Building a Sustainable Growth Company

Building a Sustainable Growth Company William Blair 36 th Annual Growth Stock Conference 1

Safe Harbor Statement This presentation contains forward-looking information that involves risks and uncertainties, including statements about the Company s plans, objectives, expectations and intentions. Such statements include, without limitation: financial or other information based upon or otherwise incorporating judgments or estimates relating to future performance, events or expectations; the Company s strategies, positioning, resources, capabilities and expectations for future performance; and the Company's outlook and financial and other guidance. These statements are based upon assumptions made by the Company as of the date hereof and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from expectations. Risks and uncertainties that could adversely affect the Company s business and prospects, and otherwise cause actual results to differ materially from those anticipated, include, without limitation: the ability of the Company to successfully manage leadership and organizational changes, including the ability of the Company to attract, motivate and retain key employees; U.S., European and worldwide economic conditions and related uncertainties; the Company s reliance on third party reimbursement policies to support the sales and market acceptance of its products, including the possible adverse impact of government regulation and changes in the availability and amount of reimbursement and uncertainties for new products or product enhancements; uncertainties regarding healthcare reform legislation, including associated tax provisions, or budget reduction or other cost containment efforts; changes in guidelines, recommendations and studies published by various organizations that could affect the use of the Company s products; uncertainties inherent in the development of new products and the enhancement of existing products, including FDA approval and/or clearance and other regulatory risks, technical risks, cost overruns and delays; the risk that products may contain undetected errors or defects or otherwise not perform as anticipated; risks associated with strategic alliances and the ability of the Company to realize anticipated benefits of those alliances; risks associated with acquisitions, including, without limitation, the Company s ability to successfully integrate acquired businesses, the risks that the acquired businesses may not operate as effectively and efficiently as expected even if otherwise successfully integrated; the risks that acquisitions may involve unexpected costs or unexpected liabilities; the risks of conducting business internationally, including the effect of exchange rate fluctuations on those operations; manufacturing risks, including the Company s reliance on a single or limited source of supply for key components, and the need to comply with especially high standards for the manufacture of many of its products and risks associated with utilizing third party manufacturers; the Company s ability to predict accurately the demand for its products, and products under development, and to develop strategies to address its markets successfully; the early stage of market development for certain of the Company s products; the Company s leverage risks, including the Company s obligation to meet payment obligations and financial covenants associated with its debt; risks related to the use and protection of intellectual property; expenses, uncertainties and potential liabilities relating to litigation, including, without limitation, commercial, intellectual property, employment and product liability litigation; technical innovations that could render products marketed or under development by the Company obsolete; competition; and the Company s ability to attract and retain qualified personnel. The risks included above are not exhaustive. Other factors that could adversely affect the company's business and prospects are described in filings made with the SEC. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements presented herein to reflect any change in expectations or any change in events, conditions or circumstances on which any such statements are based. Hologic, Aptima, Aptima Combo 2, Genius, Horizon, MyoSure, NovaSure, Panther, Selenia, The Science of Sure, ThinPrep, Tigris and associated logos, as may be used in this presentation, are trademarks and/or registered trademarks of Hologic, Inc. and/or its subsidiaries in the United States and/or other countries. Procleix is a trademark of Grifols Diagnostic Solutions Inc. 2

Non-GAAP Financial Measures Hologic has presented the following non-gaap financial measures in this presentation: constant currency revenues; non-gaap gross margin; non-gaap operating expenses; non-gaap operating margin; non-gaap net income; non-gaap EPS; adjusted EBITDA; and return on invested capital (ROIC). The Company defines its non-gaap net income, EPS, and other non-gaap financial measures to exclude, as applicable: (i) the amortization of intangible assets and impairment of goodwill and intangible assets; (ii) additional depreciation expense from acquired fixed assets and accelerated depreciation related to consolidation and closure of facilities; (iii) non-cash interest expense related to amortization of the debt discount from the equity conversion option of the convertible notes; (iv) restructuring and divestiture charges and facility and consolidation charges; (v) debt extinguishment losses and related transaction costs; (vi) unrealized gains/losses attributable to recording forward foreign currency contracts to fair value for which the company has not elected hedge accounting; (vii) litigation settlement charges (benefits); (viii) other-than-temporary impairment losses on investments and realized gains resulting from the sale of investments; (ix) other one-time, non-recurring, unusual or infrequent charges, expenses or gains that may not be indicative of the Company s core business results; and (x) income taxes related to such adjustments. The Company defines adjusted EBITDA as its non-gaap net income plus net interest expense, income taxes, and depreciation and amortization expense included in its non-gaap net income. The Company defines ROIC as its net operating profit after tax on a trailing twelve month basis divided by average net debt plus average stockholders equity. These non-gaap financial measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP. The company s definition of these non-gaap measures may differ from similarly titled measures used by others. The non-gaap financial measures used in this presentation adjust for specified items that can be highly variable or difficult to predict. The company generally uses these non-gaap financial measures to facilitate management s financial and operational decision-making, including evaluation of Hologic s historical operating results, comparison to competitors operating results and determination of management incentive compensation. These non-gaap financial measures reflect an additional way of viewing aspects of the company s operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures, may provide a more complete understanding of factors and trends affecting Hologic s business. Because non-gaap financial measures exclude the effect of items that will increase or decrease the company s reported results of operations, management strongly encourages investors to review the company s consolidated financial statements and publicly filed reports in their entirety. A reconciliation of the non- GAAP financial measures to the most directly comparable GAAP financial measures is included in the tables accompanying this presentation. 3

Presentation Outline Hologic overview Accomplishments to date Future opportunities Financials and conclusion 4

Hologic Today Innovative healthcare company with market-leading products for early detection and intervention, with a strong position in women s health Divisional Revenue FY15 Types of Revenue FY15 Diagnostics 45% Skeletal 4% Breast Health 39% Surgical 12% Service 16% Capital 23% Consumables 61% New management team leading transition from turnaround to sustainable growth FY15 revenue +8%* (+10% CC**) to $2,705 million; EPS +14%* to $1.67 Tremendous earnings power and cash flow generation 33.3% non-gaap operating margin, $697 million free cash flow in FY15 * Revenue and EPS growth exclude ~$20 million one-time contribution in 4Q14 from restructuring of Roka license, which added $0.05 to EPS. ** Constant currency growth. Hologic s fiscal year ends in September. 5

Evidence of the Turnaround Demonstrating consistent quarterly sales growth $700 $694 10% $703 10% $695 7% $693 6% $650 $631 $613 $626 $622 $612 (3%) $625 2% $633 1% $640 3% $653 7% $655 5% $600 $550 (3%*) 2%* 1%* 3%* 8%* 7%* 12%* 12%* 8%* 6%* $500 2013 2014 2015 2016 2016 Q1 Q2 Q3 Q4 * Constant currency growth. ** Total GAAP revenue growth as reported with the exception of 4Q FY14, which excludes ~$20 million onetime contribution from restructuring of Roka license. Percentage changes versus prior year periods. 6

Broad, Deep Quarterly Sales Growth Dx Breast Surgical Skeletal Total US 2014 1Q 2Q 3Q 4Q 2015 2016 1Q 2Q 3Q 4Q 1Q 2Q Dx Breast Surgical Skeletal Total OUS Dx Breast Surgical Skeletal Worldwide 0-4.9% 5-9.9% 10%+ decline * Constant currency revenue change with the exception of 4Q FY14, which excludes ~ $20 million one-time contribution from restructuring of Roka license. 7

Presentation Outline Hologic overview Accomplishments to date Future opportunities Financials and conclusion 8

Sales Stabilizing Leading product for liquid Pap testing U.S. market share >75%* Headwinds from longer testing intervals Re-energized we love ThinPrep focus Domestic market share gains International penetration in early stages Future priorities Increase co-testing penetration Invest in marketing, R&D to strengthen brand Grow internationally $600 $500 $400 $300 Cytology & Perinatal Sales $556 $519 $485 $472 (7%**) (7%**) 1%** 2012 2013 2014 2015 * Hologic estimate for the US market on a unit basis in 2015. ** Constant currency growth. 9

Opportunities for Growth Leading solution for abnormal uterine bleeding U.S. market share >65%* Better commercial execution Revitalized sales force» Improved incentive plans, lowered attrition» Expanded clinical specialists in field $300 $250 $200 $150 $100 $259 NovaSure Sales $235 $219 $217 (9%**) (7%**) 2%** 2012 2013 2014 2015 Future priorities Gain competitive share Expand U.S. market versus alternative solutions Penetrate developed markets OUS * Hologic estimate for the US market on a unit basis in 2015. ** Constant currency growth. 10

Growth Driver: Innovative technology addresses limitations of conventional mammography $900 Breast Imaging Sales $884 Landmark JAMA study Genius TM mammograms detected 41% more invasive breast cancers, while reducing recall rates by 15% $800 $700 $600 $682 $716 5%* $756 5%* 19%* Global breast imaging growing strongly Publication of clinical benefits High-impact marketing campaign CMS reimbursement Inferior competitive entrants $500 2012 2013 2014 2015 * Constant currency growth. 11

Significant Opportunity for Continued Genius TM Growth U.S. market leader with ~60% share* Gained ~3 share points in FY15 Product advantages include superiority claim, faster scan time Customers ranked Hologic highest in all 11 measures in KLAS study** Significant U.S. market penetration still ahead as market upgrades to 3D Full conversion implies >$3.5 billion opportunity Plus growing service annuity Nascent international opportunity U.S. Penetration Metrics as of September 2015 HOLX 3D Installed Base HOLX 2D Installed Base Total Mammo Units HOLX 3D of HOLX Installed Base HOLX 3D of Total Market 2,400 6,200 14,500 ~28% ~17% * Hologic estimate for the US market on a unit basis in 2015. **Women s Imaging. Are the New Technologies Delivering Promised Benefits? August 2015. Performance Report. 2015 KLAS Enterprises, LLC. All rights reserved. www.klasresearch.com. 12

Genius TM in the US Current Status Very pleased with our 3D adoption cycle Placements tracking in line with our expectations Upside surprises from share gains, price stability Lengthy runway still ahead of us Only penetrated one-third of our installed base Market less than one-fourth penetrated Clinical superiority should lead to full adoption With tougher comps, growth rates bound to slow Expect continued growth in sequential placements over the next several quarters Sequential placements could peak in FY17» While still showing solid year-over-year growth and penetration Additional share gains, incremental insurance coverage and pipeline could drive upside 13

System Driving Molecular Growth Panther system offers best-in-class automation and workflow More than 1,000 units in field globally #1 in CT/NG, HPV and Trich testing in U.S. Growing assay menu and utilization Average Panther system generated >$170,000 of revenue in FY15 Future priorities Maximize Panther placements Drive adoption of current and future portfolio, including viral load assays Launch next-generation Panther Fusion Build international business $500 $450 $400 $350 $447 Molecular Sales $487 $459 2%* 7%* 2013** 2014*** 2015 * Constant currency growth. ** Excluding divested Lifecodes business in FY13. *** Excluding ~$20 million one-time contribution from restructuring of Roka license in 4QFY14. 14

Driving Growth in GYN Surgical Leading hysteroscopic tissue removal solution for fibroids and polyps $140 $120 MyoSure Sales $116 Strong recent growth Accelerated customer adoption and improved utilization both domestically and overseas $100 $80 $60 $40 $20 $39 $87 $68 77%* 27%* 35%* Future priorities Continue broadening usage Launch of MyoSure Reach Maximize benefits of clinical specialists Expand internationally $0 2012 2013 2014 2015 * Constant currency growth. 15

Presentation Outline Hologic overview Accomplishments to date Future opportunities Financials and conclusion 16

Revitalizing Research and Development Committed to organic growth via shortand long-term R&D Upgrading talent and processes Focused on optimizing investment Key programs build on strong existing product and channel platforms Diagnostics» 3 viral load assays, test for Mycoplasma genitalium detection all launched in Europe» Complementary women s health tests» Panther Fusion to provide new chemistry and assay format Breast health» Affirm prone biopsy system with 3D compatibility launched» Brevera next-generation biopsy device Surgical: MyoSure Reach 17

International Opportunity Largely Untapped Only 24% of revenues generated OUS in FY15 Early signs of progress, but will take time Key priorities Mammography Cytology» More than 24,000 units in 10 focus» More than 30 million liquid Pap tests in 10 markets, only 1/3 are 2D/3D focus markets, Hologic share only ~40%» Hologic share less than half of U.S. level» Plus more than 140 million conventional» Optimize distributor network and Pap tests relationships» And long-term opportunity to increase Molecular diagnostics adherence to screening» Panther well-suited to smaller, hospitalbased Surgical customers» More than 85% of business comes from» All three viral load assays recently CEmarked U.S. today» Continue executing on menu expansion 18

Multiple Opportunities to Increase Profitability Building on industry-leading margins Operational Improvements Realize efficiencies from higher U.S. sales volumes Achieve productivity goals across plant network Improve inventory management Implement central procurement Out-source Skeletal manufacturing Consolidate headquarters Leverage G&A expenses Tax Multi-faceted program underway Re-financing of bank debt loosened covenants In near-term, re-align legal entities and optimize product and transaction efficiencies First 100 basis points of improvement seen in 1Q16 Over long-term, migrate infrastructure and decisionmaking as OUS revenue grows Capital Deployment Priority remains to reduce debt, with focus on dilutive convertible notes Capability for tuck-in business development rebuilt in divisions First share repurchases in 2Q16 19

Presentation Outline Hologic overview Accomplishments to date Future opportunities Financials and conclusion 20

Strong Growth in Annual Revenues and Profits $2,800 Revenue* $2,705 34% Operating Margin* 33.3% $1.70 EPS* $1.67 $2,600 $2,492 $2,511 32% 32.3% 32.0% $1.50 $1.50 $1.46 $2,400 30% $1.30 $2,200 $2,000 28% $1.10 2013 2014 2015 * Total GAAP revenue growth as reported with the exception of FY14, which excludes ~$20 million one-time revenue contribution from restructuring of Roka license that also increased operating margin and added $0.05 to EPS in FY14. Operating margin and EPS are non-gaap. 21

Industry-Leading Margins Improving Further Gains from product and geographic mix, productivity initiatives 70% 60% 62.2% 63.4% 64.2% 65.5% 50% 40% 30% 20% 10% 32.3% 32.0% 33.3% 33.4% 16.2% 16.2% 17.9% 19.5% 2013 2014 2015 2016 YTD Non-GAAP GM% Non-GAAP OI% Non-GAAP NI% 22

Strong Cash Flows, Minimal CapEx In 1H16, 77% of Hologic revenue was recurring (and growing) EPS increasing faster than revenue Gross, operating leverage Tax, interest expense and share count 800 700 600 500 400 Strong Cash Flows, Minimal CapEx 697 485 494 508 407 420 404 428 786 Business generates tremendous free cash flow Opportunities to strengthen the balance sheet, deploy capital smartly 300 200 100 0 (7%**) (7%**) 1%** Non-GAAP Net Income Free CF Operating CF 2013 2014 2015 23

Strengthening Balance Sheet, ROIC $5.0 Net Debt and Leverage Ratio* 13.0% ROIC** $4.0 $3.0 $2.0 $4.0 4.6x $3.5 4.0x $3.1 $3.1 3.3x 3.1x 12.0% 11.0% 10.0% 9.0% 8.3% 9.3% 10.9% 11.7% $1.0 8.0% 7.0% $0.0 2013 2014 2015 YTD 2Q16 6.0% 2013 2014 2015 YTD 2Q16 * Net debt is total debt minus cash; leverage ratio is principal debt minus cash to TTM adjusted EBITDA. ** ROIC on a Trailing Twelve Month basis, defined as adjusted net operating profit after tax divided by average net debt plus stockholders equity. 24

2016 Financial Guidance Full Year (Non-GAAP*) In millions, except EPS 2016 Guidance Reported vs. 2015 CC vs. 2015 Revenues $2,810 $2,830 3.9 4.6% 4.6 5.4% Diluted EPS $1.89 $1.91 13.2 14.4% 14.6 15.8% *Guidance provided by press release on 4/27/16. Presentation here is not, and should not be construed as, re-affirmation of guidance. Guidance assumes diluted shares outstanding of ~292 million for the full year and an annual effective tax rate of approximately 33%. 25

Preliminary Views on Fiscal 2017 For Hologic overall, reasonable at this stage to assume slower revenue growth in 2017 than in 2016 Won t have a budget for a while, so key top-line variables include: Growth Drivers US Breast Health product and service revenue Continued progress in multiple international segments Key molecular diagnostic products Headwinds Blood screening Discontinued CF product Surgical market share gains New products: Affirm prone biopsy system, Brevera, viral load tests, MyoSure Reach 26

A Bright Future Ahead We have accomplished a lot in a short amount of time Stabilizing mature businesses in the U.S. Maximizing domestic growth drivers Strengthening the balance sheet But we still have significant runway ahead of us R&D pipeline International expansion Operational efficiencies Tax Capital deployment As we transition from a turnaround story to a sustainable growth company With tremendous earnings power and cash generation capabilities 27

For more information: Michael Watts VP, Investor Relations and Corporate Communications 858-410-8588 28

Reconciliation of GAAP to Non-GAAP (unaudited) $s in millions, except earnings per share Three Months Ended March 26, 2016 March 28, 2015 GROSS PROFIT GAAP gross profit $385.0 $335.9 Adjustments: Amortization of intangible assets $70.8 $78.6 Incremental depreciation expense 0.5 0.8 Integration/consolidation costs - 0.2 Non-GAAP gross profit $456.3 $415.5 GROSS MARGIN PERCENTAGE GAAP gross margin percentage 55.5% 51.3% Impact of adjustments above 10.3% 12.1% Non-GAAP gross margin percentage 65.8% 63.4% OPERATING EXPENSES GAAP operating expenses $248.9 $226.2 Adjustments: Amortization of intangible assets (22.8) (27.6) Incremental depreciation expense (0.9) (0.7) Integration/consolidation costs (0.2) - Restructuring and divestiture charges (3.8) (2.0) Other - - Non-GAAP operating expenses $221.2 $195.9 OPERATING MARGIN GAAP income from operations $136.1 $109.8 Adjustments to gross profit as detailed above 71.3 79.5 Adjustments to operating expenses as detailed above 27.7 30.3 Non-GAAP income from operations $235.1 $219.6 Continued on next page 29

Reconciliation of GAAP to Non-GAAP (unaudited) $s in millions, except earnings per share Three Months Ended March 26, 2016 March 28, 2015 OPERATING MARGIN PERCENTAGE GAAP operating margin percentage 19.6% 16.8% Impact of adjustments above 14.3% 16.7% Non-GAAP operating margin percentage 33.9% 33.5% INTEREST EXPENSE GAAP interest expense $39.1 $49.4 Adjustments: Non-cash interest expense relating to convertible notes (5.8) (9.0) Non-GAAP interest expense $33.3 $40.4 PRE-TAX INCOME GAAP pre-tax earnings (loss) $91.9 $60.8 Adjustments to pre-tax earnings as detailed above 104.8 118.7 Debt extinguishment loss 4.5 - Gain on sale of available-for-sale marketable security - - Unrealized gains on forward foreign currency contracts 0.7 - Non-GAAP pre-tax income $201.9 $179.5 NET INCOME GAAP net income $68.9 $47.8 Adjustments to GAAP net income (loss) as detailed above 110.0 118.7 Income tax effect of reconciling items 2 (43.2) (47.6) Non-GAAP net income $135.7 $118.9 EARNINGS PER SHARE GAAP earnings per share Diluted $0.24 $0.17 Adjustments to net earnings (loss) (as detailed below) 0.23 0.24 Non-GAAP earnings per share Diluted 1 $0.47 $0.41 ADJUSTED EBITDA Non-GAAP net income $135.7 $118.9 Interest expense, net, not adjusted above 33.1 40.2 Provision for income taxes 66.1 60.6 Depreciation expense, not adjusted above 18.9 18.9 Adjusted EBITDA $253.8 $238.6 1 Non-GAAP earnings per share was calculated based on 287,857 and 287,580 weighted average diluted shares outstanding for the three months ended March 26, 2016 and March 28,2015. 2 To reflect an annual effective tax rate of 32.75% on a non-gaap basis for fiscal 2016 and 34.25% on a non-gaap basis for fiscal 2015. 30