NEW YORK (GenomeWeb News) — Hologic reported after the close of the market Monday a 6 percent increase in fiscal fourth quarter revenues, including a 14 percent spike in Diagnostics revenues driven primarily by the inclusion of a full quarter of Gen-Probe's sales.
For the three months ended Sept. 28, Hologic reported revenues of $622.1 million, up from $588.5 million in the same quarter last year, and falling short of the average Wall Street estimate of $624.4 million.
On an adjusted basis, revenues increased 4 percent from $600.2 million in Q4 2012, reflecting the addition of $11.6 million relating to contingent revenue earned and received under a collaboration agreement with Novartis that was eliminated as a result of the effect of purchase accounting, the company said.
Product sales increased to $521.6 million from $493 million, while service and other revenues inched up to $100.6 million from 95.6 million.
Hologic's Q4 Diagnostics revenues increased 14 percent to $290 million from $253.4 million in Q4 2012. On an adjusted basis, which includes the aforementioned $11.6 million accounting adjustment, sales growth was 9 percent.
Growth in this segment was driven primarily by the inclusion of a full quarter of Gen-Probe revenues of $147.9 million (as compared to non-GAAP revenues of $101.1 million), partially offset by a decrease in legacy Diagnostics product sales, primarily ThinPrep products, the company said.
Gen-Probe revenues no longer include the Lifecodes business, which was divested in March, and accounted for $7.3 million in revenues in the year-ago period. Moving forward, Hologic will no longer report Diagnostic financial results as legacy and Gen-Probe-related, as the acquisition of Gen-Probe occurred more than a year ago and is fully integrated, the company said.
"In our Diagnostics group, we continued to make strides in our molecular franchise," President and CEO John Cumming said during a conference call recapping Hologic's earnings. "During the quarter, we made substantial progress laying the groundwork to capitalize on our agreement with Quest. To date, we have installed almost all the instrumentation required to support conversion through our women's health assays. Our agreement with Quest represents an important example of the strategic fit of Gen-Probe with our legacy cytology business."
Cumming also noted that Hologic added a "significant number" of new medium- and high-volume molecular customers in the US. "Aptima HPV has been an important driver of new account wins and this trend should continue, following our recent [US Food and Drug Administration] approvals for use on Panther, including last week's announcement of approval of the Aptima HPV 16 18/45 genotype assay," Cumming said. "Based on the strength of our molecular franchise, we are confident about our prospects for additional large laboratory business, which we believe will be a mix of new contract wins and growth in existing accounts."
In other business segment results, Breast Health revenues grew 2 percent to $234.2 million, Gyn Surgical revenues dropped 4 percent to $76.7 million, and Skeletal Health revenues dropped 15 percent to $21.2 million.
The firm's fourth quarter net loss was $1.11 billion, or $4.11 per share, compared with a net loss of $77.8 million, or $.29 per share, in Q4 2012. On an adjusted basis, Hologic reported net income of $107.6 million, or $.39 per share, compared to $98.3 million, or $.37 per diluted share, in the comparable quarter last year. Adjusted EPS was above the average Wall Street estimate of $.37.
Hologic said the net loss includes a goodwill impairment charge of $1.11 billion. The company said that it completed a goodwill impairment analysis on the first day of fiscal Q4, and that based on this — as well as a combination of other factors including a re-evaluation of exiting product development efforts and cost structure, and a change in revenue forecasts — it determined that a portion of its goodwill within its Diagnostics segment was impaired, hence the non-cash impairment charge.
Hologic's fourth quarter R&D costs inched up year over year to $48.7 million from $47.1 million, while its SG&A expenses dropped to $124.7 million from $178.7 million. The company ended the quarter with $829.4 million in cash and cash equivalents.
For the full fiscal year 2013, Hologic's revenues increased 24 percent to $2.49 billion from $2 billion in the prior year. On an adjusted basis, revenues increased 25 percent to $2.51 billion from $2.01 billion.
Hologic reported a net loss of $1.17 billion, or $4.36 per share, for FY2013, compared with a net loss of $73.6 million, or $.28 per share, in 2012. The company reported non-GAAP net income of $406.5 million, or $1.50 per share, up from $367.8 million, or $1.38 per share, in 2012.
"We have made significant progress in recent months in reviewing the strategy, leadership, and cost structure of each of our businesses, all with a focus on making changes to the organization that will enable us to leverage our strong product platforms going forward," Cumming said in a statement.
Cumming, who was named as the new president and CEO of the company over the summer, noted in Hologic's third quarter earnings call that he was conducting a strategic review of the business.
"Organizational change doesn't happen overnight and fiscal '14 will be a year of transition for the company," Cumming said on this week's call. "The good news is our core products are the technological and market share leaders in their respective segments, which will help us power through a number of secular headwinds in FY '14. It is our objective to leverage our core franchises to drive organic growth and position us for the future."
Cumming added that he believes revenue growth will "return to the company in FY '15 and continue on an upward trend."
In terms of revenue guidance, Hologic said that it expects fiscal first quarter 2014 revenues of $600 million to $610 million, a 5 percent to 7 percent year-over-year decrease compared to first quarter fiscal 2013 non-GAAP revenues of $644.6 million, with the prior year reflecting the addition of $13.3 million primarily relating to a purchase accounting adjustment in Q1.
The decrease is expected primarily from a decline in sales of blood screening assays, NovaSure systems, and ThinPrep systems, plus, to a lesser extent, the elimination of Lifcodes revenues, which were $12.6 million in Q1 2013. This decrease, Hologic said, is expected to be partially offset by the continued ramp-up of new products including 3D Dimensions, Panther, and MyoSure systems.
The company expects non-GAAP EPS of $.30 to $.31 in Q1.
Hologic said that it expects FY2014 revenues of $2.43 billion to $2.48 billion, representing a year-over-year expected decrease of 1 percent to 3 percent over FY2013 non-GAAP revenues of $2.51 billion, with the prior year reflecting the addition of $19.7 million primarily related to a purchase accounting adjustment.
Meantime, the company expects non-GAAP EPS of $1.32 to $1.38 in FY2014.
Hologic announced separately on Monday that its board of directors has authorized the repurchase of up to $250 million of the firm's common stock over the next three years.
In Tuesday morning trade on the Nasdaq, shares of Hologic were down 15 percent at $19.50.