Hillrom's Fiscal Second Quarter Financial Results Exceed Guidance

CHICAGO, May 1, 2020 /PRNewswire/ -- Hillrom (NYSE: HRC) today announced financial results for its fiscal second quarter ended March 31, 2020, and provided a business and financial update regarding the impact of the evolving COVID-19 pandemic.

For the fiscal second quarter, Hillrom reported earnings of $0.70 per diluted share compared to $0.74 per diluted share in the prior-year period. On an adjusted basis, excluding special items, earnings of $1.28 per diluted share rose 12 percent from $1.14 per diluted share in the prior-year period, and exceeded the company's guidance range of $1.14 to $1.16 per diluted share. Adjustments to reported earnings are detailed in the reconciliation schedules provided.

"During this unprecedented and challenging period, Hillrom's mission of enhancing outcomes for patients and caregivers has never been more vital. I am extremely proud of the entire Hillrom organization, their dedication, and extraordinary contributions team members are making to support our customers as we fight this pandemic. We rapidly expanded production of critical care products, pivoted R&D efforts, and are now introducing a spectrum of new products to meet unique COVID-19 treatment challenges," said John Groetelaars, Hillrom president and CEO. "We remain confident in our ability to navigate this uncertain business and healthcare environment. The combination of our financial strength, diverse portfolio of innovative products, services and solutions, and exceptional execution, underscores our unwavering commitment to enhancing value for stakeholders."

Fiscal Second Quarter 2020 Financial Results

In the fiscal second quarter, worldwide reported revenue of $723 million increased 1 percent on a reported basis and increased 2 percent on a constant currency basis, reflecting the impact of the 2019 divestiture of the surgical consumables business. Hillrom's core revenue advanced 6 percent, above the company's guidance of approximately 4 percent core growth, and included the contribution from recent acquisitions of approximately 200 basis points and estimated revenue of approximately $15 million related to COVID-19. Core revenue excludes foreign currency, divestitures, and non-strategic assets the company may exit, including the Surgical Solutions international OEM business.

By reporting segment

    --  Patient Support Systems revenue of $382 million increased 6 percent on a
        reported basis and 7 percent on a constant currency basis. Core revenue
        increased 8 percent, primarily driven by double-digit growth of med-surg
        and specialty bed systems, including the Centrella® Smart+ Bed and
        Progressa® bed system for the ICU, and the company's care
        communications Voalte mobile platform.
    --  Front Line Care generated revenue of $258 million, an increase of 6
        percent on a reported basis and 7 percent increase on a constant
        currency basis. Strong performance reflects broad-based global strength
        across Welch Allyn® vital signs monitoring equipment and respiratory
        health products, including thermometry, blood pressure monitoring, and
        the Life2000® non-invasive ventilator.
    --  Surgical Solutions revenue of $83 million declined 26 percent on a
        reported basis, and 25 percent on a constant currency basis, reflecting
        the surgical consumables divestiture. Core revenue declined 3 percent,
        as strong growth in the U.S. was offset by timing of large capital
        projects in select markets.

Supporting the Global Response to COVID-19

Hillrom is committed to mobilizing its resources and supporting customers, caregivers and patients with decisive actions in the global response to COVID-19, including the following initiatives:

    --  Pivoting R&D efforts to introduce several innovative solutions in
        response to the surge in COVID-19 treatment challenges. Accomplishments
        include:
        --  Receiving U.S. Food and Drug Administration Emergency Use
            Authorization for a new closed-circuit design using a
            bacterial-viral filter for oscillation and lung expansion therapy
            with the MetaNeb® System to reduce cross contamination from escaped
            aerosolized particles.
        --  Adding a new feature to the Connex® Vital Signs Monitor to
            digitally capture a patient's respiratory rate; and including a
            remote monitoring platform to simplify connectivity to the recently
            launched Welch Allyn® Spot® 4400 Vital Signs Monitor, allowing
            clinicians to remotely receive a complete set of vitals, including
            SPO2, temperature and blood pressure.
        --  Launching a remote mobile software solution, Voalte Extend(TM), to
            respond to customers' emergent needs to connect patients and
            caregivers from a mobile device in makeshift care areas while
            limiting unnecessary exposure.
        --  Partnering with AgileMD, a developer of EHR-integrated web and
            mobile applications for point-of-care use, to offer a digital
            COVID-19 solution, including clinical pathways and predictive
            analytics through an EHR-integrated software platform.
        --  Adapting Hillrom patient positioning equipment for use in the ICU
            and med-surg environments to offer clinically proven prone movement
            and positioning capabilities for both ventilated and non-ventilated
            patients. Prone positioning is emerging as an important strategy in
            the treatment and survival rates of COVID-19 patients.
    --  Ramping up production with the goal of increasing capacity of the
        Life2000 non-invasive ventilator five-fold on an annualized basis, and
        more than doubling production of other critical care products, including
        ICU and med-surg hospital beds, patient monitoring devices, and physical
        assessment tools and consumables to meet increased demand. With these
        efforts, Hillrom is adding more than 300 permanent and temporary
        positions to its global workforce.
    --  Working collaboratively with the U.S. Department of Health and Human
        Services and Federal Emergency Management Agency to supply at least
        3,400 Life2000 non-invasive ventilators.
    --  Executing business continuity plans and working with global supply chain
        partners to successfully meet customer demand, while minimizing the
        potential for manufacturing or supply chain disruption.
    --  Implementing a comprehensive global action plan, including proactive
        measures to protect employees' health and safety while providing
        front-line support to healthcare providers and ensuring products are
        available when and where customers and patients need them.
    --  Supporting global COVID-19 relief efforts by contributing approximately
        $6 million through both monetary and critical medical product donations.

Recent Highlights

During the quarter the company also achieved several key milestones aimed at advancing Hillrom's innovation, transforming the portfolio and delivering sustainable value to shareholders. Highlights include:

    --  Achieving more than $260 million in new product revenue through the
        first six months of fiscal 2020. Contributing to this performance were
        several innovative products including the company's portfolio of smart
        beds, vital sign monitoring devices, respiratory and vision products, as
        well as Integrated Table Motion for the da Vinci Xi® Surgical System.
    --  Launching the Welch Allyn Spot Vital Signs 4400 device, a
        next-generation vital signs device for ambulatory and emergency
        department settings in the U.S. and Canada. With its critical
        blood-pressure averaging feature, the new multi-parameter device quickly
        and accurately detects hypertension while digitally capturing other key
        vitals - temperature, pulse rate and pulse oximetry - in less than one
        minute. Vitals information can easily be sent to the patient's
        electronic medical record.
    --  Completing the acquisition of Excel Medical, which brings to Hillrom a
        medical device integration platform, real-time waveforms and a suite of
        alarm management tools to put actionable data into the hands of
        caregivers to improve patient outcomes. This acquisition further expands
        the company's digital platform to improve clinical workflow, provides
        greater access and assimilation of real-time patient data and predictive
        analytics, and offers vendor-neutral interoperability.
    --  Being honored for Hillrom's commitment to corporate and social
        responsibility and workplace excellence by being named a "Winning"
        company by 2020 Women on Boards, the highest recognition possible for
        director diversity.
    --  Delivering significant value to shareholders through increased dividends
        and share repurchases. Hillrom raised its dividend for the tenth
        consecutive year and returned $99 million to shareholders through
        dividends and share repurchases during the first six months of fiscal
        2020. The company's strong financial position is supported by a healthy
        balance sheet, including $291 million in cash and cash equivalents, and
        revolving credit facilities totaling $1.2 billion that can used to
        address additional capital needs as necessary.

2020 Financial Outlook

Hillrom has seen an increase in demand across many areas of the portfolio, which has continued into the fiscal third quarter; however, it is now also experiencing project delays, primarily in its Surgical Solutions and Care Communications businesses, and impacts to other products as a result of fewer physician office visits. As a result, and given the ongoing uncertainty, scope and evolving nature of the pandemic, Hillrom is not in a position to reasonably estimate the net effect of these dynamics on its full-year operations and financial results at this time. Hillrom will continue to actively monitor and assess business operations and will provide additional information as appropriate. Hillrom remains confident in the long-term underlying strength of its business portfolio, its strategic direction and future growth prospects.

Discussion of Adjusted Financial Measures

In addition to the results reported in accordance with accounting principles generally accepted in the United States (GAAP), Hillrom routinely provides gross margin, operating margin, income tax expense, and earnings per diluted share results on an adjusted basis because the company's management believes these measures contribute to an understanding of our financial performance, provide additional analytical tools to understand our results from core operations and reveal underlying operating trends. These measures exclude strategic developments, acquisition and integration costs and related fair value adjustments, gains and losses associated with disposals of businesses or significant product lines, regulatory costs related to updating existing product registrations to comply with the European Medical Device Regulations, special charges, the transitional impacts of U.S. tax reform legislation, changes in tax accounting methods, other tax law changes and expenses associated with these tax items, the impacts of significant litigation matters, and other unusual events. The company also excludes expenses associated with the amortization of purchased intangible assets. These adjustments are made to allow investors to evaluate and understand operating trends excluding their impact on operating income and earnings per diluted share.

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

The company also routinely provides earnings per diluted share guidance on an adjusted basis. This excludes the impact of intangible asset amortization associated with prior business acquisitions, which we expect to be $1.28-$1.34 per diluted share for the fiscal year 2020. Management also does not include adjusted items such as strategic developments, acquisition and integration costs, special charges, and other special items or unusual items in our guidance because such items are evaluated on an ongoing basis, can be highly variable and cannot be reasonably predicted. As such, prospective quantification of these items is not feasible, and a full reconciliation of non-GAAP earnings per diluted share guidance to GAAP earnings per diluted share has not been provided. However, as a result of acquisitions, our ongoing portfolio and business optimization initiatives, and any change to the transitional impacts from U.S. tax reform legislation, we do expect adjusted items we have not predicted to potentially be significant to our GAAP measures including gross margin, operating margin, income tax expense and earnings per diluted share.

The company also presents certain results on a constant currency basis, which compares results between periods as if foreign currency exchange rates had remained consistent period-over-period. Management monitors sales performance on an adjusted basis that eliminates the positive or negative effects that result from translating international sales into U.S. dollars. Management calculates constant currency by applying the foreign currency exchange rate for the prior period to the local currency results for the current period. Management believes that evaluating growth in net revenue on a constant currency basis provides an additional and meaningful assessment to both management and investors.

Conference Call Webcast and Dial-in Information

The company will host a conference call and webcast today beginning at 7:30 a.m. (CT) / 8:30 a.m. (ET).

Conference Call Audio Only Dial-in Information: To participate in the conference call, dial (844) 654-5620 (domestic) or (647) 253-8654 (international). Please dial into the call at least 10 minutes prior to the start to allow time to connect. The confirmation code is 4311864.

Webcast: A simultaneous webcast of the call will be accessible via the company's website at www.hillrom.com. A supplementary presentation will be posted to the Hillrom website prior to the webcast.

A recording of the webcast/call audio will be available for telephone replay through May 14, 2020. To access the replay, dial (800) 585-8367 (domestic) or (416) 621-4642 (international). For the replay, callers will need to use confirmation code 4311864. If you are unable to listen to the live webcast or the telephone replay, the webcast will be archived at www.hillrom.com.

About Hillrom

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

Disclosure Regarding Forward-Looking Statements

Certain statements herein contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, regarding the company's future plans, proposed divestitures, product launches, 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. The company's actual results also could be materially adversely impacted by the length and severity of the COVID-19 pandemic, and related impacts on the company's business, results of operations, financial condition and prospects. For a more in-depth discussion of factors that could cause actual results to differ from those contained in forward-looking statements, see the discussions under the heading "Risk Factors" in the company's previously filed most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. The company assumes no obligation to update or revise any forward-looking statements, unless required by law.


                                                                                         
        
        Hill-Rom Holdings, Inc. and Subsidiaries


                                                                                        
        
        Condensed Consolidated Statements of Income


                                                                                      
        
        (In millions, except per share data, unaudited)




                                                                                                                   Three Months Ended March 31                     Six Months Ended March 31


                                                                                                     2020                                      2019         2020                          2019



            
              Net Revenue



            Product sales and service                                                                      $
            
              647.0                           $
            636.5               $
        
        1,261.3  $
        1,248.1



            Rental revenue                                                                          76.2                                              77.7                             146.9                149.6



            Total net revenue                                                                      723.2                                             714.2                           1,408.2              1,397.7





            
              Cost of Net Revenue



            Cost of goods sold                                                                     317.2                                             322.7                             623.5                639.0



            Rental expenses                                                                         38.5                                              38.9                              75.5                 76.1



            Total cost of net revenue (excludes acquisition-related intangible asset               355.7                                             361.6                             699.0                715.1
    amortization)





            Research and development expenses                                                       34.4                                              36.6                              65.9                 69.8



            Selling and administrative expenses                                                    209.9                                             203.9                             406.7                396.2



            Acquisition-related intangible asset amortization                                       27.1                                              27.3                              53.8                 53.0



            Special charges                                                                          8.8                                               3.5                              16.6                 11.5



            
              Operating Profit                                                             87.3                                              81.3                             166.2                152.1





            Interest expense                                                                      (19.1)                                           (21.8)                           (38.5)              (43.1)



            Loss on extinguishment of debt                                                                                                                                          (15.6)



            Investment income (expense) and other, net                                            (11.4)                                              1.2                            (12.7)                 1.3





            
              Income Before Income Taxes                                                   56.8                                              60.7                              99.4                110.3





            Income tax expense                                                                       9.9                                              11.2                              12.7                 18.6





            
              Net Income                                                                           $
            
              46.9                            $
            49.5                  $
       
         86.7     $
        91.7





            
              Net Income per Basic Common Share                                                    $
            
              0.70                            $
            0.74                  $
       
         1.30     $
        1.37





            
              Net Income per Diluted Common Share                                                  $
            
              0.70                            $
            0.74                  $
       
         1.29     $
        1.36





            
              Average Basic Common Shares Outstanding (in thousands)                     66,685                                            66.696                            66,731               66.866





            
              Average Diluted Common Shares Outstanding (in thousands)                   67,218                                            67,344                            67,309               67,525


                                                                                            
              
           Hill-Rom Holdings, Inc. and Subsidiaries


                                                                                                   
         
                Revenue Constant Currency


                                                                                                    
         
                (In millions, unaudited)




                                                                                                                                                                       U.S.          
              
         OUS


                                                           Three Months Ended                 Change As                               Constant               Change As                      Change As               Constant
                                                    March 31                             Reported                               Currency                Reported                       Reported                Currency


                                          2020                                2019





     Net Revenue:



     Product sales and service                  $
         
                647.0                                  $
              636.5                                             1.6                              2.6                         3.4            (1.9)
                                                                                                                                                                          %                               %                          %                                   %
                                                                                                                                                                                                                                                     %                 1.1



     Rental revenue                      76.2                                      77.7                                                       (1.9)                           (1.7)                                         (1.6)          (4.9)            (2.9)

                                                                                                                                                 %                               %                                             %              %                %



     Total net revenue                          $
         
                723.2                                  $
              714.2                                             1.3                              2.2                         2.7            (2.0)
                                                                                                                                                                          %                               %                          %                                   %
                                                                                                                                                                                                                                                     %                 0.9





     Net Revenue:



     Patient Support Systems                    $
         
                382.1                                  $
              359.6                                             6.3                              7.2                         8.3              0.4                  4.1
                                                                                                                                                                          %                               %                          %               %                   %



     Front Line Care                    258.2                                     243.1                                                         6.2                              7.0                                            5.3             8.4              10.8
                                                                                                                                                 %                               %                                             %              %                %



     Surgical Solutions                  82.9                                     111.5                                                      (25.7)                          (24.6)                                        (31.6)         (19.7)           (17.4)
                                                                                                                                                 %                               %                                             %              %                %



     Total net revenue                          $
         
                723.2                                  $
              714.2                                             1.3                              2.2                         2.7            (2.0)
                                                                                                                                                                          %                               %                          %                                   %
                                                                                                                                                                                                                                                     %                 0.9





     OUS - Outside of the United States






                                                                                                                                                                       U.S.          
              
         OUS


                                                            Six Months Ended                  Change As                               Constant               Change As                      Change As               Constant
                                                    March 31                             Reported                               Currency                Reported                       Reported                Currency


                                          2020                                2019





     Net Revenue:



     Product sales and service                $
         
                1,261.3                                $
              1,248.1                                             1.1                              1.8                         3.4            (3.7)               (1.4)
                                                                                                                                                                          %                               %                          %
                                                                                                                                                                                                                                                     %                   %



     Rental revenue                     146.9                                     149.6                                                       (1.8)                           (1.5)                                         (1.3)          (5.5)            (3.5)

                                                                                                                                                 %                               %                                             %              %                %



     Total net revenue                        $
         
                1,408.2                                $
              1,397.7                                             0.8                              1.4                         2.8            (3.7)               (1.5)
                                                                                                                                                                          %                               %                          %
                                                                                                                                                                                                                                                     %                   %





     Net Revenue:



     Patient Support Systems                    $
         
                726.3                                  $
              700.6                                             3.7                              4.4                         7.9            (8.0)               (5.3)
                                                                                                                                                                          %                               %                          %
                                                                                                                                                                                                                                                     %                   %



     Front Line Care                    512.8                                     476.5                                                         7.6                              8.1                                            6.1            11.2              12.9
                                                                                                                                                 %                               %                                             %              %                %



     Surgical Solutions                 169.1                                     220.6                                                      (23.3)                          (22.3)                                        (31.4)         (15.4)           (13.3)
                                                                                                                                                 %                               %                                             %              %                %



     Total net revenue                        $
         
                1,408.2                                $
              1,397.7                                             0.8                              1.4                         2.8            (3.7)               (1.5)
                                                                                                                                                                          %                               %                          %
                                                                                                                                                                                                                                                     %                   %





     OUS - Outside of the United States


                                                                                                                                                          
         
           Hill-Rom Holdings, Inc. and Subsidiaries


                                                                                                                                                            
         
            Reconciliation: Earnings Per Share


                                                                                                                                                        
         
         (In millions, except per share data, unaudited)




                                                                                        
      
            Three Months Ended March 31, 2020                                                                                                 
              Three Months Ended March 31, 2019


                                                                            Operating                Income                                  Income Tax                     Diluted EPS                                Operating                             Income                       Income Tax         Diluted EPS
                                                                        Margin                  Before                                   Expense                                                                   Margin                               Before                        Expense
                                                                                              Income                                                                                                                                                  Income
                                                                                              Taxes                                                                                                                                                   Taxes


                                                                                12.1

                                                                                                                                                                                                                                                                                                                         %


              
                GAAP Basis                                              %                                           $
         
               56.8                                                  $
              
                9.9                                              $
        
               0.70                11.4         $
          60.7              $
     11.2 $
     0.74



              Adjustments:



              Acquisition and integration costs and related fair value           0.4

                                                                                                                                                                                                                                                                                                      %
                                                                                    %                                2.7                                                             0.7                                                     0.03                                                      0.2                 1.6   0.3                 0.02
    adjustments



              Acquisition-related intangible asset amortization                  3.7

                                                                                                                                                                                                                                                                                                      %
                                                                                    %                               27.1                                                             6.6                                                     0.31                                                      3.8                27.3   6.4                 0.30



              Field corrective actions                                           0.2


                                                                                    %                                1.4                                                             0.4                                                     0.01                                                               %



              Regulatory compliance costs                                        0.7

                                                                                                                                                                                                                                                                                                      %
                                                                                    %                                4.8                                                             1.2                                                     0.05                                                      0.5                 3.3   0.9                 0.04



              Special charges                                                    1.2

                                                                                                                                                                                                                                                                                                      %
                                                                                    %                                8.8                                                             2.3                                                     0.10                                                      0.5                 3.5   0.9                 0.04



              Pension settlement expense                                           - %                              8.5                                                             2.0                                                     0.09                                                             %



              Litigation settlement                                                - %                            (1.2)                                                          (0.3)                                                  (0.01)                                                            %


                                                                                18.3

                                                                                                                                                                                                                                                                                                                         %


              
                Adjusted Basis                                          %                                          $
         
               108.9                                                 $
              
                22.8                                              $
        
               1.28                16.4         $
          96.4              $
     19.7 $
     1.14








                                                                                         
      
            Six Months Ended March 31, 2020                                                                                                   
              Six Months Ended March 31, 2019


                                                                            Operating                Income                                  Income Tax                     Diluted EPS                                Operating                             Income                       Income Tax         Diluted EPS
                                                                        Margin                  Before                                   Expense                                                                   Margin                               Before                        Expense
                                                                                              Income                                                                                                                                                  Income
                                                                                              Taxes                                                                                                                                                   Taxes


                                                                                11.8

                                                                                                                                                                                                                                                                                                                         %


              
                GAAP Basis                                              %                                           $
         
               99.4                                                 $
              
                12.7                                              $
        
               1.29                10.9        $
          110.3              $
     18.6 $
     1.36



              Adjustments:



              Acquisition and integration costs and related fair value         (0.3)

                                                                                                                                                                                                                                                                                                      %
                                                                                    %                              (3.8)                                                            1.0                                                   (0.07)                                                     0.1                 1.8   0.4                 0.02
    adjustments



              Acquisition-related intangible asset amortization                  3.8

                                                                                                                                                                                                                                                                                                      %
                                                                                    %                               53.8                                                            13.0                                                     0.61                                                      3.8                53.0  12.3                 0.60



              Field corrective actions                                           0.1


                                                                                    %                                1.4                                                             0.4                                                     0.01                                                               %



              Regulatory compliance costs                                        0.6

                                                                                                                                                                                                                                                                                                      %
                                                                                    %                                8.7                                                             1.8                                                     0.10                                                      0.5                 6.1   1.6                 0.07



              Special charges                                                    1.2

                                                                                                                                                                                                                                                                                                      %
                                                                                    %                               16.6                                                             3.5                                                     0.19                                                      0.8                11.5   2.8                 0.13



              Tax law and method changes                                           - %                                                                                                                                                                                                                    %                             1.0             (0.02)



              Debt refinancing costs                                               - %                             16.1                                                             3.7                                                     0.18                                                             %



              Loss on disposition of business                                      - %                              0.4                                                             0.1                                                     0.01                                                             %



              Pension settlement expense                                           - %                              8.5                                                             2.0                                                     0.10                                                             %



              Litigation settlement                                                - %                            (1.2)                                                          (0.3)                                                  (0.01)                                                            %


                                                                                17.2

                                                                                                                                                                                                                                                                                                                         %


              
                Adjusted Basis                                          %                                          $
         
               199.9                                                 $
              
                37.9                                              $
        
               2.41                16.1        $
          182.7              $
     36.7 $
     2.16


                                                                                                                              
         
         Hill-Rom Holdings, Inc. and Subsidiaries


                                                                                                                                
         
         Condensed Consolidated Balance Sheets


                                                                                                                                  
         
             (In millions, unaudited)




                                                                                                                                                                                   March 31,                  September 30,
                                                                                                                                                                                        2020                            2019



              
                ASSETS



              Current Assets



              Cash and cash equivalents                                                                                                                                                       $
       
       290.5                           $
       214.1



              Restricted cash                                                                                                                                                                                                 419.7



              Trade accounts receivable, net of allowances of $20.8 and $20.6 as of March 31, 2020 and September 30, 2019                                                             655.4                                    653.3



              Inventories, net of reserves                                                                                                                                            265.5                                    269.6



              Other current assets                                                                                                                                                    130.3                                    106.7



              Total current assets                                                                                                                                                  1,341.7                                  1,663.4



              Property, plant and equipment                                                                                                                                           841.2                                    829.6



              Less accumulated depreciation                                                                                                                                         (546.8)                                 (532.8)



              Property, plant and equipment, net                                                                                                                                      294.4                                    296.8



              Goodwill                                                                                                                                                              1,805.7                                  1,800.9



              Other intangible assets and software, net                                                                                                                             1,006.5                                  1,033.5



              Deferred income taxes                                                                                                                                                    32.6                                     33.1



              Other assets                                                                                                                                                            166.2                                     91.3



              
                Total Assets                                                                                                                                                     $
       
       4,647.1                         $
       4,919.0



              
                LIABILITIES



              Current Liabilities



              Trade accounts payable                                                                                                                                                          $
       
       224.7                           $
       197.6



              Short-term borrowings                                                                                                                                                   245.6                                    660.4



              Accrued compensation                                                                                                                                                     98.5                                    130.4



              Accrued product warranties                                                                                                                                               29.0                                     29.7



              Accrued rebates                                                                                                                                                          47.5                                     47.7



              Deferred revenue                                                                                                                                                        105.7                                    107.3



              Other current liabilities                                                                                                                                               134.4                                     95.2



              Total current liabilities                                                                                                                                               885.4                                  1,268.3





              Long-term debt                                                                                                                                                        1,864.4                                  1,783.1



              Accrued pension and postretirement benefits                                                                                                                             100.8                                     80.8



              Deferred income taxes                                                                                                                                                   123.7                                    143.0



              Other long-term liabilities                                                                                                                                             123.9                                     70.5



              
                Total Liabilities                                                                                                                                        3,098.2                                  3,345.7



              Commitments and Contingencies



              
                SHAREHOLDERS' EQUITY



              Capital Stock:



              Preferred stock - without par value: Authorized - 1,000,000; none issued or outstanding



              Common stock - without par value: Authorized - 199,000,000                                                                                                                4.4                                      4.4



              Issued: 88,457,634 shares as of March 31, 2020 and September 30, 2019; Outstanding: 66,527,730 as of March 31,
    2020 and 66,625,011 as of September 30, 2019



              Additional paid-in capital                                                                                                                                              644.4                                    637.4



              Retained earnings                                                                                                                                                     2,025.2                                  1,967.4



              Accumulated other comprehensive loss                                                                                                                                  (223.6)                                 (182.5)



              Treasury stock, common shares at cost: 21,929,904 as of March 31, 2020 and 21,832,623 as of September 30, 2019                                                        (901.5)                                 (853.4)



              
                Total Shareholders' Equity                                                                                                                               1,548.9                                  1,573.3



              
                Total Liabilities and Shareholders' Equity                                                                                                                       $
       
       4,647.1                         $
       4,919.0


                                                                                                                
       
          Hill-Rom Holdings, Inc. and Subsidiaries


                                                                                                              
       
         Condensed Consolidated Statements of Cash Flows


                                                                                                                  
       
                (In millions, unaudited)




                                                                                                                                                                                    Six Months Ended March 31


                                                                                                                                                                           2020                               2019



              
                Operating Activities



              Net income                                                                                                                                                        $
      
                86.7                       $
      91.7



              Adjustments to reconcile net income to net cash, cash equivalents and restricted cash provided
    by operating activities:



              Depreciation and amortization of property, plant, equipment and software                                                                                    34.1                                        36.4



              Acquisition-related intangible asset amortization                                                                                                           53.8                                        53.0



              Amortization of debt discounts and issuance costs                                                                                                            2.1                                         3.2



              Loss on extinguishment of debt                                                                                                                              15.6



              Benefit for deferred income taxes                                                                                                                          (8.4)                                      (8.2)



              Loss (Gain) on disposal of property, equipment, intangible assets, and impairments                                                                           1.2                                       (0.2)



              Stock compensation                                                                                                                                          19.0                                        16.9



              Other operating activities                                                                                                                                  12.4                                       (4.1)



              Change in working capital excluding cash, current debt, acquisitions and dispositions:



              Trade accounts receivable                                                                                                                                   12.2                                        24.0



              Inventories                                                                                                                                                (1.7)                                      (1.5)



              Other current assets                                                                                                                                      (23.6)                                        3.7



              Trade accounts payable                                                                                                                                       6.3                                       (6.6)



              Accrued expenses and other liabilities                                                                                                                    (55.2)                                     (54.3)



              Other assets and liabilities                                                                                                                                 2.2                                         4.2



              Net cash, cash equivalents and restricted cash provided by operating activities                                                                            156.7                                       158.2



              
                Investing Activities



              Purchases of property, plant, equipment and software                                                                                                      (46.1)                                     (31.4)



              Proceeds on sale of property and equipment                                                                                                                   1.4                                         3.1



              Payment for acquisition of business, net of cash acquired                                                                                                 (13.1)



              Payment for acquisition of intangible assets                                                                                                                                                         (17.1)



              Payments for acquisition of investments                                                                                                                                                              (26.6)



              Other investing activities                                                                                                                                 (0.1)                                        0.2



              Net cash, cash equivalents and restricted cash used in investing activities                                                                               (57.9)                                     (71.8)



              
                Financing Activities



              Payment of long-term debt                                                                                                                                 (25.1)                                      (0.1)



              Borrowings on Revolving Credit Facility                                                                                                                    190.0                                       110.0



              Payments on Revolving Credit Facility                                                                                                                     (85.0)                                    (105.0)



              Borrowings on Securitization Facility                                                                                                                       13.2                                         4.9



              Payments on Securitization Facility                                                                                                                       (17.7)                                      (4.9)



              Borrowings on Note Securitization Facility                                                                                                                  32.6                                        37.5



              Payments on Note Securitization Facility                                                                                                                  (21.2)                                     (28.4)



              Prepayment premium on extinguishment of 5.75% Notes                                                                                                       (12.2)



              Redemption of 5.75% Notes                                                                                                                                (425.0)



              Cash dividends                                                                                                                                            (28.7)                                     (27.4)



              Proceeds on exercise of stock options                                                                                                                        5.7                                         8.6



              Stock repurchases for stock award withholding obligations                                                                                                 (15.8)                                      (4.0)



              Stock repurchases in the open market                                                                                                                      (54.1)                                     (75.0)



              Other financing activities                                                                                                                                   3.9                                         3.7



              Net cash, cash equivalents and restricted cash used in financing activities                                                                              (439.4)                                     (80.1)



              Effect of exchange rate changes on cash, cash equivalents and restricted cash                                                                              (2.7)                                      (2.3)



              
                Net Cash Flows                                                                                                                              (343.3)                                        4.0



              
                Cash, Cash Equivalents and Restricted Cash:



              At beginning of period                                                                                                                                     633.8                                       183.0



              At end of period                                                                                                                                                 $
      
                290.5                      $
      187.0

CONTACT INFORMATION



       
          
               Investor Relations

    ---



               Contact: 
              Mary Kay Ladone, Senior Vice                                     Contact: 
              Lorna Williams, Executive Director,
                        President, Corporate Development,                                                    Investor Relations and Strategy
                        Strategy and Investor Relations


        Phone:          
              312-819-9387                                            
     Phone:          
              312-233-7799


        Email:          
              
                marykay.ladone@hillrom.com                 
     Email:          
              
                lorna.williams@hillrom.com





       
          
               Media

    ---



               Contact: 
              Howard Karesh, Vice President, Corporate Communications


        Phone:          
              312-819-7268


        Email:          
              
                howard.karesh@hillrom.com

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SOURCE Hillrom