Hologic's (HOLX) Q2 Earnings Beat Estimates, 2024 View Up

Hologic, Inc. HOLX reported adjusted earnings per share (EPS) of $1.03 in second-quarter fiscal 2024, down 2.8% year over year. However, the bottom line surpassed the Zacks Consensus Estimate by 6.2%.

The adjustments include charges and benefits related to the amortization of acquired intangible assets, restructuring and integration/consolidation costs, product line discontinuation and many others.

The company’s GAAP EPS were 72 cents in the quarter compared with the year-ago quarter’s EPS of 87 cents, down 17.2%.

Revenues in Detail

Revenues totaled $1.02 billion in the said quarter, down 0.8% year over year (down 0.9% at the constant exchange rate or CER). The metric surpassed the Zacks Consensus Estimate by 1.7%. Lower sales of COVID-19 assays dented the top line.

Geographical Revenue Analysis

In the fiscal second quarter, U.S. revenues totaled $759.4 million and dropped 1.2%. International revenues amounted to $258.4 million, up 30.3% year over year and down 0.1% at CER.

Segments in Detail

Revenues in the Diagnostics segment declined 3.1% year over year (down 3.2% at CER) to $450.1 million in the quarter under review. Excluding COVID-19 revenues, Diagnostics revenues increased 9.8% on a reported basis. This compares with our model’s segmental projection of $441.3 million.

Cytology & Perinatal revenues of $120.5 million were up 7.7% at CER. This compares with our model’s segmental projection of $118.5 million.

Molecular Diagnostics revenues of $322.7 million declined 5.8% at CER. Blood Screening revenues of $6.9 million fell 34.9% year over year at CER. This compares with our model’s projection of $315.9 million for Molecular Diagnostics and $7.0 million for Blood Screening.

Revenues in the Breast Health segment fell 0.2% from the year-ago period’s (down 0.3% at CER) levels to $384.6 million, primarily due to the SuperSonic Imagine Inc. (SSI) divestiture and partially offset by capital sales. Our model projected revenues of $375.1 million for this segment.

Excluding SSI, Breast Health revenue increased 1.1%, or 1.0%, at constant currency.

Revenues in the GYN Surgical business rose 7.7% year over year (up 7.4% at CER) to $156 million, primarily driven by strong results from MyoSure and Fluent Fluid Management. Our model projected revenues of $156 million in this segment.

Revenues at Skeletal Health declined 14.2% year over year (down 14.3% at CER) to $27.1 million. Our model projected revenues of $38.2 million for this segment.

Operational Update

In the fiscal second quarter, the company-provided adjusted gross margin contracted 140 basis points (bps) to 60.7%. According to the company, the downside in gross margin was primarily due to a year-over-year decline in COVID-19 assay sales.

Hologic, Inc. Price, Consensus and EPS Surprise

 

Hologic, Inc. Price, Consensus and EPS Surprise

Hologic, Inc. price-consensus-eps-surprise-chart | Hologic, Inc. Quote

 

The company’s adjusted operating margin was 30.4%, contracted 90 bps, primarily due to lower COVID-19 assay revenues.

Financial Update

Hologic ended second-quarter fiscal 2024 with cash and cash equivalents of $2.18 billion compared with $1.93 billion in the first quarter of 2024.

Total long-term debt (including the current portion) was $2.55 billion at the end of the fiscal first quarter, slightly down from $2.56 billion in the first quarter of fiscal 2024.

Net cash provided by operating activities at the end of the fiscal second quarter was $512.4 million compared with $459.7 million a year ago.

Guidance

Hologic issued the guidance for the third quarter of 2024 and updated fiscal 2024 guidance.

For the fiscal 2024, the company projects revenues within $4.00-$4.05 billion (previous guidance was $3.99-$4.07 billion), suggesting year-over-year growth in the range of (0.8%)-0.5% on a reported basis, (0.8%)-0.4% at CER and 5.1-6.5% organically. The Zacks Consensus Estimate for fiscal 2024 revenues is pegged at $4.02 billion.

Adjusted EPS for fiscal 2024 are estimated to be $4.02-$4.12 (up from the previous guidance of $3.97-$4.12), with a projected growth of 1.5-4% year over year. The Zacks Consensus Estimate for the fiscal 2024 EPS is pegged at $4.02.

For third-quarter fiscal 2024, the company projects revenues to be between $992.5 million and $1.01 billion, suggesting year-over-year growth in the range of 0.8-2.4% on a reported basis, 1.2-1.7% at CER and 4.0-5.6% organically. The Zacks Consensus Estimate for second-quarter fiscal 2024 revenues is pegged at $1.01 billion.

Adjusted EPS for the second quarter are estimated between 98 cents and $1.05, suggesting an increase of 5.4-12.9% year over year. The Zacks Consensus Estimate for second-quarter fiscal 2024 EPS is pegged at $1.02.

Our Take

Hologic delivered better-than-expected revenues and earnings in second-quarter fiscal 2024. GYN Surgical's business is driven by strong results from MyoSure Fluent Fluid Management and Laparoscopy. The company raised fiscal 2024 guidance, heightening optimism.

One of the major highlights of the second quarter includes Hologic announcement to acquire Endomagnetics — a provider of breast cancer surgery technologies, for around $310 million, as the company seeks to expand and diversify its interventional breast business.

On a year-over-year basis, revenues were down due to a decline in COVID-19 assay revenues. The company’s Breast Health segment witnessed a fall in the said quarter, primarily due to the SSI divestiture. The company also reported a contraction in both margins, which looks discouraging, too.

Zacks Rank and Key Picks

Hologic currently carries Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Align Technology, Inc. ALGN, ResMed Inc. RMD and Boston Scientific Corporation BSX.

Align Technology, carrying a Zacks Rank of 2 (Buy), reported first-quarter 2024 adjusted EPS of $2.14, beating the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Align Technology has a long-term estimated growth rate of 6.9%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.

ResMed reported third-quarter of fiscal 2024 adjusted EPS of $2.13, beating the Zacks Consensus Estimate by 10.9%. Revenues of $1.19 billion surpassed the Zacks Consensus Estimate by 1.9%. It currently sports a Zacks Rank #1.

ResMed has a long-term estimated growth rate of 10.9%. RMD’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 2.8%.

Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, beating the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. The stock carries a Zacks Rank #2.

Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 7.5%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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