HOLOGIC INC (HOLX)·Q4 2025 Earnings Summary

Executive Summary

• Q4 2025 delivered mid‑single‑digit growth and clean beats vs consensus: revenue $1,049.5M (+6.2% YoY) and non‑GAAP EPS $1.13 (+11.9% YoY), both above S&P Global consensus ($1,034.5M revenue; $1.10 EPS). The company did not host a call due to the pending Blackstone/TPG acquisition . Consensus values retrieved from S&P Global.*
• Operating leverage improved on a non‑GAAP basis (operating margin 31.2% vs 30.0% YoY) despite tariff headwinds; interventional breast and surgical led growth, while core U.S. molecular diagnostics offset lower COVID and China softness .
• Full‑year FY25 outcomes landed at the high end of Q3 guidance (revenue $4,100.5M; non‑GAAP EPS $4.26), validating management’s Q3 outlook upgrades .
• Near‑term stock narrative is dominated by M&A: definitive agreement to be acquired for up to $79/share (cash + CVRs); FY26 guidance withdrawn and Q4 call canceled, reducing forward qualitative disclosures until close .

What Went Well and What Went Wrong

What Went Well

• Interventional Breast strength and tuck‑ins: Interventional breast solutions +24.5% YoY (Endomag inclusion; organic interventional +17.1%), supporting non‑GAAP operating margin expansion to 31.2% (+120 bps YoY) .
• Surgical momentum: Surgical +10.2% YoY (+9.5% CC), driven by MyoSure, Fluent, and Gynesonics; organic surgical +5.3% (+4.5% CC) .
• Diagnostics resilience ex‑COVID: Organic diagnostics ex‑COVID +5.4% (+4.4% CC) with U.S. molecular assays (BV/CV/TV, Panther Fusion) leading; cash from operations $355.1M in Q4, supporting a 0.4x net leverage ratio .

Management quotes (Q3 call, showing momentum into Q4):

• “Our diagnostics business continued to grow nicely… and our breast health business improved sequentially as planned.” — CEO Steve MacMillan .
• “We expect mid single digit revenue growth and high single digit EPS growth in the fourth quarter.” — CFO Karleen Oberton (Q3 guidance that proved conservative) .
• “We now expect to incur $10–$12M in tariffs per quarter [in FY26]… roughly half of what we originally expected.” — COO Essex Mitchell .

What Went Wrong

• Gross margin pressure: non‑GAAP gross margin 60.9% (-60 bps YoY) on mix and tariffs; GAAP gross margin down 90 bps (Manchester facility closure costs) .
• International/China headwinds: Diagnostics international constant‑currency growth was minimal; Q3 commentary confirmed China down >50% YoY and HIV funding pressures, with residual impact into 1H FY26 .
• GAAP optics and impairments: FY25 saw sizable non‑cash impairments (Q2) and restructuring/transaction costs; while largely non‑GAAP‑excluded, they depressed GAAP margins earlier in the year .

Financial Results

Segment breakdown (YoY and sequential context):

KPIs and mix:

Consensus vs actual (Q4 2025):

Values retrieved from S&P Global.*

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We’re pleased with our performance… delivered revenue and non‑GAAP EPS that exceeded our guidance.” — CEO Steve MacMillan (Q3 call) .
• “We expect mid single digit revenue growth and high single digit EPS growth in the fourth quarter.” — CFO Karleen Oberton (Q3 call) .
• “We expect to mitigate roughly half… now $10–$12M in tariffs per quarter [FY26].” — COO Essex Mitchell (Q3 call) .
• Q4 press release highlights: cash flow from operations $355.1M; adjusted EBITDA $347.0M; non‑GAAP operating margin +120 bps; interventional breast and surgical strength; FDA/CE for Panther Fusion GI assays .

Q&A Highlights

• Tariffs mitigation and FY26 impact: Management reduced expected tariff headwinds to $10–$12M/qtr (from $20–$25M), aiding FY26 gross margins despite residual pressure .
• Breast Health trajectory: Sequential gantry improvement and strong interventional momentum; Endomag “running well ahead of plan” and turns organic in August, bolstering growth mix .
• China/HIV outlook: China business materially smaller (~$10M/qtr run‑rate); HIV funding cuts to pressure 1H FY26 diagnostics .
• Fusion platform/menu: Continued rollout, pricing premium, ~one‑third of customers have Fusion; Open Access kits contributing; GI and HAI assays targeted in later FY26/FY27 .
• Capital allocation: Significant buybacks YTD; no large M&A imminent (pre‑deal); confidence in tuck‑ins like Endomag .

Estimates Context

• Q4 2025 beats vs S&P Global consensus: revenue $1,049.5M vs $1,034.5M*, non‑GAAP EPS $1.13 vs $1.1008*; upside driven by interventional breast and surgical growth, and core U.S. molecular diagnostics . Values retrieved from S&P Global.*
• With FY26 guidance withdrawn due to the pending acquisition, sell‑side models likely move to deal‑close scenarios; near‑term adjustments focus on tariff run‑rate ($10–$12M/qtr in FY26) and China/HIV drag in 1H FY26 .

Key Takeaways for Investors

• Solid Q4 execution with clean revenue and EPS beats; non‑GAAP operating margin expansion underscores improving mix and cost discipline despite tariffs .
• Interventional Breast and Surgical are the growth hinges into close; Endomag integration strengthens recurring profile and supports margin quality .
• Diagnostics ex‑COVID remains healthy; Panther Fusion and BV/CV/TV sustain core growth while China/HIV headwinds cap international momentum near term .
• FY25 finished at/above upgraded Q3 guidance; however, FY26 visibility paused with M&A; expect limited incremental disclosures until regulatory and shareholder approvals progress .
• Tariff headwinds now “halved” for FY26; model ~100 bps gross margin drag vs FY25 per CFO, offset by mix and operating leverage .
• Cash generation and low leverage (0.4x) preserve strategic flexibility prior to transaction close; balance sheet remains a strength .
• Trading setup: near‑term moves tied to deal milestones; operational beats/misses less likely to drive price until post‑close; watch China/HIV run‑rate, tariffs, and interventional momentum as key operational KPIs .

Footnote: S&P Global consensus metrics (marked with *) sourced via SPGI data feed.