Hologic Inc. (NSDQ:HOLX) took another tangible hit to its bottom line, writing off about $100 million worth of intangibles during the first quarter.
In all, the Bedford, Mass.-based women’s health company peeled off a little more than $100 million worth of intangible assets, an accounting term for the value of the perceived advantage a company has over its competitors. The hit, combined with another $18 million charge to adopt new changes to its accounting code, pushed Hologic’s bottom line down 31 percent during the three months ended Dec. 26, 2009.
Hologic reported net income of $26 million on $412 million in sales, compared to a $38 million profit on $429 million in sales during the first quarter of 2009. The company blamed soft sales in its breast health business, which were off 10 percent from the comparable period a year ago for the sagging sales.
Company officials said sales were particularly weak for its Selenia digital mammography systems, which they blamed on the slumping capital equipment market. The breast health unit’s revenues were off about $20 million during the quarter to $179 million, compared to $199 million during the same period last year.
The breast health unit wasn’t alone in dragging Hologic down, however, as its skeletal health segment suffered a 20 percent drop-off in sales, to $21.5 million compared with $27.5 million for the comparable year-ago period.
The company’s diagnostics and gynecology units fared better, both posting small gains during the quarter.
But Hologic was once again forced to write off a large chunk of its goodwill during the quarter, although nowhere near the titanic $2.3 billion impairment of goodwill charge it logged during the second quarter last year, after troubles with the Food & Drug Administration put off the launch of its Tomosynthesis imaging system and the $580 million Third Wave acquisition didn’t add as much value as initially thought.
The company, which didn’t detail the reasons behind the writedown in its earnings release, suffered a high-profile rebuke in the Journal of the American Medical Assn. concerning the effectiveness of its ThinPrep cervical cancer test during the quarter. The article, detailing findings that ThinPrep tests are no more effective than Pap smears, caused Hologic’s stock to drop more than 3 percent in one day.
Hologic also shuffled the deck on several product lines, shuttering some of its smaller business units during the quarter ahead of the sale of the assets of its Gestiva pharmaceutical to KV Pharmaceutical Co., announced Jan. 8.
The deal, which yielded Hologic about $70 million in cash, includes a $25 million future payment when it gets Food & Drug Administration approval of the drug, which is used to help prevent premature birth in mothers who’ve delivered pre-term babies in the past.
Company officials anticipated that the discontinued product lines could cost them $21 million in lost sales during fiscal 2010.
Hologic said it expects to post about $410 million to $415 million in sales during the second quarter and raised its guidance to $1.7 billion in sales for the full year, as the capital equipment market stabilizes.