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Hologic Inc. (HOLX - Free Report) reported second-quarter fiscal 2017 adjusted earnings per share (EPS) of 50 cents, up 6.4% year over year. Adjusted EPS also beat the Zacks Consensus Estimate of 46 cents and exceeded the company’s guidance of 45–46 cents.
Management believes strong top-line growth led to faster EPS growth in the reported quarter.
On a reported basis, the company recorded net income of $526.8 million or $1.84 per share, both reflecting a year-over-year rise of over 100%.
Revenues grossed $715.4 million in the quarter, up 3.2% year over year. The top line also comfortably exceeded the Zacks Consensus Estimate of $685 million and the company's estimation of $675–$685 million. At constant exchange rate (CER), revenue growth was 3.8%.
Solid growth at Hologic’s Breast Health and GYN Surgical business segments drove the upside in the top line.
Geographically, revenues in the U.S. increased 4.1% year over year to $570.1 million. Excluding blood screening and medical aesthetics, U.S. sales rose 4.1%. On the other hand, international revenues declined 0.1% (up 2.8% at CER) to $145.3 million owing to strong growth in molecular diagnostics, GYN Surgical and Breast Health. Excluding blood screening and medical aesthetics, international sales increased 7.7% or 11.1% at constant currency.
Segments in Detail
Sales at the Diagnostics segment (44.1% of total revenue) declined 2.8% year over year (down 2.0% at CER) to $296 million in the second quarter. Under this segment, molecular diagnostics sales of $142.1 million increased 12.6% (13.3% at CER). This was primarily driven by continued strength across Aptima women's health products on the fully automated Panther and Tigris platforms, both in the U.S. and internationally. Cytology and perinatal sales of $115.6 million also showed a decline of 0.4% (up 0.8% at CER).
Sales at the Breast Health segment (39.2%) rose 1.7% (up 2.1% at CER) to $280.5 million. Revenues in the U.S. increased 1.5%, driven by increase in service revenues and new product sales that supplemented continued adoption of Hologic's Genius 3D Mammography systems.
Sales from the GYN Surgical business (14.1%) jumped 11.2% (up 11.9% at CER) to $101.1 million. This is on account of 31% growth (31.7% at CER) in MyoSure system sales to $46.6 million. Meanwhile, there was a 1% decrease (down 0.4% at CER) in NovaSure system sales.
Revenues at Skeletal Health (accounting for the rest) dropped 1.6% (down 0.9% at CER) to $21.8 million.
Operational Update
In the fiscal second quarter, Hologic’s gross margin contracted 124 basis points (bps) to 54.3%. Adjusted gross margin also decreased 233 bps to 63.4% due to the blood screening divestiture, negative impact of a stronger dollar and unfavorable product mix.
Hologic's adjusted operating expenses amounted to $276 million, up 24.2% year over year. Adjusted operating margin contracted a massive 891 bps to 24.8%.
Financial Update
Hologic exited the fiscal second quarter with cash and cash equivalents of $1.13 billion, considerably above $646 million reported at the end of the first quarter. Total long-term debt was $3.28 billion at the end of the fiscal second quarter, compared with $3.32 billion at the end of the preceding quarter.
Operating cash flow in the fiscal second quarter was $83.8 million, down from $169.6 million at the end of the fiscal first quarter.
Fiscal 2017 Guidance
Hologic raised its sales guidance for fiscal 2017. The company currently expects revenues in the range of $3.05–$3.08 billion, higher than the earlier guidance of $2.78–$2.82 billion. This new guidance reflects annualized growth of 1.0–3.1%. The current Zacks Consensus Estimate of $3.05 billion is at the low end of the company-provided guidance.
Management has also raised its EPS outlook for fiscal 2017. Hologic currently projects adjusted EPS in the range of $1.98–$2.02 (from previous $1.90–$1.94) for fiscal 2017, reflecting annualized growth of 1%–3.1%. The current Zacks Consensus Estimate for adjusted EPS is pegged at $1.97, lower than the guided range.
For third-quarter fiscal 2017, Hologic expects revenues of $790–$805 million (down from the prior guidance of $675–$685 million). The current Zacks Consensus Estimate for third-quarter revenues is $813.7 million, ahead of the company’s expectations.
Adjusted EPS is projected at 48–50 cents (beyond the upper end of the previous 48–46 cents range). The current Zacks Consensus Estimate for third-quarter adjusted EPS is pegged at 50 cents, which meets the high end of the company’s guidance.
Our Take
Hologic posted better-than-expected results in the second quarter of fiscal 2017. The company’s raised guidance for fiscal 2017 also raises optimism. Hologic’s strong cash position is another encouraging factor.
However, we are disappointed with the sales decline at the company’s Diagnostics segment. The blood screening divestiture is expected to mar the company’s growth momentum in the days ahead.
Zacks Rank & Other Key Picks
Hologic currently has a Zacks Rank #1 (Strong Buy). Other top-ranked medical stocks include Regeneron Pharmaceuticals, Inc. (REGN - Free Report) , Bio-Rad Laboratories, Inc. (BIO - Free Report) and Baxter International Inc. (BAX - Free Report) . Regeneron Pharmaceuticals and Bio-Rad Laboratories, sport a Zacks Rank 1 (Strong Buy), while Baxter International carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Regeneron Pharmaceuticals rose 18% in the last one year, in comparison to the S&P 500’s 16.0%. It has a trailing four-quarter average positive earnings surprise of 0.45%.
Bio-Rad Laboratories surged 55.7% in the past one year, better than the S&P 500 mark. It has a four-quarter average earnings surprise of 13.10%.
Baxter International rose 23.1% in the last one year, in comparison to the S&P 500. It has a four-quarter average positive earnings surprise of 17.14%.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>
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Hologic (HOLX) Tops Q2 Earnings & Sales, Raises 2017 View
Hologic Inc. (HOLX - Free Report) reported second-quarter fiscal 2017 adjusted earnings per share (EPS) of 50 cents, up 6.4% year over year. Adjusted EPS also beat the Zacks Consensus Estimate of 46 cents and exceeded the company’s guidance of 45–46 cents.
Management believes strong top-line growth led to faster EPS growth in the reported quarter.
On a reported basis, the company recorded net income of $526.8 million or $1.84 per share, both reflecting a year-over-year rise of over 100%.
Hologic, Inc. Price, Consensus and EPS Surprise
Hologic, Inc. Price, Consensus and EPS Surprise | Hologic, Inc. Quote
Revenues in Detail
Revenues grossed $715.4 million in the quarter, up 3.2% year over year. The top line also comfortably exceeded the Zacks Consensus Estimate of $685 million and the company's estimation of $675–$685 million. At constant exchange rate (CER), revenue growth was 3.8%.
Solid growth at Hologic’s Breast Health and GYN Surgical business segments drove the upside in the top line.
Geographically, revenues in the U.S. increased 4.1% year over year to $570.1 million. Excluding blood screening and medical aesthetics, U.S. sales rose 4.1%. On the other hand, international revenues declined 0.1% (up 2.8% at CER) to $145.3 million owing to strong growth in molecular diagnostics, GYN Surgical and Breast Health. Excluding blood screening and medical aesthetics, international sales increased 7.7% or 11.1% at constant currency.
Segments in Detail
Sales at the Diagnostics segment (44.1% of total revenue) declined 2.8% year over year (down 2.0% at CER) to $296 million in the second quarter. Under this segment, molecular diagnostics sales of $142.1 million increased 12.6% (13.3% at CER). This was primarily driven by continued strength across Aptima women's health products on the fully automated Panther and Tigris platforms, both in the U.S. and internationally. Cytology and perinatal sales of $115.6 million also showed a decline of 0.4% (up 0.8% at CER).
Sales at the Breast Health segment (39.2%) rose 1.7% (up 2.1% at CER) to $280.5 million. Revenues in the U.S. increased 1.5%, driven by increase in service revenues and new product sales that supplemented continued adoption of Hologic's Genius 3D Mammography systems.
Sales from the GYN Surgical business (14.1%) jumped 11.2% (up 11.9% at CER) to $101.1 million. This is on account of 31% growth (31.7% at CER) in MyoSure system sales to $46.6 million. Meanwhile, there was a 1% decrease (down 0.4% at CER) in NovaSure system sales.
Revenues at Skeletal Health (accounting for the rest) dropped 1.6% (down 0.9% at CER) to $21.8 million.
Operational Update
In the fiscal second quarter, Hologic’s gross margin contracted 124 basis points (bps) to 54.3%. Adjusted gross margin also decreased 233 bps to 63.4% due to the blood screening divestiture, negative impact of a stronger dollar and unfavorable product mix.
Hologic's adjusted operating expenses amounted to $276 million, up 24.2% year over year. Adjusted operating margin contracted a massive 891 bps to 24.8%.
Financial Update
Hologic exited the fiscal second quarter with cash and cash equivalents of $1.13 billion, considerably above $646 million reported at the end of the first quarter. Total long-term debt was $3.28 billion at the end of the fiscal second quarter, compared with $3.32 billion at the end of the preceding quarter.
Operating cash flow in the fiscal second quarter was $83.8 million, down from $169.6 million at the end of the fiscal first quarter.
Fiscal 2017 Guidance
Hologic raised its sales guidance for fiscal 2017. The company currently expects revenues in the range of $3.05–$3.08 billion, higher than the earlier guidance of $2.78–$2.82 billion. This new guidance reflects annualized growth of 1.0–3.1%. The current Zacks Consensus Estimate of $3.05 billion is at the low end of the company-provided guidance.
Management has also raised its EPS outlook for fiscal 2017. Hologic currently projects adjusted EPS in the range of $1.98–$2.02 (from previous $1.90–$1.94) for fiscal 2017, reflecting annualized growth of 1%–3.1%. The current Zacks Consensus Estimate for adjusted EPS is pegged at $1.97, lower than the guided range.
For third-quarter fiscal 2017, Hologic expects revenues of $790–$805 million (down from the prior guidance of $675–$685 million). The current Zacks Consensus Estimate for third-quarter revenues is $813.7 million, ahead of the company’s expectations.
Adjusted EPS is projected at 48–50 cents (beyond the upper end of the previous 48–46 cents range). The current Zacks Consensus Estimate for third-quarter adjusted EPS is pegged at 50 cents, which meets the high end of the company’s guidance.
Our Take
Hologic posted better-than-expected results in the second quarter of fiscal 2017. The company’s raised guidance for fiscal 2017 also raises optimism. Hologic’s strong cash position is another encouraging factor.
However, we are disappointed with the sales decline at the company’s Diagnostics segment. The blood screening divestiture is expected to mar the company’s growth momentum in the days ahead.
Zacks Rank & Other Key Picks
Hologic currently has a Zacks Rank #1 (Strong Buy). Other top-ranked medical stocks include Regeneron Pharmaceuticals, Inc. (REGN - Free Report) , Bio-Rad Laboratories, Inc. (BIO - Free Report) and Baxter International Inc. (BAX - Free Report) . Regeneron Pharmaceuticals and Bio-Rad Laboratories, sport a Zacks Rank 1 (Strong Buy), while Baxter International carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Regeneron Pharmaceuticals rose 18% in the last one year, in comparison to the S&P 500’s 16.0%. It has a trailing four-quarter average positive earnings surprise of 0.45%.
Bio-Rad Laboratories surged 55.7% in the past one year, better than the S&P 500 mark. It has a four-quarter average earnings surprise of 13.10%.
Baxter International rose 23.1% in the last one year, in comparison to the S&P 500. It has a four-quarter average positive earnings surprise of 17.14%.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>