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Hologic Q3 Revenues Grow 2 Percent, Boosted by Diagnostics

NEW YORK (GenomeWeb) – Hologic said after the close of the market on Tuesday that its revenues grew 2 percent year over year during its fiscal third quarter, with diagnostics revenues increasing 4 percent. 

The firm also announced that CFO Bob McMahon will leave the company to become the CFO of Agilent. Chief Accounting Officer Karleen Oberton will replace him, effective Wednesday. 

For the recently completed quarter, Hologic posted $824 million in revenues, compared to $806.1 million in the year-ago period. It beat the consensus Wall Street estimate of $800.4 million. 

Its diagnostics revenues totaled $294.3 million, up from $284.1 million. Within the division, molecular diagnostics revenues grew 7 percent to $154.5 million from $144.1 million, while cytology & perinatal was essentially flat at $121.1 million, compared to $121 million a year ago. Blood screening revenues dipped 2 percent year over year to $18.6 million from 19 million. 

Hologic divested its stake in blood screening firm Grifols for $1.85 billion in early 2017.

On a conference call following the release of the financial results, Hologic President, Chairman, and CEO Stephen MacMillan noted that the firm had a tailwind during the quarter from currency exchange effects and that the firm benefitted less from currency translation than it had originally forecast.

He added that diagnostics rebounded from a soft second quarter, when the division's revenues slid 6 percent year over year. Further, he noted, diagnostics experienced "upside from the divested blood screening business" in Q3.

Molecular diagnostics, MacMillan said, continued to drive growth within diagnostics. International sales of molecular diagnostics products were up in the mid-teens, while growth in the US was in the mid-single digits. Aptima women's health assays, run on the Panther molecular diagnostic system, remained the primary growth driver in dollar terms, he added, while the company's menu of virology products experienced "nice adoption."

"Although the base remains small, sales of our quantitative HIV, HCV, and HPV tests more than doubled again" year over year, MacMillan said.

He added that placements of Panther systems continue to ramp up, which he attributed to both an expanded testing menu and increased sales activities. "We expect continued Panther placements into 2019," MacMillan said. "We're probably seeing a little bit more of an uptick in some of our international Panther placements in the last couple of quarters, which we think also bodes well to continue that growth going forward."

MacMillan added that growing the cytology business in the US remains a challenge due to Hologic's high market shares and longer cervical cancer testing intervals, but international sales in the business offset domestic softness.

Despite the year-over-year decline in blood screening, meanwhile, revenues were double what the company had previously forecast, he said. The firm has annualized the financial impact of that business's divestiture and it expects a "significant reduction in quarterly blood screening revenue going forward," MacMillan added.

Among the company's other divisions, total breast health revenues increased 9 percent to $307.9 million from $283.7 million. Total medical aesthetics revenues slid 17 percent to $91.7 million from $110 million, and total GYN surgical inched up 1 percent to $107.7 from $106.5 million. Skeletal health ticked up 3 percent to $22.5 million from $21.8 million. 

Hologic reduced its R&D spending 13 percent to $54.4 million from $62.5 million, but increased its SG&A spending 8 percent to $227.4 million from $210.9 million. 

The firm posted a profit of $112.9 million, or $.41 per share, for Q3 2018, compared to a profit of $59.5 million, or $.21 per share, a year ago.  Adjusted EPS for the recently completed quarter was $.58 per share, beating the analyst's average estimate of $.56 per share. 

Hologic finished Q3 with $575.4 million in cash and cash equivalents. 

The company announced its board has approved a new $500 million share buyback program to replace the previous program. 

For fiscal Q4, the firm is guiding to a revenue decrease of .4 percent year over year to a gain year over year of 1.5 percent, translating to revenues of between $800 million and $815 million. EPS is anticipated to be between $.33 and $.35. Adjusted EPS is expected to be between $.58 and $.60. 

Hologic also presented new guidance for 2018. Full-year 2018 revenues are anticipated to grow between 4.8 percent and 5.3 percent to a range of $3.21 billion to $3.22 billion. Net loss per share is expected to be between $.25 and $.23. Adjusted EPS is expected to be in the range of $2.24 and $2.26. The firm had previously guided to full-year revenues of $3.18 billion to $3.21 billion, a loss per share of $.34 to $.29, and adjusted EPS of $2.22 to $2.27. 

Hologic also said it acquired privately held digital specimen radiography firm Faxitron Bioptics for approximately $85 million. The deal is anticipated to broaden Hologic's breast health product portfolio and expand its role in the clinical continuum of care for breast cancer patients. 

The deal is expected to be roughly neutral to Hologic's adjusted EPS for the rest of fiscal 2018 and for fiscal 2019, and is expected to be accretive afterward, it said. 

In mid-morning trading on the Nasdaq on Wednesday, Hologic's shares were down more than 3 percent at $41.45.

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