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Hologic Q3 Revenues Up 3 Percent

NEW YORK (GenomeWeb) – Hologic reported after the close of the market on Wednesday that its third quarter revenues rose more than 3 percent, driven by strong growth in US sales, its gynecology surgical business, and molecular diagnostics.

For the three months ended June 25, the diagnostics firm reported revenues of $717.4 million, up from $693.9 million a year ago, and beating the average consensus Wall Street estimate of $704.2 million.

"Despite difficult comparisons in the prior year period, global sales grew in all four of our businesses, led by gynecology surgical,” said President and CEO Steve MacMillan in a statement. “In addition, we continue to improve gross and operating margins, and our capital deployment efforts helped EPS increase significantly faster than revenue."

The firm’s US sales rose nearly 5 percent in the quarter to $564.9 million, offsetting a 1 percent drop to $152.5 million for international sales.  

In the US, the gynecology surgical business had the biggest overall percentage gain with sales increasing 19 percent year over year to $102.0 million from $85.5 million.

Revenues from Hologic's diagnostics business were up 1 percent year over year to $309.9 million from $306.9 million. Within that segment, molecular diagnostics sales had the biggest growth, up 6 percent to $131.8 million from $124.6 million in Q3 2015. To round out the diagnostics business, cytology and perinatal segment sales were up almost 4 percent at $122.2 million versus $118.1 million, and the firm's blood screening revenues dropped around 13 percent to $55.9 million from $64.2 million.

Molecular diagnostics growth was driven by continued strength across Aptima women's health products on the fully automated Panther and Tigris platforms, both in the United States and internationally, the company said.

“Diagnostics is our largest business and greatest source of non-GAAP operating profit,” MacMillan said in a conference call with analysts following the release of the earnings. “Within diagnostics, our cytology and molecular businesses performed well, while our blood screening business declined as expected. Excluding sales of our discontinued cystic fibrosis product, molecular sales would have grown at a high single-digit rate. Our domestic business was solid, as our fully automated Panther system continues to accumulate new placements and competitive wins, and the utilization of our assays for trichomoniasis, HPV, chlamydia, and gonorrhea continues to grow.”

The real standout within molecular diagnostics was the firm’s international business, MacMillan added. In recent quarters, international molecular sales had turned slightly positive under new leadership, and the company had added viral load assays to the Panther menu.

“Building on this, the business took a significant step ahead in the third quarter, with constant currency growth exceeding 20 percent,” he said. “In addition, we had a record quarter of Panther placements outside the US, coupled with a significant step up in per-instrument utilization. All of these data points have us feeling good about the potential of molecular diagnostics to become a new driver of growth for the company over time.”

MacMillan also noted that Hologic obtained an emergency use authorization for its Zika virus test for diagnostic use during Q3. Blood banks began testing donated blood for Zika with the firm’s Procleix assay under an investigational new blood protocol. “While we do not expect significant sales from these two new products, both of which run on the Panther system, our ability to rapidly develop these tests shows that we can react quickly to public health emergencies in close cooperation with regulators and customers,” he said.

Sales for the firm’s breast health products grew by 1 percent to $282.5 million from $279.5 million, while  sales for its skeletal health products were up almost 5 percent to $23.0 million from $22.0 million.

The company reported net income of $84.8 million, or $.30 per share, up from from $29.4 million, or $.10 per share a year ago. On an adjusted basis, Hologic reported EPS of $.51, beating analyst estimates for EPS of $.48.

The firm’s R&D costs rose 5 percent to $58.8 million from $56.0 million in Q3 2015, and its SG&A costs rose 2 percent to $171.5 million from $167.4 million.

Hologic ended the quarter with $441.5 million in cash and cash equivalents.

For the fourth quarter, the company expects revenues of $714.0 million to $724.0 million and earnings per share of $.49 to $.50. The company also updated its guidance for 2016 to revenues of $2.82 billion to $2.83 billion and EPS of $1.93 to $1.94. On average, analysts are expecting Q4 revenues of $728.4 million and EPS of $.50, and are anticipating FY2016 revenues of $2.82 billion and EPS of $1.91.

Hologic’s shares sank half a percent to $37 in after-hours trading on the Nasdaq.

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