News


Hologic Announces Third Quarter Fiscal 2012 Operating Results
Exceeds Non-GAAP EPS Guidance
On-Track to Complete Acquisition of Gen-Probe on or about August 1, 2012
PR Newswire
BEDFORD

BEDFORD, Mass., July 30, 2012 /PRNewswire/ -- Hologic, Inc. (Hologic or the Company) (Nasdaq: HOLX), a leading developer, manufacturer and supplier of premium diagnostics products, medical imaging systems and surgical products dedicated to serving the healthcare needs of women, today announced its results for the third fiscal quarter ended June 23, 2012.

Highlights of the quarter include:

    --  Revenues of $470.2 million.
    --  Net income of $23.6 million, or $0.09 per diluted share, calculated in
        accordance with U.S. generally accepted accounting principles (GAAP).
    --  Non-GAAP adjusted net income of $92.6 million, or $0.35 per diluted
        share, and adjusted EBITDA (non-GAAP adjusted earnings before interest,
        taxes, depreciation and amortization) of $165.8 million. A
        reconciliation of historical GAAP to non-GAAP results is included as an
        attachment to this press release.

Highlights subsequent to the quarter include:

    --  Debt financing committed and regulatory approvals received for Gen-Probe
        Incorporated (Gen-Probe) acquisition.
    --  Hologic's 3D Dimensions Tomosynthesis, 2D Selenia, and 2D Dimensions
        mammography systems placed first, second, and third, respectively, in
        the mammography category in the KLAS annual survey of healthcare
        executives and clinicians.
    --  Hologic's Cervista HPV HR test approved in the Netherlands.

Third quarter fiscal 2012 operating results overview:

Third quarter fiscal 2012 revenues totaled $470.2 million, an increase of 4.2% compared to revenues of $451.1 million in the third quarter of fiscal 2011. This increase primarily resulted from: (i) growth in Breast Health revenues of $6.3 million, or 3.1%, driven by a $6.6 million, or 9.5%, increase in service revenue related to Hologic's increased installed base of digital mammography systems; and (ii) an increase in Diagnostics revenues of $15.3 million, or 10.6%, with the majority due to an increase in international ThinPrep revenues. GYN Surgical and Skeletal Health revenues declined slightly year-over-year by $1.7 million, or 2.1%, and $0.7 million, or 3.1%, respectively. The impact on revenues from changes in foreign currencies from the third quarter of fiscal 2011 was a reduction of approximately $4.3 million.

For the third quarter of fiscal 2012, Hologic reported net income of $23.6 million, or $0.09 per diluted share, compared with net income of $36.2 million, or $0.14 per diluted share, in the third quarter of fiscal 2011.

The Company's non-GAAP adjusted net income increased 8.0% to $92.6 million, or $0.35 per diluted share, in the third quarter of fiscal 2012 compared to $85.7 million, or $0.32 per diluted share, for the same period in the prior year. The Company's fiscal 2012 and 2011 third quarter non-GAAP adjusted net income primarily excludes: (i) a charge of $61.0 million and $59.7 million, respectively, attributable to the amortization of intangible assets; (ii) non-cash interest expense of $15.1 million and $18.2 million, respectively, related to the Company's Convertible Notes; (iii) acquisition-related costs of $5.1 million and $0.7 million, respectively; and (iv) a net charge to operating expenses of $2.2 million and $3.8 million, respectively, attributable to contingent consideration relating to the Company's recent acquisitions. The Company's non-GAAP adjusted net income for the third quarter of fiscal 2012 also primarily excludes a $1.7 million charge for the write off of certain assets and related charges as a result of the Company's decision in the second quarter to cease commercialization of the Adiana product. Both periods also exclude income taxes related to such adjustments.

For the nine months ended June 23, 2012, revenues totaled $1.41 billion, an increase of 6.9% compared to revenues of $1.32 billion in the nine months ended June 25, 2011. This increase resulted from growth in: (i) Breast Health revenues of $39.0 million, or 6.4%, driven by a $21.7 million, or 5.4%, increase in product revenues primarily related to sales of the Company's 2D Dimensions and 3D digital mammography systems, and a $17.4 million, or 8.5%, increase in service revenues; (ii) Diagnostics revenues of $43.8 million, or 10.4%, primarily from growth in international ThinPrep revenues, as well as in revenues from the molecular diagnostics product lines; (iii) GYN Surgical revenues of $6.9 million, or 3.0%, primarily related to growth in sales of the MyoSure hysteroscopic tissue removal system (MyoSure), partially offset by a decrease in NovaSure endometrial ablation (NovaSure) and Adiana permanent contraception (Adiana) system sales; and (iv) Skeletal Health revenues of $2.1 million, or 3.0%, primarily due to an increase in bone densitometry sales.

For the nine months ended June 23, 2012, Hologic reported net income of $4.1 million, or $0.02 per diluted share, compared with net income of $129.6 million, or $0.49 per diluted share, in the nine months ended June 25, 2011. The Company's non-GAAP adjusted net income increased 9.6% to $269.4 million, or $1.01 per diluted share, in the nine months ended June 23, 2012 compared to $245.9 million, or $0.93 per diluted share, for the same period in the prior year. The Company's non-GAAP adjusted net income for the first nine months of fiscal 2012 and 2011 primarily excludes: (i) a charge of $183.0 million and $175.3 million, respectively, attributable to the amortization of intangible assets; (ii) non-cash interest expense of $52.0 million and $54.4 million, respectively, related to the Company's Convertible Notes; (iii) a net charge to operating expenses of $79.1 million and $0.7 million, respectively, attributable to contingent consideration relating to the Company's recent acquisitions; (iv) acquisition-related costs and charges of $7.0 million and $1.9 million, respectively; and (v) a $42.3 million and $29.9 million, respectively, non-cash loss on the exchange of Convertible Notes (recorded in the second and first quarters of fiscal 2012 and 2011, respectively). The Company's non-GAAP adjusted net income for the first nine months of fiscal 2012 also primarily excludes a $20.0 million charge for the write off of certain assets and related charges as a result of the Company's decision to cease commercialization of the Adiana product and a gain of $12.4 million related to the scheduled milestone payment received from KV Pharmaceuticals. The Company's non-GAAP adjusted net income for the first nine months of fiscal 2011 also primarily excludes a net gain on sale of intellectual property of $84.5 million and a $3.3 million charge attributable to the write-up of acquired inventory sold. Both periods also exclude income taxes related to such adjustments.

 

Non-GAAP adjusted net income, non-GAAP adjusted earnings per diluted share (non-GAAP adjusted EPS), and adjusted EBITDA are non-GAAP financial measures. The Company's definitions of these non-GAAP financial measures, and the reconciliations of these historical 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.

"We continue to capitalize on opportunities with leading products that are meeting growing global demand in our markets," said Rob Cascella, President and Chief Executive Officer. "Our position at the forefront of industry innovation is best evidenced by the faster-than-expected shift in orders from our 2D mammography systems to our new 3D breast tomosynthesis. We are pleased with the bookings rate this quarter, which helped us to build a strong backlog heading into our fourth quarter. In addition, although slightly below our estimates, revenues remain strong and stable, and we exceeded our earnings expectations led by double-digit growth in our Diagnostics segment. We are gaining momentum in Diagnostics and look forward to completing the Gen-Probe acquisition, as the transaction will create a leading diagnostics franchise."

    --  Breast Health revenues increased to $211.5 million in the current
        quarter compared to $205.2 million in the prior year, an increase of
        3.1%. Revenue growth this quarter was driven by an increase in service
        revenues related to the Company's growing installed base of digital
        mammography systems, specifically 2D and 3D Dimensions systems. During
        the quarter the Company experienced a significant acceleration in the
        shift of orders away from 2D digital mammography to the new Dimensions
        3D breast tomosynthesis system, as well as customer orders for
        Dimensions systems that were placed, but not shipped, during the third
        quarter of fiscal 2012. As stated in the Company's press release on July
        11, 2012, Hologic expects the majority of these orders to be installed
        in the fourth quarter of fiscal 2012. The customer site readiness
        requirements for tomosynthesis are more extensive than for the 2D
        systems and therefore the accelerated shift from 2D to 3D mammography
        orders has contributed to an initial delay in installations.
        Consequently, the backlog of orders was stronger at the end of the third
        quarter than at the end of the second quarter.

    --  Diagnostics revenues totaled $158.7 million in the current quarter
        compared to $143.4 million the prior year, an increase of 10.6%. Sales
        growth was driven primarily by a combination of higher ThinPrep revenues
        (with the majority from both the addition of TCT and other international
        sales) and strong growth in molecular diagnostics revenues. Incremental
        ThinPrep test revenues from the TCT acquisition were approximately $8.3
        million during the current period (incremental revenues represent the
        total third party price less the original price previously charged to
        TCT). In addition, other incremental Diagnostics revenues from TCT were
        approximately $5.7 million.

    --  GYN Surgical revenues totaled $77.7 million in the current quarter
        compared to $79.4 million in the prior year, a decrease of 2.1%. This
        was driven by a decline in sales of both the NovaSure and Adiana
        systems, almost all of which was offset by growth in MyoSure system
        sales. Adiana system sales were approximately $3.6 million less than the
        prior year as a result of the Company's decision last quarter to
        discontinue sales of the Adiana product line.
    --  Skeletal Health revenues totaled $22.4 million in the current quarter
        compared to $23.1 million in the prior year, a decrease of 3.1%. This
        slight decrease was primarily the result of a reduction in the number of
        bone densitometry system sales, partially offset by an increase in Mini
        C-Arm product sales.

Other Highlights:

Hologic's 3D Dimensions Breast Tomosynthesis System Places First in KLAS Annual Survey of Mammography Equipment Users

On June 27, 2012, the Company announced that its 3D Dimensions breast tomosynthesis, 2D Selenia, and 2D Dimensions mammography systems placed first, second and third, respectively, in the digital mammography category in the KLAS annual survey of healthcare executives and clinicians. For the "2012 Best in KLAS Awards: Medical Equipment & Infrastructure" report, over 100 medical equipment products were rated in more than 30 different categories. The Hologic Dimensions breast Tomosynthesis system received the second highest overall performance score of the 10 Best in KLAS medical equipment categories and ranked first in its category. This is the third year in a row and the fourth time since KLAS began these evaluations in 2007 that a Hologic mammography system has been ranked in the highest position in the category.

Approval of the Cervista HPV HR test in the Netherlands

 

On July 18, 2012, the Company announced the approval in the Netherlands of its Cervista HPV HR test. The Company's HPV HR test utilizes Hologic's proprietary Invader technology to detect 14 high-risk types of HPV that are associated with cervical cancer and precancerous lesions. The Company commenced commercialization immediately following approval.

Hologic has received all required regulatory approvals and secured the necessary debt financing, subject to the execution of definitive documentation, for the acquisition of Gen-Probe. Approval by Gen-Probe stockholders is the last significant remaining condition to closing, and Gen-Probe has scheduled a Special Meeting of Stockholders on July 31, 2012. Gen-Probe stockholders of record as of June 29, 2012 are entitled to vote at the Special Meeting. The transaction is expected to close on or about August 1, 2012.

Financing

On July 19, 2012, the Company announced the pricing of its private placement of $1.0 billion in aggregate principal amount of its 6.25% Senior Notes due 2020 (the "Senior Notes") and that it has received expected pricing on its anticipated $2.80 billion of Senior Secured Credit Facilities to be obtained in connection with its acquisition of Gen-Probe. Based upon the pricing of the Senior Notes and the expected pricing of the Senior Secured Credit Facilities, Hologic anticipates that the initial blended interest yield on the Company's total financing for the Gen-Probe acquisition will be approximately 4.80%, including the amortization of the original issue discount (OID) and excluding the impact of deferred financing costs.

Financial Guidance:

The Company's guidance includes Hologic's current operations and does not include the results of Gen-Probe or other future acquisitions, if any, including the impact of the financing for the Gen Probe acquisition.

Fourth Quarter Fiscal 2012 (Quarter ending September 29, 2012):

    --  The Company expects fourth quarter fiscal 2012 revenues of approximately
        $485 million. Year-over-year, this represents an expected increase in
        revenues of 4% over the fourth quarter of fiscal 2011 revenues of $467.0
        million.
    --  The Company expects non-GAAP adjusted EPS of approximately $0.35 to
        $0.36.

Fiscal 2012 (Year ending September 29, 2012):

    --  The Company expects fiscal 2012 revenues of approximately $1.9 billion.
        Year-over-year, this represents an expected increase in revenues of 6%
        over fiscal 2011 revenues of $1.79 billion.
    --  The Company expects non-GAAP adjusted EPS guidance of approximately
        $1.36 to $1.38.

Hologic may not generate expected revenues and may incur expenses or charges or realize income or gains in fiscal 2012 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.

 

Assuming the Company's acquisition of Gen-Probe is completed on or about August 1, 2012 as anticipated, the Company's future GAAP EPS will be affected by the acquisition Gen-Probe, the financing for that acquisition, and the operations of Gen-Probe following that acquisition. Future GAAP EPS may also be further affected by changes to assumptions and judgments relating to the Company's acquired businesses, nonrecurring, unusual or unanticipated charges, expenses or gains, including those incurred in connection with the Gen-Probe acquisition. Such effects, charges, expenses or gains have been excluded in the calculation of the Company's projected non-GAAP adjusted EPS. It is therefore not practicable to provide a reconciliation of this non-GAAP guidance to the most comparable GAAP measure.

 

 

Conference Call and Webcast:

Hologic's management will host a conference call on Monday, July 30, 2012, at 5:00 p.m. (Eastern) to discuss third quarter fiscal 2012 operating results. Interested participants may listen to the call by dialing 888-349-9582 or 719-325-2182 for international callers and referencing code 3813469 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, August 17, 2012, at 888-203-1112 or 719-457-0820 for international callers, access code 3813469. The Company will also provide a live webcast of the call. Interested participants may access the webcast on the Company's website at www.hologic.com/investors-overview. A PowerPoint presentation related to the conference call has been 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. 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, Adiana, Cervista, Dimensions, Invader, MyoSure, NovaSure, Selenia, TCT 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.

Gen-Probe and associated logos are trademarks and/or registered trademarks of Gen-Probe Incorporated 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 Hologic's plans, objectives, expectations and intentions. Such statements include, without limitation, statements about the timing of the completion of Hologic's acquisition of Gen-Probe, the anticipated benefits thereof, including anticipated future integration of the two companies and the success of that integration, the expected permanent financing for the transaction, other of Hologic's plans, objectives, expectations and intentions relating to that acquisition, Hologic's guidance for its current fiscal year, and other statements that are not historical facts. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including but not limited to: the ability of Hologic to consummate the acquisition of Gen-Probe in a timely manner or at all; satisfaction of the conditions precedent to consummation of the proposed acquisition, including approval by Gen-Probe's stockholders; uncertainties relating to litigation, including pending and future Gen-Probe shareholder lawsuits related to the proposed acquisition; successful completion of anticipated financing arrangements; Hologic's ability to successfully and timely integrate Gen-Probe's operations, product lines, technologies and employees, and realize synergies from the proposed transaction; unknown, underestimated or undisclosed commitments or liabilities; effects of purchase accounting that may be different from expectations; the level of demand for the combined company's products; the ability of the combined company to develop, deliver and support a broad range of products, develop new products, expand its markets and/or develop new markets; and the ability of the combined company to attract, motivate and retain key employees. Moreover, the combined business may be adversely affected by future legislative, regulatory, or tax changes as well as other economic, business and/or competitive factors.

 

As noted above, Hologic's guidance as to the results for its current fiscal year does not reflect any revenues or earnings from pending or future acquisitions, including its pending acquisition of Gen-Probe and the financing thereof. In addition, Hologic may not generate expected revenues and may incur expenses or charges or realize income or gains in fiscal 2012 that could cause actual results to vary from its guidance. Risks and uncertainties that could adversely affect Hologic's business and prospects, and otherwise cause actual results to differ materially from those anticipated, include without limitation: U.S., European and general worldwide economic conditions and related uncertainties; Hologic'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 Hologic'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; manufacturing risks, including Hologic'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; Hologic'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 Hologic's products; risks associated with acquisitions, including without limitation, Hologic'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, and the enhanced risks and challenges associated with Hologic's recent acquisitions in China; the risk of adverse events and product liability claims; 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 Hologic obsolete; competition; the risks of conducting business internationally, including the effect of exchange rate fluctuations on those operations; financing risks, including Hologic's obligation to meet payment obligations and financial covenants under Hologic's leases; and Hologic's ability to attract and retain qualified personnel.

The risks included above are not exhaustive. Other factors that could adversely affect the combined company's business and prospects are described in the filings made by Hologic and Gen-Probe with the SEC. Hologic 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)

                                                                      June 23, 2012                 September 24, 2011
                                                                      -------------                 ------------------
    ASSETS

    CURRENT ASSETS:
    Cash and cash equivalents                                                             $905,606                       $712,869
    Accounts receivable, net                                                               336,437                        318,712
    Inventories                                                                            228,496                        230,544
    Deferred income tax assets                                                              27,570                         39,607
    Prepaid expenses and other current assets                                               36,875                         41,168
    Total current assets                                                                 1,534,984                      1,342,900
                                                                                         ---------                      ---------

    Property and equipment, net                                                            232,746                        238,666
    Intangible assets, net                                                               1,914,556                      2,090,807
    Goodwill                                                                             2,294,492                      2,290,330
    Other assets                                                                            50,016                         46,077
                                                                                            ------                         ------
                                                                                        $6,026,794                     $6,008,780
                                                                                        ==========                     ==========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES:
    Accounts payable                                                                       $55,064                        $63,467
    Accrued expenses                                                                       374,850                        325,327
    Deferred revenue                                                                       127,193                        120,656
    Total current liabilities                                                              557,107                        509,450
                                                                                           -------                        -------

    Convertible notes (principal of $1,725,000)                                          1,542,146                      1,488,580
    Deferred income tax liabilities                                                        844,154                        957,426
    Deferred service obligations- long term                                                 12,987                          9,467
    Other long-term liabilities                                                             66,149                        106,962
                                                                                            ------                        -------
    Total long-term liabilities                                                          2,465,436                      2,562,435
                                                                                         ---------                      ---------

    STOCKHOLDERS' EQUITY:
    Common stock                                                                             2,649                          2,625
    Capital in excess of par value                                                       5,371,764                      5,303,713
    Accumulated deficit                                                                 (2,365,787)                    (2,369,920)
    Accumulated other comprehensive (loss) income                                           (2,857)                         1,995
    Treasury stock, at cost                                                                 (1,518)                        (1,518)
                                                                                            ------                         ------
    Total stockholders' equity                                                           3,004,251                      2,936,895
                                                                                         ---------                      ---------
                                                                                        $6,026,794                     $6,008,780
                                                                                        ==========                     ==========

 

 

                                                                                                                                                 HOLOGIC, INC.
                                                                                                                                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                                                                                  (Unaudited)
                                                                                                                                     (In thousands, except per share data)
                                                                                                                                                                                                                                                                                                           
                                                                                                                                                              Three Months Ended
                                                                  June 23, 2012                                                                                  June 25, 2011
                                                                  -------------                                                                                  -------------
                                                                                                                                                                                                                                                                                                           
    REVENUES
    Product sales                                                                                                                                                                       $384,593                                                                       $372,790
    Service and other revenues                                                                                                                                                            85,635                                                                         78,292
                                                                                                                                                                                          ------                                                                         ------
                                                                                                                                                                                         470,228                                                                        451,082
                                                                                                                                                                                                                                                                                                           
    COSTS AND EXPENSES (1):
    Cost of product sales                                                                                                                                                                134,062                                                                        129,141
    Cost of product sales - amortization of intangible assets                                                                                                                             45,280                                                                         44,877
    Cost of service and other revenues                                                                                                                                                    46,246                                                                         42,503
    Research and development                                                                                                                                                              26,229                                                                         29,325
    Selling and marketing                                                                                                                                                                 76,368                                                                         72,981
    General and administrative                                                                                                                                                            43,421                                                                         39,755
    Amortization of intangible assets                                                                                                                                                     15,733                                                                         14,794
    Contingent consideration                                                                                                                                                               2,226                                                                          3,790
    Other expenses                                                                                                                                                                           136                                                                              -
                                                                                                                                                                                             ---                                                                            ---
                                                                                                                                                                                         389,701                                                                        377,166
                                                                                                                                                                                         -------                                                                        -------
                                                                                                                                                                                                                                                                                                           
    Income from operations                                                                                                                                                                80,527                                                                         73,916
    Interest expense, net                                                                                                                                                                (25,593)                                                                       (28,673)
    Other income (expense), net                                                                                                                                                               73                                                                           (819)
                                                                                                                                                                                             ---                                                                           ----
                                                                                                                                                                                                                                                                                                           
    Income before provision for income taxes                                                                                                                                              55,007                                                                         44,424
    Provision for income taxes                                                                                                                                                            31,413                                                                          8,228
                                                                                                                                                                                          ------                                                                          -----
                                                                                                                                                                                                                                                                                                           
    Net income                                                                                                                                                                           $23,594                                                                        $36,196
                                                                                                                                                                                         =======                                                                        =======
                                                                                                                                                                                                                                                                                                           
    Net income per share:
    Basic                                                                                                                                                                                  $0.09                                                                          $0.14
                                                                                                                                                                                           =====                                                                          =====
    Diluted                                                                                                                                                                                $0.09                                                                          $0.14
                                                                                                                                                                                           =====                                                                          =====
                                                                                                                                                                                                                                                                                                           
    Weighted average number of shares outstanding:
    Basic                                                                                                                                                                                264,609                                                                        261,784
                                                                                                                                                                                         =======                                                                        =======
    Diluted                                                                                                                                                                              267,294                                                                        265,167
                                                                                                                                                                                         =======                                                                        =======

 

    (1) Stock-based compensation
     included in costs and expenses
     during the three months ended June
     23, 2012 was $1,220 for cost of
     revenues, $1,210 for research and
     development, $1,840 for selling
     and marketing and $4,484 for
     general and administrative. Stock-
     based compensation included in
     costs and expenses during the
     three months ended June 25, 2011
     was $992 for cost of revenues,
     $1,081 for research and
     development, $1,342 for selling
     and marketing and $4,364 for
     general and administrative.

 

 

                                                                                                                                                  HOLOGIC, INC.
                                                                                                                                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                                                                                   (Unaudited)
                                                                                                                                      (In thousands, except per share data)
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                               Nine Months Ended
                                                                  June 23, 2012                                                                                  June 25, 2011
                                                                  -------------                                                                                  -------------
                                                                                                                                                                                                                             
    REVENUES
    Product sales                                                                                                                                                                      $1,164,774                                                                     $1,092,345
    Service and other revenues                                                                                                                                                            249,330                                                                        229,959
                                                                                                                                                                                          -------                                                                        -------
                                                                                                                                                                                        1,414,104                                                                      1,322,304
                                                                                                                                                                                                                                                                                                            
    COSTS AND EXPENSES (1):
    Cost of product sales                                                                                                                                                                 420,429                                                                        385,863
    Cost of product sales - amortization of intangible assets                                                                                                                             135,792                                                                        131,478
    Cost of service and other revenues                                                                                                                                                    137,763                                                                        124,981
    Research and development                                                                                                                                                               83,868                                                                         87,817
    Selling and marketing                                                                                                                                                                 232,367                                                                        211,619
    General and administrative                                                                                                                                                            131,319                                                                        119,062
    Amortization of intangible assets                                                                                                                                                      47,204                                                                         43,842
    Contingent consideration                                                                                                                                                               79,098                                                                            670
    Gain on sale of intellectual property, net                                                                                                                                            (12,424)                                                                       (84,502)
    Other expenses                                                                                                                                                                          1,268                                                                            450
                                                                                                                                                                                        1,256,684                                                                      1,021,280
                                                                                                                                                                                        ---------                                                                      ---------
                                                                                                                                                                                                                                                                                                            
    Income from operations                                                                                                                                                                157,420                                                                        301,024
    Interest expense                                                                                                                                                                      (83,614)                                                                       (85,767)
    Other income, net                                                                                                                                                                       4,844                                                                            414
    Loss on debt extinguishment                                                                                                                                                           (42,347)                                                                       (29,891)
                                                                                                                                                                                          -------                                                                        -------
                                                                                                                                                                                                                                                                                                            
    Income before provision for income taxes                                                                                                                                               36,303                                                                        185,780
    Provision for income taxes                                                                                                                                                             32,170                                                                         56,199
                                                                                                                                                                                           ------                                                                         ------
                                                                                                                                                                                                                                                                                                            
    Net income                                                                                                                                                                             $4,133                                                                       $129,581
                                                                                                                                                                                           ======                                                                       ========
                                                                                                                                                                                                                                                                                                            
    Net income per share:
    Basic                                                                                                                                                                                   $0.02                                                                          $0.50
                                                                                                                                                                                            =====                                                                          =====
    Diluted                                                                                                                                                                                 $0.02                                                                          $0.49
                                                                                                                                                                                            =====                                                                          =====
                                                                                                                                                                                                                                                                                                            
    Weighted average number of shares outstanding:
    Basic                                                                                                                                                                                 263,742                                                                        260,744
                                                                                                                                                                                          =======                                                                        =======
    Diluted                                                                                                                                                                               266,359                                                                        264,114
                                                                                                                                                                                          =======                                                                        =======

 

    (1) Stock-based compensation
     included in costs and expenses
     during the nine months ended June
     23, 2012 was $3,602 for cost of
     revenues, $3,688 for research and
     development, $5,234 for selling
     and marketing and $13,836 for
     general and administrative. Stock-
     based compensation included in
     costs and expenses during the nine
     months ended June 25, 2011 was
     $3,533 for cost of revenues,
     $3,633 for research and
     development, $4,486 for selling
     and marketing and $15,593 for
     general and administrative.

 

 

                                                                                                                                                            HOLOGIC, INC.
                                                                                                                      RECONCILIATION OF GAAP EPS AND NET INCOME TO NON-GAAP ADJUSTED EPS, NET INCOME AND EBITDA
                                                                                                                                                             (Unaudited)
                                                                                                                                              (In thousands, except earnings per share)
                                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                   
                                                             Three Months Ended                                                                          Three Months Ended
                                                                June 23, 2012                                                                               June 25, 2011
                                                                -------------                                                                               -------------
                                                                                                                                                                                            
    EARNINGS PER SHARE
    GAAP earnings per share- Diluted                                                                                                                                                 $0.09                                                                                                    $0.14
    Adjustments to net income (as detailed below)                                                                                                                                     0.26                                                                                                     0.18
                                                                                                                                                                                      ----                                                                                                     ----
    Non-GAAP adjusted earnings per share- Diluted                                                                                                                                    $0.35                          (1)                                                                       $0.32                          (1)
                                                                                                                                                                                     =====                                                                                                    =====
                                                                                                                                                                                                                                                                                                                                 
    NET INCOME
    GAAP net income                                                                                                                                                                $23,594                                                                                                  $36,196
    Adjustments:
    Amortization of intangible assets                                                                                                                                               61,013                                                                                                   59,671
    Non-cash interest expense relating to convertible notes                                                                                                                         15,119                                                                                                   18,229
    Acquisition-related costs                                                                                                                                                        5,078                                                                                                      652
    Contingent consideration                                                                                                                                                         2,226                                                                                                    3,790
    Adiana closure costs                                                                                                                                                             1,696                                                                                                        -
    Other charges                                                                                                                                                                      124                                                                                                      345
    Income tax effect of reconciling items                                                                                                                                         (16,276)                         (2)                                                                     (33,147)                         (2)
    Non-GAAP adjusted net income                                                                                                                                                   $92,574                                                                                                  $85,736
                                                                                                                                                                                   =======                                                                                                  =======
                                                                                                                                                                                                                                                                                                                                 
    EBITDA
    Non-GAAP adjusted net income                                                                                                                                                   $92,574                                                                                                  $85,736
    Interest expense, net, not adjusted above                                                                                                                                        9,593                                                                                                    9,959
    Provision for income taxes                                                                                                                                                      47,689                                                                                                   41,375
    Depreciation expense                                                                                                                                                            15,926                                                                                                   17,482
                                                                                                                                                                                    ------                                                                                                   ------
    Adjusted EBITDA                                                                                                                                                               $165,782                                                                                                 $154,552
                                                                                                                                                                                  ========                                                                                                 ========

 


    EXPLANATORY NOTES:
    ------------------
    (1) Non-GAAP adjusted earnings per share was calculated based on
     267,294 and 265,167 weighted average diluted shares outstanding for the
     three months ended June 23, 2012 and June 25, 2011, respectively.

    (2) To reflect an estimated annual effective tax rate of 34.0% and 33.5%
     on a non-GAAP basis for the three months ended June 23, 2012 and June
     25, 2011, respectively.

 

 

                                                                                                                                                          HOLOGIC, INC.
                                                                                                                    RECONCILIATION OF GAAP EPS AND NET INCOME TO NON-GAAP ADJUSTED EPS, NET INCOME AND EBITDA
                                                                                                                                                           (Unaudited)
                                                                                                                                            (In thousands, except earnings per share)
                                                                                                                                                                                                                                                                                                                             
                                                                                                                                                                                                                                                 
                                                              Nine Months Ended                                                                           Nine Months Ended
                                                                June 23, 2012                                                                               June 25, 2011
                                                                -------------                                                                               -------------
                                                                                                                                                                                            
    EARNINGS PER SHARE
    GAAP earnings per share- Diluted                                                                                                                                                 $0.02                                                                                                  $0.49
    Adjustments to net income (as detailed below)                                                                                                                                     0.99                                                                                                   0.44
                                                                                                                                                                                      ----                                                                                                   ----
    Non-GAAP adjusted earnings per share- Diluted                                                                                                                                    $1.01                         (1)                                                                      $0.93                        (1)
                                                                                                                                                                                     =====                                                                                                  =====
                                                                                                                                                                                                                                                                                                                             
    NET INCOME
    GAAP net income                                                                                                                                                                 $4,133                                                                                               $129,581
    Adjustments:
    Amortization of intangible assets                                                                                                                                              182,996                                                                                                175,320
    Non-cash interest expense relating to convertible notes                                                                                                                         52,018                                                                                                 54,438
    Non-cash loss on convertible notes exchange                                                                                                                                     42,347                                                                                                 29,891
    Gain on sale of intellectual property, net                                                                                                                                     (12,424)                                                                                               (84,502)
    Acquisition-related costs                                                                                                                                                        6,982                                                                                                  1,949
    Fair value write up of acquired inventory sold                                                                                                                                       -                                                                                                  3,298
    Contingent consideration                                                                                                                                                        79,098                                                                                                    670
    Adiana closure costs                                                                                                                                                            19,980                                                                                                      -
    Other charges                                                                                                                                                                      917                                                                                                  2,895
    Income tax effect of reconciling items                                                                                                                                        (106,624)                        (2)                                                                    (67,664)                       (2)
    Non-GAAP adjusted net income                                                                                                                                                  $269,423                                                                                               $245,876
                                                                                                                                                                                  ========                                                                                               ========
                                                                                                                                                                                                                                                                                                                             
    EBITDA
    Non-GAAP adjusted net income                                                                                                                                                  $269,423                                                                                               $245,876
    Interest expense, net, not adjusted above                                                                                                                                       29,121                                                                                                 29,977
    Provision for income taxes                                                                                                                                                     138,794                                                                                                123,863
    Depreciation expense                                                                                                                                                            48,107                                                                                                 51,038
                                                                                                                                                                                    ------                                                                                                 ------
    Adjusted EBITDA                                                                                                                                                               $485,445                                                                                               $450,754
                                                                                                                                                                                  ========                                                                                               ========

 

    EXPLANATORY NOTES:
    ------------------
    (1) Non-GAAP adjusted earnings per
     share was calculated based on 266,359
     and 264,114 weighted average diluted
     shares outstanding for the nine months
     ended June 23, 2012 and  June 25, 2011,
     respectively.

    (2) To reflect an estimated annual
     effective tax rate of 34% and 33.5% on
     a non-GAAP basis for the nine months
     ended June 23, 2012 and June 25, 2012,
     respectively.

 

 

Use of Non-GAAP Financial Measures:

Hologic has presented the following non-GAAP financial measures in this press release: adjusted net income; adjusted EPS; and adjusted EBITDA. Hologic defines adjusted EBITDA as its non-GAAP adjusted net income plus interest expense, net, income taxes, and depreciation and amortization expense included in its non-GAAP adjusted net income. Hologic defines its non-GAAP adjusted net income and adjusted EPS to exclude: (i) the amortization of intangible assets; (ii) acquisition-related charges and effects, such as charges for contingent consideration (comprised of (a) adjustments for changes in the fair value of the contingent consideration liabilities initially recorded as part of the purchase price of an acquisition as required by GAAP, and (b) contingent consideration that is tied to continuing employment of the former shareholders and employees which is recorded as compensation expense), transaction costs, and charges associated with the write-up of acquired inventory to fair value; (iii) non-cash interest expense related to amortization of the debt discount for convertible debt securities; (iv) divestiture and restructuring charges; (v) non-cash loss on exchange of convertible notes; (vi) litigation settlement charges (benefits); (vii) other-than-temporary impairment losses on equity investments; (viii) other one-time, nonrecurring, unusual or infrequent charges, expenses or gains that may not be indicative of Hologic's core business results; and (ix) income taxes related to such adjustments.

Hologic believes the use of non-GAAP adjusted 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, equity investment impairments, litigation settlements, and divestiture and restructuring initiatives. These measures also reflect how Hologic manages its businesses internally. In addition to the adjustments set forth in the calculation of Hologic's non-GAAP adjusted net income and adjusted EPS, its non-GAAP 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 adjusted net income, these items may vary for different companies for reasons unrelated to the overall operating performance of a company's business. When analyzing Hologic's operating performance, investors should not consider these non-GAAP financial measures as a substitute for net income prepared in accordance with GAAP.

Investor Relations and Media Contact:

Deborah R. Gordon
Vice President, Investor Relations
Hologic, Inc.
(781) 999-7716

 

 

 

SOURCE Hologic, Inc.

 

SOURCE: Hologic, Inc.

 

Hologic Announces Third Quarter Fiscal 2012 Operating Results

Exceeds Non-GAAP EPS Guidance

On-Track to Complete Acquisition of Gen-Probe on or about August 1, 2012

PR Newswire

BEDFORD, Mass., July 30, 2012 /PRNewswire/ -- Hologic, Inc. (Hologic or the Company) (Nasdaq: HOLX), a leading developer, manufacturer and supplier of premium diagnostics products, medical imaging systems and surgical products dedicated to serving the healthcare needs of women, today announced its results for the third fiscal quarter ended June 23, 2012.

Highlights of the quarter include:

  • Revenues of $470.2 million.
  • Net income of $23.6 million, or $0.09 per diluted share, calculated in accordance with U.S. generally accepted accounting principles (GAAP).
  • Non-GAAP adjusted net income of $92.6 million, or $0.35 per diluted share, and adjusted EBITDA (non-GAAP adjusted earnings before interest, taxes, depreciation and amortization) of $165.8 million. A reconciliation of historical GAAP to non-GAAP results is included as an attachment to this press release.

Highlights subsequent to the quarter include:

  • Debt financing committed and regulatory approvals received for Gen-Probe Incorporated (Gen-Probe) acquisition.
  • Hologic's 3D Dimensions Tomosynthesis, 2D Selenia, and 2D Dimensions mammography systems placed first, second, and third, respectively, in the mammography category in the KLAS annual survey of healthcare executives and clinicians.
  • Hologic's Cervista HPV HR test approved in the Netherlands.

Third quarter fiscal 2012 operating results overview:

Third quarter fiscal 2012 revenues totaled $470.2 million, an increase of 4.2% compared to revenues of $451.1 million in the third quarter of fiscal 2011. This increase primarily resulted from: (i) growth in Breast Health revenues of $6.3 million, or 3.1%, driven by a $6.6 million, or 9.5%, increase in service revenue related to Hologic's increased installed base of digital mammography systems; and (ii) an increase in Diagnostics revenues of $15.3 million, or 10.6%, with the majority due to an increase in international ThinPrep revenues. GYN Surgical and Skeletal Health revenues declined slightly year-over-year by $1.7 million, or 2.1%, and $0.7 million, or 3.1%, respectively. The impact on revenues from changes in foreign currencies from the third quarter of fiscal 2011 was a reduction of approximately $4.3 million.

For the third quarter of fiscal 2012, Hologic reported net income of $23.6 million, or $0.09 per diluted share, compared with net income of $36.2 million, or $0.14 per diluted share, in the third quarter of fiscal 2011.

The Company's non-GAAP adjusted net income increased 8.0% to $92.6 million, or $0.35 per diluted share, in the third quarter of fiscal 2012 compared to $85.7 million, or $0.32 per diluted share, for the same period in the prior year. The Company's fiscal 2012 and 2011 third quarter non-GAAP adjusted net income primarily excludes: (i) a charge of $61.0 million and $59.7 million, respectively, attributable to the amortization of intangible assets; (ii) non-cash interest expense of $15.1 million and $18.2 million, respectively, related to the Company's Convertible Notes; (iii) acquisition-related costs of $5.1 million and $0.7 million, respectively; and (iv) a net charge to operating expenses of $2.2 million and $3.8 million, respectively, attributable to contingent consideration relating to the Company's recent acquisitions. The Company's non-GAAP adjusted net income for the third quarter of fiscal 2012 also primarily excludes a $1.7 million charge for the write off of certain assets and related charges as a result of the Company's decision in the second quarter to cease commercialization of the Adiana product. Both periods also exclude income taxes related to such adjustments.

For the nine months ended June 23, 2012, revenues totaled $1.41 billion, an increase of 6.9% compared to revenues of $1.32 billion in the nine months ended June 25, 2011. This increase resulted from growth in: (i) Breast Health revenues of $39.0 million, or 6.4%, driven by a $21.7 million, or 5.4%, increase in product revenues primarily related to sales of the Company's 2D Dimensions  and 3D digital mammography systems, and a $17.4 million, or 8.5%, increase in service revenues; (ii) Diagnostics revenues of $43.8 million, or 10.4%, primarily from growth in international ThinPrep revenues, as well as in revenues from the molecular diagnostics product lines; (iii) GYN Surgical revenues of $6.9 million, or 3.0%, primarily related to growth in sales of the MyoSure hysteroscopic tissue removal system (MyoSure), partially offset by a decrease in NovaSure endometrial ablation (NovaSure) and Adiana permanent contraception (Adiana) system sales; and (iv) Skeletal Health revenues of $2.1 million, or 3.0%, primarily due to an increase in bone densitometry sales.

For the nine months ended June 23, 2012, Hologic reported net income of $4.1 million, or $0.02 per diluted share, compared with net income of $129.6 million, or $0.49 per diluted share, in the nine months ended June 25, 2011. The Company's non-GAAP adjusted net income increased 9.6% to $269.4 million, or $1.01 per diluted share, in the nine months ended June 23, 2012 compared to $245.9 million, or $0.93 per diluted share, for the same period in the prior year. The Company's non-GAAP adjusted net income for the first nine months of fiscal 2012 and 2011 primarily excludes: (i) a charge of $183.0 million and $175.3 million, respectively, attributable to the amortization of intangible assets; (ii) non-cash interest expense of $52.0 million and $54.4 million, respectively, related to the Company's Convertible Notes; (iii) a net charge to operating expenses of $79.1 million and $0.7 million, respectively, attributable to contingent consideration relating to the Company's recent acquisitions; (iv) acquisition-related costs and charges of $7.0 million and $1.9 million, respectively; and (v) a $42.3 million and $29.9 million, respectively, non-cash loss on the exchange of Convertible Notes (recorded in the second and first quarters of fiscal 2012 and 2011, respectively). The Company's non-GAAP adjusted net income for the first nine months of fiscal 2012 also primarily excludes a $20.0 million charge for the write off of certain assets and related charges as a result of the Company's decision to cease commercialization of the Adiana product and a gain of $12.4 million related to the scheduled milestone payment received from KV Pharmaceuticals. The Company's non-GAAP adjusted net income for the first nine months of fiscal 2011 also primarily excludes a net gain on sale of intellectual property of $84.5 million and a $3.3 million charge attributable to the write-up of acquired inventory sold. Both periods also exclude income taxes related to such adjustments. 

 

Non-GAAP adjusted net income, non-GAAP adjusted earnings per diluted share (non-GAAP adjusted EPS), and adjusted EBITDA are non-GAAP financial measures. The Company's definitions of these non-GAAP financial measures, and the reconciliations of these historical 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.

"We continue to capitalize on opportunities with leading products that are meeting growing global demand in our markets," said Rob Cascella, President and Chief Executive Officer. "Our position at the forefront of industry innovation is best evidenced by the faster-than-expected shift in orders from our 2D mammography systems to our new 3D breast tomosynthesis. We are pleased with the bookings rate this quarter, which helped us to build a strong backlog heading into our fourth quarter. In addition, although slightly below our estimates, revenues remain strong and stable, and we exceeded our earnings expectations led by double-digit growth in our Diagnostics segment. We are gaining momentum in Diagnostics and look forward to completing the Gen-Probe acquisition, as the transaction will create a leading diagnostics franchise."

Third quarter fiscal 2012 revenue overview by segment (as compared to the third quarter fiscal 2011):
  • Breast Health revenues increased to $211.5 million in the current quarter compared to $205.2 million in the prior year, an increase of 3.1%. Revenue growth this quarter was driven by an increase in service revenues related to the Company's growing installed base of digital mammography systems, specifically 2D and 3D Dimensions systems. During the quarter the Company experienced a significant acceleration in the shift of orders away from 2D digital mammography to the new Dimensions 3D breast tomosynthesis system, as well as customer orders for Dimensions systems that were placed, but not shipped, during the third quarter of fiscal 2012. As stated in the Company's press release on July 11, 2012, Hologic expects the majority of these orders to be installed in the fourth quarter of fiscal 2012. The customer site readiness requirements for tomosynthesis are more extensive than for the 2D systems and therefore the accelerated shift from 2D to 3D mammography orders has contributed to an initial delay in installations. Consequently, the backlog of orders was stronger at the end of the third quarter than at the end of the second quarter.
  • Diagnostics revenues totaled $158.7 million in the current quarter compared to $143.4 million the prior year, an increase of 10.6%. Sales growth was driven primarily by a combination of higher ThinPrep revenues (with the majority from both the addition of TCT and other international sales) and strong growth in molecular diagnostics revenues. Incremental ThinPrep test revenues from the TCT acquisition were approximately $8.3 million during the current period (incremental revenues represent the total third party price less the original price previously charged to TCT). In addition, other incremental Diagnostics revenues from TCT were approximately $5.7 million.
  • GYN Surgical revenues totaled $77.7 million in the current quarter compared to $79.4 million in the prior year, a decrease of 2.1%. This was driven by a decline in sales of both the NovaSure and Adiana systems, almost all of which was offset by growth in MyoSure system sales. Adiana system sales were approximately $3.6 million less than the prior year as a result of the Company's decision last quarter to discontinue sales of the Adiana product line.
  • Skeletal Health revenues totaled $22.4 million in the current quarter compared to $23.1 million in the prior year, a decrease of 3.1%. This slight decrease was primarily the result of a reduction in the number of bone densitometry system sales, partially offset by an increase in Mini C-Arm product sales.

Other Highlights:

Hologic's 3D Dimensions Breast Tomosynthesis System Places First in KLAS Annual Survey of Mammography Equipment Users

On June 27, 2012, the Company announced that its 3D Dimensions breast tomosynthesis, 2D Selenia, and 2D Dimensions mammography systems placed first, second and third, respectively, in the digital mammography category in the  KLAS annual survey of healthcare executives and clinicians. For the "2012 Best in KLAS Awards: Medical Equipment & Infrastructure" report, over 100 medical equipment products were rated in more than 30 different categories. The Hologic Dimensions breast Tomosynthesis system received the second highest overall performance score of the 10 Best in KLAS medical equipment categories and ranked first in its category. This is the third year in a row and the fourth time since KLAS began these evaluations in 2007 that a Hologic mammography system has been ranked in the highest position in the category.

Approval of the Cervista HPV HR test in the Netherlands

 

On July 18, 2012, the Company announced the approval in the Netherlands of its Cervista HPV HR test. The Company's HPV HR test utilizes Hologic's proprietary Invader technology to detect 14 high-risk types of HPV that are associated with cervical cancer and precancerous lesions. The Company commenced commercialization immediately following approval.

Update on Gen-Probe Acquisition:

Hologic has received all required regulatory approvals and secured the necessary debt financing, subject to the execution of definitive documentation, for the acquisition of Gen-Probe. Approval by Gen-Probe stockholders is the last significant remaining condition to closing, and Gen-Probe has scheduled a Special Meeting of Stockholders on July 31, 2012. Gen-Probe stockholders of record as of June 29, 2012 are entitled to vote at the Special Meeting. The transaction is expected to close on or about August 1, 2012. 

Financing

On July 19, 2012, the Company announced the pricing of its private placement of $1.0 billion in aggregate principal amount of its 6.25% Senior Notes due 2020 (the "Senior Notes") and that it has received expected pricing on its anticipated $2.80 billion of Senior Secured Credit Facilities to be obtained in connection with its acquisition of Gen-Probe. Based upon the pricing of the Senior Notes and the expected pricing of the Senior Secured Credit Facilities, Hologic anticipates that the initial blended interest yield on the Company's total financing for the Gen-Probe acquisition will be approximately 4.80%, including the amortization of the original issue discount (OID) and excluding the impact of deferred financing costs.

Financial Guidance:

The Company's guidance includes Hologic's current operations and does not include the results of Gen-Probe or other future acquisitions, if any, including the impact of the financing for the Gen Probe acquisition.

Fourth Quarter Fiscal 2012 (Quarter ending September 29, 2012):

  • The Company expects fourth quarter fiscal 2012 revenues of approximately $485 million. Year-over-year, this represents an expected increase in revenues of 4% over the fourth quarter of fiscal 2011 revenues of $467.0 million.
  • The Company expects non-GAAP adjusted EPS of approximately $0.35 to $0.36.

Fiscal 2012 (Year ending September 29, 2012):

  • The Company expects fiscal 2012 revenues of approximately $1.9 billion. Year-over-year, this represents an expected increase in revenues of 6% over fiscal 2011 revenues of $1.79 billion.
  • The Company expects non-GAAP adjusted EPS guidance of approximately $1.36 to $1.38.

Hologic may not generate expected revenues and may incur expenses or charges or realize income or gains in fiscal 2012 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.

 

Assuming the Company's acquisition of Gen-Probe is completed on or about August 1, 2012 as anticipated, the Company's future GAAP EPS will be affected by the acquisition Gen-Probe, the financing for that acquisition, and the operations of Gen-Probe following that acquisition. Future GAAP EPS may also be further affected by changes to assumptions and judgments relating to the Company's acquired businesses, nonrecurring, unusual or unanticipated charges, expenses or gains, including those incurred in connection with the Gen-Probe acquisition. Such effects, charges, expenses or gains have been excluded in the calculation of the Company's projected non-GAAP adjusted EPS. It is therefore not practicable to provide a reconciliation of this non-GAAP guidance to the most comparable GAAP measure.

 

 

Conference Call and Webcast:

Hologic's management will host a conference call on Monday, July 30, 2012, at 5:00 p.m. (Eastern) to discuss third quarter fiscal 2012 operating results. Interested participants may listen to the call by dialing 888-349-9582 or 719-325-2182 for international callers and referencing code 3813469 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, August 17, 2012, at 888-203-1112 or 719-457-0820 for international callers, access code 3813469. The Company will also provide a live webcast of the call. Interested participants may access the webcast on the Company's website at www.hologic.com/investors-overview. A PowerPoint presentation related to the conference call has been 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. 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, Adiana, Cervista, Dimensions, Invader, MyoSure, NovaSure, Selenia, TCT 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.

Gen-Probe and associated logos are trademarks and/or registered trademarks of Gen-Probe Incorporated 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 Hologic's plans, objectives, expectations and intentions. Such statements include, without limitation, statements about the timing of the completion of Hologic's acquisition of Gen-Probe, the anticipated benefits thereof, including anticipated future integration of the two companies and the success of that integration, the expected permanent financing for the transaction, other of Hologic's plans, objectives, expectations and intentions relating to that acquisition, Hologic's guidance for its current fiscal year, and other statements that are not historical facts. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including but not limited to: the ability of Hologic to consummate the acquisition of Gen-Probe in a timely manner or at all; satisfaction of the conditions precedent to consummation of the proposed acquisition, including approval by Gen-Probe's stockholders; uncertainties relating to litigation, including pending and future Gen-Probe shareholder lawsuits related to the proposed acquisition; successful completion of anticipated financing arrangements; Hologic's ability to successfully and timely integrate Gen-Probe's operations, product lines, technologies and employees, and realize synergies from the proposed transaction; unknown, underestimated or undisclosed commitments or liabilities; effects of purchase accounting that may be different from expectations; the level of demand for the combined company's products; the ability of the combined company to develop, deliver and support a broad range of products, develop new products, expand its markets and/or develop new markets; and the ability of the combined company to attract, motivate and retain key employees. Moreover, the combined business may be adversely affected by future legislative, regulatory, or tax changes as well as other economic, business and/or competitive factors.

 

As noted above, Hologic's guidance as to the results for its current fiscal year does not reflect any revenues or earnings from pending or future acquisitions, including its pending acquisition of Gen-Probe and the financing thereof. In addition, Hologic may not generate expected revenues and may incur expenses or charges or realize income or gains in fiscal 2012 that could cause actual results to vary from its guidance. Risks and uncertainties that could adversely affect Hologic's business and prospects, and otherwise cause actual results to differ materially from those anticipated, include without limitation: U.S., European and general worldwide economic conditions and related uncertainties; Hologic'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 Hologic'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; manufacturing risks, including Hologic'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; Hologic'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 Hologic's products; risks associated with acquisitions, including without limitation, Hologic'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, and the enhanced risks and challenges associated with Hologic's recent acquisitions in China; the risk of adverse events and product liability claims; 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 Hologic obsolete; competition; the risks of conducting business internationally, including the effect of exchange rate fluctuations on those operations; financing risks, including Hologic's obligation to meet payment obligations and financial covenants under Hologic's leases; and Hologic's ability to attract and retain qualified personnel.

The risks included above are not exhaustive. Other factors that could adversely affect the combined company's business and prospects are described in the filings made by Hologic and Gen-Probe with the SEC. Hologic 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)

         
 

June 23, 2012

 

September 24, 2011

 

ASSETS

       
         

CURRENT ASSETS:

       

Cash and cash equivalents

$                    905,606

 

$                        712,869

 

Accounts receivable, net

336,437

 

318,712

 

Inventories

228,496

 

230,544

 

Deferred income tax assets

27,570

 

39,607

 

Prepaid expenses and other current assets

36,875

 

41,168

 

Total current assets

1,534,984

 

1,342,900

 
         

Property and equipment, net

232,746

 

238,666

 

Intangible assets, net

1,914,556

 

2,090,807

 

Goodwill

2,294,492

 

2,290,330

 

Other assets

50,016

 

46,077

 
 

$                 6,026,794

 

$                     6,008,780

 
         

LIABILITIES AND STOCKHOLDERS' EQUITY

       
         

CURRENT LIABILITIES:

       

Accounts payable

$                      55,064

 

$                          63,467

 

Accrued expenses

374,850

 

325,327

 

Deferred revenue

127,193

 

120,656

 

Total current liabilities

557,107

 

509,450

 
         

Convertible notes (principal of $1,725,000)

1,542,146

 

1,488,580

 

Deferred income tax liabilities 

844,154

 

957,426

 

Deferred service obligations- long term

12,987

 

9,467

 

Other long-term liabilities

66,149

 

106,962

 

Total long-term liabilities

2,465,436

 

2,562,435

 
         

STOCKHOLDERS' EQUITY:

       

Common stock

2,649

 

2,625

 

Capital in excess of par value

5,371,764

 

5,303,713

 

Accumulated deficit

(2,365,787)

 

(2,369,920)

 

Accumulated other comprehensive (loss) income

(2,857)

 

1,995

 

Treasury stock, at cost

(1,518)

 

(1,518)

 

Total stockholders' equity

3,004,251

 

2,936,895

 
 

$                 6,026,794

 

$                     6,008,780

 

 

 

HOLOGIC, INC.

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

         
 

Three Months Ended

 

June 23, 2012

 

June 25, 2011

 
         

REVENUES 

       

Product sales

$                      384,593

 

$                      372,790

 

Service and other revenues

85,635

 

78,292

 
 

470,228

 

451,082

 
         

COSTS AND EXPENSES (1):

       

Cost of product sales

134,062

 

129,141

 

Cost of product sales – amortization of intangible assets 

45,280

 

44,877

 

Cost of service and other revenues

46,246

 

42,503

 

Research and development 

26,229

 

29,325

 

Selling and marketing 

76,368

 

72,981

 

General and administrative 

43,421

 

39,755

 

Amortization of intangible assets 

15,733

 

14,794

 

Contingent consideration 

2,226

 

3,790

 

Other expenses

136

 

-

 
 

389,701

 

377,166

 
         

Income from operations 

80,527

 

73,916

 

Interest expense, net

(25,593)

 

(28,673)

 

Other income (expense), net

73

 

(819)

 
         

Income before provision for income taxes 

55,007

 

44,424

 

Provision for income taxes 

31,413

 

8,228

 
         

Net income

$                        23,594

 

$                        36,196

 
         

Net income per share: 

       

Basic

$                            0.09

 

$                            0.14

 

Diluted

$                            0.09

 

$                            0.14

 
         

Weighted average number of shares outstanding:

       

Basic

264,609

 

261,784

 

Diluted

267,294

 

265,167

 
         
 

(1) Stock-based compensation included in costs and expenses during the three months ended June 23, 2012 was $1,220 for cost of revenues, $1,210 for research and development, $1,840 for selling and marketing and $4,484 for general and administrative. Stock-based compensation included in costs and expenses during the three months ended June 25, 2011 was $992 for cost of revenues, $1,081 for research and development, $1,342 for selling and marketing and $4,364 for general and administrative.

 

 

HOLOGIC, INC.

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

         
 

Nine Months Ended

 

June 23, 2012

 

June 25, 2011

 
       

REVENUES 

       

Product sales

$                   1,164,774

 

$                   1,092,345

 

Service and other revenues

249,330

 

229,959

 
 

1,414,104

 

1,322,304

 
         

COSTS AND EXPENSES (1):

       

Cost of product sales

420,429

 

385,863

 

Cost of product sales – amortization of intangible assets 

135,792

 

131,478

 

Cost of service and other revenues

137,763

 

124,981

 

Research and development 

83,868

 

87,817

 

Selling and marketing 

232,367

 

211,619

 

General and administrative 

131,319

 

119,062

 

Amortization of intangible assets 

47,204

 

43,842

 

Contingent consideration

79,098

 

670

 

Gain on sale of intellectual property, net

(12,424)

 

(84,502)

 

Other expenses

1,268

 

450

 
 

1,256,684

 

1,021,280

 
         

Income from operations 

157,420

 

301,024

 

Interest expense

(83,614)

 

(85,767)

 

Other income, net

4,844

 

414

 

Loss on debt extinguishment

(42,347)

 

(29,891)

 
         

Income before provision for income taxes 

36,303

 

185,780

 

Provision for income taxes 

32,170

 

56,199

 
         

Net income

$                          4,133

 

$                      129,581

 
         

Net income per share: 

       

Basic

$                            0.02

 

$                            0.50

 

Diluted

$                            0.02

 

$                            0.49

 
         

Weighted average number of shares outstanding:

       

Basic

263,742

 

260,744

 

Diluted

266,359

 

264,114

 
         
 

(1) Stock-based compensation included in costs and expenses during the nine months ended June 23, 2012 was $3,602 for cost of revenues, $3,688 for research and development, $5,234 for selling and marketing and $13,836 for general and administrative. Stock-based compensation included in costs and expenses during the nine months ended June 25, 2011 was $3,533 for cost of revenues, $3,633 for research and development, $4,486 for selling and marketing and $15,593 for general and administrative.

 

 

HOLOGIC, INC.

RECONCILIATION OF GAAP EPS AND NET INCOME TO NON-GAAP ADJUSTED EPS, NET INCOME AND EBITDA

(Unaudited)

(In thousands, except earnings per share)

           
       

Three Months Ended
June 23, 2012

 

Three Months Ended
June 25, 2011

     

EARNINGS PER SHARE

         

GAAP earnings per share- Diluted

$                           0.09

   

$                           0.14

 

Adjustments to net income (as detailed below)

0.26

   

0.18

 

Non-GAAP adjusted earnings per share- Diluted

$                           0.35

(1)

 

$                           0.32

(1)

           

NET INCOME

         

GAAP net income 

$                       23,594

   

$                       36,196

 

Adjustments:

         

Amortization of intangible assets  

61,013

   

59,671

 

Non-cash interest expense relating to convertible notes

15,119

   

18,229

 

Acquisition-related costs

5,078

   

652

 

Contingent consideration 

2,226

   

3,790

 

Adiana closure costs

1,696

   

-

 

Other charges

124

   

345

 

Income tax effect of reconciling items

(16,276)

(2)

 

(33,147)

(2)

Non-GAAP adjusted net income

$                       92,574

   

$                       85,736

 
           

EBITDA

         

Non-GAAP adjusted net income

$                       92,574

   

$                       85,736

 

Interest expense, net, not adjusted above

9,593

   

9,959

 

Provision for income taxes

47,689

   

41,375

 

Depreciation expense

15,926

   

17,482

 

Adjusted EBITDA

$                     165,782

   

$                     154,552

 
           
 
           

EXPLANATORY NOTES:

         

(1) Non-GAAP adjusted earnings per share was calculated based on 267,294 and 265,167 weighted average diluted shares outstanding for the three months ended June 23, 2012 and June 25, 2011, respectively.

           

(2) To reflect an estimated annual effective tax rate of 34.0% and 33.5% on a non-GAAP basis for the three months ended June 23, 2012 and June 25, 2011, respectively.

           

 

 

HOLOGIC, INC.

RECONCILIATION OF GAAP EPS AND NET INCOME TO NON-GAAP ADJUSTED EPS, NET INCOME AND EBITDA

(Unaudited)

(In thousands, except earnings per share)

           
       

Nine Months Ended
June 23, 2012

 

Nine Months Ended
June 25, 2011

     

EARNINGS PER SHARE

         

GAAP earnings per share- Diluted

$                           0.02

   

$                           0.49

 

Adjustments to net income (as detailed below)

0.99

   

0.44

 

Non-GAAP adjusted earnings per share- Diluted

$                           1.01

(1)

 

$                           0.93

(1)

           

NET INCOME

         

GAAP net income 

$                         4,133

   

$                     129,581

 

Adjustments:

         

Amortization of intangible assets  

182,996

   

175,320

 

Non-cash interest expense relating to convertible notes

52,018

   

54,438

 

Non-cash loss on convertible notes exchange

42,347

   

29,891

 

Gain on sale of intellectual property, net

(12,424)

   

(84,502)

 

Acquisition-related costs

6,982

   

1,949

 

Fair value write up of acquired inventory sold

-

   

3,298

 

Contingent consideration 

79,098

   

670

 

Adiana closure costs

19,980

   

-

 

Other charges

917

   

2,895

 

Income tax effect of reconciling items

(106,624)

(2)

 

(67,664)

(2)

Non-GAAP adjusted net income

$                     269,423

   

$                     245,876

 
           

EBITDA

         

Non-GAAP adjusted net income

$                     269,423

   

$                     245,876

 

Interest expense, net, not adjusted above

29,121

   

29,977

 

Provision for income taxes

138,794

   

123,863

 

Depreciation expense

48,107

   

51,038

 

Adjusted EBITDA

$                     485,445

   

$                     450,754

 
           
           
 

EXPLANATORY NOTES:

(1) Non-GAAP adjusted earnings per share was calculated based on 266,359 and 264,114 weighted average diluted shares outstanding for the nine months ended June 23, 2012 and  June 25, 2011, respectively.

           

(2) To reflect an estimated annual effective tax rate of 34% and 33.5% on a non-GAAP basis for the nine months ended June 23, 2012 and June 25, 2012, respectively.

 

Use of Non-GAAP Financial Measures:

Hologic has presented the following non-GAAP financial measures in this press release: adjusted net income; adjusted EPS; and adjusted EBITDA. Hologic defines adjusted EBITDA as its non-GAAP adjusted net income plus interest expense, net, income taxes, and depreciation and amortization expense included in its non-GAAP adjusted net income. Hologic defines its non-GAAP adjusted net income and adjusted EPS to exclude: (i) the amortization of intangible assets; (ii) acquisition-related charges and effects, such as charges for contingent consideration (comprised of (a) adjustments for changes in the fair value of the contingent consideration liabilities initially recorded as part of the purchase price of an acquisition as required by GAAP, and (b) contingent consideration that is tied to continuing employment of the former shareholders and employees which is recorded as compensation expense), transaction costs, and charges associated with the write-up of acquired inventory to fair value; (iii) non-cash interest expense related to amortization of the debt discount for convertible debt securities; (iv) divestiture and restructuring charges; (v) non-cash loss on exchange of convertible notes; (vi) litigation settlement charges (benefits); (vii) other-than-temporary impairment losses on equity investments; (viii) other one-time, nonrecurring, unusual or infrequent charges, expenses or gains that may not be indicative of Hologic's core business results; and (ix) income taxes related to such adjustments.

Hologic believes the use of non-GAAP adjusted 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, equity investment impairments, litigation settlements, and divestiture and restructuring initiatives. These measures also reflect how Hologic manages its businesses internally. In addition to the adjustments set forth in the calculation of Hologic's non-GAAP adjusted net income and adjusted EPS, its non-GAAP 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 adjusted net income, these items may vary for different companies for reasons unrelated to the overall operating performance of a company's business. When analyzing Hologic's operating performance, investors should not consider these non-GAAP financial measures as a substitute for net income prepared in accordance with GAAP.

Investor Relations and Media Contact:

Deborah R. Gordon 
Vice President, Investor Relations 
Hologic, Inc. 
(781) 999-7716 

 

 

 

SOURCE Hologic, Inc.