Breast imaging devices maker Hologic (NSDQ:HOLX) issued low guidance for the year ahead as it anticipates taking a $25 million hit in 2013 to comply with the new medical device tax.
The Bedford, Mass.-based company expects next fiscal-year’s revenue to grow around 30%, but the device tax could cut about 6¢ per share off its profits, according to the latest earnings report.
Analysts viewed the outlook as a conservative one. The $1.56-$1.58 earnings-per-share forecast for 2013 excludes certain potential gains from Hologic’s $3.7 billion acquisition of Gen-Probe (NSDQ:GPRO), which closed in August and was quickly followed by news of layoffs.
"We think management has attempted to establish a low bar with its initial ranges," Leerink Swann analysts Richard Newitter and Kathleen McGrath wrote in a note to investors.
Hologic repeatedly cited in the 2.3% medical device tax, which is set to take effect Jan. 1, 2013, as a driving force in its low expectations for 2013.
"With the results of the recent presidential election, we know one thing for certain: We have a device tax absorbed within our cost of operations," Hologic president & CEO Robert Cascella told investors during a conference call this week. "There’s a promise of expanded coverage for the uninsured and the potential of millions of new lives entering the healthcare system, but it is unclear how this will be implemented."
Cascella added that a lack of clarity about the near-term healthcare environment led the company to forge a more conservative approach to managing its business and forecasting the near future.
The $25 million medical device tax bill is lower than the values calculated earlier this year by MassDevice.com, which used 2011 domestic revenues to estimate the potential impact of the medical device tax on several large and small companies. At the time we calculated that the tax would take represent a $31 million burden, representing a 18.6% chunk of Hologic’s $157 million 2011 profits.
More optimistic groups are still hoping to prevent the tax from taking effect at all. Medical device industry lobbying group AdvaMed is still looking to the so-called "lame duck" session between the election and the seating of a new Congress as an opportunity to press for repeal of the medical device tax before it takes effect on January 1.
HOLX shares were essentially flat on the results of its latest quarter and full-year results, which were announced late in the day yesterday. Shares slid 0.05% yesterday from an opening price of $20.40 to close at $20.39. Shares took a harder hit after-hours, losing 3.6% to open at $19.69 this morning. Shares had reclaimed some of those losses by mid-day, were were still down about 1.8% from yesterday and trading at $20.04 as of about 12:20 p.m.
Hologic reported $77.8 million in losses, or 29¢ lost per share on sales of $588.5 million during the 3 months ended Sept. 29, 2012. That represents a swing to the red amid a 26% increases in sales compared with profits of $27.6 million, or 10¢ per diluted share on sales of $467 million reported for the same period last year.
Excluding 1-time costs, Hologic’s Q4 2012 earnings came to 37¢ per share, 1¢ above analysts’ consensus estimates.
For the full year of 2012 Hologic reported $73.6 million in losses, or 28¢ per share on sales of $2 billion, compared with profits of $157.2 million on sales of $1.8 billion in 2011. Adjusted for 1-time expenses, 2012 earnings came to $1.38 per share, right in line with analyst’s expectations.
