MARLBOROUGH, Mass.,
July 27, 2016 /PRNewswire/
-- Hologic, Inc. (Nasdaq: HOLX) announced today the Company's
financial results for the fiscal third quarter ended June 25, 2016. GAAP diluted earnings
per share (EPS) of $0.30 increased
200% compared to the prior year period, and non-GAAP diluted EPS of
$0.51 increased 18.6%. Revenue
of $717.4 million increased 3.4%, or
3.6% in constant currency terms.
"We posted very good results across the board in our fiscal
third quarter," said Steve
MacMillan, Hologic's Chairman, President and Chief Executive
Officer. "Despite difficult comparisons in the prior year
period, global sales grew in all four of our businesses, led by GYN
Surgical. In addition, we continue to improve gross and
operating margins, and our capital deployment efforts helped EPS
increase significantly faster than revenue."
Key financial results for the fiscal third quarter are shown
below. Throughout this press release, all dollar figures are
in millions, except EPS. Unless otherwise noted, all results
are compared to the prior year period.
|
GAAP
|
Non-GAAP
|
|
Q3'16
|
Q3'15
|
Change
Increase
(Decrease)
|
Q3'16
|
Q3'15
|
Change
Increase
(Decrease)
|
|
Revenues
|
$717.4
|
$693.9
|
3.4%
|
$717.4
|
$693.9
|
3.4%
|
|
Gross
Margin
|
54.8%
|
54.6%
|
20
bps
|
65.7%
|
65.2%
|
50 bps
|
|
Operating
Expenses
|
$253.7
|
$262.7
|
(3.4%)
|
$229.2
|
$222.4
|
3.1%
|
|
Operating
Margin
|
19.4%
|
16.7%
|
270 bps
|
33.8%
|
33.2%
|
60 bps
|
|
Net Income
|
$84.8
|
$29.4
|
188.1%
|
$145.1
|
$126.9
|
14.3%
|
|
Diluted
EPS
|
$0.30
|
$0.10
|
200.0%
|
$0.51
|
$0.43
|
18.6%
|
Revenue Detail
Revenues grew in all four business segments globally, led by the
GYN Surgical division. Growth rates were affected by
exceptionally strong performance in the prior year period, when
reported revenues increased by 9.7% on a year-over-year basis.
|
$s in
millions
|
Q3'16
|
Q3'15
|
Reported
Change
Increase
(Decrease)
|
Impact of Foreign
Currency
Increase
(Decrease)
$
%
|
Constant
Currency
Change
Increase
(Decrease)
|
|
Cytology &
Perinatal
|
$122.2
|
$118.1
|
3.5%
|
$(0.4)
|
(0.4%)
|
3.9%
|
|
Molecular
Diagnostics
|
131.8
|
124.6
|
5.7%
|
(0.3)
|
(0.3%)
|
6.0%
|
|
Blood
Screening
|
55.9
|
64.2
|
(12.9%)
|
-
|
-
|
(12.9%)
|
|
Total
Diagnostics
|
$309.9
|
$306.9
|
1.0%
|
$(0.7)
|
(0.2%)
|
1.2%
|
|
Breast
Imaging
|
239.3
|
234.1
|
2.2%
|
$(0.2)
|
(0.1%)
|
2.3%
|
|
Interventional Breast
Solutions
|
41.3
|
43.3
|
(4.8%)
|
0.1
|
0.1%
|
(4.9%)
|
|
Other
|
2.0
|
2.1
|
(6.3%)
|
0.1
|
2.1%
|
(8.4%)
|
|
Total Breast
Health
|
$282.5
|
$279.5
|
1.1%
|
-
|
-
|
1.1%
|
|
GYN
Surgical
|
$102.0
|
$85.5
|
19.3%
|
$(0.5)
|
(0.5%)
|
19.8%
|
|
Skeletal
Health
|
$23.0
|
$22.0
|
4.8%
|
-
|
-
|
4.8%
|
|
Total
|
$717.4
|
$693.9
|
3.4%
|
$(1.2)
|
(0.2%)
|
3.6%
|
Other quarterly revenue highlights:
- U.S. sales of $564.9 million
increased 4.7%, continuing strong recent trends.
- The Company's international businesses continued to show signs
of stabilization and improvement. International sales of
$152.5 million decreased (1.2%), or
(0.4%) in constant currency, driven by inventory fluctuations in
blood screening. Excluding sales of discontinued products,
international sales increased slightly on a constant currency
basis, driven by sales of GYN surgical and molecular diagnostics
products.
- Excluding sales of discontinued products, global revenue
increased 4.6%, or 4.8% in constant currency.
- The GYN Surgical business performed exceptionally well in the
quarter. MyoSure® sales of $40.8
million increased 29.4%, or 29.8% in constant currency.
NovaSure® sales of $61.0 million
increased 13.9%, or 14.6% in constant currency.
- Breast Health revenue totaled $282.5
million, an increase of 1.1%. In the United States, revenue increased 1.9%, as
adoption of Hologic's GeniusTM 3D
MammographyTM systems continued to grow despite a
difficult comparison in the prior year period. Internationally,
Breast Health revenue declined (3.0%), or (2.9%) in constant
currency. However, excluding sales of discontinued products,
international Breast Health revenues increased slightly.
- In Diagnostics:
- Molecular diagnostics sales of $131.8
million increased 5.7%, or 6.0% in constant currency. Growth
was driven primarily by continued strength across Aptima® women's
health products on the fully automated Panther® and Tigris®
platforms, both in the United
States and internationally.
- Cytology and perinatal sales of $122.2
million increased 3.5%, or 3.9% in constant currency, as
sales grew both in the United
States and internationally.
- Blood screening revenue totaled $55.9
million, a decrease of (12.9%) that was driven, as expected,
primarily by inventory fluctuations and ordering patterns by
Hologic's partner Grifols.
- In Skeletal Health, revenue of $23.0
million increased 4.8%.
Segment revenue highlights by geography are shown below:
|
U.S.
Change
|
International
Change
(Reported)
|
Impact of Foreign
Currency
$
%
|
International
Change
(Constant
Currency)
|
|
Increase
(Decrease)
|
|
Diagnostics
|
3.5%
|
(5.5%)
|
$(0.7)
|
(0.8%)
|
(4.7%)
|
|
Breast
Health
|
1.9%
|
(3.0%)
|
-
|
(0.1%)
|
(2.9%)
|
|
GYN
Surgical
|
17.0%
|
34.9%
|
$(0.5)
|
(4.4%)
|
39.3%
|
|
Skeletal
Health
|
2.7%
|
9.2%
|
-
|
0.2%
|
9.0%
|
|
Total
Revenues
|
4.7%
|
(1.2%)
|
$(1.2)
|
(0.8%)
|
(0.4%)
|
Expense Detail
Gross margin was 54.8% on a GAAP basis, and 65.7% on a non-GAAP
basis. GAAP gross margin improved by 20 basis points, while
non-GAAP gross margin improved 50 basis points, mainly due
to strong domestic sales growth, favorable product mix, and
operational improvements.
Operating expenses were $253.7
million on a GAAP basis, and $229.2
million on a non-GAAP basis. GAAP operating
expenses decreased (3.4%), while non-GAAP operating expenses
increased 3.1%, mainly due to planned investments in Breast Health
and Diagnostics marketing, and increased selling
expenses.
Hologic's effective tax rate was 16.1% on a GAAP basis, and
30.6% on a non-GAAP basis, reflecting changes in income mix and
internal restructuring completed in fiscal 2015 and 2016. For
the fourth quarter and all of fiscal 2016, the Company expects an
effective tax rate of approximately 23% on a GAAP basis, or 32% on
a non-GAAP basis.
Other Key Financial Results
Adjusted non-GAAP earnings before interest, taxes, depreciation
and amortization (EBITDA) were $262.5
million, an increase of 5.1%.
Operating cash flow was $246.2
million, an increase of 1.6%. Free cash flow, defined
as operating cash flow less capital expenditures, was $225.1 million, 165.4% higher than GAAP net
income and 55.1% higher than non-GAAP net income.
Total debt outstanding at the end of the quarter was
$3.4 billion, a decrease of
($0.5) billion compared to the prior
year period.
The Company ended the quarter with cash and cash equivalents of
$441.5 million.
The combination of lower debt and EBITDA growth helped improve
Hologic's leverage ratio (net debt over EBITDA) to 2.97 in the
quarter, the first time this ratio has fallen below 3.0 since the
Gen-Probe acquisition.
Strong profit growth and lower debt have continued to improve
Hologic's adjusted return on invested capital (ROIC), which was
12.3% on a trailing 12 months basis, an increase of 170 basis
points.
During the quarter, Hologic repurchased 3.0 million shares of
its common stock for $101.2 million,
exhausting the Company's prior $250
million share repurchase program. The Company's board
of directors recently authorized a new, five-year, $500 million repurchase program.
Financial Guidance for Fiscal 2016
Based on its strong performance in the third quarter of fiscal
2016, Hologic is raising its non-GAAP EPS guidance for the full
year, as shown in the table below.
The guidance below is based on recent foreign exchange rates, a
full-year non-GAAP tax rate of approximately 32%, and diluted
shares outstanding of approximately 288 million for the full
year.
|
Current
Guidance
|
Previous
Guidance
|
Current Guidance
vs.
Prior Year
(As
Reported)
|
Current Guidance
vs. Prior Year
(Constant
Currency)
|
|
Revenues
|
$2,820 to $2,830
million
|
$2,810 to $2,830
million
|
4.3% to
4.6%
|
5.0% to
5.3%
|
|
Non-GAAP
EPS
|
$1.93 to
$1.94
|
$1.89 to
$1.91
|
15.6% to
16.2%
|
16.9% to
17.5%
|
For the fourth quarter of fiscal 2016, Hologic expects:
|
Current
Guidance
|
Current Guidance vs.
Prior Year
Period (As Reported)
|
Current Guidance
vs.
Prior Year Period
(Constant Currency)
|
|
Revenues
|
$714 to $724
million
|
1.6% to
3.0%
|
2.1% to
3.6%
|
|
Non-GAAP
EPS
|
$0.49 to
$0.50
|
14.0% to
16.3%
|
15.0% to
17.3%
|
Future Non-GAAP Adjustments
The Company does not provide GAAP EPS on a forward-looking basis
because the Company is unable to estimate with reasonable certainty
unusual or unanticipated charges, expenses or gains without
unreasonable effort. These items are uncertain, depend on
various factors, and could be material to Hologic's results
computed in accordance with GAAP.
Use of Non-GAAP Financial Measures
The Company has presented the following non-GAAP financial
measures in this press release: constant currency revenues;
non-GAAP gross margin; non-GAAP operating expenses; non-GAAP
operating margin; non-GAAP net income; non-GAAP EPS; adjusted
EBITDA; and return on invested capital (ROIC). 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)
additional depreciation expense from acquired fixed assets and
accelerated depreciation related to consolidation and closure of
facilities; (iii) non-cash interest expense related to amortization
of the debt discount from the equity conversion option of the
convertible notes; (iv) restructuring and divestiture charges and
facility and consolidation charges; (v) debt extinguishment losses
and related transaction costs; (vi) unrealized gains/losses
attributable to recording forward foreign currency contracts to
fair value for which the company has not elected hedge accounting;
(vii) litigation settlement charges (benefits); (viii)
other-than-temporary impairment losses on investments and realized
gains resulting from the sale of investments; (ix) 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 (x) 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. The Company
defines ROIC as its net operating profit after tax on a non-GAAP,
trailing 12-month basis divided by average net debt plus average
stockholders' equity.
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 third quarter of fiscal 2016. Approximately
10 minutes before the call, dial 888-504-7960 (U.S. and
Canada) or 719-325-2434
(international) and enter access code 2142145. A replay will
be available starting two hours after the call ends through
August 26, 2016 at 888-203-1112 (U.S.
and Canada) or 719-457-0820
(international), access code 2142145. The Company will also
provide a live webcast of the call at
http://investors.hologic.com.
About Hologic, Inc.
Hologic, Inc. is a leading developer, manufacturer and supplier
of premium diagnostic products, medical imaging systems and
surgical products. The Company's core business units focus on
diagnostics, breast health, GYN surgical, and skeletal
health. With a unified suite of technologies and a robust
research and development program, Hologic is dedicated to The
Science of Sure. For more information on Hologic, visit
www.hologic.com.
Hologic, Genius 3D Mammography, Aptima, ThinPrep, MyoSure,
NovaSure, Panther, Tigris, The Science of Sure, 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 included herein 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 ability of the Company to successfully
manage leadership and organizational changes, including the ability
of the Company to attract, motivate and retain key employees; U.S.,
European and general worldwide economic conditions and related
uncertainties; 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; uncertainties regarding healthcare reform
legislation, including associated tax provisions, or budget
reduction or other cost containment efforts; 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; 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; 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 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; 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. 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.
Contact
Michael Watts
Vice President, Investor Relations and Corporate Communications
(858) 410-8588
|
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
|
|
Nine Months
Ended
|
|
June 25,
2016
|
|
June 27,
2015
|
|
June 25,
2016
|
|
June 27,
2015
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Product
|
$
|
601.3
|
|
|
$
|
583.0
|
|
|
$
|
1,771.5
|
|
|
$
|
1,676.0
|
|
|
Service and
other
|
116.1
|
|
|
110.9
|
|
|
334.3
|
|
|
326.2
|
|
|
Total
revenues
|
717.4
|
|
|
693.9
|
|
|
2,105.8
|
|
|
2,002.2
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
Product
|
191.1
|
|
|
186.2
|
|
|
561.2
|
|
|
559.6
|
|
|
Amortization of
intangible assets
|
77.9
|
|
|
73.1
|
|
|
222.2
|
|
|
225.6
|
|
|
Service and
other
|
55.3
|
|
|
55.9
|
|
|
165.2
|
|
|
163.7
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
393.1
|
|
|
378.7
|
|
|
1,157.2
|
|
|
1,053.3
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Research and
development
|
58.8
|
|
|
56.0
|
|
|
169.6
|
|
|
161.2
|
|
|
Selling and
marketing
|
109.0
|
|
|
94.3
|
|
|
309.2
|
|
|
263.3
|
|
|
General and
administrative
|
62.5
|
|
|
73.1
|
|
|
202.0
|
|
|
194.7
|
|
|
Amortization of
intangible assets
|
21.9
|
|
|
27.4
|
|
|
67.3
|
|
|
82.8
|
|
|
Restructuring and
divestiture charges
|
1.5
|
|
|
11.9
|
|
|
7.5
|
|
|
21.9
|
|
|
Total operating
expenses
|
253.7
|
|
|
262.7
|
|
|
755.6
|
|
|
723.9
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
139.4
|
|
|
116.0
|
|
|
401.6
|
|
|
329.4
|
|
|
Interest
income
|
0.2
|
|
|
0.3
|
|
|
0.6
|
|
|
1.0
|
|
|
Interest
expense
|
(39.1)
|
|
|
(52.4)
|
|
|
(117.4)
|
|
|
(154.3)
|
|
|
Debt extinguishment
loss
|
—
|
|
|
(18.2)
|
|
|
(4.5)
|
|
|
(24.9)
|
|
|
Other income,
net
|
0.6
|
|
|
1.0
|
|
|
27.5
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
101.1
|
|
|
46.7
|
|
|
307.8
|
|
|
151.8
|
|
|
Provision for income
taxes
|
16.3
|
|
|
17.3
|
|
|
69.1
|
|
|
45.3
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
84.8
|
|
|
$
|
29.4
|
|
|
$
|
238.7
|
|
|
$
|
106.5
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.31
|
|
|
$
|
0.10
|
|
|
$
|
0.85
|
|
|
$
|
0.38
|
|
|
Diluted
|
$
|
0.30
|
|
|
$
|
0.10
|
|
|
$
|
0.83
|
|
|
$
|
0.37
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
277,853
|
|
|
281,184
|
|
|
281,101
|
|
|
280,064
|
|
|
Diluted
|
282,302
|
|
|
292,612
|
|
|
287,377
|
|
|
287,790
|
|
|
HOLOGIC,
INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
|
|
(In
millions)
|
|
|
June 25,
2016
|
|
September 26,
2015
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
441.5
|
|
|
$
|
492.7
|
|
|
Accounts receivable,
net
|
426.2
|
|
|
416.1
|
|
|
Inventories
|
280.5
|
|
|
283.1
|
|
|
Deferred income
taxes
|
—
|
|
|
19.0
|
|
|
Other current
assets
|
71.8
|
|
|
55.5
|
|
|
Total current
assets
|
1,220.0
|
|
|
1,266.4
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
451.5
|
|
|
457.1
|
|
|
Goodwill and
intangible assets
|
5,541.9
|
|
|
5,831.4
|
|
|
Other
assets
|
93.3
|
|
|
115.2
|
|
|
Total
assets
|
$
|
7,306.7
|
|
|
$
|
7,670.1
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of
long-term debt
|
$
|
333.4
|
|
|
$
|
391.8
|
|
|
Accounts payable and
accrued liabilities
|
418.9
|
|
|
389.1
|
|
|
Deferred
revenue
|
158.5
|
|
|
163.1
|
|
|
Total current
liabilities
|
910.8
|
|
|
944.0
|
|
|
|
|
|
|
Long-term debt, net
of current portion
|
3,088.8
|
|
|
3,248.0
|
|
|
Deferred income
taxes
|
1,030.5
|
|
|
1,178.4
|
|
|
Other long-term
liabilities
|
233.9
|
|
|
220.5
|
|
|
Total
liabilities
|
5,264.0
|
|
|
5,590.9
|
|
|
Total stockholders'
equity
|
2,042.7
|
|
|
2,079.2
|
|
|
Total liabilities
and stockholders' equity
|
$
|
7,306.7
|
|
|
$
|
7,670.1
|
|
|
HOLOGIC,
INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
(In
millions)
|
|
|
Nine Months
Ended
|
|
June 25,
2016
|
|
June 27,
2015
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net income
|
$
|
238.7
|
|
|
$
|
106.5
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation
|
61.3
|
|
|
60.8
|
|
|
Amortization
|
289.5
|
|
|
308.3
|
|
|
Non-cash interest
expense
|
38.8
|
|
|
49.5
|
|
|
Stock-based
compensation expense
|
45.1
|
|
|
42.2
|
|
|
Excess tax benefit
related to equity awards
|
(9.2)
|
|
|
(8.0)
|
|
|
Deferred income
taxes
|
(104.2)
|
|
|
(110.9)
|
|
|
Gain on sale of
available-for-sale marketable security
|
(25.1)
|
|
|
—
|
|
|
Debt extinguishment
loss
|
4.5
|
|
|
24.9
|
|
|
Loss on disposal of
business
|
—
|
|
|
9.6
|
|
|
Other adjustments and
non-cash items
|
1.2
|
|
|
5.0
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts
receivable
|
(10.8)
|
|
|
3.5
|
|
|
Inventories
|
2.1
|
|
|
32.9
|
|
|
Prepaid income
taxes
|
1.9
|
|
|
(1.3)
|
|
|
Prepaid expenses and
other assets
|
(16.2)
|
|
|
4.7
|
|
|
Accounts
payable
|
14.4
|
|
|
(1.8)
|
|
|
Accrued expenses and
other liabilities
|
34.7
|
|
|
25.3
|
|
|
Deferred
revenue
|
(6.2)
|
|
|
2.4
|
|
|
Net cash provided by
operating activities
|
560.5
|
|
|
553.6
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
Purchase of property
and equipment
|
(27.0)
|
|
|
(27.9)
|
|
|
Increase in equipment
under customer usage agreements
|
(35.8)
|
|
|
(30.2)
|
|
|
Proceeds from sale of
available-for-sale marketable security
|
31.1
|
|
|
—
|
|
|
Purchases of
insurance contracts
|
(5.2)
|
|
|
(6.4)
|
|
|
Sales of mutual
funds
|
5.2
|
|
|
7.7
|
|
|
Purchase of
intellectual property
|
(4.0)
|
|
|
—
|
|
|
Increase in other
assets
|
(0.4)
|
|
|
—
|
|
|
Net cash used in
investing activities
|
(36.1)
|
|
|
(56.8)
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
Proceeds from
long-term debt
|
—
|
|
|
1,495.1
|
|
|
Repayment of
long-term debt
|
(56.2)
|
|
|
(2,045.0)
|
|
|
Payments to
extinguish convertible notes
|
(311.5)
|
|
|
—
|
|
|
Proceeds from amounts
borrowed under revolving credit line
|
50.0
|
|
|
175.0
|
|
|
Repayment of amounts
borrowed under revolving credit line
|
(225.0)
|
|
|
—
|
|
|
Proceeds from
accounts receivable securitization agreement
|
200.0
|
|
|
—
|
|
|
Repurchase of common
stock
|
(250.0)
|
|
|
—
|
|
|
Payment of debt
issuance costs
|
—
|
|
|
(8.3)
|
|
|
Purchase of interest
rate caps
|
—
|
|
|
(6.1)
|
|
|
Net proceeds from
issuance of common stock pursuant to employee stock
plans
|
27.4
|
|
|
50.4
|
|
|
Excess tax benefit
related to equity awards
|
9.2
|
|
|
8.0
|
|
|
Payment of minimum
tax withholdings on net share settlements of equity
awards
|
(16.1)
|
|
|
(12.6)
|
|
|
Net cash used in
financing activities
|
(572.2)
|
|
|
(343.5)
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(2.0)
|
|
|
(4.4)
|
|
|
Net (decrease)
increase in cash and cash equivalents
|
(49.8)
|
|
|
148.9
|
|
|
Cash and cash
equivalents, beginning of period
|
491.3
|
|
|
736.1
|
|
|
Cash and cash
equivalents, end of period
|
$
|
441.5
|
|
|
$
|
885.0
|
|
|
HOLOGIC,
INC.
|
|
RECONCILIATION OF
GAAP TO NON-GAAP RESULTS
|
|
(Unaudited)
|
|
(In millions, except
earnings per share and margin percentages)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
June 25,
2016
|
|
June 27,
2015
|
|
June 25,
2016
|
|
June 27,
2015
|
|
|
|
|
|
|
|
|
|
Gross
Profit:
|
|
|
|
|
|
|
|
|
GAAP gross
profit
|
$
|
393.1
|
|
|
$
|
378.7
|
|
|
$
|
1,157.2
|
|
|
$
|
1,053.3
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
77.9
|
|
|
73.1
|
|
|
222.2
|
|
|
225.6
|
|
|
Incremental
depreciation expense (2)
|
0.5
|
|
|
0.8
|
|
|
1.5
|
|
|
2.4
|
|
|
Integration/consolidation costs (3)
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.5
|
|
|
Non-GAAP gross
profit
|
$
|
471.5
|
|
|
$
|
452.7
|
|
|
$
|
1,380.9
|
|
|
$
|
1,281.8
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
Percentage:
|
|
|
|
|
|
|
|
|
GAAP gross margin
percentage
|
54.8
|
%
|
|
54.6
|
%
|
|
55.0
|
%
|
|
52.6
|
%
|
|
Impact of adjustments
above
|
10.9
|
%
|
|
10.6
|
%
|
|
10.6
|
%
|
|
11.4
|
%
|
|
Non-GAAP gross margin
percentage
|
65.7
|
%
|
|
65.2
|
%
|
|
65.6
|
%
|
|
64.0
|
%
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
GAAP operating
expenses
|
$
|
253.7
|
|
|
$
|
262.7
|
|
|
$
|
755.6
|
|
|
$
|
723.9
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
(21.9)
|
|
|
(27.4)
|
|
|
(67.3)
|
|
|
(82.8)
|
|
|
Incremental
depreciation expense (2)
|
(0.9)
|
|
|
(1.0)
|
|
|
(2.6)
|
|
|
(2.3)
|
|
|
Integration/consolidation costs (3)
|
(0.2)
|
|
|
—
|
|
|
(0.7)
|
|
|
—
|
|
|
Restructuring and
divestiture charges (3)
|
(1.5)
|
|
|
(11.9)
|
|
|
(7.5)
|
|
|
(21.9)
|
|
|
Other (4)
|
—
|
|
|
—
|
|
|
(6.0)
|
|
|
(0.1)
|
|
|
Non-GAAP operating
expenses
|
$
|
229.2
|
|
|
$
|
222.4
|
|
|
$
|
671.5
|
|
|
$
|
616.8
|
|
|
|
|
|
|
|
|
|
|
Operating
Margin:
|
|
|
|
|
|
|
|
|
GAAP income from
operations
|
139.4
|
|
|
116.0
|
|
|
401.6
|
|
|
329.4
|
|
|
Adjustments to gross
profit as detailed above
|
78.4
|
|
|
74.0
|
|
|
223.7
|
|
|
228.5
|
|
|
Adjustments to
operating expenses as detailed above
|
24.5
|
|
|
40.3
|
|
|
84.1
|
|
|
107.1
|
|
|
Non-GAAP income from
operations
|
$
|
242.3
|
|
|
$
|
230.3
|
|
|
$
|
709.4
|
|
|
$
|
665.0
|
|
|
|
|
|
|
|
|
|
|
Operating Margin
Percentage:
|
|
|
|
|
|
|
|
|
GAAP income from
operations margin percentage
|
19.4
|
%
|
|
16.7
|
%
|
|
19.1
|
%
|
|
16.5
|
%
|
|
Impact of adjustments
above
|
14.4
|
%
|
|
16.5
|
%
|
|
14.6
|
%
|
|
16.7
|
%
|
|
Non-GAAP operating
margin percentage
|
33.8
|
%
|
|
33.2
|
%
|
|
33.7
|
%
|
|
33.2
|
%
|
|
|
|
|
|
|
|
|
|
Interest
Expense:
|
|
|
|
|
|
|
|
|
GAAP interest
expense
|
$
|
39.1
|
|
|
$
|
52.4
|
|
|
$
117.4
|
|
|
$
154.3
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Non-cash interest
expense relating to
convertible notes (5)
|
(5.2)
|
|
|
(9.2)
|
|
|
(17.3)
|
|
|
(27.0)
|
|
|
Debt transaction
costs (6)
|
—
|
|
|
(4.6)
|
|
|
—
|
|
|
(4.6)
|
|
|
Non-GAAP interest
expense
|
$
|
33.9
|
|
|
$
|
38.6
|
|
|
$
|
100.1
|
|
|
$
|
122.7
|
|
|
|
Pre-Tax
Income:
|
|
|
|
|
|
|
|
|
GAAP pre-tax
earnings
|
$
|
101.1
|
|
|
$
|
46.7
|
|
|
$
307.8
|
|
|
$
151.8
|
|
|
Adjustments to
pre-tax earnings as detailed
above
|
108.1
|
|
|
128.1
|
|
|
325.1
|
|
|
367.2
|
|
|
Debt extinguishment
loss (6)
|
—
|
|
|
18.2
|
|
|
4.5
|
|
|
24.9
|
|
|
Gain on sale of
available-for-sale marketable
security (7)
|
—
|
|
|
—
|
|
|
(25.1)
|
|
|
—
|
|
|
Unrealized gains on
forward foreign currency
contracts (8)
|
(0.2)
|
|
|
—
|
|
|
(0.6)
|
|
|
—
|
|
|
Non-GAAP pre-tax
Income
|
$
|
209.0
|
|
|
$
|
193.0
|
|
|
$
611.7
|
|
|
$
543.9
|
|
|
|
|
|
|
|
|
|
|
Net
income:
|
|
|
|
|
|
|
|
|
GAAP net
income
|
$
|
84.8
|
|
|
$
|
29.4
|
|
|
$
|
238.7
|
|
|
$
|
106.5
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
99.8
|
|
|
100.5
|
|
|
289.5
|
|
|
308.4
|
|
|
Non-cash interest
expense relating to
convertible notes (5)
|
5.2
|
|
|
9.2
|
|
|
17.3
|
|
|
27.0
|
|
|
Restructuring,
divestiture and
integration/consolidation costs (3)
|
1.7
|
|
|
12.0
|
|
|
8.2
|
|
|
22.4
|
|
|
Incremental
depreciation expenses (2)
|
1.4
|
|
|
1.8
|
|
|
4.1
|
|
|
4.7
|
|
|
Debt extinguishment
loss (6)
|
—
|
|
|
22.8
|
|
|
4.5
|
|
|
29.5
|
|
|
Gain on sale of
available-for-sale marketable
security (7)
|
—
|
|
|
—
|
|
|
(25.1)
|
|
|
—
|
|
|
Unrealized gains on
forward foreign currency
contracts (8)
|
(0.2)
|
|
|
—
|
|
|
(0.6)
|
|
|
—
|
|
|
Other charges
(4)
|
—
|
|
|
—
|
|
|
6.0
|
|
|
0.1
|
|
|
Income tax effect of
reconciling items (9)
|
(47.6)
|
|
|
(48.8)
|
|
|
(126.6)
|
|
|
(141.1)
|
|
|
Non-GAAP net
income
|
$
|
145.1
|
|
|
$
|
126.9
|
|
|
$
|
416.0
|
|
|
$
|
357.5
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
GAAP earnings per
share - Diluted
|
$
|
0.30
|
|
|
$
|
0.10
|
|
|
$
|
0.83
|
|
|
$
|
0.37
|
|
|
Adjustment to net
earnings (as detailed above)
|
0.21
|
|
|
0.33
|
|
|
0.62
|
|
|
0.87
|
|
|
Non-GAAP earnings per
share – diluted (10)
|
$
|
0.51
|
|
|
$
|
0.43
|
|
|
$
|
1.45
|
|
|
$
|
1.24
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
Non-GAAP net
income
|
$
|
145.1
|
|
|
$
|
126.9
|
|
|
$
|
416.0
|
|
|
$
|
357.5
|
|
|
Interest expense,
net, not adjusted above
|
33.8
|
|
|
38.4
|
|
|
99.5
|
|
|
121.7
|
|
|
Provision for income
taxes
|
63.8
|
|
|
66.1
|
|
|
195.7
|
|
|
186.2
|
|
|
Depreciation expense,
not adjusted above
|
19.8
|
|
|
18.3
|
|
|
57.2
|
|
|
55.9
|
|
|
Adjusted
EBITDA
|
$
|
262.5
|
|
|
$
|
249.7
|
|
|
$
|
768.4
|
|
|
$
|
721.3
|
|
|
|
|
|
|
|
|
|
|
Explanatory Notes
to Reconciliations:
|
|
|
(1)
|
To reflect non-cash
expenses attributable to the amortization of intangible
assets.
|
|
(2)
|
To reflect non-cash
fair value adjustments for additional depreciation expense related
to the fair value write-up of fixed assets acquired in the
Gen-Probe acquisition and accelerated depreciation expense related
to facility closure and consolidation.
|
|
(3)
|
To reflect
restructuring and divestiture charges and certain costs associated
with the Company's integration and facility consolidation plans,
which primarily include retention and transfer costs.
|
|
(4)
|
To reflect the net
impact from miscellaneous transactions during the relevant period,
including legal settlements.
|
|
(5)
|
To reflect certain
non-cash interest expense related to the amortization of the debt
discount from the equity conversion option of the Company's
convertible notes.
|
|
(6)
|
To reflect losses for
extinguishment and partial extinguishment related to voluntary
prepayments and refinancings under the Prior Credit Agreement for
the nine months ended June 27, 2015 and related cash
transaction costs, as well as repurchases of $90.0 million of the
2010 Convertible Notes and $136.6 million of the 2012 Convertible
Notes for the nine months ended June 25, 2016.
|
|
(7)
|
To reflect a realized
gain on the sale of an available-for-sale marketable
security.
|
|
(8)
|
To reflect non-cash
unrealized gains on the mark-to market on outstanding forward
foreign currency contracts, which do not qualify for hedge
accounting.
|
|
(9)
|
To reflect an
estimated annual effective tax rate of 32.00% and 34.25% for fiscal
2016 and 2015.
|
|
(10)
|
Non-GAAP earnings per
share was calculated based on 282,302 and 292,612 weighted average
diluted shares outstanding for the three months ended June 25,
2016 and June 27, 2015, respectively, and 287,377 and 287,790
weighted average diluted shares outstanding for the nine months
ended June 25, 2016 and June 27, 2015,
respectively.
|
|
Trailing Twelve
Months
ended
June 25,
2016
|
|
Return on Invested
Capital:
|
|
|
|
|
Adjusted Net
Operating Profit After Tax
|
|
|
Non-GAAP net
income
|
543.1
|
|
|
Non-GAAP
provision for income taxes
|
262.0
|
|
|
Non-GAAP
interest expense
|
138.7
|
|
|
Non-GAAP other
expense
|
1.1
|
|
|
Adjusted net
operating profit before tax
|
944.9
|
|
|
Non-GAAP
average effective tax rate (1)
|
32.56
|
%
|
|
Adjusted net
operating profit after tax
|
637.2
|
|
|
|
|
Average Net
Debt plus Average Stockholders' Equity (2)
|
|
|
Average total
debt
|
3,682.2
|
|
|
Less: Average
cash, cash equivalents and restricted cash
|
(665.2)
|
|
|
Average net
debt
|
3,017.0
|
|
|
Average
stockholders' equity (3)
|
2,172.1
|
|
|
Average net
debt plus average stockholders' equity
|
5,189.1
|
|
|
|
|
Adjusted
ROIC
|
|
|
Adjusted ROIC
(adjusted net operating profit after tax
above divided by average net debt plus
stockholders' equity above)
|
12.28
|
%
|
|
(1)
|
ROIC is presented on
a TTM basis; non-GAAP effective tax rate for the three months ended
September 26, 2015 was 34.25%, the three months ended December 26,
2015 and March 26, 2016 was 32.75% and the three months ended June
25, 2016 was 30.55%.
|
|
(2)
|
Calculated using the
average of the balances as of June 25, 2016 and June 27,
2015.
|
|
(3)
|
Adjusted (increased)
to eliminate the effect of the impairment of intangible assets of
$32.2 million in fiscal 2014.
|
|
As
of
|
|
|
June 25,
2016
|
|
|
Leverage
Ratio:
|
|
|
|
|
|
|
Total principal
debt
|
3,471.1
|
|
|
|
Total cash
|
(441.5)
|
|
|
|
Net principal debt,
as adjusted
|
3,029.6
|
|
|
|
Adjusted EBITDA for
the last four quarters
|
1,019.3
|
|
|
|
Leverage
Ratio
|
2.97
|
|
|
|
|
|
|
Other Supplemental
Information:
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
June 25,
2016
|
|
June 27,
2015
|
|
June 25,
2016
|
|
June 27,
2015
|
|
|
|
|
|
|
|
|
|
|
Geographic
Revenues
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
78.7
|
%
|
|
77.8
|
%
|
|
78.7
|
%
|
|
75.8
|
%
|
|
Europe
|
|
10.6
|
%
|
|
11.3
|
%
|
|
10.3
|
%
|
|
12.2
|
%
|
|
Asia-Pacific
|
|
7.5
|
%
|
|
7.9
|
%
|
|
7.6
|
%
|
|
8.5
|
%
|
|
All Others
|
|
3.2
|
%
|
|
3.0
|
%
|
|
3.4
|
%
|
|
3.5
|
%
|
|
Total
Revenues
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
Composition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3'16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disposables
|
|
60.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Equipment
|
|
23.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service &
Other
|
|
16.2
|
%
|
|
|
Total
Revenues
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/hologic-announces-financial-results-for-third-quarter-of-fiscal-2016-300304850.html
SOURCE Hologic, Inc.