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Hologic Q4 Revenues Decline 28 Percent on COVID Sales, Semiconductor Chip Issues

NEW YORK — Hologic reported after the close of the market on Monday that a continued decline in sales of COVID-19 assays and ongoing difficulties securing semiconductor chips contributed to an overall 28 percent year-over-year decline in its fiscal fourth quarter revenues.

But the Marlborough, Massachusetts-based firm said revenues from its non-COVID-19 diagnostics and surgical products continued to rise year over year, and the firm sees opportunities in the rising number of installed Panther automated molecular diagnostic platforms.

Hologic brought in $953.3 million in revenue for the quarter, down from $1.32 billion a year prior but still beating the firm's earlier guidance of $840 million to $870 million and Wall Street's consensus estimate of $864 million.

Excluding COVID-19 assays, Hologic reported its diagnostics revenue grew about 8 percent during the fourth quarter in comparison with the prior year. On a conference call Hologic President and CEO Steve MacMillan said that growth occurred across a range of old and new molecular assays including its sexually transmitted infection, vaginitis, Mycoplasma genitalium, and virology tests.

The firm's Breast Health revenue declined about 18 percent, largely a consequence of its difficulties acquiring semiconductor chips, while its surgical revenue grew 9 percent as COVID-19 prevalence declined and procedure volume rose. The company's skeletal health revenue grew about 2 percent.

Hologic reported a net income for the quarter of $118.7 million, or $.47 per share, compared to a net income of $328.8 million a year earlier, or $1.28 per share. On an adjusted basis, EPS for the recently completed quarter was $.82, exceeding Wall Street's estimate of $.62.

On the call MacMillan said that most new customers acquired during the pandemic were using Panther instruments beyond SARS-CoV-2 testing.

"As of the Q4 close, over 85 percent of new customers worldwide are running at least one other assay on their Panthers in addition to COVID," he said. "More impressive is that over 55 percent of these new Hologic customers are running at least two non-COVID assays on their Panthers — a strong signal of future utilization at new customer sites."

The firm has about 3,250 Panther instruments installed globally, about 350 of which were installed during fiscal 2022. Company officials said earlier this year its Panther installed base grew by 75 percent during the pandemic.

The firm's full-year revenues of $4.86 billion were down about 14 percent year over year from $5.63 billion in fiscal 2021, but above the earlier guidance range of $4.75 billion to $4.78 billion and beating analysts' estimate of $4.78 billion.

For the full year, the company's net income was $1.30 billion in fiscal 2022, or $5.13 per share, down from $1.87 billion in fiscal 2021, or $7.21 per share. Adjusted EPS was $6.02, beating Wall Street's consensus prediction of $5.82.

MacMillan said the company's core franchises of diagnostics, breast health, and surgical products are expected to grow by low double digits in fiscal 2023 and added that the company is confident that the worst of its chip shortage has passed.

He further predicted higher demand for diagnostic testing, including for respiratory diseases such as respiratory syncytial virus infections.

"The diagnostics industry has been elevated, and people desire to know with more certainty what they have," he said. "You think about something as simple as RSV that we're talking about here in the last few weeks — I'd argue that 99.9 percent of the public had never heard of RSV even a month ago, right? So, now, we're getting into these levels of granularity that people want to know more about what they have, and we think that will be a positive."

Hologic CFO Karleen Oberton said Hologic's non-COVID-19 molecular diagnostics growth included increased sales of STI, vaginitis, and virology assays. And the company still brought in $151 million in COVID-19 assay revenue in Q4 2022, about 70 percent of which came from the United States.

The firm finished the year with $2.34 billion in cash and cash equivalents.

In a note to investors, Cowen analyst Max Masucci wrote that Hologic "handily beat" the consensus for the fourth quarter and the company's stock remains a relatively safe investment. JP Morgan analyst Casey Woodring wrote that Hologic shows sustained momentum on its non-COVID-19 diagnostics.

Hologic's stock was up about 1 percent to $67.80 in early morning trading on the Nasdaq.

Oberton said on the call that Hologic expects revenues for the first quarter of 2023 will range between $940 million and $990 million, and the firm's full-year revenues will range between $3.70 billion and $3.90 billion.

EPS for fiscal Q1 2023 is expected to be in the range of $.60 to $.70. On an adjusted basis EPS is expected to be $.80 to $.90.

For full-year 2023, EPS is anticipated to be in the range of $2.51 to $2.81, while adjusted EPS is anticipated to be between $3.30 to $3.60.