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Hologic Reports Q1 Fiscal 2009 Results

Hologic, Inc. (Hologic) has reported revenues of $429.2 million for the first quarter of fiscal 2009, up 16%, compared with the revenues of $371.4 million in the year-ago quarter. It reported net income of $48 million, or $0.19 per diluted share, for the first quarter of fiscal 2009, compared with the net loss of $358.6 million, or $1.65 per diluted share, in the year-ago quarter.

First quarter fiscal 2009 revenues increase was primarily attributable to the inclusion of 13 weeks of revenues from the diagnostics, surgical and MammoSite product lines acquired in the merger with Cytyc Corporation on October 22, 2007, as compared to 10 weeks in the first quarter of fiscal 2008. Also contributing to the increase in revenues is a $12.5 million, or 34%, increase in service and other revenues primarily related to our Selenia full field digital mammography units sold, as well as revenues of $8.5 million from our acquisition of Third Wave in July 2008.

Included in the first quarter of fiscal 2009 results were charges of $42.5 million and $2.1 million attributable to the amortization of intangibles relating to the Cytyc merger and the Third Wave acquisition, respectively, and $0.6 million attributable to the increase in cost of revenues relating to the write-up of Third Wave inventory to fair value. Also included were a full quarter of operating expenses of $11.4 million from Third Wave.

Included in the first quarter of fiscal 2008 results were charges relating to the Cytyc merger, consisting primarily of: $370.0 million attributable to acquired in-process research and development costs; $41.5 million attributable to the increase in cost of revenues relating to the write-up of inventory to fair market value; and $20.4 million attributable to the amortization of intangibles.

As of December 27, 2008, total backlog for all products was $339.0 million.

“As we stated in our preliminary earnings release on January 12, 2009, this year will be challenging for us, as many drivers of our business remain uncertain,” said Jack Cumming, chairman and chief executive officer. “We witnessed an unprecedented decline in demand for capital equipment at the end of the first quarter, which impacted sales of our Selenia digital mammography systems among our hospital customers. As such, we have implemented a series of measures to control expenses and protect our bottom line. Our focus continues to be on our three new products submitted to the FDA for approval and on our long-term goals. Finally, our cash flows from operations and balance sheet remain strong, which will help navigate us through this tumultuous period.”

First quarter revenue overview by segment:

Breast Health revenues, which include the company’s Mammography, R2, Suros, Mammopad, DRC, AEG and MammoSite products, totaled $199.1 million for the first quarter of fiscal 2009 compared to $197.0 million for the same period in fiscal 2008. This increase was primarily due to an increase in service revenue related to our Selenia full field digital mammography systems sold in the current and prior periods and an increase in revenues from our Suros breast biopsy products. These increases were partially offset by fewer Selenia systems sold, resulting in a reduction in Selenia product revenues of approximately $13.2 million. We attribute this decline primarily to cost pressures faced by hospitals due to the worldwide economic instability which has resulted in longer sales cycles and delays in capital equipment purchases.

Diagnostics revenues, which include the company’s ThinPrep products, Full Term Fetal Fibronectin test, and the recently acquired Third Wave products, totaled $134.6 million, including $8.5 million from Third Wave, for the first quarter of fiscal 2009. The operations of Third Wave also accounted for $16.6 million in costs and operating expenses. The company recognized no revenues or expenses from Third Wave in the first quarter of fiscal 2008. Total Diagnostics revenues in the first quarter of fiscal 2008 were $100.3 million and included 10 weeks of revenues from the ThinPrep products and Full Term Fetal Fibronectin test as compared to 13 weeks in the current quarter.

GYN Surgical revenues, which include the company’s NovaSure endometrial ablation system and the Adiana complete transcervical sterilization system which is under development, totaled $68.0 million for the first quarter of fiscal 2009 and $49.9 million for the first quarter of fiscal 2008. This segment contributed 13 weeks of revenue in the current quarter as compared to 10 weeks in the prior year.

Skeletal Health revenues, which include the company’s osteoporosis assessment, mini C-arm and MRI product lines, increased to $27.5 million for the first quarter of fiscal 2009 from $24.3 million for the first quarter of fiscal 2008. This increase was primarily the result of increased system sales of the osteoporosis assessment and mini C-arm product lines.

Financial Outlook:

Fiscal 2009 revenues are projected to be about $1.625 to $1.675 billion, driven primarily by an increase in revenues in our diagnostics segment, including the recently acquired Third Wave products, and from growth in our NovaSure product line, offset by anticipated decreases in our breast health segment, primarily related to our mammography product line including the Selenia full field digital system.

The company expects non-GAAP adjusted EPS to be approximately $1.10 to $1.15. Included in this guidance are the full year results of Third Wave, excluding any US contribution for FDA approval of the HPV PMA, which company expect to be dilutive to non-GAAP adjusted EPS by $0.12 per share.

Second Quarter Fiscal 2009 (Quarter ending March 28, 2009):

Second quarter fiscal 2009 revenues are expected to be about $400 million to $410 million.

The company expects non-GAAP adjusted EPS to be about $0.26 to $0.28. This includes the results of third wave which company to be dilutive to non-GAAP adjusted EPS by $0.03 per share.