Hologic takes a 32-percent Q3 hit to the bottom line

August 3, 2009 by MassDevice staff

Trouble in the Bedford, Mass.-based company's breast health segment, combined with the fallout from mergers, continues to weigh on Hologic's third-quarter earnings.

Hologic Inc. took a 32 percent hit to its bottom line during the third quarter, as its Cytyc and Third Wave Technologies acquisitions continue to weigh down its fiscal 2009 performance.

The Bedford-based women's health products maker reported $41 million in net income on $403 million in sales during the three months ended June 30, a 32 percent drop from the $61 million the company reported on $430 million in sales during the same period last year.

While softness in the company's breast health business contributed to the overall decline, Hologic is still having trouble digesting the two mergers, including last year's $580 million Third Wave acquisition, which has yet to bear much fruit.

Last quarter the company took a jaw-dropping $2.3 billion write off to its goodwill and intangible assets related to that merger. Hologic reported another $48 million charge for amortization of intangibles related to the merger during the just-ended quarter.

And while the company saw some tangible returns from the acquisition during the quarter — about $10.3 million directly from Third Wave products — company officials described the gains as "modest." Hologic still owes about $214 million on a term loan it took out to finance the deal.

For the year, the company's net loss sits at $2.2 billion, compared to a net loss of $241 million for the same period last year.

Hologic's breast health business, which includes a suite of mammography tools, were also off about 20 percent during the quarter. The division did about $175 million in sales, compared to $220 million for the same period last year. There was no update about the fate of the company's Tomosynthesis imaging system, which Hologic says can detect breast cancer much earlier then other tests on the market.

Tomosynthesis has been stuck in the U.S. regulatory limbo for more than a year with no end in site, according to regulatory filings.

Hologic's other business units fared significantly better. Sales for the company's diagnostic and gynecological businesses jumped 10 and 17 percent, respectively, during the quarter.

Those units even scored some major regulatory victories: Hologic received FDA approval for the Adiana permanent contraception system in July and, while U.S. revenues for the product did not contribute to the earnings, sales of the system overseas helped contribute to the GYN unit's success.

Hologic reaffirmed its guidance for the fourth quarter and the full year. The company said it expects to do between $390 million to $400 million in sales next quarter and $1.62 billion to $1.63 billion in sales for the year.