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Hologic (HOLX) Q3 Earnings Beat Estimates, Margins Down
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Hologic, Inc. (HOLX - Free Report) reported third-quarter fiscal 2022 adjusted earnings per share (EPS) of 95 cents, down 28.6% year over year. However, the bottom line surpassed the Zacks Consensus Estimate by 37.7%.
The adjustments include charges and benefits related to the amortization of acquired intangible assets, MDR expenses and restructuring and integration/consolidation costs.
The company’s GAAP EPS were 90 cents in the quarter compared with the year-ago quarter’s EPS of $1.04, reflecting a 13.5% decline.
Revenues in Detail
Revenues totaled $1.00 billion in the reported quarter, down 14.2% year over year (down 12.2% at constant exchange rate or CER). The metric surpassed the Zacks Consensus Estimate by 11.9%. Excluding revenues from COVID-19, organic revenues declined 1.4% at CER.
U.S. revenues of $734.6 million declined 2%, whereas international revenues of $268.1 million dropped 35.9% year over year or 30.5% at CER.
Segments in Detail
Revenues in the Diagnostics segment declined 15.8% year over year (down 13.6% at CER) to $560.1 million in the quarter under review. Cytology & Perinatal revenues of $115.9 million rose 3.5% at CER. Molecular Diagnostics revenues of $435.3 million declined 16.8% at CER. Blood Screening revenues of $8.9 million fell 32.6% year over year at CER.
Revenues in the Breast Health segment fell 18.9% from the year-ago period (down 17.5% at CER) to $282.8 million. This primarily resulted from the semiconductor chip shortage. Domestic sales in this segment fell 18.6% year over year. Further, outside the United States, Breast Health sales declined 13.5% at CER.
Revenues at the GYN Surgical business rose 7.9% year over year (up 9.7% at CER) to $138.1 million, led by MyoSure, Fluent Fluid Management System sales and Bolder.
Revenues at Skeletal Health declined 16.2% year over year (down 13.6% at CER) to $21.7 million.
Operational Update
In the fiscal third quarter, the company-provided adjusted gross margin contracted 280 basis points (bps) to 63.3%. According to the company, the decrease in gross margin was primarily due to a year-over-year decline in international COVID-19 assay sales and supply chain challenges associated with semiconductor chips in the Breast Health business.
Adjusted operating expenses, as stated by the company, amounted to $311.2 million, up 0.4% year over year. The company reported an adjusted operating margin contraction of 720 bps to 32.3%.
Financial Update
Hologic ended the third quarter of fiscal 2022 with cash and cash equivalents of $2.38 billion compared with $2.29 billion at the end of the fiscal second quarter of 2022. Total long-term debt (including the current portion) was $2.82 billion at the end of the third quarter of fiscal 2022 compared with $3.07 billion at the end of the second quarter of 2022.
Net cash provided by operating activities at the end of third-quarter fiscal 2022 was $1.96 billion compared with $1.87 billion a year ago.
Guidance
Hologic issued the guidance for the fourth quarter of fiscal 2022.
For fourth-quarter fiscal 2022, the company projects revenues within $840-$870 million, suggesting a year-over-year decline in the range of 36.2-33.9% on a reported basis, 34.5-32.2% at CER and 34.4-32.1% organically. The Zacks Consensus Estimate for third-quarter fiscal 2022 revenues is pegged at $864.1 million.
Adjusted earnings per share for the quarter are estimated within 60-65 cents, suggesting a decline of 62.7-59.6% year over year. The Zacks Consensus Estimate for first-quarter fiscal 2022 earnings per share is pegged at 63 cents.
Hologic has raised the financial guidance for full-year 2022.
For fiscal 2022, the company projects revenues within $4.75-4.78 billion, suggesting a year-over-year decline in the range of 15.7-15.1% on a reported basis, 14.4-13.8% at CER and 15.4-14.9% organically (the previous guidance was $4.60-4.70 billion). The Zacks Consensus Estimate for fiscal 2022 revenues is pegged at $4.67 billion.
Adjusted earnings per share for fiscal 2022 are estimated within $5.79-$5.84, with a projected decline of 31.2-30.6% year over year (the previous guidance was $5.45-$5.65). The Zacks Consensus Estimate for fiscal 2022 earnings per share is pegged at $5.54.
Our Take
Hologic delivered better-than-expected revenues and earnings for the third quarter of fiscal 2022. The uptick in GYN Surgical business led by resilience from products such as the fluent fluid management system and Bolder Surgical buyout is encouraging. The company gained regulatory approvals in the reported quarter, instilling optimism. The regulatory authorizations include the FDA approval for the Aptima CMV Quant assay and the receipt of CE mark for the Panther Fusion EBV Quant assay and Panther Fusion BKV Quant assay, to note a few. The company’s raised outlook for fiscal 2022 indicates the continuation of this bullish trend.
However, the substantial decline in revenues and earnings compared to the year-ago period is discouraging. The contraction of both margins is worrisome. The persistent shortage in semiconductor chips continues to challenge the Breast Health segment, hampering top-line results.
Zacks Rank and Key Picks
Hologic currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated (DGX - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Neogen Corporation (NEOG - Free Report) .
Quest Diagnostics, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quest Diagnostics has an earnings yield of 7.2% compared with the industry’s 3.3%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.
Medpace Holdings, having a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $1.46, which beat the Zacks Consensus Estimate by 8.9%. Revenues of $351.2 million outpaced the consensus mark by 1.3%.
Medpace Holdings has an estimated growth rate of 22.7% for full-year 2022. MEDP’s earnings surpassed estimates in the trailing four quarters, the average being 17.3%.
Neogen reported fourth-quarter fiscal 2022 adjusted EPS of 18 cents, which surpassed the Zacks Consensus Estimate by 12.5%. Fiscal fourth-quarter revenues of $140.1 million outpaced the Zacks Consensus Estimate by 1.3%. It currently has a Zacks Rank #2.
Neogen has an estimated growth rate of 1.6% for fiscal 2023. NEOG’s earnings surpassed estimates in two of the trailing four quarters, lagged the same in one and broke even in the other, the average surprise 1.5%.
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Hologic (HOLX) Q3 Earnings Beat Estimates, Margins Down
Hologic, Inc. (HOLX - Free Report) reported third-quarter fiscal 2022 adjusted earnings per share (EPS) of 95 cents, down 28.6% year over year. However, the bottom line surpassed the Zacks Consensus Estimate by 37.7%.
The adjustments include charges and benefits related to the amortization of acquired intangible assets, MDR expenses and restructuring and integration/consolidation costs.
The company’s GAAP EPS were 90 cents in the quarter compared with the year-ago quarter’s EPS of $1.04, reflecting a 13.5% decline.
Revenues in Detail
Revenues totaled $1.00 billion in the reported quarter, down 14.2% year over year (down 12.2% at constant exchange rate or CER). The metric surpassed the Zacks Consensus Estimate by 11.9%. Excluding revenues from COVID-19, organic revenues declined 1.4% at CER.
U.S. revenues of $734.6 million declined 2%, whereas international revenues of $268.1 million dropped 35.9% year over year or 30.5% at CER.
Segments in Detail
Revenues in the Diagnostics segment declined 15.8% year over year (down 13.6% at CER) to $560.1 million in the quarter under review. Cytology & Perinatal revenues of $115.9 million rose 3.5% at CER. Molecular Diagnostics revenues of $435.3 million declined 16.8% at CER. Blood Screening revenues of $8.9 million fell 32.6% year over year at CER.
Revenues in the Breast Health segment fell 18.9% from the year-ago period (down 17.5% at CER) to $282.8 million. This primarily resulted from the semiconductor chip shortage. Domestic sales in this segment fell 18.6% year over year. Further, outside the United States, Breast Health sales declined 13.5% at CER.
Hologic, Inc. Price, Consensus and EPS Surprise
Hologic, Inc. price-consensus-eps-surprise-chart | Hologic, Inc. Quote
Revenues at the GYN Surgical business rose 7.9% year over year (up 9.7% at CER) to $138.1 million, led by MyoSure, Fluent Fluid Management System sales and Bolder.
Revenues at Skeletal Health declined 16.2% year over year (down 13.6% at CER) to $21.7 million.
Operational Update
In the fiscal third quarter, the company-provided adjusted gross margin contracted 280 basis points (bps) to 63.3%. According to the company, the decrease in gross margin was primarily due to a year-over-year decline in international COVID-19 assay sales and supply chain challenges associated with semiconductor chips in the Breast Health business.
Adjusted operating expenses, as stated by the company, amounted to $311.2 million, up 0.4% year over year. The company reported an adjusted operating margin contraction of 720 bps to 32.3%.
Financial Update
Hologic ended the third quarter of fiscal 2022 with cash and cash equivalents of $2.38 billion compared with $2.29 billion at the end of the fiscal second quarter of 2022. Total long-term debt (including the current portion) was $2.82 billion at the end of the third quarter of fiscal 2022 compared with $3.07 billion at the end of the second quarter of 2022.
Net cash provided by operating activities at the end of third-quarter fiscal 2022 was $1.96 billion compared with $1.87 billion a year ago.
Guidance
Hologic issued the guidance for the fourth quarter of fiscal 2022.
For fourth-quarter fiscal 2022, the company projects revenues within $840-$870 million, suggesting a year-over-year decline in the range of 36.2-33.9% on a reported basis, 34.5-32.2% at CER and 34.4-32.1% organically. The Zacks Consensus Estimate for third-quarter fiscal 2022 revenues is pegged at $864.1 million.
Adjusted earnings per share for the quarter are estimated within 60-65 cents, suggesting a decline of 62.7-59.6% year over year. The Zacks Consensus Estimate for first-quarter fiscal 2022 earnings per share is pegged at 63 cents.
Hologic has raised the financial guidance for full-year 2022.
For fiscal 2022, the company projects revenues within $4.75-4.78 billion, suggesting a year-over-year decline in the range of 15.7-15.1% on a reported basis, 14.4-13.8% at CER and 15.4-14.9% organically (the previous guidance was $4.60-4.70 billion). The Zacks Consensus Estimate for fiscal 2022 revenues is pegged at $4.67 billion.
Adjusted earnings per share for fiscal 2022 are estimated within $5.79-$5.84, with a projected decline of 31.2-30.6% year over year (the previous guidance was $5.45-$5.65). The Zacks Consensus Estimate for fiscal 2022 earnings per share is pegged at $5.54.
Our Take
Hologic delivered better-than-expected revenues and earnings for the third quarter of fiscal 2022. The uptick in GYN Surgical business led by resilience from products such as the fluent fluid management system and Bolder Surgical buyout is encouraging. The company gained regulatory approvals in the reported quarter, instilling optimism. The regulatory authorizations include the FDA approval for the Aptima CMV Quant assay and the receipt of CE mark for the Panther Fusion EBV Quant assay and Panther Fusion BKV Quant assay, to note a few. The company’s raised outlook for fiscal 2022 indicates the continuation of this bullish trend.
However, the substantial decline in revenues and earnings compared to the year-ago period is discouraging. The contraction of both margins is worrisome. The persistent shortage in semiconductor chips continues to challenge the Breast Health segment, hampering top-line results.
Zacks Rank and Key Picks
Hologic currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated (DGX - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Neogen Corporation (NEOG - Free Report) .
Quest Diagnostics, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quest Diagnostics has an earnings yield of 7.2% compared with the industry’s 3.3%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.
Medpace Holdings, having a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $1.46, which beat the Zacks Consensus Estimate by 8.9%. Revenues of $351.2 million outpaced the consensus mark by 1.3%.
Medpace Holdings has an estimated growth rate of 22.7% for full-year 2022. MEDP’s earnings surpassed estimates in the trailing four quarters, the average being 17.3%.
Neogen reported fourth-quarter fiscal 2022 adjusted EPS of 18 cents, which surpassed the Zacks Consensus Estimate by 12.5%. Fiscal fourth-quarter revenues of $140.1 million outpaced the Zacks Consensus Estimate by 1.3%. It currently has a Zacks Rank #2.
Neogen has an estimated growth rate of 1.6% for fiscal 2023. NEOG’s earnings surpassed estimates in two of the trailing four quarters, lagged the same in one and broke even in the other, the average surprise 1.5%.