Hologic, Inc. HOLX reported adjusted earnings per share (EPS) of 98 cents in first-quarter fiscal 2024, down 8.4% year over year. The bottom line surpassed the Zacks Consensus Estimate by 3.2%.
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 $1.03 in the quarter compared with the year-ago quarter’s EPS of 75 cents, up 37.3%.
Revenues in Detail
Revenues totaled $1.01 billion in the said quarter, down 5.7% year over year (down 6.4% at the constant exchange rate or CER). The metric surpassed the Zacks Consensus Estimate by 3%. Lower sales of COVID-19 assays dented the top line.
Segments in Detail
In the fiscal first quarter, U.S. revenues totaled $753.7 million and dropped 8.5%. International revenues amounted to $259.4 million, up 3.5% year over year and 0.3% at CER.
Revenues in the Diagnostics segment declined 19.9% year over year (down 20.6% at CER) to $447.8 million in the quarter under review. Excluding COVID-19 revenues, Diagnostics revenues increased 0.1% on a reported basis.
Cytology & Perinatal revenues of $120 million were down 6.5% at CER.
Molecular Diagnostics revenues of $319.8 million declined 25.4% at CER. Blood Screening revenues of $8 million rose 9.6% year over year at CER.
Revenues in the Breast Health segment rose 13% from the year-ago period’s (up 12.2% at CER) levels to $377.7 million, primarily due to higher capital equipment revenues compared with the prior-year period’s levels.
Revenues in the GYN Surgical business rose 5.3% year over year (up 4.6% at CER) to $162.2 million, primarily driven by strong results from MyoSure, Fluent Fluid Management and Laparoscopy.
Revenues at Skeletal Health declined 4.5% year over year (down 5.6% at CER) to $25.4 million.
Operational Update
In the fiscal first quarter, the company-provided adjusted gross margin contracted 190 basis points (bps) to 60.8%. 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 28.5%, contracted 260 bps, primarily due to lower COVID-19 assay revenues.
Financial Update
Hologic ended first-quarter fiscal 2024 with cash and cash equivalents of $1.93 billion compared with $2.72 billion in the fourth quarter of 2023.
Total long-term debt (including the current portion) was $2.56 billion at the end of the fiscal first quarter compared with $2.82 billion in the fourth quarter of 2023.
Net cash provided by operating activities at the end of the fiscal first quarter was $222 million compared with $253.4 million a year ago.
The company repurchased 2.2 million shares of its stock for $250 million in the first quarter of fiscal 2024.
Guidance
Hologic issued the guidance for the second quarter of 2024 and updated fiscal 2024 guidance.
For fiscal 2024, the company projects revenues within $3.99-$4.07 billion (previous guidance was $3.92-$4.02 billion), suggesting year-over-year growth in the range of (1%)-0.9% on a reported basis, (1.3%)-0.6% at CER and 4.7-6.8% organically. The Zacks Consensus Estimate for fiscal 2024 revenues is pegged at $3.99 billion.
Adjusted EPS for fiscal 2024 are estimated to be $3.97-$4.12 (up from the previous guidance of $3.90-$4.10), with a projected growth of 0.3-4% year over year. The Zacks Consensus Estimate for fiscal 2024 EPS is pegged at $4.00.
For second-quarter fiscal 2024, the company projects revenues to be between $990 million and 1.01 billion, suggesting a year-over-year decline in the range of 3.6-1.6% on a reported basis, 3.7-1.8% at CER and 2.3-4.5% organically. The Zacks Consensus Estimate for second-quarter fiscal 2024 revenues is pegged at $988.1 million.
Adjusted EPS for the second quarter are estimated between 95 cents and $1.00, suggesting a decline of 10.4-5.7% year over year. The Zacks Consensus Estimate for second-quarter fiscal 2024 EPS is pegged at 97 cents.
Our Take
Hologic delivered better-than-expected revenues and earnings in first-quarter fiscal 2024. The company’s Breast Health segment registered strong growth, primarily due to higher capital equipment revenue. GYN Surgical's business is driven by strong results from MyoSure Fluent Fluid Management and Laparoscopy. The company raised fiscal 2024 guidance, heightening optimism. On a year-over-year basis, revenues were down. The decline in COVID-19 assay revenues dented total revenues. The company also reported a contraction in gross margins, which looks discouraging.
Zacks Rank and Other Key Picks
Hologic currently carries Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space are SiBone SIBN , Surgery Partners SGRY and Haemonetics HAE , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for SiBone’s fourth-quarter 2023 bottom line is pegged at a loss of 28 cents, implying a 12.9% improvement from the year-ago period. The consensus estimate for revenues is pegged at $38.6 million, suggesting 20.8% growth from the fourth quarter of 2022.
SiBone has an estimated long-term earnings growth rate of 14.9% compared with the industry’s 13.4% growth. SIBN’s earnings surpassed estimates in all the trailing four quarters, the average being 24.21%.
The consensus estimate for Surgery Partners’ fourth-quarter 2023 EPS is pegged at 37 cents, implying a 37% improvement from the year-ago period. Revenues are projected to be $741.5 million, suggesting 4.9% growth from the fourth quarter of 2022.
Surgery Partners’ 2024 earnings growth rate is predicted to be 4.8%, while the revenue growth rate is estimated to be 9.2%. SGRY’s earnings surpassed estimates in all the trailing four quarters, the average being 316.07%.
The consensus mark for Haemonetics’ third-quarter fiscal 2024 EPS is pegged at 97 cents, implying a 14.1% improvement from the year-ago period. Projected revenues of $322.5 million suggest 5.6% growth from the fiscal third quarter of 2023.
Haemonetics has a historical long-term earnings growth rate of 9.4% compared with the industry’s 7.5% growth. HAE earnings surpassed estimates in all the trailing four quarters, the average surprise being 16.08%.
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