Hologic ($HOLX) now has a fresh CEO and two added board members, thanks to the machinations of activist investor Carl Icahn. But the new leader of the Massachusetts company known for women-focused diagnostic medical imaging and surgical products insists growth is a much bigger priority over a sale, at least for now.
Stephen MacMillan, the former longtime CEO of Stryker ($SYK), told Bloomberg in an interview that his main mission is "to grow the business" and not sell it. Now that he's in charge, MacMillan said he plans to focus on accelerating the growth of some business lines and examine the future of others, similar to what he did when he ran orthopedic device maker Stryker from 2005 through 2012. While there, he pursued a similar strategy in a bid to refocus and propel new revenue growth after a period of stagnation, the Bloomberg article explained. An acquisition spree isn't likely at first, but it is one of many steps MacMillan will consider, he is quoted as saying.
"I feel an urgency, but am not locked into a timeframe," MacMillan told Bloomberg, noting the main thing is "to get us winning again" through recharging growth rates down the line.
Hologic certainly needs it. The company projects about $2.4 billion in sales in fiscal 2014, down 1% to 3%. And its $3.8 billion acquisition of diagnostics heavyweight Gen-Probe has dragged down Hologic's financials. It ended its fiscal 2013 fourth quarter with a $1.1 billion goodwill impairment charge that totally wiped out net income. Bloomberg also reminds us that the company has lost money in 5 of the last 6 fiscal years. This, in turn, comes as Hologic has pursued an ongoing effort to sell off units, reorganize and launch or acquire new products in what now-former CEO Jack Cumming had termed a "transitional year." That goal: to make Hologic become profitable again.
Enter Carl Icahn. The activist investor with the salt-and-pepper beard recently dove in with his allies and snatched up 12.6% of Hologic's shares. Hologic adopted a poison-pill plan to block share-based takeovers, but analysts have predicted that Icahn would be able to persuade the board that an M&A should happen next. Icahn appeared to be on track to getting his way on Dec. 9, with news that Cumming had been sacked and MacMillan would replace him. Also, Hologic announced it brought in two new independent directors--both managing directors of Icahn Capital, a subsidiary of Icahn Enterprises. Now 10 of 11 Hologic directors are independent.
Experts have said that MacMillan would be more focused on building a stronger organization than selling the company outright, but Icahn could still up the M&A pressure if investors don't see clear results.
- read the Bloomberg story