CHICAGO, April 29, 2016 /PRNewswire/ -- Hill-Rom Holdings, Inc. (NYSE: HRC) announced financial results for its second quarter ended March 31, 2016, and updated its fiscal year 2016 financial outlook. Adjusted earnings per diluted share of $0.71 represent an increase of 11 percent from $0.64 in the prior year, while reported earnings per diluted share decreased 27 percent from $0.45 to $0.33. Adjustments to reported earnings are detailed in the reconciliation schedules provided.
Hill-Rom’s quarterly revenue of $633 million increased 33 percent compared to last year, or 35 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 was approximately flat, with strength in our U.S. businesses offset by declines internationally. Including Welch Allyn, U.S. revenue was $438 million, up 48 percent, while revenue outside the U.S. of $195 million increased 13 percent on a constant currency basis.
Management Comments
“Driven by strong growth in North America and Welch Allyn, our pro forma constant currency revenue growth for the first half of the year was 3.5 percent,” said John J. Greisch, Hill-Rom’s president and CEO. “In addition, our disciplined focus on operational execution drove strong operating margin improvement and enabled us to maintain our full-year adjusted earnings outlook despite weaker international revenues.”
Second Quarter Highlights
Revenue highlights below are reconfigured to our new reporting segments. Please refer to the company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 for additional details.
-- Revenue:
-- North America.North America revenue increased 9 percent to $270 million. On a constant currency basis, product sales and service increased 11 percent, while rental revenue increased 6 percent.
-- Front Line Care. Revenue for Front Line Care, which includes both Welch Allyn and Respiratory Care, was $185 million. On a pro-forma basis, Welch Allyn constant currency revenue growth was approximately 8 percent year over year.
-- Surgical Solutions. Surgical revenue of $95 million decreased 3 percent on a constant currency basis, or down 4 percent on a reported basis.
-- International. International revenue of $82 million was down 21 percent on a constant currency basis and 22 percent on a reported basis.
-- Adjusted operating margin increased 230 basis points to 13.9 percent.
-- Year-to-date operating cash flow increased to $88 million from $87 million in the prior year.
-- Hill-Rom’s investment in innovation resulted in the recent launch of two key new products during the quarter:
-- Welch Allyn® RetinaVue 100 Imager works in conjunction with the RetinaVue Network to make diabetic retinopathy screening in primary care settings truly practical for the first time.
-- Trumpf iLED7 Surgical Light, a next generation lighting system designed to improve the OR environment. The automatic lighting management system uses the latest 3D sensor technology to analyze the surgical area to make automatic lighting adjustments and eliminate the need for manual adjustment.
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 March 31, 2016.
Financial Guidance Summary
Revenue: For fiscal 2016, Hill-Rom now expects reported revenue to be between $2.64 and $2.67 billion, compared to $2.66 and $2.70 billion previously. This reflects:
- low-to-mid single digit pro forma constant currency growth, and
- negative currency impact of approximately 2 to 3 percent at current rates
For the third quarter of fiscal 2016, Hill-Rom expects reported revenue to be between $640 and $650 million. This reflects:
- low-single-digit pro forma constant currency growth, and
- negative currency impact of approximately 1 percent at current rates
Adjusted Earnings per Diluted Share: The company now expects full-year adjusted earnings per diluted share to be $3.26 to $3.30, compared to $3.24 to $3.30 previously.
Third quarter adjusted earnings per diluted share are expected to be $0.75 to $0.77.
Cash Flow: Hill-Rom expects cash flow from operations for the full year to be approximately $315 million, which includes non-recurring outflows related to our ongoing restructuring and integration activities. Capital expenditures are expected to be approximately $110 to $120 million.
Discussion of Adjusted Financial Measures
Hill-Rom Holdings, Inc. routinely provides earnings per share results and guidance on an adjusted basis because the company’s management believes that the presentation provides useful information to investors. This measure excludes strategic developments, acquisition and integration costs, special charges or other unusual events. Such items may be highly variable, difficult to predict and of a size that sometimes have substantial impact on the company’s reported operations for a period. Often, prospective quantification of such items is not feasible.
The company also excludes expenses associated with the amortization of intangible assets associated with prior business acquisitions. This adjustment is made to allow investors to evaluate and understand operating trends excluding the non-cash impact of acquired intangible amortization on operating income, earnings per share and other measures.
Management uses these measures internally for planning, forecasting and evaluating the performance of the business. Investors should consider non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.
Reconciliations of GAAP measures to adjusted measures appear in the financial tables of this release.
Conference Call Webcast and Dial-in Information
As previously announced, the company will host a conference call and webcast today at 8:00 a.m. ET.
Webcast: To join the live webcast with audio on April 29, visit http://edge.media-server.com/m/p/ffbep5hq. The webcast slide deck will be posted to the Hill-Rom website prior to the webcast.
Conference Call Audio Only Dial-in information: To join the live conference call, dial 877-304-8969 domestic callers / 631-291-4543 international callers. The following Confirmation Code is required for both: 81171275. Callers will need to provide their name, company affiliation and telephone number to the conference operator.
A recording of the webcast/call audio will be available for telephone replay through May 4, 2016. To access the replay, dial 855-859-2056 domestic callers / 404-537-3406 international callers. For the replay, callers will need to use Confirmation Code 81171275. If you are unable to listen to the live webcast or the telephone replay, the webcast will be archived at http://ir.hill-rom.com/events.cfm.
ABOUT HILL-ROM HOLDINGS, INC.
Hill-Rom is a leading global medical technology company with 10,000 employees worldwide. We partner with health care providers in more than 100 countries by focusing on patient care solutions that improve clinical and economic outcomes in five core areas: Advancing Mobility, Wound Care and Prevention, Clinical Workflow, Surgical Safety and Efficiency and Respiratory Health. Around the world, Hill-Rom’s people, products, and programs work towards one mission: Every day, around the world, we enhance outcomes for patients and their caregivers. Visit www.hill-rom.com for more information.
Disclosure Regarding Forward Looking Statements
Certain statements herein contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the company’s future plans, objectives, beliefs, expectations, representations and projections. It is important to note that forward-looking statements are not guarantees of future performance, and the company’s actual results could differ materially from those set forth in any forward-looking statements. For a more in depth discussion of factors that could cause actual results to differ from those contained in forward-looking statements, see the discussions under the heading “Risk Factors” in the company’s previously filed most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. The company assumes no obligation to update or revise any forward-looking statements.
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