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Hologic Q2 Revenues Rise 4 Percent Driven by MDx Sales

NEW YORK (GenomeWeb) – Hologic reported after the close of the market on Wednesday that its fiscal second quarter revenues rose 4 percent year over year, driven by strong sales in its molecular diagnostics business.

For the three months ended March 31, 2019 the firm reported revenues of $818.4 million, up from $789.3 million a year ago, and beating the consensus Wall Street estimate of $806.1 million.

Revenues from Hologic's global diagnostics business were $296.7 million, up 6 percent from $279.7 million in Q2 2018. Within diagnostics, molecular revenues were $167.8 million, up 11 percent from $150.7 million in Q2 2018, while cytology and perinatal sales were $115.5 million, down 2 percent from $117.7 million. The firm's blood screening revenues were $13.4 million, up 19 percent year over year from $11.3 million.

Removing the impact of its divested blood screening business, Hologic's diagnostics revenues in Q2 were $283.3 million, up 6 percent from $268.4 million in the prior-year quarter.

In Q2, "growth was again driven by our largest businesses, breast health and molecular diagnostics," Hologic CEO Stephen MacMillan said in a statement.

Despite recent concerns about pricing pressures tied to the Protecting Access for Medicare Act of 2014, Hologic's diagnostics revenues in Q2 represented "a material acceleration from recent quarters" against "an easy prior-year comparable," MacMillan said in a conference call to discuss the firm's financial results.

"Molecular remains the growth driver in this division," he said. "Although international is a small piece of our total molecular franchise, we are seeing very strong performance there."

In the US, where Hologic has "high market shares in key assay categories, molecular grew at a low double-digit rate," better than in recent periods, he said.

MacMillan said that the firm continues to place more Panthers and drive increased utilization by helping customers consolidate testing on its systems. In the second quarter, he noted, revenue growth was driven by strong global sales of its legacy women's health assays for chlamydia, gonorrhea, human papillomavirus, and trichomoniasis, as well as new quantitative viral load tests.

The Marlborough, Massachusetts-based firm said that its innovation pipeline continued to be productive during the quarter with recent new product launches including the Aptima Mycoplasma genitalium assay. It noted that the Aptima HIV-1 Quant Dx Assay received two new CE marks in Europe, for early infant diagnosis and testing dried blood spots.

Revenues for Hologic's breast health products were $321.5 million, up 7 percent from $300.1 million. Medical aesthetics revenues dropped to $73.8 million, down 14 percent from $85.5 million a year ago. Revenues for its GYN surgical business were $102.2 million, up 3 percent from $99.4 million, and revenues for its skeletal health products business were $24.2 million, down 1 percent from $24.6 million.

Hologic reported a net loss of $272.6 million, or $1.01 per share, compared to a net loss of $681.4 million, or $2.46 per share in Q2 2018. The company said that it's non-GAAP diluted EPS was $.58, beating the analysts' average estimate of $.57.

The company said that its net loss included an aggregate $443.8 million of non-cash impairment charges related to intangible assets and equipment in Medical Aesthetics.

Its R&D costs rose less than 1 percent to $57.3 million from $56.8 million in Q2 2018, and its SG&A costs rose 4 percent to $223.4 million from $214.3 million.

Hologic ended the quarter with $401 million in cash and cash equivalents.

For Q3 2019, the company anticipates revenues of $825 million to $840 million and EPS of between $.33 and $.35. Non-GAAP EPS is anticipated to be in the range of $.60 to $.62. On average, analysts expect revenues of $840 million and EPS of $.62 for Q3.

The company increased its revenue guidance for fiscal 2019 to between $3.33 billion and $3.35 billion from between $3.30 billion and $3.34 billion. Its EPS is now expected to be between $.06 and $.09, compared to a previous guidance of $1.39 to $1.43. Its non-GAAP EPS for 2019 is anticipated to be between $2.41 and $2.44, compared to previous guidance of $2.39 to $2.43.

In a research note on Wednesday, Canaccord Genuity analyst Mark Massaro said that Hologic's strong double-digit growth in its molecular diagnostics Panther franchise was offset by another revenue miss in its Cynosure medical aesthetics business.

"We lack conviction that Cynosure will remain part of [Hologic] in the future, and we think it makes the most sense for [the firm] to divest it," he said.

In morning trading on the Nasdaq, shares of Hologic were down 1 percent at $45.55.