Hologic, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights:

• Steve MacMillan highlighted total revenue of $1.022 billion, 1% constant currency growth, and non-GAAP EPS of $1.03. Discussed market-leading products and organizational capabilities.
• Essex Mitchell reviewed divisional revenue performance, noting Diagnostics outperformed, Breast Health lagged, and Surgical/Skeletal were in line. Highlighted Gynesonics acquisition and business development capabilities.
• Karleen Oberton discussed non-GAAP income statement, operating leverage, margin expansion, foreign exchange hedging, and provided guidance for fiscal Q2 and full year, including revenue range, EPS guidance, and division-specific expectations.

Segment Performance:

• Diagnostics: Revenue of $470.6 million, grew 5.2% and 9.1% organically excluding COVID. Molecular diagnostics grew 6.7% or 11% excluding COVID, with Biotheranostics lab testing and BV CV/TV assay showing strong growth. Cytology and perinatal business had 4.7% growth.
• Breast Health: Total first quarter revenue of $369.1 million, declined 2.1% or 5.8% organically when excluding SSI and Endomagnetics. Service revenue was over 40% of sales.
• Surgical: First quarter revenue of $166.3 million, increased 2.5%. Excited about Gynesonics acquisition, which had ~$28 million revenue in recent fiscal year.
• Skeletal: First quarter revenue of $15.8 million, decreased 37.4% due to later resumption of shipping for Horizon DXA units.

Guidance:

• Lowered full-year revenue guidance range to $4.05 billion to $4.10 billion due to stronger dollar, lower Breast Health capital equipment sales, and policy uncertainties.
• Q2 revenue expected in range of $995 million to $1.005 billion, non-GAAP EPS $1 to $1.03.
• Full-year non-GAAP EPS guidance maintained at $4.25 to $4.35.
• Expect revenue growth to improve in Q3 and Q4. Diagnostics expected mid-single digit growth excluding COVID, Breast Health expected low single digit decline including Endomagnetics, Surgical expected high single digit growth including Gynesonics.

Risks:

• Stronger dollar headwind of $30 million for full year.
• Softer Breast Health capital equipment sales.
• Policy changes affecting PEPFAR with potential $30 million revenue impact.
• Potential tariffs on products manufactured in Mexico affecting gross margins.

Q: Patrick Donnelly asked about gantry side in Breast Health.

A: Steve MacMillan said market was a bolus in 2023-2024, cyclical, with new gantry launching in 2026 to reaccelerate.

Q: Anthony Petrone asked about mid-term financial outlook and H5N1.

A: Steve MacMillan said mid-single digit growth expected, H5N1 could be upside.

Q: Doug Schenkel asked about Breast Health guidance and M&A.

A: Steve MacMillan said blend of market conditions and new gantry, M&A important with focus on accretive assets.

Q: Vijay Kumar asked about Breast Health guidance and M&A parameters.

A: Karleen Oberton said M&A focuses on revenue, margin, ROIC.

Q: Casey Woodring asked about Breast Health US vs international and gantry launch.

A: Karleen Oberton said declines in US and international, new gantry in 2026.

Q: Tejas Savant asked about Breast Health lessons and tariff.

A: Steve MacMillan said lesson on market growth rates, Karleen Oberton said biggest tariff exposure in Costa Rica.

Q: Ryan Zimmerman asked about Breast Health unit volume and Gynesonics.

A: Steve MacMillan said unit volume to improve in 2026, Gynesonics $25 million for balance of year.

Q: Jack Meehan asked about HIV testing impact and Q2 margins.

A: Karleen Oberton said HIV testing impact included, Q2 margins to improve.

Q: Puneet Souda asked about Breast Health sales rep changes and hospital CapEx.

A: Steve MacMillan said focus on gantry sales, hospitals will continue purchasing.

Q: Andrew Cooper asked about Panther Fusion adoption and margins.

A: Steve MacMillan said Fusion has growth opportunity, margins to improve through year.