These are top 10 stocks traded on the Robinhood UK platform in July
Hologic Inc. reported its third-quarter 2025 earnings, surpassing Wall Street expectations with an EPS of $1.08 against a forecast of $1.05. The company’s revenue reached $1.024 billion, slightly above the anticipated $1.01 billion. With a market capitalization of $14.47 billion and an impressive gross profit margin of 61%, Hologic maintains a strong market position. Despite this positive performance, Hologic’s stock dipped 1.57% to $66.04 in aftermarket trading, reflecting investor caution amid broader economic concerns. InvestingPro analysis shows the company maintains excellent financial health with a score of 3.04 out of 4, suggesting robust operational efficiency.
Key Takeaways
- Hologic reported a 2.86% EPS beat over estimates.
- Revenue growth was modest at 0.4%, reaching $1.024 billion.
- Stock fell 1.57% despite earnings beat, indicating cautious investor sentiment.
- Innovations in diagnostics and AI continue to drive growth.
- Challenges persist in international markets, affecting short-term outlook.
Company Performance
Hologic demonstrated resilience in Q3 2025, with a slight revenue increase and a solid EPS beat. The company’s performance was driven by strong growth in its diagnostics and surgical divisions, offsetting a decline in Breast Health. Hologic’s continued focus on innovation, particularly in AI and diagnostics, positions it well against competitors in the healthcare sector.
Financial Highlights
- Revenue: $1.024 billion, up 0.4% year-over-year.
- Earnings per share: $1.08, a 1.9% increase from the previous year.
- Non-GAAP Operating Margin: 30.1%.
- Operating Cash Flow: $343 million.
- Cash and Short-Term Investments: $1.88 billion.
Earnings vs. Forecast
Hologic’s EPS of $1.08 exceeded the forecast of $1.05 by 2.86%, while its revenue surpassed expectations by 0.99%. This performance is consistent with the company’s historical trend of modest outperformance, reflecting stable operations and effective cost management.
Market Reaction
Despite the earnings beat, Hologic’s stock fell 1.57% in aftermarket trading, closing at $66.04. This decline may reflect broader market caution and specific challenges in international markets. Trading at a P/E ratio of 27.02, InvestingPro’s Fair Value analysis suggests the stock is currently undervalued, presenting a potential opportunity for value investors. The stock remains within its 52-week range of $51.90 to $84.67, indicating stable investor confidence amid external pressures. Discover more undervalued opportunities at Investing.com’s Most Undervalued Stocks.
Outlook & Guidance
Looking ahead, Hologic projects Q4 revenue between $1.03 billion and $1.04 billion, with an EPS range of $1.09 to $1.12. For FY2025, the company anticipates revenue between $4.081 billion and $4.091 billion, and non-GAAP EPS of $4.23 to $4.26. Hologic expects to return to mid-single digit organic growth in FY2026, driven by international market expansion and continued innovation.
Executive Commentary
CEO Steve McMillan expressed confidence in Hologic’s recovery, stating, "We view our results as clear evidence of the significant progress we have made in putting these bumps behind us." He emphasized the potential for international markets to drive growth, noting, "We see international being accretive to that growth rate."
Risks and Challenges
- Declining Breast Health revenue poses a challenge to overall growth.
- International market challenges, particularly in China and Africa, could impact near-term performance.
- Macroeconomic pressures and tariff impacts remain concerns.
- Supply chain disruptions could affect product availability and costs.
Q&A
During the earnings call, analysts inquired about the recovery of the Breast Health business and the performance of the EndoMag acquisition. Executives highlighted the minimal impact from COVID-19 sales and reiterated their focus on expanding in international markets.
Full transcript - Hologic Inc (HOLX) Q3 2025:
Operator: Ladies and gentlemen, good afternoon, and welcome to Hologic’s Third Quarter Fiscal twenty twenty five Earnings Conference Call. My name is Lisa, and I’ll be your operator for today’s call. Today’s conference is being recorded. All lines have been placed on mute. I would now like to introduce Mike Watts, Corporate Vice President, Investor Relations to begin our call.
Mike Watts, Corporate Vice President, Investor Relations, Hologic: Thank you, Lisa. Good afternoon and thank you for joining Hologic’s third quarter fiscal twenty twenty five earnings call. With me today are Steve McMillan, the company’s Chairman, President and Chief Executive Officer Essex Mitchell, our Chief Operating Officer and Carleen Oberton, our Chief Financial Officer. Our third quarter press release is available now on the Investors section of our website. We will also post our prepared remarks to our website shortly after we deliver them, and a replay of this call will be available for thirty days.
Before we begin, we’d like to inform you that certain statements we make today will be forward looking. These statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied. Such factors include those referenced in the Safe Harbor statement included in our earnings release and SEC filings. Also during this call, we will discuss certain non GAAP financial measures. A reconciliation to GAAP can be found in our earnings release.
Two of these non GAAP measures are organic revenue, which we define as revenue excluding divested businesses and revenue from acquired businesses owned by Hologic for less than one year. Also, revenue excluding COVID nineteen, which further excludes COVID nineteen assay revenue and other revenue related to COVID nineteen. Finally, any percentage changes that we discuss will be on a year over year basis, and revenue growth rates will be in constant currency unless otherwise noted. Now I’d like to turn the call over to Steve McMillan, Hologic’s CEO.
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: Thank you, Mike, and good afternoon, everyone. Thanks for joining us to discuss our financial results for the 2025. We’re pleased with our performance in the quarter as we delivered both revenue and non GAAP earnings per share that exceeded our guidance. We’ve admittedly hit a few speed bumps the last couple of quarters, but we view our results as clear evidence of the significant progress we have made in putting these bumps behind us as we return to higher growth while improving women’s health. We have more work to do, but we believe our performance in the third quarter has us very well positioned for better results as we close out fiscal twenty twenty five and move into next year.
Specifically, total revenue for the third quarter was $1,024,000,000 This represented slight growth of 0.4% and exceeded the high end of our guidance range by about $14,000,000 Our diagnostics business continued to grow nicely compared to the prior year, and our breast health business improved sequentially as planned. Surgical met expectations, and we got a positive contribution from our skeletal franchise as previous supply constraints lifted. These solid revenue results helped non GAAP earnings per share reach $1.08 in the third quarter. This was a slight increase of 1.9 compared to a year ago and a penny above the high end of our guidance range. We maintained a very strong non GAAP operating margin just above 30% as we controlled expenses across the organization and mitigated some tariff impacts.
Importantly, our third quarter financial results have us squarely on the path toward accelerating growth that we described in our last call. In fact, we completed our annual strategic planning process earlier this summer and are optimistic that we will return to solid mid single digit organic revenue growth next year and over our strat plan horizon. A key reason we are confident in this outlook is the strengthening of our Breast Health business. I want to spend a little time on this today since it has understandably been a focus for investors. Although Breast Health revenues declined in the third quarter versus the prior year, this was expected.
In fact, quarterly sales finished slightly ahead of our internal expectations. I want to highlight three areas that underpin this performance and excite us about our future. First, better commercial execution, both in imaging and interventional. In the third quarter, we shipped more three d gantries than in the prior quarter, validating the sequential improvement we had forecast. In The United States, especially, our new commercial leadership team began to build on the bifurcated sales structure and tighter processes they established earlier in the year.
Based on this foundation, we rolled out a new strategy to upgrade older end of life gantries, which we expect to bear more fruit in the fourth quarter and into 2026. As we have previously discussed, gantry replacement cycles have become longer, but we remain encouraged that our leading market share remains intact. And we believe this has been validated by competitive gantry wins in recent quarters. And while all this was happening in mammography, interventional sales increased 6% organically, reflecting an easier comparable, but also the early benefits of our more focused domestic sales force. The second reason we are excited about Breast Health and a major reason we continue to win competitively is our consistent delivery of both clinical and product innovation.
For example, a retrospective study we published recently with physicians from Sanford Health in South Dakota evaluated more than a 180,000 mammograms conducted over ten years. This real world study found that high resolution three d mammography conducted with our Clarity HD software was associated with higher cancer detection rates than our standard resolution three d. This is one of scores of clinical studies published by our radiology customers that demonstrate the value of our technologies, creating by far the deepest body of evidence in our category. In terms of product innovation, this quarter we are launching our latest artificial intelligence solution, Genius AI Detection Pro, which will extend our leadership in breast focused software. This cloud based solution developed with our partner Therapixel is essentially an all in one AI assistant for the radiologist.
It analyzes prior and current mammograms through a two d and three d deep learning algorithm for increased accuracy and faster throughput. A single streamlined interface boosts efficiency up to a 24% reduction in reading time by capturing all key information in one place. This includes breast density scores, patient history, and lesion and case scores. The software will even check image quality and automatically prepopulate the radiologist report with key findings. It is being sold as an upgrade on our three dimension system now and will be available on our next generation instrument Envision when it launches next year.
Third, we’re really excited about Endomagnetics, which we acquired last summer. Endomag expands our portfolio of breast surgery products as we offer additional value across the entire breast cancer continuum of care. As a reminder, Endomag markets two primary disposable products, MagSeed, a tiny wireless seed that enables breast surgeons to quickly find and remove a tumor. And MagTrace, a radiation free tracer that finds and maps target lymph nodes to be removed or biopsied during surgery. Both products operate with a small piece of capital called the CentiMag system.
In the third quarter, EndoMag contributed nearly $20,000,000 of revenue at a very healthy gross margin. The business has been exceeding our deal model and will begin adding to organic growth rates in August. Before I turn the call over to Essex, let me conclude by saying that the operative word for Hologic in the third quarter was progress. Progress in exceeding our near term financial commitments, progress in strengthening our Breast Health business, and progress toward accelerating overall company growth in the fourth quarter as well as ’26 and beyond. All in all, we are confident in our path and optimistic about our future.
Now I will turn the call over to Essex.
Essex Mitchell, Chief Operating Officer, Hologic: Thank you, Steve, and good afternoon, everyone. In my remarks today, I will first review our divisional revenue performance in the third quarter. Then I’ll provide an update on the positive progress we have made in mitigating tariffs. As Steve said, our results in the third quarter were strong with revenue of 1,024,000,000.000 exceeding the high end of our guidance. While we faced several challenges this year, we believe they would be temporary, and we’re excited to see the momentum building across the business as we look towards FY ’26.
Starting in diagnostics. Third quarter revenue of $448,900,000 grew point 9% with two or 2.9% organically, excluding COVID related sales. As a reminder, much of the geopolitical turmoil we’ve discussed this year affects our diagnostics business. Specifically, funding cuts to USAID and Africa and the challenging operating environment in China lowered otherwise solid growth in the third quarter. As our team navigates these headwinds, the underlying growth drivers in Diagnostics remain strong.
We are still in the early innings of vaginitis and biotherapeutics opportunities. Worldwide Panther utilization continues to reach new all time highs. And our cytology customers are excited about the rollout of our Genius digital cytology platform. Molecular diagnostics continued to lead the way in the third quarter with global growth of 2.4% or 5.2 excluding COVID. In The United States, molecular growth molecular grew 7.3% excluding COVID.
Growth was driven by strong sales of our BbCVTV assay and our portfolio of Panther Fusion assays. Our diagnostics team has done an outstanding job taking BbCVTV from a new product in 2019 to what is now our second largest assay. Much of the growth we realized to this point has been from converting existing manual testing to our fully automated high throughput Panther system. There’s still meaningful opportunity to convert more of this testing demonstrated by several key account wins this quarter. But the larger opportunity will be to reach the estimated sixty percent of women in The US who who aren’t tested at all when they experience vaginitis symptoms.
To this end, we’ve deployed our physician sales force to provide education and awareness at the provider level, leveraging the same strategy we use to grow testing for sexually transmitted infections. Before moving on, I’d like to highlight our Panther Fusion sidecar and how it will play a key role in diagnostics growth moving forward. As we emerge from the pandemic, two things became clear across our customer base. Customers loved the workload advantages of the Panther, and labs were looking to consolidate their testing onto fewer platforms. The latter is the opportunity for Panther Fusion.
Fusion uses PCR technology to unlock our full menu of 23 plus assays spanning across several testing categories. Currently, fusion is mainly used for respiratory testing, but we’ve been seeing good traction this year as customers adopt more menu. In particular, our open access testing kits contributed to solid fusion growth in the third quarter. Open access gives labs the flexibility to run their own lab developed tests on our fusion platform. In addition, over the next several years, we plan to further diversify our menu by launching IVD tests for GI and hospital acquired infections.
As we continue to deliver this innovation, it further cements Hologic as an indispensable presence in the molecular lab. Turning to our cytology and perinatal businesses. Third quarter revenue declined 2.2%. This result was expected given the reduction in our China forecast that we discussed the last quarter. Excluding China, cytology would have grown low single digits for the quarter, a solid result that was fueled by the rollout of our Genius digital diagnostic system.
As we implement Genius at more laboratories around the world, we receive resoundingly positive positive feedback. GENIUS transforms the traditional manual review of PET slides, which was previously conducted on glass under a microscope by capturing a digital image of the slide. This digital image can then be reviewed remotely from anywhere in the customer’s network on our review station Using our proprietary artificial intelligence algorithm, Genius identifies precancerous lesions and cervical cancer cells for examination by lab professionals enabling a faster, more accurate diagnosis. These workflow advantages not only address the growing labor shortages our customers face, but also enable cervical cancer screening in areas of the world where infrastructure is limited. Because the Genius system requires an overhaul of the traditional path screening workflow, we we expect the full rollout to be a multiyear process contributing to growth for the next several quarters.
Moving to Breast Health. Revenue of $365,200,000 declined 5.8% or 10.8% organically, excluding endomagnetics and SSI. The decline versus prior year was expected as the ’24 presented our toughest comp of the year. Importantly, as Steve mentioned, revenue grew sequentially compared to the second quarter and finished slightly ahead of our internal goal. We were encouraged to see the progress in q three that gives us confidence this business is rebounding and will return to growth in q four.
Most apparent in the third quarter results was the strong interventional performance, growing 31.8%. Endomagnetics played a big role in this growth and turned organic in q four. But even excluding Endomagnetics, organic interventional sales grew 6%, showing the immediate impact of our refocused sales force. Turning to surgical. Third quarter revenue of 178,400,000.0 increased 6.3% or 1.2% organically excluding Gynotonic.
Growth continues to be led by international, which grew 24.8%. The investments we’ve made in our commercial and market access capabilities outside The United States have significantly expanded the reach of our minimally invasive surgical products. International surgical growth was driven by two key factors in the third quarter. Adoption in markets where reimbursement has recently been established and expanding into new markets altogether. And we’re encouraged by the strong momentum across our entire surgical portfolio.
For example, NovaSure, which has faced challenges in The US, has consistently delivered double digit growth internationally over the past several quarters. This highlights the significant opportunity we still have to elevate women’s health globally. Finally, in our skeletal business, third quarter revenue of 31,300,000.0 grew 62.1% as we resumed shipping our final DEXA model in the quarter. Sales were roughly in line with our expectations, but higher than historic levels as we continue to meet pent up demand from the prior shipping hold. Before I turn the call over to Carleen, I wanted to provide an update on the positive progress we have made in mitigating the impact of global tariffs on our business.
As a reminder, last quarter, we shared a worst case tariff estimate of 20 to 25,000,000 per quarter. We anticipated that approximately two thirds of this amount would come from the 10% tariff with imports from Costa Rica, where we manufacture most of our surgical and interventional breast health products. Shipments of both shipments of products to and from China represent the next largest portion, accounting for roughly 15% of the total. Our team has been hard at work over the last ninety days evaluating options to reduce this tariff impact. Through changes to our global supply chain and operating model in various procurement efforts, we expect to mitigate roughly half of the amount we originally provided.
This means we now expect to incur 10 to 12,000,000 in tariffs per quarter. Of course, this is based on tariffs as they stand today and is subject to change. With that, I’ll hand the call over to Carleen.
Carleen Oberton, Chief Financial Officer, Hologic: Thank you, Essex, and good afternoon, everyone. In my comments today, I will start by walking through the rest of our non GAAP income statement, then touch on several key financial metrics, and finish with our guidance for fiscal Q4 and the full year. In the third quarter, we delivered EPS of $1.08 growing modestly versus the prior year and exceeding the high end of our guidance range. Strong execution on the top line helped to achieve these results with all our global divisions meeting expectations in the quarter. Now to the rest of the income statement.
Non GAAP gross margin closed the quarter at 60.3, representing an 80 basis points decline compared to the prior year. This decrease was driven by product mix, but also by a reserve recorded in our Skeletal Health division based on our plan, discontinued sales of our Fluoriscan Insight system at the end of the fiscal year. This was a strategic decision based on the product’s low gross margin and growth potential and limited fit in our portfolio. FloraScan is expected to generate about $18,000,000 of product and service revenue in fiscal twenty twenty five before we stop selling it next year. I should also mention that cost of goods sold included about $1,400,000 of tariff expense in the third quarter, less than anticipated in part as a result of our mitigation efforts.
Moving down the P and L. Third quarter operating expenses of $309,600,000 increased 2.2%. This increase was driven by the inclusion of EndoMag and Gynasonics in our results as well as increased expense related to our deferred compensation plan. Excluding these acquisitions, operating expenses would have declined 4.3%. Underscoring our commitment to disciplined expense management and operational efficiency across the organization.
Third quarter operating margin finished at 30.1%, representing a decrease of 110 basis points compared to the prior year, but still best in class relative to our peers. This decrease reflects the dilutive impact that EndoMag and Gynasonics currently have on our bottom line. As we continue to integrate these acquisitions, however, we do expect their profitability to improve, especially since both already have gross margins that are accretive to our corporate average. Below operating income, other income net was a loss in our fiscal third quarter of slightly less than $6,000,000 This was better than anticipated as the increasing value of investments related to our deferred compensation plan largely offset the increase we saw in G and A expense from strong equity market performance in the quarter. Finally, our tax rate in Q3 was 19.25
Altogether, net margin for the quarter was a very healthy 23.8%, decreasing 100 basis points compared to the prior year, but increasing 60 basis points sequentially. Combined, these results led to non GAAP earnings per share of 1.08 slightly exceeding our bottom line commitment. Our strong profitability helps to drive excellent cash generation as we delivered $343,000,000 of operating cash flow in the third quarter. We finished the quarter with $1,880,000,000 in cash and short term investments on our balance sheet and a net leverage ratio of 0.6 times. We also refinanced our credit agreement earlier this month, so we continue to enjoy tremendous financial and strategic flexibility.
Now let’s move on to our updated non GAAP financial guidance for the full fiscal year and fourth quarter. For the fourth quarter, we are expecting total revenue of $1,030,000,000 to 1,040,000,000.00 and non GAAP EPS in the range of $1.09 to $1.12 I would point out that based on our good performance in Q3, the sequential step up that is required in Q4 is much less than we previously forecasted. At the midpoint of these ranges, we expect mid single digit revenue growth and high single digit EPS growth in the fourth quarter. This would mark a return to our longer term goals for financial performance. For the full year, we are also calling up the midpoints of our guidance ranges for revenue and EPS based on our strong performance in the third quarter as well as lower tariff headwinds.
We now expect revenue in the range of 4,081,000,000 to $4,091,000,000 and non GAAP EPS of $4.23 to $4.26 All in all, remain on the financial improvement path that we outlined earlier this year. Stabilization in Q2, progress in Q3, and a return to growth in Q4. As our teams continue to execute on this plan, our divisional outlook from our prior guidance remains largely unchanged. However, there are a few trends worth calling out for the fourth quarter. In Breast Health, as Steve and Essex discussed, we expect to return to slight top line growth in the fourth quarter.
Compared to the prior year, our Diagnostics business outside The United States will continue to be affected by the difficult operating environment in China and reduced funding for our HIV tests in Africa. In Surgical, we expect to benefit from an easy comparable period in 2024, coupled with better commercial execution. As a result, we anticipate in the fourth quarter will be our strongest quarter of revenue growth for the year. In Skeletal, we anticipate outsized growth in the fourth quarter as we will be comping against a full quarter of the DEXA stop ship in the prior year period. In 2026, however, Skeletal revenue will be less than in recent quarters as we will have fulfilled pent up demand and stopped selling our Fluoriscan product.
To help with a few other modeling items, based on recent foreign exchange rates, the weaker US dollar should represent a tailwind of approximately $6,000,000 in the fourth quarter. We expect COVID assay sales to be about $5,000,000 in the fourth quarter, and sales of COVID related items to be about 25,000,000 Finally, we expect blood screening revenue of about $5,000,000 in Q4. As a reminder, both COVID related sales and blood screening revenue are backed out of our organic growth calculations. Moving to the rest of the P and L. Our full year expectations for gross and operating margins in the low 60s and low 30s, respectively, remain unchanged.
In the fourth quarter, we do expect to incur about $8,000,000 of tariff expenses. And as Essex said, this number will increase to 10,000,000 to $12,000,000 on a quarterly basis in fiscal twenty twenty six. While this is roughly half what we originally expected, it will still represent a headwind to gross margin of almost 100 basis points compared to this year. Below operating income, we estimate that other income net to be an expense of approximately $20,000,000 in the fourth quarter. Our annual effective tax rate of 19.25% and diluted share count of $228,000,000 shares for the full year are both unchanged from our previous guidance.
To conclude, our strong third quarter results were an important step in the right direction as we delivered revenue and non GAAP EPS above our guidance ranges. We expect to build on this momentum in the fourth quarter and we believe we are well positioned to finish the year from a position of strength as we enter fiscal twenty twenty six. With that, we ask the operator to open the call for questions.
Operator: And our first question comes from Doug Schenkel with Wolfe Research.
Doug Schenkel, Analyst, Wolfe Research: Hey, good afternoon. Thank you for taking my questions. So, just, I’ll I’ll throw out two. First, you know, you talked about continued progress you made in fiscal Q3. You’re expecting around 4.5% organic growth in Q4, which would be the strongest since the pandemic.
The Street is modeling a continuation of trends in fiscal twenty twenty six. Recognizing we have to wait another quarter for formal guidance, are there any dynamics we should be contemplating in our models, either tailwinds or headwinds that could move you off trends towards continued progress and continued momentum into fiscal twenty six? And then just the second question is we have heard about some China DRG impact in the quarter for other diagnostic companies. I I don’t think this would be a meaningful factor for you guys, but I just wanna make sure there was there was nothing there that had impact for you guys in the quarter. Thank you.
Carleen Oberton, Chief Financial Officer, Hologic: Yeah, Doug. I’ll just start off with the the outlook for ’26. You know, I I I agreed, I think we said in our prepared remarks that we’re expecting mid single digit growth for ’26. I think a couple of things that I would call out is the FloraScan discontinuation. We talked about that.
It’s not terribly significant, but call that out. And the other piece is that the headwinds that we are realizing this quarter and next quarter related to China and HIV will also impact the ’26. So I would factor that, implications into your outlook for for next year.
Operator: And our next question comes from Jack Meehan with Nephron Energy.
Jack Meehan, Analyst, Nephron Energy: You, and good afternoon.
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: Hey, Jack.
Patrick Donnelly, Analyst, Citi: Steve, I wanted to ask
Jack Meehan, Analyst, Nephron Energy: you about capital allocation in the quarter. It was a very strong quarter cash flow. Didn’t expect the balance sheet cash to tick up. I was curious what your thoughts are around M and A. Are there any larger things in the funnel that you were considering?
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: No, not particularly. I think the way to think about it, Jack, is through the year to date, we spent over $750,000,000 on buybacks. And, you know, it’s sometimes it a little more in a quarter, sometimes a little less. Overall, feel good about what we have done, you know, and certainly, we’ll continue both to focus on m and a and and buybacks, but there was nothing, you know, gearing up to do something big.
Jack Meehan, Analyst, Nephron Energy: Got it. And then wanted to follow-up on the Breast Health business. Good to see the progress. I agree that was the keyword here. Was just curious your feel like within the overall company context looking into 2026, how you feel about the reception around the new product launch and also just durability of gantry placement continuing to progress in the next year.
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: Yeah. I think, really, as we think about not only next year, but the next few years, starting to feel like we’ve really got the hiccups behind us in that business, and we’re gonna be end of lifing, a lot of the older gantries. Will be launching Envision and, you know, very excited about what that’s gonna bring. And and that’s really a, you know, call it second half, later twenty six ish before that really starts to be meaningful. And that’s gonna be a big driver probably in ’27, ’28, ’29, as you well know.
And the other part I would keep your eyes on will be the interventional business. Yeah. You might notice that hit a $100,000,000 this quarter for the first time. It’s starting to become a really nice driver and really starting to pay off that vision we put in place years ago of the breast care continuum and really starting to get, that business, which is both recurring revenue and better margins. And we’re feeling really excited about where that’s headed.
Operator: And we’ll take our next question from Patrick Donnelly with Citi.
Patrick Donnelly, Analyst, Citi: Hey, guys. Thanks for taking the question. Patrick. Maybe a follow-up there. Hey, Steve.
Maybe a follow-up there on the breast side. Can you just talk about the visibility into 4Q? You know, certainly a big focus from investors in our conversations, just the progress there, the step up. You know, it sounds like you guys are confident in the rebound here. It sounds like maybe some of the sales changes are bearing fruit.
But can you just talk about the building blocks 3Q to 4Q to get back to growth? Sounds like Interventional, you’re feeling pretty good about. But just curious how you’re thinking about the visibility here into the four q return to growth on the breast side.
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: Yeah. The it starts with the Salesforce and the rigor and discipline and processes and and leadership that’s been put in there where just as we’re coming into the quarters now, you know, we’ve got much more clarity around where we’re headed. We’re getting off to better starts in the quarter and and feeling really good. And that team now has hit what they’ve said they’re gonna hit each of the last few quarters, and and just our degree of confidence and belief in them has gone really high. So I think we’re feeling really good about that.
You know, the other part that will be nice is EndoMag, as we said, is running well ahead of plan. In the final two months of this quarter, that starts to flip into organic revenue because we’ve just actually closed it just about a year ago today almost. And so we’re really excited about how that continues to go. So it’s just, you know, one of these that I think we we went through a little rough period on Breast Health. Again, it’s gonna be continue to show me, but we can see the trends and really starting to feel so much better about that business.
Yeah. Proof will be when, you know, obviously, we wanna put back, you know, real growth, in the coming quarter and then have that really accelerate. Yeah. I think we see our Breast Health business being even stronger next year than than where we’ll even finish this year.
Essex Mitchell, Chief Operating Officer, Hologic: Before we move on to this
Mike Watts, Corporate Vice President, Investor Relations, Hologic: Yeah. Go ahead, Mike. Go go ahead. No.
Patrick Donnelly, Analyst, Citi: After you after you. Sorry. I was just gonna say, you know, Carlene, maybe on the margins, can you just talk about, obviously, there’s some moving pieces, right, with the tariffs and and even this product discontinuation. Can you talk about where we’re gonna be on four q? It sounds like the low 30 is a good place to be.
And then what the right launching point is as we think about just progressing into into ’26? I know it’s usually not the exit rates. I just wanna make sure we’re thinking about it correctly. Thanks so much.
Carleen Oberton, Chief Financial Officer, Hologic: Yeah. We are expecting a step up q three to q four on gross margins. It’s you know, it starts first with the revenue with higher revenue and similar to the product mix with a higher gantry portion of the revenue. Those are margin accretive. And then coupled with q four is always seasonally our lowest operating expense quarter, and then we won’t have the onetime charges that we had here in q three.
You know, I think the outlook I would say the q two operating margin is not your jumping off point for the full year ’26. I would look to the full year of ’25 as more of the jumping off place for for margins. We would expect that as we absorb the incremental tariffs, we will be in line with ’25 in that range.
Mike Watts, Corporate Vice President, Investor Relations, Hologic: Hey, Patrick. Sorry to interrupt you there, But I wanted to just come back to to Doug’s question a couple questions ago. We kinda got interrupted there. On BRG. Yeah.
On on China. So sorry about that. We’re not directly exposed to a lot of the specific issues that some of our peers are in China. But as we talked about last quarter, it has become a pretty challenging environment for us for a number of reasons. So as we predicted, you know, total China was less than a $10,000,000 business for us in the third quarter and was down more than 50% compared to prior years.
So just wanted to tie that one up.
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: Alright. Next.
Operator: And our next question comes from Vijay Kumar with Evercore.
Vijay Kumar, Analyst, Evercore: Hi, Steve. Thanks for taking my question. Yeah. Help helpful color on fiscal twenty six return back to a solid mid singles. The the, are we excluding is is COVID a headwind, Steve?
Are we backing that out when we say mid singles? And I know FloraScan that’s moved to disc ops. Should we be removing that and then then calculating organic excluding COVID and and Descoffer? How do you think you were organic? You know, when you say solid mid singles, the four four plus, or, you know, is that more of a five five plus?
Patrick Donnelly, Analyst, Citi: Yeah.
Carleen Oberton, Chief Financial Officer, Hologic: No. No. No. Yeah. When we talk about the mid single digits, I would say the ex COVID is really inconsequential at this point.
So I I I wouldn’t push the number up because of that.
Vijay Kumar, Analyst, Evercore: I’m sorry. On fluorescan, Karleen, is that should we back that out when we were calculating organic?
Carleen Oberton, Chief Financial Officer, Hologic: Yeah. Yeah. We do organic. If that’s a discontinued product, I’d back that out.
Patrick Donnelly, Analyst, Citi: Yeah.
Vijay Kumar, Analyst, Evercore: Understood. And, Steve, one for you on EndoMag. I think that this business grew, like, a 100% in the quarter. Right? Was there was there any any timing element?
I think you’re analyzing at 80,000,000. If this thing can grow, like, strong double digits, right, this this it could be an, you know, sizable organic contributor. So was there any one off in in March? Like, what what is driving this strength in the business?
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: No. It’s really our commercial execution. You know, we took it over fully in The United States. If you recall, when we acquired this, it was going through a different party that had the distribution rights in the in The United States. We took it over at the very end of our previous quarter, and it looked a little sloppy last quarter because we had an inventory adjustment as we bought back inventory, this and that.
This the magic of this business right now, I would tell you just from watching daily sales, is it’s just incredibly steady and growing. And, you know, I think it’s where we feel really, really good. Our whole team was just over in The UK about a month ago with the team over there that that had developed the products. And no one offs. And I think both domestically and internationally, we feel really good about where it’s headed.
Vijay Kumar, Analyst, Evercore: Understood. Thank you.
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: Right. Thanks, BJ.
Operator: And we’ll go next to Lou Li with UBS.
Lou Li, Analyst, UBS: Great. Thank you for taking my questions. I think the first one on the molecular diagnostic, I think you mentioned that you’re gonna have a test menu expansion on fusion. I wonder if you can comment a little bit on the timing and the potential revenue contribution down the road. Thank you.
Carleen Oberton, Chief Financial Officer, Hologic: Yeah. I I would think that those those assays will come online probably later in ’26, early in ’27, so probably not meaningful contribution next year, more in the ’27, ’28. But but I would just caution that these are what I’ll call incremental assays to the menu. They’re not a BVCV type opportunity.
Patrick Donnelly, Analyst, Citi: A good example of that
Mike Watts, Corporate Vice President, Investor Relations, Hologic: is the open channel product that’s available now. It did contribute to growth in the quarter, but it’s relatively small in the grand scheme of
Patrick Donnelly, Analyst, Citi: things. Got
Lou Li, Analyst, UBS: it. And, Colleen, I think one of the question I wanted to follow-up on is the size of the China impact and HIV impact in 2026. So you mentioned there will be some residual happens in the first half. I wonder, can you quantify what will be the magnitude of that?
Carleen Oberton, Chief Financial Officer, Hologic: Yeah. So I think in the in the ’25, you know, our China business was more on track to be a 60 to $70,000,000 business. We’re exiting more at a $10,000,000 a quarter. So that’s the the rough little difference in the first half of the year.
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: And then China, there’s the HIV. The HIV business was stronger in our first quarter, quarter and a half really our first two quarters, and we’re assuming that’s going to, you know, de minimis numbers, into next year.
Mike Watts, Corporate Vice President, Investor Relations, Hologic0: Alright. Got it. Thank you.
Operator: And we’ll move next to Anthony Pertrone with Mizuho Group.
Patrick Donnelly, Analyst, Citi: Anthony. Anthony,
Operator: you will need to unmute for us to hear you.
Mike Watts, Corporate Vice President, Investor Relations, Hologic1: Sorry hopping between call. Hi. Apologies for that. I was on mute. Thanks, and congrats on a solid quarter here.
I think I wanna maybe just focus on Fusion for a moment there, and you you gave some good updates last quarter in the prepared remarks here. And the goal is to get Fusion to 100% of Panther. Maybe could we get an update on the Fusions that are out there today? Just where is their utilization intensity versus a non Fusion platform? And then how does pricing on a fusion platform stack up to nonfusion assays?
And I have one quick follow-up. Thanks.
Carleen Oberton, Chief Financial Officer, Hologic: Yeah. So let let me start off to clarify that the goal is not for every Panther to have a fusion. It’s really for every customer or every lab to have a fusion capability within the lab. We never anticipated that it’d be a one for one situation. What I would say is, you know, I think it’s still plenty of run room in rolling out more fusions to our customers.
Probably over a third of our customers have a fusion at this point, and that will continue to grow over our strat horizon period. I would say just from a pricing perspective, of course, the women’s health assays, the legacy assays are obviously the least pricing, on the legacy Panther. So we would expect that as the menu rolls out on fusion, it’ll probably it’ll be a pricing premium.
Mike Watts, Corporate Vice President, Investor Relations, Hologic1: That’s helpful. And then just on the mammography side, gantry, obviously, next year, 2026, looking for more of a meaningful ramp. But just maybe on the inventory build and working capital, should we expect to see working capital uptick here in the second half of the year as the company prepares more for that full launch next year?
Carleen Oberton, Chief Financial Officer, Hologic: Anthony, I would not anticipate an increase in inventory to support that launch at this period of time. I I think we’re well positioned to handle that. Many of the components are similar to our legacy three d gantry, so I wouldn’t expect any meaningful change.
Vijay Kumar, Analyst, Evercore: Yep.
Operator: And our next question comes from Andrew Breckman with William Blair.
Mike Watts, Corporate Vice President, Investor Relations, Hologic2: Great. Hi, everyone. Good afternoon. Thanks for taking the question. Steve, you opened the call sort of discussing your confidence in returning to that mid single digit growth, not just for ’26, but it sounded like over over the entire strat plan.
So can you maybe talk about that target in the context of how international plays into the buildup there? And then as my follow-up, maybe just talk about how pricing and your ability to take price plays into that as well. Thanks.
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: Yeah. I think as we look over the strat plan horizon, we see international being accretive to that growth rate with kind of, again, probably some caveats. The beginning of next year might be a little squirrelly because of the Africa stuff, because of China. But in general, over both really the bulk of ’26 and and beyond, we see international continue to be a really nice nice grower to that point. And then regarding pricing, you know, we probably see it a little bit more of our opportunities is in mix and new product innovation versus actual, you know, kinda year over year price increases.
We’re looking at, you know, targeted price increases here or there where we can. But in general, it’s much more about the innovation curve. So it’s more of a mix gain than a price gain.
Mike Watts, Corporate Vice President, Investor Relations, Hologic2: Great. Thanks for that.
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: Thank you.
Operator: We’ll move next to Navan Thay with BNP Paribas.
Mike Watts, Corporate Vice President, Investor Relations, Hologic0: Hi. Thank you. Just a clarification on Breast Health. So have the updated end of life strategy and refocused Salesforce been fully implemented in q three? So we have most results in q four and minimal impact in in q three.
And then on the m and a side, can you discuss the m and a environment in in what happened for? Thank you.
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: Sure. On the on the breast health piece, I think what we’re really encouraged by is typically when you reorganize a Salesforce, you have to take a step back or two. And I think our team implemented really the Salesforce restructure largely in our second quarter. And if we would have seen the disruption, it usually would have been in this third quarter ish. And the teams have really settled in very, very nicely on that.
So we feel very good. And it was really just this quarter where they began the end of life strategy. So that’s in the early stages, but with some very good early wins. And I think we’ve already seen some lined up here for for this quarter, which is our fourth quarter, and then looking into next year. In terms of the m and a environment, we you know, I’d say there’s two pieces.
One is we continue to be patient and looking for more things like the endomags and the Gynasonics, the BioTherapeutics that have been on more recent deals. And we’ve also dramatically strengthened our own capabilities over the last few years, both in the divisional area and corporately to where we feel really good about those last few. And we’ve continued to walk away from more things than we’re acquiring, but I feel like the deal the the funnel of size deals that we like is very good right now, but actionability, you know, we’ll continue to see. And we’re gonna be patient and do it from a position of strength.
Mike Watts, Corporate Vice President, Investor Relations, Hologic0: Thank you. That’s very helpful.
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: Great. Thank you.
Operator: And our next question comes from Ryan Zimmerman with BTIG.
Mike Watts, Corporate Vice President, Investor Relations, Hologic3: Hi, everyone. This is Izzy on for Ryan. Thank you for taking the question. Just one for me on tariff impacts. It’s great to see that you guys have been able to mitigate about half of what you called out last quarter.
I was just curious if you or if you could provide a little bit more color on the steps you took that allowed you to get to this rate, and if you have any more levers as we move into next year just given the fact that this is still a pretty dynamic situation? Thanks for taking the question.
Carleen Oberton, Chief Financial Officer, Hologic: Yeah. Well, we certainly continue to evaluate the situation. And to to your point, this can change daily. But, you know, basically, we leveraged operational efficiencies within our supply chain to drive those changes. And just for competitive reasons, we’re not gonna comment any anything more specifically.
Operator: And we’ll move next to Casey Woodring with JPMorgan.
Mike Watts, Corporate Vice President, Investor Relations, Hologic4: Maybe the first one, you just unpack the breast imaging revenue number in the quarter? You mentioned three d gantry placements grew sequentially, but imaging revenue declined sequentially. So just maybe some more color there. And then how you’re thinking about gantry placements and imaging revenue stepping up in 4Q?
Carleen Oberton, Chief Financial Officer, Hologic: Yeah. So it’s within that imaging line, there’s more than just the three d gantry. So the three d gantry line itself did sequentially increase quarter over quarter. There were some other components that were down quarter on quarter, but definitely the three was up. And I think to Steve’s comments, looking into q four, we were absolutely expecting another sequential up tick in the number of gantries, three d gantries shipped in q four, and we feel really confident.
And we have much better visibility at this point in this quarter than we even did in q three. So that’s what gives us confidence that we’ll be able to deliver that uptick in gantry.
Mike Watts, Corporate Vice President, Investor Relations, Hologic4: Got it. That’s helpful. And then if I can just squeeze one more in, just how should we think about the diagnostic setup for fiscal twenty six? You know, molecular is becoming a larger part of the base here as is BBC, CTV, and biotherapeutics within that revenue line item. So just curious at one at what point, you know, you’ll run into the law of large numbers there and, you know, ultimately, where do you think diagnostics growth will shake out, relative to that mid single digit range for for next year?
Thank you.
Carleen Oberton, Chief Financial Officer, Hologic: Yeah. I’ll start off. You know, for next year, I think we expect diagnostics to be within that mid single digit range and primarily because of that first half headwinds that we talked about that are pressuring the growth in both cytology and molecular because of China and the HIV. So we feel really great about the Diagnostics business. I think we called out BVCV, still lots of runway there.
Just a couple of headwinds in the ’26. But over the longer term, we expect diagnostics to be a strong contributor to our growth.
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: Yeah. The core business of our molecular, our Panthers, the expand expanding Panthers with our fusions, and then bringing more menu on there. We’ve got a really good, you know, short and midterm outlook for the diagnostics business. And even our genius digital diagnostics have been, you know, breathing some life into cytology, you know, keeps that, you know, from certainly declining and very low growth. But overall, you know, continue to be very excited about the opportunities despite it getting much bigger.
Mike Watts, Corporate Vice President, Investor Relations, Hologic4: Thank you.
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: Great. Thanks, Casey.
Operator: And our next question comes from Mason Carrico with Stephens.
Mike Watts, Corporate Vice President, Investor Relations, Hologic5: Good afternoon. This is Harrison on for Mason. Thanks for taking the questions. Could you talk about the benefits you’re you’re seeing so far selling endomagnetics through your direct sales force? How has that initial transition played out?
And could you talk about the demands you’re seeing from your customers there?
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: Yeah. I think we’re feeling really good based on the fact we sold almost $20,000,000 of EndoMag in the quarter. And the other, you know, benefit that we have is by bifurcating the Salesforce, as we also indicated, we saw organic growth of about 6% in the interventional line. So what we’ve got now is more dedicated Salesforce that’s able to really focus in on that customer group and feeling really good about where that’s headed.
Mike Watts, Corporate Vice President, Investor Relations, Hologic5: Great. And in the breast health business, are you seeing early signs from the commercial commercial reorg starting to bear fruit there, and how has demand shaped up following instituting that initiative?
Carleen Oberton, Chief Financial Officer, Hologic: Yeah. Sure. So I think as we said in our prepared remarks and Steve highlighted here that we’re seeing great traction early on. Know, typically, when you have a disruption in the sales force or reorg, you might take a step back. But clearly, we have not taken a step back here in the third quarter and feel good about the commercial leadership and a lot of the plans they’ve put in place from the reorg of the sales team to the end of life strategies and and getting ready to look for the end Envision launch in ’26.
Lou Li, Analyst, UBS: And
Operator: our next question comes from Tycho Peterson with Jefferies.
Mike Watts, Corporate Vice President, Investor Relations, Hologic6: Yeah. Hi. This is Jack on for Tycho. I appreciate you taking our question. Just on Genius cytology, which you touched on in the call,
Patrick Donnelly, Analyst, Citi: would be great if you
Mike Watts, Corporate Vice President, Investor Relations, Hologic6: could share some metrics that you’re seeing regarding penetration or growth that can sort of help frame the contribution of the the new product and, sort of its, contribution to the second level growth.
Carleen Oberton, Chief Financial Officer, Hologic: Yeah. So so we haven’t really put out any, metrics that we’re gonna share publicly, but I’ll just offer a couple of comments. One, from a from a revenue model perspective, a lot of the elements of the cytology, you know, selling the collection kit do not change. What does change is that we get an uptick on the digitization of the of the image, which enables the AI capabilities within a Genius platform. What I’d also say is that this is a significant workflow change within the lab.
So the rollout has been slow and measured given the significance of the change. But despite that, you know, the feedback is overwhelmingly positive of the of what this enables from an efficiency. And, hopefully, at some point, clinically, we’ll be able to you know, we’ll support, you know, further detection of cancers and the like. So just feel really good about this product and and what it’s doing for the cytology business.
Mike Watts, Corporate Vice President, Investor Relations, Hologic6: Okay. Then I guess it’s sticking on this theme of cytology and HPV here. We’ve seen a fair bit of news on HPV self collect. A lot of the reference labs are coming out with commercialized offerings, for self collection that use use competitor, collection systems. And I’m just curious how you guys are viewing this development.
If it’s a greenfield opportunity that would be nice down
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: the road to have, or
Mike Watts, Corporate Vice President, Investor Relations, Hologic6: if you’re looking at it like a necessity and that it might be taking some share away from the in office volumes that you here.
Carleen Oberton, Chief Financial Officer, Hologic: Yeah. I think at the highest level, we view this as expanding the market and getting more testing out there to women that maybe don’t have access to a gynecological exam and to have a speculum exam to capture the the specimen appropriately. So, we have we have partnered with some of the labs to have self collect as well. So, again, we view this as expanding the market.
Mike Watts, Corporate Vice President, Investor Relations, Hologic: Operator, I think we have time for maybe one more question.
Operator: And ladies and gentlemen, our last question comes from Puneet Souda with Leerink Partners.
Mike Watts, Corporate Vice President, Investor Relations, Hologic7: Hi, Steve and Carleen. Thanks for taking my questions. Hey, Puneet. The first one may yes. Thanks, Steve.
So first one, maybe on the gantry side, I mean, 2,000 legacy units that you have out there With the change in the commercial strategy and the actions you’re taking, can you elaborate a little bit about, you know, how do you see that conversion in in the last quarter here and then ’26? And how should we think about, you know, maybe on an annual basis? I know Steve used to give that number for sort of a panther, but just wanted to know on this side of the business, how do you think about, you know, these these legacy gantries getting replaced?
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: Yeah. I think we see them kinda steadily improving is the way I would keep thinking about it, Puneet, that, you know, we’ll sell more this quarter than last quarter, and then I think continuing to strengthen next year. You know, candidly, the end of life ones are, you know, more ones that will convert to our existing product. And then Envision, because these by definition are a lot of the older ones that, you know, people hadn’t upgraded or whatever, you know, had for a while and might not have been the leading adopters. And then we see Envision really kicking in on top of that, you know, later next year, really for a lot of the thought leaders and and being exciting.
So I think, again, we we view that our worst days in breast health, we had those speed bumps. But as we have both better commercial execution and the new product coming next year, feeling really good about where we’re headed.
Mike Watts, Corporate Vice President, Investor Relations, Hologic7: Got it. And then, I mean, if I may ask about again, I I I don’t think you were expecting a USPSTF question, but the USPSTF members, as you saw, the, you know, the the committee has been first, and and there’s an expectation new members are gonna come in. Just wanted to get your thoughts on the the legacy assays, if there’s an impact to that. Is is the co testing fully intact as a result? And how are you thinking about this this change, which, you know, sort of happened recently?
Steve McMillan, Chairman, President and Chief Executive Officer, Hologic: I think at the end of the day, we’re looking at it as women’s health and the tests that we’re involved with are all gonna be very important in there. And it’s, you know, positive for women’s health, positive for, you know, the payers, and and economically makes a lot of sense. So, you know, the short term machinations and turmoil there, As you’ve watched USPSTF, you know, with us for years and years, doesn’t have much of a, you know, a quarterly impact or even an annual impact on us because of fundamentally what we’re doing. So we just kinda keep our heads down. We got the payers covered, and feel good about where we’re headed.
So thanks, Puneet.
Operator: And ladies and gentlemen, that concludes today’s conference call. Thank you everyone for your participation. You may now disconnect.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.