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Hologic Q3 Revenues Increase 11 Percent as it Awaits Completion of Gen-Probe Buy

NEW YORK (GenomeWeb News) – As it awaits completion of its $3.7 billion buy of Gen-Probe, Hologic reported after the close of the market on Monday that its diagnostics business segment grew 11 percent year over year in its fiscal third quarter.

During the quarter ended June 23, the Bedford, Mass., firm said that diagnostics sales rose to $158.7 million from $143.4 million a year ago. During a conference call following the release of the firm's earnings results, Hologic President and CEO Rob Cascella said that MDx revenues were up almost 30 percent year over year driven by sales of the Cervista product line in the US and China.

Later this week, Hologic is anticipated to close on its purchase of Gen-Probe, following a shareholders' meeting at Gen-Probe's San Diego headquarters on Tuesday, during which Gen-Probe shareholders could approve the pending purchase. If they do, the deal is expected to be completed on Wednesday.

The deal was cleared by regulators in the US and Germany, and two weeks ago Hologic announced the pricing of its private placement of $1 billion of senior notes and the expected pricing of loans in connection with the deal.

Hologic previously had announced that after closing, Carl Hull, now the chairman and CEO of Gen-Probe, will stay with Hologic for at least 15 months to direct the combined diagnostic operations, which will include the cytology and molecular businesses. Cascella said on the conference call that the majority of key Gen-Probe senior managers as well as "many other key employees throughout the organization" will also stay on at Hologic.

Integration efforts have been "intense" during the past two months with more than 100 individuals on 15 functional and six cross-functional teams focused on all aspects of integration, Day 1 priorities, future goal setting, and synergies, he added.

"Our value drivers are focused primarily on commercial requirements, product development priorities, sales force rationalization, and the international rollout of products," Cascella said.

At the time the deal was announced, Hologic guided to $40 million on first-year cost synergies and $75 million in cost synergies by the third year. Hologic CFO Glenn Muir said on the call that the company remains "highly confident" that those goals will be achieved.

Companywide, revenues in the third quarter rose 4 percent to $470.2 million from $451.1 million, Hologic said today, missing the consensus Wall Street estimate of $476.2 million.

Product sales climbed 3 percent to $384.6 million from $372.8 million a year ago, while service and other revenues rose 9 percent to $85.6 million from $78.3 million.

R&D spending was cut to $26.2 million, down 11 percent from $29.3 million, and SG&A costs were up 6 percent to $119.8 million from $112.8 million.

The firm's net income for the quarter came in at $23.6 million, or $.09 per share, compared to net income of $36.2 million, or $.14 per share, a year ago. On an adjusted basis, EPS of $.35 edged out the average analyst estimate of $.34.

Hologic finished the quarter with $905.6 million in cash and cash equivalents.

For the fourth quarter, the company is guiding to revenues of $485 million, which would be a 4 percent increase over year-ago revenues of $467 million. Non-GAAP EPS is anticipated to be between $.35 and $.36.

For full-year fiscal 2012, ending Sept. 29, Hologic said that revenues are anticipated to be around $1.9 billion, which would represent a 6 percent improvement over fiscal 2011 revenues of $1.79 billion. Adjusted EPS is expected to be in the range of $1.36 and $1.38.

The figures for fiscal Q4 2011, as well as fiscal 2012, do not include any effects from the expected Gen-Probe acquisition.