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    HOLOGIC (HOLX)

    Q2 2025 Earnings Summary

    Reported on May 3, 2025 (After Market Close)
    Pre-Earnings Price$57.28Last close (May 1, 2025)
    Post-Earnings Price$55.31Open (May 2, 2025)
    Price Change
    $-1.97(-3.44%)
    • Strong recurring revenue growth: The company reported 12% growth in nonproduct revenue driven by its breast health services and Biotheranostics, highlighting improved recurring revenue streams and customer stickiness.
    • Robust diagnostics platform: Positive feedback on the Panther and Fusion systems—with a large installed base and expanding assay menu—underscores the potential for sustained future growth in molecular diagnostics.
    • Resilient supply chain and operational flexibility: A predominantly U.S.-based manufacturing footprint and proactive management of tariffs and supply issues position the company well to mitigate macro headwinds and maintain stable operations.
    • Tariff Headwinds: Tariffs—primarily affecting products manufactured in Costa Rica and China—are expected to add $20–$25 million per quarter in cost pressure, with additional increases to cost of goods sold in later quarters, which could materially squeeze margins.
    • Declining International Revenue: Reduced revenue guidance from key international markets, notably a $20 million cut in China revenue and disruptions in Africa due to funding cuts, raises concerns over sustainable growth outside domestic markets.
    • Weak Breast Health Performance: The Breast Health segment experienced a significant downturn—with revenue declining notably due to lower gantry placements—and is forecasted to see a mid-single-digit organic decline, casting uncertainty on its near-term recovery.
    MetricYoY ChangeReason

    Total Revenue (Business Segments)

    –1.2% (from $1,017.8M to $1,005.3M)

    The slight decline is driven by overall modest softness across the business segments, reflecting limited pricing improvements and minor headwinds compared to Q2 2024.

    European Market

    +6.9% (from $137.0M to $146.5M)

    Strong performance in Europe likely resulted from improved market dynamics and increased product adoption, reversing some of the challenges seen in prior periods.

    Asia-Pacific Region

    –7.3% (from $64.4M to $59.7M)

    The decline in Asia-Pacific indicates weaker demand or increased competitive pressures in the region compared to Q2 2024, reflecting broader economic or market-specific challenges.

    U.S. Market

    Stable (around $744.9M)

    The U.S. market remained largely unchanged with steady demand, indicating that any headwinds or growth opportunities effectively balanced out relative to the previous period.

    Reported Revenues (Income Statement)

    –22% (from $1,017.8M to $792.7M)

    A severe deterioration in the reported revenues reflects significant operational challenges and potential one‐time adjustments that drastically reduced the top line from Q2 2024 levels.

    Gross Profit

    –30% (from $542.3M to $377.3M)

    The sharp decline in gross profit is attributable to compressed margins due to an unfavorable product mix and increased cost pressures, contrasting strongly with the previous period’s healthier margins.

    Operating Income

    Flipped from +$210.4M to –$7.0M

    Operating income turned negative as rising expenses and deteriorating gross margins overwhelmed revenues, evidencing a marked decline in operational efficiency compared to Q2 2024.

    Net Income

    Swung from +$169.9M to –$17.4M

    Net income reversed from a profit to a loss, driven by a combination of lower reported revenues, margin compression, and increased operating costs, which compounded to significantly erode overall profitability from the prior period.

    Net Income per Share (Basic)

    From $0.73 to a loss of $0.08

    The contraction in net income per share mirrors the overall decline in net income, further exacerbated by any changes in the share count, resulting in a substantial erosion of per-share earnings compared to Q2 2024.

    MetricPeriodPrevious GuidanceCurrent GuidanceChange

    Revenue ($USD Billions)

    FY 2025

    $4.05 to $4.10

    $4.05 to $4.10

    no change

    Non-GAAP EPS ($USD)

    FY 2025

    $4.25 to $4.35

    $4.15 to $4.25

    lowered

    Gross Margins (%)

    FY 2025

    low 60s

    Low 60s

    no change

    Operating Margin (%)

    FY 2025

    low 30s

    Low 30s

    no change

    Annual Effective Tax Rate (%)

    FY 2025

    Approximately 19.5%

    19.25%

    lowered

    Diluted Shares Outstanding (Millions)

    FY 2025

    approximately 130 million

    Approximately 228

    raised

    COVID-19 Assay Sales ($USD Millions)

    FY 2025

    $35 million

    $35 to $40

    raised

    COVID-19 Related Items ($USD Millions)

    FY 2025

    $100 million

    $100 to $105

    raised

    Revenue ($USD Billions)

    Q3 2025

    no prior guidance

    $1.00 to $1.01

    no prior guidance

    Non-GAAP EPS ($USD)

    Q3 2025

    no prior guidance

    $1.04 to $1.07

    no prior guidance

    COVID-19 Assay Sales ($USD Millions)

    Q3 2025

    no prior guidance

    Approximately $5

    no prior guidance

    COVID-19 Related Items ($USD Millions)

    Q3 2025

    no prior guidance

    $25

    no prior guidance

    Blood Screening Revenue ($USD Millions)

    Q3 2025

    no prior guidance

    Approximately $6

    no prior guidance

    Currency Impact ($USD Millions)

    Q3 2025

    no prior guidance

    Negligible headwind

    no prior guidance

    MetricPeriodGuidanceActualPerformance
    Revenue
    Q2 2025
    $995M – $1.005B
    $1,005.3
    Beat
    Other Income/Expense
    Q2 2025
    Expense of $10M – $15M
    ($7.3M)
    Beat
    TopicPrevious MentionsCurrent PeriodTrend

    Breast Health

    Consistently discussed across Q3 2024, Q4 2024, and Q1 2025 with emphasis on revenue declines, innovation in imaging/gantry systems, and leadership adjustments

    Q2 2025 noted a further revenue decline alongside a reorganization of the sales team, a renewed offensive on gantry upgrades, and stronger recurring revenue performance

    Recurring topic with mixed sentiment – persistent performance challenges are being met with strategic innovation and leadership changes.

    Molecular Diagnostics

    Highlighted robust growth, assay expansion (e.g., BV/CV/TV assay), and international penetration in Q3 2024, Q4 2024, and Q1 2025

    Q2 2025 continued to emphasize moderate growth drivers, menu expansion via Panther Fusion, and a strong competitive position

    Continued expansion and positive competitive positioning remain consistent.

    Supply Chain

    Earlier calls (Q3 2024, Q4 2024, Q1 2025) discussed legacy issues such as chip shortages, IV fluid constraints, and HIV testing disruptions

    In Q2 2025, domestic manufacturing emphasis (US, Costa Rica) and an expanded supplier network have alleviated semiconductor concerns and improved operational resilience

    Notable improvement with strong operational resilience emerging over previous disruptions.

    International Revenue

    Q3 2024 and Q4 2024 underscored significant international growth potential along with underpenetrated markets, while Q1 2025 noted mixed performance in areas like Breast Health and Surgical divisions

    Q2 2025 reported declines in certain regions (Africa, South Korea, China) offset by strong growth in surgical markets, highlighting both headwinds and opportunities

    Consistent emphasis with persistent regional headwinds; sentiment remains cautious amid emerging growth opportunities.

    Strategic M&A

    Across Q3 2024, Q4 2024, and Q1 2025, discussions focused on tuck-in acquisitions (e.g., Endomagnetics and Gynesonics) and successful integration efforts to drive long-term growth

    Q2 2025 reiterated the focus on strategic tuck-in acquisitions, with integration of recent deals proceeding well and contributing to margin expansion

    A consistently prioritized strategy with smooth integration bolstering long-term growth prospects.

    Policy & Regulatory Uncertainties

    Q1 2025 raised issues around disruptions in HIV testing (e.g., PEPFAR) and tariff risks; earlier periods (Q3/Q4 2024) did not address these concerns

    Q2 2025 continued to cite funding cuts in Africa and a de-risked China forecast, reflecting ongoing geopolitical and regulatory challenges

    Emerging as a growing concern – new regulatory and funding uncertainties are prompting a more cautious outlook.

    Tariff Headwinds

    Not mentioned in Q3 2024/Q4 2024; briefly flagged in Q1 2025 regarding potential tariffs from Costa Rica/Mexico

    Q2 2025 explicitly detailed tariff-related cost pressures (an added $20–25 million per quarter) and limited pricing flexibility under long-term contracts

    A newly emphasized risk due to evolving geopolitical pressures, marking an increased focus compared to previous periods.

    Skeletal Health

    Q3 2024 and Q4 2024 reported significant challenges including stop ship issues and major revenue declines; Q1 2025 observed a sharp decline in revenue

    Q2 2025 identified a “catch-up quarter” with revenue recovery and expectations for normalization later in the year

    While earlier periods showed operational setbacks, the current period reflects an encouraging recovery trend.

    Environmental Disruptions

    Not a recurring focus until Q4 2024, which mentioned hurricanes impacting IV fluid shortages affecting surgical and breast health segments

    No mention in Q2 2025

    No current mention suggests that the transitory impacts of environmental disruptions have likely resolved.

    1. Tariff Impact
      Q: How will tariffs affect margins next year?
      A: Management expects ongoing headwinds of $20–25 million per quarter from tariffs, with cost pressures increasing COGS in later quarters, assuming no major policy changes.

    2. China Revenue
      Q: How is China revenue trending?
      A: China revenue is being de-risked, with forecasts now around $30 million annually as the market becomes less competitive.

    3. Organic Growth Drivers
      Q: What caused the 60bps haircut in organic growth?
      A: The 60bps reduction is due to weaker performance in China and Africa, driven by funding cuts and reduced sales in these regions.

    4. Gantry Replacement Cycle
      Q: What is the current gantry lifespan?
      A: Gantrys now typically last 10–12 years, reflecting improved service support and fewer external upgrade catalysts.

    5. Envision Pricing
      Q: Will Envision be priced at a premium?
      A: Management is confident in Envision’s value, maintaining a premium price similar to current offerings with standard integrated software.

    6. Supply Chain & Semiconductors
      Q: Any issues with supply chain or semiconductors?
      A: They report no significant headwinds; supply chain robustness remains evident despite global challenges.

    7. M&A Strategy
      Q: What are the M&A focus areas?
      A: They are eyeing tuck-in opportunities across diagnostics, imaging, and surgical sectors, supported by a strong balance sheet with over $1.6 billion in cash.

    8. Service Revenue Growth
      Q: How performed non-product revenue?
      A: Non-product revenue, driven by breast services and Biotheranostics, grew by 12%, highlighting a strong recurring revenue base.

    9. Fusion Platform Ordering
      Q: What are the Fusion ordering trends?
      A: Approximately one-third of customers now have Fusion capabilities, with steady, seasonally driven ordering amid heightened respiratory demand.

    10. Africa Diagnostics Outlook
      Q: How is African diagnostics evolving?
      A: Due to funding cuts and operational challenges, African diagnostics have effectively been removed from future forecasts.

    11. Gantry Demand Timing
      Q: Are hospitals delaying gantry purchases for Envision?
      A: Hospitals are not significantly delaying purchases; they continue to upgrade with current products rather than waiting for Envision.

    Research analysts covering HOLOGIC.