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Hologic Fiscal Q3 Revenues Beat Estimates on Rising Non-COVID Sales

NEW YORK – Hologic reported after the close of the market Monday that its fiscal third-quarter revenues fell 2 percent year over year on a continued slide in COVID-19 assay sales, but the firm still beat Wall Street's expectations with gains in its non-COVID diagnostics, breast health, and surgical businesses.

The firm reported that for the three months ended July 1, it had $984.4 million in revenues compared to $1.00 billion in the year-ago quarter. It beat Wall Street's consensus prediction of $962.6 million for the quarter as well as the firm's previous guidance of $930 million to $980 million.

Hologic CEO Steve MacMillan said in a statement that the Marlborough, Massachusetts-based firm delivered solid, diversified growth when COVID-19 test sales were excluded.

"Our results once again highlight that Hologic's transformation and post-pandemic performance is durable," he said. "Our business is operating from a position of strength, with all of our franchises growing double digits in the period excluding COVID."

He said on a conference call that the firm is on pace to achieve or exceed its fiscal 2023 target of low-double-digit organic growth excluding COVID-19 products. The firm is also forecasting a growth rate for the year that is more than double its 5 percent to 7 percent long-term growth target, he said.

"In each of our businesses, we feature products that streamline workflows and create real advantages that our customers not only love but need," MacMillan said.

Diagnostics revenues fell 21 percent, to $439.7 million from $560.1 million, primarily on lower sales of COVID-19 molecular assays compared to the year-ago period. Molecular diagnostic revenues slid 31 percent to $302.2 million from $435.3 million in Q3 2022. Excluding COVID-19 testing revenues, Hologic saw a 12 percent increase in other diagnostics products to $374.2 million from $335.7 million a year ago. Blood-screening test revenues rose 20 percent to $10.7 million from $8.9 million, while cytology and perinatal revenues grew 9 percent to $126.8 million from $115.9 million.

MacMillan said on the conference call that excluding COVID-19 testing, Hologic's molecular diagnostics business delivered 13 percent growth on the strength of sales of its vaginosis and vaginitis, Mycoplasma genitalium, and herpes virus assays. Hologic CFO Karleen Oberton said the firm's Biotheranostics subsidiary also "continues to be a strong double-digit grower contributing to the molecular performance."

MacMillan said Hologic also has found unexpected challenges in bringing its Mobidiag subsidiary's technology to the US market but remains excited about the technology. The Finnish molecular diagnostics maker had developed a cartridge-based instrument, Novodiag, that combines real-time PCR and microarrays for multiplex pathogen testing. Hologic bought the firm in 2021, and MacMillan said "a little more redesign is required of both the cartridge and the machine" prior to a US launch.

In its other business segments, Hologic's breast health revenues increased 27 percent during the period to $360.3 million compared to $282.8 million in the year prior. Most of that change came from gains in its breast imaging business, and the firm said improved supplies of semiconductor chips facilitated the delivery of more instruments. MacMillan said the company has a backlog of orders for its Breast Health instruments and he expects the firm will draw down that backlog at least through fiscal 2024.

The firm also reported strong results in its hysteroscopic portfolio drove a 14 percent increase in revenues from its Gyn Surgical business, to $157.3 million compared to $138.1 million during the year-ago period. The firm also saw a 25 percent rise in its Skeletal Health business, to $27.1 million from $21.7 million.

Hologic reported a net loss of $40.5 million, or $.16 per share, for Q3 2023 versus net income of $228.4 million, or $.90 per share, a year ago. It reported non-GAAP adjusted EPS of $.93 per share compared to the analysts' consensus estimate of $.89 per share for the quarter.

Hologic also raised its R&D spending about 12 percent during the quarter to $72.6 million from $65.1 million. Its SG&A spending fell about 2 percent, to $240.0 million compared to $244.2 million.

The firm ended the quarter with $2.77 billion in cash and cash equivalents.

Oberton said the company expects continued growth in its diagnostics business during Q4 led by its molecular diagnostics business, driven by expanded use of the company's Panther instruments and increasing contributions from its Biotheranostics business. COVID-19 assays are predicted to bring in $10 million in revenues for the quarter and $235 million for the year while other COVID-related sales are expected to raise $25 million in the quarter and $120 million during the fiscal year.

Oberton said the company is guiding fourth quarter revenues to be between $910 million and $950 million and EPS to be between $.63 to $.70. Non-GAAP EPS is expected to be between $.80 and $.87.

Hologic revised its full-year guidance to between $3.995 billion to $4.035 billion compared to its previous forecast of between $3.925 billion and $4.025 billion. EPS is expected to be in the range of $2.10 to $2.17 compared to the previous range of $2.91 to $3.11, while the firm is guiding non-GAAP EPS to between $3.87 and $3.94 compared to the previous guidance of $3.75 to $3.95.

MacMillan also noted during the call that although he was appointed last month as chair of Illumina's board of directors, he plans to remain with Hologic, where he remains passionate and engaged with his work. He intends to help Illumina select its next CEO, among other key decisions. Illumina's previous CEO, Francis deSouza, left the company in June.

Hologic's stock was down about 4 percent to $76.00 in early morning trading on the Nasdaq.