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Hologic Q2 Revenues Climb 104 Percent on Continued COVID-19 Demand, Recovery of Base Businesses

NEW YORK – Hologic reported after the close of the market on Wednesday that its fiscal second quarter revenues rose 104 percent year over year, driven by continued demand for testing during the COVID-19 pandemic.

For the three months ended March 27, the firm reported revenues of $1.54 billion compared to $756.1 million in fiscal Q2 2020, matching the consensus Wall Street estimate.

Revenues from Hologic's global diagnostics business were $1.06 billion, up 233 percent year over year from $319.2 million. The firm said its total diagnostics revenues excluding its divested blood screening business were $1.05 billion, up 246 percent year over year from $304 million.

Within diagnostics, the company said its molecular products revenues were $935.3 million, up 391 percent from $109.6 million in Q2 2020, based on strong demand for its two SARS-CoV-2 assays that run on its Panther and Panther Fusion systems. The firm's cytology and perinatal sales were $117.2 million, up 3 percent from $113.4 million, and its blood screening revenues were $12 million, down 21 percent year over year from $15.2 million.

Hologic posted Breast Health revenues of $336.3 million, up 9 percent compared to $307.8 million a year earlier; Gyn surgical revenues of $114.2 million, up 8 percent year over year from $105.4 million; and skeletal health revenues of $22.6 million, down 5 percent year over year from $23.7 million.

"Organic revenue doubled, driven by strong recovery and momentum in our base businesses, as well as our continued response to the COVID-19 pandemic," Stephen MacMillan, Hologic's chairman, president, and CEO, said in a statement.

Hologic expects to soon reach 100 million COVID-19 assay shipments including 27 million in its fiscal second quarter, MacMillan said on a conference call following the release of the financial results. That translates to $2.35 billion in revenues since the pandemic began, and $680 million in Q2, he said.

The company shipped 717 Panther instruments globally this past year, including about 190 in Q2, MacMillan said, adding, "As a reminder, in the five years before COVID, we shipped an average of 225 instruments per year."

Hologic is on track with expansion plans at its facilities in San Diego and Manchester, UK, and expects to reach 75 million MDx-test capacity per quarter by January 2022, he noted.

Generally, US molecular COVID testing volumes remain "much higher than for any other molecular test [application] but have declined significantly since January based on a better than expected vaccine rollout," MacMillan said. "In this context, our US sales of COVID tests also declined significantly in March and further in April. We believe molecular COVID testing demand will likely decline further as vaccines [continue to] roll out but [will still] remain important into fiscal '22 and beyond. This reflects the ongoing need for accurate clinical diagnosis, the value of testing for infection-control purposes, and so-called back-to-life testing that is helping to reopen economies."

International COVID product sales remain strong for the firm and contributed $474 million to its revenues in the second quarter, up 142 percent year over year, MacMillan said. Additionally, Hologic expects that during the next few years, the firm's organic growth, excluding growth from COVID-19 assay sales, will be higher than before the pandemic, he added.

"[During the pandemic], we used COVID cash flows to broaden our portfolio by buying assets that are growing faster than our base business," MacMillan said. "Since late February, we have completed two deals and announced a third, dramatically accelerating our longstanding goal to become a more complete diversified diagnostics leader."

The firm noted that it recently announced acquisitions of three molecular diagnostic companies: Mobidiag, a developer of MDx tests and instrumentation, for approximately $795 million; Diagenode, a European developer and manufacturer of MDx diagnostic assays and epigenetics products, for approximately $159 million; and Biotheranostics, a developer of diagnostic, prognostic, and predictive cancer tests, for approximately $230 million.

And on Dec. 30, it completed the acquisition of Somatex, a German developer of biopsy site markers and localization technologies, for approximately $63 million.

Marlborough, Massachusetts-based Hologic reported net income attributable to the firm of $619.9 million, or $2.38 per share, compared to $96.3 million, or $.36 per share, in Q2 2020. The firm reported non-GAAP diluted earnings per share of $2.59, missing analysts' average estimate of $2.62 per share.

Hologic's R&D costs rose 45 percent to $71.5 million from $49.3 million in Q2 2020, and its SG&A costs rose 87 percent to $220.4 million from $177.6 million.

The company ended the quarter with $816.4 million in cash and cash equivalents.

"We forecast strong financial results in our third fiscal quarter, driven by continued strength and recovery in our base businesses, partially offset by a potentially conservative but still significant outlook for COVID test revenue given the rapidly evolving market dynamics," Karleen Oberton, Hologic’s CFO, said in a statement.

Hologic anticipates revenues for fiscal Q3 of between $1.00 billion and $1.07 billion, GAAP EPS of between $.74 and $.89, and non-GAAP EPS of between $1.00 and $1.15.

The firm said that its future guidance does not include the impact of the pending Mobidiag acquisition, which is expected to close early in fiscal Q4.

In early Thursday morning trading on the Nasdaq, Hologic shares were down more than 8 percent to $66.50.

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