HOLX - Earnings call transcript Q2 2019

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Operator

Good afternoon, and welcome to the Hologic, Inc.

Second Quarter Fiscal 2019 Earnings Conference Call. My name is Dory, I'm 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.

Mike Watts

Good a quarter Steve both remarks, call. and Karleen Dory. for and Chairman, President Steve Karleen you, afternoon our question-and-answer Executive for Company’s we’ll thanks then Thank Officer, Chief joining MacMillan, Hologic’s the second prepared me Chief fiscal have With earnings Oberton, session. some and XXXX have today are and us Financial Officer.

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

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

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

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

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

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

Steve MacMillan

and Mike, you good Thank afternoon, everyone.

second XXXX. quarter We’re pleased fiscal the Hologic’s of for discuss to results financial

by perform businesses, periods, ranges. For strong Diagnostics, of recent international and earnings per finished share and our ahead Health to in growth well. both revenue was continue largest the overall, non-GAAP Like fourth and quarter, Breast million of consecutive we posted franchises Molecular guidance $XXX.X total results our our $X.XX, driven as of

in year. team the This division. familiar after the revenue on based leadership to we reorganized in These This some performance our the quarter continue our we momentum positive past. started also strategies improved results build earlier half strong that discussed of second the benefited that Surgical momentum in in is have from we XXXX,

We and create our continue systems installed XD growth recurring instruments, on turn in leveraging revenue by especially Genius bases products, mammography streams. core of strengths focus which large tremendous accelerating and to our Panther market-leading

ahead this, grew increasing businesses results million off international Revenue we markets and that to R&D this also plan, on and off With penetration through a let’s currency, the product basis, business all our And our expectations. with start in both of are are constant Faxitron these now. quarter. reported acquisitions. million Within and detail acquired X.X% we revenue, so $XXX.X portfolios We these discuss our contributing of more into X.X% external pay strategies great broadening Focal to $XX.X in brief second or a exceeded also development. saw quarter our introduction, internal

our largest In terms Molecular a sales as growth domestic was best the better continuously rate quarter, market, and with in Surgical accelerated Health of are of commercial our in led quarters. executing a well. second we to by geography, Breast in X.X%, in perspective, posting From six improvement drive This improve. with Diagnostics, growth

the performed also few reflects franchises a Health million, were a rates international years significantly total double-digit well, and place and put $XXX.X strong, in sustained This screening in international our Molecular Including ninth performed our on Breast legacy results also excluding performance growth Our consecutive blood quarter the of Cynosure. increase of sales growth which percentage of ago. we sales leadership highest and business recording the a clearly changes significant international the X.X%. still of declined products, Cynosure well. had solid period, Surgical basis,

revenue on detail more results. some provide me let our Now, divisional

X.X%. U.S. sales have rising was the we Breast Breast Health interventional as forma strengthen division Faxitron revenues balanced second Health, on Health underlying balanced been selling and quarter, Health imaging if our If trends growing million continue Let’s geographically, robust in breast pro of OUS the around prior remain a Breast our expectations exceeded sales with world. X.X% Breast totaled Growth about sales period, basis, business, with Global where a increasing X.X%, capabilities portfolio. as owned our increase on at growth start commercial focused the our Focal between strong. products, was growth our we also and and would $XXX.X to X.X%. biggest year the as look and sales team in

XX.X%. Our breast strong imaging segment increased very a X.X%, grew sales while interventional

than is division much As today diversified discussed, has continuum across the Breast of have patient been, market-leading products and globe. more steadier ever across and our it the we Health care innovative, with

this illustrated several results quarter second Our in ways.

our mammography customer our and remains clinically core strong, based products position in First, differentiated relationships. market very on competitive excellent

emphasize to continue systems pricing positive the new proposed prove the should implemented. breast premium conversion of maintaining while market consistent if and And XD drive We the U.S., install an number which changes to of a us importance XD and to further incremental be in density, for shares. MQSA, high

are proven Genius with mammography our to breasts. dense XD superior to ones women reminder, mammograms the for a only XD be As traditional

been in trials our XDs differentiated demonstrate we’ve some radiologists saying for all time, label performance. and have As all are published our not virtually equal; indications created as we that understand, and

contributing and are growth. Health more Breast Second, new more to products

and runway with represented which quarter. including the by products, better, XD Clarity Affirm continue base segment other And prone us of the ahead. and biopsy Performance HD, sold help majority customer XDimensions be the Our in Intelligent XD, significant our still well-received strongly new new customers, system, grew systems SmartCurve again gantries, to and

reach to we acquisitions. biopsy into the third, of to for resources. have the well. constraints the a XX.X% the medium although to on our growth $XX.X over broader quarter, slightly and system sales are successful similar Focal term. surgery quarter pro Brevera we continue and in contributed increase franchise, expect performing which tuck-in the Faxitron, breast robust Hologic’s And of continue supply our we our that facing in new Finally, and Combined million, efforts lookout of forma sales were And reflects integration power be combined

strong revenue the concerns around where quarters, the increased the easy XX.X%, molecular of our million as into X.X%. this well $XXX.X an highest sales a this versus external very six Now, to in growth on and of market, molecular represents prior-year growth although of XXth recent Molecular comparable. from we for grew the worldwide our strong acceleration driver in the the emerging leader recent let’s quarters. diagnostics and remains molecular admittedly Diagnostics, productivity broad-based acceleration double-digits the commercial are pricing in in division. In of an Despite sophistication XX quarter, material periods partnerships. a turn $XXX.X team R&D customer this rate the XX.X%, organization, million to with compared second time grew quarters. Internationally, a Based

Panther Fusion broad-based how testing model Panther we we care blade we our strong international seeing especially in although Although a is at piece the in and as market there. work key better the volumes low-double-digit was better growth collaboratively enjoy with periods business in we rate. Molecular franchise, drive grew shares small our U.S., reflects recent than This very established a to performance our molecular assay systems. leveraged razor-razor the automated the and in was quarter in are And and high largest of built around total fully categories. customers, already molecular categories, patient ones,

U.S. tests. clearances load quarters, viral teams, by quantitative new increased trichomonas, our In more R&D for chlamydia/gonorrhea, and And and as on growth have indications XX specifically, for well by our We world. health continue in in development outstanding consecutive our regulatory the and helping assays as sales now thanks of quarter the strong consolidate utilization have customers was we and to HPV second around more earned place many revenue Panthers to driven testing drive women’s markets assays which global systems. legacy

So, space, menu, is the already mid- we to even expect to molecular our Panther get stronger. the in broadest which high-volume

sales perinatal sales high million remains growth cytology in the cytology $XXX.X intervals. In while United increase of the challenged declined. perinatal the and shares cytology due market second on, cervical a slight last longer quarter, market X.X%. testing quarter, our in to increased fractionally, Moving and Like States, cancer sales were

revenue for at $XX.X with an to next year. related expect blood customers over role of pleased a to Imager, ThinPrep ability collection our mind, health, out ThinPrep the its diagnostics, facilitates in we our of remains given to ThinPrep it years. us than increase in was clearance assay. recently million, earned However, Genesis several workflow assays co-testing to and and of which APTIMA higher this strength the have we are key molecular And last plays XX% compared divested cytology With and business core our our for vial. run expected improves screening more in women’s couple Elsewhere of for in HPV the FDA innovation

As with reflects services a we transition agreements reminder, this revenue products and low-margin mainly have under Grifols.

and stream revenue XXXX. levels decline to in second this the this from balance year quarter into expect We of

GYN shift $XXX.X gears let’s where in highest of Now, cover X.X%, quarters. million grew and seven growth our rate sales Surgical,

does make well improvement as which U.S. position. strengthening, business as is one driving underlying are force While competitive sales not to see trend here, a quarter we pleased trends our in our

and important as hysteroscope contributing it’s such management have our addition, to In begun note to our growth. Omni products Fluent fluid that system new

low-double-digit in sales a NovaSure As the recent again, grew than result, rate sales periods. but a in less at MyoSure-related quarter. declined second

with declined Asia. consolidated represented turn but expectations, our in of category, keys. low-double-digits Aesthetics, and sales driven as the $XX.X States competition we let’s our reduction of non-invasive to while line lasers health range. million affected other Medical product high-single-digit XX.X%. declined revenue women’s well United declined Now, of fat where were products products PAC of By high-margin, challenges in Domestic category by discussed, sales in sales mainly about the as weak, sales finished X% have in sales outside consumable as of quarter, And in and the previously the negatively revenue skin-related increased

of more. weakness there about As to XX%, declined Medical our a talk in long-term down writing quarter. value result, of Despite by challenges, in the our in more these little in quarter. the some were implications Karleen sub-category this and body the certain a intangibles this encouraging will Aesthetics the contributed revenue than signs

in the force with come For and United showing performance our speed, to good sales regions continues growth. up example, several to States,

a sequentially, what is In seasonally fact, weaker U.S. the quarter. revenue trend increased slightly bucking usually in

new marketing that million we To future. been In round to customer optimistic partnership sales the Skeletal campaign our the SculpSure will of that performance and discussion encouraged initial $XX.X our feedback Shields the with revenue in Brooke grew improve X.X%. has out new briefly, of positive, are addition,

base revenue Although about we the our athletes. remain in small is DXA composition our body enthusiastic of to assess systems here, potential

geographically wrap the and technologies and core in and In leadership Hologic haven’t over both our Diagnostics, paying up, the Health off. to expand So, categories terms, especially last leveraging product storylines positions, much three simple Breast our is adjacent of months. our key changed major at to strategy offerings in

a For will for good quarters, that to strategy this which the confidence led the XXXX. four gives our discuss last guidance to Karleen in has moment. us very financial guidance increase results,

now, call So, me let turn over her. the to

Karleen Oberton

Steve, updated non-GAAP third touch on focus on my our statement, In walk you, percentage remarks otherwise quarter. up as financial rest of afternoon, finish be will will a and Unless few the financial well noted, for XXXX, in through a constant going changes the and metrics, income guidance results, then year-over-year Thank as to currency. basis good and on my key remarks with today, the everyone. I’m other

from largest we our solidly. described, Molecular benefited And our our to and strong EPS $X.XX exceeded as as results, as continued division. second our As grow with $XXX.X million guidance. revenue results Health Steve performances and Diagnostics, well franchises by in improved Breast our of businesses, Surgical of quarter are We international pleased

solid fiscal again has are we performance year, guidance a overall been financial and Our as raising through our the result. half of very our first

XX% Medical is doing everyone Although Aesthetics continues of lag, to our well, business knows. as our business

the kicked intangible with we we SculpSure, accounting associated products quarter, process, value to clear assets positive Touch we our TempSure strategic perspective, and like planning of equipment off that Steve see some said, annual As in lower an and our needed from MonaLisa signs Vitalia. it became as did key carrying but the

ago, write-down GAAP This expenses. which operating to quarter, significant which COGS addition also a and the related $XXX.X other which million recorded we booked this primarily to write-down but we goodwill non-cash, is of in-process result, a year As hit a R&D. in is action,

in which So, trends place. and to reflects to the strategies this want we have it previously is on that disappointing, primarily discussed, that improve while I emphasize have expect based negative we write-down we

Now, I’d quarter. period. review of the and P&L like the to basis points switch our decreased margins XX% second gears Gross compared XXX prior for to year

of these scrap Medical the decline margin by margins as gross gross to locations. international in have reserves, quarter. rest with in tariffs, this we especially this Chinese including revenue. approximately especially adjustments, discussed of Cynosure’s back inventory the expect foreign mix, quarter, Let one-time Several items the me The in performance, provide as reduced contributed our year. color margin charges and in illustrate screening integrate basis we such some to to why factors percentage Together help other and gross gross half improve past Aesthetics we XXX from the exchange the non-recurring and points blood margin decline higher percentage product resulted items

as we the efforts. to benefits, one-time we reduction the product new year, these So, of the our charges, of ramp-up cost back due product of ongoing improved look half mix, sales, better toward the absence margins expect absorption and

contributed This quarter. the expense. which total increase mainly Moving X.X% $X.X $XXX.X by million Faxitron expenses the impact and of was driven second increased acquisitions, on, of operating roughly of Focal the million in

and actually Excluding tight margin declined controls a do discussed. of future the out, ago, second effects I a line below full for of of currency reflecting cost the operating operating when point the however, XX.X% points our due in primarily margin have between place balance X.X%, and compensation that negative income basis Faxitron our and statement, I geography of compared year want growth. to expenses in analyze decline. this to you we funding declined much offset that hedges the quarter margin gross to investments XXX Focal, the Operating

adjusted half XX.X% compared mentioned. if margin the that and to mainly you’ll guidance margin this $XXX.X XX.X% gross I the prior remains declined healthy, profitability period. back of that margin due last only EBITDA example, to will million, year. see implies X.X% year year, Overall, the at So, our our improvements updated year in increased expected EBITDA for it slightly, to And operating increase versus the you look of

in the increased rate. basis XX.X% tax an points associated of margins compared XX our year benefits net with primarily Finally, improvement to with period, prior due effective

tax per our rate this our the net federal second and share to through tax range. is has of income previous quarter, million of U.S. clarified guidance non-GAAP lower $XXX.X Treasury Our exceeding provisions of than guidance led All regulations. earnings because primarily certain reform the non-GAAP in proposed $X.XX,

ratio, the debt Before we X.X buyback revised this quarter, around times. that cover the other metrics. level, activity. our I’ll ratio second could a on financial of EBITDA, comfortable remain our quickly end over touch few guidance, based on at XXXX fluctuate the leverage recognizing the of At net timing stood and We acquisitions

in Finally, free we flow second quarter. generated $XXX.X of cash million the

flows, We strong see repurchase while as continue opportunities us enable Focal acting as also the Faxitron such our market. to generate and we acquisitions authorization share to cash which pursue on tuck-in in

good the our guidance to we specifically, full EPS shift gears and our third our to increasing level, currency financial constant like two I’d investments a revenue on our year results At second offset a quarter plan and next and increased partially quarter. for forecast. and our the raising over are are make discuss high we lower effective updating Now, rate, non-GAAP guidance guidance based by we tax More quarters. full-year

revenue. Let’s start with

new our from divested blood of million constant Based billion, better reminder, rates, guided prior to revenue which of a to we $X.XXX guidance second billion on X.X%, growth forecast. of currency $X.XXX to and approximately between X.X% guidance includes we X.X%. represented sales currency revenue to our XXXX revenue Based $XX of to than our previously billion, As results, $X.XXX constant business. recent exchange $X.XXX which our on X.X% increasing are growth quarter translates billion screening our to

materially exchange roughly we dollar growth rates, currency driving headwind, exchange the confident that And year. are you expenses, ability to in feel our As effective million headwind based the control rate. prior businesses, tax fluctuations strengthened recent this our our core compared we to of XXXX. estimate on fiscal fiscal our in U.S. lower $XX and has know, Despite about foreign

our EPS growth that $X.XX, our higher guidance point diluted XX%, we reported I a growth. year, a represents X.X%, result, The diminishing $X.XX out the a is currency. of tax our are be and effective of rate EPS would of roughly for residual between from based range X.X% business an not contributions XXX full should small guidance. for impact a screening shares growth of a X% if on million and approximately blood divested guidance As of revenue outstanding increasing from and rate full-year which approximately improvement to compared to updated to double prior

third the fiscal for guidance to turn of XXXX. let’s quarter Now,

two X.X% a basis. reflects of Since on have new We basis, revised increasing X.X% of on be quarters guidance in as a reported third, annual X.X%. revenue $XXX represents year, products than guidance expect of quarter revenue will and our left currency usual, based seasonality we and $XXX only which between to making our constant fiscal million million, our fourth the revenues that in the implies X% bigger On to growth growth contributions.

the growth of to quarter, and $X.XX continuing in growth. between rates line, On revenue $X.XX X.X%, which we implies of third outpace the expect bottom EPS X.X% to

update you encourage both week. is that ranges particularly further at we’ve upsides to after middle the realistic our and guidance you would strengthened last ranges, of potential dollar downsides. tried the your important As This we to incorporate set forecasts, model as

pleased XXXX, with for conclude open international Diagnostic driving and let Molecular half Health, up by saying we performance questions, Breast first we the with businesses through call our growth. the are Before me solid our that of

These performance strategies businesses in further encouraged also to Surgical have are are drive division. place. by in the well-positioned We we improved our given growth,

your the related questions call we will repurchases. share generate the to for put we tuck-in limit good annual I a financial open for with continue this, to a questions. cash acquisitions that queue. then return Operator, raising our use, Lastly, Based follow-up, one on ready ask cash first plus to to operator on we and are opportunistic that, to flows are guidance. industry-leading Please the question. all and the focus With

Operator

Thank you. We Tycho question Peterson with go sir. Instructions] from [Operator will Morgan. JP our ahead, take Please first

Tycho Peterson

too? Steve, you obviously the starting XD talk Hey, lot, XDimensions maybe putting Faxitron much thanks. How how about are with you you're are then, there and good in Can bundling Health, up installed Breast upgrade And to with base replacement Focal obviously a start is numbers there. XD legacy and adding doing I'll Performance. the cycle? cross-selling much

Steve MacMillan

new, selling to our terms In the XDs competitive coming XDs. well base is the new as our both customers, as from versus of still existing revenue of vast the existing majority upgrading

got, I still think, left mentioned, X,XXX XDs as we the we X,XXX in to installed U.S.

we’ve got makes some driver much which worth sustainability, the certainly years of while about but our grades, and they the total still of So, us of good clearly are of percentages smaller Breast starting business, that's replacements. to so feel the Health get still primary upgrades. the we're on

that own it the And, about been Focal, first as earlier we've feel start we been As legacy organizations and sales to deep that would the good sell I in a initial very to combined there. are Faxitron relates the in as quarter products was street the our them the really the to conserving well there. of forces, we couple the and say, starts together. really were together that breast And on down we're This and selling stages. surgery off as still start able nice put a it's to nice line, merge really very

Tycho Peterson

on one guidance. follow-up And then,

So, you new NovaSure a have do [indiscernible]. for competitor

if positioning, kind about you've seen competitive any think and of curious point. at how this impact Just you

Steve MacMillan

commercialization to particularly yet anything. story not comers. total expect and relative impact frankly, seen base. over every from at coming used there been of point, efficacy effectively space. any very some are at that, competitors strong, product the history telling said day. We're about out point, the We We We've and X always Having and this of a would certainly really patients in safely time. But feel this million NovaSure loyal we that of proven new has real good our has mindful into any

Operator

with Dan question Leonard ahead, And go Bank. we take will from our sir. next Deutsche Please

Dan Leonard

Thank you.

want I So, molecular couple on the a business. to ask

price for color can any dynamics that you how confirm the in customers you full rate Steve, large And reported to pricing you the maybe numbers First, growth can double-digit quarter? were with adjustments volume that on molecular? give any and in contributed

Steve MacMillan

Dan. Sure,

the year, had quarter. those said, we we of As the were did contracts of all finalize in pricing virtually last changes any

run summer our renegotiations with feel this in the And quite reflected rate, So, from know standpoint, PAMA really everything largest we've basically was last want what with customers. with pricing We about I is, else. the relationships and to a we great say, I feel but much so think new there and there. good, got a I concern

really really that feeling about We is big driver. makes but particularly particularly good both we are us side for very the the for driving up volume ended customers, our pricing the And sense on with runway molecular ahead. and

Dan Leonard

interesting it's fast gain? women's to your you in that the think then, compared how big much faster the are update that you here. category the as legacy your you contributor share do to Can how you’re assays And And us growing health flagging market? on is category growing

Steve MacMillan

Sure. particularly data And it to I category. think part whole us much, think of physician that with our continues younger largest our helped messaging. tested, what's trying sexually overall our drive have educate Test that active physicians do category. grow Yes frankly, on make help But, the customers the we of don't we campaign full the it's sales force sure continues is continues so to our great to are we getting and Means to think women

we great don't the ago but few incidence of is, categories a realizing have maybe this true growth at looked what left, while one a we these feel, clearly So, thought not of is should less actually be done. and is than much years testing that

category. drive to player, helping probably as the faster And think And the that And, share Mike? than growing so, still we've actually itself. predominant I been really category

Mike Watts

Obviously, thing And the higher chlamydia/gonorrhea like well. the test the just a new to I Mike. be we base rates alike, So, with tests expect right? would Yes, fairly as Dan, underpenetrated. all MGen those are not the there add business. same happen over might time than growth obviously, much would thing. one And like trichomonas for it’s still is

Operator

our we'll Cowen. be Schenkel Doug taking from ahead, with And sir. question next Please go

Chris Lin

Doug today. don't be for want I granular performance, to molecular is too rate or could but this taking Thanks the question. sustainability just segment? Chris on to follow-up on assays the I double-digit know diagnostics question. introduced number pretty with my load you Hey, mean, I previous the growth you the you early just and have opportunity. help viral for us assess still a of with for you're

it right diagnostics to So, year? at think could that the molecular is least of balance grow double for the digits

Steve MacMillan

We would comp. not of We guide mention rest the an year. had the to double-digit for did we easier

I good think comp very an quarter. quarter, first we a had had we easier this

sustained think, about strong we but sustainable rates double-digit. good not for would I very model feel

outside overall single-digit I inside slightly trajectory. higher we’d growth. more U.S., mid think maybe U.S., modeling think But, the the be I’d probably to the like I yes;

Chris Lin

commentary Okay. the Molecular would even have appreciate the question, operating a onetime detail? the the we strong of below margin I just those of but you the and could And then, businesses some revenue despite for a from follow-up Street Cytology. more bit charges gross if help on bit performance, us margins contribution high-margin dissect back been the out Diagnostics costs, expectation, and

of curios just are margins. those headwinds the I’m other for what some So,

Karleen Oberton

Hi. Karleen. This is

So, that. at a let stab me take

the products anticipated. contributed the higher in And we revenue business, had quarter, on of think margin mix with Coupled items, I in we remind beyond to than screening Cynosure the there’s margin gross virtually headwind. onetime that had some blood specifically no we to that everyone, clearly the the revenue.

Operator

Kumar We will go our be question Vijay taking ahead. with Evercore. next Please from

Vijay Kumar

on here. Maybe a guidance couple

margin I back what Just, guess talk you we timers and gross Karleen, improving margin called, half, implications on the is in in gross saw revenue you as XQ? that here, When the be in back the have the mix one should gross stepping the in gross this to similar visibility up? the is it what that driven, all you margins the margins half

Karleen Oberton

Yes.

to substantially those in don’t onetime of So, half Majority locations. think and related are is activities business what back and that for those again. I again items the some us of pursue the that gives Cynosure the international now confidence the integration complete we

start the normal as well larger just I look as year, gross to going at the that as From half of a cost the overall reduction which the increase as volumes and think fiscal to are absorption really drive to the that back revenues as at kind margin when efforts our the dollars. year. planning perspective, we of we of is have teams of get well beginning back off cadence contribute the year to favorable increase kick

Vijay Kumar

one here. then, And guidance follow-up on the

hedges items? same. from the guidance You looks lowering rate FX half below tax almost [Ph] on the look of those of range most lower, the line at we beat the tax EPS thinking by like it happening there I’m the came is You curious, anything how the of and in rate. should back just be of some

Karleen Oberton

below that anything the there in we’ve the I is unusual in half guidance. Yes. anticipated bank line the don’t think

about projects. -- more in to beat want there half some I we'd is allow to yes, think, back like quarter, benefit accelerate from the think there what in to R&D also lower guidance, definitely as really invest we rate. tax the some some But is teams we is to the do the

Vijay Kumar

FX gained half? should be hedges back in the

Karleen Oberton

In yes. theory,

Operator

taking will our next question Jack Please go [Operator Barclays. be from ahead, Instructions] Meehan We with sir.

Jack Meehan

was level? business. to MyoSure, contributions drive given up NovaSure just and hoping the runway MyoSure? the adoption rates from growth left to was is think the you break get curious, Steve, I I out Could much And the on how to you GYN there NovaSure Surgical for

Karleen Oberton

the start contribution. off me let So, with

MyoSure. a NovaSure balance division on with from and $XXX total million basis, little Surgical the a worldwide was over comes from So, about XX% that of

Steve MacMillan

time, expectations opportunities, particularly pick and on Surgical, to the overall it's to defied being MyoSure gotten and the back still to has place our bigger We and a as part, speed good up to for it, has grow. So, continue feel up to force sales frankly, category, the a in major seems as that driver grow a and continue strong to become for long see U.S. today.

Mike Watts

Yes.

in low-double-digits to of that decline as we the with one MyoSure to it in Jack, mid-single-digit allow remarks the And quarters, much It’s and you. down go think, I for to in kind to. Dory, quarter folks was mentioned didn't low question NovaSure that very in grew recent fine ask consistent prepared aggregate range. follow-up

So, follow-up, Jack, if have ahead. go a you

Steve MacMillan

Got be related, Got be to to though, related. Jack.

Jack Meehan

on the XXXX, curious, be at are that be this growth the the for to as do or look you? Well, is kind point back the that you of NovaSure business then to you I’d back right get just and maybe half you way can this think thinking stabilization thinking then. about

Steve MacMillan

probably penetrated best is and may not really -- we probably we a about competitors given growing are how stabilization going have some the think in that's can just emerge. I category do

So, keep a that continue probably performance. pretty as we I think, flat to good

Operator

be question will we Bill Jaffray. Piper next Quirk Please ahead, sir. with from And go our taking

Bill Quirk

is here is couple first thinking little about the that curious think to helping about franchise. back then, couple versus question that the was years? of large I customers question, growth. would Preferred were UnitedHealth the related how And new of a of accounts on hoping, us kind get to the incremental Steve, maybe molecular So going accounts some about Lab adding added this and color How much -- existing a next you're as a approved? menu your driving And you’ve some performance be over of the had incrementally just Network, new

Steve MacMillan

Sure.

to things the simple are I'd nice say consolidate customers customers. the versus about don't our increases with think, seeing we sometimes and because two largest we existing customers. think clearly existing new getting business to as as that. have way some more We're with our it that they I is, like frankly exact breakout

network. also continue Panthers to We the place across

the I we customers. ahead years with see our and business there. and little like quarters so our as Bill? the But, two strength. your up And Health really good of help biggest good pick various that's to else, feel continue in their to drive especially with about a think contracts, it's to more And they ongoing United position point, some Anything going and with some we think particularly we them position growth

Bill Quirk

absolutely. sure, Oh,

follow-up a is. business question that So, related total the to

how of topic just is one, the And of help OUS us adoption bit specifically kind secondly, guess, little XD I in about, Just Breast could you think Thanks. then, sustainability Europe? going, revisit Health? of

Steve MacMillan

different that -- was one two worked related Job, That Bill. related clever Good into follow-up ones. a you

I'm So, of the Breast sorry, Health... sustainability

Karleen Oberton

Yes.

international we good feel I that. think, I the was think, really first sustainability. And about

a coupled go still markets. XD internationally, there's early in runway. opportunities overall to direct It’s on lot think to days key I there of with conversion the

Operator

And next ahead, question we be taking UBS. with will Dan sir. Brennan from our Please go

Dan Brennan

you thank question. Great, you. I to for Steve, Thanks a ask the taking questions. wanted

look of more the mitigated out of growing in to think the that imaging realistic sets what's you’ve in for Given the that strategy of signs cyclicality your as imaging expanded U.S. meet different now some sized via inherent business? needs success customers, potentially business, we breast the that runway you more the product of

Steve MacMillan

Yes.

to overall, longer get terms far of careful be always to want outlooks. too term of think, I too Dan, we in ourselves ahead

today. now if of mammography think, as look it to U.S., business the you going probably is relatively number The is five grown I pure not at much. in it's from gantries all years probably the that flat be

it's portfolio, it. seen had the we all value along, okay, ways we bring as that other So, thought, to to out figuring about broadening all

of as And take outperforming kind we’re much share about new digit above to that mid on So, what can obviously is digit very outperform a it. ability probably think single I single what a still to low I’d more And are of business. avenues focused take us probably find to lower our think and it market.

Dan Brennan

that, Thank Great. then, maybe for Steve. this is correlated. you And

just your those you about the to I'm wondering, out to remarks So, the basically, investors get the help opportunity market regarding dense the translate breast of made impact us the there? gotten could prepared for superior in FDA. how extent mention into that kind giving and you label would times to you think proposals the should the implemented, think and we've about how numerous that we this on business? of like, question And is the Thanks.

Steve MacMillan

guys the could the Sure. basically talk anybody flippant, other is, very than but that market but breast dominant keep shares, dense system ability which consider space, share off we to particularly should a malpractice. use This that far lot, having the you the have. growing given And what our think be about be a know anybody think the that, sound I it I’d would But to by would does high don't continue there, we said U.S. our in indication we're I levels, continue player in our market to

Operator

coming sir. our with from David will Lewis Please question Morgan Stanley. ahead, be And next go

David Lewis

Steve, and a second follow-up. investments on with maybe one start you for maybe work

you the as deploying on that just write-down now balance interest that are the consideration sell or the areas is, you think is as what any quickly about with point you look in sort the at that business to for that investments, the now your strategic of business? Steve, Just And related business? to this you do about think capital where think sheet, deployment, key divest for business. there Aesthetics with and M&A capital right Is

Steve MacMillan

David. Sure,

what manage frankly, excited long decision perfect. And right the about We obviously some we every haul. strengthen we of continue in Medical are not the we even have Aesthetics But we’ve continue going for to And has now. on, made business. been Company to the

some really sales on a Having that. the core as businesses biggest partner, capital good seeing, focused really think particularly of have a you’re really and said I piece great we divisions. that more we feel our of So, about people, as deployment, lot Shields the joining on Brooke broader

Health, I that we in a two is weren’t really that feel And we great a done stage we’ve think ago, the years to Breast So, tuck-ins. just few are which truly we about.

that you point no to very also continuing to Karleen, from tuck-ins left so, add anything do existing the can and do share and paydown businesses, deployment in good debt that. prudent are fit with our time and invest that that with over, in the being capital. need our ongoing at that delivering capital additional executing, And businesses want broader open legs, refine this cash to repurchases, both to

Karleen Oberton

as just that’s critical Yes. a the here. clearly, bring tuck-in evaluate at we teams No, ongoing. I the there’s view we really M&A an targets But would say, priority activity from perspective, but a are

David Lewis

quarter growth of Breast Breast and significant we gave follow-up, growth, quarter, very saw very quick you in us that outlook This to and terms quarter, pipeline. color quarter. of balanced lot pipeline a the to Last gantry transition a the last relative a Just Steve. is still above this market

you -- That’d about of part kind sort mid the backlog gantry on how you. can very feel where of the of be just So, update year? helpful. you Thank

Steve MacMillan

Sure.

the we the about backlog good track very ongoing growth basis, business. the ongoing rates feel to and a but order that obviously regular continue feel gantry on in very We good about the orders

Operator

And question we our from next sir. will Blair. Brian ahead Weinstein with take Please go William

Brian Weinstein

what and there numbers talk us a in upgrades welcome potentially the the what bit could the early, seeing well. be on on thought given I quarter, and that breastsoftware any can you, revenue recognize it’s this to past about would little you you’ve I some for but term? Steve, in you're longer that become think, us as

Steve MacMillan

Sure.

the to and Clarity paddles. existing Intelligent of stages HD, the XDs, in Intelligent starting -- still but We’re our early between SmartCurve upgrade software the

are within So, early think somewhat runway. they small division, long-term just stages. relatively it starting but be still but provides meaningful very to And I that

opportunities, SmartCurve and also the So, it’s and circling the to add-ons XDs, but focused to -- our is we're lot on very ahead. existing and runway convert Clarity and paddle, business of the nice very organization the back XDs Brian, clearly I a seeing about would going it to like way the say thinking HD, day-to-day, things continuing

Brian Weinstein

about go can key about on this something opportunities specific the some more bit direct your and seen that strength? a there likelihood on On where would to at expand you color OUS, we see year? just think and the markets, particular in we there, you’ve little point areas you Karleen, that comment follow-up can when countries give us And

Karleen Oberton

think markets are considering distributors there I looking all actionable direct, not in we’re certain opportunities go our going of to countries be So, don’t that to we’re but that are we're just specific, that as key either.

targets. characters of the So, weighing the all

Steve MacMillan

Yes.

X, feel about the Spain. the done obviously we and over X, arrived obviously great think, we’d Brian, and do in last gone years, Portugal even I Germany, X acquisitions in direct we’ve before. I UK in good

So, the well Europe in how look now in capabilities from countries, biggest to certainly converted to our also and we’re where strengthen now directing dealer three we’ve at countries and direct. of there, the to doing continuing

over there. So, like the of the foundation building

Karleen Oberton

Europe, in lot add Health, momentum I’d forward. just Asia about Brian opportunity Pacific, from and an the also just a perspective that just moving obviously we lot to there’s good but talked got international of there a Breast

Operator

And we will sir. next from ahead, Petrone go Please take our Anthony with Jefferies. question

Anthony Petrone

[technical My and the page, first there GYN Breast clearance question I’ll from it molecular, have is with growth, and in Surgical the Health number question the XX% competitor. I’ll question. difficulty] on diagnostics then shift a I on The to is comes off first OUS the think jumps

I Alinity think essays. CE Abbott mark clearance in announced certain for

the Thanks. just to trying given sense OUS be and of of kind molecular landscape just competitive surgical. will a of So, the get follow-up on sustainability a

Steve MacMillan

Sure.

we’re a think, I molecular about we had relatively XX is double-digit really quarters good underdeveloped. The growth still out we feel our to of business. rates. rate OUS growth continue in XX And row,

there So, there, growth. competitors earlier stages our we’re are out even though still in of

certainly healthy for competitors yes, we grow So, rates. there to continue pretty a at And business feel but us. good about there think relatively to ability it’s is I our smaller still

Karleen Oberton

have Yes. menu in we And I that U.S. full would have in the don’t the here just add we countries approved that key

focused menus trying will key that expanded in have countries the to utilization. strategies drive we on So, get higher

good of lot stuff as there a well. So,

Anthony Petrone

ablation surgical just years? it a us front gave be endometrial And litigation just update there should that similar XX impact over ago. weeks have and a the more we months, competitive the few going quick follow-up Does an in is and two would forward, Thanks. dynamics an see next or

Mike Watts

Anthony, Yes. it’s Mike.

normal, all kind have process, an open on. And, just obviously, too there don't think, want get a the in work customers on we legal that's going the competitive and testament We but give maintaining that And, go of into very you and to one. to when we to I dynamics the stuff field. is cases, I believe an stable. winning the are continues in which appeals much back, are share some think update we'll

Operator

will take from question go Please SVB our we And ahead. Leerink. next with Richard Newitter

JaimeMorgan

on Jaime is This Rich. Hi. for

you couple So, guys weaker a of OUS questions I I to little U.S. was a the Medical first guess, saying bit Aesthetics. driven was wanted on in by line, Asia. ask are being,

that's a that the could impacting just little about in and that talk you was have market dynamics follow-up. growth, then you're wondering seeing I'll bit I So, more a if

Karleen Oberton

Yes.

ongoing So, integrating structure. our international had and regional the given mentioned, I into kind I our think, as leadership, leadership are think, we of markets, I

cadence sales And of had so, we've some there. changes, disruption the on make those as we of some

of made well, we that as adjustments at we had as as some have feel the over we’ll integrate, of this think we good longer that looked nice I kind take control growth. but procedures and term business policies cadence leaders accounting some and our

Jaime Morgan

would around, competitive follow-up seeing color you given about And body? year, strategies my out for just be, guess, from new across And the of that any expectation Brooke can I talked are the perspective units, these the Shields? other would potential strategies a you then, of give remainder within that of is different -- you some with what kind rolling helpful. And you more competitive the some the specifically be Okay. anything of Thank you. are

Karleen Oberton

Yes.

body sub-segment. what I in Medical the talked we've would specifically clearly, seen factors that Aesthetics say is about the in So, we have competitive business,

that do, this know what excited meaningful don't will will able are to campaign the Brooke we about how Now, but Shields and at point. be be, it

more I in-license U.S. of turnaround sales cadence for that in think I business. of the products, our team, what what is, create to in focus excitement our strategy that additional contribute products, we team is will bag to new would think sales the key on put what to

Operator

next question Please Stifel. with ahead. our take will we Jon go from And Block

Jon Block

guys. small for Breast. question go Thanks, on a then I'll a Good and just probably Great. afternoon. clarification

margin. a color what this for fiscal clear, XX? And then then higher off is I sure, So, very thoughts be call And XX% Karleen, quick just your onetime and non-GAAP helpful maybe, was ask margin? gross I’ll gross off the when that say just longer make with XH, the want to term that to is it are follow-up? adjusted, or you

Karleen Oberton

Yes.

term I right think adjusted longer looking the it's them. half. at off we're the back But, I say, the would is as we in in XX, think, to we not is margin I giving guidance. what expect way low-XXs So, about gross that And think said,

Jon Block

Okay.

to So, an pay more a or rate, run there. the as rate fiscal XXXX about attention just exit think XH we

Karleen Oberton

Yes.

is the think noise there half. some first in I

Steve MacMillan

Yes.

Jon Block

then, And Steve, Okay. I’ll pivot.

outsource supply asked you been over to I has of for plans what can to in then just to In the about track there? sort going Thanks, get from manufacturing answered Aesthetics on a Medical continue the or words, But is are something guys. And talk house that just that? the and think, take actual you you're timing other Brevera, will itself? back for most part. standpoint,

Steve MacMillan

Sure. Thanks, Jon.

is think, the with term and piece. because probably But, and partner we’re right have we’ve -- situations really we're the simpler to working I now make longer some get next to short-term great that supply make partner probably to on before fiscal year obviously it we’re been into well shape beyond resolve in making do enhancements it we're product we to a in.

Operator

from And we question Massaro with will Mark take our Genuity. ahead. next Canaccord Please go

Mark Massaro

think pro digits rate up potentially with the can Given in negative the you initiative the the we move you or dynamics into in about Medical be double Brookfield run thinking forma do right? Aesthetics, should that’s

Karleen Oberton

year So, I single grower. the would about low we be this thought think a fiscal as we when think started

quarter mid we think as low through as I year. we I digit performance based each the ‘XX, improvements what move on about decliner. last in see think quarter, probably that’s think single in fiscal the two is to the we it’s But,

Mark Massaro

guess think marketing costs, you And that is, Aesthetics with don’t I all the my you keeping to divesting worth Okay. why more marketing think clinical help when be the Shields would that of the trials guess that in you the the Medical of do factor clinical it? a MonaLisa could trials us I business expensive. is costs, than then, related give But question about little I about Vitalia thinking the and bit Brooke cost Touch?

Steve MacMillan

we’re and we the prudently to continuing about in and thinking go where investing focus the smartly Obviously, business. future, for

plans. in that putting being we that how So, we're clearly the fact not short-term. in we’re about of and It’s in longer together the the gauge little kind term time. point And bit in spending process smart at we making this money a our of losing like, would

Mike Watts

are I really provide I like would differentiated I products And, Mark, say, just mean it’s to would lot women. a that products MonaLisa of add Touch Mike, I mean, to value -- that. clinically very valuable,

ourselves to market. the enable us want definitely we in So, that differentiate to indications proceed will those

Mark Massaro

Okay. Thank you.

Mike Watts

we’ve got time think, I more question. Dory, one for

Operator

taking of Derik Merrill final question de Bruin America with And our Bank be we will go from Please ahead. Lynch.

Unidentified Analyst

This you today. on squeezing me is in. quarter. for on Ivy Thank for [ph] Congrats Derik

the on It of question should clarification like one continue. health Breast sounds the Breast just momentum Health. So,

updated perspective comp guide, be any the color sector, there particularly of changes Thank given for growth are you. any additional Just helpful. the half tough So, in would the given the first on given the year?

Karleen Oberton

Yes.

had fiscal as Health, would the of year quarters year, for two performance based we started being it maybe high-single-digit we last the Breast full I about that the the growth. I it's to So, talked on mid-single-digit grower. say think mid for

growth you're might the back a yes, harder comp’s come in right get year the down bit. the of definitely and So, so the half

Unidentified Analyst

And one follow-up.

Looking the this any Focal expected. acquisitions Faxitron base estimates was quarter, the for better additional than year? of we should rest the Thank So, for Is that and something just of color. you.

Karleen Oberton

quarter. come had from the would but meaningful down. in So, we would they this them It say that expect know it be should I growth be XX% in high-double-digit don't moving forward, I that range.

Steve MacMillan

Thank Great. you, everyone.

Mike Watts

very that's think, much. time all everybody have. the Thanks we I

Operator

the Hologic’s This good earnings second fiscal XXXX Have evening. a now concludes call. quarter

Hologic (HOLX) 1 May 192019 Q2 Earnings call transcript