UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________________ 

FORM 10-Q

 __________________________________________________________ 

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 1, 2023

or 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 1-36214

__________________________________________________________ 

HOLOGIC, INC.

(Exact name of registrant as specified in its charter)

 __________________________________________________________

Delaware	04-2902449
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
250 Campus Drive,
Marlborough,
Massachusetts	01752
(Address of principal executive offices)	(Zip Code)

(508) 263-2900

(Registrant’s telephone number, including area code)

 __________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	HOLX	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of April 25, 2023, 246,118,192 shares of the registrant’s Common Stock, $0.01 par value, were outstanding.

HOLOGIC, INC.

INDEX

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (unaudited)
	Consolidated Statements of Income for the Three and Six Months Ended April 1, 2023 and March 26. 2022	3
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended April 1, 2023 and March 26, 2022	4
	Consolidated Balance Sheets as of April 1, 2023 and September 24, 2022	5
	Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended April 1, 2023 and Year Ended September 24, 2022	6
	Consolidated Statements of Cash Flows for the Six Months Ended April 1, 2023 and March 26, 2022	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	45
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 6.	Exhibits	48
SIGNATURES		49
EXHIBITS

2

PART I – FINANCIAL INFORMATION

Item 1.    Financial Statements (unaudited)

HOLOGIC, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In millions, except number of shares, which are reflected in thousands, and per share data)

	Three Months Ended				Six Months Ended
	April 1, 2023		March 26, 2022		April 1, 2023		March 26, 2022
Revenues:
Product	$	837.4	$	1,268.2	$	1,723.8	$	2,571.6
Service and other	189.1		167.5		376.9		335.3
	1,026.5		1,435.7		2,100.7		2,906.9
Costs of revenues:
Product	292.1		322.6		588.3		640.7
Amortization of acquired intangible assets	52.1		72.3		107.7		147.2
Service and other	96.5		94.2		201.0		186.1
Gross profit	585.8		946.6		1,203.7		1,932.9
Operating expenses:
Research and development	74.0		69.5		148.8		142.3
Selling and marketing	142.4		171.4		305.9		318.7
General and administrative	100.8		100.5		209.3		218.5
Amortization of acquired intangible assets	7.1		11.3		14.7		22.1
Contingent consideration - fair value adjustments	(12.4)		—		(12.4)		(4.1)
Restructuring charges	1.8		(0.2)		2.9		—
	313.7		352.5		669.2		697.5
Income from operations	272.1		594.1		534.5		1,235.4
Interest income	31.5		0.8		52.1		1.2
Interest expense	(27.2)		(22.6)		(55.3)		(48.3)
Debt extinguishment loss	—		—		—		(0.7)
Other income (expense), net	2.9		2.1		(12.9)		8.7
Income before income taxes	279.3		574.4		518.4		1,196.3
Provision for income taxes	60.8		118.7		112.5		241.4
Net income	$	218.5	$	455.7	$	405.9	$	954.9
Net income per common share:
Basic	$	0.88	$	1.81	$	1.64	$	3.78
Diluted	$	0.87	$	1.80	$	1.63	$	3.75
Weighted average number of shares outstanding:
Basic	247,730		251,574		247,524		252,537
Diluted	249,793		253,658		249,537		254,864

See accompanying notes.

3

HOLOGIC, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In millions)

	Three Months Ended				Six Months Ended
	April 1, 2023		March 26, 2022		April 1, 2023		March 26, 2022
Net income	$	218.5	$	455.7	$	405.9	$	954.9
Changes in foreign currency translation adjustment	15.3		(34.5)		129.1		(72.3)
Changes in value of hedged interest rate swaps, net of tax of $(2.0) and $(2.9) for the three and six months ended April 1, 2023 and $6.5 and $9.1 for the three and six months ended March 26, 2022.
Gain (loss) recognized in other comprehensive income (loss), net	(6.4)		19.4		(9.3)		27.3
Other comprehensive income (loss)	8.9		(15.1)		119.8		(45.0)
Comprehensive income	$	227.4	$	440.6	$	525.7	$	909.9

See accompanying notes.

4

HOLOGIC, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions, except number of shares, which are reflected in thousands, and par value)

	April 1, 2023		September 24, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	2,582.2	$	2,339.5
Accounts receivable, less reserves	714.0		617.6
Inventories	687.6		623.7
Prepaid expenses and other current assets	187.0		232.2
Prepaid income taxes	40.6		49.0
Total current assets	4,211.4		3,862.0
Property, plant and equipment, net	497.9		481.6
Intangible assets, net	1,202.2		1,280.6
Goodwill	3,296.9		3,236.5
Other assets	240.3		210.5
Total assets	$	9,448.7	$	9,071.2
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	26.2	$	15.0
Accounts payable	187.4		197.7
Accrued expenses	508.0		535.3
Deferred revenue	230.5		186.5
Finance lease obligations	2.9		3.2
Total current liabilities	955.0		937.7
Long-term debt, net of current portion	2,797.7		2,808.4
Finance lease obligations, net of current portion	17.0		18.0
Deferred income tax liabilities	33.4		90.8
Deferred revenue, net of current portion	12.8		9.4
Other long-term liabilities	332.0		330.7
Stockholders’ equity:
Preferred stock, $0.01 par value – 1,623 shares authorized; 0 shares issued	—		—
Common stock, $0.01 par value – 750,000 shares authorized; 299,676 and 298,533 shares issued, respectively	3.0		3.0
Additional paid-in-capital	6,091.5		6,042.6
Retained earnings	2,006.2		1,600.3
Treasury stock, at cost – 53,566 and 51,401 shares, respectively	(2,681.5)		(2,531.5)
Accumulated other comprehensive loss	(118.4)		(238.2)
Total stockholders’ equity	5,300.8		4,876.2
Total liabilities and stockholders’ equity	$	9,448.7	$	9,071.2

See accompanying notes.

5

Hologic, Inc.

Consolidated Statements of Stockholders’ Equity

(In millions, except number of shares, which are reflected in thousands)

	Common Stock			Additional Paid-in- Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Total Stockholders’ Equity
	Number of Shares	Par Value								Number of Shares	Amount
Balance at September 25, 2021	297,306	$	3.0	$	5,965.8	$	298.3	$	(59.1)	43,653	$	(1,989.4)	$	4,218.6
Exercise of stock options	45	—		1.9		—		—		—	—		1.9
Vesting of restricted stock units, net	534	—		(22.4)		—		—		—	—		(22.4)
Stock-based compensation	—	—		18.7		—		—		—	—		18.7
Net income	—	—		—		499.2		—		—	—		499.2
Other comprehensive income activity	—	—		—		—		(29.9)		—	—		(29.9)
Repurchase of common stock	—	—		—		—		—		2,335	(167.0)		(167.0)
Balance at December 25, 2021	297,885	$	3.0	$	5,964.0	$	797.5	$	(89.0)	45,988	$	(2,156.4)	$	4,519.1
Exercise of stock options	140	—		5.8		—		—		—	—		5.8
Vesting of restricted stock units, net	14	—		(0.1)		—		—		—	—		(0.1)
Common stock issued under the employee stock purchase plan	164	—		9.5		—		—		—	—		9.5
Stock-based compensation	—	—		17.8		—		—		—	—		17.8
Net income	—	—		—		455.7		—		—	—		455.7
Other comprehensive income activity	—	—		—		—		(15.1)		—	—		(15.1)
Repurchase of common stock	—	—		—		—		—		2,863	(200.0)		(200.0)
Balance at March 26, 2022	298,203	$	3.0	$	5,997.0	$	1,253.2	$	(104.1)	48,851	$	(2,356.4)	$	4,792.7
Exercise of stock options	128	—		5.2		—		—		—	—		5.2
Vesting of restricted stock units, net	4	—		(0.1)		—		—		—	—		(0.1)
Stock-based compensation	—	—		15.3		—		—		—	—		15.3
Net income	—	—		—		228.4		—		—	—		228.4
Other comprehensive income activity	—	—		—		—		(43.6)		—	—		(43.6)
Balance at June 25, 2022	298,335	$	3.0	$	6,017.4	$	1,481.6	$	(147.7)	48,851	$	(2,356.4)	$	4,997.9
Exercise of stock options	23	—		0.9		—		—		—	—		0.9
Vesting of restricted stock units, net	9	—		(0.3)		—		—		—	—		(0.3)
Common stock issued under the employee stock purchase plan	166	—		9.7		—		—		—	—		9.7
Stock-based compensation	—	—		14.9		—		—		—	—		14.9
Net income	—	—		—		118.7		—		—	—		118.7
Other comprehensive income activity	—	—		—		—		(90.5)		—	—		(90.5)
Repurchase of common stock	—	—		—		—		—		2,550	$	(175.1)	(175.1)
Balance at September 24, 2022	298,533	$	3.0	$	6,042.6	$	1,600.3	$	(238.2)	51,401	$	(2,531.5)	$	4,876.2
Exercise of stock options	267	—		10.3		—		—		—	—		10.3
Vesting of restricted stock units, net	514	—		(23.0)		—		—		—	—		(23.0)
Common stock issued under the employee stock purchase plan	171	—		10.2		—		—		—	—		10.2
Stock-based compensation	—	—		20.5		—		—		—	—		20.5
Net income	—	—		—		187.4		—		—	—		187.4
Other comprehensive income activity	—	—		—		—		110.9		—	—		110.9
Repurchase of common stock	—	—		—		—		—		1,539	(100.0)		(100.0)
Balance at December 31, 2022	299,485	$	3.0	$	6,060.6	$	1,787.7	$	(127.3)	52,940	$	(2,631.5)	$	5,092.5

6

Exercise of stock options	173	—		7.9		—		—		—	—		7.9
Vesting of restricted stock units, net	18	—		(0.2)		—		—		—	—		(0.2)
Stock-based compensation	—	—		23.2		—		—		—	—		23.2
Net income	—	—		—		218.5		—		—	—		218.5
Other comprehensive income activity	—	—		—		—		8.9		—	—		8.9
Repurchase of common stock	—	—		—		—		—		626	(50.0)		(50.0)
Balance at April 1, 2023	299,676	$	3.0	$	6,091.5	$	2,006.2	$	(118.4)	53,566	$	(2,681.5)	$	5,300.8

7

HOLOGIC, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)

	Six Months Ended
	April 1, 2023		March 26, 2022
OPERATING ACTIVITIES
Net income	$	405.9	$	954.9
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	44.3		44.9
Amortization of acquired intangible assets	122.4		169.2
Stock-based compensation expense	43.7		36.5
Deferred income taxes	(61.6)		(41.5)
Contingent consideration - fair value adjustments	(12.4)		(4.1)
Other adjustments and non-cash items	29.6		23.5
Changes in operating assets and liabilities, excluding the effect of acquisitions:
Accounts receivable	(81.8)		101.6
Inventories	(56.1)		(26.4)
Prepaid income taxes	8.3		(6.4)
Prepaid expenses and other assets	10.5		355.3
Accounts payable	(13.2)		9.1
Accrued expenses and other liabilities	(22.4)		2.9
Deferred revenue	42.5		6.9
Net cash provided by operating activities	459.7		1,626.4
INVESTING ACTIVITIES
Acquisition of business, net of cash acquired	—		(158.4)
Capital expenditures	(34.5)		(36.1)
Proceeds from the Department of Defense	20.5		58.7
Increase in equipment under customer usage agreements	(26.7)		(33.8)
Purchase of equity investment	(10.0)		—
Other activity	(6.7)		5.2
Net cash used in investing activities	(57.4)		(164.4)
FINANCING ACTIVITIES
Proceeds from long-term debt, net of issuance costs	—		1,491.2
Repayment of long-term debt	(7.5)		(1,387.5)
Payment of contingent consideration	(7.6)		(12.2)
Payment of deferred acquisition consideration	(0.8)		—
Repayment of acquired long-term debt	—		(63.6)
Repurchases of common stock	(150.0)		(367.0)
Proceeds from issuance of common stock pursuant to employee stock plans	28.4		17.3
Payment of minimum tax withholdings on net share settlements of equity awards	(23.2)		(22.5)
Payments under finance lease obligations	(2.3)		(1.7)
Net cash used in financing activities	(163.0)		(346.0)
Effect of exchange rate changes on cash and cash equivalents	3.4		4.5
Net increase in cash and cash equivalents	242.7