NEW YORK – Hologic reported after the close of the market Monday that its fiscal second quarter revenues fell 29 percent year over year on an expected fall in COVID-19 assay sales, as non-COVID-19 diagnostic sales helped the firm beat the consensus Wall Street estimate.
Marlborough, Massachusetts-based Hologic reported that for the three months ended April 1, it had $1.03 billion in revenues compared to $1.44 billion in the year-ago quarter. It beat the Wall Street consensus prediction of $958.8 million and shot past the high end of Hologic's earlier guidance of $930 million to $980 million.
Hologic CEO Steve MacMillan said in a conference call, "Our exceptional results confirm Hologic is now a much bigger, stronger company with more diverse and durable growth than pre-pandemic." That transformation was difficult to see during spikes in COVID-19 testing and supply chain difficulties, but those clouds are clearing and Hologic has emerged as a more recognized global brand, he said.
The firm recorded $464.7 million in diagnostics revenue for Q2, down about 53 percent from $987.1 million a year ago when SARS-CoV-2 Omicron infection drove up testing demand. About $71 million of that total from 2023 came from COVID-19 testing. Growth at a constant currency basis declined 52 percent year over year.
Excluding COVID-19 sales, diagnostics grew 13 percent, or 15 percent at constant currency, to $355 million from $314.2 million in Q2 2022.
MacMillan said the firm saw continued growth among its vaginitis and sexually transmitted infection panels as customers with installed Panther and Panther Fusion instruments expanded their use of Hologic's testing menu, which has 19 available assays for women's health and infectious diseases.
"As we exit the pandemic, we are placing more menu with more throughput on more Panthers and adding more Panther Fusion systems, positioning labs to unlock our full breadth of menu over time," he said.
He said Hologic also had strong revenue contributions from its Biotheranostics subsidiary and the firm's respiratory menu on the Panther Fusion. In non-molecular diagnostics, Hologic's cytology and perinatal testing revenues were down about 3 percent, or less than 1 percent at constant currency, to $111.9 million from $115.4 million, and its blood screening test revenues were up 15 percent, to $10.6 million from $9.2 million a year ago. Growth at constant currency was also 15 percent.
Hologic CFO Karleen Oberton said the firm's newer assays and legacy women's health portfolio both contributed to that performance.
Meanwhile, Hologic's breast health business grew 24 percent to $385.4 million from $310.4 million a year ago. At constant currency, the business was up about 26 percent year over year. MacMillan said on the call that the growth followed four quarters of revenue declines primarily attributable to difficulties acquiring sufficient semiconductor supplies.
Hologic's GYN surgical business rose 23 percent year over year to $144.8 million from $117.3 million. The business was up 25 percent at constant currency. According to MacMillan, the business has undergone transformation in the past several years, and the growth in the most recent quarter was driven by its MyoSure, Fluent, and NovaSure products while the firm's laparoscopic portfolio has been building momentum.
Lastly, the skeletal health business's revenues rose 51 percent to $31.6 million from $20.9 million a year ago. Growth at constant currency was 53 percent.
Hologic posted net income of $218.5 million for the quarter, or $.87 per share, for Q2 2023 versus $455.7 million, or $1.80 per share, a year ago. It reported adjusted EPS of $1.06, beating analysts' consensus estimate of $.88 per share.
Hologic increased its research and development spending in Q2 by about 6 percent year over year to $74 million from $69.5 million. Its SG&A costs fell almost 11 percent year over year to $243.2 million from $271.9 million.
The firm ended the quarter with $2.58 billion in cash and cash equivalents. Oberton said that the firm has a "tremendous amount of firepower should opportunities for capital deployment arrive."
Along that line, MacMillan said Hologic is eyeing the possibility of larger deals than it has considered in the past. He said the firm is focusing its attention on "bulking up" its existing businesses and taking advantage of the firm's existing capabilities, strengths, and sales channels. But he said Hologic is doing well enough that it can afford to be patient in eyeing potential deals.
Oberton said any targets under consideration for larger deals would be mature firms that have products on the market and would be accretive to earnings.
For fiscal Q3, Hologic expects revenues of between $930 million and $980 million. EPS is anticipated to be $.64 to $.74, while non-GAAP EPS is expected to be between $.83 and $.93.
For full-year 2023, the company is guiding to revenues of between $3.925 billion and $4.025 billion. EPS is expected to be $2.91 to $3.11, while non-GAAP EPS is anticipated to be $3.75 to $3.95.
Oberton said the full-year prediction includes expectations of continued strong performance from its molecular diagnostics revenues and steady support from its cytology business. The firm predicts $245 million in COVID-19 assays for the year and $120 million from COVID-19-related income, including some discontinued product revenue.
Hologic's stock was down about 7 percent to $81.50 in early morning trading on the Nasdaq.