Q4 Insights: Hologic, a medical device company mainly focused on women’s health, said fourth-quarter revenue beat its forecast as surgical sales helped offset weaker demand for COVID-19 tests.
While sales dropped by more than a quarter in the period ended Sept. 24, the Marlborough, Mass.-based company still beat its forecast in the period by about $100 million. The shares surged.
Other manufacturers of COVID tests, including Abbott and Thermo Fisher Scientific, also exceeded sales forecasts in their most recent results.
Profit plunged in the fourth quarter amid waning demand for COVID-19 tests and as semiconductor chip shortages hurt the company’s breast health unit.
Growing the core business: Excluding COVID, Hologic grew diagnostic sales by 11% organically and the company shared evidence that it is benefiting from the additional Panther systems now in use.
“As of the Q4 close, over 85% of new customers worldwide are running at least one other assay on their Panthers in addition to COVID. More impressive is that over 55% of these new to Hologic customers are running at least two non-COVID assays on their Panthers, a strong signal of future utilization at new customer sites,” Hologic CEO Stephen MacMillan said on the quarterly results conference call.
Rebuilding the breast business: The breast health unit again suffered from a shortage of semiconductor chips, which caused sales to fall 16%. While Hologic only has line of sight to chip allocations impacting revenue about two quarters, it’s confident the situation will improve next year.
“We have confidence the worst of the chip shortage is behind us. As chip supply normalizes, as it should over the course of 2023, we expect our gantry business to return to strength. Frankly, as we work down the backlog, we have the opportunity to perform slightly above the historical gantry placement run rate as we exit the fiscal year,” MacMillan said.
Forecast: Hologic provided new forecasts, both for the first quarter of its fiscal 2023 and for the full year. The company expects full-year revenue of $3.7 billion to $3.9 billion, a drop of about 20% on its sales in 2022, reflecting the expectation that COVID-19 sales will total $150 million. Excluding COVID-19 sales, Hologic expects low double-digit constant currency organic revenue growth. In the first quarter, sales are forecast to fall more than 30%.
“Management is guiding to low-double-digit constant-currency organic revenue growth excluding COVID across each of the business segments for the full year,” wrote analysts at William Blair in Chicago, after the results were announced. “Not only does this show the strength of each franchise, but in our view, it also highlights the transformation Hologic has undergone since the beginning of the pandemic.”
Shares of Hologic climbed 8.2% to $73.38 in morning trading on the Nasdaq exchange.