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Hologic's (HOLX) Strategic Buyouts Aid, Surgical Arm Grows
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Hologic’s (HOLX - Free Report) progress in the domestic and international markets, strong pipeline of products and continued solid performance of the Molecular Diagnostics segment bolster our confidence. The stock carries a Zacks Rank #1 (Strong Buy).
Over the past year, Hologic has outperformed its industry. The stock has gained 13.3% against the industry’s 12.9% decline. Hologic delivered better-than-expected earnings and revenues for the first quarter of fiscal 2023.
GYN Surgical also delivered an impressive quarter, growing 14.7% organically. While the extra days contributed approximately 250 basis points of net growth, even without the extra days, Diagnostics and Surgical both grew double digits and Breast Health exceeded the prior guidance.
The GYN Surgical results underscore a more diverse surgical business with more growth drivers than in the past. In addition to strong performance from MyoSure and better-than-expected results from NovaSure, the quarter showcased increasing contributions from Fluent and the company’s laparoscopic portfolio of Asessa and Boulder.
Through Acessa and Bolder acquisitions, the company has integrated Acessa’s procedure and Bolder’s advanced vessel sealing portfolio in its product line. Acessa is a unique radio frequency fibroid removal solution forming a new market and improving payer coverage for Hologic. With Boulder, the company is entering an underdeveloped market by deploying its large surgical sales force.
Excluding COVID-related business, Diagnostics grew 15.8% organically, powered by 24.5% growth in Molecular Diagnostics. This upside within Molecular Diagnostics reflected the high utilization of the company’s expanded Panther installed base. The uptick in the molecular diagnostics business was broad-based and fueled by a combination of legacy and newer assays in the portfolio. The collective revenues of the company’s core STI menu were well above pre-pandemic levels in the fourth quarter.
Hologic is currently well positioned to achieve its full-year guidance of low double-digit organic growth ex-COVID in all three franchises, well above the 5% to 7% long-term growth rate.
On the flip side, in the first quarter of fiscal 2023, Hologic witnessed a decline in reported revenues compared to the year-ago period. The decline in the top line can be attributed to lower COVID-19 assay sales and supply chain challenges in the Breast Health business. Revenues in the Breast Health segment fell on a year-over-year basis due to the persistent shortage of semiconductor chips. Escalating operating costs and the contraction of both margins are worrying.
In the fiscal first quarter, the company-provided adjusted gross margin contracted 1830 basis points (bps) to 31.1%. According to the company, the downside in gross margin was primarily due to a year-over-year decline in COVID-19 assay sales and lower capital equipment sales due to supply chain challenges related to semiconductor chip shortages, which impacted its Breast Health business. The company’s adjusted operating margin was 40.1%, down 1525 bps year over year.
Other Key Picks
A few other top-ranked stocks in the overall healthcare sector include Haemonetics Corporation (HAE - Free Report) , TerrAscend Corp. and Akerna Corp. . Haemonetics and TerrAscend both sport a Zacks Rank #1 while Akerna carries a Zack Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Haemonetics’ stock has risen 42.1% in the past year. Earnings Estimates for Haemonetics have increased from $2.87 per share to $2.91 for 2023 and from $3.02 per share to $3.28 for 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the last four quarters, delivering an average surprise of 10.98%. In the last reported quarter, it delivered an earnings surprise of 7.59%.
Estimates for TerrAscend in 2023 have remained constant at a loss of 10 cents per share in the past 30 days. Shares of TerrAscend have declined 70.6% in the past year.
TerrAscend’s earnings beat estimates in one of the last three quarters and missed the mark in the other two, with the average negative surprise being 136.11%. In the last reported quarter, TRSSF delivered an earnings surprise of 216.67%.
Akerna’s stock has declined 95.7% in the past year. The estimates for 2023 have remained constant at a loss of $1.91 per share over the past 30 days.
Akerna missed earnings estimates in each of the last four quarters, delivering a negative earnings surprise of 15.49% on average. In the last reported quarter, KERN delivered a negative earnings surprise of 13.33%.
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Hologic's (HOLX) Strategic Buyouts Aid, Surgical Arm Grows
Hologic’s (HOLX - Free Report) progress in the domestic and international markets, strong pipeline of products and continued solid performance of the Molecular Diagnostics segment bolster our confidence. The stock carries a Zacks Rank #1 (Strong Buy).
Over the past year, Hologic has outperformed its industry. The stock has gained 13.3% against the industry’s 12.9% decline. Hologic delivered better-than-expected earnings and revenues for the first quarter of fiscal 2023.
GYN Surgical also delivered an impressive quarter, growing 14.7% organically. While the extra days contributed approximately 250 basis points of net growth, even without the extra days, Diagnostics and Surgical both grew double digits and Breast Health exceeded the prior guidance.
The GYN Surgical results underscore a more diverse surgical business with more growth drivers than in the past. In addition to strong performance from MyoSure and better-than-expected results from NovaSure, the quarter showcased increasing contributions from Fluent and the company’s laparoscopic portfolio of Asessa and Boulder.
Through Acessa and Bolder acquisitions, the company has integrated Acessa’s procedure and Bolder’s advanced vessel sealing portfolio in its product line. Acessa is a unique radio frequency fibroid removal solution forming a new market and improving payer coverage for Hologic. With Boulder, the company is entering an underdeveloped market by deploying its large surgical sales force.
Hologic is currently well positioned to achieve its full-year guidance of low double-digit organic growth ex-COVID in all three franchises, well above the 5% to 7% long-term growth rate.
On the flip side, in the first quarter of fiscal 2023, Hologic witnessed a decline in reported revenues compared to the year-ago period. The decline in the top line can be attributed to lower COVID-19 assay sales and supply chain challenges in the Breast Health business. Revenues in the Breast Health segment fell on a year-over-year basis due to the persistent shortage of semiconductor chips. Escalating operating costs and the contraction of both margins are worrying.
In the fiscal first quarter, the company-provided adjusted gross margin contracted 1830 basis points (bps) to 31.1%. According to the company, the downside in gross margin was primarily due to a year-over-year decline in COVID-19 assay sales and lower capital equipment sales due to supply chain challenges related to semiconductor chip shortages, which impacted its Breast Health business. The company’s adjusted operating margin was 40.1%, down 1525 bps year over year.
Other Key Picks
A few other top-ranked stocks in the overall healthcare sector include Haemonetics Corporation (HAE - Free Report) , TerrAscend Corp. and Akerna Corp. . Haemonetics and TerrAscend both sport a Zacks Rank #1 while Akerna carries a Zack Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Haemonetics’ stock has risen 42.1% in the past year. Earnings Estimates for Haemonetics have increased from $2.87 per share to $2.91 for 2023 and from $3.02 per share to $3.28 for 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the last four quarters, delivering an average surprise of 10.98%. In the last reported quarter, it delivered an earnings surprise of 7.59%.
Estimates for TerrAscend in 2023 have remained constant at a loss of 10 cents per share in the past 30 days. Shares of TerrAscend have declined 70.6% in the past year.
TerrAscend’s earnings beat estimates in one of the last three quarters and missed the mark in the other two, with the average negative surprise being 136.11%. In the last reported quarter, TRSSF delivered an earnings surprise of 216.67%.
Akerna’s stock has declined 95.7% in the past year. The estimates for 2023 have remained constant at a loss of $1.91 per share over the past 30 days.
Akerna missed earnings estimates in each of the last four quarters, delivering a negative earnings surprise of 15.49% on average. In the last reported quarter, KERN delivered a negative earnings surprise of 13.33%.