Margin Outlook
Q: Should we expect operating margins to expand to 31% and beyond?
A: Management expects to exit the year with operating margins around 31%. " Gross margin headwinds from gantry chips and network optimization efforts amount to 50 to 75 basis points. " They foresee improvements over the course of the year but caution against significant gains in fiscal '25, aiming to continue investing appropriately in R&D and innovation. "

Business Segment Growth
Q: Which segments are driving sustainable growth, and at what rates?
A: Each business segment is expected to grow within the 5% to 7% range this year. " Internationally, segments are at the higher end or slightly beyond that range. " In Surgical, MyoSure and Fluent are growing faster, while NovaSure is growing slower. "

M&A Strategy and Deal Size
Q: Are you open to larger M&A deals, and what are your priorities?
A: They are open to larger deals in the $1 billion-plus range if they bring significant revenue and EBITDA. " The focus is on established, profitable businesses, avoiding early-stage or unprofitable projects. " Opportunities exist in med tech areas like surgical platforms and breast health. "

Breast Health Backlog
Q: What's the status of the Breast Health backlog and future expectations?
A: The Breast Health business has several quarters of backlog, likely extending into early 2025 at elevated levels. " Elevated backlog is expected for the next 3 to 5 quarters as they supply gantries to customers. "

International Growth and Margins
Q: How are international growth and margins trending, and any efforts to improve them?
A: International growth is strong, with double-digit increases over the past 5 to 6 years. " While international revenue has lower margins, they're improving margins through selective pricing and cost discipline. " Going direct in key markets enhances revenue and is typically accretive to margins. "

Market Expansion Amid Competition
Q: How are you expanding markets in competitive areas like viral load and STI testing?
A: Despite strong competitors, significant opportunities exist to expand markets. " Products like BV/CV may become their largest assay. " With only 10% of women globally tested for STIs, there's substantial market potential. "

CapEx Environment Impact
Q: What's your outlook on customer CapEx spending and its impact on sales?
A: They feel positive about the CapEx environment, not seeing dramatic changes affecting their business. " Their equipment isn't a major component of hospital CapEx budgets, making them less vulnerable to fluctuations. "

Molecular Diagnostics Outlook
Q: Has growth in Molecular Diagnostics ex-COVID slowed, and what's the outlook?
A: Growth appeared to slow due to four fewer selling days, reducing the growth rate by 4 to 6 percentage points. " They remain confident in the overall run rate and size of the business. "

Impact of Fewer Selling Days
Q: How did fewer selling days affect your quarterly results?
A: The four fewer selling days significantly impacted disposable run-rate businesses, lowering growth rates by 4 to 6 percentage points. "

Tax Rate Outlook
Q: How will the global minimum tax and R&D tax credit affect your tax rate?
A: The global minimum tax won't impact them until fiscal 2026. " Since their tax rate is already over 15%, the effect is expected to be minimal. " Changes in R&D amortization are minimally favorable but have a minimal overall impact. "

New Product Approvals Impact
Q: What is the impact of new product approvals like the Genius Digital DX system?
A: The Genius Digital DX system improves workflow without significant changes to pricing or margins. " Customers are excited due to labor-saving benefits, and it's driving growth internationally, especially in Europe. " The approval of digital cytology is seen as a substantial advancement in 40 years. "

Interest Expense Increase
Q: How will the expiration of the interest rate hedge affect interest expense?
A: With the expiration of a favorable interest rate hedge, weighted average cost of debt will increase by about 100 basis points, leading to interest expense exceeding interest income by $30 million to $50 million for the year. "

Biotheranostics Growth Potential
Q: What's the growth outlook for Biotheranostics' Breast Cancer Index test?
A: They see significant long-term potential, considering themselves in the early innings. " Growth remains accretive and is still progressing nicely. "

Panther Utilization Growth
Q: How is Panther utilization trending among customers?
A: Panther utilization is growing year-over-year. " Customers running four or more assays have nearly doubled from 20% in 2019 to close to 40% at the end of '23. "