Hologic(US:HOLX)2025-02-06 13:42Revenue Performance - Product revenues for the quarter totaled $817.9 million, a decrease of 1.2% compared to $828.1 million in the prior year[132]. - Diagnostics segment revenue increased by $17.5 million, or 4.2%, driven by a $16.2 million increase in Molecular Diagnostics and a $5.7 million increase in Cytology revenue[133]. - Breast Health segment revenue decreased by $23.1 million, or 9.9%, from $232.9 million to $209.8 million[132]. - Skeletal Health segment revenue saw a significant decline of 57.8%, dropping from $16.6 million to $7.0 million[132]. - The overall decrease in product revenues was primarily due to declines in Breast Health and Skeletal Health segments, offset by increases in Diagnostics and GYN Surgical revenues[132]. - Breast Health product revenues decreased by $23.1 million, or 9.9%, primarily due to lower sales of digital mammography systems and longer sales cycles[134]. - GYN Surgical product revenues increased by $5.0 million, or 3.2%, driven by higher sales of the Fluent fluid management system and MyoSure devices in Europe[135]. - Skeletal Health product revenues decreased by $9.6 million, or 57.8%, due to a temporary stop-ship of Horizon DXA systems[136]. - Service and other revenues increased by $18.9 million, or 10.2%, primarily from expanded Breast Health service contracts and higher lab testing volumes[139]. Operating Income and Expenses - Diagnostics segment revenues increased by 5.1% to $470.6 million, with operating income rising by 140.7% to $118.9 million, resulting in an operating income margin of 25.3%[160]. - Breast Health segment revenues decreased by 2.3% to $369.1 million, with operating income declining by 34.0% to $67.5 million, leading to an operating income margin of 18.3%[163]. - GYN Surgical segment revenues increased by 2.5% to $166.3 million, with operating income rising by 7.9% to $46.6 million, resulting in an operating income margin of 28.0%[167]. - Skeletal Health segment revenues decreased by 37.8% to $15.8 million, with operating income turning negative at $(3.2) million, reflecting a significant decline in performance[170]. - Operating expenses decreased by $18.6 million, or 5.0%, with research and development expenses down by 9.8% due to lower headcount and project spend[147][148]. Cash Flow and Working Capital - The company had $2,491.2 million in working capital and cash and cash equivalents of $1,782.1 million as of December 28, 2024, with a decrease of $378.1 million in cash during the first three months of fiscal 2025[173]. - Operating activities generated cash of $189.3 million, primarily driven by net income of $201.0 million and non-cash charges, despite a cash outflow of $77.2 million from changes in operating assets and liabilities[174]. Debt and Interest - Total recorded debt outstanding was $2.53 billion as of December 28, 2024, including $1.19 billion under the 2021 Credit Agreement and $941.3 million in 2029 Senior Notes[178]. - The interest rate under the 2021 Term Loan was 5.44% per annum as of December 28, 2024, reflecting the company's borrowing costs[180]. - The company has a remaining scheduled balance of $1.085 billion on the 2021 Term Loan, with principal payments ranging from $9.375 million to $18.75 million per three-month period starting December 26, 2025[181]. - As of December 28, 2024, the outstanding principal balance of the 2021 Term Loan was $1.2 billion, and the company was in compliance with financial covenants[182][183]. - The total aggregate principal balance of the 2028 Senior Notes is $400 million, maturing on February 1, 2028, with an interest rate of 4.625% per year[184]. - The total aggregate principal balance of the 2029 Senior Notes is $950 million, maturing on February 15, 2029, with an interest rate of 3.250% per year[185]. - A hypothetical 10% increase in the SOFR rate would increase annual interest expense by approximately $3 million, net of the impact of interest rate swap hedges[195]. - A hypothetical 100 basis point change in market rates would change annual interest income by approximately $13.2 million based on current cash and investment balances[196]. Acquisitions and Strategic Moves - The company completed the acquisition of Endomagnetics Ltd for $313.9 million, enhancing its Breast Health segment[129]. - The company sold its SSI ultrasound imaging business for $1.9 million, with an additional funding of $33.2 million for transition services[130]. - The company completed the acquisition of Gynesonics, Inc. for approximately $350 million, enhancing its diagnostic imaging technology segment[187]. Foreign Currency and Tax - For the first quarter of fiscal 2025, the company reported net foreign currency exchange gains of $25.6 million, a significant improvement from a loss of $13.1 million in the same period last year, marking a change of 372.7% in Other Income (Expense), net[156]. - The effective tax rate for the three months ended December 28, 2024, was 18.8%, compared to a benefit of 28.9% for the same period in the prior year, reflecting a significant change in tax provision[158]. - The company believes that foreign currency exchange risk is not significant, with a hypothetical 10% change in foreign currencies not materially impacting financial condition or results[198]. Other Notable Points - The percentage of product revenue from Europe increased to 16.0% from 15.3%, attributed to a penalty payment from the German government and increased GYN Surgical product sales[138]. - The company expects to resume shipments of remaining DXA products during the second and third quarters of fiscal 2025 as supply issues are resolved[136]. - The company authorized a new stock repurchase program of up to $1.5 billion, with $1.17 billion remaining unused as of December 28, 2024[186]. - As of December 28, 2024, the fair value of the 2028 and 2029 Senior Notes was approximately $387.4 million and $860.9 million, respectively[193].