Hologic(HOLX) - 2025 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents Hologic, Inc.'s unaudited consolidated financial statements and management's financial analysis Item 1. Consolidated Financial Statements (unaudited) This section presents Hologic, Inc.'s unaudited consolidated financial statements and related notes for the periods ended June 28, 2025 Consolidated Statements of Income The company reported a slight increase in total revenues for both the three and nine months ended June 28, 2025, compared to the prior year, with net income stable for the three-month period but significantly decreased for the nine-month period | Metric | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Revenues | $1,023.8 | $1,011.4 | $3,050.9 | $3,042.3 | | Gross profit | $576.6 | $560.3 | $1,534.4 | $1,670.1 | | Income from operations | $254.6 | $244.0 | $477.4 | $652.6 | | Net income | $194.9 | $194.5 | $378.5 | $610.9 | | Diluted EPS | $0.86 | $0.82 | $1.66 | $2.57 | | Diluted Shares Outstanding (thousands) | 225,462 | 236,466 | 228,186 | 238,081 | Consolidated Statements of Comprehensive Income Comprehensive income increased for the three months ended June 28, 2025, primarily due to a positive change in foreign currency translation adjustment, while for the nine-month period, it decreased due to lower net income despite a positive foreign currency translation | Metric | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | | :------------------------------------ | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Net income | $194.9 | $194.5 | $378.5 | $610.9 | | Changes in foreign currency translation adjustment | $51.1 | $(2.8) | $21.7 | $17.4 | | Other comprehensive income (loss) | $50.0 | $(2.5) | $21.4 | $8.1 | | Comprehensive income | $244.9 | $192.0 | $399.9 | $619.0 | Consolidated Balance Sheets As of June 28, 2025, total assets and total stockholders' equity decreased compared to September 28, 2024, mainly driven by a reduction in cash and cash equivalents and a decrease in intangible assets, partially offset by an increase in goodwill | Metric | June 28, 2025 ($ millions) | September 28, 2024 ($ millions) | | :-------------------------------- | :------------------------- | :---------------------------- | | Total current assets | $3,421.4 | $3,823.3 | | Property, plant and equipment, net | $570.5 | $537.8 | | Intangible assets, net | $642.2 | $844.6 | | Goodwill | $3,643.9 | $3,443.1 | | Total assets | $8,806.1 | $9,156.0 | | Total current liabilities | $962.5 | $1,037.2 | | Long-term debt, net of current portion | $2,509.0 | $2,497.1 | | Total stockholders' equity | $4,842.5 | $5,130.0 | | Total liabilities and stockholders' equity | $8,806.1 | $9,156.0 | Consolidated Statements of Stockholders' Equity Stockholders' equity decreased from September 28, 2024, to June 28, 2025, primarily due to significant share repurchases and other comprehensive losses, partially offset by net income and stock-based compensation - Total stockholders' equity decreased from $5,130.0 million as of September 28, 2024, to $4,842.5 million as of June 28, 2025, primarily driven by $752.9 million in common stock repurchases and $51.2 million in other comprehensive losses, partially offset by $378.5 million in net income and $72.0 million in stock-based compensation[16][20][23] Consolidated Statements of Cash Flows Net cash provided by operating activities decreased for the nine months ended June 28, 2025, compared to the prior year, with investing activities using significantly more cash due to business acquisitions, and financing activities also using substantial cash, primarily for share repurchases | Activity | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | | :------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Net cash provided by operating activities | $702.0 | $918.2 | | Net cash used in investing activities | $(350.6) | $(185.3) | | Net cash used in financing activities | $(778.8) | $(1,051.8) | | Net decrease in cash and cash equivalents | $(425.0) | $(316.6) | | Cash and cash equivalents, end of period | $1,735.2 | $2,439.1 | Notes to Consolidated Financial Statements The notes detail Hologic, Inc.'s accounting policies, revenue recognition, fair value measurements, acquisitions, debt, and other financial events (1) Basis of Presentation The unaudited consolidated financial statements are prepared in accordance with SEC rules for Form 10-Q, using GAAP, and include normal recurring adjustments, with management's estimates and assumptions being crucial, and the company having refinanced its term loan and revolving credit facility on July 15, 2025 - The unaudited consolidated financial statements are prepared in accordance with SEC rules for Form 10-Q and U.S. GAAP, relying on management's significant estimates and assumptions[26][28] - On July 15, 2025, the company refinanced its term loan and revolving credit facility, reducing the term loan to $1.17 billion and the revolver to $1.25 billion, with terms substantially consistent with the prior credit facility[29] (2) Revenue Total revenues increased slightly for both the three and nine months ended June 28, 2025, with Diagnostics and GYN Surgical segments showing growth, while Breast Health experienced a decline, and disposables remaining the largest revenue source | Segment | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | | :---------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Diagnostics | $448.9 | $440.8 | $1,373.1 | $1,338.7 | | Breast Health | $365.2 | $385.0 | $1,090.4 | $1,147.3 | | GYN Surgical | $178.4 | $166.6 | $507.3 | $484.8 | | Skeletal Health | $31.3 | $19.0 | $80.1 | $71.5 | | Total | $1,023.8 | $1,011.4 | $3,050.9 | $3,042.3 | | Revenue Type | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Disposables | $658.4 | $623.2 | $1,959.0 | $1,871.0 | | Capital equipment, components and software | $152.0 | $188.0 | $462.0 | $596.2 | | Service | $208.8 | $196.8 | $615.3 | $560.6 | | Other | $4.6 | $3.4 | $14.6 | $14.5 | | Total | $1,023.8 | $1,011.4 | $3,050.9 | $3,042.3 | - The company expects to recognize approximately $898.2 million in future revenue from remaining performance obligations, with 15% in fiscal 2025, 43% in fiscal 2026, 23% in fiscal 2027, 12% in fiscal 2028, and 7% thereafter, primarily from support and maintenance contracts and extended warranties in Breast Health and Skeletal Health[39] (3) Leases The company acts as a lessor for certain assets, primarily diagnostics instruments, under operating lease arrangements, with lease revenue representing less than 3% of consolidated revenue - The company leases diagnostics instruments to customers under operating lease arrangements, with lease revenue accounting for less than 3% of consolidated revenue[43] (4) Fair Value Measurements The company measures various assets and liabilities at fair value, including money market funds, U.S. Treasury securities, derivative instruments, and contingent consideration, and recorded significant intangible asset impairment charges totaling $204.0 million in Q2 fiscal 2025 | Item | June 28, 2025 Fair Value ($ millions) | September 28, 2024 Fair Value ($ millions) | | :-------------------------------- | :-------------------------------- | :--------------------------------- | | Assets: | | | | Money market mutual funds | $461.9 | $341.7 | | U.S. Treasury securities | $380.9 | $626.3 | | Interest rate swaps | $4.5 | $3.1 | | Forward foreign currency contracts | $0.1 | — | | Liabilities: | | | | Contingent consideration | — | $1.1 | | Forward foreign currency contracts | $11.1 | $12.6 | - During Q2 fiscal 2025, the company recorded $204.0 million in intangible asset impairment charges related to developed technology, trade names, and customer relationships from the Acessa, Bolder, Diagenode, and Mobidiag acquisitions, reducing their carrying values significantly, with an additional $16.9 million impairment recorded for a Mobidiag in-process R&D project[51] (5) Business Combinations In fiscal 2025, Hologic acquired Gynesonics for $340.7 million, expanding its GYN Surgical segment, and in fiscal 2024, it acquired Endomag for $313.9 million, enhancing its Breast Health segment, with both acquisitions resulting in significant goodwill and identifiable intangible assets - On January 2, 2025, Hologic acquired Gynesonics, Inc. for $340.7 million, allocating $146.1 million to intangible assets and $191.0 million to goodwill, to expand its GYN Surgical segment[59][61][65] - On July 25, 2024, Hologic acquired Endomagnetics Ltd (Endomag) for $313.9 million, allocating $197.8 million to intangible assets and $140.1 million to goodwill, to enhance its Breast Health segment with breast surgery localization and lymphatic tracing technologies[66][68][72] (6) Strategic Investments Hologic invested $24.5 million for a 45% ownership in Maverix Medical LLC, a VIE accounted for under the equity method, and holds other non-marketable equity securities totaling $53.3 million as of June 28, 2025 - Hologic invested $24.5 million for a 45% ownership in Maverix Medical LLC, a variable interest entity (VIE) accounted for under the equity method, and recorded a proportionate share of Maverix's net loss of $5.9 million for the nine months ended June 28, 2025[73] - The company holds other non-marketable equity securities totaling $53.3 million as of June 28, 2025, measured at cost less impairment, adjusted for observable price changes[75] (7) Disposition On October 3, 2023 (Q1 fiscal 2024), Hologic completed the sale of its SSI ultrasound imaging business for $1.9 million in cash, after funding it with $33.2 million, and recorded a $51.7 million charge in Q4 fiscal 2023 to adjust the asset group to fair value less costs to sell - Hologic sold its SSI ultrasound imaging business for $1.9 million in cash on October 3, 2023, after funding it with $33.2 million, and recorded a $51.7 million charge in Q4 fiscal 2023 to reflect the asset group's fair value less costs to sell[76] (8) Restructuring Hologic implemented several restructuring initiatives, including reorganizing and reducing costs in China (Q3 fiscal 2025, $4.1 million severance), reorganizing U.S. departments (Q2 fiscal 2025, $5.0 million severance), and refining the Mobidiag business strategy (Q1 fiscal 2024), which involved facility closures, employee terminations, and related impairment and severance charges - In Q3 fiscal 2025, Hologic reorganized and reduced costs in China, terminating 85 employees and recording $4.1 million in severance benefits[78] - In Q2 fiscal 2025, the company reorganized U.S. departments, terminating 50 employees in Breast Health, Surgical, and Corporate functions, resulting in $5.0 million in severance benefits[79] - The Mobidiag business strategy was refined in Q1 fiscal 2024, leading to the discontinuation of certain products, closure of Finland and France facilities, and transfer of operations to San Diego, resulting in $7.2 million in accelerated depreciation, a $12.5 million lease asset impairment, and $16.4 million in total severance charges for 190 employees[80][81] (9) Borrowings and Credit Arrangements As of June 28, 2025, Hologic had $2.51 billion in total debt, comprising a $1.17 billion term loan, $942.4 million in 2029 Senior Notes, and $398.1 million in 2028 Senior Notes, and refinanced its credit agreement on July 15, 2025, maintaining similar terms | Debt Type | June 28, 2025 ($ millions) | September 28, 2024 ($ millions) | | :-------------------------------- | :------------------------- | :---------------------------- | | Term Loan | $1,168.5 | $1,158.7 | | 2028 Senior Notes | $398.1 | $397.6 | | 2029 Senior Notes | $942.4 | $940.8 | | Total debt obligations | $2,509.0 | $2,534.6 | - On July 15, 2025, Hologic refinanced its 2021 Term Loan and Revolver with a new 2025 Credit Agreement, establishing a $1.17 billion secured term loan maturing July 15, 2030, and a $1.25 billion secured revolving credit facility also maturing July 15, 2030[89][94][215][218] - The 2025 Credit Agreement includes financial covenants (total leverage ratio and interest coverage ratio) with which the company was in compliance as of June 28, 2025[88][217] (10) Trade Receivables and Allowance for Credit Losses Hologic applies ASU No. 2016-13 for trade receivables, using an estimated loss rate method based on historical experience and current conditions, with the allowance for credit losses remaining stable at $40.4 million as of June 28, 2025 - Hologic applies ASU No. 2016-13 for trade receivables, using an estimated loss rate method that considers historical collection experience, current conditions, and forecasts[97] | Period | Balance at Beginning of Period ($ millions) | Credit Loss (Gain) ($ millions) | Write-offs, Payments and Foreign Exchange ($ millions) | Balance at End of Period ($ millions) | | :---------------- | :---------------------------------------- | :------------------------------ | :----------------------------------------------------- | :------------------------------------ | | 9 Months Ended June 28, 2025 | $41.4 | $(0.4) | $(0.6) | $40.4 | | 9 Months Ended June 29, 2024 | $38.5 | $5.8 | $(2.9) | $41.4 | (11) Derivatives Hologic uses interest rate swaps as cash flow hedges for variable rate debt and forward foreign currency exchange contracts and options to mitigate operational exposures from foreign currency fluctuations, with the remaining interest rate swap having a fair value asset position of $4.5 million as of June 28, 2025 - Hologic uses interest rate swaps as cash flow hedges for variable rate debt, with a notional amount of $500 million, fixing the SOFR component at 3.46% (first contract) and 2.98% (second contract), and the fair value of the remaining swap was an asset of $4.5 million as of June 28, 2025[102] - The company enters into forward foreign currency exchange contracts and foreign currency option contracts (not designated for hedge accounting) with a notional amount of $212.2 million as of June 28, 2025, to mitigate operational exposures from foreign currency fluctuations, primarily in Euro, the U.K. Pound, Australian dollar, Canadian dollar, Chinese Yuan, and Japanese Yen[103] | Metric | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | | :------------------------------------ | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Realized gain (loss) from forward foreign currency contracts | $1.9 | $1.7 | $6.2 | $3.5 | | Unrealized gain (loss) from forward foreign currency contracts | $(13.9) | $(0.5) | $1.6 | $(6.2) | | Unrealized gain (loss) from foreign currency option contracts | — | — | $(0.8) | — | | Total gain (loss) recognized in income | $(12.0) | $1.2 | $7.0 | $(2.7) | (12) Commitments and Contingencies Hologic is facing product liability complaints related to its BioZorb 3D Bioabsorbable Marker, with approximately 175 plaintiffs alleging injuries and undisclosed side effects, and the company believes it has valid defenses but cannot reasonably assess the outcome at this early stage - Hologic is a defendant in product liability complaints filed by approximately 175 plaintiffs, alleging injuries and undisclosed side effects from the BioZorb 3D Bioabsorbable Marker, and the company plans to vigorously defend its position but cannot reasonably assess the outcome[106] (13) Net Income Per Share Diluted net income per common share decreased for the nine months ended June 28, 2025, compared to the prior year, primarily due to lower net income and a reduced weighted average number of diluted shares outstanding | Metric | 3 Months Ended June 28, 2025 (thousands) | 3 Months Ended June 29, 2024 (thousands) | 9 Months Ended June 28, 2025 (thousands) | 9 Months Ended June 29, 2024 (thousands) | | :------------------------------------ | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Basic weighted average common shares outstanding (thousands) | 224,315 | 234,604 | 226,791 | 236,373 | | Diluted weighted average common shares outstanding (thousands) | 225,462 | 236,466 | 228,186 | 238,081 | | Basic EPS ($) | $0.87 | $0.83 | $1.67 | $2.58 | | Diluted EPS ($) | $0.86 | $0.82 | $1.66 | $2.57 | (14) Stock-Based Compensation Stock-based compensation expense increased for the nine months ended June 28, 2025, totaling $72.0 million, with the company granting 0.6 million stock options and 0.7 million RSUs during this period, and significant unrecognized compensation expense remaining | Category | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | | :-------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Cost of revenues | $2.6 | $2.6 | $9.4 | $8.5 | | Research and development | $1.6 | $2.2 | $6.6 | $8.4 | | Selling and marketing | $3.5 | $3.5 | $11.2 | $10.4 | | General and administrative | $5.8 | $6.3 | $44.8 | $41.8 | | Total | $13.5 | $14.6 | $72.0 | $69.1 | - As of June 28, 2025, Hologic had $10.9 million of unrecognized compensation expense for stock options (weighted-average period of 2.5 years) and $55.4 million for stock units (RSUs, PSUs, FCF PSUs, MSUs) (weighted-average period of 1.9 years)[111] (15) Other Balance Sheet Information Inventories increased to $713.7 million as of June 28, 2025, primarily in raw materials and finished goods, and property, plant, and equipment, net, also increased to $570.5 million, with equipment under customer usage agreements being a significant component | Category | June 28, 2025 ($ millions) | September 28, 2024 ($ millions) | | :--------------- | :------------------------- | :---------------------------- | | Raw materials | $277.2 | $251.4 | | Work-in-process | $64.5 | $62.0 | | Finished goods | $372.0 | $366.4 | | Total | $713.7 | $679.8 | | Category | June 28, 2025 ($ millions) | September 28, 2024 ($ millions) | | :-------------------------------- | :------------------------- | :---------------------------- | | Equipment | $389.0 | $378.1 | | Equipment under customer usage agreements | $575.5 | $523.1 | | Building and improvements | $253.0 | $247.1 | | Total Property, Plant and Equipment, Gross | $1,343.2 | $1,266.5 | | Less – accumulated depreciation and amortization | $(772.7) | $(728.7) | | Net Property, Plant and Equipment | $570.5 | $537.8 | (16) Business Segments and Geographic Information Hologic operates in four segments: Diagnostics, Breast Health, GYN Surgical, and Skeletal Health, with Diagnostics and GYN Surgical revenues increasing, while Breast Health declined, and the U.S. remaining the largest geographic market, though its percentage of total revenue slightly decreased | Segment | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | | :---------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Diagnostics | $448.9 | $440.8 | $1,373.1 | $1,338.7 | | Breast Health | $365.2 | $385.0 | $1,090.4 | $1,147.3 | | GYN Surgical | $178.4 | $166.6 | $507.3 | $484.8 | | Skeletal Health | $31.3 | $19.0 | $80.1 | $71.5 | | Total | $1,023.8 | $1,011.4 | $3,050.9 | $3,042.3 | | Geographic Region | 3 Months Ended June 28, 2025 (%) | 3 Months Ended June 29, 2024 (%) | 9 Months Ended June 28, 2025 (%) | 9 Months Ended June 29, 2024 (%) | | :---------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | United States | 74.3% | 75.7% | 74.2% | 74.9% | | Europe | 14.5% | 12.6% | 14.5% | 13.4% | | Asia-Pacific | 5.9% | 6.4% | 5.9% | 6.4% | | Rest of World | 5.3% | 5.3% | 5.4% | 5.3% | | Total | 100.0% | 100.0% | 100.0% | 100.0% | (17) Income Taxes Hologic's effective tax rate for the nine months ended June 28, 2025, was 16.6%, higher than the 5.1% in the prior year, primarily due to impairment charges in high-tax jurisdictions and the absence of a significant discrete tax benefit from a worthless stock deduction recognized in the prior year | Period | 3 Months Ended June 28, 2025 (%) | 3 Months Ended June 29, 2024 (%) | 9 Months Ended June 28, 2025 (%) | 9 Months Ended June 29, 2024 (%) | | :---------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Effective Tax Rate | 17.1% | 19.2% | 16.6% | 5.1% | - The effective tax rate for the nine months ended June 28, 2025, was impacted by impairment charges in high-tax jurisdictions and the geographic mix of income, while the prior year benefited from a $107.2 million discrete tax benefit related to a worthless stock deduction[120][121] (18) Intangible Assets Intangible assets, net, decreased to $642.2 million as of June 28, 2025, from $844.6 million in September 2024, primarily due to significant impairment charges totaling $204.0 million in Q2 fiscal 2025 related to developed technology, customer relationships, and trade names from Acessa, Bolder, Diagenode, and Mobidiag | Description | Gross Carrying Value (June 28, 2025) ($ millions) | Accumulated Amortization (June 28, 2025) ($ millions) | | :-------------------------------- | :---------------------------------------- | :-------------------------------------------- | | Developed technology | $4,544.7 | $3,974.4 | | In-process research and development | $8.2 | — | | Customer relationships | $593.7 | $576.5 | | Trade names | $262.9 | $228.1 | | Total acquired intangible assets | $5,409.5 | $4,779.0 | - In Q2 fiscal 2025, Hologic recorded $204.0 million in impairment charges for developed technology, customer relationships, and trade names from Acessa, Bolder, Diagenode, and Mobidiag, due to reduced forecasted revenues and operating results, with an additional $16.9 million impairment recorded for Mobidiag's in-process R&D[125][127] - Estimated remaining amortization expense for acquired intangible assets is $47.3 million for the remainder of fiscal 2025, $150.4 million for fiscal 2026, $63.2 million for fiscal 2027, $60.0 million for fiscal 2028, and $53.7 million for fiscal 2029[124] (19) Product Warranties Product warranty activity remained stable, with the balance at the end of the nine months ended June 28, 2025, at $9.9 million, consistent with the beginning of the period | Period | Balance at Beginning of Period ($ millions) | Provisions ($ millions) | Settlements/Adjustments ($ millions) | Balance at End of Period ($ millions) | | :---------------- | :---------------------------------------- | :---------------------- | :----------------------------------- | :------------------------------------ | | 9 Months Ended June 28, 2025 | $9.9 | $7.2 | $(7.2) | $9.9 | | 9 Months Ended June 29, 2024 | $8.3 | $7.2 | $(6.3) | $9.2 | (20) Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive loss decreased to $(90.1) million as of June 28, 2025, from $(111.5) million in September 2024, primarily due to positive foreign currency translation adjustments, partially offset by losses on available-for-sale securities and hedged interest rate swaps | Component | Beginning Balance (Sept 28, 2024) ($ millions) | OCI (Loss) before Reclassifications (9 Months Ended June 28, 2025) ($ millions) | Ending Balance (June 28, 2025) ($ millions) | | :-------------------------------- | :--------------------------------------------- | :---------------------------------------------------------------- | :------------------------------------------ | | Foreign Currency Translation | $(114.9) | $21.7 | $(93.2) | | Available For-Sale Debt Securities | $1.6 | $(1.5) | $0.1 | | Hedged Interest Rate Swaps | $1.8 | $1.2 | $3.0 | | Total | $(111.5) | $21.4 | $(90.1) | (21) Share Repurchase Hologic's Board authorized a new $1.5 billion stock repurchase program on September 12, 2024, with $937.5 million remaining unused as of June 28, 2025, and the company repurchased 4.7 million shares for $312.6 million under this authorization and completed a $250.0 million accelerated share repurchase (ASR) program in Q1 fiscal 2025 - On September 12, 2024, Hologic authorized a new $1.5 billion stock repurchase program, with $937.5 million remaining unused as of June 28, 2025[134][221] - During the nine months ended June 28, 2025, the company repurchased 4.7 million shares for $312.6 million under the new authorization and completed a $250.0 million accelerated share repurchase (ASR) program in Q1 fiscal 2025, acquiring 3.3 million shares[134][135] (22) New Accounting Pronouncements Hologic is evaluating the impact of new FASB ASUs: ASU 2023-07 (Segment Reporting, effective fiscal 2025), ASU 2023-09 (Income Taxes, effective fiscal 2026), and ASU 2024-03 (Expense Disaggregation, effective fiscal 2028), on its consolidated financial statements - Hologic is evaluating the impact of ASU 2023-07 (Segment Reporting, effective fiscal 2025), ASU 2023-09 (Income Taxes, effective fiscal 2026), and ASU 2024-03 (Expense Disaggregation, effective fiscal 2028) on its consolidated financial statements[136][138][139] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Hologic's financial condition, results of operations, acquisitions, liquidity, and critical accounting estimates for the periods ended June 28, 2025 CAUTIONARY STATEMENT This section highlights that the report contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially - The report contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors, which may cause actual results to differ materially from those expressed or implied[141][142] OVERVIEW Hologic is a developer, manufacturer, and supplier of diagnostics products, medical imaging systems, and surgical products focused on women's health, operating in four segments: Diagnostics, Breast Health, GYN Surgical, and Skeletal Health - Hologic is a developer, manufacturer, and supplier of premium diagnostics products, medical imaging systems, and surgical products focused on women's health, operating through four segments: Diagnostics, Breast Health, GYN Surgical, and Skeletal Health[143] - The Diagnostics segment offers molecular diagnostic assays (Panther, Panther Fusion), ThinPrep cytology systems, and Rapid Fetal Fibronectin Test, including assays for STDs, HPV, viral loads, vaginitis, and acute respiratory infections[144] - The Breast Health segment provides solutions for breast imaging (3D mammography), biopsy, breast surgery, and pathology, including Selenia 3D Dimensions and 3Dimensions systems[145][146] - The GYN Surgical segment includes MyoSure, NovaSure, Fluent, Acessa ProVu, Gynesonics Sonata, CoolSeal, and JustRight surgical stapler for treating uterine fibroids, abnormal uterine bleeding, and other gynecological conditions[147] - The Skeletal Health segment offers Horizon DXA for bone density and body composition, and Fluoroscan Insight FD mini C-arm for orthopedic surgical procedures on extremities[148] ACQUISITIONS Hologic completed two significant acquisitions: Gynesonics in January 2025 for $340.7 million, enhancing its GYN Surgical segment, and Endomag in July 2024 for $313.9 million, strengthening its Breast Health segment, with both involving substantial allocations to intangible assets and goodwill - On January 2, 2025, Hologic acquired Gynesonics, Inc. for $340.7 million, allocating $146.1 million to intangible assets and $191.0 million to goodwill, to expand its GYN Surgical segment[151] - On July 25, 2024, Hologic acquired Endomagnetics Ltd (Endomag) for $313.9 million, allocating $197.8 million to intangible assets and $140.1 million to goodwill, to enhance its Breast Health segment[152] DISPOSITION Hologic completed the sale of its SSI ultrasound imaging business on October 3, 2023, for $1.9 million in cash, after funding it with $33.2 million - Hologic sold its SSI ultrasound imaging business for $1.9 million in cash on October 3, 2023, after funding it with $33.2 million[153] RESULTS OF OPERATIONS Hologic's results of operations for the three and nine months ended June 28, 2025, show mixed performance across segments, with slight revenue growth driven by Diagnostics and GYN Surgical, offset by declines in Breast Health, and operating expenses increasing due to acquisitions and impairment charges Product Revenues Product revenues slightly decreased for the three and nine months ended June 28, 2025, compared to the prior year, with Diagnostics and GYN Surgical seeing increases, while Breast Health experienced a significant decline due to lower digital mammography system sales, and Skeletal Health showed strong growth in the three-month period | Segment | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | Change (%) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | Change (%) | | :---------------- | :---------------------------------------- | :---------------------------------------- | :--------- | :---------------------------------------- | :---------------------------------------- | :--------- | | Diagnostics | $415.1 | $406.9 | 2.0% | $1,271.3 | $1,246.8 | 2.0% | | Breast Health | $200.9 | $228.9 | (12.2)% | $603.1 | $696.7 | (13.4)% | | GYN Surgical | $175.7 | $165.4 | 6.2% | $499.7 | $479.6 | 4.2% | | Skeletal Health | $18.7 | $10.0 | 87.0% | $46.9 | $44.1 | 6.3% | | Total | $810.4 | $811.2 | (0.1)% | $2,421.0 | $2,467.2 | (1.9)% | - Diagnostics product revenues increased due to higher sales volumes of BV/CV assays and Fusion respiratory assays, partially offset by decreased SARS-CoV-2 assay sales[156][157] - Breast Health product revenues decreased significantly (12.2% for 3 months, 13.4% for 9 months) primarily due to lower sales of digital mammography systems (3D Dimensions), attributed to longer sales cycles and insufficient sales force execution, partially offset by the Endomag acquisition[158] - Skeletal Health product revenues increased significantly (87.0% for 3 months) due to increased sales volume of Horizon DXA systems, following the resolution of a temporary stop-ship order[160] Service and Other Revenues Service and other revenues increased by 6.6% and 9.5% for the three and nine months ended June 28, 2025, respectively, driven by growth in Breast Health service contracts from an expanded installed base and higher lab testing volumes from the Biotheranostics business | Metric | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | Change (%) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | Change (%) | | :-------------------------- | :---------------------------------------- | :---------------------------------------- | :--------- | :---------------------------------------- | :---------------------------------------- | :--------- | | Service and Other Revenues | $213.4 | $200.2 | 6.6% | $629.9 | $575.1 | 9.5% | - The increase in service and other revenues was primarily due to higher Breast Health service contract revenue from an expanded installed base and increased lab testing volumes from the Biotheranostics business, particularly for the Breast Cancer Index test[164] Cost of Product Revenues Cost of product revenues as a percentage of product revenues increased for both the three and nine months ended June 28, 2025, primarily due to lower sales of higher-margin Breast Health products, increased sales of lower-margin GYN Surgical products, and significant intangible asset impairment charges | Metric | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | Change (%) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | Change (%) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :--------- | :---------------------------------------- | :---------------------------------------- | :--------- | | Cost of Product Revenues | $310.5 | $298.2 | 4.1% | $916.6 | $913.9 | 0.3% | | Amortization of Acquired Intangible Assets | $41.1 | $44.4 | (7.3)% | $135.3 | $134.9 | 0.3% | | Impairment of Intangible Assets | — | $13.3 | ** | $183.4 | $39.2 | ** | | Total | $351.6 | $355.9 | (1.2)% | $1,235.3 | $1,088.0 | 13.5% | - The cost of product revenues as a percentage of product revenues increased to 38.3% (3 months) and 37.9% (9 months) in fiscal 2025, up from 36.8% and 37.0% in the prior year, mainly due to lower sales of higher-margin Breast Health products and increased sales of lower-margin GYN Surgical products[166][168][169] - Intangible asset impairment charges of $183.4 million were recorded in the nine months ended June 28, 2025, primarily related to developed technology from Acessa, Bolder, Diagenode, and Mobidiag businesses[174] - The company estimates direct tariff costs of approximately $10 million to $12 million quarterly, primarily on GYN Surgical and Breast Health interventional breast solutions disposable products from Costa Rica (10% tariff) and Skeletal Health products from Mexico (mostly exempt)[171] Cost of Service and Other Revenues Service and other revenues gross margin increased to 55.2% and 55.4% for the three and nine months ended June 28, 2025, respectively, driven by higher service contract revenue from an expanded installed base and increased lab testing revenue from Biotheranostics | Metric | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | Change (%) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | Change (%) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :--------- | :---------------------------------------- | :---------------------------------------- | :--------- | | Cost of Service and Other Revenue | $95.6 | $95.2 | 0.4% | $281.2 | $284.2 | (1.1)% | - Gross margin for service and other revenues increased to 55.2% (3 months) and 55.4% (9 months) in fiscal 2025, up from 52.4% and 50.6% in the prior year, due to increased service contract and preventative maintenance revenue from an expanded installed base of digital mammography systems and higher-margin lab testing revenue from Biotheranostics[176] Operating Expenses Total operating expenses increased for both the three and nine months ended June 28, 2025, primarily due to higher selling and marketing and general and administrative expenses, largely driven by recent acquisitions, and significant intangible asset impairment charges, while research and development expenses decreased | Expense Category | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | Change (%) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | Change (%) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :--------- | :---------------------------------------- | :---------------------------------------- | :--------- | | Research and development | $61.4 | $64.1 | (4.3)% | $183.1 | $205.5 | (10.9)% | | Selling and marketing | $152.2 | $146.3 | 4.0% | $472.8 | $439.4 | 7.6% | | General and administrative | $99.1 | $94.0 | 5.4% | $334.5 | $306.2 | 9.2% | | Amortization of acquired intangible assets | $3.0 | $5.3 | (43.4)% | $11.5 | $24.3 | (52.7)% | | Impairment of intangible assets | — | $0.4 | ** | $37.5 | $5.6 | 569.6% | | Restructuring charges | $6.3 | $6.2 | ** | $17.6 | $34.8 | ** | | Total Operating Expenses | $322.0 | $316.3 | 1.8% | $1,057.0 | $1,017.5 | 3.9% | - Research and development expenses decreased due to lower compensation, benefits, and project spend, partially offset by expenses from Endomag and Gynesonics acquisitions and increased consulting[177] - Selling and marketing expenses increased due to the inclusion of expenses from the Endomag ($6.6 million for 3 months, $26.0 million for 9 months) and Gynesonics ($6.3 million for 3 months, $18.7 million for 9 months) acquisitions[178] - Impairment of intangible assets in operating expenses totaled $37.5 million for the nine months ended June 28, 2025, including a $16.9 million charge for Mobidiag's in-process R&D asset and $20.5 million allocated to customer lists and trade names from Acessa, Bolder, Diagenode, and Mobidiag[182] Interest Income Interest income decreased by 42.3% and 31.0% for the three and nine months ended June 28, 2025, respectively, due to lower average cash and investment balances and reduced U.S. Federal Funds Rate | Metric | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | Change (%) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | Change (%) | | :--------------- | :---------------------------------------- | :---------------------------------------- | :--------- | :---------------------------------------- | :---------------------------------------- | :--------- | | Interest Income | $16.4 | $28.4 | (42.3)% | $55.5 | $80.3 | (31.0)% | - The decrease in interest income was primarily due to lower average cash and investment balances and a reduction in the U.S. Federal Funds Rate over the last twelve months[184] Interest Expense Interest expense decreased by 9.4% and 1.8% for the three and nine months ended June 28, 2025, respectively, primarily due to a lower principal balance on the 2021 Credit Agreement and reduced interest rates | Metric | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | Change (%) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | Change (%) | | :--------------- | :---------------------------------------- | :---------------------------------------- | :--------- | :---------------------------------------- | :---------------------------------------- | :--------- | | Interest Expense | $(28.9) | $(31.9) | (9.4)% | $(88.5) | $(90.2) | (1.8)% | - The decrease in interest expense was primarily due to a lower principal balance outstanding under the 2021 Credit Agreement and a reduction in interest rates, partially offset by a $9.4 million reduction in amounts received under interest rate swap agreements for the nine-month period[186] Other Income (Expense), net Other income (expense), net, shifted to a net expense of $(7.1) million for the three months ended June 28, 2025, primarily due to foreign currency exchange losses and a share loss from Maverix Medical, while for the nine-month period, it was a net income of $9.6 million, driven by foreign currency exchange gains and deferred compensation plan gains | Metric | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | Change | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | Change | | :-------------------------- | :---------------------------------------- | :---------------------------------------- | :------- | :---------------------------------------- | :---------------------------------------- | :------- | | Other Income (Expense), net | $(7.1) | $0.2 | ** | $9.6 | $0.8 | ** | - For the three months ended June 28, 2025, other income (expense), net, was $(7.1) million, primarily due to $10.6 million in net foreign currency exchange losses and a $2.5 million share loss from Maverix Medical, partially offset by a $5.9 million gain from life insurance contracts[187] - For the nine months ended June 28, 2025, other income (expense), net, was $9.6 million, driven by $11.5 million in net foreign currency exchange gains and $3.9 million from life insurance contracts, partially offset by a $5.9 million share loss from Maverix Medical[188] Provision for Income Taxes The provision for income taxes decreased for the three months ended June 28, 2025, but significantly increased for the nine-month period, with effective tax rates of 17.1% and 16.6%, respectively, and the nine-month increase was due to impairment charges in high-tax jurisdictions and the absence of a prior-year discrete tax benefit | Metric | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | Change (%) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | Change (%) | | :-------------------------- | :---------------------------------------- | :---------------------------------------- | :--------- | :---------------------------------------- | :---------------------------------------- | :--------- | | Provision for Income Taxes | $40.1 | $46.2 | (13.2)% | $75.5 | $32.6 | ** | - The effective tax rate for the nine months ended June 28, 2025, was 16.6%, significantly higher than the 5.1% in the prior year, primarily due to impairment charges in high-tax jurisdictions and the absence of a $107.2 million discrete tax benefit from a worthless stock deduction recorded in Q1 fiscal 2024[190][192] Segment Results of Operations Segment results show Diagnostics and GYN Surgical revenues increasing, while Breast Health declined, and operating income varied, with Diagnostics improving, Breast Health slightly down, GYN Surgical significantly decreasing due to impairment, and Skeletal Health remaining challenged Diagnostics Diagnostics revenues increased by 1.8% and 2.6% for the three and nine months ended June 28, 2025, respectively, driven by product and lab testing revenue growth, and operating income increased significantly due to higher gross profit and lower operating expenses, despite impairment charges | Metric | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | Change (%) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | Change (%) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :--------- | :---------------------------------------- | :---------------------------------------- | :--------- | | Total Revenues | $448.9 | $440.8 | 1.8% | $1,373.1 | $1,338.7 | 2.6% | | Operating Income | $111.1 | $89.7 | 23.9% | $249.5 | $210.1 | 18.8% | | Operating Income as % of Segment Revenue | 24.7% | 20.3% | | 18.2% | 15.7% | | - The increase in operating income was driven by higher gross profit (55.0% for 3 months) due to increased sales of Women's Health and Fusion respiratory assays, favorable manufacturing variances, and lower intangible asset amortization from impairment charges[195] - Operating expenses decreased due to lower R&D headcount, bonus expense, and marketing initiatives, and the prior year included significant lease impairment and intellectual property charges[196] Breast Health Breast Health revenues decreased by 5.1% and 5.0% for the three and nine months ended June 28, 2025, respectively, primarily due to lower product sales of digital mammography systems, and operating income also decreased, despite an increase in gross margin driven by service revenue growth and prior-year impairment charges | Metric | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | Change (%) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | Change (%) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :--------- | :---------------------------------------- | :---------------------------------------- | :--------- | | Total Revenues | $365.2 | $385.0 | (5.1)% | $1,090.4 | $1,147.3 | (5.0)% | | Operating Income | $99.6 | $102.4 | (2.7)% | $262.8 | $296.2 | (11.3)% | | Operating Income as % of Segment Revenue | 27.3% | 26.6% | | 24.1% | 25.8% | | - Gross margin increased to 57.0% (3 months) and 56.4% (9 months) due to prior-year BioZorb impairment charges, increased service contract revenue, and the inclusion of Endomag, partially offset by lower sales of 3D Dimensions systems[199] - Operating expenses increased due to the inclusion of Endomag acquisition expenses ($11.2 million for 3 months, $40.5 million for 9 months), partially offset by decreased marketing and bonus expenses[200] GYN Surgical GYN Surgical revenues increased by 7.1% and 4.6% for the three and nine months ended June 28, 2025, respectively, driven by product revenue growth, particularly from the Gynesonics acquisition, but operating income decreased significantly due to higher operating expenses and a substantial decrease in gross profit for the nine-month period, impacted by impairment charges | Metric | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | Change (%) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | Change (%) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :--------- | :---------------------------------------- | :---------------------------------------- | :--------- | | Total Revenues | $178.4 | $166.6 | 7.1% | $507.3 | $484.8 | 4.6% | | Operating Income | $48.8 | $56.7 | (13.9)% | $(29.3) | $144.3 | (120.3)% | | Operating Income as % of Segment Revenue | 27.4% | 34.0% | | (5.8)% | 29.8% | | - Gross margin decreased to 67.2% (3 months) and 43.4% (9 months) due to impairment charges related to Acessa and Bolder developed technology assets ($110.4 million) and increased sales of lower-margin products like Fluent Fluid Management systems and Sonata[204][205] - Operating expenses increased due to Gynesonics acquisition expenses ($9.9 million for 3 months, $44.2 million for 9 months), including $20.8 million for accelerated unvested stock options, and intangible asset impairment charges ($16.0 million) from Acessa and Bolder businesses[206] Skeletal Health Skeletal Health revenues increased by 64.7% and 12.0% for the three and nine months ended June 28, 2025, respectively, primarily due to increased Horizon DXA system sales, with operating income remaining flat for the three-month period but decreasing significantly for the nine-month period due to lower gross profit from non-cancelable purchase commitments and increased rework costs | Metric | 3 Months Ended June 28, 2025 ($ millions) | 3 Months Ended June 29, 2024 ($ millions) | Change (%) | 9 Months Ended June 28, 2025 ($ millions) | 9 Months Ended June 29, 2024 ($ millions) | Change (%) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :--------- | :---------------------------------------- | :---------------------------------------- | :--------- | | Total Revenues | $31.3 | $19.0 | 64.7% | $80.1 | $71.5 | 12.0% | | Operating Income | $(4.9) | $(4.8) | 2.1% | $(5.6) | $2.0 | (380.0)% | | Operating Income as % of Segment Revenue | (15.5)% | (25.3)% | | (7.0)% | 2.7% | | - Gross margin decreased to 4.6% (3 months) and 17.6% (9 months) due to a charge for non-cancelable purchase commitments related to the Insight FD system, increased costs to rework Horizon DXA systems, and lower average selling prices[208] LIQUIDITY AND CAPITAL RESOURCES Hologic's liquidity as of June 28, 2025, was characterized by $2.46 billion in working capital and $1.74 billion in cash, which decreased by $425.0 million in the first nine months of fiscal 2025, primarily due to significant cash usage in investing and financing activities, partially offset by operating cash flow - As of June 28, 2025, Hologic had $2,458.9 million in working capital and $1,735.2 million in cash and cash equivalents[210] - Cash and cash equivalents decreased by $425.0 million during the first nine months of fiscal 2025, driven by $350.6 million used in investing activities (Gynesonics acquisition, capital expenditures, strategic investments) and $778.8 million used in financing activities (share repurchases, debt payments), partially offset by $702.0 million provided by operating activities[210][211][212][213] Debt Hologic's total recorded debt outstanding was $2.51 billion as of June 28, 2025, consisting of a $1.17 billion term loan, $942.4 million in 2029 Senior Notes, and $398.1 million in 2028 Senior Notes - Total recorded debt outstanding was $2.51 billion as of June 28, 2025, comprising a $1.17 billion term loan, $942.4 million in 2029 Senior Notes, and $398.1 million in 2028 Senior Notes[214] 2025 Credit Agreement (Subsequent Event) On July 15, 2025, Hologic refinanced its credit facilities, establishing a new $1.17 billion secured term loan and a $1.25 billion secured revolving credit facility, both maturing on July 15, 2030, with the agreement including customary financial covenants, with which the company was in compliance as of June 28, 2025 - On July 15, 2025, Hologic refinanced its credit facilities, establishing a $1.17 billion secured term loan and a $1.25 billion secured revolving credit facility, both maturing on July 15, 2030[215][218] - The 2025 Credit Agreement includes financial covenants (total net leverage ratio and interest coverage ratio) that Hologic was in compliance with as of June 28, 2025[217] 2028 Senior Notes Hologic has $400.0 million aggregate principal of 4.625% Senior Notes due February 1, 2028, which are general senior unsecured obligations - Hologic has $400.0 million aggregate principal of 4.625% Senior Notes due February 1, 2028, which are general senior unsecured obligations[219] 2029 Senior Notes Hologic has $950.0 million aggregate principal of 3.250% Senior Notes due February 15, 2029, which are general senior unsecured obligations - Hologic has $950.0 million aggregate principal of 3.250% Senior Notes due February 15, 2029, which are general senior unsecured obligations[220] Stock Repurchase Program On September 12, 2024, Hologic authorized a new $1.5 billion stock repurchase program, with $937.5 million remaining unused as of June 28, 2025 - Hologic's Board authorized a new $1.5 billion stock repurchase program on September 12, 2024, with $937.5 million remaining unused as of June 28, 2025[221] Legal Contingencies Hologic is involved in various legal proceedings, including product liability complaints related to the BioZorb 3D Bioabsorbable Marker, and the company accrues loss contingencies when an adverse outcome is probable and estimable - Hologic is involved in product liability complaints regarding the BioZorb 3D Bioabsorbable Marker and accrues loss contingencies when an adverse outcome is probable and reasonably estimable under ASC 450[223] Future Liquidity Considerations Hologic expects its current cash, investments, operating cash flows, and revolving credit facility to provide sufficient funds for existing commitments and normal operations over the next twelve months, with longer-term liquidity dependent on future operating performance and potential additional capital for future expenditures or acquisitions - Hologic anticipates sufficient liquidity for the next twelve months from cash, investments, operating cash flows, and the 2025 Revolver to fund existing commitments and normal operations[224] - Longer-term liquidity is contingent on future operating performance, and additional capital may be required for substantial capital expenditures, debt repayment, acquisitions, or strategic transactions[224][225] CRITICAL ACCOUNTING POLICIES AND ESTIMATES Hologic's financial statements rely on significant estimates and judgments, including revenue recognition, allowances, valuations, purchase price allocations, recoverability of long-lived assets and goodwill, and tax reserves, with no material changes reported from the prior annual report - Hologic's financial statements involve significant estimates and judgments across areas like revenue recognition, allowances, business combinations, asset recoverability, and tax reserves[226] - No material changes to critical accounting policies or estimates were reported from the Annual Report on Form 10-K for the fiscal year ended September 28, 2024[227] Item 3. Quantitative and Qualitative Disclosures About Market Risk Hologic's primary market risk exposures are interest rate risk and foreign currency exchange risk, with a hypothetical 10% increase in SOFR increasing annual interest expense by $2.9 million (net of hedges), and a 100 basis point change in market rates changing annual interest income by $14.7 million, while foreign currency exchange risk is not considered significant - Hologic's primary market risk exposures are interest rate risk and foreign currency exchange risk[229] - A hypothetical 10% adverse movement (increase in SOFR rate) would increase annual interest expense by approximately $2.9 million (net of interest rate swap hedge)[230] - A hypothetical 100 basis point change in market rates would change annual interest income by approximately $14.7 million based on current cash and investment balances[231] - Foreign currency exchange risk is not considered significant, with a hypothetical 10% increase or decrease in foreign currencies not expected to have a material adverse impact on financial condition or results of operations[233] Item 4. Controls and Procedures Hologic's management, including the CEO and CFO, concluded that its disclosure controls and procedures were effective as of June 28, 2025, and no material changes in internal control over financial reporting occurred during the latest fiscal quarter - Hologic's disclosure controls and procedures were evaluated and deemed effective as of June 28, 2025, by management, including the CEO and CFO[235] - No material changes in internal control over financial reporting occurred during the latest fiscal quarter[236] PART II – OTHER INFORMATION This section provides other information, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 12 to the Consolidated Financial Statements - Information on legal proceedings is incorporated by reference from Note 12 to the Consolidated Financial Statements[238] Item 1A. Risk Factors There are no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended September 28, 2024, or any subsequently filed reports - No material changes to risk factors from the Annual Report on Form 10-K for fiscal year ended September 28, 2024, or subsequently filed reports[239] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the period from April 27, 2025, to May 24, 2025, Hologic repurchased 667,618 shares of common stock at an average price of $53.36 per share under its $1.5 billion stock repurchase program, with $937.5 million remaining unused | Period of Repurchase | Total Number of Shares Purchased () | Average Price Paid Per Share ($) | Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under Our Programs ($ millions) | | :-------------------------------- | :----------------------------------- | :------------------------------- | :---------------------------------------------------------------------------------------------------------------- | | March 30, 2025 – April 26, 2025 | — | — | $973.1 | | April 27, 2025 – May 24, 2025 | 667,618 | $53.36 | $937.5 | | May 25, 2025 – June 28, 2025 | — | — | $937.5 | | Total | 667,618 | $53.36