Back to top

Image: Bigstock

Why Is Hologic (HOLX) Down 3.4% Since Last Earnings Report?

Read MoreHide Full Article

A month has gone by since the last earnings report for Hologic (HOLX - Free Report) . Shares have lost about 3.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Hologic due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Hologic Q1 Earnings Surpass Estimates, Margins Down

Hologic reported first-quarter fiscal 2022 adjusted earnings per share of $2.17, down 24.1% year over year. However, the bottom line surpassed the Zacks Consensus Estimate by 80.8%.

The adjustments include charges and benefits related to amortization of acquired intangible assets, MDR expenses, and restructuring and integration/consolidation costs, to name a few.

The company’s GAAP earnings per share was $1.95 in the quarter compared with the year-ago EPS of $2.50, reflecting a 22% decline.

Revenues in Detail

Revenues grossed $1.47 billion in the reported quarter, down 8.6% year over year (down 8.2% at constant exchange rate or CER). However, the metric surpassed the Zacks Consensus Estimate by 31.4%.

Excluding revenues from COVID-19, organic revenues grew 9.0% at CER.

U.S. revenues of $1.02 billion declined 11%, whereas international revenues of $458.7 million declined 2.8% year over year or 1.3% at CER.

Organically, revenues in the United States declined 12.6% year over year to $987.5 million in the quarter. International revenues decreased 6.1% year over year (down 4.6% at CER) to $443.2 million.

Segments in Detail

Revenues at the Diagnostics segment declined 15.8% year over year (down 15.2% at CER) to $950.4 million in the quarter under review. Cytology & Perinatal revenues of $130.7 million rose 5.2% at CER. Molecular Diagnostics’ revenues of $813.3 million declined 17.8% at CER. Blood Screening revenues of $6.4 million fell 21% year over year at CER.

Revenues at the Breast Health segment improved 8% from the year-ago period (up 8.4% at CER) to $359.3 million. This primarily resulted from a robust product portfolio and strong demand for Brevera following its relaunch. Impressive performance by the segment’s Breast Imaging and Interventional Breast Solutions drove the top line.

Domestic sales in this segment improved in the quarter on a 5% revenue uptick, year over year. Further, outside the United States, Breast Health sales improved 20.3% at CER.

Revenues at the GYN Surgical business rose 8.3% year over year (up 8.2% at CER) to $134.3 million, while revenues at Skeletal Health increased 8.8% year over year (up 9.7% at CER) to $27.1 million.

Operational Update

In the fiscal first quarter, the company-provided adjusted gross margin contracted 510 basis points (bps) to 72.1%. According to the company, the decrease in gross margin was primarily due to a decline in COVID-19 assay sales compared to the prior-year period.

Adjusted operating expenses, as stated by the company, amounted to $333.9 million, up 21.6% year over year. The company reported adjusted operating margin contraction of 1080 bps to 49.4%.

Financial Update

Hologic ended the first quarter of fiscal 2022 with cash and cash equivalents of $1.42 billion compared with $1.17 billion at the end of the fourth quarter of 2021. Total long-term debt (including current portion) was $3.07 billion at the end of the first quarter of fiscal 2022 compared with $3.03 billion at the end of the fourth quarter of 2021.

Net cash provided by operating activities at the end of first-quarter fiscal 2022 was $564.2 million compared with $650 million a year ago.

Guidance

Hologic has initiated the guidance for the second quarter of fiscal 2022.

For second-quarter fiscal 2022, the company projects revenues within $1.25-$1.30 billion, implying a year-over-year decline in the range of 18.7-15.5% on a reported basis, 17.2-14% at CER and 18.8-15.5% organically. The Zacks Consensus Estimate for second-quarter fiscal 2022 revenues is pegged at $951.8 million.

Adjusted earnings per share for the quarter is estimated within $1.50-$1.60, with a projected decline of 42.1-38.2% year over year. The Zacks Consensus Estimate for first-quarter fiscal 2022 earnings per share is pegged at 89 cents.

Hologic has raised the financial guidance for full-year 2022.

For fiscal 2022, the company now projects revenues within $4.40-4.55 billion, implying a year-over-year decline in the range of 21.9-19.2% on a reported basis, 20.9-18.2% at CER and 22-19.3% organically (previous guided range was $3.75-4.00 billion). The Zacks Consensus Estimate for fiscal 2022 revenues is pegged at $3.96 billion.

Adjusted earnings per share for fiscal 2022 is estimated within $4.90-$5.20, with a projected decline of 41.7-38.2% year over year (previous guided range was $3.55-3.85). The Zacks Consensus Estimate for fiscal 2022 earnings per share is pegged at $3.87.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

The consensus estimate has shifted 59.1% due to these changes.

VGM Scores

Currently, Hologic has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Hologic has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Hologic, Inc. (HOLX) - free report >>

Published in