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Hologic Fiscal Q1 Diagnostics Revenues Rise 5 Percent

NEW YORK – Hologic reported after the close of the market Wednesday that revenues for its first quarter of fiscal year 2020 were up 2 percent year over year, driven in part by strength in its global molecular diagnostics businesses.

For the three months ended Dec. 28, 2019, the Marlborough, Massachusetts-based firm reported revenues of $850.5 million, up from $830.7 million in the prior year, beating the Wall Street analysts' average estimate of $839.8 million and in line with its preliminary projections.

On a constant currency basis, revenues for the recently completed quarter were up nearly 3 percent, the firm said.

“We posted strong financial results in our first fiscal quarter, led by our surgical and diagnostics divisions,” Steve MacMillan, Hologic’s chairman, president, and CEO, said in a statement. Excluding acquisitions and divestitures, the firm's core businesses "significantly outperformed expectations in the quarter … even as we absorbed a worse-than-expected loss from our divested medical aesthetics business," he added alluding to the Cynosure business, which the firm reached a deal to sell in November.

Hologic had acquired Cynosure in 2017 for $1.6 billion but sold it for about $140 million.

In diagnostics, Hologic reported fiscal Q1 revenues of $311.5 million, up 5 percent from $296.6 million in the prior-year period. Excluding the divested blood screening business, the diagnostics business posted Q1 2020 revenue of $300 million, up 6 percent from $282.4 million in the prior-year quarter.

Within diagnostics, the firm posted molecular diagnostics revenues of $178.5 million, up 9 percent from $164.3 million in fiscal Q1 2019. Blood screening revenues were $12.0 million, down 16 percent from $14.2 million in the prior-year period. Cytology and perinatal revenues were $121.0 million, up 3 percent from $118.1 million in the prior-year quarter.

On a conference call to discuss its financial results, MacMillan said the firm has upgraded its talent and aligned its commercial structure in its diagnostics business "to help lab customers of all sizes" grow their businesses.

"The growth driver here remains molecular where we are placing more [Panther systems], with more assay menu, in more countries," he said. "This has led to strong increases in consumables sales and consistent revenue growth."

MDx international sales continued "to be a standout in both the speed and consistency of growth," he said.

Outside the US, molecular sales increased 22.2 percent, well into the double digits for the 14th time in 15 quarters. "Growth was led by our core women's health tests, our viral-load assays with a growing contribution from HIV in Africa, and Panther Fusion," MacMillan said.

In the US, where the firm has high market shares in key assay categories, growth was broad-based, he said, as customers consolidated testing on to its large installed base of Panther instruments. Hologic has shipped more than 200 Panthers in each of the last five years, "fueling a very consistent, profitable razor razor-blade model," MacMillan added.

In other business segments, breast health revenues rose 2 percent to $331.1 million from $324.7 million. Excluding the SuperSonic Imagine business, breast health revenues were relatively flat at $325 million compared to $324.7 million a year ago. During the summer Hologic and SuperSonic, an ultrasound medical imaging firm, announced Hologic Hub, a wholly owned indirect subsidiary of Hologic, had acquired about 46 percent of SuperSonic's shares.

Medical aesthetics revenues dropped 18 percent to $65.3 million from $79.8 million. Gyn/surgical revenues rose 10 percent to $119.1 million from $108.4 million; and skeletal health revenues rose 11 percent to $23.5 million from $21.2 million.

Hologic reported a net income attributable to the firm of $386.1 million, or $1.43 per share, compared to $98.6 million, or $.36 per share, in the prior-year quarter. Its adjusted EPS was $.61 and matched the analysts' consensus estimate.

Hologic spent $61.2 million on R&D in fiscal Q1 2020, up 15 percent from $53.2 million in Q1 2019. Its SG&A expenses grew 4 percent to $233.4 million compared to $224.6 million in fiscal Q1 2019.

Hologic reported cash and cash equivalents of $370.8 million as of Dec. 28, 2019.

The company narrowed its guidance for full-year fiscal 2020 to revenues of between $3.24 billion and $3.27 billion, which would represent an increase of 2.9 percent to 3.8 percent year over year. It had previously guided to revenues of between $3.45 billion and $3.50 billion.

The firm anticipates EPS for full-year 2020 to be in the range of $2.86 to $2.90, up from its previous guidance of $1.59 to $1.64. Its adjusted EPS is expected to be in the range of $2.63 to $2.67. The firm has previously guided to an adjusted EPS range of between $2.60 and $2.65.

For fiscal Q2 Hologic guided to revenues of $770 million to $780 million, and EPS of between $.40 and $.42. Adjusted Q2 EPS is projected to be in the range of $.61 to $.63.

Prior to the release of the financial results, analysts on average expected $3.32 billion in revenue and $2.61 in adjusted EPS in 2020. They had anticipated $811.4 million in revenue and $.63 in adjusted EPS for the firm's second fiscal quarter.