In yet another example of a medtech company saying pay no attention to those shrinking COVID-19 sales behind the curtain, Hologic posted its quarterly earnings report and made sure to separate out the steep decline in coronavirus test revenues.
Though the pandemic had once brought windfalls for the makers of diagnostic supplies—money that Hologic fed into its own acquisition and expansion spree over the past two years—testmakers have wanted to make it clear to investors that those levels of demand were always to be treated as a one-time deal.
Companies have prepared for the better part of a year for COVID test revenues to largely dry up, as the nation moves to put the pandemic in the rear-view mirror. And though some companies, such as Abbott, saw their sales persist slightly longer than expected throughout 2022—and while infections and hospitalizations continue today—it appears that time has come for Hologic.
While not trying to hide anything, the company posted a 48% drop in global molecular diagnostic sales for the first quarter of its 2023 fiscal calendar, dropping to $425 million in sales compared to $813 million during the same period in the prior year.
That decline—along with continuing supply chain challenges in securing computer chips for the mammography and biopsy equipment within its breast health division—dragged down Hologic’s total quarterly revenue to $1.07 billion, or 27% below where it was after the last three months of 2021.
But “excluding COVID-19 revenues” are the words of the day. Outside of coronavirus tests, the company’s core molecular diagnostic portfolio grew nearly 25%. When including cytology, perinatal and blood screening, Hologic’s testing catalog as a whole grew by nearly 16%.
And though company-wide revenues were down by comparison, breaking the billion-dollar mark put Hologic above its own estimates, previously pegged at between $940 million and $990 million.
COVID sales, low as they were, managed to outpace projections as well. Hologic netted $127 million in assay revenue compared to previous guidance set at $75 million; annual revenue is expected to top out at $225 million for the year.
The company’s surgical revenue also expanded by nearly 15% to more than $154 million. However, breast health sales declined across both imaging and interventional hardware by 7% to $334 million. Its results were largely in line with the preliminary estimates shared during the J.P. Morgan Healthcare Conference early last month.
All told, CEO Steve MacMillan described the results as a strong start to the company’s fiscal year. “In addition, we are increasing our full-year fiscal 2023 guidance for both revenue and EPS, highlighting the confidence we have in our businesses despite an uncertain macro environment,” he said in a release.
Those figures were set at between $3.85 billion and $4.00 billion, and $2.69 and $2.99, respectively—a bit below the $4.86 billion Hologic collected during the 2022 fiscal year.
“For the second quarter and the full-year 2023, we continue to expect low double-digit constant currency organic revenue growth ex. COVID-19 in each division,” added CFO Karleen Oberton.
Early last year, the company said it would begin adding sales from its tuck-in acquisitions to its bottom line—including from the cancer test makers Biotheranostics and Diagenode, as well as the infectious disease-focused Mobidiag.
Mobidiag’s tech in particular set the stage for a European rollout of a tabletop diagnostic system—the stackable Novodiag platform, which uses real-time PCR and microarrays to identify multiple pathogens in a single sample—and as an adjacent complement to Hologic’s mainstay, high-throughput Panther systems, with their much larger laboratory footprints.
At the same time, for each new Panther system the company placed worldwide during the high points of the pandemic for COVID testing, Hologic has seen the use of those systems begin to shift over to tests for sexually transmitted infections, MacMillan said on a call with investors.
With its eyes on the long haul, the company will stick with tuck-in acquisitions and share buybacks as its primary goal. “The biggest takeaway frankly is, we're in a position of strength where our base businesses are very strong. We don't have to go do anything” when it comes to big M&A deals, MacMillan said.
“Candidly, I think there's a lot of folks trying to figure out what they want to be when they grow up right now. We know exactly where we're going, and what we want to be, and that is championing women's health and having every business go well. So it gives us the luxury of being patient.”