Hologic (NSDQ:HOLX) is spending $50 million — including $14 million during its most recent quarter — to boost its production of COVID-19 tests.
The U.S. government is providing $7.6 million to support the effort.
The investment, which CEO Stephen MacMillan outlined during a July 29 earnings call, includes installation of new high-speed filling lines and investment in new custom machinery to produce more penetrable caps.
Hologic has been producing around the clock at its facility in San Diego, where employees from areas such as finance are now working packaging lines while the company hires 150 new operations employees to boost the headcount by more than 50%. The company is also expanding capabilities at its Manchester, U.K. diagnostic plant, which started making COVID tests at the end of June
“Overall, these actions have provided the capacity to produce at least 1.5 million COVID tests per week, on average, and should enable COVID sales to increase sequentially in the fourth quarter, over and above our very strong Q3 even while accommodating higher volumes of our women’s health tests. And there is the potential to do more if we are able to work through some remaining supply chain constraints on certain instrument components,” MacMillan said during the earnings call, transcribed by Seeking Alpha.
During the third quarter ended June 27, Hologic shipped 13 million COVID tests to customers, resulting in sales of $324 million.
Hologic’s business partner Stratec is doubling the production of the Panther instruments that run Hologic assays. During the third quarter, Hologic placed 208 Panther instruments — nearly the level of the 228 Panther systems that the company was previously placing each year. By the end of June, there were more than 2,000 Panther instruments installed globally, nearly half outside the United States.
“In the medium-term, we expect that the record number of Panther and Panther Fusion instruments that we are placing now will turbo-charge our razor-razor blade business model, and dramatically increase pull-through of other assays. These include our new women’s health tests, our quantitative virology products, and our respiratory mini-panels,” MacMillan said.