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Hologic Fiscal Q4 Revenues Rise 56 Percent on Demand for SARS-CoV-2 Tests

NEW YORK – Hologic reported after the close of the market on Wednesday that its fiscal fourth quarter revenues soared 56 percent year over year, driven by increased production and global demand for its two molecular SARS-CoV-2 assays, which run on the fully automated Panther and Panther Fusion systems.

For the three months ended Sept. 26, the firm reported total revenues of $1.35 billion, up from $865.8 million a year ago and beating analysts' average estimate of $1.12 billion. Its Q4 product revenues rose 68 percent to $1.20 billion from $716.4 million, while service and other revenues dropped 3 percent to $144.5 million from $149.4 million.

Hologic reported Q4 diagnostics revenues of $939.0 million, up more than threefold year over year from $306.8 million. Without blood screening, diagnostics revenues were $930.3 million, up more than three times from $290.1 million a year ago. 

Within diagnostics, molecular diagnostics revenues totaled $818.9 million, up almost five times from $172.1 million in Q4 2019; cytology and perinatal revenues were $111.4 million, down 6 percent from $118 million in the prior-year quarter; and blood screening revenues were $8.7 million, down 48 percent year over year from $16.7 million.

Results for Hologic's "unprecedented fiscal year … were driven by the tireless efforts of our diagnostics, European, and supply chain teams to provide COVID-19 tests, and by steady improvement in our other businesses compared to the June quarter," Steve MacMillan, the firm's chairman, president, and CEO, said in a statement.

On a conference call to discuss the company's financial results, MacMillan added that Q4 performance "was driven by unprecedented global demand for our [COVID-19] tests on the Panther system and the continued recovery of our other product lines."

Early in its response to the pandemic, the company had established a goal to double its overall molecular diagnostics test production capacity from about 20 million to 40 million tests per quarter, he noted. "A capacity expansion of this magnitude would normally happen over eight to 10 years, but we set out to make it happen in six months," he said. "In the fourth quarter alone, we produced more than 50 million total molecular diagnostics tests," including about 25 million SARS-CoV-2 tests.

The company shipped 511 Panther systems this year, more than double its run rate over the last five years, and increased its global installed base to about 2,250 instruments, up almost 30 percent in 12 months, MacMillan said. 

Hologic's objective is "to produce at least 75 million total molecular diagnostic tests a quarter, starting roughly a year from now," almost four times its total capacity before the pandemic, MacMillan said. Its efforts to expand capacity will be reimbursed in part by a $119 million US government contract announced last week, he added.

The contract will support capital and labor investments to enable Hologic to provide 13 million COVID-19 tests per month for the US market by January 2022, the firm said.

MacMillan further said that Hologic is developing a combination influenza A/B and SARS-CoV-2 assay on its Panther system, which it plans to launch before the end of this year.

Q4 revenues for the firm's breast health products fell 16 percent year over year to $289.2 million from $342.6 million, while revenues for its skeletal health products were down 26 percent to $18.6 million from $25 million. Gynecology surgical revenues fell 13 percent to $100.2 million from $114.5 million in the prior-year quarter. Hologic posted no medical aesthetics product revenues for Q4, compared to $76.9 million in the prior-year quarter, as it divested that business in December 2019.

The company reported a Q4 net income of $493.6 million, or $1.88 per share, compared to a loss of $123.5 million, or $.46 per share, in Q4 2019. On an adjusted basis, Hologic reported EPS of $2.07, compared to $.65 a year ago, and beating the analysts' average estimate of $1.22 per share.

The firm’s R&D costs fell 6 percent year over year to $57 million in Q4 from $60.4 million, and its SG&A costs fell 2 percent year over year to $221.3 million from $225.5 million.

For full fiscal year 2020, Hologic's revenues rose 12 percent year over year to $3.78 billion from $3.37 billion, beating analysts' average estimate of $3.53 billion. Product revenues rose 18 percent to $3.28 billion from $2.77 billion, while service and other revenues dropped 8 percent to $549.4 million from $596.0 million.

The firm reported a net income for the year of $1.11 billion, or $4.21 per share, compared to a net loss of $203.6 million, or $.76 per share, in 2019. On an adjusted basis, the firm reported 2020 EPS of $3.98, compared to $2.43 in 2019, and beating analysts' average estimate of $3.12 per share.

The firm's R&D costs for the year fell 4 percent to $222.5 million from $232.2 million, and its SG&A costs fell 6 percent to $840.6 million from $897.2 million.

Hologic ended the fiscal year with $701.0 million in cash and cash equivalents.

In fiscal Q1 2021, the firm expects revenues in the range of $1.35 billion to $1.43 billion; EPS in the range of $1.88 to $2.03; and adjusted EPS in the range of $2.10 to $2.25. Prior to the release of the financial results, analysts on average were expecting $1.13 billion in Q1 2021 revenues, and adjusted EPS of $1.23.

Chris Lin, an analyst at Cowen, wrote in a research note on Thursday that the investment bank continues to believe that "COVID-19-driven Panther placements should result in durable longer-term revenue growth" for Hologic.

In Thursday morning trading on the Nasdaq, Hologic's shares were up more than 1 percent at $74.84.

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