Hill-Rom Reports Fiscal First Quarter Results; Updates Fiscal 2015 Financial Outlook

CHICAGO, Feb. 3, 2015 /PRNewswire/ -- Hill-Rom Holdings, Inc. (NYSE: HRC) announced financial results for its fiscal first quarter ended December 31, 2014 and updated its fiscal year 2015 financial outlook.  Adjusted earnings per diluted share of $0.49 increased 36 percent from $0.36 in the prior year, while reported earnings per diluted share of $0.21 decreased 5 percent from $0.22.  Adjustments to reported earnings are detailed in the reconciliation schedules provided.

Hill-Rom's quarterly revenue of $465 million increased 18 percent compared to last year, or 21 percent on a constant currency basis, primarily due to the Trumpf Medical acquisition and strong North America capital revenue growth.  Excluding the benefit of Trumpf, our constant currency growth was 5 percent.  Domestic revenue was $284 million, up 14 percent, while revenue outside the United States increased 34 percent on a constant currency basis to $181 million.     

Management Comments

"We are pleased to report solid revenue and adjusted earnings growth for the quarter, while also accelerating investment in the future growth of the business," said John Greisch, Hill-Rom President and Chief Executive Officer.  "Both the North America capital and Surgical/Respiratory Care businesses performed well, while our International business continues to face a challenging environment.  Despite incremental revenue headwinds of $40 to $50 million due to foreign exchange, we are raising our full-year adjusted earnings guidance.  We are committed to driving revenue growth while improving operating margin and maintaining a disciplined approach to capital allocation."

First Quarter Financial and Operational Results

-- Revenue:

-- North America.  North America revenue increased 10 percent to $225 million.  Capital sales increased 19 percent, while rental revenue declined 9 percent, or 1 percent excluding the impact of the previously exited third party reimbursed home care rental business. 

-- International.  International segment revenue declined 9 percent to $114 million (down 3 percent on a constant currency basis) with strength in Asia Pacific offset by lower revenue in Europe.  Capital revenue declined 2 percent while rental revenue declined 6 percent on a constant currency basis.

-- Surgical/Respiratory Care.  Surgical and Respiratory Care revenue doubled to $126 million reflecting 6 percent organic growth plus the addition of Trumpf Medical revenue. 

-- First quarter operating cash flow was $31 million compared to $42 million in the prior year.

-- Share repurchases for the quarter amounted to approximately $57 million.

-- Hill-Rom recently acquired access to two new technologies in our clinical focus areas of respiratory care and surgical safety and efficiency:

-- We acquired an early-stage portable therapeutic device that provides chest physiotherapy (CPT). This device allows patient mobility during therapy and is an ideal complement to our Respiratory Care portfolio.

-- The Company obtained the exclusive distribution rights to the Thermedx FluidSmart™ System, a fluid management system used in minimally invasive gynecology, urology and arthroscopy surgical procedures.   

Please see the attached schedules for additional information, including condensed financial information, a summary balance sheet, a cash flow statement and reconciliations of GAAP to adjusted financial measures. 

For a more complete review of Hill-Rom's results, please refer to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2014.

Financial Guidance Summary

Revenue:  For fiscal 2015, Hill-Rom expects reported revenue growth of 11 to 12 percent compared to 11 to 13 percent previously.  This reflects:

• low single-digit constant currency organic growth; and
• negative currency impact of approximately 4 percent compared to 1 to 2 percent previously.

For the second quarter of fiscal 2015, Hill-Rom expects reported revenue growth of 13 to 15 percent.  This reflects:

• low to mid-single-digit constant currency organic growth; and
• negative currency impact of approximately 4 percent.

Adjusted Earnings per Diluted Share:  The Company's guidance for full year adjusted earnings per diluted share is $2.44 to $2.50 compared to $2.42 to $2.48 previously.  

Second quarter adjusted earnings per diluted share are expected to be $0.57 to $0.60. 

Cash Flow:  Hill-Rom expects cash flow from operations for the full year to be approximately $250 million, unchanged from prior guidance.

Discussion of Adjusted Financial Measures

Hill-Rom Holdings, Inc. routinely provides earnings per share results and guidance on an adjusted basis because the Company's management believes that the presentation provides useful information to investors.  This measure excludes strategic developments, special charges or other unusual events.  Such items may be highly variable, difficult to predict and of a size that sometimes have substantial impact on the Company's reported operations for a period. Often, prospective quantification of such items is not feasible. 

The Company also excludes expenses associated with the amortization of intangible assets associated with prior business acquisitions.  This adjustment is made to allow investors to evaluate and understand operating trends excluding the non-cash impact of acquired intangible amortization on operating income, earnings per share and other measures.    

Management uses these measures internally for planning, forecasting and evaluating the performance of the business. Investors should consider non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.

Reconciliations of GAAP measures to adjusted measures appear in the financial tables of this release.

Conference Call Webcast and Dial-in Information

As previously announced, the Company will host a conference call and webcast today at 8:00 a.m. ET.

Webcast: To join the live webcast with audio, go to http://ir.hill-rom.com/events.cfm or http://edge.media-server.com/m/p/gugxp3zm. The webcast slide deck will be posted to the Hill-Rom website prior to the webcast.

Conference Call Audio Only Dial-in information: To join the live conference call, dial 877-304-8969 domestic callers / 631-291-4543 international callers.  The following Confirmation Code is required for both: 57960500. Callers will need to provide their name, company affiliation and telephone number to the conference operator.  A recording of the webcast/call audio will be available for telephone replay through February 10, 2015, domestically at 855-859-2056 and internationally at 404-537-3406. For the replay, callers will need to use confirmation code 57960500. If you are unable to listen to the live webcast or the telephone replay, the webcast will be archived at http://ir.hill-rom.com/events.cfm.

About Hill-Rom Holdings, Inc.

Hill-Rom is a leading global medical technology company with more than 7,000 employees worldwide.  We partner with health care providers in more than 100 countries by focusing on patient care solutions that improve clinical and economic outcomes in five core areas: Advancing Mobility, Wound Care and Prevention, Clinical Workflow, Surgical Safety and Efficiency, and Respiratory Health. Around the world, Hill-Rom's people, products, and programs work towards one mission: Enhancing outcomes for patients and their caregivers.

www.hill-rom.com

Disclosure Regarding Forward Looking Statements

Certain statements herein contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the Company's future plans, objectives, beliefs, expectations, representations and projections. It is important to note that forward-looking statements are not guarantees of future performance, and the Company's actual results could differ materially from those set forth in any forward-looking statements. For a more in depth discussion of factors that could cause actual results to differ from those contained in forward-looking statements, see the discussions under the heading "Risk Factors" in the Company's previously filed most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. The Company assumes no obligation to update or revise any forward-looking statements.

Non-GAAP Financial Disclosures and Reconciliations

While Hill-Rom reports financial results in accordance with U.S. GAAP, this press release includes non-GAAP measures. Hill-Rom uses non-GAAP measures to evaluate and manage its operations and provides the information to assist investors in performing financial analysis that is consistent with financial models developed by research analysts. Investors should consider non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.

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SOURCE Hill-Rom Holdings, Inc.

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