NEW YORK — Hologic reported after the close of the market on Wednesday that declining sales of COVID-19 assays and difficulties obtaining semiconductor chips contributed to an overall 14 percent year-over-year decline in its fiscal third quarter revenues.
But growth in sales of other diagnostics and surgical products still helped the Marlborough, Massachusetts-based company beat its expectations from a quarter ago, and executives raised its revenue and EPS guidance for full-year 2022.
Hologic brought in slightly more than $1.00 billion in total revenue, which was down from $1.17 billion a year ago but higher than the $875 million to $915 million predicted last quarter.
Excluding COVID-19 assays, Hologic reported revenue from its global diagnostic business rose 15 percent in constant currency during the third quarter in comparison with the prior year. The company's molecular diagnostics business, minus COVID-19 revenues, rose 22 percent year-over-year in constant currency on strong sales of the company's vaginitis, STI, and respiratory assays.
Hologic President and CEO Steve MacMillan said on a conference call on Wednesday that the number of Panther automated molecular diagnostic platforms installed worldwide rose about 85 percent since the start of the pandemic to 3,200. Some of those sold during the pandemic have been used primarily for COVID-19 assays, and Hologic CFO Karleen Oberton said customers have been transitioning use of those systems to the company's core women's health assays as COVID-19 testing demand declines.
Panther placements slowed to 59 new systems in the recently complete quarter, 70 percent of them in the international market, down from 119 and 123 systems in the first two quarters, respectively. MacMillan said the third quarter sales align with historic sales of 225-250 placements annually, and he expects a decline in new placements following the rise in sales during the pandemic.
Shortages of semiconductor chips hurt Hologic's breast health business, although MacMillan saw encouraging trends this past quarter in lead times, procurement, and supplies. He expects the second half of 2022 will be the low point for chip availability.
The company reported a net income for the quarter of $228.4 million, or $.90 per share, compared to a net income of $268.1 million a year earlier, or $1.04 per share. The firm also reported non-GAAP EPS of $.95.
Hologic's R&D costs for the quarter also declined about 6 percent year over year to $65.1 million from $69.0 million. Its SG&A costs were $244.2 million, down 6 percent from $260.0 million a year ago.
Hologic exited fiscal Q3 with $2.38 billion in cash and cash equivalents.
Hologic raised its full-year 2022 revenue guidance to a new range of $4.75 billion to $4.78 billion, up from an earlier guidance of $4.6 billion to $4.7 billion. It also increased its earnings guidance to a range of $4.98 to $5.03, up from $4.36 to $4.56, and raised its guidance for non-GAAP EPS to between $5.79 and $5.84, up from $5.45 to $5.65.
"We are confident, despite the current turbulence, that our previously announced 5-to-7 percent annual organic revenue growth rate through 2025 remains an achievable target provided the current chip headwinds normalizes, as we expect," MacMillan said.
In a note to investors, JP Morgan analyst Casey Woodring said that Hologic's third quarter revenues were well above Wall Street estimates, especially among diagnostic products, and noted a "clear momentum" in Hologic's base business. The company's non-COVID-19 diagnostics income shows solid demand in the US for women's health diagnostics as well as international demand for virology testing and other molecular diagnostics, Woodring added.
SVB Securities analyst Puneet Souda also said in a note that the $2.4 billion cash position on Hologic's balance sheet gives Hologic flexibility for mergers and acquisitions, noting that the company spent $1.1 billion in 2021 to buy three firms that expanded Hologic's molecular diagnostics business: Mobidiag, Diagenode, and Biotheranostics.
Since Hologic acquired Espoo, Finland-based Mobidiag in 2021, teams from the parent company and subsidiary have been analyzing the process to bring Mobidiag’s Novodiag automated molecular diagnostic platform to the US. The machine, which is used to detect infectious diseases and antibiotic resistance, is CE marked and it could be available in the US by early 2025, Oberton said.
In early afternoon trading Thursday, shares of Hologic were up a fraction of one percent on the NASDAQ, at $71.22.