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Hologic's Q3 Revenues Rise 1 Percent; Firm Raises Guidance

NEW YORK (GenomeWeb) – Hologic said after the close of the market on Wednesday that its revenues for the fiscal third quarter inched up 1 percent year over year.

For the three months ended June 28, the company recorded $632.6 million in revenues, compared to $626.1 million in the year-ago quarter, and comfortably above the average analyst estimate of $621.9 million.

Product revenues came in at $529.3 million, down slightly from $529.9 million in Q3 2013, while service and other revenues rose to $103.3 million from $96.2 million.

By segment, diagnostics dipped more than 1 percent year over year to $293.1 million, primarily due to decreases in ThinPrep pap test sales in the US, and to a lesser extent, blood screening revenues, Hologic said. Blood screening revenues were down 4 percent to $54 million, primarily due to the timing of contingent revenue from its collaboration with Grifols, Hologic CFO Robert McMahon said on a conference call following the release of the company's financial results.

The molecular diagnostics franchise, however, increased 7 percent, resulting primarily from the Aptima product line. McMahon said that the MDx business recorded $116 million in revenues during the quarter, driven by growth in the US. The core Aptima franchise rose in the high teens, driven by Hologic's strategic alliance with Quest Diagnostics forged in June 2013 and broader adoption of the Aptima HPV test.

Meanwhile, the Aptima CT/GC assay saw high-single digit growth, and the Aptima Trichomonas assay business saw strong growth, McMahon said. He added that Hologic is on track to place 1,000 Panther instruments by the end of fiscal 2015.

Of the company's other segments, breast health revenues grew more than 3 percent to $238 million on strong growth in 3D mammography system sales and continued service revenue growth from the growing installed base of digital mammography systems. 2D systems declined, however.

Hologic's GYN surgical segment revenues were up more than 3 percent to $78.5 million on strong MyoSure system sales, while skeletal health revenues grew a fraction of 1 percent to $23 million, the company said.

After a steep decline in sales and earnings early in the year, Hologic had aimed to turn the business around by the end of Fiscal 2014, and the company's financial results to date, "now offer a more definitive sign that we have stopped the declines and are returning to growing a little faster than expected," Hologic President and CEO Stephen MacMillan said on the call. "While the absolute growth rate is not the level that we aspire to, this was a second straight quarter of sales growth as our turnaround is clearly taking hold."

Hologic posted a profit of $11.3 million, or $.04 per share, for the quarter, compared to a net loss of $11 million, or $.04 per share, a year ago. Its Q3 2013 figures include about $571.7 million in charges that Hologic took related to restructuring and divestitures.

On a non-GAAP basis, Hologic had EPS of $.37 in the recently completed quarter, beating the consensus Wall Street estimate of $.34.

Its R&D costs increased 10 percent to $52.5 million from $47.8 million, while its SG&A costs rose 3 percent to $147.7 million from $143.4.

Hologic finished the quarter with $638.4 million in cash and cash equivalents.

The company said for the fiscal fourth quarter revenues are expected to be in the range of $630 million to $640 million, excluding a one-time revenue contribution of about $20 million resulting from the amendment to its licensing deal with Roka Bioscience. The $20 million in upfront payments in cash and common stock will be paid to Hologic in the fiscal fourth quarter.

Non-GAAP EPS is expected to be between $.36 and $.37, excluding a $.05 favorable impact due to the one-time $20 million revenue contribution. Including the $20 million contribution, revenues are expected to between $650 million and $660 million, with non-GAAP EPS of $.41 and $.42.

For full-year Fiscal 2014, revenues are expected to be between $2.50 billion and $2.51 billion, up from a prior guidance of $2.46 billion to $2.49 billion. The new range excludes the $20 million one-time revenue contribution.

Non-GAAP EPS is anticipated to be in the range of $1.44 to $1.45, up from a prior guidance range of $1.37 to $1.40. The new range excludes a $.05 favorable impact from the $20 million revenue contribution.

Including the $20 million contribution, revenues are expected to be between $2.52 billion and $2.53 billion, while non-GAAP EPS is expected to be in the range of $1.49 to $1.50.