8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 5, 2019

HILL-ROM HOLDINGS, Inc.

(Exact name of registrant as specified in its charter)

Indiana	1-6651	35-1160484
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
130 East Randolph Street, Suite 1000 Chicago, Illinois		60601
(Address of principal executive offices)		(Zip Code)

(312) 819-7200

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or address, if changed since last report.)

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, without par value	HRC	New York Stock Exchange

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

¨ Emerging growth company (Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.b-2 of this chapter).

¨ If an emerging growth company, indicate by check mark of 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.

Item 7.01 Regulation FD Disclosure.

Hill-Rom Holdings, Inc. (“Hillrom” or the “Company”) is disclosing under Item 7.01 of this Current Report on Form 8-K the information contained in Exhibit 99.1, which information is incorporated by reference herein. The information contained in Exhibit 99.1 is an excerpt derived from a preliminary offering memorandum that is being disseminated in connection with the Company’s private offering of $425.0 million in aggregate principal amount of senior unsecured notes (the “Notes”).

This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy the offered securities, nor shall there be any sales of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

The information contained in this Item 7.01 and in the accompanying Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”), except as shall be expressly set forth by specific reference in such filing.

Item 8.01 Other Events.

On September 5, 2019, Hillrom announced that it intends to offer, subject to market and other conditions, the Notes in a private placement transaction pursuant to Rule 144A and Regulation S under the Securities Act. The Notes will be guaranteed on a senior unsecured basis by the Company’s existing and future wholly-owned domestic restricted subsidiaries that guarantee the Company’s senior secured credit facilities. The Company intends to use the net proceeds from the offering of the Notes, together with available cash balances, to redeem all of the Company’s outstanding 5.75% senior notes due 2023, including payment of related fees and expenses.

The Notes and the related guarantees have not been and will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements thereunder. Pursuant to Rule 135c of the Securities Act, the Company is filing herewith as Exhibit 99.2 the press release dated September 5, 2019.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

Exhibit No.	Description
99.1	Excerpt derived from the Confidential Offering Memorandum, dated September 5, 2019.
99.2	Press Release dated September 5, 2019, announcing the proposed offering of the Notes.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		HILL-ROM HOLDINGS, INC.
		(Registrant)
DATE:  September 5, 2019	By:	/s/ Deborah Rasin
	Name:	Deborah Rasin
	Title:	Senior Vice President, Chief Legal Officer and Secretary

3

EX-99.1

Exhibit 99.1

Non-GAAP financial measures

In addition to financial measures presented in accordance with accounting principles generally accepted in the United States ("GAAP"), we present certain non-GAAP financial measures, including gross margin, operating margin, income tax expense and earnings per diluted share results on an adjusted basis, free cash flow, as well as EBITDA and Adjusted EBITDA, in various places throughout this offering memorandum. These measures exclude strategic developments, acquisition and integration costs and related fair value adjustments, gains and losses associated with disposals of businesses or significant product lines, regulatory costs related to updating existing product registrations to comply with the European Medical Device Regulations, special charges, the transitional impacts of the U.S. Tax Cuts and Jobs Act (the "Tax Act"), changes in tax accounting methods, other tax law changes, expenses associated with these tax items, the impacts of significant litigation matters or other unusual events. We also exclude expenses associated with the amortization of purchased intangible assets. These adjustments are made to allow investors to evaluate and understand operating trends excluding their impact on operating income and earnings per diluted share. Management uses these measures internally for planning, forecasting and evaluating the performance of the business. Investors should consider these non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.

We believe that issuers of high yield securities also present non-GAAP EBITDA and adjusted EBITDA because investors, analysts and rating agencies consider them useful in measuring the ability of high yield issuers to meet debt service obligations. For the definitions and further discussion of our non-GAAP financial measures of EBITDA and adjusted EBITDA, and reconciliations to their most directly comparable financial measures presented in accordance with GAAP, see "Summary—Summary historical consolidated financial information and other data".

In addition, we present certain results on a constant currency basis. Constant currency information compares results between periods as if foreign currency exchange rates had remained consistent period-over-period. We monitor sales performance on an adjusted basis that eliminates the positive or negative effects that result from translating international sales into U.S. dollars. We calculate constant currency by applying the foreign currency exchange rate for the prior period to the local currency results for the current period. We believe that evaluating growth in net revenue on a constant currency basis provides an additional and meaningful assessment to both management and investors.

We report our financial results in accordance with GAAP. However, our management believes that certain non-GAAP financial measures contribute to an understanding of our financial performance, provide additional analytical tools to understand our results from core operations and reveal underlying trends. Our non-GAAP financial measures, as we use them, may not be comparable to similarly titled measures used by other companies. You are encouraged to evaluate each adjustment and the reasons we consider it appropriate for supplemental analysis. Investors should consider non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of liquidity or financial performance prepared in accordance with GAAP.

Summary historical financial data of Hillrom

The following table sets forth the summary historical financial data of Hillrom as of and for the periods indicated. The summary historical consolidated financial data as of September 30, 2018 and 2017 and for the fiscal years ended September 30, 2018, 2017 and 2016 has been derived from Hillrom's audited consolidated financial statements incorporated by reference in this offering memorandum. The summary historical consolidated financial data as of September 30, 2016 has been derived from Hillrom's audited consolidated financial statements for such year, which are not included or incorporated by reference herein. We have derived the summary historical consolidated financial data as of June 30, 2019 and for the three and nine months ended June 30, 2019 and 2018 from the unaudited condensed consolidated financial statements of Hillrom for such periods incorporated by reference into this offering memorandum, which contain all adjustments, consisting of normal recurring adjustments, that management considers necessary for a fair presentation of our financial position and results of operations for the periods presented. We derived the summary historical consolidated financial data for the twelve months ended June 30, 2019 by adding the financial data for the fiscal year ended September 30, 2018 and the nine months ended June 30, 2019, and subtracting the financial data for the nine months ended June 30, 2018. Operating results for the three, nine-and twelve-month periods are not necessarily indicative of results for a full fiscal year or any other period. The audited consolidated financial statements as of September 30, 2018 and 2017 and for the fiscal years ended September 30, 2018, 2017 and 2016 and the unaudited interim condensed consolidated financial statements as of June 30, 2019 and for the three and nine months ended June 30, 2019 and 2018 of Hillrom are incorporated by reference in this offering memorandum.

This summary historical financial data of Hillrom is qualified in its entirety by reference to, and should be read in conjunction with, the information contained in "Capitalization", "Selected consolidated historical financial and other data", and "Management's discussion and analysis of financial condition and results of operations", included herein, as well as the audited consolidated financial statements of Hillrom for the fiscal years ended September 30, 2018, 2017 and 2016 and the unaudited interim condensed consolidated financial statements of Hillrom for the three and nine months ended June 30, 2019 and 2018, in each case incorporated by reference in this offering memorandum.

1

Statements of consolidated income

(Dollars in millions except	Twelve months ended June 30,			Three months ended June 30,						Fiscal year ended September 30,
per share data)	2019			2019			2018			2018			2017			2016
	(Unaudited)			(Unaudited)			(Unaudited)
Net Revenue
Product sales and service	$	2,567.2		$	653.0		$	617.6		$	2,469.6		$	2,358.1		$	2,263.4
Rental revenue		316.5			73.8			91.0			378.4			385.6			391.8
Total Revenue		2,883.7			726.8			708.6			2,848.0			2,743.7			2,655.2
Gross Profit
Product sales and service		1,257.1			320.7			300.1			1,195.5			1,122.3			1,054.0
Rental revenue		158.3			39.5			47.9			198.7			198.3			203.0
Total Gross Profit		1,415.4			356.6			348.0			1,394.2			1,320.6			1,257.0
Research and development expenses		138.9			34.1			33.6			135.6			133.7			133.5
Selling and administrative expenses		910.8			246.4			221.9			891.5			876.1			853.3
Special charges		30.9			6.2			14.0			77.6			37.4			39.9
Operating Profit		334.8			69.9			78.5			289.5			273.4			230.3
Other income (expense), net		(89.4	)		(24.2	)		(23.0	)		(92.3	)		(90.4	)		(92.0	)
Income Before Income Taxes		245.4			45.7			55.5			197.2			183.0			138.3
Income tax expense (benefit)		30.7			13.1			10.3			(55.2	)		50.7			15.5
Net Income		214.7			32.6			45.2			252.4			132.3			122.8
Less: Net loss attributable to non-controlling interests		—			—			—			—			(1.3	)		(1.3	)
Net Income Attributable to Common Shareholders	$	214.7		$	32.6		$	45.2		$	252.4		$	133.6		$	124.1
Other Financial Data:
Cash provided by (used in):
Operating activities	$	446.5		$	142.9		$	124.2		$	395.2		$	311.1		$	281.2
Investing activities		(285.6	)		(196.1	)		(17.0	)		(82.4	)		(389.4	)		(97.7	)
Financing activities		(202.5	)		68.2			(90.2	)		(356.6	)		70.6			(141.9	)
Effect of exchange rate changes on cash		(2.3	)		0.6			(9.5	)		(5.0	)		7.3			(2.2	)
Capital expenditures		(68.5	)		(19.5	)		(20.5	)	$	(89.5	)	$	(97.5	)	$	(83.3	)
Adjusted EBITDA(1)	$	627.6		$	159.4		$	151.9		$	617.6		$	573.8		$	541.4
Other Adjusted Financial Data
Ratio of adjusted total debt to Adjusted EBITDA(2)		3.3			13.1			14.3			3.2			3.7			4.0

2

Balance sheet data

	As of		As of September 30,
(Dollars in millions)	June 30, 2019		2018		2017		2016
Cash and cash equivalents	$	202.6	$	183.0	$	231.8	$	232.2
Total assets		4,575.3		4,360.0		4,528.7		4,262.4
Total debt(3)	$	2,950.6	$	2,743.8	$	3,163.1	$	2,148.5
Shareholders' equity		1,624.7		1,616.2		1,365.6		1,235.9

(1)   Adjusted EBITDA and EBITDA are non-GAAP financial measures. These measurements should not be viewed as an alternative to GAAP measures of performance. The presentation of Adjusted EBITDA and EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

We define Adjusted EBITDA as EBITDA (earnings before net interest expense, income tax expense, depreciation and amortization), as further adjusted to eliminate the impact of certain (i) non-cash items or (ii) items that we do not consider in assessing our on-going operating performance. Because they omit these non-cash items, we feel that Adjusted EBITDA and EBITDA are less susceptible to variances in actual performance resulting from depreciation, amortization and other non-cash charges and more reflective of other factors that affect our operating performance. We believe Adjusted EBITDA and EBITDA are useful to investors in evaluating our operating performance because:

• securities analysts and other interested parties use such calculations as a measure of financial performance and debt service capabilities; and

• it is used by our management for internal planning purposes, including aspects of our combined operating budget and capital expenditures.

Each of Adjusted EBITDA and EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include:

• it does not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments;

• it does not reflect changes in, or cash requirements for, working capital;

• it does not reflect interest expense or the cash requirements necessary to service interest or principal payments on our outstanding debt;

• it does not reflect payments made or future requirements for income taxes;

• it adjusts for restructuring charges, acquisition integration charges and certain other charges or expenses that we do not consider indicative of future performance, some of which may require cash expenditures;

• although it reflects adjustments for factors that we do not consider indicative of future performance, we may, in the future, incur expenses similar to the adjustments reflected in our calculation of EBITDA and Adjusted EBITDA in this offering memorandum; and

• although depreciation is a non-cash charge, the assets being depreciated will often have to be replaced in the future and EBITDA and Adjusted EBITDA do not reflect cash requirements for such replacements.

Investors are encouraged to evaluate each adjustment and the reasons we consider it appropriate for supplemental analysis.

3

The following table presents a reconciliation from net income to EBITDA and Adjusted EBITDA.

	Twelve months ended June 30,		Three months ended June 30,				Fiscal year ended September 30,
	2019		2019		2018		2018			2017		2016
					(in millions)
Net income	$	214.7	$	32.6	$	45.2	$	252.4		$	132.3	$	122.8
Income tax expense (benefit)		30.7		13.1		10.3		(55.2	)		50.7		15.5
Other expense, including net interest expense(a) Operating income		89.4		24.2		23.0		92.3			90.4		92.0
		334.8		69.9		78.5		289.5			273.4		230.3
Depreciation and amortization		193.0		49.2		50.2		203.9			210.8		209.0
EBITDA		527.8		119.1		128.7		493.4			484.2		439.3
Adjustments:
Stock-based compensation(b)		33.4		10.0		5.8		28.1			23.0		23.1
Acquisition and integration costs and related fair value adjustments(c)		16.6		13.9		2.7		8.1			23.5		38.9
Field corrective actions(d)		5.6		5.6		—		—			—		0.2
Special charges(e)		30.9		6.2		14.0		77.6			37.4		39.9
Regulatory compliance costs(f)		13.3		4.6		0.6		4.5			—		—
Litigation settlements and expenses(g)		—		—		—		5.8			5.7		—
Tax law and method changes(h)		—		—		0.1		0.1			—		—
Adjusted EBITDA	$	627.6	$	159.4	$	151.9	$	617.6		$	573.8	$	541.4

(a) Primary component is interest expense, but also includes investment earnings, transactional impacts of foreign exchange and other miscellaneous non-operating income and expense.

(b) Stock-based compensation included as an adjustment to be consistent with the calculation of Adjusted EBITDA in our debt instruments.

(c) Acquisition and integration costs and related fair value adjustments include legal and professional fees, severance, temporary labor, consulting and other costs related to the closing and integration of acquired businesses, including purchase accounting adjustments for deferred revenue and contingent consideration and the write-off of inventory step-up associated with the allocation of purchase price to acquired assets.

(d) Field corrective action costs relate to costs incurred to address broad-based product related matters outside of normal warranty provisions.

(e) Special charges include a variety of costs associated with restructuring actions, including severance and related benefits, lease termination fees, asset write-downs and temporary labor on shutdown of operations.

(f) Regulatory compliance costs are costs related to updating existing product registrations to comply with the European Medical Device Regulations.

(g) Aggregate charges, costs or recoveries associated with litigation settlements.

(h) Tax law and method changes relate to costs incurred due to the Tax Cuts and Jobs Act enacted in the United States in December 2017.

(2) Adjusted total debt is defined as our total debt as shown in the balance sheet data table and as of June 30, 2019 on an as adjusted basis after giving effect to the Transactions.

(3) The balance sheet data table reflects total liabilities on a GAAP basis as of the dates presented, which includes a deduction for unamortized debt issuance costs. The aggregate principal amounts owed on our long-term debt (including current portion) as of each date presented, in millions, is $2,070.2, $1,972.9, $2,309.3 and $2,148.5, as of June 30, 2019, September 30, 2018, September 30, 2017 and September 30, 2016, respectively.

4

EX-99.2

Exhibit 99.2

 

Hillrom Announces Launch Of $425 Million Private Placement

Company Intends to Redeem Existing 5.75% Senior Notes due 2023 with Proceeds from the Offering

CHICAGO, Sept. 5, 2019 /PRNewswire/ -- Hill-Rom Holdings, Inc. ("Hillrom" or the "Company") (NYSE: HRC) today announced the planned private offering, subject to market and other conditions, of $425 million in aggregate principal amount of senior unsecured notes (the "Notes"). The Notes will be guaranteed on a senior unsecured basis by certain of Hillrom’s existing and future wholly-owned domestic restricted subsidiaries.

The Company intends to use the net proceeds from the offering of the Notes, together with available cash balances, to redeem all of the Company's outstanding 5.75% Senior Notes due 2023, including payment of related fees and expenses.

The Notes and related guarantees have not been and will not be registered under the Securities Act of 1933, as amended (the "Securities Act") or any state securities laws. The Notes and related guarantees may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Notes and related guarantees will be offered only to persons reasonably believed to be "qualified institutional buyers" in reliance on the exemption from registration provided by Rule 144A under the Securities Act and to certain non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act.

This press release is being issued pursuant to Rule 135c under the Securities Act, and it is neither an offer to sell nor the solicitation of an offer to buy any securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful.

About Hillrom

Hillrom is a global medical technology leader whose approximately 10,000 employees have a single purpose: enhancing outcomes for patients and their caregivers by Advancing Connected Care^TM. Around the world, our innovations touch over 7 million patients each day. They help enable earlier diagnosis and treatment, optimize surgical efficiency and accelerate patient recovery while simplifying clinical communication and shifting care closer to home. We make these outcomes possible through connected smart beds, patient lifts, patient assessment and monitoring technologies, caregiver collaboration tools, respiratory care devices, advanced operating room equipment and more, delivering actionable, real-time insights at the point of care. Learn more at hillrom.com.

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, unless required by law.

SOURCE Hill-Rom Holdings, Inc.

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Cover	Sep. 05, 2019
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Sep. 05, 2019
Entity File Number	1-6651
Entity Registrant Name	HILL-ROM HOLDINGS, Inc.
Entity Central Index Key	0000047518
Entity Tax Identification Number	35-1160484
Entity Incorporation, State or Country Code	IN
Entity Address, Address Line One	130 East Randolph Street
Entity Address, Address Line Two	Suite 1000
Entity Address, City or Town	Chicago
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60601
City Area Code	(312)
Local Phone Number	819-7200
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Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, without par value
Trading Symbol	HRC
Security Exchange Name	NYSE
Entity Emerging Growth Company	false