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Hologic Q2 Revenues Drop 7 Percent on Lower COVID-19 Assay Sales

NEW YORK – Hologic reported after the close of the market on Wednesday that its fiscal second quarter revenues dropped 7 percent year over year, primarily driven by lower sales of COVID-19 assays.

For the three months ended March 26, the Marlborough, Massachusetts-based firm reported revenues of $1.44 billion compared to $1.54 billion in fiscal Q2 2021 and beat the consensus Wall Street estimate for revenues of $1.29 billion.

Hologic's global diagnostics business posted revenues of $987.1 million, down 7 percent year over year from $1.06 billion.

Within diagnostics, the company said its molecular diagnostics revenues were $862.5 million, down 8 percent from $935.3 million in Q2 2021. Cytology and perinatal sales were $115.4 million, down 2 percent year over year from $117.2 million, and blood screening revenues were $9.2 million, down 23 percent year over year from $12.0 million.

Diagnostics revenues excluding COVID-19 revenues were $290.4 million, up 3 percent year over year from $282.5 million.

Hologic said its COVID-19 revenues were down 14 percent year over year and included assay revenues of $584.1 million as well as other COVID-19 related revenues and revenue from discontinued products of $73.5 million.

Hologic posted Breast Health revenues of $310.4 million, down 8 percent year over year compared to $336.3 million; gynecologic surgical revenues of $117.3 million, up 3 percent year over year from $114.2 million; and skeletal health revenues of $20.9 million, down 8 percent year over year from $22.6 million.

"In our second quarter of fiscal 2022, Hologic posted strong financial results that significantly exceeded our guidance on both the top and bottom lines," the firm's Chairman, President, and CEO Stephen MacMillan said in a statement.

"We continued to deliver in an uncertain business environment," MacMillan said on a conference call to discuss the financial results. "For example, in January, we saw COVID cases spike once again, putting pressure on healthcare utilization and certain elective procedures. Through February and March, the ripple effects of the war in Ukraine added additional uncertainty to a world already facing headwinds from COVID, rising inflation and interest rates as well as ongoing global supply chain disruptions."

Nonetheless, Hologic placed an additional 123 Panther molecular diagnostic instruments in the second quarter compared to 119 in fiscal Q1, and "halfway through the year, we have again exceeded our pre-pandemic average of roughly 225 Panther placements per year," MacMillan said.

The firm's overall installed base of Panther instruments has grown to more than 3,100, with 45 percent placed outside the US.

Further, sales of Hologic's vaginitis assays continued to be strong during Q2. The company booked about $7 million in Q2 revenues for its Aptima BV and Aptima CV/TV vaginitis assays, which are "on pace to become a top-three women’s health assay in our molecular diagnostics portfolio," MacMillan said.

In a research note on Wednesday, SVB Leerink analyst Puneet Souda wrote that in Q2 Hologic's organic growth, without COVID-19 related revenues, was down 2.6 percent year over year, "as the core business recovery was again impacted by Omicron and supply chain challenges while COVID testing outpaced expectations."

Hologic's Breast Health business has continued to see the impact of a semiconductor chip shortage. In its first quarter call for fiscal year 2022, Hologic said that $200 million of its Breast Health segment revenues would be pushed out during the year because of the impact on mammography sales.

"The ongoing volatility of supply makes it possible that up to $50 million of an additional headwind could surface in the back half of the year," MacMillan said.

Hologic reported net income of $455.7 million, or $1.80 per share, compared to $619.9 million, or $2.38 per share, in Q2 2021. The firm reported non-GAAP diluted earnings per share of $2.07 and beat analysts' average estimate of $1.60 per share.

Hologic's R&D costs fell 3 percent year over year to $69.5 million from $71.5 million, while its SG&A costs rose 23 percent year over year to $271.9 million from $220.4 million.

The company ended the quarter with $2.29 billion in cash and cash equivalents.

For fiscal Q3, Hologic anticipates revenues of $875.0 to $915.0 million, GAAP EPS of $.39 to $.44, and non-GAAP EPS of $.67 to $.72.

For fiscal year 2022, the firm expects revenues of $4.6 billion to $4.7 billion compared to previous guidance of $4.4 billion to $4.55 billion; GAAP EPS of $4.36 to $4.56 compared to previous guidance of $3.80 to $4.10; and non-GAAP EPS of $5.45 to $5.65 compared to previous guidance of $4.90 to $5.20.

In early morning trading on the Nasdaq, Hologic shares were down more than 3 percent at $68.60.