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Hologic Fiscal Q4 Revenues Increase 6 Percent as Diagnostics Sales Grow 2 Percent

NEW YORK (GenomeWeb) — Hologic reported after the close of the market on Wednesday a 6 percent increase in revenues for its fiscal fourth quarter, including a 2 percent uptick in revenues for its Diagnostics business.

For the three months ended Sept. 27, Hologic's reported revenues were $660.6 million compared to $622.1 million in the year-ago period. This included a one-time revenue benefit of $20.1 million related to an amended license agreement with Roka Bioscience. Excluding this benefit, revenues were $640.5 million, a 3 percent increase year over year. On average, analysts had expected revenues of $636.2 million.

Hologic tallied $532.1 million in product revenues, up 2 percent from $521.6 million in the year-ago period, while service and other revenue jumped 27 percent to $128.5 million from $100.5 million in Q4 of fiscal year 2013.

Sales in the company's Diagnostics unit grew 2 percent to $297.1 million excluding the one-time revenue benefit of $20.1 million. This increase was driven primarily by growth in the company's molecular diagnostics franchise and blood screening franchise, with the latter benefitting primarily from Hologic partner Grifols inking a deal in March to provide blood screening products to the Japanese Red Cross Society.

During a call following the release of Hologic's earnings, CFO Bob McMahon noted that within the Diagnostics segment, molecular diagnostics sales increased 3 percent year over year to $117 million, driven by strong US results.

"Our core Aptima franchise experienced healthy growth, primarily due to continued uptake at Quest [Diagnostics], the broader adoption of Aptima HPV, as well as gains in [Aptima Combo 2 for CT/NG] and Trichomonas," McMahon said. "Partially offsetting this growth was a decline in instrument sales, as we sold $9 million in Tigris systems to Quest in the fourth quarter of last year."

Also in Diagnostics, blood screening had revenues of $59 million, an increase of 14 percent driven by international growth primarily due to the aforementioned Japanese Red Cross deal and partially offset by declines in the US, McMahon said.

"From an instrument standpoint, we had another strong quarter with Panther, as customers continued to see the benefits of our superior automation," McMahon said. "Our installed base increased approximately 80 percent in fiscal '14, and we are on track to place 1,000 instruments globally by the end of fiscal '15."

In other operational segments, Breast Health grew 3 percent, GYN Surgical grew 2 percent, and Skeletal Health grew 10 percent year over year.

During the earnings call, CFO Stephen MacMillan, who joined the company last December amidst tumult, said that the growth in all four business segments was indicative of a dramatic turnaround at the firm.

"While our business lines have not changed significantly, Hologic today is a dramatically different company than 12 months ago, and will be even stronger in the coming year," MacMillan said. "A year ago our sales were in decline across the board; our debt load was prohibitive; many of our businesses such as blood screening, cytology, skeletal, and surgical all appeared to be in long-term decline; and we had weak credibility with many of you in the investment community."

"What has followed has been a dramatic refocusing of our business on growth, our customers, and our people, which hopefully becomes even clearer with this quarter's results," MacMillan added.

In fiscal Q4, Hologic posted a profit of $28.2 million, or $.10 per share, compared to a net loss of $1.11 billion, or $4.11 per share, in the year ago period. The net loss in the comparable quarter last year included a goodwill impairment charge of $1.11 billion.

Non-GAAP EPS were $.43 in Q4, which included $.05 per share from the one-time revenue benefit. Net of this benefit, non-GAAP EPS was $.38, a decline of just under 4 percent compared to the prior year but just ahead of the consensus analysts' estimate of $.37.

Hologic's R&D costs increased 7 percent to $52.1 million from $48.7 million; while its SG&A expenses jumped 22 percent to $152 million from $124.8 million.

Hologic finished the quarter with $741.6 million in cash and cash equivalents.

For fiscal year 2014, Hologic's revenues were $2.53 billion compared to $2.49 billion in fiscal 2013. Product revenues edged downward to $2.09 billion from $2.1 billion, while service and other revenue increased 11 percent to $435.8 million from $391.4 million.

The company provided guidance for fiscal 2015 of $2.54 billion to $2.57 billion in revenues and growth in all four business segments. Operational revenue growth, excluding the impact of foreign currency, is expected to be approximately 2 percent to 3.5 percent compared to fiscal 2014. Including an expected 1 percent negative impact from foreign currency, the company expects reported growth of between 1 percent and 2.5 percent.

Meantime, non-GAAP EPS is expected to be in the range of $1.50 to $1.54 for fiscal 2015. Compared to EPS of $1.46 in fiscal 2014, this represents year over year growth of approximately 3 percent to 5.5 percent.

Hologic also forecast revenues of $625 million to $635 million for the first quarter of fiscal 2015, growth of approximately 2 percent to 3.5 percent when considering a negative impact from foreign currency. The company also expects non-GAAP EPS in the range of $.35 to $.36 in Q1 of fiscal 2015.

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