Time New York: Wed 15 Aug 02:39 am  |  Save 15% on H&R Block Online

  
caticonslite_bm_alt

Hologic (HOLX) Q1 Earnings & Revenues Top, Margins Down

Zacks

Hologic, Inc. HOLX reported first-quarter fiscal 2018 adjusted earnings per share (EPS) of 55 cents, up 5.8% year over year. Moreover, adjusted EPS beat the Zacks Consensus Estimate by 12.2% and surpassed the company’s guidance of 48-50 cents.

On a reported basis, the company recorded EPS of $1.45, compared to 30 cents in first-quarter fiscal 2017. Notably, the reported figure includes a one-time tax provision net benefit of $329.2 million, courtesy of the U.S. tax reform.

Revenues in Detail

Revenues grossed $791.1 million in the quarter, up 7.7% year over year (up 6.7% at constant exchange rate or CER). The top line also exceeded the Zacks Consensus Estimate of $787.7 million and the company’s guidance of $775-$790 million.


Solid contributions from Hologic’s Molecular Diagnostics, Breast Health and international business drove the top line.

Geographically, revenues in the United States grew 4.1% year over year to $597.2 million. Excluding blood screening and medical aesthetics, U.S. revenues declined 0.8%. International revenues were up 20.6% (up 15.8% at CER) to $193.9 million, banking on strong contribution from Cynosure. Excluding blood screening and medical aesthetics, international revenues increased 17.6% or 11.6% at constant currency.

Hologic, Inc. Price, Consensus and EPS Surprise

Segments in Detail

Revenues at the Diagnostics segment (35.9% of total revenues) declined 12.5% year over year (down 13.5% at CER) to $284.6 million in the first quarter. Under this segment, Molecular Diagnostics revenues of $148.6 million increased 6.2% (5.3% at CER). The global growth at Molecular Diagnostics was primarily driven by an increasing market share and utilization of fully automated Panther system along with continued solid uptake of Aptima women's health products.

Cytology and Perinatal revenues of $123.4 million also showed a rise of 2.6% (up 0.9% at CER).

Revenues at the Breast Health segment (36.4%) inched up 5.4% (up 4.2% at CER) to $288 million. Revenues in the United States slipped 1%. In the reported quarter, changes in product mix were partially offset by increases in service and new product revenues. International revenues however climbed 29.2% year over year at CER.

Revenues from the GYN Surgical business (13.6%) were down 6.4% (down 7.1% at CER) to $107.5 million. Medical Aesthetic business in the quarter reported revenues of $91.3 million, determining 11.5% of total revenues. Revenues at Skeletal Health (accounting for the rest) decreased 6% (down 7.3% at CER) to $19.7 million.

Operational Update

In the fiscal first quarter, Hologic’s gross margin contracted 140 basis points (bps) to 53.7%. Adjusted gross margin also decreased 140 bps to 63.8% due to the divestiture of blood screening business and revenues from low-margin Cynosure products.

Hologic’s adjusted operating expenses amounted to $271.8 million, up 17.6% year over year. Adjusted operating margin contracted a massive 430 bps to 29.4%.

Financial Update

Hologic exited first-quarter fiscal 2018 with cash and cash equivalents of $664.4 million, up from $646 million reported at the end of first-quarter fiscal 2017. Total long-term debt was $2.76 billion at the end of the reported quarter compared with $2.62 billion a year ago.

During the quarter, the company generated operating cash flow of $169.1 million, compared with the year-ago cash flow of $169.6 million.

Guidance

Hologic has updated its fiscal 2018 financial guidance. The company currently expects adjusted revenues of $3.2-$3.28 billion, growing in the range of 3.9-6.5% compared with the previously provided range of 4-6.6% at CER. The current Zacks Consensus Estimate is $3.25 billion, within the guided range.

Adjusted EPS is expected to grow 9.4-11.8% to $2.22-$2.27 from the previously stated range of 3.4-5.9% to $2.10-$2.15. The current Zacks Consensus Estimate for adjusted EPS is pegged at $2.18, below the guided range.

For second-quarter fiscal 2018, Hologic expects adjusted revenues of $770-$785 million, representing annualized growth of 6.5-8.6% at CER. The current Zacks Consensus Estimate for revenues is pegged at $791.7 million, above the projected range.

Adjusted EPS is projected at 53-54 cents, reflecting an annualized growth of 6-8%. The current Zacks Consensus Estimate for second-quarter adjusted EPS is pegged at 52 cents, below the company’s guidance.

Our Take

Hologic posted better-than-expected results in first-quarter fiscal 2018 in terms of both earnings and revenues. Growth across all geographical regions buoys optimism. However, we are disappointed with the decline in revenues at the company’s Diagnostics segment. The blood screening divestiture is also likely to impede growth momentum for the company.

Zacks Rank & Key Picks

Hologic carries a Zacks Rank #3 (Hold).

A few better-ranked stocks that reported solid results this earnings season are PetMed Express PETS, PerkinElmer PKI and Becton, Dickinson and Company BDX. While PetMed sports a Zacks Rank #1 (Strong Buy), PerkinElmer and Becton, Dickinson carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed recently reported third-quarter fiscal 2018 results. Adjusted earnings per share of 44 cents were up 88.3% from the prior-year quarter. Revenues rose 13.7% on a year-over-year basis to $60.1 million.

PerkinElmer reported fourth-quarter 2017 adjusted earnings per share of 97 cents. Adjusted revenues were approximately $641.6 million, up from $567 million in the year-ago quarter.

Becton, Dickinson reported first-quarter 2018 adjusted earnings per share of $2.48, up 3.9% at constant currency. Revenues are $3.08 billion, up 3.7% at constant currency.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

Zacks Investment Research
<-- You can share this post with your network,
or give us your opinion and leave a comment.
Be sure to check our RSS feeds for updates.