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Hologic Q2 Revenues Up 3 Percent, Beat Estimates

NEW YORK (GenomeWeb) – Hologic reported after the close of the market on Wednesday that its second quarter revenues rose 3 percent, driven in part by solid growth in molecular diagnostics.

For the three months ended March 31, the firm reported revenues of $715.4 million, up from $693.3 million a year ago, and beating the consensus Wall Street estimate of $685.4 million.

CEO Stephen MacMillan said in a statement that the firm's base business revenue grew greater than 5 percent on a constant currency basis, "led by our molecular diagnostics, surgical, and international franchises. And at the same time, it was a transformational quarter from a strategic perspective, as we strengthened our portfolio of businesses for the long-term."

In Q2, the firm's financial results were affected by the divestiture of blood screening, which included a large, one-time gain on a GAAP basis, and the acquisition of Cynosure, Hologic said. Because both transactions closed in Q2, its financial results contain partial-quarter contributions from both blood screening and Cynosure, the firm added.

Revenues from Hologic's global diagnostics business were down almost 3 percent year over year. Within that segment, molecular diagnostics sales surged 13 percent to $142.1 million from $126.1 million in Q2 2016, while cytology and perinatal sales were flat at $115.6 million versus $116.1 million.

The firm's blood screening revenues dropped around 38 percent to $38.3 million from $62.2 million.

Within diagnostics, molecular diagnostics sales were driven primarily by continued strength across Aptima women's health products on the fully automated Panther and Tigris platforms, both in the US and internationally, Hologic said.

MacMillan said during a conference call to discuss the firm's earnings that growth in the second quarter was led by molecular diagnostics. "In the United States, where sales increased at a low-double-digit rate, our commercial team is doing an excellent job of cross-selling our full product portfolio, gaining market share behind our fully automated Panther system, and expanding the market by driving compliance with testing guidelines," he said.

He noted that outside the US, where sales grew more than 20 percent for the third time in four quarters, the firm continues to see the benefits of "healthy Panther placements and multiple new product introductions."

In looking at the company's business mix, over the past few years, "molecular quietly has snuck up to become really our single largest product franchise," he said. Later, he added that, "I don't think we're ready to declare our global molecular business to be a double-digit grower, but….it's accretive to our total growth rate."

Sales for its breast health products rose 2 percent to $280.5 million from $275.8 million, while revenues for its GYN surgical business increased 11 percent year over year to $101.1 million from $90.9 million, and sales for its skeletal health products were down almost 2 percent to $21.8 million from $22.2 million.

Its US sales rose 4 percent in the quarter to $570.1 million, offsetting flat growth in international sales that reached $145.3 million in the quarter, the company said.

The company reported net income of $526.8 million, or $1.84 per share, up from $68.9 million, or $.24 per share. On an adjusted basis, Hologic reported EPS of $.50, beating analyst estimates for EPS of $.46.

Its R&D costs dropped 6 percent to $55.4 million from $59.1 million in Q2 2016, and its SG&A costs rose 35 percent to $220.8 million from $163.2 million.

Hologic ended the quarter with $1.13 billion in cash and cash equivalents.

For the third quarter, the company expects revenues of $790 million to $805 million and earnings per share of $.22 to $.24. Analysts have estimated revenues of $815.5 million and EPS of $.50 for Q3. The company also updated its guidance for 2017 to revenues of $3.05 billion to $3.08 billion and EPS of $2.44 to $2.48. Analysts, on average, expect revenues of $3.06 billion and EPS of $1.98.