NEW YORK – Hologic reported after the close of the market Thursday that its non-COVID fiscal first quarter organic revenues grew 6 percent year over year despite flat diagnostics revenues.
The Marlborough, Massachusetts-based firm reported its total revenues declined 6 percent to $1.01 billion for the quarter ended Dec. 30 compared to $1.07 billion in fiscal Q1 2023. However, the firm beat Wall Street's consensus estimate of $986.1 million for the quarter and topped its earlier guidance of $960 million to $985 million.
"Each one of our divisions delivered solid results, setting the stage for another strong fiscal year," Hologic CEO Stephen MacMillan said in a statement. "We are excited to continue our durable and dependable performance as we progress through fiscal 2024."
MacMillan also announced during the company's conference call that the US Food and Drug Administration on Wednesday granted Hologic marketing clearance for a digital cytology system that incorporates artificial intelligence-developed software and advanced volumetric imaging technology. The firm's Genius Digital Diagnostics System is used to aid the detection of precancerous lesions and cervical cancer cells, and MacMillan said it can help improve the accuracy of cervical cancer detection and improve cytology workflows.
The firm's Diagnostics division revenues declined 20 percent during the quarter to $447.8 million compared to $559.3 million in the year-ago quarter. Excluding COVID-19 assay sales, the firm's organic diagnostics revenues were essentially flat at $388.1 million compared to $387.7 million the prior year.
Hologic reported a 25 percent drop in revenues from molecular diagnostics, which makes up the bulk of Hologic's diagnostics business, to $319.8 million compared to $425.2 million one year earlier. It also recorded a 5 percent decline in its cytology and perinatal testing revenues to $120.0 million from $126.8 million in the year-ago quarter.
Those declines were slightly offset by a 10 percent rise in the firm's blood screening diagnostics business to $8.0 million compared to $7.3 million one year prior.
Hologic CFO Karleen Oberton attributed the decline in diagnostics revenues in part to Q1 2024 having four fewer selling days than the prior-year quarter and said Hologic's diagnostics revenues had mid-single-digit growth when adjusted for the fewer selling days. She also noted a tough year-ago comparison when non-COVID diagnostic revenues were up 16 percent year over year.
Oberton said that Hologic has set a target of 5 percent to 7 percent growth in each division for fiscal 2024, excluding COVID-19 related revenues. While the diagnostics division fell short of that target in Q1, she said the firm expects the division will return to more normal growth in Q2 and the remainder of the fiscal year with improved utilization and menu expansion on the company's Panther molecular instruments and contributions from the firm's Biotheranostics subsidiary.
MacMillan said that Hologic's largest US customers have been shifting from the company's older Tigris system to the Panther system, which opens opportunities to adopt a broader menu of Hologic's assays including its vaginosis and vaginitis assays. The company is also seeing international customers adopt a wider array of assays using the Panther instruments that they installed during the pandemic.
"What I love about these businesses, frankly, is they bring on one or two assays at a time, they get more experience, and then they bring on more," he said.
MacMillan said last month during the 42nd annual JP Morgan Healthcare Conference that the firm's installed base of Panther instruments had nearly doubled since 2019 to about 3,260 instruments and raised the company's profile in markets where it previously lacked any visibility. Oberton said at the time that at least 90 percent of the instruments installed since April 2020 were running at least one assay other than COVID-19, and about 55 percent of placements were running at least two other assays.
Oberton said Hologic expects COVID-19 assay revenues of $20 million in Q2 and $60 million for the full fiscal year.
Among its other divisions, Hologic's breast health division recorded a 13 percent rise in revenues during Q1 to $377.7 million compared to $334.2 million in the year-ago period. Its Gyn Surgical business posted a 5 percent rise in revenues to $162.2 million compared to $154.1 million in Q1 2023. Lastly, its skeletal health business posted a 5 percent decline in revenues to $25.4 million compared to $26.6 million in the year-ago quarter.
Hologic reported net income of $246.5 million, or $1.03 per share, compared to $187.4 million, or $.75 per share, in Q1 2023. The firm reported a non-GAAP diluted EPS of $.98 per share, beating the analysts' consensus estimate of $.95 per share.
The firm lowered its R&D spending 11 percent during the quarter to $66.8 million compared to $74.8 million in the year-ago quarter. It also reduced its SG&A spending about 4 percent to $260.7 million compared to $272.0 million a year earlier.
Hologic ended the quarter with $1.93 billion in cash and cash equivalents.
MacMillan said Hologic has been examining M&A opportunities that could help the firm build its surgery business, and the valuations in that sector may be better for Hologic than those in diagnostics. While the firm is interested also in specialty labs, that business has "a lot of great top-line revenue but a lot of expense and not much profit," he said.
"What we know we're good at is taking existing assets that are on the market and operating them pretty well," MacMillan said. "We don't take on wildly dilutive things just because we have the cash."
The firm's fiscal Q2 revenues are expected to range between $990 million and $1.01 billion. EPS for the quarter is anticipated to be in the range of $.77 to $.82, and the adjusted EPS is expected to be in the range of $.95 to $1.00.
The firm also updated its full fiscal year 2024 guidance to a range of $3.99 billion to $4.07 billion from a prior range of $3.92 billion to $4.02 billion. EPS is expected to be in the range of $3.52 to $3.67 for the year and adjusted EPS is expected to be in the range of $3.97 to $4.12.