HOLOGIC INC [HOLX] Filings

10-Q 1 holx-20240629.htm 10-Q holx-20240629

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________________

FORM 10-Q

__________________________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 29, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-36214

__________________________________________________________

HOLOGIC, INC.

(Exact name of registrant as specified in its charter)

__________________________________________________________


Delaware						04-2902449
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
250 Campus Drive,
Marlborough,
Massachusetts						01752
(Address of principal executive offices)						(Zip Code)

(508) 263-2900

(Registrant’s telephone number, including area code)

__________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	HOLX	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 25, 2024, 232,271,906 shares of the registrant’s Common Stock, $0.01 par value, were outstanding.

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HOLOGIC, INC.

INDEX


		Page

PART I – FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements (unaudited)

	Consolidated Statements of Income for the Three and Nine Months Ended June 29 , 2024 and July 1 ,2023	3

	Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended June 29, 2024 and July 1, 2023	4

	Consolidated Balance Sheets as of June 29, 2024 and September 30, 2023	5

	Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended June 29, 2024 and Year Ended September 30, 2023	6

	Consolidated Statements of Cash Flows for the Nine Months Ended June 29, 2024 and July 1, 2023	8

	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47

Item 4.	Controls and Procedures	49

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	50

Item 1A.	Risk Factors	50

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51

Item 5.	Other Information	51

Item 6.	Exhibits	52

SIGNATURES		53

EXHIBITS

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

HOLOGIC, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

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


	Three Months Ended				Nine Months Ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Revenues:
Product	$	811.2	$	799.1	$	2,467.2	$	2,522.9
Service and other	200.2		185.3		575.1		562.2
	1,011.4		984.4		3,042.3		3,085.1
Costs of revenues:
Product	298.2		291.0		913.9		879.3
Amortization of acquired intangible assets	44.4		51.6		134.9		159.3
Impairment of intangible assets and equipment	13.3		179.5		39.2		179.5
Service and other	95.2		94.8		284.2		295.8
Gross profit	560.3		367.5		1,670.1		1,571.2
Operating expenses:
Research and development	64.1		72.6		205.5		221.4
Selling and marketing	146.3		149.8		439.4		455.7
General and administrative	94.0		90.2		306.2		299.5
Amortization of acquired intangible assets	5.3		7.1		24.3		21.9
Impairment of intangible assets and equipment	0.4		44.3		5.6		44.3

Contingent consideration - fair value adjustments	—		—		1.7		(12.4)


Restructuring charges	6.2		2.1		34.8		4.9
	316.3		366.1		1,017.5		1,035.3
Income from operations	244.0		1.4		652.6		535.9
Interest income	28.4		32.5		80.3		84.6
Interest expense	(31.9)		(27.7)		(90.2)		(83.0)

Other income (expense), net	0.2		5.9		0.8		(7.0)
Income before income taxes	240.7		12.1		643.5		530.5
Provision for income taxes	46.2		52.6		32.6		165.1
Net income (loss)	$	194.5	$	(40.5)	$	610.9	$	365.4
Net income (loss) per common share:
Basic	$	0.83	$	(0.16)	$	2.58	$	1.48
Diluted	$	0.82	$	(0.16)	$	2.57	$	1.47
Weighted average number of shares outstanding:
Basic	234,604		246,908		236,373		247,319
Diluted	236,466		246,908		238,081		249,393

See accompanying notes.

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HOLOGIC, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In millions)


	Three Months Ended				Nine Months Ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Net income (loss)	$	194.5	$	(40.5)	$	610.9	$	365.4
Changes in foreign currency translation adjustment	(2.8)		1.1		17.4		130.2




Changes in value of hedged interest rate swaps, net of tax of $0.1 and $(2.9) for the three and nine months ended June 29, 2024 and $1.2 and $(1.7) for the three and nine months ended July 1, 2023.
Gain (loss) recognized in other comprehensive income (loss), net	0.3		3.7		(9.3)		(5.6)

Other comprehensive income (loss)	(2.5)		4.8		8.1		124.6
Comprehensive income (loss)	$	192.0	$	(35.7)	$	619.0	$	490.0

See accompanying notes.

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HOLOGIC, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions, except number of shares, which are reflected in thousands, and par value)


	June 29, 2024		September 30, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	2,439.1	$	2,722.5


Accounts receivable, less reserves	628.5		625.6
Inventory	665.5		617.6
Prepaid expenses and other current assets	158.4		175.3
Prepaid income taxes	105.5		31.6
Assets held-for-sale - current assets	—		11.9

Total current assets	3,997.0		4,184.5
Property, plant and equipment, net	528.8		517.0
Intangible assets, net	687.6		888.6
Goodwill	3,291.1		3,281.3
Other assets	385.6		267.9
Total assets	$	8,890.1	$	9,139.3
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	37.5	$	287.0
Accounts payable	202.0		175.2
Accrued expenses	540.7		534.6
Deferred revenue	219.0		199.2
Finance lease obligations	3.2		3.1
Assets held-for-sale - current liabilities	—		8.2

Total current liabilities	1,002.4		1,207.3
Long-term debt, net of current portion	2,505.6		2,531.2
Finance lease obligations, net of current portion	12.9		15.3
Deferred income tax liabilities	17.8		20.2
Deferred revenue, net of current portion	14.8		13.8
Other long-term liabilities	385.7		334.6
Stockholders’ equity:
Preferred stock, $0.01 par value – 1,623 shares authorized; 0 shares issued	—		—
Common stock, $0.01 par value – 750,000 shares authorized; 300,787 and 299,940 shares issued, respectively	3.0		3.0
Additional paid-in-capital	6,213.1		6,141.2
Retained earnings	2,667.2		2,056.3
Treasury stock, at cost – 68,731 and 58,231 shares, respectively	(3,792.9)		(3,036.0)
Accumulated other comprehensive loss	(139.5)		(147.6)
Total stockholders’ equity	4,950.9		5,016.9
Total liabilities and stockholders’ equity	$	8,890.1	$	9,139.3

See accompanying notes.

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Hologic, Inc.

Consolidated Statements of Stockholders’ Equity

(In millions, except number of shares, which are reflected in thousands)


	Common Stock			Additional Paid-in- Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Total Stockholders’ Equity
	Number of Shares	Par Value								Number of Shares	Amount






























































































































































































































Balance at September 24, 2022	298,533	$	3.0	$	6,042.6	$	1,600.3	$	(238.2)	51,401	$	(2,531.5)	$	4,876.2
Exercise of stock options	267	—		10.3		—		—		—	—		10.3
Vesting of restricted stock units, net	514	—		(23.0)		—		—		—	—		(23.0)
Common stock issued under the employee stock purchase plan	171	—		10.2		—		—		—	—		10.2
Stock-based compensation	—	—		20.5		—		—		—	—		20.5
Net income	—	—		—		187.4		—		—	—		187.4
Other comprehensive income activity	—	—		—		—		110.9		—	—		110.9
Repurchase of common stock	—	—		—		—		—		1,539	(100.0)		(100.0)
Balance at December 31, 2022	299,485	$	3.0	$	6,060.6	$	1,787.7	$	(127.3)	52,940	$	(2,631.5)	$	5,092.5
Exercise of stock options	173	—		7.9		—		—		—	—		7.9
Vesting of restricted stock units, net	18	—		(0.2)		—		—		—	—		(0.2)

Stock-based compensation	—	—		23.2		—		—		—	—		23.2
Net income	—	—		—		218.5		—		—	—		218.5
Other comprehensive income activity	—	—		—		—		8.9		—	—		8.9
Repurchase of common stock	—	—		—		—		—		626	(50.0)		(50.0)
Balance at April 1, 2023	299,676	$	3.0	$	6,091.5	$	2,006.2	$	(118.4)	53,566	$	(2,681.5)	$	5,300.8
Exercise of stock options	64	—		3.3		—		—		—	—		3.3
Vesting of restricted stock units, net	15	—		(0.5)		—		—		—	—		(0.5)
Common stock issued under the employee stock purchase plan	177			11.3									11.3
Stock-based compensation	—	—		16.9		—		—		—	—		16.9
Net loss	—	—		—		(40.5)		—		—	—		(40.5)
Other comprehensive income activity	—	—		—		—		4.8		—	—		4.8
Repurchase of common stock(1)	—	—		—		—		—		1,424	(114.1)		(114.1)
Balance at July 1, 2023	299,932	$	3.0	$	6,122.5	$	1,965.7	$	(113.6)	54,990	$	(2,795.6)	$	5,182.0

Vesting of restricted stock units, net	8	—		(0.3)		—		—		—	—		(0.3)

Stock-based compensation	—	—		19.0		—		—		—	—		19.0
Net income	—	—		—		90.6		—		—	—		90.6
Other comprehensive income activity	—	—		—		—		(34.0)		—	—		(34.0)
Repurchase of common stock(1)	—	—		—		—		—		3,241	(240.4)		(240.4)
September 30, 2023	299,940	$	3.0	$	6,141.2	$	2,056.3	$	(147.6)	58,231	$	(3,036.0)	$	5,016.9
Exercise of stock options	124	—		5.0		—		—		—	—		5.0
Vesting of restricted stock units, net	432	—		(16.2)		—		—		—	—		(16.2)

Stock-based compensation	—	—		28.7		—		—		—	—		28.7
Net income	—	—		—		246.5		—		—	—		246.5
Other comprehensive income activity	—	—		—		—		28.8		—	—		28.8
Repurchase of common stock(1)	—	—		—		—		—		2,161	(155.9)		(155.9)
Accelerated share repurchase agreement	—	—		(100.0)		—		—		5,560	(400.0)		(500.0)
December 30, 2023	300,496	$	3.0	$	6,058.7	$	2,302.8	$	(118.8)	65,952	$	(3,591.9)	$	4,653.8
Exercise of stock options	79	—		3.2		—		—		—	—		3.2
Vesting of restricted stock units, net	16	—		(0.1)		—		—		—	—		(0.1)

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Common stock issued under the employee stock purchase plan	165	—		10.0		—		—		—	—		10.0
Stock-based compensation	—	—		25.8		—		—		—	—		25.8
Net income	—	—		—		169.9		—		—	—		169.9
Other comprehensive income activity	—	—		—		—		(18.2)		—	—		(18.2)

Accelerated share repurchase agreement	—	—		100.0		—		—		1,428	(100.0)		—
March 30, 2024	300,756	$	3.0	$	6,197.6	$	2,472.7	$	(137.0)	67,380	$	(3,691.9)	$	4,844.4
Exercise of stock options	24	—		1.2		—		—		—	—		1.2
Vesting of restricted stock units, net	7	—		(0.3)		—		—		—	—		(0.3)
Common stock issued under the employee stock purchase plan	—	—		—		—		—		—	—		—
Stock-based compensation	—	—		14.6		—		—		—	—		14.6
Net income	—	—		—		194.5		—		—	—		194.5
Other comprehensive income activity	—	—		—		—		(2.5)		—	—		(2.5)
Repurchase of common stock(1)	—	—		—		—		—		1,351	(101.0)		(101.0)
June 29, 2024	300,787	$	3.0	$	6,213.1	$	2,667.2	$	(139.5)	68,731	$	(3,792.9)	$	4,950.9

(1) Includes excise tax on share repurchases.

See accompanying notes.

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HOLOGIC, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)


	Nine Months Ended
	June 29, 2024		July 1, 2023
OPERATING ACTIVITIES
Net income	$	610.9	$	365.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	75.2		66.7
Amortization of acquired intangible assets	159.2		181.2

Stock-based compensation expense	69.1		60.6
Deferred income taxes	(52.3)		(100.2)

Intangible asset and equipment impairment charges	44.8		223.8



Contingent consideration - fair value adjustments	1.7		(12.4)





Other adjustments and non-cash items	32.4		30.6
Changes in operating assets and liabilities, excluding the effect of acquisitions and dispositions:
Accounts receivable	(2.5)		(51.0)
Inventories	(47.1)		(48.5)
Prepaid income taxes	(73.9)		15.3
Prepaid expenses and other assets	(4.2)		24.6
Accounts payable	26.5		(20.3)
Accrued expenses and other liabilities	58.5		10.7
Deferred revenue	19.9		46.0
Net cash provided by operating activities	918.2		792.5
INVESTING ACTIVITIES


Sale of business, net of cash disposed	(31.3)		—
Capital expenditures	(56.0)		(55.5)
Proceeds from the Department of Defense	—		20.5
Increase in equipment under customer usage agreements	(43.9)		(42.2)





Strategic investments	(42.5)		(10.0)

Purchase of intellectual property	(10.0)		—
Other activity	(1.6)		(8.9)

Net cash used in investing activities	(185.3)		(96.1)
FINANCING ACTIVITIES

Repayment of long-term debt	(278.1)		(11.3)







Payment of contingent consideration	(2.6)		(7.6)

Payment of deferred acquisition consideration	—		(0.8)



Repurchases of common stock	(776.8)		(263.6)

Proceeds from issuance of common stock pursuant to employee stock plans	25.2		37.7
Payment of minimum tax withholdings on net share settlements of equity awards	(16.6)		(23.7)
Payments under finance lease obligations	(2.9)		(3.3)
Net cash used in financing activities	(1,051.8)		(272.6)
Effect of exchange rate changes on cash and cash equivalents	2.3		1.7
Net (decrease) increase in cash and cash equivalents	(316.6)		425.5
Cash and cash equivalents, beginning of period*	2,755.7		2,339.5
Cash and cash equivalents, end of period	$	2,439.1	$	2,765.0

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

See accompanying notes.

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HOLOGIC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

(1) Basis of Presentation

The unaudited consolidated financial statements of Hologic, Inc. (“Hologic” or the “Company”) presented herein have been prepared pursuant to the rules of the Securities and Exchange Commission (the “SEC”) for quarterly reports on Form 10-Q and do not include all of the information and disclosures required by U.S. generally accepted accounting principles (“GAAP”) for annual financial statements. These unaudited financial statements should be read in conjunction with the consolidated financial statements and related notes for the fiscal year ended September 30, 2023 included in the Company’s annual report on Form 10-K filed with the SEC on November 21, 2023. In the opinion of management, the unaudited financial statements and notes contain all adjustments (consisting of normal recurring accruals and all other necessary adjustments) considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the periods presented.

The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

The preparation of financial statements in conformity with GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from management’s estimates if past experience or other assumptions do not turn out to be substantially accurate. Operating results for the three and nine months ended June 29, 2024 are not necessarily indicative of the results to be expected for any other interim period or the entire fiscal year ending September 28, 2024. Fiscal 2023 was a 53-week fiscal year, and the additional week was included in the first quarter of fiscal 2023 consistent with the Company’s historical fiscal calendar.

Subsequent Events Consideration

The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that may require additional disclosure. Subsequent events have been evaluated as required. There were no material recognized or unrecognized subsequent events, except as described below, affecting the unaudited consolidated financial statements as of and for the three and nine months ended June 29, 2024.

On April 26, 2024, the Company executed an agreement to acquire Endomagnetics Ltd (“Endomag”) for a purchase price of approximately $310.0 million, subject to working capital and other customary adjustments. Endomag, located in the UK, develops and sells breast surgery localization and lymphatic tracing technologies. The transaction closed on July 25, 2024.

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(2) Revenue

The Company accounts for revenue pursuant to ASC 606, Revenue from Contracts with Customers (ASC 606) and generates revenue from the sale of its products, primarily medical imaging systems and related components and software, diagnostic tests and assays and surgical disposable products, and related services, which are primarily support and maintenance services on its medical imaging systems, and to a lesser extent installation, training and repairs. In addition, the Company generates service revenue from performing laboratory testing services through its Biotheranostics CLIA laboratory, which is included in its Molecular Diagnostics business. The Company’s products are sold primarily through a direct sales force, and within international markets, there is more reliance on distributors and resellers. Revenue is recorded net of sales tax. The following tables provide revenue from contracts with customers by business and geographic region on a disaggregated basis:


		Three Months Ended June 29, 2024						Three Months Ended July 1, 2023
Business (in millions)		United States		International		Total		United States		International		Total
Diagnostics:
	Cytology & Perinatal	$	73.3	$	48.9	$	122.2	$	79.7	$	47.1	$	126.8
	Molecular Diagnostics	245.4		65.3		310.7		240.2		62.0		302.2
	Blood Screening	7.9		—		7.9		10.7		—		10.7
Total		$	326.6	$	114.2	$	440.8	$	330.6	$	109.1	$	439.7

Breast Health:
	Breast Imaging	$	240.4	$	68.8	$	309.2	$	220.7	$	65.4	$	286.1
	Interventional Breast Solutions	60.1		15.7		75.8		59.2		15.0		74.2

Total		$	300.5	$	84.5	$	385.0	$	279.9	$	80.4	$	360.3

GYN Surgical		$	125.8	$	40.8	$	166.6	$	122.9	$	34.4	$	157.3

Skeletal Health		$	12.4	$	6.6	$	19.0	$	16.7	$	10.4	$	27.1
		$	765.3	$	246.1	$	1,011.4	$	750.1	$	234.3	$	984.4


		Nine Months Ended June 29, 2024						Nine Months Ended July 1, 2023
Business (in millions)		United States		International		Total		United States		International		Total
Diagnostics:
	Cytology & Perinatal	$	213.7	$	149.0	$	362.7	$	226.9	$	138.5	$	365.4
	Molecular Diagnostics	748.4		204.8		953.2		831.5		238.2		1,069.7
	Blood Screening	22.8		—		22.8		28.5		—		28.5