Hologic(HOLX) - 2025 Q3 - Quarterly Results

Executive Summary Q3 FY2025 Performance Highlights Hologic achieved better-than-expected revenue and Non-GAAP EPS growth in Q3 FY2025, driven by a recovery in Breast Health and solid performance in other segments, with total revenue up 1.2% to $1,023.8 million and Non-GAAP diluted EPS up 1.9% to $1.08 | Metric | Amount/Percentage | Change (YoY) | | :------------------- | :---------------- | :----------- | | Revenue | $1,023.8 million USD | +1.2% (+0.4% constant currency) | | GAAP Diluted EPS | $0.86 | +4.9% | | Non-GAAP Diluted EPS | $1.08 | +1.9% | | Operating Cash Flow | $343.2 million USD | N/A | - Company revenue and Non-GAAP EPS both exceeded prior guidance ranges[1][2] Financial Guidance for Q4 and Full Fiscal Year 2025 Hologic anticipates mid-single-digit organic constant currency revenue growth (excluding COVID-19 related revenue) and faster Non-GAAP EPS growth for Q4 FY2025, updating its full-year FY2025 revenue and Non-GAAP EPS guidance Q4 FY2025 Financial Guidance | Metric | Guidance Range (million USD) | Reported Growth (%) | Constant Currency Growth (%) | Organic Growth (%) | Organic (ex-COVID-19) Growth (%) | | :---------- | :--------------------------- | :------------------ | :----------------------- | :----------------- | :------------------------------- | | Revenue | $1,030 - $1,040 | 4.3% - 5.3% | 3.7% - 4.7% | 2.7% - 3.7% | 3.9% - 5.0% | | GAAP EPS | $0.90 - $0.93 | 18.4% - 22.4% | N/A | N/A | N/A | | Non-GAAP EPS | $1.09 - $1.12 | 7.9% - 10.9% | N/A | N/A | N/A | Full Fiscal Year 2025 Financial Guidance (Updated) | Metric | Current Guidance (million USD) | Previous Guidance (million USD) | Reported Growth (%) | Constant Currency Growth (%) | Organic Growth (%) | Organic (ex-COVID-19) Growth (%) | | :---------- | :----------------------------- | :------------------------------ | :------------------ | :----------------------- | :----------------- | :------------------------------- | | Revenue | $4,081 - $4,091 | $4,050 - $4,100 | 1.3% - 1.5% | 1.1% - 1.4% | (0.5%) - (0.2%) | 0.6% - 0.8% | | GAAP EPS | $2.56 - $2.59 | $2.47 - $2.57 | (22.9%) - (22.0%) | N/A | N/A | N/A | | Non-GAAP EPS | $4.23 - $4.26 | $4.15 - $4.25 | 3.7% - 4.4% | N/A | N/A | N/A | Detailed Financial Results - Q3 FY2025 Consolidated GAAP and Non-GAAP Financial Performance Hologic's total revenue grew 1.2% in Q3 FY2025, with GAAP gross margin increasing by 90 basis points while Non-GAAP gross margin decreased by 80 basis points due to product mix and increased reserves, leading to a 4.9% rise in GAAP diluted EPS and a 1.9% rise in Non-GAAP diluted EPS Q3 FY2025 Consolidated Financial Data | Metric | Q3 FY2025 GAAP | Q3 FY2024 GAAP | GAAP Change | Q3 FY2025 Non-GAAP | Q3 FY2024 Non-GAAP | Non-GAAP Change | | :---------------- | :------------- | :------------- | :---------- | :----------------- | :----------------- | :-------------- | | Revenue | $1,023.8 million USD | $1,011.4 million USD | 1.2% | $1,023.8 million USD | $1,011.4 million USD | 1.2% | | Gross Margin | 56.3% | 55.4% | 90 bps | 60.3% | 61.1% | (80 bps) | | Operating Expenses | $322.0 million USD | $316.3 million USD | 1.8% | $309.6 million USD | $302.8 million USD | 2.2% | | Operating Margin | 24.9% | 24.1% | 80 bps | 30.1% | 31.2% | (110 bps) | | Net Margin | 19.0% | 19.2% | (20 bps) | 23.8% | 24.8% | (100 bps) | | Diluted EPS | $0.86 | $0.82 | 4.9% | $1.08 | $1.06 | 1.9% | - GAAP gross margin growth was primarily driven by lower impairment charges, while Non-GAAP gross margin decline was influenced by product mix and increased reserves[9] - Non-GAAP operating margin decreased mainly due to expected profit dilution from the Endomagnetics and Gynesonics acquisitions[9] Revenue Performance by Segment Hologic's Q3 FY2025 revenue performance varied across segments, with Diagnostics revenue growing due to molecular diagnostics sales, Breast Health declining from mammography capital equipment sales, GYN Surgical revenue increasing from acquisitions and international sales, and Skeletal Health achieving significant growth Diagnostics Segment Revenue Total Diagnostics revenue grew 1.8% (0.9% constant currency) to $448.9 million, primarily driven by increased molecular diagnostics sales, partially offset by lower COVID-19 test sales, with organic diagnostics sales (excluding COVID-19) growing 3.9% | Metric | Q3 FY2025 (million USD) | Q3 FY2024 (million USD) | Reported Change (%) | Constant Currency Change (%) | | :-------------------------- | :---------------------- | :---------------------- | :------------------ | :--------------------------- | | Total Diagnostics Revenue | $448.9 | $440.8 | 1.8% | 0.9% | | Molecular Diagnostics Revenue | $320.5 | $310.7 | 3.2% | 2.4% | | Organic Molecular Diagnostics (ex-COVID-19) | $289.0 | $272.7 | 6.0% | 5.2% | | COVID-19 Related Revenue | $31.5 | $38.0 | (17.1%) | (17.8%) | - Molecular Diagnostics revenue growth was primarily driven by BV CV/TV and Panther Fusion assay sales[2] Breast Health Segment Revenue Total Breast Health revenue decreased (5.1%) or (5.8%) constant currency to $365.2 million, mainly due to lower mammography capital equipment sales, partially offset by growth from Endomagnetics revenue and service contract revenue, with organic Breast Health revenue declining (10.1%) | Metric | Q3 FY2025 (million USD) | Q3 FY2024 (million USD) | Reported Change (%) | Constant Currency Change (%) | | :-------------------------- | :---------------------- | :---------------------- | :------------------ | :--------------------------- | | Total Breast Health Revenue | $365.2 | $385.0 | (5.1%) | (5.8%) | | Breast Imaging Revenue | $264.7 | $309.2 | (14.4%) | (15.0%) | | Interventional Breast Solutions Revenue | $100.5 | $75.8 | 32.6% | 31.8% | | Organic Breast Health Revenue | $345.5 | $384.5 | (10.1%) | (10.8%) | - Interventional Breast Solutions revenue growth benefited from the Endomagnetics acquisition[2] GYN Surgical Segment Revenue GYN Surgical revenue increased 7.1% (6.3% constant currency) to $178.4 million, primarily driven by the acquired Gynesonics business and strong international sales, with organic GYN Surgical revenue growing 2.0% | Metric | Q3 FY2025 (million USD) | Q3 FY2024 (million USD) | Reported Change (%) | Constant Currency Change (%) | | :---------------- | :---------------------- | :---------------------- | :------------------ | :--------------------------- | | GYN Surgical Revenue | $178.4 | $166.6 | 7.1% | 6.3% | | Organic GYN Surgical Revenue | $169.9 | $166.6 | 2.0% | 1.2% | Skeletal Health Segment Revenue Skeletal Health revenue achieved significant growth, increasing 64.7% (62.1% constant currency) to $31.3 million, with strong performance in both the U.S. and international markets | Metric | Q3 FY2025 (million USD) | Q3 FY2024 (million USD) | Reported Change (%) | Constant Currency Change (%) | | :---------------- | :---------------------- | :---------------------- | :------------------ | :--------------------------- | | Skeletal Health Revenue | $31.3 | $19.0 | 64.7% | 62.1% | - U.S. market grew 42.0%, and international markets grew 108.0% (100.2% constant currency)[5] Other Key Financial Metrics Hologic maintained a strong cash position and low leverage ratio, repurchased shares, and refinanced debt during the third quarter, with adjusted EBITDA slightly increasing and adjusted ROIC slightly decreasing | Metric | Amount/Ratio | | :-------------------------- | :------------- | | Cash and Cash Equivalents at Period End | $1.74 billion USD | | Adjusted Net Leverage Ratio | 0.6x | | Adjusted EBITDA (Q3 FY25) | $340.9 million USD | - The company repurchased 0.7 million shares for $36 million during the third quarter[9] - The company refinanced its term loan and revolving credit facility in July, with new facilities maturing in July 2030[2] - Adjusted Return on Invested Capital (ROIC) was 13.9%, a decrease of 20 basis points year-over-year[9][34] Q3 FY2025 Revenue by Geographic Region | Region | Revenue Share | | :----------- | :------------ | | United States | 74.3% | | Europe | 14.5% | | Asia Pacific | 5.9% | | Rest of World | 5.3% | Condensed Consolidated Financial Statements Condensed Consolidated Statements of Income The Condensed Consolidated Statements of Income show total revenue of $1,023.8 million for Q3 FY2025, a slight increase from the prior year, with net income remaining relatively stable at $194.9 million and diluted EPS at $0.86 Condensed Consolidated Statements of Income (Excerpt) | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Nine Months Ended June 28, 2025 | Nine Months Ended June 29, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Total Revenue | $1,023.8 million USD | $1,011.4 million USD | $3,050.9 million USD | $3,042.3 million USD | | Gross Profit | $576.6 million USD | $560.3 million USD | $1,534.4 million USD | $1,670.1 million USD | | Operating Income | $254.6 million USD | $244.0 million USD | $477.4 million USD | $652.6 million USD | | Net Income | $194.9 million USD | $194.5 million USD | $378.5 million USD | $610.9 million USD | | Diluted Earnings Per Share | $0.86 | $0.82 | $1.66 | $2.57 | Condensed Consolidated Balance Sheets As of June 28, 2025, Hologic's total assets were $8,806.1 million, a decrease from September 28, 2024, with cash and cash equivalents decreasing while net property, plant, and equipment and other assets increased, and total liabilities and stockholders' equity also decreased accordingly Condensed Consolidated Balance Sheets (Excerpt) | Metric | As of June 28, 2025 (million USD) | As of September 28, 2024 (million USD) | | :-------------------------------- | :------------------------------- | :------------------------------- | | Total Assets | $8,806.1 | $9,156.0 | | Cash and Cash Equivalents | $1,735.2 | $2,160.2 | | Total Current Assets | $3,421.4 | $3,823.3 | | Goodwill and Intangible Assets | $4,286.1 | $4,287.7 | | Total Current Liabilities | $962.5 | $1,037.2 | | Long-Term Debt (less current portion) | $2,509.0 | $2,497.1 | | Total Stockholders' Equity | $4,842.5 | $5,130.0 | Condensed Consolidated Statements of Cash Flows For the nine months ended June 28, 2025, net cash provided by operating activities was $702.0 million, a decrease from the prior year, with net cash used in investing activities of $350.6 million primarily for business acquisitions, and net cash used in financing activities of $778.8 million mainly for common stock repurchases Condensed Consolidated Statements of Cash Flows (Excerpt) | Metric | Nine Months Ended June 28, 2025 | Nine Months Ended June 29, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net Cash Provided by Operating Activities | $702.0 million USD | $918.2 million USD | | Net Cash Used in Investing Activities | $(350.6) million USD | $(185.3) million USD | | Net Cash Used in Financing Activities | $(778.8) million USD | $(1,051.8) million USD | | Net Decrease in Cash and Cash Equivalents | $(425.0) million USD | $(316.6) million USD | | Cash and Cash Equivalents at Period End | $1,735.2 million USD | $2,439.1 million USD | - Net business acquisitions (net of cash acquired) amounted to $321.5 million for the first nine months of FY2025[25] - Expenditures for common stock repurchases totaled $752.9 million for the first nine months of FY2025[25] Non-GAAP Financial Measures and Reconciliations Use of Non-GAAP Financial Measures Hologic utilizes various Non-GAAP financial measures, including constant currency revenue, organic revenue, Non-GAAP gross margin, operating margin, net income, EPS, adjusted EBITDA, adjusted net leverage ratio, and adjusted ROIC, to supplement GAAP information, aid management decision-making, and help investors understand core business performance by excluding specific cash and non-cash items such as amortization, impairment, restructuring, and acquisition-related expenses - Non-GAAP measures supplement GAAP financial information and may differ from similar measures used by other companies[11] - These metrics are used by management for financial and operational decision-making, including evaluating historical performance, comparing with competitors, and determining management incentive compensation[12] - Non-GAAP adjustments include amortization of intangible assets, goodwill and intangible asset impairment, contingent consideration adjustments, restructuring charges, acquisition-related expenses, loss on debt extinguishment, unrealized gains and losses on forward foreign exchange contracts, and other one-time or non-recurring items[10] Reconciliation of GAAP Revenue to Organic Revenue This reconciliation details the process of adjusting GAAP revenue to organic revenue and organic revenue excluding COVID-19, showing Q3 FY2025 organic revenue of $988.6 million and organic revenue excluding COVID-19 of $957.1 million, reflecting the exclusion of divested businesses (Blood Screening, SSI) and acquired businesses (Endomagnetics, Gynesonics) as well as COVID-19 related sales Q3 FY2025 Revenue Reconciliation | Metric | Q3 FY2025 (million USD) | Q3 FY2024 (million USD) | | :-------------------------- | :---------------------- | :---------------------- | | Consolidated GAAP Revenue | $1,023.8 | $1,011.4 | | Less: Blood Screening Revenue | $(7.0) | $(7.9) | | Less: SSI Revenue | $(0.1) | $(0.5) | | Less: Endomagnetics Revenue | $(19.6) | — | | Less: Gynesonics Revenue | $(8.5) | — | | Organic Revenue | $988.6 | $1,003.0 | | Less: COVID-19 Test Kits | $(6.5) | $(13.3) | | Less: COVID-19 Related Revenue | $(25.0) | $(24.7) | | Organic Revenue (ex-COVID-19) | $957.1 | $965.0 | - Organic revenue excludes divested Blood Screening and SSI ultrasound imaging businesses, and acquired Endomagnetics and Gynesonics businesses (for the first year post-acquisition)[4][10] Reconciliation of GAAP to Non-GAAP Profitability Metrics This section provides detailed reconciliations from GAAP to Non-GAAP gross profit, operating expenses, operating income, income before taxes, net income, and their respective margins, with key adjustments including amortization of acquired intangible assets, impairment charges, and restructuring costs Q3 FY2025 Gross Profit Reconciliation | Metric | Q3 FY2025 (million USD) | Q3 FY2024 (million USD) | | :-------------------------- | :---------------------- | :---------------------- | | GAAP Gross Profit | $576.6 | $560.3 | | Adjustments (Amortization, Impairment, etc.) | $41.1 | $57.7 | | Non-GAAP Gross Profit | $617.7 | $618.0 | | GAAP Gross Margin | 56.3% | 55.4% | | Non-GAAP Gross Margin | 60.3% | 61.1% | Q3 FY2025 Operating Expenses Reconciliation | Metric | Q3 FY2025 (million USD) | Q3 FY2024 (million USD) | | :-------------------------- | :---------------------- | :---------------------- | | GAAP Operating Expenses | $322.0 | $316.3 | | Adjustments (Amortization, Restructuring, etc.) | $(12.4) | $(13.5) | | Non-GAAP Operating Expenses | $309.6 | $302.8 | Q3 FY2025 Net Income and EPS Reconciliation | Metric | Q3 FY2025 (million USD) | Q3 FY2024 (million USD) | | :-------------------------- | :---------------------- | :---------------------- | | GAAP Net Income | $194.9 | $194.5 | | Total Adjustments | $49.2 | $56.2 | | Non-GAAP Net Income | $244.1 | $250.7 | | GAAP Diluted EPS | $0.86 | $0.82 | | Non-GAAP Diluted EPS | $1.08 | $1.06 | Reconciliation of GAAP to Non-GAAP EPS Guidance This section provides reconciliations of GAAP to Non-GAAP EPS guidance for Q4 and the full fiscal year 2025, with key adjustments including amortization of acquired intangible assets, intangible asset impairment, acquisition-related costs, restructuring, integration, and other expenses, along with their tax impacts Q4 FY2025 EPS Guidance Reconciliation | Metric | Low | High | | :-------------------------- | :--- | :--- | | GAAP Net Earnings Per Share | $0.90 | $0.93 | | Amortization of Acquired Intangible Assets | $0.21 | $0.21 | | Restructuring, Integration, and Other Costs | $0.02 | $0.02 | | Tax Impact of Exclusions | $(0.04) | $(0.04) | | Non-GAAP Net Earnings Per Share | $1.09 | $1.12 | Full FY2025 EPS Guidance Reconciliation | Metric | Low | High | | :-------------------------- | :--- | :--- | | GAAP Net Earnings Per Share | $2.56 | $2.59 | | Amortization of Acquired Intangible Assets | $0.85 | $0.85 | | Intangible Asset Impairment | $0.97 | $0.97 | | Acquisition Related | $0.20 | $0.20 | | Restructuring, Integration, and Other Costs | $0.10 | $0.10 | | Income Tax Related Items | $0.03 | $0.03 | | Tax Impact of Exclusions | $(0.48) | $(0.48) | | Non-GAAP Net Earnings Per Share | $4.23 | $4.26 | Adjusted Return on Invested Capital (ROIC) Reconciliation For the trailing twelve months ended June 28, 2025, the adjusted ROIC was 13.9%, calculated by adjusting GAAP net income to Non-GAAP net operating profit after tax and dividing by average net debt plus average stockholders' equity, with adjustments for impairment charges - Adjusted Return on Invested Capital (ROIC) was 13.9% for the trailing twelve months ended June 28, 2025[33][34] Adjusted Return on Invested Capital Calculation (Excerpt) | Metric | Amount (million USD) | | :-------------------------- | :------------------- | | Adjusted Net Operating Profit After Tax | $973.2 | | Average Net Debt Plus Average Stockholders' Equity | $7,014.2 | - Stockholders' equity has been adjusted to remove the after-tax impact of goodwill and intangible asset impairment charges[35] Net Leverage Ratio Reconciliation As of June 28, 2025, Hologic's net leverage ratio was 0.6x, calculated by dividing net principal debt ($784.2 million) by EBITDA for the trailing four quarters ($1,316.3 million) Net Leverage Ratio Calculation | Metric | Amount (million USD) | | :-------------------------- | :------------------- | | Total Principal Debt | $2,519.4 | | Total Cash and Cash Equivalents | $(1,735.2) | | Net Principal Debt | $784.2 | | EBITDA for Trailing Four Quarters | $1,316.3 | | Net Leverage Ratio | 0.6 | Explanatory Notes to Reconciliations This section provides detailed explanations for each adjustment in the Non-GAAP reconciliations, including amortization of acquired intangible assets, fair value remeasurement of inventory, restructuring and integration costs, acquisition-related expenses, loss on debt extinguishment, and impairment charges - Amortization of intangible assets: Reflects non-cash expenses for acquired intangible assets[31] - Intangible asset impairment: Includes impairment charges related to Acessa, Bolder, Mobidiag, Diagenode acquisitions, and BioZorb[31] - Restructuring and integration/consolidation costs: Include severance, retention, relocation costs, and legal, tax, and professional consulting services related to acquisitions and facility consolidations[31] - Acquisition-related expenses: Include legal, consulting, and due diligence fees incurred prior to transaction close, and accelerated vesting of unvested stock options related to the Gynesonics acquisition[31] Additional Company Information About Hologic, Inc. Hologic, Inc. is an innovative medical technology company primarily dedicated to improving women's health and well-being through early detection and treatment - The company focuses on improving women's health and well-being through early detection and treatment[15] Forward-Looking Statements This press release contains forward-looking information involving known and unknown risks and uncertainties, with statements based on current assumptions, and actual results may differ materially due to factors such as competition, market demand, regulatory approvals, economic conditions, and supply chain issues - Forward-looking statements involve company plans, objectives, expectations, and intentions, and are subject to known and unknown risks and uncertainties[16] - Risks that could cause actual results to differ include competition, market developments, product demand forecasts, healthcare industry consolidation, acquisition impacts, third-party payor decisions, regulatory approvals, product defects, legal proceedings, climate change, tax legislation, global challenges (macroeconomic uncertainty, war), supply chain constraints, and cybersecurity threats[17] - The company expressly disclaims any obligation to publicly update or revise any such statements[18] Contacts Provides contact information for Hologic's investor relations team - Investor Relations contacts: Michael Watts (Corporate Vice President) and Peter Sattler (Senior Manager)[19]