- Hologic has beaten revenue expectations in the fourth quarter on the back of growth across multiple businesses and geographies.
- In results posted Wednesday, Hologic reported high single-digit growth at its diagnostics and breast health businesses.
- Hologic is planning to fuel further growth by making more tuck-in acquisitions around or a bit above the $100 million value it has executed in the past.
In the third quarter, Hologic’s breast health business was held back by “macroeconomic and political challenges” in Latin America, which caused international sales to slide 1.5% on a constant currency basis. At the time, Hologic said the situation in Latin America would remain a headwind in the fourth quarter.
Hologic returned the international breast health business to growth in the fourth quarter, though, posting a 9.4% jump in sales on a constant currency basis. Management made no mention of the situation in Latin America in the results statement or in the conference call to discuss the quarter.
The improved ex-U.S. performance helped the global breast health business to grow 7.1%, exactly matching the expansion of the diagnostic unit. Global molecular diagnostics powered the business forward, growing 9.8% on the back of rising assay volumes in the U.S. and international markets.
Hologic even got some growth out of its struggling medical aesthetics unit, which has failed to justify the $1.6 billion Cynosure takeover the company struck to enter the field. Sales were up 10.3% in the quarter, although that figure is artificially inflated by the easy comparison to the fourth quarter of 2018, when Hologic paid out $6.8 million in refunds and rebates.
“Excluding this, Cynosure sales would have been basically flat, reflecting a business environment that hasn’t changed much. Specifically, our skin-related products continue to do well, while our lasers for body contouring in woman’s health continue to struggle a bit as we await new products, both in-licensed and internally developed, to drive future growth,” Hologic CEO Steve MacMillan said on a conference call with investors.
Analysts were largely muted in their reactions to Hologic’s performance.
“Hologic has clearly made solid progress with stabilizing the core revenue growth profile subsequent to period of very mixed execution,” Cowen analysts wrote in a note to investors on Wednesday. But the analysts said “[W]e don’t see much room for upside for now.”
And Jefferies analysts predicted that “2020 will see more of the same: strength in Breast/Molecular/OUS, stabilization in CYNO, and tuck-ins to supplement growth.”
Hologic has prioritized smaller tuck-in acquisitions since placing its big bet on Cynosure. In August, Hologic bought a 46% stake in SuperSonic Imagine, a French ultrasound business. Hologic expects to close the deal at the end of the first quarter and generate sales of up to $30 million from the business across the remaining nine months of 2020.
MacMillan and his colleagues are also on the lookout for other acquisition targets but are steering clear of Cynosure-sized takeovers.
“We’re definitely in the tuck-in mode,” MacMillan said. “There will certainly probably be a few that could be bigger than $100-ish million deals that we’ve done to-date, but nothing that’s going to blow the mind or anything.”
Hologic said tuck-in acquisitions will boost revenues in 2020, adding to low to mid single digit organic growth.
Original Article: (https://www.medtechdive.com/news/hologic-beats-sales-outlook-on-diagnostics-breast-health/566804/)