expenses for divestitures and acquisitions; (vii) third-party expenses incurred related to implementing the European MDR/IVDR requirements and obtaining the appropriate approvals for its existing products; (viii) debt extinguishment losses and related transaction costs; (ix) the unrealized (gains) losses on the mark-to-market of foreign currency contracts for which the Company has not elected hedge accounting; (x) litigation settlement charges (benefits) and non-income tax related charges (benefits); (xi) other-than-temporary impairment losses on investments and realized gains and losses resulting from the sale of investments; (xii) the one-time discrete impacts related to internal restructurings and non-operational items; (xiii) other one-time, non-recurring, unusual or infrequent charges, expenses or gains that may not be indicative of the Company's core business results; and (xiv) income taxes related to such adjustments. The Company defines adjusted EBITDA as its non-GAAP net income plus net interest expense, income taxes, and depreciation and amortization expense included in its non-GAAP net income.

These non-GAAP financial measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP. The Company's definition of these non-GAAP measures may differ from similarly titled measures used by others.

The non-GAAP financial measures used in this press release adjust for specified items that can be highly variable or difficult to predict. The Company generally uses these non-GAAP financial measures to facilitate management's financial and operational decision-making, including evaluation of Hologic's historical operating results, comparison to competitors' operating results and determination of management incentive compensation. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures, may provide a more complete understanding of factors and trends affecting Hologic's business.

Because non-GAAP financial measures exclude the effect of items that will increase or decrease the Company's reported results of operations, management strongly encourages investors to review the Company's consolidated financial statements and publicly filed reports in their entirety. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the tables accompanying this release.

Conference Call and Webcast

Hologic’s management will host a conference call at 4:30 p.m. ET today to discuss its financial results for the second quarter of fiscal 2022. Interested participants may listen to the call by dialing 800-289-0720 (in the U.S. and Canada) or +1 323-701-0160 (for international callers) and referencing access code 1667821. Participants may also click here to join. Participants should dial in 5-10 minutes before the call begins. A replay will be available approximately two hours after the call ends through Friday, May 27, 2022. The replay numbers are 888-203-1112 (U.S.) or +1 719-457-0820 (international), access code 1667821, PIN 3270. The Company will also provide a live webcast of the call at investors.hologic.com.

About Hologic, Inc.

Hologic, Inc. is an innovative medical technology company primarily focused on improving women's health and well-being through early detection and treatment. For more information on Hologic, visit www.hologic.com.

Hologic and associated logos are trademarks and/or registered trademarks of Hologic, Inc. and/or its subsidiaries in the United States and/or other countries.

Forward-Looking Statements

This news release contains forward-looking information that involves risks and uncertainties, including statements about the Company’s plans, objectives, expectations and intentions. Such statements include, without limitation: financial or other information based upon or otherwise incorporating judgments or estimates relating to future performance, events or expectations; the Company’s strategies, positioning, resources, capabilities, and expectations for future performance; and the Company's outlook and financial and other guidance. These forward-looking statements are based upon assumptions made by the Company as of the date hereof and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those anticipated.

Risks and uncertainties that could adversely affect the Company’s business and prospects, and otherwise cause actual results to differ materially from those anticipated, include without limitation: the severity and duration of the COVID-19 pandemic and its impact on the U.S. healthcare system, the U.S. economy and worldwide economy; the timing, scope and effect of further U.S. and international governmental, regulatory, fiscal, monetary and public health responses to the COVID-19 pandemic; disruption of supply chains, including the availability of critical raw materials and components, including semiconductor chips, or more commonly referred to as chips, as well as cost inflation in materials, packaging and transportation; manufacturing risks, including the Company’s reliance on a single or limited source of supply for key components, the need to comply with especially high standards for the manufacture of many of its products and risks associated with utilizing third party manufacturers; continued demand for the Company’s COVID-19 TMA assay; the Company’s ability to manufacture, on a scale necessary to meet demand, its COVID-19 TMA assay as well as the Panther systems on which the assay runs; U.S., European and general worldwide economic conditions, trade relations, and related uncertainties; the Company’s ability to predict accurately the demand for its products, and products under development, and to develop strategies to address its markets successfully; the ability of the Company to successfully manage leadership and organizational changes, including the ability of the Company to attract, motivate and retain key employees and maintain engagement and efficiency in remote work environments; the Company’s reliance on third-party reimbursement policies to support the sales and market acceptance of its products, including the possible adverse impact of government regulation and changes in the availability and amount of reimbursement and uncertainties for new products or product enhancements; changes to applicable laws and regulations, including tax laws, global health care reform, and import/export trade laws; changes in guidelines, recommendations and studies published by various organizations that could affect the use of the Company’s products; uncertainties inherent in the development of new products and the enhancement of existing products, including FDA approval and/or clearance and other regulatory risks, technical risks, cost overruns and delays; the risk that products may contain undetected errors or defects or otherwise not perform as anticipated; risks associated with strategic alliances and the ability of the Company to realize anticipated benefits of those alliances; risks associated with acquisitions, including, without limitation, the Company’s ability to successfully integrate acquired businesses, the risks that the acquired businesses may not operate as effectively and efficiently as expected even if otherwise successfully integrated, and the risks that acquisitions may involve unexpected costs or unexpected liabilities; the risks of conducting business internationally; the risk of adverse exchange rate fluctuations on the Company’s international activities and businesses; the early stage of market development for certain of the Company’s products; the Company’s leverage risks, including the Company’s obligation to meet payment obligations and financial covenants associated with its debt; cybersecurity risks; risks related to the use and protection of intellectual property; expenses, uncertainties and potential liabilities relating to litigation, including, without limitation, commercial, intellectual property, employment and product liability litigation; technical innovations that could render products marketed or under development by the Company obsolete; and competition.

The risks included above are not exhaustive. Other factors that could adversely affect the Company's business and prospects are described in the filings made by the Company with the SEC, including its most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements presented herein to reflect any change in expectations or any change in events, conditions or circumstances on which any such statements are based.

SOURCE: Hologic, Inc.

HOLOGIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In millions, except number of shares, which are reflected in thousands, and per share data)

 

 

Three Months Ended

 

Six Months Ended

 

March 26, 2022

 

March 27, 2021

 

March 26, 2022

 

March 27, 2021

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

Product

$

1,268.2

 

 

$

1,378.8

 

 

$

2,571.6

 

 

$

2,834.2

 

Service and other

 

167.5

 

 

 

158.8

 

 

 

335.3

 

 

 

313.2

 

Total revenues

 

1,435.7

 

 

 

1,537.6

 

 

 

2,906.9

 

 

 

3,147.4

 

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

Product

 

322.6

 

 

 

300.7

 

 

 

640.7

 

 

 

585.2

 

Amortization of acquired intangible assets

 

72.3

 

 

 

64.5

 

 

 

147.2

 

 

 

126.1

 

Service and other

 

94.2

 

 

 

86.6

 

 

 

186.1

 

 

 

170.0

 

 

 

 

 

 

 

 

 

Gross profit

 

946.6

 

 

 

1,085.8

 

 

 

1,932.9

 

 

 

2,266.1

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

69.5

 

 

 

71.5

 

 

 

142.3

 

 

 

130.7

 

Selling and marketing

 

171.4

 

 

 

131.5

 

 

 

318.7

 

 

 

259.5

 

General and administrative

 

100.5

 

 

 

88.9

 

 

 

218.5

 

 

 

180.4

 

Amortization of acquired intangible assets

 

11.3

 

 

 

10.2

 

 

 

22.1

 

 

 

20.4

 

Contingent consideration fair value adjustments

 

 

 

 

(14.7

)

 

 

(4.1

)

 

 

(10.1

)

Restructuring and divestiture charges

 

(0.2

)

 

 

1.6

 

 

 

 

 

 

3.0

 

Total operating expenses

 

352.5

 

 

 

289.0

 

 

 

697.5

 

 

 

583.9

 

 

 

 

 

 

 

 

 

Income from operations

 

594.1

 

 

 

796.8

 

 

 

1,235.4

 

 

 

1,682.2

 

Interest income

 

0.8

 

 

 

0.3

 

 

 

1.2

 

 

 

0.7

 

Interest expense

 

(22.6

)

 

 

(21.3

)

 

 

(48.3

)

 

 

(49.3

)

Debt extinguishment loss

 

 

 

 

 

 

 

(0.7

)

 

 

(21.6

)

Other income, net

 

2.1

 

 

 

4.7

 

 

 

8.7

 

 

 

0.9

 

 

 

 

 

 

 

 

 

Income before income taxes

 

574.4

 

 

 

780.5

 

 

 

1,196.3

 

 

 

1,612.9

 

Provision for income taxes

 

118.7

 

 

 

161.1

 

 

 

241.4

 

 

 

340.1

 

 

 

 

 

 

 

 

 

Net income

$

455.7

 

 

$

619.4

 

 

$

954.9

 

 

$

1,272.8

 

 

 

 

 

 

 

 

 

Net loss attributable to noncontrolling interest

 

 

 

 

(0.5

)

 

 

 

 

 

(1.5

)

Net income attributable to Hologic

$

455.7

 

 

$

619.9

 

 

$

954.9

 

 

$

1,274.3

 

 

 

 

 

 

 

 

 

Net income per common share attributable to Hologic:

 

 

 

 

 

 

 

Basic

$

1.81

 

 

$

2.40

 

 

$

3.78

 

 

$

4.93

 

Diluted

$

1.80

 

 

$

2.38

 

 

$

3.75

 

 

$

4.88

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

Basic

 

251,574

 

 

 

258,473

 

 

 

252,537

 

 

 

258,539

 

Diluted

 

253,658

 

 

 

260,749

 

 

 

254,864

 

 

 

261,267

 

HOLOGIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)

 

 

March 26, 2022

 

September 25, 2021

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

2,290.8

 

$

1,170.3

Accounts receivable, net

 

813.0

 

 

942.7

Inventories

 

526.1

 

 

501.2

Other current assets

 

251.5

 

 

554.5

Total current assets

 

3,881.4

 

 

3,168.7

 

 

 

 

Property, plant and equipment, net

 

506.9

 

 

564.7

Goodwill and intangible assets, net

 

4,869.2

 

 

4,940.8

Other assets

 

257.0

 

 

245.7

Total assets

$

9,514.5

 

$

8,919.9

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

256.2

 

$

313.0

Accounts payable and accrued liabilities

 

843.9

 

 

815.8

Deferred revenue

 

205.0

 

 

198.0

Total current liabilities

 

1,305.1

 

 

1,326.8

 

 

 

 

Long-term debt, net of current portion

 

2,813.4

 

 

2,712.2

Deferred income taxes

 

232.1

 

 

250.5

Other long-term liabilities

 

371.2

 

 

411.8

Total stockholders' equity

 

4,792.7

 

 

4,218.6

Total liabilities and stockholders’ equity

$

9,514.5

 

$

8,919.9

HOLOGIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)

 

 

Six Months Ended

 

March 26, 2022

 

March 27, 2021

OPERATING ACTIVITIES

 

 

 

Net income

$

954.9

 

 

$

1,272.8

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation

 

44.9

 

 

 

41.5

 

Amortization of acquired intangibles

 

169.2

 

 

 

146.5

 

Stock-based compensation expense

 

36.5

 

 

 

35.6

 

Deferred income taxes

 

(41.5

)

 

 

(23.5

)

Debt extinguishment loss

 

0.7

 

 

 

21.6

 

Other adjustments and non-cash items

 

18.7

 

 

 

18.9

 

Changes in operating assets and liabilities, excluding the effect of acquisitions:

 

 

 

Accounts receivable

 

101.6

 

 

 

(171.4

)

Inventories

 

(26.4

)

 

 

(46.0

)

Prepaid income taxes

 

(6.4

)

 

 

(46.6

)

Prepaid expenses and other assets

 

355.3

 

 

 

(36.7

)

Accounts payable

 

9.1

 

 

 

32.8

 

Accrued expenses and other liabilities

 

2.9

 

 

 

(50.1

)

Deferred revenue

 

6.9

 

 

 

6.8

 

Net cash provided by operating activities

 

1,626.4

 

 

 

1,202.2

 

INVESTING ACTIVITIES

 

 

 

Acquisition of businesses, net of cash acquired

 

(158.4

)

 

 

(440.0

)

Capital expenditures

 

(36.1

)

 

 

(62.8

)

Proceeds from the Department of Defense

 

58.7

 

 

 

11.1

 

Increase in equipment under customer usage agreements

 

(33.8

)

 

 

(27.8

)

Purchase of intellectual property

 

 

 

 

(6.5

)

Other activity

 

5.2

 

 

 

(2.1

)

Net cash used in investing activities

 

(164.4

)

 

 

(528.1

)

FINANCING ACTIVITIES

 

 

 

Proceeds from long-term debt, net of issuance costs

 

1,491.2

 

 

 

 

Repayment of long-term debt

 

(1,387.5

)

 

 

(37.5

)

Proceeds from senior notes, net of issuance costs

 

 

 

 

936.3

 

Repayment of senior notes

 

 

 

 

(970.8

)

Repayments under revolving credit line

 

 

 

 

(250.0

)

Payment of contingent consideration

 

(12.2

)

 

 

 

Payment of acquired long-term debt

 

(63.6

)

 

 

 

Repurchases of common stock

 

(367.0

)

 

 

(221.4

)

Proceeds from issuance of common stock pursuant to employee stock plans

 

17.3

 

 

 

33.6

 

Payment of minimum tax withholdings on net share settlements of equity awards

 

(22.5

)

 

 

(46.7

)

Payments under finance lease obligations

 

(1.7

)

 

 

(0.9

)

Net cash used in financing activities

 

(346.0

)

 

 

(557.4

)

Effect of exchange rate changes on cash and cash equivalents

 

4.5

 

 

 

(1.3

)

Net increase in cash and cash equivalents

 

1,120.5

 

 

 

115.4

 

Cash and cash equivalents, beginning of period

 

1,170.3

 

 

 

701.0

 

Cash and cash equivalents, end of period

$

2,290.8

 

 

$

816.4

 

HOLOGIC, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(Unaudited)
(In millions, except earnings per share and margin percentages)

 

 

Three Months Ended

 

Six Months Ended

 

March 26, 2022

 

March 27, 2021

 

March 26, 2022

 

March 27, 2021

Consolidated GAAP Revenue

$

1,435.7

 

 

$

1,537.6

 

 

$

2,906.9

 

 

$

3,147.4

 

Less: Blood Screening revenue

 

(9.2

)

 

 

(12.0

)

 

 

(15.6

)

 

 

(20.1

)

Less: Revenue from Biotheranostics, Diagenode,
Mobidiag and Bolder

 

(32.7

)

 

 

(7.4

)

 

 

 

 

(66.8

 

)

 

 

 

 

(7.5

 

)

Organic Revenue

$

1,393.8

 

 

$

1,518.2

 

 

$

2,824.5

 

 

$

3,119.8

 

Less: COVID19 Assays

 

(584.1

)

 

 

(679.7

)

 

$

(1,106.9

)

 

$

(1,425.1

)

Less: COVID19 Related revenue *

 

(71.2

)

 

 

(78.7

)

 

$

(136.0

)

 

$

(156.2

)

Less: Discontinued Product revenue

 

(2.3

)

 

 

(4.2

)

 

 

(4.5

)

 

 

(9.4

)

Organic Revenue excluding Covid benefit revenues

$

736.2

 

 

$

755.6

 

 

$

1,577.1

 

 

$

1,529.1

 

*

Revenues related to COVID assay sales for instruments, collection kits and ancillaries, as well as license revenue related to COVID assay sales

Gross Profit:

 

 

 

 

 

 

 

GAAP gross profit

$

946.6

 

 

$

1,085.8

 

 

$

1,932.9

 

 

$

2,266.1

 

Adjustments:

 

 

 

 

 

 

 

Amortization of acquired intangible assets (1)

 

72.3

 

 

 

64.5

 

 

 

147.2

 

 

 

126.1

 

Integration/consolidation costs (7)

 

 

 

 

0.6

 

 

 

 

 

 

1.0

 

Fair value write-up of acquired inventory sold (10)

 

 

 

 

2.3

 

 

 

 

 

 

3.2

 

Non-GAAP gross profit

$

1,018.9

 

 

$

1,153.2

 

 

$

2,080.1

 

 

$

2,396.4

 

 

 

 

 

 

 

 

 

Gross Margin Percentage:

 

 

 

 

 

 

 

GAAP gross margin percentage

 

65.9

%

 

 

70.6

%

 

 

66.5

%

 

 

72.0

%

Impact of adjustments above

 

5.1

%

 

 

4.4

%

 

 

5.1

%

 

 

4.1

%

Non-GAAP gross margin percentage

 

71.0

%

 

 

75.0

%

 

 

71.6

%

 

 

76.1

%

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

GAAP operating expenses

$

352.5

 

 

$

289.0

 

 

$

697.5

 

 

$

583.9

 

Adjustments:

 

 

 

 

 

 

 

Amortization of acquired intangible assets (1)

 

(11.3

)

 

 

(10.2

)

 

 

(22.1

)

 

 

(20.4

)

Transaction expenses (2)

 

(0.1

)

 

 

(4.5

)

 

 

(0.9

)

 

 

(5.0

)

MDR expenses (8)

 

(1.9

)

 

 

(2.4

)

 

 

(3.9

)

 

 

(4.4

)

Contingent consideration adjustments (5)

 

 

 

 

14.7

 

 

 

4.1

 

 

 

10.1

 

Purchased research and development asset charge (14)

 

 

 

 

(7.0

)

 

 

 

 

 

(7.0

)

Integration/consolidation costs (7)

 

(2.3

)

 

 

(3.6

)

 

 

(3.2

)

 

 

(5.3

)

Restructuring and divestiture charges (7)

 

0.2

 

 

 

(1.6

)

 

 

 

 

 

(3.0

)

Non-income tax benefit, net (6)

 

1.1

 

 

 

3.3

 

 

 

0.5

 

 

 

3.3

 

Non-GAAP operating expenses

$

338.2

 

 

$

277.7

 

 

$

672.0

 

 

$

552.2

 

 

 

 

 

 

 

 

 

Operating Margin:

 

 

 

 

 

 

 

GAAP income from operations

$

594.1

 

 

$

796.8

 

 

$

1,235.4

 

 

$

1,682.2

 

Adjustments to gross profit as detailed above

 

72.3

 

 

 

67.4

 

 

 

147.2

 

 

 

130.3

 

Adjustments to operating expenses as detailed above

 

14.3

 

 

 

11.3

 

 

 

25.5

 

 

 

31.7

 

Non-GAAP income from operations

$

680.7

 

 

$

875.5

 

 

$

1,408.1

 

 

$

1,844.2

 

 

 

 

 

 

 

 

 

Operating Margin Percentage:

 

 

 

 

 

 

 

GAAP income from operations margin percentage

 

41.4

%

 

 

51.8

%

 

 

42.5

%

 

 

53.4

%

Impact of adjustments above

 

6.0

%

 

 

5.1

%

 

 

5.9

%

 

 

5.2

%

Non-GAAP operating margin percentage

 

47.4

%

 

 

56.9

%

 

 

48.4

%

 

 

58.6

%

Pre-Tax Income:

 

 

 

 

 

 

 

GAAP pre-tax income

$

574.4

 

 

$

780.5

 

 

$

1,196.3

 

 

$

1,612.9

 

Adjustments to pre-tax earnings as detailed above

 

86.6

 

 

 

78.7

 

 

 

172.7

 

 

 

162.0

 

Debt extinguishment losses (4)

 

 

 

 

 

 

 

0.7

 

 

 

21.6

 

Debt transaction costs (13)

 

 

 

 

 

 

 

1.8

 

 

 

5.8

 

Equity method investment write-off (3)

 

 

 

 

 

 

 

4.3

 

 

 

 

Gain on life insurance proceeds (15)

 

(2.3

)

 

 

 

 

 

(2.3

)

 

 

 

Unrealized losses (gains) on foreign currency contracts (9)

 

0.4

 

 

 

(4.6

)

 

 

(7.8

)

 

 

9.4

 

Non-GAAP pre-tax income

$

659.1

 

 

$

854.6

 

 

$

1,365.7

 

 

$

1,811.7

 

 

 

 

 

 

 

 

 

Net Income Attributable to Hologic:

 

 

 

 

 

 

 

GAAP net income

$

455.7

 

 

$

619.4

 

 

$

954.9

 

 

$

1,272.8

 

Adjustments:

 

 

 

 

 

 

 

Amortization of acquired intangible assets (1)

 

83.6

 

 

 

74.7

 

 

 

169.3

 

 

 

146.5

 

Restructuring and integration/consolidation costs (7)

 

2.1

 

 

 

5.8

 

 

 

3.2

 

 

 

9.3

 

MDR expenses (8)

 

1.9

 

 

 

2.4

 

 

 

3.9

 

 

 

4.4

 

Purchased research and development asset charge (14)

 

 

 

 

7.0

 

 

 

 

 

 

7.0

 

Acquisition related expenses and adjustments (2) (10)

 

0.1

 

 

 

6.8

 

 

 

0.9

 

 

 

8.2

 

Contingent consideration adjustments (5)

 

 

 

 

(14.7

)

 

 

(4.1

)

 

 

(10.1

)

Debt extinguishment losses and transaction costs (4) (13)

 

 

 

 

 

 

 

2.5

 

 

 

27.4

 

Non-income tax benefit, net (6)

 

(1.1

)

 

 

(3.3

)

 

 

(0.5

)

 

 

(3.3

)

Non-operating charges (benefit) (3) (9) (15)

 

(1.9

)

 

 

(4.6

)

 

 

(5.8

)

 

 

9.4

 

Income tax effect of reconciling items (11)

 

(16.2

)

 

 

(20.3

)

 

 

(45.4

)

 

 

(49.5

)

Non-GAAP net income

$

524.2

 

 

$

673.2

 

 

$

1,078.9

 

 

$

1,422.1

 

Net loss attributable to non-controlling interest

 

 

 

 

(0.9

)

 

 

 

 

 

(1.6

)

Net income attributable to Hologic

$

524.2

 

 

$

674.1

 

 

$

1,078.9

 

 

$

1,423.7

 

 

 

 

 

 

 

 

 

Net Income Percentage:

 

 

 

 

 

 

 

GAAP net income percentage

 

31.7

%

 

 

40.3

%

 

 

32.8

%

 

 

40.4

%

Impact of adjustments above

 

4.8

%

 

 

3.5

%

 

 

4.3

%

 

 

4.8

%

Non-GAAP net income attributable to Hologic percentage

 

36.5

%

 

 

43.8

%

 

 

37.1

%

 

 

45.2

%

 

 

 

 

 

 

 

 

Earnings Per Share Attributable to Hologic:

 

 

 

 

 

 

 

GAAP earnings per share - Diluted

$

1.80

 

 

$

2.38

 

 

$

3.75

 

 

$

4.88

 

Adjustment to net income (as detailed above)

 

0.27

 

 

 

0.21

 

 

 

0.48

 

 

 

0.57

 

Non-GAAP earnings per share – diluted (12)

$

2.07

 

 

$

2.59

 

 

$

4.23

 

 

$

5.45

 

 

 

 

 

 

 

 

 

Adjusted EBITDA:

 

 

 

 

 

 

 

Non-GAAP net income

$

524.2

 

 

$

674.1

 

 

$

1,078.9

 

 

$

1,423.7

 

Interest expense, net, not adjusted above

 

21.8

 

 

 

21.0

 

 

 

45.3

 

 

 

42.8

 

Provision for income taxes

 

134.9

 

 

 

181.3

 

 

 

286.8

 

 

 

389.5

 

Depreciation expense, not adjusted above

 

22.7

 

 

 

20.3

 

 

 

44.9

 

 

 

41.4

 

Adjusted EBITDA

$

703.6

 

 

$

896.7

 

 

$

1,455.9

 

 

$

1,897.4

 

Explanatory Notes to Reconciliations:

(1)

To reflect non-cash expenses attributable to the amortization of acquired intangible assets.

(2)

To reflect expenses with third parties related to acquisitions and divestitures prior to when such transactions are completed. These expenses primarily comprise broker fees, legal fees, and consulting and due diligence fees.

(3)

To write off an equity method investment acquired in the Mobidiag acquisition.

(4)

To reflect a debt extinguishment loss from refinancing the Credit Agreement in first quarter of fiscal 2022 and the refinancing of the 2025 Senior Notes during fiscal 2021.

(5)

To reflect adjustments to the estimated contingent consideration liability related to the Acessa Health acquisition, which is payable upon meeting defined revenue growth metrics.

(6)

To reflect the impact of non-income tax matters primarily related to settling prior years' audit matters and from a statute of limitations expiration.

(7)

To reflect restructuring and divestiture charges, and certain costs associated with the Company’s integration and facility consolidation plans, which primarily include retention and transfer costs, as well as costs incurred to integrate acquisitions and dispose businesses, including consulting, legal, tax and accounting fees. In addition, this category includes additional expenses incurred related to the Cynosure disposition, settlements of litigation and indemnification provisions for legal and tax matters that existed as of the date of disposition.

(8)

To reflect the exclusion of third-party expenses incurred to obtain compliance with the European Medical Device Regulation requirement for the Company's existing products for which it already has FDA approval and/or CE mark.

(9)

To reflect non-cash unrealized gains and losses on the mark-to market on outstanding forward foreign currency contracts, which do not qualify for hedge accounting.

(10)

To reflect the fair value step up of inventory sold during the period related to the Acessa Health and Somatex acquisitions in fiscal 2021.

(11)

To reflect an estimated annual effective tax rate of 21.0% for fiscal 2022 and 21.5% for fiscal 2021.

(12)

Non-GAAP earnings per share was calculated based on 253,658 and 254,864 weighted average diluted shares outstanding for the three and six months ended March 26, 2022 and 260,749 and 261,267 weighted average diluted shares outstanding for the three and six months ended March 27, 2021, respectively.

(13)

To reflect the amount of debt issuance costs recorded directly to interest expense as a result of refinancing the Credit Agreement in first quarter of fiscal 2022 and the refinancing of the 2025 Senior Notes during fiscal 2021.

(14)

To reflect the purchase of intangible assets used in a research and development project that has no future alternative use.

(15)

To reflect a gain on life insurance proceeds received during the second quarter of fiscal 2022.

Reconciliation of GAAP to non-GAAP EPS Guidance:

 

 

Guidance Range

Guidance Range

 

Quarter Ending June 25, 2022

Year Ending September 24, 2022

 

Low

High

Low

High

GAAP Net Income Per Share

$0.39

$0.44

$4.36

$4.56

Amortization of acquired intangible assets

0.33

0.33

1.33

1.33

Restructuring, Integration and Other charges

0.02

0.02

0.05

0.05

Tax Impact of Exclusions

(0.07)

(0.07)

(0.29)

(0.29)

Non-GAAP Net Income Per Share

$0.67

$0.72

$5.45

$5.65

 

 

Trailing Twelve
Months ended
March 26, 2022

Return on Invested Capital:

 

 

 

Adjusted Net Operating Profit After Tax

 

Non-GAAP net income attributable to Hologic

$

1,839.4

 

Non-GAAP provision for income taxes

 

495.0

 

Non-GAAP interest expense

 

90.7

 

Non-GAAP other income

 

4.9

 

Adjusted net operating profit before tax

$

2,430.0

 

Non-GAAP average effective tax rate (1)

 

21.2

%

Adjusted net operating profit after tax

$

1,914.6

 

 

 

Average Net Debt plus Average Stockholders’ Equity (2)

 

Average total debt

$

2,908.3

 

Less: Average cash and cash equivalents

 

(1,553.6

)

Average net debt

$

1,354.7

 

Average stockholders’ equity (3)

 

5,644.7

 

Average net debt plus average stockholders’ equity

$

6,999.4

 

 

 

Adjusted ROIC

 

Adjusted ROIC (adjusted net operating profit after tax
above divided by average net debt plus average stockholders’ equity)

 

27.4

%

(1)

ROIC is presented on a TTM basis; non-GAAP effective tax rate for the three months ended June 26, 2021 was 21.5%, the three months ended September 25, 2021 was 21.5%, the three months ended December 25, 2021 was 21.5% and the three months ended March 26, 2022 was 20.46%.

(2)

Calculated using the average of the balances as of March 26, 2022 and March 27, 2021.

(3)

Adjusted (increased) to eliminate the effect of the impairment of intangible assets of $32.2 million in fiscal 2014, the impairment of goodwill of $685.7 million and an IPR&D asset of $46.0 million in fiscal 2018, the impairment of intangible assets and equipment of $685.4 million in fiscal 2019 and the impairment of intangible assets and equipment of $30.2 million in fiscal 2020. The impact of the intangible asset impairment charges is reflected net of tax

 

As of

 

March 26, 2022

Net Leverage Ratio:

 

 

 

Total principal debt

$

3,098.7

 

Total cash

 

(2,290.8

)

Net principal debt, as adjusted

$

807.9

 

EBITDA for the last four quarters

$

2,514.8

 

Net Leverage Ratio

 

0.3

 

 

 

Other Supplemental Information:

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

March 26, 2022

 

March 27, 2021

 

March 26, 2022

 

March 27, 2021

 

 

 

 

 

 

 

 

 

Geographic Revenues

 

 

 

 

 

 

 

 

U.S.

 

69.1

%

 

69.2

%

 

69.0

%

 

70.0

%

Europe

 

20.3

%

 

21.9

%

 

20.1

%

 

21.4

%

Asia-Pacific

 

7.6

%

 

5.9

%

 

7.9

%

 

5.7

%

Rest of World

 

3.0

%

 

3.0

%

 

3.0

%

 

2.9

%

Total Revenues

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

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

Source: Hologic, Inc.