Hologic, Inc. (NASDAQ:HOLX) Q1 2023 Earnings Call Transcript

Vijay Kumar: Hey, guys. Congratulations on a solid Q here, and thanks for taking my question. Steve, I wanted to ask one on this guidance update here. It looks like you beat the quarter versus your midpoint of your prior guidance by about $120 million, the annual guide was raised by about $125 million. It looks like most of that’s coming from FX and change in code assumptions. When I look at Q1 print here, your underlying organic came in better. So why wouldn’t some of that underlying strength we saw in Q1 flow through — flows through the rest of the year? Is there any kinding impact of revenue recognition or is this just a conservatism?

Stephen MacMillan: It’s — we continue to deliver, I can promise you, it has nothing to do with timing of revenue recognition, Vijay. The underlying business is very strong, we’re one quarter in. Think about where we were a year ago at this time. Suddenly Russia invaded Ukraine, nobody saw that coming. I’ve lived through the downturn of 2008-2009. We’ve watched the world go up and down and over the first quarter of the year. So we’re going to continue to be very prudent, do not underestimate our confidence in our ability to run the business.

Vijay Kumar: Understood. And then maybe another way to ask this question Steve is Diagnostic. Clearly it was a highlight, 16% and organic. So what is driving this? Is this like reagents? What kind of testing is driving this? Or was this easy code comp? When I look at Q1, overall underlying organic was 6%, they hit double digits for the year, the base has to do clean stroke at the back half. How should we think about this diagnostic which was 15% in Q1 ramping up in back half or is the back half being carried by normalization of breast imaging revenues?

Stephen MacMillan: Look, clearly the comps on molecular and diagnostics will get harder in the back half. But fundamentally, what’s driving it, we sort of answered this I think earlier. We placed a whole bunch of Panthers, almost 1,500 Panthers in COVID time over the last three years. We’ve got more customers adopting our core menu. We have our new products being launched doing very well. And those are really the main drivers, as well as a little bit of flu and a little bit of viral stuff as we’ve been penetrating a little more Africa.

Karleen Oberton: Yes. I mean, I think it is the Panther placements and new customers as well. I think we’ve talked about in our corporate presentation that of newly acquired customers, 85% are running at least one other assay and over 55% are running at least two other assays. So I think that is the value of the Panther in the menu that we have driving that growth.

Operator: And our next question will come from Tim Daley with Wells Fargo.

Tim Daley: Great. So Steve, I love the comments on some parties out there trying to figure out who they want to be when they grow up. And just running with that, we’ve seen a lot of players in molecular diagnostics seem to be adding menu in women’s health arena. So given your legacy foothold there, how can you think about the current competitive environment? Are you worried about any price pressures, maybe from new entrants trying to gain share via that lever? Yes, just kind of the sensible stance here and kind of what you would answer as to any questions around that?