Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $1,005 million, a decrease of 0.5% in constant currency, but at the upper end of guidance [5][6] - Non-GAAP earnings per share were $1.30, flat compared to the previous year, reflecting solid gross margin expansion and benefits from share buybacks [6][30] - Operating cash flow generated in Q2 was $169.5 million, with cash and equivalents at $1,430 million at quarter end [10][34] Business Line Data and Key Metrics Changes - Diagnostics revenue was $453.6 million, growing 1.5% or 5.2% excluding COVID-related sales, driven by molecular diagnostics [14][17] - Breast Health revenue declined 6.9% to $356.2 million, with a 9.2% organic decline, attributed to lower gantry placements [18][39] - Surgical revenue increased 5.1% to $162.5 million, with international surgical business growing 16.2% [21][22] - Skeletal revenue grew 22.9% to $33 million, benefiting from improved production ramp of the DEXA system [23] Market Data and Key Metrics Changes - The company lowered sales expectations for China due to geopolitical turbulence, now forecasting only about $50 million in revenue from China for fiscal 2025 [12][36] - The diagnostics business in Africa faced declines due to funding cuts, impacting overall growth [17][55] Company Strategy and Development Direction - The company aims to accelerate growth in Breast Health and has reorganized its sales team to improve performance [19][20] - Hologic is actively seeking acquisitions and investments, with a focus on tuck-in M&A and returning value to shareholders through stock repurchases [11][33] - The company is confident in its strong market positions in core US and European markets, despite challenges in other regions [12][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver solid financial results despite macroeconomic challenges [5][6] - The company anticipates faster growth beginning in Q4 2025, driven by better commercial execution and new product introductions [12][36] - Management highlighted the importance of employee engagement and its role in navigating dynamic environments [10] Other Important Information - The company expects a gross impact of $20 to $25 million per quarter from recently announced tariffs, primarily affecting manufacturing in Costa Rica and China [26][27] - Non-GAAP gross margin improved to 61.1%, driven by strong diagnostics sales and the addition of EndoMag and Gynasonics [30] Q&A Session Summary Question: Impact of tariffs and supplier pricing - Management indicated that while there are potential higher costs from suppliers, they believe offsets will balance the impact [45][46] Question: Breast Health sales force reorganization - The reorganization aims to improve focus on capital and disposable product sales, with expectations of a more stable business moving forward [47][49] Question: Revenue guidance and Africa diagnostics weakness - The decline in revenue guidance is primarily due to reduced expectations from China and the impact of funding cuts in Africa [54][55] Question: Gantry replacement cycle - The average life of gantries has extended, and the company is in a replacement cycle, expecting steady placements moving forward [75][76] Question: Supply chain management - Management feels confident in their supply chain, with most manufacturing done in the US, and is evaluating options but not planning significant changes [69][71] Question: Molecular diagnostics contracting cycles - The molecular diagnostics business is expected to grow, despite headwinds from HIV testing declines in Africa [81][83]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $1,005 million, a decrease of 0.5% in constant currency, but at the upper end of guidance [7][8] - Non-GAAP earnings per share were $1.30, flat compared to the previous year, reflecting solid gross margin expansion and benefits from share buybacks [8][30] - Non-GAAP gross margin improved to 61.1%, up 40 basis points year-over-year [31][34] Business Line Data and Key Metrics Changes - Diagnostics revenue was $453.6 million, growing 1.5% or 5.2% excluding COVID-related sales, driven by molecular diagnostics [16][18] - Breast Health revenue declined 6.9% to $356.2 million, with a 9.2% decline organically, attributed to lower gantry placements [19][40] - Surgical revenue increased 5.1% to $162.5 million, with international surgical business growing 16.2% [23][24] - Skeletal revenue grew 22.9% to $33 million, exceeding internal expectations due to improved production [25] Market Data and Key Metrics Changes - The diagnostics division's growth was impacted by reduced HIV testing in Africa due to funding cuts, affecting overall performance [18] - Sales expectations for China were lowered due to geopolitical challenges, with anticipated revenue now at approximately $50 million for the fiscal year [14][66] Company Strategy and Development Direction - The company aims to accelerate growth in Breast Health and has reorganized its sales team to improve focus on capital and disposable product sales [20][21] - Strategic acquisitions, such as Endomagnetics and Gynasonics, are expected to enhance market position and drive future growth [13][35] - The company is exploring various mitigation strategies for tariff impacts, primarily from Costa Rica and China [27][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the challenging macroeconomic environment and anticipates improved growth rates in the fourth quarter [14][43] - The company expects to return to healthy growth in Breast Health by Q4 2025, driven by better commercial execution and new product introductions [40][43] Other Important Information - The company generated $169.5 million in operating cash flow in Q2 and ended the quarter with over $1.6 billion in cash and investments [12][35] - The effective tax rate for Q2 was 19%, reflecting adjustments to align with the expected full-year rate [34] Q&A Session Summary Question: Can you discuss the potential higher costs from suppliers and mitigation efforts? - Management indicated that while there are discussions about potential price increases, they believe they can offset these costs through their existing operations in Costa Rica [46][47] Question: What is the current appetite for capital from hospitals? - Management noted that the breast health business has stabilized, and they expect hospitals to allocate budgets for meaningful product improvements [48][75] Question: How is the company addressing the decline in Africa and China? - The company is de-risking its revenue expectations from China and addressing funding cuts affecting testing in Africa [14][66] Question: What is the outlook for the Breast Health business? - Management is optimistic about returning to steady growth in Breast Health, with improvements expected in the fourth quarter [40][54] Question: Can you provide insights on the gantry replacement cycle? - The average life of gantries has extended to 10-12 years, and the company is actively managing an end-of-life strategy for older units [78] Question: How is the company managing supply chain challenges? - Management expressed confidence in their supply chain, particularly for US-manufactured products, while evaluating potential adjustments as needed [73][74]