BEDFORD, Mass., Feb. 3, 2014 /PRNewswire/ -- Hologic, Inc.
(Hologic or the Company) (NASDAQ: HOLX), a leading developer,
manufacturer and supplier of premium diagnostic products, medical
imaging systems and surgical products, with an emphasis on serving
the healthcare needs of women, today announced its results for the
first fiscal quarter ended December 28,
2013.
Highlights of the Quarter Include:
- Revenues of $612.4 million.
- Non-GAAP net income of $94.1
million, or $0.34 per diluted
share, and adjusted EBITDA (non-GAAP earnings before interest,
taxes, depreciation and amortization) of $213.5 million.
- Net loss of $5.4 million, or
$0.02 per diluted share, calculated
in accordance with U.S. generally accepted accounting principles
(GAAP).
- Stephen P. MacMillan named
President and Chief Executive Officer, and a member of the Board of
Directors.
- FDA approval of the Aptima HPV 16 18/45 genotype assay for use
on the Panther system.
- Voluntary prepayment of an additional $100 million on the Term Loan B facility on
October 31, 2013.
- Redeemed in full $405 million of
principal of the 2.00% Convertible Senior Notes issued in
2007.
The following non-GAAP financial measures are included in this
press release: revenues, net income, earnings per diluted share
(EPS), and adjusted EBITDA. The Company's definitions of these
non-GAAP financial measures, and the reconciliations of these
measures to the Company's comparable GAAP financial measures for
the periods presented, are set forth in the supplemental
information attached to this press release. When analyzing the
Company's operating performance, investors should not consider
these non-GAAP measures as a substitute for the comparable
financial measures prepared in accordance with GAAP.
First Quarter Fiscal 2014 Operating Results Overview:
First quarter fiscal 2014 revenues decreased 3.0% to
$612.4 million from $631.4 million in the prior year (first quarter
sales of the prior year included $12.6
million of revenues from Lifecodes, which the Company sold
in March 2013). During the same
period, non-GAAP revenues decreased 5.0% from $644.6 million. Non-GAAP revenues in the first
quarter of fiscal 2013 reflect the addition of $13.3 million primarily related to contingent
revenue earned and received under the Company's blood screening
collaboration that was eliminated as a result of the effect of
purchase accounting.
Fluctuation in foreign currency exchange rates had a negligible
impact on revenues compared with the first quarter of fiscal
2013.
First quarter fiscal 2014 net loss was $5.4 million, or $0.02 per diluted share, compared with net income
of $3.1 million, or $0.01 per diluted share, for the same period in
the prior year. First quarter fiscal 2014 non-GAAP net income was
$94.1 million, or $0.34 per diluted share, a decrease of 7.5% and
9.5%, respectively, compared to $101.8
million, or $0.38 per diluted
share, in the prior year.
"While we delivered on our commitments in the quarter, we
clearly have work to do to return to sustainable top and bottom
line growth," said Stephen
MacMillan, President and Chief Executive Officer. "Looking
forward, I am energized by our unique collection of leading product
technologies and a deeply committed and passionate employee base to
drive organic growth. Through the balance of fiscal 2014, we will
remain focused on improving our operating performance and growth
profile and on paying down our debt balance, which we believe will
enhance shareholder value."
First Quarter Fiscal 2014 Revenue Overview by Segment
(Compared to the First Quarter Fiscal 2013):
- Diagnostics revenues totaled $285.8
million compared to revenues of $305.9 million in the prior year, a decrease of
6.6%. On a non-GAAP basis, which includes the $13.3 million prior year adjustment described
above, sales declined 10.5%. This decline was primarily due to: (i)
the Company's divestiture of its Lifecodes business in March 2013, which generated revenues
of $12.6 million in the prior year first quarter; (ii)
decreases in ThinPrep pap test sales in the U.S. attributed to
interval expansion, as well as lower average sales prices
internationally; and (iii) a decrease in blood screening revenues,
primarily resulting from lower West Nile Virus assay sales.
Partially offsetting these declines were increases in molecular
product sales from the Company's Aptima product line.
- Breast Health revenues grew 2.6% to $226.5 million compared to $220.8 million in the prior year. This increase
was driven primarily by: increased sales of 3D Dimensions
systems as the Company continues to drive a sales shift to 3D
Dimensions systems from its 2D systems; service revenue growth of
$6.0 million, or 7.5%, from the
growing installed base of digital mammography systems; and, to a
lesser extent, biopsy device sales growth as a result of market
share gains and growth in existing accounts. Partially offsetting
these increases was the expected overall sales decline of 2D
systems as customers move to the Company's 3D systems.
- GYN Surgical revenues totaled $78.9
million compared to $80.9
million in the prior year, a decrease of 2.5%. Significant
growth in MyoSure system sales was offset by lower NovaSure system
sales.
- Skeletal Health revenues totaled $21.3
million compared to $23.7
million in the prior year, a decrease of 10.1%, resulting
from decreases in sales of bone densitometry and mini C-arm
systems.
Financial Guidance:
The Company's guidance includes current operations, including
revenues from its approved and cleared products. This guidance does
not include the effects of any future stock repurchases,
acquisitions, divestitures or additional voluntary debt payments
that may occur during fiscal 2014.
Second Quarter Fiscal 2014 (Quarter Ending March 29, 2014):
- The Company expects second quarter fiscal 2014 revenues of
$605 million to $615 million.
Year-over-year, this represents a decrease of 1% to 2% over second
quarter fiscal 2013 non-GAAP revenues of $619.1 million (prior year reflects the addition
of $6.4 million, primarily relating
to a purchase accounting adjustment in the second quarter). The
decrease is expected primarily from a decline in sales of ThinPrep
pap tests and NovaSure systems, and the elimination of revenues
from Lifecodes, which were $10.6
million in the second quarter of fiscal 2013. This decrease
is expected to be partially offset by the continued ramp-up of new
products including 3D Dimensions, molecular assays, and MyoSure
systems.
- The Company expects non-GAAP EPS of $0.32 to $0.34.
Fiscal 2014 (Year Ending September 27,
2014):
- The Company is reaffirming fiscal 2014 revenue guidance of
$2.425 billion to $2.475 billion.
Year-over-year, this represents a decrease of 1% to 3% over fiscal
2013 non-GAAP revenues of $2.51
billion (prior year reflects the addition of $19.7 million primarily relating to a purchase
accounting adjustment). The decrease is expected to be primarily a
result of a decline in sales of ThinPrep pap tests, blood screening
assays, and NovaSure systems, and the elimination of revenues from
Lifecodes, which were $23 million in
fiscal 2013. This decrease is expected to be partially offset by
the continued ramp-up of new products including 3D Dimensions,
molecular assays, and MyoSure systems.
- The Company expects non-GAAP EPS of $1.34 to $1.38 (as compared to $1.32 to $1.38 provided on November 12, 2013). This includes an incremental
reduction in EPS from the prior year of $0.02 from the impact of the medical device
excise tax and $0.05 from an increase
in the expected annual effective tax rate.
Hologic may not generate expected revenues and may incur
expenses or charges, realize income or gains, or execute
transactions in fiscal 2014 that could cause actual results to vary
from the guidance above. In addition, the Company is continuing to
monitor the effects of the U.S., European and general worldwide
economic and regulatory conditions and related uncertainties,
including the implementation of healthcare cost containment
measures and healthcare reform legislation, as well as foreign
currency fluctuations, which, along with other uncertainties facing
the Company's business including those referenced elsewhere herein
and its filings with the Securities and Exchange Commission, could
adversely affect anticipated results.
Conference Call and Webcast:
Hologic's management will host a conference call on Monday, February 3, 2014, at 5:00 p.m. (Eastern) to discuss first quarter
fiscal year 2014 operating results. Interested participants may
listen to the call by dialing 877-397-0292 or 719-325-4942 for
international callers and referencing code 6120983 approximately 15
minutes prior to the call. For those unable to participate in the
live broadcast, a replay will be available one hour after the call
ends through Friday, February 21,
2014, at 888-203-1112 or 719-457-0820 for international
callers, access code 6120983. The Company will also provide a live
webcast of the call. Interested participants may access the webcast
on the Company's website
at www.investors.hologic.com/investors-overview. A PowerPoint
presentation related to the conference call will be posted to the
site.
About Hologic, Inc.:
Hologic, Inc. is a leading developer, manufacturer and supplier
of premium diagnostic products, medical imaging systems, and
surgical products, with an emphasis on serving the healthcare needs
of women. The Company operates four core business units focused on
breast health, diagnostics, GYN surgical and skeletal health. With
a comprehensive suite of technologies and a robust research and
development program, Hologic is committed to improving lives. The
Company is headquartered in Massachusetts. For more information, visit
www.hologic.com.
Hologic, Aptima, Dimensions, Gen-Probe, MyoSure, NovaSure,
Panther, and ThinPrep 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 Statement Disclaimer:
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 recent and ongoing 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 the recently enacted or
future 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, the risks that acquisitions may involve
unexpected costs or unexpected liabilities, including the risks and
challenges associated with the Company's recent acquisition of
Gen-Probe and operations in China;
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, and the need to comply with especially high standards
for the manufacture of many of its products; 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.
|
HOLOGIC,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In
thousands)
|
|
|
|
December 28,
2013
|
|
September
28, 2013
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
448,637
|
|
$
829,404
|
Accounts receivable,
net
|
394,471
|
|
409,273
|
Inventories
|
301,709
|
|
289,363
|
Prepaid expenses and
other current assets
|
82,122
|
|
96,103
|
Total current
assets
|
1,226,939
|
|
1,624,143
|
|
|
|
|
Property and
equipment, net
|
479,735
|
|
491,528
|
Intangible assets,
net
|
3,802,421
|
|
3,906,722
|
Goodwill
|
2,813,907
|
|
2,814,528
|
Other
assets
|
161,306
|
|
163,902
|
|
$
8,484,308
|
|
$
9,000,823
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Current portion of
long-term debt
|
$
77,033
|
|
$
563,812
|
Accounts
payable
|
90,966
|
|
80,534
|
Accrued
expenses
|
324,130
|
|
271,931
|
Deferred revenue and
other current liabilities
|
136,128
|
|
172,129
|
Total current
liabilities
|
628,257
|
|
1,088,406
|
|
|
|
|
Long-term debt, net
of current portion
|
4,224,732
|
|
4,242,098
|
Deferred income taxes
and other long-term liabilities
|
|
1,680,788
|
|
1,728,806
|
Total long-term
liabilities
|
5,905,520
|
|
5,970,904
|
|
|
|
|
Total stockholders'
equity
|
1,950,531
|
|
1,941,513
|
|
$
8,484,308
|
|
$
9,000,823
|
|
|
HOLOGIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
|
|
|
|
Three Months
Ended
|
|
December 28,
2013
|
|
December 29,
2012
|
|
|
|
|
REVENUES
|
|
|
|
Product
sales
|
$
512,382
|
|
$
533,254
|
Service and other
revenues
|
100,066
|
|
98,108
|
|
612,448
|
|
631,362
|
|
|
|
|
COSTS AND EXPENSES
(1):
|
|
|
|
Cost of product
sales
|
176,878
|
|
222,327
|
Cost of product sales
– amortization of intangible assets
|
|
76,666
|
|
75,287
|
Cost of service and
other revenues
|
53,308
|
|
52,075
|
Research and
development
|
48,669
|
|
51,509
|
Selling and
marketing
|
83,257
|
|
94,443
|
General and
administrative
|
67,819
|
|
54,391
|
Amortization of
intangible assets
|
26,216
|
|
28,526
|
Contingent
consideration
|
-
|
|
39,526
|
Gain on sale of
intellectual property
|
-
|
|
(53,884)
|
Restructuring and
divestiture charges
|
18,350
|
|
3,933
|
|
551,163
|
|
568,133
|
|
|
|
|
Income from
operations
|
61,285
|
|
63,229
|
Interest
expense
|
(61,290)
|
|
(72,081)
|
Other
income
|
1,526
|
|
1,499
|
Debt extinguishment
loss
|
(2,940)
|
|
-
|
Loss before income
taxes
|
(1,419)
|
|
(7,353)
|
Provision (benefit)
for income taxes
|
3,932
|
|
(10,471)
|
|
|
|
|
Net (loss)
income
|
$
(5,351)
|
|
$
3,118
|
|
|
|
|
Net (loss) income per
common share:
|
|
|
|
Basic
|
$
(0.02)
|
|
$
0.01
|
Diluted
|
$
(0.02)
|
|
$
0.01
|
|
|
|
|
Weighted average
number of shares outstanding:
|
|
|
|
Basic
|
272,708
|
|
266,344
|
Diluted
|
272,708
|
|
269,379
|
|
|
Explanatory
Note:
|
(1) Stock-based
compensation included in costs and expenses during the three months
ended December 28, 2013 was $1,510 for cost of revenues, $1,873 for
research and development, $1,749 for selling and marketing, $3,833
for general and administrative and $4,761 for restructuring and
divestiture. Stock-based compensation included in costs and
expenses during the three months ended December 29, 2012 was $1,834
for cost of revenues, $1,868 for research and development, $2,201
for selling and marketing, $5,941 for general and administrative
and $222 for restructuring and divestiture.
|
|
|
HOLOGIC, INC.
RECONCILIATION OF GAAP REVENUES, EPS AND NET (LOSS) INCOME TO
NON-GAAP REVENUES, EPS, NET INCOME AND ADJUSTED EBITDA
(Unaudited)
(In thousands, except earnings per share)
|
|
|
|
Three Months
Ended
|
|
December 28,
2013
|
|
December 29,
2012
|
|
|
|
|
|
|
REVENUES
|
|
|
|
|
GAAP
revenues
|
$
612,448
|
|
$
631,362
|
|
Adjustment primarily
related to blood screening collaboration
|
-
|
|
13,275
|
(1)
|
Non-GAAP
revenues
|
$
612,448
|
|
$
644,637
|
|
|
|
|
|
|
(LOSS) EARNINGS
PER SHARE
|
|
|
|
|
GAAP (loss) earnings
per share - Diluted
|
$
(0.02)
|
|
$
0.01
|
|
Adjustment to net
(loss) income (as detailed below)
|
0.36
|
|
0.37
|
|
Non-GAAP earnings per
share – Diluted
|
$
0.34
|
(2)
|
$
0.38
|
(2)
|
|
|
|
|
|
NET (LOSS)
INCOME
|
|
|
|
|
GAAP net (loss)
income
|
$
(5,351)
|
|
$
3,118
|
|
Adjustments:
|
|
|
|
|
Amortization of
intangible assets
|
102,882
|
(3)
|
103,813
|
(3)
|
Contingent
consideration
|
-
|
|
39,526
|
(4)
|
Non-cash interest
expense relating to convertible notes
|
11,546
|
(5)
|
15,644
|
(5)
|
Acquisition and
integration-related costs
|
5,106
|
(6)
|
5,521
|
(6)
|
Restructuring and
divestiture charges
|
18,350
|
(7)
|
3,933
|
(7)
|
Fair value adjustment
to depreciation expense
|
3,054
|
(8)
|
2,689
|
(8)
|
Debt extinguishment
loss
|
2,940
|
(9)
|
-
|
|
Fair value write-up
of acquired inventory sold
|
-
|
|
29,876
|
(10)
|
Contingent revenue
primarily from blood screening collaboration
|
|
-
|
|
13,275
|
(1)
|
Gain on sale of
intellectual property
|
-
|
|
(53,884)
|
(11)
|
Other charges
(gains), net
|
1,279
|
(12)
|
(3,367)
|
(12)
|
Income tax effect of
reconciling items
|
(45,658)
|
(13)
|
(58,366)
|
(13)
|
Non-GAAP net
income
|
$
94,148
|
|
$
101,778
|
|
|
|
|
|
|
ADJUSTED
EBITDA
|
|
|
|
|
Non-GAAP net
income
|
$
94,148
|
|
$
101,778
|
|
Interest expense,
net, not adjusted above
|
49,388
|
|
56,177
|
|
Provision for income
taxes
|
49,590
|
|
47,895
|
|
Depreciation expense,
not adjusted above
|
20,408
|
|
21,653
|
|
Adjusted
EBITDA
|
$
213,534
|
|
$
227,503
|
|
|
|
Explanatory
Notes:
|
(1) To primarily
reflect a fair value adjustment relating to contingent revenue
earned and received post acquisition under the Company's blood
screening collaboration, which was eliminated under purchase
accounting.
|
(2) Non-GAAP earnings
per share was calculated based on 275,471 and 269,379 weighted
average diluted shares outstanding for the three months ended
December 28, 2013 and December 29, 2012, respectively.
|
(3) To reflect a
non-cash charge attributable to the amortization of intangible
assets.
|
(4) To reflect a
charge to operating expenses attributable to contingent
consideration related to certain of the Company's
acquisitions.
|
(5) To reflect
certain non-cash interest expense related to the Company's
convertible notes.
|
(6) To reflect
certain costs associated with the Company's acquisition(s) and
integration plans, which primarily include retention costs,
transfer costs, and asset impairments.
|
(7) To reflect
restructuring and other divestiture charges.
|
(8) To reflect a
non-cash fair value adjustment for additional depreciation expense
related to the fair value write-up of fixed assets acquired from
Gen-Probe.
|
(9) To reflect debt
extinguishment costs associated with the Company's voluntary $100
million prepayment on the Term Loan B facility.
|
(10) To reflect a
non-cash adjustment recorded for the fair value write-up of
inventory acquired from Gen-Probe and sold during the reporting
period.
|
(11) To reflect a net
gain resulting from a cash payment received in final settlement of
an agreement, net of costs associated with this
transaction.
|
(12) To reflect the
net impact from miscellaneous transactions during the
period.
|
(13) To reflect an
estimated annual effective tax rate of 34.5% for the three months
ended December 28, 2013 and an annual effective tax rate of 32.0%
for the three months ended December 29, 2012 on a non-GAAP
basis.
|
|
Future Non-GAAP Adjustments:
Future GAAP EPS may be affected by changes in ongoing
assumptions and judgments relating to the Company's acquired
businesses, and may also be affected by nonrecurring, unusual or
unanticipated charges, expenses or gains, all of which are excluded
in the calculation of non-GAAP EPS as described in this press
release. It is therefore not practicable to reconcile non-GAAP EPS
guidance to the most comparable GAAP measure.
Use of Non-GAAP Financial Measures:
The Company has presented the following non-GAAP financial
measures in this press release: revenues; net income; EPS; and
adjusted EBITDA. The Company defines its non-GAAP revenues to
primarily include contingent revenue earned post-acquisition under
the blood screening collaboration which was eliminated under
purchase accounting. 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 its non-GAAP net income and EPS to
exclude: (i) the amortization of intangible assets; (ii)
acquisition-related charges and effects, such as charges for
contingent consideration, transaction costs, integration costs
including retention, and credits and/or charges associated with the
write-up of acquired inventory and fixed assets to fair value, and
the effect of a reduction in revenue primarily related to
contingent revenue under the blood
screening collaboration, described above; (iii) non-cash
interest expense related to amortization of the debt discount for
convertible debt securities; (iv) restructuring and divestiture
charges; (v) non-cash debt extinguishment losses and related
transaction costs; (vi) litigation settlement charges (benefits);
(vii) other-than-temporary impairment losses on investments; (viii)
other one-time, nonrecurring, unusual or infrequent charges,
expenses or gains that may not be indicative of the Company's core
business results; and (ix) income taxes related to such
adjustments.
The Company believes the use of non-GAAP revenues is useful to
investors as it eliminates certain effects of purchase accounting
on its recognition of revenue. The Company believes the use of
non-GAAP net income is useful to investors by eliminating certain
of the more significant effects of its acquisitions and related
activities, non-cash charges resulting from the application of GAAP
to convertible debt instruments with cash settlement features,
charges related to debt extinguishment losses, investment
impairments, litigation settlements, and restructuring and
divestiture initiatives. These non-GAAP measures also reflect how
Hologic manages its businesses internally. In addition to the
adjustments set forth in the calculation of the Company's non-GAAP
net income and EPS, its adjusted EBITDA eliminates the effects of
financing, income taxes and the accounting effects of capital
spending. As with the items eliminated in its calculation of
non-GAAP net income, these items may vary for different companies
for reasons unrelated to the overall operating performance of a
company's business. When analyzing the Company's operating
performance, investors should not consider these non-GAAP financial
measures as a substitute for net income prepared in accordance with
GAAP.
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Investor Relations
and Media Contacts:
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Deborah R. Gordon
Vice President, Investor Relations
(781)
999-7716
deborah.gordon@hologic.com
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Al Kildani
Senior Director, Investor Relations
(858) 410-8653
al.kildani@hologic.com
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SOURCE Hologic, Inc.