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Hologic (HOLX) to Report Q4 Earnings: What's in the Cards?

Hologic's (HOLX) recent acquisitions and product launches are expected to contribute significantly to its fourth-quarter performance.

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This story originally appeared on Zacks

Hologic, Inc. HOLX is slated to report fourth-quarter fiscal 2021 results on Nov 1, after the closing bell.

- Zacks

In the last reported quarter, the company’s earnings of $1.33 per share lagged the Zacks Consensus Estimate by 19.8%. Its earnings surpassed the consensus estimate in three of the last four quarters and missed in one, the average surprise being 30.50%.

Let’s see how things are shaping prior to the announcement.

Factors at Play

Diagnostics

Like the last reported quarter, the company expects global Molecular Diagnostics revenues for the fiscal fourth quarter to reflect the benefits of additional tests onto Hologic’s Panther-installed base. The company’s Panther and Panther Fusion instruments have likely maintained momentum on continued adoption, thus contributing to the top line.

In July 2021, Hologic received CE Mark approval for using saliva samples with the Aptima SARS-CoV-2 assay in Europe. In June 2021, Hologic received CE Mark approval for its new Aptima CMV Quant assay to help diagnose and manage solid-organ transplant patients and hematopoietic stem cell transplant patients. These assays are likely to have witnessed high market acceptance through the fiscal fourth quarter, banking on a surge in Delta variant cases, thus boosting revenues.

In June 2021, Hologic acquired Mobidiag Oy (a privately-held commercial-stage Finnish-French developer of innovative molecular diagnostic tests and instrumentation), strengthening its international and diagnostics businesses by enabling it to expand into the large and fast-growing acute care market. We expect Mobidiag to have a full-quarter contribution to the company’s fourth-quarter revenue growth.

Like other players in the industry, over the past few months, the company had been witnessing declining sales of COVID-19 tests in the United States following the mass vaccine rollout. However, with the rapid rise in COVID-19 cases through July and August in the United States, the molecular diagnostic business of Hologic might have picked up momentum again in its fiscal fourth quarter, in line with the industry-wide trend.

Hologic, Inc. Price and EPS Surprise

As of now, the Zacks Consensus Estimate for Molecular Diagnostics’ revenues is pegged at $394 million, suggesting a decline of 51.9% from the year-ago quarter’s reported figure.

Breast Health

During the last-quarter earnings call, management observed that the Breast Health arm has been witnessing a faster-than-expected return to growth despite the pandemic-led challenging business climate. We are optimistic about an improved sequential performance by the segment during the fiscal fourth quarter, given the company’s ongoing efforts to diversify the business across the patient continuum of care.

Recently, the company strengthened the interventional franchise by relaunching Brevera and buying Somatex -- a long time partner and leading developer of breast cancer markers. This development is also expected to have contributed to the company’s Breast Health business in the to-be-reported quarter.

The Zacks Consensus Estimate for Breast Imaging’s revenues is pegged at $279 million, indicating an uptick of 18.2% from the prior-year quarter’s figure.

GYN Surgical

Similar to the last-reported quarter, Hologic’s GYN Surgical business arm is expected to have registered strong growth in the fourth quarter on robust adoption of its ProVu laparoscopic radio frequency ablation system (used for the treatment of uterine fibroids) along with new hysteroscopes and Acessa's laparoscopic radio frequency ablation system. Further, the quarterly performance is expected to have been boosted by the European launch of its CE-marked Fluent fluid management system in January 2021.

In July 2021, Hologic announced that Anthem ANTM -- the second-largest health plan company in the United States -- updated its medical policy to cover Laparoscopic Radiofrequency Ablation (LAP-RFA), which includes the former’s Acessa procedure. This new coverage expands access to millions of women across the country suffering from uterine fibroids. We expect this major development to have contributed significantly to the company’s fourth-quarter revenues.

The Zacks Consensus Estimate for GYN Surgical’s revenues is pegged at $123 million, indicating a rise of 23% from the prior-year quarter’s figure.

The Estimate Picture

The Zacks Consensus Estimate for total fiscal fourth-quarter revenues of $1.02 billion suggests a decline of 24.31% from the prior-year quarter’s figure.

The consensus estimate for earnings per share is pegged at 98 cents, indicating a decline of 52.66% from the year-ago reported figure.

What Our Model Suggests

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has higher chances of beating estimates. However, this is not the case here as you can see:

Earnings ESP: Hologic has an Earnings ESP of +7.30%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).

Stocks Worth a Look

Here are a couple of medical stocks worth considering as these have the right combination of elements to beat on earnings this reporting cycle.

Henry Schein, Inc. HSIC has an Earnings ESP of +0.31% and a Zacks Rank of 2. The company will release third-quarter 2021 results on Nov 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

West Pharmaceutical Services, Inc. WST has an Earnings ESP of +1.93% and a Zacks Rank of 2. The company is scheduled to release third-quarter 2021 results on Oct 28.



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