The paragraph is about Hologic's First Quarter Fiscal 2025 Earnings Conference Call. The call is led by Mike Watts, Corporate Vice President of Investor Relations, and features key company executives like Steve MacMillan, Essex Mitchell, and Karleen Oberton. The press release for the quarter is available on Hologic's website, along with prepared remarks and a replay of the call for 30 days. The call includes forward-looking statements with potential risks and uncertainties, and discusses non-GAAP financial measures, particularly focusing on organic revenue and organic revenue excluding COVID-19-related sales. Percentage changes mentioned in the call are generally year-over-year, and revenue growth rates are in constant currency unless specified otherwise.

Steve MacMillan, CEO of Hologic, announced the first-quarter financial results for fiscal 2025, highlighting a total revenue of $1.022 billion, a 1% increase on a constant currency basis, despite a stronger dollar impacting reported revenue. Non-GAAP earnings per share reached $1.03, a 5% increase, driven by improved operating margins, share buybacks, and foreign exchange hedging. At the JP Morgan conference, MacMillan emphasized Hologic's consistent growth since 2014, with revenues increasing from $2.5 billion to over $4 billion (a 4.8% CAGR) and non-GAAP earnings per share growing from $1.46 to $4.08 (a 10.8% CAGR). He expressed confidence in continued double-digit earnings growth due to Hologic's market-leading products and strong organizational capabilities.

The paragraph outlines the company's confidence in achieving its long-term financial goals despite occasional setbacks. It highlights their strategy of focusing on mid-single digit growth, enhancing operating margins, and utilizing acquisitions and share buybacks to boost revenue and earnings per share. The company leverages its leading brands in diagnostics, breast health, and surgical services to generate reliable cash flow, which fuels future innovation. They emphasize their strong market shares and the growth driven by expanding their product lines both organically and through acquisitions. The company's success is attributed to its organizational capabilities and its dedicated workforce, particularly in the field of women's health, which has led to advancements in clinical care and market expansion.

The company has successfully created a market for high throughput vaginitis testing, contributing to its significant molecular diagnostics test on the Panther system. Initially achieving success in the U.S., the company is now expanding globally, enhancing its market access and business development through improved talent and processes. Recent acquisitions like Biotheranostics, Endomagnetics, and Gynesonics are expected to drive revenue growth, strengthening organizational capabilities and providing confidence in future earnings and shareholder value. Essex Mitchell then reports on divisional revenue performance, noting strong diagnostics performance, consistent surgical and skeletal results, but underperformance in breast health, with overall 1% growth in Q1.

The paragraph details the company's revenue growth, driven primarily by molecular diagnostics, particularly their Biotheranostics lab testing and BV CV/TV assay, which both experienced strong double-digit growth. The company is expanding its market through a physician sales force, similar to their strategy for women's health tests on their Panther platform. Despite competition, their core assays maintain leading market positions. Non-COVID respiratory testing met expectations, and the Panther Fusion system has seen increased adoption by nearly 40% of US customers. Additionally, the cytology and perinatal business experienced higher than average growth, aided by easy comparisons to the prior year's depressed sales.

In the first quarter, total revenue for the Breast Health division was $369.1 million, reflecting a decline of 2.1% overall, or 5.8% organically if excluding SSI and Endomagnetics. This decrease was mainly due to reduced sales of capital equipment, though there was a strong performance in service revenue, which accounted for over 40% of sales. Looking ahead, 2025 is expected to be a softer year for gantry placements as the market normalizes post-chip shortage and most 2D mammography units have been upgraded to 3D. The company faces the challenge of converting 3D units to their new Envision platform, which has received positive feedback. Internationally, budget constraints are impacting capital investments. Nonetheless, the integration of Endomagnetics, acquired in late 2024, is going well and is set for a strong year.

The paragraph discusses Endomag's innovative market products and R&D capabilities, which present opportunities to expand the interventional breast portfolio. It reports a 2.5% increase in first-quarter revenue for the Surgical segment, driven by strong international growth, despite a temporary IV fluid shortage in the U.S. Skeletal business revenue decreased by 37.4% due to delayed shipping of Horizon DXA units, with production expected to normalize by the third quarter. The Gynesonics acquisition, completed in January, adds the SOMATEX system, a minimally invasive tool for treating uterine fibroids, to their surgical portfolio. This tool complements existing offerings and is expected to drive double-digit sales growth. Although the acquisition will slightly dilute non-GAAP EPS this year due to planned investments, strengthening business development remains a focus.

The paragraph discusses the company's strategic focus on mergers and acquisitions to enter high-growth adjacent markets, highlighting recent successful deals like Biotheranostics, Endomagnetics, and Gynesonics. Karleen Oberton then outlines the financial performance, noting a 5% growth in non-GAAP earnings per share despite only a 1% increase in revenue, demonstrating strong operating leverage. The first quarter showed an improved non-GAAP gross margin due to favorable product mix and efficiencies, and a slight increase in operating expenses mainly from the inclusion of Endomagnetics. The operating margin improved by 90 basis points due to higher gross margins and effective expense management.

The company focuses on leveraging its P&L for margin expansion and EPS growth. Despite a $4 million net loss in other income, its foreign exchange hedging program helped minimize currency impacts. The Q1 tax rate was 19.5%, and the net margin was 23.4%, maintaining strong performance. Confident in its future, the company repurchased 6.8 million shares, reducing its share count by 8 million. This led to non-GAAP EPS of $1.03, meeting high guidance expectations. With $189 million in Q1 operating cash flow and $2 billion in cash/investments, the company is well-positioned for growth. It acknowledges the impact of new US policies and a strong dollar on its financial guidance.

Entering the new year, the company has adjusted its financial expectations for 2025, lowering its revenue guidance by $100 million to a range of $4.05 billion to $4.10 billion, while maintaining its non-GAAP EPS guidance at $4.25 to $4.35. Despite growth in Diagnostics and Surgical businesses and an addition of $25 million from Gynesonics' revenue, three factors contribute to the reduced guidance. A stronger US dollar is expected to create a $30 million headwind, lower sales of Breast Health capital have been forecast due to market uncertainties, and potential policy changes in the US could lead to disruptions, including the impact on foreign aid affecting $30 million in revenue from HIV testing partnerships, and possible tariffs on products from Mexico affecting gross margins.

The company is adjusting its forecast due to delayed tariffs, but is maintaining its full-year EPS guidance of $4.25 to $4.35, thanks to strong financial discipline. For the second quarter, they expect revenues between $995 million and $1.005 billion, with non-GAAP EPS of $1 to $1.03. Revenue growth is anticipated to improve in the third and fourth quarters, and Diagnostics is expected to grow mid-single digits, excluding decreasing COVID-19 sales. COVID-19 related revenues are projected to be $9 million for Q2 and $35 million for the year, with related items reaching $100 million annually. Led screening revenue is projected at $5 million for Q2 and $20 million for the year, excluding them from organic growth calculations. Breast Health expectations are reduced due to weaker capital equipment sales, forecasting a low single-digit decline for the year, including Endomagnetics.

The company anticipates revenue growth in the second half of the fiscal year, with significant growth expected in Q4. In the Surgical segment, high single-digit growth is predicted due to the inclusion of Gynesonics and increased international contributions. Gross margins are expected to be in the low 60s, with improvements in the second half from increased sales and operational efficiencies. Operating margins are projected to be in the low 30s, with expansion throughout the year. Other income is estimated to be an expense, with a specific range for Q2 and the full year. The effective tax rate remains at 19.5%, and the anticipated diluted shares outstanding are 230 million. The company is committed to meeting its EPS goals despite top-line pressure, which is considered temporary. It is optimistic about long-term growth due to strong market positions and new growth initiatives. The paragraph closes with an invitation for questions from the audience.

In the paragraph, Steve MacMillan discusses the trends and outlook in the hospital Capital Expenditure (CapEx) market, specifically relating to Breast Health. He notes that there was significant growth in Breast Health during late 2023 and early 2024 due to a surge that temporarily inflated the market beyond its usual trend. This growth was similar to post-COVID boosts seen in other sectors. However, the long-term market trend is now lower than in 2023, and the overall market is expected to decline slightly this year due to a combination of market normalization post-COVID and anticipation of a new gantry product. MacMillan suggests that, while the current market downturn is cyclical, the upcoming product launch in 2026 could potentially rejuvenate both the market and the company's business.

In the paragraph, Patrick Donnelly asks questions about the competitive landscape and growth outlook in the diagnostics sector, particularly regarding the BV, CV/TV parts of the portfolio. Steve MacMillan responds enthusiastically about their Diagnostics business, highlighting their strategic Panther placements during COVID, the rollout of new assays, and their strong position in the molecular lab channel. He expresses confidence in their growth prospects, including international opportunities and the development of Biotheranostics, amidst a competitive and noisy diagnostic space.

In the paragraph, Karleen Oberton discusses the potential for growth in their molecular diagnostics area, specifically with the new assay BV, CV, highlighting their unique approach with a physician sales force that collaborates with lab customers. Anthony Petrone from Mizuho Group questions the company's medium to long-term financial outlook, noting a current trend of low single-digit growth as opposed to a previous 5% to 7% range. He inquires about the return to higher growth rates and the potential for an H5N1 bird flu assay. Steve MacMillan responds by emphasizing strong past performance with a 17% organic growth in a year, suggesting confidence despite current cyclical challenges and excitement for future growth across different franchises.

The surgical and diagnostics businesses are thriving, with promising international expansion in Gynesonics. The company remains prepared to respond quickly to health crises like H1N1, though expectations are tempered, drawing a parallel to the Zika virus response. The Breast Health business is focusing on the disposable and interventional segments and expects a new gantry release to stabilize growth. Doug Schenkel from Wolfe Research asks for clarification on the Breast Health guidance's reliance on market conditions or anticipation of growth following the new gantry launch. He also inquires about the role of M&A in the company's long-term strategy and factors considered given the political climate. Steve MacMillan begins to address these queries.

The paragraph discusses the impact of market conditions and a new product launch on a company's performance, highlighting that market conditions have a more significant influence. The company remains optimistic about future growth, especially post-chip shortage, and innovation advances are expected to boost acceleration. The firm emphasizes its M&A-focused capital allocation strategy, referencing recent acquisitions of Endomagnetics and Gynesonics as fitting their growth objectives by adding on-market products that enhance growth rates.

The paragraph features a discussion between Karleen Oberton, Vijay Kumar from Evercore ISI, and another individual named Steve, about financial metrics and guidance related to certain business segments. Oberton highlights the focus on revenue growth, asset accretion, and gross margin when evaluating financial performance. She notes that while some ventures like Gynesonics might be initially dilutive, they expect to manage such situations effectively with a goal of achieving double-digit ROIC over time. Kumar asks about the Breast Health segment's performance, to which Oberton confirms a mid-single-digit organic decline year-over-year. She anticipates similar performance from Q1 to Q2 but expects improvement in Q3 and a strong Q4. Kumar also inquires about the surgical franchise, suggesting that early-year impacts like a flu shortage should improve, with expectations of Gynesonics contributing to growth, moving from low to potentially high single-digit growth in the latter half of the year.

In the discussion, Karleen Oberton addresses the impact of an IV fluid shortage on Q1 results and suggests that Q2 may see a slight setback due to deductible resets, but expects improved growth rates in the latter half of the year, especially with the addition of Gynesonics. Tycho Peterson from Jefferies inquires about potential impacts of the USPSTF and Braidwood case on their portfolio, to which Steve MacMillan responds that they don't foresee a significant impact and are confident in the value of their products. Regarding Panther utilization, Steve expresses optimism about substantial growth potential without expanding the installed base, attributing this to their expanded manufacturing capacity from COVID-related investments, which reduces the need for significant new capital expenditures.

The article discusses the expansion potential of the Panther Fusion sidecar, highlighting its ability to open significant opportunities for PCR assays, which are cost-effective and quick to market. The company sees long-term growth prospects through Fusion and an expanded menu. During a Q&A, Casey Woodring from JP Morgan inquires about the Breast business's performance, noting mid-single-digit declines in both US and international markets, with slightly larger international declines due to budget constraints. Karleen Oberton states that the manufacturing consolidation should not delay the launch of a new gantry in 2026, which is expected to improve margins.

In the discussion, Steve MacMillan addresses questions about the impact of new gantry sales and the associated costs, stating that while there are benefits from facility consolidation and potentially higher ASPs, higher costs might offset these, keeping the margin profile unchanged. Tejas Savant from Morgan Stanley inquires further about the gantry sales and the upgrade pathway’s effect on customer conversations. MacMillan responds that there is significant excitement among leading customers for the Envision gantry, and acknowledges that the company may have overestimated market growth rates, mistaking a temporary increase in gantries sold for a long-term trend. He admits that more gantries were placed than usual and refers to internal discussions where the team’s assumptions were challenged.

The paragraph discusses a past oversight regarding market growth assumptions and highlights new leadership and enhanced analytics at a business division after a chip shortage. It also addresses the impact of tariffs on Hologic's operations, noting that while there's some exposure to tariffs in Mexico, the more significant concern would be tariffs affecting manufacturing in Costa Rica, where most surgical and Breast Health products are made. The company has minimal exposure in China, and most gantries and molecular diagnostics are produced in the U.S. Overall, the company considers its position to be strong despite potential tariff issues.

The paragraph discusses a financial update and future outlook for a company, specifically addressing questions from analysts during an earnings call. Ryan Zimmerman from BTIG inquires about the company's breast segment, particularly concerning the expected launch of a new gantry in 2026, which may lead to a price increase but possibly a decline in unit volume. Steve MacMillan, responding, expresses optimism about future unit growth and pricing. Zimmerman also asks about Gynesonics sales projections, and Karleen Oberton clarifies that the company anticipates $25 million in sales for the remaining three quarters of the year. The discussion also touches upon guidance uncertainties related to HIV testing policy.

In this conversation, Jack Meehan asks Karleen Oberton about the impact of a $30 million sales disruption on their guidance, which Oberton confirms is included due to significant potential supply chain impacts. Meehan clarifies that this will appear in the virology and molecular lines. Oberton notes a slight improvement in operating margins for Q2 with more substantial improvements expected later due to revenue growth and operating expenses being highest in the first two quarters. Puneet Souda then shifts the discussion to issues related to breast product sales, inquiring about forecast assessments, changes in sales incentives, and sales rep adjustments, in light of challenges with hospital capital expenditures.

The paragraph discusses the pressures hospitals face regarding capital expenditures (CapEx) for purchasing new equipment, particularly in challenging economic times. Steve MacMillan expresses optimism about the continued demand for mammography equipment due to its importance in women's health. Despite a slight market downturn, the company is refocusing efforts on selling gantries after being sidetracked by a chip shortage. In response to a question from Andrew Cooper about the adoption of Panther Fusion, MacMillan is optimistic that its adoption could nearly reach 100% as existing customers consider adding to their testing menu.

The paragraph discusses the steady growth and customer acquisition in the molecular diagnostics business, highlighting the challenges of transitioning customers to new assays. It mentions the continuous addition of technologies like Panthers and Fusions, suggesting years of gradual growth. The conversation shifts to operating margins, with Andrew Cooper asking about expectations for margin improvement throughout the year despite lower revenue and potential M&A impact. Karleen Oberton explains that margins will improve from Q1 and Q2 but cautions against using the year's end margin as a baseline for 2026, due to expense and revenue seasonality. Steve MacMillan reiterates that operating margins typically improve over the year because of expense patterns.

The paragraph discusses the company's financial performance, highlighting an 80 basis point improvement in gross margin and a 90 point improvement in operating margin in the first quarter compared to the previous year. The company is optimistic about achieving better overall margins this year than last, which were already strong. The paragraph concludes with the end of a conference call and thanks the participants.

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