Hill-Rom Reports Strong First Quarter Results Exceeding Previous Guidance And Increases Full Year Earnings Outlook

CHICAGO, Feb. 1, 2016 /PRNewswire/ -- Hill-Rom Holdings, Inc., (NYSE: HRC) announced financial results for its first quarter ended December 31, 2015, and updated its fiscal year 2016 financial outlook.  Adjusted earnings per diluted share of $0.68 represent an increase of 39 percent from $0.49 in the prior year, while reported earnings per diluted share decreased 67 percent from $0.21 to $0.07. Adjustments to reported earnings are detailed in the reconciliation schedules provided.

Hill-Rom's quarterly revenue of $661 million increased 42 percent compared to last year, or 47 percent on a constant currency basis, primarily due to the Welch Allyn acquisition and strong growth in North America.   Excluding Welch Allyn, constant currency revenue growth was 3 percent. Domestic revenue was $443 million, up 56 percent, while revenue outside the United States of $218 million increased 34 percent on a constant currency basis.     

Management Comments

"We are pleased to report another quarter of strong revenue and adjusted earnings growth and an improved full year outlook," said John J. Greisch, Hill-Rom's president and CEO. "We demonstrated solid execution of our plan to drive significant margin expansion, delivering a 430 basis point increase in adjusted operating margin this quarter. Our revenue performance in North America and Welch Allyn were ahead of our expectations, more than offsetting the challenges we continue to face in our international business."

First Quarter Highlights

-- Revenue:

-- North America.North America revenue increased 11 percent to $249 million. On a constant currency basis, capital sales increased 11 percent, while rental revenue increased 12 percent. 

-- Welch Allyn. Welch Allyn revenue was $198 million, which on a pro-forma basis represents approximately 7 percent constant currency growth year over year.

-- Surgical/Respiratory Care. Surgical and Respiratory Care revenue of $121 million was flat on a constant currency basis, or down 5 percent on a reported basis.

-- International. International segment revenue of $94 million was down 9 percent on a constant currency basis and 17 percent on a reported basis. 

-- Adjusted operating margin increased 430 basis points to 13.2 percent.

-- First quarter operating cash flow increased to $46 million from $31 million in the prior year.

-- On January 21, Hill-Rom and Intuitive Surgical announced U.S. FDA clearance for Integrated Table Motion, which seamlessly synchronizes the movements of the da Vinci® Xi®, Intuitive Surgical's latest robotic-assisted surgical system, and Trumpf Medical's advanced operating table, the TruSystem® 7000dv. Integrated Table Motion allows surgeons and anesthesiologists the real-time ability to reposition the operating table with the surgical robotic arms docked, a first-of-its-kind innovation.  

Please see the attached schedules for additional information and reconciliations of GAAP to adjusted financial measures. 

For a more complete review of Hill-Rom's results, please refer to the company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2015.

Financial Guidance Summary

Revenue: For fiscal 2016, Hill-Rom expects reported revenue to be between $2.66 and $2.70 billion. This reflects:

• low- to mid-single-digit constant currency organic growth;
• mid-single digit pro-forma constant currency growth from Welch Allyn, compared to 3 to 5 percent previously; and
• negative currency impact of 2 to 3 percent at current rates, compared to 1 to 2 percent previously.

For the second quarter of fiscal 2016, Hill-Rom expects reported revenue to be between $645 and $655 million.

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