Improving semiconductor chip supply enabled Hologic to make additional deliveries of breast imaging devices, causing sales to beat its expectations in the second quarter of its financial year. The company’s revenues of $1.03 billion exceeded its previous forecast of $930 million to $980 million.
Hologic, a provider of diagnostic, imaging and surgical devices for women's health, reported “four quarters of decline” prior to its latest set of results, CEO Stephen MacMillan said on a conference call with investors, but it “emphatically returned to growth” in the second quarter. MacMillan attributed the recovery of the breast health business to several factors, led by improvements to the supply of components.
“Semiconductor chip availability continues to improve, allowing for the delivery of more gantries in the quarter than planned. This included moving a number of gantries originally allocated for the back half of the year into the second quarter,” MacMillan said on the call.
MacMillan framed the second quarter breast health results as a “one-time bump.” Having pulled forward sales, Hologic expects gantry deliveries in the next two quarters to be “modestly” below the level seen in the second quarter, MacMillan said on the call.
Shares in Hologic fell 4.6% to $83.66 in Tuesday morning trading.
M&A plans
The slight fall in Hologic’s share price may reflect concerns that the second quarter growth is an outlier that the company will struggle to replicate in the coming quarters. Analysts at BTIG set out the case for a cautious reading of the results in a note to investors.
“While the optics of the quarter were good, the pull-forward in mammography revenue coupled with COVID assay revenue accounted for much of the beat. The raise in guidance is below the magnitude of the beat both on top and bottom line,” the analysts wrote. Bulls will say it's conservative (and it may very well be), but we are starting to worry about [Hologic] facing tougher comps moving into FY24.”
Hologic could drive growth in its 2024 financial year and beyond by acquiring companies. Asked about M&A plans on the call, MacMillan said Hologic is “considering widening the aperture to consider larger deals, but, frankly, those would be things with more mature earnings profiles and still be accretive to growth.”
Forecast:
Hologic now expects full-year revenue of $3.93 billion to $4.03 billion, up from $3.85 billion to $4.0 billion under its prior forecast.
