Hologic(US:HOLX)2025-07-30 21:32Financial Data and Key Metrics Changes - Total revenue for Q3 was $1,024 million, representing a slight growth of 0.4% year-over-year, exceeding guidance by approximately $14 million [8][17] - Non-GAAP earnings per share reached $1.08, a 1.9% increase compared to the previous year, and above the high end of guidance [8][32] - Non-GAAP operating margin was maintained just above 30%, reflecting effective expense control [8][32] Business Line Data and Key Metrics Changes - Diagnostics revenue was $448.9 million, growing 0.9% overall and 2.9% organically, excluding COVID-related sales [18] - Breast Health revenue was $365.2 million, declining 5.8% or 10.8% organically, but showed sequential growth compared to Q2 [26] - Surgical revenue increased by 6.3% to $178.4 million, with international growth leading at 24.8% [27] - Skeletal revenue grew significantly by 62.1% to $31.3 million, driven by resumed shipping of DEXA models [29] Market Data and Key Metrics Changes - The diagnostics business faced challenges due to geopolitical issues, particularly in China and funding cuts in Africa, impacting growth [18][20] - The Breast Health business is expected to rebound, with improved sales execution and new product launches anticipated to drive future growth [9][26] Company Strategy and Development Direction - The company aims for mid-single-digit organic revenue growth in the upcoming fiscal year, supported by a strengthened Breast Health business and ongoing product innovations [9][36] - Focus on enhancing the Breast Health portfolio through new product launches and improved sales strategies [10][12] - Continued investment in international markets is expected to contribute positively to overall growth [101] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to solid growth, citing progress in overcoming recent challenges [6][9] - The company anticipates a strong Q4, with expectations for revenue growth driven by improved sales execution and product offerings [36][38] - Management acknowledged headwinds from geopolitical factors affecting diagnostics but remains confident in the underlying growth drivers [18][20] Other Important Information - The company has made significant progress in mitigating tariff impacts, reducing expected tariff expenses to $10-12 million per quarter [30][31] - The discontinuation of the Fluoriscan product is expected to have a minimal impact on overall revenue [46][77] Q&A Session Summary Question: Outlook for fiscal 2026 and potential headwinds - Management expects mid-single-digit growth for fiscal 2026, with headwinds from the discontinuation of Fluoriscan and challenges in China and HIV funding impacting growth [46][47] Question: Capital allocation and M&A considerations - The company has focused on share buybacks and remains open to M&A opportunities but has no significant deals in the pipeline currently [51][110] Question: Visibility into Breast Health business for Q4 - Management is confident in the Breast Health business's recovery, supported by improved sales force execution and new product launches [60][62] Question: Impact of tariffs and mitigation strategies - The company has successfully mitigated about half of the anticipated tariff impacts through operational efficiencies [114][116] Question: Diagnostic growth expectations for fiscal 2026 - Diagnostics growth is expected to be in the mid-single-digit range, influenced by headwinds from China and HIV funding [122][124]