Allow Me to Reintroduce Myself: Hologic Gets Back to Basics After Cynosure

Women’s Health company, Hologic seems to be finished with “big” medtech acquisitions for the near future – instead, turning to tuck-in deals to drive growth. In a presentation titled “Reintroducing a Unique Asset in Women’s Health, the Marlborough, MA-based company’s CEO Steve MacMillan spoke to investors and analysts Monday during the 38^th annual J.P. Morgan Healthcare Conference.

“We intend to deploy our strong-free cashflow more aggressively on growth accretive tuck-in deals, not huge deals … and also on share buybacks because we believe in our future,” MacMillan said.

Hologic’s board announced on Sunday the approval of a new $500 million share repurchase program.

The switch to smaller deals is perhaps a direct result of Hologic’s acquisition and subsequent divestiture of Cynosure. Hologic acquired Cynosure for $1.65 billion in 2017 but divested the company to an affiliate of investment funds managed by Clayton, Dubilier & Rice for $205 million. The medical aesthetics business had been draining for Hologic and constantly under-performed.

“Divesting Cynosure did remove that overhang,” he said. “Obviously a deal we would not do again, but we also recognized it, took action and moved forward.”

In preliminary earnings released Sunday, the company said it expects to report total revenues of about $850.5 million, an increase of 2.4% compared to the prior-year period, or 2.8% in constant currency. This was above the consensus Wall Street estimate of $839.2 million. These preliminary results compare to Hologic’s most recent guidance range of $835 million to $850 million, which was provided on Nov. 6, 2019.

The highlight of the preliminary earnings was Hologic’s surgical business, which saw strong growth. In preliminary earnings for the most recent quarter, Hologic posted revenue of $119 million compared to the $108.4 million the company posted this time last year.

MacMillan said at one point Hologic’s surgical business was just not in “good shape.”

"We just posted 10% growth in our surgical business,” MacMillan said. “One that many had given up for dead many years ago.”