Hologic’s stock dips despite strong quarterly earnings

Hologic’s stock stumbled a little this week despite higher-than-expected quarterly earnings, following a slew of news that included a finalized acquisition in digital specimen imaging, the departure of its chief financial officer and its medical aesthetics arm getting knocked by the FDA.

The medtech giant posted revenues of $834 million for its fiscal third quarter, up 2.2% compared to last year’s $806.1 million, with a gross profit of $436 million. While Hologic’s U.S. revenue decreased by 0.3%, to $616.8 million, its international revenues totaling $207.2 million represented a 10.5% increase, or 5.5% in constant currency.

“Our Breast Health and international businesses continued their strong recent performance,” Hologic's chairman, president and CEO, Steve MacMillan, said in a statement. “And Surgical and Cynosure both showed sequential improvement, in line with our expectations.”

Hologic’s breast health divisions brought in $307.9 million in the past quarter, up 8.5% compared to last year. To further broaden that portfolio, the company completed its $85 million acquisition of the radiographic imaging company Faxitron Bioptics, including products in lesion localization and sentinel lymph node biopsy.

Hologic said it hopes the additions will allow it to play a larger role in the field of breast-conserving surgery. In addition, the Tuscon, Arizona-based Faxitron recently introduced its VisionCT platform, offering 360-degree images of excised lesions using a 3D breast specimen-designated CT scanner.

“Acquiring Faxitron is consistent with our capital deployment goals,” MacMillan said. “This is a great tuck-in acquisition that leverages our existing strength in the breast health channel, while providing attractive growth and return on invested capital.”

At the same time, Hologic’s CFO, Bob McMahon, announced he would leave the company after four years to become the CFO of the scientific analysis and manufacturing company Agilent Technologies.

McMahon will be succeeded by 12-year company veteran Karleen Oberton, who has served as chief accounting officer since 2015. Oberton joined Hologic in 2006 after working as a senior corporate controller at Immunogen. Before that, she held roles in the life sciences and tech practices of Ernst & Young and Arthur Andersen.

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Meanwhile, Hologic’s new aesthetics outfit, Cynosure, was chided by the FDA alongside six other manufacturers earlier this week for marketing devices for unapproved “vaginal rejuvenation” procedures using lasers, radiofrequency energy or other methods to reshape tissue.

“Today, we’re warning women and their healthcare providers that the FDA has serious concerns about the use of these devices to treat gynecological conditions beyond those for which the devices have been approved or cleared,” said FDA Commissioner Scott Gottlieb, M.D., in a statement. “In reviewing adverse event reports and published literature, we have found numerous cases of vaginal burns, scarring, pain during sexual intercourse, and recurring or chronic pain.”

A letter (PDF) from the FDA’s Center for Devices and Radiological Health to Cynosure cited its DEKA SmartXide Laser System, its MonaLisa Touch procedure and marketing claims on its website—with the agency noting its belief that the device appears to have been modified since its previous clearance, and gave the company 30 days to respond. Other manufacturers included in the FDA’s probe were Alma Lasers, BTL Aesthetics, BTL Industries, InMode, Sciton and Thermigen.

Hologic picked up Cynosure early last year in a $1.65 billion, all-cash transaction, marking its first move into the aesthetics and body-contouring space. Cynosure also markets laser-based devices for hair, tattoo and scar removal.