HOLX - Earnings call transcript Q4 2019

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Operator

Good afternoon. And welcome to the Hologic's Fourth Quarter Fiscal 2019 Earnings Conference Call. My name is Cody, and I am your operator for today's call. Today's conference call is being recorded. All lines have been placed on mute.

to Corporate Watts, call. Communications like Investor President now and Relations to would introduce Vice Mike of I begin the

Mike Watts

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

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

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

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

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

this call, measures. earnings can certain our non-GAAP found will reconciliation to Also during GAAP be A be release. in we discussing financial

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

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

Steve MacMillan

sixth fiscal our We're discuss financial Hologic's XXXX, the quarter consistent everyone. quarter to good pleased you, afternoon, of And Thank Mike. results for of fourth results. consecutive good

and drove earnings $X.XX, of our that X.X% in-line rate very XX.X% came expectations. of in in a margins an constant revenue currency non-GAAP operating our Improving and strong exceeded growth share increase with at million, $XXX.X per guidance. Total net

each year. XXXX United our revenue We of States. the sales with This divisions, in increasing our the best wrapped was domestically both outside balanced, up and with growth of growth fiscal

of Surgical, good XX were to growth best by which largest strengthening in results businesses, we posted Diagnostics, quarters. in excited Health the and addition Molecular continued its our very In Breast

give year. a a we're Before details, we fiscal discuss on as quarterly marking the report since of status step back the our end the and company let me whole

clearly our of rate progress X%, out the growth In over was lot XXXX, benefits if half Screening fiscal the inorganic quarters. the made have first overall you business We about last Blood a of divested and the of Cynosure. strip six

range. leading you which excludes several Faxitron currency the grow. shares challenging XXXX. our that fiscal the movements, we a around leadership to impressive declining in in market organic performance, is markets, second restructured We fiscal year that had half acquisitions And the of full about our of X.X%, growth team underlying consider guidance ahead growth or where last and year, added and the had XXXX, growth it X% year Focal, expect as our solid two make we do short, of X%. to same In well And by time. blood improved over initial to of tuck-in we This screening well when half last for and flat operate the was organic to executed and

are steadier, across let Now, engine install grew position which we're creating Breast on snapshot for providing further XD a in more our R&D leadership each growth of diversified me doing the base, and continuum breast of incredibly domestic are X.X% build By brief by external acquisitions we to strong our all our Mammography. U.S. Health, franchises. healthcare. an leveraging down performance XXXX, a break In internal major of of we how using

sales the to the which fiscal and force surgical, R&D for with automated growth U.S. our molecular and Panther base leveraging improving grew our fully drive In growth. for drive revitalized domestic diagnostics, X.X% are broadest which grew our install steadily of In assay mid the space. to full customers engine the to instruments, have year, with X.X% high volume we in partnering our year, menu market we

X.X% medical have domestic Outside a startup effectively aesthetics, growth where for internally the new in for force both all transformed and much products XXXX, revenue externally revenue XXXX, to growth profit developed with declined and States, driver, grew was years sales short X.X% we ago drive few we In licensed stabilized what of ahead a United which as into await improvement. we a our consistent U.S. have opportunity growth.

more million on our with robust were $XX.X Revenue for the and a to discuss guidance $XXX.X in year basis. Focal with grew deals We of full pro businesses off these Faxitron With exceeded quarter a and fourth that forma our Within the to million acquired detail. revenue. introduction, low-teens start let's contributed X.X%. results this, good growth

sales the Excluding our Blood in divested Screening our $XXX.X business, the overall still rate fourth of year. increase revenue of X.X% growth million quarter from which best grew

terms In X.X% of of million the geography, in quarter. healthy increase sales $XXX.X a domestic very

was quarter. the growth U.S. the Outside a $XXX.X again, to fifth currency, third States, of Screening constant quarter. consecutive United in sales increased rebound compared X.X% the million accelerating for Blood X.X%, nice Excluding

detail trusted breast product of let division, core business Together, remains outcomes innovative and Mammography acquisitions, steadier, our results. we the our offer Now, for revenue. it productivity more building XD on solid Based are rock We more customers. these as ourselves revenue an increasingly healthcare. portfolio Health, some we to and deliver on divisional predictable Breast life Breast easier that patients established make continuum provide for me that that the products with in workflows Health. and better on diversified internal biggest translated experts strategic In spans have our R&D clinical

trends strong. an tough million, comparable. year X.X% of Breast prior Global quarter, increase Health In the against $XXX.X remained totaled the in sales fourth underlying

Breast Health grew States, to to revenue the X.X%, United third of In accelerating X.X%. healthy were geography, growth quarter. of domestic the sales post terms Outside a pleased we compared

benefited from sub revenue. Focal sales included XX.X%, about Imaging million breast portfolio. of as $XX.X X.X% Faxitron grew Interventional while $X.X we sales million our terms sales selling of interventional on of imaging growing In focused segments, while increased

sales an our by systems XD have of XD giving layer strongly, Imaging, commercial years a we which about domestic quarterly United teams. new in increased can On record accomplishment we our eight onto a some base States, additional a impressive us shipped establishing Genius cumulative launch systems tremendous revenue X,XXX basis, after the install In the life, streams.

conversion We providing continue have current Hologic States, Yet, more systems our at installed base pace, multiple in than are competitive more the especially years converted there than as X,XXX XX% XD to market share. our to of still United XD. gain of we runway us and

is how growth SmartCurve, including our Other by growth. Imaging to driven nicely quarters, XD XDimensions innovative performance growth strategy. products, contributing XD, our Clarity added also recent R&D in HD new and Intelligent new was Imaging gantries, As demonstrating to and

enhance results and XD launch install supply our further well these, upgrades are expect our as Interventional, due We from previously from this have long-term In a we as base biopsy the new disposables, we constraints discussed. artificial from to like offset that opportunity quarter developing existing fourth with intelligence to Brevera than capital year. benefited to growth sales more which headwind have the strong lower a tools

Imagine, innovator you me in Diagnostics, acquisition cart-based technology. to on SuperSonic of let pending turn SSI, French or our update a I ultrasound Before

the be deal revenue tuck-in to this slight a accretive rate, call expected to albeit and As near-term. EPS growth our some leverages dilution points our is in reminder, with existing to

record purchase now a opened August, rest shares company. and fourth the cash SSI's but basis revenue to under did expense a finalized of expense. we have booked haven't we accounting we Because XX% acquired our for loss, share non-GAAP early on other the net results offer non-GAAP method in no acquisition the recorded equity In tender of from or $X.X of yet, investments. SSI, SSI's their means the of This we quarter million

quarter, Karleen this. the our will tell first deal end fiscal to expect and about you the We close of by more

turn diagnostics, where let's the Now quarter. $XXX.X X.X% revenue of million fourth to increased in

grew business, X.X%, clearances the the Molecular fiscal productivity Excluding of strong based a of global and team, driver divested XX R&D still our performance. physician Screening sales which growth XXXX sales the and remains based achieves Blood the in teams. very sophistication from on revenue lab here, our diagnostics

million quarters, a XXth a difficult of worldwide prior sales grew very quarter, And, for X.X%. comp. XX year molecular double-digit in the into against healthy In the the very well molecular Internationally, $XXX.X fourth time last although, volumes XX.X%, and drive X.X%. key assay how higher categories, enjoy grew care reflects we customers already patient in our molecular This sales U.S., established still to market with better the markets. shares we in grew in work collaboratively

instruments. based of trichomonas, Sales again testing Molecular install increased Panther largest rate growth broad of gonorrhea, including consolidated high single-digit health Aptima large and at customers chlamydia our base in an assays, the women's automated impressive overall. fully was HPV our quarter, as on

Panther assays. Breast tests defensible in in Panther new Health. products has our also unique quantitative just by a Genius our added many out early Mammography diagnostics, to XD Aptima over growth, leadership contributions as and have vaginosis systems from Fusion load Sales our carved position molecular highly led viral

Over our United the Panther's the than amount cumulative the units, X,XXX XX% install XXX, year same brought of as before. to which States. course about of XXXX, outside grew This total by of more more base global our are the than

to new on volume. about rate fiscal customers we overall grew at R&D these in partner high as pipeline, year and to of global utilization Importantly, with and drive now emerge grow a instruments $XXX,XXX Average has is for testing Panther as revenue continued basis, assays a our from a single-digit XXXX.

of million $XXX X%. fourth quarter, sales and increased outside Cytology United slightly, small Perinatal on, in the Cytology Perinatal Moving States, a increase were all the sales declined. while sales

shares remains compared was Elsewhere higher growth cytology XX.X% screening increase our last at revenue market blood in longer Domestic million, of to the than Diagnostics, cancer due expected in challenged testing our decline. year. cervical and $XX.X business an related divested to intervals. to high market

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

margin quarter. gross our for hurt the here outperformance the So percentage

Now X.X%, accelerating pipeline. let's the where R&D fourth sales revitalized division million in growth the fastest has turn XX consistently re-energized behind profitable of $XXX.X Surgical, our our growth force been quarter, and most quarters. In increased sales a to GYN

business Sean comps. still spend of to this sequentially more outside a difficult we U.S. domestic been time, made leadership Under little President only of has against changes leadership, division our sales years in our talent, incentives seven growing significant revenue scratched We changes who's rapidly same little progress progressively structure Underpinning the been surgical this At highlighting the under States, we've a And team. last the the are small, Doherty, off. we've the six opportunity. the paying quarters increased named ago. Sean's and two of and in while made has growth of United performance, more want in time surgical, the surface these than tremendous have

endometrial respectively. ahead runway significant methods. products, MyoSure and as and From we a and product ablation NovaSure line perspective the grower supporting remains in remain with replace fibroid launch healthy leaders extensions MyoSure categories, more removal and a antiquated

and stable, to is many share market cases, slow our declines. are believe category in we NovaSure, although, back, customers need we we for As winning

Finally, to and new products dilator. Lok Management Omni growth. have Most our Fluent launched Definity just Hysteroscope, begun to we surgical Omni System notably, our contribute cervical seal and new and cervical Fluid our materially

like and Breast to sales products strengthening future So Surgical and and large diverse, a the more to enabling Health, intend more internal acquisitions. in add better new becoming us development through much is leverage both force we

million Now $XX.X about XX.X%. to of let's turn and increased revenue of Medical sales X% consolidated global Aesthetics where represented

period of a As a XXXX. fourth the and in the year million rebates easy refunds in revenue had associated as of $X.X with Vitalia reversal we of comparable we reminder, quarter booked an TempSure prior

hasn't have changed basically a Cynosure that environment this, been sales Excluding flat, would much. reflecting business

do to for Specifically, both as contouring health while struggle woman's products, continue drive in a future our bit in-licensed growth. await skin-related to our internally to new developed, we products well, continue body lasers and

skeletal based DXA revenue our of the on density body discussion briefly, out testing. bone growth round and systems X.X% sales million composition of grew To for $XX

tuck-in the our and quarter installed To pipelines especially Diagnostics, our our wrap out quarter large for in represent execution. States, results fourth are revitalized we Building sixth Breast internationally, in market leading while up, acquisitions, United international integrating looking of R&D new strong brands expanding our effectively and Health churning on more. and consecutive from bases products

turn let over the me call Karleen. Now to

Karleen Oberton

year-over-year today, my remarks be key other through noted, my financial in focus initial statement, In a everyone. few going non-GAAP financial a for our guidance finished with to our results, afternoon, walk otherwise percentage and touch on on on constant currency. will changes good then I'm and Steve, will remarks you, metrics, and basis XXXX. Thank income Unless

$X.XX pleased with guidance described, revenue our results, quarter EPS million $XXX.X are of exceeded Steve we line as our with our As in fourth and finished expectations.

strong balanced was our performance and sales and in domestically growth with each businesses, Our of both internationally.

growth. In and we operating leveraged margins addition, the manage profitable for net as business continue improved to

the product decrease for higher XX quarter. tariffs reviewing to fourth U.S. With start decreased points margins let This compared that and the the our China by year stronger manufacturing mix. XX.X% period. to sales was primarily introduction, slightly costs, prior by me P&L trade due Gross of in dollar, basis

margins and it's straight we did for trend continue However, to expect third quarter worth noting that sequentially this gross in improve the XXXX.

Total and Focal, the operating in increased discipline, quarter. strong reflecting operating just X.X%, expenses G&A. excluding fourth increased million X% of $XXX.X expenses Faxitron in But especially expense

balance sequentially R&D also been and operating line more the fourth our XX.X% quarter basis improved operating the investments growth XX of to discipline, on margin has today. our Based increased since drive leverage, We Operating continue level in to of it never our best with margins productive operating top pipeline than is improvements and strong XXXX. to goal points.

fourth quarter. the net expenses Other in $XX totaled million

a $X.X was also benefited guidance. our our currency this line from from hedges. specifically our loss gains As contemplated expenses Steve not share most in of results, recent of which SSI million, Other explained, included

these a zero reset hedges XXXX, assuming stay reminder, in As to back flat. currency

margins XX the net of points third compared to quarter result XXXX. increased Finally, best prior period, XX.X% our since basis of year the

to tax our which the non-GAAP effective $X.XX, loss lower fourth rate, in non-GAAP this addition better very remained our $XXX healthy. had of earnings million forecast. from to net profitability per All margins, the Overall, offset SSI. of led with income share and quarter slightly net in line In we operating effectively

to we basis, to Aesthetics. non-cash charges, than of GAAP totaling million expected $XX.X a EPS related On impairment due lower $X.XX, posted Medical

of but much in has year our we've impairment. this for process long as normal As at looked charges these business, changed accounting of not lived part reviewing noted, assets end Steve

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

buyback fluctuate on debt improved X.X this at ratio of comfortable quarter. end of could The recognizing times timing the acquisitions around based net the fourth ratio combination our that capital. level, on leverage profit return at of activity. and Our We growth the stood the strong remain and invested

prior ROIC year-end, basis month trailing of XX a of was XX year. XX% the an over on As increase basis, points

quarter, in Finally, million, of the an to adjusted fourth increase X.X%. $XXX.X EBITDA improved

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

let and XXXX. are takes Before to usual, puts as comparing me that, remind I there several in you do, XXXX

at a roughly company $XX about In our results is Blood levels terms in from points on and will recent reported to XXXX, expected business basis exchange decline revenues of headwinds, be significantly overall. divested Screening foreign drag the rates or XX of in on million,

the to acquisition a On side, Imagine positive XXXX. SuperSonic in of the represent will tailwind reported revenue growth

consolidated that of estimates Our be the guidance SSI's timing at into revenues financials beginning $XX the assumes second results wide revenue nine to the range Current $XX include for million Hologic's million operating of months. Street totaling with and will scenarios. quarter a

hopefully, help So modeling. will this guidance with

full slightly the SSI's we quarter, reminder, have our for loss, EPS For we portion the non-GAAP a and of we the will first SSI be assumed as announced when deal. year to diluted said as

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

We will XXXX good year anticipate fiscal for Hologic be a that overall.

growth billion rates constant recent line to currency Specifically, and in compared top $X.X with in the Based revenue it, between we X.X%, to of range exceed we high guidance translates on into organic X% line sales growth end accelerate growth If revenue our to should exchange of X.X% organic and improved reported performance rates, our or this XXXX. anticipate billion. meet X.X% XXXX. $X.XX of

will Said that rate growth X% basically other model growth the how would currency depending as about XXXX. SSI point similar organic each and and out should headwind of Hologic tailwind think XXXX, we our discussed to growth screen an be next previously offset being I We rate, revenue to year. components. But going way, continue rate various constant X.X% in you to another the additional expect forward, believe that important story organic on the I blood deals of that tuck-in in our boost acquisitions part the

part contemplates division, excluding We in terms less Aesthetics. single-digits. the mid global In in Skeletal of similar lower Surgical of growth growth and and Medical Breast in guidance diagnostics, Screening, our forecast rates Blood

should estimates, XXXX, growth high drive with our on across markets to international in a multiple these see sustainable in basis, revenue as opportunities grow businesses. the line single-digits we continue Within currency all in to constant

from continue the million should revenue Fusion million of Molecular lead in to anticipate to XXXX. and more women's Blood the Diagnostics, In lower assays. health behind divested in than charge We of Panther XXXX increased $XX Screening utilization $XX business, much than and XX virology respiratory

driven results, new multiple Focal, we Surgical, products, service Health, growth annually. by MyoSure, three In launched and Aesthetics, SSI NovaSure, Steve recently that the productive Breast over from quarters well International. our Medical the from will we've Affirm growth In StimSure, which TempSure discussed business, In annuity new a Europe. Faxitron new International sales and increasingly from $XXX including expansion continued in stabilization products, large of totaled the of accretive expect and now and be force growth expect and growth million of products we an

terms forecast gross In profitability, to margins XXXX. improve in full we to of year XX.X% the

expect which our sales gross ramp manufacturing We cost of mix, lower new by partially reduction improved adds the absorption offset margin to benefits, These cost, be benefits and gross efforts. the our our dollars due will margins product of margin percentage. international ongoing business, but product expansion better pressures

the the launched revenues. benefits gross on, mixed will higher we of on newly percentage overall from goes margin the that terms year forecast In sequentially as quarter, increase based and products

absorb and we IVDR new an showing costs expenses, leverage the European to to helps and even ultimately related MDR healthy percentage in margin regulations. growth expect continue million incremental we operating operating of that as terms drive In EPS, strong and $X

be in expenses due primarily medical in our hedge and of modeling consistent gains Below again. million be device not, expect other the with to tax, recorded fiscal to current absence $XXX XXXX, net however, will include Street's based the expectations line, roughly suspended rates. guidance Our a recent we excise does that foreign exchange it the currency we on greater the than of re-instatement

of All diminishing this the reported our leads represents and about Blood despite $X.XX divested to EPS and currency forecasted X% XXXX. share earnings from growth, X.X%, between and in This rate from growth double of per contributions between headwind $X.XX business. Screening revenue

as This and up XXXX shares to expect XXXX. it quarterly progresses of in rate assumes We about to year diluted XX.XX%, the of tax a for year. sequentially flat approximately $XXX did ramp EPS as outstanding the full-year million guidance

to expect in also We $XXX mid in million one-time items. continue robust XXXX cash flow generating free range, the excluding

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

$XXX reported of quarter. million X.X% growth growth X.X%. and This X% million to revenues the to to expect We in X% constant currency $XXX reflects of of

years, As the Breast first Health rate of quarter, X.X% reported December We quarter growth X.X% $X.XX seasonally and contributes diluted And on year. to business a Breast lower representing exceptionally performed our holidays. forecast basis. in in quarter to XXXX to reminder, is in earnings the most weaker the of, Health the growth which RSNA to this due a non-GAAP $X.XX first per share

open the saying successful let we as fourth Before year questions, company. for by quarter conclude capped call our up for the me off

to outperformance led Breast businesses, the continued and overall. largest revenue Surgical Molecular Health Our and Diagnostics, improve, driving way

completed. pipeline by the the franchises, have encouraged and we are deals of our commercial the continued our R&D progress productivity in strong We execution, the international

into our and expense We healthy heading controls foundation the and and capital. leverage confident feel EPS to XXXX, have tight continue to we strategically deliver in redeploy revenue growth. exercise Overall,

Please first Then questions to With to related call queue. follow open I we ready operator question. the up. Operator, a your to for will plus ask for one the are the return the questions. limit that,

Operator

JPMorgan. go instructions] from with Please we'll [Operator first Tycho Peterson ahead. hear And

Tycho Peterson

kind highlighted that seems maybe really a product getting Steve, of bit I'll digit towards new on you up end you the the company. of notion below can like guidance. Obviously, call, growth launches backed be start state the it be that. bias with single given guidance. that the a you higher mid haven't would you're the little But of

we a then little think actually could there So incremental the about little of a on to can next launches next you are bit are And year? drag going that for a be year. which be most talk of growth new about things bit product as

Steve MacMillan

this quarter to here about we XX%. make certainly want feel the in terms the look in most start just number where no ourselves. and good too get Tycho, quarter, getting about mistake, had well we've Molecular year the recent XX% far Health Diagnostics And comp of code in or been. into as don't we of to It's kind zip of was if ahead we growth. organic to above year. really against We first you like XX.X% the great a go Breast We're in

confidence the want new don't we to just of Surgical getting in through, the ahead growth stronger. back coming business, quarter-upon-quarter all in don't far that But products So get the building too bouncing underlying ourselves. mistake for and

think economy being So don't gates. feel coming we the else for global us very with But an business. the how uncertain ahead about we I far the good. certainly now, feel this We're out there's guidance mistake ourselves. sense is no just of right too and It's of everything

Tycho Peterson

that. you wondering kind And about And then quantify of perspective? operating from the can margins. leverage, that as the levers on hit of margin XXXX, your follow-up margin Karleen, all, see where if you think just on we gross called question you tariffs I'm the from first curious

Karleen Oberton

margin expect in we as growth. So quantified I And believe we look expect XXXX, recent And middle the we've to as revenue. of first acquisitions the think to P&L, do especially opportunities leverage of contribute the when to improve, the Tycho, we still gross into we at there's the higher the annually integrate operating do margins your we tariffs $XX question, China headwind. that as margins part expect million we around

Operator

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

Bill Quirk

was. potential first the typically And still that what some curious model are capital in at So that U.S. the your picture. thoughts of of I'm exposure it once I present? Steve, just question, in pockets bigger appreciate capital I we're guess kind is hearing much softness, the than less

Steve MacMillan

running having think our the people meltdown, is cautious. be a Moyers] can the the and said few business. [Bill company sustainability feel we know, one as I I as who last better And better that, more little about you major of economic of think through a

First capital. less off, much so we're on dependent

increasingly, business, Breast gantries between diagnostics that. a our businesses, portion all business, Our Health are our the and are and surgical revenue smaller these recurring smaller of

The of is product service those smaller of that business are big, can budgets. upgrades the the and funded kinds things operating hospital from that additional expenses be outlays, out

feel very And I the good growth within what really think businesses. we very, about certainly the going transformed likelihood of that company the like last fact the we've looked continued into the downturn.

Bill Quirk

And a for the Thanks. utilization Can comments as you're the like follow-up, to us it I you recall seem remind then made then diagnostic one and you following were as as XX% utilization average? on something just average gets in good you second about at rather terms are about on go? to where of percentage up on Panther. XX% that then that systems. XX% And we the Is can kind looking system? at high just briefly, how a of

Steve MacMillan

in it, that the XX-ish too Sure. still certainly above number. I U.S. that, would granular to get say Not numbers seeing and outside percent U.S., we're Bill. probably below with the

know, more Panther, about putting of Panthers. feel Panthers XXX-ish I ahead each what year. and of of the And more have And we year, thinking each think another you onto continued us. the menu good placing really about So of domestically still way more a the we this last as both placing keep and runway we and lot part keep we're is internationally. more then is, And

So amount Panther. place enormous additional there's still to without to long an having a way of us go

of already issue has Panthers, as and that in the the our the made. of of lot a and more of been even it expansion will internationally been will ahead. part be margin the we've placing So margin years story part been gross capital That's recoup then

Karleen Oberton

approvals, will look Just Panther. approved certain key additional that, mentioned. we that the markets. and or two one that the international peruse And drive as have to that we regulatory increased on We margin at only add expansion to Steve assays utilization

Operator

Jack our take Meehan you. with Thank We'll from next Barclays. question

Jack Meehan

molecular. U.S., to runway were XX XX% of business. international math pretty international last around about curious -- was wanted XX% like Obviously, you sorry, over was focus placements the I last overall just placements on It for a lot X,XXX just seems was was was the based thought I last just I'm strong the U.S. in Diagnostics X,XXX like the international, on in in year. year just the year. that what

So what's the runway And that are broadly, for Panther? kind in any for and labs impact just seeing of more might U.S.? you how of amongst runway the maybe consolidation signs placements

Steve MacMillan

expect probably Jack, Xth-ish the second little some see. I think I think your earlier largest I internationally. to we we're customers. the particularly highest our still point, to level in lab in States, inning that United To continue that's so opportunities, But a significant consolidation, with think, an inevitable

about deep United the that very great players we've relationships, feel obviously, where relationships States. with the think I largest cultivated the part in we

benefit the forth. to you categories, very they We are help continue will drive know, work to them volumes. consolidators, going volume And certainly both a as standpoint really from closely with we

Mike Watts

one to thing that market. If just add Jack, I U.S. about the this is can Mike.

Panthers U.S. we have, I have assays. said, placed the think XX, lot XX Panther more Steve As tests different of in than use about a domestically we our approved But half customers and of on two only

menu layer those approved additional on it already gets there's as more to So approved. lots systems it's room board and

Jack Meehan

be going health think grew high overall. sexual And digits follow-up question caught to that is, single I was I my

those what what year Fusion know and terms for for balance continuing the you if mark-to-market looking in give us the was wondering some total I assumes how the just versus virology So slits, within just forecast at molecular you could of the XXXX to expand? the what

Steve MacMillan

double, most base in that's than being We it base Fusion think I aren't off talked probably mean lot that going start, much $XX I far. Jack. but close in good recent that is of the of is but a quite ago ramping that about to a I there, virology to to year think kind I smaller don't go the that. a XXXX. off quite range. we of million Yes, mean, detail

Operator

Thank you.

Maa will We of with now from Bank hear America. Ivy

Ivy Maa

more I OUS you OUS impact to question guess a off. You're start about trend? more broad margin. have base, Can talk which just extend some on investing the to might in the about talking the

to largest was wanted you. there untapped out still there, there? out what still Thank what So opportunities see or the opportunity the

Steve MacMillan

all think all look as for of we it, in major Ivy, we Sure, the our opportunities geographies. at tremendous see I franchises of

we've we the Germany, there. Europe Health over the think most really a think gone of in business, footprint down and Spain, Europe. of rest put last have use a in in Breast Portugal, UK in dealers I we where Switzerland, we in really years of really now we've I more the built -- But Western few Austria, competency still direct the

opportunities Our surgical and fundamental a Diagnostics business, including as as time out to started. that in seeing businesses. And there. getting really Breast We're diagnostics well. Breast particularly few just take in the nice progress Health similar a direct in starting Europe Surgical, really business only fairly The just more had Shifting those gone countries really we've over in Pac, underdevelopment, Asia business, to Cytology, and and candidly, we're it's more build we're story. that Japan, is longer big But certainly I very dynamics, build in certainly the over diagnostics the and out well. space will given Health think across biggest

see competencies way going growing think you're I year each to inflection to the rate consistently So about not we're it's overall an be the at creative building a it and is, to an point, company. few we going but something more think

Karleen Oberton

as The opportunity key the just we so to Health clearly to drive U.S., key our add comments analog I And countries internationally on XD still to are some as the long expanding to XD, I products. from is just menu business not converting made compared the assay would is well in for XD, going early. Breast runway growth. continued

Ivy Maa

to for that. about just takes provide you you sectors? Thanks. for you the margin and can And follow of of up on myriad puts constitution there're any sort the in lot next if of Can Karleen, year. margins, those talked trends

Karleen Oberton

of than and So lot results, takes expected. gross I margins. was puts I think referring to a more maybe in we you're think takes the There

thinking basis a on that. talked basis the goes that to we're little operating build we margin gross bit I probably about range And from points. in about, that think believe look XXX margin perspective points an we as of of As XXXX, expansion to from will as about a I XX year

Operator

Cowen. from We'll you. with Schenkel now Thank Doug hear

Chris Lin

This Doug. is for for taking Chris Thanks questions. my on

start want Just on Europe. with another question to

backdrop macro if businesses? you mixed the especially Given have in capital any Europe, oriented the for curious more order seen softness,

Steve MacMillan

I else always We are think in are the between and between us continue we've nervous there, our for not but like at any seeing there. Europe preparing. moment. a we Brexit, have feel getting going I'm everything softness on teams to And just and been planning, stronger you little stronger

the we So so in by And tell far come feel excited last team our about just in our really, you how outlook. are I They can't good years. Europe. few have

Chris Lin

maybe a I tracking then the And in question U.S. to Health, think placements on you've been Breast XXX XXX

in to the XXXX maybe model it in the down gantry like U.S. for right think placements way was above Sounds just us Maybe about QX. help

Steve MacMillan

truly articulated breaking much in and to our into said was that team years years on I we've and U.S. think, been pretty back doing. we intent Pete I gotten cycle, what breaking cycle our done or ago, the four it it go to when the we steady saw of And think range. of we job we attempt breakthrough ago a Valenti And were that is replacement and so that see cadence we has cycle. we more much and coming had has

well out which the works set it's the range, us available. positive far of think I then our install MQSA more competitive think it so ahead I gaining data see for everybody upgrading can I the in runway base gives that's still think able a kind that's of think from ahead, gives about But clearly We're still So just is I to into because mining that years it. go back of plus think here, get us us years rough that settling from way additional being -- the revenue than to further. and pretty

Operator

move Evercore to next now on Vijay question We'll you. from Kumar ISI. with Thank

Unidentified Analyst

This is for on the [Luke] Doc.

had ahead guys just about you about side? and in a there. a And overall any bit on you Just the XXXX. pull as there great CapEx in Health, Do uncertainty thinking and the macro the just place so see on the quick Breast forwards guys it quarter coming talked

Steve MacMillan

Luke. not, have We

year I this a quarter kind Health at last Breast to when about in was that think but that really time. fiscal we much seen point first in of our wondered of little effect haven't strong, bit really

Unidentified Analyst

And then I in guess Cynosure, flat to to returning the next 'XX. one, the Aesthetics business, ex items growth the

How is 'XX quarters, to something in about we should in think that QX? going expecting that's be guys of should And are build that that or outlook the stable? to that over the pretty So for you accelerate. there kind

Steve MacMillan

there. the Keep expectations down

over the hopefully quarter, product our I as calendar first the of the to fiscal up. shaping hit think into go some coming is got that because We've new probably pipeline hit should start won't frankly but year we in build quite things the year. it'll way

that feel through better I So build on year. we think business certainly the about the

Operator

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

Mason Austen

is thanks today, question. on taking This for David Mason for my

'XX. And of stabilization to Does grow fiscal any NovaSure provide? the next environment that on this referenced you updates year? You expecting in mean can competitive business you're

Steve MacMillan

that We're declaring that next see necessarily feel the of We growing trajectory NovaSure year. business. great surgical do not the business, that we about itself

Mason Austen

this you. should the guidance a like. we share any X But year. of we past M&A amount your And uptick about Does count mean looks million think to it million doesn't how couple balancing? significant shares or deployment in about repurchased years, buybacks, this Thank over you've of year, an signal capital X activity should incorporate

Karleen Oberton

really So between repurchase. strategy M&A and tuck-in I think anything's changed don't deployment capital share

repurchase think I minimal to from dilution. manage guidance just perspective, a a assumed share we

play it's the early today here flow where deal will sit and out. just we As

Operator

hear We'll you. Jefferies. now Denhoy from Thank Raj with

Anthony Petrone

Raj. Anthony is This for

on a Breast Just quick couple one Health. guidance on then and

follow image what's guidance just just Just at for Health? SSI. baked in on guidance, up SuperSonic line and wondering I'm there the XXXX on Thanks. Brest

Karleen Oberton

Sure, is Anthony, Karleen. this

we've what don't own of We're that So offer we XXX% process. as today. a know, said tender is you

three to revenue a that to we of range $XX QX So guidance in will million is QX for have quarters what our the from SSI assumes $XX million.

We revenue portion their of no also QX, assume well or in that for QX but expenses. as we'll our loss have

Anthony Petrone

Breast on just And Health.

an screening. is there breast dense if on wondering update FDA around the proposal Just

rule? screening think for think XXXX And you for Breast Health the patients? Just final within final that what when be Thanks imaging should really would do do the again. more dense you for rule for means robust and call imaging breast timing

Steve MacMillan

Sure Anthony. exactly those I'm my FDA. predicting owed on lifetime for kind probably of of things out

our we I business that feel us is is breasts have is all FDA think comes that. indication, what a exactly about where see when great ones not, Whether through, see don't a XD from uptick in we XXXX time the people the material that control, as guideline that or of with other new what than that of business the comes helping reinforcement further do through are business, the dense going. we're it having in when necessarily only we the is we as it which

Mike Watts

reminder, a time, that's at for what going the so to level state quite some seeing as And Anthony, states contributes been a bunch as in of that on we're well.

Steve MacMillan

a It's us. net clearly positive for

Operator

Thank you.

will question Brian with Weinstein our next take from We William Blair

Andrew Brackmann

second on… but on over that to Brian. for Steve, the wanted the is Andrew Brian on he's of celebrating in be just Bears This half Maybe the game. win call, Brackmann actually Eagles out

Steve MacMillan

Bears be to that going tryouts the they're open the at actually was Brian having. at thought I

Andrew Brackmann

a good. leg's I they need heard not His too kicker.

Steve MacMillan

kickers. every program… other regular All then can Back math right. Well, scheduled he to our

Andrew Brackmann

mentioned that Breast sort think year the can sort intelligence rolling detail provide and might next can you to Steve, of through you provide of XXXX. artificial On on over exactly. you then sort impact company several what Yes, it product Health, additional of the years? the out this have the lever Any

Steve MacMillan

Sure.

and start anything I But be the will were less to install meaningful by of much more think help we additional to time, sell, it going be just around where the establish largest HD, it's or we're monetize leaders acceleration think business. our starting of we I'd paddle the sales. gantries being in to that. Clarity SmartCurve our more the terms base into that in the moat products into our over like like business able leverage to a of software base to

then million be meaningfully in So XXXX and start they contribute that I start to growth, products are to of to and ex AI don't on add break in in but more think out you'll beyond. going dribble XXXX to later able here will

Andrew Brackmann

question the when And issue, on be I Brevera behind might Thanks. when it. then missed any have you But just that guys? that update clean-up on may a

Steve MacMillan

think year. I likely later be it'll this

quarter. on we market the new Our with fourth be our fiscal will capital, expectation is back probably in

we be so. give there our So so, Brian should best.

Operator

UBS. now [Operator hear instructions] We'll from Brennan Dan with

Dan Brennan

a molecular. first, ask on Steve, to wanted question just I

that can digit And in So market? sustainable? for consumable high single the Is what's competitive on in you growth? dynamics of comment kind baked XXXX the

Steve MacMillan

quarters really global next I then mid Certainly, year, and growth singles. think digit the for upwards probably comps, about think in high it going some be think going the to to towards the pushing about molecular first we singles against as double against especially we're smart rate is three year this tough gaining numbers.

will I it growth space. think very still So that in be strong

should certainly good continue innovate. the that be rolling more assays, are And business we and we for more that think we feel good. environment, to competitive out I as pretty

So low digits. we've the guided our least mid in Karleen overall at single diagnostics businesses, said, probably as

will that. above Molecular leading So be clearly

Dan Brennan

up M&A, working tuck-in follow been to just sounds strategy come. well. there It to on will maybe the then And like has more be

how do of, going appetite should just maybe kind you've expect So Thanks. now on us should you color of of the size about of maybe bunch these? can the kind we anything think to a successfully level the bigger, give that forward deals executed of some we that

Steve MacMillan

under glad we've because been Sure you XXXXs really from been been a, built the And see lead shifted to frankly the and over what's just Dan. had But able what capabilities. up starting business most the tuck-in Actually to be really last for we've to we're we'll Cynosure what's do the divisional really that, corporate of asked few strategy appreciated deal. development led probably is, a what years, I there. think even really up,

exceed, us of annual deals. our amount flow expect In to terms of would example, in of rough for magnitude, not cash terms

$XXX-ish or certainly in be definitely we're blow a think that million to bigger could tuck-in but anything. I that So, will There mode. nothing probably few deals the to-date, that's than we've going done the be mind

up year. formal each buybacks we've some being while being board our within like we not management on cash it's to businesses, and opposed opportunities a as use really year we within able to do something needing do and core acquisitions and discussed both or have stock by. And as now the something to our And really think that natural policy, take some there's a more. we're flow lever quite we've seen more excited each think things I bit that able of frankly team to a I

you. thank So

Mike Watts

that's and about that all about we the that think I time Cody, have.

we talk and everybody your for thanks you today, the to time call soon. will on So all

Operator

That you. good call. a conference concludes Have Thank fiscal XXXX evening. Hologic's quarter fourth

Hologic (HOLX) 6 Nov 192019 Q4 Earnings call transcript