HOLX - Earnings call transcript Q3 2018

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Operator

Good afternoon and welcome to the Hologic Inc.

Third Quarter Fiscal 2018 Earnings Conference Call. My name is Jessica and I am your operator for today's call. Today's conference call is being recorded. All lines have been placed on mute. to Communications, Watts, to like Relations President, now Corporate and begin would introduce Vice Mike Investor I the call.

Michael J. Watts

Bob Good quarter We're call. and Bob Jessica. for also Chairman, President Steve you, afternoon our Executive for CFO, chief company's thanks Thank announced Officer; have Chief joining MacMillan, our session. Hologic's the third new me remarks, Karleen Chief week. replacing accounting fiscal that and With by was prepared earnings McMahon, our and XXXX today Oberton. are Bob and joined formerly us a and Financial Officer. just officer, we she's some answer both this Steve Karleen question have and we'll then

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

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

Finally, call a for be XX days. archived replay this will of

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

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

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

Stephen P. MacMillan

guidance accelerated last good diagnostics posted and Breast grow the quarter Hologic's Health to molecular our overall, both strong and international of our share our afternoon fiscal quarter. core outperformed, ranges. revenue from We're everyone. Thank pace, discuss for and franchise We continued pleased third per above total a financial franchises results at with finishing XXXX. robust earnings results you to Mike,

discuss In with solid had and Aesthetics line further acquisition we Medical expand Health We'll our In which X.X% quarter, the addition, on million or an Surgical grew expectations. results. me a will provide Breast our revenue that moment, franchise. divisions, recently, more a of reported just but our tuck-in top-line struggled today, of both let currency. in that third overview in first, a and $XXX strengthen showed improvement, And in our sequential X.X% constant closed basis,

progress with this we several Although we growth encouraging making areas are satisfied we're company. the not in believe rate, of

progress, the many let a out however, others, compared This than tailwind like less benefit, dollar since prior to year had strengthened has Before point the we me that three then. months period. that ago, was since forecast we from discuss weaker we dollar the

of the the now quarter last addition, effects we note annualized blood In occurred that year. have divestiture, Cynosure please and both screening the of of second which acquisition the in

upside from Health, strong. Now international blood biggest third second from quarter, U.S. Diagnostics Surgical the period, global to let's finished also the details. declining business. basis, in predicted, while divested led in expectations, improvement improved in flat a year way line three our and basically increasing with a we the over into accelerated but quarters. tough revenue sequentially. the get the was showing on as compared last Cynosure is sales prior business, Breast quarter, soft remained the comp with screening steady as a our

third our of robust legacy In in growth demonstrated quarter. terms again franchises geography, international the

$XXX.X million, capabilities improvements years. total products, of in once in by XX.X%. performance were This in growth, increased declined Cynosure talent increase sales made we the Including Breast reflecting period, recent our Cynosure, strong an Health, was OUS of and the revenue again also businesses but broad-based which other Excluding led contributed international significant, X.X%. OUS sales have

subject our potential that of list of mention about sales, while and the represents our X.X% several China international, Chinese to On tariffs. only me expanded on response total of the let in news, products recent of are included

do a XX while would of Surgical. in Cynosure have to saw on the situation. a company, tough we commercial tariffs the States, a impact growth not organization year total the the we reflecting on Underpinning these the significant think rates prior eye materially in we compared sequential points. Diagnostics this, Health, are third improved in franchises, close legacy as a positive the United sales comp basically as but our was on basis, United momentum In quarter, potential in So million sequentially $XXX.X Breast however, strengthening in the increased revenue declined period, expected, keeping down flat and States. basis

me provide detail divisional let in third results some the revenue on quarter. Now our

of consecutive mentioned, fourth Breast robust million, with of a annualizing just the lead for XX% Health sales again As first acquisitions. two outperformed to Breast the increase period. International growth European quarter, in of the way, Global the $XXX.X over totaled Health continued our despite sales X.X%. distributor

increased the of In they growth strengthened in place, growth Health, globally, put Breast breast the commercial quarter much second have sales in U.S. our of since addition, our X.X%, best execution. XXXX. strategies posted larger Within team, quarter a and rate of the imaging business X.X% the testament and to products solid

streak, differentiated Systems, globally. all is and behind We prone are by double-digit as continue growth, platform. XD system, another important performing biopsy of interventional growth third recent this XX.X% Performance and and time, Genius At market Affirm products. our XDimensions and quarter the clinically consecutive new bolstered which emerging our sales to introducing products include growth systems, mammography interventional These well. have R&D XD of share our our revitalizing gain With of pipeline hot their same continued increasing

here New biopsy products system, workflow played patient especially the well, and experience. a Brevera improves our new role which revolutionary biopsy as

stronger Our Breast announced even of with the which Health we business gets acquisition today. Faxitron,

solutions, portfolio publicly role localization the cancer opportunity focuses sentinel lymph in Faxitron's we welcome take care pathologists. and to nearly breast broadens This XX market-leading Before from employees I this node our patients. via I'd expands to digital on like that play the surgeons breast continuum breast to strong specimen Faxitron which Hologic. are channel biopsy of lesion the a to details, for sold discuss distribution and product span products, clinical to radiography transaction

Faxitron breast channel, capital capital. an leverages complement Faxitron a financial our attractive with while on mammography acquiring So From enable role great us a to will strengths growth in growth breast tuck-in goals. providing larger invested the surgery, acquisition a market. consistent health It's in the our return perspective, suite is our deployment and expertise play conserving that and in adjacent

a increased than our part theme and a we Faxitron divisions, acquisitions of in that across today. our like development that machines more our in Faxitron will that are business call, story hope mammography activity also quarters. become is our seeing coming We more much last discussed Breast regular Health reinforces division

global as business built and have the increasingly our new products, placements capital mature XD diversified, a of the around Genius increasingly, U.S. coming service, And software, We platform. market core out. in even is growth from level

around XD energy domestic on and sales it as excitement of in acquisition. represented core our fact, quarter, complementary systems, been this than and selling at stronger mammography better Breast based and our today, has tuck-in customers' sales better gets products a Breast Health portfolio. our this needs clinically core, global In XX% The force is multiple of full about understanding a differentiated and division built now gantries never Health only new

complaint into Before on, Fuji. our we order issued The in United with ITC cease pleased prevents in me here. mention we by Commission products forward of ruling prevents that States, November. desist and against sale a move Trade the favorable a look final also to importation infringement those patent by products infringing the let International Fuji recommended initial are the exclusion judge order further and that ruling an the the of the that We

X.X%. The to the and where Diagnostics, be marking X.X% Moving the continues $XXX.X driver in and eighth sequentially. sales growth grew accelerated to last we million achieved global Internationally, the revenue time molecular, quarters molecular have $XXX.X grew growth, mid-teens, double-digit here in of million on nine of introductions also grew of tough a U.S., mid-single-digit was believe flu a we negatively key we rate, markets. by new quarter affected our second steady a In from global improving reflecting a enjoy already into bad at shares cadence in that healthy assay still product molecular high market season. where the grew categories,

Panther labs. the growth Our remain but assays primary adoption the on nice system a our in dollar variety terms, Aptima we're virology menu of women's health drivers also seeing at of

HPV Although remains of quantitative the resource-limited HCV tests more sales of HIV, period. the internationally viral Initiative growth again and global Elsewhere declined than week optimistic perinatal cervical intervals, further sales shares countries. that will United in cancer high our Diagnostics, And challenged due we the flat. lead longer million doubled prior remains enabled last we sales Cytology announced and to are Global to States roughly year of market versus the a Access but base X.X%. in growth testing $XXX.X finish solid small, quarter our to and testing cytology cytology in

of hand, declined, our this test fibronectin fetal sales the down other On dragging sub-segment.

revenue related divested our blood Finally million. business $XX.X totaled to on Diagnostics, screening

financial we Although we now the blood was significant and in expect forecast. forward. impact annualized it of quarterly blood this screening represented what Nonetheless, going the a revenue a decline divestiture, have reduction screening roughly X.X%, double of

this, posting revenues of quarters encouraged are we two Consistent expectations, to fractionally signs our stabilization let's Underpinning global Surgical Now increased GYN of division. cover in with declines. our after million NovaSure. disappointing see of $XXX.X

category, our our discussed team endometrial more changing ablation relative sales of of is force, the product and in we to new culture last As our the competitors. emphasizing benefits investing in Surgical leadership call, the the

perform NovaSure this As while decline on well, time, to rate a recent much continues global than was MyoSure quarters. same with in X.X% quarter. the the result, At growth less in of basis, sales X.X% a of declined

better, quarter. in to team growth our better expect we the the Surgical execute fourth return total continues As to to do business

Minerva. Before me gratified in the we we patent by we're leave victory Surgical, lawsuit infringement against very our mention initiated that let

Minerva's two know, you $X.X for As probably of of awarded infringement patents. in week us million NovaSure our damages a last jury

play we from selling States. a the the prohibiting As in United continues infringing process legal to injunction the to seek out, intend Minerva device permanent

Now sales quarter, large last Coming million, disappointing we Medical down a let's $XX.X XX% reset Aesthetics, believe right versus the results a which discuss posted a off direction. represent in the these year in prior of step period. comp

to markets Cynosure, revenue that revamped do of customers, our have force us remain still in the in This at with and lot is helps increased work gaining sequentially. we healthy, we flexibility. strengthen and expectations quarter, finished strategic and encouraged are line domestic relationships third gives us in sales While also with and confidence. settling a Aesthetics

aesthetic during Instrument, agreement using we unit a oxide their and Nitronox distribute to signed procedures. Corporation, system, to business example, Hannifin are an For reduce with pain Parker recently anxiety increasingly nitrous physicians Porter of which

another and one In distribute we the commercial for United transactions removal. These sustainable that supplement can hair innovation industry. small have on a building advantage competitive deals addition, stability, States, our agreed strength, we to scale this laser El.En capitalize with goal in organic ultimate of fragmented how the with in show

signs from are our implementing progress other the at team We of leadership is to changes Cynosure. beginning see new

upgrades. TempSure efforts are noninvasive customers off. who TempSure this have example, anticipated normal start. Cynosure, and platform to fat as most what growth would is customer good are being solid our sequentially, underpenetrated SculpSure new systems placements reduction our brand For the our in additional seasonality, market we radiofrequency and by long-term opportunities broadening also Encouragingly, new to above opening posted strengthen beginning are pay to up from for to off base a purchased

in in another increased business from improving, This a the significantly SculpSure Patient disposables RealSelf, quarter competitors. sign primary have more of quarter, customer on are website revenue our health than increased decline aesthetics And interest now of support, and XX% and service and on the noticing. for the DTC an and represented increased efforts despite than sales. sales. based better the is industry, finally, referrals influential ratings and in are recurring post-sale better For have our overall total example, and the dramatically, that almost customers Cynosure

it comps prove and aesthetics, learning prior-year with forecast growth win So way while in Cynosure, engine next how starting become a we consistent in are the Cynosure the right mode will are still we normalize. very that quarter, much to as

less Before which MonaLisa let say Cynosure, just regarding Cynosure's represents yesterday of we received XX% the letter that me leave Touch, sales. FDA than we

term. these concerns, FDA's that MLT may this obviously are the market the products acknowledge to analyzing short appropriately. create uncertainty specific We that, some need that we around still said but be in Having marketed agree

we believe clinical our Women's demonstrate to the leader we of value for may products, I regulatory be can compliance – higher in here competitors we strength lives over us time, clear we strong have same our improve Health, very to want not Given will and the regulatory all already since here, as from that a FDA level our benefit studies our the products be have over responsibly. we the capabilities. that goals especially scrutiny marketed and authorities clinically MLT, of believe done are efforts to and share relative long-term, a

with systems, more bone action playing supporting $XX.X of signals. screening osteoporosis we and sales management. to solid level revenues science up continued international due are briefly, density and revenue are discussion and for that evidence, welcome We Health both about so human this the technology strong used To all X.X% our of field wrap the Skeletal million grew performance which clinical adoption

and in revenue EPS were results financial to the both third our up, So quarter, with exceeding our guidance. wrap strong

the While we about in growth are international Cynosure. Breast led from boost with are at are perspective, to the and Surgical progress Faxitron making of And we excited our today's a pleased acquisition way business. Health breast we and also

as hand CFO. I this take to Bob, over outstanding for years the our Before call thank opportunity let me him four to

And separately to announced and has role our partner this be we played great you has our a to turn, the Hologic XXXX, built to to off in organization, helped our strengthen many today, return Since enabled a call. me. leader join coming leaving terrific and Agilent. He growth, Bob relationships of the He in sheet strong flows which key cash success. As by been with Bob in paying a company on improve our debt. balance in us businesses to will he

While has Chief progress on we excited we has as her introducing knowledge A deep as made, accounting of you well qualified divisions, been see financial to member are our a look our matters. Bob our our Team, are was of to leave, and continue for Mike expert forward Accounting to Leadership expand and replace long markets, our She ideally is sorry to Hologic Oberton, a and our also we veteran, and promote people. soon. many businesses, She him. to and Officer, Global XX-year valued planning a Karleen already an both partner to the have I of financial and Karleen

the I'll to call turn Now over Bob.

Robert W. McMahon

Thanks Steve, and good afternoon everyone.

role. huge my I greater new Hologic, will of call company's miss future, team organization Karleen and to many four in will on Directors, with team, say working achieved, the thank begin, even optimistic I financial Steve, Women's honor you, to Board over and but analysts and Hologic last and things proud staying the of we've of forward the the from you years. Health. many let for a the also building I that in immensely and but entire the making about just take our of confident of a leave this with sustainable I Before growth me also for a what terms am privilege the not heights. look touch investors about I in just difference perspective, business finance and

basis. Now In be other will non-GAAP a I'm through going let's results. to and a my financial will for our key remarks finish percentage with Unless get metrics, touch our walk noted, then our income third-quarter remarks today, updated changes on financial statement, year-over-year on results, guidance on focus few XXXX. otherwise my to

share XX% our lower a revenue solid effective we expense performance, control, of rate, Health quarter program, and and to higher our and This us posted earnings the improved and than share mentioned, $X.XX, both post third year repurchase combined drove Cynosure per tax enabled Steve with EPS As growth, ago. a non-GAAP sequentially that international top-line strong Breast well. while in as exceeded results Surgical our guidance.

geographic our as P&L, were due XX operating to Total of we protect on Moving of operating primarily This to drive as activities. property sales gross to percentage to balanced our as ago, leverage of down XX.X% international basis year primarily points down XX.X% the year. mix, basis to the decreased expense X.X%, margin expenses gross was and a as initiatives, our margins. through million carry United States. due sales the XX to compared lower than line our mix was the geographic $XXX effect prior margin in up to the key for efforts desire well growth intellectual points compared within gross of Operating funding with margin increase legal a product

due basis Now statement. to to increased to XX.X% round XXX ago, the margins a rate. points of year discussion out income of lower the a effective tax Net mainly compared

We of share our in in repurchase common advantage our quarter. third opportunistically took the also price to stock volatility

for shares million. we bought back X.X million total $XX.X a Specifically, of

pleased we're new, old authorization a approved addition, In repurchase million that share board plan. to has $XXX the announce to our replace

all share third to in year. the mentioned led So of compared as of XX% earnings per non-GAAP I prior these an previously, increase quarter, $X.XX activities to the

So EPS business, even U.S. to as our than the sales. international at rate well grows more above a we rapidly continue increase

financial we quickly Before a updated touch few on other our metrics. key guidance, I'll about talk

Our level times, over that with leverage we comfortable cash debt stands fluctuate a at remain ratio, around we One net little debt reason recognizing X.X timing strong flow. like transactions is generate could continue Faxitron. to level, our of it this we currently EBITDA, comfortable on are based and the

year-to-date, free generated and flow million, notes. was convertible million our free $XXX with non-recurring exclude cash retiring payments we associated quarter, when the $XXX cash tax This have you of recapture

acquisitions also million cash us on with to authorization. and of of the $XXX our small opportunistically strong provide continue pursue our flow to structure repurchase like while tuck-in acting share revamping plenty Our capacity debt Faxitron,

EBITDA of slightly the compared increased million $XXX.X to adjusted Finally, year. prior

the with quarter, full for updated guidance. year to beginning turn non-GAAP full-year revenue let's guidance our and financial Now our fourth

forecast, strengthened of as guided. Diagnostics, FDA me on forecast the remind now expect recur a in seasonality FX as near-term that you Also a reported than third more $X.XXX reported to to quarter that Touch. billion year. in X.X% rates, XXXX, Based quarter, this benefited expect increasing that quarter, constant recent last X.X%, sequential in a billion fourth X.X% performance into we strong to are and guidance to and headwind to With fiscal revenue million currency will expect $XXX basis, the year-over-year, to We revenue growth growth X.X% currency between decline year's grow of divisional one let of the of from the now the Steve third perspective, due recent dollar guidance decline impact has our and fourth of due our year, million exchange this $X.XX X.X% the to screening half not last million will We quarter. rates, than incorporating will quarter. Surgical X.X% quarter. remaining currency our basis on potential revenues letter only from in roughly of terms. reported equates royalty of X.X%. full-year on our this payments reflects of last decline guidance we higher in we representing to $XXX this as constant $X.X to fiscal year improve since in from ranging the Also be We growth the a level. the from Cynosure this in mentioned, to are a growth blood little of growth fourth well. to quarter a annual normal but quarter period, in prior in or Underlying We XXXX implies while to in fourth X.X% on Diagnostics MonaLisa Compared

move on our Now revised let's forecast. EPS to

of despite which discussed. XX.X% to for our full EPS I incremental growth are or $X.XX, to about headwind reported non-GAAP FX range absorbing roughly guidance tightening year $X.XX implies We a $X.XX, the of

to at and So This based year. from having shares the full-year screening EPS XX%, we full outstanding rate recent non-GAAP contribution in year. for tax on double-digit about a prior rates, a the despite a rate XXX is million earnings guidance exchange approximately of growing are blood earnings XXX our material million foreign of diluted

basis. increase the Our would $X.XX, for full-year non-GAAP quarter on or represent XX% of an a reported about share EPS translates range per to $X.XX, $X.XX guidance to earnings which of fourth roughly

update to into incorporated model our upsides you you we estimates, around As again we've would encourage midpoints, as your and downsides both forecast. these

exceeded Before opening and me third commitments revenue in summarize EPS saying by the let call quarter. we for our questions, the

we're the ahead highlight bullish pay and of and international. progress a for ask same question. in the in to plus encouraged and remain will starting at related Our Cynosure, begin making and opportunities that, call divisions fourth to Surgical the we follow-up, to these the Health made, by the us, At the your for operator Please progress return the we're to results Breast that for up questions. questions I then growth for these we've the with open limit both ready efforts one the first time, With off quarter. better queue. Operator, are will

Operator

we'll you. now Doug Thank with [Operator Schenkel And Cowen. Instructions]. go to

Doug Schenkel

afternoon and and my listen to thank questions. taking just you for the I'll then are Diagnostics. on them two I'll Molecular ask Good of both answers, your

the on And year your where I'm your accelerated reagent then contract contract. fiscal So talked wondering a molecular that it renewing of products. number if five really are a a you impact these an while growth assays, you've virology. XXXX? remarks, have first growth Do was to broader more and expect an reference now pricing you small prepared passed in has provide In placements on diagnostic mark, update you your you've in related as way to that for a off virology assays is And could environment system revenue pricing if erosion acknowledging lab overall wondering the I'm base. with on second meaningful contracts. of the question Molecular not including on strong rental U.S. new to new launched has about molecular recently large limited but

questions So of three two. actually was that I instead guess

that. you. Thank about Sorry

Stephen P. MacMillan

way clever you clearly say three. I very to going – and of was questions it two Doug was was that the

Let's, them all. to try we take will

off Panther the it's definitely so I placements, And, all but menu growth of will terms incrementally driven think helping pay in think our on the sales Diagnostics is that. activities continued strengthening both again, just I piece, that in enhanced seeing and Molecular continue. we by are

little of an that We in couple international growth going expect Panther Panther we in continued probably more placements also a the uptick We're forward. well bodes into seeing think our of placements of XXXX. continue bit to quarters, some which last

significantly of any In on piece next in final quarter, year's particular we'll terms about in else going specific as terms of we're different flattish. more discussions will that be contracts, to pricing we in. pressures, customer of in share nothing as but go any into we the that pretty the the And not comment past, negotiations, said factored guidance and everything

Operator

our question from Vijay now take Kumar ISI. with We'll next Evercore

Vijay Kumar

Thanks for Hey, question. my guys. taking

So first maybe on the one start I'll that...

Stephen P. MacMillan

Just thought news could few Vijay when the we all in we you that days. last you with hit the

Vijay Kumar

I'm curious path we've on be a It's years just Steve. a did its the story and maybe was a the think on I'll to you start congrats sustainable a I digest, maybe background -- and timing curious because just just Hologic lot line the maybe, here. to transition of the some transition who've for you from grower. move. at could us the if Bob, with Yes, helpful? provide management some business of being the number on looked I'm a certainly top on But been thought lot that would and perspective,

Robert W. McMahon

leave we to I leave I'm we've team in Yes. what the have and the of gave of here partner more have stone I Thanks, Agilent quite Karleen. is many that I work it or Vijay. a here the experience opportunities very hands ways I that be the know be big leave is of we've got my more rest in the kind will global with and here And in talented would proud My sad great Hologic. capable will when is shape accomplished couldn't and what the continue And to that a of opportunity stepping that say to great leadership certainly the doing. say of Steve was place, she been the I a it. what would very business actually in ahead honestly is the bigger. professional I I slightly company opportunity has me in company And career and better than at which knowing here. team

Operator

Sachs. We'll now Ro take Goldman our with next Isaac from question

Isaac Ro

Good look Congrats a you afternoon like detail disposables. Could particular Faxitron thank you. business? in the have us little and the give bit just about of seems curious on And margins. the just maybe Bob. acquisition. there's on gross website nature to quick of took the to of it at will a and combination it just a and I equipment the impact But

just of the at profitability level. in gross interested So business will that the have sort margin contribution

Robert W. McMahon

Yeah, business fiscal last in it's its This generated million hey, roughly $XX Isaac, Bob. year.

that going leveraging scale material to margins We opportunity So lower slightly gross it's a than that see that improve to not the we have on improve. They're today an there's have. impact that over total obviously do company. to has opportunities believe do where time, we the are but we

not the but and neutral to XXXX it have about impact in business will any then be in probably think thereafter. going we EPS As XXXX accretive

Operator

Quirk next our from Bill Jaffray. question take with We'll Piper

William R. Quirk

as Great. both well Karleen. to Thanks. as Congrats Bob afternoon. Good

if of just Let's I questions a see, staying may. at Faxitron for second, Isaac's. couple off of follow-up I a guess

quickly we us product dialed how Breast get Thanks. tell split? And can team for So in trained And line? in Health $X.X U.S., guess quarter? the probably on million lastly then the revenue fourth about OUS the I should you looks then have like

Robert W. McMahon

give the going revenue OUS We're would the in as to U.S. is would the of the now. international Yeah, you say hey, not – What Bill I probably majority is then improve. distribution well our although is what and it's I to right this say Bob. it as do a they going bring what it to do already, strong about leverage we I'll think that so we are have as channel be call discipline is able split to

channel. some radiology the expertise bring we our offerings actually breast suite. We a biopsy within and So that expands then and the bring

an that have they leading a as So that already products in position think they adjacency – the strong a about provide. we it have they

we'll business think even do. expertise I were beyond actually resources be able able utilize they grow and our to what to to that

Operator

William Brian We'll go Blair. with to now Weinstein

Brian David Weinstein

guys. Hey, Thanks for taking...

Michael J. Watts

I if operator you too. allow could you be ask. jump just before follow-up That great. a would in, question Make sure Brian,

Brian David Weinstein

taking for question. Thanks the

how out So you throw it. one Steve, react see to to

Michael J. Watts

(XX:XX).

Brian David Weinstein

Yeah.

term, to maybe not where satisfying So you of is? in being curious about is not do is you on be you about to makeup you the Longer point, X% the talked the think level what growth where do I'm of about how growth? you growth clearly this here? think how think want X.X% do given quarter. what want that satisfied QX, range, satisfying you the with but X.X%, be. there business more company just at this for

Stephen P. MacMillan

Yeah. Clearly, businesses, our the goal there. the think, to And single given in get back obviously, we the digit business. is to Brian, want nature I of be mid

well to it's you getting going be a above large the rest got that going then of As be below businesses it. we've that and couple know, to are

think come avoid as point to certainly in I transition certainly of and want XXXX we next we're year out to giving into be guidance we time, this accelerating year. but So going as at the

Brian David Weinstein

the and And Cyno you there. disposables service it. Got the then recurring for piece revenues within and talked about follow-up, customer

where of you at targets that and this that up was kind than said, more and in have you near be you're Can total that XX% XX% talk the specifically should point how of term? you think would I sales. any that you for other think doing

Stephen P. MacMillan

we're is, simple see in very The PAC goal the Yeah. some uptick revenue. starting key to nice

more machines starting as there enormous, the usage. moving it's nicely get still but very in to out SculpSure are the not that So are directions,

And play we've treatments, going. think the that that's marketing driving it's products And getting broader all talked SculpSure the get new keys our to efforts, in people time, PAC in journey, that's certainly. element as so certainly, become will over I bring business, of to about, getting We more multi-year of of the over part of be a part going capital to to pure much time disposable a think addition going just bigger sale. a a but

Operator

We'll a now Tycho Peterson take with from question JPMorgan.

Tycho W. Peterson

it's requests for Thanks. here to on like I sales, with understand Maybe Hey. forward at want looked XX% to Cyno out I the of outcomes to their but I only the starting Congrats of MonaLisa. of it Agilent. range had in Cyno. really working kind know Bob. two FDA only look him letter. just

maybe and to playing you about to get timelines talk you So how back see can this out? them

Stephen P. MacMillan

Sure.

does the you playing not to DOJ clearer Stryker regulations the early orthopedic if looked on very looked Christie for and five we And over and fined what, industry Chris net sales damper I got in and be came I my when I Stryker, over to practices you in very this we all and with companies on bigger at the things and early get long requested. practices you best be to think, within a may going us as got why and to share industry a the picture settled were four other our think level to going be to to know the let the were at, in a me playing quarter, we tell I over. my will share. and And a the that market remember, my when came we'll major pursuing know were that's exactly the end prosecution they've see, that win. and were will standing next at you Tycho, was this through think will orthopedic had industry. CEO put painful When days in remember of to you, Christie go in because But And recall scrutiny that DOJ And may got it enough head around sales the people are that Chris competitors our thought And I did of and took into gaining I as and for while Stryker perspective what a is this that, all the deferred back this at agreements field, looked give going companies on field market the huge teams down day Stryker at when got XX window of got little was sand, losing good. first it Stryker, the where And a front path. the is time products meeting much them time. lot be. positive timeline well this the XX-day when going You better, And the not. best happen level started go years, that and

bit cream a allow So be. short of little frankly, while where the believe scrutiny, to it having top, we and I pain, can that's fully it a to it expect because rise the will be term little welcome to absolutely we

trials. investing us play to it'll time. in We're think clinical building We're the the people. over are We investing the in right teams really right well and

Operator

Stifel. Block to go Jonathan with We'll next question our from

Jonathan David Block

Great. relatively afternoon. quick probably, guys. Two, Good questions. Thanks,

you, for maybe Bob roughly or one came like up first million. looks the $XX currency XXX constant So bps by

And viewing remaining So, today maybe curious approximately months guys screening got fair to a versus the that Health, blood three half say on upside ago? are to Breast you how attributable then I've follow-up. is I'm just and the guidance

Robert W. McMahon

Yes.

right you're way, the Jon. thinking I about think it

Jonathan David Block

then I for starting set Surgical It quarter. this Steve believe you. Medical one you And and said to to Aesthetics next sounds like growth, Okay. both are maybe return

products one that the profile just talk It expect they've these assets, Medical on like at track. you in times. because on growth you them about that seems Aesthetics. recapture these Can some and to you You're growth fallen point adding a ask to I hyper back hard were bag got rough both divisions

maybe you term maybe we what and longer talk what about can expect near expect, should term? should guys. you then Thanks So

Stephen P. MacMillan

Sure.

when I had became think you by Surgical was Surgical, let's declining a the frankly we good years it if category. digit take And competitive way X.X solid growth, growth hyper in mid-single recall, then which withdrawal some into ago business. a got the

then category those inflated fibroid high categories, singles. for it. term that ablation think a probably you The if truthfully, play longer and a it I removal probably is out, rate growth is flattish endometrial

be of you a average to the grow blended ought Surgical expect bit, every is singles. the compete our And we probably in. faster categories mid we ourselves business know, So as than to we

call few talking has it So globally last I been in better want the think or returned will that. to growth We this a to getting declined quarter about think We be We'd feel be be Surgical you'll quarters still to sequentially growth. getting less. to each I don't than stronger U.S., return but less. it is declining U.S. flattish coming this over back quarter. The love it see where we in mid into the it And certainly even the singles good.

Aesthetics, So then And at to business verge of fully on feel market confident look that growth. starting turn what the we than team right we number. into grower is around do return to better that XX%-ish Medical the at probably a believe will we're we market to

going year. digit So as double of we a that we're unless to come we're be the out growth not satisfied going on for

Operator

questioner We'll with who our next Richard Leerink go Partners. is to Newitter

Jaime L. Morgan

terms sales is for This on just getting you Hi. A of are in and know I confidence. gaining Rich. Jaime reps said Morgan business. settling organization? quick follow-up to on midst the in question are you guys Aesthetics of the kind Medical of the Where in

looking on of can the hiring we for kind cadence just kind update an the give around total count expecting should of for head the rep and and So sort there? commentary increases you what productivity and progress, of any rep of be

Stephen P. MacMillan

normal Jaime. over for year since a a level first we time I'd about at say Yeah, ago. the Sure, are probably

think it's a range we've you've that always bit. a now And couple and of level. the and really time in standard where openings first openings that got kind at So little been that a there we've few I it's got here but of

of feel about we've still I up think of many really been very the pretty who've average the still is Now just because reps part progress going we junior in But have good team, cover I tenure they not the of the a our the are people to speed made. we encouraging here, cases. the coming legacy a lot folks that's off ball. lot to are of And think

else. people the offset up of vacancies really they've strong really, very So by we growth some putting while have rates been and everything

as and No. XXX% But most quarter, people? at good the into operating we effectiveness Are have better. to the fourth think positions with feel filled I yet? we starting come we Yes. So do better of

Jaime L. Morgan

quick Okay, TempSure that's product. then follow-up just And helpful. one the on

Women's think opportunity either was wondering this the Surgical your those an you've your potentially are market indications in us that this kind product? you in indicated I with could into progress indications of how Thanks. give looking update expanded and on expand guys both much past of I could on if you Health. and

Stephen P. MacMillan

Sure.

one think what that Surgical I real be call, we that have of the we excited have about coming next product basically what that continue to TempSure first, is into. of I'll And we be is gotten offshoot should platform technologies a probably year.

next TempSure of initial by as coming So have behind we very into the excited then go it year. and sales stuff we'll

Robert W. McMahon

the in several just product Jaime, we Health weeks. launched Yeah, last Women's literally the

Operator

David to Stanley. Morgan a from go question Lewis now We'll with

David Ryan Lewis

there. think Good and again the Steve, Three here. of quarter to afternoon. about the Bob kind Congrats just move. into want things fourth Cynosure on different on going

Cynosure traditional business. core You've the got in seasonality

through business down got You've and of on sort How quarter-over-quarter, can on? of But interlocking headwind. fourth you three talked about about the got just the quarter sort of if in improving you this dynamics as you sequentially be about light you've components. sort walk three thinking MonaLisa call of going some we momentum that think us down should

Stephen P. MacMillan

think would the Yeah, David, is this I in about are pretty industry I way think light. it August July and typically

have clear a you down. do So step

improved MonaLisa is little a could be be international of hope that. component And you've almost offset also force softer. which candidly got curveball. will that But sales that I our and else the little also slight would a think everything probably the

I it term well a the it in this up quarter down put being what quarter here play actually probably on are a that pause from assume not. business think and think we the probably long cautious short deep that is us. be for that's getting to on more the of do back But between slight see the still I term will potentially wanting a would might headwind in some sales go will or while – I over out that out getting this track difference

David Ryan Lewis

up. kind just follow Okay. quick of, And two small ones, Steve

studies from for data MonaLisa First couple a ongoing of is There are MonaLisa. perspective. a

that enjoined? way I Thanks was remarks. thoughts end the some prepared wonder so of low are sort market Performance data in expectations any you much. one in you are XD for I'm MonaLisa? not But to of extent on is. And last they in the the other suspended think Fuji one where the I then front mentioned the on clinical on year. your sure what

Stephen P. MacMillan

Sure.

Another to get three into questions magical David. ability two,

deep without of the get very being On we a that we're competitively, and are aggressive not incredibly feel opportunities and continue on that the of the does legal to just going piece, that Fuji create I there going were go win accounts Frankly, some that us? they were lot wins. low. think, our we good pricing teams some even frankly, to Certainly, for

in now is may it And as momentum our there. There's Health us like arena go allow the momentum lot what's Breast on going So up that really one of business right really there's in we we business that first in some – additional pick to Health. here forward. Breast a

Robert W. McMahon

lower XX% gantries David, of XDimensions I that in add to we of roughly have we launched And new or the that sold we gantries opportunities. newest high all to we the XD can recently, just rate to that point, two that. still represented a the XD the continue capture that quarter. something is Steve, the end, just at launched just and Performance very

believe look ten So new when we we're those. out that every we of excess we when in look at U.S. at of the still getting eight of placements,

so, the beyond nature by really that that not doing around the benefits and the clinical that's as gantries. just are what provide. And very we been to and beyond their so, what's feel think good they and a features price, I continue do Steve's these good, I and competitive to that about very they expand team feel hallmark it's will think offering products of but And point, we it

Stephen P. MacMillan

the on things And frankly, discussions. discussed partnership. MonaLisa. for that FDA but the deep fairly we extended in with about haven't deep other And we the studies to into actually deeper question We're it's why exactly MonaLisa very discussions Touch,

where a it. And on wanted know, that great around we for being I to data see we have last have been selling call, time, because modest clinical additional structure the of you we've expectations quarterly this we announced, we it. but the to more the as product claim been we product As in generate think, strengthen terms limited, over

with been actually discussions on we're them deep that. in So

Operator

from a Barclays. take We'll Jack question with now Meehan

Jack Meehan

should give as are look Steve Good be Hi. on thinking Bob of I some hoping and margins into the we the was color year? we heading operating that into what and new you could us afternoon. puts some about and takes XXXX,

Stephen P. MacMillan

gross Yeah. not continues what, international want get probably Jack, dramatically, think going probably think I gross at going I be had up seeing years. dealing happens huge that seek to business as with that a we wins that. to with could margin, to on to not move XXXX to be you slight much the we careful as we depending try not to high but but the in into margins the previous what a the know would make on gross – to tariffs also guidance, that headwind They're because level, margin a of grow be we to can, lower

think I of we'll get little bit leverage. OpEx a

to little that's margin – a that more grow start drive we the got be So to expansion. operating ability as to bit whereas

Jack Meehan

activity time? could acquisition hoping over And in Does just space. the around on you you. you of stand was I that, how think related the thank how fit that segment And of can your you elaborate Health to across businesses? all broaden your you're the deal seeing Faxitron some Breast increased into the Yes, does commentary

Stephen P. MacMillan

great Yes, question.

the Me Chief outlook. at see I profile direct they're a I'd organizational we're call more year much up things in we really of seeing we Operating where and starting think flow they're the things to that whole true more supplement at tuck-ins ramp just a different activity existing lot that and some to the And very just, looking corporate it's supporting businesses. team our our that are what starting the it's Presidents -- We say of as many that to change more much now the really deals have think Faxitron. a the you the end know having calendar I'd are made I of divisions the access an eliminated And Officer. last

conserving growth it's continue As of been build it in and relates the have the in we the we to breast out from we've bigger and at mammography. an a us play. for to able It's seeing right go area Breast to Health strength adjacency. continuum such the looking And surgery have and patient we've care of how been to be

of knowledge, small the allow got are so we've But very a that have this and we've to say We kind tuck-ins that And starting And them build space right want really the in these each of got that out. presence. got them we're see the be product will -- some we us frankly forth. now to I doing. we've coming today, in would to division

some teams every whatever going ago just quarter So really or never ready forth. good And a tell or linear the ideas to to many we things. to have year bring we're even But two that not I ago one starting else. years want or you to good can are going say to surface clean. I'm It's go

Operator

from take Jefferies. with Raj now a We'll Denhoy question

Anthony Petrone

chance it looks were Breast looks against FDA there's focus going first like inquiries, that of there question. Thanks was Health, they Fuji. That bit Hi. on for the forward a second mix Anthony There's was Maybe expectations for suit on contents more in question. there to practices my into little a just is half marketing Cynosure? a favor for Raj. back a MonaLisa be of I Raj. the certainly, like mean in bit. on detail revenue there. a I'm the a maybe specifically then And just this Hello, taking bit mute. patent I wondering on sorry then bifurcates will actually of the just it but win Anthony and maybe little

plays that Is a the sort situation Thanks. of So tailwind within Breast out. second shifts maybe just update that here and with go forward half? on you particular in share an as Health Fuji how

Stephen P. MacMillan

Sure.

it's very the ourselves. will on really piece, going early the it think MonaLisa to companies other We're else. for to on just play out I focus know everything how and

feel about we MonaLisa. good continue think to I

the very did way again anything expertise. promoted forward. over We you in sure invest are We'll up perfect. Stryker our as my And the days, are And willing none stuff feel clinical clean to us just really and or the and then have earlier that product move (XX:XX) by the good there. commitment like between I we'll clinical about I'm of legacy slightly to in studies. here

they of of we're institutions. big competing think with wins to that get. Siemens is really and a continuing the what really been GE frankly Fuji, to day-to-day And about relates it competitor. As we haven't we're to continue I Most feel good

a don't grow concerns our years, continuing way of about for take share. Breast number post to doing have without You market business all now the we the Health the cliff been

So think, and infringing that'll we're from the nuisance chances. Siemens. patents category. I in are to certainly our we hope products we that formidable are competing Fuji, But them our have permanently and And like in there day-in some and they against also GE But withdrawn put competitors certainly I very the still help. day-out

Operator

We'll Bruin of question with de America. now Derik next take from Bank our

Derik de Bruin

Hello and afternoon. good

Stephen P. MacMillan

Hey, Derik.

Robert W. McMahon

Derik. Hey,

Derik de Bruin

Great. Hey.

number So mid-teens can one, you million was still you comfortable I'm three did in Faxitron sneak of QX? ahead like Quirk's growth like there. wondering ahead can China? you in if sort are of just And how Number have if the growing? bless it going curious, I'll see – buying just any I'm of tariffs seen $X.X dynamics Doug. And, (XX:XX) I in And two, to for with Just OUS? the in of Number the market business legacy that. unusual any yeah, leave the you've you sort seen fast

Stephen P. MacMillan

And necessarily don't Hey. we're going the Bill's... growth we disclose but to Great. think Faxitron I of kind rates solid. ignored

Robert W. McMahon

faster current company. the And than

Stephen P. MacMillan

just I good It's But think was yeah. Bill's full in year and where the terms over. of, accretive guess, we we a are where number would it slightly to feel take I quarter are they in rate. about our Yeah, high, growth number. probably as

business base for going growth base the our I rates, would of forward. not growth terms In endorse business mid-teens international

stacked of growth big we've accretive. think I to We But straight business stuff. clearly against to get we're and had starting big now international seven still expect our especially comps quarters really be comps.

acquisitions. up, a picked also of couple as We distributor know, you

I that, don't bigger for not in the feel point. – about China. international stocking So And that'll wish I come good I business in I being – was annualized noticeable an this But to kind company. to in any that think China. think us growth realize nothing impact certainly all of to seen from the of but our at business we've our or down rate we as continue slow accretive really finally, of buying have

Operator

We'll Canaccord go now Mark Genuity. to Massaro with

Mark Anthony Massaro

you're had Certainly from Diagnostics a start Thanks benefit Steve, can just and and guess I not expect market currency for questions the with to Wanted think congratulations, guys. you you you there, much level, Hey, But indicated rates growth broadly a the penetration just you Europe mid-teens how in speak or international about significant you share growth the Bob. year. across business. to high the competing international business. and perspective? next from see how

Stephen P. MacMillan

Mark. Sure,

me clear. comment be international to unless was total Derik, misunderstood our his Let at I teens. My business question, mid about growing

our comment I a grower business. about Diagnostics not would to total continue ready again give to more was be think Molecular expect we business internationally. healthy guidance but my to very our And

I on feel about we in going think Europe. good what's

to continue We place Panthers.

against opportunities that Europe. a gotten and lot about though additional we menu going competitors are team there builds the continue. And feeling in part some getting that some in the And as at are of out we again world, really formidable Our good very to has selling. nice expect wins stronger very even

Mark Anthony Massaro

it. Got

Robert W. McMahon

Asia gain there, look that over a at have when we of Europe in in shares So, point Mark, lot our market I and time as to our opportunity to expand. menus mean we market share

Mark Anthony Massaro

or there? parter think on per digit Got say you high update gantries, stable maybe single for you there, of analyzer roughly flat any The that uptake seeing just looking you sequentially, it. Breast I a then would guys And on two Health growth an number annuity placements there? are were secondly that is Panther, or maybe follow-up. And

Robert W. McMahon

Yes.

the still XXX on been but (XX:XX:XX) we've between that range. it's Mark the sequentially gantries, quarter, had saying So been Health was and per – up in XXX were we've within it Breast range that we and

Panther rebound driver this the the Diagnostics We business to growth increase. going quarter real things on that expected. of forward. annuity for system we strong one that continues a saw the For as nice that's That's

coming to we expect menu that's the that With grow. opportunity to would additional on continue

Operator

Vijay take questions from with now Evercore We'll ISI. Kumar

Vijay Kumar

And in. fourth to want squeezing me I for assumptions. maintenance thanks just Hey, quarter the back guidance go (XX:XX:XX) through

FX headwind million all QX? going it's $X for if blood Just is to level, to I royalty the million And Faxitron. all $X.X Is QX. different from the correct it, number call Diagnostics Bob, is $X be I let's high those which the that's million million contribution, to that And roll-off, some about is had? There's $X about going repeat. from million to $X understood in numbers so, that not baked what numbers, into

Robert W. McMahon

Yes.

when Vijay. is FX were And about I think ballpark, by would in roughly us guide, we what say where from the we You're last hurting is $X the million.

Vijay Kumar

going that that's QX right, And all in QX? be $X million in headwind to

Robert W. McMahon

had when That's included And number. was the about guidance we the in QX. latest comprehended roughly impacted into in QX – We QX we've million that That's that gave about relative guidance correct. $X to guidance. $X million roughly by and

Vijay Kumar

maybe better that maybe like than is And expected, – of for slight got aggressive very expansion now. understood margins, you. And like you. Is looks margins. blood Street for Thank little been margins a Obviously to right if XXXX? op is it I much a XXXX. it sort coming that's I mean the headwind Steve's comments, margin looks on

Robert W. McMahon

Again, to Yeah. into all probably get not the going we're details.

The necessary margin to as we improvement Steve call. they at the I at probably was a pass. as not business, look talking impact the come think give about that whole of our was tariffs quarter said, operating of international to margin growing drive guidance gross line we business the more we'll going we fourth do see new have as look is we lot on look what levers faster. to That and expansion our believe being

Operator

now will Raymond James. with to Bedford We go Jayson

Jayson T. Bedford

and questions. one keep bring I'll And Good Thanks for down. average to taking afternoon. it the the

So...

Stephen P. MacMillan

Jayson. you, Thank

Jayson T. Bedford

You're welcome.

ramp going a point the the to you cycle quarter few business fund life R&D X% the it's where percent spend. right lower last was growth been frankly specifically the sales forward? margin picture or trended profile, some on over X.X% Just the a as sales lower the in of of should the Steve, in than bigger to question, R&D level of to we time. have years. as this a it In is It's organic of spend there think

Stephen P. MacMillan

Sure.

more. heavy it was down. not much bit the clinical programs because came came which the that in to a a think, investment largely Diagnostics, down I would program expect leverage virology and huge I

almost it's the I kind business like of it's think – development stuff.

the the hopefully Now future, grow make keep and keep could in we for projects some we we're and that everything even think see investing good to grow that probably future. work other and forward. can slightly we're it to happening. budget, sort starting want an be forward, got the tick on. for the top probably getting less people – that ever sure we better – want level as we've But invest of at to again go place line, don't it because I things we And leverage we're up else able going will R&D that area to of And

Jayson T. Bedford

Thank you.

Michael J. Watts

Operator, I more think for questions. we time two maybe have

Operator

now Tycho to Peterson go We'll JPMorgan. with

Tycho W. Peterson

Hey, thanks for letting me in. follow-up to... get want Steve, I a

Stephen P. MacMillan

earlier. sorry, cut got thought Yeah, you off

Tycho W. Peterson

getting next whole is on want necessarily new know single how to question you next is, back But digit notion comment year? year. back of growth, growth the too really to digit don't driving much product much the recovery The on contingent mid single okay. I mid to That's

Stephen P. MacMillan

And much call for guidance talk next next role. we give certainly when the we'll play They'll year. on more a again

Robert W. McMahon

I pipeline. our Breast point, one talked in of Diagnostics with I about improvement a you you bigger business the the our continue when launched that to going That there, then expect products Aesthetics obviously, to tuck also Health think ins. forward, way is about Steve's business we've quarter, going but the see some several we mean continue on portfolio. cadence forward. Surgical piece, in XXXX, been with able things R&D, expansion new the Tycho to I being gantries those and the in I but products helping the deals, and think portfolio, product things of distribution across growth more that doing and surround R&D the then to mean additional expect increasingly drive think the really our creates do be our I important area and And the of in Surgical in even Medical vibrancy the to We menu what some new would Yeah, on shown to would nice actually it's speaking the where and product we're and I without is nice our some

Tycho W. Peterson

Thanks. Okay.

Operator

question Bank. Leonard our will with We take from final Dan Deutsche

Dan Leonard

you. Thank

elaborate hoping business actually on in was mean, Molecular you I competitors have for market of quite could business. you your markets. I your in program bit a the do molecular emerging emerging So

about talk we some you. how expect efforts? Thank you be you contribution start can can so And those timing see size and when to what and from opportunity you'd that would

Stephen P. MacMillan

foot And putting our way long It's lot announcement probably early start as it It'll we we putting you feel entrenched probably it competitors in of much But But system that going menu we're to in stages. we're Dan there. think significant finally well there. the going in to a and on the to last initial go in yield Panthers there. We're week beyond. bigger even it's about into going benefits be as can us more relationships. with getting very the terms door. good our price XXXX. a the And I to the we We're and are place in we try feel make Sure, also Obviously I'd have margin the the but I XXXX well. probably said, the be as will a call think the be Initiative, overall that us to Clinton of Health difference that Care, probably building do we it's Health lower put Access for map and not go there. be in good as a as like good to lower

Robert W. McMahon

would would two think I leadership our tell underscores it Hologic. was the been thing within there. you other have strength is the possible I something ago, of that this years not

to a else. speak what So being partners conjunction has the truly long that hereon U.S. our able anything in leadership just that a work I and lot believe a with a in that symbol as difference. really of with think to – as our I makes team leadership And said much is Steve Diagnostics EMEA

Stephen P. MacMillan

thank off. and to Bob We Bob know ahead. moves to this we he I listening to as the a company all think forth better. Thank best again And years final comment Bob, will signs watching welcome Karleen. in for keep you. to of and a very thanks making better for get her and wish keep huge the fitting Many you everybody you and as And he our as call.

Operator

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

Hologic (HOLX) 31 Jul 182018 Q3 Earnings call transcript