Q1 2025 Earnings Summary
- Improving Operating Margins and EPS Growth: Hologic expects operating margins to expand over the course of the year, exiting at higher levels than in Q1 and Q2. Despite lowering revenue guidance, they are maintaining their full-year EPS guidance of $4.25 to $4.35, demonstrating strong financial discipline and capability to mitigate bottom-line impacts.
- Upcoming Product Innovations Driving Future Growth: The anticipated launch of the new M. gen platform in Breast Health in 2026 is expected to reaccelerate market growth and Hologic's business, contributing to higher revenue from both units and price mix.
- Strategic M&A to Accelerate Revenue Growth: Hologic continues to focus on M&A as a key part of their growth strategy. Recent acquisitions like Endomagnetics and Gynesonics are expected to be accretive to revenue growth rates and margins, with Gynesonics' $28 million in revenue growing at a healthy double-digit rate.
- Declining sales in the Breast Health segment: The company expects the Breast Health business to decline mid-single digits organically for the full year, driven by softer capital equipment sales and delays as customers await the new gantry launch in 2026. Both U.S. and international markets are experiencing mid-single-digit declines, slightly higher internationally. This slowdown is expected to persist into the second quarter before improving in the second half of the year. , , ,
- International budget constraints impacting sales: The company is facing challenges in international markets due to budget constraints from customers abroad, leading to higher declines internationally in the Breast Health segment. This could continue to negatively affect international sales until customers' budgetary issues are resolved. ,
- Policy uncertainties affecting Diagnostics revenue: Potential revenue impact from policy changes related to HIV testing under PEPFAR, with supply chain disruptions potentially affecting revenue by as much as $30 million for the fiscal year, even though waivers have been granted. This uncertainty is substantially included in the company's guidance.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +1% | Slight improvement from Diagnostics growth was offset by softer Breast Health results. Overall, revenues stabilized in the post-pandemic environment. |
Diagnostics | +5% | Gains driven by increased adoption of women’s health assays and higher Biotheranostics lab testing volumes, outweighing the ongoing decline in COVID-19 testing demand. |
Breast Health | -2% | A softer market caused by mammography saturation and lengthened replacement cycles, with normalizing demand following post-chip shortage highs. |
GYN Surgical | +3% | Steady adoption of MyoSure and Fluent devices plus international gains, tempered by a shrinking U.S. ablation market. |
Skeletal Health | -38% | Significantly affected by the temporary stop-ship of Horizon DXA systems needed to address EMC compliance issues, leading to reduced volumes. |
Disposables | +6% | Heightened usage of diagnostic test kits and biopsy disposables offset by declining COVID-19 volumes. |
Capital Equipment | -23% | Softening demand for U.S. mammography systems post-upgrade surge, tough prior-year comps, and lower capital spending in some markets. |
Service | +11% | Expanded installed base in major product lines boosted service contract revenue; increased Biotheranostics lab testing service also contributed. |
Asia-Pacific | -6% | Continued COVID-related disruptions in China and competitive pressures in key markets dampened regional performance. |
Operating Income | +16% | Improved gross margins in Diagnostics and cost controls in Breast Health offset higher restructuring charges, raising operating profitability. |
Net Income | -18% | Lapped one-time tax benefits from the prior year, coupled with increased FX losses, resulted in a lower net income YoY. |
EPS (Basic) | -16% | Lower net income and less impact from share repurchases contributed to the EPS decline, especially against the favorable tax benefits booked last year. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Total Revenue | Q2 2025 | no prior guidance | $995M – $1.005B | no prior guidance |
Non-GAAP EPS | Q2 2025 | no prior guidance | $1.00 – $1.03 | no prior guidance |
Other Income/Expense | Q2 2025 | no prior guidance | $10M – $15M expense | no prior guidance |
COVID-19 Assay Sales | Q2 2025 | no prior guidance | ~$9M | no prior guidance |
COVID-Related Items | Q2 2025 | no prior guidance | ~$25M | no prior guidance |
Lead Screening | Q2 2025 | no prior guidance | ~$5M | no prior guidance |
Total Revenue | FY 2025 | $4.15B – $4.20B | $4.05B – $4.10B | lowered |
Non-GAAP EPS | FY 2025 | $4.25 – $4.35 | $4.25 – $4.35 | no change |
Gross Margin | FY 2025 | Improvement of ~50 bps over the course of the year | In the low 60s, step-up in second half | no change |
Operating Margin | FY 2025 | Improvement of 50–100 bps over the course of the year | Low 30s, with steady expansion | no change |
Other Income/Expense | FY 2025 | Expense of $50M – $60M | Expense of $40M – $45M | lowered |
Effective Tax Rate | FY 2025 | 19.5% | 19.5% | no change |
Diluted Shares Outstanding | FY 2025 | ~235M | ~130M | lowered |
Diagnostics | FY 2025 | no prior guidance | Mid-single-digit growth excl. COVID | no prior guidance |
Breast Health | FY 2025 | no prior guidance | Decline in low single digits | no prior guidance |
Surgical | FY 2025 | no prior guidance | High single-digit growth | no prior guidance |
COVID-19 Assay Sales | FY 2025 | ~$25M | ~$35M | raised |
COVID-Related Items | FY 2025 | ~$95M | ~$100M | raised |
Lead Screening | FY 2025 | no prior guidance | ~$20M | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Total Revenue | Q1 2025 | $1.025B to $1.035B | $1.0218B | Missed |
Gross Margin | Q1 2025 | Around 60% | 56.8% (calculated from Total RevenueAnd COGS) | Missed |
Operating Margin | Q1 2025 | Around 30% | 22.5% (calculated from Operating Income÷ Total Revenue) | Missed |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Breast Health segment performance | In Q4 2024, it grew by 6.2% year-over-year, helped by capital and service growth. In Q3 2024, up 7.1% year-over-year. In Q2 2024, slightly declined by 0.3%. | In Q1 2025, revenue declined 2.1% with softness in gantry sales and anticipation of the M. gen platform. | Shifted from growth to slight decline, reflecting more cautious capital spending. |
International expansion and budget constraints | In Q4 2024, strong expansion potential was highlighted but no explicit budget constraints. In Q3 2024 and Q2 2024, some constraints were acknowledged, especially in Breast Health. | In Q1 2025, budget constraints outside the U.S. were cited as a factor for softer capital investments. | Becoming more prominent, with greater focus on constraints. |
Molecular Diagnostics and assay growth (Panther) | In Q4 2024, Molecular Diagnostics grew 9% excluding COVID. In Q3 2024, up 10.5% excluding COVID. In Q2 2024, up 10.7% excluding COVID. | In Q1 2025, Molecular Diagnostics grew 6.7% overall, 11% excluding COVID, with strong Panther adoption. | Consistent double-digit growth (ex-COVID), remains a key driver. |
Strategic M&A (Endo-Mag, Gynesonics, Endomagnetics) | In Q4 2024, acquisitions of Endomagnetics and definitive agreement with Gynasonix. In Q3 2024, integration of Endomag. In Q2 2024, initial Endo-Mag deal details. | In Q1 2025, Gynesonics closed, alongside continued focus on M&A for portfolio expansion. | Ongoing acquisitions, strengthening core divisions. |
Skeletal Health supply chain and operational challenges | In Q4 2024, DxA stop ship led to a 54.9% revenue drop; shipments to resume in Q1 2025. In Q3 2024, a $20M headwind from a supplier issue, expected resolution by early Q1 2025. Q2 2024 had no major discussion. | In Q1 2025, sales down 37.4%; shipping resumed later than anticipated, expecting to normalize by Q3. | Improving but still pressured, with manufacturing ramp-up expected soon. |
M. gen platform (2026 launch) | Not mentioned in Q4, Q3, or Q2 2024. | In Q1 2025, expected 2026 launch might be causing some delayed capital purchases. | Newly introduced, potential catalyst for future Breast Health upgrades. |
Policy uncertainties (PEPFAR HIV testing) | No mention in Q4, Q3, or Q2 2024. | In Q1 2025, possible $30M revenue disruption due to PEPFAR HIV testing policy disruption. | New risk, could impact Diagnostics revenue if disruptions persist. |
EPS and revenue guidance stability | Q4 2024 guidance: stable at $4.25–$4.35 EPS, with revenue $4.15B–$4.20B. Q3 2024 featured a 5–7% top-line indication but no specific FY25 guide. Q2 2024: $4.02–$4.12 EPS, $4.0B–$4.05B revenue. | In Q1 2025, revenue guidance lowered by $100M but EPS guidance maintained at $4.25–$4.35. | Top-line caution but bottom-line stable, reflecting cost management and leverage. |
Potential cannibalization within GYN Surgical portfolio | In Q4 2024, minimal cannibalization concerns for Gynasonix vs. MyoSure, as each targets different fibroid types. No mention Q3 or Q2 2024. | Not mentioned in Q1 2025. | No new updates, remains a minor concern previously addressed. |
IV fluid shortages | In Q4 2024, hurricane-related shortages were a headwind for elective surgeries, likely through Q1–Q2 2025. No mention Q3 or Q2 2024. | In Q1 2025, short-lived headwind in Surgical; mostly resolved by quarter-end. | Transient issue, impact diminishing going forward. |
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Breast Health Decline and Outlook
Q: Why is Breast Health guidance lowered? Market conditions or stalling?
A: The Breast Health guidance is lowered due to both market conditions and anticipation of a new gantry launch, with market conditions being the bigger impact. After a "bolus" of over 27% growth in late '23 and early '24, the market is experiencing a cyclical downturn, and the total market is expected to be down this year. However, they expect the business to reaccelerate in '26 with the introduction of the new gantry. -
Medium-Term Financial Outlook
Q: When will growth return to 5–7% range?
A: The company acknowledges they are currently below mid-single-digit growth but expect to return to the 5–7% range as the Breast Health market recovers and new products launch. Each franchise is expected to contribute to growth, including Surgical and Diagnostics, and the new gantry in '26 will reaccelerate the Breast Health business. -
Diagnostics Growth Drivers
Q: What drives future Diagnostics growth?
A: Future growth in Diagnostics will come from global Panther placements and new assays like BV/CV. There's significant opportunity to increase Panther utilization without new placements. They are in the "mid-innings" of the BV/CV opportunity, and expanding the menu, especially with Panther Fusion assays, will drive growth for multiple years. -
M&A Strategy and Capital Allocation
Q: Thoughts on M&A environment and criteria?
A: M&A remains a primary capital allocation strategy, focusing on assets that are accretive to growth rates and margins. Recent acquisitions like Endomagnetics and Gynesonics fit this model. They seek double-digit ROIC within a reasonable timeframe and prioritize on-market products that can grow the top line accretively. -
Policy Impact on HIV Testing Revenue
Q: How does policy uncertainty affect guidance?
A: The guidance includes a potential disruption of up to $30 million in HIV testing revenue due to policy uncertainty. Despite a waiver, supply chain disruptions have occurred, and this impact is substantially included in the guidance. -
Margin Expectations and Guidance
Q: Any color on margin outlook for the year?
A: Operating margins are expected to improve each quarter, with more significant improvement in the back half of the year due to revenue growth and seasonal operating expenses. They anticipate exiting the year at a higher operating margin than in Q1 and Q2, but caution that it won't be a jumping-off point for '26. -
2026 New Gantry Launch Impact
Q: Will the new gantry in '26 boost growth?
A: The new gantry launch in '26 is expected to improve the Breast Health business through increased units and higher prices from mix. They anticipate this will reaccelerate the market and contribute positively to growth, helping offset current declines. -
Panther Fusion Adoption
Q: Can Panther Fusion adoption reach 100%?
A: While doubling utilization might be aggressive, there's significant opportunity for Panther Fusion adoption to approach 100% over time. As they expand the menu with Fusion assays, customers are expected to adopt more, driving steady improvement. -
Surgical Franchise Growth
Q: Will Surgical growth improve in back half?
A: The Surgical business was impacted by IV fluid shortages in Q1, but they expect improvement in the back half of the year. The addition of Gynesonics will contribute to growth, and they anticipate improving growth rates moving forward. -
Tariff Exposure and Manufacturing
Q: How exposed are revenues to tariffs?
A: The biggest tariff exposure relates to manufacturing in Costa Rica, where they produce surgical and disposable Breast Health products. A tariff imposed there would be the most significant challenge, but overall exposure is limited. Many products are made in the U.S., reducing risk.