), one of the leading players in the women's health industry,
recently received an unfavorable ruling in a patent infringement
Smith & Nephew
). The suit involved the sale of MyoSure tissue removal device,
which was included in Hologic's portfolio with the acquisition of
The verdict went in favor of Smith & Nephew, which was
awarded $4 million as damages for lost profits. Nevertheless,
Hologic is indemnified up to a certain amount as part of its deal
with Interlace Medical for potential associated liabilities. Though
the company is disappointed with the verdict it will continue to
sell the MyoSure product and plans to pursue the appellate process.
Besides, several issues remain that could impact the applicability
of this verdict.
Earlier this year, Hologic decided to discontinue Adiana,
another product in its GYN Surgical business, because it found the
product commercially not viable. Moreover, it resolved the patent
infringement litigation with
) by discontinuing Adiana. In return, Conceptus would forgo
the $18.8 million jury award. In addition to Hologic granting
Conceptus a license to intellectual property related to Adiana, the
two companies have also agreed to dismiss the false patent marking
case between them.
During the last reported quarter, Hologic's Gyn Surgical segment
revenues dropped 2.1% year over year to $77.7 million on the heels
of decline in sales of both the NovaSure and Adiana systems,
partially offset by growth in MyoSure system sales. MyoSure
revenues represented more than $10 million in the quarter.
Meanwhile, in August, Hologic strengthened its position in the
area of molecular diagnostics with the acquisition of Gen-Probe.
Moreover, the adoption of the Dimensions platform boosted growth of
the company's Breast Health segment.
Sales of Dimensions represented 71% of digital mammography
revenue and 60% of units in the third quarter of 2012. Moreover,
based on installations made till the third quarter, the company has
achieved 45% of the goal of placing 500-700 3D systems (and
targeting 60% at the end of FY12) in the US within the first two
years of approval. After taking into account units in backlog (that
will be shipped in the fourth quarter), the company has already
achieved the 60% target.
We have a Neutral recommendation on Hologic. The stock retains a
Zacks #3 Rank (hold) in the short term.
CONCEPTUS INC (CPTS): Free Stock Analysis
HOLOGIC INC (HOLX): Free Stock Analysis Report
SMITH & NEPHEW (SNN): Free Stock Analysis
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