News


Hologic Announces Second Quarter Fiscal 2014 Operating Results
PR Newswire
BEDFORD

BEDFORD, Mass., April 30, 2014 /PRNewswire/ -- Hologic, Inc. (Hologic or the Company) (NASDAQ: HOLX), a leading developer, manufacturer and supplier of premium diagnostic products, medical imaging systems and surgical products, with an emphasis on serving the healthcare needs of women, today announced its results for the second fiscal quarter ended March 29, 2014.

Second Quarter Financial Highlights and Recent Developments:

    --  Revenues increased 2.0% to $625.0 million (prior year revenues included
        $10.6 million from Lifecodes, which the Company sold in March 2013).
        --  Breast Health revenues increased 8.5%.
    --  Non?GAAP net income increased 9.9% to $103.1 million, or $0.37 per
        diluted share.
    --  Adjusted EBITDA increased 5.0% to $222.4 million.
    --  Net loss improved to $16.8 million, or $0.06 per diluted share,
        calculated in accordance with GAAP.
    --  Refinanced Term Loan B resulting in an interest rate reduction of 50
        basis points.
    --  Appointed Eric Compton as Chief Operating Officer and Claus Egstrand as
        Senior Vice President and General Manager, International.
    --  Grifols, Hologic's blood screening collaboration partner, was selected
        as a partner by the Japanese Red Cross in screening the country's 5.3
        million annual blood donations using the Panther( )system and associated
        assays.
    --  Acceptance of the American Medical Association CPT application for
        Category I Codes establishing a pathway for screening and diagnostic
        breast tomosynthesis reimbursement beginning January 1, 2015.
    --  Publication of six new peer-reviewed studies that further validate the
        benefits of Hologic's 3D mammography in breast cancer screening.

The Company includes non-GAAP financial measures in this press release. Definitions of these non?GAAP financial measures, and the reconciliations to the Company's comparable GAAP financial measures (calculated in accordance with U.S. generally accepted accounting principles) for the periods presented, are included in this press release.

Second Quarter Fiscal 2014 Operating Results Overview:

Second quarter fiscal 2014 revenues increased 2.0% to $625.0 million from $612.7 million in the prior year (second quarter fiscal 2013 revenues included $10.6 million from Lifecodes, which the Company sold in March 2013). During the same period, revenues increased 1.0% from non-GAAP revenues of $619.1 million in the prior year. Non-GAAP revenues in the second quarter of fiscal 2013 reflect the addition of $6.4 million that was eliminated for GAAP purposes as a result of a purchase accounting adjustment.

Fluctuation in foreign currency exchange rates added 40 basis points to revenues compared to the second quarter of fiscal 2013.

Second quarter fiscal 2014 net loss improved to $16.8 million, or $0.06 per diluted share, compared to a net loss of $51.1 million, or $0.19 per diluted share, for the same period in the prior year. Second quarter fiscal 2014 non-GAAP net income was $103.1 million, or $0.37 per diluted share, an increase of 9.9% and 7.9%, respectively, compared to $93.8 million, or $0.35 per diluted share, in the prior year.

"Second quarter results reflect early progress towards our renewed focus on executional discipline as we drive to our goal of sustainable organic growth," said Stephen MacMillan, President and Chief Executive Officer. "Our key product lines, such as Hologic's unique 3D mammography and Aptima HPV, gained momentum during the quarter. To be clear, we still have plenty of work to do in order to consistently improve our operating results, achieve long-term growth and maximize value creation. However, I am excited by how our sales teams are responding to help achieve progress towards our primary objectives: leveraging our unique collection of leading technologies to drive organic growth and focusing our capital allocation efforts on debt reduction."

Second Quarter Fiscal 2014 Revenue Overview by Segment (Compared to the Second Quarter Fiscal 2013):

    --  Diagnostics revenues totaled $290.8 million compared to revenues of
        $296.5 million in the prior year, a decrease of 1.9%. On a non-GAAP
        basis, which includes the $6.4 million prior year purchase accounting
        adjustment, sales declined 4.0%. This decline was primarily due to: (i)
        the Company's divestiture of its Lifecodes business in March 2013; and
        (ii) decreases in ThinPrep pap test sales in the U.S. due to interval
        expansion. Partially offsetting these declines were increases in: (i)
        molecular product sales primarily from the Company's Aptima product
        line; and (ii) blood screening revenues.


    --  Breast Health revenues grew 8.5% to $238.7 million compared to $220.1
        million in the prior year. This increase was driven primarily by: (i) a
        significant increase in sales of 3D mammography systems as the Company
        continued to drive a sales shift to 3D systems from its 2D systems; (ii)
        service revenue growth of $7.5 million, or 9.1%, from the growing
        installed base of digital mammography systems; and (iii) to a lesser
        extent, growth in C-View system sales, as well as biopsy device sales
        growth, specifically the Eviva product line. Partially offsetting these
        increases was the expected overall sales decline of 2D systems as
        customers continued to move to the Company's 3D systems.


    --  GYN Surgical revenues totaled $72.0 million compared to $73.7 million in
        the prior year, a decrease of 2.2%. Significant growth in MyoSure system
        sales was offset by lower NovaSure system sales.
    --  Skeletal Health revenues totaled $23.5 million compared to $22.4 million
        in the prior year, an increase of 4.7%. Higher revenues from the
        Company's new Horizon bone densitometry system were partially offset by
        a decrease in legacy bone densitometry system sales.

Financial Guidance:

The Company's guidance includes current operations, including revenues from its approved and cleared products. This guidance does not include the effects of any future stock repurchases, acquisitions, divestitures or additional voluntary debt payments that may occur during fiscal 2014.

Third Quarter Fiscal 2014 (Quarter Ending June 28, 2014):

    --  The Company expects third quarter fiscal 2014 revenues of $615 million
        to $625 million. Year?over?year, this is flat to 2% down over third
        quarter fiscal 2013 revenues of $626.1 million.
    --  The Company expects non?GAAP EPS of $0.33 to $0.34.

Fiscal 2014 (Year Ending September 27, 2014):

    --  The Company is raising its fiscal 2014 revenue guidance to a range of
        $2.460 billion to $2.490 billion (from $2.425 billion to $2.475 billion
        provided on February 3, 2014). Year-over-year, this represents a
        decrease of 1% to 2% over fiscal 2013 non-GAAP revenues of $2.512
        billion (prior year reflects the addition of $19.7 million primarily
        relating to a purchase accounting adjustment). Prior year revenues
        include $23 million from Lifecodes, which the Company sold in March
        2013.
    --  The Company is raising its fiscal 2014 non-GAAP EPS guidance to a range
        of $1.37 to $1.40 (as compared to $1.34 to $1.38 provided on February 3,
        2014).

Hologic may not generate expected revenues and may incur expenses or charges, realize income or gains, or execute transactions in fiscal 2014 that could cause actual results to vary from the guidance above. In addition, the Company is continuing to monitor the effects of the U.S., European and general worldwide economic and regulatory conditions and related uncertainties, including the implementation of healthcare cost containment measures and healthcare reform legislation, as well as foreign currency fluctuations, which, along with other uncertainties facing the Company's business including those referenced elsewhere herein and in its filings with the Securities and Exchange Commission, could adversely affect anticipated results.

Conference Call and Webcast:

Hologic's management will host a conference call on Wednesday, April 30, 2014, at 5:00 p.m. (Eastern) to discuss second quarter fiscal year 2014 operating results. Interested participants may listen to the call by dialing 877-856-1955 or 719-325-4807 for international callers and referencing code 9333157 approximately 15 minutes prior to the call. For those unable to participate in the live broadcast, a replay will be available two hours after the call ends through Friday, May 23, 2014, at 888?203?1112 or 719?457?0820 for international callers, access code 9333157. The Company will also provide a live webcast of the call. Interested participants may access the webcast on the Company's website at www.investors.hologic.com/investors-overview. A PowerPoint presentation related to the conference call will be posted to the site.

About Hologic, Inc.:

Hologic, Inc. is a leading developer, manufacturer and supplier of premium diagnostic products, medical imaging systems, and surgical products, with an emphasis on serving the healthcare needs of women. The Company operates four core business units focused on breast health, diagnostics, GYN surgical and skeletal health. With a comprehensive suite of technologies and a robust research and development program, Hologic is committed to improving lives. The Company is headquartered in Massachusetts. For more information, visit www.hologic.com.

Hologic, Aptima, C-View, Eviva, Gen?Probe, Horizon, MyoSure, NovaSure, Panther, and ThinPrep and associated logos are trademarks and/or registered trademarks of Hologic, Inc. and/or its subsidiaries in the United States and/or other countries.

Forward?Looking Statement Disclaimer:

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

Risks and uncertainties that could adversely affect the Company's business and prospects, and otherwise cause actual results to differ materially from those anticipated, include without limitation: the ability of the Company to successfully manage recent and ongoing leadership and organizational changes, including the ability of the Company to attract, motivate and retain key employees; U.S., European and general worldwide economic conditions and related uncertainties; the Company's reliance on third?party reimbursement policies to support the sales and market acceptance of its products, including the possible adverse impact of government regulation and changes in the availability and amount of reimbursement and uncertainties for new products or product enhancements; uncertainties regarding the recently enacted or future healthcare reform legislation, including associated tax provisions, or budget reduction or other cost containment efforts; changes in guidelines, recommendations and studies published by various organizations that could affect the use of the Company's products; uncertainties inherent in the development of new products and the enhancement of existing products, including FDA approval and/or clearance and other regulatory risks, technical risks, cost overruns and delays; the risk that products may contain undetected errors or defects or otherwise not perform as anticipated; risks associated with strategic alliances and the ability of the Company to realize anticipated benefits of those alliances; risks associated with acquisitions, including without limitation, the Company's ability to successfully integrate acquired businesses, the risks that the acquired businesses may not operate as effectively and efficiently as expected even if otherwise successfully integrated, the risks that acquisitions may involve unexpected costs or unexpected liabilities; the risks of conducting business internationally; the risk of adverse exchange rate fluctuations on the Company's international activities and businesses; manufacturing risks, including the Company's reliance on a single or limited source of supply for key components, and the need to comply with especially high standards for the manufacture of many of its products; the Company's ability to predict accurately the demand for its products, and products under development, and to develop strategies to address its markets successfully; the early stage of market development for certain of the Company's products; the Company's leverage risks, including the Company's obligation to meet payment obligations and financial covenants associated with its debt; risks related to the use and protection of intellectual property; expenses, uncertainties and potential liabilities relating to litigation, including, without limitation, commercial, intellectual property, employment and product liability litigation; technical innovations that could render products marketed or under development by the Company obsolete; and competition.

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

 


                                                     HOLOGIC, INC.

                                         CONDENSED CONSOLIDATED BALANCE SHEETS

                                                      (Unaudited)

                                                    (In thousands)



                                                   March 29, 2014              September 28, 2013
                                                   --------------              ------------------


    ASSETS

    Current assets:

    Cash
     and
     cash
     equivalents                                                      $490,379                   $829,404

     Accounts
     receivable,
     net                                                               387,633                    409,273

    Inventories                                                        310,980                    289,363

     Deferred
     income
     taxes                                                              34,398                          -

    Other
     current
     assets                                                             41,170                     96,103

    Total
     current
     assets                                                          1,264,560                  1,624,143


     Property
     and
     equipment,
     net                                                               472,154                    491,528

     Goodwill
     and
     intangible
     assets                                                          6,477,411                  6,721,250

    Other
     assets                                                            148,270                    163,902
                                                                       -------                    -------

    Total
     assets                                                         $8,362,395                 $9,000,823
                                                                    ==========                 ==========


    LIABILITIES AND STOCKHOLDERS' EQUITY


    Current liabilities:

     Current
     portion
     of
     long-
     term
     debt                                                              $89,497                   $563,812

     Accounts
     payable
     and
     accrued
     liabilities                                                       316,484                    392,275

     Deferred
     revenues                                                          144,702                    132,319
                                                                       -------

    Total
     current
     liabilities                                                       550,683                  1,088,406


    Long-
     term
     debt,
     net
     of
     current
     portion                                                         4,183,958                  4,242,098

     Deferred
     income
     taxes                                                           1,450,342                  1,535,306

    Other
     long-
     term
     liabilities                                                       197,309                    193,500
                                                                       -------                    -------

    Total
     liabilities                                                     6,382,292                  7,059,310

    Total
     stockholders'
     equity                                                          1,980,103                  1,941,513

    Total
     liabilities
     and
     stockholders'
     equity                                                         $8,362,395                 $9,000,823
                                                                    ==========                 ==========

 

 




                                                        HOLOGIC, INC.
                                       CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                         (Unaudited)
                                            (In thousands, except per share data)



                                              Three Months Ended

                                                March 29, 2014                         March 30, 2013
                                                --------------                         --------------

    Revenues:

    Product                                                        $521,135                           $516,116

    Service and
     other                                                          103,873                             96,547
                                                                    -------                             ------

    Total revenues                                                  625,008                            612,663


    Cost of revenues:

    Product                                                         185,724                            207,227

    Amortization
     of intangible
     assets                                                          76,883                             75,733

    Impairment of
     intangible
     assets                                                          26,567                                  -

    Service and
     other                                                           53,722                             50,377
                                                                     ------                             ------

    Total cost of
     revenues                                                       342,896                            333,337
                                                                    -------                            -------


    Gross profit                                                    282,112                            279,326


    Operating expenses:

    Research and
     development                                                     49,915                             49,621

    Selling and
     marketing                                                       78,657                             88,614

    General and
     administrative                                                  62,109                             64,233

    Amortization
     of intangible
     assets                                                          29,100                             28,667

    Contingent
     consideration                                                        -                             30,187

    Restructuring
     and
     divestiture
     charges                                                         11,559                             12,462

    Impairment of
     intangible
     assets                                                             522                                  -

    Total
     operating
     expenses                                                       231,862                            273,784
                                                                    -------                            -------


    Income from
     operations                                                      50,250                              5,542


    Other expense:

    Interest
     expense                                                        (54,449)                           (76,049)

    Other expense,
     net                                                             (7,551)                            (3,241)
                                                                     ------                             ------

    Total other
     expense                                                        (62,000)                           (79,290)


    Loss before
     income taxes                                                   (11,750)                           (73,748)

    Provision
     (benefit) for
     income taxes                                                     5,015                            (22,644)
                                                                      -----                            -------


    Net loss                                                       $(16,765)                          $(51,104)
                                                                   ========                           ========


    Net loss per common share:

    Basic                                                            $(0.06)                            $(0.19)
                                                                     ======                             ======

    Diluted                                                          $(0.06)                            $(0.19)
                                                                     ======                             ======


    Weighted average number of shares outstanding:

    Basic                                                           274,589                            268,175
                                                                    =======                            =======

    Diluted                                                         274,589                            268,175
                                                                    =======                            =======

 

 




                                                        HOLOGIC, INC.
                                       CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                         (Unaudited)
                                            (In thousands, except per share data)



                                               Six Months Ended

                                                March 29, 2014                         March 30, 2013
                                                --------------                         --------------


    Revenues:

    Product                                                      $1,033,517                           $1,049,370

    Service and
     other                                                          203,939                              194,655
                                                                    -------                              -------

    Total revenues                                                1,237,456                            1,244,025


    Cost of revenues:

    Product                                                         362,602                              429,554

    Amortization
     of intangible
     assets                                                         153,549                              151,020

    Impairment of
     intangible
     assets                                                          26,567                                    -

    Service and
     other                                                          107,030                              102,452

    Total cost of
     revenues                                                       649,748                              683,026
                                                                    -------                              -------


    Gross profit                                                    587,708                              560,999


    Operating expenses:

    Research and
     development                                                     98,584                              101,130

    Selling and
     marketing                                                      161,914                              183,057

    General and
     administrative                                                 129,928                              118,624

    Amortization
     of intangible
     assets                                                          55,316                               57,193

    Contingent
     consideration                                                        -                               69,713

    Restructuring
     and
     divestiture
     charges                                                         29,909                               16,395

    Impairment of
     intangible
     assets                                                             522                                    -

    Gain on sale
     of
     intellectual
     property                                                             -                              (53,884)

                                                                    476,173                              492,228
                                                                    -------                              -------

    Income from
     operations                                                     111,535                               68,771


    Other expense:

    Interest
     expense                                                       (115,739)                            (148,130)

    Other expense,
     net                                                             (8,965)                              (1,742)
                                                                     ------                               ------

    Total other
     expense                                                       (124,704)                            (149,872)


    Loss before
     income taxes                                                   (13,169)                             (81,101)

    Provision
     (benefit) for
     income taxes                                                     8,947                              (33,115)
                                                                      -----                              -------


    Net loss                                                       $(22,116)                            $(47,986)
                                                                   ========                             ========


    Net loss per common share:

    Basic                                                            $(0.08)                              $(0.18)
                                                                     ======                               ======

    Diluted                                                          $(0.08)                              $(0.18)
                                                                     ======                               ======


    Weighted average number of shares outstanding:

    Basic                                                           273,648                              267,259
                                                                    =======                              =======

    Diluted                                                         273,648                              267,259
                                                                    =======                              =======

 

 


                                                                                                              HOLOGIC, INC
                                                               RECONCILIATION OF GAAP REVENUES, EPS AND NET LOSS TO NON-GAAP REVENUES, EPS, NET INCOME AND ADJUSTED EBITDA
                                                                                                               (Unaudited)
                                                                                                (In thousands, except earnings per share)



                                                                                                                                     Three Months Ended

                                                                                                                                       March 29, 2014                           March 30, 2013
                                                                                                                                       --------------                           --------------


    Revenues:

    GAAP revenues                                                                                                                                           $625,008                           $612,663

    Adjustment related to blood screening collaboration                                                                                                            -                              6,429   (1)
                                                                                                                                                                 ---                              -----

    Non-GAAP revenues                                                                                                                                       $625,008                           $619,092
                                                                                                                                                            ========                           ========


    (Loss) Earnings per share:

    GAAP loss per share - Diluted                                                                                                                             $(0.06)                            $(0.19)

    Adjustment to net loss (as detailed below)                                                                                                                  0.43                               0.54
                                                                                                                                                                ----                               ----

    Non-GAAP earnings per share - Diluted                                                                                                                      $0.37        (2)                   $0.35   (2)
                                                                                                                                                               =====                              =====


    Net (loss) income:

    GAAP net loss                                                                                                                                           $(16,765)                          $(51,104)

    Adjustments:

    Amortization of intangible assets                                                                                                                        105,983        (3)                 104,400   (3)

    Contingent consideration                                                                                                                                       -                             30,187   (4)

    Non-cash interest expense relating to convertible notes                                                                                                    8,341        (5)                  13,621   (5)

    Restructuring, divestiture and acquisition-related charges                                                                                                15,573        (6)                  19,893   (6)

    Fair value adjustments                                                                                                                                     3,124        (7)                  25,710   (7)

    Contingent revenue from blood screening collaboration                                                                                                          -                              6,429   (1)

    Debt extinguishment charges                                                                                                                                5,443        (9)                   9,661   (9)

    Impairment of intangible assets                                                                                                                           27,089       (10)                       -

    Other charges, net                                                                                                                                         3,621       (11)                   1,855  (11)

    Income tax effect of reconciling items                                                                                                                   (49,296)      (12)                 (66,807) (12)
                                                                                                                                                             -------                            -------

    Non-GAAP net income                                                                                                                                     $103,113                            $93,845
                                                                                                                                                            ========                            =======


    Adjusted EBITDA:

    Non-GAAP net income                                                                                                                                     $103,113                            $93,845

    Interest expense, net, not adjusted above                                                                                                                 44,953                             55,807

    Provision for income taxes                                                                                                                                54,311                             44,163

    Depreciation expense, not adjusted above                                                                                                                  19,974                             17,963
                                                                                                                                                              ------                             ------

    Adjusted EBITDA                                                                                                                                         $222,351                           $211,778
                                                                                                                                                            ========                           ========

 


                                                                                                                HOLOGIC, INC.
                                                                 RECONCILIATION OF GAAP REVENUES, EPS AND NET LOSS TO NON-GAAP REVENUES, EPS, NET INCOME AND ADJUSTED EBITDA
                                                                                                                 (Unaudited)
                                                                                                  (In thousands, except earnings per share)



                                                                                                                                        Six Months Ended

                                                                                                                                         March 29, 2014                           March 30, 2013
                                                                                                                                         --------------                           --------------


    Revenues:

    GAAP revenues                                                                                                                                           $1,237,456                           $1,244,025

    Adjustment primarily related to blood screening collaboration                                                                                                    -                               19,704   (1)
                                                                                                                                                                   ---                               ------

    Non-GAAP revenues                                                                                                                                       $1,237,456                           $1,263,729
                                                                                                                                                            ==========                           ==========


    (Loss) earnings per share:

    GAAP loss per share - Diluted                                                                                                                               $(0.08)                              $(0.18)

    Adjustment to net loss (as detailed below)                                                                                                                    0.79                                 0.90
                                                                                                                                                                  ----                                 ----

    Non-GAAP earnings per share - Diluted                                                                                                                        $0.71        (2)                     $0.72   (2)
                                                                                                                                                                 =====                                =====


    Net (loss) income:

    GAAP net loss                                                                                                                                             $(22,116)                            $(47,986)

    Adjustments:

    Amortization of intangible assets                                                                                                                          208,865        (3)                   208,213   (3)

    Contingent consideration                                                                                                                                         -                               69,713   (4)

    Non-cash interest expense relating to convertible notes                                                                                                     19,887        (5)                    29,265   (5)

    Restructuring, divestiture and acquisition-related charges                                                                                                  39,029        (6)                    29,347   (6)

    Fair value adjustments                                                                                                                                       6,178        (7)                    58,275   (7)

    Contingent revenue primarily from blood screening                                                                                                                -                               19,704

        collaboration                                                                                                                                                                                         (1)

    Gain on sale of intellectual property                                                                                                                            -                              (53,884)  (8)

    Debt extinguishment charges                                                                                                                                  8,383        (9)                     9,661   (9)

    Impairment of intangible assets                                                                                                                             27,089       (10)                         -

    Other charges (gains), net                                                                                                                                   4,900       (11)                    (1,512) (11)

    Income tax effect of reconciling items                                                                                                                     (94,954)      (12)                  (125,173) (12)
                                                                                                                                                               -------                             --------

    Non-GAAP net income                                                                                                                                       $197,261                             $195,623
                                                                                                                                                              ========                             ========


    Adjusted EBITDA:

    Non-GAAP net income                                                                                                                                       $197,261                             $195,623

    Interest expense, net, not adjusted above                                                                                                                   94,341                              111,984

    Provision for income taxes                                                                                                                                 103,901                               92,058

    Depreciation expense, not adjusted above                                                                                                                    40,382                               39,616
                                                                                                                                                                ------                               ------

    Adjusted EBITDA                                                                                                                                           $435,885                             $439,281
                                                                                                                                                              ========                             ========


 


    Explanatory Notes to
     Reconciliations:



    (1) To primarily reflect a fair
     value adjustment relating to
     contingent revenue earned and
     received post acquisition under the
     Company's blood screening
     collaboration, which was eliminated
     under purchase accounting.

    (2) Non-GAAP earnings per share was
     calculated based on 276,546 and
     271,642 weighted average diluted
     shares outstanding for the three
     months ended March 29, 2014 and
     March 30, 2013, respectively, and
     276,008 and 270,510 weighted
     average diluted shares outstanding
     for the six months ended March 29,
     2014 and March 30, 2013,
     respectively.

    (3) To reflect a non-cash charge
     attributable to the amortization of
     intangible assets.

    (4) To reflect a charge to operating
     expenses attributable to contingent
     consideration related to certain of
     the Company's acquisitions.

    (5) To reflect certain non-cash
     interest expense related to the
     Company's convertible notes.

    (6) To reflect certain costs
     associated with the Company's
     acquisition(s) and integration
     plans, which primarily include
     retention costs, transfer costs,
     and asset impairments, as well as
     restructuring and divestiture
     charges.

    (7) To reflect non-cash fair value
     adjustments for: (i) additional
     depreciation expense in both
     periods presented related to the
     fair value write-up of fixed
     assets acquired from Gen-Probe;
     and (ii) write-up of inventory
     acquired from Gen-Probe and sold
     during the prior year period.

    (8) To reflect a net gain resulting
     from a cash payment received in
     final settlement of an agreement,
     net of costs associated with this
     transaction.

    (9) To reflect a non-cash loss
     related to the Credit Agreement
     amendments for those creditors who
     opted not to participate in the
     refinancing or for partial
     extinguishment related to voluntary
     prepayments, as well as related
     third-party transaction costs.

    (10) To reflect a non-cash
     impairment charge on certain of the
     Company's intangible assets related
     to the MRI breast coils product
     line to reflect fair value.

    (11) To reflect the net impact from
     miscellaneous transactions during
     the period.

    (12) To reflect an estimated annual
     effective tax rate of 34.5% for the
     three and six months ended March
     29, 2014 and an annual effective
     tax rate of 32.0% for the three and
     six months ended March 30, 2013 on
     a non-GAAP basis.

Future Non-GAAP Adjustments:

Future GAAP EPS may be affected by changes in ongoing assumptions and judgments relating to the Company's acquired businesses, and may also be affected by nonrecurring, unusual or unanticipated charges, expenses or gains, which are excluded in the calculation of the Company's non-GAAP EPS guidance as described in this press release. It is therefore not practicable to reconcile non-GAAP EPS guidance to the most comparable GAAP measure.

 

Use of Non-GAAP Financial Measures:

The Company has presented the following non-GAAP financial measures in this press release: revenues; net income; EPS; and adjusted EBITDA. The Company defines its non-GAAP revenues to primarily include contingent revenue earned post-acquisition under the blood screening collaboration which was eliminated under purchase accounting. The Company defines adjusted EBITDA as its non-GAAP net income plus net interest expense, income taxes, and depreciation and amortization expense included in its non-GAAP net income. The Company defines its non-GAAP net income and EPS to exclude: (i) the amortization of intangible assets; (ii) acquisition-related charges and effects, such as charges for contingent consideration, transaction costs, integration costs including retention, and credits and/or charges associated with the write-up of acquired inventory and fixed assets to fair value, and the effect of a reduction in revenue primarily related to contingent revenue under the blood screening collaboration, described above; (iii) non-cash interest expense related to amortization of the debt discount for convertible debt securities; (iv) restructuring and divestiture charges; (v) non-cash debt extinguishment losses and related transaction costs; (vi) litigation settlement charges (benefits); (vii) other-than-temporary impairment losses on investments; (viii) other one-time, nonrecurring, unusual or infrequent charges, expenses or gains that may not be indicative of the Company's core business results; and (ix) income taxes related to such adjustments.

The Company believes the use of non-GAAP financial measures is useful to investors by eliminating certain of the more significant effects of its acquisitions and related activities, non-cash charges resulting from the application of GAAP to convertible debt instruments with cash settlement features, charges related to debt extinguishment losses, investment impairments, litigation settlements, and restructuring and divestiture initiatives. These non-GAAP measures also reflect how Hologic manages its businesses internally. In addition to the adjustments set forth in the calculation of the Company's non-GAAP net income and EPS, its adjusted EBITDA eliminates the effects of financing, income taxes and the accounting effects of capital spending. As with the items eliminated in its calculation of non-GAAP net income, these items may vary for different companies for reasons unrelated to the overall operating performance of a company's business. When analyzing the Company's operating performance, investors should not consider these non-GAAP financial measures as a substitute for net income prepared in accordance with GAAP.

 

 


    Contacts:



    Deborah R. Gordon                      Al Kildani
    Vice President, Investor Relations and Senior Director, Investor Relations
                                           (858) 410-8653
     Corporate Communications              al.kildani@hologic.com

    (781) 999-7716

    deborah.gordon@hologic.com

 

SOURCE Hologic, Inc.

 

SOURCE: Hologic, Inc.

 

Hologic Announces Second Quarter Fiscal 2014 Operating Results

PR Newswire

BEDFORD, Mass., April 30, 2014 /PRNewswire/ -- Hologic, Inc. (Hologic or the Company) (NASDAQ: HOLX), a leading developer, manufacturer and supplier of premium diagnostic products, medical imaging systems and surgical products, with an emphasis on serving the healthcare needs of women, today announced its results for the second fiscal quarter ended March 29, 2014.

Second Quarter Financial Highlights and Recent Developments:

  • Revenues increased 2.0% to $625.0 million (prior year revenues included $10.6 million from Lifecodes, which the Company sold in March 2013).
    • Breast Health revenues increased 8.5%.
  • Non‐GAAP net income increased 9.9% to $103.1 million, or $0.37 per diluted share.
  • Adjusted EBITDA increased 5.0% to $222.4 million.
  • Net loss improved to $16.8 million, or $0.06 per diluted share, calculated in accordance with GAAP.
  • Refinanced Term Loan B resulting in an interest rate reduction of 50 basis points.
  • Appointed Eric Compton as Chief Operating Officer and Claus Egstrand as Senior Vice President and General Manager, International.
  • Grifols, Hologic's blood screening collaboration partner, was selected as a partner by the Japanese Red Cross in screening the country's 5.3 million annual blood donations using the Panther system and associated assays.
  • Acceptance of the American Medical Association CPT application for Category I Codes establishing a pathway for screening and diagnostic breast tomosynthesis reimbursement beginning January 1, 2015.
  • Publication of six new peer-reviewed studies that further validate the benefits of Hologic's 3D mammography in breast cancer screening.

The Company includes non-GAAP financial measures in this press release. Definitions of these non‐GAAP financial measures, and the reconciliations to the Company's comparable GAAP financial measures (calculated in accordance with U.S. generally accepted accounting principles) for the periods presented, are included in this press release.

Second Quarter Fiscal 2014 Operating Results Overview:

Second quarter fiscal 2014 revenues increased 2.0% to $625.0 million from $612.7 million in the prior year (second quarter fiscal 2013 revenues included $10.6 million from Lifecodes, which the Company sold in March 2013). During the same period, revenues increased 1.0% from non-GAAP revenues of $619.1 million in the prior year. Non-GAAP revenues in the second quarter of fiscal 2013 reflect the addition of $6.4 million that was eliminated for GAAP purposes as a result of a purchase accounting adjustment.

Fluctuation in foreign currency exchange rates added 40 basis points to revenues compared to the second quarter of fiscal 2013.

Second quarter fiscal 2014 net loss improved to $16.8 million, or $0.06 per diluted share, compared to a net loss of $51.1 million, or $0.19 per diluted share, for the same period in the prior year. Second quarter fiscal 2014 non-GAAP net income was $103.1 million, or $0.37 per diluted share, an increase of 9.9% and 7.9%, respectively, compared to $93.8 million, or $0.35 per diluted share, in the prior year.

"Second quarter results reflect early progress towards our renewed focus on executional discipline as we drive to our goal of sustainable organic growth," said Stephen MacMillan, President and Chief Executive Officer. "Our key product lines, such as Hologic's unique 3D mammography and Aptima HPV, gained momentum during the quarter. To be clear, we still have plenty of work to do in order to consistently improve our operating results, achieve long-term growth and maximize value creation. However, I am excited by how our sales teams are responding to help achieve progress towards our primary objectives: leveraging our unique collection of leading technologies to drive organic growth and focusing our capital allocation efforts on debt reduction."

Second Quarter Fiscal 2014 Revenue Overview by Segment (Compared to the Second Quarter Fiscal 2013):

  • Diagnostics revenues totaled $290.8 million compared to revenues of $296.5 million in the prior year, a decrease of 1.9%. On a non-GAAP basis, which includes the $6.4 million prior year purchase accounting adjustment, sales declined 4.0%. This decline was primarily due to: (i) the Company's divestiture of its Lifecodes business in March 2013; and (ii) decreases in ThinPrep pap test sales in the U.S. due to interval expansion. Partially offsetting these declines were increases in: (i) molecular product sales primarily from the Company's Aptima product line; and (ii) blood screening revenues.
     
  • Breast Health revenues grew 8.5% to $238.7 million compared to $220.1 million in the prior year. This increase was driven primarily by: (i) a significant increase in sales of 3D mammography systems as the Company continued to drive a sales shift to 3D systems from its 2D systems; (ii) service revenue growth of $7.5 million, or 9.1%, from the growing installed base of digital mammography systems; and (iii) to a lesser extent, growth in C-View system sales, as well as biopsy device sales growth, specifically the Eviva product line. Partially offsetting these increases was the expected overall sales decline of 2D systems as customers continued to move to the Company's 3D systems.
     
  • GYN Surgical revenues totaled $72.0 million compared to $73.7 million in the prior year, a decrease of 2.2%. Significant growth in MyoSure system sales was offset by lower NovaSure system sales. 
     
  • Skeletal Health revenues totaled $23.5 million compared to $22.4 million in the prior year, an increase of 4.7%. Higher revenues from the Company's new Horizon bone densitometry system were partially offset by a decrease in legacy bone densitometry system sales.

Financial Guidance:

The Company's guidance includes current operations, including revenues from its approved and cleared products. This guidance does not include the effects of any future stock repurchases, acquisitions, divestitures or additional voluntary debt payments that may occur during fiscal 2014.

Third Quarter Fiscal 2014 (Quarter Ending June 28, 2014):

  • The Company expects third quarter fiscal 2014 revenues of $615 million to $625 million. Year‐over‐year, this is flat to 2% down over third quarter fiscal 2013 revenues of $626.1 million
     
  • The Company expects non‐GAAP EPS of $0.33 to $0.34.

Fiscal 2014 (Year Ending September 27, 2014):

  • The Company is raising its fiscal 2014 revenue guidance to a range of $2.460 billion to $2.490 billion (from $2.425 billion to $2.475 billion provided on February 3, 2014). Year-over-year, this represents a decrease of 1% to 2% over fiscal 2013 non-GAAP revenues of $2.512 billion (prior year reflects the addition of $19.7 million primarily relating to a purchase accounting adjustment). Prior year revenues include $23 million from Lifecodes, which the Company sold in March 2013.
     
  • The Company is raising its fiscal 2014 non-GAAP EPS guidance to a range of $1.37 to $1.40 (as compared to $1.34 to $1.38 provided on February 3, 2014).

Hologic may not generate expected revenues and may incur expenses or charges, realize income or gains, or execute transactions in fiscal 2014 that could cause actual results to vary from the guidance above. In addition, the Company is continuing to monitor the effects of the U.S., European and general worldwide economic and regulatory conditions and related uncertainties, including the implementation of healthcare cost containment measures and healthcare reform legislation, as well as foreign currency fluctuations, which, along with other uncertainties facing the Company's business including those referenced elsewhere herein and in its filings with the Securities and Exchange Commission, could adversely affect anticipated results.

Conference Call and Webcast:

Hologic's management will host a conference call on Wednesday, April 30, 2014, at 5:00 p.m. (Eastern) to discuss second quarter fiscal year 2014 operating results. Interested participants may listen to the call by dialing 877-856-1955 or 719-325-4807 for international callers and referencing code 9333157 approximately 15 minutes prior to the call. For those unable to participate in the live broadcast, a replay will be available two hours after the call ends through Friday, May 23, 2014, at 888‐203‐1112 or 719‐457‐0820 for international callers, access code 9333157. The Company will also provide a live webcast of the call. Interested participants may access the webcast on the Company's website at www.investors.hologic.com/investors-overview. A PowerPoint presentation related to the conference call will be posted to the site.

About Hologic, Inc.:

Hologic, Inc. is a leading developer, manufacturer and supplier of premium diagnostic products, medical imaging systems, and surgical products, with an emphasis on serving the healthcare needs of women. The Company operates four core business units focused on breast health, diagnostics, GYN surgical and skeletal health. With a comprehensive suite of technologies and a robust research and development program, Hologic is committed to improving lives. The Company is headquartered in Massachusetts. For more information, visit www.hologic.com.

Hologic, Aptima, C-View, Eviva, Gen‐Probe, Horizon, MyoSure, NovaSure, Panther, and ThinPrep and associated logos are trademarks and/or registered trademarks of Hologic, Inc. and/or its subsidiaries in the United States and/or other countries.

ForwardLooking Statement Disclaimer:

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

Risks and uncertainties that could adversely affect the Company's business and prospects, and otherwise cause actual results to differ materially from those anticipated, include without limitation: the ability of the Company to successfully manage recent and ongoing leadership and organizational changes, including the ability of the Company to attract, motivate and retain key employees; U.S., European and general worldwide economic conditions and related uncertainties; the Company's reliance on third‐party reimbursement policies to support the sales and market acceptance of its products, including the possible adverse impact of government regulation and changes in the availability and amount of reimbursement and uncertainties for new products or product enhancements; uncertainties regarding the recently enacted or future healthcare reform legislation, including associated tax provisions, or budget reduction or other cost containment efforts; changes in guidelines, recommendations and studies published by various organizations that could affect the use of the Company's products; uncertainties inherent in the development of new products and the enhancement of existing products, including FDA approval and/or clearance and other regulatory risks, technical risks, cost overruns and delays; the risk that products may contain undetected errors or defects or otherwise not perform as anticipated; risks associated with strategic alliances and the ability of the Company to realize anticipated benefits of those alliances; risks associated with acquisitions, including without limitation, the Company's ability to successfully integrate acquired businesses, the risks that the acquired businesses may not operate as effectively and efficiently as expected even if otherwise successfully integrated, the risks that acquisitions may involve unexpected costs or unexpected liabilities; the risks of conducting business internationally; the risk of adverse exchange rate fluctuations on the Company's international activities and businesses; manufacturing risks, including the Company's reliance on a single or limited source of supply for key components, and the need to comply with especially high standards for the manufacture of many of its products; the Company's ability to predict accurately the demand for its products, and products under development, and to develop strategies to address its markets successfully; the early stage of market development for certain of the Company's products; the Company's leverage risks, including the Company's obligation to meet payment obligations and financial covenants associated with its debt; risks related to the use and protection of intellectual property; expenses, uncertainties and potential liabilities relating to litigation, including, without limitation, commercial, intellectual property, employment and product liability litigation; technical innovations that could render products marketed or under development by the Company obsolete; and competition.

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

 

HOLOGIC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

 

March 29, 2014

 

 September 28, 2013

       

ASSETS

     

Current assets:

     

Cash and cash equivalents

$                 490,379

 

$             829,404

Accounts receivable, net

387,633

 

409,273

Inventories

310,980

 

289,363

Deferred income taxes

34,398

 

-

Other current assets

41,170

 

96,103

Total current assets

1,264,560

 

1,624,143

       

Property and equipment, net

472,154

 

491,528

Goodwill and intangible assets

6,477,411

 

6,721,250

Other assets

148,270

 

163,902

Total assets

$              8,362,395

 

$          9,000,823

       

LIABILITIES AND STOCKHOLDERS' EQUITY

     
       

Current liabilities:

     

Current portion of long-term debt

$                   89,497

 

$             563,812

Accounts payable and accrued liabilities

316,484

 

392,275

Deferred revenues

144,702

 

132,319

Total current liabilities

550,683

 

1,088,406

       

Long-term debt, net of current portion

4,183,958

 

4,242,098

Deferred income taxes

1,450,342

 

1,535,306

Other long-term liabilities

197,309

 

193,500

Total liabilities

6,382,292

 

7,059,310

Total stockholders' equity

1,980,103

 

1,941,513

Total liabilities and stockholders' equity

$              8,362,395

 

$          9,000,823

 

 

 

HOLOGIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)
(In thousands, except per share data)

 

 

Three Months Ended

 

March 29, 2014

 

March 30, 2013

Revenues:

     

Product

$             521,135

 

$              516,116

Service and other

103,873

 

96,547

Total revenues

625,008

 

612,663

       

Cost of revenues:

     

Product

185,724

 

207,227

Amortization of intangible assets

76,883

 

75,733

Impairment of intangible assets

26,567

 

-

Service and other

53,722

 

50,377

Total cost of revenues

342,896

 

333,337

       

Gross profit

282,112

 

279,326

       

Operating expenses:

     

Research and development

49,915

 

49,621

Selling and marketing

78,657

 

88,614

General and administrative

62,109

 

64,233

Amortization of intangible assets

29,100

 

28,667

Contingent consideration

-

 

30,187

Restructuring and divestiture charges

11,559

 

12,462

Impairment of intangible assets

522

 

-

Total operating expenses

231,862

 

273,784

       

Income from operations

50,250

 

5,542

       

Other expense:

     

Interest expense

(54,449)

 

(76,049)

Other expense, net

(7,551)

 

(3,241)

Total other expense

(62,000)

 

(79,290)

       

Loss before income taxes

(11,750)

 

(73,748)

Provision (benefit) for income taxes

5,015

 

(22,644)

       

Net loss 

$               (16,765)

 

$               (51,104)

       

Net loss per common share:

     

Basic

$                    (0.06)

 

$                    (0.19)

Diluted

$                    (0.06)

 

$                    (0.19)

       

Weighted average number of shares outstanding:

     

Basic

274,589

 

268,175

Diluted

274,589

 

268,175

 

 

 

HOLOGIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)
(In thousands, except per share data)

 

 

Six Months Ended

 

March 29, 2014

 

March 30, 2013

       

Revenues:

     

Product

$         1,033,517

 

$         1,049,370

Service and other

203,939

 

194,655

Total revenues

1,237,456

 

1,244,025

       

Cost of revenues:

     

Product

362,602

 

429,554

Amortization of intangible assets

153,549

 

151,020

Impairment of intangible assets

26,567

 

-

Service and other

107,030

 

102,452

Total cost of revenues

649,748

 

683,026

       

Gross profit

587,708

 

560,999

       

Operating expenses:

     

Research and development

98,584

 

101,130

Selling and marketing

161,914

 

183,057

General and administrative

129,928

 

118,624

Amortization of intangible assets

55,316

 

57,193

Contingent consideration

-

 

69,713

Restructuring and divestiture charges

29,909

 

16,395

Impairment of intangible assets

522

 

-

Gain on sale of intellectual property

-

 

(53,884)

 

476,173

 

492,228

Income from operations

111,535

 

68,771

       

Other expense:

     

Interest expense

(115,739)

 

(148,130)

Other expense, net

(8,965)

 

(1,742)

Total other expense

(124,704)

 

(149,872)

       

Loss before income taxes

(13,169)

 

(81,101)

Provision (benefit) for income taxes

8,947

 

(33,115)

       

Net loss 

$               (22,116)

 

$               (47,986)

       

Net loss per common share:

     

Basic

$                    (0.08)

 

$                    (0.18)

Diluted

$                    (0.08)

 

$                    (0.18)

       

Weighted average number of shares outstanding:

     

Basic

273,648

 

267,259

Diluted

273,648

 

267,259


 

 

HOLOGIC, INC
RECONCILIATION OF GAAP REVENUES, EPS AND NET LOSS TO NON-GAAP REVENUES, EPS, NET INCOME AND ADJUSTED EBITDA
(Unaudited)
(In thousands, except earnings per share)

 

 

Three Months Ended

 

March 29, 2014

 

March 30, 2013

 
         

Revenues:

       

GAAP revenues

$                   625,008

 

$                  612,663

 

Adjustment related to blood screening collaboration

-

 

6,429

(1)

Non-GAAP revenues

$                 625,008

 

$                  619,092

 
         

(Loss) Earnings per share:

       

GAAP loss per share - Diluted

$                        (0.06)

 

$                      (0.19)

 

Adjustment to net loss (as detailed below)

0.43

 

0.54

 

Non-GAAP earnings per share – Diluted

$                         0.37

(2)

$                        0.35

(2)

         

Net (loss) income:

       

GAAP net loss

$                   (16,765)

 

$                  (51,104)

 

Adjustments:

       

Amortization of intangible assets

105,983

(3)

104,400

(3)

Contingent consideration

-

 

30,187

(4)

Non-cash interest expense relating to convertible notes

8,341

(5)

13,621

(5)

Restructuring, divestiture and acquisition-related charges

15,573

(6)

19,893

(6)

Fair value adjustments

3,124

(7)

25,710

(7)

Contingent revenue from blood screening collaboration

-

 

6,429

(1)

Debt extinguishment charges

5,443

(9)

9,661

(9)

Impairment of intangible assets

27,089

(10)

-

 

Other charges, net

3,621

(11)

1,855

(11)

Income tax effect of reconciling items

(49,296)

(12)

(66,807)

(12)

Non-GAAP net income

$                 103,113

 

$                   93,845

 
         

Adjusted EBITDA:

       

Non-GAAP net income

$                  103,113

 

$                   93,845

 

Interest expense, net, not adjusted above

44,953

 

55,807

 

Provision for income taxes

54,311

 

44,163

 

Depreciation expense, not adjusted above

19,974

 

17,963

 

Adjusted EBITDA

$                 222,351

 

$                 211,778

 


 

HOLOGIC, INC.
RECONCILIATION OF GAAP REVENUES, EPS AND NET LOSS TO NON-GAAP REVENUES, EPS, NET INCOME AND ADJUSTED EBITDA
(Unaudited)
(In thousands, except earnings per share)

 

 

Six Months Ended

 

March 29, 2014

 

March 30, 2013

 
         

Revenues:

       

GAAP revenues

$              1,237,456

 

$               1,244,025

 

Adjustment primarily related to blood screening collaboration

-

 

19,704

(1)

Non-GAAP revenues

$              1,237,456

 

$               1,263,729

 
         

(Loss) earnings per share:

       

GAAP loss per share - Diluted

$                        (0.08)

 

$                      (0.18)

 

Adjustment to net loss (as detailed below)

0.79

 

0.90

 

Non-GAAP earnings per share – Diluted

$                         0.71

(2)

$                        0.72

(2)

         

Net (loss) income:

       

GAAP net loss

$                  (22,116)

 

$                  (47,986)

 

Adjustments:

       

Amortization of intangible assets

208,865

(3)

208,213

(3)

Contingent consideration

-

 

69,713

(4)

Non-cash interest expense relating to convertible notes

19,887

(5)

29,265

(5)

Restructuring, divestiture and acquisition-related charges

39,029

(6)

29,347

(6)

Fair value adjustments

6,178

(7)

58,275

(7)

Contingent revenue primarily from blood screening 

    collaboration

-

 

19,704

 

(1)

Gain on sale of intellectual property

-

 

(53,884)

(8)

Debt extinguishment charges

8,383

(9)

9,661

(9)

Impairment of intangible assets

27,089

(10)

-

 

Other charges (gains), net

4,900

(11)

(1,512)

(11)

Income tax effect of reconciling items

(94,954)

(12)

(125,173)

(12)

Non-GAAP net income

$                 197,261

 

$                 195,623

 
         

Adjusted EBITDA:

       

Non-GAAP net income

$                 197,261

 

$                 195,623

 

Interest expense, net, not adjusted above

94,341

 

111,984

 

Provision for income taxes

103,901

 

92,058

 

Depreciation expense, not adjusted above

40,382

 

39,616

 

Adjusted EBITDA

$                  435,885

 

$                 439,281

 


 

Explanatory Notes to Reconciliations:

 

(1) To primarily reflect a fair value adjustment relating to contingent revenue earned and received post acquisition under the Company's blood screening collaboration, which was eliminated under purchase accounting.

(2) Non-GAAP earnings per share was calculated based on 276,546 and 271,642 weighted average diluted shares outstanding for the three months ended March 29, 2014 and March 30, 2013, respectively, and 276,008 and 270,510 weighted average diluted shares outstanding for the six months ended March 29, 2014 and March 30, 2013, respectively.

(3) To reflect a non-cash charge attributable to the amortization of intangible assets.

(4) To reflect a charge to operating expenses attributable to contingent consideration related to certain of the Company's acquisitions.

(5) To reflect certain non-cash interest expense related to the Company's convertible notes.

(6) To reflect certain costs associated with the Company's acquisition(s) and integration plans, which primarily include retention costs, transfer costs, and asset impairments, as well as restructuring and divestiture charges.

(7) To reflect non-cash fair value adjustments for: (i) additional depreciation expense in both periods presented related to the fair value write-up of fixed assets acquired from Gen-Probe; and (ii) write-up of inventory acquired from Gen-Probe and sold during the prior year period.

(8) To reflect a net gain resulting from a cash payment received in final settlement of an agreement, net of costs associated with this transaction.

(9) To reflect a non-cash loss related to the Credit Agreement amendments for those creditors who opted not to participate in the refinancing or for partial extinguishment related to voluntary prepayments, as well as related third-party transaction costs.

(10) To reflect a non-cash impairment charge on certain of the Company's intangible assets related to the MRI breast coils product line to reflect fair value.

(11) To reflect the net impact from miscellaneous transactions during the period.

(12) To reflect an estimated annual effective tax rate of 34.5% for the three and six months ended March 29, 2014 and an annual effective tax rate of 32.0% for the three and six months ended March 30, 2013 on a non-GAAP basis.

Future Non-GAAP Adjustments:

Future GAAP EPS may be affected by changes in ongoing assumptions and judgments relating to the Company's acquired businesses, and may also be affected by nonrecurring, unusual or unanticipated charges, expenses or gains, which are excluded in the calculation of the Company's non-GAAP EPS guidance as described in this press release. It is therefore not practicable to reconcile non-GAAP EPS guidance to the most comparable GAAP measure. 

 

Use of Non-GAAP Financial Measures:

The Company has presented the following non-GAAP financial measures in this press release: revenues; net income; EPS; and adjusted EBITDA. The Company defines its non-GAAP revenues to primarily include contingent revenue earned post-acquisition under the blood screening collaboration which was eliminated under purchase accounting. The Company defines adjusted EBITDA as its non-GAAP net income plus net interest expense, income taxes, and depreciation and amortization expense included in its non-GAAP net income. The Company defines its non-GAAP net income and EPS to exclude: (i) the amortization of intangible assets; (ii) acquisition-related charges and effects, such as charges for contingent consideration, transaction costs, integration costs including retention, and credits and/or charges associated with the write-up of acquired inventory and fixed assets to fair value, and the effect of a reduction in revenue primarily related to contingent revenue under the blood screening collaboration, described above; (iii) non-cash interest expense related to amortization of the debt discount for convertible debt securities; (iv) restructuring and divestiture charges; (v) non-cash debt extinguishment losses and related transaction costs; (vi) litigation settlement charges (benefits); (vii) other-than-temporary impairment losses on investments; (viii) other one-time, nonrecurring, unusual or infrequent charges, expenses or gains that may not be indicative of the Company's core business results; and (ix) income taxes related to such adjustments.

The Company believes the use of non-GAAP financial measures is useful to investors by eliminating certain of the more significant effects of its acquisitions and related activities, non-cash charges resulting from the application of GAAP to convertible debt instruments with cash settlement features, charges related to debt extinguishment losses, investment impairments, litigation settlements, and restructuring and divestiture initiatives. These non-GAAP measures also reflect how Hologic manages its businesses internally. In addition to the adjustments set forth in the calculation of the Company's non-GAAP net income and EPS, its adjusted EBITDA eliminates the effects of financing, income taxes and the accounting effects of capital spending. As with the items eliminated in its calculation of non-GAAP net income, these items may vary for different companies for reasons unrelated to the overall operating performance of a company's business. When analyzing the Company's operating performance, investors should not consider these non-GAAP financial measures as a substitute for net income prepared in accordance with GAAP.

 

 

Contacts:

 

Deborah R. Gordon
Vice President, Investor Relations and

 Corporate Communications

(781) 999-7716

deborah.gordon@hologic.com 

Al Kildani
Senior Director, Investor Relations
(858) 410-8653
al.kildani@hologic.com

 

 

SOURCE Hologic, Inc.