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Mammography Sales Put a Dent in Hologic's Earnings

by Lynn Shapiro, Writer | August 04, 2009
The company reports a solid
quarter despite some challenges
Hologic Inc., (Bedford, MA), maker of diagnostics, medical imaging systems and surgical products for women, announced its fiscal third-quarter results on Monday for the quarter ending June 27.

The company said profits fell 3 percent as cutbacks in purchases at hospitals hurt sales of its Selenia digital mammography systems. The company regards its performance as "solid" in a challenging market characterized by reduced capital spending by health care organizations.

Earnings dropped to $41 million, or 16 cents per share, from $61.4 million, or 24 cents per share, a year ago. Excluding one-time items, the company said it earned 29 cents per share. Revenue fell 6 percent, to $403.1 million from $429.5 million.

Diagnostics, GYN Bright Spots

Revenue from Hologic's breast health business fell 20 percent, to $174.9 million, while diagnostic revenue jumped 10 percent to $139.5 million after Hologic bought Third Wave Technologies, a medical diagnostics company, in 2008.

GYN Surgical revenue climbed $65.8 million from $56.3 million, while skeletal health revenue fell $22.9 million from $27.1 million.

As of June 27, 2009, total backlog for all products was $333.6 million.

Hologic says it is lifting its profit forecast for the year, but expects lower sales.

Speaking at a conference call on Monday, Jack Cumming, Hologic's chairman and chief executive, said that the third quarter marked the U.S. launch of Hologic's two Cervista HPV tests, following FDA approval of the tests on March 13, 2009.

GYN Surgical revenues, which include the company's NovaSure endometrial ablation system and the Adiana Permanent Contraception System, totaled $65.8 million for the third quarter of fiscal 2009, compared to $56.3 million for the third quarter of fiscal 2008. This increase was primarily due to an increase in the number of NovaSure systems sold in the third quarter of fiscal 2009, Cumming said.

Adiana, just approved in July, has not yet added to revenues.

Summing up the company's results, Cumming said, "We continue to feel the ongoing impact of the economic environment, primarily within our Breast Health segment. However, these results were in line with our expectations.

He added, "We are very pleased with the performance of our Diagnostics and GYN Surgical product lines as they once again experienced double-digit annualized sequential growth and also performed at or above expectations in the quarter.

"We are also very excited with the recent FDA approval of our Adiana Permanent Contraception System and are thrilled to be able to offer women a new alternative for their long-term contraception needs. Finally, we remain committed to developing new products to complement our current lines and fuel our long-term growth objectives, and our cash flows from operations and balance sheet continue to remain very strong."