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Hologic Q1 Revenues Grow 6 Percent

This article has been updated with information from Hologic's earnings presentation.

NEW YORK (GenomeWeb) – Hologic reported after the close of the market Wednesday that revenues for its first quarter of fiscal year 2017 were up around 6 percent year over year, driven in part by strong growth in molecular diagnostics product revenues. 

For the three months ended Dec. 31 2016, the firm reported revenues of $734.4 million, up from $695.2 million in the prior year and above the consensus Wall Street estimate of $724.2 million. On a constant currency basis, Q1 revenues grew around 6 percent.

In diagnostics, Hologic reported fiscal Q1 revenues of $325.4 million, up 5 percent from $310.7 million in the prior-year period. Within diagnostics, the firm posted molecular diagnostics revenues of $139.9 million, an 8 percent increase from $129.6 million in fiscal Q1 2016. The firm said that "continued strength" across Aptima women's health products on the automated Panther and Tigris platforms contributed to growth within the US and internationally.

Also in diagnostics, Hologic reported blood screening revenues of $65.2 million, up 7 percent from $60.7 million in the prior year period, driven by "Zika-related sales and strong international ordering patterns."

"Both revenue and earnings per share exceeded our guidance, illustrating the progress we're making on our journey from turnaround story to sustainable growth company," Steve MacMillan, the firm's chairman, president, and CEO, said during a conference call to recap the earnings.

"We began to see the next chapter of our growth story emerge this quarter in two important areas," he said. "First, our efforts to revitalize our research and development pipeline are beginning to bear fruit, as new products contributed progressively more to growth. Second, we generated growth internationally after four consecutive quarters of decline in fiscal 2016."

Although Hologic is "still very much a startup outside the US," the international molecular diagnostics and surgical segments both grew more than 20 percent on a constant currency basis in Q1 and were leaders in driving international growth," MacMillan said.

Earlier this month, Hologic received US Food and Drug Administration approval of its first HIV viral load assay. On the call, he called it "a highly complex assay that required a prospective clinical trial and premarket approval from the FDA."

The firm expects to achieve clearance for a Hepatitis C assay later this fiscal year, and Hepatitis B in 2018, he added.

In other business segments, cytology and perinatal sales were relatively flat at $120.3 million in the recently completed quarter, compared to $120.4 million in Q1 2016.

Breast health revenues were up 4 percent year over year at $273.3 million from $262.2 million; GYN surgical sales rose 16 percent to $114.8 million from $98.8 million; and Skeletal health sales dropped around 11 percent to $20.9 million from $23.5 million in the prior-year quarter.

US revenues grew around 5 percent in the quarter to $573.6 million, while international revenues were up around 7 percent to $160.8 million, driven by strong growth in blood screening, molecular diagnostics, and GYN surgical, the firm said. Excluding blood screening, international sales grew almost 3 percent, and around 6 percent at constant currency.

Hologic spent $54.4 million on R&D in fiscal Q1 2017, up around 6 percent from $51.7 million in 2016. Its SG&A expenses were $179.8 million, up around 2 percent from $176.4 million in fiscal Q1 2016.

Hologic posted net income of $86.5 million, or $0.30 per share, compared to $84.9 million, or $0.29 per share, in the prior-year quarter. On a non-GAAP basis, its EPS was $0.52, beating analysts' consensus estimate of $.51.

The firm reported cash and cash equivalents of $646 million as of Dec. 31, 2016.

Hologic projected revenues of between $2.79 billion and $2.83 billion for full-year fiscal 2017, which would represent a decrease of 1.7 percent to .3 percent year over year. The firm said that it expects EPS to be in the range of $2.73 to $2.77.

On a non-GAAP basis, EPS is expected to be in the range of $1.90 to $1.94.

Hologic noted that current guidance includes revenues and EPS from the divested blood screening business for part of the year.

The firm announced earlier this week that it completed the sale of its stake in blood screening firm Grifols for $1.85 billion.

By monetizing the Grifols business, Hologic "significantly derisked" its portfolio, MacMillan said.

Divesting the blood screening business removes a drag on the firm's growth that enables it to increase revenues and EPS at a faster rate, and the deal "markedly strengthens our balance sheet and increases our financial flexibility to grow through acquisitions," he added.

The firm also guided to revenues of $675 million to $685 million, and EPS of between $1.85 and $1.86 for fiscal Q2 2017.

Non-GAAP EPS is projected to be in the range of $.45 to $.46.

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