Hologic ((HOLX)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Hologic’s latest earnings call revealed a mixed sentiment, reflecting both strengths and challenges faced by the company. While the Diagnostics division showcased solid growth and the company maintained strong operating margins, challenges were evident in the Breast Health and Skeletal businesses, along with a lowered revenue guidance. Despite these hurdles, Hologic’s commitment to maintaining its EPS guidance underscores its operational efficiency.
Diagnostics Revenue Growth
The Diagnostics division emerged as a bright spot, reporting revenue of $470.6 million, marking a 5.2% growth and an impressive 9.1% organic growth when COVID-related sales are excluded. Particularly, molecular diagnostics saw a growth of 6.7%, or 11% when excluding COVID-related sales, highlighting the division’s robust performance.
Non-GAAP EPS Performance
Hologic reported non-GAAP earnings per share of $1.03, which not only hit the high end of their guidance range but also represented a 5% increase year-over-year. This achievement underscores the company’s strong financial performance and its ability to meet market expectations.
Strong Operating Margin
The company achieved a 90 basis point improvement in non-GAAP operating margins, demonstrating substantial operating leverage. This improvement reflects Hologic’s focus on operational efficiency, even as they navigate revenue challenges.
Gynesonics Acquisition
Hologic completed the acquisition of Gynesonics, a move that adds approximately $28 million in revenue from its most recent fiscal year. The acquisition is expected to grow at a healthy double-digit rate, signaling strategic expansion into promising markets.
Breast Health Revenue Decline
The Breast Health segment faced challenges, with total first-quarter revenue declining to $369.1 million, a decrease of 2.1% overall, or 5.8% organically. This decline points to softer demand in capital equipment sales, impacting overall segment performance.
Skeletal Revenue Decline
The Skeletal business reported a significant revenue decline, with first-quarter earnings at $15.8 million, down by 37.4% due to the delayed resumption of Horizon DXA unit shipments. This decline highlights operational challenges within the segment.
Lowered Full-Year Revenue Guidance
Hologic adjusted its full-year revenue guidance downwards by $100 million, now projecting between $4.05 billion and $4.10 billion. This revision accounts for currency headwinds and reduced sales in Breast Health capital equipment. Despite these adjustments, the company maintained its non-GAAP EPS guidance, showcasing fiscal discipline and efficiency.
Forward-Looking Guidance
In its forward-looking guidance, Hologic projected total revenue for fiscal year 2025 between $4.05 billion and $4.10 billion, reflecting a $100 million reduction due to currency fluctuations and softer Breast Health sales. However, the company remains optimistic, maintaining its non-GAAP EPS guidance and expecting gradual revenue growth improvement throughout the year, culminating in strong growth in Q4.
In summary, Hologic’s earnings call reflected a balanced view of triumphs and trials. While the Diagnostics division continues to thrive and operational margins improve, challenges in Breast Health and Skeletal businesses necessitate strategic adjustments. The company’s ability to uphold its EPS guidance amidst these challenges is commendable, signaling resilience and operational adeptness.
