Hologic Beats Estimates - Analyst Blog

Hologic (HOLX) reported an EPS of 4 cents during the first quarter of fiscal 2011 compared with the year-ago quarter's EPS of 10 cents. However, after adjusting for certain items, EPS was 30 cents, surpassing the Zacks Consensus Estimate by 2 cents and a penny above the year-ago quarter. Revenues were $432.6 million, an increase of 4.9% compared to the prior-year quarter and higher than the Zacks Consensus Estimate of $428 million.

Hologic operates in four segments − Breast Health, Diagnostics, GYN (Gynecology) Surgical, and Skeletal Health − which contributed 45%, 32%, 18% and 5%, respectively to the total revenue during the quarter. Barring Diagnostics revenue which declined 0.9% to $139.1 million during the quarter, the other three segments recorded a robust growth of 9.1% ($195.4 million), 5.9% ($75.7 million) and 4.3% ($22.4 million), respectively.

The strong growth witnessed by Breast Health was primarily driven by the rise in revenue from services related to Hologic's installed base of digital mammography systems, 2D/3D Dimensions product, the inclusion of Sentinelle Medical (acquired in August 2010) and Eviva breast biopsy product. This was partially offset by a reduction in the number of Selenia systems sold.

Diagnostics revenue declined due to a reduction in ThinPrep pap tests volume resulting from reduced patient visits in a period of economic uncertainty. However, increased revenues from Cervista tests and other molecular diagnostic products provided some cushion to the decline. The increase in GYN Surgical revenue primarily came on the back of growth in sales of Adiana devices and to a lesser extent, sales of NovaSure devices globally. The increase in Skeletal Health revenues was driven by higher sales of bone densitometry units.

Hologic has received approvable letter from the US food and Drug Administration (FDA) for its Selenia Dimensions 3-D digital breast tomosynthesis system. However, it is yet to receive the final approval from the agency. Earlier in 2011, Hologic had acquired Interlace Medical, a developer of the MyoSure hysteroscopic tissue removal system for $128.9 million and two annual contingent payments.

Guidance

Hologic provided its guidance for the second quarter of fiscal 2011 and reiterated fiscal 2011 outlook. In the second quarter, revenue is expected to compare favorably with the first quarter's adjusted EPS of 28 cents. The Zacks Consensus EPS Estimate of 30 cents is higher than the company guidance. For fiscal 2011, Hologic expects revenues of $1.73−$1.76 billion and adjusted EPS of $1.22−$1.24.