07.20.23
Rank: #25 (Last year: #22)
$4.86 Billion
Prior Fiscal: $5.63 Billion
Percentage Change: -13.68%
R&D Expenditure: $283.4M
Best FY22 Quarter: Q1 $1.47B
Latest Quarter: Q2 $1.02B
No. of Employees: 6,944
Global Headquarters: Marlborough, Mass.
KEY EXECUTIVES:
Stephen P. MacMillan, Chairman, President, and CEO
Monica Aguirre Berthelot, Vice President, Chief of Staff
Karleen Oberton, Chief Financial Officer
Patrick Brady, Sr. VP, Global Supply Chain, Quality and Regulatory
Erik Anderson, Division President, Breast & Skeletal Health Solutions
Essex Mitchell, Division President, GYN Surgical Solutions
Jennifer Schneiders, President, Diagnostic Solutions
Jan Verstreken, Group President, International
“In the midst of every crisis, lies great opportunity.”
Pithy but factual, yet mysterious and complicated.
Such are the elements of this well-known adage cited often throughout history by philosophers, scholars, politicians, entrepreneurs, and military leaders alike. It’s typically referenced during crises as a reminder of the potential benefits obscured within challenges, and has repeatedly proven its worth as an effective solutions mechanism.
Yet the maxim remains steeped in confusion. Its origins are murky, with credit given to Chinese military general Sun Tzu, German physicist Albert Einstein, Greek philosopher Plato (“necessity is the mother of invention”), and Japanese Kanji (the word for crisis is supposedly written with two characters, one representing danger; the other, opportunity). Einstein is most widely endorsed as its creator, but there is no real evidence linking him to the axiom—no backstory, no documentation (written or otherwise), no corroboration (personal or professional).
Nothing.
Nevertheless, the saying has become an effective strategy for managing and surviving any crisis or extreme threat. Countless individuals and businesses, for example, found great opportunities lurking in the COVID-19 pandemic: Disgruntled employees either changed careers or left the workforce, while companies profited from pandemic-induced diagnosis and treatment solutions.
Among the organizations that successfully leveraged the pandemic’s opportunities was Hologic Inc., a Marlborough, Mass.-based women’s healthtech firm that was one of the first to develop a COVID-19 test [its Panther Fusion assay received U.S. Food and Drug Administration (FDA) Emergency Use Authorization on March 16, 2020—the day the world began to shut down].
“We make tens of millions of tests every year for sexually transmitted infections, cervical cancer screening, and viral load monitoring,” Kevin Thornal, Hologic’s former Diagnostic Solutions Division president (current Nevro CEO/president), recalled in an online post. “It’s routine for us, so we knew we had to make a test for Panther, and make it as rapidly as possible.”
ANALYST INSIGHTS: Hologic did an amazing job of maximizing its pandemic cash from its diagnostic solutions to rapidly acquire new business to enhance its product portfolio in the last few years. Based on these investments, it’s in good shape for future growth. The question is, “Do they stand still with organic growth or do they continue to strategically enhance their solutions with inorganic activity?”
Hologic’s top executives also knew that more than one test would be needed to diagnose and track the rapidly spreading disease. Consequently, the firm’s R&D, manufacturing, and regulatory affairs teams worked at a furious pace, compressing an average two-year process into two months to develop the Aptima SARS-CoV-2 assay, which was cleared for U.S. and European use in May 2020. By the end of that year, Hologic had shipped approximately 68 million COVID-19 tests worldwide.
The Panther and Aptima assays’ meteoric turnaround clearly is a testament to Hologic’s capacity to pivot and fast-track diagnostic technology deployment. But it also demonstrates its leaders’ acumen for recognizing (and leveraging) opportunities in a crisis.
“...what we have said at the beginning was we thought that this [COVID-19] long-term would create a new assay for us that would be far more enduring then, I think, anybody ever thought it would be back in 2020—back...when everybody thought this was going to go away in a hurry or it was going to go away as soon as vaccines arrived or molecular testing was going to go away as soon as antigen tests came along,” Hologic Chairman, President, and CEO Stephen P. MacMillan told analysts during a Q4 earnings call last fall. “What we’ve learned is this thing is going to be around...we always said in the beginning, this is a respiratory virus that will mutate. Herd immunity was never going to be achieved. And we thought we would end up with an enduring business. Whether that enduring business ends up being $50 million, $100 million, $150 million, $200 million, we really don’t know, but we feel really good that we’re in that business.”
Those feelings certainly are warranted: Hologic’s Molecular Diagnostics revenue nearly doubled in the pandemic’s first year, going from $1.64 billion in fiscal 2020 to $3.17 billion in fiscal 2021. However, ebbing demand for coronavirus tests—courtesy of waning infection rates—reversed the firm’s diagnostics fortunes in FY22 (ended Sept. 24, 2022), as Molecular Diagnostic revenue descended 20.8% ($660.1 million) to $2.51 billion, according to Hologic’s latest annual report. The company attributed the deficit to a $729 million loss in Aptima and Panther Fusion SARS-CoV-2 assay sales (from $2.16 billion in fiscal 2021 to $1.43 billion in fiscal 2022), as well as the impact of at-home testing alternatives and lower average selling prices globally.
COVID-19’s slow retreat from pandemic status also curtailed Hologic’s Panther and Panther Fusion instrument revenue in FY22, but the losses were somewhat offset by a $53.6 million spike in worldwide sales of Aptima assays and STD collection kits (primarily for the CTGC, Bacterial Vaginosis, and CV Candida tests). Yet that particular increase was tempered by lower HPV assay volumes and lower average selling prices.
Further contributing to the Molecular Diagnostics financial seesaw was a $32.6 million increase in global Quant Viral assays and Fusion respiratory product sales, and $13.3 million in incremental product revenue from the inclusion of Hologic’s Diagenode and Mobidiag brands in fiscal 2022. But those gains were neutralized by volatile foreign currency exchange rates.
Hologic complemented its Mobidiag portfolio in October 2021 with the European debut of the Novodiag system, a fully automated molecular diagnostic solution for on-demand molecular testing of infectious diseases and antimicrobial resistance. The solution combines real-time polymerase chain reaction with microassay capabilities to identify multiple pathogens in a single sample. Novodiag is precision engineered for affordability, simplicity, and accuracy across a broad menu of high and low plex tests.
“The addition of the Novodiag system to our diagnostic molecular scalable solutions portfolio will offer more customers in Europe a wider choice of solutions that meet their needs, from single patient rapid testing to population-level screening,” Jan Verstreken, group president, International, said upon the product’s launch.
Joining Novodiag on the European market in November 2021 was the Genius Digital Diagnostic System, a screening tool that uses deep learning artificial intelligence and volumetric imaging technologies to spot pre-cancerous lesions and cancer cells, enabling earlier cervical cancer diagnosis. The Genius system received CE mark approval in late 2020; it is not available in the United States, but another version of the Genius software designed to detect breast cancer in mammography images was cleared by the FDA in December 2020.
Hologic added to its Panther scalable solutions portfolio near the end of Q1, introducing Panther Trax to the United States, Europe, Canada, Australia, and New Zealand. Panther Trax enhances laboratory automation by physically linking multiple Panther instruments into a single workcell, thereby enabling increased testing volumes without increasing staff.
The procession of new Molecular Diagnostics products continued in the second half of fiscal 2022 with regulatory consents for two transplant-focused assays and two COVID-19-flu-RSV tests. The Panther Fusion SARS-CoV-2/Flu A/B/RSV assay and Novodiag RES-4 molecular diagnostic test launched in Europe in early July 2022—well before the start of the northern hemisphere’s respiratory viral season.
Both transplant-focused assays passed regulatory muster two weeks apart in May 2022. First up was FDA approval of the Aptima CMV Quant assay, which measures the viral load of cytomegalovirus (CMV) in organ or stem cell transplant patients. Running on Hologic’s Panther system, the test merged into the company’s existing portfolio of diagnostic and viral load tests for HIV-1, Hepatitis C and Hepatitis B. It reportedly is the first test to commence in the United States for detecting and monitoring post-transplant pathogens on the Panther system.
Hologic followed the Aptima CMV Quant approval with CE mark approval of two new molecular assays that monitor for Epstein-Barr virus (EBV) and BK virus (BKV) in transplant patients. Panther Fusion EBV Quant Assay and Panther Fusion BKV Quant Assay quantify the viral load of the respective viruses with the aim of aiding in diagnosing and managing solid organ transplant and hematopoietic stem cell transplant patients. The in-vitro nucleic acid amplification tests run on Hologic’s automated Panther Fusion system using real-time PCR technology. The EBV assay is validated for use with whole blood and plasma samples, and the BKV assay is validated for use with human plasma and urine samples.
The cavalcade of new Molecular Diagnostics innovation, however, failed to boost Diagnostics segment revenue in FY22. Total sales sank 18.3% to $3.02 billion due to losses in both Molecular Diagnostics and Blood Screening (down a staggering 34.7% to $32.4 million) but an $800,000 increase in Cytology & Perinatal proceeds helped curb the segment’s fiscal decline.
Two of Hologic’s three other product segments also posted sales losses in fiscal 2022. Breast Health revenue fell 9.2% to $1.23 billion due to lower digital mammography system volumes (mostly 3D Dimensions), related software and workflow products, Affirm biopsy systems, and Brevera biopsy systems. The company blamed the reduced volume on the global semiconductor chip shortage, which consequently impacted its ability to manufacture enough mammography systems to meet customer demand. Breast Imaging proceeds tumbled 12.2% to $951.6 million, but the decline was partially offset by a 2.7% increase in Interventional Breast Solutions revenue (to $276.2 million), which was driven by higher sales of ATEC and Brevera disposables. Foreign currency exchange rates negatively impacted segment revenue.
Foreign currency exchange rates also worked against Hologic’s GYN Surgical and Skeletal Health sales as well, though the former segment still managed to turn a profit in fiscal 2022. Revenue jumped 7.1% to $522.9 million, thanks mostly to higher sales of the company’s Fluent Fluid Management solutions, its MyoSure system, Accessa Pro Vu system, and Bolder products (including the CoolSeal vessel sealing devices and JustRight surgical staplers). The Bolder products are a relatively new addition to Hologic’s GYN Surgical lineup, having been incorporated via acquisition ($160 million, Bolder Surgical) in October 2021.
GYN Surgical’s gains, however, were somewhat tempered by weak demand for the NovaSure V5 endometrial ablation device. The product delivers radiofrequency energy to ablate the uterus’ endometrial lining to reduce or stop abnormal menstrual bleeding.
Skeletal Health product revenue slipped 3.4% to $93.6 million due to lower sales of the Horizon DXA and Insight FD Fluoroscan systems, largely attributable to supply chain constraints. “We have confidence the worst of the chip shortage is behind us,” MacMillan said during the earnings call.
An improving chip supply would certainly be heralded by Hologic and other companies that depend on the electronic components for their products. A free-flowing supply also would help the company’s finances rebound from a particularly rough fiscal year. Overall FY22 sales fell 13.6% to $4.86 billion and gross profit deteriorated 21% to $2.99 billion, owing to pandemic-induced declines in the Diagnostic business, lower Breast Health revenue, and volatile foreign exchange rates. Income from operations plummeted 34% to $1.64 billion and basic net income per share dropped 28.5% to $5.18.
$4.86 Billion
Prior Fiscal: $5.63 Billion
Percentage Change: -13.68%
R&D Expenditure: $283.4M
Best FY22 Quarter: Q1 $1.47B
Latest Quarter: Q2 $1.02B
No. of Employees: 6,944
Global Headquarters: Marlborough, Mass.
KEY EXECUTIVES:
Stephen P. MacMillan, Chairman, President, and CEO
Monica Aguirre Berthelot, Vice President, Chief of Staff
Karleen Oberton, Chief Financial Officer
Patrick Brady, Sr. VP, Global Supply Chain, Quality and Regulatory
Erik Anderson, Division President, Breast & Skeletal Health Solutions
Essex Mitchell, Division President, GYN Surgical Solutions
Jennifer Schneiders, President, Diagnostic Solutions
Jan Verstreken, Group President, International
“In the midst of every crisis, lies great opportunity.”
Pithy but factual, yet mysterious and complicated.
Such are the elements of this well-known adage cited often throughout history by philosophers, scholars, politicians, entrepreneurs, and military leaders alike. It’s typically referenced during crises as a reminder of the potential benefits obscured within challenges, and has repeatedly proven its worth as an effective solutions mechanism.
Yet the maxim remains steeped in confusion. Its origins are murky, with credit given to Chinese military general Sun Tzu, German physicist Albert Einstein, Greek philosopher Plato (“necessity is the mother of invention”), and Japanese Kanji (the word for crisis is supposedly written with two characters, one representing danger; the other, opportunity). Einstein is most widely endorsed as its creator, but there is no real evidence linking him to the axiom—no backstory, no documentation (written or otherwise), no corroboration (personal or professional).
Nothing.
Nevertheless, the saying has become an effective strategy for managing and surviving any crisis or extreme threat. Countless individuals and businesses, for example, found great opportunities lurking in the COVID-19 pandemic: Disgruntled employees either changed careers or left the workforce, while companies profited from pandemic-induced diagnosis and treatment solutions.
Among the organizations that successfully leveraged the pandemic’s opportunities was Hologic Inc., a Marlborough, Mass.-based women’s healthtech firm that was one of the first to develop a COVID-19 test [its Panther Fusion assay received U.S. Food and Drug Administration (FDA) Emergency Use Authorization on March 16, 2020—the day the world began to shut down].
“We make tens of millions of tests every year for sexually transmitted infections, cervical cancer screening, and viral load monitoring,” Kevin Thornal, Hologic’s former Diagnostic Solutions Division president (current Nevro CEO/president), recalled in an online post. “It’s routine for us, so we knew we had to make a test for Panther, and make it as rapidly as possible.”
ANALYST INSIGHTS: Hologic did an amazing job of maximizing its pandemic cash from its diagnostic solutions to rapidly acquire new business to enhance its product portfolio in the last few years. Based on these investments, it’s in good shape for future growth. The question is, “Do they stand still with organic growth or do they continue to strategically enhance their solutions with inorganic activity?”
—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors
Hologic’s top executives also knew that more than one test would be needed to diagnose and track the rapidly spreading disease. Consequently, the firm’s R&D, manufacturing, and regulatory affairs teams worked at a furious pace, compressing an average two-year process into two months to develop the Aptima SARS-CoV-2 assay, which was cleared for U.S. and European use in May 2020. By the end of that year, Hologic had shipped approximately 68 million COVID-19 tests worldwide.
The Panther and Aptima assays’ meteoric turnaround clearly is a testament to Hologic’s capacity to pivot and fast-track diagnostic technology deployment. But it also demonstrates its leaders’ acumen for recognizing (and leveraging) opportunities in a crisis.
“...what we have said at the beginning was we thought that this [COVID-19] long-term would create a new assay for us that would be far more enduring then, I think, anybody ever thought it would be back in 2020—back...when everybody thought this was going to go away in a hurry or it was going to go away as soon as vaccines arrived or molecular testing was going to go away as soon as antigen tests came along,” Hologic Chairman, President, and CEO Stephen P. MacMillan told analysts during a Q4 earnings call last fall. “What we’ve learned is this thing is going to be around...we always said in the beginning, this is a respiratory virus that will mutate. Herd immunity was never going to be achieved. And we thought we would end up with an enduring business. Whether that enduring business ends up being $50 million, $100 million, $150 million, $200 million, we really don’t know, but we feel really good that we’re in that business.”
Those feelings certainly are warranted: Hologic’s Molecular Diagnostics revenue nearly doubled in the pandemic’s first year, going from $1.64 billion in fiscal 2020 to $3.17 billion in fiscal 2021. However, ebbing demand for coronavirus tests—courtesy of waning infection rates—reversed the firm’s diagnostics fortunes in FY22 (ended Sept. 24, 2022), as Molecular Diagnostic revenue descended 20.8% ($660.1 million) to $2.51 billion, according to Hologic’s latest annual report. The company attributed the deficit to a $729 million loss in Aptima and Panther Fusion SARS-CoV-2 assay sales (from $2.16 billion in fiscal 2021 to $1.43 billion in fiscal 2022), as well as the impact of at-home testing alternatives and lower average selling prices globally.
COVID-19’s slow retreat from pandemic status also curtailed Hologic’s Panther and Panther Fusion instrument revenue in FY22, but the losses were somewhat offset by a $53.6 million spike in worldwide sales of Aptima assays and STD collection kits (primarily for the CTGC, Bacterial Vaginosis, and CV Candida tests). Yet that particular increase was tempered by lower HPV assay volumes and lower average selling prices.
Further contributing to the Molecular Diagnostics financial seesaw was a $32.6 million increase in global Quant Viral assays and Fusion respiratory product sales, and $13.3 million in incremental product revenue from the inclusion of Hologic’s Diagenode and Mobidiag brands in fiscal 2022. But those gains were neutralized by volatile foreign currency exchange rates.
Hologic complemented its Mobidiag portfolio in October 2021 with the European debut of the Novodiag system, a fully automated molecular diagnostic solution for on-demand molecular testing of infectious diseases and antimicrobial resistance. The solution combines real-time polymerase chain reaction with microassay capabilities to identify multiple pathogens in a single sample. Novodiag is precision engineered for affordability, simplicity, and accuracy across a broad menu of high and low plex tests.
“The addition of the Novodiag system to our diagnostic molecular scalable solutions portfolio will offer more customers in Europe a wider choice of solutions that meet their needs, from single patient rapid testing to population-level screening,” Jan Verstreken, group president, International, said upon the product’s launch.
Joining Novodiag on the European market in November 2021 was the Genius Digital Diagnostic System, a screening tool that uses deep learning artificial intelligence and volumetric imaging technologies to spot pre-cancerous lesions and cancer cells, enabling earlier cervical cancer diagnosis. The Genius system received CE mark approval in late 2020; it is not available in the United States, but another version of the Genius software designed to detect breast cancer in mammography images was cleared by the FDA in December 2020.
Hologic added to its Panther scalable solutions portfolio near the end of Q1, introducing Panther Trax to the United States, Europe, Canada, Australia, and New Zealand. Panther Trax enhances laboratory automation by physically linking multiple Panther instruments into a single workcell, thereby enabling increased testing volumes without increasing staff.
The procession of new Molecular Diagnostics products continued in the second half of fiscal 2022 with regulatory consents for two transplant-focused assays and two COVID-19-flu-RSV tests. The Panther Fusion SARS-CoV-2/Flu A/B/RSV assay and Novodiag RES-4 molecular diagnostic test launched in Europe in early July 2022—well before the start of the northern hemisphere’s respiratory viral season.
Both transplant-focused assays passed regulatory muster two weeks apart in May 2022. First up was FDA approval of the Aptima CMV Quant assay, which measures the viral load of cytomegalovirus (CMV) in organ or stem cell transplant patients. Running on Hologic’s Panther system, the test merged into the company’s existing portfolio of diagnostic and viral load tests for HIV-1, Hepatitis C and Hepatitis B. It reportedly is the first test to commence in the United States for detecting and monitoring post-transplant pathogens on the Panther system.
Hologic followed the Aptima CMV Quant approval with CE mark approval of two new molecular assays that monitor for Epstein-Barr virus (EBV) and BK virus (BKV) in transplant patients. Panther Fusion EBV Quant Assay and Panther Fusion BKV Quant Assay quantify the viral load of the respective viruses with the aim of aiding in diagnosing and managing solid organ transplant and hematopoietic stem cell transplant patients. The in-vitro nucleic acid amplification tests run on Hologic’s automated Panther Fusion system using real-time PCR technology. The EBV assay is validated for use with whole blood and plasma samples, and the BKV assay is validated for use with human plasma and urine samples.
The cavalcade of new Molecular Diagnostics innovation, however, failed to boost Diagnostics segment revenue in FY22. Total sales sank 18.3% to $3.02 billion due to losses in both Molecular Diagnostics and Blood Screening (down a staggering 34.7% to $32.4 million) but an $800,000 increase in Cytology & Perinatal proceeds helped curb the segment’s fiscal decline.
Two of Hologic’s three other product segments also posted sales losses in fiscal 2022. Breast Health revenue fell 9.2% to $1.23 billion due to lower digital mammography system volumes (mostly 3D Dimensions), related software and workflow products, Affirm biopsy systems, and Brevera biopsy systems. The company blamed the reduced volume on the global semiconductor chip shortage, which consequently impacted its ability to manufacture enough mammography systems to meet customer demand. Breast Imaging proceeds tumbled 12.2% to $951.6 million, but the decline was partially offset by a 2.7% increase in Interventional Breast Solutions revenue (to $276.2 million), which was driven by higher sales of ATEC and Brevera disposables. Foreign currency exchange rates negatively impacted segment revenue.
Foreign currency exchange rates also worked against Hologic’s GYN Surgical and Skeletal Health sales as well, though the former segment still managed to turn a profit in fiscal 2022. Revenue jumped 7.1% to $522.9 million, thanks mostly to higher sales of the company’s Fluent Fluid Management solutions, its MyoSure system, Accessa Pro Vu system, and Bolder products (including the CoolSeal vessel sealing devices and JustRight surgical staplers). The Bolder products are a relatively new addition to Hologic’s GYN Surgical lineup, having been incorporated via acquisition ($160 million, Bolder Surgical) in October 2021.
GYN Surgical’s gains, however, were somewhat tempered by weak demand for the NovaSure V5 endometrial ablation device. The product delivers radiofrequency energy to ablate the uterus’ endometrial lining to reduce or stop abnormal menstrual bleeding.
Skeletal Health product revenue slipped 3.4% to $93.6 million due to lower sales of the Horizon DXA and Insight FD Fluoroscan systems, largely attributable to supply chain constraints. “We have confidence the worst of the chip shortage is behind us,” MacMillan said during the earnings call.
An improving chip supply would certainly be heralded by Hologic and other companies that depend on the electronic components for their products. A free-flowing supply also would help the company’s finances rebound from a particularly rough fiscal year. Overall FY22 sales fell 13.6% to $4.86 billion and gross profit deteriorated 21% to $2.99 billion, owing to pandemic-induced declines in the Diagnostic business, lower Breast Health revenue, and volatile foreign exchange rates. Income from operations plummeted 34% to $1.64 billion and basic net income per share dropped 28.5% to $5.18.