After COVID-19 testing sales pushed the company’s quarterly income to over $1.3 billion last year, Hologic is beginning to spend some of that cash—albeit conservatively. The company kicked off 2021 with a $64 million tuck-in acquisition of a German manufacturer of breast cancer biopsy markers and guidance equipment.
Somatex Medical Technologies develops minimally invasive devices used in diagnosing tumors, as well as in interventional treatments, which Hologic aims to absorb into its breast health business. The company’s products include the Tumark line of tissue markers, previously distributed by Hologic.
“The acquisition of Somatex allows us to expand our biopsy portfolio by providing a suite of market-leading solutions that not only address our customers’ needs but also improve the biopsy experience for their patients,” Jennifer Meade, president of Hologic’s breast and skeletal health division, said in a statement.
In addition, Hologic expects the acquisition will help grow its sales presence in Europe, by providing a direct channel in Germany to a network of regional and international distributors.
“We’ve had a strong partnership with Somatex for several years, which along with our shared focus on innovation, will allow us to quickly integrate and begin building a pipeline that will drive profitable growth and recurring revenue for our breast health business globally,” Meade added.
The acquisition has been completed, and Hologic expects the deal to add about $13 million in revenue to its balance sheet for the 2020 calendar year, including sales of Tumark tissue markers to Hologic. Somatex was previously owned by E-Med Solutions, a group of investors in Berlin led by the German private equity company Westlake Partners.
The fourth quarter of Hologic’s 2020 fiscal year ended last September, bringing in $1.3 billion over the three-month period—a 55.6% increase compared to the same quarter the year before. Its molecular diagnostics business alone saw a 375% increase in sales, driven by COVID-19 tests for its high-throughput Panther diagnostic systems.
Previously, analysts at Jefferies predicted that coronavirus testing could provide Hologic with more than $3 billion in free cash over the next two years, but noted that the company's leadership has said it's in no rush to spend it. Instead, it will pursue disciplined tuck-in acquisitions and share buybacks—and may let the money pile up if it can't find the perfect fit.