HOLOGIC, INC. 
By BEDFORD, Mass.,
Highlights of the quarter include:
-- Record revenues of $371.4 million.
-- Merger with Cytyc Corporation on October 22, 2007 contributes $158
million of revenue (for 10 of 13 weeks).
-- Record 384 Selenia full field digital mammography systems installed and
recognized as revenue.
-- Record backlog of $244.5 million for historical businesses
(mammography/breast care/skeletal health).
-- Issued $1.725 billion of convertible senior notes (at 2% interest).
-- Term loan balance reduced to $295 million at December 29, 2007.
-- Reported net loss of $358.6 million due primarily to non-cash charges
related to the Cytyc merger.
-- Hologic was added to the Nasdaq-100 index(R) on December 24, 2007.
First quarter fiscal 2008 revenues totaled
The Company's non-GAAP adjusted net income for the first quarter of fiscal
2008 increased 213% to
-- a $370.0 million charge for the in-process research and development
costs related to Cytyc;
-- a $41.5 million increase in cost of revenues relating to the write-up
of acquired inventory to fair value;
-- a $26.2 million charge to operating expenses to amortize the intangible
assets acquired from Cytyc, AEG, BioLucent, Fischer, R2 and Suros;
-- a $2.9 million impairment charge for certain intangible assets acquired
from Cytyc and written-off; and
-- a $7.6 million charge for stock-based compensation expense.
Non-GAAP adjusted net income is a non-GAAP financial measure. A reconciliation of this adjusted net income to the Company's net income for the first quarters of fiscal 2008 and 2007 is set forth in the supplemental disclosure schedule attached to this press release. The Company believes this non-GAAP measure is useful to investors in comparing the results of operations in fiscal 2008 to the comparable period in fiscal 2007 by eliminating certain of the more significant effects of the acquisitions that took place since fiscal 2006, as well as the Company's non-cash compensation expense associated with its stock option and other equity awards. Management uses this non-GAAP financial measure for this purpose, and these amounts are also excluded by the Company when calculating compliance with the Company's financial covenants under its credit facility. When analyzing the Company's operating performance, investors should not consider this non-GAAP measure as a substitute for net income prepared in accordance with GAAP.
Pro-forma revenue for the full quarter, as if the companies had been
combined in both periods, grew 24% to
As expected, the Company recorded in the current quarter the entire
expense of approximately
During the first quarter, Hologic recognized as revenue the sale of 384
Selenia full-field digital mammography systems. At
"We are pleased with our fiscal first quarter results which were slightly
above expectations and provide a solid foundation for achieving our goals this
fiscal year," said
In connection with its transformational merger with Cytyc in early fiscal 2008, the Company added two significant new operating segments and combined a number of previous operating segments to better align the new resources of the combined company.
The Company now has four reporting segments: Breast Health (formerly Mammography/Breast Care), Diagnostics, GYN Surgical and Skeletal Health. The Diagnostics and GYN Surgical reporting segments were previously part of Cytyc. The AEG and MammoSite (formerly a part of Cytyc) operations are now included in Breast Health, and the osteoporosis assessment, mini C-arm and MRI products are included in Skeletal Health.
First quarter financial overview by segment:
-- Breast Health revenues increased 43% to $197.0 million for the first
quarter of fiscal 2008 from $137.6 million for the same period in
fiscal 2007. This increase was primarily due to continued increasing
sales of Selenia together with R2 CAD software and the inclusion of the
recently acquired MammoSite product from Cytyc. Operating income for
this business segment in the first quarter of fiscal 2008 increased to
$42.7 million compared to operating income of $24.6 million in the
first quarter of fiscal 2007. This increase in operating income in the
current quarter was primarily due to the significant increase in
revenues and the higher gross margins on increasing product sales of
Selenia and, to a lesser extent, lower cost of CAD in connection with
our acquisition of R2. The operating income included a $2.5 million
charge to cost of revenues relating to the write-up of inventory to
fair market value in connection with the Cytyc merger. Breast Health
costs and expenses in the first quarters of fiscal 2008 and 2007
included $4.9 million and $1.2 million, respectively, of stock-based
compensation.
-- Diagnostics revenues, which includes the Company's ThinPrep products
and Full Term Fetal Fibronectin test, totaled $100.3 million for the
first fiscal quarter of 2008. The Company recognized no revenues from
this segment prior to the completion of its merger with Cytyc on
October 22, 2007. The operating loss for this business segment in the
first quarter of fiscal 2008 was $82.0 million. The operating loss
included an $85.2 million charge for in-process research and
development and a $26.6 million charge to cost of revenues relating to
the write-up of inventory to fair market value in connection with the
Cytyc merger. Costs and expenses for this business segment in the first
quarter of fiscal 2008 included $1.0 million of stock-based
compensation.
-- GYN Surgical revenues, which includes the Company's NovaSure
endometrial ablation system and the Company's Adiana complete
transcervical sterilization system under development, totaled $49.9
million for the first fiscal quarter of 2008. The Company recognized no
revenues from this segment prior to the completion of its merger with
Cytyc on October 22, 2007. The operating loss for this business segment
in the first quarter of fiscal 2008 was $282.9 million. The operating
loss included a $284.8 million charge for in-process research and
development, a $12.4 million charge to cost of revenues relating to the
write-up of inventory to fair market value and an impairment charge of
$2.9 million for certain intangible assets related to the Cytyc merger.
Costs and expenses for this business segment in the first quarter of
fiscal 2008 included $.7 million of stock-based compensation.
-- Skeletal Health revenues decreased to $24.3 million for the first
quarter of fiscal 2008 from $25.6 million for the same period in fiscal
2007. This decrease was primarily due to a reduction in the number of
bone densitometry systems sold and a slight shift to lower end bone
densitometry systems with lower average selling prices. The operating
loss for this business segment in the first quarter of fiscal 2008 was
$.6 million compared to operating income of $1.9 million in the first
quarter of fiscal 2007, reflecting an inventory impairment charge of
$2.0 million in the current quarter and a shift to more systems with
fewer features, lower selling prices and earning lower gross margins
which was offset in part by lower operating expenses. Skeletal Health
costs and expenses in the first quarters of fiscal 2008 and 2007
included $1.0 million and $.3 million, respectively, of stock-based
compensation.
Hologic's management will host a conference call today at
About Hologic, Inc.
Hologic, Inc. is a leading developer, manufacturer and supplier of premium diagnostics, medical imaging systems and surgical products dedicated to serving the healthcare needs of women. Hologic's core business units are focused on breast health, diagnostics, GYN surgical, and skeletal health. Hologic provides a comprehensive suite of technologies with products for mammography and breast biopsy, radiation treatment for early-stage breast cancer, cervical cancer screening, treatment for menorrhagia, osteoporosis assessment, preterm birth risk assessment, and mini C-arm for extremity imaging. For more information visit www.hologic.com.
Forward Looking Disclaimer
This News Release contains forward-looking information that involves risks and uncertainties, including statements regarding the Company's plans, objectives, expectations and intentions. Such statements include, without limitation, statements regarding: the Company's backlog and any implication that the Company's backlog may be indicative of future sales; and the Company's expectations regarding the demand for the Company's products and the anticipated benefits from its business combination with Cytyc. 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.
The Company's backlog consists of purchase orders for which delivery is scheduled within the next twelve months, as specified by the customer. In certain circumstances, orders included in backlog may be canceled or rescheduled by customers without significant penalty. Therefore, backlog as of any particular date should not be relied upon as indicative of the Company's revenues for any future period.
In addition to its merger with Cytyc, Hologic has recently acquired AEG Elektrofotografie, R2 Technologies, Suros Surgical Systems and BioLucent, Inc., and prior to Hologic's acquisition of Cytyc, Cytyc had recently acquired Adiana, Inc. and Adeza BioMedical Corp. Risks and uncertainties relating to the Cytyc merger and these acquisitions could cause actual results to materially differ from those contemplated by the forward-looking statements. Such risks and uncertainties include, without limitation: the ability of Hologic to successfully integrate acquired businesses, which may result in the combined companies not operating as effectively and efficiently as expected; the ability and time it may take to achieve the expected synergies from its acquisitions; the risk that the Company may incur unexpected costs or liabilities in connection with an acquisition; the risk that the combined companies may be adversely affected by future legislative, regulatory, or tax changes as well as other economic, business and/or competitive factors; risks associated with international operations; financing risks associated with its acquisition of Cytyc, including risks associated with the Company's significant debt incurred in financing that transaction, including the Company's obligation to meet financial covenants and payment obligations under the Company's financing arrangements and leases, restrictive covenants that may limit the Company's ability to engage in advantageous transactions and other risks generally associated with the substantial leverage and other limitations resulting from such financing.
Other risks and uncertainties that could adversely affect the Company's business and prospects include without limitation: the Company's reliance on third party reimbursement policies to support the sales and market acceptance of its products; manufacturing risks that may limit the Company's ability to increase commercial production of the Selenia and other of the Company's digital products, including the Company's reliance on a single source of supply for some key components of its products as well as the need to comply with especially high standards for those components and in the manufacture of digital X-ray products in general; uncertainties inherent in the development of new products and the enhancement of existing products, including technical and regulatory risks, cost overruns and delays; the risk that newly introduced products may contain undetected errors or defects or otherwise not perform as anticipated; the ability of the Company's sales force to successfully service its product offerings; the Company's ability to successfully manage current or future acquisitions, alliances or joint ventures; 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; expenses and uncertainties relating to litigation; technical innovations that could render products marketed or under development by the Company obsolete; competition; general worldwide economic conditions and related uncertainties; future legislative, regulatory, or tax changes as well as other economic, business and/or competitive factors; and the effect of exchange rate fluctuations on international operations. The risks included above are not exhaustive.
Other factors that could adversely affect the Company's business and prospects are described in the Company's filings with the Securities and Exchange Commission. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based.
HOLOGIC, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
ASSETS
December 29, September 29,
2007 2007
CURRENT ASSETS:
Cash and cash equivalents $189,329 $100,403
Accounts receivable, net 288,404 152,743
Inventories 150,070 105,289
Deferred income tax asset 36,763 29,356
Prepaid expenses and other current assets 88,313 11,389
Total current assets 752,879 399,180
Property and equipment, net 258,741 69,769
Intangible assets, net 2,630,245 174,361
Goodwill, net 4,191,182 407,528
Other assets, net 65,581 15,511
$7,898,628 $1,066,349
LIABILITIES AND STOCKHOLDERS' EQUITY
December 29, September 29,
2007 2007
CURRENT LIABILITIES:
Current portion of notes payable $2,914 $1,977
Accounts payable 60,104 42,289
Accrued expenses 127,049 88,577
Deferred revenue 60,333 45,769
Total current liabilities 250,400 178,612
Notes payable, net of current portion 304,980 9,222
Convertible debt 1,728,694 -
Deferred tax liabilities 945,470 54,866
Deferred revenue 9,985 10,135
Other long term liabilities 49,357 7,791
Total long term liabilities 3,038,486 82,014
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value-Authorized -
300,000 shares Issued - 127,362 and 55,150
shares, respectively 1,274 551
Capital in excess of par value 4,794,813 634,029
Retained earnings (190,635) 168,453
Accumulated other comprehensive income 5,723 4,123
Treasury stock, 107 and 90 shares,
respectively, at cost (1,433) (1,433)
Total stockholders' equity 4,609,742 805,723
$7,898,628 $1,066,349
HOLOGIC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended
December 29, December 30,
2007 2006
REVENUES $371,445 $163,212
COSTS AND EXPENSES (1):
Cost of revenues 183,455 85,785
Cost of revenues - amortization of intangible
assets 20,155 3,072
Research and development 20,147 10,816
Selling and marketing 56,986 20,883
General and administrative 34,334 14,731
Amortization of acquired intangible assets 6,249 1,408
Impairment of acquired intangible assets 2,900 -
Acquired in-process research and development 370,000 -
694,226 136,695
(Loss) income from operations (322,781) 26,517
Interest income 2,253 261
Interest and other expense, net (31,674) (842)
(Loss) income before provision for income taxes (352,202) 25,936
Provision for income taxes 6,405 9,850
Net (loss) income ($358,607) $16,086
Net (loss) income per common and common
equivalent share:
Basic ($3.31) $0.31
Diluted ($3.31) $0.30
Weighted average number of common shares
outstanding:
Basic 108,441 52,617
Diluted 108,441 54,394
(1) Stock-based Compensation included in Costs
and Expenses:
Cost of revenues $725 $173
Research and development 686 210
Selling and marketing 715 144
General and administrative 5,457 989
$7,583 $1,516
Hologic, Inc. and Subsidiaries
Consolidated Statements of Operations and
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted Net Income
(Unaudited)
(In thousands)
Three Months Ended Three Months Ended
December 29, 2007 December 30, 2006
Adjust- Adjust-
GAAP ments Non-GAAP GAAP ments Non-GAAP
REVENUES $371,445 - $371,445 $163,212 - $163,212
COSTS AND
EXPENSES:
Cost of
revenues 183,455 (725)(1) 141,187 85,785 (173)(1) 85,612
(41,543)(3)
Cost of revenues -
Amortization
of intangible
assets 20,155 (19,927)(2) 228 3,072 (2,844)(2) 228
Research and
development 20,147 (686)(1) 19,461 10,816 (210)(1) 10,606
Selling and
marketing 56,986 (715)(1) 56,271 20,883 (144)(1) 20,739
General and
administrative 34,334 (5,457)(1) 28,877 14,731 (989)(1) 13,742
Amortization of
acquired
intangible
assets 6,249 (6,249)(2) - 1,408 (1,408)(2) -
Impairment charge 2,900 (2,900)(4) - - - -
Charge for
in-process
research and
development 370,000 (370,000)(5) - - - -
694,226 (448,202) 246,024 136,695 (5,768) 130,927
(Loss) income
from
operations (322,781) 448,202 125,421 26,517 5,768 32,285
Interest income 2,253 - 2,253 261 - 261
Interest and
other income
(expense), net (31,674) - (31,674) (842) - (842)
(Loss) income
before provision
for income
taxes (352,202) 448,202 96,000 25,936 5,768 31,704
Provision for
income taxes 6,405 28,153(6) 34,558 9,850 2,192(7) 12,042
Net (loss)
income ($358,607) $420,049 $61,442 $16,086 $3,576 $19,662
(1) - (7) see explanatory notes on following pages.
Hologic, Inc. and Subsidiaries
Consolidated Statements of Operations and
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted Net Income
(Unaudited)
(dollars in thousands)
The Company has provided net income on a non-GAAP basis for the first quarter of fiscal 2008 and 2007 excluding certain acquisition related charges and stock compensation expense. A reconciliation of this non-GAAP financial measure to the Company's net (loss) income for the first quarter of fiscal 2008 and 2007 is set forth in the supplemental schedule above. The Company believes that this non-GAAP measure is useful to investors in comparing the results of operations in the first quarter of fiscal 2008 to the comparable period in fiscal 2007 by eliminating certain of the more significant effects of the acquisitions since fiscal 2006, as well as the Company's non-cash compensation expense associated with its stock option and other equity awards. Management uses this non-GAAP financial measure for this purpose, and these amounts are also excluded by the Company when calculating compliance with the Company's financial covenants under its credit facility. When analyzing the Company's operating performance, investors should not consider this non-GAAP measure as a substitute for net (loss) income prepared in accordance with GAAP.
(1) To exclude the impact of stock based compensation expense in
accordance with Statement of Financial Accounting Standards ("SFAS")
No. 123R. For the three months ended December 29, 2007 and December
30, 2006, the total pre-tax expense for all stock based compensation
expense in accordance with SFAS No. 123R was $7,583 and $1,516,
respectively.
(2) To exclude the ongoing, non-cash amortization of the intangible assets
acquired since fiscal 2006.
(3) To exclude the increase in cost of revenues resulting from the
write-up of acquired Cytyc inventory sold during the first quarter of
fiscal 2008.
(4) To exclude the non-cash expense associated with the write-off of
certain intangible assets acquired from Cytyc in the first quarter of
fiscal 2008.
(5) To exclude the non-cash expense associated with the write-off the
acquired in-process research and development related to the
acquisition of Cytyc in the first quarter of fiscal 2008.
(6) To reflect the tax effect at an estimated effective rate of 36% of
adjustments (1), (2), (3) and (4) above.
(7) To reflect the tax effect at an estimated effective rate of 38% of
adjustment (1) and (2) above.
Contact:
Glenn P. Muir Frances Crecco
Executive Vice President & CFO Director, Investor Relations
Hologic, Inc. Hologic, Inc.
(781) 999-7300 (781) 999-7377
SOURCE Hologic, Inc.
