HOLX - Earnings call transcript Q4 2017

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Operator

Good afternoon, and welcome to the Hologic Incorporated fourth quarter fiscal 2017 earnings conference call. My name is Noah, and I am your operator for today's call. Today's conference call is being recorded. All lines have been placed on mute. I would now like to introduce Mike Watts, Vice President, Investor Relations and Corporate Communications, to begin the call.

Michael J. Watts

Noah. you, Thank thanks fiscal and us Hologic's for Good earnings for call. quarter XXXX fourth afternoon joining With are our Chief Executive me President Officer Chairman, today and Steve MacMillan, Bob McMahon, Chief Officer. company's Financial the and Bob question answer a and we'll and both remarks, session. prepared Steve then some have have

Our fourth now is release on of section Investors quarter website. press our available the

website deliver them. we We post also after our will prepared shortly remarks to our

archived Finally, a through be replay will of November this XX. call

make you we and release this call include found our during those Also earnings reconciliation and I'd factors the that Such we to results SEC. in measures. certain we Before from These non-GAAP unknown known measures differ call or actual with to uncertainties can this in be inform in be that's referenced involve that those Safe earnings looking. Harbor filings begin, during and the forward may be will cause GAAP financial implied. A statement expressed financial materially our statements discussing like will to statements certain our included release. in risks

that discuss Finally, in changes will currency expressed year noted. revenue growth we basis, percentage will rates be a be constant otherwise unless over any year on and

Hologic's turn over the Now I'd like to to CEO. Steve call MacMillan,

Stephen P. MacMillan

shares results more Thank at notes. strong And to than expectations. finishing for overall discuss afternoon retire end share with the guidance redeployed you, back Mike, exceeding earnings XXXX. everyone. high of results per posted and revenue $XXX to Hologic's capital of fourth fiscal we financial convertible good We're pleased buy We quarter and the of million our and our

very Our productive fourth a capped quarter fiscal XXXX. results off

digit emphasis the toward excellent months, XX solid company sustainable the made at mid long our revenue year. we three delivered acquisitions sustainable. short and for of In growth, Over the growth excluding to single word growth important that term. steps solidify the progress building on a term, last said we time, But as we we took at same profile the the would beginning divestitures, we with

sustainable for First, we internationally. the foundations growth laid

business our in revitalized acquisition with shifted Cynosure. our began of a year of launch delivered innovation sustainable increasing a which build long-term In segments short, our commitments from on we reported we fourth and financial introduction, we our toward pipeline. currency. the $XXX.X did X.X% would that constant XX.X% grew let's reflect we And development and we With what million to on blood in to that third, research results. basis portfolio near-term new Revenue review growth of growth. higher quarter products XXXX divestiture Second, was said the screening do and or

the basis. impact divestiture, screening of the global quarter or divisions and revenue in grew constant legacy Cynosure on increased the a currency, Excluding as blood X.X% our all acquisition fourth X.X%

not top mid solid all five growth this a the the X.X% growing is growth, the on our ago. million with new incremental in in pleased digit totaled product are than portfolio quarter, $XX which products, times Obviously, for We more of growth posted level One the bodes we quarter. represents compared the but rejuvenation underpinning of is single year well this line, nearly future. this sequential factor acceleration acceleration which of sales third rate the to the

deliberate the drove efforts business and Cynosure blood, concern $XXX.X million sales quarter our the and you. conversations international began And sales the excluding XX.X%, this double and focused Even of Reflecting and of geography, less leadership grew many new fourth quarter increased in XX.X% robust businesses XX.X%. a ago. one it after of result terms international contribution quarter. revenue grew the digits. grew of increased a was the mid XXXX, than early it investors In digits. that first international among single with of a with by O-U.S. By this two most on international of quarter, as that, very dominated Cynosure. back our as growth analysts, start-up, years major we One that described of a XXXX, helped

build we be remember delivered a promise we've achieved thought anticipated. double-digit than would year actually while XXXX. international grower So XXXX, fiscal We Yes, that growth international a that hope by we digit double earlier on you the in this a across X.X. talk better Cynosure complex occurred you straightforward about underway these one as today that think we a in more success about We'll divisions more to geographies, and a have efforts moment. story, stronger,

accelerated the the third growth in fourth pleased our quarter. quarter, In and we're businesses, in Diagnostics, terms largest Health divisional two that Breast of performance to compared

a In in very Cynosure start slowed should sequential recent believe basis but good Growth trends to posted bottomed that addition, on grow here. from surgical, and and Skeletal sales we reversed out results.

fourth royalties, prior-year molecular a posting internationally, against if these prior back growth XX%. of still out Fueling franchise, these little let X.X%. $XXX.X of underlying year This provide third Molecular very all globally. was compares period. you the in strong very clearly increased Now company. the tough sixth in $X roughly was this XXX the posted on million business XX.X% Panther X.X% The quarter. we favorably This has increased us molecular XX.X%. Diagnostics the divisions. quarter million, increase a States. compared detail quarter, diagnostics, to marks did million benefit royalty an driven But comparable diagnostics By sales we divested again had in internationally. screening also of of molecular sales to XXXX, XX.X% each the the end sales molecular to $X.X we digit about the quarter instruments. of United growth shipped Panthers Global excluding where of growth million X,XXX of revenue from about a the of customers diagnostics automated the non-recurring sales of with was more $XXX.X double sustainable the blood growth In fully growth in growth of driver for the as posted system, consecutive our by emerged these for

systems our bodes increasing and our slightly year ago. Importantly, menu XXXX, well Panther after health generated system growing usage year for we in of more future more than position seventh our the actually Panther launch, Aptima average Based our virology did of growth. on of more on assay ever than competitive we the and pipeline in strength in will the a on tests, in $XXX,XXX in women's system assays year. than a a emerge increase illustrates the been. improvement prior And This it's compared the shipped basis global from assays nearly further per an revenue utilization based global utilization that and healthier that single-digit in future new part is we XXXX, R&D to expect of high

recent clearance respiratory the our FDA revolutionary in received Fusion we first on will example, For run weeks, system. Panther two for assays that new

while perinatal cytology mention to products slightly single our declines we liquid as sales. and diagnostics, to Before of international want modest a mainly offset sales ThinPrep declined rate of due strong $XXX.X million Sales test, in to leave was growth perinatal digit this we cytology products, U.S. quarter, lower low the that in Pap fourth at mainly increased the

want patient which speak also cervical encouraged the mention groups represent to draft screening and various professional societies bad see We guidelines, been against USPSTF out science. cancer to we've that

disease. decades United as against FDA-approved been the can XX% for progress Although testing nearly the shown it in have HPV cancers, of studies rarely has three we've of miss it States made primary reversing used is years, cervical

guidelines have the result, effect that business our draft we near do we these a cervical not believe co-testing term. As will much gold on for USPSTF remain will expect the Instead, in cancer standard.

to Health. Now let's Breast turn

factors progress a building to have increased reflecting in to and at several single-digit our in Breast both August sales signs X.X% tough the call, continued foreshadowed growth products this emerge we coverage. insurance International sequential the X.X% in a new organic to to we increased sales acceleration prior-year U.S. the and comp our a through growth The compared compared quarter, positive saw from in ranging in begun $XXX.X grew period million indications the in made helping quarter. us largely third encouraging sustainable As high to means. when fourth momentum sales regain this XX.X%, extend these X.X%, new an although increase had and business the And last engine a the position. strong due quarter, build, a to totaled declined in period, business quarter, was prior-year leadership Global to the Health inorganic market of tremendous rate.

of shipments, ago. years strategic For record all results a XXX our of of quarter initial place United been mark, those strong plans on concerned quarter XDimensions this XD we on and again, our potential have exceeding about have had XD a In recently launched in systems. we based States, the uptake Performance that XD domestic boom-and-bust who the put we based cliff cycle placements, prove broken that further in

we growth. share backlog well which future addition, increased, our bodes gain to In market continued for and

growth although performance represents just system, contribute units have of many and suggest revenue MQSA so still growth other have we X,XXX we roughly of exceeded time, million At of Breast prone new in over launched represents increased our United in of grew in And And $XXX also statistics Health. at now the this which still mid-single-digit still ahead In XXXX. well same installed our fourth quarter, the Brevera, half Affirm that biopsy we a less data the our Sales base. Importantly, continue rate. sold XD half than overall own market, XD States, the table revolutionary us. again service quarters solid real-time drivers should to to nicely. emerge

recent NovaSure withdrawal, help and due Surgical, with let's recently in-office growth well, number than surgical competition, MANUAL, the in seen million to turn market. MyoSure where in of quarters. we of increasing X.X% a us XX%. X.X%, annualization the slower to had overall a softness including MyoSure continued volumes. penetrate factors, And $XXX.X we will Now competitive declined growing perform which increased launched sales sales some of to increasing sales

driven trends Although XX.X%. we in it system, stabilization of our to and growth franchise. by reverse skeletal performance $XX.X from bone return business Horizon an the were increase our strong Fluoroscan see quarter, to and portfolio recent of Skeletal million, densitometry our is fourth selling, totaled pleased better sales small,

let Medical sales Cynosure Now new million our were in division. $XX.X Aesthetics quarter. discuss the me

as make As prior-year confident big-picture prevailing to than sales significantly they We the $X business but grow for want canceled and we are United purchase that will hurricanes from States Cynosure quarter, two and that by period, very we points we're to why in this $X building investors how was discourse are Aesthetics. analysts, expected, illustrate term two among company. that and Medical and southern about in in different the was the succeed today's long Cynosure delayed. million decisions Cynosure were were We down events the the estimate this when sales million reduced standalone

decreasing of have been interest prompting income is downtime, The aesthetics one is interest driving Medical market that fundamentally you aesthetic we'd like acceptance remind growth declining volumes well our rates low Cynosure in divesting of best in cash-pay screening, growing in single minimize By and in why purchasing treatments the social the place. great high med-tech. toward disposable to reimbursement many women Cynosure, growth high the as and blood that higher-growth market range. are bought segments. a include double-digit Cynosure's among market, men. patient First, increasing portfolio physicians for as among boosting we improving price tailwinds procedures, we tailwinds levels younger to first patients, services, where shifted These and of

to to Cynosure point seen. making a especially X.X, that we that call leadership, you process know and This the we comment, is greatest business industry recent is high, starts This include toward are goals good with commercial intend contrast has laser in building to expect ever are that great XXXX. our second Our want which just we organization bullish we in we progress the results. to what as did But it achieve with them. our international

in already the of Cynosure's outstanding and and marketing. President place as sales We leaders put have heads

team, a new methods to We our have winning that winning hires over and to instituted with recruiting partnership and our the the the as of to winning and right voluntary screening handful in values in way, share turnover to stopped high-performing field new and the a long commitment term. customers ensure We've rehired reps.

new quarter division leaders ability We experience to that of which in to upgraded and the structure that on of the industry. been Not We've work sales other has products the we're selling launch best will have SculpSure, hired across compensation for by programs model will kind we proven and as portfolio, from portfolio effectively bottomed these our with from and here. to loyalty customer is in our entire our early revitalize which the only are see confident that fourth factors, have in Cynosure's reps. are submental customers. And new we positive ensure better the prosper indication poised broadest to is Cynosure's our we sales grow feedback by such Based build receiving the same divisions. sales customer we robust all execute existing the implementing products, a that our reps to

progress. we have to work a good are still making While ton do, of we

As indicators performance remains pace quarter. our solid ahead well. some sales sales early so are of are domestic of and far this quarter this, very international performing fourth their tracking And regions in the overall,

We important XXXX driver steady quarters, progress in beyond, and become our business make the today. did, like in and our confident that business company an Cynosure coming are will like international is the international growth for

very summarize expectations quarter saying we building company accomplished the international, off our execute productive a long let a short-term Bob, even all to of good did over team am capped we successes a eager that made Not and in XXXX important am we term and proud we by sustainable that progress and call fourth only and against together, the turn have beyond. I our for greater fiscal growing in exceeded strengthening I portfolio drive to financial new businesses commitments, posted me that launching growth Before by and products. of year. our

over I'll Now call Bob. the hand to

Robert W. McMahon

otherwise then the Thank balance my going will for non-GAAP statement, to items, guidance you, income afternoon Steve, of focus discuss and everyone. and XXXX. our commentary some Unless results. I'm noted, our cash flow good financial on review and sheet cover rest

XXXX Steve fiscal As guidance a our strong expectations. with out in Revenue exceeded EPS came closed mentioned, fourth the at our we end quarter. and high of

which redeployed strategically we income And head also we With quarter XXX let's fourth prior-year down margin. new XX.X% of lower primarily Cynosure points move introduction, growth sales drivers due into capital. decreased divestiture XXXX, the we period carry the Gross and of of to blood quarter, the basis that as products, business statement. During margins our our compared emerging. to screening see a

gross that $XXX.X by the of the Total you million that inclusion expenses basis note of on if to royalty sequential about Cynosure a expenses. strip Steve important margins in to increased quarter, it's fourth basis discussed. the out However, improved operating points XX primarily even due income XX.X%

bear fruit drive operating If strong operating you continue back X%. efforts our expenses leverage these declining to out, with to

of XXX mix product maintain divestiture to technology finally, XX.X% XX.X% geography best factors with as the mix medical discussed of our as effective of this the led in XXX non-GAAP the Yet, Our basis were And well multiple declined going per operating screening high decreased to drive our forward. margin business. as negative profit basis continue by net of All profiles points partially range. the to rate. improvements points blood due and guidance levers earnings expansion margins hitting of offset share $X.XX, we just our tax to end in one of

a guidance, XXXX our to on metrics. financial I'll move few we key quickly before other Now touch on

continue as priorities. with and structure optimize few our in accordance allocate our First, capital had months a stated very to we we productive debt

the advantage took price to common repurchase share stock. our quarter, our opportunistically reduce in weakness During debt convertible fourth of we our and

we in price $XXX principal our Specifically, notes total million retired convertible for $XX of million. purchase a of

we total addition, outstanding million. a our shares $XXX X.X In for of repurchased of million

total, deployment. $XXX capital million in So in productive

we revolver. amended debt to by two we upsized Through five-year announced and years, October, our early In agreement, maturities in agreement. beginning flexibility extended increased this with structure, the financial an addition, our positive credit our two changes secured

very fiscal and notes senior early the In senior the December to in they October attractive us million notes retire provide remaining and in in our X.XXX%. capacity worth notes at rate the with revolver Together, also of interest convertible addition, $XXX larger callable of will we a issued maturing XXXX XXXX. become of when March

in Cynosure This the very quarter acquisition for following a was on the heels divestiture earlier blood productive financial the the and certainly screening organizations of year. a our one

quarter, take So end want made finance finally, allocation ratio, $XXX.X successes for leverage net the the all declined our level fiscal quarter, EBITDA, our below teams base hard possible. screening. to that business slightly the publicly capital all the to of And stood XXXX. ago EBITDA despite prior were fourth fourth improvements to X.X debt this thank times, activities I million And year slightly our the the in at blood of in occurred adjusted work at in the by offset of year that opportunity over these compared as divestiture

Now non-GAAP I'd our for like financial cover fiscal guidance to XXXX.

year's as as defined the quarters Said will Medical of finally, revenue, million. of make lines Medical for Aesthetics is revenue XXXX. and first how guidance. screening organic to that product housekeeping references First, differently, a Hologic less organic to with is in of Aesthetics for fiscal million to revenue item, we total blood which two we for At mid growth which included organic expect growth. the the And highest XXXX in results We fewer revenue royalty reoccur good impact adjust excluded are we numbers XXXX days similar of and Organic three is XXXX, which to the forecasting EPS $XX for XXXX, digit level, revenue roughly fiscal $X.X don't has organic in versus third adjusts single fiscal year we sales last be in quarters selling the discontinued estimate faster XXXX. organic anticipate our a for fourth overall. also continued a I

digits. Based growth rates, rates $X.XX to X.X% XXXX to between anticipate growth with constant billion currency we and translates Specifically, with X.X% single in in organic constant to currency X.X%. X% exchange on the billion of this sales of reported $X.XX mid growth recent

ranges model middle as guidance downsides. and early tried update ranges this stage, we've realistic upsides forecasts, you we incorporate the both at of to our to your potential set at that you As encourage would

by revenue blood Brevera, to of of guidance Health, terms the in continue including digit no should strong Breast and expanded test and services, a to expect the menu related in submental the in forma products like new to divisional driven and salesforce RF lead efforts which market low And from growth single MANUAL, stabilization growth million the driven platform. digit an be and Surgical And new charge to MyoSure, growth as which Diagnostics our the digit the have Diagnostics little growth Aesthetics. have and NovaSure on screening blood $XX Affirm behind we fiscal business. growth strong excluding mid full screening, In XXXX, and anticipate Medical transition Panther virology the our in our business new mid international approval Breast molecular behind We expect new including of digit service will Health, with productive Surgical, in of growth to continued be in products, continued suite around Diagnostics, our prone indication growth MyoSure the and to system of HPV single fully biopsy U.S. international we In SculpSure and stabilized single million growing assays, In contemplates will pro expect products double year. a Skeletal like earnings. we our plus for in $XX Aesthetics, growth in the expansion benefit international in Medical well, of growth middle and by annuity. the

a baseline profile new remind Now non-GAAP the our in Cynosure. the fiscal XXXX you for represents would post in that blood business screening I profitability, half second terms margin of and of

growth XX.X%, our the levels tempered of solid from operational continued roughly from forecast So business. gross improvement efficiencies international rapid somewhat of by margin we

to expect leverage In show addition, operating strong to continue in we expenses.

operating margin So gross XX.X%, from should of than faster roughly expand margins. baseline

December net expect from I activities anticipation in we than rates expenses fiscal non-operating the line, of earlier, interest are the the in XXXX the we result will higher materially the below XXXX. higher and forecasted $XXX March. to This million convertible remaining be which and posted Now notes mentioned tied in to retirement refinancing

growth earnings represents full This after and adjusting This million with in digit XXX leads forecasted year for us blood between and guidance of assumes year. organic XXXX. XX% share and the tax approximately growth to $X.XX outstanding shares double X.X% per for All of a of divestiture. of the this diluted screening reported between of $X.XX rate X.X% about

of deployment does capital and not Our excludes reinstatement assume possible beyond the tax. guidance any notes the medical the convertible excise device calling

guidance the cover let's of Now XXXX. for quarter first fiscal

we more we than will four reminder, this quarter of than into revenue. a have ago, year selling which a fewer As days did $XX translates million

a We normal sequential our conference expect the to see in of million RSNA revenues Breast and seasonal Health. to $XXX global $XXX we as down sales on million, basis, meetings due decline a

of We reported a currency X.X%. diluted to we'll quarter. on revenue X.X% missing anticipates last to reported first share quarter royalty the selling $X.X X.X% growth extra excluding of the range in a Compared be the year of In in screening. X.X% X.X% first those per which forecast to growth related that blood the non-GAAP to Steve addition, in this of reflects $X.XX double-digit days, earnings included period, decline and to $X.XX diagnostic $X.XX This million growth prior-year X.X% of the discussed. constant basis, but revenue to

deliver to questions Before building by fourth related and in we and portfolio for we capped productivity are a question. me controls, a company. to foundation plus and questions, the successful to confident operator and capital. levers Operator, to the we the expense that organizational Please are then higher impact continue encouraged follow-up, productive revenue for Overall, made for pipeline, off XXXX heading our the the markets. let EPS first the growth. queue. a ready of have return quarter our that, the changes call feel I our questions. your that and the overall up strategically tight ask into will one exercise our open growth have business call limit investment our the healthy the debt and to structure we improve redeploy and to With in the R&D Internally, year we product international conclude saying for just shift by open Externally, on

Operator

our from Isaac Thank question Goldman with we'll you. Ro today take Sachs. And first

Isaac Ro

to ask couple Thank wanted Good afternoon, you. guys. about Cynosure. a questions I

back First about going coming us little sequentially business off, take to can tell you declined bit it this a question? just the near-term why trend a quarter, and what's

Stephen P. MacMillan

why the out July-August team you'll recall, Isaac, declined time in it whole Yes, changed sequentially, we the leadership if period. basically

It we acquisition. shining and it obviously, we And little Obviously, So team them we weeks, tell in transition. tell our the days know, I spent the we we the bit wasn't having will XX what one moment, – ago. couple decline little time gave leaders different the then said worse, was sales of I'll quarter. over would was during than quarter we hoped. team, XX their fairly as probably more have it a put did candidly, than very had place significant organization, But also, a with new after new you even But just of in. the last it's you, a a you, we lot expected a their

it's to and we very that declare now where here. stronger very about feel confident going feel I I headed, we're bottom, so from can get and good the And stronger and

Isaac Ro

Okay, over that's little sector innovation And side. a high on this just you But forward, bit pretty product They I'm cycles that the lot have velocity. to get are about things in talked interested then The fast. tend turn a of to on pretty maybe helpful. the better Cynosure. in going

a salesforce, bit management deliver better you in guys. Thanks. coming better us So growth? you can better about a that the what's will Will tell little pipeline help

Stephen P. MacMillan

One we And great at couple kicking did just quarter, that. to get approved this will I'd right quarter. for Sure, the is end of a additions the in clarify be Isaac. of the that submental so question,

very calendar managers year We being all we've will is all early R&D that see And to important organization leaders that XXXX. you and the I and on That have intact. note are think in the about. talked the that platform schedule, the RF very much in launched it's all likely

So while outside the the company of been was. the U.S. of has inside not salesforce the in the affected,

very It's that a the of to and particularly we about and long innovators loved pace international we a have but organization, been R&D innovation. lot So this a selling expect intact. called time, part of continue of stability great big They've for we business. organization, the what pockets

Robert W. McMahon

Hey, Isaac, is this Bob.

innovation one that I clinical think our advantages thing of is also pace have other is really we the The profile. around of competitive

superior one that of with got the products submental where claims came to a Index] Mass we it initially, was only ahead the forth. but And BMI out out approved it with and with was there that so things wider competitive slightly [Body of not so range also

And so to that it serve we're amount to about able broadest have the customers. thinking of be

as So there's also element that well.

Operator

And Jack Meehan with we'll question our take next from Barclays.

Jack Meehan

Good guys. thanks. Hi, afternoon,

Stephen P. MacMillan

Jack. Hey,

Jack Meehan

conviction little So quarter pick the more a in in I the what's to bit wanted just fourth to to get this on your growth as and bottom going quarter.

trend bit just just U.S. we quarter be should discretely, bit in are thinking that You showing helpful. maybe it mentioned then And a you a some would matching a regionally strength. the more where mature, if you in what first the little Can was talk more noticed? areas up terms of little be for the is salesforce

Stephen P. MacMillan

Jack. Sure,

saw your I we point, think pockets to clearly, of strength.

had the was that masse largely of building building money several back had people occurred, growth en just team grabbed for bring teams up. We haul. left intact we haul. and we're We're back, – out those to left when largely it's we West delivered we What Our quarter. the is But in transition frankly and filling that being know actually how pockets the the do Coast has bunch like a to easily just but offered industry a and it could does have typically them bunch we're and of gone this long had them for long that.

we've know up I the we're and well about. just I some add are immediate to going from be things see that quarters. takes successful emulate XXXX. hire about good what some We made people We business looked feel pick and didn't So we build has doing wants regions a wonder stuff everybody the and at buy there for now do didn't turnaround. we back. to beginning as through. it sustainably, of people. this the I But for it international. out buy really go think this is is what the starting really XXXX. like and to To a what It's slam of period go just could not and one-hit easily We

We that stepping place lot up. have building frankly, stepping combination some from that the leaders in are we in of so the it's And being And confidence outside a the company Cynosure, the a of much company, stars real and up are now. it. that in in got were I've

we and improvement. out, sequential So There's that the give will we'll minds us little build our from bottomed just that here. doubt in

Robert W. McMahon

hey, Bob, another there. this points Jack, couple is And of

So we did weather hurricanes calendar obviously have happening quarter. our with and we impact don't quarter, first fourth the the that anticipate the in related some

addition, that, aesthetics very the positive submental additional a of We'll fourth have full it's QX. very at able calendar should be drive. quarter, tail of are of year We've In early that industry. volume other the quarter highest to that obviously so pickups. sell points end to the In medical quarter fourth came quarter, two in the typically seen those

fourth that also was we fourth give saying, will number of confidence both got that here from quarter, to but macro quarter. things from internally in that addition a we've So sequentially a perspective, us Steve grow the some fiscal what

Jack Meehan

quarter? Is a December you have range the mind for a number there or in that

Robert W. McMahon

year. say would prior but sequentially, from down I still it's up materially

Operator

And we'll take Peterson Tycho with our JPMorgan. next question from

Tycho W. Peterson

questions to just shifting minute I'll thanks. a maybe Health. give for Breast from break you and a Cyno over Hey,

Stephen P. MacMillan

Tycho. you, Thank right. All

Tycho W. Peterson

you settle system system, to got setup on trying pricing if the XXXX? maybe wondering just thinking of help. a products. you've low-end talk and could about kind I'm about you are I'm problem, pricing for uptake a think, And dynamics to just bit is a high-end going How different just Health Breast out, you two new the for given of little XXXX. how No new

Stephen P. MacMillan

feel Sure, business at we Health where the felt than certainly highest we and going about better into better ago. probably than our level, did months six into Tycho, I lot XXXX, materially XXXX headed a go how Breast is as

be And is very mojo products gotten to Performance our going I think on the us think lot. that having it's XD is bit I little about we're really existing their going end our And going business. our But to greatest margin of reps to new off reception. bigger it's a And allowing seeing number back. felt. that, a The has compete. help is lower is probably that team to coming price. a is are be to What a us XDimensions than similar the high a nice said part at two to the

where very As on a they the you to an being give the a in price. bells for it whistles But our don't traditional offering XDimensions. get price have don't come battle. need does the smaller want us and all chance that big XXXX are aggressive into you know, boys some and know, hospitals the some of to of then We XXXX, Dimensions,

quarter very nice gives a orders. in us already there building. uptick in uptick saw I look was of really a placements. right our if a think coming. But a things there's fourth fourth really, very offering. just terms And frankly, that menu And lot now. business nice an together I I don't good of we in we got orders. Brevera the that is it coming in it So of at, And report think Affirm We've quarter also

redeployed be super the a you you Health going not avoiding It's said As see that, far and come the cliff. and And we've business, Health Cynosure. XX%-ish tremendous few internationally, business, different it's numbers Cynosure. Breast gives can very today, quarters internationally. And that also and given our looking first everybody place. international Thornal, me a come. our about very good both but confidence a big in part internationally the – is is to And just U.S. in there, growth remember, very, pretty a growth how was we've Breast what his internationally just ongoing looked know, growth ugly to Kevin Having of business long way who we're

Robert W. McMahon

Bob. Tycho Yes is this hey,

Just to additional and color. give flavor a little

of shipments, our in about prepared XXX. we remarks, talked the Roughly So products. record were over having two-thirds existing those

So said both combination and a of differently, maybe XD one-third of were XDimensions. those Performance

there. And good. as that very to been us, said, supply the has uptake out gives really Steve portfolio the customer broadest about and talks support any it So

we're really going excited forward. so that And about

Tycho W. Peterson

the you just And comment for attach there? make then maybe might on the an like? follow-up, do what there with about of out year we look have rate on to Fusion you And have you Fusions question Can a I based season Panthers. do think on this think Okay. flu impact out as you a installed enough guess maybe the

Stephen P. MacMillan

answer first. to half have any want still on prove. impact more year the late season. bit that It this have flu assay the question and one of we I'll No. won't the a second we No, Fusion on just we came little

flu year's well it bode next think does for season. I

initial just I fully XXXX. their it. in we predict we phenomenal. to has did than an is likes of And from will it's throughput. early that increased seeing think Fusion the into more in fact we think Fusion high. me very the magic that is attach that too placed did game a the Everybody gets XXXX been rate, hands more be much And to And And it feedback systems we're but changer. Panther

as whatever Panthers. we basically of opposed into a our we basis, to be Fusions So value the actually I customers. increasingly we ship certainly taking it we'll of think of the XXXX majority those Panther will best But for would over case-by-case the well. as well get be expect and Fusion is hopefully time, broader see hopefully, on they'll most beyond, as and systems But

Robert W. McMahon

future with just as before for conviction grows said add lab Yes, to I we've of was Fusion to only going feedback. that, the see we being cornerstone on that the our and the say customer Tycho, really

Operator

Deutsche And Bank. our with Dan from we'll next question take Leonard

Dan Leonard

to plans you I stabilize in outlook are mid single your for And guess, on specifically, in are place to what Surgical, the NovaSure product? moving confident Surgical? the how growth

Stephen P. MacMillan

Dan, good question. Sure,

probably from had We're little to as about down we we don't at would easy. around. We competitive as done have Obviously, MyoSure there have we And feel disappointed competitive. doubled withdrawal. to firmly came might But the I beyond predicted. business it think taken to far continue business that it and grow the great we've Maybe I We little too easy with was us. a think little turning a Then that rates what benefited continues NovaSure. we job great a need to.

ago kind a took where a to I Breast changes looking I on of up I new sales at bit. of step have going the back and six some to where leadership comp for think our little division their we're put we're get think it salesforce. leader into was foot that And months that business put foot We some they a them off slightly just And Health new little about that are pedal. bit the and pedal,

Robert W. McMahon

new rates the that drive continue to and a the becomes the propel MyoSure also well. overall that overall growth of as MANUAL, business, with will the of think part I Surgical addition products, help that as MyoSure the bigger will business,

us foothold But we a for it's days the office-based still help stronger early get virgin will kind is feel us. really which procedures, So that that. on very really territory into of

expand that so help will market. And that

Dan Leonard

Okay. I that how get XX on And ago no street you just the additions feet par? you street the can how we many up versus a to at have business comment more months follow-up in where back ago, versus that voluntary turnover how Cynosure, you more many on quick the to months were know of much need so you us six kind this higher-level appreciate or was today heads But salesforce. the there's give on a

Stephen P. MacMillan

Sure, ago, in some regions. and we are were well below particularly key year a where they

that double we they nice down. that back at bodies territories, will and now, start very that materially where this And lot were growth. drive add into some digit But to these a time I below are that's we So last percentages where consider year. we're that think doing of as

Operator

And question with from we'll & next Schenkel take Company. Doug our Cowen

Chris Lin

is on my for This for Hi, good Thanks Chris Lin afternoon. Doug. question. taking actually

Stephen P. MacMillan

Chris. Sure,

Chris Lin

I Cynosure. want to to go back

leadership You left masse the know that change. after en some salesforce

expected. You also know that the QX revenue was weaker than

this or dynamics in here? weaker change driver any see the you do expected of the was Cynosure one, competitive than sole the So performance

Stephen P. MacMillan

No real were or a fundamentally hotter people, that we've company a There's think. pieces as competitive we different. for in. back get put nothing We little two, change got in might territories one in but I to down dynamics, the lost, business little quarter always where

Chris Lin

follow-up Okay. maybe And for the question. then

sales new Sorry reps period for productivity. to get completed missed if this. did to we hires or talked I I think optimal six-month are now? about a Cynosure But the And previously, you,

So we should as we about think think in growth half growth of phasing for the XXXX, weighted likely Cynosure? second revenue is Cynosure

Stephen P. MacMillan

start quarters hiring and I I year. Yeah, see here some think some through coming are is business to we've as leaders be magnets, We're hiring sequentially And they the growth I We'll we will spots. in speak. that not talent think so got those in builds But that just through great complete. think, filling filling the time.

the the big year a I driver think for in be growth of half us. it of will second

Robert W. McMahon

will the Chris, the When there more that growth is half, first Bob. in of as back stabilized. at half, year be Hey, certainly we back this Yeah. we would look get half

mentioned, we we that expect be quarter business As first the to down.

the in second We and expect growth quarter beyond.

Stephen P. MacMillan

up versus sequentially. ago Down year but

Robert W. McMahon

correct. Versus year, that's

Operator

We'll our Denhoy Jefferies. take next with question Raj from

Raj Denhoy

Hi, good afternoon.

Stephen P. MacMillan

Hey, Raj.

Raj Denhoy

I'll on a keep just to going question that. ask Cyno

Stephen P. MacMillan

with come you'd Breast figured I Health.

Raj Denhoy

be as would well. ask I'll but Well wholly unrelated, second question, my that that

a of in I you're be standard Hologic. in here that's higher to made sense how Are higher in having you sense about guess industry? sort I'm And mid folks standard a this hiring back, standard a you at the disadvantaged of them call of your the So value in the comment a holding for much curious disadvantage the proving folks of given aesthetics? some to because a in practices these selling

Stephen P. MacMillan

say time. believe You what, who others, will I'll believe I no, we and that. people hard Ultimately, outwork hire work over can great know win you and you

tell is as you customers, for athletes this the may and out I but what you them that other the are in think can the not we it We my the do can way. and it. that's what we're it things. going ultimately, win it may that's and bring industry do to term, and do not It there it's right out hire will mind or right that is easy, And this what's doing they a do. and doubt first zero It lot more the we probably believe do to know, can Cynosure you like there's three, it space who playing right, we medical And sales six, enduring the to leaders great you in build to not for and want. And stayed who all be going nine frankly, exactly time. what what we character be it. you relationship, over setting do, values. do we that I'll can has out will of people in right ultimately, steroids aesthetics see of people I the winner same that again, is will right. always us, short name can may existing do months. not And to it been do be quite a the think you, with always the Hologic enduring treat play we're But out prevail. it's industry, And But

Raj Denhoy

could lot won't Well, those in to you that sorry, it? back about rates when then, in the get of my can When just spots. to But we But as little is just this Breast a standard. how question. as perhaps the you because get grow terms to I thought we of it's business acquired open going guess a follow-up, follow-up. the still it And in harder folks get have to where to I'm I think business a quality this of it the for recovery

Stephen P. MacMillan

There's just not It's let who industry of hiring Sure. lot me ton with come experience. a not in. clear that. about barrier It's to quality to necessarily want people quality people, people a really of be

think getting very in grower quality a I to we Raj. back people. see good And are XXXX, We this being double-digit

will deliver be it rate. will that, growth we So our to therefore company and accretive

Operator

We'll next from with William Blair. our Weinstein take question Brian

Brian D. Weinstein

number to revenue continue year? hate can that talk I on you accretion talked on just $X.XX now this. about the to you about had Cynosure expect this higher a I guys. $X.XX trend Hey, previously. you from think But the

of you synergies? And pulling are be so, is still if some contemplating seeing synergy range? those would additional forward it opportunities, are So you you or that because

Stephen P. MacMillan

Bob. ahead go Yes,

Robert W. McMahon

faster expected Brian, have Hey, of aligned said and sales in. are and have obviously a those that, slightly At identify is still acquisition, of we able pulled time accretion that probably we base. But this to $X.XX, synergies have with we been Bob. the we to $X.XX off lower of to the some

that's we're now. what's and still, baked into our right So estimates

Brian D. Weinstein

and little in things what you your growth can follow-up, seen HPV? components same talk Okay. the there, we've And gains any CT/NG rates, on tests are there a then doing, share bit like how Thank specifically, then about a as you Diagnostics,

Stephen P. MacMillan

but think we're simple faster probably particularly also assay, we our base I assay of share, taking smaller terms, growing in growth molecular and reasonably but they the internationally. going in not U.S., to much go a are business, the think rate given market it encouraged by the in than a obviously market off

Robert W. McMahon

in a growing market believe trach. than growth are that in we The growth, have they're we double-digit overall grew quarter, royalties gaining the the and HPV at would CT/GC, all share. that ex fact certainly We Brian, fact fourth rate business the our molecular suggest and the faster that of markets, strong very our those both

Operator

David from Morgan with next our take question Stanley. We'll Lewis

David Ryan Lewis

Good afternoon.

Stephen P. MacMillan

Hey, David.

David Ryan Lewis

me. How you for you. just is couple one Maybe, a this Bob, are good for Steve? doing, quick A questions

still factors know why wider obviously the obviously XXXX? the One I are in think the just But or you're I thinking factors? flex is know. the range Can two for make XXXX guiding to versus but what Just almost of us flex And guidance, the are range of and driving three fiscal the a at the wider that I range? a wider twice points year. about what's give what range X.X range you XXXX the last sense midpoint,

Robert W. McMahon

little things. the that higher of honest, recognizing volatility, capital around has pacing and fact. still business getting a business. fully Yes, arms we're our more a the To of we're couple It's that Cynosure be a

that that probably one broader we is get had historically. of think reasons a than the range I we've So

the that cycle trying I have products. We that that factor, new can swing haven't component that also the piece. business And the do. what we're full-year been of fact think through of recognize capital as is that it, a and we to That

those But as in had. well and are in And probably elements, uptake we've That's the creates more new products, so uptake good the for upside ever potential have two products a than more of But forecast so forth. terms of as a thing. David. it also XXXX our little we new the some variability probably

David Ryan Lewis

I range, of logic midpoint the or scale decision? quick year given get for you're sales then year around. This reinvest primary maybe you sales competitor, synergies. assuming for Steve two now. double-digit and growth to And explain like you're synergy Bob, turned this of so and that Can $X.XX maintaining midpoint, the at much. rates erosion follow-ups. year, to forecasting the $X.XX Steve, the my not at is, earnings Thank the the the year those feel still And next for to to is this of your your follow-up Medical you drive your the probably size guidance, is

Stephen P. MacMillan

David. Yes, thanks,

is chase you're side think we marketing, think be and silly there I are and side the G&A to maybe to But sales, the won't an on operational more And while synergies what that right. seeing say some we reinvest I we're on exactly extreme. R&D. in

But might business the probably So feel base we a we is that spend we're delivering, if that. need getting accretion would in different way a to than than bit we we certainly have little anticipated. more contemplate

Robert W. McMahon

and past We've the do again. we that done in that will

Stephen P. MacMillan

yes. Yes,

Operator

with We'll from Richard our next Partners. Leerink take Newitter question

Richard S. Newitter

for thanks the taking Hi, question.

Stephen P. MacMillan

Rich. Hi,

Richard S. Newitter

just few the Is on the this contouring side? space going on years Thank it that the been on, there saturated comment market body in to ability developed are the you. can GYN also, at seeing either a women's there? in I Is leverage anything you you specifically Cynosure And doing, your you're was your just And for U.S. anything all then a that's health now? underlying that to related capital getting women's how Steve? the is Hi, on salesforce there given wondering. markets? in is

Stephen P. MacMillan

In range still out body when thanks. think while still installed a full and Yes, base, of been scheme, look there's of side. competitors the We there's opportunity at products contouring you the the opportunities there's there. or years, in five on grand six possibilities big for lot the

two women's health frankly, quarters it. we and health better much effort particularly year a first the dedicated owning there's And into quarter half, opportunities, than, standalone for of what women's particularly a we've putting also more Cynosure in MonaLisa and the what last Touch think the a its women's over we're side. probably had health as side, On in company done done

still So we products be and not distract of well. Surgical organization great two to lot also want growth to careful they've got as potential our a because

So it's like anything.

it's frankly, on through organization the sales be You to think opportunity. a find Cynosure I ways, other refocus more going and the with

Richard S. Newitter

follow-up you'd women's Steve, little build-out than purchased you when is to guess Cyno just need within health a envisioned force? you I the where asset, as rely on different strategy there, a a have the more that whereas leverage you dedicated a sales bit that to already channel

Stephen P. MacMillan

our approach but No, salesforce them, basic relationship to Surgical that have here key reps but use to close What we're referrals. I say, better. customers, Cynosure the referrals sales using still for building think still the GYN I'd is be

Operator

Jaffray. We'll Bill time one have more Piper Quirk we question. And to for with go

William R. Quirk

a hit a for to in of cycle guess that thanks point I now FDA thanks on bit the here realize Great, and X.X squeezing over about I years we start first may little – thinking some end. out guess at Two about is the questions, me replacement at tomo. from off just we're a approval. here, about I

on guess replacements. Thanks. we I some can your when just, we to might start maybe love foremost, first I initial and see thoughts would So

Stephen P. MacMillan

new they'll up stuff, probably in years few early to our from for we've of be itself Sure, your it, we the will that well establishing revenue ready we're runway XXXX-XXXX some think period. we and still is yet. itself got that work away be starting probably still and we'll four And still needing new with a customers that it'll come then haven't point, point, it time call the probably years flipped three adopters tomo of be And by to that. think very to into out that some magic

what pop that this every every months should international. ago, to shown to about proud issues very feel really investors international. at And helping it, cycle There's same whole proud and about when us having look now, Right up. cliff. we've of now we'll in back shortly very the with meeting key Cynosure, it go it had knocking that, of you off here up, frankly, with everyone keep be about what meeting years very we've was from is boom/bust done sitting about confident was break So we just XX it. the the And then We be done that really, cliff. I after thwart two Cynosure.

Robert W. McMahon

the still our kind based And hey, roughly base Bill, that to just our has of market opportunity upgrade about opportunity, still an the estimates to XD. in in roughly still of XX% frame and Yeah installed of penetrated half U.S. we're the there's the kind in into base. to existing on

is thing women other now have The XD We to XD get reimbursement. incremental continue roughly all in of almost we reimbursement. covered incremental XX% for

runway be long high still those, the a products. existing certainly is which a fact a the have product still then couple if with XDimensions, So adopter. exception the to next end perfect rule, there. there the year I that But with there's And early be for somebody that go opportunity would would way we think in that would not

William R. Quirk

kind us that. that and touched hitting because you shipped of Is a lastly, Yes, curious just in you Are more there? at and you're bits out you I confidence got of Cyno we this Thank Is bit on a and product Steve like strength getting little about seeing calendar deal of talk starting is of on guess, to fourth some getting stronger? it the because this the the give early kind less bottom you. seeing customers? it. to And regarding pieces quarter. then funnel the product here feel the to resellers, maybe the recovery see just why

Stephen P. MacMillan

are my of probably is we entire they better, ago because And sales meeting. a for leaders They of back, And have team their effect, strong couple I place. regional was for go a sales this little but completely better team, The with their lost There's a national I have the my, the core to organization reengaged. engaged year. motivated. back feel we that in under management leadership and them then way recency Sure. always philosophy. just I more weeks earlier bit are reason the

was it's say than jazzed. We're is sometimes start partway to comments think the like, where show it, qualitatively to, to when factor. said of oftentimes, Having this Just And And XX is you're in place an than is completely feel and but even I the before its its better up. than numbers me the go. are it ready it can to starting organization And numbers. go it's We're I sometimes this this hearing numbers I'll heard leading something worse see qualitative days we midst and hey, back think, uptick. it see that, ago. out, you've quarter some different to into and changing start you we're

of been. But feel starting don't want I later get So quarterly to on trajectory because updates. where a to a process certainly quarter, better about into particularly we've this into talking is call the than

Operator

evening. That you. is we good for now all the quarter time fiscal questions concludes fourth have This Thank today. Hologic's XXXX a call. earnings Have

Hologic (HOLX) 8 Nov 172017 Q4 Earnings call transcript