Slides
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Steve MacMillan Chairman, President & CEO January 14, 2025 | 43rd Annual J.P. Morgan Healthcare Conference
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Safe Harbor Statement This presentation contains forward-looking information that involves risks and uncertainties, including statements about the Company’s plans, objectives, expectations and intentions. Such statements include, without limitation: financial or other information based upon or otherwise incorporating judgments or estimates relating to future performance, events or expectations; the Company’s strategies, positioning, resources, capabilities, and expectations for future performance; the ASR program, which is subject to the finalization and execution of a definitive agreement on terms and conditions satisfactory to Hologic; and the Company's outlook and financial and other guidance. 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. Risks and uncertainties that could adversely affect the Company’s business and prospects, and otherwise cause actual results to differ materially from those anticipated, include, without limitation: the development of new or improved competitive technologies and products and competition; the anticipated development of markets the Company sells its products into and the success of the Company’s products in these markets; the Company’s ability to predict accurately the demand for its products, and products under development and to develop strategies to address markets successfully; the anticipated performance and benefits of the Company’s products; the Company’s business strategies; the effect of consolidation in the healthcare industry; the ability to execute acquisitions and the impact and anticipated benefits of completed acquisitions and acquisitions the Company may complete in the future; the coverage and reimbursement decisions of third-party payors; the uncertainty of the impact of cost containment efforts and federal healthcare reform legislation on our business and results of operations; the guidelines, recommendations, and studies published by various organizations relating to the use of the Company’s products; the Company’s ability to obtain and maintain regulatory approvals and clearances for its products, including the implementation of the European Union Medical Device and In Vitro Diagnostic Regulation requirements, and maintain compliance with complex and evolving regulations and quality standards, as well as the uncertainty of costs required to obtain and maintain compliance with such regulatory and quality matters; the possibility that products may contain undetected errors or defects or otherwise not perform as anticipated; the impact and costs and expenses of investigative and legal proceedings and compliance risks the Company may be subject to now or in the future; potential negative impacts resulting from climate change or other environmental, social, and governance and sustainability related matters; the impact of future tax legislation; the ongoing and possible future effects of global challenges, including macroeconomic uncertainties, such as inflation, bank failures, rising interest rates and availability of capital markets, wars, conflicts, other economic disruptions and U.S. and global recession concerns, on the Company’s customers and suppliers and on the Company’s business, financial condition, results of operations and cash flows and the Company’s ability to draw down its revolver; the effect of the worldwide political and social uncertainty and divisions, including the impact on trade regulations and tariffs, that may adversely impact the cost and sale of the Company’s products in certain countries, or increase the costs the Company may incur to purchase materials, parts and equipment from its suppliers; conducting business internationally; potential cybersecurity threats and targeted computer crime; the ongoing and possible future effects of supply chain constraints, including the availability of critical raw materials and components, as well as cost inflation in materials, packaging and transportation; the possibility of interruptions or delays at the Company’s manufacturing facilities, or the failure to secure alternative suppliers if any of the Company’s sole source third-party manufacturers fail to supply the Company; the ability to consolidate certain of the Company’s manufacturing and other operations on a timely basis and within budget, without disrupting the Company’s business and to achieve anticipated cost synergies related to such actions; the Company’s ability to meet production and delivery schedules for its products; the effect of any future public health pandemic or other crises, including the timing, scope and effect of U.S. and international governmental, regulatory, fiscal, monetary and public health responses to such crises; the ability to successfully manage ongoing organizational and strategic changes, including the Company’s ability to attract, motivate and retain key employees and maintain engagement and efficiency in remote work environments; the Company’s ability to protect its intellectual property rights; anticipated trends relating to the Company’s financial condition or results of operations, including the impact of interest rate and foreign currency exchange fluctuations; estimated asset and liability values; compliance with covenants contained in the Company’s debt agreements; and the Company’s liquidity, capital resources and the adequacy thereof. The risks included above are not exhaustive. Other factors that could adversely affect the Company's business and prospects are described in the filings made by the Company with the SEC, including its most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements presented herein to reflect any change in expectations or any change in events, conditions or circumstances on which any such statements are based. Hologic and associated logos are trademarks and/or registered trademarks of Hologic, Inc. and/or its subsidiaries in the United States and/or other countries. 2
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The Company has presented the following non-GAAP financial measures in this presentation: constant currency revenues; organic revenue; non-GAAP operating margin; non-GAAP EPS; and adjusted net leverage ratio. Organic revenue for fiscal 2024 excludes the divested Blood Screening and SSI ultrasound imaging businesses and the acquired Endomagnetics business. Revenue from acquired businesses is generally included in organic revenue starting a year after the acquisition. The Company defines its non-GAAP net income, EPS, and other non-GAAP financial measures to exclude, as applicable: (i) the amortization of intangible assets; (ii) the impairment of goodwill and intangible assets and equipment and the loss to record assets held-for-sale to fair value less costs to sell; (iii) adjustments to record contingent consideration at fair value; (iv) charges to write-off inventory for a product line discontinuance; (v) the fair value write-up of acquired inventory sold during the period; (vi) restructuring charges, facility closure and consolidation charges (including accelerated depreciation), and costs incurred to integrate acquisitions (including retention, transaction bonuses, legal and professional consulting services); (vii) transaction related expenses for acquisitions; (viii) third-party expenses incurred related to the implementation of the European MDR/IVDR requirements and obtaining the appropriate approvals for its existing products; (ix) debt extinguishment losses and related transaction costs; (x) unrealized (gains) losses on the mark-to-market of foreign currency contracts to hedge operating results for which the Company has not elected hedge accounting; (xi) litigation settlement charges (benefits) and non-income tax related charges (benefits); (xii) other-than- temporary impairment losses on investments and realized gains and losses resulting from the sale of investments; (xiii) the impacts related to internal restructurings and non-operational items; (xiv) other one-time, non-recurring, unusual or infrequent charges, expenses or gains that may not be indicative of the Company's core business results; and (xv) income taxes related to such adjustments. The Company defines adjusted EBITDA as its non-GAAP net income plus net interest income/expense, income taxes, and depreciation and amortization expense included in its non-GAAP net income. The Company defines its adjusted net leverage ratio as the principal amount of its debt net of cash and cash equivalents, divided by its adjusted EBITDA for the last four quarters. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP. The Company's definition of these non-GAAP measures may differ from similarly titled measures used by others. The non-GAAP financial measures used in this presentation adjust for specified items many of which can be highly variable or difficult to predict. The Company generally uses these non-GAAP financial measures to facilitate management's financial and operational decision-making, including evaluation of Hologic's historical operating results, comparison to competitors' operating results and determination of management incentive compensation. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures, may provide a more complete understanding of factors and trends affecting Hologic's business. Because non-GAAP financial measures exclude the effect of items that will increase or decrease the Company's reported results of operations, management strongly encourages investors to review the Company's consolidated financial statements and publicly filed reports in their entirety. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the tables accompanying this presentation. Non-GAAP Financial Measures 3
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4 Overview Track record of dependable growth Transforming core franchises Competencies for future success Strong financials Presentation Outline
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Hologic Today 1. Solid revenue/EPS growth 2. Market leading brands 3. Multiple growth platforms 4. Early-stage growth opportunities 5. Strong operating margins 6. Exceptional free cash flow 7. Fortress balance sheet 5
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Overview Track record of dependable growth Transforming core franchises Competencies for future success Strong financials Presentation Outline 6
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Mid-Single-Digit Total Sales Growth 7 Note: Dollars in millions, as reported. 2014 excludes Roka royalty payment of $20.1M. Revenue from divested Blood Screening busi ness is included in both periods. If Blood Screening revenue of $223.3M in 2014 and $30.3M in 2024 were excluded, CAGR would be 5.7%. Numbers may not foot due to rounding. $1,036 $1,607 $1,167 $1,782$308 $641 $2,511 $4,030 2014 2024 Breast & Skeletal Health Diagnostics Surgical
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Double-Digit Non-GAAP EPS Growth 8 Note: Non-GAAP EPS for 2014 excludes ~$0.05 one-time contribution from amending Roka license. $1.46 $4.08 2014 2024
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Overview Track record of dependable growth Transforming core franchises Competencies for future success Strong financials Presentation Outline 9
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Panther Placements Expanded global footprint providing foundation for future growth 10 Note: numbers are rounded. ~300 ~1,000 ~1,700 ~200 ~800 ~1,600 ~500 >1,700 >3,300 2014 2019 2024 US International
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Broadening menu from core STIs into multiple testing categories Panther Assays 11 4 16 23 2014 2019 2024 Note: Figures represent number of FDA cleared assays available in the US.
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Diagnostics Powered by molecular growth 12 Note: Dollars in millions. Excludes Roka royalty payment of $20.1M in 2014 and revenue from the divested Blood Screening busi ness of $223.3M in 2014 and $30.3M in 2024. Numbers may not foot due to rounding. $485 $479 $459 $1,194 $79 $943 $1,752 2014 2024 Cytology & Perinatal MDx (ex. Covid Assays) Covid Assays
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3D Breast Health Gantries ~1,500 >10,000 ~700 >4,000 2014 US International 2024 ~2,200 ~15,000 Establishing 3D Mammography as the standard of care 13 Note: numbers are rounded.
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Breast & Skeletal Health More recurring revenue 14 Note: Dollars in millions. Excludes $2.6M of revenue from the divested SSI business in 2024. Interventional includes breast c onserving surgery. $274 $366 $357 $609$165 $337 $150 $208 $91 $84 $1,036 $1,604 2014 2024 Gantry Service Interventional Accessories and Equipment Skeletal
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Surgical Doubled in size with a diversified portfolio 15 Note: Dollars in millions. >$200 <$200 <$100 >$400 <$50 $308 $641 2014 2024 NovaSure Tissue Removal Laparoscopy
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Overview Track record of dependable growth Transforming core franchises Competencies for future success Strong financials Presentation Outline 16
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Unique Culture • Purpose driven, results driven • Passion for women’s health • Highly engaged workforce of 7,000 • 97th percentile of similar companies • Workplace recognition from Gallup, Forbes, Fortune and WSJ 17
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Creating and Expanding Markets • Pap smear to ThinPrep Pap test • 2D to 3D mammography • MyoSure to treat uterine fibroids • High-throughput vaginitis testing • Plus many others… 18
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Expanding Internationally • Indirect to direct salesforces • Market access capabilities • Still in early innings 19 Note: Dollars in millions. Organic revenue shown -- excludes Blood Screening in 2014 and SSI and Endomagnetics in 2024. $533 $999 2014 2024
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Adding New Growth Drivers • Organic innovation BV CV/TV assay Fluent fluid management Genius digital cytology • Tuck-in M&A Biotheranostics Acessa & Bolder Endomagnetics Gynesonics Strong Foundation New Growth Drivers Intl Opportunity Market Leading Brands International Opportunity Organic Innovation M&A 20
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Overview Track record of dependable growth Transforming core franchises Competencies for future success Strong financials Presentation Outline 21
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Profitability *Adjusted operating margin % reflects non-GAAP operating margin divided by revenue, based on most recent fiscal year , as reported by FactSet (definitions may vary) . HOLX is for full-year 2024. SPSIHE average includes only companies within the SPSIHE index that reported a positive non- GAAP operating margin in their most recent fiscal year. 22 Best-in-class operating margin 18.8% 30.0% SPSIHE Average HOLX Adjusted Operating Margin %*
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Cash Flow Note: Dollars in millions. Free cash flow defined as cash flow from operations plus proceeds from the Department of Defense l ess capital expenditures and increase in equipment under customer usage agreements. Free cash flow conversion defined as free cash flow divided by Non- GAAP net income. For HOLX, FY24 free cash flow ex cludes one-time tax benefit of $107.2M related to a worthless stock deduction of a foreign subsidiary. FY22 free cash flow for HOLX excludes one- time tax refund of ~$400M related to the divestiture of the Medical Aesthetics business. SPSIHE average calculated by taking the average FCF conversion for the last 5 fiscal years for companies within the SPSIHE index that reported positive non-GAAP net income and positive free cash flow. 89% 96% SPSIHE Average HOLX Trailing 5-Yr Avg FCF Conversion %* $540 $1,048 2019 2024 Free Cash Flow (with adjustment)* Proven ability to convert earnings and generate cash 23
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Balance Sheet $3.5 $0.4 2014 2024 Net Debt and Leverage Ratio* 4.0x 0.6x 0.3x • Fortress balance sheet provides strategic flexibility • Over $4.6B deployed since FY20 • $2.9B on share repurchases • $1.7B on M&A • $2.4B of cash & investments at YE • Ample firepower to fuel future growth 2.3x 24 Note: Net debt is total debt minus cash in $ billions; leverage ratio is principal debt minus cash divided by TTM adjusted EB ITDA. Capital deployment figures are through FY24 year-end.
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Financial Goal: Continue Double-Digit Non-GAAP EPS Growth 25 • Key drivers • Mid-single-digit revenue growth • Modest operating margin expansion • Regular acquisitions • Meaningful buybacks
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Mike Watts Corporate VP, Investor Relations michael.watts@hologic.com For More Information: Pete Sattler Sr Manager, Investor Relations peter.sattler@hologic.com
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Appendix
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Reconciliation of GAAP to Non-GAAP (unaudited) 28 2024 2014 CAGR Consolidated Worldwide GAAP Revenue 4,030.3 2,530.7 Less: ROKA royalty payment - (20.1) Adjusted Revenue less Roka 4,030.3 2,510.6 4.8% 2024 2014 Consolidated Worldwide GAAP Revenue 4,030.3 2,530.7 Less: ROKA royalty payment - (20.1) Less: Blood Screening (30.3) (223.3) Adjusted Revenue less Roka and Blood Screening 4,000.0 2,287.3 5.7% Reconciliation of Revenue Schedule Presented on Page 7 Earnings per Share: 2024 2014 CAGR GAAP income per share - Diluted 3.32 0.06 Adjustments to net income (as detailed in the 2024 and 2014 Q4 earnings releases) 0.76 1.45 Less: One-time contribution from amending Roka license - (0.05) Non-GAAP Earnings per Share - Diluted 4.08 1.46 10.8% Reconciliation of Earnings per Share Schedule Presented on Page 8
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Reconciliation of GAAP to Non-GAAP (unaudited) 29 2024 2014 CAGR Consolidated GAAP Diagnostics Revenue 1,782.0 1,186.8 Less: Blood Screening (30.3) (223.3) Less: ROKA royalty payment - (20.1) Adjusted Diagnostics Revenue less Roka and Blood Screening 1,751.7 943.4 6.4% Reconciliation of Revenue Schedule Presented on Page 12 2024 2014 CAGR Consolidated GAAP International Revenue 1,006.2 631.6 Less: Endomagnetics in Fiscal 2024 (4.2) - Less: SuperSonic Imagine in Fiscal 2024 (2.6) - Less: Blood Screening in Fiscal 2019 - (98.2) Adjusted Organic International Revenue less Endomag, SSI and Blood Screening 999.4 533.4 6.5% Reconciliation of Revenue Schedule Presented on Page 19
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Reconciliation of GAAP to Non-GAAP (unaudited) 30 2024 2019 CAGR GAAP Net Cash Provided by Operating Activities 1,285.2 649.5 Less: Purchase of property and equipment (72.4) (57.0) Less: Increase in equipment under customer usage agreements (57.8) (52.1) Less: Worthless stock deduction tax benefit (107.2) - Free Cash Flow (with adjustment above) 1,047.8 540.4 14.2% Reconciliation of Free Cash Flow Schedule Presented on Page 23 2024 GAAP Income from Operations Margin Percentage 21.9% Impact of adjustments detailed in Fiscal 2024 Q4 earnings release 8.1% Non-GAAP Operating Margin Percentage 30.0% Reconciliation of Operating Margin Schedule Presented on Page 22