Hologic posted an improved second-quarter fiscal 2014 with adjusted
EPS of $0.37, up 7.9% year over year, which surpassed the Zacks
Consensus Estimate by $0.04. Revenues of $625 million were up 2%
and exceeded the Zacks Consensus Estimate of $610 million. It also
edged past the company's guidance range. Amid looming headwinds
such as lower sales of legacy products, a challenging capital
spending environment, European uncertainty and increasing pricing
pressure, Hologic's topline was boosted by strong performance in
the 3D tomosynthesis and MyoSure product lines. Currently, the
major goal of management is to sustain top- and bottom-line organic
growth going ahead. Besides, it is also working on the divesture of
some of its smaller businesses to focus on the more profitable
ones. Accordingly, we reiterate the stock at Neutral.
Headquartered in Bedford, MA, Hologic Inc. develops,
manufactures, and supplies diagnostics, medical imaging systems and
surgical products which cater to the healthcare needs of women. The
company is focused on mammography systems for breast examination
and osteoporosis assessment. The company also provides a
comprehensive suite of technologies with products for mammography
and breast biopsy, radiation treatment for early-stage breast
cancer, cervical cancer screening, and treatment for menorrhagia,
osteoporosis assessment, preterm birth risk assessment, and mini
C-arm for extremity imaging.
In Aug 2012, Hologic acquired Gen-Probe. Gen-Probe based in San
Diego, California, is a leader in molecular diagnostics products
and services that are used primarily to diagnose human diseases and
screen donated human blood. Gen-Probe's results of operations are
reported within Hologic s Diagnostics segment from the date of
acquisition. The acquisition has helped Hologic derive the lion s
share of its revenues from the diagnostics business and gain access
to Gen-Probe's molecular diagnostic platforms of TIGRIS and PANTHER
systems. Gen-Probe has a wide portfolio of tests, including the
APTIMA franchise used to detect common sexually transmitted
diseases (STDs) such as chlamydia and gonorrhea, certain high-risk
strains of HPV, and trichomonas products. In addition, Gen-Probe
has PROCLEIX line of HIV, HCV, HBV and West Nile Virus (WNV) blood
screening products and a partnership with Novartis.
Subsequent to the Gen-Probe deal, Diagnostics went on to become
the largest segment at Hologic (representing 45% of the total sales
in the second quarter of 2014). Hologic operates through the
following four segments:
Diagnostics: With the Gen-Probe acquisition, Hologic currently
offers APTIMA family of assays that includes the APTIMA Combo 2
assay, which feature the APTIMA CT and APTIMA GC assays for the
detection of Chlamydia and gonorrhea, respectively, the APTIMA HPV
assay for the detection of 14 sub-types of high-risk HPV associated
with cervical cancer, and the APTIMA Trichomonas assay for the
detection of Trichomonas vaginalis, the parasite that causes
The company also develops instrumentation and software designed
specifically for performing certain diagnostic assays, including
the APTIMA family of assays and the PROCLEIX family of assays in
the blood screening market. The instrumentation includes the TIGRIS
system (an integrated, fully-automated testing instrument for
high-volume laboratories which is approved for use with a number of
APTIMA and PROCLEIX assays), the PANTHER instrument system (an
integrated, fully automated testing instrument for low- to
mid-volume laboratories, and semi-automated direct tube sampling
(DTS) instruments used to run a number of infectious disease and
blood screening assays.
Other products include the ThinPrep system, primarily used in
cytology applications such as cervical cancer screening and the
Rapid Fetal Fibronectin Test, for pre-term birth risk assessment.
Moreover, the molecular diagnostic reagents are used for various
DNA and RNA analysis applications. The current molecular diagnostic
offerings include Cervista HPV high risk (HR) and Cervista HPV
16/18 products to assist in the diagnosis of human papillomavirus
(HPV), as well as other products to diagnose cystic fibrosis,
cardiovascular risk and other diseases.
Breast Health: Products include a broad portfolio of breast
imaging and related products and accessories, including digital and
film-based mammography systems, computer-aided detection (CAD),
breast biopsy guidance systems, minimally invasive breast biopsy
and tissue extraction devices and breast brachytherapy products.
The advanced breast imaging platform Dimensions, utilizes
tomosynthesis technology to produce both three-dimensional (3D) and
two dimensional (2D) full field digital mammography images. In Feb
2011, Hologic had received approval from the U.S. Food and Drug
Administration (FDA) to enable the 3D tomosynthesis capability of
the Dimensions system.
GYN Surgical: Products include the NovaSure endometrial ablation
system and the MyoSure hysteroscopic tissue removal system.
NovaSure system is a minimally invasive procedure for the treatment
of heavy menstrual bleeding while MyoSure is a tissue removal
device to provide incision less removal of fibroids and polyps
within the uterus. Following the acquisition of Interlace Medical
in 2011, the MyoSure system was added to the GYN Surgical product
portfolio. Subsequent to the receipt of 510k clearance for the
pre-market application for the Aquilex fluid control system in Feb
2012, the company has started to commercialize the system. The
Aquilex system is for hysteroscopic procedures and is designed to
reduce procedure and anesthesia time while providing high quality
visualization to the surgeon.
In 2012, management decided to cease the manufacturing,
marketing and selling of the Adiana system as it was found to be
financially unviable and was expected to remain so in the
Skeletal Health: This segment includes dual-energy X-ray bone
densitometry systems, an ultrasound-based osteoporosis assessment
product, and Fluoroscan mini C-arm imaging products.
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