Hologic at 45th Annual William Blair Growth Stock Conference: Strategic Focus on Women’s Health

On Wednesday, 04 June 2025, Hologic Inc. (NASDAQ:HOLX) participated in the 45th Annual William Blair Growth Stock Conference. Carleen Oberton, CFO, outlined Hologic’s strategic direction, highlighting its robust performance in women’s health technology. While the company enjoys a strong balance sheet and steady revenue growth, it faces challenges such as macroeconomic headwinds and funding reductions.

Key Takeaways

• Hologic reported a strong cash position of $1.6 billion and a leverage ratio below one times.
• The company aims for mid-single-digit revenue growth and double-digit earnings growth.
• Key growth drivers include the Panther platform, 3D mammography, and MyoSure for fibroid treatment.
• Hologic is managing challenges such as tariffs and the loss of USAID funding impacting $50 million in annual revenue.
• Strategic acquisitions and product innovations are central to Hologic’s future growth.

Financial Results

• Cash and Investments: Ending fiscal Q2 with $1.6 billion.
• Revenue Model: 80% of revenue is recurring, from consumables and services.
• Growth History: Revenue has grown nearly 5%, and earnings over 10% in the last decade.
• Capital Deployment: $3.6 billion on share repurchases and $2 billion on M&A.
• Free Cash Flow: Averaging over $1 billion annually.

Operational Updates

• Diagnostics Division: Over 3,300 Panther instruments placed; assay menu expanded to over 20.
• Breast Health: 80%+ market share in 3D mammography in the U.S.; service revenue doubled in 10 years.
• Surgical Business: Focus on minimally invasive fibroid treatment; acquired Gynasonics.
• International Expansion: 25% of revenue from outside the U.S.; investing in market access and development.

Future Outlook

• Strategic Focus: Market conversion to 3D mammography and new product launches like the BVCV assay.
• Innovation: Launch of the Envision platform and continued focus on acquisitions.
• Challenges: Addressing macro headwinds and USAID funding loss for HIV business in Sub-Saharan Africa.

For a detailed understanding, readers are encouraged to refer to the full conference call transcript below.

Full transcript - 45th Annual William Blair Growth Stock Conference:

Andrew Brackman, Diagnostics Analyst, William Blair: Thanks for joining us here as we begin to wrap up the second day of the William Blair Growth Stock Conference. If you haven’t met me, I’m Andrew Brackman. I’m the diagnostics analyst here at William Blair that covers Hologic. Today, we’re pleased to have the team, including CFO, Carleen Oberton and from Investor Relations, Peter Sattler. I am required to tell you that for a full list of research disclosures, please visit williamblair.com, and the format today will be a formal presentation in here, followed by a breakout in Genie A.

With that, I’ll turn it over to Carleen. Thanks.

Carleen Oberton, CFO, Hologic: Thank you Andrew and good afternoon everyone. So our safe harbor statement, non GAAP financial measures, and let’s get to the good stuff. Hologic. Hologic is a medical technology company uniquely focused in women’s health care. In each of our franchises, we have products that are market leading products based on clinically differentiated outcomes.

We are typically what we consider the gold standard of care, and that would be, for example, ThinPrep in cervical cancer screening, our Panther instrument in molecular diagnostics, our three d mammography, our three d Genius mammography in our breast health business, and our MeyerShore for the treatment of fibroids in our surgical business. These large market leading shares really are the foundation for growth for the organization. We’re able to invest both organically and inorganically around these platforms. These platforms have tremendous gross margin. As a result, we have peer leading operating margins and tremendous cash flow, and at this point in time we have a really fortress balance sheet.

We have a credit agreement with best in class terms, and we ended our fiscal Q2 with $1,600,000,000 in cash and investments and a leverage ratio less than one times. Structurally we operate within three divisions. Our two largest divisions are Diagnostics and Breast Health, followed by our Surgical division. From revenue models, we have several different revenue models including a capital, service, and consumables. If you look at the consumables and the service, that translates into about 80% of our revenue is recurring in nature.

From a geography perspective, we’re clearly indexed to The US with only 25% of our revenue coming outside of The US at this point in time. That clearly is an opportunity for growth for us. I would also say that as a women’s healthcare company, while that is an opportunity, it also has its challenges when you think about some of our market leading products here in The U. S. With breast cancer screening, cervical cancer screening.

Not every country outside The U. S. Has those screening programs. But again, that’s an opportunity with us to partner with health ministries and drive those programs, because as we know, early detection of cancer leads to better outcomes and better cost profiles for health systems. If we look our growth profile, while we have a couple of challenging quarters that we’re dealing with now, if you take a step back and you look back at the past ten years, revenue has grown just under 5%, and we’ve grown earnings just over 10%.

And as we think about our algorithm as we move forward, we talk about mid single digit growth and double digit earnings growth, and I think we’ve got a record that we’ve done that over the last decade and we’ll continue to be able to do that. So let’s talk about a couple of our franchises. So diagnostics is our largest franchise and is leading us in growth. And if you look at over the last ten years, the business has grown 6.4%. Now let’s take that and its components.

This cytology business, which is cervical cancer screening, has roughly been flat over the last ten years. As we look at the market in The U. S, it’s probably flattish to declining and slight growth OUS. And then molecular really has grown over two and a half times over this period, driven by our Panther platform in the over 23 assays approved on that instrument. So let’s talk about the Panther.

Panther is really the foundation of the molecular business. It’s a high throughput instrument with best in class automation and one of the best hands off time for the lab techs, and we know that labs and the technicians are under a lot of work constraints, and so Panther is a great solution. And during COVID, our Panther placements literally exploded and almost doubling in size to over 3,300 today. In addition just to the growth of the Panther, we actually were able to recapitalize many of our large lab customers that had been up until the pandemic running our legacy Tigris platform. And think about the legacy Tigris platform only had four assays approved on it, Recapitalizing all of our customers to Panther opens up the whole menu of 23 plus assays, including Panther and Panther Fusion.

So while the Panther placements exploded during COVID, we have this tremendous R and D team that has been expanding the menu, has grown from twenty fourteen with just four assays approved to over 20 approved on our Panther and Panther Fusion platforms. Today, when we look at our customers, only about a third run four or more assays. So as we think about revenue growth moving forward for molecular, it’s about utilization. How do we continue to drive utilization on that Panther platform? And we do that in two ways.

Commercially, we have a lab sales force that partners with the lab, but we also have a physician sales force that partners with our labs to get customer level data to understand screening frequency, and we go out and talk to docs and promote screening guidelines to grow the markets and grow revenue both for our lab customers and ourselves. As well in the diagnostics division is our biotherapeutics asset that we acquired in 2021. That was our step into specialty lab, having clear lab capabilities. When we bought BioTheraGnostics, about $35,000,000 in revenue, probably approaching $125,000,000 in revenue today, still early days of penetration, probably only about 12% penetrated. So expect that to be a growth platform moving forward as well.

Our breast and skeletal health business starts with the gantry and a tremendous installed base for screening. And what we’ve done is we’ve invested both organically and inorganically across what we call the patient continuum of care. So a woman starts with screening, annual screening. If there’s something suspicious, she goes to biopsy, so where we have our firm prone table as well as our Brevera for taking samples. And if unfortunately it is cancer, they move on to surgery, where we have products, markers that are used in surgery, as well as our latest acquisition, one of our latest acquisitions, Endomagnetics, which is a wireless marker that we see the market converting from wired to wireless marking for breast surgery.

And when you look at the components of revenue, you can see that our service revenue has almost doubled over the last ten years. This service revenue is largely attached to that gantry install base. We have a very high attach rate of low 80% where we have that reoccurring revenue for that install base. And as we’ve diversified and invested again against that patient continuum of care, that gantry business, which about ten years ago was about a third of the division’s revenue, is probably less than 20% at this point in time. And as I mentioned, that is the growth in the installed base, tremendous growth both internationally in The U.

S. And from a three d perspective we have high 80%, we have 80% share plus of the three d market in The U. S. And still room to grow share and convert the market OUS from two d to three d. In our surgical business, our surgical business has grown nicely over the last ten years at that 7.6% CAGR.

That has really been led by our minimally invasive treatment of fibroids, our MyoSure product and our Fluent fluid management product has really driven that growth. We’ve recently acquired Gynasonics, which enhances our fibroid treatment portfolio. So you think about fibroids characterized by size and location. The MyoSure will treat smaller fibroids and now with Gynasonics we’re able to treat larger fibroids. And with our Assessive platform, we can also treat fibroids laparoscopically that are outside the uterus.

When we think about surgical and the treatment of fibroids, the unfortunate reality is that women wait an average of three and a half years before they actually get a fibroid treated. And as well, unfortunately, often that treatment is a hysterectomy. And so our opportunity is to get more women treated sooner and get treated with minimally invasive procedure versus the hysterectomy. So I think we have a pretty unique culture given our focus and our purpose to be champions of women’s health. I think we’re purpose driven and results driven.

I think that plays nicely in that diagram we call our virtuous circle. So it starts with innovation, investing organically and inorganically to bring these clinically differentiated products to market. So we do that, we grow revenue and profits, and as we do that we’re able to take some of that profit to invest in market expansion, market access, and then we treat more women. And so as we do that, as we treat more women and we drive more revenue, we’re able to continue to invest. So that is the virtuous circle.

You know, as a CFO of an organization, we don’t need an off-site to figure out what our purpose is. It’s what we’ve always done. We’ve always been champions of women’s health and we’ll continue to do that. We have over 7,000 employees. We have a highly engaged employee workforce with 99 percentile ratings as it relates to our mission and purpose, again, to be champions of women’s health and really resonates with people and how they feel good about their jobs.

And we’ve also had several recognitions as great places to work. You know, one of the investments we’ve made in being champions of women’s health has been in our Global Women’s Health Index. This is where we partner with Gallup and we do a global survey of the status of women’s health, women and girls’ health and well-being, and we’re able to measure progress across a number of different spectrums. That allows us to have conversations with health ministries and other leaders to talk about the status of women’s health in their country or their region and how we might improve it. And again, things like cancer screening, STD screenings are things that lead to better outcomes for women.

We’ve also been the title sponsor of the WTA over the last four years. If anyone watches tennis on the non grand slam events, you’ll see Hologic on the net. And this has really been a special partnership, I think a lot of the women on the tour really appreciate that Hologic, a women’s health company, has been their sponsor, and also sponsoring and ensuring that they get equal pay as their male counterparts. So as we look forward, we start from this capability to create and expand markets, and we’ve done that across all of our franchises. So converting from the pap test to our thin prep pap test, which is a liquid based cytology, which again drives better outcomes in screening.

We’ve converted the market from two d to three d here in The U. S. And have dominant position with our clinically superior images in best in class scan times, a little over three seconds in a scan time with our three d machine. I mentioned MyoSure, so when we bought MyoSure back in 2011, I think it was, we estimated it to be maybe $100,000,000 revenue potential. It’s close to $400,000,000 today as we continue to educate about the treatment of fibroids and expand that market.

We’ve recently launched our BVCV assay on our Panther platform. BVCV is the most common reason vaginized, common reason a woman goes to the gynecologist. And so what we’re doing there is converting what’s been a lab developed test to an IVD test on a high throughput Panther instrument. We’ve also expanded internationally and we will continue to do so, as I mentioned earlier, still under indexed at only about 25% of our revenue. We’ve done that through a number of ways.

We’ve gone direct in key markets about ten years ago. If you looked at most of our businesses were being managed and sold through dealers, we’ve gone direct and we’ve invested in market access and market development capabilities to promote screening programs that drive our revenue in those markets. And still a runway to go internationally for sure. And so we have this great foundation and we think we have the ability to build upon that foundation both organically and inorganically, And you see that organically what we’ve done a couple of different things. New product innovation has been the BVCV asset I mentioned, our FluentPro fluid management system is something we developed organically in the house, Our Genius Digital Cytology, this is the latest innovation in cytology.

If you think about traditional cytology as someone actually standing up and looking into a microscope to evaluate a slide, We have now launched the capability to digitize that slide so that a cytologist can look at that image anywhere on a laptop and then layer on AI to find more cancers and really drive the throughput of that screening capability. And to come next year we’ll be launching our next generation gantry, the Envision platform, which brings best in class image capability, even shorter scan time than we have today, as well as workflow efficiencies. And we have the ability to continue to grow off that foundation with inorganic investments, and some of the ones that we’ve done recently is biotherapeutics in our diagnostics division, EndoMag in breast health, and Gynasonics in Surgical. I think when you look at each of those, those are really what we call tuck in acquisitions where we’ve acquired assets that are growing faster than the core. We’re laying those in and then we’re driving efficiencies on the bottom line to drive operating margins towards our corporate average.

As I mentioned, we have peer leading margins at 30%, which really translates into then tremendously strong cash flow. If you look at our five year average, high 90% conversion of cash flow, averaging probably lately over a billion dollars of free cash flow every year. And as I mentioned, we had tremendous cash flow during the twenty one, twenty two, twenty three timeframe at the peak of COVID testing, and as a result, we have the $1,600,000,000 of cash and investments on the balance sheet. We have a tremendously strong balance sheet. We have deployed significant cash flow over the last several years.

We’ve deployed about $3,600,000,000 on share repurchase and another $2,000,000,000 on M and A. And we have tremendous firepower to continue to deploy capital. As I mentioned, we’re under one time leverage. I think we talk about a normal leverage ratio, our normal leverage target would be two to three times. In 2019, before we entered into the pandemic, were about two and a half times, so I think that’s probably what you’d expect for a normal leverage ratio.

So as we look to the balance of 2025, it’s clear we are focused on executing on the second half of the year. You know, if you look at what we guided for Q3, what is implied for Q4, we are returning to growth as we exit the fiscal year. We’ve made a number of changes within our breast health business from sales leadership to sales structure to enhancing our processes. While it’s early days, you know, two months into Q3 we do see the benefits of those changes and gives us confidence that we will see better execution on our gantry business in Q3 and sequentially better in Q4. Diagnostics again is leading growth.

We see continued strong momentum in the diagnostics business given the Panther utilization, our install base, and our growing menu. And like everyone else, we’re managing through some macro headwinds both on the tariffs as well as some things that are unique to Hologic. One of the things that are unique to us is when the USAID funding was stopped, that basically took out our HIV business in Sub Saharan Africa. That was basically a $50,000,000 business annually. We’ve taken that out of the outlook.

While there is discussion that maybe funding will come back, we’ve taken a conservative approach and assumed that it hasn’t. But that would be a unique headwind to us at this point in time. But again, we’re focused on delivering and have good line of sight to closing out Q4 in growth. Just as a reminder, this is our guidance for the full year, which again applies pretty low growth organically but has a bit higher growth on the non GAAP EPS of $4.15 to $4.25 Our long term outlook calls for mid single digit revenue growth with some margin expansion to drive double digit earnings growth, and some of that will include share repurchase. As we talked about here today, we have tremendous capital, tremendous firepower to manage our dilution as we move forward.

Thank you.

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