Hologic, Inc. 3Q09 Earnings Release

Hologic, Inc. (HOLX) reported 3Q09 revenue of $403.1 million, a 6.1% decrease from $429.5 million in 3Q08. Diluted earnings per share excluding one time items came in at $0.29, a 12% decrease from 3Q08, beating Bloomberg analysts’ expectation by 12%.

The company blamed the current economic environment, the resulting delays and reductions in hospital spending and longer sales cycles for this decline. As evidenced by a reduction in Selenia System sales, and a decrease in company’s osteoporosis assessment, mini C-arm, MRI Product lines, and flat ThinPrep products, HOLX is having a difficult time selling their product to hospitals and upgrading current systems in the hospitals.

HOLX’s write-off of certain intangible assets continued for 3Q09, albeit at a much smaller pace of $4.1 million dollars, and the company also recognized net charges of $40.1 million on amortization of intangibles related to Cytyc merger and the Third Wave acquisition, and a full quarter of costs and expenses from Third Wave.

Considering the current market situation, where hospitals are just waiting on health reform to finalize before making any big purchases and trying to make their books strong to secure any financing needs, plus all their internal write down issues inherited from untimely acquisitions, are double whammy for the company. That is why the company with a 39 average P/E ratio for the past 5 years is currently trading at 12 P/E, and it seems all this bad news is already priced in. Frankly in my view, they rather seem to be weathering this storm quiet well.

A few positive notes include FDA Approval of Adiana Permanent Contraception System, which will start contributing in 4Q09, and expected continuing double digit growth on Diagnostics and GYN Surgical revenues. Diagnostics newly includes Third Wave product revenue of $10.3 million in 3Q09.

HOLX’s backlog stands at $333.6 million, which is within its historical range.

For the fiscal year 2009, the company now expects sales to come in between $1.625 billion and $1.65 billion, lowering the top estimate by $15 million.