Q1 2024 Hologic Inc Earnings Call

Operator: Please stand by. Good afternoon, and welcome to Hologic's first quarter fiscal 2024 earnings conference call. My name is Cynthia, and I am your operator for today's call. Today's conference is being recorded. All lines have been placed on mute.

Please standby.

Cynthia: Good afternoon, and welcome to the whole logics first quarter fiscal 'twenty 'twenty four earnings Conference call. My name is Cynthia and I'm your operator for today's call.

Cynthia: Today's conference is being recorded.

Speaker Change: All lines have been placed on mute.

Ryan Simon: I would now like to introduce Ryan Simon, Vice President of Investor Relations, to begin the call. Thank you, Cynthia. Good afternoon, and thank you for joining Hologic's first quarter fiscal 2024 earnings call. With me today are Steve MacMillan, the company's chairman, president, and chief executive officer; Karleen Oberton, our chief financial officer; and Essex Mitchell, our chief operating officer. Our first quarter press release is available now on the Investors section of our website. We will also post our prepared remarks to our website shortly after we deliver them, as well as an updated corporate presentation. And a replay of this call will be available on our website for the next 30 days. Before we begin, we would like to inform you that certain statements we make today 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.

Speaker Change: I'd now like to introduce right Simon <unk>, Vice President Investor Relations to begin the call. Please go ahead.

Simon: Thank you Cynthia good afternoon, and thank you for joining <unk> first quarter fiscal 2024 earnings call with me today are Steve Macmillan, The company's chairman, President and Chief Executive Officer, Carlene, Overton, our Chief Financial Officer, and Ethics Mitchell, our Chief operating officer.

Our first quarter press release is available now on the investors section of our website. We will also post our prepared remarks to our website. Shortly after we deliver them as well as an updated corporate presentation and a replay of this call will be available on our website for the next 30 days.

Before we begin we would like to inform you that certain statements. We make today 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.

Ryan Simon: Such factors include those referenced in the Safe Harbor Statement included in our earnings release and SEC filings. Also, during this call, we will discuss certain non-GAAP financial measures. A reconciliation to GAAP can be found in our earnings release. Two of these on-gap measures are, one, organic revenue, which we define as revenue excluding divested businesses and revenue from acquired businesses owned by Hologic for less than one year.

Simon: Such factors include those referenced in the Safe Harbor statement included in our earnings release and SEC filings.

Simon: Also during this call we will discuss certain non-GAAP financial measures a reconciliation to GAAP can be found in our earnings release.

Simon: Two of these non-GAAP measures are one organic revenue, which we defined as revenue excluding divested businesses and revenue from acquired businesses owned by Hologic for less than one year and two organic revenue, excluding COVID-19, which further exclude COVID-19 assay revenue revenue related to Covid nine.

Ryan Simon: And two, organic revenue excluding COVID-19, which further excludes COVID-19 assay revenue, revenue related to COVID-19, and sales from discontinued products in diagnostics. Finally, any percentage changes we discuss will be on a year-over-year basis, and revenue growth rates will be in constant currency unless otherwise noted. Now, I'd like to turn the call over to Steve MacMillan, HOLOX CEO. Thank you, Ryan. Good afternoon, everyone.

Simon: <unk> and sales from discontinued products in diagnostics.

Finally, any percentage changes, we discussed will be on a year over year basis and revenue growth rates will be in constant currency unless otherwise noted now I'd like to turn the call over to Steve Macmillan Hologic CEO. Thank you, Brian and good afternoon, everyone. We are pleased to discuss our financial results for the first quarter of fiscal 'twenty.

Stephen P. MacMillan: We are pleased to discuss our financial results for the first quarter of fiscal 2024. For the quarter, total revenue was $1.01 billion, and non-GAAP earnings per share was $0.98. Both revenue and EPS came in above the high end of our guide. Before diving into our results, it is important to view our Q1 growth performance in proper perspective. Simply put, our first two quarters of fiscal 24 face incredibly difficult challenges.

Simon: 24.

Stephen P. MacMillan: For the quarter total revenue was one point or $1 billion and non-GAAP earnings per share was 98 cents.

Stephen P. MacMillan: Both revenue and EPS came in above the high end of our guidance.

Stephen P. MacMillan: Before diving into our results. It is important to view, our Q1 growth performance in proper perspective Sim.

Stephen P. MacMillan: Simply put our first two quarters of fiscal 'twenty four face incredibly difficult comps.

Stephen P. MacMillan: Despite Q1-24 having four fewer selling days compared to the prior year, and even against a prior-year molecular diagnostics ex-COVID revenue growth of 24.5% and a surgical revenue growth rate of nearly 15%, we grew total organic revenue, ex-COVID, a solid 5.2%. Even more impressive, when adjusting for the four fewer selling days, our Q1 results stand taller. On an adjusted basis, we estimate the total company organic revenue growth ex COVID was in the high single digits for the period.

Stephen P. MacMillan: Despite Q1, 'twenty for having four fewer selling days compared to the prior year and even against a prior year molecular diagnostics ex COVID-19 revenue growth of 24.5%.

Stephen P. MacMillan: In a surgical revenue growth rate of nearly 15%. We grew total organic revenue ex COVID-19 a solid five 2%.

Stephen P. MacMillan: Even more impressive when adjusting for the four fewer selling days, our Q1 results stand taller.

Stephen P. MacMillan: On an adjusted basis, we estimate the total company organic revenue growth ex Covid was in the high single digits for the period.

Stephen P. MacMillan: These are incredibly strong results against challenging comps as we continue to perform exceptionally well against our five to seven percent ex-COVID long-term target. We continue to showcase our durability and broad strength across our division, both delivering on our short-term guidance and maintaining our long-term target. Keep in mind that our long-term revenue targets are more impressive today, given we are growing off a much larger base than we originally contemplated. As we've said before, you can count on us to deliver. During our call today, we will focus on building upon our messaging from the JPMorgan conference three weeks ago. In our presentation, we highlighted that we are a new HOLOX. Bigger and faster.

Stephen P. MacMillan: These are incredibly strong results against challenging comps as we continue to perform exceptionally well against our 5% to 7% ex Covid long term target.

Stephen P. MacMillan: We continue to showcase our durability and broad strength across our divisions, both delivering on our short term guidance and maintaining our long term targets.

Stephen P. MacMillan: Keep in mind that our long term revenue targets are more impressive today.

Stephen P. MacMillan: Given we are growing off a much larger base than we originally contemplated.

As we've said before you can count on us to deliver.

Stephen P. MacMillan: During our call today, we will focus on building upon our messaging from the JP Morgan conference three weeks ago.

Stephen P. MacMillan: During our presentation, we highlighted that we are a new whole logic bigger faster stronger and poised for continued success.

Stephen P. MacMillan: Stronger and Poised for Continued Success. As part of our discussion, Essex will share more insights about our high confidence in our future success. He will also shed light on what we view as underappreciated elements of our growth strategy that are helpful to fully recognize the potential of our business. Before then turning the call over to Karleen to discuss our detailed financial results. We will share reflections from our participation at the World Economic Forum in Davos.

As part of our discussion Essex will share more insights about our high confidence in our future success.

Stephen P. MacMillan: He will also shed light on what we view is underappreciated elements of our growth strategy that are helpful to fully recognize the potential of our business.

Essex: Before then turning the call over to Colleen to discuss our detailed financial results.

Colleen: We will share reflections from our participation at the World Economic Forum in Davos.

Stephen P. MacMillan: While we continue to make progress enhancing women's health, it is clear we still have a long way to go. Starting with our meetings at J.P. Morgan, we realize there are two camps of investors. There is one camp that understands our transformation and recognizes the drivers powering our current results and future growth potential. At the same time, there is another camp that, quite frankly, does not.

Speaker Change: While we continue to make progress elevating women's health.

Speaker Change: It is clear we still have a long way to go.

Speaker Change: Starting with our meetings with J P. Morgan, we realize there are two camps of investors.

Speaker Change: There is one camp that understands our transformation and recognizes the drivers powering our current results and future growth potential.

Speaker Change: At the same time, there is another camp that quite frankly does not.

Stephen P. MacMillan: That said, we certainly appreciate the complexity. Over the past three years, there have been many moving parts, clouding the narrative of the force we've become. From revenue still normalizing following the ups and downs of COVID to moving past semiconductor chip supply challenges to selling days dynamics, only naming a few, each has contributed to irregular comps that may be difficult to interpret and also Challenging Tomorrow. We appreciate that each represents a layer of complexity that must be pulled back to fully appreciate the underlying strength of our business. Looking beyond the quarterly nuances, our steady performance over time really shines. Above all, we are bigger, faster, stronger, and poised for further growth. We are a durable and diversified growth company with disciplined operations. Peer Group Leading Margin

Speaker Change: That said, we certainly appreciate the complexity.

Speaker Change: Over the past three years there've been many moving pieces clouding the narrative of the force we've become.

Speaker Change: Revenue still normalizing following the ups and downs of Covid to moving past semiconductor chip supply challenges to selling days dynamics only naming a few each has contributed to irregular comps that may be difficult to interpret and also challenging tomorrow.

Speaker Change: We appreciate that each represents a layer of complexity that must be pulled back to fully appreciate the underlying strength of our business.

Speaker Change: Looking beyond the quarterly nuances are steady performance over time really shines.

Speaker Change: Above all we are bigger faster stronger and poised for further growth we are a durable and diversified growth company with disciplined operations peer group, leading margins, an exceptionally strong balance sheet and above all.

Essex Mitchell: Above all, an exceptionally strong balance sheet, and above all, a talented and engaged workforce. We are poised to continue to drive top-line growth while growing the bottom line even faster. To shed more light on what gives us high confidence in our future, I'll pass it over to Essek. Thank you, Steve, and good afternoon, everyone.

Speaker Change: A talented and engaged employee workforce, we are poised to continue to drive topline growth while growing the bottom line even faster.

To shed more light on what gives us high confidence in our future I'll pass it over to Essex.

Thank you, Steve and good afternoon, everyone.

Essex Mitchell: As we've commented over the past several quarters, we have dramatically transformed our business since 2008 through the challenges of the pandemic. More recently, as we've moved further away from the peaks of COVID testing and prevalence, we have posted exceptional pre-CoVID results. These results back up our claim that we are much more than a COVID story and, without a doubt, built for the long term. At the same time, as Steve

Essex: Commented over the past several quarters, we have dramatically transformed our business since 2019 through the challenges of the pandemic.

More recently as we've moved further away from the peaks of Covid testing and prevalence we have posted exceptional ex COVID-19 results.

Essex: These results back up our claims that we are much more than a cobot story and without a doubt built for the long term.

Essex: At the same time as Steve mentioned.

Essex Mitchell: There is a lot to unpack to fully understand our... Many recognize that we are a new Hologic compared to where we were in fiscal 2019. Since then, we've grown our molecular diagnostics business by approximately 80%. Our breast business, by nearly 10%, and our surgical business, by nearly 40%. Yet there are still some on the fence and uncertain of our future growth potential. As some of our peers have also performed well over this time period, it's not easy to see the true way. The underlying assumption is that winners must be exclusively taking shares.

Essex: There is a lot to unpack to fully understand our business.

Essex: Many recognize that we are a new hologic compared to where we were in fiscal 2019.

Essex: Since then we have grown our molecular diagnostics business approximately 80%.

Essex: Our breast business, nearly 10% and our surgical business nearly 40% yes.

Yes, there are still some of the feds and uncertain of our future growth potential.

Essex: As some of our peers have also performed well over this time period, it's not easy to see the true way.

Essex: The underlying assumption is that winter months.

Essex: Ultimately taking share.

Essex Mitchell: In reality, there is much more to it. In addition to competing and taking share, Hologic's growth is centered on innovation and making. We then drive this innovation to commercial execution by leveraging our world-class sales. As we are positioned today... Our future growth is much less about hand-to-hand combat in the trenches of the markets where we operate. Instead, our growth is derived from growing and expanding markets through education, awareness, and Innovative New Products in Tapping Into Underpenetrated. As an example, our three largest revenue product lines launched since 2019. Exploding COVID are BBCB-TV, Bioparanoptics, and Fluid.

Essex: In reality, there was much more into it.

Essex: In addition to competing and taking share hologic growth is centered on innovation and making sure.

Essex: We then drive this innovation to commercial execution by leveraging our world class sales teams.

Essex: We are positioned today.

Essex: Our future growth is much less about hand to hand combat in the trenches of the markets, where we operate instead our growth is derived from growing and expanding market through education awareness <unk>.

Essex: Innovative new products and tapping into Underpenetrated markets.

Essex: As an example, our three largest revenue product lines launched since 2019, excluding COVID-19 or <unk> buyout aeronautics and fluid.

Essex Mitchell: These three lines alone collectively delivered over $300 million in revenue in 2023, but that was essentially non-existent to start 2019. Moreover, each product line falls into one or more of our market-creating strategies, and each is still in its earlier stages of development. Similarly, outside of the top three, we have a number of other product lines, new since 2019, which could each individually represent $100 million revenue opportunities over time. And these lines are also still in their earlier innings of growth.

Essex: These three lines alone collectively delivered over $300 million in revenue in 2023.

Essex: That was essentially nonexistent to start 2019.

Essex: Moreover, each product line falls into one or more of our market, creating strategies and each is still in the earlier stages of growth.

Essex: Similarly outside of the top three we have a number of other product lines and new <unk> 2019, which could each individually represent $100 million revenue opportunity overtime.

Essex: These lines are also still in the early innings of growth.

Essex Mitchell: To highlight a few, our respiratory assays, GYN scopes, and laparoscopic surgical portfolio each delivered double-digit growth rates for fiscal 2020, on top of our market expansion activities. We continue to drive further growth by leveraging our large installed and user bases of core products in each division. Through the Panther, our gantries, and our hysteroscopic surgical portfolio, we have incredibly deep customer relationships in each of our unique channels. Post-COVID, our call points around the world are stronger than ever. Customers associate Hologic with industry-leading, differentiated technology, ongoing innovation, and best-in-class workflow and automation solutions.

Essex: To highlight a few our respiratory assay gyn's scopes and laparoscopic surgical portfolio each delivered double digit growth rates for fiscal 'twenty three.

Essex: On top of our market expansion activity, we continue to drive further growth by leveraging our large install and user bases of core products in each division.

Essex: Through the Panther, our gantry in our history Scopic surgical portfolio, we have an incredibly deep customer relationships in each of our unique channels.

Essex: Post Covid, our call point around the world are stronger than ever.

Essex: Customers associated Hologic with industry, leading differentiated technologies ongoing innovation.

Best in class workflow and automation solutions.

Essex Mitchell: Moreover, our strong reputation as leaders and champions for women's health continues to open doors. Earning This Advantage gives us a unique opportunity to supercharge growth from products introduced into our chain. While there are many out there that claim to be winners, even in categories we continue to lead year over year, we are extremely confident in our ability to carve out and create opportunities. Similarly... We are equally confident in our demonstrated ability to gain and maintain market share across our core products. With our core businesses incredibly healthy and many of our growth-driving products still in early canning, All in, we believe we are well positioned for the future and well Thank you, Essex.

Essex: Moreover, our strong reputation as a leader in champion for women's health continues to open doors.

Essex: Earning this advantage provides us a unique opportunity to supercharge growth from products introduced into our channel.

Essex: While there are many out there that claim to be winter even in categories. We continue to lead year over year, we are extremely confident in our ability to carve out and create opportunities for growth.

Essex: Similarly, we are equally confident in our demonstrated ability to gain.

Essex: And maintaining market share across our core product lines.

Essex: Our core businesses.

Essex: Incredibly healthy in many of our growth driving products still in early days all in we believe we are well positioned for the future and well positioned to maintain our strong performance for the years to come Steve.

Stephen P. MacMillan: Thank you Essex to close out the discussion of our growth prospects, while we continue to make significant progress outside of the U S. We still have tremendous opportunity to grow and build a much greater presence internationally.

Stephen P. MacMillan: To close out the discussion of our growth prospects, while we continue to make significant progress outside of the U.S., we still have tremendous opportunity to grow and build a much greater presence internationally. Shifting gears, before turning the call over to Karleen, we'd like to share reflections from our time at the World Economic Forum in Davos. For a third year in a row, we had the opportunity to participate in the forum where we presented the results of our third annual Hologic Global Women's Health Index. The Index, which is the largest study of its kind examining the overall state of women's health and well-being, continues to generate tremendous support from major organizations dedicated to improving women's health. As we've said before, over time, we believe the index may be the single greatest contribution to the world that we make at Hologic.

Stephen P. MacMillan: Shifting gears before turning the call over to Colleen wed like to share reflections from our time at the World Economic Forum in Davos.

Essex: For a third year in a row, we had the opportunity to participate at the Forum, where we presented the results of our third annual Hologic Global Womens Health Index.

The index, which is the largest study of its kind examining the overall state of women's health and wellbeing continues to generate tremendous support from major organizations dedicated to improving women's health.

Essex: As we've said before over time, we believe the index may be the single greatest contribution to the world that we make at Hologic.

Stephen P. MacMillan: This year's results show that we all need to stand behind women more than ever. The harsh reality is that women's health globally has not only stagnated over the past year but is sadly moving in the wrong direction. The data shows that only 11% of women were screened for cancer, and only 10% for STIs. Billions of women are not being screened. This. Must

Essex: This year's results show that we all need to stand behind women more than ever.

Essex: Reality is that women's health globally has not only stagnated over the past year, but has sadly moving in the wrong direction.

Essex: The data shows that only 11% of women.

Essex: Our screen for cancer, and only 10% for stis.

Essex: Billions of women are not being screened.

Essex: This must change.

Stephen P. MacMillan: Change is coming, and we have a tremendous opportunity to lead the way with our women's health portfolio. The key takeaway here is that, in many ways... Our markets are still in the early innings of reaching their potential. As we look ahead, we are even more inspired to live into our purpose, passion, and promise.

Essex: And we have a tremendous opportunity to lead the way with our women's health portfolio.

The key takeaway here is that in many ways.

Essex: Our markets are still in the early innings of reaching their potential.

Essex: As we look ahead, we are even more inspired to live into our purpose passion and price.

Stephen P. MacMillan: We continue to believe, and we have proven, that we can drive results through our unwavering commitment to women's health. Our strong results come from our strong purpose. And finally, in late breaking news, we are incredibly proud to announce that just last night, our new Genius Digital Diagnostic System with the Genius Cervical AI algorithm received clearance from the U.S. Food and Drug Administration. This accomplishment is only made possible by the creativity, focus, and dedication of our outstanding team. Continuing to trailblaze our path, our system is the first and only FDA-cleared digital cytology system that combines deep learning-based AI with advanced imaging technology.

Essex: We continue to believe and we have proven that we can drive results through our unwavering commitment to women's health.

Essex: Our strong results come from our strong purpose.

Essex: And finally in late breaking news, we are incredibly proud to announce that just last night, our new genius digital diagnostic system with the genius cervical AI algorithm received clearance from the U S food and drug administration.

Essex: This accomplishment is only made possible by the creativity focus and dedication of our outstanding diagnostics team.

Essex: Continuing to trail Blaze our path.

Essex: Our system is the first and only FDA cleared digital cytology system that combines deep learning based AI with advanced imaging technology.

Karleen Marie Oberton: It can help more accurately detect cervical cancer, improve psychology workflow, and ultimately enhance patient care. We continue to deliver it at a time when women need it most. With that, let me hand the call over to Karleen.

Essex: It can help more accurately detect cervical cancer improve psychology workflow and ultimately enhance patient care.

Essex: We continue to deliver and at a time when women need it most.

Essex: With that let me hand, the call over to Colleen.

Karleen Marie Oberton: Thank you, Steve, and good afternoon, everyone. And congratulations again on our diagnosis. In my statements today, I will provide an overview of our divisional revenue results and walk down our income statement that highlights the broad-based strong performance across our. I will also touch on a few additional key financial metrics. And we will finish with our guidance for the second quarter of fiscal 24 in the HOLX. Jumping right in, we are pleased to share that our first quarter financial performance was strong. We exceeded our expectations on both the top and bottom.

Colleen: Thank you, Steve and good afternoon, everyone and congratulations again to our diagnostics team.

Colleen: In my statements today, I will provide an overview of our divisional revenue results.

Colleen: Locked down our income statement that highlights the broad based strong performance across our business.

Colleen: I will also touch on a few additional key financial metrics.

Colleen: And finish with our guidance for the second quarter of fiscal 'twenty, four and the full year.

Colleen: Jumping right in we are pleased to share that first quarter financial performance was strong.

Colleen: We exceeded our expectations on both the top and bottom line.

Karleen Marie Oberton: Total revenue came in at $1.013 billion, beating the midpoint of our guidance by about $40 million. As Steve mentioned, despite four fewer selling days in the quarter... We delivered organic revenue growth of 5.2% excluding the impact of COVID, in line with our long-term revenue growth target of $5 to $7 billion. In addition, non-GAAP earnings per share was 98%.

Colleen: Total revenue came in at 1.013 billion, beating the midpoint of our guidance by about $40 million.

Colleen: As Steve mentioned, despite four fewer selling days in the quarter, we delivered organic revenue growth of five 2%, excluding the impact of Covid in line with our long term revenue growth target of 5% to 7%.

Colleen: In addition, non-GAAP earnings per share was <unk> 98.

Karleen Marie Oberton: We are exceeding the high end of our guidance. Overall, we continue to deliver robust performance on both the top and bottom. Before moving to our divisional results, we again want to emphasize that our balance sheet and willingness to deploy capital remain a core strength of our business in a macroenvironment that remains dynamic.

Colleen: Exceeding the high end of our guidance.

Colleen: Overall, we continue to deliver robust performance in both the top and bottom lines.

Colleen: Before moving to our divisional results.

Speaker Change: Again want to emphasize that our balance sheet and willingness to deploy capital remain a core strength of our business in a macro environment environment that remains dynamic.

Karleen Marie Oberton: As an example, in our first quarter, we initiated a $500 million accelerated share repurchase program. We purchased an additional $150 million of our stock and also paid down $250 million of floating rate debt with a cash balance of 1.9 billion dollars. A leverage ratio well below our target. Roughly $350 million remaining on our current share repurchase authorization. We have significant firepower and flexibility to deploy further capital should the opportunity arise. Turning to our divisional, Diagnostics, first quarter revenue of $447.8 million declined.

Speaker Change: As an example in our first quarter, we initiated a $500 million accelerated share repurchase program.

Speaker Change: Purchase an additional $150 million of our stock.

Speaker Change: Also pay down $250 million of floating rate debt.

Speaker Change: With a cash balance of $1 9 billion.

Speaker Change: Our leverage ratio well below our target range.

Speaker Change: And roughly $350 million remaining on our current share repurchase authorization.

Speaker Change: We have significant firepower and flexibility to deploy further capital should the opportunity arise.

Speaker Change: Turning to our divisional results.

Speaker Change: Diagnostics.

Speaker Change: First quarter revenue of $447 $8 million declined 26%.

Karleen Marie Oberton: Excluding COVID Assay and Related Ancillary Revenues. Diagnostics Revenue Declined 0.9%, yet adjusted for selling days, we estimate we grew mid single digits. As a reminder, Q1-23 was a very strong quarter for diagnosis, boasting 15.8% growth x COVID and molecular diagnosis, and 24.5% growth x. And without a doubt, our Q1-24 results were impacted by The Holoxists, LLC.

Speaker Change: Excluding COVID-19 assay and related ancillary revenue.

Speaker Change: Diagnostics revenues declined 9%.

Speaker Change: Yet adjusted for selling days, we estimate we grew mid single digits compared to the prior year.

Speaker Change: As a reminder, Q1 'twenty three with a very strong quarter for diagnostics.

Speaker Change: Hosting 15, 8% growth ex Covid.

Speaker Change: <unk> diagnosed diagnostics 24, 5% growth ex COVID-19.

Speaker Change: That Adel our Q1 'twenty four results was impacted by four fewer selling days compared to the prior year.

Karleen Marie Oberton: Within diagnostics, our molecular business continues to drive the division. You'll bring growth of 1.9% Xcode, or mid to high single digits when adjusted for the impact of fewer. We continue to see underlying strength in BVCB TV, which grew more than 20% in the quarter, and it's still in its early innings of adoption by a. More than 95% of our BBC TV revenue is derived in the U.S. The Hollywood Professional Publishing Company, LLC.

Speaker Change: Within diagnostics, our molecular business continues to drive the division's results.

Delivering growth of one 9% ex COVID-19.

Speaker Change: Mid to high single digits, when adjusted for the impact of fewer selling days.

Speaker Change: We continue to see underlying strength in BDC D T D, which grew more than 20% in the quarter and it is still in its early innings of adoption by our customers.

Speaker Change: More than 95% of our BV <unk> television revenue is derived in the U S.

Speaker Change: Representing incredible longer term opportunity internationally.

Karleen Marie Oberton: In addition, non-COVID respiratory revenue delivered ahead of our expectations. As we experienced stronger than anticipated demand for our flu, RSV, and hepatitis A vaccines, corresponding with published CDC data on respiratory virus positivity, sales ramped up in the final week. Finally, biotheranostics remains a positive driver of growth for our molecular.

Speaker Change: In addition, non COVID-19 respiratory revenue delivered ahead of our expectations.

Speaker Change: We experienced stronger than anticipated demand for our flu RSV and four plex assays.

Speaker Change: Corresponding with published CDC data on respiratory virus positivity sales.

Speaker Change: Sales ramped up in the final weeks of the quarter.

Speaker Change: Finally, <unk> remains a positive driver of growth for our molecular business.

Karleen Marie Oberton: Delivered Accretive Revenue and Performance Now moving to breast health, total first quarter revenue of $377.7 million, 12.0, showcasing solid double-digit growth.

Speaker Change: And delivered accretive revenue performance in the period.

Speaker Change: Now moving to breast health.

Speaker Change: Total first quarter revenue of $377 7 million increased 12, 2%.

Speaker Change: Okay, seeing solid double digit growth.

Karleen Marie Oberton: Demand for our gantries remains robust, and our interventional business also delivered a strong performance. In our gantry business, we continue to benefit from a strong cadence of orders, and our elevated backlog continues to give us high confidence. ®MD-BO Finally, as a reminder, 1, 2, and 3 results were impacted by, Interventional; we continue to see strong performance from our Barbera needles, as well as from our 2MARC markers used for marking biopsy sites. www.holicinc.com Leveraging strong performance in the quarter, we believe our breast health franchise remains well-positioned to deliver on its financial targets. The Holox Group, LLC.

Speaker Change: Demand for our <unk> Gantries remains robust in our interventional business also delivered a strong quarter.

Speaker Change: And our gantry business, we continue to benefit from a strong cadence of orders in our elevated backlog continues to give us high confidence in the performance of this business going forward.

Speaker Change: Finally, as a reminder, Q1 'twenty three results were impacted by constrained supply.

In interventional, we continue to see strong performance from our Barbera needles as well as for Mark to Mark markers used for marking biopsy sites and suspicious lesions impressed tissue.

Speaker Change: Leveraging strong performance in the quarter, we believe our breast health franchise remains well positioned to deliver on its financial targets in fiscal 'twenty four.

Karleen Marie Oberton: Next to surgeons, our first quarter revenue of $162.2 million increased $4.3 million, www.holicinc.com. The division's growth continues to be fueled by MyaShore and the related fluency, with an increasing contribution from our Lapis. As anticipated, The Overshore declined in Q1 as we lapped the selling price contribution. Introduced just before, And finally, in our skeletal business, first quarter revenue of $25.4 million declined by The Holoxchild Foundation, LLC.

Speaker Change: Continuing next to surgical our first quarter revenue of $162 $2 million increased four 6%.

Speaker Change: High single digits, when adjusted for selling days.

Speaker Change: The division's growth continues to be fueled by my issuer and their related fluid system with an increasing contribution from a laparoscopic portfolio.

Speaker Change: As anticipated <unk> declined in Q1, as we lapped the selling price contribution from the product D. Five extension introduced just before fiscal 'twenty three.

Speaker Change: And finally in our skeletal business first quarter revenue of $25 4 million declined five 6% from.

Speaker Change: The lower capital placement and upgrades.

Karleen Marie Oberton: Now let's move on to the rest of the non-GAAP P&L for the first, Growth margin of 60.8% is driven primarily by strong performance in our base, higher than expected COVID, www.holicinc.com. However, as anticipated, our gross margin result remains temporarily depressed due to the ongoing amortization of Semiconductor purchase at higher cost during the chip supply. As we continue to deploy gantries, we are moving farther away from this high-priced... And as a result, we expect margins to continue to benefit from this inventory cycling as we progress. Sifting to operating, Total operating expenses of $327.3 million. First Quarter Decreased by 3.5% This decrease in the period was driven by lower market..., lower cost from fewer days, and less expense due to the recently divested SSI. Q123, this translates to a 28.5% operating margin, in line with our expectations, although we continue to deliver peer group leading operating modules. We will continue to exercise operational discipline. The Holoxchild Project, LLC.

Speaker Change: Now, let's move on to the rest of the non-GAAP P&L for the first quarter.

Speaker Change: Gross margin of 68% was driven primarily by strong performance in our base business and higher than expected Covid revenues, which carries a favorable impact to our margins.

Speaker Change: As anticipated our gross margin results remains temporarily depressed due to the ongoing amortization of semiconductor chips purchased at higher costs during the chip supply headwind.

Speaker Change: As we continue to deploy Gantries, we're moving farther away from this high priced inventory.

Speaker Change: As a result, we expect margins to continue to benefit from this inventory cycling as we progressed through the year.

Speaker Change: Shifting to operating expenses.

Speaker Change: It'll operating expenses of $327 $3 million in the first quarter decreased by three 6%.

Speaker Change: This decrease in the period was driven by lower marketing spend.

Speaker Change: Lower costs from fewer days.

Speaker Change: And less expense due to the recently divested Ssi business.

Speaker Change: For Q1 'twenty three this translates to a 28, 5% operating margin in line with our expectations.

Speaker Change: While we continue to deliver peer group, leading operating margins.

Speaker Change: Continued exercise operational discipline and continuously seek to improve where it makes sense for our business.

Karleen Marie Oberton: Below Operating Income, Other Income, Net, represented again in our fiscal first quarter. As expected, we benefited from an elevated cash balance and high..., even though we deployed significant cash. Finally, our tax rate in Q1 was $19.75, as expected.

Speaker Change: Below operating income other income net.

Speaker Change: Represented a gain of <unk> fiscal first quarter.

Speaker Change: As expected, we benefited from elevated cash balance and high interest rates, even though it'll be deployed significant cash in the quarter.

Speaker Change: Finally, our tax rate in Q1 with 1970, 5%.

Speaker Change: As expected.

Karleen Marie Oberton: Moving on from the P&L, cash flow from operations was $220 million in the first... In addition, as previously mentioned, during Q1, we repurchased 2.2 million shares for $150 million. This activity was above and beyond initiating a $500 million dollar ASR and showcased our high confidence in our business and willingness to bet on ourselves. As well as our ongoing strategy to deploy, Now let's move on to our non-GAAP financial guidance for the second quarter and full year. We are expecting total revenue in the range of $990 million to $1.01 billion. P.S. of 95 cents to one dollar.

Speaker Change: Moving on from the P&L and cash flow from operations was $220 million in the first quarter.

Speaker Change: In addition, as previously mentioned during Q1, we repurchased two 2 million shares for $150 million.

Speaker Change: This activity was above and beyond initiating a $500 million ASR.

Speaker Change: Showcasing our high confidence in our business and willingness to bet on ourselves as well as our ongoing strategy to deploy capital.

Speaker Change: Now, let's move on to our non-GAAP financial guidance for the second quarter and full year fiscal 'twenty four.

Speaker Change: For our fiscal Q2 'twenty four.

Speaker Change: We are expecting total revenue in the range of 990 million to 1.01 billion.

Speaker Change: And EPS of <unk> 95 to one dollar.

Karleen Marie Oberton: For the full year, 24, our guidance assumes revenue of $3.99 billion and 4.065 and EPS of $3.97 to $4.12. With respect to foreign exchange, we are assuming an FX tailwind of $2 million for Q2 and $12 million for fiscal 2020. Much of this tailwind was realized in Q1. And therefore, we estimate that foreign exchange will remain neutral to marginally favorable throughout the remainder of the year.

Speaker Change: For the full year 24, our guidance assumes revenue of $3 99 billion to $4 65 billion.

Speaker Change: And EPS of $3 97 to $4 12.

Speaker Change: With respect to foreign exchange, we are assuming an FX tailwind of $2 million for Q2 and.

Speaker Change: And $12 million for fiscal 'twenty four.

Speaker Change: Much of this tailwind was realized in Q1.

Speaker Change: And therefore, we estimate that foreign exchange will remain neutral to marginally favorable throughout the remainder of the year.

Karleen Marie Oberton: Earnings to our division. We want to reiterate that we expect each business to grow at least 5 to 7 percent. The full fiscal 24, excluding the impact.

Speaker Change: Turning to our divisions.

Speaker Change: We want to reiterate that we expect each business to grow at least 5% to 7% for the full fiscal 'twenty four excluding the impact of Covid.

Karleen Marie Oberton: Starting with diagnostics, we expect the business to grow within our 5-7% long-term framework for the remainder of fiscal 2020. While performance was below this level in Q1, primarily due to the impact of fewer selling days compared to the prior year period, we expect the division to return to more normal growth in Q2 and for the remainder of our fiscal year. We expect improving utilization and menu expansion on the panel, coupled with ongoing contributions from Biotherapy and Ophthalmology, will continue to drive molecular Closing out on non-COVID diagnostics, we expect blood revenue of approximately $7 million in Q2, and $30 million for the. In terms of COVID revenue, we expect COVID assay sales to be approximately $20 million in the second quarter of 2020. $60,000,000 for the full year.

Speaker Change: Starting with diagnostics, we expect the business to grow within our 5% to 7% long term framework for the remainder of fiscal 'twenty four.

Speaker Change: Our performance was below this level in Q1, primarily due to the impact of fewer selling days compared to the prior year period.

Speaker Change: We expect the division to return to more normal growth in Q2 and for the remainder of our fiscal year.

Speaker Change: We expect improving utilization and menu expansion on the Panther, coupled with ongoing contributions from <unk> to continue to drive molecular growth.

Speaker Change: Closing out on non Covid diagnostics, we expect led revenue of approximately $7 million in Q2 and $30 million for the year.

Speaker Change: In terms of Covid revenue, we expect Covid assay sales to be approximately $20 million in the second quarter of 'twenty four.

Speaker Change: And $60 million for the full year.

Karleen Marie Oberton: COVID-related items are expected to be slightly less than $30 million in the second quarter, and approximately $105 million for the full year. Moving to Breast Health We continue to expect Fiscal 24 to showcase strong demand for our portfolio of products and services. We're moving on. It's important to understand the comp dynamics that will impact the breast business. As previously noted, Q123 was a softer comp due to ship's supply conditions. As a reminder, in Q2-23, we delivered a strong quarter of gantry placement to meet pent-up customer demand during these earlier days of chip supply. However, deliveries in Q3 and Q4 of 23 were both lower than Q2.

Speaker Change: I would related items are expected to be slightly less than $30 million in the second quarter and approximately $105 million for the full year fiscal 'twenty four.

Speaker Change: Moving to breast health.

Speaker Change: We continue to expect fiscal 2004 to showcase strong demand for our portfolio of products and services.

Speaker Change: We're moving on it's important to understand the <unk> dynamics that will impact the breast business through fiscal 'twenty four.

Speaker Change: As previously noted Q1, 'twenty three with a softer comp due to shift supply constraints.

Speaker Change: As a reminder, in Q2 'twenty three we do lot delivered a strong quarter gantry placements can be.

Meet pent up customer demand during these earlier days of chip supply recovery.

Speaker Change: And deliveries in Q3, and Q4 of 23 were both lower than Q2.

Karleen Marie Oberton: We expect this dynamic to result in a lower breast health year-over-year growth rate in Q2 that will improve in the back half of the year. For the full year, we continue to expect to deliver more gantries in fiscal 24 than in 2020. We move further from the chip supply headwinds while maintaining excellent demand visibility. Finally, in surgical, we anticipate our full year fiscal 24 revenue growth to be at the high end of our five to seven long-term target. Although impacted by fewer selling days, Q1 started the year strong. We expect the business to perform well in Q2 and the remainder of the fiscal year. Moving next to Marge.

Speaker Change: We expect this dynamic to result in a lower breast health year over year growth rate in Q2 that will improve in the back half of fiscal 'twenty four.

Speaker Change: For the full year, we continue to expect to deliver more gantries in fiscal 'twenty. Four then in 'twenty three.

Speaker Change: As we move further from the chip supply headwinds, while maintaining excellent demand visibility.

Speaker Change: Finally in surgical we anticipate our full year fiscal 'twenty for revenue growth to be at the high end of our five to seven long term target.

Speaker Change: Although impacted by fewer selling days Q1 started the year strong and we expect the business to perform well in Q2 and the remainder of the fiscal year.

Speaker Change: Moving next to margins are.

Karleen Marie Oberton: Our guidance assumes a cadence of improvement throughout Fiscal 24 for both gross margin and operating expenses. For gross margin, we anticipate Q2 levels similar to Q1. Exiting the fiscal year at the lowest, As well, our guidance assumes Q2 operating margins approaching 30%..., with a Q4-24 exit rate around 31. Continuing down the P&L. We expect Q2 operating expenses to step down from Q1. As a reminder, Q1 is typically our highest-spending quarter. We kick off the fiscal year with our internal global sales meetings and major trade show events, such as RS&A. For the balance of the year, we anticipate quarterly operating expenses to be about $300 to $320.

Speaker Change: Guidance assumes a cadence of improvement throughout fiscal 'twenty four for both gross margin and operating margin.

Speaker Change: For gross margin, we anticipate Q2 level similar to Q1.

Speaker Change: Exiting the fiscal year in the low sixty's.

Speaker Change: As well our guidance assumes Q2 operating margins approaching 30% with the Q4 2004 exit rate around 31%.

Speaker Change: Continuing down the P&L.

Speaker Change: We expect Q2 operating expenses to step down from Q1 <unk>.

Speaker Change: As a reminder, Q1 is typically our highest spend quarter seasonally.

Speaker Change: As we kick off the fiscal year with our internal global sales meetings and major trade show events such as RSA.

Speaker Change: For the balance of the year, we anticipate quarterly operating expenses to be about $300 million to $310 million.

Karleen Marie Oberton: Below operating income, we estimate fiscal 24 other income net to be an expense of approximately $10 million in Q2, and an expense between $30 to 50 million dollars for the full year. Our current guidance assumes an increase in interest income relative to our previous guidance. We expect to have a higher cash balance throughout the remainder of the year. Our guidance is based on an annual effective tax rate of approximately 19.75%. And diluted shares outstanding are expected to be approximately $239 million for the full year.

Speaker Change: Below operating income, we estimate fiscal 2000 and for other income net to be an expense of approximately $10 million in Q2.

Speaker Change: And in expense between $30 million to $50 million for the full year.

Speaker Change: Our current guidance assumes an increase in interest income relative to our previous guidance as we expect to have a higher cash balance throughout the remainder of the fiscal year.

Speaker Change: Our guidance is based on an annual effective tax rate of approximately 1970, 5% and.

Speaker Change: And diluted shares outstanding are expected to be approximately $239 million for the full year.

Karleen Marie Oberton: To conclude, Q1 was a strong quarter across each of our businesses and sets us up nicely for the rest of the year. As we close Q1, we move forward to Q2 and Fiscal 24 with good momentum. And as always, we remain focused on advancing women's health around the world while delivering on our promises and commitments to our shareholders and customers. Patients Around the World. With that, we ask the operator to open the call.

Speaker Change: To conclude Q1 was a strong quarter across each of our businesses and sets us up nicely for the rest of the year.

Speaker Change: As we closed Q1, we move forward to Q2 in fiscal 'twenty for us with good momentum.

And as always we remain focused on advancing women's health around the world, while delivering on our promises and commitments to our shareholders.

Speaker Change: Employees.

Speaker Change: Customers and patients around the world.

Speaker Change: That we ask the operator to open the call for questions.

Operator: Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow the signal to reach our equipment.

Speaker Change: Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad.

Speaker Change: You are using a speaker phone. Please make sure your mute function is turned off to allow the signal to reach our equipment. Please limit yourself to one question and one follow up question.

Stephen P. MacMillan: Please limit yourself to one question and one follow-up question. Again, press star one to ask a question. We will take our first question from Teja Savant, with Morgan Stanley. Please go ahead. Hey guys, good morning, sorry, good evening, and congratulations on the solid performance here. Steve, I want to start with the molecular diagnostics franchise. You know, I want to ask you a little bit about Aptima there. You've talked in the past about the benefits of co-testing and the time it will take for physicians to embrace any change. That said, you know, if guidelines move to HPV testing alone, how do you think about the upside of Aptima, and what, if any, should be the gating factors to transitioning those volumes? Are there any sort of differences in competitive dynamics for ThinPrep versus the HPV franchise? I think regardless of what happens with the guidelines, we see co-testing as being well-intentioned.

Speaker Change: Press Star one to ask a question we will take our first question from Tejas Savant with Morgan Stanley. Please go ahead.

Tejas Savant: Hey, guys. Good morning, sorry, good evening.

Tejas Savant: Congrats on the.

Tejas Savant: Solid performance yet.

Tejas Savant: Steve I wanted to start with.

Tejas Savant: Our diagnostics franchise.

Ask you a little bit about optimal there you've talked in the past about the benefits of co testing the time it would take for physicians to embrace any change that said if guidelines moves to HPV testing alone. How do you think about the upside on optima and what does that mean, you should be the gating factors to transitioning those volumes.

Tejas Savant: Are there any sort of differences in competitive dynamics for Tim perhaps verses the HPV franchise.

Tejas Savant: So I think regardless of what happens with the guidelines, we see co testing is being well in traction if anything it's going to probably get stronger with the approval. We just got last night of our digital cytology business, which I think is probably not as fully appreciated but as we bring that to market its going to draw.

Stephen P. MacMillan: If anything, it's going to probably get stronger with the approval we just got last night of our digital cytology, which I think is probably not as fully appreciated, but as we bring that to market, it's going to dramatically improve the workflow for our customers. It's gonna improve efficacy. It just, it's probably the biggest, you know, improvement step forward in psychology in 40 years. So, you know, we remain very committed and believe incredibly strongly. By the way, as a reminder, it's a single collection device that is used both for our Aptame HPV as well as for cytology. So it's no additional work for the doctor or the patient, and you get the results.

Tejas Savant: <unk> improved the workflow for our customers, it's going to improve the efficacy. It just it's probably the biggest improvement step forward in cytology in 40 years. So we remain very committed and believing incredibly strongly by the way as a reminder, it's a single collection device that is <unk>.

Tejas Savant: Used both for our estimate HPV as well as cytology. So it's no additional work.

Tejas Savant: For the Doctor or the patient and you get the results. We continue to be very excited and if anything probably more excited about our cytology business combined with our HBV business going forward.

Karleen Marie Oberton: So we continue to be very excited and, if anything, probably more excited about our cytology business combined with our HPV business going forward. That's helpful. And then Karleen, one for you on the margin. So you talked about sort of exiting this year at about 31%. Can you just help us parse out the dynamics of the gantry chips with the higher cost, you know, coming through the backlog here versus your network optimization plans? What are the relative impacts of those two drivers?

Speaker Change: Got it that's helpful and.

Speaker Change: Colleen one for you on margins. So you talked about sort of exiting this year at about 31% can you just help us parse out the dynamics from.

Colleen: The gantry chips at the higher cost coming through the backlog here versus your network optimization plans what are the relative impacts of those two drivers and as we look to fiscal 'twenty five should we be thinking of that 31% as a good jumping off point off of which you expect to see quarter over quarter.

Colleen: Expansion.

Speaker Change: Yeah. So let me take it into part two on the gross margin line.

Speaker Change: <unk> in the network optimization efforts are probably about a 50 to 75 basis headwind to gross margins and again, we see have line of sight to that improving over the course of the year as we mentioned in our prepared remarks on operating expenses. If you looked at just Q1, if you took out the impact of.

Karleen Marie Oberton: And as we look to fiscal 25, should we be thinking of that 31% as a good jumping off point from which you expect to see quarter over quarter expansion? Yes, so let me take it in two parts. So on the growth margin line, you know, the chips in the network optimization efforts are probably about a 50 to 75 point headwind.

Speaker Change: Kind of the seasonally high Q1.

Speaker Change: Operating expenses operating margins would have been closer to 30% so.

Speaker Change: Moving through the year as we see those dynamics at the gross margin in the normal step down in operating expenses, we see line of sight to exiting the year at 31, I do think that as a good jumping off point I think I would caution from significant improvement over the course of 'twenty five from there given those are really as we said peer leading.

Speaker Change: Operating expenses that we always want to continue to make sure that we are investing the right amount back into R&D and innovation and see the benefits like we saw last night with the approval of digital cytology.

Patrick Donnelly: Holix.com: We will take our next question from Patrick Donnelly with Citi. Please go ahead. Hey, guys, how are you?

Speaker Change: Yeah.

Speaker Change: We will take our next question from Patrick Donnelly with Citi. Please go ahead.

Patrick Donnelly: Hey, guys. How are you thanks for taking the question.

Patrick Donnelly: Thanks for taking the question. Steve, maybe one for you on the diagnostics business. You know, it sounds like the rest of the year you're going to kind of hang around that five to seven framework inside there.

Patrick Donnelly: Steve maybe one for you on the diagnostics business. It sounds like the rest of the year are going to kind of hanging around that 5% to seven framework inside there I think one of the reasons for the uptick.

Stephen P. MacMillan: I think one of the reasons for the uptick was improved utilization. Obviously, that utilization piece has been a big focus as we come out of COVID. Now that we're in a relatively, hopefully, relatively stable environment on the testing side without COVID, can you just talk about the utilization metrics that you're seeing? What gives you guys the confidence on that trajectory? Any metrics would be helpful.

Stephen P. MacMillan: Improved utilization, obviously that utilization piece has been a big focus as we come out of Covid.

Now that we're in a relatively hopefully relatively stable environment on the testing side without Covid can you just talk about utilization metrics that you are seeing what gives you guys the confidence on that trajectory.

Stephen P. MacMillan: Yeah, sure, Patrick. I think, you know, the biggest metric we track over time is just purely revenue. And I think we continue to feel good about that. But the internals on that are, if you go customer by customer.

Any metrics would be helpful. There.

Speaker Change: Yeah sure Patrick I think the biggest metric obviously, we track over time is just purely revenue and I think we continue to feel good but the internals on that or if you go customer by customer.

Stephen P. MacMillan: We continue to grow our portfolio with a lot of our customers. And not to be overlooked, our largest customers in the U.S., as they shift from Tigris to Panther, are opening up additional menu opportunities for them to be adopting things like BBCV and some of our other products. So we see really good growth with our largest customers in the U.S. We're also continuing to see, and what we're still in the early-ish innings is the international expansion and all those Panthers we placed internationally during COVID, as those are coming online. And I think what I love about these businesses, frankly, is they bring on one or two assays at a time, they get more experience, and then they bring more. And so it's not like a one-off pop that, frankly, might be better in the short term but harder to lap.

Speaker Change: We continue to grow our portfolio with a lot of our customers and not to be overlooked are our largest customers in the U S. As they shift from Tigris to Panther. It is opening up additional menu opportunities for them to be adopting things like <unk> and <unk>.

Speaker Change: Some of our other products. So we see really good growth with our largest customers in the U S. We're also continuing to see and what we are still in the early.

Speaker Change: Earnings is the international expansion and all of those Panthers, we placed internationally during COVID-19 as those are coming online in <unk>.

Speaker Change: I think what I love about these businesses frankly as they bring on one or two assays at a time they get more experience and then they bring more and so it's not like a one off pop that frankly, it might be better in the short term, but harder to lap and so what we really have going on around the world our.

Stephen P. MacMillan: And so what we really have going on around the world are customers all over the place just gradually bringing on either additional assays or, as we come out with new menus, being able to build that. And that installed base of Panther, that we're able to just drive more throughput through. That is what really makes us feel very good about... I'll just add two points to that, Patrick.

Speaker Change: Tumors all over the place just gradually bringing on either additional assays are as we come out with new menu being able to build that in that installed base of Panthers.

Speaker Change: We're able to just drive more throughput through.

Speaker Change: Is what really makes us feel very good about the future I'll just add two points to that Patrick while we haven't given up her panther utilization I would say that we are seeing that per panther utilization grow year over year.

Stephen P. MacMillan: While we haven't given a per PANTHER utilization number, I would say that we are seeing that per PANTHER utilization grow year over year. And the other metric I would give you is that, going back to 2019, around 20% of our customers were running four or more assays. That's probably close to double here at the end of 23.

Speaker Change: And the other metric I would give you that we went back to 2019, you know around 20% of our customers were running for more assays, that's probably close to doubled here at the end of 'twenty. Three so those are things that should give us confidence of the stickiness of the Panther in the customers are adding menu.

Stephen P. MacMillan: So those are things that should give us confidence about the stickiness of the PANTHER in the customers. Great, thank you guys. Thanks, Packard. We will take our next question from Jack Meehan with Nefron Research. Please go ahead. Hey, Jack.

Speaker Change: Great. Thank you guys.

Speaker Change: Thanks, Patrick.

Speaker Change: We will take our next question from Jack Meehan with Nephron Research. Please go ahead.

Jack Meehan: Hey, Jack.

Jack Meehan: Thanks. Good afternoon. Steve, there's always next season soon enough. That's right, so Essex is also a big Eagles fan, so we've got time to do that. Oh man, yeah, the pain frame.

Jack Meehan: Good afternoon.

Jack Meehan: Steve There is always next season.

Speaker Change: Soon enough.

Speaker Change: That's right ethics is also a big egos.

Speaker Change: Oh man, yeah, the payment frame.

Stephen P. MacMillan: Well, I wanted to get your thoughts on the diagnostics business at BioTheranostics. Could you just give us an update, talk about the growth runway for the Breast Cancer Index test? And I think, Karleen, you mentioned growth was accretive, but did it slow a little bit? Was that related to selling days, or was that just any color would be great?

Stephen P. MacMillan: Well I wanted to get your thoughts on the diagnostics business at bio thorough gnostics could you just give us an update talk about the growth runway for the breast cancer Index test and.

Stephen P. MacMillan: I think Colleen you mentioned growth was accretive but.

Stephen P. MacMillan: Does it slow a little bit was that related to selling days or just any color would be great.

Stephen P. MacMillan: Yeah, I think, Jack, that the more we look at the BCI test and the opportunities ahead of us... I think we're still in the early innings of what that business can become, and since we've owned it and watched the team operate, I think we just feel incredibly good about the long-term potential. So it was still very acquisitive and still growing nicely here. We just don't want to be breaking it out at the level given the size of it, but feel really, really good. All right.

Colleen: Yeah, I think Jack due to more we look at the PCI test and the opportunities ahead of us.

Colleen: We're still in the earlier innings on what that business can be call and.

Since we've owned it and watching the team operate I think we just feel incredibly good about the long term potential. So it was still well accretive yes.

Colleen: Still growing nicely here, we just don't want to be breaking it out.

Colleen: So the level given the size of it but feel really really good about the opportunity.

Speaker Change: Alright, and then.

Stephen P. MacMillan: And then, you know, the cash on the balance sheet continues to get a lot of questions around M&A priorities for Hologic. The recent questions we've gotten have been around, you know, interest in doing things in the med tech world. I was wondering if you could just comment on that. And then, you know, kind of on the biothermostics team, just like the world of specialty labs, kind of using that as a foray into that world.

Speaker Change: The cash on the balance sheet continue to get a lot of questions around M&A priorities for Hologic.

Speaker Change: The recent questions. We found had been around interest and doing things in the Med Tech World was wondering if you could just comment on that and then.

Speaker Change: Kind of on the biotech Aeronautics team just like the world of specialty labs kind of using that as a foray into that world.

Stephen P. MacMillan: Just any color on M&A strategy would be great. Yeah, I think, Jack, I think that the magic of because we are both diagnostics and med tech, to your first part of that question, it does open up the opportunity for additional things. And we're seeing some interesting things that would allow us to build on our surgical platform or our breast cancer, you know, the breast surgeon re-business areas. So we continue to look in those areas. And frankly, I think some of the valuations in those areas might be a little bit better than, say, for example, some of the diagnostics ones. So I think we certainly can shop in that aisle.

Speaker Change: Just any color on the M&A strategy would be great.

Speaker Change: Yeah, Jack I think that the magic that because we are both diagnostics and med Tech two year first part of that question. It does open up the opportunity for additional things and were seeing some interesting things that would allow us to build on our surgical platform, where our breast cancer.

Speaker Change: The breast surgeon REIT business areas. So we continue to look in those areas and frankly some of the valuations in those areas might be a little bit better than say for example, some of the diagnostics. One so I think we certainly can shop in that aisle.

Stephen P. MacMillan: And coming back to the second part of your question, the other aisle we can shop in, you know, the specialty labs, I think one of the things we're really proud of with biotherapeutics is that it actually makes money, which you very well know that a lot of the specialty labs have a lot of great top-line revenue, but a lot of expense and not much profit. And so I think we can continue to want to be thinking about things that can be generating a bottom line, as Carlene is staring at me hard right now. I'm making part of that up, but I've worked with her long enough to know her discipline.

Speaker Change: And coming back to the second part of your question and the other Io we can shop in a specialty labs I think one of the things we're really proud of it <unk> it actually makes money.

Speaker Change: Which you very well know that.

Speaker Change: A lot of the specialty labs, there is a lot of great topline revenue, but a lot of expense and not much profit and so I think we continue to want to be thinking about things that can be generating bottom line as carlene is staring at me hard right now.

Speaker Change: I'm, making part of that up but I've worked with for a long enough to know.

Stephen P. MacMillan: So we're being, you know, very mindful and careful in that space and continuing to feel like what we know we're good at is taking existing assets that are on the market and operating them pretty well. We don't want to take on, you know, wildly dilutive things, because we have the cash and we've... I think being patient in the underlying performance of our business continues to give us that. Hopefully, that gives you the landscape here, Jack.

Speaker Change: Our disciplined so we're being.

Speaker Change: Very mindful and careful in that space and continuing to feel like what we know we're good at is taking existing assets that are on the market and operating them pretty well.

Speaker Change: We don't want to take on wildly dilutive things just because we have the cash and we continue to I think be patient in the underlying performance of our businesses continues to give us that ability to be patient. So hopefully that gave you the landscape here Jack Thank you.

Stephen P. MacMillan: Thank you. We will take our next question from John Sauerbeer with UBS. Please go ahead. Good afternoon and thanks for taking the question. Just a question to start off on the breast health business.

Speaker Change: We will take our next question from John <unk> with UBS. Please go ahead.

John: Good afternoon, and thanks for taking the question.

John: Just a question on the to start off on the breast health business.

Karleen Marie Oberton: You know, any updates on what the backlog looks like there? And you know, how many quarters of backlog do you have? And just how would that compare to a normal backlog in that business?

John: Any updates on what the backlog looks like there and how many quarters of backlog that you have and just how would that compare to a normal backlog in that business.

Karleen Marie Oberton: Yeah, I think we certainly have several quarters of backlog, probably going into early 25 at what I'll call elevated levels. We traditionally have backlog for this business, given the capital nature of it, but we see it being elevated for probably the next three to five quarters as we work through that backlog and supply. http://TheBusinessProfessor.com And then, you know, as a follow-up on the diagnostic business and the Panther, I appreciate that you're not providing a pull-through there on any issue, but just any way, like, quantitatively or qualitatively, So what I would say is that the respiratory menu is on the fusion sidecar, so that's where we see the most upside coming through in that respiratory menu, but certainly, as we've talked about, BVCV is really leading the growth in the molecular diagnostics business at this point, primarily in the U.S., longer term, great opportunity internationally, but also seeing, you know, customers take on some of our legacy women's health as Please go ahead. Hey guys, congrats on the print and thanks for taking my questions. Hi Steve.

Speaker Change: Yeah, I think we certainly have several quarters of backlog probably going into early 'twenty five at what I'll call elevated levels.

Speaker Change: <unk> traditionally have backlog for this business given the capital nature of it but we see it being elevated for the next three to five quarters as we work through that backlog and supply.

Speaker Change: And true to our customers.

Speaker Change: Got it and then as a follow up on the diagnostic business and the Panther I appreciate that youre not providing on pull through there.

Speaker Change: Any way you like quantitatively or qualitatively to provide on just what type of improvement on customer spending youre seeing with the addition of the fusion sidecar.

Speaker Change: So what I would say is that the respiratory menu is on the fusion side costs and that's why we see the most.

Speaker Change: Upside coming through in that in that respiratory menu, but yes, certainly as we've talked about BBC V is really leading the growth in the molecular diagnostics business at this point, primarily in the U S longer term, that's a great opportunity internationally.

Speaker Change: But also seeing customers take on some of our legacy women's health assays as well so feel good about that.

Menu is driving the growth, but led by VDC D. At this point.

Speaker Change: Yeah.

Speaker Change: We will take our next question from Vijay Kumar with Evercore ISI. Please go ahead.

Vijay Muniyappa Kumar: Hey, guys congrats on the print and thanks for taking my question.

Vijay Muniyappa Kumar: Hi, Steve.

Vijay Muniyappa Kumar: Maybe my first one for you here. It was helpful for you to talk about those growth drivers. I'm curious.

Vijay Muniyappa Kumar: Maybe my first one for you here.

Vijay Muniyappa Kumar: <unk>.

Vijay Muniyappa Kumar: It was helpful for you to talk about those growth drivers.

Speaker Change: I'm curious.

Stephen P. MacMillan: What percentage of revenues do you think is growing high single-sustainably? What percentage should be growing with, you know, mid-singlish? And what percentage of revenues are low singles? Have you looked at that analysis? I'm just curious about when you say five to seven, how investors could get, you know, comfortable when they do the sum of the parts for the business segments. Yeah, I think we think about it by business segment. And I think what we've really said, Vijay, is that each of our businesses this year should be within that five to seven. So I think that, you know, makes us feel really good. Obviously, within each of the businesses, you know, we're not gonna go down to product line by product line, right? But if you played it out, right?

Speaker Change: What percentage of your revenues do you think are growing high single sustainably what percentage should be growing.

Speaker Change: Mid single ish and what percent of your revenues are low singles have you looked at that analysis I'm. Just curious when you say five to seven how investors could get.

Speaker Change: Comfortable when they do the sum of the parts between.

Speaker Change: On the on the on the business segments.

Speaker Change: Yes, I think we think about it by business segment and I think what we've really said Vijay is that each of our businesses. This year should be within that five to seven so I think that.

Speaker Change: <unk> has is still really good obviously within each of the businesses. We are not going to go down that product line by product line right, but if you've played it outright surgical you got my assurance fluent growing faster than that you have no for sure lower than that right. We've got that always across the businesses, but I think the way to think about it is we feel really good about each of our <unk>.

Stephen P. MacMillan: Surgical, you got MyoSure and Fluent growing faster than that; you have NovaSure lower. Right, we've got that always across the businesses. But I think the way to think about it is that we feel really good about each of our businesses growing in that range. And I would tell you that, internationally, each of those businesses is certainly at the higher end of that range, if not, you know, slightly. So, we've got it across, you know, every business has growth drivers, and like any business, there's always a few that aren't growing as fast, and, you know, that's just the nature of the beast. But overall, I think... Again, magically, every one of our businesses, and Karleen, maybe one for you on the guidance, like Q1 came in mid-singles despite the day's Why, you know, when I just think about the three and a half or the five you did in Q1, is it just the comps that are driving 2Q?

<unk> is growing in that range and I would tell you that internationally each of those businesses is certainly at the higher end.

Speaker Change: Of that range, if not slightly beyond so we've guided across every business has growth drivers and like any business. There's always a few that aren't growing as fast and.

Speaker Change: That's just the nature of the Beast, but overall I think what were again magically every one of our businesses is in that in that frame.

Speaker Change: Okay.

Speaker Change: And Carlin, maybe one for you on.

The guidance for Q1 came in mid singles. Despite the <unk> headwinds <unk> guidance is for about two and a half.

Speaker Change: <unk>.

Speaker Change: Why.

Speaker Change: When I just think about the C N half or five you did in Q1 is it just the comps what's driving <unk> and when you think about the back half step up from first half to hit the annual guide.

Karleen Marie Oberton: And when you think about the back half, step up from the first half to hit the annual guide, is it just the days normalization in the back half, or are there any other drivers we should be looking at for the back half? Yes. Yes, the biggest issue here in Q2 is the comps that are driving that. So if you looked at Q2 of 23, DX, ex-COVID, grew almost 15 percent. Molecular within that grew almost 24 percent, breast over 25 percent, and surgical over 25 percent. So I think what we've been saying all along is that Q2 was just an outstanding quarter. We're proud of that quarter.

<unk> Bayes normalization in back half or any other drivers we should be looking at for the back half.

Speaker Change: Yes, the biggest issue here in Q2 is the comps that is driving that so if you looked at Q2 of 'twenty three co Dx ex Covid grew almost 15% molecular within that grew almost 24% breast over 25% and surgical over 25%. So I think.

Speaker Change: What we've been saying all along is that Q2 was just a outstanding quarter proud of that quarter. As we went into Q3 and Q4, we have more normalized comps that we're going against that drive that improved growth rate in the back half.

Karleen Marie Oberton: As we went into Q3 and Q4, we had more normalized comps that were going against that drive that improved growth rate. We will take our next question from Anthony Petrone with Mizuho Group. Please go ahead. Hey guys, this is Dimitri speaking for Anthony.

Speaker Change: We will take our next question from Anthony <unk> with Mizuho Group. Please go ahead.

Speaker Change: Hey, guys. This is dmitry speaking for Anthony.

Dimitri: Congratulations on a great quarter. I just wanted to ask about the molecular diagnostics ex-COVID seems like it might have slowed down this quarter versus like year over year and just a little bit more color on that this quarter and kind of like your expectations for Q2. You know, a stronger respiratory virus season.

Dmitry: Congratulations on great quarter.

Dmitry: So I wanted to ask about like the molecular diagnostics ex COVID-19 it seemed like might've slowed down.

Dmitry: This quarter versus like year over year.

Just a little bit more color on that this quarter and kind of like your expectations for Q2, you see like a stronger respiratory virus season.

Stephen P. MacMillan: How should we think about that? Yeah, I think the big piece that affected molecular in the quarter was the four fewer selling days. It's a disposable run rate business.

Dmitry: How should we think about that.

Speaker Change: Yeah, I think the big piece that affected molecular in the quarter. The single biggest was the four fewer selling days.

Speaker Change: Disposable run rate business and yes, if you think about that knocked between four and 600 basis points off the quarterly growth rate frankly, depending on exactly how the days fall and both that quarter and this quarter that we're in now the second quarter are going against these ridiculously strong comps of over two.

Stephen P. MacMillan: And if you think about that, that knocked, you know, between four and 600 basis points off the quarterly growth rate, frankly, depending on The Morning Fingerprint. Sounds great. And you guys gave full year guidance for COVID. Should we be thinking about that kind of the new baseline now going forward? Yeah, I think, as we've talked about, we think of COVID as an upside. So the guide would indicate a continued step down each quarter. I mean, it's hard to really tell, https://www.holicinc.com. ...

<unk> percent molecular growth from a year ago, but I think the overall run rate.

Speaker Change: And the sheer size of the businesses now we feel very good about.

Speaker Change: Sounds great and you guys gave a full.

Speaker Change: Full year guidance for Covid shall.

Speaker Change: Should we be thinking about that kind of the new baseline going forward.

Speaker Change: Yeah, I think as.

We've talked about we think COVID-19 as upside. So is the guide with indicators of continued step down each quarter I mean, it's hard to really tell if there's another flu season next year that drives a little elevated COVID-19, but.

Speaker Change: You know again, we were looking at is upside and so.

Maybe even think about something less than what we're anticipating for 'twenty four 'twenty five.

Speaker Change: Yeah.

Speaker Change: We will take our next question from Puneet Sudan with Leerink partners. Please go ahead.

Stephen P. MacMillan: [inaudible] We will take our next question from Puneet Suda with Lear Inc. Partners. Please go ahead. Yeah, Steve, Karleen, thanks for taking the questions. Hey Steve, so the first one on the Genius Digital DX system, can you just remind me, and I apologize if I missed this, any changes to pricing or margins as a result, and maybe just, I know ThinPrep remains the same, but can you just talk a little bit about how you see the adoption of this in a market that's fairly established already? And Sure, thanks, Puneet.

Puneet Sudan: Yes, Hi, Steve Carley and thanks for taking the questions.

Puneet Sudan: Alright.

Puneet Sudan: Yes, Hey, Steve.

Puneet Sudan: So first one on genius.

Puneet Sudan: Do so Dx system can you just remind me and I apologize if I missed this.

Puneet Sudan: Any changes to pricing or margins as a result, and maybe just I know didn't prep remains the same but you know can.

Puneet Sudan: Can you just talk a little bit about <unk>.

Puneet Sudan: How do you see the adoption of this in a market that's fairly established already and then I have a follow up for Charlie.

Stephen P. MacMillan: Yeah, don't assume any real change in the margin structure. I think the real win here is the workflow. I will tell you, our key customers are incredibly excited. As you know, one of the biggest issues right now, running labs, everything else, is workers and psychologists, especially, trying to read these slides. It's been a very manual and labor-intensive process.

Speaker Change: Sure. Thanks, Brent Yeah don't assume any real change in the margin structure I think the real win here is for is the workflow I will tell you. Our key customers are incredibly excited as you well know right one of the biggest issues right now running labs everything else is workers.

Speaker Change: And psychologists, especially trying to read the slides, it's been a very manual and labor intensive process.

Stephen P. MacMillan: I can tell you, going back to one of my first meetings with Quest, when I got in this role almost ten years ago, I called that meeting nine years ago, with discussions around the workflow of cytology, and it was one of their biggest, https://www.facebook.com www.holicinc.com Album. Got it. That's super helpful. And then, Karleen, I wanted to ask about the tax rate. How do you think the net result of the, you know, 15% global tax rate if that was implemented, and then the R&D tax credit that just sort of came through with the tax bill passing in the House? Netting those effects, you know, how should we think about the tax rate and longer term rate for Hologic? Yes, so let me first frame that.

Speaker Change: I can tell you going back to one of my first meetings with quest when I got in this role almost 10 years ago called that meeting with nine years ago with discussions around the workflow of cytology and it was one of their biggest concerns.

Concerns so our team has gone out and really addressing that and I think the magic is going to be unleashing that as we are internationally as well.

Speaker Change: It's been part of what's starting to drive the growth in our European business has been having that approval already over there so feeling really good as well as frankly the reduction of the false negatives.

Speaker Change: It's just that much more accurate.

Speaker Change: Going forward. So I think it's going to Bruce we think it's going to bring some new life.

Speaker Change: Particularly it's been the excitement from our customers that I think has been.

Speaker Change: The galvanizing part for us.

Speaker Change: Got it.

Speaker Change: That's super helpful.

Speaker Change: And then.

Speaker Change: <unk> on I wanted to ask about the tax rate.

Speaker Change: How are you thinking about the net result of the 15% global tax rate if that was implemented and then R&D tax credit, but just sort of came through.

Speaker Change: With the tax bill passing in the house.

Speaker Change: Netting those effects, how should we think about the tax rate longer term for hologic.

Speaker Change: Yeah. So let me first frame that if to the extent the global minimum tax rate has an effect.

Stephen P. MacMillan: To the extent the global minimum tax rate is in effect, for us, it doesn't impact us until fiscal 26, so we've got some time before we have to deal with that, but I would say given the lack of legislation here in the U.S., it's really hard to say what the impact is. I would tend to think it would be more on the minimal side given that our tax rate is already high.

Speaker Change: For us it doesn't impact us in fiscal 'twenty six so we've got some time before we have to deal with that but I would say given this lack of legislation here in the U S. It's really hard to say what the impact is but I would tend to think.

Speaker Change: More on the mineral side, given that our tax rate is already over the 15% in.

Karleen Marie Oberton: In regards to the change in the amortization for R&D expenses, probably minimally favorable for us, but really minimal impact on timing. The Holox Association, LLC. Thanks, great. We will take our next question from Ryan Zimmerman with BTIG. Please go ahead. Hey, thanks for taking the questions this evening. I'm going to start with breast health a little bit. I had the opportunity to spend some time with Eric and the team at RS&A. And I'm just curious because, you know, you mentioned the increase in gantries and just, you know, help us understand kind of where we are in the placement of gantries relative to sockets and just how much of the growth is coming from new software like Genius AI detection, and things like that.

Speaker Change: In regards to the change in the amortization for R&D expense, probably minimally favorable for us, but really minimal impact given that's just a timing issue really in any event.

Speaker Change: Okay.

Speaker Change: Thanks, Brett.

Speaker Change: We will take our next question from Ryan Zimmerman with <unk>. Please go ahead.

Jon Block: Hey, Thanks for taking the questions. This evening, let me start with breast health, a little bit and the opportunity to spend some time with Eric and the team at <unk>.

I'm just curious because you mentioned the increase in Gantries and just help us understand kind of where we're at in.

Jon Block: And the placement of Gantries relative to sockets and just how much of the growth is coming from.

Jon Block: New software like genius, AI detection and things like that and as we normalize for comps you know what.

Karleen Marie Oberton: And as we normalize for comps, you know, what the right way to think about the growth of the breast health business is given this mix now that's moving maybe away from equipment to more software. Yeah, Ryan, I wouldn't underestimate that there's still going to be continued gantry placements. So a lot of it, the core is actually still the gantry placements.

Jon Block: The right way to think about the growth of the breast health businesses. Given this mix now thats moving maybe away from equipment two to more software.

Speaker Change: Yeah, Ryan I wouldn't underestimate that theres still going to be continued gantry placements. So a lot of it.

Speaker Change: Core is actually still the gantry replacements and then it's the service and the revenue and the additional AI and other things that we sell underneath it but I think we continue to feel very good about gantry placements really from a couple of standpoints first off Theres still kind of a tail end of going from two D.

Stephen P. MacMillan: And then there's the service and the revenue and the additional AI and other things that we sell underneath it. But I think we continue to feel very good about gantry placements from a couple of standpoints. First off, there's still kind of a tail end to going from 2D to 3D. But we're really into the mode now of also being early adopters of 3D.

Speaker Change: To three D, but we're really into the mode. Now of also the early adopters of three D. Their machines are now.

Stephen P. MacMillan: Their machines are now, you know, need to be upgraded. And with all the additional enhancements we've made to the system, we continue to place those gantries. So I think it's, we've turned it into certainly a much more diversified business. But at the core, the gantries are still a very key foundational component. Okay, that's helpful, Steve.

We need to be upgraded and with all the additional enhancements we've made to the system. We continue to place those gantries. So I think it's <unk>.

Speaker Change: We've turned it into certainly a much more diversified business.

Speaker Change: The.

Speaker Change: At the core of the Gantries are still a very key foundational component of the strength of our business.

Stephen P. MacMillan: And then, just piggybacking off that, I mean, you know, I would love to get your assessment on the CapEx environment. We've heard from, you know, some of your peers already. You know, we have some 340B money that's kind of making its way back to hospitals, which may or may not be making its way into capital equipment demand, but we'd love to get your view of the kind of year ahead on the CapEx demand from Hologic. Yeah, I think we continue to feel pretty good from, you know, most of our customers around the CapEx side. I think when people were more fearful a year, a year and a half ago, we kind of felt like it was still okay. If there are little bits that dribble back in, that's fine too.

Speaker Change: Okay. That's helpful. Steve and then just piggybacking off that I mean, well.

Speaker Change: Love to get your assessment on the Capex environment, and we've heard from some of your peers already.

Steve: We have some 340 b money, that's kind of making its way back to hospitals, which may or may not be making its way into capital equipment demand, but love to get your view of kind of a year ahead on on the Capex the man from from <unk> perspective.

Speaker Change: Yes, I think we continue to feel pretty good from.

Speaker Change: Most of our customers around the Capex side, I think when people were more fearful year year and a half ago, we kind of felt like it was still okay. If theres little bits the dribble back in that's fine too, but I think overall.

Stephen P. MacMillan: But I think overall, we think we're in a reasonable position and not seeing any dramatic changes one way or the other, at least in terms of, And again, you know, we're not the biggest capital component for the hospitals as, you know, the ERP systems or certainly the big, www.TheBusinessProfessor.com. Regardless, we're in a good position. We'll take our next question from Casey Woodring with J.P Please go ahead.

Speaker Change: We think we're in a reasonable position and not seeing any dramatic changes one way or the other.

Speaker Change: At least affecting our business and again you know we're not the biggest capital component for the hospitals as are the ERP systems or the certainly the big iron.

Speaker Change: Pieces. So we continue to feel like regardless, we're in a good position.

Speaker Change: Yeah.

Speaker Change: We will take our next question from Casey Woodring with J P. Morgan. Please go ahead.

Casey Woodring: Great. Thank you for taking my questions. Maybe one for Karleen.

Speaker Change: Okay.

Casey Woodring: Great. Thank you for taking my questions.

Casey Woodring: Maybe one for Carl lean on the other income line can you. Please be specific on what you're assuming for non-GAAP interest income interest expense and other income for Q2 and the full year.

Karleen Marie Oberton: On the other income line, can you please be specific on what you're assuming for non-GAAP interest income, interest expense, and other income for 2Q and the full year? By my math, I'm getting the $6 million of net, and other income for one cue, and you're guiding to 30 to 50 million of other expense for the year. So just trying to bridge one cue through the rest of the year.

Casey Woodring: On my math, I'm getting to $6 million of net interest and other income for <unk> and you're guiding to 30% to $50 million of other expense for the year. So I'm just trying to bridge <unk>.

Through the rest of the year.

Karleen Marie Oberton: Yes, so 1Q is a little unique in that, on two pieces, our interest income was actually higher than our interest expense, given that we still had a favorable interest rate hedge in place, which actually expired at the end of December. So moving forward, our interest expense, our weighted average cost of debt, will increase about 100 basis points through the balance of the year, which really drives that flip, and that interest expense will be higher than interest income, to the tune of roughly 30 to 50 million. Also, in Q1, we had about, you know, four to $5 million of benefit below the line from our mark-to-market investment. For more information, please visit www. FEMA.gov Got it.

Speaker Change: Yeah. So <unk> is a little unique in that in two pieces. Our interest income was actually higher than our interest expense given that we still had a favorable interest rate hedge in place, which actually expired at the end of December so moving forward our interest expense our weighted average cost of debt will increase about 100 basis.

Speaker Change: This points through the balance of the year, which really drives that flipped and that interest expense will be higher than interest income to the tune of roughly the $30 million to $50 million. Also in Q1 is we had about $4 million to $5 million of benefit below the line from a mark to market investments.

Speaker Change: With which really are EPS neutral as they offset a mark to market liability on deferred compensation. So we really don't forecast any benefit or expense related to that because again, that's offset in operating expenses. So it's really a maintaining a high cash balance and are assuming some.

Karleen Marie Oberton: That's that's helpful. And then maybe just if I can sneak one more in on the international piece, which saw very strong growth there above the fleet average, I think 33% constant currency and breast. I know, international revenues inherently have a lower margin, you've talked about that before, but curious if you're doing anything there to drive that contribution margin higher, and investments you're making outside the US, and how should we think about international margin expansion versus the fleet average kind of moving forward? Thank you.

Speaker Change: Employment as we exit the year, but it's really that exploration of that interest rate hedge contract that drives higher interest expense.

Speaker Change: Got it that's helpful. And then maybe just if I can sneak one more in on the international piece saw very strong growth there above the fleet average, 33% constant currency and Brett I know international revenue is inherently lower margin you've talked about that before but curious if youre doing anything there to drive that contribution margin higher and investments you're making.

Speaker Change: The U S and how should we think about international margin expansion versus the fleet average kind of moving forward. Thank you alright, yeah, we're really proud of what the international team has been doing it looking at selective pricing opportunities they've been very disciplined on the cost side. So that we're still dilutive.

Stephen P. MacMillan: Yeah, we're really proud of what the international team has been doing in looking at selective pricing opportunities. They've been very disciplined on the cost side, so we're still dilutive. Our international growth is still dilutive, certainly to the gross margin and a touch on the operating margin, but our teams are being very disciplined and trying to help lessen that gap. Yeah, and I think there are opportunities as we go direct in key markets. Not only do we see better revenue performance, but that is typically typically,,,,,,,,,,,,,,, Hi, good evening. Hey Derek. Hey. Sorry, I don't do sports references. I typically don't do sports references.

Speaker Change: Our international growth is still dilutive certainly to the gross margin and a touch on the operating margin, but our teams are being very disciplined and try to help.

Speaker Change: Lessen that gap over time.

Yeah, and I think there's opportunities as we go direct in key markets not only do we see better revenue performance, but that is usually typically accretive to the margin line as well.

Speaker Change: We will take our next question from Derik de Bruin with Bank of America. Please go ahead.

Speaker Change: Hi, good evening.

Speaker Change: Hey, Derik.

Speaker Change: Hey.

Speaker Change: Sorry, I don't do I typically don't do sports references sorry.

Speaker Change: I will make one.

Speaker Change: But.

Derik de Bruin: So I will make one. But just out of curiosity, I know you say that the market's not trench warfare, but I mean, you do have, You know, I mean, you do have really strong competitors in, you know, viral load testing and SDI testing. How, you know, how should we sort of think about what your market shares are and what's around? Because, I mean, clear, I mean, there's, you know, are the markets, are the markets for testing expanding for these? Or are they stagnant?

Just out of.

Speaker Change: So I know you say that the market's not.

Speaker Change: Trench warfare, but I mean, you do have.

Speaker Change: I mean, you do have really strong competitors in.

Speaker Change: Viral load testing in STI testing.

Speaker Change: How should we sort of think about what your market shares are and what's around because I mean clear I mean, there is.

Speaker Change: Is it the markets are markets that are testing or expanding for these or are they staggered I'm just sort of curious about sort of like market growth and then can you talk a little bit about whats your pipeline beyond BV CV TV and just what other sort of like what other sort of like molecular assays can be sort of be at it.

Derik de Bruin: I'm just sort of curious about sort of like market growth, and then can you talk a little bit about what your pipeline beyond BVCVTV is? And just, you know, what other sort of like molecular assays can you sort of add?

Stephen P. MacMillan: So it's a question of, like, what are the market expansion opportunities in some of these markets that are more, I would say, competitive, and, Thanks. Yeah, Derik, starting off, you know, there certainly is, we face very formidable competitors, and there's a lot of hand to hand combat. The flip side is, and I think it is the piece that people consistently miss, is how much opportunity there is to expand our markets, right? And let's go to surgical for a moment.

Speaker Change: Mike what's the market expansion opportunities in some of these markets that are more I would say competitive and.

Speaker Change: <unk>.

Speaker Change: Hadn't historically grown a lot in versus what's the new pipeline. Thanks.

Speaker Change: Yeah, Derik starting up there shortly as we faced very formidable competitors and Theres a lot of hand to hand combat. The flip side is and I think it is the piece that people consistently Miss is how much opportunity there is to expand our markets right.

Let's go to surgical for a moment nobody ever would have imagined that Meyer sure would've someday gotten to be as big as Nova sure. When we first launched it and now dwarfs no brochure and is still growing strongly as we've come out with BV CV <unk> may become our own.

Stephen P. MacMillan: Nobody ever would have imagined that MyoSure would have someday gotten to be as big as NovaSure when we first launched it, and now it dwarfs NovaSure and is still growing strongly. As we've come out with BVCV, you know; BVCV may become our largest assay. It's sometimes hard to fully understand the impact and the size of the market creation that we're doing. So we just want, you know, people to understand that it's hard to fully identify because we're growing and building these markets. And when you look at even some of the data that we got from the Global Women's Health Index, where women's health sits and testing sits globally is still a fraction of what it should be, right? If you consider that only 10% of all women in the world get tested that should for STIs, you know, that alone would say the market is probably 10X larger. Now, we're not gonna realize that in the next five years either.

Speaker Change: Largest assay, it's sometimes it's hard to fully understand the impact and the size of the market creation that.

Speaker Change: We're doing so we just want people to understand it's hard to fully identify because we're growing in building these markets and when you look at even some of the data that we got from our global Womens Health Index, where women's health sits and testing sits globally is still up.

Speaker Change: Fraction of what it should be right. If you consider that only 10% of all women in the world to get tested that should for stis that alone would say the market is probably 10 acts now we're not going to realize that in the next five years, either so to call the total available market.

Stephen P. MacMillan: So to call the total available market, you know, truly 10X because it's not quite accessible at that level; it's where we are in between. So, you know, I think that the gist is we continue to pioneer new products, new assays and grow and create these markets over time. We will take our next question from Mike Matson with Needham & Company. Please go ahead. Yeah, thanks.

Speaker Change: Truly 10 times, because it's not quite accessible at that level, its where we are in between so.

The just as we continue to pioneer new products, new assays and grow and create these markets over time.

Speaker Change: We will take our next question from Mike Matson with Needham <unk> Company. Please go ahead.

Mike Matson: Yeah. Thanks, Thanks for taking my questions.

Mike Matson: Thanks for taking my questions. I wanted to follow up on the earlier question just on the gantries in the mammography business. So I understand that you've, you know, made a number of enhancements and so forth, but I believe the platform's, you know, fairly been around for a while now. So, I mean, is there any, and I know you're not trying to be as capital focused, boom-bust and all that stuff, but, you know, it seems like every company's got to kind of launch a new platform every once in a So, I mean, is that something we could see in the near term? Absolutely.

Mike Matson: I wanted to follow up on the earlier question just on the Gantries in the mammography business I understand that.

Mike Matson: Made a number of enhancements and so forth but.

Mike Matson: I believe the platforms fairly been around for a while now so I mean is there any I didn't hear you.

Mike Matson: We're not trying to be a capital focused boom bust and all that stuff, but it could.

Mike Matson: Seems like every company has got a kind of launching new platform. Another once in a while so I mean is that something we could see in the near term maybe.

Speaker Change: Yes completely so first as a reminder, recall that we did launch our <unk> performance and then our <unk> and what we've been doing is gradually improving and working in better imaging better detection all through so it's not like we're selling a 10 year old product, even though we.

Stephen P. MacMillan: So first, as a reminder, recall that we did launch our 3D performance and then our 3D. And what we've been doing is gradually improving and working on better imaging, and better detection all the time. So it's not like we're selling a 10 year old product, even though we've, you know, added, you know, it's now 10 years or a little 11 years since we got the 3D approved, but we've been selling, you know, newer products along the way. And having said that, we are working on additional hardware and gantry changes as well that will evolve here, you know, over the next few years. Okay, thanks. And then just on M&A, I think there was another question kind of about, you know, the areas that you're looking at, but I guess I wanted to ask about just, www.patreon.com Yeah, I think you know, we would consider something in that range if it brought significant revenue and, frankly, EBITDA. So, you know, we're not going to embark on something of that size for a science project or something at an early stage or something that's losing money.

Speaker Change: It is now 10 years, a little 11 years since we got.

Speaker Change: The <unk> approved but we have been selling newer products along the way and having said that we are working on additional hardware and gantry changes as well that will evolve here.

Speaker Change: Over the next few years.

Speaker Change: Okay. Thanks, and then just and then just on M&A I think there was another question kind of about the areas that you're looking at but I guess I wanted to ask about just.

Speaker Change: Potential size of the deals because I feel like you've kind of hit it or maybe correctly commented in the past that you are potentially open to larger deals. If you found the right thing by larger I mean kind of affiliate in clubs.

Speaker Change: Yes, I think we would consider something in that range. If it brings significant revenue and frankly EBITDA. So we're not going to embark on something of that size for a science project Theres something early stage or something that's losing money I would say you would only expect us.

Stephen P. MacMillan: I would say you would only expect us to do something like that. We have the capacity, but it would have to be a pretty special asset. There's not a lot of things, but there are a few things we're looking at in that range. And we continue to be incredibly disciplined, but these would be established businesses that we think, you know, we could improve upon in terms of their ability. Thank you. Hey Cynthia, this is Ryan. In consideration of time, we'll take one final question, and then we'll go next to Navon Tai with BMP.

Speaker Change: To do something like that we have the capacity.

Speaker Change: But it would have to be a pretty special asset theres not a lot of things, but there are a few things we're looking at in that range.

Speaker Change: And we continue to be incredibly disciplined but it would be established businesses that we think.

Speaker Change: We can improve upon in terms of their ability to contribute to us. So thank you.

Speaker Change: Cynthia This is Ryan in consideration of time, we'll take one final question.

Nevada: And we will go next to Nevada tie with BNP. Please go ahead.

Navon Tai: Please go ahead. Hi, thank you for taking my question. Good evening. Maybe my first question is, if you can discuss your AI capabilities versus competition, including in breast health versus recent innovation with competitors. And a second question is following up on your comments regarding Vaginitis International that you're leading. Can you discuss the size of the long-term opportunity outside of the U.S. and any potential structural differences? Yeah, I think, you know, relative to the AI front, as it relates to breast health, we've been on the leading edge for quite some time between our CAD programs and, you know, the genius AI detection program. So we continue to feel very good, particularly as it relates to the workflow advantages and the linkage to our workstations and our products.

Nevada: Hi, Thank you for taking my question good evening.

Nevada: Sure.

Nevada: Maybe my first question is you can discuss your capabilities versus competition, including breast health.

Nevada: Mr Innovation competitors.

Nevada: And second question following up on your comments regarding.

Nevada: A bunch of Nike International opportunity.

Nevada: Can you discuss the size.

Nevada: Long term opportunity outside of the U S and any potential structural differences.

Speaker Change: Yes, I think relative to the AI front as it relates to breast health we've been on.

Speaker Change: On the leading edge for quite some time between our our CAD programs.

Speaker Change: The genius AI detection program. So we continue to feel very good, particularly as it relates to the workflow advantages and the linkage to our workstations at our products and.

Navon Tai: So, and on the second question of international business, I think, again, we've been generating, you know, frankly, double-digit growth for international business for the better part, excluding COVID-ish, for the last five or six years, and will continue to see international business being accretive to our overall growth rate here for years to come. Thank you very much, http://TheBusinessProfessor.com. This concludes today's question and answer session, and this now concludes Hologic's first quarter fiscal 2024 earnings conference call. Thank you, and have a good evening.

Speaker Change: And on the second question of International I think again, we've been generating frankly double digit growth for our international business for the better part excluding COVID-19 ish for the last five or six years and continue to see international being accretive to our overall growth rate here for years to come.

Speaker Change: Thank you very much.

Speaker Change: Yeah.

Speaker Change: This concludes today's question and answer session and this now concludes <unk> first quarter fiscal 2024 earnings conference call. Thank you and have a good evening.

Speaker Change: Okay.