UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
__________________________________________________________ 
FORM 10-Q
 
 __________________________________________________________ 
(Mark One)
☒
ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 30, 20172023
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.HOLOGIC, INC.
(Exact name of registrant as specified in its charter)

__________________________________________________________
Delaware04-2902449
Delaware04-2902449
(State or other jurisdiction of incorporation)incorporation or organization)(I.R.S. Employer Identification No.)
250 Campus Drive,
Marlborough, Massachusetts
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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueHOLXNASDAQ
Indicate by check mark whether the registrant: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  ý☒    No  ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  ý☒    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“emerging growth company"company” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filerý☒Accelerated filer¨☐
Non-accelerated filer
¨ (Do not check if a smaller reporting company)
☐		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.)Act).    Yes  ¨☐    No  ý☒
As of February 5, 2018, 276,529,054January 25, 2024, 234,731,521 shares of the registrant’s Common Stock, $0.01 par value, were outstanding.


Table of Contents

HOLOGIC, INC.
INDEX
 
Page
Page
Item 1.
Consolidated Statements of Income for the Three Months Ended December 30 2017, 2023 and December 31 2016. 2022
3
4
5
Consolidated Statements of Stockholders’ Equity for the Three Months Ended December 30, 2023 and Year Ended September 30, 2023
6
67
78
Item 2.
3226
Item 3.
4939
Item 4.
5041
Item 1.
5242
Item 1A.
5242
Item 2.
5243
Item 6.5.
5343
Item 6.
5544
45
EXHIBITS




2
Table of Contents
PART I – FINANCIAL INFORMATION
 
Item 1.Financial Statements (unaudited)
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
December 30,
2017		 December 31,
2016
Revenues:   
Revenues:
Revenues:
Product
Product
Product$650.7
 $613.4
Service and other140.4
 121.0
791.1
 734.4
Service and other
Service and other
1,013.1
1,013.1
1,013.1
Costs of revenues:
Costs of revenues:
Costs of revenues:   
Product213.7
 198.3
Product
Product
Amortization of acquired intangible assets79.8
 73.5
Amortization of acquired intangible assets
Amortization of acquired intangible assets
Service and other73.1
 57.8
Gross Profit424.5
 404.8
Service and other
Service and other
Gross profit
Gross profit
Gross profit
Operating expenses:
Operating expenses:
Operating expenses:   
Research and development54.8
 54.4
Research and development
Research and development
Selling and marketing
Selling and marketing
Selling and marketing139.5
 110.0
General and administrative77.9
 69.8
General and administrative
General and administrative
Amortization of acquired intangible assets14.4
 21.4
Amortization of acquired intangible assets
Amortization of acquired intangible assets
Impairment of intangible asset
Impairment of intangible asset
Impairment of intangible asset
Contingent consideration - fair value adjustment
Contingent consideration - fair value adjustment
Contingent consideration - fair value adjustment
Restructuring charges3.8
 3.2
290.4
 258.8
Restructuring charges
Restructuring charges
369.3
369.3
369.3
Income from operations
Income from operations
Income from operations134.1
 146.0
Interest income0.8
 0.3
Interest income
Interest income
Interest expense(41.0) (40.4)
Debt extinguishment loss(1.0) —
Other income, net2.9
 10.2
Interest expense
Interest expense
Other expense, net
Other expense, net
Other expense, net
Income before income taxes95.8
 116.1
(Benefit) provision for income taxes(310.9) 29.6
Income before income taxes
Income before income taxes
Provision (benefit) for income taxes
Provision (benefit) for income taxes
Provision (benefit) for income taxes
Net income
Net income
Net income$406.7
 $86.5
Net income per common share:   
Net income per common share:
Net income per common share:
Basic
Basic
Basic$1.47
 $0.31
Diluted$1.45
 $0.30
Diluted
Diluted
Weighted average number of shares outstanding:
Weighted average number of shares outstanding:
Weighted average number of shares outstanding:   
Basic276,856
 278,663
Basic
Basic
Diluted280,802
 284,224
Diluted
Diluted
See accompanying notes.


3
Table of Contents
HOLOGIC, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In millions)
 Three Months Ended
 December 30,
2017		 December 31,
2016
Net income$406.7
 $86.5
Changes in foreign currency translation adjustment5.5
 (15.7)
Changes in unrealized holding gains and losses on available-for-sale securities, net of tax of $0.2 and $1.5 for the three months December 30, 2017 and December 31, 2016:   
Gain recognized in other comprehensive income (loss)—
 2.3
Loss reclassified from accumulated other comprehensive loss to the statements of income0.4
 0.1
Changes in pension plans, net of taxes of $0.6 for the three months ended December 30, 20170.6
 —
Changes in value of hedged interest rate caps, net of tax of $(4.9) and $0.5 for the three months ended December 30, 2017 and December 31, 2016:   
(Loss) gain recognized in other comprehensive income (loss), net(4.3) 0.7
Loss reclassified from accumulated other comprehensive loss to the statements of income2.3
 2.1
Other comprehensive income (loss)4.5
 (10.5)
Comprehensive income$411.2
 $76.0
 Three Months Ended
 December 30,
2023		December 31,
2022
Net income$246.5 $187.4 
Changes in foreign currency translation adjustment43.0 113.8 
Changes in value of hedged interest rate swaps, net of tax of $(4.5) for the three months ended December 30, 2023 and $(0.9) for the three months ended December 31, 2022.
Loss recognized in other comprehensive income(14.2)(2.9)
Other comprehensive income28.8 110.9 
Comprehensive income$275.3 $298.3 
See accompanying notes.






4
Table of Contents
HOLOGIC, INC.


CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions, except number of shares, which are reflected in thousands, and par value)
 
December 30,
2023		December 30,
2023		September 30,
2023
ASSETS
Current assets:
Current assets:
Current assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Accounts receivable, less reserves
December 30,
2017		 September 30,
2017
ASSETS   
Current assets:   
Cash and cash equivalents$664.4
 $540.6
Accounts receivable, less reserves of $11.5 and $9.8, respectively548.0
 533.5
Inventories358.2
 331.6
Accounts receivable, less reserves
Accounts receivable, less reserves
Inventory
Prepaid expenses and other current assets
Prepaid income taxes14.3
 22.4
Prepaid expenses and other current assets53.5
 50.5
Assets held-for-sale - current assets
Total current assets
Total current assets
Total current assets1,638.4
 1,478.6
Property, plant and equipment, net467.1
 472.8
Intangible assets, net2,681.3
 2,772.3
Goodwill3,176.7
 3,171.2
Other assets84.8
 84.7
Total assets$8,048.3
 $7,979.6
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Current liabilities:
Current liabilities:
Current portion of long-term debt
Current portion of long-term debt
Current portion of long-term debt$572.1
 $1,150.8
Accounts payable160.3
 166.6
Accrued expenses412.7
 375.3
Deferred revenue163.2
 171.2
Current portion of capital lease obligations1.6
 1.6
Finance lease obligations
Assets held-for-sale - current liabilities
Total current liabilities
Total current liabilities
Total current liabilities1,309.9
 1,865.5
Long-term debt, net of current portion2,757.7
 2,172.1
Capital lease obligations, net of current portion22.3
 22.7
Finance lease obligations, net of current portion
Deferred income tax liabilities586.4
 973.6
Deferred revenue18.8
 20.8
Deferred revenue, net of current portion
Other long-term liabilities159.2
 140.2
Commitments and contingencies (Note 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; 288,750 and 287,853 shares issued, respectively2.9
 2.9
Preferred stock, $0.01 par value – 1,623 shares authorized; 0 shares issued
Preferred stock, $0.01 par value – 1,623 shares authorized; 0 shares issued
Common stock, $0.01 par value – 750,000 shares authorized; 300,496 and 299,940 shares issued, respectively
Additional paid-in-capital5,628.9
 5,630.8
Accumulated deficit(1,976.0) (2,382.7)
Treasury stock, at cost – 12,560 shares(450.1) (450.1)
Retained earnings
Treasury stock, at cost – 65,952 and 58,231 shares, respectively
Accumulated other comprehensive loss(11.7) (16.2)
Total stockholders’ equity3,194.0
 2,784.7
Total liabilities and stockholders’ equity$8,048.3
 $7,979.6
See accompanying notes.



5
Table of Contents
Hologic, Inc.
Consolidated Statements of Stockholders’ Equity
(In millions, except number of shares, which are reflected in thousands)
 Common StockAdditional
Paid-in-
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Loss		Treasury StockTotal
Stockholders’
Equity
 Number of
Shares		Par ValueNumber of
Shares		Amount
Balance at September 24, 2022298,533 $3.0 $6,042.6 $1,600.3 $(238.2)51,401 $(2,531.5)$4,876.2 
Exercise of stock options267 — 10.3 — — — — 10.3 
Vesting of restricted stock units, net514 — (23.0)— — — — (23.0)
Common stock issued under the employee stock purchase plan171 — 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, 2022299,485 $3.0 $6,060.6 $1,787.7 $(127.3)52,940 $(2,631.5)$5,092.5 
Exercise of stock options173 — 7.9 — — — — 7.9 
Vesting of restricted stock units, net18 — (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, 2023299,676 $3.0 $6,091.5 $2,006.2 $(118.4)53,566 $(2,681.5)$5,300.8 
Exercise of stock options64 — 3.3 — — — — 3.3 
Vesting of restricted stock units, net15 — (0.5)— — — — (0.5)
Common stock issued under the employee stock purchase plan177 11.3 11.3 
Stock-based compensation— — 16.9 — — — — 16.9 
Net loss— — — (40.5)— — — (40.5)
Other comprehensive income activity— — — — 4.8 — — 4.8 
Repurchase of common stock(1)
— — — — — 1,424 (114.1)(114.1)
Balance at July 1, 2023299,932 $3.0 $6,122.5 $1,965.7 $(113.6)54,990 $(2,795.6)$5,182.0 
Vesting of restricted stock units, net8 — (0.3)— — — — (0.3)
Stock-based compensation— — 19.0 — — — — 19.0 
Net income— — — 90.6 — — — 90.6 
Other comprehensive income activity— — — — (34.0)— — (34.0)
Repurchase of common stock(1)
— — — — — 3,241 (240.4)(240.4)
September 30, 2023299,940 $3.0 $6,141.2 $2,056.3 $(147.6)58,231 $(3,036.0)$5,016.9 
Exercise of stock options124 — 5.0 — — — — 5.0 
Vesting of restricted stock units, net432 — (16.2)— — — — (16.2)
Stock-based compensation— — 28.7 — — — — 28.7 
Net income— — — 246.5 — — — 246.5 
Other comprehensive income activity— — — — 28.8 — — 28.8 
Repurchase of common stock(1)
— — — — — 2,161 (155.9)(155.9)
Accelerated share repurchase agreement(100.0)5,560 (400.0)(500.0)
December 30, 2023300,496 $3.0 $6,058.7 $2,302.8 $(118.8)65,952 $(3,591.9)$4,653.8 
(1) Includes excise tax on share repurchases
See accompanying notes.

6
Table of Contents

HOLOGIC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
Three Months EndedThree Months Ended
December 30,
2023		December 31,
2022
OPERATING ACTIVITIES
Net income
Net income
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
Depreciation
Depreciation
Amortization of acquired intangible assets
Stock-based compensation expense
Stock-based compensation expense
Stock-based compensation expense
Deferred income taxes
Intangible asset impairment charge
Intangible asset impairment charge
Intangible asset impairment charge
Three Months Ended
December 30,
2017		 December 31,
2016
OPERATING ACTIVITIES   
Net income$406.7
 $86.5
Adjustments to reconcile net income to net cash (used in) provided by operating activities:   
Depreciation27.0
 20.4
Amortization of acquired intangibles94.2
 94.9
Non-cash interest expense8.7
 14.3
Stock-based compensation expense16.4
 19.2
Deferred income taxes(390.7) (24.6)
Debt extinguishment loss1.0
 —
Other adjustments and non-cash items1.2
 (6.0)
Changes in operating assets and liabilities, excluding the effect of acquisitions:   
Other adjustments and non-cash items
Other adjustments and non-cash items
Changes in operating assets and liabilities, excluding the effect of acquisitions and dispositions:
Accounts receivable
Accounts receivable
Accounts receivable(6.4) 21.5
Inventories(23.3) (20.7)
Prepaid income taxes8.1
 (0.8)
Prepaid expenses and other assets(5.0) (17.4)
Accounts payable(7.1) (17.8)
Accrued expenses and other liabilities48.9
 14.6
Deferred revenue(10.6) (14.5)
Net cash provided by operating activities169.1
 169.6
INVESTING ACTIVITIES   
Acquisition of businesses, net of cash acquired(4.1) —
Sale of business, net of cash disposed
Sale of business, net of cash disposed
Sale of business, net of cash disposed
Capital expenditures(10.2) (11.5)
Increase in equipment under customer usage agreements(11.6) (13.2)
Proceeds from sale of available-for-sale marketable securities0.1
 0.4
Increase in equipment under customer usage agreements
Increase in equipment under customer usage agreements
Purchase of strategic equity investments
Purchase of strategic equity investments
Purchase of strategic equity investments
Other activity(0.4) (0.9)
Other activity
Other activity
Net cash used in investing activities
Net cash used in investing activities
Net cash used in investing activities(26.2) (25.2)
FINANCING ACTIVITIES   
Repayment of long-term debt(1,331.3) (18.8)
Proceeds from long-term debt1,500.0
 —
Repayment of amounts borrowed under accounts receivable securitization program—
 (12.0)
Proceeds from senior notes350.0
 —
Payments to extinguish convertible notes(296.9) (6.4)
Proceeds from amounts borrowed under revolving credit line495.0
 —
Repayments of amounts borrowed under revolving credit line(720.0) —
Payment of debt issuance costs(11.9) —
Repayment of long-term debt
Repayment of long-term debt
Payment of deferred acquisition consideration
Payment of deferred acquisition consideration
Payment of deferred acquisition consideration
Repurchases of common stock
Repurchases of common stock
Repurchases of common stock
Proceeds from issuance of common stock pursuant to employee stock plans9.5
 13.2
Payments under capital lease obligations(0.4) —
Proceeds from issuance of common stock pursuant to employee stock plans
Proceeds from issuance of common stock pursuant to employee stock plans
Payment of minimum tax withholdings on net share settlements of equity awards(14.3) (16.4)
Payments under finance lease obligations
Net cash used in financing activities(20.3) (40.4)
Effect of exchange rate changes on cash and cash equivalents1.2
 (6.4)
Net increase in cash and cash equivalents123.8
 97.6
Cash and cash equivalents, beginning of period540.6
 548.4
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of period*
Cash and cash equivalents, end of period$664.4
 $646.0
*Includes $33.2 million of cash recorded in assets held-for-sale - current assets as of September 30, 2023.
See accompanying notes.


7
Table of Contents
HOLOGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(allAll tabular amounts in millions, except number of shares, which are reflected in thousands, and per share data)

(1) Basis of Presentation

The unaudited consolidated financial statements of Hologic, Inc. (“Hologic” or the “Company”) presented herein have been prepared pursuant to the rules of the Securities and Exchange Commission (“SEC”(the “SEC”) for quarterly reports on Form 10-Q and do not include all of the information and disclosures required by U.S. generally accepted accounting principles (“GAAP”). for annual financial statements. These unaudited financial statements should be read in conjunction with the consolidated financial statements and related notes for the fiscal year ended September 30, 20172023 included in the Company’s annual report on Form 10-K filed with the SEC on November 21, 2017.2023. In the opinion of management, the unaudited financial statements and notes contain all adjustments (consisting of normal recurring accruals)accruals and all other necessary adjustments) considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the periods presented.

The unaudited consolidated financial statements include the accounts of the Company and its wholly ownedwholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

The preparation of financial statements in conformity with U.S. GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from management’s estimates if past experience or other assumptions do not turn out to be substantially accurate. Operating results for the three months ended December 30, 20172023 are not necessarily indicative of the results to be expected for any other interim period or the entire fiscal year ending September 29, 2018.
On March 22, 2017,28, 2024. Fiscal 2023 was a 53-week fiscal year, and the Company completed the acquisition of Cynosure, Inc. ("Cynosure"), which resulted in the Company expanding into the medical aesthetics market. Cynosure develops, manufactures and markets aesthetic treatment systems that enable medical practitioners to perform non-invasive and minimally invasive procedures. Cynosure's results of operations are reported within the Company's Medical Aesthetics reportable segment. The Company's acquisition of Cynosure is more fully described in Note 3.
Recently Adopted Accounting Pronouncements
In December 2016, the FASB issued Accounting Standards Update No. 2016-19, Technical Corrections and Improvements (ASU 2016-19). This guidance changes how companies classify internal-use software from classification within property, plant, and equipment to intangible assets. The amendments in the update are effective for annual periods beginning after December 15, 2016, and were applicable to the Company in fiscal 2018. The Company adopted ASU 2016-19additional week was included in the first quarter of fiscal 2018. As a result of2023 consistent with the adoption, the Company has reclassified $17.6 million and $18.4 million of internal-use software from property, plant, and equipment to intangible assets as of December 30, 2017 and September 30, 2017, respectively. Additionally, the Company reclassified $12.9 million and $12.3 million of capitalized software embedded in its products from other assets to intangible assets as of December 30, 2017 and September 30, 2017, respectively.Company’s historical fiscal calendar.

Subsequent Events Consideration

The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence for certain estimates or to identify matters that may require additional disclosure. Subsequent events have been evaluated as required. There were no material recognized or unrecognized subsequent events recorded inaffecting the unaudited consolidated financial statements as of and for the three months ended December 30, 2017. On January 19, 2018,2023.


8
Table of Contents
(2) Revenue

The Company accounts for revenue pursuant to ASC 606, Revenue from Contracts with Customer (ASC 606) and generates revenue from the sale of its products, primarily medical imaging systems and related components and software, diagnostic tests and assays and surgical disposable products, and related services, which are primarily support and maintenance services on its medical imaging systems, and to a lesser extent installation, training and repairs. In addition, the Company completedgenerates service revenue from performing laboratory testing services through its Biotheranostics CLIA laboratory, which is included in its Molecular Diagnostics business. The Company’s products are sold primarily through a private placementdirect sales force, and within international markets, there is more reliance on distributors and resellers. Revenue is recorded net of $1.0 billion aggregate principal amountsales tax. The following tables provide revenue from contracts with customers by business and geographic region on a disaggregated basis:    

Three Months Ended December 30, 2023
Business (in millions)
United StatesInternationalTotal
Diagnostics:
Cytology & Perinatal$69.8 $50.2 $120.0 
Molecular Diagnostics247.6 72.2 319.8 
Blood Screening8.0 — 8.0 
Total$325.4 $122.4 $447.8 
Breast Health:
Breast Imaging$228.4 $73.0 $301.4 
Interventional Breast Solutions61.1 15.2 76.3 
Total$289.5 $88.2 $377.7 
GYN Surgical$125.1 $37.1 $162.2 
Skeletal Health$13.7 $11.7 $25.4 
$753.7 $259.4 $1,013.1 


Three Months Ended December 31, 2022
Business (in millions)
United StatesInternationalTotal
Diagnostics:
Cytology & Perinatal$78.2 $48.6 $126.8 
Molecular Diagnostics328.2 97.0 425.2 
Blood Screening7.3 — 7.3 
Total$413.7 $145.6 $559.3 
Breast Health:
Breast Imaging$212.2 $52.2 $264.4 
Interventional Breast Solutions57.8 12.0 69.8 
Total$270.0 $64.2 $334.2 
GYN Surgical$123.1 $31.0 $154.1 
Skeletal Health$16.8 $9.8 $26.6 
$823.6 $250.6 $1,074.2 


9
Table of senior notes, allocated between (i) $600 million of its 4.375% Senior Notes due 2025 (the “New 2025 Senior Notes”) at an offering price of 100%Contents
Three Months Ended
Geographic Regions (in millions)
December 30, 2023December 31, 2022
United States$753.7 $823.6 
Europe142.8 147.4 
Asia-Pacific63.8 63.8 
Rest of World52.8 39.4 
$1,013.1 $1,074.2 

The following table provides revenue recognized by source:

Three Months Ended
Revenue by type (in millions)
December 30, 2023December 31, 2022
Disposables$628.9 $727.8 
Capital equipment, components and software199.2 158.5 
Service178.8 183.3 
Other6.2 4.6 
$1,013.1 $1,074.2 

The Company considers revenue to be earned when all of the aggregate principal amount of the 2025 Senior Notes, plus accrued and unpaid interest from October 10, 2017, and (ii) $400 million of its new 4.625% Senior Notes due 2028 (the "2028 Senior Notes," and together with the New 2025 Senior Notes, the "New Notes") at an offering price of 100% of the aggregate principal amount of the 2028 Senior Notes. In connection with the offering of the New Notes,following criteria are met: the Company has calleda contract with a customer that creates enforceable rights and obligations; promised products or services are identified; the transaction price, or the amount the Company expects to receive, including an estimate of uncertain amounts subject to a constraint to ensure revenue is not recognized in an amount that would result in a significant reversal upon resolution of the uncertainty, is determinable; and the Company has transferred control of the promised items to the customer. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the contract. The transaction price for the contract is measured as the amount of consideration the Company expects to receive in exchange for the goods and services expected to be transferred. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, control of the distinct good or service is transferred. Transfer of control for the Company’s products is generally at shipment or delivery, depending on contractual terms, but occurs when title and risk of loss transfers to the customer which represents the point in time when the customer obtains the use of and substantially all of its outstanding 5.250% Senior Notes due 2022 (the "2022 Senior Notes"),the remaining benefits of the product. As such, the Company’s performance obligation related to product sales is satisfied at a point in aggregate principaltime. Revenue from support and maintenance contracts, extended warranty, and professional services for installation, training and repairs is recognized over time based on the period contracted or as the services are performed as these methods represent a faithful depiction of the transfer of goods and services.

The Company recognizes a receivable when it has an unconditional right to payment, which represents the amount of $1.0 billion, for redemption on February 15, 2018 at an aggregate redemption pricethe Company expects to collect in a transaction and is most often equal to the principal amounttransaction price in the contract. Payment terms are typically 30 days in the U.S. but may be longer in international markets. The Company treats shipping and handling costs performed after a customer obtains control of the outstanding 2022 Senior Notes, plusgood as a fulfillment cost and records these costs within costs of product revenue when the applicable premium and accrued and unpaid interest through the day immediately preceding the redemption date.corresponding revenue is recognized.


Additionally, on January 29, 2018, the Company announced that pursuant to the terms of the indenture for the 2.00% Convertible Senior Notes due 2042 (the “2042 Notes”), holders of the 2042 Notes had the option of requiring the Company to repurchase their 2042 Notes on March 1, 2018 at a repurchase price payable in cash equal to 100% of the accreted principal amount of the 2042 Notes, plus accrued and unpaid interest to, but not including the put date. The Company also announced on January 29, 2018 that it had electedplaces instruments (or equipment) at customer sites but retains title to redeem, on March 6, 2018, allthe instrument. The customer has the right to use the instrument for a period of time, and the Company recovers the cost of providing the instrument through the sales of disposables, namely tests and assays in Diagnostics and handpieces in GYN Surgical. These types of agreements include an embedded lease, which is generally an operating lease, for the right to use an instrument and no instrument revenue is recognized at the time of instrument delivery. The Company recognizes a portion of the then outstanding 2042 Notes at a redemption price payable in cash equalrevenue allocated to 100%the embedded lease concurrent with the sale of disposables over the term of the accreted principal amountagreement.

Revenue from laboratory testing services, which is generated by the Company’s Biotheranostics business, is recognized based upon contracted amounts with payors and historical cash collection experience for the same test or same payor group. Revenue is recognized once the laboratory services have been performed, the results have been delivered to the ordering physician, the payor has been identified, and insurance has been verified. The estimated timeframes for cash collection are three months for Medicare payors, six months for Medicare Advantage payors, and nine months for commercial payors.

Generally, the contracts for capital equipment include multiple performance obligations. For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using its best estimate of

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the standalone selling price of each distinct good or service in the contract. The Company determines its best estimate of standalone selling price using average selling prices over 3- to 12-month periods of data depending on the products or nature of the 2042 Notes, plus accruedservices coupled with current market considerations. If the product or service does not have a history of sales or if sales volume is not sufficient, the Company relies on prices set by its pricing committees or applicable marketing department adjusted for expected discounts.

Variable Consideration

The Company exercises judgment in estimating variable consideration, which includes volume discounts, sales rebates, product returns and unpaid interestother adjustments. These amounts are recorded as a reduction to revenue and classified as a current liability. The Company bases its estimates for volume discounts and sales rebates on historical information to the extent it is reasonable to be used as a predictive tool of expected future rebates. To the extent the transaction price includes variable consideration, the Company applies judgment in constraining the estimated variable consideration due to factors that may cause reversal of revenue recognized. The Company evaluates constraints based on its historical and projected experience with similar customer contracts. The Company’s contracts for the sale of capital equipment and related components, and assays and tests typically do not provide the right to return product, however, its contracts for the sale of its GYN Surgical and Interventional Breast Solutions surgical handpieces provide for a right of return for a limited period of time. In general, estimates of variable consideration and constraints are not material to the Company’s financial statements.

Remaining Performance Obligations

As of December 30, 2023, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied was approximately $808.9 million. These remaining performance obligations primarily relate to support and maintenance obligations and extended warranty in the Company’s Breast Health and Skeletal Health reportable segments. The Company expects to recognize approximately 37% of this amount as revenue in fiscal 2024, 33% in fiscal 2025, 18% in fiscal 2026, 8% in fiscal 2027, and 4% thereafter. As permitted, the Company does not include remaining performance obligations related to contracts with original expected durations of one year or less in the amounts above.

Contract Assets and Liabilities

The Company discloses accounts receivable separately in the Consolidated Balance Sheets at their net realizable value. Contract assets primarily relate to the Company’s conditional right to consideration for work completed but not includingbilled at the redemptionreporting date. Holders alsoContract assets at the beginning and end of the period, as well as the changes in the balance, were immaterial.

Contract liabilities primarily relate to payments received from customers in advance of performance under the contract. The Company records a contract liability, or deferred revenue, when it has an obligation to provide service, and to a much lesser extent product, to the customer and payment is received or due in advance of performance. Deferred revenue primarily relates to support and maintenance contracts and extended warranty obligations within the Company’s Breast Health and Skeletal Health reportable segments. Contract liabilities are classified as other current liabilities and other long-term liabilities in the Consolidated Balance Sheets. The Company recognized revenue of $64.4 million and $66.8 million in the three months ended December 30, 2023 and December 31, 2022, respectively, that was included in the contract liability balance at September 30, 2023 and September 24, 2022, respectively.

Practical Expedients
The Company applies a practical expedient to expense costs to obtain a contract with a customer as incurred when the amortization period would have a rightbeen one year or less. These costs solely comprise sales commissions and typically the commissions are incurred at the time of shipment of product and upon billings for support and maintenance contracts.


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(3) Leases

Lessor Activity - Leases where Hologic is the Lessor

Certain assets, primarily diagnostics instruments, are leased to convert their 2042 Notes. In connection with holders’ rightcustomers under contractual arrangements that typically include an operating lease and performance obligations for disposables, reagents and other consumables. These contractual arrangements are subject to converttermination provisions which are evaluated in determining the 2042 Notes,lease term for lease accounting purposes. Contract terms vary by customer and may include options to terminate the Company announced that it would settlecontract or options to extend the contract. Where instruments are provided under operating lease arrangements, some portion or the entire lease revenue may be variable and subject to subsequent non-lease component (e.g., reagent) sales. Sales-type leases are immaterial. The allocation of revenue between the lease and non-lease components is based on stand-alone selling prices. Lease revenue represented less than 3% of the Company’s consolidated revenue for all conversions of 2042 Notes entirely in cash.periods presented.




(2)(4) Fair Value Measurements

Assets/Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The Company has investments in derivative instruments consistingcomprised of interest rate capsswaps and forward foreign currency contracts, which are valued using analyses obtained from independent third partythird-party valuation specialists based on market observable inputs, representing Level 2 assets. The fair values of the Company's interest rate caps and forward foreign currencythese derivative contracts represent the estimated amounts the Company would receive or pay to terminate the contracts. Refer to Note 611 for further discussion and information on derivative contracts. In addition, the interest rate caps and forward foreign currency contracts.
The Company has a payment obligation to the participants under its Nonqualified Deferred Compensation Plan (“DCP”). This liability iscontingent consideration liabilities that are recorded at fair value, based on the underlying value of certain hypothetical investments under the DCP as designated by each participant for their benefit. Since the value of the DCP obligationwhich is based on market prices,Level 3 inputs. The contingent consideration liability as of December 30, 2023 and December 31, 2022 was primarily related to the liability is classified within Level 1.Acessa acquisition.

Assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following at December 30, 2017:2023:

  Fair Value at Reporting Date Using
 Balance as of December 30, 2023Quoted Prices in
Active Market for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs (Level 2)		Significant
Unobservable
Inputs (Level 3)
Assets:
Interest rate swaps$8.2 $— $8.2 $— 
Total$8.2 $— $8.2 $— 
Liabilities:
Contingent consideration$3.7 $— $— $3.7 
Forward foreign currency contracts4.1 — 4.1 — 
Total$7.8 $— $4.1 $3.7 

Liabilities Measured and Recorded at Fair Value on a Recurring Basis

Changes in the fair value of recurring fair value measurements using significant unobservable inputs (Level 3), which solely consisted of contingent consideration liabilities, during the three month periods ended December 30, 2023 and December 31, 2022 were as follows:

Three Month Ended
December 30, 2023December 31, 2022
Balance at beginning of period$2.0 $23.4 
Contingent consideration recorded at acquisition— — 
Fair value adjustments1.7 — 
Payments— — 
Balance at end of period$3.7 $23.4 


12
   Fair Value at Reporting Date Using
 Balance as of December 30, 2017 
Quoted Prices in
Active Market for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs (Level 2)
 
Significant
Unobservable
Inputs (Level 3)
Assets:       
Interest rate cap - derivative5.3
 —
 5.3
 —
Forward foreign currency contracts0.4
 —
 0.4
 —
Total$5.7
 $—
 $5.7
 $—
Liabilities:       
Deferred compensation liabilities$49.7
 $49.7
 $—
 $—
Forward foreign currency contracts2.6
 —
 2.6
 —
Total$52.3
 $49.7
 $2.6
 $—
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Assets Measured and Recorded at Fair Value on a Nonrecurring Basis

The Company remeasures the fair value of certain assets and liabilities upon the occurrence of certain events. Such assets consistare comprised of cost-method equity investments and long-lived assets, including property, plant and equipment, intangible assets, and goodwill. During the first quarter of fiscal 2024, the Company recorded a $12.5 million impairment charge for right of use lease assets related to the expected closure of facilities in the Diagnostics division (see Note 8 for further discussion). In addition, during the first quarter of fiscal 2024, the Company recorded a $4.3 million impairment charge for an in-process research and development project from the Mobidiag acquisition, reducing the fair value of this asset to $22.4 million. There were no suchother remeasurements forin the three months ended December 30, 20172023 and December 31, 2016.2022.

Disclosure of Fair Value of Financial Instruments

The Company’s financial instruments mainly consist of cash and cash equivalents, accounts receivable, cost-method equity investments, interest rate caps,swaps, forward foreign currency contracts, insurance contracts, DCP liability, accounts payable and debt obligations. The carrying amounts of the Company’s cash and cash equivalents, accounts receivable and accounts payable approximate their fair value due to the short-term nature of these instruments. The Company’s interest rate capsswaps and forward foreign currency contracts are recorded at fair value. The carrying amount of the insurance contracts are recorded at the cash surrender value, as required by U.S. GAAP, which approximates fair value, and the related DCP liability is recorded at fair value. The Company believes the carrying amounts of its cost-method equity investments approximate fair value.

Amounts outstanding under the Company’s Amended and Restated2021 Credit Agreement and Securitization Program of $1.6$1.2 billion and $200.0 million aggregate principal respectively, as of December 30, 20172023 are subject to variable rates of interest based on current market rates, and as such, the Company believes the carrying amount of these obligations approximates fair value. The Company’s 20224.625% Senior Notes due 2028 (the “2028 Senior Notes”) and 20253.250% Senior Notes due 2029 (the “2029 Senior Notes”) had a fair valuevalues of approximately $1.1 billion$386.3 million and $358.6$858.0 million, respectively, as of December 30, 20172023 based on their trading prices, representing a Level 1 measurement. The fair values of the Company’s Convertible Notes were based on the trading prices of the respective notes and represents a Level 1 measurement. Refer to Note 59 for the carrying amounts of the various components of the Company’s debt.


The estimated fair values of the Company’s Convertible Notes at December 30, 2017 were as follows:
2042 Notes284.8
2043 Notes0.3
 $285.1

(3)(5) Business Combinations


Cynosure Inc.Fiscal 2023 Acquisitions

JW Medical

On March 22, 2017,July 3, 2023, the Company completed the acquisition of Cynosure and acquired allassets from JW Medical Corporation (“JW Medical”) for a purchase price of $6.7 million. JW Medical was a long-standing distributor of the outstanding sharesCompany’s Breast Health products in South Korea. The majority of Cynosure. Each share of common stock of Cynosure outstanding immediately prior to the effective time of the acquisition was canceled and converted into the right to receive $66.00 in cash. In addition, all outstanding restricted stock units, performance stock units, and stock options were canceled and converted into the right to receive $66.00 per share in cash less the applicable exercise price, as applicable. The acquisition was funded through available cash, and the total purchase price was $1.66 billion. The Company incurred $18.8 million of transaction costs, which were recorded within general and administrative expenses.

Cynosure, headquartered in Westford, Massachusetts, develops, manufactures, and markets aesthetic treatment systems that enable plastic surgeons, dermatologists and other medical practitioners to perform non-invasive and minimally invasive procedures to remove hair, treat vascular and benign pigmented lesions, remove multi-colored tattoos, revitalize the skin, reduce fat through laser lipolysis, reduce cellulite, clear nails infected by toe fungus, ablate sweat glands and improve women’s health. Cynosure also markets radiofrequency (RF) energy-sourced medical devices for precision surgical applications such as facial plastic and general surgery, gynecology, ear, nose, and throat procedures, ophthalmology, oral and maxillofacial surgery, podiatry and proctology. Cynosure's results of operations are reported in the Company's Medical Aesthetics reportable segment from the date of acquisition and the goodwill within this reportable segment is solely related to Cynosure.
The total purchase price was allocated to Cynosure’s preliminary tangible and identifiablea customer relationship intangible assets and liabilitiesasset with a useful life of 5 years.

Normedi

On April 3, 2023, the Company completed the acquisition of Normedi Nordic AS (“Normedi”) for a purchase price of $7.7 million. Normedi was a long-standing distributor of the Company’s Surgical products in the Nordics region of Europe. The purchase price includes $1.1 million for contingent consideration based on the estimated fair values of those assets as of March 22, 2017, as set forth below. The preliminary purchase price allocation is as follows:

Cash$107.2
Marketable securities82.9
Accounts receivable40.2
Inventory121.1
Property, plant and equipment44.1
Other assets and liabilities, net12.2
Accounts payable and accrued expenses(75.3)
Deferred revenue(11.2)
Capital lease obligation(25.2)
Identifiable intangible assets: 
       Developed technology736.0
       In-process research and development107.0
       Distribution agreement42.0
       Customer relationships35.0
       Trade names74.0
Deferred income taxes, net(315.7)
Goodwill683.5
Purchase Price$1,657.8

In performing the preliminary purchase price allocation, the Company considered, among other factors, the intended future use of acquired assets, analysis of historical financial performance and estimates of future performance of Cynosure’s

business.incremental revenue growth over a 2-year measurement period. The Company has not yet obtained allallocated $3.0 million of the information related to the fair value of the acquired assets and liabilities, primarily taxes, to finalize the purchase price allocation.
As part of the preliminary purchase price allocation, the Company has determined the identifiable intangible assets are developed technology, in-process research and development ("IPR&D"),to a distribution agreement, customer relationships, and trade names. The preliminary fair value of the intangible assets has been estimated using the income approach, and the cash flow projections were discounted using rates ranging from 11% to 12%, except for the IPR&D assets in which the Company used a range of 14% to 22%. The cash flows are based on estimates used to price the transaction, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital.

The developed technology assets are comprised of know-how, patents and technologies embedded in Cynosure's products and relate to currently marketed products. The developed technology assets primarily comprise the significant product families of Cynosure, primarily SculpSure, Icon, and PicoSure.

IPR&D projects relate to in-process projects that have not reached technological feasibility as of the acquisition date and have no alternative future use. The primary basis for determining technological feasibility of these projects is obtaining regulatory approval to market the underlying project or expected commercial release depending on the project. The Company recorded, on a preliminary basis, $107.0 million of IPR&D related to three projects, which were expected to be completed during fiscal 2018 and 2019 with a preliminary cost to complete of approximately $18.0 million. During the fourth quarter of fiscal 2017, the Company obtained regulatory approval for two projects with an aggregate fair value of $61.0 million and these assets were reclassified to developed technology. The remaining project is expected to be completed during fiscal 2019 with an estimated cost to complete of approximately $4.0 million. Given the uncertainties inherent with product development and introduction, there can be no assurance that any of the Company's product development efforts will be successful, completed on a timely basis or within budget, if at all. All of the IPR&D assets were valued using the multiple-period excess earnings method approach.

The distribution agreement intangible asset relates to Cynosure's exclusive distribution rights for the MonaLisa Touch device in certain geographic regions. The customer relationships intangible asset pertains to Cynosure's relationships with its end customers and related service arrangements and distributors throughout the world. Trade names relate to the Cynosure corporate name and primary product names, and the Company used the Relief-from-Royalty Method to estimate the fair valuea useful life of this asset.

Developed technology, distribution agreement, customer relationships and trade names are being amortized on a straight-line basis over a weighted average period of 11.8 years, 8 years, 7.75 years, and 8.9 years, respectively.

The preliminary calculation of the excess of the purchase price over the estimated fair value of the tangible net assets and intangible assets acquired was recorded to goodwill.

Contingent Consideration

The factors contributingCompany’s contingent consideration liability is primarily related to its acquisition of Acessa Health, Inc. (“Acessa”), which was acquired in August 2020. Acessa developed the recognitionProVu laparoscopic radiofrequency ablation system. The Company estimated the fair value of this liability to be $81.8 million as of the preliminary amount of goodwill areacquisition date. The contingent payments were based on several strategica multiple of annual incremental revenue growth over a three-year period ending annually in December of each of 2021, 2022, and synergistic benefits that are expected2023. There was no maximum earnout. Pursuant to be realized fromASC 805, Business Combinations (ASC 805), the Cynosure acquisition. These benefits includeCompany recorded its estimate of the expectation thatfair value of the Company's entry intocontingent consideration liability utilizing the aestheticsMonte Carlo simulation based on future revenue projections of Acessa, revenue growth rates of comparable companies, implied volatility and applying a risk adjusted discount rate. Each quarter the Company was required to remeasure the fair value of the liability as assumptions change, and such adjustments were recorded in operating expenses. This fair value measurement was based on significant inputs not observable in the market will significantly broadenand thus represented a Level 3 measurement as defined in ASC 820, Fair Value Measurements. This fair value measurement was directly impacted by the Company's offering in women's health. The combined company is expected to benefit from a broader global presence, synergistic utilizationCompany’s estimate of Hologic's direct sales force, primarily its GYN Surgical sales force, with certain Cynosure products,future incremental revenue growth of the business. Accordingly, if actual revenue growth were higher or lower than the estimates within the fair value measurement, the Company

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would record additional charges or gains. During the three months ended December 30, 2023, the third and final measurement period was completed, and the Company's entry into an adjacent cash-pay segment. NoneCompany recorded a loss of $1.7 million to increase the goodwillcontingent consideration liability to fair value based on actual revenue results in the final earn-out period. As of December 30, 2023, the contingent consideration liability related to Acessa was $2.6 million and the payment is expected to be deductible for income tax purposes.made during the second quarter of fiscal 2024.


In fiscal 2017, Cynosure's revenue and pre-tax loss, which excludes acquisition expenses incurred by
(6) Strategic Investment

Maverix Medical

On November 13, 2023, the Company entered into an agreement with KKR Comet, LLC, an affiliate of KKR & Co. Inc. (“KKR Comet”), to form a legal entity to develop and acquire innovative technologies and commercial operations within the lung cancer space. The new entity, named Maverix Medical LLC (“Maverix”), will be managed by Ajax Health. As part of this strategic investment, the Company contributed $24.5 million in return for 45% ownership in the period from the acquisition date to September 30, 2017 were $207.5 millionClass A Common units of Maverix, and $96.4 million, respectively. The pre-tax loss includes amortization expense, the impact of the step-up in inventory, retention and integration expenses including legal and consulting fees, and restructuring charges. The following unaudited pro forma information presents the combined financial results forboth the Company and CynosureKKR Comet have committed to make additional capital contributions in proportion to the ownership percentages upon meeting certain objectives and as ifapproved by the acquisition of Cynosure had been completed at Maverix board. In accordance with ASC 810, Consolidation, and ASC 323, Investments - Equity Method and Joint Ventures, the beginningCompany determined that this investment should be accounted for under the equity method, which requires the Company to record its proportional share of the prior fiscal year, September 26, 2015 (fiscal 2016):


 Three Months Ended
 December 31, 2016
 (unaudited)
Revenue$856.3
Net income$74.1
Basic earnings per common share$0.27
Diluted earnings per common share$0.26

The unaudited pro forma informationentity’s net income (loss). This investment is recorded within Other assets in the Consolidated Balance Sheets, and the Company’s proportionate share of Maverix’s loss for the three months ended December 31, 2016 (the first quarter30, 2023 was immaterial.

(7) Disposition

Sale of fiscal 2017) was calculated after applyingSuperSonic Imagine Ultrasound Imaging Business

On September 29, 2023, the Company's accounting policies andCompany executed an agreement to sell its SSI ultrasound imaging business to SSH Holdings Limited for a sales price of $1.9 million in cash. Under the impact of acquisition date fair value adjustments. The pro forma condensed consolidated financial results have been prepared for comparative purposes only and include certain adjustments to reflect pro forma results of operations as if the acquisition occurred on September 27, 2015 (the beginning of fiscal 2016), such as increased amortization for the fair value of acquired intangible assets. The pro forma information does not reflect the effect of costs or synergies that would have been expected to result from the integrationterms of the acquisition.contract, the Company agreed to fund the SSI business with $33.2 million of cash. The pro forma information does not purportsale was completed on October 3, 2023. The Company also agreed to provide certain transition services for up to one year, depending on the nature of the service. The SSI ultrasound imaging asset group met the criteria to be indicative of the results of operations that actually would have resulted had the combination occurred at the beginning of the period presented, or of future results of the consolidated entities.
Medicor Medical Supply

On April 7, 2017, the Company completed the acquisition of MMS Medicor Medical Supplies GmbH ("Medicor") for a purchase price of approximately $19.0 million, which includes a working capital adjustment of $2.0 million that was paidclassified as assets held-for-sale in the fourth quarter of fiscal 2017,2023. As a result, the Company recorded a charge of $51.7 million in the fourth quarter of fiscal 2023 to record the asset group to its fair value less costs to sell pursuant to ASC 360, Property, Plant and a holdbackEquipment-Impairment or Disposal of $1.9 million that is payable two years fromLong-Lived Assets.

The assets and liabilities of the disposed business at the date of acquisition. Medicordisposition were as follows:

Assets:
Cash$33.2 
Accounts receivable4.5
Inventory16.2
Prepaid expenses and other assets8.6
Valuation allowance(50.6)
Total assets disposed of$11.9 
Liabilities:
Accounts payable$3.1 
Accrued expenses5.1
Total liabilities disposed of$8.2 

The valuation allowance of $50.6 million was a long-standing distributorrecorded to appropriately reflect the assets held-for-sale classification in the Consolidated Balance Sheet in the fourth quarter of the Company's Breast and Skeletal Health products in Germany, Austria and Switzerland. Based on the Company's preliminary valuation, it has allocated $5.4 million of the purchase pricefiscal 2023 relative to the preliminary value of intangible assets, which have a weighted average life of 7.7 years,loss recorded and $8.9 million to goodwill. The remaining $4.7 million of purchase price has been allocated to the acquirednet tangible assets and liabilities. The allocation of the purchase price is preliminary as the Company continues to gather information supporting the acquired assets and liabilities.disposed.

Emsor, S.A.

On December 11, 2017, the Company completed the acquisition of Emsor S.A. ("Emsor") for a purchase price of approximately $13.1 million, which includes a holdback of $0.5 million that is payable eighteen months from the date of acquisition, and contingent consideration which the Company has estimated at $2.0 million. The contingent consideration is payable upon Emsor achieving predefined amounts of cumulative revenue over a two year period from the date of acquisition. Emsor was a distributor of the Company's Breast and Skeletal Health products in Spain and Portugal. Based on the Company's preliminary valuation, it has allocated $2.8 million of the purchase price to the preliminary value of intangible assets and $3.5 million to goodwill. The remaining $6.8 million of purchase price has been allocated to acquired tangible assets and liabilities. The allocation of the purchase price is preliminary as the Company continues to gather information supporting the acquired assets and liabilities.


(4) Restructuring Charges
The Company evaluates its operations for opportunities to improve operational effectiveness and efficiency, including facility and operations consolidation, and to better align expenses with revenues. In addition,has determined that this disposal did not qualify as a discontinued operation as the Company continually assesses its management and organizational structure. As a result of these assessments, the Company has undertaken various restructuring actions, which are described below. The following table displays charges related to these actions recorded in the fiscal 2018 year to date period (three months ended December 30, 2017) and fiscal 2017 (the year ended September 30, 2017) and a rollforwardsale of the accrued balances from September 30, 2017SSI ultrasound imaging business was deemed to December 30, 2017:

not be a strategic shift having or that will have a major effect on the Company’s operations and financial results.

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  Fiscal 2018 Actions Fiscal 2017 Actions Fiscal 2016 Actions Total    
Restructuring Charges        
Fiscal 2017 charges:       
Workforce reductions $—
 $8.5
 $—
 $8.5
Facility closure costs —
 —
 4.8
 4.8
Fiscal 2017 restructuring charges $—
 $8.5
 $4.8
 $13.3
Fiscal 2018 charges:        
Workforce reductions $3.8
 $—
 $—
 $3.8
Fiscal 2018 restructuring charges $3.8
 $—
 $—
 $3.8

  Fiscal 2018 Actions Fiscal 2017 Actions Fiscal 2016 Actions Other Total    
Rollforward of Accrued Restructuring          
Balance as of September 30, 2017 $—
 $7.5
 $3.7
 $0.3
 $11.5
Fiscal 2018 charges 3.8
 —
 —
 —
 3.8
Stock-based compensation (1.3) —
 —
 —
 (1.3)
Severance payments and adjustments (0.9) (2.3) (0.2) —
 (3.4)
Other payments —
 —
 (0.3) (0.1) (0.4)
Balance as of December 30, 2017 $1.6
 $5.2
 $3.2
 $0.2
 $10.2
(8) Restructuring
Fiscal 2018 Actions
During the first quarter of fiscal 2018,2024, as a result of a change in strategy for a certain business within Diagnostics, including the discontinuation of the sale of certain products and expected closure of facilities, the Company decided to terminatedetermined certain employees acrossfixed assets lives should be shortened and lease assets were impaired at the organization, includingaffected facilities. As such, the Company recorded accelerated depreciation of $7.2 million and a corporate executive and sales and marketing personnel in its Diagnostics and Medical Aesthetics reportable segments.lease asset impairment charge of $12.5 million. The charges wereCompany has initiated discussions with the respective Works Councils. In addition, the Company recorded the minimum statutory severance benefit for the affected employee groups of $1.8 million pursuant to ASC 712, Compensation-NonretirementCompensation Nonretirement Postemployment Benefits(ASC 712) or. The Company expects total severance benefits related to this action will be approximately $4.0 million to $8.0 million. This action is expected to be completed by the end of calendar 2024.

During the first quarter of fiscal 2022, the Company finalized its decision to close its Danbury, Connecticut facility where it manufactures its Breast Health capital equipment products. The manufacturing of the Breast Health capital equipment products and all other support services are in the process of being transferred to the Company’s Newark, Delaware facility. In addition, research and development, sales and services support and administrative functions are also transferring to the Newark, Delaware and Marlborough, Massachusetts facilities. The transition is expected to be completed by the third quarter of fiscal 2025. The employees were notified of the closure during the first quarter of fiscal 2022, and the majority of employees located in Danbury were given the option to relocate to the new locations. The Company is recording severance benefits ratably over the required service period pursuant to ASC 420, Exit or Disposal Cost Obligations(ASC (ASC 420) depending on the employee.. As such,a result, the Company recorded severance and benefits charges of $3.8 million in the first quarter. Included within this charge is $1.3 million related to the modification of equity awards.
Fiscal 2017 Actions
In connection with its acquisition of Cynosure, the Company decided to terminate certain Cynosure executives in the second quarter of fiscal 2017 and recorded $1.5 million in severance and benefits charges. During the third and fourth quarters of fiscal 2017, the Company terminated additional executives and employees and recorded $4.3$0.5 million and $1.3$0.7 million respectively,during the three months ended December 30, 2023 and December 31, 2022, respectively. The Company estimates that total severance charges, including retention, will be approximately $5.9 million. In addition, in severance and benefits charges.
Fiscal 2016 Actions
In connection with the closure of the Bedford, Massachusetts facility, during the first quarter of fiscal 20172024, as part of exiting the building, the Company recorded $3.5 million for lease obligation charges related to a sectionfacility restoration costs of the facility that the Company had determined met the cease-use date criteria. The Company made certain assumptions regarding the time period it would take to obtain a subtenant and the sublease rates it can obtain. During the third quarter of fiscal 2017, the Company updated its assumption regarding the time period it will take to obtain a subtenant at the Bedford location and as a result recorded an additional $1.3 million lease obligation charge. These estimates may vary from the actual sublease agreements executed, if at all, resulting in an adjustment to the charge. The Company has vacated other portions of the building but not the entire facility, and at this time does not meet the cease-use date criteria to record additional restructuring charges.$0.5 million.





(5)
(9) Borrowings and Credit Arrangements

The Company’s borrowings consisted of the following:

December 30,
2023		September 30,
2023
Current debt obligations, net of debt discount and deferred issuance costs:
Term Loan$37.4 $287.0 
Total current debt obligations$37.4 $287.0 
Long-term debt obligations, net of debt discount and issuance costs:
Term Loan1,186.4 1,195.6 
2028 Senior Notes397.0 396.8 
2029 Senior Notes939.3 938.8 
Total long-term debt obligations$2,522.7 $2,531.2 
Total debt obligations$2,560.1 $2,818.2 

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 December 30,
2017		 September 30,
2017
Current debt obligations, net of debt discount and deferred issuance costs:   
Term Loan$46.7
 $121.3
Revolver120.0
 345.0
Securitization Program200.0
 200.0
Convertible Notes205.4
 484.5
Total current debt obligations$572.1
 $1,150.8
Long-term debt obligations, net of debt discount and deferred issuance costs:   
Term Loan1,430.1
 1,190.5
2022 Senior Notes982.6
 981.6
2025 Senior Notes345.0
 —
Total long-term debt obligations$2,757.7
 $2,172.1
Total debt obligations$3,329.8
 $3,322.9

Amended and Restated2021 Credit Agreement

On October 3, 2017,September 27, 2021, the Company refinanced its then existing term loan and certain of its domestic subsidiaries entered into an Amended and Restated Credit and Guaranty Agreement (the "Amended and Restated Credit Agreement")revolving credit facility with Bank of America, N.A. in its capacity as Administrative Agent, Swing Line Lender and L/C Issuer, and certain other lenders (the “2018 Credit Agreement”) by entering into a Refinancing Amendment (the “2021 Credit Agreement”). On August 22, 2022, the Company further amended the 2021 Credit Agreement to address the planned phase out of LIBOR by the UK Financial Conduct Authority. Under this amendment, the interest rates applicable to the loans under the 2021 Credit Agreement denominated in U.S. dollars were converted to a variant of the secured overnight financing rate (“SOFR”), as established from time to time party thereto. by the Federal Reserve Bank of New York, plus a corresponding spread.

The Amended and Restated2021 Credit Agreement amends and restates the Company's prior credit and guaranty agreement, originally dated as of May 29, 2015 (the "Prior Credit Agreement"). The proceeds under the Amended and Restated Credit Agreement of $1.8 billion were used, among other things, to pay off the Term Loan of $1.32 billion and the Revolver then outstanding under the Company's Prior Credit Agreement. Borrowings under the Amended and Restated Credit Agreement are secured by first-priority liens on, andprovided a first-priority security interest in, substantially all of the assets of the Company's U.S. subsidiaries, with certain exceptions.

The credit facilities (the “Amended and Restated Credit Facilities”) under the Amended and Restated Credit Agreement consist of:

A $1.5 billion secured term loan to the Company ("Amendedfacility (the “2021 Term Loan"Loan”) withand a maturity date of October 3, 2022; and
A secured$2.0 billion revolving credit facility (the "Amended Revolver"“2021 Revolver”) under which the the Company may borrow up to $1.5 billion, subject to certain sublimits, with a maturity date of October 3, 2022.

At the closing, the Company borrowed $345 million under the Amended Revolver, which was fully repaid during October 2017.. As of December 30, 2017,2023, the Company had $120.0 millionprincipal amount outstanding under the Amended Revolver.

Borrowings under the Amended and Restated Credit Facilities bear interest, at the Company's option and in each case plus an applicable margin as follows:

Amended Term Loan: at the Base Rate, Eurocurrency Rate or LIBOR Daily Floating Rate (as defined in the Amended and Restated Credit Agreement), 
Amended Revolver: if funded in U.S. dollars, the Base Rate, Eurocurrency Rate, or LIBOR Daily Floating Rate, and, if funded in an alternative currency, the Eurocurrency Rate; and if requested under the swing line sublimit, the Base Rate.

The applicable margin to the Base Rate, Eurocurrency Rate, or LIBOR Daily Floating Rate is subject to specified changes depending on the total net leverage ratio as defined in the Amended and Restated Credit Agreement. The borrowings of the Amended2021 Term Loan initially bearwas $1.2 billion, and the interest at an annual rate equal to the Eurocurrency Rate (i.e., the LIBOR rate) plus an Applicable Rate equal to 1.50%. The borrowings of the Amended Revolver initially bear interest at a rate equal to the LIBOR Daily Floating Rate plus an Applicable Rate equal to 1.50%. The Company is also required to pay a quarterly commitment fee calculated on the undrawn committed amount available under the Amended Revolver.

The Company is required to make scheduled principal payments under the Amended Term Loan in increasingwas 6.46% per annum. No amounts ranging from $9.375 million per three-month period commencing with the three-month period ending on December 29, 2017 to $37.5 million per three-month period commencing with the three-month period ending on December 23, 2021. The remaining balance of the Amended Term Loan and any amountswere outstanding under the Amended2021 Revolver, are dueand the full amount was available to be borrowed by the Company. During the first quarter of fiscal 2024, the Company made a $250.0 million voluntary prepayment on the 2021 Term Loan.

Interest expense, weighted average interest rates, and the interest rate at maturity. In addition, subject to the termsend of period under the 2021 Credit Agreement were as follows: 

Three Months Ended
December 30, 2023December 31, 2022
Interest expense$22.6 $20.4 
Weighted average interest rate6.44 %4.63 %
Interest rate at end of period6.46 %5.43 %

The Company’s effective interest rate swap agreements, the first of which fixed the SOFR component of the variable interest rate on $1.0 billion of aggregate principal under the 2021 Term Loan at 1.23% and conditions set forthterminated on December 17, 2023, and the second of which fixes the SOFR component of the variable interest rate on $500 million of aggregate principal under the 2021 Term Loan at 3.46% commencing on December 17, 2023 and terminating on December 27, 2024, resulted in the AmendedCompany receiving $9.7 million and Restated Credit Agreement, the Company is required to make certain mandatory prepayments from the net proceeds of specified types of asset sales (subject to certain reinvestment rights), debt issuances and insurance recoveries (subject to certain reinvestment rights). These mandatory prepayments are required to be applied by the Company, first, to the Amended Term Loan, second, to any outstanding amount under any Swing Line Loans (as defined in the Amended and Restated Credit Agreement), third, to the Amended Revolver, fourth to prepay any outstanding reimbursement obligations with respect to Letters of Credit (as defined in the Amended and Restated Credit Agreement) and fifth, to cash collateralize any Letters of Credit. Subject to certain limitations, the Company may voluntarily prepay any of the Amended and Restated Credit Facilities without premium or penalty.

Borrowings outstanding under the Amended and Restated Credit Agreement and the Prior Credit Agreement for$6.6 million during the three months ended December 30, 20172023 and December 31, 2016 had weighted-average2022, respectively, which was recorded as a reduction to interest rates of 2.75% and 2.05%, respectively. The interest rate on the outstanding Amended Term Loan borrowing at December 30, 2017 was 3.07%. Interest expense under the Amended and Restated Credit Agreement aggregated $12.4 million for the three months ended December 30, 2017, which includes non-cash interest expense of $0.7 million related to the amortization of the deferred issuance costs and accretion of the debt discount. Interest expense under the Prior Credit Agreement aggregated $9.8 million for the three months ended December 31, 2016, which includes $1.1 million of non-cash interest expense related to the amortization of the deferred issuance costs and accretion of the debt discount.expense.


The Amended and Restated2021 Credit Agreement contains affirmative and negative covenants customarily applicable to senior secured credit facilities, including covenants restricting the ability of the Company, subject to negotiated exceptions, to incur additional indebtedness and grant additional liens on its assets, engage in mergers or acquisitions or dispose of assets, enter into sale-leaseback transactions, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, and change the nature of their businesses. In addition, the Amended and Restated Credit Agreement requires the the Company to maintain certaintwo financial ratios. The Amended and Restated Credit Agreement also contains customary representations and warranties and events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross defaults and an event of default uponcovenants; a change of control of the Company.

Borrowings are secured by first-priority liens on, and a first-priority security interest in, substantially all of the assets of the Company, with certain exceptions. For example, borrowings under the Amended and Restated Credit Agreement are not secured by those accounts receivable that are transferred to the special purpose entity under the Company's Accounts Receivable Securitization program. The Amended and Restated Credit Agreement contains total net leverage ratio and an interest coverage ratio, financial covenantsboth of which are measured as of the last day of each fiscal quarterquarter. These terms, and an excess cash flow prepayment requirement measured ascalculations thereof, are defined in further detail in the 2021 Credit Agreement. As of the end of each fiscal year. The total net leverage ratio was 5.00:1.00 beginning on the Company's fiscal quarter ended December 30, 2017, and then decreases over time to 4.50:1.00 for2023, the quarter ending March 27, 2021. The interest coverage ratio was 3.75:1.00 beginning on the Company's fiscal quarter ended December 30, 2017, and remains as such for each quarter thereafter. The total net leverage ratio is defined as the ratio of the Company's consolidated net debt as of the quarter end to its consolidated adjusted EBITDA (as defined in the Amended and Restated Credit Agreement) for the four-fiscal quarter period ending on the measurement date. The interest coverage ratio is defined as the ratio of the Company's consolidated adjusted EBITDA for the prior four-fiscal quarter period ending on the measurement date to adjusted consolidated cash interest expense (as defined in the Amended and Restated Credit Agreement) for the same measurement period. The Company was in compliance with these covenants ascovenants.

2028 Senior Notes
As of December 30, 2017.

The Company evaluated the Amended and Restated Credit Agreement for derivatives pursuant to ASC 815, Derivatives and Hedging, and identified embedded derivatives that required bifurcation as the features are not clearly and closely related to the host instrument. The embedded derivatives were a default provision, which could require additional interest payments, and a provision requiring contingent payments to compensate the lenders for changes in tax deductions. The Company determined that the fair value of these embedded derivatives was nominal as of December 30, 2017.

Pursuant to ASC 470, Debt (ASC 470), the accounting for the Amended and Restated Credit Agreement was evaluated on a creditor-by-creditor basis with regard to the Amended and Restated Credit Agreement to determine whether each transaction should be accounted for as a modification or extinguishment. Certain creditors under the Amended and Restated Credit Agreement did not participate in this refinancing transaction and ceased being creditors of the Company. As a result,2023, the Company recorded a debt extinguishment loss of $1.0 million in the first quarter of fiscal 2018 to write-off the pro-rata amount

of unamortized debt discount and deferred issuance costs related to these creditors. For the remainder of the creditors, this transaction was accounted for as a modification because on a creditor-by-creditor basis the present value of the cash flows between the two debt instruments before and after the transaction was less than 10%. Pursuant to ASC 470, subtopic 50-40, third-party costs of $1.7 million related to this transaction were recorded as interest expense and $4.9 million was recorded as a reduction to debt representing deferred issuance costs and fees paid directly to the lenders.

2025 Senior Notes

On October 10, 2017, the Company completed a private placement of $350 million aggregate principal amount of its 4.375% Senior Notes due 2025 (the “2025 Senior Notes”) at an offering price of 100% of the aggregate principal amount of the 2025 Senior Notes. The 2025 Senior Notes are general senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain domestic subsidiaries of Hologic (the “ 2025 Domestic Guarantors”).

The 2025 Senior Notes mature on October 15, 2025 and bear interest at the rate of 4.375% per year, payable semi-annually on April 15 and October 15 of each year, commencing on April 15, 2018. The Company recorded interest expense of $3.5 million for the three months ended December 30, 2017 which includes non-cash interest expense of $0.1 million related to the amortization of the deferred issuance costs and accretion of the debt discount.

The Company may redeem the 2025 Senior Notes at any time prior to October 15, 2020 at a price equal to 100% of the aggregate principal amount so redeemed, plus accrued and unpaid interest, if any, to the redemption date and a make-whole premium set forth in the Indenture. The Company may also redeem up to 35% of the aggregate principal amount of the 2025 Senior Notes with the net cash proceeds of certain equity offerings at any time and from time to time before October 15, 2020, at a redemption price equal to 104.375% of the aggregate principal amount so redeemed, plus accrued and unpaid interest, if any, to the redemption date. The Company also has the option to redeem the 2025 Senior Notes on or after: October 15, 2020 through October 14, 2021 at 102.188% of par; October 15, 2021 through October 14, 2022 at 101.094% of par; and October 15, 2022 and thereafter at 100% of par. In addition, if the Company undergoes a change of control coupled with a decline in ratings, as provided in the 2025 Indenture, the Company will be required to make an offer to purchase each holder’s 2025 Senior Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date.

On January 19, 2018, the Company completed a private placement of $1.0 billion aggregate principal amount of senior notes, which included $600 million of additional 4.375% Senior Notes due 2025 (the “New 2025 Senior Notes”), issued under a supplement to the 2025 Indenture. See “Subsequent Events” below.

2022 Senior Notes

The Company's 5.250% Senior Notes due 2022 (the “2022 Senior Notes”) mature on July 15, 2022 and bear interest at the rate of 5.250% per year, payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2016. The Company recorded interest expense of $14.0 million and $15.1 million for the three months ended December 30, 2017 and December 31, 2016, respectively, which includes non-cash interest expense of $1.0 million and $1.0 million, respectively, related to the amortization of the deferred issuance costs and accretion of the debt discount.

In connection with the offering of the New 2025 Senior Notes and the Company’s 4.625% Senior Notes due 2028, the Company has called all of its outstanding 2022 Senior Notes, in the aggregate principal amount of $1.0 billion, for redemption on February 15, 2018 at an aggregate redemption price equal to the principal amount of the outstanding 2022 Senior Notes, plus the applicable premium and accrued and unpaid interest through the day immediately preceding the redemption date. See “Subsequent Events” below.

Convertible Notes

On various dates during the first quarter of fiscal 2018, the Company entered into privately negotiated repurchase transactions and extinguished $39.3 million principal amount of its 2.00% Convertible Senior Notes due 2042 (the "2042 Notes") for total payments of $52.8 million. This amount includes the conversion premium resulting from the Company's stock price on the date of the transactions being in excess of the conversion prices of $31.175. As a result, on a gross basis, $13.4 million of the consideration paid was allocated to the reacquisition of the equity component of the original instrument, which was recorded net of deferred taxes of $3.8 million within additional paid-in-capital.
On December 15, 2017, pursuant to the provisions of the indenture governing the Company's 2.00% Convertible Senior Notes due December 15, 2043 (the "2043 Notes"), the Company redeemed or repurchased an aggregate of $201.7 million in original principal amount of the 2043 Notes then outstanding for an aggregate repurchase price of approximately $244.1

million, representing the then accreted principal amount of the 2043 Notes. The remaining $0.3 million in original principal amount of the 2043 Notes were converted, and the Company elected to settle these conversions, which will occur in the second quarter of fiscal 2018.

The term "Convertible Notes" refers to the 2042 Notes and the 2043 Notes.
Interest expense under the Convertible Notes was as follows:
 Three Months Ended
 December 30,
2017		 December 31,
2016
Amortization of debt discount$2.9
 $5.2
Amortization of deferred financing costs0.1
 0.2
Principal accretion1.6
 4.6
Non-cash interest expense4.6
 10.0
2.00% accrued interest (cash)1.1
 2.0
 $5.7
 $12.0
Subsequent Events
2025 Senior Notes and 2028 Senior Notes
On January 19, 2018, the Company completed a private placement of $1.0 billion aggregate principal amount of senior notes, allocated between (i) an additional $600 million aggregate principal amounts of its 2025 Senior Notes pursuant to a supplement to the indenture governing the Company's existing 2025 Senior Notes, at an offering price of 100% of the aggregate principal amount of the 2025 Senior Notes, plus accrued and unpaid interest from October 10, 2017 and (ii) $400 million aggregate principal amounts of itshad 4.625% Senior Notes due 2028 (the "2028“2028 Senior Notes"Notes”) at an offering price of 100% ofoutstanding in the aggregate principal amountbalance of the 2028 Senior Notes. The new 2025 Senior Notes have the same terms as the existing 2025 Senior Notes.$400 million. The 2028 Senior Notes are general senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain of the Company’s domestic subsidiaries of Hologic (the “2028 Domestic Guarantors”).

The 2028 Senior Notes were issued pursuant to an indenture (the “2028 Indenture”), dated as of January 19, 2018 among the Company, the 2028 Domestic Guarantors and Wells Fargo Bank, National Association, as trustee. The 2028 Senior Notes mature on February 1, 2028 and bear interest at2028.

2029 Senior Notes

As of December 30, 2023, the rateCompany had 3.250% Senior Notes due 2029 (the “2029 Senior Notes”) outstanding in the aggregate principal balance of 4.625% per year, payable semi-annually on February 1 and August 1 of each year, commencing on August 1, 2018.$950 million. The 2028 Indenture contains covenants which limit, among other things, the ability2029 Senior Notes are general senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain of the Guarantors to create liensCompany’s domestic subsidiaries and engage in certain salemature on February 15, 2029.


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Interest expense for the 2029 Senior Notes and leaseback transactions. These covenants are subject to a number exceptions and qualifications.

The Company may redeem the 2028 Senior Notes was as follows:

Three Months Ended
Interest RateDecember 30, 2023December 31, 2022
2028 Senior Notes4.625 %4.8 5.2 
2029 Senior Notes3.250 %8.2 8.9 
Total$13.0 $14.1 

(10) Trade Receivables and Allowance for Credit Losses

The Company applies ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) to its trade receivables and allowances for credit losses, which requires that financial assets measured at any time prioramortized cost be presented at the net amount expected to February 1, 2023 at a price equal to 100%be collected. The expected credit losses are developed using an estimated loss rate method that considers historical collection experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the aggregate principal amount so redeemed, plus accruedreported amount. The estimated loss rates are applied to trade receivables with similar risk characteristics such as the length of time the balance has been outstanding and unpaidthe location of the customer. In certain instances, the Company may identify individual trade receivable assets that do not share risk characteristics with other trade receivables, in which case the Company records its expected credit losses on an individual asset basis. For example, potential adverse changes to customer liquidity, such as the ongoing and possible future effects of global challenges including macroeconomic uncertainties, such as inflation, rising interest if any,rates and availability of capital markets, and other economic disruptions. To date, the Company has not experienced significant customer payment defaults, or identified other significant collectability concerns. In connection with assessing credit losses for individual trade receivable assets, the Company considers significant factors relevant to collectability including those specific to the redemption datecustomer such as bankruptcy, length of time an account is outstanding, and a make-whole premium set forth in the Indenture. The Company may also redeem up to 35%liquidity and financial position of the aggregate principal amountcustomer. If a trade receivable asset is evaluated on an individual basis, the Company excludes those assets from the portfolios of trade receivables evaluated on a collective basis.

The following is a rollforward of the 2028 Senior Notes with the net cash proceeds of certain equity offerings at any time and from time to time before February 1, 2021, at a redemption price equal to 104.625% of the aggregate principal amount so redeemed, plus accrued and unpaid interest, if any, to the redemption date. The Company also has the option to redeem the 2028 Senior Notes on or after: February 1, 2023 through February 1, 2024 at 102.312% of par; February 1, 2024 through February 1, 2025 at 101.541% of par; February 1, 2025 through February 1, 2026 at 100.770% of par; and February 1, 2026 and thereafter at 100% of par. In addition, if the Company undergoes a change of control coupled with a decline in ratings, as provided in the 2028 Indenture, the Company will be required to make an offer to purchase each holder’s 2028 Senior Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date.
2042 Notes
On January 29, 2018, the Company announced that pursuant to the terms of the indentureallowance for the 2.00% Convertible Senior Notes due 2042 (the “2042 Notes”), holders of the 2042 Notes had the option of requiring the Company to repurchase their 2042 Notes on March 1, 2018 at a repurchase price payable in cash equal to 100% of the accreted principal amount of the 2042 Notes, plus accrued and unpaid interest to, but not including the put date. The accreted principal amount of the 2042 notes will be $206.0 millioncredit losses as of the repurchase date. The Company also announced on January 29, 2018 that, it had electedDecember 30, 2023 compared to redeem, on March 6, 2018, all of the then outstanding 2042 Notes at a redemption price payable in cash equal to 100% of the accreted principal amount of the 2042 Notes, plus accrued and unpaid interest to, but not including the redemption date.December 31, 2022:


Holders also have a right to convert their 2042 Notes. Based on a closing price of the Company’s common stock of $42.75 per share (the closing price for the Company’s common stock on December 29, 2017), the conversion value for the outstanding 2042 notes would be $1,371 per $1,000 of original principal amount of the notes, or $282.6 million in the aggregate. The conversion value of the notes would increase or decrease to the extent that the trading price of the Company’s common stock increases or decreases. The Company has elected to settle any conversion of the 2042 Notes entirely in cash.
Balance at
Beginning
of Period		Credit LossWrite-offs,
Payments and Foreign Exchange		Balance at
End of
Period
Three Months Ended
December 30, 2023$38.5 $4.9 $(0.3)$43.1 
December 31, 2022$37.7 $1.2 $0.2 $39.1 



(11) Derivatives
(6) Derivatives
Interest Rate CapSwaps - Cash Flow Hedge

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages its exposure to some of its interest rate risk through the use of interest rate caps,swaps, which are derivative financial instruments. The Company does not use derivatives for speculative purposes. For a derivative that is designated as a cash flow hedge, changes in the fair value of the derivative are recognized in accumulated other comprehensive income ("AOCI"(“AOCI”) to the extent the derivative is effective at offsetting the changes in the cash flows being hedged until the hedged item affects earnings. To the extent there is any hedge ineffectiveness, changes in fair value relating to the ineffective portion are immediately recognized in earnings in other income (expense) in the Consolidated Statements of Income.
During
In fiscal 2015,2019, the Company entered into separatean interest rate cap agreementsswap contract with multiple counter-partiesan effective date of December 23, 2020 and a termination date of December 17, 2023 to help mitigatehedge a portion of its variable rate debt. On August 25, 2022, the interest rate volatility associatedswap agreement was restructured (consistent with the 2021 Credit Agreement) to convert the benchmark interest rate from LIBOR to the SOFR rate effective September 23, 2022 with a termination date of December 17, 2023. The Company applied the practical and optional expedients in ASC 848, Reference Rate Reform, in evaluating the impact of modifying the contract, which resulted in no change to the accounting for this derivative contract. The notional amount of this swap was $1.0 billion. The restructured interest rate swap fixed the SOFR component of the variable interest rate on amounts borrowed$1.0 billion of the notional amount under the term loan feature of its credit facilities (see Note 6)2021 Credit Agreement at 1.23%. Interest rate cap agreements provide the right to receive cash if the reference interest rate rises above a contractual rate. The aggregate premium paid for the interest rate cap agreements was $13.2 million, which was the initial fair value of the instruments recorded in the Company's financial statements.
During fiscal 2017, the Company entered into new separate interest rate cap agreements with multiple counter-parties to extend the expiration date of its hedges by an additional year. The aggregate premium paid for the interest rate cap agreements was $1.9 million, which was the initial fair value of the instruments recorded in the Company's financial statements.
The critical terms of the restructured interest rate capsswap were designed to mirror the terms of the Company’s LIBOR-basedSOFR-based borrowings under its Priorthe 2021 Credit Agreement and Amendedtherefore were highly effective at offsetting the cash flows being hedged. The Company designated this derivative as a cash flow hedge of the variability of the SOFR-based interest

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payments on $1.0 billion of principal. Therefore, changes in the fair value of the swap were recorded in AOCI. The contract ended during the first quarter of fiscal 2024 and Restatedas a result the fair value of this derivative was $0.0 million as of December 30, 2023.

On March 23, 2023, the Company entered into two consecutive interest rate swap contracts with the first contract having an effective date of December 17, 2023 and terminating on December 27, 2024, and the second contract having an effective date of December 27, 2024 and terminating on September 25, 2026. The notional amount of these swaps is $500 million, and the first interest rate swap fixes the SOFR component of the variable interest rate at 3.46%, and the second interest rate swap fixes the SOFR component of the variable interest rate at 2.98%. The critical terms of the interest rate swaps are designed to mirror the terms of the Company’s SOFR-based borrowings under the 2021 Credit Agreement and therefore are highly effective at offsetting the cash flows being hedged. The Company designated these derivativesthis derivative as a cash flow hedgeshedge of the variability of the LIBOR-basedSOFR-based interest payments on $1.0 billion$500 million of principal, which ended on December 29, 2017 and which will end on December 30, 2018 for the interest rate cap agreements entered into in fiscal 2015 and fiscal 2017, respectively.
As of December 30, 2017, the Company determined that the existence of hedge ineffectiveness, if any, was immaterial, and allprincipal. Therefore, changes in the fair value of the interest rate caps wereswap are recorded in the Consolidated Statements of Comprehensive Income as a component of AOCI.
During the three months ended December 30, 2017 and December 31, 2016, $2.3 million and $2.1 million, respectively, was reclassified from AOCI to the Company’s Consolidated Statements of Income related to the interest rate cap agreements. The Company expects to similarly reclassify a loss of approximately $1.9 million from AOCI to the Consolidated Statements of Income in the next twelve months.
The aggregate fair value of these interest rate capsswaps was $5.3an asset position of $8.2 million and $4.8 million atas of December 30, 2017 and September 30, 2017, respectively, and is included in Prepaid expenses and other current assets on the Company’s Consolidated Balance Sheet. Refer to Note 2 “Fair Value Measurements” above for related fair value disclosures.2023.

Forward Foreign Currency Exchange Contracts and Foreign Currency Option Contracts

The Company enters into forward foreign currency exchange contracts and foreign currency option contracts to mitigate certain operational exposures from the impact of changes in foreign currency exchange rates. Such exposures result from the portion of the Company'sCompany’s cash and operations that are denominated in currencies other than the U.S. dollar, primarily the Euro, the UK Pound, the Australian dollar, the Canadian dollar, the Chinese Yuan and the Japanese Yen. These foreign currency exchange contracts are entered into to support transactions made in the ordinary course of business and are not speculative in nature. The contracts are generally for periods of one year or less. The Company hasdid not electedelect hedge accounting for any of the forward foreign currency contracts it has executed;these contracts; however, the Company may seek to apply hedge accounting in future scenarios. As of December 30, 2023 the notional amount was $282.3 million. The change in the fair value of these contracts is recognized directly in earnings as a component of other income (expense), net. During

Realized and unrealized gains and losses from these contracts, which were the only derivative contracts not designated for hedge accounting, for the three months ended December 30, 20172023 and December 31, 2016, the Company recorded net realized loss2022, respectively, were as follows:

Three Months Ended
December 30, 2023December 31, 2022
Amount of realized gain (loss) recognized in income
Forward foreign currency contracts$1.3 $(2.4)
Foreign currency option contracts— (0.2)
$1.3 $(2.6)
Amount of unrealized gain (loss) recognized in income
Forward foreign currency contracts$(12.5)$(13.8)
Foreign currency option contracts— (8.3)
$(12.5)$(22.1)
Amount of gain (loss) recognized in income
Total$(11.2)$(24.7)


18
Table of $0.2 million and a net realized gain of $1.2 million, respectively, from settling forward foreign currency contracts and unrealized gains of $1.5 million and $8.4 million, respectively, on the mark-to-market for its outstanding forward foreign currency contracts.Contents
As of December 30, 2017, the Company had outstanding forward foreign currency contracts that were not designated for hedge accounting and were used to hedge fluctuations in the U.S. dollar of forecasted transactions denominated in the Euro,

UK Pound, Australian dollar, Canadian Dollar and Japanese Yen with an aggregate notional amount of $157.4 million.
Financial Instrument Presentation

The table below presents the fair value of the Company'sCompany’s derivative financial instruments as well as their classification on the balance sheet as of December 30, 2017:
2023:
 Balance Sheet Location December 30, 2017 September 30, 2017
Assets:     
Derivative instruments designated as a cash flow hedge:     
Interest rate cap agreementsPrepaid expenses and other current assets $5.3
 $3.6
Interest rate cap agreementsOther assets —
 1.2
   $5.3
 $4.8
      
Derivatives not designated as hedging instruments:     
Forward foreign currency contractsPrepaid expenses and other current assets $0.4
 $0.4
      
Liabilities:     
Derivatives not designated as hedging instruments:     
Forward foreign currency contractsAccrued expenses $2.6
 $4.0

Balance Sheet LocationDecember 30, 2023September 30, 2023
Assets:
Derivative instruments designated as a cash flow hedge:
Interest rate swap contractsPrepaid expenses and other current assets$6.0 $16.2 
Interest rate swap contractsOther assets2.2 10.7 
$8.2 $26.9 
Derivatives not designated as hedging instruments:
Forward foreign currency contractsPrepaid expenses and other current assets$— $8.4 
$— $8.4 
Liabilities:
Derivatives not designated as hedging instruments:
Forward foreign currency contractsAccrued expenses$4.1 $— 

The following table presents the unrealized gain (loss) recognized in AOCI related to the interest rate capsswaps for the following reporting periods:

Three Months Ended
December 30, 2023December 31, 2022
Amount of (loss) gain recognized in other comprehensive income, net of taxes:
Interest rate swaps$(14.2)$(2.9)
Total$(14.2)$(2.9)

 Three Months Ended
 December 30, 2017 December 31, 2016
Amount of gain (loss) recognized in other comprehensive income, net of taxes:   
Interest rate cap agreements$(4.3) $0.7
The following table presents the adjustment to fair value (realized and unrealized) recorded within the Consolidated Statements of Income for derivative instruments for which the Company did not elect hedge accounting:
Derivatives not classified as hedging instruments Amount of Gain (Loss) Recognized in IncomeLocation of Gain (Loss) Recognized in Income
  Three Months Ended December 30, 2017 Three Months Ended December 31, 2016 
Forward foreign currency contracts $1.2
 $9.6
Other income, net

(7)(12) Commitments and Contingencies

Litigation and Related Matters


On June 9, 2010, Smith & Nephew, Inc. ("Smith & Nephew")November 4, 2022, a product liability complaint was filed suit against Interlace Medical, Inc. ("Interlace"), which the Company acquiredin Massachusetts state court by a group of plaintiffs who claim they sustained injuries caused by the BioZorb 3D Bioabsorbable Marker, and additional complaints were subsequently filed alleging similar claims. The BioZorb device is an implantable three-dimensional marker that helps clinicians overcome certain challenges presented by breast conserving cancer surgery (lumpectomy). The complaints allege that the plaintiffs suffered side effects that were not disclosed in the BioZorb instructions for use and make various additional claims related to the design, manufacture and marketing of the device. Complaints have been filed on January 6, 2011,behalf of 84 plaintiffs, one pending in Massachusetts state court, which has set a tentative November 2025 trial date, and the remainder in United States District Court for the District of Massachusetts. The complaint alleged that the Interlace MyoSure hysteroscopic tissue removal device infringed U.S. patent 7,226,459 (the '459 patent). On November 22, 2011, Smith & Nephew filed suit againstwhich has not set a trial date. Discovery is ongoing. While the Company in the United States District Court for the District of Massachusetts. The complaint alleged that use of the MyoSure tissue removal system infringed U.S. patent 8,061,359 (the '359 patent). Both complaints sought preliminarybelieves it has valid defenses and permanent injunctive reliefplans to vigorously defend its position, litigation can be costly and unspecified damages. On

September 4, 2012, following a two week trial, the jury returned a verdict of infringement of both the '459unpredictable, and '359 patents and assessed damages of $4.0 million. A two-day bench trial regarding the Company’s assertion of inequitable conduct on the part of Smith & Nephew with regard to the '359 patent began on December 10, 2012 and oral arguments on the issue of inequitable conduct were presented on February 27, 2013. On June 27, 2013, the Court denied the Company’s motions related to inequitable conduct and allowed Smith & Nephew’s request for injunction, but ordered that enforcement of the injunction be stayed until final resolution, including appeal, of the current re-examinations of both patents at the United States Patent and Trademark Office (“USPTO”). The Court also rejected the jury’s damage award and ordered the parties to identify a mechanism for resolving the damages issue. The USPTO issued final decisions that the claims of the '459 and the '359 patents asserted as part of the litigation are not patentable, which decisions Smith & Nephew appealed to the U.S. Patent Trial and Appeal Board ("PTAB"). In 2016, the PTAB (i) affirmed the USPTO decision with respect to the '459 patent, holding that the claims at issue are invalid, and (ii) reversed the USPTO decision with respect to the '359 patent, holding that the claims at issue are not invalid. The Company and Smith & Nephew have appealed the decisions by the Patent Trial and Appeal Board on the '359 patent and the '459 patent, respectively, to the U.S. Court of Appeals for the Federal Circuit ("Court of Appeals"). Briefing on both appeals is completed. Oral arguments were held in the '459 patent appeal on October 24, 2017 and in the '359 patent appeal on December 7, 2017. On January 30, 2018, the Court of Appeals issued a decision in the '459 patent appeal that affirmed-in-part and reversed-in-part the PTAB ruling and remanded the matter to the PTAB for further proceedings. At this time, based on available information regarding this litigation,early stage the Company is unable tocannot reasonably assess the ultimate outcome of this case or determine an estimate, or a range of estimates, of potential losses.matter.

On April 11, 2017, Minerva Surgical, Inc. (“Minerva”) filed suit against the Company and Cytyc Surgical Products, LLC (“Cytyc”) in the United States District Court for the Northern District of California alleging that the Company’s and Cytyc’s NovaSure ADVANCED endometrial ablation device infringes Minerva’s U.S. patent 9,186,208. Minerva is seeking a preliminary and permanent injunction against the Company and Cytyc from selling this NovaSure device as well as enhanced damages and interest, including in lost profits, price erosion and/or royalty. On January 5, 2018, the Court denied Minerva's motion for a preliminary injunction. At this time, based on available information regarding this litigation, the Company is unable to reasonably assess the ultimate outcome of this case or determine an estimate, or a range of estimates, of potential losses.

In January 2012, Enzo Life Sciences, Inc. ("Enzo") filed suit against the Company's subsidiary, Gen-Probe Incorporated ("Gen-Probe"), in the United States District Court for the District of Delaware, alleging that certain of Gen-Probe’s diagnostics products, including products that incorporate Gen-Probe’s hybridization protection assay technology (HPA), which include the Aptima line of products, infringe Enzo’s U.S. patent 6,992,180 (the '180 patent). On March 6, 2012, Enzo filed suit against the Company in the United States District Court for the District of Delaware, alleging that products based on the Company's Invader chemistry platform, such as Cervista HPV HR and Cervista HPV 16/18, infringe the '180 patent. On July 16, 2012, Enzo amended its complaint to include additional products that include HPA or TaqMan reagent chemistry, including the Progensa, AccuProbe and Prodesse product lines. The Company counter-claimed for non-infringement, invalidity and unenforceability of the '180 patent. On September 30, 2013, Enzo filed its infringement contentions which added products including "Torch" probes (e.g., MilliPROBE Real-Time Detection System for Mycoplasma), PACE and certain Procleix assays. Both complaints sought preliminary and permanent injunctive relief and unspecified damages. Summary judgment and Daubert motions were filed by the parties on December 15, 2016. A hearing on the summary judgment motions was held on April 4, 2017, and on June 28, 2017, the Court ruled that the '180 patent is invalid for nonenablement. Final judgment was entered on July 19, 2017, and on August 18, 2017, Enzo filed a notice of appeal with the Court of Appeals for the Federal Circuit. Enzo’s opening appeal brief was filed on November 28, 2017, and the Company’s responsive brief is due March 8, 2018. At this time, based on available information regarding this litigation, the Company is unable to reasonably assess the ultimate outcome of this case or determine an estimate, or a range of estimates, of potential losses.

On March 27, 2015, Enzo filed an additional suit against the Company in the United States District Court for the District of Delaware. The complaint alleges that certain additional Company molecular diagnostic products, including, inter alia, the Procleix Parvo/HAV assays and coagulation products, including the Invader Factor II test and the Invader Factor V test, also infringe the '180 patent. The complaint further alleged that certain of the Company’s molecular diagnostic products, including the Company’s Progensa PCA3, Aptima and Procleix products using target capture technology infringe Enzo’s U. S. Patent 7,064,197 (the '197 patent). On June 11, 2015, this matter was stayed pending the resolution of summary judgment motions in the other related suits involving the '197 patent. The litigation remains stayed. On March 30, 2016, Hologic filed two requests for inter partes review of the ‘197 patent at the USPTO. The USPTO instituted the two inter partes reviews on all challenged claims on October 4, 2016. Combined oral arguments for the two inter partes reviews were held on June 1, 2017. On September 28 and October 2, 2017, the PTAB issued final written decisions in the two inter partes reviews finding that all of the challenged claims of the ‘197 patent are unpatentable. In response to the final written decisions, Enzo filed notices of appeal on November 29, 2017, and the United States Court of Appeals for the Federal Circuit consolidated Enzo’s appeals on December 14, 2017. Enzo’s opening brief is due March 12, 2018. At this time, based on available information regarding this

litigation and the related inter partes reviews, the Company is unable to reasonably assess the ultimate outcome of this case or determine an estimate, or a range of estimates, of potential losses.

On October 3, 2016, Enzo filed an additional suit against the Company in the United States District Court for the District of Delaware. The complaint alleges that all of the Company's Progensa PCA3, Aptima and Procleix products infringe U.S. Patent 6,221,581 (the '581 patent). On November 28, 2016, the Company filed an answer and counterclaims of non-infringement, invalidity and unenforceability. On June 30, 2017, Hologic filed its initial invalidity contentions, which provide support for finding that the asserted claims of the '581 patent are invalid based on anticipation, obviousness, lack of adequate written description and enablement, and indefiniteness. On August 31, 2017, the Company and Enzo filed supplemental invalidity charts and supplemental infringement charts, respectively. The parties filed their proposed claim constructions on September 28, 2017. The parties’ claim construction briefs are due in April 2018. On October 4, 2017, the Company filed for inter partes review of the ‘581 patent with the USPTO based on Enzo’s asserted claims. Enzo filed its preliminary response on January 19, 2018. A decision on whether to institute inter partes review is expected in April 2018. At this time, based on available information regarding this litigation, the Company is unable to reasonably assess the ultimate outcome of this case or determine an estimate, or a range of estimates, of potential losses.

On February 3, 2017, bioMérieux, S.A. and bioMérieux, Inc. (collectively “bioMérieux”) filed suit against the Company in the United States District Court for the Middle District of North Carolina. The complaint alleged that the Company’s Aptima HIV-1 RNA Qualitative assay and Aptima HIV-1 Quant Dx assay, as well as products manufactured by the Company and sold to Grifols, S.A. and Grifols Diagnostic Solutions Inc. (“Grifols USA”) for resale under the names Procleix HIV-1/HCV assay, Procleix Ultrio assay, and Procleix Ultrio Plus assay, infringe U.S. Patent Nos. 8,697,352 and 9,074,262. On April 3, 2017, the Company and Grifols USA filed a Motion to dismiss asking the Court to dismiss the complaint in its entirety for bioMérieux’s failure to state a claim upon which relief can be granted. On June 9, 2017, Hologic and Grifols USA filed a supplemental motion to dismiss for improper venue. bioMérieux filed a response to the venue motion on June 30, 2017, and Hologic and Grifols USA responded by filing a brief in further support of their motion to dismiss for improper venue on July 14, 2017. On January 3, 2018, the district court judge for the Middle District of North Carolina granted the parties’ consent motion to transfer the case to Delaware. At this time, based on available information regarding this litigation, the Company is unable to reasonably assess the ultimate outcome of this case or determine an estimate, or range of estimates, of potential losses.

On July 27, 2016, plaintiff ARcare, Inc., individually and as putative representative of a purported nationwide class, filed a complaint against Cynosure.  The plaintiff alleges that Cynosure violated the Telephone Consumer Protection Act by: (i) sending fax advertisements that did not comply with statutory and Federal Communications Commission requirements that senders provide recipients with certain information about how to opt out from receiving faxed advertisements in the future; and (ii) sending unsolicited fax advertisements. The complaint sought damages, declaratory and injunctive relief, and attorneys’ fees on behalf of a purported class of all recipients of purported fax advertisements that the plaintiff alleges did not receive an adequate opt-out notice. On September 30, 2016, Cynosure answered the complaint and denied liability. On September 7, 2016, the plaintiff sent a demand letter seeking a class settlement for statutory damages under Massachusetts General Laws, Chapter 93A § 9 (“Chapter 93A”). On October 7, 2016, Cynosure responded denying any liability under Chapter 93A, but offering the plaintiff statutory damages of $25 on an individual basis. In March 2017, Cynosure and ARcare entered into a settlement agreement, subject to court approval, which requires Cynosure to pay settlement compensation of $8.5 million notwithstanding the number of claims filed. If approved, Cynosure would receive a full release from the settlement class concerning the conduct alleged in the complaint. As a result of the settlement agreement, Cynosure recorded a charge of $9.2 million, in the period ended December 31, 2016, which is still accrued on the Company's balance sheet as of December 30, 2017.

On March 17, 2017, a purported shareholder of Cynosure, Michael Guido, filed an action against Cynosure in the Court of Chancery of the State of Delaware pursuant to Section 220 of the Delaware General Corporation Law seeking the production of certain books and records, including books and records related to the acquisition of Cynosure by Hologic. The action follows Cynosure’s rejection of Mr. Guido’s demand for these books and records on the ground that he had not met the requirements of the statute. In addition to books and records, the complaint seeks reasonable attorneys’ fees. The Company filed an answer to the complaint on April 10, 2017. At this time, based on available information regarding this matter, the Company is unable to reasonably assess the ultimate outcome of this case or determine an estimate, or range of estimates, of potential losses.

The Company is a party to various other legal proceedings and claims arising out of the ordinary course of its business. The Company believes that except for those matters described above there are no other proceedings or claims pending against it, the ultimate resolution of which could have a material adverse effect on its financial condition or results of operations. In all cases, at each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under ASC 450, Contingencies. Contingencies (ASC 450). Legal costs are expensed as incurred.




19
(8)
Table of Contents
(13) Net Income Per Share

A reconciliation of basic and diluted share amounts is as follows:

 Three Months Ended
 December 30,
2023		December 31,
2022
Basic weighted average common shares outstanding238,627 247,319 
Weighted average common stock equivalents from assumed exercise of stock options and issuance of restricted stock units1,587 1,962 
Diluted weighted average common shares outstanding240,214 249,281 
Weighted-average anti-dilutive shares related to:
Outstanding stock options and restricted stock units2,046 1,631 

 Three Months Ended
 December 30,
2017		 December 31,
2016
Basic weighted average common shares outstanding276,856
 278,663
Weighted average common stock equivalents from assumed exercise of stock options and stock units2,212
 3,143
Incremental shares from Convertible Notes premium1,734
 2,418
Diluted weighted average common shares outstanding280,802
 284,224
Weighted-average anti-dilutive shares related to:   
Outstanding stock options2,272
 1,442
Stock units216
 13
The Company has outstanding Convertible Notes, and the principal balance and any conversion premium may be satisfied, at the Company’s option, by issuing shares of common stock, cash or a combination of shares and cash. The Company's current policy is that it will settle the principal balance of the Convertible Notes in cash. As such, the Company applies the treasury stock method to these securities and the dilution related to the conversion premium of the 2042 and 2043 Notes is included in the calculation of diluted weighted-average shares outstanding to the extent each issuance is dilutive based on the average stock price during each reporting period being greater than the conversion price of the respective Notes.
(9)(14) Stock-Based Compensation

The following presents stock-based compensation expense in the Company’s Consolidated Statements of Income:

Three Months Ended
December 30,
2017		 December 31,
2016
Cost of revenues$2.2
 $2.8
Cost of revenues
Cost of revenues
Research and development
Research and development
Research and development2.5
 2.8
Selling and marketing2.9
 2.7
Selling and marketing
Selling and marketing
General and administrative7.5
 10.9
Restructuring1.3
 —
General and administrative
General and administrative
$16.4
 $19.2
$
$
$

The Company granted 1.6options to purchase 0.5 million and 0.90.5 million shares of the Company’s common stock options during the three months ended December 30, 20172023 and December 31, 2016,2022, respectively, with weighted-average exercise prices of $40.82$71.93 and $37.62,$74.26, respectively. There were 6.74.5 million options outstanding at December 30, 20172023 with a weighted-average exercise price of $31.20.$54.20.


The Company uses a binomial model to determine the fair value of its stock options. The weighted-average assumptions utilized to value these stock options are indicated in the following table:

Three Months Ended
December 30,
2017		 December 31,
2016
Risk-free interest rate2.1% 1.8%
Risk-free interest rate
Risk-free interest rate
Expected volatility
Expected volatility
Expected volatility35.3% 36.6%
Expected life (in years)4.7
 4.7
Expected life (in years)
Expected life (in years)
Dividend yield
Dividend yield
Dividend yield—
 —
Weighted average fair value of options granted$13.00
 $12.18
Weighted average fair value of options granted
Weighted average fair value of options granted

The Company granted 0.80.7 million and 0.90.6 million restricted stock units (RSUs)(“RSUs”) during each of the three months ended December 30, 20172023 and December 31, 2016,2022, respectively, with weighted-average grant date fair values of $40.79$71.90 and $37.58$74.30 per unit, respectively. As of December 30, 2017, there were 2.0 million unvested RSUs outstanding with a weighted-average grant date fair value of $37.72 per unit. In addition, the Company granted 0.40.1 million and 0.1 million performance stock units (PSUs)(“PSUs”) during the three months ended December 30, 20172023 and December 31, 2016,2022, respectively, to members of its senior management team, which have a weighted-average grant date fair value of $40.86$71.92 and $37.64$74.35 per unit, respectively. Each recipient of PSUs is eligible to receive between zero and 200% of the target number of shares of the Company’s common stock at the end of three yearsa three-year performance period, provided that the Company’s defined Return on Invested Capital metrics are achieved. The Company also granted 0.1 million and 0.1 million of FCF PSUs based on a three-year cumulative free cash flow measure (“FCF PSUs”) to members of its senior management team, which had a grant date fair value of $71.92 and $74.35 per unit during the three months ended December 30, 2023 and December 31, 2022, respectively. Each recipient of FCF PSUs is recognizingeligible to receive between zero and 200% of the target number of shares of the Company’s common stock at the end of the three-year

20
Table of Contents
measurement period. The PSUs and FCF PSUs cliff-vest three years from the date of grant, and the Company recognizes compensation expense ratably over the required service period based on its estimate of the probable number of shares that will vest.vest upon achieving the measurement criteria. If there is a change in the estimate of the number of shares that are probable of vesting, the Company will cumulatively adjust compensation expense in the period that the change in estimate is made. The Company also granted 0.30.1 million and 0.1 million market basedmarket-based awards (MSUs)(“MSUs”) to members of its senior management team during the three months ended December 30, 20172023 and December 31, 2016,2022, respectively. Each recipient of MSUs is eligible to receive between zero and 200% of the target number of shares of the Company’s common stock at the end of three yearsa three-year performance period based upon achieving a certain total shareholder return relative to a defined peer group. The MSUs were valued at $49.45$88.06 and $48.90$97.91 per share using the Monte Carlo simulation model.model in fiscal 2024 and 2023, respectively. The MSUs cliff-vest three years from the date of grant, and the Company is recognizingrecognizes compensation expense for the MSUs ratably over the service period. At December 30, 2023, there was 1.7 million in aggregate unvested RSUs, PSUs, FCF PSUs and MSUs outstanding.

At December 30, 2017,2023, there was $37.0$17.7 million and $98.4$86.7 million of unrecognized compensation expense related to stock options and stock units (comprised of RSUs, PSUs, FCF PSUs and PSUs)MSUs), respectively, to be recognized over a weighted-average period of 3.12.3 and 2.12.0 years, respectively.


(10) Disposition

Blood Screening Business

On December 14, 2016, the Company entered into a definitive agreement to sell the assets of its blood screening business to its long-time commercial partner, Grifols for a sales price of $1.85 billion in cash, subject to adjustment based on an estimated closing amount of inventory. The divestiture was completed on January 31, 2017, and the Company received $1.865 billion. The sale resulted in a gain of $899.7 million recorded in the second quarter of fiscal 2017 within operations in the Consolidated Statements of Income. As a result of this disposition and proceeds received, the Company recorded a tax obligation of $649.5 million, which was paid in fiscal 2017. Upon the closing of the transaction, the Company's existing collaboration agreement with Grifols terminated, and a new collaboration agreement was executed as part of this transaction pursuant to which the Company provides certain research and development services to Grifols. In addition, the Company agreed to provide transition services to Grifols over the next two to three years depending on the nature of the respective service, including the manufacture of inventory. The Company also agreed to sell Panther instrumentation and certain supplies to Grifols as part of a long term supply agreement. In determining the accounting for the multiple elements of the overall arrangement, the Company allocated $13.1 million of the proceeds to these elements based on their estimated fair values.

The Company determined this disposal did not qualify to be reported as a discontinued operation as the blood screening business was deemed not to be strategic to the Company and has not had and will not have a major effect on the Company's operations and financial results. Under the previous collaboration agreement, the Company performed research and development activities and manufacturing, while Grifols performed the commercial and distribution activities. The blood screening business was embedded within the Company's molecular diagnostics business, and the Company retains ownership and will continue to use the intellectual property for the underlying technology of its molecular diagnostics assays and instrumentation.
Income from operations of the disposed business presented below represents the pretax profit of the business as it was operated prior to the date of disposition. The operating expenses include only those that were incurred directly by and were retained by the disposed business and are now incurred by Grifols. As noted above, the Company is performing a number of transition services and the financial impact from these services are not included in income from operations presented below. The Company is in effect serving as a contract manufacturer of assays for Grifols for a two to three year period from the date of disposal. Revenue and income from operations of the disposed business for the three month period ended December 31, 2016 was $65.2 million and $28.6 million, respectively. Under the long term supply agreement, transition services agreement to manufacture assays and research and development services, the Company recorded revenue of $12.6 million for the three months ended December 30, 2017.


(11)(15) Other Balance Sheet Information

December 30,
2023		September 30,
2023
Inventories
Raw materials$264.2 $238.6 
Work-in-process60.2 66.3 
Finished goods309.2 312.7 
$633.6 $617.6 
Property, plant and equipment
Equipment$380.6 $380.0 
Equipment under customer usage agreements520.6 508.1 
Building and improvements240.6 230.0 
Leasehold improvements46.0 44.4 
Land41.2 41.1 
Furniture and fixtures19.9 19.2 
Finance lease right-of-use asset8.5 8.2 
$1,257.4 $1,231.0 
Less – accumulated depreciation and amortization(730.4)(714.0)
$527.0 $517.0 



 December 30,
2017		 September 30,
2017
Inventories   
Raw materials$114.2
 $95.7
Work-in-process44.6
 45.0
Finished goods199.4
 190.9
 $358.2
 $331.6
Property, plant and equipment   
Equipment$363.7
 $357.9
Equipment under customer usage agreements379.0
 368.7
Building and improvements172.7
 172.0
Leasehold improvements61.1
 60.6
Land46.4
 46.3
Furniture and fixtures21.0
 20.8
 1,043.9
 1,026.3
Less – accumulated depreciation and amortization(576.8) (553.5)
 $467.1
 $472.8
(12)(16) Business Segments and Geographic Information

The Company has fivefour reportable segments: Diagnostics, Breast Health, Medical Aesthetics, GYN Surgical and Skeletal Health. Certain reportable segments represent an aggregation of operating units within each segment. The Company measures and evaluates its reportable segments based on segment revenues and operating income adjusted to exclude the effect of non-cash charges such(such as intangible asset amortization expense, and goodwill and intangible asset and goodwill impairment charges, acquisition related fair value adjustmentscharges), transaction and integration expenses for acquisitions, restructuring, consolidation and divestiture and facility consolidationcharges, litigation charges, and other one-time or unusual items.



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Table of Contents
Identifiable assets for the five principal operatingreportable segments consist of inventories, intangible assets, goodwill, and property, plant and equipment. The Company fully allocates depreciation expense to its five reportable segments. The Company has presented all other identifiable assets as corporate assets. There were no inter-segment revenues during the three months ended December 30, 20172023 and December 31, 2016.2022. Segment information is as follows:

Three Months Ended
December 30,
2017		 December 31,
2016
Total revenues:   
Total revenues:
Total revenues:
Diagnostics
Diagnostics
Diagnostics$284.6
 $325.4
Breast Health288.0
 273.3
Medical Aesthetics91.3
 —
Breast Health
Breast Health
GYN Surgical
GYN Surgical
GYN Surgical107.5
 114.8
Skeletal Health19.7
 20.9
Skeletal Health
Skeletal Health
$791.1

$734.4
Income (loss) from operations:   
$
$
$
Income from operations:
Income from operations:
Income from operations:
Diagnostics
Diagnostics
Diagnostics$36.5
 $41.1
Breast Health89.7
 85.2
Medical Aesthetics(23.0) —
Breast Health
Breast Health
GYN Surgical
GYN Surgical
GYN Surgical30.2
 25.5
Skeletal Health0.7
 (5.8)
Skeletal Health
Skeletal Health
$134.1

$146.0
$
$
$
Depreciation and amortization:
Depreciation and amortization:
Depreciation and amortization:   
Diagnostics$64.7
 $84.9
Diagnostics
Diagnostics
Breast Health4.9
 5.1
Medical Aesthetics28.5
 —
Breast Health
Breast Health
GYN Surgical
GYN Surgical
GYN Surgical22.9
 25.1
Skeletal Health0.2
 0.2
Skeletal Health
Skeletal Health
$121.2

$115.3
$
$
$
Capital expenditures:
Capital expenditures:
Capital expenditures:   
Diagnostics$11.9
 $10.3
Diagnostics
Diagnostics
Breast Health3.5
 2.2
Medical Aesthetics1.6
 —
Breast Health
Breast Health
GYN Surgical
GYN Surgical
GYN Surgical2.4
 4.1
Skeletal Health0.7
 0.3
Skeletal Health
Skeletal Health
Corporate1.7
 7.8
$21.8

$24.7
Corporate
Corporate
$
$
$
December 30,
2023		September 30,
2023
Identifiable assets:
Diagnostics$2,570.1 $2,596.4 
Breast Health1,234.1 1,170.1 
GYN Surgical1,450.1 1,455.4 
Skeletal Health30.3 33.7 
Corporate3,184.9 3,883.7 
$8,469.5 $9,139.3 
��December 30,
2017		 September 30,
2017
Identifiable assets:   
Diagnostics$2,583.0
 $2,621.6
Breast Health840.5
 824.0
Medical Aesthetics1,723.9
 1,751.2
GYN Surgical1,477.8
 1,494.6
Skeletal Health26.8
 25.5
Corporate1,396.3
 1,262.7
 $8,048.3
 $7,979.6


The Company had no customers that represented greater than 10% of consolidated revenues during the three months ended December 30, 20172023 and December 31, 2016.2022.

The Company operates in the following major geographic areas as noted in the below chart. Revenue data is based upon customer location. Other than the United States, no single country accounted for more than 10% of consolidated revenues. The Company’s sales in Europe are predominantly derived from the United Kingdom, Germany, France, GermanySpain, Italy and the United Kingdom.Netherlands. The Company’s sales in Asia-Pacific are predominantly derived from China, Australia and Japan. The “Rest of World” designation includes Canada, Latin America and the Middle East.


22
Table of Contents
Revenues by geography as a percentage of total revenues were as follows:
 
 Three Months Ended
 December 30,
2023		December 31,
2022
United States74.4 %76.7 %
Europe14.1 %13.7 %
Asia-Pacific6.3 %5.9 %
Rest of World5.2 %3.7 %
100.0 %100.0 %

 Three Months Ended
 December 30,
2017		 December 31,
2016
United States75.5% 77.9%
Europe11.5% 10.7%
Asia-Pacific8.7% 8.4%
Rest of World4.3% 3.0%
 100.0% 100.0%

(13)(17) Income Taxes

In accordance with ASC 740, Income Taxes (ASC 740), each interim period is considered integral to the annual period, and tax expense is measured using an estimated annual effective tax rate. An entity is required to record income tax expense each quarter based on its annual effective tax rate estimated for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis, adjusted for discrete taxable events that occur during the interim period.

The Company’s effective tax rate for the three months ended December 30, 20172023 was (324.5)%a benefit of 28.9% compared to 25.5%a provision of 21.6% for the corresponding period in the prior year.

The benefit recorded in the current quarter is primarily due to the impact of the Tax Cuts and Jobs Act (the "Act") enacted on December 22, 2017. As a result of this law, US corporations are subject to lower income tax rates, and the Company is required to remeasure its US net deferred tax liabilities at a lower rate, resulting in a net benefit of $355.2 million recorded in the provision for income taxes. Partially offsetting this benefit, the Company recorded a charge of $26.0 million for transition taxes related to the deemed repatriation of foreign earnings. For the current quarter, in addition to the items noted, the effective tax rate for the three months ended December 30, 2023 was lower than the U.S. statutory tax rate primarily due to a $107.2 million discrete tax benefit related to a worthless stock deduction on the impactinvestment in one of earnings in jurisdictions subject to lowerthe Company’s international subsidiaries.

The effective tax rates, and the domestic production activities deduction benefit. Forrate for the three months ended December 31, 2016,2022 was higher than the effective tax rate was lower than theU.S. statutory tax rate primarily due to the tax benefit from restricted stock units upon vesting, earnings in jurisdictions subject to lower tax rates, and the domestic production activities deduction benefit.

US Tax Reform
The Act reduces the US federal corporate income tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred,reserves, the global intangible low-taxed income inclusion, and creates newstate income taxes, on certain foreign sourced earnings.
At December 30, 2017, the Company has not completed its accounting for the tax effects of enactment of the Act; however, as described below, the Company has made a reasonable estimate of the effects on its existing deferred tax balances and the one-time transition tax, and recognized a provisional net benefit of $329.2 million, which is included in income tax expense.

On December 22, 2017, the SEC issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) directing SEC registrants to considerpartially offset by the impact of the US legislation as “provisional” when it does not haveU.S. deduction for foreign derived intangible income, the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting forgeographic mix of income earned by our international subsidiaries, which are taxed at rates lower than the change in tax law. In accordance with SAB 118, the additional estimated net income tax benefit of $329.2 million represents the Company’s best estimate based on its interpretation of the US legislation as the Company is still accumulating data to finalize the underlying calculations, or in certain cases, the US Treasury is expected to issue further guidance on the application of certain provisions of the US legislation.


In the three months ended December 30, 2017, the Company revised its estimated annual effective rate to reflect a change in the federalU.S. statutory income tax rate, from 35% to 21%. The rate change is administratively effective at the beginning of the Company’s fiscal year, using a blended rate for the annual period. The Company's blended statutory incomeand federal and state tax rate for fiscal 2018 is 24.5%.credits.

Deferred tax assets and liabilities: The Company re-measured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is 24.5% for fiscal 2018 reversals and 21% for post-fiscal 2018 reversals. However, the Company is still analyzing certain aspects of the Act and refining its calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. The provisional net benefit amount recorded related to the re-measurement of the Company’s deferred tax balance was $355.2 million.

Foreign tax effects: The one-time transition tax is based on the Company’s total post-1986 earnings and profits (E&P) which were previously deferred from US income taxes. The Company recorded a provisional amount for its one-time transition tax liability related to the deemed repatriation of the earnings of its foreign subsidiaries, resulting in an increase in income tax expense of $26.0 million. The Company has not yet finalized its calculation of the total post-1986 foreign E&P for these foreign subsidiaries. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when the Company finalizes the calculation of its post-1986 foreign E&P previously deferred from US federal taxation and finalizes the amounts held in cash or other specified assets. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax and any additional outside basis difference inherent in these entities as these amounts continue to be indefinitely reinvested in foreign operations. The Company continues to evaluate this assertion in its ongoing analysis of the effects of tax reform on the Company's strategic initiatives. The Company believes that determining the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in these entities (i.e., basis difference in excess of that subject to the one time transition tax) is not practicable.

Further, starting in fiscal 2019, the Act subjects a US shareholder of a controlled foreign corporation to current tax on “global intangible low-taxed income” (GILTI) and establishes a tax on certain payments from corporations subject to US tax to related foreign persons, also referred to as base erosion and anti-abuse tax (BEAT).

Because of the complexity of the new international tax provisions not applicable to the Company until fiscal 2019, the Company is continuing to evaluate these provisions of the Act and the application of ASC 740.


Non-Income Tax Matters


The Company is subject to tax examinations for value added, sales-based, payroll and other non-income tax items. A number of these examinations are ongoing in various jurisdictions. The Company takes certain non-income tax positions in the jurisdictions in which it operates and records loss contingencies pursuant to ASC 450. In the normal course of business, the Company's positions and conclusions related to its non-income tax positions could be challenged, resulting in assessments by governmental authorities.

In January 2018, While the Company settled anbelieves estimated losses previously recorded are reasonable, certain audits are still ongoing state tax audit for approximately $11.0 million, resulting in a reversal of $4.0 millionand additional charges could be recorded to general and administrative expenses in the first quarterfuture.




23
Table of fiscal 2018.Contents


(14)(18) Intangible Assets and Goodwill

Intangible assets consisted of the following:
 
DescriptionAs of December 30, 2023As of September 30, 2023
Gross
Carrying
Value		Accumulated
Amortization		Gross
Carrying
Value		Accumulated
Amortization
Acquired intangible assets:
Developed technology$4,419.7 $3,698.9 $4,411.0 $3,649.5 
In-process research and development22.4 — 25.7 — 
Customer relationships602.6 559.6 600.0 550.6 
Trade names254.1 219.0 253.6 212.8 
Total acquired intangible assets$5,298.8 $4,477.5 $5,290.3 $4,412.9 
Internal-use software24.9 18.7 24.0 17.8 
Capitalized software embedded in products28.4 23.2 27.7 22.7 
Total intangible assets$5,352.1 $4,519.4 $5,342.0 $4,453.4 
DescriptionAs of December 30, 2017 As of September 30, 2017
Gross
Carrying
Value
 
Accumulated
Amortization
 
Gross
Carrying
Value
 
Accumulated
Amortization
Acquired intangible assets:       
Developed technology$4,528.8
 $2,266.7
 $4,528.7
 $2,186.8
In-process research and development46.0
 —
 46.0
 —
Customer relationships556.7
 402.8
 552.8
 393.8
Trade names310.3
 161.1
 310.3
 156.4
Distribution agreement42.0
 4.1
 42.0
 2.8
Non-competition agreements1.5
 0.1
 1.5
 0.1
Business licenses2.5
 2.2
 2.4
 2.2
Total acquired intangible assets$5,487.8
 $2,837.0
 $5,483.7
 $2,742.1
        
Internal-use software65.8
 48.2
 64.5
 46.1
Capitalized software embedded in products15.5
 2.6
 14.3
 2.0
Total intangible assets$5,569.1

$2,887.8

$5,562.5

$2,790.2

The estimated remaining amortization expense of the Company'sCompany’s acquired intangible assets as of December 30, 20172023 for each of the five succeeding fiscal years iswas as follows:

Remainder of Fiscal 2018$283.1
Fiscal 2019$366.0
Fiscal 2020$354.8
Fiscal 2021$333.2
Fiscal 2022$320.3
Remainder of Fiscal 2024$151.5 
Fiscal 2025$188.5 
Fiscal 2026$158.6 
Fiscal 2027$71.5 
Fiscal 2028$68.5 

During the first quarter of fiscal 2024, the Company assessed its only in-process research and development intangible asset from its Mobidiag Oy acquisition for impairment. The Company conducted its fiscal 2017 impairment test on the first day of the fourth quarter, and used a discounted cash flow method (DCF) to estimatedetermined the fair value of its reporting units as of July 2, 2017. The Company believes it used reasonable estimatesthis indefinite lived asset utilizing the DCF model and assumptions about future revenue, cost projections, cash flows, market multiples and discount rates as of the measurement date. Asrecorded a result of completing Step 1, all of the Company's reporting units had fair values exceeding their carrying values, and as such, Step 2 of the$4.3 million impairment test was not required. However, one of its reporting units, Medical Aesthetics, had a fair value as of the measurement date that exceeded its carrying value by 2% with goodwill of $683.5 million. The Medical Aesthetics reporting unit is solely comprised of the Cynosure, Inc. business, which the Company acquired on March 22, 2017. In connection with the Company's annual strategic planning process and annual goodwill impairment test, it lowered its estimated financial projections for this business as a result of its then current operating performance being below expectations, which the Company primarily attributed to the significant turnover in the U.S. sales force in 2017 following the date of acquisition. The Company is continuing its efforts to rebuild the U.S. sales force and this continues to affect short term performance. The Company’s long-term outlook for the Medical Aesthetics business has not materially changed. The Company is continuing to monitor the operating performance of this reporting unit compared to the projections used in the annual impairment test, as well as current market and business conditions, to determine if an event has occurred or circumstances change that would more likely than not reducecharge, reducing the fair value of the reporting unit below its carrying amount.this asset to $22.4 million. The Company has evaluated these factors and determined that no significant events occurred or circumstances changed during the period ended December 30, 2017 that would suggest it is more likely than not that thereduction in fair value of this asset was primarily due to a reduction in forecasted revenues and a delay in the reporting unit has declined below its carrying value.timing of completing the project. In the eventaddition, the Company is unsuccessful in its efforts to rebuilddetermined that the U.S. sales force or its efforts take significantly longer than expected, or other adverse conditions are identified, future operating performance may be below forecasted projections. If this occurs, the Company may need to revise its long-term growth rates or increase discount rates, and these factors could result in a decline in the fair valueuseful life of the reporting unitcustomer relationship and the Company maytrademark intangible assets from its Mobidiag acquisition should be required to record a goodwill impairment charge.shortened and recorded accelerated amortization expense of $7.3 million.


(15)(19) Product Warranties

Product warranty activity was as follows:
 
Balance at
Beginning of
Period		ProvisionsSettlements/
Adjustments		Balance at
End of Period
Three Months Ended:
December 30, 2023$8.3 $2.9 $(2.1)$9.1 
December 31, 2022$8.0 $2.6 $(2.2)$8.4 


24
 
Balance at
Beginning of
Period
 Provisions 
Settlements/
Adjustments
 
Balance at
End of Period
Three Months Ended:       
December 30, 2017$17.0
 $4.3
 $(5.1) $16.2
December 31, 2016$5.0
 $2.6
 $(1.7) $5.9
Table of Contents
(16)(20) Accumulated Other Comprehensive LossIncome (Loss)


The following tables summarize the changes in accumulated balances of other comprehensive lossincome (loss) for the periods presented:

Three Months Ended December 30, 2023
Foreign Currency TranslationPension PlansHedged Interest Rate SwapsTotal
Beginning Balance$(168.0)$0.3 $20.1 $(147.6)
Other comprehensive income (loss) before reclassifications43.0 — (14.2)28.8 
Ending Balance$(125.0)$0.3 $5.9 $(118.8)

Three Months Ended December 31, 2022
Foreign Currency TranslationPension PlansHedged Interest Rate SwapsTotal
Beginning Balance$(267.2)$(0.3)$29.3 $(238.2)
Other comprehensive income (loss) before reclassifications113.8 — (2.9)$110.9 
Ending Balance$(153.4)$(0.3)$26.4 $(127.3)

(21) Share Repurchase
 Three Months Ended December 30, 2017
 Foreign Currency Translation Marketable Securities Pension Plans Hedged Interest Rate Caps Total
Beginning Balance$(18.5) $(0.4) $(1.6) $4.3
 $(16.2)
Other comprehensive income (loss) before reclassifications5.5
 —
 0.6
 (4.3) 1.8
Amounts reclassified to statement of income—
 0.4
 —
 2.3
 2.7
Ending Balance$(13.0) $—
 $(1.0) $2.3
 $(11.7)


On September 22, 2022, the Board of Directors authorized a stock repurchase program, with a five-year term, to repurchase up to $1.0 billion of the Company’s outstanding common stock, effective as of the close of trading September 23, 2022. This repurchase program replaced the previous $1.0 billion authorization. During the three months ended December 30, 2023 and December 31, 2022, the Company repurchased 2.2 million and 1.5 million shares of its common stock under the authorization for total consideration of $150.0 million and $100.0 million, respectively. As of December 30, 2023, $348.6 million remained available under this authorization.
 Three Months Ended December 31, 2016
 Foreign Currency Translation Marketable Securities Pension Plans Hedged Interest Rate Caps Total
Beginning Balance$(26.1) $(0.3) $(2.5) $(3.4) $(32.3)
Other comprehensive income (loss) before reclassifications(15.7) 2.3
 —
 0.7
 (12.7)
Amounts reclassified to statement of income—
 0.1
 —
 2.1
 2.2
Ending Balance$(41.8) $2.1
 $(2.5) $(0.6) $(42.8)

On November 6, 2023, the Board of Directors authorized the Company to repurchase up to $500 million of the Company’s outstanding shares pursuant to an accelerated share repurchase (“ASR”) agreement. On November 15, 2023, the Company executed the ASR agreement with Goldman Sachs & Co. (“Goldman Sachs”) pursuant to which the Company agreed to repurchase $500 million of the Company’s common stock. In connection with the firstlaunch of the ASR, on November 17, 2023, the Company paid Goldman Sachs an aggregate of $500 million and received approximately 5.6 million shares of the Company’s common stock, representing 80% of the transaction value based on the Company’s closing share price on November 14, 2023.The final number of shares to be received under the ASR agreement will be determined upon completion of the transaction and will be based on the total transaction value and the volume-weighted average share price of the Company’s common stock during the term of the transaction. Final settlement of the transaction is expected to be completed in the second quarter of fiscal 2017, one of the Company's cost-method equity investments became a marketable security, and the Company recorded the increase in value on a gross basis of $4.0 million to other comprehensive income.2024.



(17)(22) New Accounting Pronouncements


In January 2017,November 2023, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other2023-07, Segment Reporting (Topic 350)280) Improvements to Reportable Segment Disclosures. This guidance simplifies how companies calculate goodwill impairments by eliminating Step 2 of the impairment test. The guidance requires companiesentities to compareprovide enhanced disclosures about significant segment expenses. For entities that have adopted the fair value of a reporting unit to its carrying amount and recognize an impairment charge foramendments in Update 2023-07, the amount by which the carrying amount exceeds the reporting unit's fair value. Theupdated guidance is effective for annual periodsfiscal years beginning after December 15, 2019,2023, and interim periods within fiscal years beginning after December 15, 2024, and is applicable to the Company in fiscal 2020. Early adoption is permitted.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740). The guidance requires companies to recognize the income tax effects of intercompany sales and transfers of assets, other than inventory, in the income statement as income tax expense (or benefit) in the period in which the transfer occurs. The guidance is effective for annual periods beginning after December 15, 2017, and is applicable to the Company in fiscal 2019. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact of the adoption of ASU 2016-16 on its consolidated financial position and results of operations.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flow (Topic 230). The guidance reduces diversity in how certain cash receipts and cash payments are presented and classified in the Statements of Cash Flows. Certain of ASU

2016-15 requirements are as follows: 1) cash payments for debt prepayment or debt extinguishment costs should be classified as cash outflows for financing activities, 2) contingent consideration payments made soon after a business combination should be classified as cash outflows for investing activities and cash payment made thereafter should be classified as cash outflows for financing up to the amount of the contingent consideration liability recognized at the acquisition date with any excess classified as operating activities, 3) cash proceeds from the settlement of insurance claims should be classified on the basis of the nature of the loss, 4) cash proceeds from the settlement of Corporate-Owned Life Insurance (COLI) Policies should be classified as cash inflows from investing activities and cash payments for premiums on COLI policies may be classified as cash outflows for investing activities, operating activities, or a combination of investing and operating activities, and 5) cash paid to a tax authority by an employer when withholding shares from an employee's award for tax-withholding purposes should be classified as cash outflows for financing activities. The guidance is effective for annual periods beginning after December 15, 2017, and is applicable to the Company in fiscal 2019. Early adoption is permitted. The adoption of ASU 2016-15 is not expected to have a material effect on the Company's consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326). The guidance requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis. The income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the expected credit losses during the period. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security. The updated guidance is effective for annual periods beginning after December 15, 2019, and is applicable to the Company in fiscal 2021.2025. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-132023-07 on its consolidated financial position and results of operations.

In February 2016,December 2023, the FASB issued ASU No. 2016-02, Leases2023-09, Income Taxes (Topic 842)740) Improvements to Income Tax Disclosures. The guidance requires an entityFASB issued this Update to recognize a right-of-use assetenhance income tax disclosures primarily related to the rate reconciliation and a lease liability for virtually all of its leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease.income taxes paid information. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. The guidance isin this Update are effective for annualfiscal years, and interim periods within those fiscal years, beginning after December 15, 2018,2024, and is applicable to the Company in fiscal 2020. Early adoption is permitted. The updated guidance requires a modified retrospective adoption. The Company is currently evaluating the anticipated impact of the adoption of ASU 2016-02 on its consolidated financial position and results of operations.
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This guidance changes how entities measure equity investments that do not result in consolidation and are not accounted for under the equity method. Entities will be required to measure these investments at fair value at the end of each reporting period and recognize changes in fair value in net income. A practicability exception will be available for equity investments that do not have readily determinable fair values, however; the exception requires the Company to consider relevant transactions that can be reasonably known to identify any observable price changes that would impact the fair value. This guidance also changes certain disclosure requirements and other aspects of current U.S. GAAP. This guidance is effective for annual periods beginning after December 15, 2017, and is applicable to the Company in fiscal 2019.2025. Early adoption is permitted. The Company is currently evaluating the anticipated impact of the adoption of ASU 2016-012023-09 on its consolidated financial position and results of operations.


In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides guidance for revenue recognition. This ASU is applicable to any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer25
Table of nonfinancial assets. ASU 2014-09 will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled to receive in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current U.S. GAAP. These judgments may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2017, which is fiscal 2019 for the Company. The Company will adopt Topic 606 effective September 30, 2018 and has established a cross-functional team to evaluate and implement the new revenue recognition rules. The Company will adopt Topic 606 using the modified retrospective method but has not finalized evaluating the anticipated impact of the adoption of ASU 2014-09 on its consolidated financial position and results of operations.Contents


Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT

Some of the statements contained in this report and documents incorporated by reference herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934.1934, as amended (the “Exchange Act”). These statements involve known and unknown risks, uncertainties and other factors which may cause our or our industry’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements may include, but are not limited to, statements regarding:

•the ongoing and possible future effects of global challenges, including macroeconomic uncertainties, such as inflation, bank failures, rising interest rates and availability of capital markets, the Israel-Hamas and Ukraine-Russia wars, other economic disruptions and U.S. and global recession concerns, on our customers and suppliers and on our business, financial condition, results of operations and cash flows and our ability to draw down our revolver;
•the effect of the continuing worldwide macroeconomicpolitical and social uncertainty and divisions, including the UK's decision to leaveimpact on trade regulations and tariffs, that may adversely impact the European Union, on our businesscost and results of operations;
the coverage and reimbursement decisions of third-party payors and the guidelines, recommendations, and studies published by various organizations relating to the usesale of our products in certain countries, or increase the costs we may incur to purchase materials, parts and treatments;
the uncertainty of the impact of cost containment efforts and federal healthcare reform legislation on our business and results of operations;
the impact to our results of operations from the disposal of our blood screening business to Grifols, and the operational challenges of separating this business unitequipment from our molecular diagnostics business;suppliers;
•the ability to successfully manage ongoing organizationalexecute acquisitions and strategic changes, including our ability to attract, motivate and retain key employees;
the impact and anticipated benefits of completed acquisitions including our acquisition of Cynosure, Inc. in the second quarter of fiscal 2017, and acquisitions we may complete in the future;
•the development of new competitive technologies and products;
•our ability to predict accurately the demand for our products, and products under development and to develop strategies to address markets successfully;
•continued demand for our COVID-19 assays;
•potential cybersecurity threats and targeted computer crime;
•the ongoing and possible future effects of supply chain constraints, including the availability of critical raw materials and components, including semiconductor chips, as well as cost inflation in materials, packaging and transportation;
•the possibility of interruptions or delays at our manufacturing facilities, or the failure to secure alternative suppliers if any of our sole source third-party manufacturers fail to supply us;
•the ability to consolidate certain of our manufacturing and other operations on a timely basis and within budget, without disrupting our business and to achieve anticipated cost synergies related to such actions;
•the ability to successfully manage ongoing organizational and strategic changes, including our goal of expanding ability to attract, motivate and retain key employees and maintain engagement and efficiency in remote work environments;
•our market positions;
the development of new competitive technologies and products;
ability to obtain regulatory approvals and clearances for our products;products, including the implementation of the European Union Medical Device and In Vitro Diagnostic Regulation requirements, and maintain compliance with complex and evolving regulations;
•the coverage and reimbursement decisions of third-party payors;
•the uncertainty of the impact of cost containment efforts and federal healthcare reform legislation on our business and results of operations;
•the guidelines, recommendations, and studies published by various organizations relating to the use of our products;
•the effect of consolidation in the healthcare industry;
•our ability to meet production and delivery schedules for our products;
•the effect of any future public health pandemic or other crises, including the timing, scope and effect of U.S. and international governmental, regulatory, fiscal, monetary and public health responses to such crises;
•our ability to protect our intellectual property rights;
•the possibility that products may contain undetected errors or defects or otherwise not perform as anticipated;
•the anticipated development of markets we sell our products into and the success of our products in these markets;
•the anticipated performance and benefits of our products;
•business strategies;
estimated asset and liability values;
the impact and costs and expenses of any litigation we may be subject to now or in the future;
our compliance with covenants contained in our debt agreements;
•anticipated trends relating to our financial condition or results of operations, including the impact of interest rate and foreign currency exchange fluctuations;
•estimated asset and liability values;
•the impact of future tax legislation;

26
Table of Contents
•conducting business internationally;
•the impact and costs and expenses of any litigation we may be subject to now or in the future;
•our compliance with covenants contained in our debt agreements; and
•our liquidity, capital resources and the adequacy thereof.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential”“likely,” “future,” “strategy,” “potential,” “seeks,” “goal” and similar expressions intended to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this report. Except as otherwise required by law, we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this report to reflect any change in our expectations or any change in events, conditions or circumstances on which any of our forward-looking statements are based. Factors that could cause or contribute to differences in our future financial results include the cautionary statements set forth herein and in our other filings with the Securities and Exchange Commission, including thosethe “Risk Factors” set forth under "Risk Factors" set forthor incorporated by reference in Part II, Item 1A of this Quarterly Report if any,on Form 10-Q, as well as those described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2017.2023 or any other of our subsequently filed reports. We qualify all of our forward-looking statements by these cautionary statements.


OVERVIEW

We are a developer, manufacturer and supplier of premium diagnostics products, medical imaging systems, and surgical products with an emphasisfocused on women's health. On March 22, 2017, we acquired Cynosure, Inc., or Cynosure. Cynosure is a developer, manufacturerwomen’s health and supplier of a broad array of light-based aestheticwell-being through early detection and medical treatment systems. The products are used to provide a diverse range of treatment applications such as non-invasive body contouring, hair removal, skin revitalization and scar reduction, as well as the treatment of vascular lesions. The Cynosure business is referred to as Medical Aesthetics and operates as a separate business segment. As a result of our acquisition of Cynosure, we operate in five segments: Diagnostics, Breast Health, Medical Aesthetics, GYN Surgical and Skeletal Health.treatment. We sell and service our products through a combination of direct sales and service personnel and a network of independent distributors and sales representatives. We operate in four segments: Diagnostics, Breast Health, GYN Surgical and Skeletal Health.
We
Through our Diagnostics segment, we offer a wide range of diagnostic products, which are used primarily to aid in the screening and diagnosis of human diseases and through January 31, 2017, we offered products that screened donated human blood and plasma.diseases. Our primary diagnosticsDiagnostics products include our Aptima family ofmolecular diagnostic assays, which run on our advanced instrumentation systems (Panther, Panther Fusion and Tigris), our ThinPrep cytology system, and the Rapid Fetal Fibronectin Test and, through January 31, 2017, our Procleix blood screening assays. TheTest. Our Aptima family of molecular diagnostic assays is used to detect, among other things, the infectious microorganisms that cause the common sexually transmitted diseases, or STDs, such as chlamydia and gonorrhea, or CT/NG; certain high-risk strains of human papillomavirus, or HPV, andHPV; Trichomonas vaginalis, the parasite that causes trichomoniasis.trichomoniasis; Mycoplasma genitalium; and Herpes Simplex viruses 1 and 2. We also offer viral load tests for the quantitation of Hepatitis B virus, Hepatitis C virus, human immunodeficiency virus, or HIV-1, and human cytomegalo virus, or CMV, for use on our Panther instrument system. In addition, we offer bacterial vaginosis and candida vaginitis assays for the diagnosis of vaginitis, a common and complex ailment affecting millions of women a year. Our assay portfolio also includes diagnostic tests for a range of acute respiratory infections, including SARS-CoV-2, various strains of influenza and parainfluenza, and respiratory syncytial virus, as well as a test for the detection of Group B Streptococcus, or GBS, that are run on the Panther Fusion system, a field upgradeable instrument addition to the base Panther system. In response to the COVID-19 pandemic, we developed and launched the Aptima SARS-CoV-2 assay and the Aptima SARS-CoV-2/Flu assay (each of which runs on our standard Panther system) and the Panther Fusion SARS-CoV-2 assay (which runs on our Panther Fusion system). In May 2022, we CE-marked two new molecular assays, Panther Fusion EBV Quant assay for quantitation of Epstein-Barr virus, and the Panther Fusion BKV Quant assay for quantitation of the BK virus. These two new assays are the first quantitative real-time PCR assays on the Panther Fusion system. These assays, along with the Aptima CMV Quant assay already available in Europe, expand our menu of transplant monitoring assays. The ThinPrep System is primarily used in cytology applications, such as cervical cancer screening, and the Rapid Fetal Fibronectin Test assists physicians in assessing the risk of pre-term birth. In blood screening, we developed and manufactured the Procleix family of assays, which are used to detect various infectious diseases. These blood screening products were marketed worldwide by our former blood screening collaborator, Grifols S.A., or Grifols, to whom we sold the blood screening business.
In the first quarter of fiscal 2017, we entered into a definitive agreement to sell our blood screening business to Grifols for a sales price of $1.85 billion in cash, subject to adjustment based on the closing amount of inventory. The transaction closed on January 31, 2017 and we received $1.865 billion. The sales price was subject to adjustment based on a finalization of inventory provided to Grifols. The sale resulted in a gain of $899.7 million recorded in the second quarter of fiscal 2017. As a result of this disposition and proceeds received, we recorded a tax obligation of $649.5 million, which was paid in fiscal 2017. Upon the closing of the transaction, our existing collaboration agreement with Grifols terminated, and a new collaboration agreement was executed as part of this transaction for us to provide certain research and development services to Grifols. In addition, we agreed to provide transition services to Grifols over a two to three year period depending on the nature of the respective service, including the manufacture of inventory, and we are in effect serving as a contract manufacturer of assays for Grifols for a two to three year period from the disposal date. We also agreedgenerate service revenues from our CLIA-certified laboratory for testing related to sell Panther instrumentationbreast cancer and certain supplies to Grifols as part of a long term supply agreement. Following the closing of this disposition, we no longer operate our blood screening business, except to the limited extent we have agreed to support Grifols. Under the long term supply agreement, transition services agreement to manufacture assays, and research and development services, we recognized revenues of $12.6 million in the first quarter of fiscal 2018. For the disposed blood screening business, in the first quarter of fiscal 2017, revenue was $65.2 million, gross profit was $43.6 million, and operating income was $28.6 million. Revenue, gross profit and operating income of the disposed business represents the financial impact of the business as it was operated prior to the date of disposition. The operating expenses include only those that were incurred directly by and were retained by the disposed business and are now incurred by Grifols. See Note 10 to our consolidated financial statements included herein.all metastatic cancers.

Our Breast Health products includesegment offers a broad portfolio of solutions for breast imagingcancer care primarily in the areas of radiology, breast surgery, pathology and related products and accessories, includingtreatment. These solutions include 3D digital mammography systems, computer-aided detection, or CAD, for mammography andimage analytics software utilizing artificial intelligence, reading workstations, minimally invasive breast biopsy devices,guidance systems, breast biopsy site markers, localization, specimen radiology, connectivity solutions and breast biopsy guidance systems.conserving surgery products. Our most advanced breast imaging platform,platforms, Selenia 3D Dimensions utilizes a technology calledand 3Dimensions systems, utilize tomosynthesis to produce 3D images that show multiple contiguous slice images of the breast, which we refer to as the Genius 3D Mammography exam, as well as conventional 2D full field digital mammography images. Our clinical results for FDA approval demonstrated that conventional 2D digital mammography with the addition of 3D tomosynthesis is superior to 2D digital mammography alone for both screening and diagnostics.exam.
Our Medical Aesthetics segment offers a portfolio of aesthetic treatment systems, including SculpSure, PicoSure and MonaLisa Touch that enable plastic surgeons, dermatologists and other medical practitioners to perform non-invasive and minimally invasive procedures to remove hair, treat vascular and benign pigmented lesions, remove multi-colored tattoos, revitalize the skin, reduce fat through laser lipolysis, reduce cellulite, clear nails infected by toe fungus, ablate sweat glands and improve gynecologic health. This segment also markets radio frequency, or RF, energy sourced medical devices for precision surgical applications such as facial plastic and general surgery, gynecology, ear, nose, and throat procedures, back and thigh procedures, ophthalmology, oral and maxillofacial surgery, podiatry and proctology.
Our GYN Surgical products include our NovaSure Endometrial Ablation System,MyoSure hysteroscopic tissue removal system, or NovaSure, andMyoSure, our MyoSure

Hysteroscopic Tissue Removal System, or MyoSure. The NovaSure endometrial ablation is a one-time procedure for the treatmentsystem, or NovaSure, our Fluent fluid management system, or Fluent, our Acessa ProVu laparoscopic

27

radiofrequency ablation system, or Acessa ProVu, as well as our CoolSeal vessel sealing portfolio and our JustRight surgical stapler. The MyoSure suite of abnormal uterine bleeding. MyoSure tissuedevices offers four options to provide incision-less removal is a minimally invasive procedure that targets and removesof fibroids, polyps, and other pathology within the uterus. The NovaSure portfolio is comprised of the NovaSure CLASSIC device, NovaSure ADVANCED device and the NovaSure V5 device for the treatment of abnormal uterine bleeding. The Fluent system is a fluid management system that provides liquid distention during diagnostic and operative hysteroscopic procedures. The Acessa ProVu system is a fully integrated system that uses laparoscopic ultrasound, guidance mapping and radiofrequency ablation to treat nearly all types of fibroids. The CoolSeal portfolio includes the Trinity, Reveal, and Mini advanced bipolar vessel sealing devices. The JustRight 5 mm stapler features a smaller instrument profile and is used for laparoscopic general and pediatric surgery.

Our Skeletal Health segment offers Discovery andsegment’s products include the Horizon X-ray bone densitometers that assess theDXA, a dual energy x-ray system, which evaluates bone density of fracture sites; and performs body composition assessments, and the Fluoroscan Insight FD mini C-arm, imaging systems that assistwhich assists in performing minimally invasive orthopedic surgical procedures on a patient'spatient’s extremities, such as the hand, wrist, knee, foot, and ankle.

Unless the context otherwise requires, references to we, us, Hologic or our company refer to Hologic, Inc. and its consolidated subsidiaries.

Trademark Notice

Hologic is a trademark of Hologic, Inc. Other trademarks, logos, and slogans registered or used by Hologic and its divisions and subsidiaries in the United States and other countries include, but are not limited to, the following: 2D Dimensions, 3Dimensions, 3D Mammography, AccuProbe,3D, 3DQuorum, Acessa, Acessa ProVu, Affirm, Prone,Amplidiag, Aptima, ATEC, BioZorb, Brevera, Celero, Hologic Clarity HD, CoolSeal, C-View, Cervista, Cynosure,DirectRay, Dimensions, Discovery, Eviva, Faxitron, Fluent, Fluoroscan, Gen-Probe, Genius,Focal Therapeutics, Genius 3D, Genius, 3D Mammography,Genius AI, Hologic, Horizon, Icon, Invader, Medicor, MedLite, MultiCare,Insight, Intelligent 2D, ImageChecker, JustRight, LOCalizer, MyoSure, NovaSure, PACE,Novodiag, Panther, PicoSure, Procleix, Prodesse,Panther Fusion, Progensa, Quantra, Rapid Fibronectin Test, SculpSure,Ffn, SecurView, Selenia, Sertera, SmartCurve, Smart-Depth, ThinPrep, Tigris, and Tigris.Tomcat.
Procleix, Ultrio, and Ultrio Plus
All other brand names or trademarks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. Hologic’s use or display of other parties’ trademarks, trade dress or products in this Quarterly Report does not imply that Hologic has a relationship with, or endorsement or sponsorship of, Grifols Worldwide Operations Limited. MonaLisa Touch is a registeredthe trademark of DEKA M.E.L.A. Srl-Calenzano-Italy.or trade dress owners.




ACQUISITIONSDISPOSITION


Cynosure, Inc.SuperSonic Imagine Ultrasound Imaging


On March 22, 2017,September 29, 2023, we executed an agreement to sell our SSI ultrasound imaging business to SSH Holdings Limited for a sales price of $1.9 million in cash. The sale was completed the acquisition of Cynosure and acquired all of the outstanding shares of Cynosure. The acquisition was funded through available cash, and the total purchase price was $1.66 billion.

The preliminary allocation of the purchase price is based on estimates of the fair value of assets acquired and liabilities assumed as of March 22, 2017. The Company has not yet obtained all of the information relatedOctober 3, 2023. We are providing certain transition services for up to the fair value of the acquired assets and liabilities, primarily taxes, to finalize the purchase price allocation. The purchase price has been allocated to the acquired assets and assumed liabilities based on management’s estimate of their fair values.

As part of the preliminary purchase price allocation, the Company has determined the identifiable intangible assets are developed technology of $736.0 million, in-process research and development of $107.0 million, trade names of $74.0 million, a distribution agreement of $42.0 million and customer relationships of $35.0 million. The preliminary fair value of the intangible assets has been estimated using the income approach, specifically the excess earning method and relief from royalty method, and the cash flow projections were discounted using rates ranging from 11% to 12%. The cash flows are based on estimates used to price the transaction, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital.

The developed technology assets comprise know-how, patents and technologies embedded in Cynosure’s products and relate to currently marketed products. In-process research and development projects relate to in-process projects that have not reached technological feasibility as of the acquisition date and have no alternative future use. The primary basis for determining technological feasibility of these projects is obtaining regulatory approval to market the underlying product or expected commercial releaseone year, depending on the project. We recorded $107.0 millionnature of in-process research and development assets related to three projects, which were expectedthe service. The SSI ultrasound imaging asset group met the criteria to be completed during fiscal 2018 and 2019 with a preliminary cost to complete of approximately $18.0 million. Duringclassified as assets held-for-sale in the fourth quarter of fiscal 2017,2023. As a result, we obtained regulatory approval for two projects with an aggregaterecorded a charge of $51.7 million in the fourth quarter of fiscal 2023 to record the asset group at its fair value of $61.0 million and these assets were reclassifiedless costs to developed technology. The remaining project is expected to be completed during fiscal 2019 with an estimated cost to complete of approximately $4.0 million. Given the uncertainties inherent with product development and introduction, we cannot assure that any of our product development efforts will be successful, completed on a timely basis or within budget, if at all. All of the in-process research and development assets were valued using the multiple-period excess earnings method approach using discount rates ranging from 14% to 22%.sell.


The excess of the purchase price over the preliminary estimated fair value of the tangible net assets and intangible assets acquired of $683.5 million was recorded to goodwill. The factors contributing to the recognition of the amount of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the Cynosure acquisition. These benefits include the expectation that the Company's entry into the aesthetics market will significantly broaden our offering in women's health. The Company is expected to benefit from a broader global presence, synergistic utilization of Hologic's direct sales force, primarily its GYN Surgical sales force, with certain Cynosure products and entry into an adjacent, cash-pay segment.

Medicor Medical Supply

On April 7, 2017, we completed the acquisition of MMS Medicor Medical Supplies GmbH, or Medicor, for a purchase price of approximately $19.0 million. Medicor was a long-standing distributor of our Breast and Skeletal Health products in Germany, Austria and Switzerland. Based on the preliminary valuation, we have allocated $5.4 million of the purchase price to the preliminary value of intangible assets and $8.9 million to goodwill. The allocation of the purchase price is preliminary as we are continuing to gather information supporting the acquired assets and liabilities.

Emsor, S.A.

On December 11, 2017, we completed the acquisition of Emsor S.A. ("Emsor") for a purchase price of approximately $13.1 million, which includes contingent consideration which the Company has estimated at $2.0 million. The contingent consideration is payable upon Emsor achieving predefined amounts of cumulative revenue over a two year period from the date of acquisition. Emsor was a distributor of the Company's Breast and Skeletal Health products in Spain and Portugal. Based on the Company's preliminary valuation, it has allocated $2.8 million of the purchase price to the preliminary value of intangible assets and $3.5 million to goodwill. The allocation of the purchase price is preliminary as the Company continues to gather information supporting the acquired assets and liabilities.

RESULTS OF OPERATIONS

All dollar amounts in tables are presented in millions.

Product Revenues
 
 Three Months Ended
 December 30, 2023December 31, 2022Change
 Amount% of
Total
Revenue		Amount% of
Total
Revenue		Amount%
Product Revenues
Diagnostics$419.4 41.4 %$532.1 49.5 %$(112.7)(21.2)%
Breast Health232.9 23.0 %182.7 17.0 %50.2 27.5 %
GYN Surgical159.2 15.7 %153.4 14.3 %5.8 3.8 %
Skeletal Health16.6 1.6 %18.1 1.7 %(1.5)(8.3)%
$828.1 81.7 %$886.3 82.5 %$(58.2)(6.6)%


28
 Three Months Ended 
 December 30, 2017 December 31, 2016 Change 
 Amount 
% of
Total
Revenue
 Amount 
% of
Total
Revenue
 Amount % 
Product Revenues            
Diagnostics$279.1
 35.3% $319.1
 43.5% $(40.0) (12.5)% 
Breast Health175.1
 22.1% 165.4
 22.5% 9.7
 5.9 % 
Medical Aesthetics76.7
 9.7% —
 —% 76.7
 100.0 % 
GYN Surgical107.3
 13.6% 114.6
 15.6% (7.3) (6.4)% 
Skeletal Health12.5
 1.6% 14.3
 1.9% (1.8) (12.4)% 
 $650.7
 82.3% $613.4
 83.5% $37.3
 6.1 % 
Table of Contents
We generated an increasehad a decrease in product revenues of 6.1% in the current quarter compared to the corresponding period in the prior year primarily due to our acquisition of Cynosure on March 22, 2017 and an increase in Breast Health sales. Cynosure's results (after the date of acquisition) are reported in our Medical Aesthetics segment and is the sole business in this segment. Partially offsetting the increase, our Diagnostics business product revenues declined as a result of the sale of our blood screening business effective January 31, 2017, and we had lower revenues in GYN Surgical and Skeletal Health. Excluding blood screening, Diagnostics revenues increased $13.2 million in the current quarter compared to the corresponding period in the prior year. In addition, the first quarter of fiscal 2017 was a 14-week quarter as fiscal 2017 was a 53-week fiscal period, and we estimate that the four extra selling days in the prior year period contributed approximately $20 million to revenue, primarily in the U.S.
Diagnostics product revenues decreased 12.5% in the current quarter compared to the corresponding period in the prior year primarily due to the decrease in blood screening revenues of $53.2 million as a result of the divestiture of the business during the second quarter of FY17, and we had four fewer selling days in the firstDiagnostics business as COVID-19 assay sales declined significantly and the prior year period included an extra week based on our fiscal calendar. This decrease was partially offset by improved performance by our Breast Health division, as supply chain constraints impacted the prior year quarter of fiscal 2018. In connection with the divestiture agreement, we have committed to providing Grifols manufacturing support through the defined transition services period and long term access to Panther instrumentation and certain supplies. As such, we will continue to generate a level of revenues, but much lower than historical trends. For the current three month period, product revenue under the new long term supply agreement and transition services agreement to manufacture assays for Grifols was $10.2 million. Excluding the divestiture of the blood screening business, diagnostic product revenues grew driven by increases in Molecular Diagnostics of $10.3 million and Cytology and Perinatal of $2.9 million.
Molecular Diagnostics product revenue of $146.3 million, and in particular revenue related to our Aptima family of assays, increased $10.3 million in the current quarter on a worldwide basis due to our increased installed base of Panther instruments, which is driving higher volumes of assay testing and an increase in international sales of our virology products as we have recently received regulatory approval for certain of these products. These increases were partially offset by lower instrument sales and the loss of one week in the current three month period compared to the corresponding period in the prior year. Cytology and Perinatal product revenue increased $2.9 million due to higher international ThinPrep volumes, partially offset by slightly lower domestic volumes as average selling prices remained relatively consistent. In addition, we experienced an increase in Perinatal revenue as domestic volumes increased primarily due to a change in certain customers ordering patterns.
Breast Health product revenues increased 5.9% in the current quarter compared to the corresponding period in the prior year primarily due to increased unit volumes of our 2D and 3D Dimensions systems internationally, increased sales volume of our Affirm Prone table and Brevera breast biopsy system, which was recently commercially released in the US, and an increase in Eviva and ATEC volumes internationally. In addition, the acquisition of Medicor and Emsor, former distributors of our products, resulted in

higher revenues. These increases were partially offset by lower sales volume of our 2D and 3D Dimensions systems and related components in the U.S. due to market and competitive dynamics, as well as a shift to lower priced systems. In addition, we experienced lower sales of our C-View software product and 3D upgrades in the US.
Our Medical Aesthetics business was formed in fiscal 2017 by the acquisition of Cynosure effective March 22, 2017. Accordingly, we did not have any revenues in the prior year period.
GYN Surgical revenue.

Diagnostics product revenues decreased 6.4%$112.7 million, or 21.2%, in the current quarter compared to the corresponding period in the prior year primarily due to a decrease in volumeMolecular Diagnostics revenues of NovaSure system sales$107.5 million and to a lesser extent, a decrease in Cytology & Perinatal revenue of $9.9$6.5 million, partially offset by an increase in Blood Screening of $1.2 million. Molecular Diagnostics’ product revenue was $292.9 million in the US,current three month period compared to $400.4 million in the corresponding period in the prior year. The decrease was primarily attributable to a decrease of $100.1 million in sales from our two SARS-CoV-2 assays (primarily the Aptima SARS-CoV-2 assay and to a lesser extent the Panther Fusion SARS-CoV-2 assay) due to lower volumes, which we primarily attribute to increased competitionlower demand from an improvement in the COVID-19 pandemic compared to the prior year, the increasing use of rapid tests and a stagnant market for endometrial ablation, partially offset by a slight increasedecrease in average selling prices in international markets. We expect sales of our SARS-CoV-2 assays to continue to be significantly lower in fiscal 2024 compared to fiscal 2023. Within Cytology & Perinatal, in the current three month period we had a decrease in sales of our ThinPrep Pap Test from lower volumes in the U.S., which we primarily attribute to laboratories building up their inventories in the second half of fiscal 2023 which are now being worked down. We also experienced an increase in revenue from international sales denominated in foreign currencies from the favorable foreign currency exchange impact of the weakened U.S. dollar against a mix shiftnumber of currencies.

Breast Health product revenues increased $50.2 million, or 27.5%, in the current quarter compared to the higher priced NovaSure ADVANCED devicecorresponding period in the prior year primarily due to an increase in volumes of our digital mammography systems, primarily 3D Dimensions systems and related workstation and workflow products, including software, an increase in Trident systems unit sales, and an increase in MyoSure systemAffirm biopsy systems. The increase in volume was primarily driven by the supply chain constraints in the prior year related to electronic components, primarily semiconductor chips, which impacted our ability to manufacture sufficient quantities to meet customer demand. The increases in our breast imaging products were partially offset by lower sales onof SSI ultrasound imaging products of $2.9 million as a worldwide basis. In addition, we had four fewer selling daysresult of the sale of this business in the beginning of the first quarter of fiscal 2018.2024. We also had an increase in sales of our interventional breast solutions products of $6.8 million in the current quarter compared to the corresponding period in the prior year primarily driven by higher Tumark breast marker sales as we were able to fill backlog orders, and to a lesser extent Brevera needles and Eviva devices. We also implemented price increases in Europe across multiple products and experienced an increase in revenue from international sales denominated in foreign currencies from the favorable foreign currency exchange impact of the weakened U.S. dollar against a number of currencies.

GYN Surgical product revenues increased $5.8 million, or 3.8%, in the current quarter compared to the corresponding period in the prior year primarily due to increases in the sales volume of our MyoSure devices and Fluent Fluid Management products as procedure rates recovered from the impact of the COVID-19 pandemic. This was partially offset by a decrease in NovaSure devices, which we primarily attribute to an increase in the use of alternative treatments and competition.

Skeletal Health product revenues decreased 12.4%$1.5 million, or 8.3%, in the current quarter compared to the corresponding period in the prior year primarily due to a decrease in sales volume of our mini C-arm sales in the U.S. due to competitive pressures, whichInsight FD systems. This was partially offset by increasesan increase in system upgrades and to a lesser extent an increase in sales of our Horizon osteoporosis assessment product revenues, primarily attributable to higher sales volume in the current three month period.DXA Systems.


29
Table of Contents
Product revenues by geography as a percentage of total product revenues were as follows:

Three Months Ended 
December 30, 2017 December 31, 2016 
United States74.4% 76.8% 
United States
United States
Europe
Europe
Europe12.0% 11.4% 
Asia-Pacific9.1% 8.8% 
Asia-Pacific
Asia-Pacific
Rest of World4.5% 3.0% 
100.0% 100.0% 
Rest of World
Rest of World
100.0
100.0
100.0
In the current quarter compared to the corresponding period in the prior year, the
The percentage of product revenue derived from the U.S. decreased while Europe, Asia-Pacific, and Rest of World increased, andwhich we primarily attribute to the percentage of product revenue fromdecrease in the U.S. decreased, primarily as a result of sales from our two SARS-CoV-2 assays (primarily the Cynosure acquisition,Aptima SARS-CoV-2 assay and to a lesser extent the Panther Fusion SARS-CoV-2 assay) due to lower volumes, as discussed above. This was partially offset by an increase in digital mammography systems in Europe. A higherthe U.S. of Breast Health capital equipment sales and related workflow products including software. The percentage of Cynosure's revenues are internationally based comparedproduct revenue increased in Europe, Asia-Pacific, and Rest of World in the current quarter primarily due to legacy Hologic's. an increase in international Breast Health capital equipment and interventional breast solutions consumables sales and to a lesser extent Surgical sales, partially offset by a decrease in SARS-CoV-2 assay volumes.In addition, the percentage of product revenue from regions other thanin Europe, Asia-Pacific and Rest of World increased due to the favorable foreign currency exchange impact of the weakened U.S., Europe and Asia-Pacific increased as we expanded our international infrastructure and sales efforts in these regions. dollar against a number of currencies.

Service and Other Revenues

 Three Months Ended
 December 30, 2023December 31, 2022Change
 Amount% of
Total
Revenue		Amount% of
Total
Revenue		Amount%
Service and Other Revenues$185.0 18.3 %$187.9 17.5 %$(2.9)(1.5)%
 Three Months Ended 
 December 30, 2017 December 31, 2016 Change 
 Amount 
% of
Total
Revenue
 Amount 
% of
Total
Revenue
 Amount % 
Service and Other Revenues$140.4
 17.7% $121.0
 16.5% $19.4
 16.0% 

Service and other revenues consist primarily of revenue generated from our field service organization to provide ongoing service, installation, and repair of our products. The majority of these revenues are generated within our Breast Health segment,segment. The decrease in service and other revenue in the current quarter compared to the corresponding period in the prior year was primarily due to lower spare parts sales and to a lesser extent our Medical Aesthetics business. Thea decrease in service contracts primarily due to the extra week in the prior year period partially offset by an increase in installation and training revenue related to the increase in Breast Health capital equipment sales discussed above. Partially offsetting this decrease was a one-time $2.0 million milestone payment in the Surgical business continues to convertin the current quarter.

Cost of Product Revenues

 Three Months Ended
 December 30, 2023December 31, 2022Change
 Amount% of
Product
Revenue		Amount% of
Product
Revenue		Amount%
Cost of Product Revenues$307.2 37.1 %$296.2 33.4 %$11.0 3.7 %
Amortization of Acquired Intangible Assets45.5 5.5 %55.6 6.3 %(10.1)(18.2)%
$352.7 42.6 %$351.8 39.7 %$0.9 0.3 %

Cost of Product Revenues. The cost of product revenues as a high percentage of our installed base of digital mammography systems to service contracts upon expiration of the warranty period. Our Medical Aesthetics business represented approximately 10% of serviceproduct revenues was 37.1% in the firstcurrent quarter compared to 33.4% in the corresponding period in the prior year. Cost of fiscal 2018. Serviceproduct revenues as a percentage of revenue increased in the current quarter primarily due to a decrease in sales of our SARS-CoV-2 assays, which have higher gross margins compared to our other diagnostic products, and other revenuescomprised 6.4% of total product revenue in the current quarter compared to 23.8% in the corresponding period in the prior year. This increase was partially offset by higher sales of our 3D Dimensions systems and related software products.


30
Table of Contents
Diagnostics’ product costs as a percentage of revenue increased 16.0% in the current quarter compared to the corresponding period in the prior year primarily due to $14.6 million contributed by Cynosure,lower sales of our SARS-CoV-2 assays, unfavorable manufacturing variances at a certain manufacturing facility, and lower ThinPrep Pap Test volumes which have higher margins. Partially offsetting this increase was acquiredan increase in the second quartervolumes of fiscal 2017,our Women’s Health Aptima assays, lower inventory reserves and higher service contract conversion and renewal rates.to a lesser extent lower international freight costs.


Cost of Product Revenues
 Three Months Ended 
 December 30, 2017 December 31, 2016 Change 
 Amount 
% of
Product
Revenue
 Amount 
% of
Product
Revenue
 Amount % 
Cost of Product Revenues$213.7
 32.8% $198.3
 32.3% $15.4
 7.8% 
Amortization of Intangible Assets79.8
 12.3% 73.5
 12.0% 6.3
 8.5% 
 $293.5
 45.1% $271.8
 44.3% $21.7
 8.0% 
Cost of Product Revenues. The cost of product revenues as a percentage of product revenues was 32.8% in the current quarter compared to 32.3% in the corresponding period in the prior year. Cost of product revenues as a percentage of product revenues in the current quarter were relatively consistent within the legacy Hologic segments. However, the cost of product revenues was higher due to the inclusion of Cynosure results as Cynosure products have a lower gross margin than our legacy products.
Diagnostics'Breast Health’s product costs as a percentage of revenue decreased slightly in the current quarter compared to the corresponding period in the prior year primarily due to increased Aptima assayhigher sales volumes increased sales volume of Perinatalour higher margin products, that have high margins, favorableprimarily 3D Dimensions and related software products, improved manufacturing variancesutilization and lower instrument sales, which have low margins. These improvements were primarily offset bya slight increase in average selling prices of our biopsy disposables as well as an increase in prices across multiple products in Europe. Also contributing to the divestiture of the blood screening business that occurred during the second quarter of fiscal 2017. The products that we supply to Grifols under the new supply and collaboration agreements are at lower gross margins than we earneddecrease in the disposed business, and we expect this to continue.
Breast Health’s product costs as a percentage of revenue in the current quarter was relatively consistenta decrease in inventory reserves and freight.

GYN Surgical’s product costs as a percentage of revenue increased in the current quarter compared to the corresponding period in the prior year. Higher gross margins fromyear primarily due to product mix of higher volumes of lower margin products, mostly attributable to sales volume increases in the Affirm Prone table, the Brevera breast biopsy system,of our Fluent Fluid Management systems, and Eviva and ATEClower volumes of our NovaSure devices and favorable manufacturing variances werepartially offset by a reductionan increase in 3D Dimensions systems, a mix shift to lower priced 3D systems and a decrease in 3D upgrades and C-View software sales, which havevolume of higher gross margins than capital equipment sales.margin products, primarily MyoSure devices, as procedure rates recovered from the impact of the COVID-19 pandemic.
GYN Surgical’s product costs as a percentage of revenue was relatively consistent in the current quarter compared to the corresponding period in the prior year.
Skeletal Health’s product costs as a percentage of revenue decreased in the current quarter compared to the corresponding period in the prior year primarily due to higher obsolescence charges recordedan increase in the prior year.volume of Horizon DXA systems and upgrades as well as a decrease in volume of Insight FD which has lower margins.

Amortization of Intangible Assets. Amortization of intangible assets relates to acquired developed technology, which is generally amortized over its estimated useful life of between 85 and 15 years using a straight-line method or, if reliably determinable, based on the pattern in which the economic benefits of the assets are expected to be consumed. Amortization expense has increased in the current three month period primarily due to $17.4 million related to intangible assets acquired in the Cynosure acquisition, partially offset by a decrease in amortization expense related to divestiture of the blood screening business of $5.4 million, lower amortization expense related to the Cytyc acquisition intangibles, which are being amortized based on the pattern of economic benefits, and having one less week of expense in the current quarter as compared to the corresponding period in the prior year.

Cost of Service and Other Revenues
 Three Months Ended 
 December 30, 2017 December 31, 2016 Change 
 Amount 
% of
Service
Revenue
 Amount 
% of
Service
Revenue
 Amount % 
Cost of Service and Other Revenue$73.1
 52.1% $57.8
 47.8% $15.3
 26.5% 
Service and other revenues gross margin decreased to 47.9% in the current three month period compared to 52.2% in the corresponding period in the prior year primarily due to Cynosure's service gross margin, which is lower than that generated by the Breast Health business.
Operating Expenses
 Three Months Ended 
 December 30, 2017 December 31, 2016 Change 
 Amount 
% of
Total
Revenue
 Amount 
% of
Total
Revenue
 Amount % 
Operating Expenses            
Research and development$54.8
 6.9% $54.4
 7.4% $0.4
 0.8 % 
Selling and marketing139.5
 17.6% 110.0
 15.0% 29.5
 26.8 % 
General and administrative77.9
 9.9% 69.8
 9.5% 8.1
 11.6 % 
Amortization of intangible assets14.4
 1.8% 21.4
 2.9% (7.0) (32.8)% 
Restructuring and divestiture charges3.8
 0.5% 3.2
 0.4% 0.6
 18.8 % 
 $290.4
 36.7% $258.8
 35.2% $31.6
 12.2 % 
Research and Development Expenses. Research and development expenses increased 0.8% in the current quarter compared to the corresponding period in the prior year primarily due to lower amortization of intangible assets as a result of an impairment in the inclusionprior year related to the Mobidiag acquisition and SSI, which was disposed of Cynosure researchat the beginning of the first quarter of fiscal 2024.

Cost of Service and Other Revenues
Three Months Ended
 December 30, 2023December 31, 2022Change
 Amount% of
Service
Revenue		Amount% of
Service
Revenue		Amount%
Cost of Service and Other Revenue$92.9 50.2 %$104.5 55.6 %$(11.6)(11.1)%

Service and other revenues gross margin increased to 49.8% in the current quarter compared to 44.4% in the corresponding period in the prior year. The increase in the current quarter was primarily due to a decrease in service department costs related to the extra week in the prior year period, a decrease in time and material billings, which have lower margins compared to our service contract business, and an increase in license revenue from the one-time $2.0 million milestone payment in the Surgical business in the current quarter.


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Operating Expenses

 Three Months Ended
 December 30, 2023December 31, 2022Change
 Amount% of
Total
Revenue		Amount% of
Total
Revenue		Amount%
Operating Expenses
Research and development$66.8 6.6 %$74.8 7.0 %$(8.0)(10.7)%
Selling and marketing148.9 14.7 %163.5 15.2 %(14.6)(8.9)%
General and administrative111.8 11.0 %108.5 10.1 %3.3 3.0 %
Amortization of intangible assets13.3 1.3 %7.6 0.7 %5.7 75.0 %
Impairment of intangible assets and equipment4.3 0.4 %— — %4.3 **
Contingent consideration - fair value adjustment1.7 0.2 %— — %1.7 **
Restructuring and Divestiture charges22.5 2.2 %1.1 0.1 %21.4 **
$369.3 36.4 %$355.5 33.0 %$13.8 3.9 %
** Percentage not meaningful

Research and Development Expenses. Research and development expenses decreased 10.7% in the current quarter compared to the corresponding period in the prior year. The decrease in the current quarter was primarily due to a decrease in compensation and benefits as a result of $6.5additional expenses from the extra week in the prior year period, the elimination of expenses from SSI of $2.9 million partially offset by the divestiture of the blood screening business,from its disposal and lower project spend, a reduction in headcount primarily in Diagnostics, and one less week of expenses compared to the prior year first quarter, which had 14 weeks.Breast Health. At any point in time, we have a number of different research projects and clinical trials being conducted and the timing of these projects and related costs can vary from period to period.

Selling and Marketing Expenses. Selling and marketing expenses increased 26.8%decreased 8.9% in the current quarter compared to the corresponding period in the prior year. The decrease was primarily due to lower spending on advertising and marketing initiatives, primarily from our sponsorship of the Women’s Tennis Association, a decrease in compensation and benefits as a result of additional expenses from the extra week in the prior year period and lower severance expense, and the elimination of expenses from SSI of $2.2 million from its disposal, partially offset by higher commissions in our Breast Health division from an increase in sales.

General and Administrative Expenses. General and administrative expenses increased 3.0% in the current quarter compared to the corresponding period in the prior year. The increase in the current quarter was primarily due to an increase in compensation and benefits from higher stock compensation expense as a result of the inclusionplan’s retirement provisions, higher expense from our deferred compensation plan, an increase in legal expenses as the prior year period included a benefit of Cynosure, which contributed $33.1$7.4 million from receiving the settlement awarded to us in the Minerva litigation, and an increase in bad debt expense of $3.7 million. Excluding Cynosure, expenses related to Hologic's legacy business decreasedThese increases were partially offset by lower charges in the current quarter compared toas the corresponding prior year period primarily due to lower commissions, lower spend on travelquarter included an $8.9 million charge for a business dispute in connection with terminating the Mobidiag joint venture agreement in China, and meeting expenses, a declinedecrease in sales personnel headcountand use tax charges. In addition, we had a decrease in GYN Surgicalcharitable donations of $5.0 million, and Diagnostics andlower IT infrastructure spend from one less week of expenses, partially offset by higher salary compensation from increased headcount in Breast Health and increased spending on marketing initiatives in Diagnostics.activity.
General and Administrative Expenses. General and administrative expenses increased 11.6% in the current quarter compared to the corresponding period in the prior year. The current three month period includes expenses related to Cynosure of $13.7 million which includes accelerated depreciation of Cynosure's SAP ERP system. Excluding Cynosure, expenses related to Hologic's legacy business decreased in the current quarter compared to the corresponding period in the prior year primarily due to resolution of a non-income tax matter which resulted in a $4.0 million reduction in the Company's expected tax liability, lower compensation from stock compensation as a result terminating certain executives and lower measurement on performance stock units, a decrease in transaction related expenses and one less week of expenses, partially offset by an increase in litigation fees.

Amortization of Intangible Assets. Amortization of intangible assets primarily results from customer relationships and trade names distributor relationships and business licenses related to our acquisitions. These intangible assets are generally amortized over their estimated useful lives of between 25 and 30 years using a straight-line method or, if reliably determinable, based on the pattern in which the economic benefits of the assets are expected to be consumed utilizing expected undiscounted future cash flows. Amortization expense decreasedincreased in the current quarter primarily due to accelerated amortization of customer relationship and tradename intangible assets acquired in the Mobidiag acquisition.

Impairment of Intangible Assets and Equipment. As discussed in Note 4 to the consolidated financial statements, we recorded an impairment charge of $4.3 million to record our only IPR&D asset from the Mobidiag acquisition to fair value. The reduction in fair value was primarily due to a reduction in forecasted revenues and timing of completing the project.

Contingent Consideration Fair Value Adjustments.In connection with the acquisition of Acessa Health Inc., or Acessa, we are obligated to make contingent earn-out payments. The payments were based on achieving incremental revenue growth over a three-year period ending annually in December of each of 2021, 2022, and 2023. As of the acquisition date, we recorded a contingent consideration liability for the estimated fair value of the amount we expected to pay to the former shareholders of

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the acquired business. As of the end of the first quarter of fiscal 2024, the third and final measurement period was completed, and we recorded a loss of $1.7 million to increase the contingent consideration liability to fair value based on actual revenue results in the final earn-out period.

Restructuring Charges. During the first quarter of fiscal 2024, as a result of a change in strategy for a certain business within Diagnostics, including the discontinuation of the sale of certain products and expected closure of facilities, we determined certain fixed assets lives should be shortened and lease assets were impaired at the affected facilities. As such, we recorded accelerated depreciation of $7.2 million and a lease asset impairment charge of $12.5 million. We have initiated discussions with the respective Works Councils. In addition, we recorded the minimum statutory severance benefit for the affected employee groups of $1.8 million. Additional severance benefit charges are expected to be recorded in fiscal 2024. For additional information, please refer to Note 8 to our consolidated financial statements.

Interest Income
 Three Months Ended
 December 30,
2023		December 31,
2022		Change
 AmountAmountAmount%
Interest Income$27.9 $20.6 $7.3 35.4 %

Interest income increased in the current quarter compared to the corresponding period in the prior year primarily due to lower amortization expense from intangible assets related to the blood screening business of $10.4 million that was disposed of duringincrease in interest rates as the second quarter ofU.S. Federal Reserve had continually raised its Federal Funds Rate throughout our fiscal 2017 and one less week of expenses. This decrease was2023 year, partially offset by intangible asset amortization expense of $4.7 million as a result of the Cynosure acquisition.
Restructuring and Divestiture Charges. In fiscal 2015, we decided to shut down our Bedford, Massachusetts facility and transfer production of our Skeletal Health products to a third-party contract manufacturer and other activities to our Marlborough, Massachusetts and Danbury, Connecticut facilities. We also implemented additional organizational changes to our international operationslower average cash balances in fiscal 2016. In addition, in connection with our acquisition of Cynosure, we implemented certain organizational changes. Pursuant to U.S. generally accepted accounting principles, the related severance and benefit charges are recognized either ratably over the respective required employee service periods or up-front for contractual benefits, and other charges are being recognized as incurred. In the current quarter we recorded charges of $3.8 million for severance benefits primarily relatedcompared to the departure of an executive officer and employees within our Diagnostics and Medical Aesthetics segments. Incorresponding period in the prior year period, we recorded a charge of $3.5 million related to the closure of the Bedford facility, partially offset by small adjustments to actions noted above for severance and benefits. For additional information pertaining to restructuring actions and charges, please refer to Note 4 to the consolidated financial statements contained in Part I, Item 1 of this Quarterly Report.year.

Interest Expense
 
 Three Months Ended
 December 30,
2023		December 31,
2022		Change
 AmountAmountAmount%
Interest Expense$(26.0)$(28.1)$2.1 (7.5)%
 Three Months Ended 
 December 30,
2017		 December 31,
2016		 Change 
 Amount Amount Amount % 
Interest Expense$(41.0) $(40.4) $(0.6) 1% 


Interest expense consists primarily of the cash interest costs and the related amortization of the debt discount and deferred issuance costs on our Convertible Notes, 2022 Senior Notes, 2025 Senior Notes, and amounts borrowed under our Amended and Restated Credit Agreement and Accounts Receivable Securitization Program.outstanding debt. Interest expense decreased in the current quarter has increased fromcompared to the corresponding period in the prior year primarily due to an increase in amounts received under an interest ratesrate swap agreement, which hedges the benchmark interest rate under our credit facilities2021 Credit Agreement, compared to the prior year period, and issuance costs expensed from the refinancing ofto a lesser extent a lower principal balance outstanding under our credit facilities in the quarter2021 Credit Agreement, partially offset by lowerthe increase in the variable interest from Convertible Note repurchases in fiscal 2017 and fiscal 2018, and the prior year quarter had an additional week of expense.rate under our 2021 Credit Agreement.
Debt Extinguishment Loss

Other Expense, net
 Three Months Ended 
 December 30,
2017		 December 31,
2016		 Change 
 Amount Amount Amount % 
Debt Extinguishment Loss$(1.0) $—
 $(1.0) 100.0% 
 Three Months Ended
 December 30,
2023		December 31,
2022		Change
 AmountAmountAmount%
Other Expense, net$(8.8)$(15.8)$7.0 (44.3)%


InFor the first quarter of fiscal 2018, we entered into an Amended and Restated Credit Agreement with Bank of America, N.A. The proceeds under the Amended and Restated Credit Agreement of $1.8 billion were used, among other things, to pay off the Term Loan and Revolver outstanding under the Prior Credit Agreement. In connection with this transaction, we recorded a debt extinguishment loss of $1.0 million.

Other Income, net
 Three Months Ended 
 December 30,
2017		 December 31,
2016		 Change 
 Amount Amount Amount % 
Other Income, net$2.9
 $10.2
 $(7.3) (71.6)% 


For the current three month period,2024, this account primarily consisted of a gain of $1.6 million of net foreign currency exchange gainslosses of $13.1 million primarily from the mark-to marketmark-to-market of outstanding forward foreign currency exchange contracts used to hedge operating results, partially offset by a gain of $1.4$5.7 million onfrom the change in cash surrender value of life insurance contracts related to our deferred compensation plan driven by stock market gains and a $0.7 million insurance recovery, partially offset by a realized loss of $0.6 million on the sale of a marketable security.gains. For the first quarter of fiscal 2017,2023, this account primarily consisted of gains of $8.4 million on the mark-to-market of outstanding forward foreign currency contracts due to the strengthening US dollar, $0.8 million on net foreign currency exchange gains and $0.8losses of $18.1 million, onprimarily from the mark-to-market of foreign currency contracts used to hedge operating results, partially offset by a gain of $2.5 million from the change in cash surrender value of life insurance contracts related to our deferred compensation plan.plan driven by stock market gains.


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Provision (Benefit) for Income Taxes
 
 Three Months Ended 
 December 30,
2017		 December 31,
2016		 Change 
 Amount Amount Amount % 
Provision for Income Taxes$(310.9) $29.6
 $(340.5) ** 
 Three Months Ended
 December 30,
2023		December 31,
2022		Change
 AmountAmountAmount%
Provision (Benefit) for Income Taxes$(55.2)$51.7 $(106.9)**
**Percentage not meaningful

Our effective tax rate for the three months ended December 30, 20172023 was (324.5)%a benefit of 28.9% compared to 25.5%a provision of 21.6% for the corresponding period in the prior year. The benefit recorded in the current quarter is due primarily to the impact of the Tax Cuts and Jobs Act (the "Act") enacted on December 22, 2017. We have made reasonable estimates of the effects of the Act and these estimates could change in future periods as we complete our analysis of the effects of the Act (refer to Note 13 of the accompanying notes to the consolidating financial statements for additional discussion). As a result of this law, US corporations are subject to lower income tax rates, and we were required to remeasure our U.S. net deferred tax liabilities at a lower rate, resulting in a net benefit of $355.2 million recorded in the provision for income taxes. Partially offsetting this benefit, we recorded a charge of $26.0 million for transition taxes related to the deemed repatriation of foreign earnings. For the current quarter, in addition to the items noted, theOur effective tax rate for the three months ended December 30, 2023 was lower than the U.S. statutory tax rate primarily due to a $107.2 million discrete tax benefit related to a worthless stock deduction on the impactinvestment in one of earnings in jurisdictions subject to lowerthe Company’s international subsidiaries. Our effective tax rates, and the domestic production activities deduction benefit. Forrate for the three months ended December 31, 2016,2022 was higher than the effective tax rate was lower than theU.S. statutory tax rate primarily due to income tax reserves, the global intangible low-taxed income inclusion, and state income taxes, partially offset by the impact of the U.S. deduction for foreign derived intangible income, the geographic mix of income earned by our international subsidiaries, which are taxed at rates lower than the U.S. statutory tax benefit from restricted stock units upon vesting, earnings in jurisdictions subject to lowerrate, and federal and state tax rates, and the domestic production activities deduction benefit.credits.

Segment Results of Operations

We report our business as fiveoperate in four segments: Diagnostics, Breast Health, Medical Aesthetics, GYN Surgical and Skeletal Health. The accounting policies of the segments are the same as those described in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2017.2023. We measure segment performance based on total revenues and operating income or loss.income. Revenues from product sales of each of these segments are described in further detail above. The discussion that follows is a summary analysis of total revenues and the primary changes in operating income or loss by segment.


Diagnostics

 Three Months Ended
 December 30,
2023		December 31,
2022		Change
 AmountAmountAmount%
Total Revenues$447.8 $559.3 $(111.5)(19.9)%
Operating Income$49.4 $151.1 $(101.7)(67.3)%
Operating Income as a % of Segment Revenue11.0 %27.0 %
 Three Months Ended 
 December 30,
2017		 December 31,
2016		 Change 
 Amount Amount Amount % 
Total Revenues$284.6
 $325.4
 $(40.8) (12.5)% 
Operating Income$36.5
 $41.1
 $(4.6) (11.2)% 
Operating Income as a % of Segment Revenue12.8% 12.7%     

Diagnostics revenues decreased in the current quarter compared to the corresponding period in the prior year primarily due to the fluctuationsdecrease in product revenues discussed above. The primary driver of the reduction in revenues was the divestiture of the blood screening business in the second quarter of fiscal 2017.

Operating income for this business segment decreased in the current quarter compared to the corresponding period in the prior year primarily due to thea decrease in gross profit from lower revenues partially offset by lowerCOVID-19 assay sales and an increase in operating expenses. Gross margin was 48.0% in the current quarter, compared with 48.8% in the corresponding prior year period. The decrease in gross margin was primarily due to lower revenues as a result of the disposition of the higher-margin blood screening business and lower margins generated under the new supply and collaboration arrangement. These gross margin decreases were partially offset by the impact of the increase in Aptima assay volumes, increased sales volume of Perinatal products that have high margins, favorable manufacturing variances, lower instrument sales, which have lower margins, and lower amortization expense.
Operating expenses decreased in the current period compared to the corresponding period in the prior year primarily due to lower amortization expense as a result of the blood screening divestiture, lower research and development expenses related to a reduction in project spending as well as the divestiture of blood screening, lower headcount, no transaction fees in the current quarter, and one less week of expenses in the current quarter, partially offset by increased spending on marketing initiatives and restructuring charges.
Breast Health
 Three Months Ended 
 December 30,
2017		 December 31,
2016		 Change 
 Amount Amount Amount % 
Total Revenues$288.0
 $273.3
 $14.7
 5.4% 
Operating Income$89.7
 $85.2
 $4.5
 5.2% 
Operating Income as a % of Segment Revenue31.1% 31.2%     
Breast Health revenues increased52.0% in the current quarter compared to the corresponding period in the prior year primarily due to the $9.7 million increase in product revenue in the current quarter discussed above and increases of $5.0 million in service revenue.
Operating income for this business segment increased in the current quarter primarily due to the increase in gross profit from higher revenues as gross margins were consistent year over year. The overall gross margin decreased to 60.3% in the current quarter compared to 60.6%57.9% in the corresponding period in the prior yearyear. The decrease in gross margin in the current period was primarily due to the increase in service revenue. Higher gross margins fromlower sales volumevolumes of our SARS-CoV-2 assays which have a higher margin, unfavorable manufacturing variances at a certain manufacturing facility and lower sales volumes of our ThinPrep products, partially offset by increases in the Affirm Prone table, the Brevera breast biopsy system,and Eviva and ATEC devices, and favorable manufacturing variances were offset by a reduction in 3D Dimensions systems, a mix shift to lower priced 3D systems andour Women's Health Aptima assay sales, a decrease in 3D upgradesinventory reserves, a decrease in intangible asset amortization expense, and C-View software sales, which have higher gross margins than capital equipment sales.lower international freight.

Operating expenses increased in the current quarter compared to the corresponding period in the prior year primarily due to restructuring charges of $21.5 million, accelerated amortization of acquired intangibles of $7.3 million, an impairment charge of $4.3 million related to the in-process research and development intangible asset, higher corporate allocations from an increase in salarystock compensation and expenses from increased headcountour deferred compensation plan and an increase in bad debt expense. Partially offsetting these increases was the Breast Health sales organization primarily dueprior year period included a charge of $8.9 million related to the Medicor

acquisitiontermination of the Mobidiag joint venture in China, a decrease in sales and use tax charges, lower severance, a decrease in marketing initiatives and allocated charitable contributions and the third quarter of fiscal 2017, increased commissions and litigation expenses, partially offset by one lessprior year period included an additional week of expenses.
Medical Aesthetics

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 Three Months Ended 
 December 30,
2017		 December 31,
2016		 Change 
 Amount Amount Amount % 
Total Revenues$91.3
 $—
 $91.3
 100.0 % 
Operating Loss$(23.0) $—
 $(23.0) (100.0)% 
Operating Loss as a % of Segment Revenue(25.2)% —%     
Breast Health
Medical Aesthetics revenue
 Three Months Ended
 December 30,
2023		December 31,
2022		Change
 AmountAmountAmount%
Total Revenues$377.7 $334.2 $43.5 13.0 %
Operating Income$102.2 $60.5 $41.7 68.9 %
Operating Income as a % of Segment Revenue27.1 %18.1 %

Breast Health revenues increased in the current period relatedquarter compared to the acquisition of Cynosure.corresponding period in the prior year due to an increase in product revenue, partially offset by a decrease in service revenue as discussed above.
The operating loss of $23.0 million
Operating income for this business segment increased in the current quarter compared to the corresponding period wasin the prior year primarily due to an increase in gross profit from product sales and a decrease in operating expenses. Gross margin was 56.9% in the current quarter compared to 54.0% in the corresponding period in the prior year. The increase in gross margin is primarily due to higher volumes of our capital equipment, primarily 3D Dimensions, and related software sales and to a lesser extent a decrease in acquired intangible asset amortization due to impairments in the prior year and improved manufacturing utilization. Partially offsetting this increase was a decrease in service gross margin due to lower service contract revenue from the extra week in the prior year period.

Operating expenses decreased in the current quarter compared to the corresponding period in the prior year primarily due to a decrease in compensation and benefits from the extra week in the prior year period, the elimination of intangible assets$6.3 million of $22.1 million,expenses from the SSI disposition, a reduction in headcount in research and accelerated depreciation expense for Cynosure's SAP ERP system.development, and a decrease in marketing initiatives and allocated charitable contributions. Partially offsetting these decreases were higher corporate allocations from an increase in stock compensation and expenses from our deferred compensation, and an increase in sales commissions from higher capital equipment sales.

GYN Surgical

 Three Months Ended
 December 30,
2023		December 31,
2022		Change
 AmountAmountAmount%
Total Revenues$162.2 $154.1 $8.1 5.3 %
Operating Income$43.2 $48.8 $(5.6)(11.5)%
Operating Income as a % of Segment Revenue26.6 %31.6 %
 Three Months Ended 
 December 30,
2017		 December 31,
2016		 Change 
 Amount Amount Amount % 
Total Revenues$107.5
 $114.8
 $(7.3) (6.4)% 
Operating Income$30.2
 $25.5
 $4.7
 18.4 % 
Operating Income as a % of Segment Revenue28.1% 22.2%     

GYN Surgical revenues decreasedincreased in the current quarter compared to the corresponding period in the prior year primarily due to the increase in product revenues discussed above.

Operating income for this business segment decreased in the current quarter compared to the corresponding period in the prior year primarily due to an increase in operating expenses partially offset by an increase in gross profit. Gross margin was 67.7% in the current quarter compared to 68.6% in the corresponding period in the prior year. The decrease in gross margin was primarily due to higher volume sales of Fluent Fluid Management systems and lower volumes of our NovaSure devices, partially offset by an increase in MyoSure devices, which have higher margins, and a one-time milestone payment.

Operating expenses increased in the current quarter compared to the corresponding period in the prior year primarily due to lower operating expenses partially offset by lower gross profit driven by lower revenues. Gross margin increaseda $7.4 million settlement awarded to 64.9%us in the Minerva litigation in the corresponding prior year period, an increase in bad debt expense, and a loss of $1.7 million in the current quarter from 63.9% into increase the corresponding period in the prior year primarily dueAcessa contingent consideration liability to a decrease in amortization expense.fair value.
Operating expenses decreased in the current quarter due to a decrease in headcount in the GYN Surgical sales organization and lower commissions, lower research and development project spend, the resolution

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Table of a tax matter which resulted in a $4.0 million reduction in the Company's expected tax liability in the current quarter of which $3.2 million was related to GYN Surgical and one less week of expenses, partially offset by an increase in litigation fees.Contents


Skeletal Health

 Three Months Ended
 December 30,
2023		December 31,
2022		Change
 AmountAmountAmount%
Total Revenues$25.4 $26.6 $(1.2)(4.5)%
Operating Income$3.4 $2.0 $1.4 70.0 %
Operating Income as a % of Segment Revenue13.5 %7.7 %
 Three Months Ended 
 December 30,
2017		 December 31,
2016		 Change 
 Amount Amount Amount % 
Total Revenues$19.7
 $20.9
 $(1.2) (5.7)% 
Operating Income (Loss)$0.7
 $(5.8) $6.5
 (111.2)% 
Operating Income (Loss) as a % of Segment Revenue3.3% (27.8)%     

Skeletal Health revenues decreased in the current quarter compared to the corresponding period in the prior year primarily due to the decrease in product revenues discussed above.above.

Operating income for this business segment increased in the current quarter compared to the corresponding period in the prior year primarily due to a $2.0 millionan increase in gross profit due to higher obsolescence chargespartially offset by an increase in the prior year period.operating expenses. Gross margin increased to 46.4%was 38.5% in the current quarter asperiod, compared to 34.3%29.8% in the corresponding period in the prior year. This business also hadThe increase in gross margin was primarily due to higher sales volumes of our Horizon DXA and system upgrades, which have higher margins, as well as a decrease in volume of Insight FD, which has lower operatingmargins.

Operating expenses dueincreased in the current quarter compared to the corresponding period in the prior year period including facility closure costs incurred forprimarily due to an increase in third-party commissions partially offset by a decrease in compensation and benefits from the Bedford facility of $3.5 million and we had one lessextra week of expenses.in the prior year period.

LIQUIDITY AND CAPITAL RESOURCES

At December 30, 2017,2023, we had $328.5$2,595.2 million of working capital and our cash and cash equivalents totaled $664.4$1,932.1 million. Our cash and cash equivalents balance increaseddecreased by $123.8$823.6 million during the first three months of fiscal 20182024 primarily due to cash generated through cash flow fromused in investing and financing activities primarily related to repurchases of our core operating activities,common stock and debt repayments, partially offset by net repurchases and repayments of debt, and capital expenditures.cash generated from operating activities.

In the first three months of fiscal 2018,2024, our operating activities provided cash of $169.1$220.0 million, primarily due to net income of $406.7$246.5 million, non-cash charges for depreciation and amortization aggregating $121.2$88.4 million, stock-based compensation expense of $16.4$28.7 million, non-cash charges for unrealized foreign currency exchange losses of $13.6 million and non-cash interest expenselease asset impairment charges of $8.7 million related to our outstanding debt.$12.5 million. These adjustments to net income were partially offset by a decrease in net deferred tax liabilitiesincome taxes of $390.7$17.6 million primarily from the change in tax rate due to the capitalization of research expenditures under the tax reform,rules and to a lesser extent the amortization of intangible assets. Cash provided by operations also included a net cash inflowoutflow of $4.6$157.8 million from changes in our operating assets and liabilities. ChangesThe net cash outflow was primarily driven by an increase in prepaid income taxes of $70.1 million primarily due to the worthless stock deduction and to a lesser extent the timing of tax payments relative to the provision for income taxes, an increase of $38.2 million in accounts receivable due to higher sales in the first quarter of fiscal 2024 compared to the fourth quarter of fiscal 2023 as our operating assetsdays sales outstanding remained consistent, a $35.7 million decrease in accrued expenses primarily due to the payment of our annual bonuses and liabilities were driven primarilycommissions partially offset by an increase in accrued expensesinterest based on the timing of $48.9 million primarily related topayments, and an increase in accrued federal income taxes and interest on debt based on timinginventory of payments, partially offset by lower compensation accruals, principally bonus (paid annually), and a reduction of prepaid income taxes of $8.1 million.$13.0 million to meet expected demand across our primary product lines. These cash flow increasesoutflows were partially offset by an increase of $7.2 million in inventory of $23.3 million as inventory levels were built up to meet anticipated demand and launch newer products, a decrease of deferred revenue of $10.6 millionaccounts payable primarily due to meeting the required revenue recognition criteria on certain transactions and timing of invoicing of support and maintenance contracts, an increase in accounts receivable of $6.4 million due to a slight increase in days sales outstanding, and a decrease in accounts payable of $7.1 million based on timing of payments.

In the first three months of fiscal 2018,2024, our investing activities used cash of $26.2$104.2 million primarily relateddue to $21.8 million for capital expenditures of $38.0 million, which primarily consisted of the placement of equipment under customer usage agreements and purchasespurchase of manufacturing equipment and computer hardware,to a lesser extent building improvements, $34.5 million for the purchase of strategic equity investments and $4.1a $31.3 million net payment to acquire Emsor.sell our SSI ultrasound business.

In the first three months of fiscal 2018,2024, our financing activities used cash of $20.3$943.8 million primarily due to $676.8 million for repurchases of our common stock, including a $500 million accelerated share repurchase program, $259.4 million for debt principal payments of $1.3 billion to pay off the Term Loan outstanding under the Priorour 2021 Credit Agreement, $296.9including a $250.0 million to repurchase our 2042voluntary prepayment, and 2043 Notes including accreted principal on the 2043 Notes and conversion premium on the 2042 Notes, $225.0 million of net repayments on amounts borrowed under our revolving credit facilities, and payments of $14.3$16.2 million for employee-relatedthe payment of employee taxes withheld for the net share settlement of vested restricted stock units. Partially offsetting these uses of cash were proceeds of $1.5 billion from the Amended and Restated Credit Agreement, proceeds of $350 million from issuance of the 2025 Senior Notes and $9.5 million from our equity plans, primarily from the exercise of stock options.plans.



36

Debt

We had total recorded debt outstanding of $3.3$2.56 billion at December 30, 2017,2023, which iswas comprised of amounts outstanding under our Amended and Restated2021 Credit Agreement and Amended Revolver of $1.60$1.22 billion (principal of $1.61$1.23 billion), 2022

2029 Senior Notes of $982.6$939.3 million (principal of $1.0 billion)$950.0 million), 2025and 2028 Senior Notes of $345.0$397.0 million (principal of $350.0$400.0 million) Convertible Notes of $205.4 million (principal of $206.3 million) and amounts outstanding under the accounts receivable securitization program of $200.0 million..
Amended and Restated
2021 Credit Agreement

On October 3, 2017,September 27, 2021, we entered into an Amendedrefinanced our then existing term loan and Restated Credit and Guaranty Agreement (the "Amended and Restated Credit Agreement")revolving credit facility with Bank of America, N.A. in its capacity as Administrative Agent, Swing Line Lender and L/C Issuer, and certain other lenders from time to time party thereto. The Amended and Restated(the “2018 Credit Agreement amends and restates the Company's prior credit and guaranty agreement, originally dated as of May 29, 2015Agreement”) by entering into a Refinancing Amendment (the "Prior“2021 Credit Agreement"Agreement”). The proceeds under the Amended and Restated Credit Agreement of $1.8 billion were used, among other things, to pay off the Term Loan of $1.32 billion and the Revolver then outstanding under the Prior Credit Agreement. Borrowings under the Amended and Restated2021 Credit Agreement are secured by first-priority liens on, and a first-priorityfirst priority security interest in, substantially all of the assets of the Company'sour and our Subsidiary Guarantors’ U.S. subsidiaries, with certain exceptions.

assets. The credit facilities (the “Amended and Restated“2021 Credit Facilities”) under the Amended and Restated2021 Credit Agreement consist of:


•A $1.5 billion secured term loan to the Company ("Amended(“2021 Term Loan"Loan”) with a stated maturity date of October 3, 2022;September 25, 2026; and
•A secured revolving credit facility (the "Amended Revolver"“2021 Revolver”) under which the weBorrowers may borrow up to $1.5$2.0 billion, subject to certain sublimits, with a stated maturity date of October 3, 2022.September 25, 2026.


At the closing, we borrowed $345 million under the Amended Revolver, which was fully repaid during October 2017. As of December 30, 2017, the Company had $120.0 million outstanding2023, there were no borrowings under the Amended2021 Revolver.

On August 22, 2022, we further amended the 2021 Credit Agreement (the “Third Amendment”) related to the planned phase out of LIBOR by the UK Financial Conduct Authority. Under this amendment, the interest rate applicable to the loans under the 2021 Credit Agreement denominated in U.S. dollars were converted to a variant of the secured overnight financing rate (“SOFR”) plus an applicable spread.
Borrowings under the 2021 Credit Agreement, other than Swing Line Loans, bear interest, at our option, at the Base Rate, at the Term SOFR Rate, at the Alternative Currency Daily Rate, or at the Daily SOFR Rate, in each case plus the Applicable Rate.
The Applicable Rate in regard to the Base Rate, the Term SOFR Rate, the Alternative Currency Daily Rate, the Alternative Currency Term Rate and the Daily SOFR Rate is subject to change depending on the Total Net Leverage Ratio (as defined in the 2021 Credit Agreement). As of December 30, 2023, the interest rate under the 2021 Term Loan was 6.46% per annum.

We are also required to pay a quarterly commitment fee calculated on a daily basis equal to the Applicable Rate as of such day multiplied by the undrawn committed amount available under the Revolver. As of December 30, 2023, this commitment fee was 0.15% per annum for the 2021 Revolver.

We are required to make scheduled principal payments under the Amended2021 Term Loan in increasing amounts, rangingwhich currently range from $9.375 million per three-month period to $18.75 million per three-month period commencing with the three-month period ending on December 29, 2017 to $37.5 million per three-month period commencing with the three-month period ending on December 23, 2021.26, 2025. The remaining scheduled balance of $1.085 billion (or such lesser aggregate principal amount of the AmendedTerm Loans then outstanding) on the 2021 Term Loan and any amounts outstanding under the Amended2021 Revolver are due at maturity.their respective maturities. In addition, subject to the terms and conditions set forth in the Amended and Restated2021 Credit Agreement, we aremay be required to make certain mandatory prepayments from the net proceeds of specified types of asset sales (subject to certain reinvestment rights), debt issuances (excluding permitted debt) and insurance recoveries (subject to certain reinvestment rights). TheseCertain mandatory prepayments are requiredsubject to be applied by us, first, to the Amended Term Loan, second, to any outstanding amount under any Swing Line Loans (as defined in the Amended and Restated Credit Agreement), third, to the Amended Revolver, fourth to prepay any outstanding reimbursement obligations with respect to Letters of Credit (as defined in the Amended and Restated Credit Agreement) and fifth, to cash collateralize any Letters of Credit.reduction or elimination if certain financial covenants are met. Subject to certain limitations, we may voluntarily prepay any of the Amended and Restated2021 Credit Facilities without premium or penalty.

Borrowings are secured by first-priority liens on, and a first-priority security interest in, substantially all As of December 30, 2023, the outstanding principal balance of the assets of the Company, with certain exceptions. For example, borrowings under the Prior Credit Agreement are not secured by those accounts receivable that are transferred to the special purpose entity under the Company's Accounts Receivable Securitization program.2021 Term Loan was $1.2 billion.


The Amended and Restated2021 Credit Agreement contains affirmative and negative covenants customarily applicable to senior secured credit facilities, including covenants restricting the ability of the Company, subject to negotiated exceptions, to incur additional indebtedness and grant additional liens on its assets, engage in mergers or acquisitions or dispose of assets, enter into sale-leaseback transactions, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, and change the nature of their businesses. In addition, the Amended and Restated Credit Agreement requires the the Company torequirement that we maintain certain financial ratios. The Amended and Restated Credit Agreement also contains customary representations and warranties and events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross defaults and an event of default upon a change of control of the Company.

The Amended and Restated Credit Agreement contains two financial covenantsratios (a total net leverage ratio and an interest coverage ratio) measured as of the last day of each fiscal quarter and an excess cash flow prepayment requirement measured as offor the end of each fiscal year.previous twelve-month period. As of December 30, 2017,2023, we were in compliance with these covenants.


2025

37

2028 Senior Notes


On October 10, 2017, we completed a private placement of $350 millionThe total aggregate principal amountbalance of 4.375%the 2028 Senior Notes due 2025 (the “2025 Senior Notes”) at an offering price of 100% of the aggregate principal amount of the 2025 Senior Notes.is $400.0 million. The 20252028 Senior Notes are general senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain domestic subsidiaries of Hologic (the “ 2025 Domestic Guarantors”).

The 2025 Senior Notes were issued pursuant to an indenture (the “2025 Indenture”), dated as of October 10, 2017, among the Company, the 2025 Domestic Guarantors and Wells Fargo Bank, National Association, as trustee. The 2025 Senior Notes mature on October 15, 2025 and bear interest at the rate of 4.375% per year, payable semi-annually on April 15 and October 15 of each year, commencing on April 15, 2018.

We may redeem the 2025 Senior Notes at any time prior to October 15, 2020 at a price equal to 100% of the aggregate principal amount so redeemed, plus accrued and unpaid interest, if any, to the redemption date and a make-whole premium set forth in the Indenture. The Company may also redeem up to 35% of the aggregate principal amount of the 2025 Senior Notes with the net cash proceeds of certain equity offerings at any time and from time to time before October 15, 2020, at a redemption price equal to 104.375% of the aggregate principal amount so redeemed, plus accrued and unpaid interest, if any, to the redemption date. We also have the option to redeem the 2025 Senior Notes on or after: October 15, 2020 through October 14, 2021 at 102.188% of par; October 15, 2021 through October 14, 2022 at 101.094% of par; and October 15, 2022 and thereafter at 100% of par. In addition, if the Company undergoes a change of control coupled with a decline in ratings, as provided in the 2025 Indenture, the Company will be required to make an offer to purchase each holder’s 2025 Senior Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date.

On January 19, 2018, the Company completed a private placement of $1.0 billion aggregate principal amount of senior notes, which included $600 million of additional 4.375% Senior Notes due 2025, issued under a supplement to the 2025 Indenture. See “Subsequent Events” below.

2022 Senior Notes

On July 2, 2015, we issued $1.0 billion aggregate principal amount of our 2022 Senior Notes. The 2022 Senior Notes are our general senior unsecured obligations and are guaranteed on a senior unsecured basis by certain of our domestic subsidiaries. The 2022 Senior Notes mature on July 15, 2022 and bear interest at the rate of 5.250% per year, payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2016.

In connection with the offering of the New 2025 Senior Notes and our 4.625% Senior Notes due 2028, we called all of our outstanding 2022 Senior Notes, in the aggregate principal amount of $1.0 billion, for redemption on February 15, 2018 at an aggregate redemption price equal to the principal amount of the outstanding 2022 Senior Notes, plus the applicable premium and accrued and unpaid interest through the day immediately preceding the redemption date.

Convertible Notes

At December 30, 2017, our Convertible Notes, in the aggregate principal amount of $206.3 million, are recorded at $205.4 million. These notes consist of:
$206.0 million of our 2.00% Convertible Senior Notes due 2042 issued in March 2012 ("2042 Notes"); and
$0.3 million of our 2.00% Convertible Senior Notes due 2043 issued in February 2013 ("2043 Notes").

The 2042 Notes have conversion price of $31.175 and is subject in each case to adjustment. Holders of the 2042 Notes may convert their Convertible Notes at the applicable conversion price under certain circumstances, including without limitation (x) if the last reported sale price of our common stock exceeds 130% of the applicable conversion price for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding calendar quarter and (y) if the applicable series of Convertible Notes has been called for redemption. It is our current intent and policy to settle any conversion of the Convertible Notes as if we had elected to make either a net share settlement or all cash election, such that upon conversion, we intend to pay the holders in cash for the principal amount of the Convertible Notes and, if applicable shares of our common stock or cash to satisfy the premium based on a calculated daily conversion value.

Holders may require us to repurchase the 2042 Notes on each of March 1, 2018, 2022, 2027 and 2032, and on March 2, 2037, or upon a fundamental change, as provided in the indenture for the 2012 Notes, at a repurchase price equal to 100% of their accreted principal amount, plus accrued and unpaid interest.

We may redeem any of the 2042 Notes beginning March 6, 2018. We may redeem all or a portion of the 2042 Notes (i.e., in cash or a combination of cash and shares of our common stock) at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest to, but excluding, the applicable redemption date.

We have recorded deferred tax liabilities related to our Convertible Notes original issuance discount, representing the spread between the stated cash coupon rate and the higher interest rate that is deductible for tax purposes based on the type of security. When our Convertible Notes are extinguished, we are required to recapture the original issuance discount previously deducted for tax purposes. The tax recapture, however, decreases as the fair market value of the Convertible Notes and the amount paid on settlement increases.

On January 29, 2018, we announced that, pursuant to the terms of the indenture governing the 2042 Notes, we had elected to redeem, on March 6, 2018, all of the then outstanding 2042 Notes at a redemption price payable in cash equal to 100% of the accreted principal amount of the 2042 Notes, plus accrued and unpaid interest, including contingent interest, if any, to, but not including the redemption date. See “Subsequent Events” below.

Accounts Receivable Securitization Program
On April 25, 2016, we entered into a one-year $200.0 million accounts receivable securitization program (the "Securitization Program") with several of our wholly owned subsidiaries and certain financial institutions. Under the terms of the Securitization Program, we and certain of our wholly-owned subsidiaries sell our customer receivables to a bankruptcy remote special purpose entity, which is wholly-owned by us. The special purpose entity, as borrower, and we, as servicer, have entered into a Credit and Security Agreement with several lenders pursuant to which the special purpose entity may borrow from the lenders up to $200.0 million, with the loans secured by the receivables. The amount that the special purpose entity may borrow at a given point in time is determined based on the amount of qualifying receivables that are present in the special purpose entity at such point in time. On April 21, 2017, we entered into an amendment to extend the Securitization Program an additional year to April 20, 2018. The amendment allows us to continue to borrow up to $200.0 million and due to structural changes to the terms, the borrowing base has fewer limitations. As of December 30, 2017, $200.0 million was outstanding under the Securitization Program. The assets of the special purpose entity secure the amounts borrowed and cannot be used to pay our other debts or liabilities.
The Credit and Security Agreement contains customary representations and warranties and events of default, including payment defaults, breach of representations and warranties, covenant defaults, and an event of default upon a change of control. In addition, it contains financial covenants consistent with that of the Prior Credit Agreement. As of December 30, 2017, we were in compliance with these covenants.
Subsequent Events
2025 Senior Notes and 2028 Senior Notes
On January 19, 2018, we completed a private placement of $1.0 billion aggregate principal amount of senior notes, allocated between (i) an additional $600 million aggregate principal amounts of our 2025 Senior Notes (the "New 2025 Senior Notes") at an offering price of 100% of the aggregate principal amount of the 2025 Senior Notes, plus accrued and unpaid interest from October 10, 2017 and (ii) $400 million aggregate principal amounts of our 4.625% Senior Notes due 2028 (the "2028 Senior Notes") at an offering price of 100% of the aggregate principal amount of the 2028 Senior Notes. The New 2025 Senior Notes have the same terms as the existing 2025 Senior Notes. The 2028 Senior Notes are general senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain domestic subsidiaries of Hologic (the “2028 Domestic Guarantors”). In connection with the offering of the New Notes, we called all of our outstanding 2022 Senior Notes, in aggregate principal amount of $1.0 billion, for redemption on February 15, 2018 at an aggregate redemption price equal to the principal amount of the outstanding 2022 Senior Notes, plus the applicable premium and accrued and unpaid interest through the day immediately preceding the redemption date.

The 2028 Senior Notes were issued pursuant to an indenture (the “2028 Indenture”), dated as of January 19, 2018 among the Company, the 2028 Domestic Guarantors and Wells Fargo Bank, National Association, as trustee. The 2028 Senior Notes mature on February 1, 2028 and bear interest at the rate of 4.625% per year, payable semi-annually on February 1 and August 1 of each year, commencing on August 1, 2018. The 2028 Indenture contains covenants which limit, among other things, the ability of the Company and the Guarantors to create liens and engage in certain sale and leaseback transactions. These covenants are subject to a number exceptions and qualifications.


year. We may redeem the 2028 Senior Notes at any time prior to February 1, 2023 at a price equal to 100% of the aggregate principal amount so redeemed, plus accrued and unpaid interest, if any, to the redemption date and a make-whole premium set forth in the Indenture. The Company may also redeem up to 35% of the aggregate principal amount of the 2028 Senior Notes with the net cash proceeds of certain equity offerings at any time and from time to time before February 1, 2021, at a redemption price equal to 104.625% of the aggregate principal amount so redeemed, plus accrued and unpaid interest, if any, to the redemption date. The Company also hashave the option to redeem the 2028 Senior Notes on or after: February 1, 2023 through February 1, 2024 at 102.312% of par; February 1, 2024 through February 1, 2025 at 101.541% of par; February 1, 2025 through February 1, 2026 at 100.770% of par; and February 1, 2026 and thereafter at 100% of par. In addition, if we undergothere is a change of control coupled with a decline in ratings, as provided in the 2028 Indenture,indenture, we will be required to make an offer to purchase each holder’s 2028 Senior Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date.
2042
2029 Senior Notes

On January 29, 2018, we announced that pursuant to the termsThe total aggregate principal balance of the indenture governing2029 Senior Notes is $950.0 million. The 2029 Senior Notes are general senior unsecured obligations and are guaranteed on a senior unsecured basis by certain domestic subsidiaries. The 2029 Senior Notes mature on February 15, 2029 and bear interest at the 2042 Notes, holdersrate of the 2042 Notes had3.250% per year, payable semi-annually on February 15 and August 15 of each year. We have the option of requiring us to repurchase their 2042redeem the 2029 Senior Notes on March 1, 2018or after: September 28, 2023 through September 27, 2024 at 101.625% of par; September 28, 2024 through September 27, 2025 at 100.813% of par; and September 28, 2025 and thereafter at 100% of par. In addition, if there is a change of control coupled with a decline in ratings, as provided in the indenture, we will be required to make an offer to purchase each holder’s 2029 Senior Notes at a repurchase price payable in cash equal to 100%101% of the accretedtheir principal amount, of the 2042 Notes, plus accrued and unpaid interest, if any, to but not including the putrepurchase date. The accreted principal amount

Stock Repurchase Program

On September 22, 2022, the Board of the 2042 notes will be $206.0 millionDirectors authorized a stock repurchase program, with a five-year term, to repurchase up to $1.0 billion of our outstanding common stock, effective as of the close of trading September 23, 2022. This repurchase date. We also announced on January 29, 2018 that, pursuant toprogram replaced the terms ofprevious $1.0 billion authorization. During the indenture governing the 2042 Notes,three months ended December 30, 2023, we had elected to redeem, on March 6, 2018, all of the then outstanding 2042 Notes at a redemption price payable in cash equal to 100% of the accreted principal amount of the 2042 Notes, plus accrued and unpaid interest, including contingent interest, if any, to, but not including the redemption date. Holders also have a right to convert their 2042 Notes in accordance with the terms of the indenture. If the closing pricerepurchased 2.2 million of our common stock exceeds the conversion pricefor total consideration of the 2042 notes, which is $31.175 per share, holders$150.0 million. As of the 2042 Notes will likely exercise their conversion rights prior to the redemption date as they would receive more value upon conversion compared to redemption. Based on a closing price of our common stock of $42.75 per share (the closing price for our common stock on December 29, 2017), the conversion value for the outstanding 2042 notes would be $1,371 per $1,000 of original principal amount of the notes, or $282.630, 2023, $348.6 million in the aggregate. The conversion value of the notes would increase or decrease to the extent that the trading price of our common stock increases or decreases. We have elected to settle any conversion of the 2042 Notes entirely in cash.remained available under this authorization.
Stock Repurchase Program
On June 21, 2016,November 6, 2023, the Board of Directors authorized the Company to repurchase of up to $500.0$500 million of our outstanding shares pursuant to an accelerated share repurchase (“ASR”) agreement. On November 15, 2023, we executed the Company's outstandingASR agreement with Goldman Sachs & Co. (“Goldman Sachs”) pursuant to which we agreed to repurchase $500 million of our common stock. In connection with the launch of the ASR, on November 17, 2023, we paid Goldman Sachs an aggregate of $500 million and received approximately 5.6 million shares of our common stock, overrepresenting 80% of the next five yearstransaction value based on our closing share price on November 14, 2023. The final number of which $300.0 million remains available for repurchaseshares to be received under this authorization asthe ASR agreement will be determined upon completion of December 30, 2017. There were no repurchasesthe transaction and will be based on the total transaction value and the volume-weighted average share price of our common stock made under this authorization during the term of the transaction. Final settlement of the transaction is expected to be completed in the second quarter ended December 30, 2017.of fiscal 2024.

The timing of the share repurchases will be based upon our continuing analysis of market, financial, and other factors. Repurchases under the authorized share repurchase plan may be made using a variety of methods, which may include, but are not limited to, open market purchases, privately negotiated transactions, accelerated share repurchase agreements, or purchases pursuant to a Rule 10b5-1 planunder the Exchange Act. The authorized share repurchase plan may be suspended, delayed or discontinued at any time.


38

Legal Contingencies

We are currently involved in several legal proceedings and claims. In connection with these legal proceedings and claims, management periodically reviews estimates of potential costs to be incurred by us in connection with the adjudication or settlement, if any, of these proceedings. These estimates are developed, as applicable in consultation with outside counsel, and are based on an analysis of potential litigation outcomes and settlement strategies. In accordance with ASC 450, Contingencies, loss contingencies are accrued if, in the opinion of management, an adverse outcome is probable and such financial outcome can be reasonably estimated. It is possible that future results for any particular quarter or annual period may be materially affected by changes in our assumptions or the effectiveness of our strategies relating to these proceedings. Information with respect to this disclosure may be found in Note 712 to the Consolidated Financial Statements in this Quarterly Report on Form 10-Q, which information is incorporated herein by reference.

Future Liquidity Considerations


We intend to use the net proceeds from the sale of our New 2025 Senior Notes and our 2028 Senior Notes and available cash, which may include borrowings under our Amended Revolver, to redeem our outstanding 2022 Senior Notes on February 15, 2018. Additionally, we intend to use the net proceeds from the sale of our 2025 Senior Notes, our Amended and Restated Credit Agreement and available cash, which may include borrowings under our Amended Revolver, to redeem or repurchase all of our outstanding Convertible Notes in the second quarter of fiscal 2018. We also expect to continue to review and evaluate potential strategic transactions and alliances that we believe will complement our current or future business. Subject to the

“Risk Factors” “Risk Factors,” if any, set forth or incorporated by reference in Part II, Item 1A of this Quarterly Report on Form 10-Q, as well as those described in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2017,2023 or any other of our subsequently filed reports, and the general disclaimers set forth in our Special Note Regarding Forward-Looking Statements“Cautionary Statement” regarding forward-looking statements at the outset of this Quarterly Report,Item 2, we believe that our cash and cash equivalents, cash flows from operations, and the cash available under our Amended2021 Revolver and our Securitization Program will provide us with sufficient funds in order to fund our expected normal operations and debt payments including interest and potential payouts for any Convertible Notes, and the costs of redeeming our outstanding 2022 Senior Notes, including payment of any premium, over the next twelve months. Our longer-term liquidity is contingent upon future operating performance. We may also require additional capital in the future to fund capital expenditures, repayment of debt, and related deferred tax liabilities, as applicable, acquisitions, strategic transactions or other investments. As described above, we have significant indebtedness outstanding under our Amended and Restated2021 Credit Agreement, 2022 Senior Notes, 2025 Senior Notes, 2028 Senior Notes, Convertible Notes and the Securitization Program.2029 Senior Notes. These capital requirements could be substantial. For a description of risks to our operating performance and our indebtedness, see the “Risk Factors” set forth or incorporated by reference in Part II, Item 1A of this Quarterly Report on Form 10-Q, as well as those described in Part I, Item 1A inof our Annual Report on Form 10-K for the fiscal year ended September 30, 2017.2023.


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our financial condition and results of operations are based upon our interim consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to revenue recognition for multiple element arrangements, allowance for doubtful accounts, reserves for excess and obsolete inventories, valuations, purchase price allocations and contingent consideration related to business combinations, expected future cash flows including growth rates, discount rates, terminal values and other assumptions used to evaluate the recoverability of long-lived assets and goodwill, estimated fair values of intangible assets and goodwill, amortization methods and periods, warranty reserves, certain accrued expenses, restructuring and other related charges, stock-based compensation, contingent liabilities, tax reserves and recoverability of our net deferred tax assets and related valuation allowances. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates if past experience or other assumptions do not turn out to be substantially accurate. Any differences may have a material impact on our financial condition and results of operations. For a discussion of how these and other factors may affect our business, see the “Cautionary Statement” aboveregarding forward-looking statements set forth at the outset of this Item 2 and the “Risk Factors” set forth or incorporated by reference in Part II, Item 1A of this Quarterly Report on Form 10-Q as well as those described in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2017.2023 or any other of our subsequently filed reports.

The critical accounting estimates that we believe affect our more significant judgments and estimates used in the preparation of our consolidated financial statements presented in this report are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2017.2023. There have been no material changes to our critical accounting policies or estimates from those set forth in our Annual Report on Form 10-K for the fiscal year ended September 30, 2017.2023.






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Table of Contents
Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

Financial Instruments, Other Financial Instruments, and Derivative Commodity Instruments. Financial instruments consist of cash and cash equivalents, accounts receivable, cost-method equity investments, insuranceforeign currency derivative contracts, and related deferred compensation plan liabilities, interest rate capswap agreements, forward foreign currencyinsurance contracts, accounts payable and debt obligations. Except for our outstanding Convertible Notes, 2022 Senior Notes2028 and 20252029 Senior Notes, the fair value of these financial instruments approximatesapproximate their carrying amount. As of December 30, 2017, we have $206.3 million in principal amount of Convertible Notes outstanding. The fair value of our 20422028 and 2029 Senior Notes and 2043 Notes as of December 30, 2017 was approximately $284.8$386.3 million and $0.3 million, respectively. The fair value of our 2022 Senior Notes and 2025 Senior Notes as of December 30, 2017 was approximately $1.10 billion and $358.6 million, respectively. Amounts outstanding under our Amended and Restated Credit Agreement and Securitization Program of $1.61 billion and $200.0$858.0 million, respectively, as of December 30, 20172023. Amounts outstanding under our 2021 Credit Agreement of $1.2 billion aggregate principal as of December 30, 2023 are subject to variable rates of interest based on current market rates, and as such, we believe the carrying amount of these obligations approximates fair value.

Primary Market Risk Exposures. Our primary market risk exposure is in the areas of interest rate risk and foreign currency exchange rate risk. We incur interest expense on borrowings outstanding under our Convertible Notes, 2022 Senior Notes, 20252028 and 2029 Senior Notes, and Amended2021 Credit Agreement. The 2028 and Restated Credit Agreement, as well as under our accounts receivable securitization program. The Convertible Notes, 2022 Senior Notes, and 20252029 Senior Notes have fixed interest rates. BorrowingsEffective September 25, 2022 (the first day of fiscal 2023), borrowings under our Amended and Restated2021 Credit Agreement currently bear interest at the EurocurrencySOFR Rate (i.e., Libor)plus SOFR Adjustment of 0.10% plus the applicable margin of 1.50%1.00% per annum. Borrowings under our accounts receivable securitization program currently bear interest at Libor plus the applicable margin of 0.7%.


As of December 30, 2017,2023, there was $1.61$1.2 billion of aggregate principal outstanding under the Amended and Restated2021 Credit Agreement, including amounts borrowed under the Amended Revolver, and $200.0 million aggregate principal outstanding under the securitization program.Agreement. Since thesethis debt obligations areobligation is a variable rate instruments,instrument, our interest expense associated with these instrumentsthe instrument is subject to change. A hypothetical 10% adverse movement (increase in LIBORthe SOFR rate) would increase annual interest expense by approximately $2.4 million.$3.9 million, which is net of the impact of our interest rate swap hedge. We previously entered into multiple interest rate capswap agreements to help mitigate the interest rate volatility associated with the variable rate interest on the amounts outstanding.outstanding under our credit facilities. The critical terms of the interest rate capsswaps were designed to mirror the terms of our LIBOR-basedSOFR-based borrowings under the Prior2021 Credit Agreement, and therefore the interest rate caps areswap is highly effective at offsetting the cash flows being hedged. We designated these derivativesderivative instruments as a cash flow hedgeshedge of the variability of the LIBOR-basedTerm SOFR-based interest payments on $1.0 billion$500 million of principal which ends on December 28, 2018.principal.

The return from cash and cash equivalents will vary as short-term interest rates change. A hypothetical 10% increase or decrease in market interest rates however, would not have a material adverse effectincrease annual interest income by approximately $8.7 million based on our business, financial condition or results of operations.current cash balances.

Foreign Currency Exchange Risk. Our international business is subject to risks, including, but not limited to:to unique economic conditions, changes in political climate, differing tax structures, other regulations and restrictions, and foreign exchange rate volatility. Accordingly, our future results could be materially adversely impacted by changes in these or other factors.


We conduct business worldwide and maintain sales and service offices outside the United StatesU.S. as well as manufacturing facilities in Costa Rica and the United Kingdom. Our international sales are denominated in a number of currencies, primarily the Euro, U.S. dollar, UK Pound, Australian dollar, Canadian dollar, Chinese Yuan and Renminbi.Japanese Yen. The majority of our foreign subsidiaries'subsidiaries functional currency is the local currency, although certain foreign subsidiaries functional currency is the U.S. dollar based on the nature of their operations or functions. Our revenues denominated in foreign currencies are positively affected when the U.S. dollar weakens against them and adversely effectedaffected when the U.S. dollar strengthens. Fluctuations in foreign currency rates could affect our sales, cost of goods and operating margins and could result in exchange losses. In addition, currency devaluations can result in a loss if we hold deposits ofin that currency. We have executed forward foreign currency contracts to hedge a portion of results denominated in the Euro, UK Pound, Australian dollar, Japanese Yen, Canadian dollar and Canadian dollar.Chinese Yuan. These contracts do not qualify for hedge accounting. As a result, we may experience volatility in our Consolidated Statements of Income due to (i) the impact of unrealized gains and losses reported in other income, net on the mark-to-market of outstanding contracts and (ii) realized gains and losses recognized in other income, net, whereas the offsetting economic gains and losses are reported in the line item of the underlying cash flow, for example, revenue.

We believe that the operating expenses of our international subsidiaries that are incurred in local currencies will not have a material adverse effect on our business, results of operations or financial condition. Our operating results and certain assets and liabilities that are denominated in foreign currencies are affected by changes in the relative strength of the U.S. dollar against those currencies. Our expenses, denominated in foreign currencies, are positively affected when the U.S. dollar strengthens against themthose currencies and adversely affected when the U.S. dollar weakens. However, we believe that the foreign currency exchange risk is not significant. AWe believe a hypothetical 10% increase or decrease in foreign currencies in whichthat we transact in would not have a material adverse impact on our business, financial condition or results of operations.


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Item 4.    Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of December 30, 2017,2023, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934.Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of December 30, 2017.2023.

An evaluation was also performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of any change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. That evaluation did not identify any change in our internal control over financial reporting that occurred during our latest fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


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Table of Contents
PART II – OTHER INFORMATION
Item 1.    Legal Proceedings.

Information with respect to this Item may be found in Note 712 to the Consolidated Financial Statements in this Quarterly Report on Form 10-Q, which information is incorporated herein by reference.

Additional information on our commitments and contingencies can be found in our Annual Report on Form 10-K for our fiscal year ended September 30, 2017.2023.

Item 1A. Risk Factors.


There are no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for our fiscal year ended September 30, 2017, except as noted below.2023 or any of our subsequently filed reports.
The impact


42
Table of recently enacted U.S. tax laws is not yet clear.Contents

Congress recently enacted legislation commonly known as “ The Tax Cuts and Jobs Act” (the “Act”). The Act made significant changes to U.S. federal income tax laws. Certain provisions of the Act could have an adverse effect on the financial condition of the Company or its affiliates. The interpretations of many provisions of the Act are still unclear. We cannot predict when or to what extent any U.S. federal tax laws, regulations, interpretations, or rulings clarifying the Act will be issued or the impact of any such guidance on the Company. Certain key provisions of the Act that could impact us include, but are not limited to international tax provisions that affect the overall tax rate applicable to income earned from non-U.S. operations, limitations on the deductibility of executive compensation and limitations on a taxpayer’s net interest expense deduction.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Issuer's
Issuer’s Purchases of Equity Securities

Period of Repurchase
Total Number of
Shares Purchased
(#) (1)
 
Average Price
Paid Per Share
($) (1)
 
Total Number of
Shares Purchased As Part of Publicly
Announced Plans or Programs 
(#) (2)
 Average Price Paid Per Share As Part of Publicly Announced Plans or Programs($) (2) 
Maximum
Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under Our
Programs
(in millions) ($) (2)
October 1, 2017 – October 28, 2017610
 $37.01
 —
 $—
 $300.0
October 29, 2017 – November 25, 2017251,463
 39.61
 —
 —
 300.0
November 26, 2017 – December 30, 2017106,078
 40.92
 —
 —
 300.0
Total358,151
 $39.99
 —
 $—
 $300.0
Period of RepurchaseAverage Price
Paid Per Share
($) (1)
Total Number of
Shares Purchased As Part of Publicly
Announced Plans or Programs 
(#) (1)
Maximum
Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under Our
Programs
(in millions)
($) (1) (2)
October 1, 2023 – October 28, 2023$69.44 2,160,798 $348.6 
October 29, 2023 – November 25, 202371.94 5,560,189 348.6 
November 26, 2023 – December 30, 2023— — 348.6 
Total$71.24 7,720,987 $348.6 
 ___________________________________
(1)For the majority of restricted stock units granted, the number of shares issued on the date that the restricted stock units vest is net of the minimum statutory tax withholding requirements that we pay in cash to the appropriate taxing authorities on behalf of our employees. These repurchases of our common stock were to cover employee income tax withholding obligations in connection with the vesting of restricted stock units under our equity incentive plans.
(2)On June 21, 2016, the Board of Directors authorized the repurchase of up to an additional $500.0 million of our outstanding common stock over the next five years. There were no repurchases of common stock made under this authorization during the quarter ended December 30, 2017.



(1)On September 22, 2022, the Board of Directors authorized a stock repurchase program, with a five-year term, to repurchase up to $1.0 billion of the Company’s outstanding common stock, effective as of the close of trading on September 23, 2022. As of December 30, 2023, $348.6 million remained unused under this program. The program does not obligate the Company to acquire a minimum amount of shares. Under the program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. For additional information regarding the Company’s repurchase programs, please see “Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Stock Repurchase Program.”
(2)On November 15, 2023, the Company entered into a share repurchase (“ASR”) agreement with Goldman Sachs. Under the ASR, Hologic agreed to purchase $500 million of Hologic’s common stock. The initial delivery was 5.6 million shares, representing 80% of the transaction value based on the Company’s closing share price on November 14, 2023 of $71.94. The final number of shares to be received under the ASR agreement will be determined upon completion of the transaction and will be based on the total transaction value and the volume-weighted average share price of our common stock during the term of the transaction. Final settlement of the transaction is scheduled to be completed in the second quarter of fiscal 2024.

Item 5. Other Information

Rule 10b5-1 Trading Plans

During the first quarter of fiscal 2024, none of our directors or executive officers adopted Rule 10b5-1 trading plans and none of our directors or executive officers terminated a Rule 10b5-1 trading plan or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).

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Table of Contents

Item 6.    Exhibits.
(a) Exhibits
Incorporated by
Reference
Exhibit
Number		Exhibit DescriptionFormFiling Date/
Period End
Date
Incorporated by
Reference
Exhibit
Number
Exhibit DescriptionForm
Filing Date/
Period End
Date
4.1
Indenture dated October 10, 2017, by and among Hologic, the Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee.
8-K10/10/2017
4.2
Form of 4.375% Senior Note due 2025 (included in Exhibit 4.1).
8-K10/10/2017
4.3
First Supplemental Indenture dated January 19, 2018, by and among Hologic, the Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee
8-K1/19/2018
4.4
Indenture dated January 19, 2018, by and among Hologic, the guarantors party thereto and Wells Fargo Bank, National Association, as Trustee.
8-K1/19/2018
4.5
Form of 4.625% Senior Note due 2028 (included in Exhibit 4.4).
8-K1/19/2018
10.1
Amended and Restated Credit and Guaranty Agreement, originally dated as of May 29, 2015 and amended and restated as of October  3, 2017, among Hologic, Hologic GGO 4 Ltd, Hologic UK Finance LTD and each other Designated Borrower from time to time party thereto, the Guarantors from time to time party thereto, each Lender from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.
8-K10/4/2017
10.2
Form of Performance Stock Unit Award Agreement (ROIC) (adopted fiscal 2018)
.8-K11/9/2017
10.3
Form of Performance Stock Unit Award Agreement (relative TSR) (adopted fiscal 2018)
8-K11/9/2017
10.4
Transition Agreement by and between Eric B. Compton and Hologic, Inc., dated November 30, 2017.
8-K12/1/2017
10.5*†

31.1*
31.1*
Certification of Hologic’s CEO pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
32.1**
32.2**
101.INS*XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*Inline XBRL Taxonomy Extension Schema DocumentDocument.
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase DocumentDocument.
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase DocumentDocument.
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase DocumentDocument.
101.DEF*Inline XBRL Taxonomy Extension DefinitionDefinition.
104*Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
_______________


* Filed herewith.
**    Furnished herewith.
†    Confidential treatment has been requested as to portions






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Table of the exhibit. Confidential materials omitted and filed separately with the Securities and Exchange Commission.Contents


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 thereunto duly authorized.
 
Hologic, Inc.
(Registrant)
Hologic, Inc.
Date:February 2, 2024(Registrant)
Date:February 8, 2018/s/    Stephen P. MacMillan        
Stephen P. MacMillan

Chairman, President and Chief Executive Officer

(Principal Executive Officer)
Date:February 2, 2024/s/    Karleen M. Oberton        
Date:
February 8, 2018/s/    Robert W. McMahon        Karleen M. Oberton
Robert W. McMahon
Chief Financial Officer

(Principal Financial Officer)



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