Hologic
(Nasdaq: HOLX)
shares fell this morning despite third-quarter results that topped the consensus forecast.
Shares of HOLX dipped 4% at $76.29 apiece in early-morning trading today. MassDevice’s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — fell 0.6%.
The Marlborough, Massachusetts-based women’s health and diagnostics company posted losses of $40.5 million. That equals 16¢ per share on sales of $984.4 million for the three months ended July 1, 2023.
Hologic recorded a bottom-line slide into the red from profits of $228.4 million for the same period a year ago. It reported a sales decline of 1.8%, primarily driven by lower sales of COVID-19 assays compared to last year. Revenues still exceeded Hologic’s guidance for between $930 million and $980 million.
Adjusted to exclude one-time items, earnings per share came in at 93¢, landing 4¢ ahead of Wall Street projections. Sales also topped expectations of $962.6 million.
Breaking down the third-quarter results for Hologic
Hologic attributed a large chunk of its losses in the quarter to impairment charges of $223.8 million for intangible assets and equipment acquired in its Mobidiag acquisition, plus impairment of its ultrasound imaging assets.
Growth came from the company’s breast health business, which saw revenues grow 27.4% year-over-year. The company attributed this to higher capital equipment revenue and an improving semiconductor chip supply environment. Surgical revenue ticked up 13.9% thanks to strong results from Hologic’s hysteroscopic portfolio.
“Hologic again delivered solid, diversified growth in our fiscal third quarter, excluding the impact of COVID,” said Steve MacMillan, chair, president and CEO. “Our results once again highlight that Hologic’s transformation and post-pandemic performance is durable. Our business is operating from a position of strength, with all of our franchises growing double-digits in the period excluding COVID.
“As we close out fiscal 2023 and look forward to fiscal 2024, it’s clear we are poised for success and built for the long term.”
Hologic increased its full-year sales guidance for between $3.995 billion and $4.035 billion. Previous projections landed between $3.925 billion and $4.025 billion. Adjusted EPS guidance is set for between $3.87 and $3.94, tightening the previous projection for $3.75 to $3.95.
The analyst’s view
BTIG analysts Ryan Zimmerman, Sam Durno and Iseult McMahon maintained a “Neutral” rating for Hologic.
The analysts worry about reductions in growth and cash flow and have concerns over what normalized margins will look like in a post-COVID-19 setting.
“We believe Hologic is improving the business overall,” the analysts wrote. “The long-term growth targets set out at 5%-7% appear achievable overall but could be impacted in the near term by a tougher macro environment coupled with concerns on capex, inflation, supply chain, and Fx. Further, with slowing COVID assay revenue, limited reductions in operating expenses, and constrained margin expansion, we worry that there may be downward revisions to adj. EPS numbers ahead.”