Hologic Announces Financial Results for Fourth Quarter of Fiscal 2024 Form 8 K

Hologic Announces Financial Results for Fourth Quarter of Fiscal 2024

- Revenue of $987.9 Million, GAAP Diluted EPS of $0.76 and Non-GAAP Diluted EPS of $1.01 -

- Total Company Revenue Growth of 4.5%, or 4.2% in Constant Currency

and 5.0% Organically ex. COVID-19 in Constant Currency -

- Company Expects Strong Execution of its Broad-Based Growth Strategy in Fiscal 2025 -

MARLBOROUGH, Mass. (November 4, 2024) - Hologic, Inc. (Nasdaq: HOLX) announced today the Company's financial results for the fiscal fourth quarter ended September 28, 2024.

"We delivered strong fiscal 2024 results, reinforcing our track record of durable performance with another solid quarter of growth," said Steve MacMillan, Hologic's chairman, president, and chief executive officer. "Each year we grow stronger, leveraging our leading brands to drive diverse revenue growth and industry leading margins, while generating exceptional cash flow. We are excited for 2025, as we continue to drive market creation with our intense focus on workflow efficiency and automation, ultimately making a difference for our customers and patients worldwide."

Recent Highlights

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. Our fiscal fourth quarter organic revenue results exclude the divested Blood Screening and SSI ultrasound imaging businesses, as well as the acquired Endomagnetics business. Revenue from acquired businesses is generally included in organic revenue starting a year after the acquisition.

Revenue Detail

Other Financial Highlights

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Financial Guidance for the First Quarter and Full-Year Fiscal 2025

"In our fiscal fourth quarter of 2024, Hologic delivered strong financial performance, capping off another solid year of growth," said Karleen Oberton, Hologic's chief financial officer. "Looking ahead to fiscal 2025, our robust balance sheet and projected strong cash flows provide exceptional operational flexibility, positioning us well to achieve sustainable revenue growth and even faster EPS growth over the long term."

Hologic's financial guidance for the first quarter and full year 2025 is shown in the table below. The guidance is based on a full year non-GAAP tax rate of approximately 19.5%, and diluted shares outstanding of approximately 235 million for the full year. Constant currency guidance assumes that foreign exchange rates are the same in fiscal 2025 as in fiscal 2024. Organic revenue guidance for fiscal 2025 is in constant currency and excludes the divested Blood Screening and SSI ultrasound imaging businesses. Revenue from acquired businesses is generally included in organic revenue guidance starting a year after the acquisition. Organic revenue excluding COVID-19 is in constant currency and is organic revenue excluding COVID-19 assay revenue, COVID-19 related revenue, and discontinued product sales in Diagnostics.

The guidance below includes the financial results of the closed Endomagnetics acquisition for the full year, which will become organic in the fourth quarter of fiscal 2025, but does not include any contribution from the Gynesonics acquisition, which has not closed. There is no year over year net selling day impact comparing 2025 to 2024. First quarter and full year fiscal 2025 guidance incorporates the expected impact from the ongoing temporary stop-ship of Horizon DXA systems (Skeletal).

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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-19; non-GAAP gross margin; non-GAAP operating expenses; non-GAAP operating margin; non-GAAP effective tax rate; non-GAAP net income; non-GAAP net income margin; non-GAAP EPS; adjusted EBITDA; adjusted net leverage ratio and adjusted ROIC. Organic revenue for the fiscal fourth quarter of 2024 excludes the divested Blood Screening and SSI ultrasound imaging businesses and the acquired Endomagnetics business. Revenue from acquired businesses is generally included in organic revenue starting a year after the acquisition. Organic revenue excluding COVID-19 revenues is organic revenue less COVID-19 assay revenue, COVID-19 related sales of instruments, collection kits and ancillaries, COVID-19 related revenue from Diagenode and Mobidiag, as well as COVID-19 related license revenue, and revenues from discontinued products in Diagnostics. 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; (ii) the impairment of goodwill and intangible assets and equipment and the loss to record assets held-for-sale to fair value less costs to sell; (iii) adjustments to record contingent consideration at fair value; (iv) charges to write-off inventory for a product line discontinuance; (v) the fair value write-up of acquired inventory sold during the period (vi) restructuring charges, facility closure and consolidation charges (including accelerated depreciation), and costs incurred to integrate acquisitions (including retention, transaction bonuses, legal and professional consulting services); (vii) transaction related expenses for acquisitions and dispositions; (viii) third-party expenses incurred related to the implementation of the European MDR/IVDR requirements and obtaining the appropriate approvals for its existing products; (ix) debt extinguishment losses and related transaction costs; (x) unrealized (gains) losses on the mark-to-market of foreign currency contracts to hedge operating results for which the Company has not elected hedge accounting; (xi) litigation settlement charges (benefits) and non-income tax related charges (benefits); (xii) other-than-temporary impairment losses on investments and realized gains and losses resulting from the sale of investments; (xiii) the impacts related to internal restructurings and non-operational items; (xiv) 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 (xv) income taxes related to such adjustments. The Company defines adjusted EBITDA as its non-GAAP net income plus net interest income/expense, income taxes, and depreciation and amortization expense included in its non-GAAP net income. The Company defines its adjusted net leverage ratio as the principal amount of its debt net of cash and cash equivalents, divided by its adjusted EBITDA for the last four quarters. The Company defines its adjusted ROIC as its non-GAAP operating income for a trailing twelve months tax effected by its non-GAAP effective tax rate divided by the sum of its average net debt and stockholders' equity, which is adjusted to exclude the after-tax effects of goodwill and intangible assets and equipment impairment charges.

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 many of which 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 2024. Interested participants may listen to the call by dialing 888-394-8218 (in the U.S. and Canada) or +1 773-305-6853 (for international callers) and referencing access code 4567924. Participants may also click to join. Participants should dial in 5-10 minutes before the call begins. The Company will also provide a live and replay webcast of the call at hologic.com/investors. The replay of the call will be available approximately two hours after the call ends through Wednesday, December 4, 2024.

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; the ASR program, which is subject to the finalization and execution of a definitive agreement on terms and conditions satisfactory to Hologic; 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.

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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 ongoing and possible future effects of global challenges, including macroeconomic uncertainties, such as inflation, bank failures, rising interest rates and availability of capital markets, geopolitical conflicts, wars, other economic disruptions and U.S. and global recession concerns, on the Company's customers and suppliers and on the Company's business, financial condition, results of operations and cash flows and the Company's ability to draw down its revolver; the effect of the worldwide political and social uncertainty and divisions, including the impact on trade regulation and tariffs, that may adversely impact the cost and sale of the Company's products in certain countries, or increase the costs the Company may incur to purchase materials, parts and equipment from its suppliers; the ability to execute acquisitions and the impact and anticipated benefits of completed acquisitions and acquisitions the Company may complete in the future; the development of new competitive technologies and products and competition; the Company's ability to predict accurately the demand for its products, and products under development and to develop strategies to address markets successfully; continued demand for the Company's COVID-19 assays; potential cybersecurity threats and targeted computer crime; the ongoing and possible future effects of supply chain constraints, including the availability of critical raw materials and components, as well as cost inflation in materials, packaging and transportation; the possibility of interruptions or delays at the Company's manufacturing facilities, or the failure to secure alternative suppliers if any of the Company's sole source third-party manufacturers fail to supply the Company; the ability to consolidate certain of the Company's manufacturing and other operations on a timely basis and within budget, without disrupting its business and to achieve anticipated cost synergies related to such actions; 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 ability to obtain and maintain regulatory approvals and clearances for the Company's products, including the implementation of the European Union Medical Device Regulations and In Vitro Diagnostic Regulation requirements, and to maintain compliance with complex and evolving regulations and quality standards, as well as the uncertainty of costs required to obtain and maintain compliance with such regulatory and quality matters; 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; 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; the effect of any future public health crises, including the timing, scope and effect of U.S. and international governmental, regulatory, fiscal, monetary and public health responses to such crises; 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; cost and expenses of investigative and legal proceedings and compliance risks; potential negative impacts resulting from climate change or other environmental, social and governance and sustainability related matters; and technical innovations that could render products marketed or under development by the Company obsolete.

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.

Contact:

Ryan Simon

Vice President, Investor Relations

[email protected]

(858) 410-8514

SOURCE: Hologic, Inc.

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HOLOGIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In millions, except number of shares, which are reflected in thousands, and per share data)

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HOLOGIC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)

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HOLOGIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)

*Includes $33.2 million of cash recorded in assets held-for-sale - current assets as of September 30, 2023.

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HOLOGIC, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(Unaudited)

(In millions, except earnings per share)

Reconciliation of GAAP Revenue to Organic Revenue

*Revenues estimated to be related to COVID assay sales for instruments, collection kits and ancillaries.

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		Three Months Ended			Years Ended
		September 28, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Gross Profit:
GAAP gross profit		$	557.7			$	500.3			$	2,227.8			$	2,071.5
Adjustments:
Amortization of acquired intangible assets (1)			45.5				46.4				180.5				205.7
Impairment of intangible assets and equipment (14)			-				-				39.2				179.5
Product line discontinuance (13)			-				24.7				7.1				24.7
Integration/consolidation costs (3)			-				-				-				(0.1	)
Fair value write-up of acquired inventory sold (17)			4.3				-				4.3				-
Non-GAAP gross profit		$	607.5			$	571.4			$	2,458.9			$	2,481.3
Gross Margin Percentage:
GAAP gross margin percentage			56.5	%			52.9	%			55.3	%			51.4	%
Impact of adjustments above			5.0	%			7.5	%			5.7	%			10.2	%
Non-GAAP gross margin percentage			61.5	%			60.4	%			61.0	%			61.6	%
Operating Expenses:
GAAP operating expenses		$	327.6			$	367.8			$	1,345.2			$	1,403.1
Adjustments:
Amortization of acquired intangible assets (1)			(4.9	)			(6.2	)			(29.2	)			(28.1	)
Impairment of intangible assets and equipment (14)			-				-				(5.6	)			(44.3	)
Transaction expenses (4)			(4.2	)			(1.1	)			(7.6	)			(1.4	)
Contingent consideration adjustments (7)			-				2.5				(1.7	)			14.9
Integration/consolidation costs (3)			(0.3	)			(0.3	)			(0.3	)			(0.8	)
Purchased R&D asset charge (16)			-				-				(10.0	)			-
MDR expenses (2)			-				(0.2	)			-				(1.5	)
Legal related settlement charges (11)			(1.0	)			-				(1.0	)			(1.3	)
Loss on assets held-for-sale (19)			-				(51.7	)			-				(51.7	)
Restructuring charges (3)			(6.2	)			(7.1	)			(41.1	)			(12.0	)
Non-income tax charges (5)			-				-				-				(2.9	)
Non-GAAP operating expenses		$	311.0			$	303.7			$	1,248.7			$	1,274.0
Operating Margin:
GAAP income from operations		$	230.1			$	132.5			$	882.6			$	668.4
Adjustments to gross profit as detailed above			49.8				71.1				231.1				409.8
Adjustments to operating expenses as detailed above			16.6				64.1				96.5				129.1
Non-GAAP income from operations		$	296.5			$	267.7			$	1,210.2			$	1,207.3
Operating Margin Percentage:
GAAP income from operations margin percentage			23.3	%			14.0	%			21.9	%			16.6	%
Impact of adjustments above			6.7	%			14.3	%			8.1	%			13.4	%
Non-GAAP operating margin percentage			30.0	%			28.3	%			30.0	%			30.0	%
Pre-Tax Income:
GAAP pre-tax earnings		$	221.6			$	145.6			$	865.1			$	676.1
Adjustments to pre-tax earnings as detailed above			66.4				135.2				327.6				538.9
Debt extinguishment loss (6)			-				-				0.4				-
Other income (18)			(6.3	)			-				(6.3	)			-
Unrealized losses (gains) on forward foreign currency contracts (8)			14.1				(7.5	)			20.1				11.4
Non-GAAP pre-tax income		$	295.8			$	273.3			$	1,206.9			$	1,226.4
Net Income:
GAAP net income		$	178.6			$	90.6			$	789.5			$	456.0
Adjustments:
Amortization of acquired intangible assets (1)			50.4				52.6				209.7				233.8
Impairment of intangible assets and equipment (14)			-				-				44.8				223.8
Restructuring and integration/consolidation costs (3)			6.5				7.4				41.4				12.7
Fair value write-up of acquired inventory sold (17)			4.3				-				4.3				-
Purchased R&D asset charge (16)			-				-				10.0				-
Product line discontinuance (13)			-				24.7				7.1				24.7
MDR expenses (2)			-				0.2				-				1.5
Debt extinguishment loss (6)			-				-				0.4				-
Legal related settlement charges (11)			1.0				-				1.0				1.3
Transaction expenses (4)			4.2				1.1				7.6				1.4
Contingent consideration adjustments (7)			-				(2.5	)			1.7				(14.9	)
Loss on assets held-for-sale (19)			-				51.7				-				51.7
Other income (18)			(6.3	)			-				(6.3	)			-
Unrealized losses (gains) on forward foreign currency contracts (8)			14.1				(7.5	)			20.1				11.4
Non-income tax charges (5)			-				-				-				2.9
Worthless stock deduction (15)			-				-				(107.2	)			-
Income tax related items (9)			(0.9	)			19.5				14.7				82.1
Income tax effect of reconciling items (12)			(14.4	)			(18.5	)			(70.1	)			(104.2	)
Non-GAAP net income		$	237.5			$	219.3			$	968.7			$	984.2
Net Income Margin Percentage:
GAAP net income margin percentage			18.1	%			9.6	%			19.6	%			11.3	%
Impact of adjustments above			5.9	%			13.6	%			4.4	%			13.1	%
Non-GAAP net income margin percentage			24.0	%			23.2	%			24.0	%			24.4	%
Earnings per Share:
GAAP income per share - Diluted		$	0.76			$	0.37			$	3.32			$	1.83
Adjustment to net income (as detailed above)			0.25				0.52				0.76				2.13
Non-GAAP earnings per share - diluted (10)		$	1.01			$	0.89			$	4.08			$	3.96
Adjusted EBITDA:
Non-GAAP net income		$	237.5			$	219.3			$	968.7			$	984.2
Interest expense (income), net			3.6				(7.8	)			13.4				(9.4	)
Provision for income taxes			58.5				54.0				238.4				242.2
Depreciation expense, not adjusted above			24.1				22.8				92.2				89.6
Adjusted EBITDA		$	323.7			$	288.3			$	1,312.7			$	1,306.6

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Explanatory Notes to Reconciliations:

(1) To reflect non-cash expenses attributable to the amortization of acquired intangible assets.

(2) To reflect the exclusion of third-party expenses incurred to obtain compliance with the European Medical Device Regulation requirement for the Company's existing products for which it already had FDA approval and/or CE mark.

(3) To reflect restructuring charges, and certain costs associated with the Company's integration and facility consolidation plans, which primarily include severance, retention and transfer costs, as well as costs incurred to integrate acquisitions, including consulting, legal and tax fees. In addition, this category includes additional expenses, primarily accelerated depreciation and an impairment on a lease asset incurred in fiscal 2024 related to closing certain facilities in the Diagnostics business.

(4) To reflect expenses with third parties related to acquisitions prior to when such transactions are completed. These expenses primarily comprise legal, consulting and due diligence fees.

(5) To reflect the net impact of establishing a non-income tax loss contingency related to prior years and the settlement of a prior year non-income tax audit.

(6) To reflect a debt extinguishment loss for the prepayment of debt under the Credit Agreement in first quarter of fiscal 2024.

(7) To reflect an adjustment to the estimated contingent consideration liability related to the Acessa Health acquisition, which was payable upon meeting defined revenue growth metrics.

(8) To reflect non-cash unrealized gains and losses on the mark-to-market on outstanding forward foreign currency contracts, which have not been designated for hedge accounting.

(9) To reflect the net impact of income tax reserves from the expiration of the statute of limitations, and non-recurring income tax charges and benefits.

(10) Non-GAAP earnings per share were calculated based on 235,971 and 237,553 weighted average diluted shares outstanding for the three and twelve months ended September 28, 2024, respectively, and 247,142 and 248,831 for the three and twelve months ended September 30, 2023, respectively.

(11) To reflect net charges and benefits from legal related settlements.

(12) To reflect the tax effects of Non-GAAP reconciling items, excluding specific income tax related items separately stated in Note 9 and the worthless stock deduction in Note 15. Amounts are calculated using the effective tax rate in the jurisdiction to which the adjustment relates.

(13) To reflect the write-off of inventory and charges for non-cancellable purchase orders related to a product line discontinuance in the Diagnostics division.

(14) To reflect an impairment charge for an in-process research and development intangible asset acquired in the Mobidiag acquisition during the first quarter of fiscal 2024 and impairment charges related to intangible assets from the Focal acquisition recorded during the second and third quarters of fiscal 2024. To reflect impairment charges for intangible assets and equipment acquired in the Mobidiag acquisition and impairment of our SSI ultrasound imaging assets recorded during the third quarter of fiscal 2023.

(15) To reflect the discrete tax benefit related to a worthless stock deduction on the investment in one of the Company's international subsidiaries.

(16) To reflect the purchase of an intangible asset to be used in a research and development project that has no future alternative use.

(17) To reflect the fair value write-up of inventory sold during the period related to the Endomagnetics acquisition during the fourth quarter of fiscal 2024.

(18) To reflect amounts owed to the Company for a change in control provision related to a license agreement.

(19) To reflect the loss to record the SSI ultrasound imaging business to fair value as the business was designated as assets held-for-sale during the fourth quarter of fiscal 2023.

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Reconciliation of GAAP to non-GAAP EPS Guidance:

Return on Invested Capital (ROIC) Reconciliation of Net Income to ROIC:

(1) ROIC is presented on a TTM basis; non-GAAP effective tax rate for the trailing twelve month period was 19.75%.

(2) Calculated using the average of the balances as of September 28, 2024 and September 30, 2023.

(3) For Adjusted ROIC, stockholder's equity is adjusted (increased) to eliminate the effect of the impairment of intangible assets of $32.2 million in fiscal 2014, the impairment of goodwill of $685.7 million and an IPR&D asset of $46.0 million in fiscal 2018, the impairment of intangible assets and equipment of $685.4 million in fiscal 2019, the impairment of intangible assets and equipment of $30.2 million in fiscal 2020, the impairment of intangible assets of $45.1 million in fiscal 2022, the impairment of intangible assets and equipment of $223.8 million in fiscal 2023 and the impairment of an intangible asset of $4.3 million in the first quarter of fiscal 2024, $26.8 million in the second quarter of fiscal 2024 and $13.7 million in the third quarter of fiscal 2024. The impact of the intangible asset impairment charges is reflected net of tax.

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Other Supplemental Information:

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