Hologic, Inc. (Hologic or the Company) (Nasdaq: HOLX), a leading developer, manufacturer and supplier of premium diagnostics products, medical imaging systems and surgical products dedicated to serving the healthcare needs of women, today announced its results for the first fiscal quarter ended December 24, 2011.
Highlights of the quarter include:
- Revenues of $472.7 million resulting from year-over-year growth in all four operating segments.
- Net income was $20.8 million, or $0.08 per diluted share, calculated in accordance with U.S. generally accepted accounting principles (GAAP).
- Non-GAAP adjusted net income was $90.0 million, or $0.34 per diluted share, and adjusted EBITDA (non-GAAP adjusted earnings before interest, taxes, depreciation and amortization) was $162.3 million. A reconciliation of GAAP to non-GAAP results is included as an attachment to this press release.
- U.S. Food and Drug Administration (FDA) approval of the Cervista High Throughput Automation (HTA) system for HPV Screening.
- CE Marking for C-View synthesized 2D image reconstruction algorithm for 3D mammography exams.
- State Food and Drug Administration (SFDA) approval in China for the Serenity digital mammography system.
- Digital breast tomosynthesis voted "hottest clinical procedure" of 2011 by radiology community.
First quarter fiscal 2012 operating results overview:
First quarter fiscal 2012 revenues totaled $472.7 million, an increase of 9.3% compared to revenues of $432.6 million in the first quarter of fiscal 2011. This increase resulted from growth in revenues in all four of our operating segments, primarily from: (i) growth in Breast Health revenues of $20.0 million, or 10.2%, driven by a $14.1 million, or 10.9%, increase in product revenues and a $5.9 million, or 9.0%, increase in service revenues; (ii) an increase in Diagnostics revenues of $15.0 million, or 10.8%, primarily due to growth in ThinPrep revenues from our acquisition of TCT International Co., Ltd. (TCT) in Beijing, China on June 1, 2011 and strong growth in sales of our Cervista HPV tests; (iii) an increase in GYN Surgical revenues of $2.9 million, or 3.8%, related to contributions from the MyoSure hysteroscopic tissue removal (MyoSure) system, partially offset by a decrease in NovaSure endometrial ablation (NovaSure) system sales; and (iv) an increase in Skeletal Health revenues of $2.3 million, or 10.3%, primarily due to an increase in bone densitometry product sales.
For the first quarter of fiscal 2012, Hologic reported net income of $20.8 million, or $0.08 per diluted share, compared with net income of $10.9 million, or $0.04 per diluted share, in the first quarter of fiscal 2011.
The Company's non-GAAP adjusted net income increased 12.7% to $90.0 million, or $0.34 per diluted share, in the first quarter of fiscal 2012 compared to $79.9 million, or $0.30 per diluted share, in the prior year. The Company's fiscal 2012 and 2011 first quarter non-GAAP adjusted net income primarily excludes: (i) a non-cash charge of $61.0 million and $56.6 million, respectively, attributable to the amortization of intangible assets; (ii) a non-cash interest expense charge of $19.0 million and $18.5 million, respectively, related to the Company's Convertible Notes; (iii) a net charge of $15.6 million and $1.1 million, respectively, for contingent consideration related to its recent acquisitions; and (iv) $1.0 million and $0.7 million, respectively, of acquisition-related costs and other charges. The Company's fiscal 2011 first quarter non-GAAP adjusted net income also excludes: (i) a non-cash loss of $29.9 million attributable to the convertible notes exchange completed in that quarter; and (ii) a non-cash charge of $1.3 million related to the fair value write-up of acquired inventory sold.
Non-GAAP adjusted net income, non-GAAP adjusted earnings per diluted share (non-GAAP adjusted EPS), and adjusted EBITDA are non-GAAP financial measures. The Company's definitions of these non-GAAP financial measures, and the reconciliations of these measures to the Company's comparable GAAP financial measures for the periods presented, are set forth in the supplemental information attached to this press release. When analyzing the Company's operating performance, investors should not consider these non-GAAP measures as a substitute for the comparable financial measures prepared in accordance with GAAP.
“We are very pleased with the strong start to fiscal 2012, with revenues and operating performance that exceeded our guidance,” said Rob Cascella, President and Chief Executive Officer. “We once again saw year-over-year growth in all four of our business segments and are excited by the early successes we have experienced with our newly released products and recent acquisitions. We have maintained our leadership position in multiple markets and continue to set new standards in product innovation. Tomosynthesis is but one example of our commitment to leading edge, clinically significant technologies. We are confident over time Tomosynthesis will change the standard of care in breast imaging, and in doing so, will cause 2D mammography to become technologically obsolete. Our recent approvals and market clearances are yet other examples of new technologies developed to improve upon the healthcare outcomes of women around the world.”
First quarter fiscal 2012 revenue overview by segment (as compared to first quarter fiscal 2011):
- Breast Health revenues, which include the Company's mammography, breast biopsy, Magnetic Resonance Imaging (MRI) coils and MammoSite product lines, increased to $215.4 million in the current quarter compared to $195.4 million in the prior year, an increase of 10.2%. Product revenue growth was driven primarily by a combination of: (i) the continued shift in sales from Selenia to Dimensions systems and, to a lesser extent, an increase in the total number of digital mammography systems sold; and (ii) growth in sales of all of the Company's breast biopsy products, led by Eviva. The Company also realized a $5.9 million, or 9.0%, increase in service revenue related to its increased installed base of digital mammography systems.
- Diagnostics revenues, which include the Company's ThinPrep products, Rapid Fetal Fibronectin test, Cervista HPV tests, and other molecular diagnostics products, totaled $154.1 million in the current quarter compared to $139.1 million in the prior year, an increase of 10.8%. Sales growth was driven primarily by a combination of higher ThinPrep revenue (both from the addition of TCT and from other international sales) and strong growth in sales of Cervista HPV tests. Incremental ThinPrep revenues from the TCT acquisition were approximately $7.3 million during the current period (incremental revenues represent the total third party price less the original price previously charged to TCT).
- GYN Surgical revenues, which include the Company's NovaSure, MyoSure and Adiana systems, totaled $78.5 million in the current quarter compared to $75.7 million in the prior year, an increase of 3.8%. Sales growth was driven by an increase in sales of the MyoSure system, partially offset by lower NovaSure system sales. On a sequential basis, NovaSure system sales increased almost 5%.
- Skeletal Health revenues, which mainly include the Company's osteoporosis assessment and mini C-arm product lines, totaled $24.7 million in the current quarter compared to $22.4 million in the prior year, an increase of 10.3%. This increase was primarily the result of an increase in bone densitometry sales.
FDA Approval of the Cervista High Throughput Automation System for HPV Screening
On December 15, 2011, the Company announced the FDA approval of its Cervista HTA system for use with the Company's previously approved Cervista HPV HR test. The Company's HPV HR test utilizes Hologic's proprietary Invader technology to detect 14 high risk types of HPV that are associated with cervical cancer and precancerous lesions. The Cervista HTA system automates the DNA extraction and detection steps of the Cervista HPV HR test and allows for significant hands-off time during processing. Product launch occurred in January 2012.
CE Marking for the C-View Synthesized 2D Image Reconstruction Algorithm
On November 27, 2011, the Company announced the commercial release of its C-View synthesized 2D image reconstruction algorithm that eliminates the need for a conventional 2D mammogram as a component of a 3D mammography exam. For users of Hologic's 2D plus 3D tomosynthesis breast cancer screening system, C-View software creates a 2D image from a single tomosynthesis scan. C-View software is approved for sale throughout the European Economic Area and in other countries recognizing the CE Mark. During fiscal 2012, the Company plans to submit a pre-market approval application to the FDA for this capability.
SFDA Approval in China for the Serenity Digital Mammography System
On December 21, 2011, the Company received SFDA approval in China for its Serenity digital mammography system. In conjunction with the Company's acquisition of Beijing Healthcome Technology Company, Ltd. (Healthcome) on July 19, 2011, the Company began development of a lower cost digital mammography system better suited for certain segments of the Chinese market. This new system incorporates Hologic's selenium detector into the updated platform of the Healthcome analog system.
Radiology Community Votes Digital Breast Tomosynthesis "Hottest Clinical Procedure" of 2011
In October 2011, the leading radiology portal, AuntMinnie.com, picked digital breast tomosynthesis as the hottest clinical procedure in radiology for 2011 in their annual event recognizing excellence in medical imaging. AuntMinnie.com provides a forum for radiology professionals to acknowledge the contributions of their peers to the field of medical imaging. Candidates are nominated by AuntMinnie.com members and are selected by a panel of experts in the field through two rounds of voting. AuntMinnie.com provides a comprehensive community Internet site for radiologists and related professionals in the medical imaging industry and features the latest news and information about medical imaging.
In the matter of Conceptus v. Hologic, as a result of the October 2011 jury verdict, Conceptus sought to permanently enjoin future sales of the Adiana system. On January 9, 2012, following arguments by both parties on January 6, 2012, the court issued a ruling that denied Conceptus' request. The court further ruled that no royalties will be payable to Conceptus for future sales of the Adiana system and denied payment of any supplemental damages. As a part of the jury verdict, the jury awarded Conceptus damages of $18.8 million. Any such payment would have no impact to Hologic's results of operations or financial position since the payment, should it be paid, has been deducted from the contingent consideration otherwise due to former Adiana, Inc. shareholders (the former owners of the Adiana system). The initial verdict and this new ruling may be appealed by either party.
The Company's guidance reflects its current core products, including revenues from its approved/cleared products and its recently acquired businesses, but does not reflect any revenue or earnings from future acquisitions, if any.
Second Quarter Fiscal 2012 (Quarter ending March 24, 2012):
- The Company expects second quarter fiscal 2012 revenues of $470 to $475 million. This primarily reflects an increase in revenues related to its fiscal 2011 acquisitions, the ramp-up of new products including the Dimensions and MyoSure systems, and an overall strengthening in each of the Company's operating segments. Year-over-year, this represents an expected increase in revenues of 7% to 8% over second quarter fiscal 2011 revenues of $438.7 million.
- The Company expects non-GAAP adjusted EPS to be approximately $0.33.
Fiscal 2012 (Year ending September 29, 2012):
- The Company is reaffirming fiscal 2012 revenue guidance of $1.9 billion to $1.925 billion. Year-over-year, this represents an expected increase in revenues of 6% to 8% over fiscal 2011 revenues of $1.79 billion. This primarily reflects an increase in revenues related to the Company's fiscal 2011 acquisitions and, to a lesser extent, increases in the Breast Health, GYN Surgical and Diagnostics segments.
- The Company is increasing non-GAAP adjusted EPS guidance by $0.01 to approximately $1.36 to $1.38.
Estimates of certain non-GAAP adjustments that the Company anticipates will be reflected in its non-GAAP fiscal 2012 second quarter and fiscal 2012 year financial performance are included as an attachment to this press release.
Hologic may not generate expected revenues and may incur expenses or charges or realize income or gains in fiscal 2012 that could cause actual results to vary from the guidance above. In addition, the Company is continuing to monitor the effects of the U.S., European and general worldwide economic and regulatory conditions and related uncertainties, including the implementation of healthcare cost containment measures and healthcare reform legislation, as well as foreign currency fluctuations, which, along with other uncertainties facing the Company's business including those referenced elsewhere herein and its filings with the Securities and Exchange Commission, could adversely affect anticipated results.