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Hologic (HOLX) to Expand in Oncology With Biotheranostics Buyout
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Hologic, Inc. (HOLX - Free Report) recently announced its plans to acquire Biotheranostics, Inc., a privately held commercial-stage company providing molecular diagnostic tests for breast and metastatic cancers. The buyout deal, which is expected to close in February 2021, has been finalized at approximately $230 million, subject to working capital, antitrust clearance and other customary closing adjustments.
For investors’ note, the latest buyout is expected to be slightly dilutive to Hologic’s non-GAAP earnings per share in fiscal 2021, break-even in 2022 and accretive thereafter.
It is encouraging to note that Hologic recently completed another buyout (of SOMATEX Medical Technologies GmbH), which is expected to enhance its Breast Health business.
With the latest buyout, Hologic aims to strengthen its Diagnostics business on a global scale.
Rationale Behind the Buyout
Per Hologic’s management, the latest acquisition of Biotheranostics enables it to foray into the large and fast-growing oncology adjacency. Further, the buyout is expected to leverage Hologic’s commercial capabilities and expertise in molecular diagnostics automation to accelerate growth and aid physicians in making more informed decisions. It is also expected to enable the delivery of more personalized treatment and better clinical outcomes for more women. Additionally, Biotheranostics’ Clinical Laboratory Improvement Amendments lab will provide Hologic with new capabilities to help accelerate market development for innovative new tests.
Biotheranostics’ polymerase chain reaction-based gene expression tests — Breast Cancer Index (“BCI”) and CancerTYPE ID — have already been extensively validated in large studies in the oncology space with critically unmet needs and high growth potential. Further, the BCI test has been included in numerous clinical practice guidelines for breast cancer while both tests enjoy widespread reimbursement in the United States. The tests will be added to Hologic’s Diagnostics business following the acquisition. This will not only strengthen its molecular diagnostics and breast health portfolios but will also provide attractive growth and return on its invested capital.
Industry Prospects
Per a report by Grand View Research, the global molecular diagnostics market was valued at $9.2 billion in 2019 and is expected to reach $18.2 billion by 2027, at a CAGR of 9%. Factors like increasing prevalence of infectious diseases and technological advancements in molecular diagnostics are expected to drive the market.
Given the market potential, the recent acquisition is expected to significantly boost Hologic’s Diagnostics business globally.
Notable Developments in Diagnostics Arm
Hologic has been witnessing a series of developments in its Diagnostics business over the past few months.
The company, in November 2020, announced that the FDA has approved a diagnostic claim for its HIV-1 (human immunodeficiency virus type 1) viral load monitoring assay– the Aptima HIV-1 Quant Dx assay. This has made the assay the first dual-claim assay for both diagnosis and viral load monitoring in the United States.
The same month, Hologic received the CE Mark in Europe for its new Genius Digital Diagnostics System, the first digital cytology platform that combines a new A.I. algorithm with advanced digital imaging. Also in November 2020, the company confirmed that the Diagnostics business had performed robustly, mainly due to the unprecedented surge in COVID-19-related testing during its fiscal fourth-quarter 2020 earnings call.
Hologic, in October, announced the amendment of the FDA’s Emergency Use Authorization that was initially received for its Aptima SARS-CoV-2 assay in May.
Price Performance
Shares of the company have gained 46.4% in the past year compared with the industry and the S&P 500’s 25.8% and 18.1% growth, respectively.
Zacks Rank & Other Key Picks
Currently, Hologic flaunts a Zacks Rank #1 (Strong Buy).
A few other top-ranked stocks from the broader medical space are Amedisys, Inc. (AMED - Free Report) , IDEXX Laboratories, Inc. (IDXX - Free Report) and Patterson Companies, Inc. (PDCO - Free Report) .
IDEXX’s long-term earnings growth rate is estimated at 15.8%. It currently carries a Zacks Rank #2.
Patterson’s long-term earnings growth rate is estimated at 11.1%. The company presently carries a Zacks Rank #2.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Image: Shutterstock
Hologic (HOLX) to Expand in Oncology With Biotheranostics Buyout
Hologic, Inc. (HOLX - Free Report) recently announced its plans to acquire Biotheranostics, Inc., a privately held commercial-stage company providing molecular diagnostic tests for breast and metastatic cancers. The buyout deal, which is expected to close in February 2021, has been finalized at approximately $230 million, subject to working capital, antitrust clearance and other customary closing adjustments.
For investors’ note, the latest buyout is expected to be slightly dilutive to Hologic’s non-GAAP earnings per share in fiscal 2021, break-even in 2022 and accretive thereafter.
It is encouraging to note that Hologic recently completed another buyout (of SOMATEX Medical Technologies GmbH), which is expected to enhance its Breast Health business.
With the latest buyout, Hologic aims to strengthen its Diagnostics business on a global scale.
Rationale Behind the Buyout
Per Hologic’s management, the latest acquisition of Biotheranostics enables it to foray into the large and fast-growing oncology adjacency. Further, the buyout is expected to leverage Hologic’s commercial capabilities and expertise in molecular diagnostics automation to accelerate growth and aid physicians in making more informed decisions. It is also expected to enable the delivery of more personalized treatment and better clinical outcomes for more women. Additionally, Biotheranostics’ Clinical Laboratory Improvement Amendments lab will provide Hologic with new capabilities to help accelerate market development for innovative new tests.
Biotheranostics’ polymerase chain reaction-based gene expression tests — Breast Cancer Index (“BCI”) and CancerTYPE ID — have already been extensively validated in large studies in the oncology space with critically unmet needs and high growth potential. Further, the BCI test has been included in numerous clinical practice guidelines for breast cancer while both tests enjoy widespread reimbursement in the United States. The tests will be added to Hologic’s Diagnostics business following the acquisition. This will not only strengthen its molecular diagnostics and breast health portfolios but will also provide attractive growth and return on its invested capital.
Industry Prospects
Per a report by Grand View Research, the global molecular diagnostics market was valued at $9.2 billion in 2019 and is expected to reach $18.2 billion by 2027, at a CAGR of 9%. Factors like increasing prevalence of infectious diseases and technological advancements in molecular diagnostics are expected to drive the market.
Given the market potential, the recent acquisition is expected to significantly boost Hologic’s Diagnostics business globally.
Notable Developments in Diagnostics Arm
Hologic has been witnessing a series of developments in its Diagnostics business over the past few months.
The company, in November 2020, announced that the FDA has approved a diagnostic claim for its HIV-1 (human immunodeficiency virus type 1) viral load monitoring assay– the Aptima HIV-1 Quant Dx assay. This has made the assay the first dual-claim assay for both diagnosis and viral load monitoring in the United States.
The same month, Hologic received the CE Mark in Europe for its new Genius Digital Diagnostics System, the first digital cytology platform that combines a new A.I. algorithm with advanced digital imaging. Also in November 2020, the company confirmed that the Diagnostics business had performed robustly, mainly due to the unprecedented surge in COVID-19-related testing during its fiscal fourth-quarter 2020 earnings call.
Hologic, in October, announced the amendment of the FDA’s Emergency Use Authorization that was initially received for its Aptima SARS-CoV-2 assay in May.
Price Performance
Shares of the company have gained 46.4% in the past year compared with the industry and the S&P 500’s 25.8% and 18.1% growth, respectively.
Zacks Rank & Other Key Picks
Currently, Hologic flaunts a Zacks Rank #1 (Strong Buy).
A few other top-ranked stocks from the broader medical space are Amedisys, Inc. (AMED - Free Report) , IDEXX Laboratories, Inc. (IDXX - Free Report) and Patterson Companies, Inc. (PDCO - Free Report) .
Amedisys’ long-term earnings growth rate is estimated at 14.8%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
IDEXX’s long-term earnings growth rate is estimated at 15.8%. It currently carries a Zacks Rank #2.
Patterson’s long-term earnings growth rate is estimated at 11.1%. The company presently carries a Zacks Rank #2.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>