HOLX - Earnings call transcript Q1 2022

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Operator

Good afternoon and welcome to the Hologic's First Quarter 2022 Earnings Conference Call. My name is Ron and I am your operator for today's call. Today’s conference is being recorded. All lines have been placed on mute. I would now like to introduce Ryan Simon, Vice President, Investor Relations to begin the call.

Ryan Simon

Ron. you, Thank thank XXXX and joining first Hologic's Good call. you fiscal earnings quarter afternoon for With Steve our today Executive me are Officer; and Chairman, and Chief President Karleen Oberton, Chief Officer. MacMillan, Financial the company's

quarter of website section first the corporate an our press now along available Our on is Investors updated with presentation. release

them. available post of this replay our will our through also a X. remarks to website will And be shortly We prepared after March we deliver call

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

of we less revenue define organic Blood businesses as revenue, one from owned for these than which by Screening acquired year. currency the divested Hologic excluding is constant non-GAAP One and business revenue measures

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

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

Stephen MacMillan

Ryan, you, everyone. good and Thank afternoon,

financial the are quarter first for results of Once discuss We strong. results are again, XXXX. our our to pleased fiscal

delivering and growth, than to organic health off X% start We are each COVID diagnostics, all a great more revenue. excluding skeletal with in and surgical divisions breast global

significantly by XX% the on share of earnings guidance the top-line, were $X.XX was revenue exceeded billion XX% the For non-GAAP and bottom. our per $X.XX. high-end numbers the and on Both quarter,

three quarters. several themes. communicating major the the Over been And most conference, at we've JPMorgan recently last

base before. our growth than more stronger, diverse with is drivers business First, ever

In first we upside. out count supply continue are to two business meet us third, uncertainties because pandemic results COVID first the strong to look pandemic, playing the evolve outlook utilization. financial deliver care chain challenges from as to generate regardless generate to improved to various of and And words, today's testing our health the our well results needs positioned themes we how Second, and as in the help on points, the remains, certainly of uncertain world's at quarter for you fiscal dramatically environment. are other These can year. we

making COVID. Our base businesses are are against well. performing a difference we And massive

strength from our result, health we along testing, and have supply our earnings with diagnostics challenges compensate that and revenue business. surgical to for businesses COVID-XX we guidance As in chain are temporary emerged breast expect in a raising our than upside significantly as more

are fundamentally we different a at As shared JPMorgan, eight company ago. years we than

revenue each margin more ever Now recurring more has higher geography and before, than world. each the diverse division in around Hologic across

Our strategic during been and has accelerated strong by performance success result of is financial pandemic. plan execution the against our our

As may of evidenced well term the we positioned pandemic regardless long results, sustainable growth, are our the for turn. by QX direction

us sustained today expand this growth focus predict what the of much on we emerging in do maintain More path While It COVID, to to what company. like that on will know from we is our Hologic division. we stronger can't specifically, future long-term. confidence a each over we we'd know in ability gives pandemic clear the

first over pandemic, installed drive to fusion, than XXXX larger growth division, Panther of Panther automated will XX of XX% our throughput huge the the of Panther more base industry leading with clearly placed expect strong. We we our Of systems, Panther this the stage into indicates of units still systems demand robust Panthers this that pandemic, Panther half internationally. to well for diagnostics base the our At note, Panthers is globally. in in testing. assays and our strong pace future. than in strong along the menu customers alone, is placed over Utilization prior quarter use also with pandemic. our high the know installed well to across Today, First, double prior for non-COVID our systems almost our these is XXX these

We are significantly footprint. XX menu customers signs seeing on that our clear are our assays Panther of leveraging expanded

the of utilization. growing First sales diagnostic and growth reflect this foremost, molecular

as M&A core franchise molecular grew diagnostics activity. revenues, well For worldwide, discontinuations, QX, recent COVID XX% excluding our product as

following. emphatic know the be on a these post people's some based answer is, question we Panthers yes, an minds will Now, The is on used pandemic?

First, the other already to testing our molecular least growth nearly the simplicity of molecular are minimizes over In the which diagnostics our realize broadening incredible and in of Panther, dramatically for and portfolio invested we diagnostic the a customers bonafide assays being fundamental And speaks strategy. and enormous second, are system. haul, adopt U.S. Extending of who our automation of COVID XX% of running the one is at who long will world, advantage element and workflow Panther customers labor of customers more labor restricted expect adoption assays the our time. our activity of costs. assay. This players a

relationship women's with teams Our fueling with model new razor, health business and strategic legacy tests razor both a assays. sales and strengthening tremendous done customers, job have blade accounts, winning our our

to of in leadership off revenue first panel quarter XXXX. is our women's first with of X.Xx the leveraging the roughly health, example, quarter, our great start a million vaginitis in an As $XX

responded testing customers and financial than once major We and We generated our pandemic. million sticking success and $XXX sales, around And posted needs to are significant our we believe COVID the outlook aside. than molecular launch would testing be panel successful extremely to Clearly in accurate highly upside. as fighting continues is play this over like. in consensus. million assay COVID a $XXX will role more most longer the clearly, diagnostic anyone proud COVID also just COVID ever our QX, of again In

foreseeable remain prepared contribute to our for testing continue to believe the And demand we ongoing meet will We COVID business globally. future. materially to

Second, installed screening transformed surgery from the As In and breast our to more base of of business. high attachment division the to We this a at AI. making treatment with the know franchise once revenue. diverse, company base our market through continue And shifting and maintained has strong broadening breast our this continuum Mammography than across software line XX%, systems. share, capital a from our skeletal with remain growth breast gantry margin high business recurring to health service quarter, higher X.X% service and grow wide. contributors installed we our first The diagnosis to continued care Genius one of to and continues top health that more rate largest XD business we've dependent base of and grew on health upgrade

capital continue to and mammography meaningful business breast So be and going a forward. of is foundational will part business our

points interventional to same compared reference, the nature, the roughly the products with a adjacent Brevera the These breast recurring higher to used of more Sales is needles, in including revenue. handheld is projected sales gantry include health surgery today, that built solid XX% in business of we of growth growth recurring biopsy are the system, XXXX, division. XX% and our those interventional gantry revenue legacy of and capital size devices. as business in portfolio addition, grown In breast driving only have interventional compared to As products markers, more

chips the interventional further emerged us The our recently, our expect business diversity shortages growth of help chain supply division business going mammography and in breast specifically transform challenges skeletal breast and other its systems. We that continue of increasing computer our imaging and forward. to will offset have

significantly for balance Karleen on meaningful molecular in Our updated guidance COVID, guidance of we surgical. will the our this, incorporates and headwind outperformance core year. revenue and temporary a Despite are EPS fiscal our revenue but raising discuss, based as

continue the solidify we Now, X.X% the first business shifting Despite diversification will we headwinds, division NovaSure growth. of surgical, our know leading the and pandemic quarter, MyoSure. and for grew the gears drive market to that positions to In

ever. the With Acessa surgical to Acessa the a integration the than of start. late our QX and different growth acquisition engines a nearly revenue November, of three a with the profile great in year Bolder has the today, and business addition is very was times Bolder ago more in of close procedure off

Bolder seeing lot of a surgical recent developed version team. already five, is the sales launch NovaSure are The we in good sales Hologic traction. also It's this seeing around seeing through we the As excitement early in-house of are field but days, product.

to position Fluid in-house We the to innovation, hysteroscopic will this great are be our we space complexities come. is procedures. also the of international another maintaining of growth developed in example future that for consistent contributor a Fourth driving is of years business our finally, Fluent streamline with committed to in organic fluid Further, leadership know used and Management products. best-in-class System, management Fluent growth.

we of And than we We health, M&A, growth, are on the and feet growth, more direct engaged are with the years. business breast QX, firmly ever regions in international in strong excluding In XX% to the Through organic COVID. achieved longer organic street no prior before, expect our customers. business continue. with growth export especially nearly and

leaders place in have the we With today.

much we groundbreaking we've more the opportunity business Women's midst our more through a an molecular opportunity diversification and and perspective, and to to earned These million add for balance improved COVID, States, the will many women the market world only flows a world leadership them are the in with and and the leaders much Health we our women Through is is demonstrate conditions. in results around COVID To testing. different XXX the sheet fight are have over quarter of Hologic conjunction with summary, yield before. our changemakers In in We generating around come. stronger world. results especially the valuable exceptional Health we've of from progress years outlook strong and Women's like initiatives, Hologic market Global Index, the are as laid largest against stronger the our there uncertain additional foundation in that connecting United than world. first confident leaders which pristine in and are are Clearly, impact with the billion X.X the today. made cash ever factors to about we've elevate lives Stronger in

external As strong conditions our our manage regardless uncertainties of we that for are through this evolve. to is whether confident clear What are growth of our we've Hologic growth, to ability strong how deliver poised to we duration us in the to results. continue is one the and exceptional have call at With more continue done business pandemic, continue various confidence continues, that, into over generate COVID to us wanes navigate with all across our fundamentally drivers and This gives or that and to clear turn more financial change Karleen. me growth geographies. business revenue changed can we let we recurring the

Karleen Oberton

you, afternoon, and Thank Steve, good everyone.

quarter first our guidance and are that share to bottom-line. results We significantly pleased the are top-line very on both exceeded

quarter X% highlights that improving revenues. business COVID-XX an first Our based grew organically excluding

our quarter, strength wave $X.XX our Total Steve with our X% of with quarter than revenues our in is far and showcased more business in grew quarter for surging COVID range the is surpassed base diversified significantly the was strength in to Omicron. ended to business that to our target exceeding quarter, cases business As mentioned, important $X.XX broadly due guidance first long-term of $X.XX. guidance. billion EPS and initial Delta started our that Each COVID model revenue franchises previous of also of in It X.XX ahead to every the of off. of growth X%. X% excluding note a the paying occurred

We also advantage We priorities market and believe I'll continued uncertainty, funding share generate is balance our of cash repurchases. times sheet deployment shortly. our healthy in which significant to tuck in of M&A touch on free flow, a capital

divisional XX.X% the of to revenue I me some our let million on our prior the declined provide $XXX.X on COVID-XX performance, that, where In do exclude of diagnostics, Like year. I impact revenue applicable. detail clarity Before results. will global compared

I quarter. of excluding first ancillary assay small non-COVID as increased the over items business, related exclude doing our XX%. of By revenue revenue assay. XX% by global above the portfolio levels. underlying in worldwide sales level again chlamydia, molecular will molecular about COVID largest grew our However, run To benefits. performance growth just pre-pandemic discontinued our COVID-XX diagnostics understand organically strong was products, a The non-COVID execution gonorrhea across was base this in better

than Our continued internationally, $XXX Our annual strong panel COVID, before to is last year's than well more rate. of excluding run newer instrumentation, see And Panther molecular our for we contributed vaginitis pandemic. our business larger demand the perspective, ahead million now

Rounding COVID quarter, assay act our we XX% tests As it United cytology This a growth $XXX of that high breast and the generated States million although represented to compared conservatively, XX about the COVID COVID-XX our total of our global the X% to million above continue X%. $XXX.X perinatal results, out world. was interventional demand to million grew revenue The relates our nice we levels. forecast meet aggressively but year, the In In around assay revenue behind also result was about customers. demand of and revenue, XXXX grew by than scenes driven for prior shipped health, customers. business. to diagnostics, to more was

which up period, Steve headwinds. the underscoring of was also face imaging COVID mid-single digits in As the XX% highlighted and quarter. nearly in service resilience the Breast in increased

from from of the performance Our and momentum revenue continues our system diversify quarter was Acessa. and products to strategy X%. rebound as by In of well nice first BX million to as recurring such off. new driven a surgical, next revenue generation launch solid increase This as NovaSure pay XXX.X in grew Fluent

business impacted pullbacks procedures, quarter. While impact by in minimal elective was in was surgical our the the

to to in issues, monitoring Omicron QX. stay related expect to headwind which do continued in We staffing close the customers our be a we surge

business $XX.X year prior the our skeletal XX% compared period. had to revenue million Lastly, increased of

by let's but P&L XXX.X volumes in QX. margin Gross of increased we're driven the rest compared expenses quarter. move for first of higher Total million Now down of beat period. our the XX.X% test the to operating sequentially quarter, COVID-XX the first significantly in than X% the XX% to expected on forecast,

COVID-XX. incremental in quarter. a our within the given in and we made million pulling We approximately future from operating continue inclusion benefit spending the to additional of R&D recent $XX reinvest for And growth expenses, spend initiatives accounted Further for forward of the charitable and with acquisitions donations marketing, also QX.

in a at net and tax per Non-GAAP of was rate these XX.X% at XX.X%. above income our margin very million Finally, margin finished is nearly well $X.XX, Putting above share XX.X% came our guidance. end operating as top the and was pieces non-GAAP in QX expected. forecast prior net earnings XX% XXX.X strong non-GAAP our together

in a These flow cash was flows give $XXX million on continue very the XXX% Moving first non-GAAP financial net us from than and of more income. which robust tremendous to was strategic operations strong cash result, quarter, flexibility.

million. quarter we $XXX our acquisition For for million X.X for example, shares the in repurchased of the and million of closed stock Bolder Surgical $XXX

strong X.Xx. within Based adjacency. end cash to M&A channels, strategically of that had our sales at balance the operational And X.X leverage our or we performance, evaluate well on our billion continued existing of quarter. We sheet ratio narrow fits on our was the the first

it our rates. ever Our led capital cash excess on division growth as as as as intend structure and share is that strong top well been. we bottom-line our deploy repurchases improved acquisitions, And has to

our we take market example, second have to shares For plan our quarter buying within fiscal under advantages been XXbX-X of volatility.

compared trailing basis XX-month the increase points ROIC XX.X% to XXX Finally, year. was a on basis, prior of an

I few key want year quarter XXXX, fiscal Before for second mention full to points. we the discuss increased guidance our and a

either be the meet it market pandemic we To may need remains will we customers our COVID uncertain, We base pandemic additional expect future should macro in outbreaks, revenue. strong believe against generate positioned highly hedged Or businesses. turn. performance there and nicely well believe way volatility. the are and subside, we are we Although testing we our

Due in of of to to timelines shortage chips, delivery relates will chain As breast division. expect that become available a we temporary it our for the health in have weeks. more challenges mammography specific headwinds, lengthen recent these capital supply lack supply

one the continuity and year business This outlook out as units up million which in This the purely we in of for times we are significantly inventory lead underlying are estimating $XX maintain headwind to our our extend for Despite service increasing diversified revenue effects, shortage, While second fiscal mitigate our a gantries includes $XXX is not supply model. these full beginning be supply we preserve million already revenue the field. demand will conservatism around of quarter, remain and of to underscoring issue to pushed proactively strong. hope evolution new are XXXX. headwind of of to we

contributions surgical businesses our and offset headwinds. along with expect more diagnostics than We mammography COVID to

guidance. Now, fiscal of our with range billion on of financial specific let results in strong billion. again, second expect the total move the very In to X.X me to X.XX we quarter revenue XXXX,

lower revenue QX. a usually As is reminder, seasonally our than QX

For million midpoint. of at all fiscal billion we total in XXXX, revenue of $XXX to prior expect significantly guidance by the X.XX X.X billion, range year our full the exceeding

growth into $XX dollar the the with million be to full second strength diagnostics the $XX panel, and recent instruments assays we of are continues our approximately globally. installed quarter a larger foreign base constant of the Vaginitis currency engine Given in Further, seeing for like headwinds year. Panther are as assuming encouraging of based expansion modeling, the core exchange our tremendous molecular In and of million U.S. on well new aid as international XXXX and our in we over assays. STI of uptake XXXX opportunities rebound

fiscal cytology for In franchise high As our our of digits. and perinatal well. base health, single expect breast we continued a organic inorganic investments grow XXXX, inclusive result to diagnostics perform to and

For Further, teens great example, represents growing a the QX. approximately in in to the of start in total recurring XX% high service off sales Brevera quarter. for revenue XXXX, is

NovaSure MyoSure performance. drive continue in we with from growth, to expect Finally, surgical to help better

we addition, for our new an to Bolder of to long-term expect Like the to above we surgical fiscal In franchise. momentum expect growing fast diagnostics, and guidance organic recent add products already grow and acquisitions XXXX. Acessa base

COVID done aggressively. least for XXXX. $X expect With the expected $XX and COVID of sales quarter really at we million revenue the Therefore, full $XXX year. the conservatively no will forecasting are rest the the million mind, $XXX that in year. be discontinued second demand quarter the are items, from And at act assay we the one of quarters, the that for full past and progress as several have million is billion in certainty of terms only sales, knows and will how in for be In to year. we COVID-related approximately products diagnostics, to for least including assay second

reminder, divested backs the business. annualize until organic a out of well from the full from our revenue as quarter revenue our As screening after first guidance blood acquisitions as deals

million revenue screening million and $X it On COVID We we diagnostics. at to organic $XX expect year. underlying backing million the To the for amount X% our health, mentioned assay supply out of the product In of $XXX rest related Hologic QX, are year. discontinued items $XX out roughly high-end expect appreciate to of to sales, of for this back and excluding business, grow to the guidance. revenue at least of headwinds to ancillary $X of inorganic small measure in and the revenues full and revenue our breast a million long-term growth total, X% previously blood million we the is important in chain of

year down be to than our quarter. Moving percentages margin in our gross high are higher guidance we last the XXs mid estimates for the percentage margin in to the mid the and forecast operating our full P&L, Both XXs.

demand percentages first throughout to year, in the both conservative that most COVID with expect our the will We consistent planning half. decline occur sequentially

additional the gross should be chain full and for costs In operating this, levels. inflationary well have logistics. to Despite and addition, we year, plastics both guidance above our into as pre-pandemic margin it relates supply electronics, incorporated

be the spending XXXX, we up compared expect to of expenses, back to but half In the sequentially terms in year. declined of operating

will for less operating opportunity the we As with future testing other growth. the higher continued net be quarters $XX a than COVID Below expenses year. for the to a million quarter to more of highlight revenue, invest remainder in to little income, expect we take we've

year, tax of the above Our full to quarter for guidance shares of XX.X% second All nets and prior consensus outstanding an full is effective EPS on the XX% year. $X.XX $X.XX current to around at based well this to for and $X.XX diluted estimates guidance in expected above of rate the $X.XX midpoint. the our million XXX out

related you macro high. supply remind incorporate encourage your upsides of update We the chain you is due which downsides. the at that to middle would let me to and both uncertainty challenge forecast, potential you pandemic As our still model and ranges, therefore

up first expectations Let saying by that posted wrap me exceeded very and quarter results Hologic guidance. far strong that

acquisitions We franchises drivers have are face for we a capturing your the questions. business ago, flexibility the various guidance will years financial from of organic are we ask the two added stronger we COVID our uncertainties. demand year, question. also much upside capital for our return a With the Operator, plus prosper to are questions Please growth for the and first testing. positioned the to multiple than queue. additional financial and significantly the raising each deployment, in With for highlighting our follow in multiple to well to up, one of that, open the to limit I ready company for call operator then to investments, related

Operator

[Operator with you. of We'll the first Leonard Instructions] the question Dan line Thank Wells from take Fargo.

Dan Leonard

color on the question as first bit offer deployment. deployment the on sheet? more builds My front a elaborate Could plan to you be on you aggressive capital capital how balance or cash on

Karleen Oberton

Yes.

having want tuck think as tuck what obviously free disciplined is, that talked priority. cash fully share annual I and be flow will flow the we continue M&A said we managing between it repurchase. M&A But in that, to to cash would in relates free that Dan, be about our to deploy our we've

deal. some and let right build the might for we again, So looking on disciplined the while cash balance sheet

Dan Leonard

up, an testing views follow then, unrelated And your on at endemic COVID evolved have all? needs

Stephen Macmillan

the be going answer. better. stronger is better It's there COVID what's be And and amount ongoing will we we ongoing going feel it going people will most an mutation not for about health there have of And governments at around frankly, poised. most world of to I thing. think now. you And the having out while ever. a molecular years many, population years. there's believe part to ago, the I If That's two truly well And and day, Right? last antigen it be many even on than for capture true of we're none testing on the think go this business mutates. believe we'd virus, be We that end of the us realized endemic. back Omicron feel the we would probably molecular have feel of testing imagined testing our And is I think and and

Operator

take with We'll of the Vijay the next from Kumar question Evercore ISI. line

Vijay Kumar

reduction one up, health Just the the what, on I is feel What the segment supply things I is in we parts right, brought like on hearing of had other you what's chain and ago, that Steve. better. which three months months. segment companies. of this the business or breast supply weren't been do the coming curious the bad from we've guess three in guidance changed like I as chain because guidance impact, other been last this the feel this impacting? base when the now I'm base And things are because

supply out? talk from push of about was gross that performance? just the by base chain much impact you could better if of XXX if How maybe So offset million revenue was

Stephen MacMillan

both Yes. Certainly, we've some surgical strengthening. with and as businesses, it of diagnostics-based highlighted is,

we've forecasted, out to Just as want conservatively, COVID, that put there. we

primarily way have not will out. work business. service. its our breast exactly for obviously and supply in all we've chip issues chips the totally deliveries, the we're gantry issues, that gotten have for maintained some health in chain don't that's around and better. times, We're the at And lengthening to anybody looked lead fully not got You And semiconductor sure when it's

great, lengthen when taking probably conservative being next right businesses annoyance of existing now, And and are rest this, can make we're what of it's year frankly, care it'll call our And I the we firing. and, we'll the look better. customers. So, absorb

Karleen Oberton

service that that's thing to allocating most build base installed got we've keep what we shortfall. Inventory screening. inventory that can But running get is think just that because that have actively here we're back XX the on Yes. I million to that, and women is up important to Vijay we would is, revenue of so I have QX to in to that, cover point Steve's

Vijay Kumar

an of talk that base? from of using maybe high are think can prior million Understood. you CTGC Are follow-up, had additional about kind they pandemic post M&A, guidance kind revenue And assays the change higher one expect and What think XX% pull then contribution customers, Panther I I Maybe through something are did they given volume? assay. about XXX Steve, Karlene these install we mentioned in the of U.S. a using? what

Karleen Oberton

Yes, yes.

I the STI in XXXX, about pulling out inorganic talked So that assays, piece are question million. And XXX we're I acquisitions on think, the revenue from I there to roughly biggest think you total another is certainly, we the the And on million. went think then $XXX assays our asset.

So would primarily would say customers, that a be lot that running. of I what they're

Operator

Nephron from the take line with now of we'll And Meehan Jack the next Research. question

Jack Meehan

could become most outside to big Wanted you for continue on it right, your pretty your business Steve, is a it's statement to launch If serves million pretty I'm over successful vaginitis sure you. say, maybe that path. think $XXX memory of gonorrhea the comment me, around COVID? panel feel chlamydia, like

what looks about you just like the adoption think talk maybe So seeing, like, for revenue? the you're ramp

Stephen MacMillan

Yes.

gonorrhea feeling long pretty I quarter, it's I the I multiply got to the going get just range. think we good million very that about if that you year. this to million you've in to into think taken did this ramp, XX up and I minimum bare by what four chlamydia, think XXX we expect that do figure first But into multi of, time over we a think we're really, that be clearly, is years. us But feel

its quarters. XXX to if now to through forward continue way XXX. the a now, I probably we goes they'll north think So build fast of And few certainly years from

Karleen Oberton

for that to years think talk to out. the XX about couple I launch, that Yes. when the to we're [ph] about about get only assay here, think million, took a I And think, to years close again, six we getting Jack comparison, and and five [trick]

So kind highlight. the of that's that success launch I of the want to

Stephen MacMillan

a to to of It's the great very diagnosed it's rapid think been and completely really meaningful And it's I under the go a uptake. reason indication, it's part doctor.

Jack Meehan

up sales look first follow in had to point. -- you I'm product really just breast of then, model, the fiscal also on And at in the the looking quarter. imaging like my wanted an impact didn't the supply chain Great. much

this is is just XXX item, maybe context put help just of something in line bit a picking so in and would million that light little the be significant kind more color of helpful. really pretty that that So last seems up few around in weeks,

Stephen MacMillan

years. find been on, Yes, and Tecan chips we thinking things. some solutions. plastic first I've MTUs chain additional clearly They've we the on In call hoping we it and where tugging the would the At semiconductor emerged our of you couple kept day, been Herculean tips, end and the over some other find is would team and it. has last it we here, here, we're can supply come beck manufacture glass watched COVID did of hearing tubes a the on down. find global see everybody's operations the as manufacture were to from solutions, where just a really but getting we it's we alternatives our or COVID door. suppliers, been of Panthers to swabs haven't to the able piece, issues were at scale we and out able kept call the lot of the chip during on And everything, time more

into then, at there's moment forth. we now sell go could gotten quarter we've hurting it's we will not clearly, the new in right, is, allocation us gantries. as but lot it’s of last a as didn't have on So pieces even yes, two right the it that of more And very -- so into we one chips technically impact all,

that's that running. sure there we gantry and So make we want every up to out keep

for the will ongoing nearly be So be revenue, service. chunk trying that the want sure the of as but good side. of we're coming we just we And hit to short-term big, maximize wouldn't keeping taking were to chips service if make care a we're

call that So midst and fairly want thing. to definitely one big overall in to it's an of your an right a annoyance, it's out point, the we now, number

deal, far hit it's come or win. kind three You now a right of And how will to I that through little think as a been it and punch. does of knockdown have sizable very to company, up body about years annoying right? a been underscore set kind eight big blow think have we've would ago work continue ourselves we ago four would even know that a years

Operator

We’ll take next Donnelly line Patrick with Citi. of from the question now the

Patrick Donnelly

taking far to question be Because, beyond Steve, is look little right are beyond the as look you guys. How kind to going utilization Certainly stretching this. bit base for is a bigger. the the on Panther way thanks again, COVID. business that the most beyond the outlook is beyond obviously, anymore you of at Hey, touched framing get kind COVID? number of questions, well, right at this the installed to we

up COVID I at a think looking least when or of you it kind view, everyone tries that why? COVID, at that's setting do is frame to number endemic and utilization how business it, put on that beyond

Stephen MacMillan

Why we total term kind a about from of real that simplistic which revenue it. think in Patrick, our comes is

as revenue down term, dollar from we've will gone more where will also that placed volume for because off over a near And so, Panther. customers, point, global on where likely over quite the we've was XXXX pay basis, it don't pandemic And come to pure pre some clearly, to what much internationally time. we a have the it clearly Panthers, bunch smaller to going whole in right, we're have

So times go per about where mean, we the of revenue the way down over I that's here number to generated time. of amount we Panthers, Panther. enormous upside comes think ultimately see And going it, to to

the Panthers the And we've So there. keep keep yet folks it's wanting, where then, still have to so COVID assays or the regular year bought out spikes put plus, on. ready they and again, last in installed that many of getting they Panthers, brought

[torques] in were quarter, all much are XXXX, that it even those XXXX, all and delayed, in surging. largely generated volume, we so have just [ph] So growth to was generated still COVID down this XX% while pent-up comes we

a it, think a down lot the a I average we're going assays going generate on And machines. it's accretive selling hard it's but for to company to So time. be that's above rates lot model se, to growth long just more per clearly to to more come exactly going

Karleen Oberton

maybe years. is XX% growth the even just tremendous couple And mean, basically ‘XX. past I over a your versus that's QX to to up like business add a point finer that over That's

Patrick Donnelly

the And you just Obviously, Karleen, that talk Can any bit? you're to supply [ph] the through through. of bit helpful, kind one maybe hard the try we the again, of to talked to adding [go] as pressures. you're of that sure supply of margin That's up for setup. seeing a I chain some How rest core Sure. just margin as you noise about we down impact chain from peck on breast? the you on imagine there number COVID the a back inflationary for for stuff, sets the year? that out on some

Karleen Oberton

as is Yes, certainly. revenue supply that chain some cost of breast the the higher Yes, we the well, though, both and mentioned. on

of to that we still business absent revenue operating the if base that that think pandemic. margins, certainly in had low headwind, XX%, prior COVID minimal were are I the we

contribute line. I keep to that think, still some of strengths continue margin on we operating business is continue are healthy the that. we So to talked the eye And to an about on again, that base

Operator

We'll question with now take Savant Morgan the next Stanley. the of Tejas from line

Tejas Savant

And of as Patrick's commercial sort as evolves? in the COVID you U.S. can to degree mix sort you mix time following there. us made what on is the ASP testing given do what side? the question over on up OUS investments operating your some cushion testing margin and the good use, COVID versus Just to a expect give capabilities Karleen, of in the views to leverage you've well, of second updated just blended

Karleen Oberton

lower average look some ASP ASP, as when I higher testing in we are as the one expect this emergency an payment pricing held which think international health when certainly, in has we forward, chain, that supply accretive as costs perspective, that folks, even that be and our have come business improvement of down certainly revenue come still, this to the of them targets go a have the buffering higher ends nicely still renew after some the the come we well here, seeing. that -- think we're have $XX, average. think, of down, to And they on quarter, down. to public U.S., in as way pricing in we will for pricing go the the that probably the with annually about margins, But contracts, year to higher the lower overall that will do corporate Yes, from pretty overall I roughly overall you

about we're to the optimization international certainly years, talked grow, network that focused revenue from on. over more business. accretion that we margin we'll have the continues have that And opportunities past several intentionally, international investing internationally, believe We we've

Tejas Savant

your customers one Steve, launch you in here that it. here? of you, from see sales high drive some an of overtime accounts? at everybody's in do Got of automation added And the could for Panther quantify Can given this in throughput Panther the you on And Or the a savings more the expect sort moment? labor some to your convenience seeing tracks of high uptick throughput of the is customers us December. issues new cost for the current

KarleenOberton

the lead there's do We XX track really months. long be a labor our think system, absolutely. This to Yes, to labs. efficiency that time XX for a so would something is this

this on, data will it to So And excited development on But in a partnered we here. for it we that is on with actual customers couple our have any years. we're how the officially work of of something cost savings of lab. actually launch the have won't kind

Operator

with We will of the next now line William Blair. take Weinstein Brian questions from the

Brian Weinstein

geographic kind specific little lean kind recognize talk Did that, through you're maybe let's about what that. I But U.S. and of strings? So follow the run territories growth that a bit you seeing I'll was? a up continue board. rate I Can out about more kind of there's the and of bit. guess a also across and a products Thanks. into where missed about there? can performance. I what bit call And anything And the it's have you to would little after if be then, you maybe you talk

Stephen MacMillan

continue growth the is. little I above And to it's ton that bit think, Western become many, said because think I many well. out that exactly the And is a that. years is where Panthers. Europe, probably really A of of But as feel where a good. obviously, candidly, Yes, And is I lot of that's we the rate bigger And certainly more think of Europe, out We're Western out overall, of Asia we're Africa chunk international, we starting international Pac a said it it I we've to of of expected U.S biggest years. think, footprint is our we'd coming get overall, double-digit into grower would placed a really double-digit for Brian the ago, and grower. international rate.

Brian Weinstein

a Is any kinds to that, side? the of guessing, Yes. driving out is, significant diagnostics other but of on I'm kind obviously you'd there product seeing there? anything of want are call OUS? acceleration I businesses That mean,

Stephen MacMillan

the where as to Europe, just and can the anything, years been really the overall molecular think I is, four think four going over rate, diagnostics outside Panthers, is is I magic those across Even in now, if actually XX-ish percent it's at business few be you doing or -- a turbocharged go been key growth it's we've largely in back oftentimes here. three placing Western three, psychology business U.S. the actually our the markets board. particularly well,

like been up in markers, of things very health us the whatever, little Surgicals helped even solid we has forward, ago, XX breast and months well the there. Going as some German-based did picking acquisition on bit. on health, a company it's put SOMATEX the map breast a the with

incremental no the wonder. country, one feel geography, one one it's better It's magic So, not -- is, actually makes hit of And a for inexorably one things, not it. there's gives doing the stronger. even us that It's getting I more confidence like really it bunch us even what think one future. line, product just a is whole then, that's franchise of one

Operator

Tycho the with JPMorgan. take of We question line Peterson will the next from now

Casey Woodring

my This questions. is for Tycho. Casey on for taking Thanks

health. breast on is one First

breast embedded How's this And So the sales? of how to profile about now, guess the impact change we recurring the term, in health shift? given the revenue gantries? gantry XX% is alongside that what mixed think margins business margin should with lower sort near numbers I in the XXXX of towards margins shift is

Karleen Oberton

Yes.

revenue we think headwind, equal operating to to would module certainly that of our were Certainly, that is able for business operating and COVID headwind performance the raise then service contribution if health business, and about the the business full the breast the So the probably on biggest the here, margins, to I interventional perspective. part accretive contributions. the which guidance say, is we But, the based gantries $XXX is there's fortunately the million on from an of year margins, Then rest significant I division, operating from of think division.

well manage can headcount -- to this headwind have we manage do So other like or the things. and not things

about our still feel our preserve So this and service engineers salesforce good headwind. we through managing have that great

Casey Woodring

Thank helpful. and side. record over it. give wondering growth metrics you updated of That's did this you. can are that the is just us I new some them customers from How to reporting much coming Panther how test few if last customers? existing quarters menu of trends in Got those was the more x-COVID versus molecular in of

Karleen Oberton

annual an we Casey, think Yes. test as of the record number.

in the that number million prior XXXX our about that another XXXX, So in million to million $XX range. in And will about to $XX perspective, million, it we expect year be largest and put did we in XX pandemic, XXXX. to XX million XX was

Operator

We'll Bruin the take Derik De question next BofA. with now from

Derik De Bruin

enormously more than impressive So at you're number placing actually, that have. you just this I was up to And last certainly XXX, wanted of I quarter, thought question. follow look, on would that just, Panthers

this greenfields, your you little the number placements is the guess replacements. Panther expanded, in market back at you color overall and get continued were pace installs customers, of in that go how of some to diagnostics, add-on of on where just bit molecular and where of opportunity. and if are, a idea like look doing -- try not step I that market servicing script, sort pre-pandemic just the Just look competitive that labs And overall is,

Stephen MacMillan

very they and into for expansion It's that. going labs going into a good you've hospitals labs, labs, customers into again, into they're for we've that, customers -- are are some certainly some are a us. focus based, very And, existing going the a going broad a to is going whether they're think, well. the And of got they're win we it's Derek. new edge, have small big and an And well, they're high Panther forth. we're seeing therefore, known competitive got we business, really us going terms of We've In three where where definitely some new as certainly like add some might going customers fourth. do to throughput thing instruments the on be winning you overall feel or real it's -- that's just as

Derik De Bruin

then one And Great. just other question.

of there sort the think because of shifts, the of you're is being Thank years sort how or of sort that are about laws mix changes geographic As up we contemplated? the should air the in tax the on like, it's [indiscernible], out still tax rate you. in all potential

Karleen Oberton

partnering our you non-GAAP tax that, in would our is But know, when that tell on you up, really the tax went department overall that. headline certainly operations the in rate as comment have we to certainly tax efficiency something federal in team up. strategies. the I like But there's future real devils details to the And, place. rate hard legislation if on put no Certainly Yes. go an rate with would active

Operator

the the with next We'll line BTIG. Zimmerman take now question from of Ryan

Ryan Zimmerman

you And I say XX And million million Karleen, XX in little originally, to this you and XXX those you million sales a quarter? thinking We XXX just of this line COVID to The about year? Or of the in your are I fair back of at you quarter? now are upcoming kind what if differently done number, was the into four that guidance, can it be the XX a and think to I on change the half billion quarter. about think pace should XXX pacing back have think COVID we did number, out? given and XXX is guys that million. assume, assumed around a the than laid

Karleen Oberton

Yes, Ryan.

assuming about quarter. million in said in I as the So a we of remarks, prepared second here minimum are XXX my

in QX QX. and of your So mass roughly lead would to that XX and the XX

Ryan Zimmerman

categories. take you And surgery you how was more breast, there of that? much that. you're to Is want in of Okay. relative downstream. kind your your about And Steve, beyond surgical have go there have a on you where you room think where in broader kind Is existing now guys you missed go mammography Obviously, today, portfolio I how before. you Curious to go to breast? beachhead must procedure deeper? surgery and about than room moved [Indiscernible]. could rounded And just think of then, to when have options. you were the

Stephen MacMillan

whether ways markers the obviously, both -- about terms conserving done think Yes. in of we build-ons Focal, we've the We're surgery of breast actually, looking as and we stuff. smaller it, Faxitron kind

can various of so see And potential we different in broad really some can on of way. breast, continuum across the be be organic, and doing and to what we we ways more are at particularly look else of that think I we the treatment of that go things organic side assessing care. would its continue

time We have one question. for more

Operator

Souda line take SVB We'll the Puneet of with question next Leerink. from

Puneet Souda

for and just existing well. that maybe So flow one have obviously, me, cash position position you as great cash

the be public times what and buyers be the between of And to frequent just, So disconnect sort somewhat question happens these of a sudden in given markets. around to sellers, the appears pullback a the valuation. in

market? overall do in Thank normalized, out Or this if private in you. but the you're you wondering been to evaluations have normalize markets, -- public timing at anything sort seeing of there? expectations the look current and like the just seeing of the seems disconnect different broadly, and sort to it so how So speak if you're

Stephen MacMillan

both and us later. that keep eyes to them, went of then. and year buy a public of And bunch is you of right we It's wanted the now public? had kind banker lot might to face every we had a ahead at them sellers, And and go There's always lot privates in you position. in and our that, correct, our been go think question. we look you Yes. and you old have a last good that of on companies why days great said great Certainly stuff when I the we valuation a we're we'll have feel don't remembering

you may a lot there's no So the they've us of opportunities now, corrections which I a the urgency. business, think candidly, create And when at right really themselves. we successful for to have right in got time, have settle

no magical year, so from puts we urgency want we racking strong need think position take to to the the it's And, true people where do be but in this do growing, up might were to year or believe us I and think will are could that what spot not don't keep Meanwhile, cash, be a while anything. that whether it's realities, able that want core we readjust advantage be themselves next we we So in our opportunities great what that act. when our businesses whether present that of standpoint, we'll to realities they absolutely to

Operator

quarter And a good have call. This earnings that's the for fiscal Hologic’s XXXX we Have questions. all time concludes conference now first evening.

Hologic (HOLX) 3 Feb 222022 Q1 Earnings call transcript