Stephen P. MacMillan, Chairman, President, and CEO
Robert W. McMahon, CFO
Jay A. Stein, Co-Founder, Chairman Emeritus, Sr. VP, and Chief Technical Officer
Sean S. Daugherty, Division President, GYN Surgical Solutions
Kevin R. Thornal, Division President, Cynosure
Peter J. Valenti III, Division President, Breast and Skeletal Health Solutions
Thomas A. West, Division President, Diagnostics Solutions
NO. OF EMPLOYEES: 6,233
GLOBAL HEADQUARTERS: Marlborough, Mass.
To the relative indifference of anyone outside the medical device industry, Hologic’s first quarter of fiscal year 2017—ended Sept. 30—culminated in bloodshed.
Miraculously, no Hologic employees lost their lives due to the blood loss, which ultimately amounted to approximately $1.85 billion in cash. Longtime commercial partner Grifols, however, was sanguine at the news that it would be inheriting the Massachusetts-based diagnostic, imaging, surgical, and aesthetics firm’s shares of its blood screening business. Hologic and Grifols had collaborated since 1998 to provide molecular blood screening, with Hologic supplying the Procleix blood screening products, and Grifols leading commercialization efforts worldwide. The molecular assays and instruments were utilized around the world to screen blood for HIV, hepatitis B and C, West Nile, and Zika prior to transfusion.
The companies had shared revenue from the products, but Hologic’s share of the business was completely divested to Grifols at the close of last January. Two weeks later, Hologic began the $1.6 billion acquisition ostensibly funded by shedding its blood screening business—medical aesthetics systems and technologies firm Cynosure Inc.
Already a strong contender in women’s health and OB/GYN, Cynosure added non-invasive body contouring, hair removal, skin revitalization, and other women’s health products to Hologic’s GYN Surgical portfolio and newly established Medical Aesthetics segment. According to Hologic, as of last year the medical aesthetics market exceeded $2 billion globally and will grow at a low-double-digit rate over the next few years, making it one of the fastest growing segments within the medical technology industry.
As the American population continues to age and more effective non-surgical products hit the market, Cynosure’s business had generated double-digit revenue growth the past seven years. Growth is being provoked by physicians’ ambition to increase their cash-based procedures as well—a large portion of aesthetics is not subject to reimbursement risks, which makes it less cyclical, according to William Blair analyst Margaret Kaczor. Because of this, she told Reuters, “Larger acquirers [like Hologic] can access a fast growing, profitable market that is just in the first quarter of the game.”
Cynosure’s revenue was $433.5 million, and accounted for $178 million of Hologic’s 2017 revenue, a mere 5.8 percent of the company’s fiscal 2017 sales of $3.1 billion. The acquisition and integration of Cynosure’s portfolio as the Medical Aesthetics segment is primarily responsible for the company’s 7 percent revenue boost from the previous year.
The Medical Aesthetics segment was further augmented by two fourth-quarter FDA clearances granted to the SculpSure non-invasive body contouring (lipolysis) product, which permanently eliminates fat cells in problem areas via a selective wavelength laser that targets and heats subdermal fat cells. Last June, SculpSure was approved to treat the back and inner and outer thighs. Last September, SculpSure’s treatment area was expanded to the submental area—also known as a double chin. The latest clearance marked the sixth available body treatment area.
ANALYST INSIGHTS: Hologic continues to be a strong company, bolstered by several recent acquisitions into tangential markets, still staying core to women’s health. Their core focus sets them apart from many other competitors and strengthens their company image and name.
—Marissa K. Fayer, CEO and Founder, Health Equity for Women and HERHealthEQ
Hologic’s Diagnostics business—its chief revenue generator, accounting for 38 percent of total sales—fell 3.3 percent from the previous year to reach $1.2 billion. The shedding of the blood screening business to Grifols was primarily responsible for the loss, dropping $94.6 million from the segment’s proceeds. Excluding the divestiture, molecular diagnostic products yielded a year-over-year increase of $57.5 million due to a boosted installed base of the company’s Panther instruments, driving higher volumes of assay testing in Hologic’s Aptima assays in particular.
The Aptima HSV 1 & 2 assay, a nucleic amplification test conducted via swab specimens from skin lesions to detect herpes simplex virus (HSV) RNA, earned CE mark approval in November 2016, and subsequently achieved FDA clearance last June. Run on Hologic’s fully automated Panther system and five times more sensitive than live culture samples, the HSV 1 & 2 assay qualitatively spots and differentiates between HSV-1 and HSV-2. Patient specimens collected in a broad range of commercially available transport media can be tested with the assay.
Hologic was granted two FDA PMA approvals for its Aptima assay portfolio last year. The Aptima HIV-1 Quant assay, a nucleic acid amplification test for the quantitative detection of RNA from HIV in plasma specimens, was approved last January. The assay uses a dual target approach against highly reserved regions in the HIV genome to reliably and consistently quantify HIV-1 groups and subtypes. The Aptima Hepatitis C Quant Dx assay was awarded PMA approval last February. This assay quantifies hepatitis C virus viral load and confirms active infection by way of real-time transcription-mediated amplification (TMA), which is proven to reliably quantify the determination of sustained antiviral response across all major genotypes and a wide linear range.
Across the pond, the Aptima assay line achieved a number of CE mark clearances in fiscal 2017. Responding to the Zika outbreaks dominating last year’s headlines, the Aptima Zika Virus molecular test gained EU approval last February for patients at risk of exposure to Zika or with signs and symptoms of the virus. It identifies Zika RNA in human serum, plasma, and urine specimens, and can be used up to 14 days following symptom onset. In June, the Aptima Combo 2 assay for chlamydia and gonorrhea received new CE-marked claims, expanding the testing method to both clinician- and patient-collected throat and rectal swabs. About a week later, the Panther Fusion system and assays for flu and respiratory testing won CE mark clearance. The Panther Fusion module is an in-lab upgrade to the Panther instrument, offering multiple chemistries on a single platform as well as a higher throughput of up to 335 Panther Fusion tests in eight hours, or up to 500 Fusion and Aptima tests.
The firm’s Breast Health sales dropped 1.6 percent to $708 million in 2017, mainly due to lower sales volume of the 3D Dimensions systems and components and discontinuation of the Selenia system in 2016. This was somewhat offset by 3D upgrades and an international revenue increase as a result of the 2017 acquisition of Hologic’s Breast and Skeletal Health products distributor in Germany, Austria, and Switzerland, MMS Medicor Medical Supplies GmbH.
Hologic’s Genius 3D Mammography exam earned FDA approval last June as the only mammogram superior to standard 2D mammography for routine breast cancer screening of women with dense breasts. A subgroup analysis from a previously published (JAMA 2014) retrospective multicenter clinical study made available shortly after the announcement also showed that with the addition of tomosynthesis to digital mammography, detection rates for invasive cancer increased significantly for women ages 40 to 69.
“Patients, and even referring physicians, have been confused about the current recommendations on when to start screening for breast cancer given the conflicting guidance from medical societies,” said Elizabeth Rafferty, M.D., lead author of the study. “The fact that tomosynthesis offers specific benefit to women in their 40s is not surprising, but the magnitude of that benefit was unexpected. We needed a better screening tool, and tomosynthesis fills that void. The substantial increase in cancer detection, along with fewer false positive studies, should address any concerns that have lingered over screening this population of women. The time has come for tomosynthesis to be viewed as the standard of care for breast cancer screening, beginning at age 40.”
In the final month of the company’s 2017 fiscal year, Hologic launched two Breast Health products. The Brevera breast biopsy system hit the U.S. market in late August. Designed for 2D and 3D breast biopsy, the system lets radiologists obtain and image tissue samples in the procedure room in a few seconds. Previously, radiologists performing stereotactic breast biopsy procedures to diagnose breast cancer were often required to leave the patient under compression while moving to another room to image and verify samples. A week and a half later, the 3Dimensions mammography system, which provides higher quality 3D images, enhanced workflow for technologists, a more comfortable experience, and low-dose options, became available to the European market.
Hologic’s ever-dwindling Skeletal Health business dropped 3.5 percent to $60 million in fiscal 2017 revenue, provoked by competitive pressures stifling U.S. mini C-arm sales. The drop was slightly offset by increased global sales volume of the Horizon osteoporosis assessment product.
The firm’s GYN Surgical revenue rose a moderate 8.7 percent in 2017 sales, reaching $426 million primarily as a result of increased MyoSure tissue removal system sales, somewhat offset by lower NovaSure ablation system revenues. The NovaSure Advanced 6mm global endometrial ablation system, which reduces abnormal uterine bleeding by applying radiofrequency energy to the endometrium and gently removing the lining of the uterus in two minutes or less, was launched in Europe, Canada, and Australia in November 2016, and was released in the United States last February. The new GEA device’s smaller sheath size requires less cervical dilation, reducing patient discomfort, and comes equipped with an acorn-shaped cervical seal to create an increased sealing surface.
Redwood City, Calif.-based startup Minerva Surgical hit Hologic with a lawsuit last April alleging the NovaSure Advanced GEA system infringed on its patented technology—specifically Patent No. 9,186,208, covering systems for endometrial ablation. The complaint, filed in San Francisco federal court, sought an injunction blocking U.S. sales of NovaSure Advanced. Minerva’s rival device, by comparison, won FDA PMA approval in July 2015, but had not been launched at the time the allegations arose.
However, a ruling that took place this past January determined Minerva isn’t entitled to an injunction barring sales of NovaSure Advanced. According to Bloomberg BNA, Judge James Donato of the U.S. District Court for the Northern District of California declared halting NovaSure advanced sales would limit women’s access to a device that would offer them “a greater degree of effectiveness and comfort than other options on the market.”