The operator introduces the Hologic Second Quarter Fiscal 2024 Earnings Conference Call and introduces Ryan Simon, Vice President of Investor Relations. The second quarter press release is available on the company's website and certain statements made during the call will be forward-looking. Non-GAAP financial measures and revenue growth rates will also be discussed.

In the second paragraph, Steve MacMillan, Hologic's CEO, discusses the company's financial results for the second quarter of fiscal 2024. He highlights that total revenue and non-GAAP earnings per share exceeded expectations, despite facing tough comps from the previous year. MacMillan also mentions the company's goals during the COVID-19 pandemic and how they have successfully achieved them, positioning them for continued growth in a post-pandemic world.

The company has achieved its primary objectives and strengthened its franchises both in the U.S. and internationally. They have also maintained high employee engagement scores and are continuously looking for ways to innovate and grow. The company's diverse portfolio, international business, and strong balance sheet have allowed them to consistently drive top-line growth. The company's unique collection of Diagnostics and Medtech businesses have multiple growth drivers and a strong market share, allowing for continued growth in the future.

The company's diverse product and service offerings contribute to its enduring strength and growth. The company's unique set of businesses allows it to positively impact women's health and adapt to changing market conditions. The company's Molecular Diagnostics business has seen significant growth in its installed base and menu, with plans to continue expanding its reach and adding new products. This growth is reflected in the company's strong performance in the second quarter, particularly in the U.S. market.

The company has added newer products to their portfolio, leading to a strong performance in both the U.S. and international markets. The company's digital cytology product was recently approved in the U.S., providing further growth opportunities. In the Breast Health division, the company has expanded their offerings to cover the entire continuum of breast cancer care. The gantry and service businesses have performed well globally, with strong growth in the emerging interventional breast business. In the Surgical division, the company has expanded their product lines and is seeing strong growth in both the core business and new product lines internationally. The company expects to continue growing in mature markets and territories as they expand their reach globally.

Hologic's international growth is a result of identifying and capturing underpenetrated markets with steady execution. Their success is driven by going direct and entering markets where they can elevate the standard of care. There is still significant market adoption opportunity for Hologic, especially in Europe and Asia Pacific. As champions for women's health, they believe that adoption will continue to grow over time as governments prioritize women's health.

The company has a strong balance sheet and plans to allocate capital towards in-house initiatives, M&A, and share repurchases. They prioritize deals that will have a positive impact on both top and bottom line growth. They are constantly reviewing potential opportunities and have the flexibility to explore different areas for growth. They recently announced an agreement to acquire Endo-Magnetics, a provider of breast cancer surgery technologies, which will complement and diversify their interventional breast business and accelerate growth.

The company's second quarter financial results exceeded expectations, with total revenue of $1.018 billion and organic growth of 4.9%. Non-GAAP earnings per share were $1.03, and the company generated over $290 million in cash from operating activities. The balance sheet remains strong, with a cash balance of nearly $2.2 billion and the ability to generate strong cash flow. In the Diagnostics franchise, revenue declined by 3.2%, but grew by 9.8% when excluding COVID-related revenue. The company is confident in its ability to continue its success in the third and fourth quarters.

In the Diagnostics division, Molecular Diagnostics saw strong growth, particularly in the BV/CV/TV assay. Non-COVID respiratory assays also performed well, with increased volume and higher average selling prices. Biotheranostics also contributed to growth in this division. In Psychology and perinatal, international growth and a favorable comparison to the prior year drove a 7.9% increase. In Breast Health, revenue decreased slightly but grew when excluding SSI. Growth was primarily driven by international interventional sales, demonstrating the diversity of growth drivers within the division and across the company.

In the second quarter, Surgical revenue increased by 7.4%, driven by MyoSure and Fluent fluid management system. NovaSure was a headwind to growth due to lapping the prior year's ASP lift. Skeletal revenue declined by 14.3% due to lower capital placements and upgrades. Gross margin was in line with expectations at 60.7%, with a decline of 160 basis points from the prior year. Operating expenses decreased by 3% due to the divested SSI business. Operating margin was 30.4% for the quarter. Other income represented a loss of $6 million due to lower cash balances and higher interest expense. The tax rate was 19.75%. For the third quarter, the company expects revenue between $992.5 million to $1007.5 million and EPS of $0.98 to $1.05.

The company has provided guidance for the full year 2024, with expected revenue of $4 billion to $4.05 billion and EPS of $4.02 to $4.12. The recent strengthening of the U.S. dollar is expected to have a significant impact on the second half of the year, with a $10 million impact on prior guidance. Each franchise is expected to grow at least 5% to 7% in fiscal 2024, excluding the impact of COVID. The Molecular Diagnostics business is expected to drive high single-digit growth, while cytology and perinatal business is expected to have minimal growth due to normalized comps. Blood revenue is expected to be $7 million in Q3 and $28 million for the full year. COVID-related revenue is expected to be $5 million to $10 million in Q3 and $60 million to $65 million for the full year. Breast Health is expected to grow within the 5% to 7% range for the year.

The company expects steady performance in Breast Health for the rest of the year, with strong demand for their products. They are confident in delivering more gantries than last year and are successfully managing resources. In Surgical, they anticipate high revenue growth for the full fiscal year. They also reiterate their guidance for improving margins and operating income throughout the year. The company expects other income to be an expense in Q3 and for the full year. They remain focused on advancing women's health and fulfilling their commitments to shareholders, employees, customers, and patients.

In this paragraph, the operator opens the call for questions and the first question is asked by Patrick Donnelly from Citi. He asks about the strength and durability of the Diagnostics franchise, specifically the molecular DXP, and what is driving its success. Steve MacMillan, the speaker, attributes the success to the company's response to the COVID crisis and the adoption of their Panther system. He also mentions their recent deal and their focus on capital allocation.

The speaker discusses the company's priorities in terms of their balance sheet and M&A strategy. They mention their ideal scenario of doing one $300 million deal like Endomag every quarter, but acknowledge that it may not always be possible. They also mention their willingness to amass cash and use it for buybacks if needed. The company's strong balance sheet and cash flow give them flexibility and strength for future financial projections.

The speaker discusses the recent acquisition of Endomagnetics and how it fits into the existing interventional portfolio. They expect it to be accretive to the division's growth rate and mention the recent update on breast cancer screening guidelines. They believe the USPSTF guidelines will not have a significant impact on their business, which is primarily focused on capital sales rather than volume.

The speaker discusses the impact of recent guidelines on women and the company's focus on maintaining co-testing as the gold standard. They also discuss the potential for USPSTF to move to HPV primary and the possibility of conducting a trial to establish primary HPV delay claim. The organic revenue guide range has been tightened due to currency impact, but the company is still performing within expectations.

Puneet Souda from Leerink Partners asks about the feedback on the Genius digital cytology system and its adoption in the U.S. market. Karleen Oberton responds that they are currently focused on successful integration into lab workflow and minimal contribution is expected in 2024. Steve MacMillan is asked about the competitive landscape and potential share shifts, to which he responds that Hologic's opportunities are strongest in the point-of-care testing and reference lab markets, especially with the potential for RSV testing.

The speaker discusses the company's focus on building their business and growing categories for their customers, rather than solely focusing on market share. They mention their strong presence in respiratory testing and reference labs, and express confidence in their growth rates. They decline to provide guidance for fiscal year 2025, but suggest that investors stay tuned for more information in the November call.

The company is in the early stages of assessing the international opportunity for their BV/CV/TV assay, and while there is potential for growth, it will likely be a longer-term market development opportunity. The company is pleased with the momentum they have in the United States for this assay. When it comes to the international business and margins, there are levers in place to drive future margin expansion, such as going direct and investing in market development and market access capabilities. Acquiring distributors in international markets has also been a successful strategy in the past. The surgical portfolio is expected to contribute to the overall margin profile for the business.

The speaker discusses the growth of the company's international business, which has been driven by a variety of products and regions. They mention the success of their surgical and interventional products, as well as the recent acquisition of a distributor in the Nordics. The speaker also highlights the approval of their digital cytology product in Western Europe as contributing to their overall international growth. They emphasize the company's gradual approach to building their international business over time rather than making sudden changes.

The company has been making investments in their breast health business for several years, and as their products are launched in different countries, they use the funding to continue building. The recent acquisition of Endomag is part of their strategy to expand their presence in the breast care continuum and they may make further moves in this area. The company also mentioned a life cycle for their breast health products, with a launch expected in 2014.

The speaker discusses Hologic's strategy for monetizing the upgrade replacement opportunity for their devices. They have been intentional about smoothing out the business and avoiding boom and bust cycles. They have been providing software and other upgrades to their gantry system, which has been well received by customers. The speaker also mentions that they have something in development for 2025. The improved utilization is the main contributor to their success, with over 90% of new customers running at least one other assay and over 55% running at least two other assays.

The speaker believes that the Panther instrument and its menu have been valuable for customers and there is potential for continued utilization and growth in the future. The conference call has now ended.

This summary was generated with AI and may contain some inaccuracies.