Hologic, Inc. (NASDAQ:HOLX) Q1 2024 Earnings Call Transcript

Vijay Kumar: Hey, guys, congrats on the [inaudible]. Thanks for taking my question. Hi, Steve. And maybe my first one for you here on, it was helpful for you to talk about those growth drivers. I’m curious what percentage of revenues do you think are growing high single sustainably? What percentage should be growing mid-single-ish? And what percentage of revenues are low singles? Have you looked at that analysis? I’m just curious on when you say 5% or 7%. How investors could get comfortable when they do the sum of the cost between with — on the business segments?

Steve MacMillan: Yes, I think we think about it by business segment. And I think what we’ve really said, Vijay is that each of our businesses this year should be within that 5% to 7%. So I think that has us feel really good. Obviously, within each of the businesses, we’re not going to go down that product line by product line, right. But if you played it out, right, Surgical, you got MyoSure and Fluent growing faster than that you have NovaSure lower than that, right. We’ve got that always across the businesses. But I think the way to think about it is we feel really good about each of our businesses growing in that range. And I will tell you that internationally, each of those businesses is certainly at the higher end of that range, if not slightly beyond.

So we’ve got it across, every business has growth drivers. And like any business, there’s always a few that aren’t growing as fast. And, that’s just the nature of the beast. But overall, I think what we’re, again, magically, every one of our businesses is in that frame.

Vijay Kumar: Understood. And Karleen, maybe one view on the guidance like Q1 came in mid singles, despite the day’s headwinds 2Q guidance is for about 3.5. Why, when I just think about the 3.5 five versus the five you did in Q1, is it just the comps, what’s driving 2Q and when you think about the back half step up from first half to hit the annual guide, is that just the days normalization and back half or any other drivers we should be looking at the back half?

Karleen Oberton: Yes, the biggest issue here in Q2 is the comps that is driving. So if you looked at Q2 of ‘23 DX ex- COVID grown 15%, molecular within that grown 24%, breast over 25% and surgical over 25%. So I think what we’ve been saying all along is that Q2 was just a standing quarter. Proud of that quarter. As we went into Q3 and Q4, we have more normalized comps that were going against that drive that improved growth rate in the back half.

Operator: We will take our next question from Anthony Petrone with Mizuho Group.

Unidentified Analyst : Hey, guys, this is Dimitri speaking for Anthony. Congratulations on great quarter. I just saw I wanted to ask about like the Molecular Diagnostics, ex-COVID. Seems like might have slowed down this quarter versus like year-over-year, and just a little bit more color on that this quarter. And kind of like your expectations for Q2, do you see like a stronger respiratory virus season. How should we think about that?

Steve MacMillan: Yes, I think the big piece that affected molecular in the quarter, the single biggest was the four fewer selling days. It’s a disposable run rate business. And if you think about that, that knocked, between 400 and 600 basis points off the quarterly growth rate, frankly, depending on exactly how the days fall. And both that quarter and this quarter that we’re in now, the second quarter are going against these ridiculously strong comps of over 20-ish percent molecular growth from a year ago. But I think the overall run rate, and the sheer size of the businesses now we feel very good about.

Unidentified Analyst : Sounds great. And you guys gave full year guidance for COVID. Should we be thinking about that kind of the new baseline now going forward?

Karleen Oberton: I think, as we’ve talked about, we think of COVID as upside. So as the guide would indicate as a continued step down each quarter. I mean, it’s hard to really tell if there’s another flu season next year that drives a little elevated COVID. But, again, we were looking at his upside. And so, maybe even think about something less than what we’re anticipating for ‘24 and ‘25.

Operator: We’ll take our next question from Puneet Souda with Leerink Partners.

Puneet Souda: Yes, hi, Steve, Karleen, thanks for taking the questions. Yes, hey, Steve. So first one on Genius Digital DX system, can you just remind me in a positive if I miss this, any changes to pricing or margins as a result? And maybe just I know, ThinPrep remains the same. But, can you just talk a little bit about, how do you see the adoption of this in a market that’s fairly established already? And then I have a follow up for Karleen.

Steve MacMillan: Sure. Thanks, Puneet. Yes, don’t assume a real change in the margin structure. I think the real win here is for is the workflow, I will tell you, our key customers are incredibly excited, as you will know, right? One of the biggest issues right now, running labs, everything else is workers and cytologists especially trying to read these slides. It’s been a very manual and labor intensive process. I can tell you going back to one of my first meetings with Quest, when I got in this role, almost 10 years ago, call that meeting with nine years ago, with discussions around, the workflow of cytology, and it was one of their biggest concerns. So our team has gone out and really addressing that, and I think the magic is going to be unleashing that as we are internationally as well.