MARLBOROUGH, Mass., Nov. 2, 2016 /PRNewswire/ -- Hologic, Inc. (Nasdaq: HOLX) announced today the Company’s financial results for the fiscal fourth quarter ended September 24, 2016. GAAP diluted earnings per share (EPS) of $0.33 increased 266.7% compared to the prior year period, while non-GAAP diluted EPS of $0.52 increased 20.9%. Revenue of $726.8 million increased 3.4%, or 3.8% in constant currency terms.
“We closed out a very successful fiscal year with another strong performance in the fourth quarter,” said Steve MacMillan, Hologic’s Chairman, President and Chief Executive Officer. “Our results demonstrate that we are making good progress in building a sustainable growth company, and we look forward to more successes in 2017 based on the strength of our product franchises and the dedication of our people.”
Key financial results for the fiscal fourth quarter are shown below. Throughout this press release, all dollar figures are in millions, except EPS. Some totals may not foot due to rounding. Unless otherwise noted, all results are compared to the prior year period. Non-GAAP presentations exclude a number of cash and non-cash items as discussed below under “Use of Non-GAAP Financial Measures.”
GAAP | Non-GAAP | |||||
Q4'16 | Q4'15 | Change Increase (Decrease) | Q4'16 | Q4'15 | Change Increase (Decrease) | |
Revenues | $726.8 | $702.8 | 3.4% | $726.8 | $702.8 | 3.4% |
Gross Margin | 55.9% | 54.0% | 190 bps | 65.7% | 64.6% | 110 bps |
Operating Expenses | $259.0 | $253.7 | 2.1% | $235.5 | $218.7 | 7.7% |
Operating Margin | 20.2% | 17.9% | 230 bps | 33.3% | 33.5% | (20 bps) |
Net Margin | 12.7% | 3.6% | 910 bps | 20.0% | 18.1% | 190 bps |
Diluted EPS | $0.33 | $0.09 | 266.7% | $0.52 | $0.43 | 20.9% |
Revenue Detail
Revenue growth in the fourth quarter was led by the GYN Surgical division, while the molecular diagnostics and breast imaging franchises also performed well. Growth rates were affected by strong revenue growth in the prior year period.
$s in millions | Q4'16 | Q4'15 | Reported Change Increase (Decrease) | Impact of Foreign Currency Increase (Decrease) $ % | Constant Currency Change Increase (Decrease) | |
Cytology & Perinatal | $121.0 | $120.8 | 0.2% | $(0.9) | (0.7%) | 0.9% |
Molecular Diagnostics | 134.3 | 123.2 | 9.0% | (0.7) | (0.6%) | 9.6% |
Blood Screening | 56.6 | 60.2 | (6.0%) | - | - | (6.0%) |
Total Diagnostics | $311.9 | $304.2 | 2.5% | $(1.7) | (0.6%) | 3.1% |
Breast Imaging | 248.8 | 241.6 | 3.0% | $(0.7) | (0.2%) | 3.2% |
Interventional Breast Solutions | 40.9 | 42.4 | (3.7%) | (0.1) | (0.2%) | (3.5%) |
Other | 2.6 | 2.3 | 18.1% | 0.0 | 0.4% | 17.7% |
Total Breast Health | $292.3 | $286.3 | 2.1% | $(0.7) | (0.2%) | 2.3% |
GYN Surgical | $101.5 | $86.8 | 16.9% | $(0.7) | (0.7%) | 17.6% |
Skeletal Health | $21.1 | $25.5 | (17.1%) | $0.0 | 0.2% | (17.3%) |
Total | $726.8 | $702.8 | 3.4% | $(3.0) | (0.4%) | 3.8% |
Other quarterly revenue highlights:
- U.S. sales of $578.0 million increased 7.4%, continuing strong recent trends.
- International sales of $148.9 million decreased (9.6%), or (7.8%) in constant currency, compared to strong results in the prior year period.
- Total revenues increased 3.4%, or 3.8% in constant currency. Excluding a $3.9 million headwind from sales of discontinued products, total revenue would have increased 4.0%, or 4.4% in constant currency.
- The GYN Surgical business continued to perform well. Divisional revenue of $101.5 million increased 16.9%, or 17.6% in constant currency. MyoSure® system sales of $42.6 million increased 32.7%, or 33.4% in constant currency. NovaSure® sales of $58.6 million increased 7.9%, or 8.7% in constant currency.
- Breast Health revenue totaled $292.3 million, an increase of 2.1%, or 2.3% in constant currency. Revenue in the United States increased 7.2%, driven by increases in service revenue and new product sales that supplemented continued adoption of Hologic’s Genius 3D Mammography systems.
- In Diagnostics:
- Molecular diagnostics sales of $134.3 million increased 9.0%, or 9.6% in constant currency. Growth was driven primarily by continued strength across Aptima® women’s health products on the fully automated Panther® and Tigris® platforms, both in the United States and internationally. In addition, sales benefited from a royalty payment of $5.0 million.
- Cytology and perinatal sales of $121.0 million increased 0.2%, or 0.9% in constant currency.
- Blood screening revenue totaled $56.6 million, a decrease of (6.0%) on both a reported and constant currency basis that was driven, as expected, mainly by ordering patterns by Hologic’s partner Grifols.
- In Skeletal Health, revenue of $21.1 million decreased (17.1%), or (17.3%) in constant currency, due to lower sales of mini C-arm products.
Segment revenue highlights by geography are shown below:
U.S. Change | International Change (Reported) | Impact of Foreign Currency $ % | International Change (Constant Currency) | ||
Increase (Decrease) | |||||
Diagnostics | 6.0% | (6.5%) | $(1.7) | (2.0%) | (4.5%) |
Breast Health | 7.2% | (17.8%) | $(0.7) | (1.3%) | (16.5%) |
GYN Surgical | 16.7% | 18.4% | $(0.7) | (5.6%) | 24.0% |
Skeletal Health | (14.4%) | (21.5%) | $0.0 | 0.4% | (21.9%) |
Total Revenues | 7.4% | (9.6%) | $(3.0) | (1.8%) | (7.8%) |
Fourth Quarter Expense Detail
Gross margin was 55.9% on a GAAP basis, and 65.7% on a non-GAAP basis. GAAP gross margin improved by 190 basis points, while non-GAAP gross margin improved by 110 basis points, mainly due to strong domestic sales growth, favorable product mix, and operational improvements.
Operating expenses were $259.0 million on a GAAP basis, and $235.5 million on a non-GAAP basis. GAAP operating expenses increased 2.1%, while non-GAAP operating expenses increased 7.7%, mainly due to increased investments in research and development, higher general and administrative and selling and marketing expenses, and an increase to stock-based compensation from a change in the retirement provisions of the Company’s equity compensation plan.
Hologic’s effective tax rate was 14.3% on a GAAP basis, and 31.0% on a non-GAAP basis.
Other Key Financial Results
GAAP net income was $92.2 million. Adjusted non-GAAP earnings before interest, taxes, depreciation and amortization (EBITDA) were $263.9 million, an increase of 5.2%.
Operating cash flow was $226.7 million and free cash flow, defined as operating cash flow less capital expenditures, was $194.9 million. For the full year, the Company generated operating cash flow of $787.2 million and free cash flow of $692.7 million, 109.4% higher than GAAP net income and 23.3% higher than non-GAAP net income.
Total debt outstanding at the end of the quarter was $3.3 billion, a decrease of ($0.3) billion compared to the prior year period. During the quarter, the Company repurchased $47.6 million of its 2010 convertible notes for $81.3 million, reducing the future dilutive effect of these securities.
The Company ended the quarter with cash and cash equivalents of $548.4 million.
The combination of lower debt and EBITDA growth helped improve Hologic’s leverage ratio (net debt over adjusted EBITDA) to 2.8 in the quarter.
Strong profit growth and lower debt have continued to improve Hologic’s adjusted return on invested capital (ROIC). On a trailing 12 months basis, ROIC of 12.7% improved 180 basis points.
Financial Guidance for Fiscal 2017
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