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Hologic Q3 Revenues Decline Nearly 4 Percent as MDx Revenues More Than Double

NEW YORK – Hologic said after the close of the market on Wednesday that its revenues for the fiscal third quarter fell nearly 4 percent year over year. The reason for the decline was the inclusion of revenue from its divested Cynosure Medical Aesthetics business in the year-ago quarter.

Hologic posted $822.9 million in total revenues for the quarter, compared to $852.4 million in the year-ago period. It handily beat the consensus Wall Street revenue estimate of $616.7 million. Excluding material acquisitions and divestitures, organic revenue grew nearly 8 percent in the quarter.

The company's diagnostics revenues totaled $532.2 million, up 75 percent from $305.4 million. Within the division, molecular diagnostics revenues grew 169 percent to $460.3 million from $170.9 million, while cytology & perinatal was down 47 percent to $64.1 million from $120.3 million. Molecular diagnostics revenues were driven by strong demand for the firm's SARS-CoV-2 assays that run on the Panther and Panther Fusion instruments, Hologic said.

On a conference call to discuss the financial results, CEO Stephen MacMillan said the quarter ended with better results than the firm ever envisioned as it experienced "unprecedented demand" for COVID-19 testing. As a result, Hologic scaled up its manufacturing capacity significantly and plans to produce 40 million molecular tests per quarter by fall 2020, MacMillan said.

During the third quarter, Hologic sold almost 13 million COVID-19 tests and reached the capacity to provide 1.5 million tests per week. The company also placed 208 Panther systems globally and expects to place 500 in FY2020, MacMillan noted.

Earlier this week, the firm announced a $7.6 million award from the US Department of Health and Human Services and the US Department of Defense to help Hologic expand production of custom sample collection and processing consumables for SARS-CoV-2 testing.

Also within the diagnostics division, blood screening revenues dipped 45 percent year over year to $7.8 million from $14.2 million. Hologic divested its stake in blood screening firm Grifols for $1.85 billion in early 2017.

Among the company's other divisions, breast health revenues declined 31 percent to $224 million from $325.4 million. GYN surgical revenues fell 54 percent to $51.5 million from $112.2 million. Skeletal health revenues declined 38 percent to $15.2 million from $24.4 million.

CFO Karleen Oberton said on the call that breast health revenue was negatively affected by the pandemic, but noted it declined in line with the company's expectations. She added that the surgical business recovered more rapidly than the firm's internal forecasts suggested, with substantial improvements in May and June.

Hologic decreased its R&D spending 10 percent to $55.1 million from $61.4 million and dropped its SG&A spending approximately 7 percent to $208.8 million from $223.5 million.

The firm posted a net profit of $137.9 million, or $.53 per share, for the quarter, compared to $93.9 million, or $.35 per share, a year ago. Adjusted EPS for the quarter was $.75 per share, almost double the analysts' average estimate of $.38 per share.

Hologic finished fiscal Q3 with $744.2 million in cash and cash equivalents.

For fiscal Q4, the firm is guiding to a revenue increase of 6.8 percent to 18.4 percent year over year, translating to revenues between $925 million and $1.03 billion. EPS is anticipated to be between $.73 and $.93, and adjusted EPS is expected to be between $.95 and $1.15.

Hologic didn't provide full-year guidance and offered wider guidance ranges than usual for the fourth quarter due to the "highly fluid and unpredictable" business environment, Oberton said in a statement. She added on the call that demand for COVID-19 tests will likely exceed supply in the fourth quarter of 2020.

Shares of Hologic were up 6 percent to $67.85 in aftermarket trading on the Nasdaq.

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