– Revenue of $1.317 Billion Exceeds Expectations –

– Company Posts GAAP Diluted EPS of $1.28, Non-GAAP Diluted EPS of $1.61 –

– Financial Guidance for Fiscal 2022 Anticipates Solid Growth in Core Women’s Health Businesses and Continued Contributions to COVID-19 Fight –

Hologic, Inc. (Nasdaq: HOLX) announced today the Company’s financial results for the fiscal fourth quarter ended September 25, 2021.

“Our excellent top- and bottom-line results in the fourth quarter of fiscal 2021 exceeded expectations and capped off a remarkable year,” said Steve MacMillan, the Company’s chairman, president and chief executive officer. “In 2021, we lived into our Purpose, Passion and Promise by showcasing our team’s incredible ability to respond simultaneously to the world’s women’s health and COVID-19 testing needs, which drove annual revenue growth of 47% to more than $5.6 billion.”

Recent Highlights

• Revenue of $1.317 billion decreased (2.3%) for the quarter, or (2.9%) in constant currency, driven by lower sales of COVID-19 assays compared to the prior year period.
• Excluding significant acquisitions, organic revenue of $1.266 billion in the quarter decreased (5.4%), or (6.0%) in constant currency.
• Excluding revenue from COVID-19 assays and related products such as collection kits, organic revenue grew 12.0% on a constant currency basis, which compares favorably to the long-term goal of 5% to 7% growth that the Company outlined in its last quarterly earnings call.
• Global revenue for the Company’s Breast Health and GYN Surgical divisions grew 15.6% and 21.8%, or 15.1% and 20.9% in constant currency, respectively, as the businesses recovered strongly compared to the prior year period, when sales were negatively affected by the COVID-19 pandemic.
• Global diagnostics revenue of $836.8 million decreased (10.9%), or (11.5%) in constant currency, driven by lower sales of COVID-19 assays. However, excluding revenue from COVID-19 assays and related products, global diagnostics revenue grew 5.1% on an organic, constant currency basis. Similarly, global molecular diagnostics revenue of $704.5 million declined (14.0%), or (14.5%) in constant currency, yet grew 6.5% on an organic, constant currency basis excluding sales of COVID-19 assays and related products.
• Consistent with the Company’s capital allocation strategy, announced the acquisition of Bolder Surgical, a private, U.S.-based company that provides advanced energy vessel sealing surgical devices, for approximately $160 million.
• Released results of the inaugural Hologic Global Women’s Health Index, the world’s most comprehensive, globally comparative survey about women’s health. Developed in partnership with Gallup, the Index is an unprecedented, in-depth examination of critical markers for women’s health, by country and territory, and over time.
• Launched across Europe the Novodiag system, a fully automated molecular diagnostics solution for on-demand testing of infectious diseases and antimicrobial resistance. The launch follows the Company’s acquisition of Mobidiag Oy in June 2021.
• Cash flow from operations was a very strong $465.4 million in the fourth quarter. For the full fiscal year, the Company generated more than $2.3 billion of operating cash flow.
• Investor’s Business Daily named Hologic one of their “100 Best ESG Stocks.”

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

Throughout this press release, all dollar figures are in millions, except EPS, unless otherwise noted. Some totals may not foot due to rounding. Unless otherwise noted, all results are compared to the corresponding prior year period. Non-GAAP results exclude certain cash and non-cash items as discussed under “Use of Non-GAAP Financial Measures.” Constant currency percentage changes show current period revenue results as if the foreign exchange rates were the same as those in the prior year period. For fiscal 2021, organic revenue excludes the divested Blood Screening business, as well as the acquired Acessa, Biotheranostics, Diagenode and Mobidiag businesses. Revenue from acquired businesses is generally included in organic revenue starting a year after the acquisition.

Revenue Detail

Other Financial Highlights

• U.S. revenue of $950.6 million decreased (4.4%). International revenue of $366.0 million increased 3.9%, or 1.6% in constant currency. Organically, U.S. revenue of $912.6 million decreased (7.4%), while international revenue of $353.2 million increased 0.3%, a decrease of (2.0%) in constant currency.
• GAAP gross margin of 62.9% decreased (630) basis points. Non-GAAP gross margin of 69.4% decreased (480) basis points. The decrease in gross margin was primarily due to a decline in COVID-19 assay sales compared to the prior year period.
• GAAP operating margin of 33.4% decreased (1,360) basis points. Non-GAAP operating margin of 42.5% decreased (1,120) basis points. The decrease in operating margin was primarily due to a decline in COVID-19 assay sales compared to the prior year period.
• GAAP net income attributable to Hologic of $328.8 million decreased (33.7%). Non-GAAP net income attributable to Hologic of $415.7 million decreased (23.5%). Adjusted non-GAAP earnings before interest, taxes, depreciation and amortization (EBITDA) was $575.8 million, a decrease of (23.1%).
• COVID-19 assay revenue of $443.3 million decreased (26.3%), or (26.8%) in constant currency. COVID-19 related revenue, which is revenue from products such as collection kits that depends in part on COVID-19 test demand, was $63.8 million in the fourth quarter, an increase of 1.1%, or 0.7% in constant currency, compared to the prior year period.
• Total principal debt outstanding at the end of the fourth quarter was $3.05 billion. The Company ended the quarter with cash and equivalents of $1.17 billion, and a net leverage ratio (net debt over adjusted EBITDA) of 0.6.
• On a trailing 12 months basis, adjusted Return on Invested Capital (ROIC) of 32.6% increased 1,410 basis points compared to the prior year period.

Financial Guidance for Fiscal 2022

“We expect strong financial results in fiscal 2022, with solid growth in our core women’s health businesses and a meaningful contribution from COVID-19 testing,” said Karleen Oberton, Hologic’s chief financial officer.

Hologic’s financial guidance for the first quarter and full year 2022 is shown in the table below. The guidance is based on a full year non-GAAP tax rate of approximately 21.5%, and diluted shares outstanding of 260 million for the full year. Constant currency guidance assumes that foreign exchange rates are the same in fiscal 2022 as in fiscal 2021. Organic revenue guidance is in constant currency, and excludes the divested Blood Screening business. Revenue from acquired businesses is generally included in organic revenue guidance starting a year after the acquisition. Therefore, in fiscal 2022, Acessa will be included in organic revenue for the full year, Biotheranostics and Diagenode will become part of organic revenue in the fiscal third quarter, and Mobidiag will become part of organic revenue in the fiscal fourth quarter. The guidance below does not include the impact of the Bolder Surgical acquisition, which has not closed.

Use of Non-GAAP Financial Measures

The Company has presented the following non-GAAP financial measures in this press release: constant currency revenues; organic revenues; organic revenues excluding COVID related revenues, non-GAAP gross margin; non-GAAP operating expenses; non-GAAP operating margin; non-GAAP effective tax rate; non-GAAP net income; non-GAAP net margin; non-GAAP EPS; and adjusted EBITDA. For fiscal 2021, organic revenue excludes the divested Blood Screening business, as well as the acquired Acessa, Biotheranostics, Diagenode and Mobidiag businesses. Revenue from acquired businesses is generally included in organic revenue starting a year after the acquisition. The Company defines its non-GAAP net income, EPS, and other non-GAAP financial measures to exclude, as applicable: (i) the amortization of intangible assets and impairment of goodwill, intangible assets and equipment; (ii) adjustments to record contingent consideration at fair value; (iii) additional expenses resulting from the purchase accounting adjustment to record inventory at fair value; (iv) restructuring and divestiture charges and facility closure and consolidation charges, including accelerated depreciation, and costs incurred to integrate acquisitions (including retention, transaction bonuses, legal and professional consulting services) and separate divested businesses from existing operations; (v) expenses related to the divested Cynosure business incurred subsequent to the disposition date primarily related to indemnification provisions for legal and tax matters; (vi) transaction related expenses for divestitures and acquisitions; (vii) third-party expenses incurred related to implementing the European MDR/IVDR requirements and obtaining the appropriate approvals for its existing products; (viii) debt extinguishment losses and related transaction costs; (ix) the unrealized (gains) losses on the mark-to-market of foreign currency contracts for which the Company has not elected hedge accounting; (x) litigation settlement charges (benefits) and non-income tax related charges (benefits); (xi) other-than-temporary impairment losses on investments and realized gains and losses resulting from the sale of investments; (xii) the one-time discrete impacts related to internal restructurings and non-operational items; (xiii) other one-time, non-recurring, unusual or infrequent charges, expenses or gains that may not be indicative of the Company's core business results; and (xiv) income taxes related to such adjustments. The Company defines adjusted EBITDA as its non-GAAP net income plus net interest expense, income taxes, and depreciation and amortization expense included in its non-GAAP net income.

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

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

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

Conference Call and Webcast

Hologic’s management will host a conference call at 4:30 p.m. ET today to discuss its financial results for the fourth quarter of fiscal 2021. Interested participants may listen to the call by dialing 800-458-4121 (in the U.S. and Canada) or +1 323-794-2093 (for international callers) and referencing access code 2820462. Participants may also click here to join. Participants should dial in 5-10 minutes before the call begins. A replay will be available approximately two hours after the call ends through Friday, December 3, 2021. The replay numbers are 888-203-1112 (U.S.) or +1 719-457-0820 (international), access code 2820462, PIN 3270. The Company will also provide a live webcast of the call at investors.hologic.com.

About Hologic, Inc.

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

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

Forward-Looking Statements

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

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

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

SOURCE: Hologic, Inc.

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HOLX$ Announced Financial Results for Fourth Quarter of Fiscal 2021