Hill-Rom Reports Fiscal First Quarter Results; Updates 2013 Financial Outlook For R&D Tax Credit Reinstatement

Hill-Rom Reports Fiscal First Quarter Results; Updates 2013 Financial Outlook
                       For R&D Tax Credit Reinstatement

-- First quarter revenue of $428 million grew 12 percent versus prior year

-- Adjusted diluted earnings per share for the first quarter decreased 11
percent to $0.47 compared to $0.53 in the prior year

-- Reported diluted earnings per share for the first quarter decreased 26
percent to $0.39 compared to $0.53 in the prior year

-- Adjusted EBITDA for the first quarter of $75 million compares to $76
million in the prior year

-- Financial guidance: Full year adjusted earnings per share are now expected
to be $2.01 to $2.11, reflecting the reinstatement of the R&D tax credit;
reported revenue and adjusted EBITDA guidance are unchanged, with revenue
expected to increase 7 to 8 percent and adjusted EBITDA expected to be $315 to
$325 million

PR Newswire

BATESVILLE, Ind., Jan. 23, 2013

BATESVILLE, Ind., Jan. 23, 2013 /PRNewswire/ -- Hill-Rom Holdings, Inc. (NYSE:
HRC) announced financial results for its fiscal first quarter ended December
31, 2012 and updated its outlook for 2013 to include the impact of the
recently reinstated R&D tax credit. Adjusted earnings per diluted share
decreased 11 percent to $0.47 from $0.53 due to lower gross margin, driven by
adverse product and geographic mix, along with increased investment in
research and development and higher operating expenses associated with
recently acquired businesses, including intangible amortization. Reported
earnings per diluted share also decreased to $0.39 from $0.53 in the prior
year. Adjustments to reported earnings relate to costs associated with
recent acquisitions, including the step-up of acquired inventories, additional
costs related to field corrective actions, a litigation charge and gains
associated with a vendor product recall. See detail in the attached schedule.

(Logo: http://photos.prnewswire.com/prnh/20130123/DE47178LOGO )

Hill-Rom's quarterly reported revenue of $428 million increased 12 percent
compared to last year or 13 percent on a constant currency basis. Excluding
the impact of currency and acquisitions, revenue declined approximately 2
percent. Domestic revenue was essentially flat at $273 million, while revenue
outside the United States increased 42 percent to $155 million in the same
period (44 percent on a constant currency basis).

Management Comments

"Despite a year over year revenue decline in our core capital business in
North America, we delivered revenue and adjusted earnings ahead of our
expectations," stated John J. Greisch, President and CEO. "We are pleased
with improved operating cash flow in this challenging environment andwe are
committed to a continuing focus on operational efficiencies to drive
sustainable, long term margin improvement."

Financial and Operational Highlights

-- First quarter revenue highlights include:

-- North America. North America revenue declined 7 percent to $235 million.
Capital sales declined 6 percent due primarily to a 10 percent decline in
patient support systems revenue, partially offset by growth in certain other
capital categories. Rental revenue declined 9 percent.

-- International. International segment revenue, excluding Volker, increased
14 percent on a constant currency basis due primarily to growth in Latin
America and the Middle East. International revenue, including Volker,
increased 39 percent to $135 million, or 42 percent on a constant currency
basis.

-- Surgical/Respiratory Care. Surgical/Respiratory Care revenue increased 84
percent to $59 million, due to the addition of the Aspen Surgical business.
Excluding Aspen Surgical, segment revenue decreased 5 percent on lower
respiratory care revenues.

-- Operating cash flow for the quarter was $65 million, compared to $62
million in the prior year.

-- Adjusted EBITDA for the quarter was $75 million, compared to $76 million in
the prior year.

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

For a more complete review of Hill-Rom's results, please refer to our
Quarterly Report on Form 10-Q for the quarter ended December 31, 2012.

Financial Guidance Summary

Consistent with prior guidance, for full year fiscal 2013, Hill-Rom expects
reported revenue growth of 7 to 8 percent. This reflects:

  oorganic constant currency revenue decline of 1 to 2 percent;
  ono material currency impact at current rates; and
  oincremental revenue from fiscal 2012 acquisitions of approximately $145
    million.

For the full year, adjusted earnings per share guidance is unchanged except
for the impact of the reinstatement of the R&D tax credit. Adjusted earnings
per diluted share are now expected to be $2.01 to $2.11, including $0.03
related to the current year tax credit and $0.03 related to the prior year
credit to be recognized in the second quarter.

Cash flow from operations for the full year is now expected to be
approximately $270 to $280 million, up $5 million from our previous guidance.
Adjusted EBITDA is unchanged at $315 to $325 million.

For the second quarter of fiscal 2013, Hill-Rom expects reported revenue
growth of 4 to 5 percent. This reflects:

  oorganic constant currency revenue decline of approximately 5 percent;
  ono material currency impact at current rates; and
  oincremental revenue from fiscal 2012 acquisitions of approximately $45
    million.

Adjusted earnings per diluted share are expected to be $0.48 to $0.50 for the
quarter.

Additional assumptions and discussion will be provided during the Company's
conference call to be held tomorrow morning. Information to access the
webcast is provided below.

Discussion of Adjusted Financial Measures

Hill-Rom Holdings, Inc. routinely provides earnings per share results and
guidance on an adjusted basis because the Company's management believes that
the presentation provides useful information to investors. In addition, we
are providing adjusted earnings before interest, taxes, depreciation and
amortization (adjusted EBITDA). These measures exclude strategic
developments, special charges and the impact of significant litigation or
other unusual events. Such items may be highly variable, difficult to predict
and of a size that sometimes have substantial impact on the Company's reported
operations for a period. Often, prospective quantification of such items is
not feasible. Management uses these measures internally for planning,
forecasting and evaluating the performance of the business. Investors should
consider non-GAAP measures in addition to, not as a substitute for, or as
superior to, measures of financial performance prepared in accordance with
GAAP.

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

Conference Call Webcast and Dial-in Information

As previously announced, the Company will host a conference call and webcast
tomorrow morning on Thursday, January 24, 2013, at 8:00 a.m. ET.

Webcast: To join the live webcast with audio, go to
http://ir.hill-rom.com/events.cfm or
http://ir.hill-rom.com/eventdetail.cfm?eventid=123121. The webcast slide deck
will be posted to the Hill-Rom website prior to the webcast.

Conference Call Audio Only Dial-in information: To join the live conference
call, dial 877-304-8969 domestic callers / 631-291-4543 international
callers. The following Confirmation Code is required for both: 83612495.
Callers will need to provide their name, company affiliation and telephone
number to the conference operator. A recording of the webcast/call audio will
be available for telephone replay through January 31, 2013, domestically at
855-859-2056 and internationally at 404-537-3406. For the replay, callers will
need to use confirmation code 83612495. If you are unable to listen to the
live webcast or the telephone replay, the webcast will be archived at
http://ir.hill-rom.com/events.cfm.

ABOUT HILL-ROM HOLDINGS, INC.

Hill-Rom is a leading worldwide manufacturer and provider of medical
technologies and related services for the health care industry, including
patient support systems, safe mobility and handling solutions, non-invasive
therapeutic products for a variety of acute and chronic medical conditions,
medical equipment rentals, surgical products and information technology
solutions. Hill-Rom's comprehensive product and service offerings are used by
health care providers across the health care continuum and around the world in
hospitals, extended care facilities and home care settings to enhance the
safety and quality of patient care.

Hill-Rom…enhancing outcomes for patients and their caregivers.

www.hill-rom.com

Disclosure Regarding Forward-Looking Statements

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

Hill-Rom Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Dollars in millions except per share data)
                                                  Quarter Ended December 31
                                                  2012            2011
Net revenues
Capital sales                                     $ 324.4        $ 266.9
Rental revenues                                   104.0           114.2
Total revenues                                    428.4           381.1
Cost of revenues
Cost of goods sold                                188.9           147.7
Rental expenses                                   48.1            48.3
Total cost of revenues                            237.0           196.0
Gross profit
Capital                                           135.5           119.2
Rental                                            55.9            65.9
Total gross profit                                191.4           185.1
As a percentage of sales                          44.7%           48.6%
Research and development expenses                 17.2            15.3
Selling and administrative expenses               136.1           120.2
Litigation charge                                 1.0             -
Operating profit                                  37.1            49.6
Other income/(expense), net                       (1.8)           (1.2)
Income tax expense                                11.3            15.5
Net income                                       $  24.0       $  32.9
Diluted earnings per share:
Earnings per share                               $  0.39       $  0.53
Average common shares outstanding - diluted       61,106          62,337
(thousands)
Dividends per common share                        $0.1250         $0.1125

Non-GAAP Financial Disclosures and Reconciliations

While Hill-Rom reports financial results in accordance with U.S. GAAP, this
press release includes non-GAAP measures. These non-GAAP measures are not in
accordance with, nor are they a substitute for, GAAP measures. Hill-Rom uses
the non-GAAP measures to evaluate and manage its operations and provides the
information to assist investors in performing financial analysis that is
consistent with financial models developed by research analysts. Investors
should consider non-GAAP measures in addition to, not as a substitute for, or
as superior to, measures of financial performance prepared in accordance with
GAAP.

Hill-Rom Holdings, Inc. and Subsidiaries
Revenues - Constant Currency
(Dollars in millions)
                        Quarter Ended December 31
                        2012         Foreign      2012      2011      Constant
                                     Exchange                        Currency
                        As Reported  Impact       Adjusted  As        Change
                                                            Reported
                        $         $                 $   
Capital sales           324.4               $ 326.1  266.9    22.2%
                                     (1.7)
Rental revenues         104.0        (0.2)        104.2     114.2     -8.8%
                        $         $                 $   
Total                   428.4               $ 430.3  381.1    12.9%
                                     (1.9)
                        $         $                 $   
North America          234.7               $ 234.4  252.4    -7.1%
                                     0.3
Surgical and            59.0         0.1          58.9      32.0      84.1%
Respiratory Care
International          134.7        (2.3)        137.0     96.7      41.7%
                        $         $                 $   
Total                  428.4               $ 430.3  381.1    12.9%
                                     (1.9)



Hill-Rom Holdings, Inc. and Subsidiaries
Reconciliation: Earnings Per Share
(Dollars in millions except per share data)
                    Quarterly Period Ended December  Quarterly Period Ended
                    31, 2012                         December 31, 2011
                    Income     Income                Income   Income
                    Before     Tax        Diluted    Before   Tax      Diluted
                    Income     Expense    EPS        Income   Expense  EPS
                    Taxes                            Taxes
                    $      $      $      $     $     $   
GAAP Earnings         35.3  11.3       0.39              15.5    0.53
                                                     48.4
Adjustments:
Acquisition and     3.5        1.2        0.04       1.7      0.5      0.02
integration costs
Field corrective    2.5        0.9        0.03       -        -        -
action
Litigation charge   1.0        0.4        0.01       -        -        -
Vendor product      -          -          -          (2.1)    (0.8)    (0.02)
recall
                    $      $      $      $     $     $   
Adjusted Earnings     42.3  13.8       0.47              15.2    0.53
                                                     48.0
                    Reconciliation:
                    Adjusted EBITDA
                    (Dollars in
                    millions)
                    Quarter Ended
                    December 31
                    2012       2011
Adjusted income     $      $    
before income         42.3  48.0
taxes
Add back:
Other expense       1.8        1.2
Depreciation and    31.1       26.6
amortization
Adjusted EBITDA     $      $    
                      75.2  75.8



Hill-Rom Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in millions)
                                       December 31, 2012  September 30, 2012
Assets
Current Assets
    Cash and cash equivalents          $          $         
                                          107.6           84.3
    Trade accounts receivable, net of  373.1              392.6
    allowances
    Inventories, net                   122.7              126.9
    Other current assets               79.0               78.0
            Total current assets       682.4              681.8
Property, plant and equipment, net     245.5              250.1
Goodwill                               342.5              335.2
Other assets                           344.6              360.5
Total Assets                           $          $         
                                        1,615.0         1,627.6
Liabilities
Current Liabilities
    Trade accounts payable             $          $         
                                           78.2          80.7
    Short-term borrowings              115.2              115.2
    Other current liabilities          178.3              182.2
            Total current liabilities  371.7              378.1
Long-term debt                         234.6              237.5
Other long-term liabilities            187.8              199.4
Total Liabilities                      794.1              815.0
Shareholders' Equity                   820.9              812.6
Total Liabilities and Shareholders'    $          $         
Equity                                  1,615.0         1,627.6

Hill-Rom Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Dollars in millions)
                                          Quarterly Period Ended December 31
                                          2012                   2011
Operating Activities
 Net income                              $ 24.0                $ 32.9
 Adjustments to reconcile net income to
 net cash provided by
  operating activities:
  Depreciation and amortization           31.1                   26.6
  Provision for deferred income taxes     (4.4)                  (3.6)
  Loss (gain) on disposal of property,
  equipment leased to others,
   intangible assets and            0.3                    (1.6)
  impairments
  Stock compensation                      3.3                    2.5
  Excess tax benefits from employee stock (0.1)                  (0.7)
  plans
  Change in working capital excluding
  cash, current investments,
  current debt and acquisitions and
  dispositions:
  Trade accounts receivable               19.5                   34.8
  Inventories                             4.2                    1.8
  Other current assets                    (4.7)                  16.5
  Trade accounts payable                  (2.5)                  (1.7)
  Accrued expenses and other liabilities  (7.9)                  (43.5)
  Other, net                              2.0                    (1.9)
Net cash provided by operating activities 64.8                   62.1
Investing Activities
 Capital expenditures and purchase of     (16.5)                 (18.6)
 intangibles
 Proceeds on sale of property and         2.9                    3.1
 equipment leased to others
 Payment for acquisition of businesses,   (0.2)                  -
 net of cash acquired
Net cash used in investing activities     (13.8)                 (15.5)
Financing Activities
 Net change in short-term debt            -                      (3.8)
 Payment of long-term debt                (2.8)                  (47.3)
 Purchase of noncontrolling interest      (0.7)                  (0.7)
 Payment of cash dividends                (7.5)                  (7.0)
 Proceeds on exercise of options          2.5                    2.1
 Proceeds from stock issuance             0.7                    0.9
 Excess tax benefits from employee stock  0.1                    0.7
 plans
 Treasury stock acquired                  (20.4)                 (1.7)
Net cash used in financing activities     (28.1)                 (56.8)
Effect of exchange rate changes on cash   0.4                    (0.5)
Net Cash Flows                            23.3                   (10.7)
Cash and Cash Equivalents:
 At beginning of period                   84.3                   224.6
 At end of period                         $107.6                 $213.9

SOURCE Hill-Rom Holdings, Inc.

Website: http://www.hill-rom.com
Contact: Investor Relations Contact: Blair A. (Andy) Rieth, Jr., Vice
President, Investor Relations, +1-812-931-2199, andy.rieth@hill-rom.com; Media
Contact: Marylou McNally, Vice President, Corporate Communications,
+1-312-819-7233, marylou.mcnally@hill-rom.com
 
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