- Revenue Growth Hologic reported $1.024 billion in Q3 revenue, a 0.4% year-over-year increase, exceeding guidance.
- Earnings Performance Non-GAAP EPS reached $1.08, a 1.9% increase, surpassing guidance and reflecting strong profitability.
- Diagnostics Growth Diagnostics revenue grew 0.9% to $448.9 million, with organic growth of 2.9% excluding COVID-related sales.
- Breast Health Performance Breast Health revenue declined 5.8% to $365.2 million but showed sequential improvement and beat internal expectations.
- Surgical Business Expansion Surgical revenue increased 6.3% to $178.4 million, driven by 24.8% international growth, highlighting strong global demand.
Segment Performance
The Breast Health revenue declined 5.8% to $365.2 million, but grew sequentially and finished slightly ahead of internal expectations. Interventional sales increased 31.8%, driven by Endomagnetics, which contributed nearly $20 million in revenue. Surgical revenue grew 6.3% to $178.4 million, led by international growth of 24.8%. Skeletal Health revenue was $31.3 million, up 62.1%, as the company resumed shipping its DEXA model.
Margins and Guidance
Non-GAAP gross margin was 60.3%, and operating margin was 30.1%. The company expects to return to solid mid-single-digit organic revenue growth next year and is optimistic about its future. Guidance for fiscal Q4 and the full year will be provided, with the company confident in its path and optimistic about its future. The company reported operating cash flow of $343 million and finished the quarter with $1.88 billion in cash and short-term investments.
Valuation and Outlook
With a P/E ratio of 26.9 and a P/S ratio of 4.94, the stock seems to be trading at a premium. However, with a strong track record of execution and a positive outlook, the stock may be worth the premium. Analysts estimate next year's revenue growth at 4.9%, which is in line with the company's guidance. The actual EPS of $1.08 relative to estimates of $1.05 is a positive surprise.
Management's Commentary
According to the company's management, "We feel good about the trends in Breast Health and expect it to be a strong driver in the next few years." The company expects diagnostics to grow within the mid-single-digit range in 2026, driven by the growth of molecular, BV, CV/TV, and Biotheranostics.
Tariff Impacts and Mitigation
The company has made progress in mitigating tariff impacts and now expects to incur $10 million to $12 million in tariffs per quarter. The company continues to evaluate the situation and has levers in place to manage potential future impacts.