Med tech giant Hologic ($HOLX) posted another strong quarter of revenue growth, but a colossal $1.1 billion goodwill impairment charge washed away net income, startled investors and sent the company's shares down about 13% overnight.
Hologic's revenue grew about 5.7% in its fiscal fourth quarter, hitting $622.1 million thanks to the success of its breast imaging technology, strong demand for its tissue removal devices and, largely, the effects of its $3.8 billion buyout of former competitor Gen-Probe.
However, that blockbuster deal has been dragging profits since its close last year, and Hologic doesn't expect things to improve. In fiscal 2014, Hologic projects about $2.4 billion in sales, a decrease of between 1% and 3% from the prior year. And Gen-Probe could be doing more harm than good in the short term, too: Hologic didn't divulge much about its $1.1 billion charge except that it was tied to the diagnostics business, which owes about 50% of its sales to Gen-Probe.
The disappointing fourth quarter marks a fitting end to an up-and-down year for Hologic. The company has ditched its CEO, sold off units and worked to redefine its business on the move, an effort that has led to a few regulatory and sales victories but dragged down outlooks, profits and share values. Now, new CEO Jack Cumming said Hologic is preparing for another "transitional year," but the company is optimistic it can make the right moves to return to profitability.
"We have made significant progress in recent months in reviewing the strategy, leadership and cost structure of each of our businesses, all with a focus on making changes to the organization that will enable us to leverage our strong product platforms going forward," Cumming said in a statement.
His assurances may not be enough for investors, however, and, following the aftermarket release, Hologic's share price fell more than 13% to about $19.87 before Tuesday's open amid a few analyst downgrades.
- read the full results