Q1 2021 Hologic Inc Earnings Call
Good afternoon, and welcome to Hologic first quarter fiscal 2021 earnings Conference call. My name is Eduardo and I'm. Your operator for today's call. Today's conference call is being recorded all lines have been placed on mute I'd now like to introduce Mike Watts, Vice President of Investor Relations and corporate communications to begin the call.
Thank you Eduardo good afternoon, and thanks for joining us for Hologic is first quarter of fiscal 'twenty and 'twenty One earnings call with me today are Steve Macmillan, the company's chairman, President and CEO and Carlene Obrien, our Chief Financial Officer, Stephen Curry and both have some prepared remarks, then we'll have a question and answer session today.
Our first quarter press release is available now on the investors section of our website. We also will post our prepared remarks to our website shortly after we deliver them.
Finally, a replay of this call will be archived through February 26.
Before we begin I'd like to inform you that certain statements. We make during this call will be forward looking these statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied such factors include those referenced in the safe Harbor statement. That's included in our earnings release and in our filings with the SEC.
So during this call we will be discussing certain non-GAAP financial measures a reconciliation to GAAP can be found in our earnings release, one of these non-GAAP measures as organic revenue and we define organic revenue as constant currency revenue, excluding the divested blood screening and cynosure businesses as well as the acquired assess the business.
Finally, any percentage changes, we discussed will be on a year over year basis and revenue growth rates will be expressed in constant currency unless otherwise noted.
Now I'd like to turn the call over to Steve Macmillan Hologic CEO.
Thank you, Mike and good afternoon, everyone.
We're pleased to discuss our financial results for the first quarter of fiscal 2021.
We are off to a very strong start to the year across all our businesses and major geographies.
Once again, our diagnostics division delivered incredible performance by making a massive impact against COVID-19.
And our breast health and surgical businesses businesses continued to strength with each returning to growth in the United States Europe and Asia Pacific.
So our performance was strong and broad based across both divisions and geographies.
As a result, our financial results were exceptional in the first quarter, let's provide a quick overview.
Total revenue was $161 billion with non-GAAP earnings per share of $2.86.
Organic revenue more than doubled up 104%, while EPS increased more than fourfold.
Higher production volumes and diagnostics enabled us to leverage our fixed cost base.
Both revenue and EPS came in well ahead of our expectations at the beginning of the quarter.
With that introduction I'd like to cover three main topics in my remarks today, which will echo some of the themes from our presentation at the Jpmorgan Conference earlier this month.
First how our purpose driven culture is contributing to and we believe driving alright excellent financial results.
Second how we're making a huge difference in the fight against COVID-19.
And third why will be Y will be a stronger company on the other side of the pandemic.
To begin many of you will recall that Larry Fink, the CEO of Blackrock wrote in early 2018, the companies both public and private should serve a social purpose.
Three years later, we would argue that Hologic is the epitome of such a company. We are an incredibly purpose driven highly engaged team that is waking up every day wanting to make a positive difference in the world and.
And we believe this culture is contributing to differentiated financial performance. Both in terms of our Covid response, and the faster than expected return to growth in our breast health and surgical divisions.
Our employees understand that the bigger our collective impact on the world.
More day, and our shareholders benefit.
What makes us tick as our strong purpose of enabling healthier lives everywhere every day.
Within this we have a special passion to champion women's health.
But we don't just help women.
If for example, you're one of the tens of millions of people who are out of Hologic Covid test in the last year, you can rest assured that you're getting a high quality highly accurate result.
That's the promise, we make to our customers, which we call the science of sure.
Our purpose passion and promise have shown up in countless ways since the pandemic began.
Some are visible externally like extraordinarily rapid rapid eua's or massive increases in production capacity.
But many are behind the scenes from how we rewarded our frontline employees for their heroic efforts during the pandemic.
Our board and management team found safe ways to meet in person.
How we always try to under promise and over deliver on the Covid tests commitments, we made to customers.
And governments around the world.
We talk about many of these topics in our second annual sustainability report titled the power of purpose.
We just published on our website last week.
I'd encourage all our investors, but especially those interested in ESG issues to take a look.
Now, let us give you an update on our Covid testing efforts.
As you can probably tell from our financial results. We continued to make good progress on our plans to expand manufacturing capacity for our two COVID-19 assays out of our plant in San Diego and Manchester U K.
Total output increased sequentially compared to the September quarter, which enabled us to provide about 30 million COVID-19 assays to customers generating revenue of about $745 million.
As we have said we are now selling more COVID-19 test each quarter than we had ever produced all of our molecular tests before the pandemic Ed.
And we are on track to meet our goal to produce at least 75 million total molecular diagnostic tests a quarter globally by January of 2022.
This would represent more than three and a half times, our total capacity pre COVID-19 a tremendous accomplishment thanks to our employees our suppliers.
And the U S government, which is providing financial support.
In the first quarter about one third of our Covid test revenue came outside the United States mainly from Europe.
Covid testing continues to strengthen our international business our relationships with customers.
Our future prospects in diagnostics and even market access for our other franchises.
These COVID-19 sales contributed total international revenue of $472 million in the quarter, which represent a tremendous growth of 145%.
On an organic basis.
At the same time, we are also encouraged that demand for new Panther instruments remains very strong you might recall that last fiscal year, we placed more than 500, new Panther systems worldwide more than double our usual run rate.
And we are off to an excellent start in fiscal 'twenty, one with another 150 shipments in the first quarter alone.
We still have a long waiting list for instruments, which we believe reflects the longevity of COVID-19 testing that our customers anticipate.
Overall, our global installed base now stands at roughly 2400 instruments, giving us a robust platform for future growth as more customers come to appreciate our systems best in class capabilities.
Now, let us shift gears to our third major topic.
Why we believe our business will be much stronger on the other side of the pandemic.
First <unk>.
It's never been more clear to us that demand for highly accurate molecular COVID-19 testing will remain robust for a while.
While we may have become a little numb to infection rates that remains staggeringly high in the United States and globally.
But as a reminder, the almost 2 million molecular tests that are being performed daily in the United States today.
Would annualize to a market that's about 17 times bigger than the single largest molecular market be.
Before COVID-19.
So while demand will inevitably decline as vaccines rollout nucleic acid testing is likely to have a long meaningful tail that extends into fiscal 'twenty two and beyond.
With Covid likely remaining our biggest molecular product for years to come.
As we have seen it will take time to manufacture and administer vaccines broadly.
And many people will choose not to be vaccinated.
The societal need for and focus on Covid testing.
Far exceed anything we have ever seen before Ed.
And the pandemic emotional poll will last much longer driving future demand.
As public concern around Covid persists, the combination of our huge Panther installed base at facilities close to the patient.
And our gold standard assay performance have us uniquely positioned to pursue many use cases that will be around for the long term.
These include testing before hospital admissions asymptomatic screening for various purposes, and even confirmatory testing of other less accurate modalities.
Studies have shown that these other tests can miss two thirds of asymptomatic cases.
These false negative results can contribute to super spreader events.
Even as the market matures and our production capacity increases we believe our combination of robust chemistry innovative engineering on Panther and differentiated labeling from FDA will help us gain market share.
Moving on the second reason of Hologic will be stronger in the future is the significant non COVID-19 business. We are gaining on our rapidly growing installed base of Panther instruments.
I don't think it's an exaggeration.
To say that in the United States, Europe and Asia.
Every single Panther debt our commercial teams have placed has been then with an eye towards the future.
They are doing a fantastic job of extending and broadening commercial contracts, winning key strategic accounts and fueling our razor razor blade business model.
As an indicator of this.
Last quarter, we discussed test of record where tours.
Which represent contracted year, one revenue from new assay customers.
We said that we had achieved a new record in tours in fiscal 2020.
With non Covid business.
Total and $35 million in the United States.
50% more than we had ever done before.
This positive trend has actually accelerated in early 2021.
With more than $20 million of additional tours in the first quarter alone.
That's one reason the momentum in our molecular business, which was already good before COVID-19 is improving further today, especially in Europe.
For example, when we remove COVID-19 assay sales from our molecular number as well as instruments in ancillary is core assay sales grew roughly 10% globally in the first quarter more than double the rate a quarter ago.
The third reason, we believe we will be stronger post COVID-19 is the thanks to the tremendous success of our diagnostics business.
We have been able to use the last several quarters to further bolster our breast and surgical franchises for the future.
In breast, we have continued to expand on our strategy to diversify the business across the patient continuum of care.
Rather than just placing capital equipment, we're now selling a full portfolio of hardware and software upgrades intervention tools and service.
While the world has been understandably focused on Covid, we have increased our direct presence with breast health customers and developed and launched products such as provera, which is off to a very good start and its relaunch.
And most recently, we acquired for $64 million, the German company Soma attacks, a longtime partner of ours to strengthen our portfolio of breast cancer markers and.
Enhance our commercial presence in Europe.
And improve our profitability.
In surgical.
Both our R&D and business development pipelines have been productive broadening the portfolio of products that we sell through a high performing highly engaged sales force.
New products, such as our fluent fluid management system, and new history scopes are complementing our market, leading <unk> and <unk> devices.
And helps that division returned to growth in the first quarter well ahead of schedule.
On the business development front.
In August we spent approximately $80 million plus future contingent earn out to buy assessor health.
Assesses pro view is a laparoscopic RF product that is used to treat fibroids. The Maya share can't reach huge very complementary to our surgical business and a nice fit for our sales force.
So far early feedback from our customers has been good.
The acquisitions of assessing some attacks demonstrate the final reason, we will be stronger after the pandemic.
The ability to use the healthy cash flow that COVID-19 test are generating to step up our business development activities.
The pending $230 million acquisition of Bioterror, and optics, which we announced earlier. This month is another good example of this strategy.
<unk> a leader in molecular tests for breast and metastatic <unk> cancers.
Enables us to expand into the adjacent growth market of oncology.
More specifically Biopharma gnostics, who has done a great job of developing a strong clinical and reimbursement foundation.
For their flagship breast cancer Index test.
Which plays an important role in a large but under.
Penetrated breast cancer market that we know a lot about.
In addition, bioterror and optics provides us clinical lab capabilities that we can use to develop markets for novel content down the road.
I'm, a financial perspective, biotherapeutics brings more than $30 million of annual revenue.
Growth rates in excess of 20%.
Strong gross margins.
We're excited that since we announced the deal Biopharma Gnostics has received some very good news that will benefit women with early stage hormone receptor positive breast cancer.
The national comprehensive cancer network or N. CCN included the breast cancer index test in its guidelines to predict the benefit of extended debt treatment.
With various endocrine therapies.
This should help establish the test as the standard of care for this important clinical question and contribute to increased patient access.
Before turning the call over to Colleen.
Let me conclude by saying that we are off to an excellent start in fiscal 2021.
Our purpose driven culture is driving excellent execution and performance both in terms of our Covid test and the recovery of our other businesses.
And we are working hard to ensure that the financial success. We are experiencing now will translate into a stronger company down the road.
We are confident it will.
Now I will turn the call over to car line.
Thank you, Steve and good afternoon, everyone you.
In my remarks today I'm going to provide an overview of our divisional sales results walk through our income statement.
Briefly touch on a few other key financial metrics and finish with our guidance for the second quarter fiscal 'twenty one.
As Steve said, we are very pleased with our first quarter results.
Revenue and EPS significantly exceeded our guidance.
Reported revenue of $1 six 1 billion increased 87%.
Organically revenue grew 104%.
Driven by strong Covid sales and the continued improvement of our base business across all major geographies.
Given the incredible demand for our Covid test in our strong results in our base business.
Able to significantly improve profit margin and cash flow.
As a result, EPS at $2.86 in the first quarter increased 369%.
Well ahead of our expectation.
Further operating cash flow has continued to be extremely strong which I'll discuss.
Before I do that let me provide some detail on our divisional revenue results.
And diagnostics our largest division.
Mobile revenue of 1.128 billion grew 256% in the first quarter driven by molecular where sales increased 449%.
In response to the unprecedented demand for Covid testing, we shipped about 30 million Covid test to customize.
Generating revenue of 745 million globally.
And excluding Covid are based molecular business excel it accelerated sequentially.
As customers continue to see the benefit of our assay menu and.
The strength of Panther is high throughput automation.
Rounding out diagnostics, our cytology and perinatal businesses grew by 1% in the quarter.
Driven in part by a catch up in cytology procedures at calendar year end.
In breast health global revenue of $332 7 million was down slightly overall.
However performance improved compared to the fourth quarter and the business return to slight growth in all geographies, except for Latin America.
The division's performance was driven by the intervention business, which grew 15% in the quarter and was helped by the relaunch of our provera by biopsies and stuff.
Although we are encouraged by sequential improvement in the capital environment and by healthy equipment sales at calendar year end.
Overall spending to remain challenged because of Covid.
However, our intentional diversification to service and consumables as well as several recent acquisitions have helped mitigate pressure on capital.
As an example, breast health service revenue, which is larger than capital sales grew by mid single digits in the quarter.
In surgical sales of 124 million grew three 3%.
A great result, given headwinds on elective procedures from recently, increasing COVID-19 cases in some parts of the country.
This range without shows the strength and commitment of our surgical sales force as well as the benefit of several new products.
Overall in terms of geography domestic sales of 114 billion increased 80% on a reported basis.
On an organic basis U S revenue was up 91 per cent.
Outside the United States sales of $472 million increased 106% in constant currency.
Organically sales outside the U S grew 145 per cent.
A stellar result that reflects our growing international strength.
Now, let's move on to the rest of the P&L for the first quarter.
Yes.
Gross margin of 77, 2% increased 1560 basis points.
By sales of high margin Covid tests, and the divestiture of the low margin cynosure business.
Total operating expenses of $274 5 million decreased five 1% in the first quarter.
However expenses actually increased when normalized for the cynosure sales and about $6 $5 million of credits from BARDA associated with the development of our Covid assays.
These increases were driven by investments in R&D and marketing for future growth.
In addition expenses associated with our deferred compensation plan increased as a result of equity market gains.
As a reminder, while this liabilities mark to market most of the expenses offset by a benefit we realized in other income in the quarter.
In addition, our non-GAAP tax rate in the quarter with 21, 75% slightly lower than previously forecasted driven by favorable geographic mix of income.
Primarily from sales of COVID-19 assays outside the United States.
Putting all this together operating margins increased 3270 basis points to 16, 2%.
And net margins increased 2730 basis points to 46, 6%.
As a result, non-GAAP net income finished at $749 6 million and non-GAAP earnings per share with $2 86, well ahead of expectations.
Before we cover our 2021 second quarter guidance I'll quickly touch on a few other financial metrics.
Driven by demand for our Covid test cash flow from operations was $650 million in the first quarter, a very strong result.
This was about the same as our total cash flow from operations for all of fiscal 2019.
Looked at another way and just the last two quarters, we have generated about $1 1 billion in operating cash flow, which gives us tremendous financial and strategic flexibility.
For example, we repurchased nearly one 5 million shares of stock for $101 million in the first quarter.
Our board recently approved a new $1 billion authorization.
Highlighting our commitment to capital deployment.
And we were also able to strengthen our balance sheet by repaying our outstanding revolver balance of $250 million.
As a reminder, we had borrowed against the revolver as a precautionary measure very early in the pandemic.
Sure.
Overall, we had $869 million of cash at the end of the first quarter.
And with more than $1 billion of BD EBITA for the quarter, our leverage ratio fell to <unk> eight times.
While we remain comfortable with leverage ratio between two and three over the longer term. We also have no problem with a lower ratio in the short term.
As you know we are actively pursuing a number of division led tuck in acquisitions and hope to use our cash to complete more deals. This year. In addition to buying back our stock.
Finally, ROIC was 26, 7% on a trailing 12 month basis, a significant increase of 1440 basis points.
Before we open the call for questions, Let me discuss our expectations for the second quarter of fiscal 'twenty one we.
We anticipate that fiscal 'twenty, one will be an excellent year for.
For Hologic overall, but our business environment remains fluid due to the ongoing effects of the pandemic.
Therefore, we are only providing a single quarter of guidance today.
Let me also point out that our guidance does not include the impact of the pending bioterror Gnostics acquisition, which has not yet closed.
Uh huh.
In the second quarter of fiscal 'twenty, one we expect excellent financial results again with total revenue in the range of one $5 billion to $156 billion.
This represents an approximate doubling of organic revenue growth to roughly 96% to 104%.
Underlying this we expect similar sales of our Covid test to drive exceptional diagnostics growth.
As a reminder, most of our new molecular production capacity is expected to come online in the second half of our fiscal year.
Blood screening revenue, which we back out of our organic calculations. It is expected to be about $10 million in the quarter.
In our other businesses, let me remind you that our March quarter sales are typically down sequentially compared to the December period for our breast surgical and based diagnostics businesses.
As capital sales and semi elective procedures tend to be seasonally stronger at the end of the calendar year.
In addition, our guidance incorporates headwinds related to customer spending constraints and restrictions on procedure volumes given rising COVID-19 cases.
While our customers are much better prepared than they were last spring to manage through local increases in COVID-19 prevalence. We have seen a recent slowdown in some elective surgeries.
On the bottom line, we expect EPS of $2 56 to $2 68 in the second quarter with extraordinary growth rates debt significantly outpace revenue, even as we increase investments for future growth.
Put this in perspective, we expect to earn more in the second quarter alone than we did in the full year of 2019.
The second quarter guidance is based on tax rate of 2021, 75% and diluted shares outstanding of $262 million to $263 million per the quarter.
I'd also like to point out that we expect other expenses net to increase to close to $25 million in the second quarter, as we don't forecast gains or losses related to certain hedging activities like we saw in the first quarter.
As you update your forecast, let me remind you that macro uncertainty has increased in recent weeks due to the pandemic.
While our visibility has improved compared to several months ago, we would still encourage you to model at the middle of our ranges, which incorporate both potential upsides and downsides.
Before we open the call for questions, let me wrap up by saying that Hologic financial performance in the first quarter was terrific.
We continue to make a huge impact fighting the COVID-19 pandemic and on women's health globally.
Further I'm confident that we have positioned ourselves to deliver exceptional long term performance.
With that I'll ask the operator to open the call for questions.
Please limit your questions to one plus a related follow up then return to the queue.
Operator, we are ready for the first question.
Thank you.
I'll ask a question please signal by pressing star one on your telephone keypad series using a speaker phone. Please make sure. Your mute function is turned off total every signal to reach our equipment again that is star one to ask a question, we'll pause for just a moment.
Well take our first question from Dan Leonard at Wells Fargo. Please go ahead.
So first question.
He can comment that your.
Sales for Covid testing outside of the U S has actually helped the strength in your other franchises do you could you elaborate a bit on that.
Yeah, Dan. Thank you know first off it's funny, how things go in.
Full circle as you know over the last few years, we've acquired a number of our dealers in Europe.
On the breast health side and that gave us much more of a direct presence in a lot of the key countries UK, Germany.
Spain, Portugal, just to name a few Ed that's really helped us strengthen our team in Europe. So we've been building relationships at a higher level as Covid has hit its given us incredible access to a lot of the major governments, we've got contracts with just about every major government in Europe.
And in so doing we're now on their radar screen that they really a lot of them didn't know about the diagnostics business and how much of a leader we are in the sexually transmitted infections and other stuff. So we've been able as we've been selling in COVID-19 and giving them Panthers to really be booking new business that will come on.
On line.
As the as the Panthers go down and really just being able to talk more about our cytology business our HPV business.
And really just a different level of relationship that we think is going to strengthen our significantly down the road.
Okay.
Okay. That's helpful.
I can follow up.
You characterize the M&A environment right now and he did for independents.
Specifically.
B.
Is it feasible to do something in your core infectious disease testing fees or do you think this is an environment where.
You really got to wait for the pandemic subside before before the sorts of assets become available. Thank you.
Great question day I think.
Put it in a couple of different perspectives first and foremost I would say is as while we're obviously generating a ton of cash right. Now. We also have the luxury of being an enormous position of strength.
And that our base businesses are performing and I think the best way to you.
It can be very disciplined on deals is when it's easy to walk away from anything because you don't need anything and you feel good about the underlying business.
So then if we look at the market specifically.
Been fascinating to watch over the last eight months right first you know everybody hunkered down back March April may including ourselves, we had pushed things like the assessor deal, we'd even pushed out a few months.
We'd had a relationship with bioterror and optics.
Just wanted to see where our own cash flow was at that point in time so.
Now obviously, there's a lot of.
Companies that are fairly flushed with cash there is there's also a fairly healthy IPO market right now so there's there's a bit of froth out there I think and we want to be disciplined. So I would tell you as excited as the deals we've done I'm probably more proud of.
Some deals we've got pretty deep on over the last three four months, but we walked away from.
Really over valuation or other issues in diligence and that's I think the maturing of our team here and the fundamental strength. So I think we're in a position where if we can get the right assets at the right price with good ROIC sees.
That's great.
And if we need to wait some things out or even missed some things.
We're not going to get caught into bidding wars and overpay. So.
I do think it's.
You know, it's a pretty vibrant market right now.
Every banker, beating us, beating our door down trying to sell those things and.
As you can imagine, but staying very disciplined.
I appreciate that color. Thank you Ed.
Alright, well now take our next question from Patrick Donnelly at Citi. Please go ahead.
Great. Thanks, guys.
Steve maybe one for you just on the Covid testing side.
I'm sure you get this a lot obviously, but just on the durability side.
We think out to the back half of them actually rolling out a little choppy here, but its going out.
I do think about the back half and the Pi, possibly beginning to naturally shrink there all tests aren't created equal so I guess, where do you see hologic kind of landing in terms of when that probably start shrinking you get a bigger piece, how does that play out and again sort of your capacity is expanding.
The view of that split between Covid and non Covid as we get through this year.
Sure Patrick you know youre hitting on.
Clearly one of the biggest questions I believe very strongly.
That we will continue to improve our market share right in the beginning this is kind of the wild wild west the FDA granted a gazillion EUA as everybody raised out to the market.
At the end of the day, we have some very powerful and enduring assets that we believe will put us in a really good place over the long run.
It starts frankly with Panther and the installed base.
No theres a part of hospitals.
Bare minimum are going to want to continue to test everybody that comes in their doors for procedures. They have them on site there'll be doing that as we seek to get more people back to work and back to school. There is going to be a need for high level testing thats, a symptomatic and I think again what's been.
Happening in the short term because there wasn't enough molecular tests in the beginning in the long turnaround times theirs.
Big emphasis on.
Out of the rapid tests.
Particularly some of the antigen stuff and they're gonna have a place but at the end of the day, they're not indicated most of them for asymptomatic screening.
And we keep learning more and more by the day how much of this is asymptomatic Lee being.
Pass it along.
And when you look at a lot of these super spreader events. They are quite frankly being caused by using the wrong test off label.
Two.
Ill try to determine what other people have something and.
I think over time, what we always say to our team as the cream rises to the top so you have Panther and it's where it's located you have an assay that's got incredible sensitivity specificity and one of the best labels.
We also have the pooling indication and once you get back into screening call. It next fall right think about simple things, we want to get everybody back to school in the fall.
The vaccine still aren't indicated for people under 16.
So as we keep talking about Vaccinating. The country children are going to be excluded from that we're going to want to be doing asymptomatic screening and a lot of the antigen test that people may say, a great right now, they're not going to be as effective.
Picking up.
<unk> asymptomatic.
Indications.
So we have that and then you just have the pure workflow advantage that should never be forgotten and that is the workflow of panther or the random access automation ability to just make this as easy.
Lab tax around the world.
They have been running a marathon at sprint speeds, they're exhausted you can't walk into any lab and not hear from a lab director that detects are just tired.
And they would much rather be able to be using panther and one of the fundamental realities is we've been we've been shipping so much but not all of it has been with our full 10 caps and that's part of the capacity we've been building up and as we're able to provide more and more of our Penn caps. It creates a full automation.
Benefit that not everybody has even been fully getting yet so.
We have no idea.
Truly exactly how this is going to play out but all the discussions we've been having with the biden transition team.
And then continued about hey are you still building up more capacity.
And we certainly are.
We'll see how it all plays out but I think like every market we compete in.
We think we're going to be their standing.
That's really helpful perspective, I appreciate that.
And then maybe just one I think Carl you mentioned it there at the end you have seen a little bit of a recent slowdown in some elective surgeries and elective procedures customers rising rising COVID-19 cases, being a bit of a headwind can you just expand a little bit on kind of what you're seeing this quarter sequentially versus last quarter in terms of that slowdown.
You guys are and what the impact could be just want to make sure Robert good envelope.
Yeah overall I would say, it's really on the margin.
We.
Frankly, I think we finished last quarter better than most the fact that surgical in breast health both ended up growing.
Which we wouldn't have expected.
Whether they grow or stay flattish, we're probably talking little pieces here.
We're seeing little pockets right in certain geographies.
Suddenly above a couple of slower days in the surgical business or in the breast health consumable business. So I'd call. It it's a little temporary outages.
But fundamentally.
It's going to be.
Many for US given that we've got the Covid offset and I think we just continue to focus on share and it'll.
Take care of itself over time, but.
Maybe slightly more muted this quarter on a couple of those businesses, but still overall good.
Thanks, Steve.
Right.
Well take our next question from Chris Flynn of Cowen. Please go ahead.
Hey, good afternoon, and thanks for taking my question.
I also welcome back to the earnings call it growing.
Thank you Ethan job, Chris remember it right.
In past quarters, you provided an estimate on what percentage of Panther placements are expected to replace Tigris and also what percentage of Panther placements displace a competitor or enabled a new customer to begin testing.
You have an update on those figures for US also I know you Tessa record cash a record metrics you track assay adoption, but do you have an estimate on what percentage of Panthers placed over the past year are now also running non COVID-19 test.
Hey, Chris It's Mike Let me, let me, let me take a crack at that I think on your first point we.
What we said a few quarters ago was in the early days, we placed a significant portion of our Panthers into some of our largest customers where they were going to replace Tigris as over time and provide access to a broader menu. There's four test approved on Tigers I think now 18 on Panther. If you include the two Covid test.
We haven't given an update on that since then so I don't have an update for a specific number for you today.
I'll tell you that by and large we are focusing on our existing customers, obviously and broadening our relationships.
With those customers, if you think about where our Panthers sit overall most of them sit in hospital labs and I think this gets back to one of the comments that Steve was making earlier about how getting testing closer to the patient is going to help us from a share perspective.
Going forward for pre op procedures things like that.
And then the second part of your question Chris.
On tours.
What percentage of new Panthers.
Yes, I don't know that number either.
But.
I think as Steve said in his prepared remarks.
That's what the sales force is focused on right and we've talked a bit in the past about how were extra incentivizing our sales force to bring in new non COVID-19 business.
You've done a great job of that so I think I think as Steve said in the prepared remarks, I mean, basically every panther that we place is being placed with an eye towards the future.
And that run rate of tours, I mean, we did $35 million.
Last year, we talked about this that was 50% more than we've ever done before pretty excited about that and now in the first quarter. We do another $20 million. So don't know that that will continue at that pace, but certainly at a at a good run rate here out of the chute.
Okay, Great and then for my follow up I, just wanted to go back to the topic of decentralization.
One of your largest peers and higher throughput COVID-19, diagnostics recently announced the acquisition of a molecular point of care platform beyond the acquisition I think this pandemic has also highlighted the need for rapid and accurate diagnostic tools now given that Panther is in a unique position as a leading mid to high throughput.
Molecular diagnostics platform do you want to extend that leadership to a lower volume setting.
Do you have any updated thoughts on that market opportunity.
We continue to look at different areas and different technologies.
We've been inundated would probably get.
Five or 10 per day.
Little companies different technologies coming our way.
Certainly looking at some weird.
We'll probably generally a little more focused in the labs that were within our existing customers. We're always looking on.
On the fringe or other ways to extend out from there.
So well.
We will continue to look at everything.
Stay disciplined on where we can get a good return and where we can bring value to the to the market.
Okay, great. Thanks for taking my questions.
Alright, well take our next question from Tycho Peterson Jpmorgan. Please go ahead.
Hey, Thanks, Steve I'm going to stick with the Bureau, there'll be seen I'm just curious over the last few weeks, obviously, new strength of emerge and then you've got revenue administration, making a big push share. So a couple of quick hits if you will.
Are you on a test per the new variants and then as we think about mix I think up until now you've basically been doing lots of Standalone Covid, how do you think about combo assays.
Mix mix shifting over the course of the year and then how do you think about the sustainability of the current pricing trends and reimbursement as it stands today.
Yes.
So I think in terms of the new variants right now we feel very good that the way we've designed our test.
Would they have we basically design ours with two targets to ensure they're as a backup target.
In case the virus Mutates. So we continue to watch that but feel very good interest.
Part of the many advantages of having an incredibly.
Sensitive and specific tests to begin with it.
Targets the genomic regions that are less likely to mutate. So I think we feel very good about our ability to continue debt.
To catch those.
It was very well in the.
The second part of that was what again.
So Michael actually yes, yes, I'm sorry, yes, the multiplex we figure come the fall for this this winter as we all know there's basically been no flu season demand for our product is.
Virtually been entirely.
Our single Covid test I think come next fall, having a syndromic multi.
Multiple option is probably going to make more sense than you would expect that we will typically be there.
And pricing and reimbursement.
I think at least in the short term, we're probably still a reasonable I think over the long run we've got to assume.
Both of those will eventually come down.
But I think at this point, particularly with the vitamin administration, extending the public health emergency through the end of 2021.
We don't see any real near term pressure.
On reimbursement.
I'm sure again that'll probably start to evolve as we go forward and it may evolve at different paces with different governments around the world as well, but.
So that ultimately will be some.
Some downward pressure certainly probably on pricing.
But feel pretty good about where we are right now.
And then one on capital deployment quite hop off you are putting up great numbers your stock still trading around 10 times EBITDA. So how are you thinking about buybacks would you consider an ASR.
We certainly did an ASR.
In conjunction with the cynosure divestiture in general not a huge.
Fan of those short of an event I think we've been pretty good buyers of our stock when you look back over the last really five fiscal years I think we've bought back over 30 million shares.
And then fairly consistent last year, even more so.
Thank you.
It continues to be an important part.
Of our strategy, but.
Probably more executed along the way both offsetting dilution as well as frankly, we would.
Reducing our share count really now for a number of years.
Okay. Thank you.
All right, we'll now take our next question from Raj <unk>.
Jefferies. Please go ahead.
Hey, this is Zack on for Ross just to see from US you started the year by announcing two acquisitions and $1 billion.
Can you give any more detail on the potential timing of the share repurchase program should we expect it to start to come in post COVID-19.
And then also can you give any more color on a potential deal size and timing.
To introduce.
Hi. This is currently it's about let me just make a couple of commentary in regards to capital allocation.
Certainly we're focused on deploying our free cash flow, which has grown tremendously over the past several quarters.
Our priority is going to be that tuck in M&A growth accretive assets and I think to sales on the comments that Steve made.
Capital share repurchase is going to be part of that strategy, but I would say the $1 billion authorization is over a five year period. So we would expect to utilize that on some regular cadence over that period of time.
Great next.
We will now take our next question from Jack Meehan.
Ron Research. Please go ahead.
Thank you good afternoon guys.
Jack.
Talk about the core business. So as you reflect on the quarter how much do you think pent up demand contributed across the three segments. I know you talked about some catch up in cytology, but do you think there might have been some flush from hospitals in breast health or in gyn surgical procedures going back.
We think there was probably some catch up again is it.
A few percentage points is saying.
It's hard to completely quantify Jack in terms of both cytology as well as surgical.
And plus you have the year end people trying to get them in who have exceeded their their caps for the year. So you tend to have a pretty good.
Time at year end in terms of capital a little hard to know we saw a little bit of strength and pockets certainly.
Again, I think the way we're thinking about it overall is theres still going to be some little puts and takes here as the markets settle back down in the coming quarters are we continuing to take market share we continue to get stronger.
And none of it frankly is going to make a huge difference.
Could we grow we grow 100% next quarter or 95%.
We're talking on the base businesses.
The minor percentages in terms of the total.
Yeah, the only thing.
Is that on the <unk> relaunch there was definitely some pent up demand for capital for that relaunch and I think that really bodes well for that product moving forward and we think that'll be a nice contributor to the breast health Division.
Great.
Then.
Hoping maybe give a little bit of color around expectations for new product launches throughout 2021.
What do you have in the pipeline should we think kind of more.
Incremental launches and how does the environment make you think about maybe doing larger moves in any other businesses.
Out of the R&D portfolio.
Yes, I think in terms of your first question I think we've got.
Consistently a lot of singles coming.
In new product development frankly.
Hit a grand Slam in diagnostics and put all of our energy in it.
Hard to be able to fully understand how much R&D and manufacturing and quality assurance resources went into getting all of both the assays out for Covid as well as the additional label indications things like pulling and they involve a lot of software. So we're continuing.
Even just on pathways to continue to strength in there in breast health, we've got a number of things coming out using AI we've got.
Follow ups from the Ssi acquisition on ultrasound per barrel was really in the process of rolling out.
So we've got a lot of additional software and smaller things. There then we've got obviously assess the pro view product rolling in within the surgical business. So I think we feel very good about the cadence.
Those things rolling out and then on the M&A front.
Probably go back to that.
The comment I made in probably answering the first question a show which is the to me the best way to be disciplined in M&A is to have a great core business and all of our businesses right. Now are good. We've also got just really good teams able to do some great due diligence, we've really walked away from a number of things.
Even over the last few months.
And we continue to work others. So I think we're able to look a little bit bigger certainly given the cash, but we don't necessarily have big eyes are big needs.
And I think if anything we're probably likely to be built.
Building, a little bit more of a cash position here in the in the near term as Carl mentioned, we've generated $1 billion one of cash just in the last two quarters.
We certainly aren't spending at that rate and thats, Okay for right now, we'll be patient and disciplined.
Hey, Ed worry I think we think you guys maybe.
But what do I think we have time for maybe one more question.
Alright, we will now take our last question from Vijay Kumar Evercore ISI. Please go ahead.
Hi.
Daniel on for Vijay Thanks for taking the question.
Your comment on the 150 Panther placements in the quarter with a strong order book I'm, just wondering on capacity per Panther production or in other words, how I should think about the unwind on that order book.
Sure.
We're continuing to produce Panthers.
A similar rate right now to what we just placed.
Given that we still have very strong demand.
Probably later into.
Calendar year 'twenty, one does that start to.
To back down a little bit probably given the extreme ramp up.
But we were continuing.
To produce at a similar rate right now.
Thank you.
Okay. Thank you that is all the time, we have for questions. Today. This now concludes <unk> first quarter fiscal 2021 earnings conference call have a good evening.
Okay.
Okay.
[noise].
Yes.
[music].
Yeah.
Hmm.
[music].
Okay.
[music].
Yeah.
Yeah.