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Hologic's (HOLX) Q2 Earnings Beat Estimates, 2023 View Up
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Hologic, Inc. (HOLX - Free Report) reported adjusted earnings per share (EPS) of $1.06 in second-quarter fiscal 2023, down 48.8% year over year. However, the bottom line surpassed the Zacks Consensus Estimate by 20.5%.
The adjustments include charges and benefits related to the amortization of acquired intangible assets, certain asset impairment charges and restructuring and integration/consolidation costs, among others.
The company’s GAAP EPS were 87 cents in the quarter compared with the year-ago quarter’s EPS of $1.80, reflecting a 51.7% plunge.
Revenues in Detail
Revenues totaled $1.03 billion in the reported quarter, declining 28.5% year over year (down 27.5% at the constant exchange rate or CER). The metric surpassed the Zacks Consensus Estimate by 6.2%. Lower sales of COVID-19 assays dragged the top line.
Segments in Detail
In the fiscal second quarter, U.S. revenues totaled $768.7 million and declined 22.5%. International revenues amounted to $257.8 million, falling 41.9% year over year or 38.5% at CER.
Revenues in the Diagnostics segment declined 52.9% year over year (down 52.2% at CER) to $464.7 million in the quarter under review. Excluding COVID-19 revenues, Diagnostics revenues increased 13% on a reported basis and 14.9% at CER.
Cytology & Perinatal revenues of $111.9 million were down 0.7% at CER. Molecular Diagnostics revenues of $342.2 million declined 59.8% at CER. Blood Screening revenues of $10.6 million fell 15.2% year over year at CER.
Revenues in the Breast Health segment rose 27.1% from the year-ago period’s (up 28.8% at CER) levels to $311.5 million. Outside the United States, Breast Health sales increased 42.5% at CER. The upside was driven by the improving semiconductor chip supply, enabling additional gantry deliveries within the quarter and resulting in higher capital equipment revenues compared with the prior-year period’s levels.
Revenues in the GYN Surgical business rose 23.4% year over year (up 25.2% at CER) to $144.8 million, led by improved procedure volume as COVID prevalence declined.
Revenues at Skeletal Health increased 51.2% year over year (up 53.4% at CER) to $31.6 million.
Operational Update
In the fiscal second quarter, the company-provided adjusted gross margin contracted 890 basis points (bps) to 62.1%. According to the company, the downside in gross margin was primarily due to a year-over-year decline in COVID-19 assay sales.
The company’s adjusted operating margin was 31.3%, contracted 1610 bps.
Financial Update
Hologic ended second-quarter fiscal 2023 with cash and cash equivalents of $2.58 billion compared with $2.34 billion at the end of first-quarter fiscal 2023.
Total long-term debt (including the current portion) was $2.79 billion at the end of the fiscal second quarter compared with $2.80 at the end of the fiscal first quarter.
Net cash provided by operating activities at the end of the fiscal second quarter was $459.7 million compared with $1.63 billion a year ago.
Guidance
Hologic issued the guidance for the third quarter and raised fiscal 2023 guidance.
For fiscal 2023, the company projects revenues within $3.92-4.03 billion (up from the previous guidance of $3.85-4.00 billion), suggesting a year-over-year decline in the range of 19.3-17.2% on a reported basis, 18.5-16.4% at CER and 18.7-16.6% organically. The Zacks Consensus Estimate for fiscal 2023 revenues is pegged at $3.97 billion.
Adjusted earnings per share for fiscal 2023 are now estimated within $3.75-$3.95 (up from the previous guidance of $3.55-$3.85), with a projected decline of 37.7-34.4% year over year. The Zacks Consensus Estimate for fiscal 2023 earnings per share is pegged at $3.74.
For third-quarter fiscal 2023, the company projects revenues within $930-$980 million, suggesting a year-over-year decline in the range of 7.2-2.3% on a reported basis, 6.9-1.9% at CER and 6.8-$1.8% organically. The Zacks Consensus Estimate for second-quarter fiscal 2023 revenues is pegged at $953.7 million.
Adjusted earnings per share (EPS) for the third quarter are estimated within 83-93 cents, suggesting a decline of 12.6-2.1% year over year. The Zacks Consensus Estimate for second-quarter fiscal 2023 EPS is pegged at 87 cents.
Our Take
Hologic delivered better-than-expected revenues and earnings for the second quarter of fiscal 2023. The company’s Breast Health segment registered strong growth driven by improving semiconductor chip supply enabling additional gantry deliveries within the quarter, resulting in higher capital equipment revenue compared to the prior year period. GYN Surgical business grew organically as the company registered procedural volumes return as well as acceleration from the new business lines. Moreover, the company has raised 2023 guidance, raising optimism on the stock.
However, on a year-over-year basis, both revenues and earnings were significantly down. The significant decline in COVID-19 assay revenues dragged total revenues down. The company also reported a contraction in both margins, which looks discouraging.
Zacks Rank and Key Picks
Hologic currently carries Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Edwards Lifesciences Corporation (EW - Free Report) , Intuitive Surgical, Inc. (ISRG - Free Report) and Johnson & Johnson (JNJ - Free Report) .
Edwards Lifesciences, carrying a Zacks Rank #2 (Buy), reported first-quarter 2023 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion outpaced the consensus mark by 4.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in two of the trailing four quarters, missed the same in one and broke even in the other, the average being 1.2%.
Intuitive Surgical, having a Zacks Rank #2, reported first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate by 3.4%. Revenues of $1.70 billion outpaced the consensus mark by 6.9%.
Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 1.9%.
Johnson & Johnson reported first-quarter 2023 adjusted earnings of $2.68 per share, beating the Zacks Consensus Estimate by 6.8%. Revenues of $24.75 billion surpassed the Zacks Consensus Estimate by 5%. It currently carries a Zacks Rank #2.
Johnson & Johnson has a long-term estimated growth rate of 5.5%. JNJ’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.9%.
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Hologic's (HOLX) Q2 Earnings Beat Estimates, 2023 View Up
Hologic, Inc. (HOLX - Free Report) reported adjusted earnings per share (EPS) of $1.06 in second-quarter fiscal 2023, down 48.8% year over year. However, the bottom line surpassed the Zacks Consensus Estimate by 20.5%.
The adjustments include charges and benefits related to the amortization of acquired intangible assets, certain asset impairment charges and restructuring and integration/consolidation costs, among others.
The company’s GAAP EPS were 87 cents in the quarter compared with the year-ago quarter’s EPS of $1.80, reflecting a 51.7% plunge.
Revenues in Detail
Revenues totaled $1.03 billion in the reported quarter, declining 28.5% year over year (down 27.5% at the constant exchange rate or CER). The metric surpassed the Zacks Consensus Estimate by 6.2%. Lower sales of COVID-19 assays dragged the top line.
Segments in Detail
In the fiscal second quarter, U.S. revenues totaled $768.7 million and declined 22.5%. International revenues amounted to $257.8 million, falling 41.9% year over year or 38.5% at CER.
Revenues in the Diagnostics segment declined 52.9% year over year (down 52.2% at CER) to $464.7 million in the quarter under review. Excluding COVID-19 revenues, Diagnostics revenues increased 13% on a reported basis and 14.9% at CER.
Cytology & Perinatal revenues of $111.9 million were down 0.7% at CER. Molecular Diagnostics revenues of $342.2 million declined 59.8% at CER. Blood Screening revenues of $10.6 million fell 15.2% year over year at CER.
Hologic, Inc. Price, Consensus and EPS Surprise
Hologic, Inc. price-consensus-eps-surprise-chart | Hologic, Inc. Quote
Revenues in the Breast Health segment rose 27.1% from the year-ago period’s (up 28.8% at CER) levels to $311.5 million. Outside the United States, Breast Health sales increased 42.5% at CER. The upside was driven by the improving semiconductor chip supply, enabling additional gantry deliveries within the quarter and resulting in higher capital equipment revenues compared with the prior-year period’s levels.
Revenues in the GYN Surgical business rose 23.4% year over year (up 25.2% at CER) to $144.8 million, led by improved procedure volume as COVID prevalence declined.
Revenues at Skeletal Health increased 51.2% year over year (up 53.4% at CER) to $31.6 million.
Operational Update
In the fiscal second quarter, the company-provided adjusted gross margin contracted 890 basis points (bps) to 62.1%. According to the company, the downside in gross margin was primarily due to a year-over-year decline in COVID-19 assay sales.
The company’s adjusted operating margin was 31.3%, contracted 1610 bps.
Financial Update
Hologic ended second-quarter fiscal 2023 with cash and cash equivalents of $2.58 billion compared with $2.34 billion at the end of first-quarter fiscal 2023.
Total long-term debt (including the current portion) was $2.79 billion at the end of the fiscal second quarter compared with $2.80 at the end of the fiscal first quarter.
Net cash provided by operating activities at the end of the fiscal second quarter was $459.7 million compared with $1.63 billion a year ago.
Guidance
Hologic issued the guidance for the third quarter and raised fiscal 2023 guidance.
For fiscal 2023, the company projects revenues within $3.92-4.03 billion (up from the previous guidance of $3.85-4.00 billion), suggesting a year-over-year decline in the range of 19.3-17.2% on a reported basis, 18.5-16.4% at CER and 18.7-16.6% organically. The Zacks Consensus Estimate for fiscal 2023 revenues is pegged at $3.97 billion.
Adjusted earnings per share for fiscal 2023 are now estimated within $3.75-$3.95 (up from the previous guidance of $3.55-$3.85), with a projected decline of 37.7-34.4% year over year. The Zacks Consensus Estimate for fiscal 2023 earnings per share is pegged at $3.74.
For third-quarter fiscal 2023, the company projects revenues within $930-$980 million, suggesting a year-over-year decline in the range of 7.2-2.3% on a reported basis, 6.9-1.9% at CER and 6.8-$1.8% organically. The Zacks Consensus Estimate for second-quarter fiscal 2023 revenues is pegged at $953.7 million.
Adjusted earnings per share (EPS) for the third quarter are estimated within 83-93 cents, suggesting a decline of 12.6-2.1% year over year. The Zacks Consensus Estimate for second-quarter fiscal 2023 EPS is pegged at 87 cents.
Our Take
Hologic delivered better-than-expected revenues and earnings for the second quarter of fiscal 2023. The company’s Breast Health segment registered strong growth driven by improving semiconductor chip supply enabling additional gantry deliveries within the quarter, resulting in higher capital equipment revenue compared to the prior year period. GYN Surgical business grew organically as the company registered procedural volumes return as well as acceleration from the new business lines. Moreover, the company has raised 2023 guidance, raising optimism on the stock.
However, on a year-over-year basis, both revenues and earnings were significantly down. The significant decline in COVID-19 assay revenues dragged total revenues down. The company also reported a contraction in both margins, which looks discouraging.
Zacks Rank and Key Picks
Hologic currently carries Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Edwards Lifesciences Corporation (EW - Free Report) , Intuitive Surgical, Inc. (ISRG - Free Report) and Johnson & Johnson (JNJ - Free Report) .
Edwards Lifesciences, carrying a Zacks Rank #2 (Buy), reported first-quarter 2023 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion outpaced the consensus mark by 4.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in two of the trailing four quarters, missed the same in one and broke even in the other, the average being 1.2%.
Intuitive Surgical, having a Zacks Rank #2, reported first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate by 3.4%. Revenues of $1.70 billion outpaced the consensus mark by 6.9%.
Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 1.9%.
Johnson & Johnson reported first-quarter 2023 adjusted earnings of $2.68 per share, beating the Zacks Consensus Estimate by 6.8%. Revenues of $24.75 billion surpassed the Zacks Consensus Estimate by 5%. It currently carries a Zacks Rank #2.
Johnson & Johnson has a long-term estimated growth rate of 5.5%. JNJ’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.9%.