Stock-Based Compensation

3 Months Ended

Dec. 27, 2025

Share-Based Payment Arrangement [Abstract]

The following presents stock-based compensation expense in the Company’s Consolidated Statements of Income:


	Three Months Ended
	December 27, 2025		December 28, 2024
Cost of revenues	$	3.7	$	3.5
Research and development	1.8		2.5
Selling and marketing	4.1		3.7
General and administrative	17.3		20.4

	$	26.9	$	30.1

Pursuant to the Merger Agreement, the Company did not grant any stock options for fiscal 2026. The Company granted options to purchase 0.5 million shares of the Company’s common stock during the three months ended December 28, 2024 with a weighted-average exercise price of $79.38. There were 4.2 million options outstanding at December 27, 2025 with a weighted-average exercise price of $58.31.

The Company uses a binomial model to determine the fair value of its stock options. The weighted-average assumptions utilized to value these stock options are indicated in the following table:


	Three Months Ended
	December 27, 2025 (1)			December 28, 2024
Risk-free interest rate	—		%	4.2		%
Expected volatility	—		%	32.5		%
Expected life (in years)	—			4.8
Dividend yield	—			—
Weighted average fair value of options granted	$	—		$	26.74

(1) No stock option awards were granted in the first quarter of fiscal 2026

The Company granted 1.1 million and 0.8 million restricted stock units (“RSUs”) during the three months ended December 27, 2025 and December 28, 2024, respectively, with weighted-average grant date fair values of $74.28 and $79.88 per unit, respectively. Pursuant to the Merger Agreement, the Company did not grant any performance stock awards for fiscal 2026. The Company granted 0.1 million performance stock units (“PSUs”) during the three months ended December 28, 2024 to members of its senior management team, which had a weighted-average grant date fair value of $79.39 per unit. Each recipient of PSUs is eligible to receive between zero and 200% of the target number of shares of the Company’s common stock at the end of a three-year performance period, provided that the Company’s defined Return on Invested Capital metrics are achieved. The Company also granted 0.1 million of free cash flow performance stock units (“FCF PSUs”) based on a three-year cumulative free cash flow measure to members of its senior management team, which had a grant date fair value of $79.39 per unit during the three months ended December 28, 2024. Each recipient of FCF PSUs is eligible to receive between zero and 200% of the target number of shares of the Company’s common stock at the end of the three-year measurement period. The PSUs and FCF PSUs cliff-vest three years from the date of grant, and the Company recognizes compensation expense ratably over the required service period based on its estimate of the probable number of shares that will vest upon achieving the measurement criteria. If there is a change in the estimate of the number of shares that are probable of vesting, the Company will cumulatively adjust compensation expense in the period that the change in estimate is made. The Company also granted 0.1 million market stock units (“MSUs”) to members of its senior management team during the three months ended December 28, 2024. Each recipient of MSUs is eligible to receive between zero and 200% of the target number of shares of the Company’s common stock at the end of a three-year performance period based upon achieving a certain total shareholder return relative to a defined peer group. The MSUs were valued at $87.41 per share using the Monte Carlo simulation model in fiscal 2025. The MSUs cliff-vest three years from the date of grant, and the Company recognizes compensation expense for the MSUs ratably over the service period. At December 27, 2025, there was 2.1 million in aggregate unvested RSUs, PSUs, FCF PSUs and MSUs outstanding.

At December 27, 2025, there was $8.0 million and $98.6 million of unrecognized compensation expense related to stock options and stock units (comprised of RSUs, PSUs, FCF PSUs and MSUs), respectively, to be recognized over a weighted-average period of 2.3 and 2.0 years, respectively.

As a result of the Merger Agreement, at closing of the transaction all outstanding restricted stock units, including PSUs and MSUs, granted by the Company prior to the date of executing the Merger Agreement of October 21, 2025 will be cancelled and converted into the right to receive the merger consideration in respect of each share. At the closing, each Company stock option that is outstanding and unvested will vest in full and will be cancelled and converted into the right to receive the merger consideration less the exercise price.

HOLOGIC INC 10-Q