Hologic continues to be impacted by the global chip shortage on the breast health imaging side of its business, but strong COVID-19 testing sales helped overcome those challenges in the company's fiscal second quarter.

Hologic CFO Karleen Oberton said that significant uncertainties still exist in the chip market and it is possible that the company will face an additional $50 million headwind in the back half of 2022. Last quarter, Hologic said it was expecting $200 million of revenue would be pushed out of fiscal year 2022 because of the chip shortage. The chip shortage is mainly impacting mammography and other imaging systems in the company's breast health division.

"So first, let's recognize in this quarter, we did a little better, and that was really a lot of efforts between our service and supply chain folks really prioritizing in remanufacturing chips for the service needs, which allowed us to sell more new gantries," Oberton said.

She explained that the additional $50 million headwind possibility is mostly about timing.

"We are pleased that we got a higher allocation of chips than we had originally expected, but the timing of that is such that it won't come in until 2023," Oberton said. "I think we thought if there was an additional allocation, we might get that benefit in '22, but it's looking like it's 2023."

She also emphasized that there is a strong backlog growing in the breast health business.

"We're working really strategically with customers to make sure that we're not losing any business because of this," Oberton said. "And I think our intelligence would be that our competitors are probably in likely the same position as us."

Like many medtech companies, Hologic's base business was also impacted by the Omicron variant early in the quarter. But once again, COVID testing sales of $584 million helped offset that impact.

"In breast, as we discussed in our last call, the semiconductor chip shortage was the primary driver of the division's temporary decline," Hologic CEO Stephen MacMillan said during the company's second-quarter earnings call. "Encouragingly, underlying demand remains strong as measured by healthy orders and a growing backlog. As we've seen during the last two years, as COVID testing rises, elective annual exams, screenings, and [elective] surgical procedures are often postponed. And as COVID testing declines, we see the opposite, and our base business returns."

Medtech analysts, including Ryan Zimmerman of BTIG, pointed out that Hologic's diagnostics business would have missed consensus by about 17.4% if it weren't for COVID assay sales and accessories. Hologic's breast health, gynocology surgical, and skeletal businesses all fell short of expectations by 2.7%, 4.6%, and 12.9% respectively, Zimmerman noted. Still, Hologic did raise its guidance for the year to between $4.6 billion and $4.7 billion.