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Hologic (HOLX) Q1 Earnings Surpass Estimates, Margins Down
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Hologic, Inc. (HOLX - Free Report) reported first-quarter fiscal 2022 adjusted earnings per share (EPS) of $2.17, down 24.1% year over year. However, the bottom line surpassed the Zacks Consensus Estimate by 80.8%.
The adjustments include charges and benefits related to amortization of acquired intangible assets, MDR expenses, and restructuring and integration/consolidation costs, to name a few.
The company’s GAAP EPS was $1.95 in the quarter compared with the year-ago EPS of $2.50, reflecting a 22% decline.
Revenues in Detail
Revenues grossed $1.47 billion in the reported quarter, down 8.6% year over year (down 8.2% at constant exchange rate or CER). However, the metric surpassed the Zacks Consensus Estimate by 31.4%.
Excluding revenues from COVID-19, organic revenues grew 9.0% at CER.
U.S. revenues of $1.02 billion declined 11%, whereas international revenues of $458.7 million declined 2.8% year over year or 1.3% at CER.
Organically, revenues in the United States declined 12.6% year over year to $987.5 million in the quarter. International revenues decreased 6.1% year over year (down 4.6% at CER) to $443.2 million.
Segments in Detail
Revenues at the Diagnostics segment declined 15.8% year over year (down 15.2% at CER) to $950.4 million in the quarter under review. Cytology & Perinatal revenues of $130.7 million rose 5.2% at CER. Molecular Diagnostics’ revenues of $813.3 million declined 17.8% at CER. Blood Screening revenues of $6.4 million fell 21% year over year at CER.
Revenues at the Breast Health segment improved 8% from the year-ago period (up 8.4% at CER) to $359.3 million. This primarily resulted from a robust product portfolio and strong demand for Brevera following its relaunch. Impressive performance by the segment’s Breast Imaging and Interventional Breast Solutions drove the top line.
Domestic sales in this segment improved in the quarter on a 5% revenue uptick, year over year. Further, outside the United States, Breast Health sales improved 20.3% at CER.
Revenues at the GYN Surgical business rose 8.3% year over year (up 8.2% at CER) to $134.3 million, while revenues at Skeletal Health increased 8.8% year over year (up 9.7% at CER) to $27.1 million.
Operational Update
In the fiscal first quarter, the company-provided adjusted gross margin contracted 510 basis points (bps) to 72.1%. According to the company, the decrease in gross margin was primarily due to a decline in COVID-19 assay sales compared to the prior-year period.
Adjusted operating expenses, as stated by the company, amounted to $333.9 million, up 21.6% year over year. The company reported adjusted operating margin contraction of 1080 bps to 49.4%.
Financial Update
Hologic ended the first quarter of fiscal 2022 with cash and cash equivalents of $1.42 billion compared with $1.17 billion at the end of the fourth quarter of 2021. Total long-term debt (including current portion) was $3.07 billion at the end of the first quarter of fiscal 2022 compared with $3.03 billion at the end of the fourth quarter of 2021.
Net cash provided by operating activities at the end of first-quarter fiscal 2022 was $564.2 million compared with $650 million a year ago.
Guidance
Hologic has initiated the guidance for the second quarter of fiscal 2022.
For second-quarter fiscal 2022, the company projects revenues within $1.25-$1.30 billion, implying a year-over-year decline in the range of 18.7-15.5% on a reported basis, 17.2-14% at CER and 18.8-15.5% organically. The Zacks Consensus Estimate for second-quarter fiscal 2022 revenues is pegged at $951.8 million.
Adjusted EPS for the quarter is estimated within $1.50-$1.60, with a projected decline of 42.1-38.2% year over year. The Zacks Consensus Estimate for first-quarter fiscal 2022 EPS is pegged at 89 cents.
Hologic has raised the financial guidance for full-year 2022.
For fiscal 2022, the company now projects revenues within $4.40-4.55 billion, implying a year-over-year decline in the range of 21.9-19.2% on a reported basis, 20.9-18.2% at CER and 22-19.3% organically (previous guided range was $3.75-4.00 billion). The Zacks Consensus Estimate for fiscal 2022 revenues is pegged at $3.96 billion.
Adjusted EPS for fiscal 2022 is estimated within $4.90-$5.20, with a projected decline of 41.7-38.2% year over year (previous guided range was $3.55-3.85). The Zacks Consensus Estimate for fiscal 2022 EPS is pegged at $3.87.
Our Take
Hologic exited the first quarter of fiscal 2022 with better-than-expected results. Impressive performance by the Breast Imaging and Interventional Breast Solutions business drove the top line. The recently-completed buyout of Bolder Surgical along with the launch of the Panther Trax bodes well for the company. Further, the uptick in GYN Surgical business led by MyoSure is encouraging. The company has raised full-year 2022 guidance, which indicates the continuation of this bullish trend. However, the year-over-year decline in revenues driven by lower sales of COVID-19 assays compared to the prior-year period is discouraging. Escalating operating costs and contraction of both margins are worrying.
Zacks Rank & Other Key Picks
Hologic currently carries a Zacks Rank #2 (Buy).
Here are a few other medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.
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Hologic (HOLX) Q1 Earnings Surpass Estimates, Margins Down
Hologic, Inc. (HOLX - Free Report) reported first-quarter fiscal 2022 adjusted earnings per share (EPS) of $2.17, down 24.1% year over year. However, the bottom line surpassed the Zacks Consensus Estimate by 80.8%.
The adjustments include charges and benefits related to amortization of acquired intangible assets, MDR expenses, and restructuring and integration/consolidation costs, to name a few.
The company’s GAAP EPS was $1.95 in the quarter compared with the year-ago EPS of $2.50, reflecting a 22% decline.
Revenues in Detail
Revenues grossed $1.47 billion in the reported quarter, down 8.6% year over year (down 8.2% at constant exchange rate or CER). However, the metric surpassed the Zacks Consensus Estimate by 31.4%.
Excluding revenues from COVID-19, organic revenues grew 9.0% at CER.
U.S. revenues of $1.02 billion declined 11%, whereas international revenues of $458.7 million declined 2.8% year over year or 1.3% at CER.
Organically, revenues in the United States declined 12.6% year over year to $987.5 million in the quarter. International revenues decreased 6.1% year over year (down 4.6% at CER) to $443.2 million.
Segments in Detail
Revenues at the Diagnostics segment declined 15.8% year over year (down 15.2% at CER) to $950.4 million in the quarter under review. Cytology & Perinatal revenues of $130.7 million rose 5.2% at CER. Molecular Diagnostics’ revenues of $813.3 million declined 17.8% at CER. Blood Screening revenues of $6.4 million fell 21% year over year at CER.
Revenues at the Breast Health segment improved 8% from the year-ago period (up 8.4% at CER) to $359.3 million. This primarily resulted from a robust product portfolio and strong demand for Brevera following its relaunch. Impressive performance by the segment’s Breast Imaging and Interventional Breast Solutions drove the top line.
Domestic sales in this segment improved in the quarter on a 5% revenue uptick, year over year. Further, outside the United States, Breast Health sales improved 20.3% at CER.
Hologic, Inc. Price, Consensus and EPS Surprise
Hologic, Inc. price-consensus-eps-surprise-chart | Hologic, Inc. Quote
Revenues at the GYN Surgical business rose 8.3% year over year (up 8.2% at CER) to $134.3 million, while revenues at Skeletal Health increased 8.8% year over year (up 9.7% at CER) to $27.1 million.
Operational Update
In the fiscal first quarter, the company-provided adjusted gross margin contracted 510 basis points (bps) to 72.1%. According to the company, the decrease in gross margin was primarily due to a decline in COVID-19 assay sales compared to the prior-year period.
Adjusted operating expenses, as stated by the company, amounted to $333.9 million, up 21.6% year over year. The company reported adjusted operating margin contraction of 1080 bps to 49.4%.
Financial Update
Hologic ended the first quarter of fiscal 2022 with cash and cash equivalents of $1.42 billion compared with $1.17 billion at the end of the fourth quarter of 2021. Total long-term debt (including current portion) was $3.07 billion at the end of the first quarter of fiscal 2022 compared with $3.03 billion at the end of the fourth quarter of 2021.
Net cash provided by operating activities at the end of first-quarter fiscal 2022 was $564.2 million compared with $650 million a year ago.
Guidance
Hologic has initiated the guidance for the second quarter of fiscal 2022.
For second-quarter fiscal 2022, the company projects revenues within $1.25-$1.30 billion, implying a year-over-year decline in the range of 18.7-15.5% on a reported basis, 17.2-14% at CER and 18.8-15.5% organically. The Zacks Consensus Estimate for second-quarter fiscal 2022 revenues is pegged at $951.8 million.
Adjusted EPS for the quarter is estimated within $1.50-$1.60, with a projected decline of 42.1-38.2% year over year. The Zacks Consensus Estimate for first-quarter fiscal 2022 EPS is pegged at 89 cents.
Hologic has raised the financial guidance for full-year 2022.
For fiscal 2022, the company now projects revenues within $4.40-4.55 billion, implying a year-over-year decline in the range of 21.9-19.2% on a reported basis, 20.9-18.2% at CER and 22-19.3% organically (previous guided range was $3.75-4.00 billion). The Zacks Consensus Estimate for fiscal 2022 revenues is pegged at $3.96 billion.
Adjusted EPS for fiscal 2022 is estimated within $4.90-$5.20, with a projected decline of 41.7-38.2% year over year (previous guided range was $3.55-3.85). The Zacks Consensus Estimate for fiscal 2022 EPS is pegged at $3.87.
Our Take
Hologic exited the first quarter of fiscal 2022 with better-than-expected results. Impressive performance by the Breast Imaging and Interventional Breast Solutions business drove the top line. The recently-completed buyout of Bolder Surgical along with the launch of the Panther Trax bodes well for the company. Further, the uptick in GYN Surgical business led by MyoSure is encouraging. The company has raised full-year 2022 guidance, which indicates the continuation of this bullish trend. However, the year-over-year decline in revenues driven by lower sales of COVID-19 assays compared to the prior-year period is discouraging. Escalating operating costs and contraction of both margins are worrying.
Zacks Rank & Other Key Picks
Hologic currently carries a Zacks Rank #2 (Buy).
Here are a few other medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.
AMN Healthcare Services, Inc. (AMN - Free Report) has an Earnings ESP of +10.29% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare’s long-term earnings growth rate is estimated at 16.2%. AMN’s earnings yield of 6.5% compares favorably with the industry’s 0.9%.
Henry Schein, Inc. (HSIC - Free Report) has an Earnings ESP of +1.94% and a Zacks Rank of 2.
Henry Schein’s long-term earnings growth rate is estimated at 11.8%. HSIC's earnings yield of 6.1% compares favorably with the industry’s 4.3%.
Laboratory Corporation of America Holdings (LH - Free Report) or LabCorp has an Earnings ESP of +9.21% and a Zacks Rank #1.
LabCorp’s long-term earnings growth rate is estimated at 10.6%. LH’s earnings yield of 66.7% compares favorably with the industry’s 4.3%.