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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended October 3, 2021
OR
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number: 001-39956
Ortho Clinical Diagnostics Holdings plc
(Exact name of registrant as specified in its charter)
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England and Wales |
98-1574150 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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1001 Route 202 Raritan, New Jersey |
08869 |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: 908-218-8000
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Ordinary shares, $0.00001 par value per ordinary share |
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OCDX |
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Nasdaq Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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☐ |
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Accelerated filer |
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Non-accelerated filer |
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☒ |
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Smaller reporting company |
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☐ |
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Emerging growth company |
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☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 29, 2021, the registrant had 236,889,470 ordinary shares outstanding ($0.00001 par value per share).
Table of Contents
i
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Ortho Clinical Diagnostics Holdings plc
Consolidated Statements of Operations
(Unaudited)
(In millions, except per share data)
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Fiscal Quarter Ended |
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Fiscal Nine Months Ended |
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October 3, 2021 |
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September 27, 2020 |
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October 3, 2021 |
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September 27, 2020 |
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Net revenue |
$ |
522.5 |
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$ |
451.1 |
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$ |
1,521.8 |
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$ |
1,249.6 |
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Cost of revenue, excluding amortization of intangible assets |
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252.4 |
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234.1 |
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748.7 |
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650.2 |
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Gross profit |
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270.1 |
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217.0 |
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773.1 |
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599.4 |
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Selling, marketing and administrative expenses |
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140.9 |
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121.0 |
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411.0 |
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347.9 |
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Research and development expense |
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32.1 |
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32.7 |
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91.3 |
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82.1 |
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Amortization of intangible assets |
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33.3 |
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33.1 |
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100.3 |
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98.7 |
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Other operating expense, net |
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9.8 |
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9.5 |
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27.7 |
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22.8 |
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Income from operations |
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54.0 |
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20.7 |
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142.8 |
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47.9 |
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Interest expense, net |
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36.1 |
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48.9 |
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112.5 |
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148.6 |
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Tax indemnification (income) expense, net |
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(0.2 |
) |
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16.5 |
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(0.6 |
) |
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11.6 |
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Other (income) expense, net |
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(2.6 |
) |
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(5.9 |
) |
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50.8 |
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61.1 |
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Income (loss) before income taxes |
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20.7 |
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(38.8 |
) |
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(20.0 |
) |
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(173.4 |
) |
Provision for (benefit from) income taxes |
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6.0 |
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(10.3 |
) |
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24.4 |
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(2.4 |
) |
Net income (loss) |
$ |
14.7 |
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$ |
(28.5 |
) |
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$ |
(44.4 |
) |
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$ |
(171.0 |
) |
Basic net income (loss) per ordinary share |
$ |
0.06 |
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$ |
(0.20 |
) |
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$ |
(0.20 |
) |
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$ |
(1.17 |
) |
Basic weighted-average ordinary shares outstanding |
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235.6 |
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146.4 |
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225.4 |
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146.4 |
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Diluted net income (loss) per ordinary share |
$ |
0.06 |
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$ |
(0.20 |
) |
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$ |
(0.20 |
) |
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$ |
(1.17 |
) |
Diluted weighted-average ordinary shares outstanding |
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242.8 |
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146.4 |
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225.4 |
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146.4 |
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
1
Ortho Clinical Diagnostics Holdings plc
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
(In millions)
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Fiscal Quarter Ended |
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Fiscal Nine Months Ended |
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October 3, 2021 |
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September 27, 2020 |
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October 3, 2021 |
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September 27, 2020 |
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Net income (loss) |
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$ |
14.7 |
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$ |
(28.5 |
) |
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$ |
(44.4 |
) |
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$ |
(171.0 |
) |
Other comprehensive income (loss), before tax: |
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Foreign currency derivatives |
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2.1 |
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(3.5 |
) |
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6.4 |
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(2.3 |
) |
Interest rate derivatives |
|
|
5.9 |
|
|
|
1.0 |
|
|
|
22.7 |
|
|
|
(49.0 |
) |
Foreign currency translation adjustments |
|
|
(13.9 |
) |
|
|
8.1 |
|
|
|
(21.7 |
) |
|
|
1.7 |
|
Other comprehensive income (loss), before tax |
|
|
(5.9 |
) |
|
|
5.6 |
|
|
|
7.5 |
|
|
|
(49.6 |
) |
Income tax provision related to items of other comprehensive income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other comprehensive income (loss), net of tax |
|
|
(5.9 |
) |
|
|
5.6 |
|
|
|
7.5 |
|
|
|
(49.6 |
) |
Comprehensive income (loss) |
|
$ |
8.7 |
|
|
$ |
(22.9 |
) |
|
$ |
(36.9 |
) |
|
$ |
(220.6 |
) |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
2
Ortho Clinical Diagnostics Holdings plc
Consolidated Balance Sheets
(Unaudited)
(In millions, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
October 3, 2021 |
|
|
January 3, 2021 |
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
255.9 |
|
|
$ |
132.8 |
|
Accounts receivable (net of allowance for credit losses of $9.7 and $9.8, respectively) |
|
|
237.8 |
|
|
|
318.7 |
|
Inventories |
|
|
308.3 |
|
|
|
278.7 |
|
Other current assets |
|
|
141.8 |
|
|
|
127.0 |
|
Total current assets |
|
|
943.8 |
|
|
|
857.2 |
|
Property, plant and equipment, net |
|
|
782.6 |
|
|
|
832.0 |
|
Goodwill |
|
|
570.8 |
|
|
|
580.1 |
|
Intangible assets, net |
|
|
912.5 |
|
|
|
1,016.7 |
|
Deferred income taxes |
|
|
7.1 |
|
|
|
8.0 |
|
Other assets |
|
|
93.0 |
|
|
|
107.5 |
|
Total assets |
|
$ |
3,309.9 |
|
|
$ |
3,401.5 |
|
Liabilities and Shareholders’ Equity (Deficit) |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
139.3 |
|
|
$ |
146.2 |
|
Accrued liabilities |
|
|
251.5 |
|
|
|
284.7 |
|
Deferred revenue |
|
|
32.6 |
|
|
|
35.5 |
|
Current portion of borrowings |
|
|
64.4 |
|
|
|
160.0 |
|
Total current liabilities |
|
|
487.7 |
|
|
|
626.4 |
|
Long-term borrowings |
|
|
2,206.9 |
|
|
|
3,558.5 |
|
Employee-related obligations |
|
|
39.9 |
|
|
|
39.3 |
|
Other liabilities |
|
|
94.2 |
|
|
|
120.8 |
|
Deferred income taxes |
|
|
84.4 |
|
|
|
67.3 |
|
Total liabilities |
|
|
2,913.0 |
|
|
|
4,412.3 |
|
Commitments and contingencies (Note 15) |
|
|
|
|
|
|
Shareholders’ Equity (Deficit): |
|
|
|
|
|
|
Preferred redeemable shares, $1.39 nominal value per share, 50,000 and no shares issued and outstanding as of October 3, 2021 and January 3, 2021, respectively |
|
|
0.1 |
|
|
|
— |
|
Ordinary shares, $0.00001 par, 1,000,000,000 shares authorized, 236,679,437 and 147,295,511 shares issued and outstanding as of October 3, 2021 and January 3, 2021, respectively |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
2,419.7 |
|
|
|
975.1 |
|
Accumulated deficit |
|
|
(1,961.9 |
) |
|
|
(1,917.5 |
) |
Accumulated other comprehensive loss |
|
|
(61.0 |
) |
|
|
(68.4 |
) |
Total shareholders’ equity (deficit) |
|
|
396.9 |
|
|
|
(1,010.8 |
) |
Total liabilities and shareholders’ equity (deficit) |
|
$ |
3,309.9 |
|
|
$ |
3,401.5 |
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
3
Ortho Clinical Diagnostics Holdings plc
Consolidated Statements of Changes in Shareholders’ Equity (Deficit)
(Unaudited)
(In millions, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares issued |
|
|
Ordinary share par value |
|
|
Preferred redeemable shares issued |
|
|
Preferred redeemable shares par value |
|
|
Additional paid-in capital |
|
|
Accumulated deficit |
|
|
Accumulated other comprehensive loss |
|
|
Total |
|
Balance as of July 4, 2021 |
|
234,921,002 |
|
|
$ |
— |
|
|
|
50,000 |
|
|
$ |
0.1 |
|
|
$ |
2,407.0 |
|
|
$ |
(1,976.6 |
) |
|
$ |
(54.9 |
) |
|
$ |
375.6 |
|
Net income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14.7 |
|
|
|
— |
|
|
|
14.7 |
|
Exercise of stock options |
|
1,436,782 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7.6 |
|
|
|
— |
|
|
|
— |
|
|
|
7.6 |
|
Restricted stock units vested, net of shares withheld for taxes |
|
321,653 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Recognition of stock-based compensation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5.1 |
|
|
|
— |
|
|
|
— |
|
|
|
5.1 |
|
Foreign currency derivatives, net of tax of $0.0 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.1 |
|
|
|
2.1 |
|
Interest rate derivatives, net of tax of $0.0 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5.9 |
|
|
|
5.9 |
|
Foreign currency translation adjustments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(13.9 |
) |
|
|
(13.9 |
) |
Balance as of October 3, 2021 |
|
236,679,437 |
|
|
$ |
— |
|
|
|
50,000 |
|
|
$ |
0.1 |
|
|
$ |
2,419.7 |
|
|
$ |
(1,961.9 |
) |
|
$ |
(61.0 |
) |
|
$ |
396.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares issued |
|
|
Ordinary share par value |
|
|
Preferred redeemable shares issued |
|
|
Preferred redeemable shares par value |
|
|
Additional paid-in capital |
|
|
Accumulated deficit |
|
|
Accumulated other comprehensive loss |
|
|
Total |
|
Balance as of June 28, 2020 |
|
146,560,341 |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
968.7 |
|
|
$ |
(1,848.1 |
) |
|
$ |
(127.1 |
) |
|
$ |
(1,006.5 |
) |
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(28.5 |
) |
|
|
— |
|
|
|
(28.5 |
) |
Exercise of stock options |
|
21,394 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Restricted stock grant, net of shares retained for taxes |
|
2,831 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Recognition of stock-based compensation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.4 |
|
|
|
— |
|
|
|
— |
|
|
|
2.4 |
|
Foreign currency derivatives, net of tax of $0.0 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3.5 |
) |
|
|
(3.5 |
) |
Interest rate derivatives, net of tax of $0.0 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.0 |
|
|
|
1.0 |
|
Foreign currency translation adjustments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8.1 |
|
|
|
8.1 |
|
Balance as of September 27, 2020 |
|
146,584,566 |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
971.1 |
|
|
$ |
(1,876.6 |
) |
|
$ |
(121.5 |
) |
|
$ |
(1,027.0 |
) |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
4
Ortho Clinical Diagnostics Holdings plc
Consolidated Statements of Changes in Shareholders’ Equity (Deficit)
(Unaudited)
(In millions, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares issued |
|
|
Ordinary share par value |
|
|
Preferred redeemable shares issued |
|
|
Preferred redeemable shares par value |
|
|
Additional paid-in capital |
|
|
Accumulated deficit |
|
|
Accumulated other comprehensive loss |
|
|
Total |
|
Balance as of January 3, 2021 |
|
147,295,511 |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
975.1 |
|
|
$ |
(1,917.5 |
) |
|
$ |
(68.4 |
) |
|
$ |
(1,010.8 |
) |
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(44.4 |
) |
|
|
— |
|
|
|
(44.4 |
) |
Issuance of ordinary shares upon completion of initial public offering, net of commissions, underwriting discounts and offering costs |
|
87,400,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,415.2 |
|
|
|
— |
|
|
|
— |
|
|
|
1,415.2 |
|
Issuance of incorporation shares consisting of ordinary share and preferred redeemable shares |
|
1 |
|
|
|
— |
|
|
|
50,000 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
Exercise of stock options |
|
1,662,272 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9.9 |
|
|
|