Hologic Inc (HOLX)

Margin Outlook
Q: How will margins trend this year amid headwinds?
A: Management expects margins to face headwinds in the first half due to the IV fluid shortage impacting their most profitable surgical business and other transitory factors. However, they anticipate margin expansion in the back half of the year as these issues are resolved and benefits from network optimization initiatives materialize. They provided a full-year revenue guidance midpoint of 4% growth and anticipate accelerated growth in the latter half, which will help drive margin expansion. - , -

IV Fluid Shortage Impact
Q: How will the IV fluid shortage affect your businesses?
A: The IV fluid shortage, resulting from hurricane impacts, is expected to be a headwind in Q1 and possibly into Q2, particularly affecting the surgical and breast businesses that require these fluids. This shortage is considered transitory, and management believes it will be resolved over the course of the year, potentially turning from a headwind into a tailwind as procedures are rescheduled. - , - , - , -

Skeletal Health Headwinds
Q: Is skeletal health still a headwind in fiscal '25?
A: Yes, the skeletal health business is experiencing a stop ship situation, roughly impacting revenues by $5 million per month. Management expects shipments to resume in the latter half of Q1, making it a headwind in the first half. This transitory issue contributes to lower growth early in the year but is anticipated to improve as the year progresses. - , -

Guidance vs. Long-Range Plan
Q: How does the guidance bridge to the 5–7% LRP target?
A: The full-year guidance of 3.4% to 4.7% ex-COVID growth reflects transitory headwinds in the first half, including the skeletal health stop ship, IV fluid shortages, and conservative estimates for respiratory products. As these issues are resolved, management expects accelerated revenue growth in the back half, aligning with their long-range plan of 5–7% growth. -

Breast Health Outlook
Q: What's the outlook for Breast Health with the new gantry launch?
A: The new gantry is expected to impact revenues more significantly in fiscal years '26 to '28. This year might see a slight slowdown in gantry sales prior to the launch. However, growth will be supported by the service business, interventional products, and acquisitions like Endomag. Management anticipates normalized growth rates in '25, with a steady replacement cycle rather than a significant surge of upgrades. - , - , - , -

Share Repurchase Program
Q: Will the $250 million share repurchase occur in one quarter?
A: The company plans to initiate the $250 million share repurchase program in the next couple of weeks and expects to complete it within the fiscal second quarter, providing a prorated benefit in fiscal 2025. -

Biotheranostics Growth
Q: What's the growth outlook for Biotheranostics and key assays?
A: BV/CV/TV assays, their second-largest assay generating several hundred million dollars in revenue, are expected to continue growing at double-digit rates in '25, though slightly lower due to an increasing base. Biotheranostics is closer to the $100 million-plus level, also achieving solid double-digit growth in '24 and expected to maintain similar growth in '25. Management believes Biotheranostics is still in the early stages with low market penetration, indicating significant growth potential ahead. - , -

Panther Placements and Utilization
Q: How are Panther placements and assay utilization trending?
A: The installed base has grown to over 3,300 Panthers worldwide, significantly higher than pre-pandemic levels. While placements have slowed, there's no negative impact on business growth. The focus is now on driving assay adoption and utilization without needing to place many new Panthers, which is beneficial for capital efficiency. Trends in customers running multiple assays continue to improve. - , -

Conservative Respiratory Outlook
Q: What's your outlook for respiratory products?
A: Management is taking a conservative stance due to the unpredictability of flu seasonality. The transition to the respiratory panel contributed several tens of millions of dollars in revenue in '24, but they don't expect another transition year, making it a headwind in the first half. This conservatism could represent a headwind of at least $10 to $20 million. - , - , -

M&A and Capital Allocation
Q: What are your capital allocation priorities in 2025?
A: The company continues to pursue a balanced approach between M&A and share repurchases. M&A efforts are driven within each division, focusing on assets that complement their portfolios and where Hologic brings expertise, as seen with acquisitions like Endomagnetics and Gynasonix. There's no specific priority among divisions, and they expect similar capital allocation patterns in 2025 as seen in 2024. -

NovaSure Decline in U.S.
Q: Can the decline of NovaSure in the U.S. be stabilized?
A: NovaSure volumes in the U.S. are experiencing a slow decline due to alternatives like IUDs and hormonal treatments for abnormal uterine bleeding. While the company maintains market share, they expect this trend to continue. However, international sales are expanding with a strong growth rate, helping offset the U.S. decline and allowing the overall business to post market-leading results. -

Gynasonix Acquisition
Q: How does Gynasonix fit into your portfolio?
A: The Gynasonix acquisition complements their existing GYN Surgical portfolio, aligning with procedures their surgical team handles daily. The Sonata system addresses different types of fibroids than their current products, filling a gap between Accesa and MyoSure without cannibalizing existing products. This addition strengthens their offerings in treating fibroids across various types. - , -

Tax Rate Outlook
Q: Is there upside to the 19.5% tax rate guidance for '25?
A: The projected effective tax rate for fiscal '25 is 19.5%, down 25 basis points from fiscal '24, primarily due to limiting foreign losses that weren't deductible. While they are always exploring opportunities to drive the rate lower, management is not committing to a rate below 19.5% at this time. -

International Growth and Margins
Q: How will international growth impact margins?
A: International business is expected to grow at a faster rate than the domestic business. While international growth can be dilutive to margins, the company anticipates operating margin improvement, starting at 30% and expecting an increase of 50 to 100 basis points over the course of '25. They balance margin improvement initiatives with the understanding that international growth brings its own leverage opportunities. - , -

Chip Shortage Resolution
Q: Have you moved past the higher cost of chips?
A: The company is likely on the tail end of dealing with higher chip costs. There may still be a few components working through the system, but they expect to move past this issue as they progress through fiscal '25. This should favorably impact margins over time. -

Skeletal Health Recovery
Q: Will you recoup lost Skeletal Health sales in fiscal '25?
A: While focused on resuming shipments and meeting customer demand, management is not projecting a significant recoupment of the $15 million per quarter lost during the stop ship period. The priority is restoring the business rather than expecting immediate sales recovery on top of base expectations. -

Facility Integration Benefits
Q: How will facility integrations impact margins?
A: The integration within the Breast Health business is expected to be completed over the course of the year, bringing manufacturing and R&D together for synergies. Management anticipates this will contribute to margin improvements as they progress through fiscal '25, though they haven't provided specific figures. -